Property demised to original lessees — Assignees of lease breaching covenants — Landlords re-entering premises and claiming possession — Whether courts could grant relief — House of Lords remitting case to High Court to hear tenants’ application for relief against forfeiture — Court hearing new evidence — Position materially different from that at first hearing — Application for relief refused
The plaintiffs were the trustees and reversioners of properties including 17 Gledhow Gardens, London SW5. In 1964 a lease of the property was demised to R. The lease, which was due to expire in 1997, contained a number of covenants and the property was to be used in letting furnished rooms during the lessees’ personal occupation. In 1989 the lease was assigned to the defendants (RAL). Work was done on the premises without the trustees’ permission and they re-entered the premises and sought possession. RAL sought relief from forfeiture.
At first instance it was held that the re-entry was lawful and that the court had no jurisdiction to grant relief under section 146 of the Law of Property Act 1925. However, the judge also stated that if he had jurisdiction he would have granted relief from forfeiture on stringent conditions. An appeal to the Court of Appeal was dismissed: [1991] 1 EGLR 70.
The House of Lords allowed the appeal in 1991 and remitted the case to the High Court stating that on the renewal of RAL’s application for relief the parties would be at liberty to adduce further evidence for the judge to consider the issue on the basis of the facts at the date of the hearing: [1992] 1 EGLR 43.
Held Relief was refused.
1. The application was heard nearly four years after the lawful re-entry: the approach was to assume that the decision at first instance should be followed; and RAL granted relief from forfeiture, if the court was satisfied that the position today was not materially different from what it has been in early 1990.
2. However, the court had been given the benefit of additional evidence which had not been available to that court. Further through the passage of time, there was a fuller picture as to what the premises had been used for and as to the position with regard to planning regulations.
3. In the court’s judgment the position was materially different and there was no difficulty in concluding that it was not a case where it would be appropriate to grant relief.
4. In light of the evidence before it, the court took into account the fact that, inter alia, in June 1993, the council had served nine enforcement notices on RAL alleging breaches of planning permission and planning control.
5. It appeared that from the outset it was the intention of RAL’s parent company to acquire and convert the premises for use as short-term lets and a responsible tenant seeking relief in the present circumstances would have made proper inquiries to ensure that the use to which they put the premises was feasible and lawful.
6. The present use of the premises was in breach of an express covenant; there was no reason why it was necessary for the court to imply a term that consent should not be unreasonably withheld in order to make business sense out of the bargain made by the parties at the time. It was not for the court to decide to allow a newcomer to carry on such a business in future other than in the landlords’ absolute discretion. It was not appropriate for a court to grant relief on a basis which was in breach of the terms of the existing lease or which involved rewriting the bargain made by the parties. Otherwise a tenant who did not like parts of a lease could deliberately break its provisions and then ask the court to write out the parts that he did not like. That would not be a proper exercise of the court’s discretion.
7. The lease had no value at the present time and the works done by RAL had substantially damaged the trustees’ reversionary interest. Moreover, the breach of covenant entitling the trustees to forfeit had been deliberate.
8. The court had taken into account the trustees’ behaviour which had been wholly inappropriate for any landlord, but now that the law was clarified one would hope that no other landlord would expect to gain anything from such conduct. However, there was no reliable evidence to suggest that RAL would comply with the lease whatever condition the court imposed so that it was inappropriate to give relief subject to conditions.
Gordon Bennett (instructed by Frere Cholmeley & Biscoff) appeared for the trustees; Michael Driscoll QC (instructed by Gouldens) appeared for Residential Apartments Ltd.
