Landlord and tenant — Forfeiture — County Courts Act 1984 section 138(9C) — Whether holder of charging order entitled to relief from forfeiture — Charging order — Whether holder of charging order owner of interest within meaning of section 138(9C) — Whether possession order should be set aside
On 20 August 1993 Mrs C and her son, who became
intervening creditors in the proceedings, obtained a charging order nisi on
a 125‑year lease of a flat held by the defendant tenant to secure payment
of £233,887.96 owed by the tenant to the creditors. On 30 October 1996 the
claimant landlord obtained an order for possession and forfeiture of the lease,
together with a judgment against the tenant for arrears of rent and costs for
£653.75. The creditors first heard of the possession order when the landlord
applied to HM Land Registry to close the leasehold title. The county court
judge allowed an appeal by the landlord from a decision of the district judge
who gave leave to the creditors to intervene, set aside the possession order
and made provision for a new hearing. The creditors appealed, contending that
as the lease was forfeit they could not enforce their security and that the
possession order should be set aside, notwithstanding the expiration of the six
months allowed by section 138(9A) of the County Courts Act 1984 as they had an
interest, by way of the charging order, within the meaning of section 138(9C)
of the 1984 Act or section 146(4) of the Law of Property Act 1925.
Sir Christopher Staughton: The wording of section
138(9C) of the 1984 Act is not confined to persons who have a term of years or
the equivalent under section 87 of the Law of Property Act 1925 (charge by way
of legal mortgage). The holder of a charging order can apply for relief from
forfeiture and obtain the lease under section 138(9C). On an application by
such a holder, the court could, if it thought fit, restore the original lease
for the purposes merely of enabling the applicant to apply for an order for
sale, and on condition that he do so. By reason of the failure of the landlord
to give notice of the possession proceedings in accordance with the County
Court Rules 1981 Ord 6 r 3(2), and because there was a defect in the form of
the possession order in failing to allow 28 days for the payment of rent before
the order took effect, the order was set aside. The possession action was
remitted to the county court.
Act 1979 does not have an interest under a lease derived from the lessee’s
interest therein within the meaning of section 138(9C) of the 1984 Act.
The following cases are
referred to in this report.
Bland v
Ingrams Estates Ltd [1999] 2 EGLR 49; [1999] 25 EG 185; [1999] EGCS 54
Di Palma v Victoria
Square Property Co Ltd [1984] Ch 346; [1984] 2 WLR 761; [1984] 2 All ER 92;
(1984) 48 P&CR 140
Good’s Lease, Re
[1954] 1 WLR 309; [1954] 1 All ER 275
High Street Investments Ltd v Bellshore Property Investments Ltd (1996) 73 P&CR 143;
[1996] 2 EGLR 40; [1996] 35 EG 87
Ladup Ltd v Williams & Glyn’s Bank plc [1985] 1
WLR 851; [1985] 2 All ER 577; (1985) 50 P&CR 211
Midland Bank plc v
Pike [1988] 2 All ER 434
Pepper (HMIT) v Hart
[1993] AC 593; [1992] 3 WLR 1032; [1993] 1 All ER 42, HL
Tennant
v Trenchard (1869) 4 Ch 537
This was an appeal by the
intervening creditors, Mrs
a decision of Judge Hull QC in Epsom County Court allowing an appeal by the landlord,
Croydon Unique Ltd, from orders made by District Judge Keogh allowing the
creditors to intervene and setting aside a possession order obtained by the
landlord against the tenant, Terence Clifford Wright.
Paul
Teverson (instructed by Arnold Fooks Chadwick) appeared for the intervenors;
Stuart Armstrong (instructed by AN Tzourou & Co, of Selsdon) represented
the landlord; the tenant appeared in person for part of the hearing and was not
represented.
Giving the first judgment, SIR CHRISTOPHER STAUGHTON said:
Mrs
intervene in this action brought by Croydon Unique Ltd (the landlord) against
Mr
The landlord and the tenant are successors in
title to the original parties to a lease dated 17 August 1987. The premises
were a first-floor flat at 28 Sutton Court Road, Sutton, Surrey, and the lease
was for 125 years.
On 20 August 1993 the creditors obtained a
charging order nisi upon the tenant’s interest in the flat at Sutton
Court Road, and in another property, which does not feature in this litigation,
to secure payment of the sum of £233,887.96 owed by the tenant to the
creditors. The condition in the order was:
unless (‘nisi‘) the contrary be shown
before the Registrar at the Registrar’s Chambers, 412 Thomas More Building,
Royal Courts of Justice, Strand, at 11.45 in the forenoon of 18 October 1993.
A caution was registered on behalf of the
creditors at the Land Registry on 24 August 1993.
The order was not in fact made absolute until
23
conceded in the outline argument for the landlord:
1. that the creditors were to be treated as
equitable chargees by virtue of the charging order nisi from the time
when it was made; and
2. that such an order may create a proprietary
interest and can, if registered, bind third parties who receive the property.
There came a time, as lawyers tend to say, when
the tenant was in arrears with the rent of the flat. Judgment was given against
him in Epsom County Court on 30
The terms of the order were as follows:
1. The court has decided that you should give the
plaintiff possession of Flat
because you have not paid the rent due under the terms of your lease.
2. You must also pay to the plaintiff £468.75 for
unpaid rent, £[blank] for use and occupation of the property and £185.00 for
the plaintiff’s costs of making the application for possession.
3. You must pay the total sum of £653.75 to the
plaintiff on or before 30
4. If you pay the unpaid rent and costs as set
out in paragraph 3, the existing lease will continue and the plaintiff will no
longer be entitled to possession of the property under this order. If you do
not pay the amounts owing, the plaintiff can take steps to evict you and your
goods may be sold or other enforcement proceedings taken to obtain payment.
This is called ‘enforcing the order and money judgment’.
The order was wrong. Section 138(3) of the County
Courts Act 1984 required that a period of not less than four weeks should
elapse before the order for possession could take effect, if by then the tenant
had not paid the arrears of rent and costs. Instead it was an order for
possession on the very day that it was made, unless the amount due was then
paid. We do not know how the order came to be made in that form.
The creditors were not told of the landlord’s
application to the court for possession, or the order made. They only heard of
it when the landlord’s solicitors applied to close the leasehold title on the
register, in December 1997, and the Land Registry informed the creditors of
that application. The creditors then applied to be joined in the landlord’s
action in Epsom County Court, where nothing had happened for 16 months.
On 7 August 1998 District Judge Keogh gave leave
to the creditors to intervene, set aside the possession order and made
provision for a further hearing. However, there was an appeal to Judge Hull QC
by the landlord, which was allowed on 18 December 1998. The creditors now
appeal to this court by leave of Judge Hull.
So the present situation is that the landlord has
the benefit of the lease being forfeited, when it is said to be worth £70,000,
as compensation for the unpaid rent and costs amounting to £653. The creditors
no longer have any charge on the lease for the sum of £233,887, which they are
owed by the tenant. They had asserted in the county court that they were
prepared to discharge the landlord’s claim for unpaid rent, if there was relief
from forfeiture. But that solution was rejected by the circuit judge.
Mr Wright, the tenant, was present for the greater
part of the hearing of this appeal. He told us that he had no knowledge of this
action until he heard about it from the creditors, and questioned whether the
order for substituted service had been rightly made. We did not think it right
to consider whether any remedy is available to him — always supposing that his
financial position is such as to make it worthwhile for him to pursue the
matter. If he does wish to do so, he must apply to the county court. We
expressed no view as to whether he would have a prospect of success, since the
full facts were not before us. So we consider only the appeal of the creditors.
Relevant legislation
We were referred to a large number of statutory
provisions and decided cases, with admirable scholarship. But in what is to me
an arcane topic, I confine myself to the material that is strictly necessary to
a decision.
Section 138 of the County Courts Act 1984 provides
as follows:
Provisions as to forfeiture for non-payment of
rent
138.–(1) This section has effect where a lessor
is proceeding by action in a county court (being an action in which the county
court has jurisdiction) to enforce against a lessee a right of re-entry or
forfeiture in respect of any land for non-payment of rent.
(2) If the lessee pays into court [or to the
lessor] not less than 5 clear days before the return day all the rent in arrear
and the costs of the action, the action shall cease, and the lessee shall hold
the land according to the lease without any new lease.
(3) If —
(a) the action does not cease under
subsection (2); and
(b) the court at the trial is satisfied
that the lessor is entitled to enforce the right of re-entry or forfeiture,
the court shall order possession of the land to be
given to the lessor at the expiration of such period, not being less than 4
weeks from the date of the order, as the court thinks fit, unless within that
period the lessee pays into court [or to the lessor] all the rent in arrear and
the costs of the action.
(4) The court may extend the period specified
under subsection (3) at any time before possession of the land is recovered in
pursuance of the order under that subsection.
(5) If —
(a) within the period specified in the
order; or
(b) within that period as extended under
subsection (4),
the lessee pays into court [or to the lessor] —
(i) all the rent in arrear; and
(ii) the costs of the action,
he shall hold the land according to the lease
without any new lease.
Further provisions were inserted by the
Administration of Justice Act 1985 section 55, and these are the most relevant
to the present dispute:
(9A) Where the lessor recovers possession of the
land at any time after the making of the order under subsection (3) (whether as
a result of the enforcement of the order or otherwise) the lessee may, at any
time within six months from the date on which the lessor recovers possession,
apply to the court for relief; and on any such application the court may, if it
thinks fit, grant to the lessee such relief, subject to such terms and
conditions, as it thinks fit.
(9B) Where the lessee is granted relief on an
application under subsection (9A) he shall hold the land according to the lease
without any new lease.
(9C) An application under subsection (9A) may be
made by a person with an interest under a lease of the land derived (whether
immediately or otherwise) from the lessee’s interest therein in like manner as
if he were the lessee; and on any such application the court may make an order
which (subject to such terms and conditions as the court thinks fit) vests the
land in such a person, as lessee of the lessor, for the remainder of the term
of the lease under which he has any such interest as aforesaid, or for any
lesser term.
In this subsection any reference to the land
includes a reference to a part of the land.
In this case the creditors first heard of the
forfeiture at a time when more than six months had elapsed from the date when
the landlord recovered possession.
We were also referred to section 146(4) of the Law
of Property Act 1925:
Where a lessor is proceeding by action or
otherwise to enforce a right of re‑entry or forfeiture under any
covenant, proviso, or stipulation in a lease, or for non-payment of rent, the
court may, on application by any person claiming as under-lessee any estate or
interest in the property comprised in the lease or any part thereof, either in
the lessor’s action (if any) or in any action brought by such person for that
purpose, make an order vesting, for the whole term of the lease or any less
term, the property comprised in the lease or any part thereof in any person entitled
as under-lessee to any estate or interest in such property upon such conditions
as to execution of any deed or other document, payment of rent, costs,
expenses, damages, compensation, giving security, or otherwise, as the court in
the circumstances of each case may think fit, but in no case shall any such
under-lessee be entitled to require a lease to be granted to him for any longer
term than he had under his original sub-lease.
Next there is the now obsolescent Ord 6 r 3 of the
County Court Rules 1981, which has these provisions:
(2) In proceedings for forfeiture where the
plaintiff knows of any person entitled to claim relief against forfeiture as
underlessee (including a mortgagee) under section 146(4) of the Law of Property
Act 1925 or under section 138(9C) of the County Courts Act 1984, the
particulars of claim shall give the name and address of that person and the
plaintiff shall file a copy of the particulars of claim for service on him.
(3) Where possession of land which consists of or
includes a dwelling-house is claimed because of non-payment of rent, the
particulars of claim shall be in the prescribed form…
The prescribed form, N119, requires the plaintiff
to state:
There is no underlessee (or mortgagee) entitled
to claim relief against forfeiture
or else give the name and address of the person who
‘is entitled to claim relief against forfeiture as underlessee (or mortgagee)’.
(I confess that I am puzzled by the use of brackets.)
The corresponding provision for the High Court was
in RSC Ord 6 r 2(c)(iii), and is now in 16PD-002/6(8) of the Civil Procedure
Rules, each of which provisions refers to a person entitled to claim relief as
underlessee (including a mortgagee) under section 146(4). That reflects the
position, which is accepted by counsel for the landlord, that a mortgagee can
claim relief under section 146. (The curious will find some new brackets in the
CPR that were not in RSC.)
The issues
The creditors cannot enforce their charging order
for as long as the lease remains forfeited, since the lease no longer exists.
There was no application for relief within the six months allowed by section
138(9A). They must therefore show that the court ought to set aside the
forfeiture, some years after it occurred in 1996. For that purpose: (i) they
must be persons who could have obtained relief from forfeiture if they had been
before the court on that occasion; and (ii) there must be grounds for setting aside
a judgment that was made in their absence.
As to the first issue, the question is whether the
holder of a charging order is, in terms of section 138(9C):
a person with an interest under a lease of land
derived (whether immediately or otherwise) from the lessee’s interest therein.
Alternatively, is he in terms of section 146(4):
any person claiming as under-lessee any estate or
interest in the property comprised in the lease or any part thereof?
The second issue, whether there are grounds for
setting aside the judgment given in the absence of the creditors, depends in
the first instance on whether they were in terms of Ord 6 r 3:
a person entitled to claim relief against
forfeiture as underlessee (including a mortgagee) under section 146(4) of the
Law of Property Act 1925 or under section 138(9C) of the County Courts Act 1984
and should therefore have been given notice of the
proceedings, which they were not. Alternatively, should the judgment be set
aside on the ground that it was irregular in the way already stated?
Cases
Most directly in point is Ladup Ltd v Williams
& Glyn’s Bank plc [1985] 1 WLR 851, although this dealt with the
inherent jurisdiction of the High Court and not the County Courts Act 1984. The
argument of Miss Hazel Williamson, for the landlords in that case, is
succinctly stated at pp854H-855D, and was embraced by Mr
landlord in the present case:
Section 3(4) of the Charging Orders Act 1979
provides, so far as material:
‘a charge imposed by a charging order shall have the
like effect and shall be enforceable in the same courts and in the same manner
as an equitable charge created by the debtor by writing under his hand.’
There is no doubt that the primary remedies of a
person entitled to such an equitable charge are to apply to the court for an
order for sale or for the appointment of a receiver. An equitable chargee,
since he has neither a legal estate nor the benefit of a contract to create
one, cannot foreclose or take possession: see, for instance, Megarry and
Wade, The Law of Real Property, 5
and Lightwood’s Law of Mortgage, 9 ed (1977) pp156-158. That is, subject to
section 90 of the Law of Property Act 1925, which confers on the court powers
ancillary to its power to make an order for sale in reference to ‘an equitable
mortgage on land,’ an expression which, in this context, by virtue of section
205(1)(xvi) of the Act, includes an equitable charge. Among the powers
conferred on the court by section 90 is a power to create and vest in the
mortgagee (or chargee) a legal term of years absolute to enable him to carry
out the sale as if the mortgage (or charge) had been created by deed by way of
legal mortgage.
Miss Williamson’s contention is that, to obtain
relief against forfeiture of a lease under the inherent jurisdiction of the
court, the applicant for such relief must be a person having an interest under,
or deriving from, the lease entitling him to possession of the land, such as,
typically, a lessee, an underlessee or a mortgagee. An equitable chargee, she
submits, not being entitled to possession of the land, has no such interest.
That argument was rejected by Warner J, although,
as he was concerned only with an application to strike out the creditor’s
application, he did not, strictly speaking, make a definitive ruling. The
concluding passage in his judgment was as follows, at p860E:
Mr Magee, starting with the unchallengeable
propositions that a right to forfeit a lease for non-payment of rent is
regarded by equity simply as security for payment of the rent and that relief
against forfeiture is granted in equity on the footing that in normal
circumstances it would be unconscionable for a landlord who has received his
rent in full, with any appropriate interest and costs, to insist (in the
absence of any outstanding breach of any other covenant in the lease) on taking
advantage of the right to forfeit, submits that that is so whoever the person
may be to whose detriment the forfeiture would operate, even be he a mere equitable
chargee.
Miss Williamson, for her part, submits that
relief against forfeiture imports that someone should remain in, or assume,
possession of the demised property in right of the lease, who will be, in
consequence, under a continuing liability to the landlord for the rent and for
compliance with the other covenants in the lease, and that that someone cannot
be a person such as an equitable chargee who is not entitled to possession.
I feel the force of Miss Williamson’s submission,
but it seems to me that Mr
because of difficulties of the kind suggested by Miss Williamson, there will be
cases where the court will be unable to exercise its discretion to grant relief
to an equitable chargee where it would have been able to grant relief to an
applicant with a right to possession. I do not think, however, that such
possible difficulties constitute a compelling reason for holding that the court
has no jurisdiction at all to entertain an application for relief made by an
equitable chargee. It seems to me that the fact that the court has power, at
the suit of an equitable chargee, to order the sale of the property subject to
his charge, coupled with the fact that, in the case of land, it has the powers
conferred by section 90 of the Law of Property Act 1925, should enable the
difficulties in question to be overcome in most or at least many cases. At all
events, I am certainly not persuaded that it is plain and obvious that as a
matter of law this court has no jurisdiction to entertain Ladup’s application.
I therefore propose to dismiss the motion to strike it out.
The distinction between those arguments and that
conclusion and the present case is that we are dealing with a statute (the
County Courts Act 1984) as opposed to the inherent jurisdiction of the court.
The 1988 edition of the County Court Practice
had this note to section 138, citing Ladup‘s case:
The court has inherent equitable jurisdiction to
grant relief against forfeiture for non-payment of rent regardless of who the
person was to whose detriment the forfeiture would operate.
Ladup‘s case was,
of course, in the High Court, where there is inherent jurisdiction relating to
this topic. It is argued that there is none in the county court, and the
jurisdiction is to be found only in section 138. The note was still to be found
in the 1996 edition.
Other cases relied on were directed at the wording
to be found in section 138(9C) — an interest under a lease of the land derived
from the lessee’s interest therein. It is not disputed that the holder of a
charging order has an interest, and that it is a proprietary interest. But is
it otherwise within the wording of the subsection? In High Street
Investments Ltd v Bellshore Property Investments Ltd [1996] 2 EGLR
40 the question was whether an equitable assignee of an underlease was entitled
to apply for relief from forfeiture under section 146 of the Law of Property
Act. Reference was made to subsection (5)(b):
‘Lessee’ includes an original or derivative
under-lessee, and the persons deriving title under a lessee.
Of that, Peter Gibson LJ said at p42K:
Mr Zeidman said that the meaning of ‘lessee’ was
not apt to include an assignee. He relied in particular on the preposition
‘under’ as distinct from ‘from’ which he said would have been the appropriate
language if an assignee were included. I cannot agree. Like, it appears, Nourse
LJ, it seems to me that an assignee is plainly a person who can be said to
derive title under a lessee.
That may tend to show that an interest under
a lease in section 138 is not confined to a subdemise, but includes a
transaction by which all or part of the lessee’s rights by virtue of the lease
are transferred to someone else.
In the same case, Leggatt LJ said at p42C:
[High Street Investments] derived title from the
underlease as equitable assignees and are therefore entitled to apply for
relief from forfeiture.
It follows that the word ‘derived’ likewise does
not necessarily imply something in the nature of a subdemise, and can refer to
what one might call a horizontal rather than a vertical transfer.
In Midland Bank plc v Pike [1988] 2
All ER 434 the question was whether a creditor holding a charging order may
obtain an order for sale under section 30 of the Law of Property Act 1925,
which provides:
(1) If the trustees for sale refuse to sell or to
exercise any of the powers conferred by either of the last two sections, or any
requisite consent cannot be obtained, any person interested may apply to the
court for a vesting or other order for giving effect to the proposed
transaction or for an order directing the trustees for sale to give effect
thereto, and the court may make such order as it thinks fit.
Mr Edward Nugee QC, sitting as a deputy judge of
the High Court, referred to section 3(4) of the Charging Orders Act 1979
(already set out above in an extract from Ladup’s case). He continued at
p436a:
Counsel for the bank submits that the charging
order which the bank has obtained has the like effect as an equitable charge,
that an equitable charge gives the chargee a proprietary interest in the
property charged and that this proprietary interest is sufficient to make the
bank a ‘person interested’ for the purposes of s 30. He bases his submission on
principle and on authority.
As to principle, an equitable charge, he submits,
has all the characteristics of a proprietary interest. It endures through
changes of ownership of the property charged, the rights of the chargee prevail
over those of the trustee in bankruptcy of the chargor or any successor in
title of the chargor, and the benefit of the charge is transmissible. An
equitable charge operates as an assignment pro tanto of the property
charged. I accept this submission. If authority is required to support it, it
may be found in Swiss Bank Corp v Lloyds Bank Ltd… [1979] Ch 548;
affd [1981] 2 All ER 449; [1982] AC 584 (see especially the statement of
principles by Browne-Wilkinson J ([1979] 2 All ER 853 at pp865-866; [1979] Ch
548 at pp565-566), which was approved by Lord Wilberforce ([1981] 2 All ER 449
at p453; [1982] AC 548 at p613)) and the references by Browne-Wilkinson J to ‘a
property interest (by way of charge or trust)’ ([1979] 2 All ER 853 at p868,
[1979] Ch 548 at p568) and by Lord Wilberforce to ‘any charge or other
proprietary interest’ ([1981] 2 All ER 449 at p453; [1982] AC 548 at p613).
Mr Armstrong disputes that the authorities cited
justify the conclusion that an equitable charge operates as an assignment pro
tanto (his emphasis). He may be right. But he has accepted that it is a
proprietary interest, as he must, and so binding on third parties; and it is
derived from the lessee’s interest in the lease. A charging order does not give
a right to possession or foreclosure, but it seems to be an assignment of some
proprietary right, effected by the order of the court.
Re Good’s Lease
[1954] 1 WLR 309 was concerned with a guarantor who had paid part of the debt,
and so became entitled to receive a legal charge or mortgage on a lease that
the debtor had deposited with him as security. The guarantor sought to
intervene in an action for possession by the landlord, by virtue of section
146(4) of the Law of Property Act. I have already set out that subsection.
Harman J said at p311:
‘Underlease’ is defined by subsection (5) as
including ‘an agreement for an underlease where the underlessee has become
entitled to have his underlease granted.’ It is comparatively familiar law that
relief under that section or its predecessor, the Act of 1892, has been given
to mortgagees by sub-demise. That is not surprising, because a mortgagee by
sub-demise, of course, has a term vested in him. But, so far as I know, there
is no authority — none has been called to my attention — for similar relief
being given to a person not having a legal term or any term vested in him and
therefore having no estate in the property, though in a sense he has an interest
in it, as having a right to a charge on it. But the definition does include in
the word ‘underlease’ ‘an agreement for an underlease.’ That must mean that the
legislature intended a person having not only an underlease but having an
agreement for an underlease to be included in the scope of the section.
The right of the applicant is a right to call on
the debtor to execute a proper legal charge or mortgage. It is said that that
right is a right to have a charge by way of legal mortgage such as is envisaged
by section 87 of the Law of Property Act, which, as is well known, does not
demise a term or do anything but charge property by way of legal mortgage. But
the effect is that (subsection (1)) ‘the mortgagee shall have the same
protection, powers and remedies… as if (b) where the mortgage is a
mortgage of a term of years absolute, a sub-term less by one day than the term
vested in the mortgagor had been thereby created in favour of the mortgagee.’
Therefore, as between him and his mortgagor, he is in the same position as if
he had a mortgage by sub-demise. I think, on the whole, that it cannot make any
difference that the equitable chargee is entitled under the covenant to have a
charge by way of legal mortgage. He is in the same position as though he were
entitled to have a mortgage direct by sub-demise.
That passage lends support to the view that, under
section 146(4), an applicant for relief must have a term vested in himself — or
be put in the same position as if he had by section 87. That would not include
the holder of a charging order.
Last, under this head I come to Bland v Ingrams
Estates Ltd [1999] EGCS 54*. That was, again, an application for relief
under section 146(4), and also under the inherent jurisdiction of the court. It
failed before Mr Peter Leaver QC, sitting as a deputy judge of the High Court.
We do not have a copy of his judgment but he appears to have said that relief
was only available where proprietary or possessory rights were liable to be
forfeited, and not the ‘mere equity’ of an equitable chargee.
*Editor’s note: Also reported at [1999] 2 EGLR 49
The remedy available
Section 138(9A) provides that, when a lessee
applies for relief:
the court may, if it thinks fit, grant to the
lessee such relief, subject to such terms and conditions, as it thinks fit.
Then subsection (9B) provides that where the
lessee is granted relief under (9A):
he shall
hold the land according to the lease without any new lease.
(My emphasis.)
That at first sight is curious, as it seems to
derogate from the discretion of the court in (9A). But I do not suppose that it
causes any difficulty in practice. But difficulty arises when one comes to
subsection (9C); in the case of an applicant other than the lessee:
the court may make an order which (subject to
such terms and conditions as the court thinks fit) vests the land in such a
person, as lessee of the lessor, for the remainder of the term of the lease
under which he has any such interest as aforesaid, or for any lesser term.
Is that the full extent of the relief that can be
granted to an applicant under (9C)? Is he not able to obtain an order under
(9A) or (9B), of course on condition that he pays the outstanding rent and
costs? If so, the only remedy available to the holder of a charging order
(assuming that his case is within (9C)) is to acquire a lease that he never had
before, and to impose on the landlord a new tenant.
There are, in my view, two answers to that
argument. First, I do not think that an applicant under (9C) is confined to the
relief mentioned under that section. Subsection (9C) begins:
An application under subsection (9A) may be made
by a person…
If so made, it is still an application under (9A);
and the words ‘on any such application’ in (9A) consequently apply. Nor do I
think that relief under (9A) or (9C) is confined by (9B).
Accordingly, it seems to me that, on an
application by the holder of a charging order, the court could, if it thought
fit, restore the original lease for the purpose merely of enabling the
applicant to apply for an order for sale, and on condition that he do so.
The second answer amounts in practice to much the
same thing. One should not be shocked if the effect of subsection (9C) is that
the holder of a charging order can obtain a lease that he never had before, and
can thrust himself upon the landlord as a new tenant. Similar relief is
provided in the Law of Property Act itself at section 90:
Where an order for sale is made by the court in
reference to an equitable mortgage on land (not secured by a legal term of
years absolute or by a charge by way of legal mortgage), the court may, in
favour of a purchaser, make a vesting order conveying the land or may appoint a
person to convey the land or
to carry out the sale, as the case may require, in like manner as if the
mortgage had been created by deed by way of legal mortgage pursuant to this
Act, but without prejudice to any incumbrance having priority to the equitable
mortgage unless the incumbrancer consents to the sale.
That was the basis for the rejection by Warner J
of Miss Williamson’s argument in Ladup‘s case. It has, in my view, a
double effect. First, as I have said, it means that this property legislation
does contemplate that an order can create for an applicant a term that he never
had before. Second, the court could make such an order in the present case
under the combined effect of section 138(9A) and section 90, if it did not make
the order under section 138(9C) itself. It is not disputed that section 90
applies to a charging order.
Conclusion on the
first issue
Neither the wording of section 138(9C) nor the
cases cited compel me to conclude that the subsection is confined to those who
have a term of years or the equivalent under section 87. Indeed, the
authorities, such as they are, suggest that the subsection can apply to the
holder of a charging order. What is more, if the wording of section 138(9C)
were capable of two meanings, I would have no hesitation in preferring that
which I have held to be the correct meaning. It would, in my opinion, usually
be manifestly unjust to deprive the holder of a charging order, who has
registered his interest, of any right to apply for relief from forfeiture. That
is shown by the figures in this case, although the creditors were dilatory in
obtaining an order absolute and then a sale of the lease. I say nothing as to
whether the same result would ensue under section 146(4); it may or may not
produce the same result.
Mr Paul Teverson also argued that the creditors
were lessees within section 138(9A), being persons deriving title under a lease
(section 140). That too need not be decided, but it seems to me somewhat
implausible.
The second issue —
setting aside the judgment
In 1987, when Ord 6 r 3(2) first appeared in the
County Court Rules, it read:
any person entitled to claim relief against
forfeiture either as underlessee (including a mortgagee) under section
146(4) of the Law of Property Act 1925 or under section 138(9C) of the
County Courts Act 1984…
(My emphasis.)
By the time of the 1988 edition, the word ‘either’
had been removed.
It was suggested by Mr Armstrong that we should
have regard to the County Court Rules as an indication of the meaning of the
statute, that is to say section 138. I decline that invitation. Of course, we
pay attention to the opinion of a named lawyer that is properly put before us,
although we like to know how the opinion was expressed and when it was given.
But we scarcely have evidence of that character in the present case. Moreover,
it is the opinion of the person who deleted the word ‘either’ that would be
most important in this case — unless it happened by accident at the printers.
When the word ‘either’ was there, the rule accorded with my construction of
section 138.
I make the same comment about form N119. That too
I cannot regard as an indication of the meaning of section 138.
On the contrary, I consider that the statute can
be used to elucidate the meaning of the rule. If, as I have held, section
138(9C) allows the holder of a charging order to apply for relief from
forfeiture, then I regard that as an indication that Ord 6 r 3(2) requires such
a person to be given notice of the possession proceedings. That is, in my
opinion, a possible meaning of the rule even after ‘either’ was deleted.
The words ‘as underlessee (including a mortgagee)’ may apply only to the case
of an application under section 146(4), and not to an application under section
138(9C). I agree that the preferred construction based on the language alone
would be that those words apply to both cases. But where another possible
construction makes better sense than that which the words alone would suggest,
the other possible construction may properly be adopted. (A similar method of
interpretation is very commonly used with written contracts.)
On that construction, the problem of form N119
remains; the landlord in this case did, presumably, all that the form required,
but did not comply with the rule. I am afraid that that misfortune (if such it
be) must fall on the landlord rather than the creditors.
That makes it unnecessary to consider whether the
word ‘mortgagee’ can, in the context of Ord 6 r 3(2) — and for that matter in
the context of form N119 — include the holder of a charging order. Again, I
express no view on that point.
There is, however, another route by which the
creditors can, in my opinion, have the order for possession set aside. The
order was, as I have said, defective. Instead of allowing four weeks for the
outstanding rent to be paid, it allowed no time at all. It is true that this
may well have been a slip; it is also true that in all probability nothing
would have happened differently if the order had said 30 November instead of
30
the same applies to those who live by the rules. The court had no jurisdiction
to make such an order, and the creditors are entitled to have it set aside. The
landlord may apply for a new order; but the creditors now know of the
proceedings and may apply for relief against forfeiture.
I would allow this appeal, set aside the order of
30
para 7 of the respondent’s outline argument that points raised by the
appellants were not argued below. We have not, as yet, been required to
investigate whether that was the case.
Since writing this judgment I have considered the
passage in Hansard (19 March 1985, cols 468-470), discovered by the
diligence of Pill LJ as we were not referred to Hansard at the hearing.
The Lord Chancellor did not expressly advert to the question of whether a
charging order could be an interest under a lease of land derived from the
lessee’s interest. To be frank, it seems to me very likely that he did no more
than read out the departmental brief, although whether the reference to ‘some
lessors’ near the foot of col 469 (which should have read ‘some lessees’) was
an error of the department or of the Lord Chancellor or of the notetaker I am
unable to say. I do not regard what was said on that occasion as the sort of
material that should be taken into account under the doctrine of Pepper
(HMIT) v Hart [1993] AC 593. So, I remain of the view that this
appeal should be allowed.
Dissenting from the majority judgment, PILL LJ said: The conclusions
reached by Sir Christopher Staughton on both issues are conclusions that would
do no injustice to the respondent on the facts of this case. I can only admire,
if I may say so, the elegance of the reasoning that leads to them. My
difficulty has been in jumping the first hurdle.
The jurisdiction of the county court being
statutory, the creditors rely on section 138(9C) of the County Courts Act 1984
(the 1984 Act). The section makes provision in subsection (9A) for applications
by a lessee for relief against forfeiture. Subsection (9C) provides:
An application under subsection (9A) may be made
by a person with an interest under a lease of the land derived (whether
immediately or otherwise) from the lessee’s interest therein in like manner as
if he were the lessee; and on any such application the court may make an order
which (subject to such terms and conditions as the court thinks fit) vests the
land in such a person, as lessee of the lessor, for the remainder of the term
of the lease under which he has any such interest as aforesaid, or for any
lesser term.
The creditors submit that, as equitable chargees,
they have ‘an interest under a lease of the land derived… from the lessee’s
interest therein’. I have no difficulty in following that an equitable assignee
of an underlease derives title under a lease: High Street Investments Ltd
v Bellshore Property Investments Ltd [1996] 2 EGLR 40. My difficulty is
in holding that an equitable chargee comes into the same category.
The nature of the charging order obtained by the
creditors in this case appears from section 1 of the Charging Orders Act 1979.
That section empowers the court to impose on property of a debtor a charge for
securing the payment of any money due or to become due under a court order or
judgment requiring the debtor to pay a sum of money to another person. The
order is made ‘for the purpose of enforcing that
of a judgment for the payment of money, it is indirect rather than direct in
that it provides the creditor with security over the property of the debtor. As
stated in the 1999 White Book vol 2 p856:
It makes the creditor a secure creditor, who
having obtained his charging order must proceed as may be necessary according
to the nature of the property charged, to enforce his charge in order to obtain
the actual proceeds of his charge to satisfy his judgment in whole or in part.
The remedy under an equitable charge is sale (Tennant
v Trenchard (1869) 4 Ch 537), but the court may also appoint a receiver.
I accept the analysis of the remedies available to a person with the benefit of
a charging order set out in the judgment of Warner J in Ladup Ltd v Williams
& Glyn’s Bank plc [1985] 1 WLR 851 at p855, and cited by Sir
Christopher Staughton.
Anomalies that, the author submitted, arise in
this area of the law were set out by Mr Stephen Tromans in an article entitled Forfeiture
of Leases: Relief for Underlessees and Holders of Other Derivative Interests
(Conveyancer & Property Lawyer 1986 187 at p210). I mention them to
illustrate the difficulty in finding any symmetry that would assist on the
point of statutory construction that has arisen:
It should by now be apparent that the law
relating to relief from forfeiture as it applied to underlessees and mortgagees
is in need of some rationalisation and clarification. A fundamental problem is
the sheer complexity of the remedies: equitable and statutory; some relating
only to rent, others of wider ambit; some High Court only, some county court
only, and some both; and all with their own idiosyncratic rules. The often
overlapping nature of the remedies means that much thought needs to be devoted
to how they interrelate, and how far the restrictions on one apply to others.
It is perhaps also not sufficiently appreciated
that the terms of the relief granted may to some degree depend on the route to
the relief pursued: in particular, the underlessee wishing to obtain relief in
respect of only part of the property comprised in the headlease would be well
advised to proceed by section 146(4) of the Law of Property Act, or, if
appropriate, under section 138(9A) of the County Courts Act. Whether these
differences are justifiable must be open to doubt. For example, why should the
discretion of the county courts under section 138(9A) and (9C) be wider than
that of the High Court under section 38 of the Supreme Court Act?
I find it very difficult to conclude that a person
having the benefit of a charge under the Charging Orders Act has an interest
under a lease derived from the lessee’s interest therein within the meaning of
section 138(9C). The interest would not have existed but for the lease, but it
derives from a debt due from debtor to creditor unconnected with the lease.
There may be cases where the debt has been incurred by the debtor by reason of
his position as a lessee, for example an insurance premium, but the creditor’s
interest as chargee arises by reason of a debt incurred by the lessee, and is
not derived from the lessee’s interest in the land or in the lease. The word
‘derived’ imports a requirement that the interest relied on arises out of the
debtor’s lease, a requirement that is not satisfied merely because the interest
may be enforced against the lease. Miss Williamson’s arguments in Ladup,
cited by Sir Christopher Staughton and the force of which Warner J felt in that
case, I find to be decisive. Warner J was not of course construing a statute
when considering the word ‘derive’, but the more general question of the
inherent jurisdiction of the High Court.
The word ‘derived’ was not new in this branch of
the law when it was included in section 138(9C) of the 1984 Act, inserted into
that Act by virtue of section 55 of the Administration of Justice Act 1985. In
section 146(5)(b) of the Law of Property Act 1925, ‘lessee’ is said to
include ‘an original or derivative under-lessee, and the persons deriving title
under a lessee’. Moreover, section 38 of the Supreme Court Act 1981 provides:
(1) In any action in the High Court for the
forfeiture of a lease for non‑payment of rent, the court shall have power
to grant relief against forfeiture in a summary manner, and may do so subject
to the same terms and conditions as to the payment of rent, costs or otherwise
as could have been imposed by it in such an action immediately before the commencement
of this Act.
(2) Where the lessee or a person deriving title
under him is granted relief under this section, he shall hold the demised
premises in accordance with the terms of the lease without the necessity for a
new lease.
The word ‘deriving’ must be expected to bear the
same meaning in section 138(9C) as in those two sections. As used in those
sections, it does not appear to me apt to cover the position of an equitable
chargee. If it does in section 38(2), it puts the equitable chargee in a strong
position to stand in the shoes of the lessee when a lessor seeks forfeiture of
a lease for non-payment of rent in the High Court.
Ladup was heard
upon an application to strike out and it appears that the case did not go to a
full hearing. Warner J relied upon the inherent jurisdiction of the High Court
and it is common ground that the county court has no such jurisdiction. The
appellants submit that section 138(9C) was inserted into the 1984 Act, by way
of the Administration of Justice Act 1985, to give the county court the same
powers in relation to relief against forfeiture as the High Court was held to
have in Ladup by virtue of its inherent jurisdiction. The coincidence in
time between Ladup and the parliamentary debate on the 1985 Act is
striking; judgment in Ladup was given on 25 January 1985, and what
became section 138, subsections 9A to 9C, was moved in the House of Lords by
way of amendment to the Administration of Justice Bill on 19
It is common ground that one purpose of the
amendment enacted as subsection (9A) was to permit applications for relief
against forfeiture in the county court to be made during the same period as
those in the High Court. In Di Palma v Victoria Square Property Co
Ltd [1984] Ch 346, Scott J had stated:
I can see no good reason why county court judges
who exercise a like discretion to grant relief from forfeiture in cases which
fall within section 146 of the Law of Property Act 1925 to that exercised by
High Court judges, should not be trusted with the same discretion as High Court
judges in cases of forfeiture for non-payment of rent.
This is a case in which I am prepared to look at
the Lord Chancellor’s statement, when introducing the proposed amendments in
the House of Lords, as an aid to the construction of the word ‘derived’ in
section 138(9C). I do so to consider, and only to consider, whether there is
material to support the view that the word ‘derive’ can be given what I regard
as the extended meaning for which the creditors contend.
Introducing the amendments in the House of Lords,
Lord Hailsham, Lord Chancellor stated:
These amendments confer on county courts
jurisdiction to grant relief against forfeiture analogous to that which exists
in the High Court. The county courts’ lack of jurisdiction in this respect was
criticised by judges in two recent High Court cases. The County Courts Act 1984
already contains provisions which enable a lessee to avoid forfeiture of his
lease in cases where he has failed to pay rent and, which may be exercised
right up to the time when the lessor regains possession of the lands under the
court order. The amendment will confer a new and additional power on a county
court to grant relief if the lessee or a person with interest under a lease,
for instance a mortgagee or a sub-tenant, applies within six months after
possession has been recovered.
The jurisdiction will not be quite identical to
that of the High Court, whose jurisdiction derives partly from equity and
partly from statute and precedent. Instead it builds upon the systematic code
already contained in Section 138 of the County Courts Act 1984.
(Hansard 19 March 1985, cols 468 and 469).
Dealing specifically with subsection (9C), the
Lord Chancellor stated that it:
extends the right to apply for relief against
forfeiture to persons with interests derived from leases — sub-lessees and
mortgagees. At present, until possession is recovered by the lessor enforcing
the right to forfeit, a sub-lessee or mortgagee can apply to the county court
under Section 146(4) of the Law of Property Act 1925 for relief in the form of
a new lease. Both the grant of relief and the terms are at the absolute
discretion of the court. The court can also grant relief to a sub-lessee from
demised premises. The only restriction is that the sub-lessee cannot obtain a
term longer than that remaining under his original sub-lease.
Subsection 9(c) does all the same things but is
necessary because the protection of Section 146(4) of the Law of Property Act
1925 cannot extend beyond the recovery of possession by the lessor forfeiting
the lessee’s lease. (Col 470).
(The reference to subsection (9c) I assume to be
to subsection (9C).)
The amendment was agreed to. The only other speech
was that of Lord Mischon, who stated:
My Lords, we entirely agree with the necessity
and the advantageous nature of these amendments. (Column 470).
I am not able to accept that in section 138(9C)
parliament conferred authority upon Warner J’s view that an equitable chargee
may apply for relief against forfeiture or that the power to consider an
application from an equitable chargee was conferred upon the county court by
the section. The opening words of the Lord Chancellor’s statement assist the
creditors, but the Lord Chancellor went on to say that the jurisdiction of the
county court ‘will not be quite identical to that of the High Court’. Moreover,
when dealing with subsection (9C), the Lord Chancellor referred to ‘persons
with interests derived from leases — sub-lessees and mortgagees’. There is no
reference to equitable chargees. I add my view that it cannot be assumed that a
judgment on a striking-out application so speedily formed the basis for the
amendment to the Bill.
While I could probably jump the other hurdles with
Sir Christopher Staughton, I regret that I fall at the first. I acknowledge
that the conclusion I have reached does not produce the result I would wish to
reach upon the facts of the present case. However, the word ‘deriving’ should
be construed consistently in this branch of the law and the adoption of the meaning
advocated by the creditors could have more general implications. Moreover,
there are situations in which the construction of the word ‘derive’ favoured by
Sir Christopher Staughton could produce injustice in another direction. For
example, upon its use in favour of an equitable chargee under section 38(2) of
the Supreme Court Act 1981, a judgment creditor for a small debt might obtain a
valuable lease.
I would dismiss this appeal.
Giving her judgment, BUTLER-SLOSS LJ said: I have had the opportunity to
read, in draft, the judgments of Sir Christopher Staughton and Pill LJ. I
gratefully adopt the recital of the facts in Sir Christopher’s judgment.
One might have thought that an issue that might be
crucial to creditors who obtain charging orders over leases of property would
have been decisively determined many years ago. It seems to me astonishing that
the holder of a charging order over a lease is said to be unable to be heard in
forfeiture proceedings and powerless to obtain any relief or protection of the
asset that is the object of the charging order. If that is the state of the
law, it raises a serious question mark over the value of a charging order over
leases and reveals a serious gap in the enforcement process.
The question that lies at the heart of this appeal
is whether the holder of a charging order is a person who could obtain relief
from forfeiture. In order to answer that question it is necessary for him to
come either within the County Courts Act 1984 section 138(9C) or the Law of
Property Act 1925 section 146(4). That is so as to be within the provisions of
Ord 6 r 3 of the County Court Rules 1981 as a person entitled to claim relief
under forfeiture under section 146(4) or section 138(9C). If the
creditors/intervenors/opponents are persons entitled under either section, they
should have been given notice of the proceedings and there are grounds for
setting aside the judgment of 30
I turn first to the use and enforceability of a
charging order. Section
court to impose upon the property of a debtor a charge for securing the payment
of any money due or to become due under a court order or judgment requiring the
debtor to pay a sum of money to another person. Section 3(4) provides that:
a charge imposed by a charging order shall have
the like effect and shall be enforceable in the same courts and in the same
manner as an equitable charge created by the debtor by writing under his hand.
In Ladup Ltd v Williams & Glyn’s
Bank plc [1985] 1
creditor’s application in a case of forfeiture for non-payment of rent, Warner
J heard arguments that were similar to those presented to us, save that he was
asked to exercise the inherent jurisdiction of the High Court while we are
concerned with the County Courts Act. The judge felt able to grant relief, on
terms, to the holder of a charging order over the lease forfeited by the
landlord. He said at p860H:
It may be that, because of difficulties of the
kind suggested by Miss Williamson, there will be cases where the court will be
unable to exercise its discretion to grant relief to an equitable chargee where
it would have been able to grant relief to an applicant with a right to
possession. I do not think, however, that such possible difficulties constitute
a compelling reason for holding that the court has no jurisdiction at all to
entertain an application for relief made by an equitable chargee. It seems to
me that the fact that the court has power, at the suit of an equitable chargee,
to order the sale of the property subject to his charge, coupled with the fact
that, in the case of land, it has the powers conferred by section 90 of the Law
of Property Act 1925, should enable the difficulties in question to be overcome
in most or at least many cases. At all events, I am certainly not persuaded
that it is plain and obvious that as a matter of law this court has no
jurisdiction to entertain Ladup’s application.
The question remains, however, whether such relief
can be granted in the county court.
It is therefore necessary to look with some care
at the language of section 138(9C). Subsection (9A) provides for applications
by a lessee for relief, and by (9B), if relief is granted, the lessee will hold
the land according to the existing lease. (9C) is as follows:
An application under subsection (9A) may be made
by a person with an interest under a lease of the land derived (whether
immediately or otherwise) from the lessee’s interest therein in like manner as
if he were the lessee; and on any such application the court may make an order
which (subject to such terms and conditions as the court thinks fit) vests the
land in such a person, as lessee of the lessor, for the remainder of the term
of the lease under which he has any such interest as aforesaid, or for any
lesser term.
The words that cause the difficulty are ‘an
interest under a lease of the land… derived from the lessee’s interest
therein’. The holder of a charging order has an interest in the land, which may
be enforced in the same manner as an equitable charge. It is a proprietary
interest. Is that interest to be treated as ‘derived from the lessee’s
interest?’
There is one decision of this court and two
decided in the High Court that may throw some light on the point. In High
Street Investments Ltd v Bellshore Property Investments Ltd [1996] 2
EGLR 40 an equitable assignee of an underlease sought relief from forfeiture
under the provisions of section 146 of the Law of Property Act. In section
146(5)(b):
‘Lessee’ includes an original or derivative
under-lessee, and the persons deriving title under a lessee.
It was argued that an assignee did not come within
the meaning of lessee. Peter Gibson LJ did not agree. He said at p42L:
Like, it appears, Nourse LJ, it seems to me that
an assignee is plainly a person who can be said to derive title under a lessee.
Leggatt LJ said that, as equitable assignees, the
appellants derived title from the underlease and were entitled to apply for
relief from forfeiture. These observations would appear to show that an
interest under a lease may be wider than an underlease and may extend to those
deriving title from the underlease as equitable assignees.
In Re Good’s Lease [1954] 1 WLR 309 a
guarantor became entitled to a legal charge over a lease deposited by the
debtor for security, which had not been executed. He sought to intervene, by
invoking section 146 of the Law of Property Act, in an action for possession by
the landlord. Harman J held (at p312) that, since the guarantor had the right
to call on the debtor to execute a legal charge or mortgage:
Therefore, as between him and his mortgagor, he
is in the same position as if he had a mortgage by sub-demise. I think, on the
whole, that it cannot make any difference that the equitable chargee is
entitled under the covenant to have a charge by way of legal mortgage. He is in
the same position as though he were entitled to have a mortgage direct by
sub-demise.
This finding under section 146(4) would not appear
to include the holder of a charging order.
In Midland Bank plc v Pike [1988] 2
All ER 434 the holder of a charging order sought an order for sale under
section 30 of the Law of Property Act as a ‘person interested’. Mr Nugee QC,
sitting as a deputy High Court judge, accepted the creditor’s argument that the
charging order had the like effect as an equitable charge and as such gave the
chargee a proprietary interest in the property charged sufficient to make the
creditor a ‘person interested’ for the purposes of section 30. He agreed with
the submission of counsel that the equitable charge had all the characteristics
of a proprietary interest including ‘operating as an assignment pro tanto
of the property charged’.
A charging order is therefore a proprietary
interest in land which is binding on third parties if registered. It has the
like effect as an equitable charge. It does not give a right to foreclosure but
it may operate as an assignment pro tanto of some proprietary right.
Section 90(1) of the Law of Property Act provides
specifically that:
Where an order for sale is made by the court in
reference to an equitable mortgage on land (not secured by a legal term of
years absolute or by a charge by way of legal mortgage) the court may, in
favour of a purchaser, make a vesting order conveying the land or may appoint a
person to convey the land or create and vest in the mortgagee a legal term of
years absolute to enable him to carry out the sale, as the case may require, in
like manner as if the mortgage had been created by deed by way of legal
mortgage pursuant to this Act, but without prejudice to any incumbrance having
priority to the equitable mortgage unless the incumbrancer consents to the
sale.
Warner J relied upon this section in Ladup.
Section 90 clearly applies to charging orders. Consequently, the holder of a
charge may obtain an order vesting land in himself for the purpose of carrying
out the sale, which may include the creation of a term of years not previously
held by him. Since the Law of Property Act 1925 provided for an equitable
chargee to be able to obtain a lease not previously held by him, for my part I
see no difficulty in the concept that a creditor under the provisions of
section 138(9C) may be able to do the same. I do not share Pill LJ’s concern
that to construe the word ‘derive’ as encompassing an equitable chargee might
enable a judgment creditor for a small debt to obtain a valuable lease under
section 38(2) of the Supreme Court Act 1981. In such circumstances, the court
that granted relief to the judgment debtor would be able to ensure in the order
that the lease be granted for the sole purpose of effecting its sale, as was
envisaged by Warner J in Ladup.
Although I recognise that the reason for obtaining
the charging order was a debt unconnected with the lease, the grant of the
charging order gave the appellants, as creditors, a proprietary interest in the
land, which was sufficient, in my view, to come within the words of section
138(9C). If a court made an order under (9C) in favour of the creditors, it would
clearly be for a lesser term than the remainder of the lease and for the
purpose of effecting a sale of the lease and repayment of the debt.
In so far as the subsection is not entirely clear,
I agree with Sir Christopher that it would be manifestly unjust to construe it
in such a way as to deprive the appellants of any right to seek relief from
forfeiture. It would appear therefore that the prescribed form for giving
notice, N119, is too narrowly drafted. The alternative route of a combination
of subsection (9A) and section 90 of the Law of Property Act is a possible way
of achieving the same result. I am uncertain whether the result can be achieved
under section 146(4). I agree with Sir Christopher’s judgment and with his
proposed order and that this appeal should be allowed.
Appeal allowed.
