Maryland Estates Ltd v Joseph

When a county court grants conditional relief from forfeiture for non-payment of rent, “all the rent in arrear” in section 138(3) of the County Courts Act 1984 means the rent payable up to the date specified in the court’s order. It is not confined to rent outstanding when the possession proceedings were served.

Relief restores or preserves the original lease for all purposes, without creating a new lease. The tenant consequently remains liable for rent accruing while the proceedings are pending. This construction avoids immediate renewed forfeiture and repeated possession proceedings for later arrears.

The landlord sought possession of a flat for non-payment of rent and service charges recoverable as rent. The tenants paid the arrears outstanding when the proceedings were served but did not pay later sums accruing under the lease.

A deputy district judge held that section 138(3) of the County Courts Act 1984 permitted conditional possession to depend only upon payment of the arrears due when the proceedings were served. His Honour Judge Diamond QC upheld that decision and limited the landlord’s recoverable costs.

The landlord appealed. The central issue was whether “all the rent in arrear” included rent and service charges accruing after service but before the date specified in the court’s order.

1. Appeal allowed unanimously. Beldam LJ, with whom Bracewell J agreed, held that section 138(3) of the County Courts Act 1984 did not confine “all the rent in arrear” to the amount outstanding when the proceedings were served.

2. Although the county court’s jurisdiction to relieve against forfeiture was wholly statutory, section 138 had to be construed in light of its purpose. Its language closely resembled earlier legislation granting comparable relief at law and should receive a purposive construction unless its wording required otherwise.

3. Section 138(5) provides that, upon payment of all arrears and costs, the tenant holds according to the lease without any new lease. Relief therefore preserves or restores the original lease for all purposes. The tenant remains subject to the obligation to pay the rent reserved by that lease while the proceedings are pending.

4. Accordingly, “all the rent in arrear” means the rent payable up to the date stated in the order. Where service charges are recoverable as rent under the lease, they form part of that amount. The contrary construction would leave a tenant who obtained relief immediately in further breach for post-service arrears and would force the landlord to commence repeated proceedings.

5. The reasoning was consistent with Driscoll v Church Commissioners for England [1957] QBD 330 and Dendy v Evans [1910] 1 KB 263. Those decisions established that relief operates on the footing that there has been no effective destruction of the original estate and that the lease continues for all purposes.

6. The order below was varied by substituting for the original arrears figure an amount representing the rent and service charges due under the lease up to 24 June 1997 and remaining unpaid at the date of Judge Diamond’s order.

1. Court of Appeal: Allowed the landlord’s appeal and varied the conditional possession order so that relief depended upon payment of rent and service charges accruing up to the specified date.

2. Central London County Court, His Honour Judge Diamond QC: Upheld the deputy district judge’s construction and confined the arrears payable as a condition of relief to those outstanding when the proceedings were served.

3. Central London County Court, Deputy District Judge Clapham: Declared the landlord entitled to possession but granted conditional relief upon payment of the arrears outstanding when the proceedings were served and the landlord’s recoverable costs.