Forfeiture Of Residential Leases – Again

Forfeiture Of Residential Leases – Again

Triplerose Ltd v Patel [2018] UKUT 374 (LC)

All conveyancers will be well aware of the promised –threatened? – changes to residential leaseholds. One of the perceived problems with residential leases is the availability of the right to forfeit i.e. terminate the lease. If a lease were to be forfeited, this would result in the loss to the home-owner of their property – and with no compensation. It would appear that should leases not be abolished entirely, the right to forfeit could well be abolished.

Be that as it may, some of us remember that when Commonhold was introduced, one of the reasons given as to why it was not taken up with enthusiasm, was that with no right of forfeiture, there was no effective method of enforcing the Commonhold covenants!

In the meantime, landlords of leasehold flats and houses are still using the the threat of forfeiture to enforce compliance with covenants. A typical example was before Martin Rodger QC, Deputy Chamber President in the Upper Tribunal last month. Under section 168(4), Commonhold and Leasehold Reform Act 2002, a landlord cannot commence forfeiture proceedings until the tenant has either admitted the breach or a Court or Tribunal has made an order that there is a breach. In this case the issue was whether the following covenant in the lease had been breached:

“Not during the said term (i) without the consent in writing of the lessor and the superior lessor to cut or maim any of the walls floors timbers stanchions or girders of the flat, or (ii) commit or permit any waste or damage whatsoever to the flat or make or permit to be made any alteration in the elevation or in the external decoration thereof or in the means of access thereto.”

The alleged breach was that the tenant had replaced a window at the rear of the flat with a door. On the facts there had been no cutting of the walls to install the door – as often would be necessary – but it had simply been inserted into the existing aperture in the brickwork where the window had been. The question was, therefore, whether there had been an ‘alteration in the elevation’ of the building by the installation of the door.

The First Tier Tribunal (FTT) concluded that the installation of a door in the rear wall of the building could not be a breach of the clause because it was not an alteration to the “elevation” of the flat. The “elevation”, the FTT considered, meant only the front of the building and so the covenant did not prevent changes to the rear. The FTT relied on the case of Joseph v London County Council (1914) 111 LT 276 in which it was held that “‘elevation’ meant the front view of a building”.

Martin Rodger QC took a different view. “It is not necessary to refer to a specialist legal dictionary or to the observations of an Edwardian judge to identify the natural and ordinary meaning of the word “elevation”. It is not a term of art, and … it can be understood by anyone familiar with ordinary usage… Unless it is qualified by reference to a specific plane … it denotes the external vertical surfaces of a building generally, the front, the back and the sides, rather than referring only to the front of the building”.

He went on to say : “ The overall purpose of such a clause is to ensure that a building is returned to the landlord in substantially the same form in which it was demised, and the FTT’s limited meaning is inconsistent with that purpose”.

But just a final thought. The fact that there has been a breach of covenant does not mean that the landlord can now forfeit the lease. To forfeit, the landlord can now follow the normal procedure. This involves serving a notice under section 146 of the Law of Property Act 1925. This notice must specify the breach and require it to be remedied within a reasonable period. If it is, i.e. the door is removed and the window restored, then there can be no forfeiture – just a big bill for legal costs for the tenant. And if it is not, then forfeiture would be possible.

Paul Butt, Consultant at Rowlinsons Solicitors

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