A landlord who wishes to forfeit a lease must first establish that it has the right to do so. If such a right exists (because there is a forfeiture clause in the parties’ lease), the landlord must comply with section 146 of the Law of Property Act 1925, which (except in the case of non-payment of rent) requires the landlord to serve a warning notice on the tenant specifying “the particular breach complained of” and, if the breach is capable of remedy, requiring the tenant to remedy it. And it is only following a failure by the tenant to comply with such a notice that a landlord can exercise its right to forfeit.
The question that arose in Toms v Rubery [2019] EWCA Civ 128 was whether a landlord had served a s146 notice prematurely. The parties’ lease enabled the landlord to re-enter if the tenant “commits any… breach of his obligations under this agreement and (where such breach is capable of remedy)… fails to remedy any such breach within fourteen days following the receipt of written notice… to remedy the same”.
Following an inspection, the landlord identified several breaches of covenant connected with the state and condition of the premises. So it served a 14 day default notice, together with a s146 notice giving the tenant seven weeks to remedy the breaches of covenant that it had identified, and, after inspecting again, tried to forfeit the lease. The tenant claimed that the landlord had jumped the gun and that the s146 notice was premature because it was served simultaneously with the default notice. The judge at first instance agreed and the proceedings for possession were dismissed.
On appeal, the landlord argued that section 146 requires only that a breach of covenant has occurred. It does not require that the landlord’s right of re-entry should also have become exercisable (although the right must be exercisable when a landlord actually purports to forfeit a lease). But the Court of Appeal disagreed, ruling that the right to serve a s146 notice arises only when a right of re-entry becomes enforceable, and does not arise beforehand.
The court explained that section 146 must be interpreted using common sense. It does not explicitly state when a landlord can serve a s146 notice. But it was enacted to ensure that tenants are notified of breaches, so that they know what needs to be remedied (as well as enabling them to apply for relief from forfeiture). It is based on the premise that the right is enforceable when the notice is given and the reference in section 146(1) to a “right of re-entry or forfeiture” is a reference to an existing right, and not a future one.
The landlord would have been right if the parties’ lease had provided for a right of re-entry on a breach of the repairing covenants. But their contract required more. Where a breach was remediable, the landlord was required to give the tenant 14 days’ notice – and it was only the tenant’s failure to remedy the breaches specified in that notice that resulted in the right to forfeit. So the landlord should have allowed 14 days to elapse after serving its default notice, before serving a s146 notice on the tenant.
The requirement for the service of a separate default notice may be unusual, but landlords ignore it at their peril and, when serving a subsequent s146 notice, should make it clear that “the particular breach complained of” is the tenant’s failure to comply with their previous default notice.
Allyson Colby, property law consultant
