Law Report: Forfeiture of lease cannot be withdrawn: G S Fashions Ltd v B & Q plc - Chancery Division (Mr Justice Lightman), 19 October 1994

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Where a lessor issued a writ claiming the forfeiture of a lease for breach of a covenant in the lease and the lessee by its defence accepted the forfeiture, the lessor could not thereafter question the validity of the forfeiture in order to enforce covenants in the lease.

Mr Justice Lightman dismissed the plaintiff landlord's appeal against Master Moncaster's decision, on 19 May 1994, that two leases in which the first defendant was the tenant were determined by service of the writ. Leave to appeal was granted. The landlord alleged that the tenant had assigned the lease without consent in breach of a covenant.

The landlord served a specially endorsed writ alleging that the lease had been forfeited and sought possession and mesne profits. The tenant accepted the forfeiture. On the tenant claiming that with forfeiture it was no longer bound by the rental covenants, the landlord applied for leave to amend the writ to delete the claim to forfeit.

The landlord claimed that the tenant had not parted with possession and that the landlord had made a mistake in thinking that there had been a parting of possession and the tenant had induced the mistake. The tenant applied for a declaration that the lease had been forfeited.

David Mayall (Edge & Ellison, Leicester) for the landlord; Jonathan Gaunt QC and Alistair Craig (Hepherd Winstanley & Pugh, Southampton) for the tenant.

MR JUSTICE LIGHTMAN said that a lessor who claimed that the lessee had committed a breach of covenant which triggered a right to forfeit the lease, had served the necessary notice and had not waived the right of forfeiture might (1)peaceably re-enter, take possession and thereby forfeit the lease; (2)issue and serve a writ electing immediately and unequivocally to forfeit and claim possession; (3)issue and serve a writ cliaming in the alternative (a) determination that the lease had been forfeited and (b)enforcement of the covenants in the lease.

In Billson v Residential Properties (1992) 1 AC 494 Lord Templeman stated that the legal effect of (1) and (2) were the same.

In this case the landlord by its writ after pleading a breach of the covenant made the immediate election to forfeit. In law this was the equivalent of the landlord peaceably re-entering and taking possession. The lease was to be treated as determined by forfeiture.

As a matter of justice, after the lessor had made this election and the lessee had accepted the new relationship of landowner and trespasser thereby created, the lessee should not be required to face the risk of a change of mind by the lessor justified by second throughts as to his entitlement to take the draconian course of forfeiture by revisiting questions as to the sufficiency of his notice or the existence of the breach of covenant.

There was no basis in the statement of facts for any arguable allegation of misrepresentation, express or implied, by the tenant inducing the landlord's mistaken view that the tenant had committed a breach of covenant. There was no requirement of knowledge or absence of mistake for a valid and binding decision to exercise a contractual right.