Long lease containing covenant by tenants to pay maintenance charges — Tenants in arrears of maintenance charges — Landlord forfeiting lease — Landlord granting assured shorthold tenancy of property to new tenant — Tenants applying for relief from forfeiture — High Court allowing appeal — Whether maintenance charges were rent for the purposes of forfeiture — Whether judge had erred in exercise of discretion — Tenants’ appeal allowed
The defendant landlord granted a long lease of a flat to the plaintiff tenants, who were husband and wife. The lease contained a covenant by the tenants, inter alia, to pay the reserved rents and an annual maintenance charge. Over a period of six years the landlord took five sets of legal proceedings against the tenants to recover arrears of rent and maintenance charges. Following a further default in the payment of maintenance charges the landlord served a notice under the Law of Property Act 1925 section 146(2) requiring payment. No payment was made and the landlord forfeited the lease. Although the landlord had informed the tenants’ solicitor of the events no response was received. The landlord then granted an assured shorthold tenancy of the flat to a new tenant.
The tenants issued a summons seeking relief from forfeiture 11 months later. They claimed that the delay in making the application had been because they had been unable to give joint instructions as they had not been in communication. The master granted relief from forfeiture subject to certain conditions. The landlord appealed. The judge held that although the general rule in cases of non-payment of rent was that only in exceptional circumstances would the court refuse relief to a tenant, in the case of non-payment of maintenance charges the landlord did not have to show anything exceptional to prevent the grant of relief. The court had to weigh up the positions of the landlord and tenant. The judge found that the balance was in favour of the landlord and allowed the appeal from the master’s order. The tenants appealed on the grounds that the arrears of maintenance charges should have been treated as arrears of rent for the purposes of the jurisdiction to grant relief against forfeiture. The landlord contended that there were no grounds for interfering with the exercise of the judge’s discretion under section 146.
Held The tenant’s appeal was allowed.
1. The lease had not contained an agreement that the maintenance charge was to be treated as or deemed to be rent or additional rent and therefore it was not rent, either within the meaning of the lease or of the statutory provisions conferring jurisdiction to grant relief from forfeiture for non-payment of rent: see Escalus Properties Ltd v Robinson [1995] 2 EGLR 23.
2. Although a maintenance charge was not rent, there was in the context of relief from forfeiture no difference in substance between a covenant to pay rent and a covenant to pay maintenance charges. They were both covenants to pay money, secured by the right of forfeiture and therefore the considerations affecting relief in a case of non-payment of rent were applicable. Accordingly, the judge had erred in the exercise of his discretion and there was to be relief against forfeiture.
3. The conditions of the order of the master would be varied to the extent that the lease was to be sold and the landlord was to take out of the proceeds any arrears of rent and the maintenance charge due, the balance to be paid to the tenants. The sale was to be postponed while the new tenant was in occupation.
Shane Dougall (instructed by Karim) appeared for the plaintiffs; Edward Denehan (instructed by Slater Adams & Co) appeared for the defendant.
