Greenwood Reversions Ltd v World Environment Foundation Ltd & Ors

Relief against forfeiture for breach of a lease covenant is a broad statutory discretion. Its exercise depends on all the circumstances, including the applicant’s conduct, the gravity of the breaches, proportionality, the landlord’s interests and available alternatives. Relief may be refused where the breach forms part of persistent and wilful misconduct, even though financial loss could in principle be remedied. An unqualified demand for future rent was assumed, without being finally decided, to have the same effect as acceptance of rent. That principle does not apply unless the demand is made to the actual tenant, and the demand must be unequivocally consistent with continuation of the lease.

World Environment Foundation Ltd and Dr Madhav Mehra appealed against Judge Ryland’s decision at the Central London County Court on 21 December 2006. The judge held that the lease of a flat had been forfeited and refused relief against forfeiture.

The appeal concerned whether correspondence sent by the landlord’s solicitors in December 2002 and January 2003 waived the right to forfeit, and whether relief should nevertheless have been granted. The appellants also renewed applications for permission to appeal concerning refusal of an adjournment and costs. The central issues were the proper approach to waiver and the statutory discretion to grant relief against forfeiture.

1. Appeal dismissed. The correspondence did not waive the right to forfeit. The court assumed, without deciding the point, that an unqualified demand for future rent operates like receipt of rent and engages the strict rule of waiver. The demand was made to Dr Mehra, who was no longer the tenant; after the registered assignment, WEF held the lease and owed rent by privity of estate. The letter to WEF merely sought an explanation. In any event, the letters read as a whole were not an unequivocal demand for rent: they made clear that the landlord would accept continuation only upon payment of several sums and threatened forfeiture if payment was not made.
2. Section 146(2) of the Law of Property Act 1925 confers a wide discretion. The court must consider the proceedings and conduct of the parties and all other circumstances. The guidance in Shiloh Spinner v Harding was consistent with that broad approach and did not impose a requirement that relief could be refused only in exceptional cases of wilful breach.
3. The judge had not misdirected himself or erred in principle. He considered the history of the tenancy, the wilful and persistent breaches, the close relationship between Dr Mehra and WEF, attempts to evade enforcement, the substantial sums owed, the value of the flat, proportionality and the possible sale of the flat. The case was not merely one of unpaid money. The landlord was entitled to regard the conduct as demonstrating that Dr Mehra was not a respectable tenant whom it should be required to accept.
4. The judge was entitled to refuse relief. The proposed sale-and-payment solution considered in Khar v Delmounty was not required, given the conduct, delay and costs. The renewed applications for permission to appeal concerning the adjournment and costs were wholly without merit and were refused.

• Court of Appeal (Civil Division): [2008] EWCA Civ 47. The appeals were dismissed. Renewed permission applications concerning the adjournment and costs were refused.
• Central London County Court: Judge Ryland held on 21 December 2006 that the lease had been forfeited, refused relief against forfeiture, ordered possession and made costs orders.