Osibanjo & Anor v Seahive Investments Ltd

Waiver of forfeiture by acceptance of rent requires knowledge of the breach and acceptance of money as rent. The question is objective: whether the landlord’s conduct recognises the continuing lease and landlord-and-tenant relationship. Banking a cheque is not conclusive. A payment retained to secure dismissal of bankruptcy proceedings, with the balance returned, was not accepted as rent. An unbanked cheque does not ordinarily waive forfeiture. Continuing breaches create recurring causes for forfeiture.

The tenants appealed from a possession order made by HHJ Welchman in the Lambeth County Court on 20 December 2007. The judge refused relief from forfeiture of a lease of premises used as a public house and restaurant and held that the landlord had not waived forfeiture by processing part of a £10,000 cheque after acquiring knowledge of covenant breaches.

The appeal principally concerned whether the cheque had been accepted as rent. The tenants also sought permission to argue that bankruptcy proceedings, acceptance of the sum retained to discharge the bankruptcy debt, and the delayed return of a later cheque amounted to waiver. They renewed challenges to factual findings and to the refusal of relief from forfeiture.

1. Appeal dismissed; permission refused. The principal waiver argument failed because the trial judge found that the money retained from the £10,000 cheque was not accepted as rent.
2. The court stated the governing approach, citing Matthews v Smallwood [1910] 1 Ch 777, Central Estates (Belgravia) Limited v Woolgar (No 2) [1972] 1 WLR 1048, John Lewis Properties PLC v Viscount Chelsea (1994) 67 P & CR 120 and Thomas v Ken Thomas Limited [2007] EWCA Civ 1504. Waiver requires knowledge of the cause of forfeiture and money tendered and accepted as rent. The test is objective. Subjective intention, an error or a without-prejudice qualification does not by itself prevent waiver.
3. Processing the cheque was evidence of payment but was not conclusive evidence of acceptance as rent. The covering letter distinguished the sum required to secure dismissal of the bankruptcy petition from the proposed payment towards rent arrears. Seahive retained only the bankruptcy sum, returned the balance and used the retained sum to obtain dismissal of the petition. Objectively, it had not accepted rent.
4. The bankruptcy proceedings did not themselves waive forfeiture. They began before Seahive knew of the breaches and pursued the separate purpose of establishing inability to pay debts. The proposed bankruptcy-debt ground was also unsuitable for introduction on appeal because the relevant facts had not been properly investigated below.
5. Receipt of the later cheque, which was returned without being banked, did not amount to waiver. In the absence of exceptional circumstances, an unpresented cheque is insufficient. Waiver concerning an earlier breach would not prevent forfeiture for a continuing breach, because continuation creates a subsequent recurring cause for forfeiture.
6. Rix LJ separately reserved the question whether rent accruing before knowledge of the breach can found waiver, provided it accrued after the breach and was accepted with knowledge. That issue was unnecessary because there had been no acceptance of rent as rent. Lady Justice Smith agreed with the result.

• Court of Appeal (Civil Division): The appeal from the Lambeth County Court was dismissed. Permission to appeal on renewed or amended grounds was refused.
• Lambeth County Court: HHJ Welchman made a possession order on 20 December 2007 and refused relief from forfeiture.