The Tropical Zoo Limited v The Mayor and Burgesses of the London Borough of Hounslow

A lease may make compliance with a notice to remedy a freestanding tenant covenant, separate from any landlord step-in remedy. Failure to comply may therefore create a fresh right of forfeiture, even where the landlord waived forfeiture for the original breach.

Waiver requires knowledge of the breach and an unequivocal act affirming the lease. Acceptance by a rent-collection agent waives forfeiture only where the agent has authority to make decisions concerning continuation of the lease. Receipt by an agent limited to treasury functions is insufficient. Relief from forfeiture is discretionary. Where relief depends on future performance, the court must have a real likelihood or prospect that the conditions will be met.

The claimant held a 125-year lease of land from the defendant council for an urban farm and the construction of a tropical zoo. The lease required the zoo building to be completed within two years. The building was not constructed.

The council served a notice requiring the breach to be remedied and later served notices under section 146 of the Law of Property Act 1925. The claimant sought declarations that the lease was not forfeitable, alternatively relief from forfeiture. The issues were whether the notice created a freestanding covenant, whether the council had waived forfeiture by delayed return of rent payments, and whether relief should be granted.

1. Freestanding covenant. Schedule 2 paragraph 9.1 was drafted as a distinct obligation to remedy a notified breach within the specified period. It was separate from paragraph 9.2, which required the tenant to permit the landlord to enter and recover the costs of remedying the breach. The provision was therefore a tenant covenant, and failure to comply materially engaged clause 5.1.1.

2. Waiver. Clause 5.1.1 did not contract out of the common law doctrine of waiver. Its parenthesis preserved the landlord’s right to rely on a later breach despite waiver of an earlier right of re-entry. Waiver required knowledge of the breach and an unequivocal act affirming the lease. Acceptance of rent was ordinarily such an act.

3. A rent-collection agent’s receipt of rent was not necessarily acceptance by the landlord. The agent needed actual or ostensible authority to make commercial decisions about continuation of the lease. Avison Young’s authority was limited to demanding and collecting rent. Its prompt attempted return of the March 2021 payments, and the circumstances surrounding the delayed return of the September 2022 payment, did not objectively amount to acceptance by the council.

4. The court declined to adopt the approach in McDrury v Luporini that acceptance of rent during the currency of a statutory notice could not amount to waiver. Section 146 did not prevent waiver before the right of forfeiture became enforceable. On the facts, however, no waiver occurred.

5. Relief from forfeiture. Relief was refused. Construction of the zoo was fundamental to the lease. The evidence did not establish a real likelihood or prospect that the claimant or its proposed funders could finance and complete the building. The court was not required to protect third parties seeking to use the lease as leverage for development rights.