Golding v Martin (2022) EW Misc 2 (CC)

We first saw this forfeiture case when it went to the Court of Appeal (our note). Briefly, Ms Martin had bought a leasehold flat, and indeed extended the lease. In 2003, she went to live in Majorca. She left no forwarding address with the freeholder and her brother dealt with matters on the flat, which was unoccupied. In 2021, Mr Golding  became the freeholder. Service charges for refurbishment works were disputed, determined by the FTT in the sum of some £11,000 and, it appears, a money judgment obtained. The service charges remained unpaid, and in 2016, Mr G brought a forfeiture possession claim and a possession order was made on 15 July 2016. No forwarding address had been provided by Ms M. Mr G rentered the flat on 23 August and in October 2016 gifted a lease of the flat to his daughter. In January 2017, Ms M applied to set aside the possession order. This was dismissed at first instance, but that was overturned on first appeal, to HHJ Luba QC, on the basis that MS M had i) acted promptly, ii) had a good reason for not attending the hearing, and iii) if the tenant has a reasonable prospect of obtaining relief against forfeiture at a hearing following the setting aside of the possession order, that counts as “success at the trial”.

The Court of Appeal agreed with HHJ Luba QC and dismissed Mr G’s appeal, also finding that the possession order was defective as being ‘possession forthwith’ rather than after 4 weeks as required by s.138(3) of the County Courts Act 1984. So, the possession order was either set aside or a nullity, and the matter went back to the County Court.

Now, it appears that everyone at that time, HHJ Luba QC, and indeed the Court of Appeal, (and I) anticipated that an application for relief from forfeiture would be promptly made by Ms M (indeed, it was a bit of a surprise that none had already been made). The Court of Appeal noting:

the point that the restoration of a long lease is, from the lessee’s point of view, a “success”. If the order is set aside, and a new trial or hearing takes place, Ms Martin will obtain an order which is far more favourable to her than the order that is currently in place. In our judgment, that will be a “success”. As well as giving her the right to relief against forfeiture, it will also be more favourable both in terms of the period allowed for paying the arrears; and the terms of payment.

But it now turns out, in this trial judgment, that between March 2019 – the Court of Appeal decision – and March 2020 – no such application was made. In March 2020, an application was made along with a defence of waiver (not pursued at trial) and a counterclaim for £290,000 in unjust enrichment. The claim was then stayed by the Coronavirus rules.

The position at trial was therefore rather oddly, that Mr G no longer sought a possession order, on the basis that he had taken possession on 23 August 2016 by re-entry, and Ms M primarily sought the counterclaim.

HHJ Luba QC held:

Forfeiture takes place at the date of service of the possession claim. But even if that were not the case, Mr G had re-entered the property on 23 August 2016. Section 2 Protection from Eviction Act 1977, which restricts forfeiture to being by court proceedings did not apply, as no-one was residing there in 2016. The flat hd been empty since 2003.

Forfeiture by peaceful re-entry, on the breach of lease, had taken place on 23 August 2016. Whether Mr G believed he as doing so pursuant to the court order of 15 July 2016 didn’t matter. It was re-entry pursuant to his common law rights and on breach of lease.

Ms M argued that s.138 County Courts Act 1984 governed the position:

He submits that I must grant a possession order on Mr Golding’s claim. That, he contends, is the force of section 138. Such outcome is required of the Court notwithstanding that:

a. Mr Golding seeks no such order;

b. a new leasehold owner is and has for some time been in possession of the flat;

c. the new owners are not parties to the proceedings; and

d. Ms Martin does not herself seek to enforce any remedy which will oust them and restore her.

He submits that whatever may have occurred ‘on the ground’, this remains, for the purposes of section 138(1), an “action in the county court to enforce against a lessee a right of re-entry or forfeiture in respect of any land for non-payment of rent.” Further, that action has not “ceased under subsection (2)” and – in light of the admissions and findings above – “the lessor is entitled to enforce the right of re-entry or forfeiture”. These are the two preconditions in section 138(3).

Accordingly, he contends that I am obliged to make an order for possession (section 138(3) uses the word “shall”). Further, I am required to defer that order for a period which will enable Ms Martin to pay the arrears of service charges she owes and the costs of the action. Because she now is said to have the ability to pay her service charges and costs within a reasonable period no physical repossession of the property need be taken by her because upon timely payment she “shall hold the land according to the lease without any new lease” by operation of section 138(5) alone. This, he submits, is the very outcome postulated by the Court of Appeal in the passage extracted above. The 2016 Order having been set aside Ms Martin is “entitled to be placed back into the position she was in before the possession order was made – i.e. have restored to her both her lease and possession of the property”.

Mr G argued that the possession claim was simply a belt and braces approach, where there was a common law right to re-entry on breaches that were now admitted. The claim was only still alive because of the defence of waiver that had been filed, but was now no longer relied upon. Mr G could not be compelled to seek an order he did not wish to.

HHJ Luba QC held for Mr G on this issue, Ms M’s arguments on s.138 were artificial in circumstances were s.138 had no practical application.

The only relevant part of s.138 was at (9A) which provides

Where the lessor recovers possession of the land at any time after the making of the order under subsection (3) (whether as a result of the enforcement of the order or otherwise) the lessee may, at any time within six months from the date on which the lessor recovers possession, apply to the court for relief; and on any such application the court may, if it thinks fit, grant to the lessee such relief, subject to such terms and conditions, as it thinks fit.

This was taken in Gibbs v Lakeside Developments Ltd (2018) EWCA Civ 2874 to potentially be applicable in a situation where “a landlord had exercised a right of re-entry that was good at common law but that had occurred following the making of a possession order that may have been irregular and might well have been set aside (because it was made in proceedings that had never been served).”

But if it did apply here, it was simply too late

Re-entry was made lawfully on 23 August 2016. The possession order was set aside in 2019. The application for relief from forfeiture was not made until 10 March 2020. The subsection provides a six-month time limit which I am not empowered to disapply or enlarge.

Ms M’s argument that as no order had yet been made under s.138(3) – given the set aside of the previous order – the clock was not yet running on s.138(9A) and wouldn’t be until a possession order was made, but that fell with her broader argument on s.138.

The application for relief from forfeiture failed.

The claim for unjust enrichment also failed, for the same reasons. Once the defence of waiver had been dropped and the breach of lease admitted, there could be no basis for such a claim.

Comment

Well this whole saga was something of a mess. If Ms M had made an application for relief from forfeiture at the same time as the set aside application, in January 2017, things might have been quite different. But as it stands, this is both a) a reminder of the limits of the Protection from Eviction Act 1977 and, as the judgment puts it

The endnote to the final chapter in this cautionary tale must be that a non-resident and absentee leaseholder who provides no correspondence address other than that of the property itself must either (a) make proper arrangements for forwarding or diverting the mail addressed to the premises or (b) entrust the task of ‘keeping an eye’ on their property to persons who are actually committed to that task.