Saravananthan Thirunavukkrasu v Baljit Singh Brar
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Marcus Smith |
| Judgment Date | 24 September 2018 |
| Neutral Citation | [2018] EWHC 2461 (Ch) |
| Docket Number | Claim No. C00KT562 |
| Court | Chancery Division |
| Date | 24 September 2018 |
[2018] EWHC 2461 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
ON APPEAL FROM
THE COUNTY COURT AT CENTRAL LONDON
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
THE HONOURABLE Mr. Justice Marcus Smith
Claim No. C00KT562
Appeal Ref. CH-2017-000280
Mr. Timothy Cowen (instructed by Richmond and Barnes Solicitors) for the Appellants (the Defendants in the court below)
Mr. Aaron Walder (instructed through the Bar Direct Access Scheme) for the Respondent (the Claimant in the court below)
Hearing date: 12 July 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A. INTRODUCTION
. By a lease dated 10 July 2013 (the “Lease”), the Appellants as landlords leased to the Respondent as tenant a property known as and referred to in this Judgment as 101 Stanley Road, Teddington, Middlesex TW11 8UB (the “Property”).
. On 12 February 2016, the Appellants, as the persons entitled to the reversion on the Lease, purported to forfeit the Lease by re-entering the Property. In proceedings commenced under Claim No. C00KT562 in the County Court at Kingston-upon-Thames – and subsequently transferred to the County Court at Central London – the Respondent sought:
(1) A declaration that the Appellants' purported forfeiture of the Lease was unlawful;
(2) Damages for trespass and/or breach of covenant; and
(3) Damages for conversion of the Respondent's goods, as well as interest, costs and further or other relief.
. On 18 May 2017, Her Honour Judge Baucher sitting in the County Court at Central London ordered the trial of a preliminary issue in the following terms:
“There shall be a trial of a preliminary issue as to whether or not the Defendants' actions in purporting to forfeit the lease on 12 February (as set out in paragraph 14 of the Amended Particulars of Claim and agreed in paragraph 10 of the Defence) were lawful or unlawful for the reasons further particularised in paragraphs 15 and 16 of the Amended Particulars of Claim and paragraphs 11 and 12 of the Defence.”
. The pleadings say as follows:
(1) Paragraph 14 of the Amended Particulars of Claim avers that the Appellants purported to forfeit the Lease by re-entering the Property and securing it against the Respondent. This is admitted in paragraph 10 of the Defence.
(2) Paragraphs 15 and 16 of the Amended Particulars of Claim aver that the Appellants' re-entry onto the Property was a trespass and a breach of the Appellants' express covenant to give quiet enjoyment (paragraph 16) because:
(a) As at 12 February 2016, there were no arrears of rent outstanding (paragraph 15(a)); and/or
(b) By exercising the statutory mechanism for Commercial Rent Arrears Recovery (“CRAR”) under Part 3 of the Tribunals, Courts and Enforcement Act 2007, the Appellants had unequivocally acknowledged the continued existence of the Lease and waived their right to forfeit it for any non-payment of rent previously fallen due. No further sums, not falling within the CRAR had fallen due to justify forfeiture (paragraph 15(b)).
(3) These paragraphs were disputed in the Defence. The Defence asserted:
(a) That there were arrears outstanding (paragraph 11(a)).
(b) That the use of the CRAR procedure did not constitute waiver of the right to forfeit (paragraphs 11(b) and (c)), for the reasons there set out.
. The preliminary issue came before His Honour Judge Madge on 14 November 2017. At the conclusion of the hearing, which the Judge heard summarily pursuant to CPR 24 without hearing evidence, the Judge made an order declaring that the purported forfeiture of the Lease on 12 February 2016 was unlawful (the “Order”). The Judge made various orders consequential upon this, but it is this declaration that forms the substance of the Appellants' appeal. At the same time, he gave an ex tempore judgment, which has been transcribed (the “Judgment”).
. By an order dated 11 April 2018, Arnold J gave the Appellants permission to amend their grounds of appeal and granted their application for permission to appeal. There are three grounds of appeal:
(1) Ground 1. That the Judge erred in proceeding on a summary basis without hearing evidence in relation to:
(a) Whether a demand had been made for “insurance rent” by the Appellants, which had not been paid by the Respondent.
(b) Whether there had been a variation of the Lease, altering the rent payment due date.
(c) Whether the Appellants had accepted payment for “future rent”, given that the Respondent had not discharged arrears of rent.
(d) Whether the CRAR procedure was defective because of the failure to give notice. 1
(2) Ground 2. That the use of the CRAR procedure:
(a) Could not apply in relation to outstanding “insurance rent”.
(b) In any event did not constitute a waiver of the right to forfeit the Lease.
(3) Ground 3. That the costs order made by the Judge – which was one of indemnity costs – should not have been made in all the circumstances.
. These grounds of appeal are more comprehensible if the facts of the case are understood. The facts are set out in the next Section.
B. THE FACTS
. His Honour Judge Madge determined the preliminary issue without hearing evidence. He considered that the preliminary issue could be determined summarily according to CPR 24. 2 Accordingly, it is important that I determine this appeal – as the Judge sought to do – on the basis of facts that were not in issue between the parties. To the extent that facts were in issue, I note this: depending on their materiality, such factual controversies may have a bearing on the outcome of this appeal, given the approach adopted by the Judge.
. Save where I identify points that were in issue, the following facts were not contentious between the parties:
(1) The date of the Lease was 10 July 2013, with a term expiring May 2034. According to the terms of the Lease, 3 rent was payable in four (quarterly) equal instalments. According to the Lease:
(a) The last quarter date before the forfeiture was 25 December 2015.
(b) The quarter date as regards the next due payment of rent (disregarding questions of forfeiture) was 25 March 2015.
It is appropriate to note that the Appellants pleaded that this arrangement was varied in that there was an oral agreement that the rent be paid fortnightly on or around 7 and 22 of each month. 4
(2) During the course of the Lease, the Respondent was in arrears of rent. 5
(3) On a date in January 2016, 6 the Appellants instructed enforcement agents to recover these arrears using the right of a landlord to effect CRAR.
(4) Although the rules require notice of enforcement to be provided to the tenant, it was a matter of dispute between the Appellants and the Respondent as to whether such a notice was served in this case. 7
(5) On 29 January 2016, the Respondent sought to pay by cheque rent in the amount of £3,000. The Reply pleads as follows in paragraph 3(b):
“It is admitted that on or around 29 January 2016, the [Respondent] had deposited a cheque for £3,000 into the [Appellants'] bank account. The [Respondent] did not notify the enforcement agents of this during their visit. Following his payment of the sums demanded by the enforcement agents in full, the [Respondent] cancelled the aforementioned cheque in the belief that all arears of rent had been cleared. It is admitted that this cheque was
dishonoured by the bank. It is denied that multiple cheques provided by the [Respondent] were dishonoured.”It was common ground that the cheque was paid and dishonoured. The Appellants contended that the amount the enforcement agents sought to recover was reduced by £3,000 to reflect this payment, which (of course) was ultimately not received. 8
(6) On 1 February 2016, the enforcement agents exercised CRAR over the Respondent's goods for stated rent arrears of £8,270. With fees, the amount distrained against (if I can use the old language) was £10,533.20. This amount was paid to the enforcement agents by the Respondent on 4 February 2016 by electronic funds transfer, and the enforcement agents passed to the Appellants the sum of £8,270. 9 The monies were received by the Appellants on 17 February 2016. 10
(7) On 12 February 2016, as I have described, the Lease was purportedly forfeited by peaceable re-entry.
C. DISTRESS, FORFEITURE AND CRAR
. A right of forfeiture (or a right of re-entry) is a right to determine a lease by a landlord if:
(1) When exercised, it operates to bring the lease to an end earlier than it would naturally terminate; and
(2) It is exercisable in the event of some default by the tenant. 11
. The common law remedy of distress was replaced by the CRAR regime with effect from 6 April 2014. Distress was a remedy only available in respect of the non-payment of rent. 12Woodfall describes the background as follows: 13
“Distress was an ancient self-help remedy which entitled the landlord or an authorised bailiff to seize goods on premises let under a lease and sell them in satisfaction of arrears of rent. It was founded on the principle that the rent reserved by the demise issues out of the land, and the landlord distrains by taking possession, in the nature of a pledge, of goods and chattels found on such land. The ancient common law right was simply to enter the demised premises and seize and impound goods (at which point the distress was complete), but a right to sell the goods impounded was conferred on the landlord by the Distress for Rent Act 1689. Distress was regarded by many as an...
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