Ragmohan Singh Chug & Anor v Mohinderpal Singh Dhaliwal & Anor

A tenant’s acceptance of forfeiture under an agreement with the landlord may settle any later challenge to the re-entry, the validity of the notice and relief from forfeiture. A covenant prohibiting the tenant from suffering another person to occupy premises may create a continuing breach where the unauthorised occupation can be terminated by the tenant but is allowed to continue. Acceptance of rent may waive a once-and-for-all breach, such as non-payment on a specified date, without waiving a continuing breach. A notice under section 146 of the Law of Property Act 1925 is construed objectively. It is sufficient if, read in context by a reasonable recipient, it identifies the breach and conveys the need to remedy or regularise it.

The appeal concerned a twenty-year commercial lease of shop premises. The tenant allowed another person to occupy and operate the premises without the landlord’s consent. The landlord served a notice under section 146 of the Law of Property Act 1925 and subsequently re-entered.

The County Court rejected claims by the tenant and the occupying company for declarations that the re-entry was unlawful and, alternatively, relief from forfeiture. It found that the tenant had later agreed to accept the forfeiture in return for the landlord abandoning dilapidations claims. The appeal challenged the findings on waiver, the adequacy of the notice and the exercise of the discretion to grant relief.

1. Appeal dismissed. The tenant’s agreement in July 2019 to accept forfeiture and relinquish any further interest in the property, in return for the landlord not pursuing dilapidations, provided a complete answer to all three grounds. It prevented a later challenge to the re-entry, any complaint about defects in the section 146 notice, and any application for relief from forfeiture.
2. The landlord’s acceptance of rent after learning of the unauthorised occupation did not waive the right to forfeit for breach of the alienation covenant. Non-payment of rent was a once-and-for-all breach: waiver of that breach prevented forfeiture for it. By contrast, the covenant not to suffer another person to occupy the premises was continuing. Where occupation was permitted under an informal licence terminable at will, a fresh breach arose each day that the tenant allowed it to continue. This conclusion was consistent with the obiter observations of Mummery LJ in Seahive Investments Ltd v Osibanjo [2008] EWCA Civ. 1282.
3. The section 146 notice was to be construed objectively, applying the approach in Mannai v Eagle Star Life Assurance Co. Ltd [1997] AC 749. In context, a reasonable recipient would understand that the irregular occupation had to be stopped or regularised. The notice therefore sufficiently required remedy of the breach and specified the particular breach complained of, despite describing the arrangement as a letting rather than a licence.
4. The County Court’s treatment of relief from forfeiture involved a formal inconsistency: the July agreement meant that relief did not arise, yet the judge also analysed the discretion. In substance, the agreement was treated as decisive. The judge had not ignored the value of the old lease, the higher rent and premium obtained under the later lease, or other relevant matters.

• Chancery Appeals (ChD): appeal from the judgment of HHJ Saggerson in the Central London County Court dated 5 July 2022. Appeal dismissed.