Golding v Martin

In a county court claim to forfeit a lease for non-payment of rent, a “trial” within section 138 of the County Courts Act 1984 includes any proceeding which disposes of the possession claim. The resulting possession order must allow at least four weeks for payment and must provide that possession is conditional upon non-payment of the arrears and costs.

An order omitting those safeguards is beyond the court’s power and must be set aside. A lessee has a reasonable prospect of “success at the trial” if relief against forfeiture, or the restoration of a valuable long lease through the statutory conditional order, is realistically available. Success is assessed practically rather than through an excessively technical distinction between defeating possession and obtaining relief from forfeiture.

The landlord obtained an unconditional order forfeiting a valuable long lease and granting possession after the absentee lessee failed to pay service charges reserved as rent. The order neither postponed possession for the statutory minimum period nor allowed the lessee to preserve the lease by paying the arrears and costs. The landlord recovered possession and the flat was later transferred and sold.

A deputy district judge refused to set aside the order. He found that the lessee had acted promptly and had a good reason for not attending, but held that possible relief against forfeiture was not a defence and therefore did not amount to a reasonable prospect of success. HHJ Luba QC allowed her appeal, holding that a reasonable prospect of obtaining relief could amount to success at trial.

The landlord’s second appeal raised what counts as “success at the trial”. By a respondent’s notice, the lessee also contended that the original possession order was beyond the county court’s power because it did not comply with section 138(3) of the County Courts Act 1984.

1. Appeal dismissed. The original possession order was beyond the county court’s power and had to be set aside. The court did not need to decide whether it was a nullity or merely an order requiring setting aside.

2. Section 138(3) of the County Courts Act 1984 prescribes the order which the court must make in a forfeiture claim for non-payment of rent. Possession cannot take effect less than four weeks after the order, and the order cannot be unconditional. It must allow the lessee to retain the lease by paying the arrears and costs within the stipulated period. Those requirements protect a valuable statutory right and are not technical formalities. The order here omitted both safeguards: paras 15–20 and 28–29.

3. The lessee could raise that pure point of law for the first time on the second appeal. The ordinary discretion against new appellate points is subject to an exception where the county court acted without jurisdiction or power. The remaining new grounds in the respondent’s notice depended on matters beyond pure law and could be pursued after remittal: paras 18–20 and 30.

4. A “trial” for section 138 includes any proceeding by which a possession claim based on non-payment of rent is disposed of, including a hearing under CPR Part 55. The statutory meaning is not confined by the later procedural meaning of “trial” under the CPR. A narrower construction would bypass the statutory protection in the usual form of possession proceedings and create an irrational scheme: paras 23–27.

5. Although unnecessary to the disposition, the court decided the important issue for which permission had been granted. A realistic prospect of obtaining relief against forfeiture can amount to “success at the trial”. Relief is inextricably involved with the forfeiture claim and operates as an equitable defence to the landlord’s legal right. The expression should receive a practical rather than excessively technical interpretation: paras 31–37.

6. Where a valuable long lease is at risk, the court may take a broader view of success than where only a rack-rented tenancy is threatened. Even though section 138(3) dictates the form of the replacement order, restoration of the lease and receipt of more favourable time and payment terms constitute success from the lessee’s perspective. The question is whether the court can afford relief which prevents the possession order from causing loss of the tenancy: paras 38–42.

1. Court of Appeal (Civil Division): The landlord’s second appeal was dismissed. The possession order was set aside as beyond the county court’s power, and the court also upheld the conclusion that the lessee had a real prospect of success at trial: [2019] EWCA Civ 446.

2. County Court at Central London, HHJ Luba QC: The lessee’s appeal was allowed. A reasonable prospect of obtaining relief against forfeiture at a rehearing was held to amount to “success at the trial”.

3. County Court, DDJ Mohabir: The application to set aside was refused. Although the lessee had acted promptly and had a good reason for not attending, the judge held that relief against forfeiture was not a defence and therefore did not establish a reasonable prospect of success.

4. County Court, DDJ Thomas: An unconditional order forfeiting the lease and granting possession to the landlord was made. This court held that the order failed to comply with section 138(3) of the County Courts Act 1984.