Forfeiture is, for the most part, beloved by landlords and hated/feared by tenants. For what might be relatively minor breaches of covenant, you can lose your lease and the landlord make an enormous windfall. The legislative trend is (slowly) in favour of restricting (and possibly even abolishing) forfeiture as demonstrated by s.168, Commonhold and Leasehold Reform Act 2002. By s.168, Commonhold and Leasehold Reform Act 2002, a landlord may not serve a notice under s.146, Law of Property Act 1925, or otherwise exercise a right of re-entry (i.e. forfeiture) in respect of a breach of a covenant (other than one to pay rent – which is unaffected by s.146, see s.146(11); or service/administration charges, which are dealt with under s.81, Housing Act 1996), unless the breach has been admitted by the tenant or determined by a court, LVT or arbitral tribunal.
In Cussens v Realread Ltd [2013] EWHC 1229 (QB), Ms Cussens was the leaseholder of two flats in a block owned by Realread. It was alleged that the flats were used for “unlawful and immoral” purposes, (namely prostitution and that this was a nuisance*; this behaviour was said to be a breach of covenant. Realread wanted to forfeit the lease and, so, in an effort to comply with s.168, 2002 Act, issued proceedings in the county court seeking a declaration that there had been a breach of covenant. Given the unchallenged evidence from two police officers and another leaseholder, the factual basis of the claim was made out and the CJ granted a declaration as sought and made an order for costs. There is no suggestion in the judgment that Ms Cussens was in any way personally responsible for any of this
Ms Cussens appealed to the High Court arguing that there was no jurisdiction to enable the county court to make a declaration of this nature. The appeal was dismissed. There was nothing in s.168, 2002 Act which dealt with whether a county court could make a declaration of this sort, but that was besides the point. The court court had jurisdiction under s.15, County Courts Act 1984 to deal with cases about contracts. The lease was a contract and so the county court had jurisdiction. However, (a) the county court could always transfer the case to the LVT for determination; and, (b) there was a potential argument (for another day) as to whether the county court, if it were to deal with such a case, should apply a limited costs power, akin to the restrictive powers of the LVT.
* probably only to other residents although this isn’t made clear