Southern Depot Co Ltd v British Railways Board and another

Breach of covenant — User — Relief from forfeiture — Whether wilful breach — Whether relief from forfeiture — Terms of relief — Relief granted to tenantBy a lease dated May 3 1984 the defendants demised a site at Watford to the plaintiff tenants for 42 years from January 1 1966. The plaintiffs covenanted not to use the premises for any purpose other than use as and for a storage and distribution depot and not to assign or underlet or part with possession without consent. In October 1987 the plaintiffs executed a trust in favour of BPCC plc without consent. The defendants served a notice under section 146 of the Law of Property Act 1925 alleging breaches of the user and alienation covenants. On June 9 1988 the defendants effected a peaceable re-entry and forfeited the lease; prior to this date the tenants issued the present proceedings seeking relief from forfeiture. Held The plaintiffs’ claim for relief was granted on terms. The execution of the trust for the benefit of BPCC was not a breach of the alienation covenant although allowing the beneficiary on to the site amounted to a parting with possession. Although the plaintiffs had committed a “wilful” breach of the user and alienation covenants in the sense that the breaches were knowingly committed, there was no difference between such a breach and a breach of a repairing covenant where repairs were knowingly not carried out. Applying the dicta of Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] AC 691 to the effect that the legislative intervention in the form of section 146 of the Law of Property Act 1925 has amplified the equitable jurisdiction to grant relief from forfeiture in the case of leases. This provision makes no distinction between wilful or other breaches of covenant and accordingly this was a proper case to give relief. Robert Pryor QC and Erica Foggin (instructed by Titmuss Sainer & Webb) appeared for the plaintiffs; and David Neuberger QC and Jonathan Ferris (instructed by the solicitor to the British Railways Board) appeared for the defendants.