Landlord purporting to determine lease — Tenant accepting lessor’s entitlement to forfeiture — Lessor later challenging that lease forfeited — Declaration that lease determined by service of writ — High Court dismissing appeal
The tenant was the assignee of two leases of retail premises in Blackburn Road, Leicester (“the premises”), and the landlord was the lessor. The leases contained common form covenants against the lessee assigning, subletting or parting with possession without the consent of the lessor and a proviso for re-entry in the event of a breach of covenant. In August 1993 the tenant applied for the landlord’s consent to assign the leases to K. In anticipation of acceptance, the tenant granted K a licence to use the premises for storage for one week. After the stipulated date expired K started trading from the premises. In October 1993 the landlord learned that K was occupying the premises. On December 5 1993 the landlord served a writ on the tenant alleging that the tenant had assigned, let or parted with possession without the landlord’s consent, that the leases had been forfeited and seeking possession.
On December 23 1993 the tenant accepted the forfeiture and required K to leave. The tenant wrote to the landlord on January 24 1994 making it clear that with forfeiture of the leases it no longer had any interest in the premises and was no longer bound by the rental covenants. The landlord reconsidered the desirability of obtaining forfeiture and applied for leave to amend the writ deleting the claim to forfeit. The tenant applied successfully for a declaration that the leases had been forfeited. The landlord appealed. (Present counsel and solicitors were not instructed at the time the proceedings were served.)
Held The appeal was dismissed.
1. A lessor who claimed that the lessee had committed a breach of covenant which triggered a right to forfeit the lease, had served any necessary notice under section 146 of the Law of Property Act 1925 and had not waived the right of forfeiture might, inter alia: (1) peaceably re-enter under the proviso for re-entry, take possession and forfeit the lease; (2) issue and serve a writ seeking relief solely on the footing that it had come to an end, electing immediately and unequivocally to forfeit and claim possession.
2. The legal effect of those actions was the determination of the lease and not merely an unequivocal election to determine: see Bilson v Residential Properties [1992] 1 EGLR 70. The view to the contrary expressed in Baglarbasi v Deedmethod Ltd [1991] 2 EGLR 71 at p73B could not stand. Service of the writ constituted a notional re-entry: see Associated Deliveries v Harrison (1984) 272 EG 321 at p322.
3. In this case the landlord, by its writ, after pleading a breach of the covenant against parting with possession made the immediate election to forfeit. In law that was the equivalent of the landlord peaceably re-entering and taking possession. The tenant admitted and agreed the commission of the breach, forfeiture and the landlord’s right to possession. At that stage of the pleadings alone there was an agreement resolving or obviating any dispute as to the landlord’s entitlement to forfeit. The forfeiture effected by service of the writ no longer remained open to challenge by the landlord. The lease was to be treated as determined by forfeiture, as the parties intended.
David Mayall (instructed by Edge & Ellison) appeared for the landlord; Jonathan Gaunt QC and Alistair Craig (instructed by Hepherd Winstanley & Pugh) appeared for the tenant; the second, third and fourth defendants did not appear and were not represented.