Cumbria Zoo Company Limited v The Zoo Investment Company Limited

Forfeiture requires a material breach of covenant. A lease right of access limited to purposes connected with the lease and the landlord’s interest in the land does not authorise inspection or removal of chattels left with the tenant under a separate agreement. A request made at a different time from that agreed is not reasonable notice. A one-off disposal of another’s chattel is not necessarily use of the premises. Absent dishonesty or continuous conduct, it did not breach covenants against illegal use, damaging use or compliance with laws relating to equipment. Under section 23(3) of the Landlord and Tenant (Covenants) Act 1995, a successor landlord may rely on pre-assignment breaches unless waived. The later services agreement superseded the earlier agreement, but its benefits were not assignable without consent.

The claimant operated a zoo under two leases. The defendant acquired the reversion and served notices under section 146 of the Law of Property Act 1925, alleging wrongful refusals of access and unauthorised disposal of chattels. It then re-entered the premises. Interim relief restored the claimant to possession.

The trial concerned preliminary issues: whether a later services agreement replaced an earlier agreement; whether the relevant contractual rights had been assigned; and whether the alleged access refusals or disposals constituted material breaches justifying forfeiture. The disputed chattels were shop furniture, a Sumitomo excavator and the locomotive Thomas 2.

The preliminary issues were determined without establishing a breach capable of supporting forfeiture.

1. Services agreements. The second services agreement was signed by Mr Rivera and was binding. The court rejected non est factum: he knew the general nature of the document, had an opportunity to read it, was represented by a solicitor and could see from the document itself that it was a management and services agreement. The later agreement’s entire-agreement clause superseded the first agreement as to future performance.
2. Assignment. Clause 9 unambiguously prohibited assignment without the claimant’s consent. Consent had not been sought or given. The benefits of the second agreement therefore had not been assigned to the defendant, and its purported termination of that agreement had no effect. This was consistent with the principle in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85.
3. Access. The 29 April request was made with reasonable notice, but it sought access to inspect or remove chattels, a purpose outside the lease’s reserved right of entry. The refusal was therefore not a breach. The 6 May visit had been agreed for 2 pm. Arriving at 9 am was not reasonable notice in the circumstances, and the claimant was entitled to wait for its representative to attend.
4. Chattels. The shop furniture formed part of the transferred shop stock. Title to the excavator and Thomas 2 had not transferred, and both had been appropriated by disposal, but the defendant failed to prove dishonesty. A criminal conviction was not a prerequisite to relying on underlying theft-related conduct in a civil forfeiture claim, although that observation was unnecessary to the result.
5. Covenants and materiality. A one-off disposal did not constitute use of the premises for an illegal or damaging purpose; the word connoted continuous or systematic conduct. Disposal also did not breach the covenant concerning compliance with laws relating to equipment. Under section 23(3) of the Landlord and Tenant (Covenants) Act 1995, the successor landlord could in principle rely on earlier breaches, but no waiver was proved. Any non-dishonest disposal in a mistaken belief of entitlement was not material enough to justify forfeiture.
6. Witness evidence. The court applied the requirements of Practice Direction 57AC. The defendant’s substantial non-compliance justified disregarding argumentative and unauthorised passages and risked sanctions and weakened credibility. Minor objections should nevertheless be approached proportionately.

The preliminary issues were answered accordingly. The defendant’s re-entry was not supported by an established material breach.