Rojer Taylor White v 29 Buckland Crescent Management Company Limited

Settlement agreements are interpreted by ordinary contractual principles in their legal and statutory context. A broad release and agreement not to sue ordinarily prevent revival of the original claim. A carve-out for claims concerning breach of the settlement does not, without clear words, permit proceedings for breach of a different agreement, such as a lease. A lease forfeiture clause is construed strictly: the alleged trigger must fall fairly and squarely within the specified event. A settlement obligation to carry out works by a date is distinct from a continuing repairing covenant in the lease. An application under section 168(4) does not itself establish an entitlement to forfeit. The protections in the Leasehold Property (Repairs) Act 1938 reinforced that construction.

Mr White held a long lease of a flat in a building owned by the respondent company. The company made applications to the First-tier Tribunal concerning an alleged breach of the repairing covenant and unpaid charges. The parties settled those proceedings. The settlement included an admission of breach, an obligation to complete works by a specified date, a broad release, an agreement not to sue, and a carve-out for claims concerning breach of the settlement.

After the works were not completed, the company served a section 146 notice and brought forfeiture proceedings. HHJ Dight held that the settlement precluded forfeiture. Richards J disagreed, although he granted relief against forfeiture on payment of the company’s indemnity costs: [2024] EWHC 1480 (Ch). The central issue was whether the settlement permitted forfeiture for breach of the lease or only claims for breach of the settlement itself.

The Court of Appeal unanimously allowed the appeal. The company’s claim was pleaded as a claim for breach of the lease’s repairing covenant. It was therefore within the release and agreement not to sue, and outside the limited carve-out for claims concerning breach of the settlement.

1. Construction of the settlement. Settlement agreements and releases are governed by ordinary contractual principles: BCCI v Ali [2001] UKHL 8, [2002] 1 AC 251. The agreement had to be interpreted in its legal context, including the Leasehold Property (Repairs) Act 1938: The Financial Conduct Authority v Arch Insurance UK Ltd [2020] EWHC 2448 (Comm), [2020] Lloyd’s Rep IR 527. The release in clause 6 and the agreement not to sue in clause 7.1 were expressed in broad terms. Clause 7.2 was confined to claims for breach of the Settlement Agreement and did not extend to breaches of the lease.
2. Different obligations. The repairing covenant was a continuing obligation throughout the lease. Clause 5.3 of the settlement was a once-for-all obligation to complete a particular package of works by a specified date. The two obligations could not be equated.
3. Section 168 and the statutory context. Section 168 of the Commonhold and Leasehold Reform Act 2002 restricts service of a section 146 notice but says nothing about instituting forfeiture proceedings. An application under section 168(4) is a discrete determination which may support an injunction, damages or a charging order, as well as a possible forfeiture route: Bedford v Paragon Asra Housing Ltd [2021] UKUT 266 (LC), [2022] L & TR 7; Eastpoint Block A RTM Co Ltd v Otubaga [2023] EWCA Civ 879, [2023] 1 WLR 3896. The application and settlement gave the company substantial benefits without implying a right to forfeit. The 1938 Act also meant that a notice would not necessarily lead to forfeiture, since a counter-notice could require the company to obtain leave.
4. Forfeiture. A forfeiture clause must be strictly construed, and the alleged trigger must fall fairly and squarely within the specified event: Croft v Lumley (1858) 6 HL Cas 672. The lease clause covered breaches of covenants or agreements contained in the lease. It did not cover the separate settlement obligation. The company could pursue appropriate remedies for breach of the settlement, such as specific performance or damages, but could not revive forfeiture proceedings.

The carve-out in clause 7.2 did not entitle the company to forfeit the lease.

• Court of Appeal (Civil Division): The appeal was allowed. The settlement agreement precluded the respondent’s forfeiture claim.
• High Court (Chancery Division): Richards J, in [2024] EWHC 1480 (Ch), disagreed with HHJ Dight’s conclusion that forfeiture was precluded, but granted relief against forfeiture on payment of the respondent’s costs on the indemnity basis.
• Earlier decision: HHJ Dight held that the respondent was precluded from seeking forfeiture. No citation for that decision was stated.