Charles Christian Bedford v Paragon Asra Housing Limited

An application to determine a breach of covenant is not ordinarily an abuse of process merely because the landlord may have waived the right to forfeit. The tribunal must consider whether alternative remedies remain available and whether waiver is indisputable. Unless a defence of waiver is guaranteed to succeed, proceedings under section 168 of the Commonhold and Leasehold Reform Act 2002 may properly continue. The First-tier Tribunal’s function is generally to determine whether the covenant was breached. The County Court is the proper forum for waiver of forfeiture as a defence to subsequent forfeiture proceedings, subject to limited cases where waiver must be considered to decide another issue.

The appellant held a shared ownership lease containing an absolute covenant against subletting. After the respondent landlord discovered that the property had been sublet, it applied under section 168 of the Commonhold and Leasehold Reform Act 2002 for a determination that the covenant had been breached.

The appellant applied under rule 9(3)(d) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 to strike out the proceedings as an abuse of process. He argued that the landlord had waived forfeiture by accepting rent with knowledge of the subletting. The FTT refused to strike out the application and determined that breaches had occurred. The central issues were whether the possibility of alternative remedies prevented the proceedings from being abusive and whether the FTT should determine waiver at the strike-out stage.

1. Appeal dismissed. The FTT had been entitled to refuse to strike out the landlord’s application.
2. Abuse of process involves serious unfairness or conduct bringing the administration of justice into disrepute. The court must first decide whether the conduct is abusive and then decide whether, in its discretion, strike-out is proportionate. The power must be exercised cautiously.
3. The availability of alternative remedies was highly relevant. A landlord may seek an injunction requiring compliance with the covenant or damages, including damages on a negotiating basis. Such remedies may be pursued alongside or instead of forfeiture. A determination of breach may therefore serve a legitimate purpose even if forfeiture later proves unavailable.
4. The FTT’s statutory function under section 168 was ordinarily to determine whether a breach of covenant had occurred. Waiver of the right to forfeit is distinct from waiver of the covenant itself. The former usually operates as an election affecting one remedy, while the latter may prevent reliance on the covenant for the relevant breach. Neither prevents reliance on the covenant for later breaches under section 148(1) of the Law of Property Act 1925.
5. The FTT could, in principle, consider waiver when necessary to decide a strike-out application. It was not strictly correct to treat that question as one of jurisdiction. Nevertheless, the proceedings were plainly not abusive because the facts of the subletting and the landlord’s knowledge were disputed and insufficiently established. Until those facts were determined, waiver could not be treated as clear and indisputable.
6. It was proportionate for the FTT to determine the substantive breach application at the same hearing. Separate procedural litigation would risk wasting resources and duplicating evidence. The appellant could raise waiver in the County Court if forfeiture proceedings were later brought.

• Upper Tribunal (Lands Chamber): appeal from the FTT’s decision of 23 December 2020 dismissed.
• First-tier Tribunal (Property Chamber): refused to strike out the section 168 application and determined that the appellant had breached the covenant against subletting.