Edgware Road (2015) Ltd v Tera Westend Ltd

A landlord’s unauthorised withdrawal from a rent deposit account may be taken into account when determining whether rent or service charge is in arrears. Contractual provisions governing permitted withdrawals do not necessarily regulate the consequences of an unauthorised withdrawal.

A rent cesser clause operates from the factual occurrence specified in the lease, rather than from the date of a later arbitral award, unless the lease provides otherwise. Service-charge payments demanded on account may constitute rent reserved by the lease and may trigger a right of re-entry.

Relief from forfeiture is ordinarily granted on payment of arrears and costs, but truly exceptional tenant conduct may justify refusal. A dishonest claim advanced within the landlord and tenant relationship may be such conduct.

The appellant landlord re-entered commercial premises on 6 May 2022, asserting arrears of rent and service charge. The respondent tenant disputed the arrears, relying on a rent deposit deed, a rent cesser clause, and the effect of an award under the Commercial Rent (Coronavirus) Act 2022.

The County Court held that there were no arrears capable of supporting forfeiture. It also expressed obiter views that, if forfeiture had been valid, relief would have been refused. The landlord appealed, and the tenant advanced points by Respondent’s Notice concerning service by email, service-charge payments on account, and relief from forfeiture.

The central issues were how the unauthorised withdrawal should be allocated, when rent was suspended, whether service-charge payments were rent reserved by the lease, and whether relief from forfeiture should be granted.

1. Appeal dismissed. There were no arrears of service charge capable of supporting forfeiture. The rent cesser clause also suspended the relevant passing rent from the date on which the premises became unfit for use. The issue of relief from forfeiture therefore did not arise as a matter necessary to the result.
2. The COVID Award did not retrospectively mean that protected rent had never accrued. Sections 14(9) and 14(10) of the Commercial Rent (Coronavirus) Act 2022 altered the effect of the tenancy after the award, but did not erase accrued rights in the broad sense advanced by the tenant (paras [84]–[95]).
3. The unauthorised withdrawal of £43,800 could be treated as reducing arrears. Clauses 2.4 and 2.6 of the rent deposit deed concerned money remaining in the account or permitted withdrawals. They did not prevent the court from considering the practical effect of an unauthorised withdrawal. Treating the money as a notional credit to the deposit account would give the landlord both the benefit of having spent it and the benefit of treating it as still held. Allocation against later non-protected rent was preferable, and the County Court’s conclusion was not disturbed (paras [112]–[135]).
4. The rent cesser clause contained a factual trigger and a consequence. The suspension ran from the date of destruction or damage, not from the date of the arbitrator’s award. The clause suspended passing rent but not service charge (paras [137]–[146]).
5. The lease permitted service-charge demands by email. Its wording clearly contained an error, and the proper corrective construction was that the word “given” was included by mistake. The clause extended, rather than contracted, the statutory methods of service (paras [147]–[159]).
6. Payments demanded on account of service charge were themselves additional rent. The lease treated reasonably estimated outgoings as part of the additional rent and required top-up payments to be measured against additional rent already paid. Non-payment could therefore trigger the right of re-entry (paras [163]–[184]).
7. Relief from forfeiture is an equitable discretion. Ordinarily, payment of arrears and costs attracts relief, and inability to pay future rent is generally irrelevant. Truly exceptional conduct may nevertheless justify refusal. On the assumed basis that forfeiture was valid, the tenant’s dishonest lost-profits claim, together with the surrounding circumstances, justified refusal of relief (paras [185]–[216]).

The parties were invited to agree an order. If they could not, consequential matters were to be determined at a hearing within 28 days.

• Chancery Appeals: On appeal from the County Court at Central London, the landlord’s appeal against the order of HHJ Monty KC dated 3 March 2025 was dismissed.