Landlord and tenant — Forfeiture of tenancy — Claim for relief from forfeiture — Flat used for purposes of prostitution — Tenant of flat was a businessman who spent much time abroad and when in England lived in other premises, from which his business was conducted — Flat had been occupied by licensees two of whom the tenant had evicted after complaints by landlords about the use made of the flat by its occupants — It was clear from the evidence before the county court judge that the flat was being used over a period of years for prostitution and the judge found that the tenant either knew of, or shut his eyes to, the use made of the flat — The judge held that the tenant was in breach of the covenant in the lease not to permit the flat to be used for any illegal or immoral purpose and that the breach was irremediable — He rejected the tenant’s claim for relief against forfeiture — Decisions in Rugby School (Governors) v Tannahill, Glass v Kencakes Ltd and Expert Clothing Service & Sales Ltd v Hillgate House Ltd discussed — Submission on behalf of tenant that recent decisions had shown a relaxation by the courts of the doctrine that breaches of negative covenants in the ‘stigma’ type of cases were irremediable was rejected — In such cases the mere cesser of the objectionable use did not remedy the breach because the stigma continued to attach to the premises — Held that the judge had correctly applied the law and had properly exercised his discretion to refuse relief from forfeiture — Appeal by tenant dismissed
This was an
appeal R A Behrendt, tenant of a flat at 25 Charles Street, London W1, from a
decision of Judge McDonnell at Westminster County Court granting possession of
the flat to the present respondents, the plaintiffs in the action, British
Petroleum Pension Trust Ltd, and dismissing the appellant’s claim for relief
from forfeiture.
Jonathan Brock
(instructed by Guy Clapham & Co) appeared on behalf of the appellant; R J
Furber (instructed by Linklaters & Paines) represented the respondents.
Giving the
first judgment at the invitation of Oliver LJ, PURCHAS LJ said: This is an
appeal from an order of His Honour Judge McDonnell made on January 31 1985 at
the Westminster County Court. The learned judge ordered that the respondent
plaintiff, the British Petroleum Pension Trust Ltd (‘the reversioner’), should
be granted possession of certain premises, namely Flat B, 25 Charles Street,
London W1 (‘the flat’), within 14 days and dismissed a counterclaim by the
appellant defendant R A Behrendt (‘the tenant’) in which he claimed relief from
forfeiture.
The relevant
facts are as follows. By an underlease dated June 10 1968 the reversioner’s
predecessor in title let the flat to the tenant’s predecessor in title for a
period of 25 years. Clause 2 of the underlease contained a covenant on the part
of the tenant in these terms:
To use the
flat for the purposes of a private residence in one occupation only and not to
do or permit the flat to be used for any illegal or immoral purposes, or to
permit to be done any act or thing at the flat or in connection therewith which
would afford reasonable ground for suspecting that the flat was being or about
to be used for any such purpose.
The underlease
further contained the usual provisions for re-entry and forfeiture in the event
of a breach or breaches of covenant. The claim for forfeiture depended upon
allegations that the flat was being used, or that the tenant had permitted the
flat to be used, for purposes of prostitution. Although there was at one time a
dispute about this, for the purpose of the appeal it was not disputed that the
flat had at the material time been used for immoral purposes.
The tenant was
a businessman who spent much of his time abroad. On average only 12 weeks in
the year were spent in England. He lived
from which his business was conducted not far away in another part of London.
On October 22 1980 the tenant granted a licence to a Miss Byard to occupy the
flat.
During 1981
the reversioner received complaints that prostitution was being carried on at
25 Charles Street. The building contained a number of flats so that there was
some difficulty in discovering which of the particular occupiers was or were
involved. The complaints were traced to Miss Byard and the flat. On January 26
1982 solicitors for the reversioner served a notice under section 146 of the
Law of Property Act 1925. Miss Byard’s licence was determined by the tenant and
she left the flat in March 1982.
The tenant
gave an account of his making careful investigations before arranging for
another occupant of the flat against his leaving the country on business. By
March 1983 there was evidence that the flat was again being used for the
purposes of prostitution. However, on April 4 1983 the tenant’s solicitors had
written to the reversioner’s solicitors saying that the flat had been vacant
since March 31 and that prior thereto the premises had been let by agents for
short periods to overseas business persons. The judge found that this statement
was untrue. Miss Miles, the person who was allowed into occupation the previous
year in May, was still in occupation but had been withholding her rent because
of some dispute she had with the tenant’s agents.
On May 9 1983 the
reversioner’s solicitors wrote to the tenant’s solicitors stating that, on the
assurances given by the tenant, their instructions were not to continue with
forfeiture proceedings. They asked for arrears of rent and service charges to
be paid and this was done. It was common ground between the parties that for
the purposes of forfeiture the reversioner thereby waived any antecedent
breaches of covenant notwithstanding that it might have been argued that in
relying on the false assurances given to them on behalf of the tenant their
waiver would not have been effective.
There was a
body of evidence, which it is not necessary for me to detail in this judgment,
demonstrating that without doubt the flat was used regularly for the purposes
of prostitution between the end of 1982 and February 1984. On March 25 1984
further notices under section 146 were served. No point is taken upon the
service of these notices and it is necessary only to comment that according to
the tenant he did not become aware of the notices until he was informed by his
solicitors in early May. He immediately gave instructions that Miss Miles
should be evicted. Although she was indignant and threatened not to leave, she
did in fact vacate the premises when someone acting on behalf of the tenant
arrived to change the locks at the flat.
The learned
judge was quite satisfied from the evidence that the tenant either knew of or
deliberately shut his eyes to the use of the premises for prostitution. It is
not necessary for me to rehearse the grounds upon which he came to this
conclusion. I will content myself with saying that he was amply justified in
reaching the conclusion which he did. Section 146 of the Law of Property Act
provides — in its material part — as a prerequisite to enforcing a right of
forfeiture:
. . . and the
lessee fails, within a reasonable time thereafter, to remedy the breach, if it
is capable of remedy, and to make reasonable compensation in money, to the
satisfaction of the lessor, for the breach.
This appeal
raises the point whether the breach of the covenant was ‘capable of remedy’;
and, if so, by effecting the immediate eviction of the prostitute whether the
tenant remedied the breach within a reasonable time.
On the appeal
Mr Brock submitted that the learned judge was wrong in holding that the breach
was irremediable within the meaning of section 146 of the Law of Property Act
1925. The passage of the judgment which Mr Brock attacks is:
In the
present case I am quite satisfied that the defendant either knew or
deliberately shut his eyes to the fact that from early 1983 onwards the flat
was being used for immoral purposes and that he continued to let it to Miss
Miles in that state of mind after the probability of such use had been drawn to
his attention. I therefore hold that there was a breach of the covenants after
May 1983 and that such breach was irremediable. The plaintiffs were therefore
entitled to forfeit the lease and did so by serving the proceedings in this action.
Mr Brock
referred to the judgments in Rugby School (Governors) v Tannahill
[1935] 1 KB 87, CA, and other authorities considered by Paull J in Glass
v Kencakes Ltd [1966] 1 QB 611 for the proposition that the use of
premises for immoral purposes was not in all cases irremediable provided that
no damage to the reversion was established. In an attractively presented
submission Mr Brock purported to trace the change in the court’s attitude
towards a more liberal approach from the proposition that all breaches of a
negative covenant were incapable of being remedied; see Rugby School
(Governors) v Tannahill [1934] 1 KB 695, MacKinnon J at first
instance, at p 701:
A promise to
do a thing, if broken, can be remedied by the thing being done. But breach of a
promise not to do a thing cannot in any true sense be remedied; that which was
done cannot be undone. There cannot truly be a remedy, there can only be
abstention, perhaps accompanied with apology.
Although on
appeal Greer LJ [1935] 1 KB 87 at p 90 was not prepared to accept this
distinction without some qualification, there is no doubt that he held that a
breach of covenant not to use premises for an immoral purpose was irremediable:
The first
point is, whether this particular breach is capable of remedy. In my judgment
MacKinnon J was right in coming to the conclusion that it was not. I think
perhaps he went further than was really necessary for the decision of this case
in holding that a breach of any negative covenant — the doing of that which is
forbidden — can never be capable of remedy. It is unnecessary to decide the
point on this appeal; but in some cases where the immediate ceasing of that
which is complained of, together with an undertaking against any further
breach, it might be said that the breach was capable of remedy. This particular
breach, however — conducting the premises, or permitting them to be conducted,
as a house of ill-fame — is one which in my judgment was not remedied by merely
stopping this user. I cannot conceive how a breach of this kind can be
remedied. The result of committing the breach would be known all over the
neighbourhood and seriously affect the value of the premises. Even a money
payment together with the cessation of the improper use of the house could not
be a remedy.
Although Mr
Brock attempted to draw distinctions between the judgments of Greer LJ and
Maugham LJ for the relevant purposes of this appeal, I cannot follow that there
is any distinction to be drawn. At p 93 Maugham LJ said:
The second
thing to be gathered from the section is that the breach must be capable of
remedy within a reasonable time. The lessor is not to be kept out of his right
of action for an unreasonable time. If, for example, the breach is of such a
character that many months or perhaps years must elapse before the breach can
be remedied to the satisfaction of the lessor, such a case would not be as
regards remedy within the section at all.
I can see
nothing inconsistent between the two judgments. Mr Brock then referred to the
judgment of Paull J in Glass v Kencakes Ltd [1966] 1 QB 611 at p 629:
Having
considered these authorities to which I have referred, I think the following
propositions may be stated: (1) The mere fact that the breach complained of is
a breach of user by a subtenant contrary to a covenant in the lease does not
render the breach incapable of remedy. If one of the tenants of these flats in
Queensway had, unknown to the defendants, carried on a small business of
dressmaking in the flats, I would hold without hesitation that the breach was
capable of remedy so far as the defendants are concerned, but it may be that
the remedy would have to consist not only of stopping the tenant from carrying
on that business but of bringing an action for forfeiture, it being then left
to the court to decide whether the particular tenant should be granted relief.
(2) The fact that the business user involves immorality does not in itself
render the breach incapable of remedy, provided that the lessees neither knew
of nor had any reason to know of the fact that the flat was being so used. The
remedy in such a case, however, must involve not only that immediate steps are
taken to stop such a user so soon as the user is known, but that an action for
forfeiture of the subtenant’s lease must be started within a reasonable time.
If therefore the lessee has known of such a breach for a reasonable time before
the notice is served, the breach is incapable of remedy unless such steps have
been taken. (3) It does not follow that such a breach is always capable of remedy.
All the circumstances must be taken into consideration. For example, if the
notice is not the first notice which has had to be served, or if there are
particularly revolting circumstances attaching to the user, or great publicity,
then it might well be that the slate could not be wiped clean, or, to use
another phrase, the damage to the property might be so great as to render the
breach incapable of remedy.
Finally, Mr
Brock referred to the recent decision of this court in Expert Clothing
Service & Sales Ltd v Hillgate House Ltd [1985] 3 WLR 359*. This
case involved a breach of covenant to reconstruct the premises — see per Slade
LJ at p 373:
In the present
case there is no question of the breach of the covenant to reconstruct having
given rise to any ‘stigma’ against the lessors or the premises. Significantly,
the lease in 1982 still had 20 years to run. Mr Collins has, I think, been able
to suggest no convincing reasons why the plaintiffs would still have suffered
irremediable damage if (i) the section 146 notice had required the lessee to
remedy the breach and (ii) the lessors had been allowed a reasonable time to
elapse sufficient to enable the lessee to comply with the relevant covenant,
and (iii) the lessee had complied with the covenant in such
. . . In my
judgment, on the remediability issue, the ultimate question for the court was
this: if the section 146 notice had required the lessee to remedy the breach
and the lessors had then allowed a reasonable time to elapse to enable the
lessee fully to comply with the relevant covenant, would such compliance,
coupled with the payment of any appropriate monetary compensation, have
effectively remedied the harm which the lessors had suffered or were likely to
suffer from the breach? If, but only if,
the answer to this question was ‘No’, would the failure of the section 146
notice to require remedy of the breach have been justifiable? In Rugby School (Governors) v Tannahill
[1935] 1 KB 87, Egerton v Esplanade Hotels, London Ltd [1947] 2
All ER 88 and Hoffman v Fineberg [1949] Ch 245 the answer to this
question plainly would have been ‘No’. In the present case, however, for the
reasons already stated, I think the answer to it must have been ‘Yes’.
*Editor’s
note: Also reported at p 83 ante.
I have, I
fear, cited at greater length perhaps than necessary from the authorities upon
which Mr Brock relied in order to assess the value of his submission that the
movement away from the judgment of MacKinnon J detectable in the judgments of
Greer and Maugham LJJ has been progressively continued in later cases. The
position where negative covenants, other than those against immoral users, are
concerned need not be considered in this judgment. In Scala House &
District Property Co Ltd v Forbes [1974] QB 575 the court was
concerned with a covenant not to assign, underlet or part with possession of
the premises. Russell LJ (as he then was) in delivering the leading judgment
was careful to exclude from his consideration whether that breach was capable
of being remedied cases which he described as ‘the stigma’ cases. Referring to Borthwick-Norton
v Romney Warwick Estates Ltd [1950] 1 All ER 798, he said at p 585
H:
It would seem
likely that the notice did not call upon the lessee to remedy the breach, but
the argument does not seem to have gone upon an allegation of defect in the
notice in that regard: the lessee argued that, being ignorant of the circumstances,
he had not ‘suffered’ the acts complained of, an argument that was, on the
facts, rejected, and relief from forfeiture was refused. The case does not
assist on the question whether a past breach is capable of remedy. If the point
had been taken no doubt the same answer — the stigma point — would have been
readily available to the court from the Rugby School case [1934] 1 KB 695.
And at p 586
E:
Glass v Kencakes Ltd [1966] 1 QB 611, a decision of Paull J, was
of this nature. The lease forbade the use of the upper part of the premises
otherwise than for residential purposes. The lessee sublet that part to D, who
caused and permitted their use for the business of prostitution unknown to the
lessee. The sublease contained a similar covenant. The section 146 notice was
simply based upon the fact of business use. It asserted that the breach was
incapable of remedy. The judge held that the breach of the sublease by D was
incapable of remedy by him: apparently he considered that the person who caused
or permitted such a use could not, by the cesser of such use, remedy the
breach, because the stigma on the premises could not be blotted out within a
reasonable time so long as the man responsible remained subtenant. He therefore
could not remedy his breach.
And at p 587
B:
Two points
are to be noticed in that case. First: Paull J did not address his mind,
particularly in the case of the large block of flats mentioned, to the possible
situation of the lessee if the subletting in question, and therefore the
unlawful user, had come to an end before discovery by the head lessor, when no
remedial step would have been available to the lessee, and whether in such case
the lessee could only have sought relief. Second: the decision in terms says
nothing of a case (other than ‘stigma’ cases) where the lessee is directly
responsible for the breach by a business user contrary to covenant
In Expert
Clothing Service & Sales Ltd v Hillgate House Ltd the court was
considering admitted breaches of a covenant to reconstruct premises in the
context of the question whether the breaches were capable of being remedied
within a reasonable time. The case is clearly distinguishable; but Slade LJ in
a comprehensive judgment considered the wider aspects of section 146(1). In a
passage occurring just before that part relied upon by Mr Brock and cited
earlier in this judgment, Slade LJ clearly excluded, as did Russell LJ, the
‘stigma cases’; see at p 373:
However, in my
opinion, in considering whether or not remedy within a reasonable time is possible,
a crucial distinction (which I infer from the judgment did not feature
prominently in argument before the judge) falls to be drawn between breaches of
negative user covenants, such as those under consideration in the Rugby
School and the Esplanade Hotels cases, and breaches of positive
covenants. In the two last-mentioned cases, where the relevant breaches
consisted of allowing premises to be used as a brothel, even full compliance
with the covenant within a reasonable time and for a reasonable time would not
have remedied the breach. As Maugham LJ pointed out in the Rugby School case,
at p 94:
‘. . . merely
ceasing for a reasonable time, perhaps a few weeks or a month, to use the
premises for an immoral purpose would be no remedy for the breach of covenant
which had been committed over a long period’.
On the facts
of cases such as those, mere cesser by the tenant of the offending use within a
reasonable period and for a reasonable period of time could not have remedied
the breaches because it could not have removed the stigma which they had caused
to attach to the premises. The harm had been irretrievably done. In such cases,
as Harman J pointed out in Hoffman v Fineberg [1949] Ch 245, 257,
mere cesser will not enable the tenant to ‘make his record clean, as he could
by complying, though out of time, with a failure to lay on the prescribed
number of coats of paint’.
I have found
nothing in the recent authorities which enables me to accede to Mr Brock’s
submissions that the concept that breaches of the negative covenant in ‘stigma’
cases are irremediable has in any way been relaxed. The reference by Russell LJ
in the Scala House case to the position of the lessee of ‘large blocks
of flats’, which I have cited earlier in this judgment, would indicate that he
concluded that at least an open question remained, in the case of a lessee
innocent of any knowledge of the breach by a subtenant, as to whether he would
nevertheless be held to be guilty of an irremediable breach and would,
therefore, be forced to rely upon the discretionary remedy of relief from
forfeiture. Happily, in view of the finding of the learned judge to which I
have already referred, the determination of this question may be deferred to
another occasion.
Although, as
Mr Brock submitted, action to remedy the breach by the immediate removal of
Miss Miles was both expeditious and complete, this is no answer where the
breach is irremediable in law; nor in this case, in view of the finding of the
learned judge, can the tenant have recourse to the defence that he was wholly
innocent of any knowledge of the breach, even if such a defence was available
to him in law. Mr Furber submitted that, although the prostitution was carried
on by the sublicensee, the continuing presence in the property of the tenant
who had knowingly suffered the prostitution to take place, even if he himself
had not actively participated in or promoted it but had merely permitted it,
meant that the cause of the stigma remains by the very fact of the continued
presence. I agree with this submission. By his continued presence in the flat
the stigma resulting from the immoral user itself continues and there has been
no effective cesser.
I now turn to
consider the grounds numbered 10 and 11 in the notice of appeal. These may be
considered together and are to the effect that the learned judge failed to take
account of, or alternatively failed to give sufficient weight to, various
factors set out in the notice and so exercised his discretion to refuse relief
from forfeiture wrongly. The factors upon which this ground is based in summary
are as follows:
(a) that upon learning of the service of the
section 146 notice the tenant forthwith gave instructions for Miss Miles to be
evicted, notwithstanding legal advice to the effect that if the allegations in
the notice were unfounded he would face proceedings by her for unlawful
eviction;
(b) that the tenant was not himself directly or
indirectly involved in any way with the use of the flat for prostitution and
that there was no evidence, and the learned judge did not find as a fact, that
the use of the flat had resulted in any stigma attaching thereto or in any
decrease in the value of the reversioner’s interest or their good name and
reputation;
(c) the early vacation of the flat by Miss Miles
together with the absence of evidence of prostitution subsequent to February
1984;
(d) an offer by the tenant to enter into a
covenant with the reversioner not to sublet without their consent;
(e) that the tenant had paid a premium for the
assignment of the underlease and had carried out works pursuant to a licence
dated January 30 1979;
(f) the underlease had a substantial portion of
the term remaining unexpired.
The learned
judge in the exercise of his discretion decided not to grant relief from
forfeiture. Having considered the authorities of Borthwick-Norton & Co
v Romney Warwick Estates Ltd [1950] 1 All ER 798 and Central Estates
(Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048, he dismissed the
offer made by the defendant to enter into a covenant with the plaintiffs not to
sublet the premises without their consent, in my judgment rightly. As the
learned judge said, this would merely transfer the responsibility from the
tenant to the reversioners, who are entitled to rely upon the covenants in the
lease without assuming further responsibility. They are entitled to look to the
tenant for the proper observance of the covenants. The learned judge summarised
his reasons for withholding relief in these words:
Because of
the defendant’s behaviour in the past, and in particular that he has
deliberately shut his eyes to what he knew or ought to have known was taking
place on the premises and made no attempt to keep an eye on them when he was
living no more than a mile away or to heed the warnings from the plaintiffs
save when they were backed up by the service of section 146 notices, I am of
the opinion that it would be quite wrong to grant relief from forfeiture in
this case.
In my judgment
the learned judge was entitled to have regard to the conduct of the tenant
which led to the service of the section 146 notices on the first occasion and
the breaches of covenant which were for the purposes of forfeiture only waived
thereafter when coming to the overall decision as to whether or not to grant
relief. This is an area in which the learned judge exercised his discretion and
in my judgment rightly did so. Nothing has been established to show that in
exercising his discretion the learned judge either omitted relevant matters
which he should have considered or took into account irrelevant matters which
he should not have, or was plainly wrong. The grounds of appeal relating,
therefore, to the failure of the learned judge to grant relief in my judgment
must also fail.
For these
reasons I would dismiss this appeal.
OLIVER LJ
agreed and did not add anything.
The appeal
was dismissed with costs.
