Lease of public house – Forfeiture proceedings for non-payment of rent – Civil Procedure Rules – Proceedings leading to consent order requiring tenant to make certain payments by fixed date – Time stated to be of the essence – Tenant failing to comply – Whether court empowered by new rules to extend deadline imposed by the order – Whether tenant entitled to relief in any event
The parties were, at all material times, engaged in litigation in which the defendant landlord sought to forfeit the lease of the tenant’s public house for the non-payment of £70,000 arrears of rent and other amounts (the gross arrears), and the claimant tenant sought damages for alleged breaches by the landlord of Article 85 (now Article 81) of the European Treaty (the euro-claim). Following the rejection of the tenant’s claim at first instance, an order was made laying down a schedule of rent payments to be made pending the outcome of a consolidated appeal affecting numerous tenants who had made similar euro-claims. The tenant failed to adhere to the schedule.
The landlord took summary proceedings for possession, which led to the making of a consent order on 2 December 1998. Under the terms of the order, which declared that time was to be of the essence, the landlord became entitled to possession unless a payment of £1,137.46 was made by the tenant on or before 9 December 1998 (the deadline). The tenant paid half of the amount before the deadline, but a cheque for the balance did not reach the landlord before 18 December 1998. On 22 December 1998 the landlord obtained an order for immediate possession. On 22 January 1999 an application by the tenant for a stay of the possession order and for relief against forfeiture was refused by a High Court master. The tenant appealed to a judge of the Chancery Division, contending, inter alia, that the deadline imposed by the consent order could be extended under powers conferred by the (new) Civil Procedure Rules, notably Part 3.1(2)(a) (extending or shortening time for compliance) and Part 3.9 (relief from sanctions).
On 27 May 1999 judgment was given in the consolidated appeal, where it was held that, even if damages were eventually to be recovered under the euro-claim, these could not be set off against the landlord’s claim for non-payment of rent: see Courage Ltd v Crehan [1999] 2 EGLR 145.
Held: The deadline imposed by the consent order would not be extended. Relief would be granted on condition that the gross arrears* were paid within seven weeks.
1. Under the now superseded Rules of the Supreme Court, a consent order of the kind under consideration took effect as a contract, the terms of which could not be varied by the court, by extending a time-limit or otherwise, unless there were contractual grounds for so doing. This was not the case if the parties had merely signified that they were not objecting to the order: see Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185; Tigner-Roche & Co v Spiro (1982) 126 SJ 525. While it was not manifest, from the provisions relied on by the tenant, that the court had acquired the wider jurisdiction contended for, such a conclusion could be drawn when those parts were read in the light of the overriding objective (to deal with cases justly) declared in CPR Part 1 Rule 1.1, and reiterated in Rule 1.4 of that part (duty of the court to manage cases). In assuming a power to amend a contractually binding order, the court recognised that the new rules possessed an element of public interest that was lacking under the superseded rules.
2. However, given the stringency of the consent order and the outcome of the consolidated appeal, it would not be appropriate to exercise that power in the manner sought by the tenant.
3. The above considerations did not preclude the tenant from applying for relief against forfeiture (see Nance v Naylor [1928] 1 KB 263), such relief being available provided that all arrears (here the gross arrears) were paid by a date which the court had to specify in its order: see Gill v Lewis [1956] 2 QB 1. The court did have a discretion, however, to allow applications for an extension of that date in appropriate cases: see Barton Thompson & Co Ltd v Stapling Machines Co Ltd [1966] Ch 499. Having regard to the severe hardship which would be occasioned by forfeiture, relief would be granted conditionally on payment of the gross arrears* within a period of seven weeks.
* Editor’s note: the tenant was given liberty to apply in certain events (unconnected with the euro-claim) for a reduction of the amount payable under the order to £50,000.
Charles Taylor (instructed by Edward Harte & Co, of Brighton) appeared for the claimant; Catherine Taskis (instructed by Masons) appeared for the defendants.
Alan Cooklin, barrister
