Another Game of Forfeits

Last year I wrote about an unusual case where an order to forfeit a long lease of a flat was made – the case of Malik v McCadden. Forfeiture is the nuclear option, when a court allows a landlord to bring a lease to an end without any compensation to the tenant, and allows them to sell it again to somebody else – normally because the tenant hasn’t been paying the rent or service charges. I commented at the time that you very rarely get as far as forfeiting long residential leases, and that the courts are very much against making forfeiture orders, and require landlords to jump through a lot of hoops in order to get one. More details are set out in my piece on Malik if any of you want to look them up.

Well, here’s another case about forfeiture, and this time it’s in the Court of Appeal, not just the County Court, as most of them are. It’s Golding v Martin [2019]EWCA Civ 446, and like Malik it shows the dangers of not responding to legal action being taken by your landlord. However, it also shows the danger of acting for a landlord and not checking up on the procedural requirements if you are trying to do something at all out of the ordinary.

The Facts

Ms Martin was the lessee of a flat in Sidcup, on a long lease that had been extended in exchange for a substantial premium. It had the usual clauses providing for a service charge, reserved as rent, and allowing forfeiture if the rent was 21 days in arrears. She moved to Majorca in 2003 leaving the flat unoccupied, and not leaving a forwarding address for her landlord. Mr Golding acquired the freehold in 2012 and caried out extensive refurbishment of the block containing the flat. He served a demand for the service charges at the flat and when this was not paid got a decision from the FTT that Ms Martin’s share of the cost was nearly £12,000 but was unable to recover this from her. He was in communication with her brother, a surveyor and some solicitors, but still had no address for Ms Martin. So he got a money judgment and issued proceedings for forfeiture. Ms Martin was unaware of these proceedings and so did not attend the hearing on 15th July 2016 when an order for posession was made.

This is where things started to go wrong for the landlord.

The Law

Most possession claims in the County Court are brought in respect of Assured Tenancies, or Assured Shorthold Tenancies, and are not brought by way of forfeiture but under the express provisions of s7 or s21 of the Housing Act 1988. This however was a long lease and so the order is made under s138 County Courts Act 1984. It’s a long complicated provision and all set out here, but in essence it provides that an order for possession must be suspended to allow payment of the arrears and costs for a period to be fixed by the court (but for at least 4 weeks). T can apply for this time to be extended, and can even apply for relief from the forfeiture (under s138(9A)) for up to 6 months after possession is taken by L. So forfeiture is very much a last resort, only to be granted when all other options are exhausted.

The Hearings

The DDJ clearly didn’t realise that there was a prescribed form of words for his order and made an order stating that the lease held in respect of the flat be forfeited and possession be granted to L. And L’s solicitors can’t have noticed the problem either. So there was no period before possession was given, and no relief if the arrears and costs were paid before then. As there is a prescribed form of order set out in an Act of Parliament this order was clearly very defective indeed.

Mr Golding took possession of the empty flat shortly after the hearing and it was sold on to a third party in 2016 or early 2017. However, shortly before the 6 month period for applying for relief under s138(9A) expired Ms Martin got to hear of the order and applied to set it aside under r39.3(5) CPR.  This provides:

(5) Where an application is made [to set aside an order] by a party who failed to attend the trial, the court may grant the application only if the applicant—

(a) acted promptly when he found out that the court had exercised its power … to enter judgment or make an order against him;

(b) had a good reason for not attending the trial; and

(c) has a reasonable prospect of success at the trial.”

The DDJ hearing the application accepted a) and b) but denied c) on the grounds that relief against forfeiture is not technically “success” as there was no defence to the possession claim as such.

HHJ Luba, in the County Court at Central London allowed the appeal, and the CA agreed with him, but only after a lot of very technical argument about whether the hearing on 15th June 2016 was a “trial”, whether the order was a nullity or merely one that should be set aside, and whether relief from forfeiture was indeed “success”. So they all go back to the County Court for a fresh hearing of the possession claim. I hope the flat is worth all this expense, and wonder what is going to happen to the new owners following the sale in 2016/17.

And the Moral?

You have got to know what you are asking for, and when things might be about to cause you problems. Don’t expect a busy DJ to know the form of words in anything other than a run-of-the-mill case. Look up the legislation and bring along a copy.

But again, don’t leave your valuable flat and go off to Spain for 13 years without leaving an address for your landlord, or a very reliable agent, as problems arise from time to time and they are much easier to deal with if you know about them at the time.

Forfeiture is a minefield. If you remember this I’ve done some good.

PS – Since writing this there has been a more detailed report (as ever) on the Nearly Legal blog, if you want more bells and whistles.

 

 

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