Forfeiture — Peaceable re-entry effected after judgment at first instance, but before House of Lords decision, in Billson v Residential Apartments Ltd — Whether re-entry lawful — Whether purchaser of reversionary interest would have been bound by grant of relief of forfeiture had relief been given
plaintiffs, Mr and Mrs Bhojwani, were the assignees of a 15-year lease of shop
premises at 397 Barking Road, London E6, granted by the defendants, Kingsley
Investment Trust Ltd, to the plaintiffs’ predecessors on July 27 1981 —
Following a failure by the plaintiffs to pay the quarter’s rent due in December
1989, the defendants peaceably re-entered the premises on January 4 1990 and
remained in possession until January 12 1990, when arrears were paid — By March
16 1990 the defendants served an interim schedule of dilapidations on the
plaintiffs requiring certain work to be carried out, including underpinning —
The plaintiffs failed to pay the quarter’s rent due in March 1990 — On May 15
1990 the defendants peaceably re-entered the premises — Meanwhile, on February
16 1990 Mummery J had given judgment in Billson v Residential Apartments Ltd
to the effect that after a re-entry for breach of covenant other than a covenant
to pay rent the court had no power in equity, or under statute, to grant the
tenant relief from forfeiture — After the Court of Appeal’s judgments in the
Billson case had been delivered, the defendants sold the premises ‘with vacant
possession’ on May 9 1991 — In respect of that sale, in their replies to
standard inquiries before contract, the defendants’ solicitors gave the answer
‘no’ to two questions about the existence of disputes relating to the property;
the present proceedings had by that time been commenced
general damages were dismissed and judgment was given on the defendants’
counterclaim for the quarter’s rent due in March 1990 and damages for breach of
the repairing covenants — Peaceable re-entry two months after service of the
section 146 notice was too soon, even taking into account the service of the
interim schedule in early February 1990 — But for the non-payment of rent in
March 1990 the re-entry would have been unlawful — However, the re-entry was
lawful because the March rent was unpaid — The plaintiffs did not get relief
from forfeiture because this was not sought, for understandable reasons, in
1990 and not applied for in 1992 — The fact that the defendants had sold the
premises would not have deterred the court from granting relief from forfeiture
if relief were otherwise appropriate — Although the
plaintiffs, a leasehold interest is an estate in land and would have been
binding on the purchaser had the court granted relief — The fact that the
purchaser would have had a claim against the defendants for selling them
property with vacant possession when it was subject to a leasehold interest would
not have deterred any court from granting relief — The defendants committed no
wrong against the plaintiffs either when they re-entered or in relying upon the
judgment of Mummery J in the Billson case and in resisting the plaintiffs’
attempts to get back into the property
The following
case is referred to in this report
Billson v Residential Apartments Ltd [1992] 1 AC 494; [1991] 3 WLR
264; [1991] 3 All ER 265; [1991] 1 EGLR 70; [1991] 18 EG 169 & [1991] 19 EG
122, CA; [1992] 1 AC 494; [1992] 2 WLR 15; [1992] 1 All ER 141; [1992] 1 EGLR
43; [1992] 01 EG 91, HL
This was a
claim by the plaintiffs, Ram Valiram Bhojwani and Hamida Valiram Bhojwani,
against the defendants, Kingsley Investment Trust Ltd, for possession of shop
premises at 397 Barking Road, London E6, and for damages following the
forfeiture of a lease of the premises dated July 27 1981 by peaceable re-entry.
The defendants counterclaimed for arrears of rent and damages for breach of
repairing covenants.
John Ross
Martyn (instructed by Kumar & Co) appeared for the plaintiffs; Anthony
Radevsky (instructed by Reynolds Porter Chamberlain) represented the
defendants.
Giving
judgment, MR T MORISON QC said: This is a claim which arises out of a
lease of shop premises at 397 Barking Road, London E6 (‘the premises’). The
plaintiffs are the assignees of a 15-year lease, expiring in December 1995,
granted by the defendants to the plaintiffs’ predecessors on July 27 1981. The
assignment took place at the end of May 1988.
The bare facts
are as follows. On March 16 1990 the plaintiffs received notice under section
146 of the Law of Property Act 1925 alleging breaches of various repairing
covenants, together with a schedule of dilapidations. The March instalment of
rent was not paid. Two months later, on May 15 1990, the defendants re-entered
the premises.
The plaintiffs
make the following claims in the statement of claim:
(1) Possession of the premises from the
defendants. They say that the re-entry was effected before a reasonable time
for the performance of the works specified in the section 146 notice had
elapsed since service of the notice and that, therefore, the re-entry by the
defendants was unlawful. Alternatively, they sought relief from forfeiture.
(2) £13,562.50 as damages for excessive distress.
They alleged that the defendants purported to impound the plaintiffs’ stock,
which they valued at £15,000, in respect of outstanding rent of £1,437.50.
Alternatively, they were asking for the delivering up of their stock or damages
in lieu.
(3) General damages for the loss of profit and
goodwill, which they say they sustained as a result of the matters complained
of.
The defendants
have served a counterclaim claiming the outstanding March quarter’s rent,
damages for breach of the repairing covenants and a small sum by way of the
costs and expenses of effecting re-entry.
Since the
proceedings were issued at the end of May 1990, there have been two
interlocutory matters of relevance. First, on June 14 1990, there was a hearing
before Mummery J of the plaintiffs’ motion for an order that they:
(1) be given possession of the premises;
(2) be returned their stock upon payment of the
outstanding rent.
I am told by
the defendants’ counsel, Anthony Radevsky, who attended the hearing, that after
debate as to the powers of the court to grant relief from forfeiture under
section 146, where the landlord had effected re-entry, and after the plaintiffs
had unsuccessfully applied for time to file further evidence, the plaintiffs
abandoned their motion and were ordered to pay the costs. This was an adjourned
hearing, the motion having previously come before the court on June 5 1990,
when it was adjourned at the plaintiffs’ request.
The second
interlocutory matter related to the defendants’ summons under Ord 14, which
came before Master Gowers on October 18 1990 and, by consent, an order was
made, which, in substance, provided that:
(1) the plaintiffs pay to the defendants
£1,690.89 (in respect of the outstanding rent and interest);
(2) provided that sum was paid on or before
November 23 1990, the defendants would release to the plaintiffs their stock in
trade.
On May 9 1991,
despite the fact that the plaintiffs were claiming relief from forfeiture, the
defendants sold their freehold interest in the premises with vacant possession.
The purchasers were a company called Safeland plc and the price was £114,000.
It appears that at the time of sale the defendants did not disclose to the
purchaser that there was a dispute concerning the premises or that there was a
claim by a former tenant for relief from forfeiture. The defendants are a
subsidiary of MEPC Developments Ltd and part of the MEPC group.
In the light
of these developments since the proceedings were commenced, the plaintiffs now
put their case in two ways:
(a) first, they say that the defendants
wrongfully entered the premises because they had not allowed the plaintiffs
sufficient time to execute the works specified in the schedule of dilapidations
and, thus, they are entitled to damages for trespass;
(b) because of the sale to Safeland, any chance
of the plaintiffs obtaining relief from forfeiture has effectively been
destroyed from a practical point of view. The right to seek relief from
forfeiture is a right given by statute and the plaintiffs can claim damages
from the defendants for the loss of the chance of being granted relief, the
defendants being in breach of their duty as lessors by derogating from their
grant or alternatively by being in breach of the covenant of quiet enjoyment.
I shall set
out my findings of fact. Much of the evidence was non-controversial, but on the
more important conflicts of evidence I shall give reasons why I have preferred
the evidence of one witness rather than that of another.
The first
plaintiff and his wife, the second plaintiff, are East African Asians who came
to this country from Tanzania in 1967. He was in full-time employment with
London Transport until 1987, when he elected to take voluntary redundancy. For
about six months he and his wife looked around for a small business to buy and
came across the premises in question. In May 1988 he and his wife took an
assignment of a lease on the premises, which had an unexpired term of about
seven and a half years. The price paid for the lease, the goodwill, fixtures
and fittings was £27,500. In order to raise this money and to pay for the stock
at valuation, the first plaintiff borrowed £43,000 from his bank.
The premises
comprise the ground floor, with an extension to the rear, and basement of an
Edwardian or late-Victorian terrace property on the main Barking Road. The
lettable area acquired by the plaintiffs was some 1,450 sq ft. The rear
extension and the basement areas were used by the plaintiffs as storage space
for the retail unit at the front of the building on the ground floor. There
they carried on the business of a gift shop.
The business
was not a success. During their first trading year the plaintiffs made a loss
of about £5,000. As a result, the plaintiffs had difficulty in paying the rent
on the due quarter days. The quarterly rent was £1,312.50 (£5,250 pa) and the
rent account produced by the defendants shows the position quite clearly. On
average the rent was 110 days overdue from the date when the plaintiffs first
entered the property. Further, the bailiffs had been put in on two occasions.
No doubt
because of the lack of success in the business, in April 1989 the plaintiffs
put their business and interest in the property on the market through local
business agents and valuers. Those agents had acted for the vendor from whom
the plaintiffs took an assignment the previous year. The agents were requested
by the plaintiffs to put forward an asking price of £32,500 plus stock at
valuation.
The quarter’s
rent due in December 1989 was not paid on time and, in respect of the rent then
outstanding, the defendants re-entered the premises on January 4 1990 and
remained in possession until January 12 1990, on payment of the arrears.
Probably shortly after the premises had been re-entered, the plaintiffs
notified their agents that they were dropping their asking price to £29,500.
During the
period of the defendants’ possession they were able to carry out an inspection
of the premises and, thereafter, they sent to the plaintiffs an interim
schedule of dilapidations under cover of a letter of February 1 1990, which
asked the plaintiffs to advise the defendants ‘that you are making arrangements
for the necessary works to be undertaken within 14 days of this letter’. There
was no reply to that letter. There was a follow-up letter dated March 1 1990 in
which the defendants noted the absence of a reply and concluded ‘unless I hear
from you by return I shall have to consider instructing my solicitor on this
matter’. That letter provoked some action from
March 7 1990 and stated, in the last paragraph: ‘Our clients have instructed a
surveyor to inspect the property and we will write to you again in due course.’
Mr Bhojwani,
the first-named plaintiff, gave evidence; his wife did not. I found him to be a
generally credible witness, but I found it impossible to accept that he had not
instructed a surveyor until June 1990. Mr Bernard Living [FRICS], the surveyor
who gave evidence on his behalf, was first contacted about these premises in
June 1990. Mr Bhojwani did not suggest he had contacted any other surveyor.
Despite the terms of the letter from his solicitors, he must, therefore, have
first set about contacting and instructing a surveyor four months after the
schedule of dilapidations had first been served upon him. I do not think that
it would be right to conclude that Mr Bhojwani deliberately lied to his
solicitor; it seems to me as likely that, in the conversation between them,
what was going to be done became confused with what had been done.
Before the
plaintiffs’ solicitors’ letter of March 7 would have been received by the
defendants in the normal course of post, their solicitors sent to the
plaintiffs a section 146 notice by letter dated March 7 1990. I am prepared to
accept that, through an administrative error, the schedule was not enclosed
with that letter. Accordingly, another letter, together with a copy of the same
interim schedule that had previously been received by the plaintiffs at the
beginning of February 1990 was sent by recorded delivery dated March 15 1990
and I infer that the notice and schedule were duly received and thus served on
the plaintiffs on the following day, March 16 1990.
Although I
entertained some doubts about the matter, I am prepared to accept Mr Bhojwani’s
evidence that he tried to do two things following receipt of the section 146
notice. The first was to get a copy of the lease from his bank, who retained it
as part of their security in respect of his indebtedness. He says he spoke to
his bank on a number of occasions but they did not respond to his requests. I
also accept that he tried to get a number of builders to go round the property
and estimate for the repairs. In fact, on the first floor of the premises,
there was a building firm called Globewide Ltd and they prepared an estimate of
the works that were required to be done, excluding electrical work and
‘underpinning’. Their written estimate is quite unspecific as to what items in
the schedule it covered and no representative from Globewide was called to give
evidence.
I have no
doubt that the plaintiffs could and should have done a good deal more to help
themselves. For example, if they were having trouble getting a copy of the
lease their solicitors could have intervened on their behalf. Further, their
unsuccessful attempts to get builders to come round is, I think, only
consistent with the plaintiffs being somewhat lackadaisical, probably because
their time was fully absorbed in trying to keep the business going. The
recession had started and building firms were, generally speaking, short of
work. The work required to be done (apart from the underpinning) was the sort
of small job which a jobbing builder would have been grateful for at this time.
However, it would be unfair to conclude that the plaintiffs were prepared to
ignore their repairing obligations under the lease. I think that Mr Bhojwani
must have mistakenly assumed that he could get the work done in a reasonably
leisurely way. The lease, after all, had a few years to run and the works,
apart from two items, were essentially cleaning up and painting.
In about March
1990, an old friend of the plaintiffs, a Mr I M M Patel, visited the premises
and made an offer, subject to contract, to buy the plaintiffs’ business and
interests in the premises for £15,000. I have no doubt that Mr Patel was
telling me the truth. He was an impressive witness. He has been in business for
many years. He said he based his price on his own assessment of the potential,
relying on his own business experience, having regard to the state of the
premises as he saw them, the range of goods that was being sold and the
surrounding area. Although Mr Patel was cross-examined to the effect that he
could not have reached a proper valuation without having seen the plaintiffs’
books and without knowing of the plaintiffs’ financial difficulties, I found no
difficulty in accepting that £15,000 represented the sort of price that the
plaintiffs might well have achieved to dispose of the ‘goodwill’ in their
business, if any, and their interest in the lease. Not only was there credible
evidence from an experienced business man, but this evidence was supported by
evidence from Mr Ronald Batson, a director of the plaintiffs’ agents [WH Cork
Ltd]. They put the value of the ‘goodwill’ at £15,000 by this date. Mr Batson,
also, did not know the true state of the plaintiffs’ finances. In my judgment,
neither Mr Patel nor the valuer placed a value on the ‘goodwill’ by reference
to what was actually happening on the premises but rather on the potential for
such a business, given the location, the size of the premises, the surrounding
area, including presumably the location of competitors, and the amount of the
annual rent and the unexpired term of the lease. Their lack of knowledge of the
state of the plaintiffs’ own business did not affect their judgment and does
not undermine the credibility of what they said. However, the plaintiffs did
not accept this offer.
Consistently
with their past conduct, the plaintiffs failed to pay the March quarter’s rent
on time. Unknown to them, by the middle of April 1990, the defendants had
decided that they would instruct the bailiffs to effect a further re-entry. The
unchallenged evidence of Mr Thompson, a property manager employed by MEPC plc,
was that on April 18 1990, in consultation with the defendants’ solicitors, he
indicated that steps should be put in hand to instruct bailiffs to effect a
further re-entry upon the premises, both because of the apparent failure of the
plaintiffs to take any steps to comply with the section 146 notice and because
of the breach of the covenant to pay rent. I accept Mr Thompson’s evidence that
it normally took some time for the bailiffs to effect a re-entry and that if
the plaintiffs had contacted the defendants before their instructions were
carried out then the defendants would have been in a position to cancel the
instructions.
There was no
contact from the plaintiffs and on May 15 1990 the defendants re-entered the
premises. The following day, Mr Bhojwani telephoned the defendants’ solicitors
and there is a file note of this conversation. The plaintiff says that he
offered to pay the outstanding rent. He says the conversation was to this
effect: I offered to pay the rent; the solicitor told me it would cost £8,000
(or £9,000, he could not be sure which) to do the repairs; when I offered to
pay the rent the solicitor said he could not give me the keys until after
everything had been paid for including the cost of repairs. The relevant part
of the attendance note reads:
I [the
solicitor] said it was not just a question of payment of the rent arrears this
time but there was also the dilapidation which my clients had costed at £8,000.
Suggesting to Mr Bhojwani that he should speak with his solicitor, Mr Kumar. He
said he already had and that Mr Kumar would be telephoning me later today.
Mr Harman
Wilson, the solicitor concerned, gave evidence. He produced the attendance note
and said that while he had a recollection only of the middle part of the
conversation he could say that no offer was made to pay the outstanding rent.
He said that if the arrears had been offered he would have recorded it. It will
be apparent that there is a conflict of evidence, although in a relatively
small compass. It is clear from the attendance note that there had been some
discussion about the amount which the plaintiffs had to pay to get their lease
back. On the whole, I prefer to accept the contemporaneous documentary evidence
on this issue. On a balance of probabilities, I accept that it is likely that
had an offer of the rent been made such offer would have been recorded.
Further, in that event, I would have expected the plaintiff to have been asked
when he was going to be in a position to pay the rent. I have some doubt
whether the Bhojwanis would have had the money available then. In his first
affidavit, sworn on May 30 1990, Mr Bhojwani stated that he had deposited the
rent with his solicitor, but he does not say when he did so. If the plaintiffs
had had the rent moneys before the re-entry it would, I assume, have been paid
over to the defendants. The explanation for late payment was the way the
business was going. While it is possible, I think it unlikely that the
Bhojwanis happened to have the rent available immediately after the re-entry.
Proceedings
were commenced by the plaintiffs and the motion to which I have earlier
referred was issued. It is important to note at this stage that Mummery J had,
on February 16 1990, given judgment in the case of Billson v Residential
Apartments Ltd. Part of the ratio of his judgment was the finding that
after re-entry had been effected for breach of covenant other than the covenant
to pay rent the court had no power, in equity or under statute, to grant the
tenant relief from forfeiture. That decision was approved by a majority in the
Court of Appeal in early 1991 ([1991] 3 WLR 264*) and it was not until the
House of Lords† unanimously reversed the
decision of the Court of Appeal, and thus of Mummery J, that it became clear
that relief from forfeiture was available under section 146 of the 1925 Act,
even where the landlord had re-entered for breach of covenant other than the
covenant to pay rent.
*Editor’s
note: Also reported at [1991] 1 EGLR 70.
† Editor’s
note: Reported at [1992] 1 EGLR 43.
Thus it might
reasonably have appeared to the plaintiffs’ legal advisers in May 1990 that
because the defendants had re-entered for breach of the repairing covenants
they were disentitled to relief from forfeiture, unless it could be shown that
the re-entry on that ground had been unlawful. In their affidavit evidence
filed in response to the motion, the defendants expressly argued that because
of their re-entry relief was not on the cards.
Subsequently,
after the Court of Appeal’s judgments in Billson had been delivered, the
defendants sold the premises ‘with vacant possession’. An auction was held on
May 9 1991. The defendants (I do not need to go into the arrangements made
between companies within the MEPC group) were vendors of four of the lots: lots
75-78 inclusive, being adjacent premises in Barking Road, namely the odd
numbers from 395 to 401 respectively. The premises, no 397, was the only one of
the four lots being sold with vacant possession. All except the premises were
sold in the auction; the premises were sold outside the room after the auction
but on the same day. In their replies to standard inquiries before contract,
the defendants’ solicitors gave the answer ‘no’ to two questions about the
existence of disputes relating to the property. The present proceedings were in
being at this time and the replies under this head have not been explained by
the defendants; however, nothing in the end, in my view, turns on this.
Much of the
evidence before me related to the schedule of dilapidations and to the question
whether the defendants’ re-entry was effected before a reasonable time for
doing the works referred to in the section 146 notice had elapsed. The notice
and the schedule were formally served on March 16 1990, although, as I have
noted, the schedule had been with the plaintiffs since the beginning of
February.
Section 146
provides that a right of re-entry for breach of a repairing covenant is
unenforceable unless the lessor first serves a notice on the tenant ‘specifying
the particular breach complained of’ and, where, as here, the breaches are
capable of remedy, requiring the lessee to remedy them ‘and the lessee fails
within a reasonable time thereafter, to remedy the breach . . .’. It follows,
therefore, that the word ‘thereafter’ refers to the period of time commencing
after the notice specifying the breaches and requiring them to be remedied has
been served: in this case March 16 1990. Although I do not ignore the fact that
the particulars of the lack of repair had been sent to the plaintiffs a month
and a half before, the statute requires me to look at the time as from March
16, although taking account, no doubt, of all relevant prior circumstances. The
amount of time that elapsed between the service of the notice and the re-entry
was two months. Generally, a period of three months is thought to be adequate
but there are no hard-and-fast rules and all will depend upon what is required
to be done.
In this case,
as I have indicated, most of the items in the dilapidations schedule were
cleaning and painting rather than anything of substance. But here were two
major items: the first related to the rear extension where the defects noted
were:
brickwork
cracked and foundation subsided
and under the
heading ‘remedial works required’
investigate
reasons for subsidence and carry out all repairs necessary, ie underpinning
existing foundations and re-building wall
The second
major item related to the WC, where there was damp and the suggested works
included hacking off plasterwork and treating the wall with appropriate
bituminous paint.
There was much
dispute in the evidence between experts about the time it would take to do the
works of repair. My findings are as follows.
Broadly, I was
impressed by the evidence of both experts, but I preferred that of Mr Living to
that of Mr Alan Cavell [chartered civil and structural engineer — expert for
the defendants] for two reasons. First, Mr Living had seen the premises in
their state of disrepair; Mr Cavell had not and therefore was inevitably having
to speculate about timing rather more than Mr Living had to, bearing in mind
the latter had a mental picture of the place. In any event, as he admitted, Mr
Cavell was only able to have a cursory inspection of the outside of the
property, no adequate arrangements being made for him to get access inside.
Second, I thought that Mr Cavell approached this matter from the viewpoint of a
rather better organised and well-established tenant than was appropriate to
this case; whereas Mr Living was, I thought, rather more down-to-earth and
sensible in forming his judgments as to how a reasonable tenant in the
plaintiffs’ position would have behaved.
The fact that
a member of MEPC’s experienced staff stated in the schedule that underpinning
work was required would have been likely to have sounded alarm bells with any
reasonably diligent tenant. He would need to do a number of things:
(a) instruct a surveyor who would be likely to
want to take appropriate measurements to make sure the subsidence was not
progressive and to make proper inquiries in the area;
(b) take advice from his solicitors as to the
extent of his obligations and that would have required an examination of the
terms of the lease and an exploration of the insurance position (the tenant not
being responsible for matters for which the landlord was insured). In this case
the defendants were insured for subsidence as from 1988. I have had no
satisfactory evidence as to when the subsidence started: it appeared not to
have been of recent origin; yet there were no records disclosed of any previous
reports of subsidence, although Mr Richard Ramsey MCIOB [a chartered builder
employed by defendants’ managing agents], who prepared the schedule, had
visited the premises on several occasions prior to the plaintiffs taking them
over.
(c) find a suitable builder and compare
specifications and prices and then arrange for the work to be done having
regard to the fact that the shop premises were open during the week.
All this
preparatory work would have been required, in my judgment, and would have taken
several weeks to put in hand. Underpinning requires specialist contractors, who
would, no doubt, have had to be consulted. Considerable energy was devoted by
both counsel to counting the days required for this or that and adding them
together. In the end, I have looked at the schedule, the preparatory work
required and the time likely to have been taken up with doing the work, bearing
in mind that the plaintiffs had a business to run at the same time, and taking
account of the evidence of Mr Living, which I accept. On the evidence before
me, I readily conclude that two months after service of the section 146 notice
was too soon for re-entry, even taking into account the service of the schedule
in early February.
There had been
no contact between the parties since about the beginning of March. No attempt
was made to find out whether the tenants were having difficulty in doing the
work or precisely what was happening; instead, when the bailiffs became
available the re-entry was effected. That was, I think, a direct consequence of
the decision in Billson at first instance.
But for the
non-payment of rent in March 1990, I would have held that the re-entry was
unlawful. But the problem for the plaintiffs, which their counsel was quite
unable to overcome, is that the defendants were entitled to re-enter for
non-payment of rent. Had the true state of the law been known in March 1990,
namely that section 146 applied even after the landlords had effected re-entry,
I have no doubt that in May 1990 the plaintiffs would have obtained relief from
forfeiture upon payment of the outstanding rent and with some sensible
timetable imposed for the doing of the repairs, which it was common ground had
to be done. In due course, it would have become apparent that no underpinning
work was really required. The building was not moving: it had moved as far as
it would go. When the landlords came to sell the property, before Mr Cavell had
been instructed, they carried out relatively inexpensive repair work and
instead of costing about £8,000, as they believed when the schedule was served,
on the evidence I am satisfied that all the work could, in the end (but only
after all the true facts were known), have been done for £3,000. The evidence
is somewhat scant but this figure appears realistic.
The answer to
the plaintiffs’ first claim, namely that the re-entry was a trespass, is that
the re-entry was lawful because the March rent was unpaid. If it had been
unlawful then presumably the damage the plaintiffs would have sustained would
have been the loss of the chance to sell their interest in the lease for the
sum of £15,000 less, in all probability, the cost of doing the works to avoid
re-entry for breach of the repairing covenant. The offer of £15,000 was both
real and realistic and I am fairly confident that it would have been accepted
by the plaintiffs, who would have cut their losses and got out of the premises.
However, because one is trying to evaluate the loss of a chance and anything
might have happened, including the purchaser’s dropping out, I would value the
loss at a round £10,000. However, that sum is not recoverable because the
re-entry was lawful.
The second way
of putting the case was, I fear, hopeless. The reason why the plaintiffs did
not get relief from forfeiture was because they did not press for relief in
1990 for understandable reasons, and did not apply to me for relief in 1992,
also for good
deterred me from granting relief from forfeiture if relief were otherwise
appropriate. As I have indicated, the defendants sold the property without
disclosing their dispute with the plaintiffs. A leasehold interest is an estate
in land and would have been binding on the purchaser had I granted relief. The
premises are empty. The fact that Safeland plc would have had a claim against
the defendants for selling them a property with vacant possession when it was
subject to a leasehold interest would not have deterred any court from granting
relief. What prevents the plaintiffs from getting relief now is the fact that
they have no money and could not pay any outstanding rent. Their business
venture is effectively at an end. What prevented them from getting relief in
1990 was their perception of the law. The defendants have, I conclude,
committed no wrong against the plaintiffs either when they re-entered or in
relying upon the judgment of Mummery J and resisting the plaintiffs’ attempts
to get back into the property.
With some
reluctance, I reject the whole of the plaintiffs’ claim as it was advanced
before me and I give judgment for the defendants on their counterclaim, there
being no dispute as to that. The defendants will have judgment for £3,000
(being the cost of repairs) as damages for breach of the repairing covenants
and £295.55 under para 17 of the defence and appropriate interest.
Costs will
follow the event and there will be the usual legal aid order that the
defendants may not enforce their order for costs without the leave of the
court, and the plaintiffs may have an order for legal aid taxation.
