Cussens v Realreed Ltd

Section 168 of the Commonhold and Leasehold Reform Act 2002 does not itself confer jurisdiction on a county court to determine a lease breach solely to enable forfeiture proceedings. A county court may nevertheless have jurisdiction where the proceedings are founded on the lease contract and seek declaratory relief under section 15 of the County Courts Act 1984. A landlord’s declaration of breach is not the same cause of action as later forfeiture proceedings. Where both parties accepted the county court forum until trial, the ordinary costs rule may properly apply, although the costs judge may take the alternative leasehold valuation tribunal procedure into account when assessing proportionality.

The landlord brought claims concerning two long residential leases, alleging that the tenant had breached absolute covenants prohibiting immoral use of the flats. HHJ Saggerson declared that breaches had occurred under section 168 of the Commonhold and Leasehold Reform Act 2002 and ordered the tenant to pay the landlord’s costs.

On appeal, the tenant challenged the county court’s jurisdiction and the costs order. The central issues were whether section 168 conferred jurisdiction to make a determination solely for future forfeiture proceedings, whether the claims were otherwise founded on contract, and whether the costs regime applicable before a leasehold valuation tribunal restricted the county court’s discretion.

1. Appeal dismissed. The challenge to the evidence was not pursued effectively. The evidence established that one flat had been used for prostitution, which constituted use for an immoral purpose and breached the absolute lease covenant.
2. Section 168(4) of the Commonhold and Leasehold Reform Act 2002 is permissive as to applications to a leasehold valuation tribunal, but it does not establish county court jurisdiction. Section 168(2)(c) likewise does not confer jurisdiction on every court to determine a breach solely for the purposes of section 168. It recognises determinations made in proceedings otherwise properly before a court, such as claims for damages, injunctions or declarations.
3. The county court nevertheless had jurisdiction under section 15 of the County Courts Act 1984. The claims were founded on contract because the landlord had to plead and prove the lease terms. Sections 78, 79 and 141 of the Law of Property Act 1925 supported the landlord’s enforcement of the tenant’s covenants despite the absence of direct contractual privity. Declaratory relief was available, and the resulting determinations were effective under section 168.
4. The proceedings did not improperly divide a cause of action under section 35 of the County Courts Act 1984. A claim for a declaration of breach and a later claim for forfeiture are separate causes of action.
5. Paragraph 10 of Schedule 12 to the 2002 Act generally governs costs before leasehold valuation tribunals. The first-instance judge misunderstood its scope, but that error did not drive the costs decision. Both parties had accepted the county court forum until trial, and there was no error of principle or injustice in applying the ordinary costs rule under CPR 44.3.
6. The costs judge could take into account the alternative tribunal procedure when assessing whether the landlord’s costs were reasonably incurred, reasonable in amount and proportionate.

• Central London County Court: HHJ Saggerson declared breaches of the two leases under section 168 of the Commonhold and Leasehold Reform Act 2002 and ordered the tenant to pay the landlord’s costs.
• High Court (Queen’s Bench Division): The appeal was dismissed. Permission had been granted by Foskett J after permission was refused on the papers by Males J.