Landlord and tenant — Whether lease had been forfeited by peaceable re-entry and, if so, whether relief against forfeiture should be granted to tenants — The lease, for 80 years from 1932 at a yearly rent of £50, was, subject to the question of forfeiture, vested in the plaintiffs — Defendant was the present freeholder — There was a subtenancy, for 10 years from 1976, of the premises, a lock-up shop and flat — Defendant’s predecessors in title as freeholders devised a scheme to secure the forfeiture of the lease by peaceable re-entry, the steps being to enter the premises with the consent of the occupying subtenant, to change the locks on the door and to request the subtenant in future to pay rent direct to them — The subtenant agreed to co-operate on the understanding that his own security would not be adversely affected — It was submitted on behalf of the defendant freeholder that these arrangements resulted in a forfeiture of the leasehold interest by peaceable re-entry — London & County (A & D) Ltd v Wilfred Sportsman Ltd and Bayliss v Le Gros considered — Held that the arrangements made in the present case did not constitute a re-entry — Here both the freeholders and the subtenant were proceeding on the footing of the continuing validity of the subtenant’s underlease — This was wholly inconsistent with the determination by forfeiture of the superior lease — Bayliss v Le Gros was at the most an authority that a re-entry might be effected by an arrangement whereby the subtenant remained in occupation as the direct tenant of the landlord on the terms of a new tenancy — In view of this decision the question of relief against forfeiture did not arise, but the judge expressed the opinion that it would have been a proper case for relief — The defendant, who had purchased the freehold at auction, had sufficient knowledge of the facts to put him on notice that the leaseholders were likely to have an unanswerable claim for relief — Declaration that the lease had not been forfeited
The following
cases are referred to in this report.
Bayliss v Le Gros (1858) 4 CB(NS) 537
Howard v Fanshawe [1895] 2 Ch 581
London
& County (A&D) Ltd v Wilfred Sportsman
[1971] Ch 764; [1970] 3 WLR 418; [1970] 2 All ER 600; (1970) 21 P&CR 788,
CA
Lovelock v Margo [1963] 2 QB 786; [1963] 2 WLR 794; [1963] 2 All ER
13, CA
The
plaintiffs, who had become beneficially entitled under a will to the leasehold
interest in a lock-up shop and flat at 195 Burnt Oak Broadway, Edgware,
Middlesex, sought a declaration to the effect that in the events which had
happened their leasehold interest had not been forfeited. The defendant, Samuel
Sobelman, was the present freeholder.
D Burton
(instructed by Gamlens, agents for Charlsley Harrison, of Windsor) appeared on
behalf of the plaintiffs; Miss C Hutton (instructed by Duke-Cohan & Co)
represented the defendant.
Giving
judgment, MR JOHN CHADWICK QC said: The property known as 195 Burnt Oak
Broadway, Edgware, comprises a lock-up shop with a flat above. The freehold
title to the property is registered at Her Majesty’s Land Registry under title
number NGL 27938. Between March 17 1982 and January 17 1985 the registered
proprietor of the property was Twogates Properties Ltd. On January 17 1985, the
defendant, Samuel Sobelman, was registered as proprietor in the place of
Twogates.
At all
material times since the first registration of the property, entry no 3 in the
charges register has shown the property to be subject to a lease dated October
24 1932 for a term of 80 years from September 29 1932 at the yearly rent of
£50. The leasehold interest under the lease of 1932 is itself registered at the
Land Registry, formerly under title no P115020, but now under title NGL540312.
At all times between July 2 1938 and October 22 1985 the registered proprietor
of the leasehold interest was Norman Frederick Stockbridge.
Norman
Frederick Stockbridge died on September 23 1950. On October 22 1985 the
plaintiffs in this action, who are the three children of Norman Frederick
Stockbridge and the persons who, in the events which have happened, are now
entitled beneficially to the real property devised by his will, were registered
as the proprietors of the leasehold interest. The questions raised in this
action are whether the 1932 lease was forfeited by a peaceable re-entry made on
behalf of the then freeholders, Twogates Properties Ltd, on October 19 1984;
and, if so, whether the plaintiffs should be relieved from such a forfeiture.
The 1932 lease
contains a proviso for re-entry in the following terms, so far as material:
provided
always and these presents are upon this condition that if the said yearly rent
hereby reserved or any part thereof shall at any time be in arrear and unpaid
for 21 days after the same shall have become due and whether legally demanded
or not . . . then and in any case it shall be lawful for the lessor or any
person or persons duly authorised by him in that behalf into or upon the hereby
demised premises or any part thereof in the name of the whole to re-enter and
the said premises peaceably to hold and enjoy thenceforth as if this demise had
not been made.
The yearly
rent of £50 payable under the 1932 lease was to be paid by equal quarterly
payments on the usual quarter days in each year. It is admitted by the
plaintiffs that rent was not paid on September 29 1983 or on any of the four
quarter days thereafter. Accordingly, by October 19 1984, the arrears of rent
owing by the plaintiffs to Twogates Properties Ltd amounted to not less than
£62.50.
At the
relevant time in 1984 the directors of Twogates Properties Ltd included Mr
Michael Moss, his brother Mr Sydney Moss and Mr Bryan David Lipson, a partner
in the firm of solicitors, Cowan, Lipson & Rumney. Mr Michael Moss and Mr
Sydney Moss were chartered surveyors who carried on business under the name
Quennell Moss & Co. It is clear that, by February 1984, Mr Sydney Moss and
his brother were giving consideration to the remedies which might be open to
Twogates Properties Ltd as landlords in relation to the non-payment of rent
under the 1932 lease; and, in particular, to the possibility of forfeiture of
the lease. In a memorandum dated February 27 1984, Mr Lipson advised Mr Sydney
Moss as to the legal position: after setting out what he conceived to be the
relevant legal principles, Mr Lipson continued:
On these basic
principles if you wish to effect a forfeiture by peaceable reentry then in my
opinion you must take the following steps on the day on which you peaceably
re-enter the premises:-
1 Peaceably enter the premises (which will
obviously have to be done with the consent of the occupation lessee who is in
any event unlikely to refuse consent)
2 Take physical possession of the premises by
changing the locks on the door
3 Accept the present subtenant as your tenant
by giving that subtenant a set of keys to the new lock
4 Inform the subtenant in writing of the steps
you have taken with a request that he should pay all future rent to Twogates
Properties Ltd.
As appears
from that memorandum it was appreciated by the landlords at the time that the
property was then in the occupation of a subtenant. The subtenancy was upon the
terms of a lease dated April 29 1976 made between Ada Lillian Stockbridge, the
widow of Norman Frederick Stockbridge, and Gerald Clayton for a term of 10
years from March 25 1976. Following a rent review in 1983, the rent payable by
Mr Clayton under the 1976 underlease was £3,500 per annum. Mr Clayton carried
on the business of a retail furniture shop at the property. He used the flat
premises above the shop for storage purposes in connection with that business.
Mr Clayton also carried on the business of a retail do-it-yourself shop under
the name ‘Home Handyman’ at 188 Burnt Oak Broadway, which was on the opposite
side of the street from the property.
It is clear
that by the middle of September 1984 Twogates Properties Ltd had decided to
take steps to forfeit the 1932 lease. The property was entered for sale at an
auction which was to be held by Harman Healy & Co on November 20 1984. On
September 13 1984, Cowan, Lipson & Rumney sent to Mr Barnett at Harman
Healy & Co draft special conditions of sale in respect of the freehold
interest, and a copy land certificate of the freehold title. Although the land
certificate showed the property to be subject to the 1932 lease, it is
clear from the draft special conditions that it was intended to be sold free
from that lease, and subject only to the occupation lease; although this was,
at that stage, wrongly described as a 15-year lease granted in 1971 at a
current rent of £2,600 per annum.
The third
quarter’s rent was due on September 29 1984. I will assume, but without
deciding, that a demand for that rent was sent by Quennell Moss & Co, on
behalf of Twogates Properties Ltd, to Mrs Verena Evans on behalf of the
plaintiffs. Some three weeks went past and no rent was received. It was decided
by Twogates Properties Ltd and Mr Lipson that they would effect a forfeiture on
October 19 1984. In preparation, Mr Lipson dictated two letters. I set out the
first of these in full. The letter is addressed to Mr Clayton at 195 Burnt Oak
Broadway, and reads:
Re: 195
Burnt Oak Broadway, Edgware
We act for
Twogates Properties Ltd, the freeholders of the above property which they own
subject to the following leases:-
1 A lease dated October 24 1932 made between
Robert Wilson Black and The Oak Property Co Ltd for a term of 80 years from
September 29 1932 at a rent of £50 per annum payable quarterly in arrears on
the usual quarter days in each year.
2 An underlease made in or about 1971 for a
term of 15 years at a current rent of £2,600 per annum payable quarterly in
advance on the four usual quarter days in each year. We understand that you are
in occupation of the above premises under the provisions of the underlease
referred to in 2 above, but we do not know whether that underlease was granted
to you direct by the head lessees or whether you subsequently acquired it by
way of assignment.
Our clients
acquired the freehold on December 17 1981 and from that date until in or about
June 1983, they sent rent demands to Stockbridge Holdings Ltd, care of Mrs V
Evans, the Old Crispin, Windsor Forest, Berkshire and the rent was always paid.
Since September 28 1983, despite sending demands, the rent owing to our clients
has not been paid and, as at today’s date, our clients are owed rent for the
period from September 29 1983 to September 29 1984 (five quarters at £50 per
annum amounting to £62.50).
We have
advised our clients that in these circumstances, they are entitled to forfeit
the lease dated October 24 1932 on the grounds of non-payment of rent by
peaceably re-entering the premises and re-taking possession. Our clients
propose to exercise their legal rights today by taking the following steps:-
(1) Peaceably re-entering the premises.
(2) Changing the locks on the front door.
(3) Instructing you to pay all future rent
payable by you under the underlease referred to in 2 above to our clients or as
they may direct.
Our
representative, Mr L M Bloch, a partner in this firm (who will probably be
accompanied by another member of our staff, Miss A Prizeman) will call at your
premises today together with our clients’ locksmith and they will hand you this
letter and will supervise the changing of the locks, and when that work had
been completed they will hand you the following:-
(1) A complete set of keys to the new lock.
(2) A letter of authority relating to the payment
of future rent.
We would like
to make it perfectly clear that our clients are not in any way challenging your
right to remain in occupation of the premises under the provisions of the
underlease under which you are the present lessee. Their sole concern is to
enforce their legal rights of forfeiture against their tenant and the effect of
the steps which our clients propose to take will be that after the forfeiture
has been effected, you will become our clients’ direct lessee.
As our
clients would like to know the exact terms upon which you occupy the premises,
we would be grateful if you would kindly hand Mr Bloch a copy of your
underlease. If you do not have a copy available, then we will be quite prepared
at our clients’ expense to make a photocopy of the original in your presence at
a nearby photocopying agency so that the original document never leaves your
possession.
We hope that
we have made the position clear, but if there is any further information you
require, Mr Bloch will be able to provide it and the writer of this letter (Mr
B D Lipson) will also be available to answer any questions you may have on the
telephone.
Mr Bloch gave
evidence before me. He told me that he had been asked by Mr Lipson on October
18 1984 to attend at the property, 195 Burnt Oak Broadway, on the following day
for the purpose of making a peaceable re-entry. Mr Bloch told me that he had no
experience in effecting a peaceable re-entry, and that he had no detailed
knowledge of the relevant law other than what was stated in the letter which I
have set out above and which was handed to him by Mr Lipson. Mr Bloch’s
evidence, which was confirmed by Miss Prizeman (then an articled clerk with
Cowan, Lipson & Rumney) and which was not seriously at variance with that
given by Mr Clayton, may be summarised as follows.
At 10am on
October 19 1984, Mr Bloch and Miss Prizeman went to 195 Burnt Oak Broadway.
They found Mrs Clayton there, and she directed them to the do-it-yourself shop
at 188 Burnt Oak Broadway on the other side of the road. Mr Clayton was busy in
his shop and Mr Bloch joined the queue and waited for customers to be served. When
his turn came Mr Bloch told Mr Clayton that he was a solicitor, and that there
was a matter which he wanted to discuss privately. He said that he acted for
the landlords, but he assured Mr Clayton that nothing that he wanted to discuss
would be prejudicial to Mr Clayton personally. Mr Clayton told Mr Bloch that he
was busy and asked him to return at 11 o’clock.
When Mr Bloch
and Miss Prizeman returned to 188 Burnt Oak Broadway at 11 o’clock the shop was
less busy. Mr Bloch again told Mr Clayton that he acted for the landlords, and
on this occasion he showed him the letter of October 19 1984, which I have set
out above. Mr Clayton read the letter and, as it appeared to Mr Bloch,
understood what was proposed. Mr Clayton expressed his concern as to his own
position, and Mr Bloch assured him that he would not be prejudiced. Mr Bloch
told me that he did not think that he had applied his mind to the question
whether forfeiture of the head lease would involve a forfeiture of the
underlease when he told Mr Clayton that he would remain in possession under his
underlease. He accepted, under cross-examination, that it would be consistent
both with the terms of the letter dated October 19 1984 and with his, Mr
Bloch’s probable understanding at that time, that Mr Clayton’s underlease was
not to be affected by what was being done.
Mr Clayton was
content with these assurances. Understandably, he did not wish to incur
unnecessary legal costs; but he telephoned his solicitors and asked them to let
Mr Bloch have a copy of the underlease. Mr Bloch recalls that Mr Clayton told
his solicitors in the course of that telephone call that what Mr Bloch was
proposing to do would not prejudice him. I am satisfied, first, that Mr Bloch
did not seek to influence Mr Clayton against consulting his solicitors; but,
second, that Mr Clayton was content not to do so because of the assurances that
he was being given. Mr Clayton then telephoned his wife, at 195 Burnt Oak
Broadway, to tell her that Mr Bloch would be coming to change the locks with a
locksmith and that he was to be allowed to do this.
Mr Bloch and
Miss Prizeman then went to 195 Burnt Oak Broadway, with the locksmith, and
instructed him to start changing the locks. Miss Prizeman and the locksmith
remained there with Mrs Clayton. Mr Bloch went to Mr Clayton’s solicitors to
collect a copy of the underlease. When he returned to the property he found
that there had been some difficulty with the locks, but that the locksmith had
finally succeeded in fitting a new lock. Mr Bloch told me that he wanted to be
sure that the new lock did in fact work and that he satisfied himself of this.
He then gave all the keys to the new lock to Mrs Clayton, and he returned to
188 Burnt Oak Broadway, where he handed to Mr Clayton the second of the two letters
which had been dictated by Mr Lipson on the previous day. The second letter was
also addressed to Mr Clayton and was in these terms:
Re: 195
Burnt Oak Broadway, Edgware
We act for
Twogates Properties Ltd, the freeholders of the above property, and write to
give you formal notice that our clients have today forfeited the lease of the
above premises dated October 24 1932 and made between Robert Wilson Black (1)
and the Oak Property Co Ltd (2) by peaceably re-entering the premises and
re-taking possession.
As a result
of our clients’ having taken physical possession of the premises, you are now
our clients’ direct lessee. Will you please accept this letter as our clients’
formal request and authority to you to pay all future rent payable by you under
the provisions of the underlease under which you hold the premises to this firm
on behalf of Twogates Properties Ltd.
After handing
over that letter, Mr Bloch thought that the act of forfeiture by re-entry had
been completed. He returned to the offices of Cowan, Lipson & Rumney. In
due course, he made a statutory declaration, dated October 29 1984, setting out
the events of October 19.
As I have
said, Mr Clayton’s evidence did not differ substantially from that of Mr Bloch.
He confirmed that Mr Bloch had assured him that he had nothing to worry about
and that his lease was safe. Mr Clayton thought that he had suggested to Mr
Bloch that he, Mr Clayton, should telephone Mrs Evans. I accept that Mr Clayton
considered this possibility; but I do not think that it was the subject of
discussion between him and Mr Bloch, nor that Mr Bloch made any attempt to
persuade him against such a course. In my judgment, the true position was that
Mr Clayton took the view, upon reading the first of the two letters of October
19 1984, that Mr Bloch was entitled to do what he was proposing to do; that it
was inconceivable that Mrs Evans could be unaware of what was to be done; and
that having been given assurances that the course proposed was not going to
affect his own underlease, he was not concerned to object.
After Mr Bloch
had left, Mr Clayton found that the new lock which had been installed at 195
Burnt Oak Broadway was unsatisfactory.
the locking plate; with the consequence that the tongue of the new lock would
not enter into the style of the door. He telephoned Cowan, Lipson & Rumney
during the afternoon of that day to complain about this. His complaint was met
by a third letter dated October 19 1984 from Cowan, Lipson & Rumney. The
second paragraph of that letter is of some significance:
We confirm
that our clients have asked us to apologise for any inconvenience that may have
been caused and we further confirm that we told you on the telephone this
afternoon to arrange for a new lock to be fitted and we stated that as long as
the cost was reasonable our clients would pay the bill. We invite you to send
us an invoice for the installation of the new lock and as long as the figure is
reasonable we have instructions to pay the cost on our clients’ behalf direct
to your locksmith.
In the event,
Mr Clayton replaced the new lock with the original lock that had been left
behind. The matter progressed towards the auction. On October 29 1984 Cowan,
Lipson & Rumney sent to Mr Barnett at Harman Healy & Co amendments to
the special conditions of sale relating to the property at 195 Burnt Oak
Broadway, and a copy of the statutory declaration made by Mr Bloch and the
exhibits thereto. The amendment to the special conditions was in these terms:
2 . . . The
purchaser shall assume (as is the case) that the lease dated October 24 1932
and made between the Oak Property Co Ltd (1) and Robert Wilson Black (2)
referred to in entry number 3 in the charges register to the said title was
forfeited on the grounds of non-payment of rent by a peaceable re-entry on
October 19 1984 on which date the vendor retook physical possession of the
property and authorised and instructed Gerald Clayton, the lessee under the
provisions of the underlease referred to in special condition 3 hereof, to pay
all future rent due from him to the vendor. On completion, the vendor’s
solicitors shall hand the purchaser a statutory declaration approving the facts
which amount to a lawful re-entry on October 19 1984. A copy of the said
statutory declaration is available for inspection at the offices of the
auctioneers and the vendor’s solicitors, and the purchaser having had an opportunity
to inspect it prior to the date hereof shall be deemed to purchase with full
knowledge of the contents thereof and shall raise no requisition or objection
in relation thereto. The purchaser shall not be entitled to require the vendor
to procure the deletion of entry number 3 from the charges register of the said
title prior to completion and shall not be entitled to refuse or delay
completion by reason of the fact that the charges register of the said title
still retains an entry of the said lease dated October 24 1932.
On November 12
1984 Cowan, Lipson & Rumney sent a further amendment to the special
conditions to Harman Healy & Co. That was in the following terms:
3. The
property is sold subject to and with the benefit of a lease dated April 29 1976.
By reason of
the matters referred to in special condition 2 hereof the vendor does not have
in its possession the original counterpart of the said lease and can only
provide a copy thereof. The purchaser shall not be entitled to refuse or delay
completion by reason of the fact that the vendor does not hand over either the
original counterpart lease or a certified copy thereof and only has in its
possession a copy thereof referred to in paragraph 4 of the said statutory
declaration referred to in special condition 2 hereof. The purchaser shall not
be entitled to base any claim against the vendor whether for damages for breach
of contract, compensation for loss of bargain, interest or otherwise by reason
of any of the matters referred to in special conditions 2 and 3 hereof.
Some time
prior to the auction, the defendant, Mr Sobelman, obtained copies of the
auction particulars and the special conditions in their unamended form. It is,
I think, clear that there is nothing in the particulars or the conditions (as
printed, and before amendment) which would put a prospective purchaser on
notice that the property was subject to the 1932 lease. Mr Sobelman attended
the auction on November 20 1984. The auction was conducted on behalf of Harman
Healy & Co by Mr Barnett. Mr Barnett is a fellow of the Royal Institution
of Chartered Surveyors, an experienced auctioneer and has been a partner in
Harman Healy & Co for some 21 years.
Mr Barnett
told me that he was well aware, and had expressed the view to Cowan, Lipson
& Rumney, that it had to be made abundantly clear to any purchaser that the
property at 195 Burnt Oak Broadway had been the subject of a ground lease which
had been forfeited. In particular, it had to be made clear that the landlords
would not have the original counterpart of the 1976 underlease to produce to a
purchaser.
There were
over 90 lots to be sold on November 20 1984; and I accept that it would not be
unusual in a sale of this nature for there to be a number of last minute
addenda to the particulars and conditions as published in the printed
catalogue. To meet this point Harman Healy & Co produced a series of pink
roneoed sheets drawing attention to the additions. On one of those sheets there
is found the entry:
Lot 35 — 195
Burnt Oak Broadway, Edgware, Middlesex.
Extra special
conditions together with revised plan available at the rostrum.
Mr Barnett
told me, and I accept, that some 500 copies of these sheets were produced and
were placed on every chair in the room at the auction hall.
The property,
which was lot 35, was to be sold at the beginning of the afternoon session. I
have had the advantage of hearing in the course of the trial a tape-recording
of Mr Barnett’s introduction to the afternoon session. That recording was, I
understand, taken as a matter of normal procedure. It is clear from that
recording, and Mr Barnett confirmed in his oral evidence before me, that he
drew specific attention to the addendum and to the entry relating to lot 35. I
read from a transcript of the relevant parts of that recording. At the
beginning of the afternoon session Mr Barnett said this:
On lot 35
there is a two page extra special condition together with a revised plan. I’ll
just mention that one in particular now. If there is anyone contemplating
bidding on lot 35, which is Burnt Oak Broadway, I would like you to be aware of
what is in the additional special conditions. Don’t ask me in the middle of the
bidding, so please, anyone for lot 35 who hasn’t seen the additional three page
special conditions and the plan, please make sure you see it before I get to
that lot because it is only in two lots’ time.
And,
immediately before offering lot 35 for sale, he said:
Lot 35 is 195
Burnt Oak Broadway, Edgware, Middlesex. It is a lock-up shop with a
self-contained flat above. A separate lock-up shop at the side plus a rear
building. It’s freehold. It is let on the tenancy as set out. They have paid
£3,500 a year, it is worth quite a lot more, you will see the reference to the
comparable, and I would just again tell you that there are these special
conditions that we are selling subject to, so don’t anyone come in at the very
last minute not knowing what is in these special conditions. The plan will show
the additional land at the back that wasn’t shown on the catalogue. I advise
you that you shouldn’t bid unless you have read these special conditions. That
is all.
Mr Sobelman
did not recall seeing the pink addenda sheets in the auction hall. But he did
recall Mr Barnett’s speech; and, in particular, he recalled that Mr Barnett had
said that anyone interested in lot 35 should come up and take the special
conditions. Mr Sobelman went to the rostrum and asked for the special
conditions for lot 35. He told me that he was handed one white sheet of paper;
and it is clear that this was the first of the two additional special
conditions. He read the document sitting in his seat in the auction hall and
appreciated that there was an additional lease referred to in the special
condition about which he had not previously been aware. He told me that he
thought it was an old lease which had expired before Mr Clayton had taken
possession, and that his knowledge of it had no effect on his bidding. It is
clear from his evidence that he was aware that some step had been taken to
obtain peaceable re-entry within the previous months, but I accept that he had
little time to consider the matter — and no time on which to take legal advice
— and that he would not have appreciated the full significance of what was
stated in the special condition.
The property
was offered for auction on the afternoon of November 20 1984, and was knocked
down in the course of the auction to Mr Sobelman at the price of £54,500. It is
common ground that this price would reflect the value of the property at that
time on the basis that it was subject only to the 1976 underlease. The value of
the freehold subject to the 1932 lease would be very substantially less. At the
conclusion of the auction, Mr Sobelman signed a memorandum evidencing his
purchase. In due course, after the title had been investigated by his
solicitors, Mr Sobelman took a transfer of the freehold interest dated December
8 1984 at a purchase consideration of £54,500. He charged the property to his
bank to secure an advance of some £30,000 which he applied towards the purchase
price. I should, perhaps, mention, that the bank has taken no part in these
proceedings, although I have been informed that it is aware of them.
On January 2
1985 Cowan, Lipson & Rumney sent to Brecher & Co, the solicitors acting
for Mr Sobelman in the purchase, the executed transfer, the land certificate,
the counterpart lease of 1932, the original statutory declaration of Mr Bloch
and the exhibits thereto, and a letter of authority addressed to Mr Clayton in
respect of all rent falling due on or after December 24 1984.
On January 4
1985 Brecher & Co sent that letter of authority to Mr Clayton and requested
him to forward to them a cheque for the current quarter’s rent due under the
1976 underlease — an amount of £875. On January 11 1985, Mr Clayton replied to
the effect that, although he had been about to send the rent to Brecher &
Co in response to their letter, he had now had a demand from Stockbridge
Trust, who were astounded to be told of the events of the past two months. Mr
Clayton asked Brecher & Co to ‘get together with Stockbridge Trust and
resolve the matter’.
At about the
same time, the plaintiffs, through their solicitors Charlsley Harrison, by a
letter dated January 10 1985 tendered the arrears of rent due under the 1932
lease. That tender was not accepted, and shortly thereafter, on February 13
1985, the present proceedings were commenced by the plaintiffs.
The first
question which I have to consider is, of course, whether there was a re-entry
by the landlords on October 19 1984. If there was no re-entry, then there was
no forfeiture. There appears to be little authority on the nature of the acts
required to effect a re-entry against an intermediate tenant in a case where
the premises are in the occupation of a subtenant. I was referred to a passage
in the current edition of Woodfall on Landlord and Tenant, at para
1-1899:
Peaceable
re-entry may be effected by the forfeiting landlord accepting as tenant a
subtenant who is already in occupation, or by letting into occupation some
third party and maintaining him there as tenant. But, it is clear that some
unequivocal act or words are necessary to constitute a peaceable re-entry.
The authority
cited in support of the first sentence of that passage is London &
County (A&D) Ltd v Wilfred Sportsman [1971] Ch 764. But that was
a case in which the defendants had gone into possession as trespassers against
the tenant. The position was explained by Russell LJ at p 785:
Finally, the
plaintiffs argued that there was in fact here no re-entry. There could be none
by the third party until the reversion was vested in it on August 31 1965.
Prior to that date the situation was that no 5 was being occupied by the
defendants at the instance of the third party in trespass against Miah as the
lessee. Mere continuation of that situation (it was argued) could not operate
as a re-entry. It would have been necessary for the third party and the
defendants in some way to withdraw from the premises and then return physically
in order to achieve a re-entry. As it was put, the trespass must be
discontinued before there can be a forfeiture by re-entry. I am not able to
accept that argument. I see no point in the law requiring what was described in
Bayliss v Le Gros (1858) 4 CBNS 537 as an ‘idle ceremony’ — a
case in which there was sufficient re-entry by acceptance of a subtenant
already in occupation as tenant of the forfeiting landlord. Before August 31
1965 the third party was supporting the defendants in occupation in trespass
against Miah. Thereafter the third party was reversioner, entitled to forfeit,
and by asserting the right in law to keep the defendant in occupation as tenant
of the third party could only be understood in law to be asserting the determination
of Miah’s lease by reason of a forfeiture.
The right in
law which the third party, Greenwoods, was asserting in that case was the right
to maintain the defendants, Sportsman, in occupation of the premises known as 5
Upper High Street, Bargoed, Glamorgan, as their tenants under a new tenancy
upon the terms of a draft lease which had been negotiated and agreed between
Greenwoods and Sportsman. That was not a case in which Sportsman had ever been
the subtenants, in respect of 5 Upper High Street, of the tenant, Miah, whose
lease Greenwoods were held to have determined by re-entry. In my judgment London
& County (A&D) Ltd v Wilfred Sportsman Ltd is no authority
for the proposition that a landlord may effect a re-entry of premises against
his tenant by an arrangement made with an existing subtenant under which the
subtenant is to remain in occupation of the premises as the tenant of the
landlord for the residue and otherwise upon the terms of his existing sublease.
But, although it appears to me clear that the Wilfred Sportsman case
does not, on its own facts, afford the defendant any assistance in the present
case, the dictum of Russell LJ to which I have referred does suggest that Bayliss
v Le Gros may be authority for that proposition.
In Bayliss
v Le Gros (1858) 4 CB(NS) 537, the facts were these. Factory premises at
Tottenham were let under a lease dated September 28 1850 by one Barnewell to
the plaintiff’s father for a term of 21 years at the yearly rent of £165.15s,
payable quarterly. The lease contained a proviso for re-entry in the event of
non-payment of rent or breach of covenant. The plaintiff’s father died on
October 23, 1850, having by his will bequeathed the leasehold premises to his
executors, namely his wife, one Joseph Fletcher and the plaintiff, on his
attaining age 21. The widow alone proved the will; and she continued to carry
on business at the factory premises.
On June 1 1851
the widow deposited the lease with Fletcher as security for a debt of £2,500,
and also secured the same debt by a chattel mortgage over the plant and
machinery of the premises. On June 22 1852 the plaintiff came of age, but he
did not then come in to prove his father’s will. On November 1 1852 Fletcher
died, and his will was proved by his executors. In February 1853 the widow died
intestate.
At some time
after the widow’s death, the defendants, Messrs Le Gros, went into possession
of the premises. On October 24 1853, the landlord Barnewell, having inspected
the premises and found them out of repair, allowed the defendants to remain in
possession as his tenants under an oral agreement until Lady Day 1854 at a
yearly rent of £150 and upon condition that they should purchase the plant and
machinery from Fletcher’s executors. This they did by an assignment dated
November 5 1853.
On January 9
1854 the defendants gave Barnewell notice of their intention to quit the
premises at Lady Day 1854. Nevertheless, they remained in possession, and a
tenancy for a further year was agreed at the same rent. On December 21 1854,
the plaintiff took out letters of administration to his mother’s estate; and on
February 24 1855 he took probate of his father’s will. By a writ dated February
12 1855 he brought an action of ejectment to recover possession of the premises
from the defendants.
The question
for the court was whether the lease dated September 28 1850 had been determined
by a re-entry by Barnewell. The court were unanimous in holding that there had
been a re-entry. Cockburn CJ said:
Finding the
premises in a dilapidated state the landlord comes upon them and enters into an
agreement with a man he finds in possession, to become his tenant — intending
thereby to act upon the forfeiture and to oust the lessee. I think that was
quite sufficient to constitute an entry by the landlord so as to put an end to
the lease.
Williams J was
of the same view. He said:
As to the
other point, if Barnewell had entered and desired the person he found on the
premises to go out, and then desired him to resume possession as his tenant,
the case would have been clear beyond all doubt. They did not go through that
idle ceremony: but the facts set out in the special case show a re-entry by the
landlord, and something more.
It was urged
upon me on behalf of Mr Sobelman that Bayliss v Le Gros had been
decided on the basis that Messrs Le Gros had been let into possession by the
plaintiff. Some support for this contention can be found in an answer given by
counsel for the plaintiff to a question put by the court in the course of the
argument in that case — see the last few lines at the bottom of p 553 in the
report. But it appears to me that, upon a true analysis of the facts, there was
no evidence to explain how the defendants in that case came to be occupying the
premises before October 24 1853; and, in particular, no evidence that they had
ever been subtenants of, or paid rent to, the plaintiff before that date. It
must be kept in mind that the plaintiff had no estate in 1853 out of which he
could grant a sublease. But, whether Messrs Le Gros were subtenants, licensees
or trespassers in relation to the plaintiff immediately before October 24 1853,
it is clear that the arrangement which they made with Barnewell on that date
was not that they should remain in possession under any existing tenancy, but
rather that they should be allowed to remain only on the basis that they became
the tenants of Barnewell under a new tenancy, and for a different term.
It follows
that, notwithstanding the dictum of Russell LJ in London & County (A
& D) Ltd v Wilfred Sportsman Ltd, to which I have referred, I am
unable to regard Bayliss v Le Gros as an authority for the
proposition which I have set out above. In my judgment, the most that can be
derived from Bayliss v Le Gros is that a landlord may effect a
re-entry against his tenant by an arrangement with an existing subtenant under
which the subtenant is to remain in occupation as the tenant of the landlord
upon the terms of a new tenancy. So understood, I do not think that that
authority assists the defendant in the present case.
In the present
case, it appears to me apt to describe the changing of the lock at 195 Burnt
Oak Broadway as ‘an idle ceremony’. This is, I think, exemplified by the fact
that, when told by Mr Clayton that the new lock was unsatisfactory, Twogates
Properties Ltd, through their solicitors, were content that the lock should be
replaced by Mr Clayton himself. There was never any intention on the part of
the landlords to exclude the subtenant from possession. There is, to my mind,
no doubt that Mr Bloch and his locksmith would not have been permitted by Mr
Clayton to interfere with the existing lock if Mr Clayton had been told that
that act was intended in any way to interfere with his rights under his
existing sublease. Mr Clayton was not told this. On the contrary he was
assured, by Mr Bloch in person and by the first of the letters dated October 19
1984, that Twogates Properties Ltd were not in any way challenging his right to
remain in occupation of the premises at 195 Burnt Oak Broadway under the
provisions of his existing underlease. If there was a re-entry in the
present case, it was not effected by the changing of the lock.
The real
question on this part of the case, as it appears to me, is whether the
landlords effected a re-entry, constructively, by obtaining Mr Clayton’s
consent to their actions upon the terms of the first letter of October 1984. In
my judgment, even if it could be said that Mr Clayton attorned tenant to
Twogates Properties Ltd by tacitly accepting the terms of that letter, such an
attornment would not be evidence of an unequivocal intention on the part of the
landlords to re-enter under the provisions of the 1932 lease. It is clear that
both Twogates Properties Ltd and Mr Clayton were acting on the basis that the
1976 underlease would continue. If Mr Clayton was making an attornment at all
he was doing so as tenant under that underlease.
It is equally
clear, although perhaps not appreciated at the time, that the continuation of
the 1976 underlease was wholly inconsistent with the determination, by
forfeiture, of the 1932 lease. In these circumstances, it is, in my judgment,
impossible to regard the arrangements which Twogates Properties Ltd made on
October 19 1984 as amounting to a re-entry under the 1932 lease.
On the view
which I take of the matter, it is unnecessary to consider whether an attornment
by Mr Clayton upon the terms of the 1976 underlease would be made void by the
provisions of section 151(2) of the Law of Property Act 1925. It is, I think, a
question of some difficulty whether a landlord who is asserting that
notwithstanding that the head lease has been forfeited nevertheless the
underlease survives is ‘a person claiming to be entitled to the interest of the
land of the lessor’ (meaning the intermediate lessor) for the purposes of that
subsection. It seems to me that that difficulty arises because the subsection
is not framed to meet a situation which the draftsman would have recognised as
being incapable of existing at law.
It is,
strictly, unnecessary also for me to go on to consider the second question
raised in the action; namely whether, if the 1932 lease had been determined by
forfeiture, this would be a proper case for the court to grant relief from
forfeiture.
Nevertheless,
in case this matter should go further, it may be of assistance if I express the
view that this would have been a proper case for relief. The principles upon
which relief from forfeiture for non-payment of rent is granted are well known,
and they may be found in the line of authority of which Howard v Fanshawe
[1895] 2 Ch 581 and Lovelock v Margo [1963] 2 QB 786 are leading
examples. It was urged upon me, on behalf of the defendant, that relief ought
not to be granted where to do so would prejudice the rights of third parties.
Mr Sobelman, so it was argued, had purchased the freehold at auction on the
basis that it was not encumbered by the 1932 lease. I do not think that it
would be right to give weight to this consideration. Before Mr Sobelman made
his bid at the auction on November 20 1984, he had in his possession the first
of the additional special conditions, which he had obtained from the
auctioneers. This disclosed that the property had been subject to the 1932
lease; and that, if that lease had determined, it was by reason of a peaceable
re-entry for non-payment of rent which had been effected within the past few
weeks. Knowing these facts, Mr Sobelman was on notice, before he purchased the
property, that the tenant under the 1932 lease was likely to have an
unanswerable claim for relief from forfeiture. Whether or not Mr Sobelman was
actually aware that such a claim could or would be made, I do not know of any
grounds upon which (if they had need to do so) the plaintiffs should have been
unable to pursue that claim against Mr Sobelman to as full an extent as they
could have done against his predecessors, Twogates Properties.
Accordingly, I
declare that the lease dated October 24 1932 has not been forfeited by the
events which took place on October 19 1984 and, further, that the plaintiffs
are entitled to give a good receipt to Gerald Clayton for the sum of £875,
being the rent due under the underlease on December 25 1984 and for all
subsequent rent payable thereunder.
The
plaintiffs were awarded costs.
