Law Report: No relief against forfeiture: United Dominions Trust Ltd v Shellpoint Trustees. Court of Appeal (Lord Justice Nourse, Lord Justice Butler-Sloss and Sir Christopher Slade), 19 March 1993

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A mortgagee of a long lease, which had been forfeited for non-payment of rent by the mortgagor, was itself a 'lessee' who could have paid off the arrears within the specified period, and it was therefore barred by section 138(7) of the County Courts Act 1984 from obtaining relief against forfeiture.

The Court of Appeal allowed an appeal by the lessor, Shellpoint Trustees, from David Neuberger QC, sitting as a deputy High Court judge, who decided as a preliminary issue that he had jurisdiction to grant the mortgagee, United Dominions Trust Ltd, relief against forfeiture.

In 1987 the mortgagee had advanced pounds 61,000 to the lessee, Ali Karimi-Nick, to pay the premium on a long lease of a flat in Kensington, which contained provisions for forfeiture for non-payment of rent. The lessee fell into arrears and the lessor obtained a county court judgment for possession and arrears. The mortgagee was unaware until December 1990 that the judgment had been executed and so failed to apply for relief against forfeiture under section 138(9A) and (9C) of the 1984 Act, as amended by section 55 of the Administration of Justice Act 1985.

Section 138 provides: '(7) If the lessee does not within the period specified in the order . . . pay into court all the rent in arrear, and the costs of the action, the order shall be enforced . . .and . . . the lessee shall be barred from all relief.'

Michael Daiches (Binks Stern), who did not appear below, for the lessor; Simon Berry QC and Andrew Goodman (Hill Bailey, Bromley) for the mortgagee.

LORD JUSTICE NOURSE said that section 140 defined a 'lessee' as including an original or derivative under-lessee and the persons deriving title under a lessee. It was common ground that this included a legal chargee of a lease. As such, the mortgagee could have paid off the arrears under section 138(2) and (5), and was likewise a 'lessee' for the purposes of section 138(7). Since the mortgagee had not applied to do so under section 138(9C) within the six-month period limited by section 138(9A), it was now by virtue of section 138(7) barred from relief.