Landlord and tenant – Possession order – Relief from forfeiture – Court of Appeal remitting claim for possession to county court for rehearing – Claimant landlord forfeiting lease by peaceful physical re-entry and no longer requiring possession order – Whether court required to make possession order under section 138 of County Courts Act 1984 – Claim determined accordingly
The defendant was the lessee of a flat in Mottingham Court, a block of flats in Sidcup, south-east London. The lease had been extended in return for a substantial premium. The lease included an obligation to pay a service charge and it was liable to forfeiture if the rent remained unpaid for 21 days.
In 2003, the defendant moved to Majorca, leaving the flat unoccupied with no forwarding address. The claimant acquired the reversion in 2012 and refurbished the block containing the defendant’s flat. In November 2015, the claimant sent a demand for service charge to the defendant at the flat. The First-tier Tribunal subsequently determined that the defendant was required to pay £11,794.66 by way of service charge.
The claimant wished to avoid any suggestion that re-entry might be unlawful and, in June 2016, brought proceedings in the county court claiming forfeiture of the lease and seeking a possession order. The proceedings were served by postal delivery to the defendant’s flat. The defendant did not attend the hearing and was not represented. The court granted a possession order.
In August 2016, the claimant took possession of the empty flat and granted a new 150-year lease of it to his daughter, by way of gift. She later sold it to a third party for £290,000.
In December 2016, the defendant was told about the possession order and applied to have it set aside under CPR 39.3(5). Following a number of appeals, cross-appeals and delays, the Court of Appeal set aside the possession order and remitted the matter to the county court for rehearing: [2019] EWCA Civ 446; [2019] PLSCS 52.
The defendant argued, amongst other things, that section 138 of the County Courts Act 1984 required the court to make an order for possession to give her the opportunity to seek relief from forfeiture. She also counterclaimed for unjust enrichment in the sum of the resale value of the flat.
Held: The claim was determined accordingly.
(1) At common law a landlord might forfeit a lease by peaceful physical re-entry or by legal proceedings. In the case of residential property, the first of those methods was subject to statutory restrictions. Since the flat had been empty since the defendant left the UK in 2003, section 2 of the Protection from Eviction Act 1977 did not apply as no-one was lawfully residing there. Therefore, the claimant could forfeit by peaceful physical re-entry or by legal proceedings. Because the possession order had been set aside, it could not be said that it operated to forfeit the lease. However, it was not in dispute, on the facts, that the claimant re-entered and took possession on 23 August 2016.
As a result of the admissions made by the defendant, the claimant had been entitled to re-enter by dint of her breaches of the lease on the date he did. There was no statutory inhibition on him doing so as the flat was empty, and no-one was residing there. The claimant could not be forced to obtain a remedy he no longer needed. He did not seek a possession order. Nor was he obliged to discontinue his claim. As CPR 38.1(2) expressly provided, a claimant who claimed more than one remedy and then abandoned his claim to one of those remedies was not treated as “discontinuing” and was not required to give notice of discontinuance. The claimant sought relief beyond possession and had expressly invited an affirmation of his right to lawful re-entry without a possession order.
(2) Section 138 of the 1984 Act was designed to give relief against forfeiture to tenants. The court should eschew a literal interpretation of words unless driven to do so. Section 138(3)(b) was directed to a case where the court was being invited to determine whether a landlord “is entitled to enforce the right…”. The present tense was apt to a case in which the proof of entitlement was a pre-requisite to the making of an order which would forfeit the lease. It had no application where, by the time the claim got to trial, the landlord had long since lawfully forfeited by re-entry.
Section 138(9A) potentially applied in the present case because the court was trying a claim in which a possession order had previously been made, re-entry had been lawfully taken after it and relief from forfeiture was now sought by way of counterclaim. But, even if that was right, it was now too late. Re-entry was made lawfully on 23 August 2016. The possession order was set aside in 2019. The application for relief from forfeiture was not made until 10 March 2020. The subsection provided a six-month time limit which the county court was not empowered to disapply or enlarge. In any event, the court would refuse an extension of time. There was nothing in the circumstances of the case to justify granting the very substantial extension that would be necessary.
There was no possession order made which could trigger the automatic relief in section 138(3) and none would now be made; the provisions of section 138(9A) were not applicable in the absence of an order made under section 138(3) and (even if the order of July 2016 was such an order, the application in respect of it was out of time); and the provisions of section 139(2) of the 1984 Act were not available, because the application to the county court for relief was made long outside the six-month period following re-entry in August 2016.
(3) That decision, taken together with the admissions that the exercise of the right to re-enter for breach was not waived and that re-entry was lawful, put paid to any claim for damages for unjust enrichment. The claimant did precisely what the lease permitted him to do in precisely the circumstances it addressed. The statutory qualifications on the exercise of his rights were either all addressed or of no application. Nothing unjust had occurred.
A possession order would not now be made. The claimant had long since lawfully recovered possession by re-entry and ended the lease. The application for relief from forfeiture was made too late. The counterclaim for damages for unjust enrichment failed.
Nicola Muir (instructed by Wannops LLP) appeared for the claimant; Faisel Sadiq (instructed by SA Law) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of Golding v Martin
