The First Tier (Property) Tribunal (FTT) had correctly found that a flat had been used as a brothel but should have made more particular findings as to the extent of the lessee’s responsibility.
This was the decision of Martin Rodger QC in Marchitelli v 15 Westgate Terrace Ltd [2020] UKUT 192 (LC) in which he expounded the importance of clear findings in determinations which may form the basis of forfeiture.
Before a landlord can exercise a right of re-entry or forfeit for a breach of a covenant a notice (a section 146 notice) must be served under section 146 of the Law of Property Act 1925. Where the lease is a long lease of a dwelling, a section 146 notice may not be served in respect of a breach unless the tenant has admitted the breach or it has been finally determined by a court or the FTT has determined that the breach has occurred (after an application under section 168(4) of the Commonhold and Leasehold Reform Act 2002 (the 2002 Act)).
15 Westgate Terrace, London, SW10, is a residential building divided into five flats. One of those flats, flat 1, was held under a long lease by Ms Marchitelli. The lease included a covenant on the part of the lessee “Not to do or permit or suffer in or upon [the flat] or any part thereof any illegal or immoral act or any act or thing which may be or may become a nuisance or annoyance or cause damage to the lessors or the tenants of the lessor or the occupiers of any part of the building”.
At the material time the lessee did not live at the flat. Her evidence was that she had been undergoing significant treatment for a serious medical condition. She engaged the services of a Mr Torino, who she said appeared to be “a reputable agent”. In September 2017, the flat was sub-let. From about October 2017, other occupiers of the building noticed increased activity at the flat, especially at night, with frequent male visitors. It was said that this caused them nuisance and disturbance. They discovered that the resident of the flat was a Natalie Ferraz and that there were “internet advertisements for Natalie Ferraz, a transvestite, offering services of a sexual nature to men”. Other residents of the building formed the view that the flat was being used as a brothel.
Repeated complaints were made to the lessee and to Mr Torino but the problem continued. Eventually the occupiers of the flat left and it came to be managed and let by experienced agents. Although the problems complained of had ceased, in February 2019 the lessor’s solicitors applied to the FTT for a determination under section 168 of the 2002 Act. After two days of evidence, split by many months, the FTT found that the flat had been used as a brothel and further found “apart from contacting Mr Torino, it appears that [the lessee] had taken few active steps to resolve the situation or to rid the property of its difficult tenant”.
The lessee appealed. The first contention that the FTT was wrong to find that the flat was used as a brothel was rejected. There was no need for “direct evidence of any flagrante delicto”. The “circumstantial evidence” before the FTT was sufficient.
However, the FTT’s findings in relation to the lessee’s failings were inadequate. A serious breach of covenant should not have to be inferred from generalised statements. “The same degree of transparency [as is required of a section 146 notice] is required of a determination of breach by the FTT. Without it the landlord will not be able to serve a sufficiently specific section 146 notice”. Further, unless the FTT makes specific findings of fact concerning the breach and the tenant’s part in it, the county court will face an impossible task when it is required to determine whether to forfeit the lease or to grant relief against forfeiture. It is essential that the county court is in a position from the FTT’s decision to assess the seriousness of the breach, culpability of the lessee and the appropriate response to an application for relief from forfeiture. If that degree of certainty is not achieved, it may be necessary for the county court to rehear evidence which has already been presented to the FTT. That is not what section 168 of the 2002 Act contemplates and would render it pointless. Also, a tenant may be guilty if a lessee’s agent permitted or suffered the wrong. Here the FTT had made no findings as to the extent of Mr Torino’s knowledge or his responsibility either for facilitating what was going on in the flat or preventing it.
The finding that the flat was a brothel would stand but the question of culpability would have to be remitted. In the circumstances of this case it would be remitted to a differently constituted tribunal.
Elizabeth Haggerty is a barrister at Lamb Chambers
