Leases of commercial premises – Non-payment of rent – Forfeiture – Waiver – Appellants remaining in occupation after end of contractual lease terms while negotiating for grant of new fixed-term leases – No rent paid during that period – Respondent landlords forfeiting leases for non-payment of rent – Appellants’ claim for relief from forfeiture struck out – Whether respondents’ actions amounting to waiver of right to forfeiture in circumstances where no acceptance of rent – Whether arguable case for grant of discretionary relief from forfeiture – Appeal dismissed
The respondent council owned a parade of shops, two of which were let to the appellants under leases for terms expiring in August 2005. During the term of the leases the appellants and the respondents has serious disagreements over the disrepair of the premises and who was responsible for rectifying the position. Following the expiry of the leases, both appellants remained in occupation while negotiations were conducted for the grant of new fixed-term leases. However, the appellants ceased to pay rent and, in August 2007, the respondents peaceably re-entered both premises and sought to forfeit the tenancies on the ground of substantial rent arrears. At that time, the first appellant had accrued rent arrears of £10,000 and the second appellant owed £18,300.
The appellants brought proceedings against the respondents in which they sought, inter alia, relief against forfeiture. They claimed that correspondence from the respondents, including various rent demands and an invitation to take part in a payment agreement scheme, showed that the respondents had chosen to continue with the leases after the right to forfeiture had arisen and had thereby waived their right to forfeiture. In the alternative, the appellants sought discretionary relief against forfeiture.
The respondents’ application to strike out the claim was allowed in the appellants’ absence on the ground that the appellants had no reasonable prospects of success at trial. The appellants’ application to set aside the order was refused; the judge found that there was no reasonable prospect of relief from forfeiture being granted since there was no prospect of the appellants being able to pay off the arrears within a reasonable time. The appellants appealed.
Held: The appeal was dismissed.
The acts relied on by the appellants did not properly constitute a waiver of the right to forfeit for arrears of rent. Since the appellants had paid no rent during the relevant period, there had been no waiver by the acceptance of rent. The other acts of the respondents were not so unequivocal that, when considered objectively, they could be regarded only as having been carried out consistently with the continued existence of the tenancy. The mere fact that a landlord and tenant had engaged in without prejudice discussions did not necessarily amount to a waiver: Re National Jazz Centre [1988] 2 EGLR 57; [1988] 38 EG 142 applied. Moreover, even a waiver of any previous right to forfeit that had arisen from non-payment of rent would not have prevented forfeiture for subsequent breaches by non-payment of rent falling due thereafter. Further, the judge had examined with care all the relevant issues and had correctly concluded that the appellants would have no reasonable prospect of succeeding in their claim to relief from forfeiture because they were unable to pay the arrears within a reasonable time.
Mr Van Staden appeared for the appellants as a McKenzie friend; Andrew Skelly (instructed by the legal department of Newham London Borough Council) appeared for the respondents.
Sally Dobson, barrister
