Michah Lucian Alexander Benka & Anor v Louise Keith

Forfeiture of a long residential lease requires compliance with the statutory preconditions in section 168 of the Commonhold and Leasehold Reform Act 2002 before service of a section 146 notice. A later determination or admission cannot retrospectively validate an invalid notice. The First-tier Tribunal’s jurisdiction includes ancillary questions closely connected with determining whether a breach occurred, including whether a covenant was waived so that no breach arose.

Payment made in litigation does not necessarily admit liability, particularly where the surrounding circumstances show that the payment was intended to be neutral. A garage lease is not a lease of a dwelling for section 166 purposes, but that distinction cannot support a forfeiture claim which was not pleaded. A damages claim should not be struck out where the pleadings disclose reasonable grounds, even though the claim may remain vulnerable to summary judgment.

The appellants appealed from HHJ Simpkiss’s decision dismissing claims concerning forfeiture of a flat lease, recovery of rent and service-charge arrears, and damages for alleged breaches of covenant. The proceedings had begun in 2013. The County Court had referred alleged breaches to the First-tier Tribunal, whose 2023 order recorded agreed admissions and an £8,000 payment in settlement of service-charge liabilities.

The appeal concerned whether the First-tier Tribunal process resolved or preserved issues relevant to the validity of the section 146 notice, whether section 166 affected the rent claim, whether the money claims remained live, and whether the pleaded damages claims had been wrongly dismissed.

1. Disposition. The appeal was allowed on Ground 12 in relation to the damages claims and dismissed on all other grounds. The damages issues were provisionally remitted to the County Court.
2. Section 168 of the Commonhold and Leasehold Reform Act 2002 required a final determination or admission of breach before the section 146 notice was served. The 2023 First-tier Tribunal order recorded later admissions and could not retrospectively validate the 2013 notice. The forfeiture claim based on breaches of covenant was therefore not viable.
3. The County Court order had referred all pleaded allegations of breach, including ancillary allegations concerning admissions, to the First-tier Tribunal. The Tribunal’s jurisdiction was not to be construed artificially. Questions ancillary to determining breach could fall within that jurisdiction, whereas waiver of an accrued right to forfeit was a distinct question.
4. The earlier decisions of HHJ George and the Court of Appeal, including [2023] EWCA Civ 821, did not determine the present issue. They addressed delay, abuse of process and compliance with the County Court order while the Tribunal process remained outstanding.
5. Section 166 of the Commonhold and Leasehold Reform Act 2002 applied to rent under a long lease of a dwelling. The payment of rent in 2015 was made in circumstances which did not amount to an admission of technical liability or breach. The section 166 point did not apply to the separate garage lease, but no forfeiture claim had been pleaded under that lease.
6. The rent and service-charge claims had been paid or compromised. There was consequently nothing useful left for trial, and striking them out was appropriate.
7. The pleaded damages claims identified alleged losses, gave figures, and were sufficiently particularised to disclose reasonable grounds under CPR rule 3.4. The appellate court should not determine summary judgment where no such application had been made.

• Chancery Appeals (ChD): HHJ Simpkiss dismissed the remaining claims following applications to strike out and for reverse summary judgment. Mr Justice Adam Johnson allowed the appeal on Ground 12 and dismissed it on all other grounds.
• Court of Appeal: In [2023] EWCA Civ 821, the proceedings were reinstated because the delay did not amount to an abuse of process while the First-tier Tribunal process remained unresolved.