Avebury Taverns Ltd v Kwabena Afriyie Asamoah & Anor

Forfeiture for breach of covenant is not confined to breaches of positive obligations. Under section 146, a breach of a negative covenant may also be remediable, depending on the covenant’s wording and the circumstances. Remediation may include stopping the conduct, undertaking not to repeat it, and paying compensation for past loss. Loss of profits or goodwill is ordinarily capable of assessment by forensic accountants or the court, unless specific evidence shows an exceptional difficulty. Where remediability is clearly raised as a preliminary issue and no evidence of irremediability has been pleaded or served, the issue may properly be decided on submissions.

Avebury Taverns Ltd granted the defendants a tenancy of a public house subject to trading covenants requiring specified drinks to be purchased from the claimant and restricting the sale of other drinks. After alleged breaches, the claimant served section 146 notices on 27 July 2000. The notices did not require the defendants to remedy the breaches or pay compensation because the claimant considered them irremediable.

At Edmonton County Court, District Judge Cohen tried remediability as a preliminary issue, assuming the breaches had occurred. He decided the issue on submissions and held that the breaches were potentially remediable. The claimant sought permission to appeal after Arden LJ refused permission on paper. The central questions were whether evidence should have been heard and whether the alleged breaches were capable of remedy.

1. Disposition. Mr Justice Bodey, whose judgment Lord Justice Jonathan Parker agreed with, dismissed the renewed application for permission to appeal. There was no real prospect of success.
2. Remediability under section 146. The question whether a breach is capable of remedy depends on the precise wording of the covenant and the factual circumstances. Both positive and negative covenants may be remediable.
3. Application to the alleged breaches. The defendants could remedy the alleged breaches by stopping the sale of unauthorised beverages and the wholesale business, undertaking not to repeat those activities, and paying compensation for past financial loss. Loss of profits and diminution of goodwill are frequently assessed in breach of contract cases. In the absence of specific evidence that this was an exceptional case, those losses were not beyond the ability of forensic accountants or the court to assess.
4. Preliminary determination. The validity of the notice had been clearly pleaded as an issue. The claimant had neither pleaded particulars explaining why the breaches were irremediable nor prepared or served evidence on that question. Allowing oral evidence at the hearing would have taken the defendants by surprise. The district judge was therefore entitled to decide remediability on submissions alone.
5. Order. The application was dismissed, with no order for costs.

• Court of Appeal (Civil Division). A renewed application for permission to appeal was dismissed. Arden LJ had previously refused permission on paper on 1 August 2001.
• Edmonton County Court. District Judge Cohen’s order of 15 March 2001 followed a preliminary ruling that the alleged breaches were potentially remediable and that the section 146 notices were invalid.