Long leases – Breach of covenant – Section 168 of Commonhold and Leasehold Reform Act 2002 – Determination that tenant in breach of covenant as preliminary to serving notice of forfeiture – Respondent landlord applying to county court for declarations instead of applying to leasehold valuation tribunal as contemplated by section 168 – Whether county court having jurisdiction to make determination for purpose of section 168 – Whether entitled to award costs against appellant – Appeal dismissed
The appellant held long leases of two flats. The respondent landlord brought proceedings in the county court seeking declarations, for the purposes of section 168 of the Commonhold and Leasehold Reform Act 2002, that the appellant was in breach of the terms of her leases by using the flats for prostitution contrary to a covenant prohibiting their use for any unlawful or immoral purpose. A determination of breach under section 168 was a necessary preliminary to serving notice to forfeit the lease.
The county court judge found that the appellant was in breach of covenant as alleged, made declarations accordingly. In respect of costs, he considered that it was appropriate to follow the normal rule of awarding costs on the standard basis to the respondent as the successful party.
On appeal from that decision, the appellant argued that: (i) the county court had no jurisdiction to make a determination under section 168, where that section provided for an application to be made to a leasehold valuation tribunal (LVT) for that purpose; and (ii) even if jurisdiction existed, any award of costs was constrained by the costs regime applicable to such LVT proceedings as laid down by Schedule 12 to the 2002 Act. On the jurisdiction point, the respondent contended that section 168 impliedly conferred jurisdiction on the county court; alternatively, that the necessary jurisdiction could be derived from the ordinary jurisdiction of the county court, under section 15 of the County Courts Act 1984, to hear any action founded on contract.
Held: The appeal was dismissed.
(1) Section 168 of the 2002 Act did not confer jurisdiction on the county court to make a determination of breach of covenant under that section. The section contemplated that the determination required before notice of forfeiture could be made on an application to the LVT. Although section 168(2)(c) contemplated that such an application might be unnecessary where a court had determined that there was a breach, that did not mean that proceedings could be brought in the county court purely for the purpose of obtaining such a determination; instead, section 168(2)(c) might apply where the determination had been made in proceedings brought by the landlord for damages for breach of covenant or for an injunction to restrain such breach, or where the tenant brought proceedings for a declaration that a planned use of the demised premises would be lawful.
(2) However, the county court had the necessary jurisdiction under section 15 of the 1984 Act. A lease was a contract. By virtue of sections 78 and 79 of the Law of Property Act 1925, covenants related to any land of the covenantor or covenantee were deemed to be made with or on behalf of persons deriving title from them; moreover, a landlord was entitled to enforce a tenant’s covenants by virtue of section 141 of the 1925 Act. Accordingly, proceedings brought by a landlord against a tenant with whom there was privity of estate were “founded on contract” within the meaning of section 15 of the 1984 Act: Hutchings v Islington London Borough Council [1998] 1 WLR 1629 applied. A claim for declarations that the tenant was in breach of covenant was an “action founded on contract”, within the meaning of section 15, such that it could be brought in the county court regardless of whether any other relief was also sought.
Such declarations, if granted, would be a form of determination that, under section 168 of the 2002 Act, would clear the way for forfeiture proceedings. A claim for declarations would not fall foul of the prohibition in section 35 of the 1984 Act against dividing any cause of action for the purpose of bringing two or more actions in one or more of the county courts. Although the purpose of the declaration proceedings was to clear the way for forfeiture proceedings, a claim for a declaration and a later claim for forfeiture of the lease to which that declaration related were not a single cause of action. Consequently, the county court judge had been entitled to make the declarations in the instant case.
(2) The judge had been entitled to apply the general rule in CPR 44.3(2)(a) that the unsuccessful party should be ordered to pay the costs of the successful party. He had made no error of principle in deciding not to make a different order under CPR 44.3(2)(b) and in declining to proceed by reference to the cost-capping provisions of Schedule 12 of the 2002 Act, which were applicable to LVT proceedings. He had been entitled to take into account that the appellant had had every opportunity to apply to have the proceedings transferred to the LVT but had chosen not to do so. Until the trial, neither party had objected to the proceedings in the county court and both had appeared content with that forum.
Per curiam: On the assessment of costs on the standard basis pursuant to the award, the costs judge might take into account the alternative LVT procedure that had been available to the landlord and might, to some extent, restrict the costs awarded in light of that matter.
Christopher Marsh-Finch (instructed by Creed Lane Law Group) appeared for the appellant; Jonathan Seitler QC (instructed by RLS Law) appeared for the respondent.
Sally Dobson, barrister
Long leases – Breach of covenant – Section 168 of Commonhold and Leasehold Reform Act 2002 – Determination that tenant in breach of covenant as preliminary to serving notice of forfeiture – Respondent landlord applying to county court for declarations instead of applying to leasehold valuation tribunal as contemplated by section 168 – Whether county court having jurisdiction to make determination for purpose of section 168 – Whether entitled to award costs against appellant – Appeal dismissed The appellant held long leases of two flats. The respondent landlord brought proceedings in the county court seeking declarations, for the purposes of section 168 of the Commonhold and Leasehold Reform Act 2002, that the appellant was in breach of the terms of her leases by using the flats for prostitution contrary to a covenant prohibiting their use for any unlawful or immoral purpose. A determination of breach under section 168 was a necessary preliminary to serving notice to forfeit the lease.The county court judge found that the appellant was in breach of covenant as alleged, made declarations accordingly. In respect of costs, he considered that it was appropriate to follow the normal rule of awarding costs on the standard basis to the respondent as the successful party.On appeal from that decision, the appellant argued that: (i) the county court had no jurisdiction to make a determination under section 168, where that section provided for an application to be made to a leasehold valuation tribunal (LVT) for that purpose; and (ii) even if jurisdiction existed, any award of costs was constrained by the costs regime applicable to such LVT proceedings as laid down by Schedule 12 to the 2002 Act. On the jurisdiction point, the respondent contended that section 168 impliedly conferred jurisdiction on the county court; alternatively, that the necessary jurisdiction could be derived from the ordinary jurisdiction of the county court, under section 15 of the County Courts Act 1984, to hear any action founded on contract.Held: The appeal was dismissed. (1) Section 168 of the 2002 Act did not confer jurisdiction on the county court to make a determination of breach of covenant under that section. The section contemplated that the determination required before notice of forfeiture could be made on an application to the LVT. Although section 168(2)(c) contemplated that such an application might be unnecessary where a court had determined that there was a breach, that did not mean that proceedings could be brought in the county court purely for the purpose of obtaining such a determination; instead, section 168(2)(c) might apply where the determination had been made in proceedings brought by the landlord for damages for breach of covenant or for an injunction to restrain such breach, or where the tenant brought proceedings for a declaration that a planned use of the demised premises would be lawful. (2) However, the county court had the necessary jurisdiction under section 15 of the 1984 Act. A lease was a contract. By virtue of sections 78 and 79 of the Law of Property Act 1925, covenants related to any land of the covenantor or covenantee were deemed to be made with or on behalf of persons deriving title from them; moreover, a landlord was entitled to enforce a tenant’s covenants by virtue of section 141 of the 1925 Act. Accordingly, proceedings brought by a landlord against a tenant with whom there was privity of estate were “founded on contract” within the meaning of section 15 of the 1984 Act: Hutchings v Islington London Borough Council [1998] 1 WLR 1629 applied. A claim for declarations that the tenant was in breach of covenant was an “action founded on contract”, within the meaning of section 15, such that it could be brought in the county court regardless of whether any other relief was also sought.Such declarations, if granted, would be a form of determination that, under section 168 of the 2002 Act, would clear the way for forfeiture proceedings. A claim for declarations would not fall foul of the prohibition in section 35 of the 1984 Act against dividing any cause of action for the purpose of bringing two or more actions in one or more of the county courts. Although the purpose of the declaration proceedings was to clear the way for forfeiture proceedings, a claim for a declaration and a later claim for forfeiture of the lease to which that declaration related were not a single cause of action. Consequently, the county court judge had been entitled to make the declarations in the instant case.(2) The judge had been entitled to apply the general rule in CPR 44.3(2)(a) that the unsuccessful party should be ordered to pay the costs of the successful party. He had made no error of principle in deciding not to make a different order under CPR 44.3(2)(b) and in declining to proceed by reference to the cost-capping provisions of Schedule 12 of the 2002 Act, which were applicable to LVT proceedings. He had been entitled to take into account that the appellant had had every opportunity to apply to have the proceedings transferred to the LVT but had chosen not to do so. Until the trial, neither party had objected to the proceedings in the county court and both had appeared content with that forum.Per curiam: On the assessment of costs on the standard basis pursuant to the award, the costs judge might take into account the alternative LVT procedure that had been available to the landlord and might, to some extent, restrict the costs awarded in light of that matter.Christopher Marsh-Finch (instructed by Creed Lane Law Group) appeared for the appellant; Jonathan Seitler QC (instructed by RLS Law) appeared for the respondent.Sally Dobson, barrister
