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United Kingdom House of Lords Decisions


You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Billson v. Residential Apartments Ltd [1991] UKHL 7 (12 December 1991)
URL: http://www.bailii.org/uk/cases/UKHL/1991/7.html
Cite as: [1992] 1 AC 494, [1992] AC 494, [1991] UKHL 7, [1991] 3 WLR 264

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    Parliamentary Archives,
    HL/PO/JU/18/251

    Residential Apartments Limited (Appellants) v. Billson and

    others (Respondents)

    JUDGMENT

    Die Jovis 12 Decembris 1991

    Upon Report from the Appellate Committee to whom was
    referred the Cause Residential Apartments Limited against
    Billson and others, That the Committee had heard Counsel as
    well on Monday the 18th as on Tuesday the 19th and Wednesday
    the 20th days of November last, upon the Petition and Appeal
    of Residential Apartments Limited of Britannic House, 28
    Princes Street, Ipswich, Suffolk IPL 1RJ, praying that the
    matter of the Order set forth in the Schedule thereto, namely
    an Order of Her Majesty's Court of Appeal of the 11th day of
    February 1991, might be reviewed before Her Majesty the Queen
    in Her Court of Parliament and that the said Order might be
    reversed, varied or altered or that the Petitioners might have
    such other relief in the premises as to Her Majesty the Queen
    in Her Court of Parliament might seem meet; as upon the case
    of Hew Richard Dalrymple Billson, Charles George Findlay, John
    de Cardonel Elmslall Findlay and Robert Francis Kerr lodged in
    answer to the said Appeal; and due consideration had this day
    of what was offered on either side in this Cause:

    It is Ordered and Adjudged, by the Lords Spiritual and
    Temporal in the Court of Parliament of Her Majesty the Queen
    assembled, That the said Order of Her Majesty's Court of
    Appeal of the llth day of February 1991 complained of in the
    said Appeal be, and the same is hereby, Set Aside and that the
    Order of Mr. Justice Mummery of the 16th day of February 1990
    be, and the same is hereby, Set Aside: And it is further
    Ordered, That the Cause be, and the same is hereby, remitted
    back to the Chancery Division of the High Court of Justice to
    determine the application for relief against forfeiture:
    And it is also further Ordered, That the Respondents do pay or
    cause to be paid to the said Appellants the Costs incurred by
    them in respect of the said Appeal to this House, the amount
    thereof to be certified by the Clerk of the Parliaments.

    Cler: Parliamentor:

    Judgment: 12.12.91

    HOUSE OF LORDS

    RESIDENTIAL APARTMENTS LIMITED
    (APPELLANT)

    v.

    BILLSON AND OTHERS
    (RESPONDENTS)

    Lord Keith of Kinkel
    Lord Templeman
    Lord Oliver of Aylmerton
    Lord Goff of Chieveley
    Lord Jauncey of Tullichettle


    LORD KEITH OF KINKEL

    My Lords,

    I have had the opportunity of considering in draft the
    speech to be delivered by my noble and leaned friend Lord
    Templeman. I agree with it, and for the reasons he gives would
    allow this appeal. I agree also with his observations regarding
    costs and with the orders which he proposes in respect to them.

    LORD TEMPLEMAN

    My Lords,

    By a lease dated 15 July 1964 freeholders demised the
    premises, 17 Gledhow Gardens, South Kensington, for a term due
    to expire by effluxion of time on 25 June 1997. On 3 May 1989
    the lease was assigned to the appellant, Residential Apartments
    Ltd. The reversion is vested in the respondent trustees.

    The provisions of the lease included a covenant by the

    tenants:

    "(f) . . . not to make any alteration in or addition to the
    demised premises or any part thereof without the consent in
    writing of the Lessors first had and obtained."

    The lease also contained the following proviso for re-entry:

    "(i) If and whenever any rent hereby reserved shall be in
    arrear for twenty-one days after becoming due (whether
    legally demanded or not) or if and whenever any covenant
    by the Lessee hereinbefore contained (other than the
    covenant to pay rent) shall not be performed or observed
    then and in any such case the Lessors may by re-entry or
    (at their option) by notice in writing in that behalf given to
    the Lessees determine this demise and thereupon this demise
    shall absolutely determine but without prejudice to any right

    of action or remedy of the Lessors in respect of any breach
    of covenant by the Lessees."

    In breach of covenant the appellant embarked on alterations
    to the demised premises without the consent of the trustees.
    Section 146(1) of the Law of Property Act 1925 provides that:

    "(1) A right of re-entry or forfeiture under any proviso or
    stipulation in a lease for a breach of any covenant or
    condition in the lease shall not be enforceable, by action or
    otherwise, unless and until the lessor serves on the lessee a
    notice:

    1. specifying the particular breach complained of; and

    2. if the breach is capable of remedy, requiring the
      lessee to remedy the breach;

    (c) in any case, requiring the lessee to make
    compensation in money for the breach;

    and the lessee fails, within a reasonable time thereafter, to
    remedy the breach, if it is capable of remedy, and to make
    reasonable compensation in money, to the satisfaction of the
    lessor, for the breach."

    The trustees served on the appellant a notice dated 4 July
    1989 complying with section 146(1) but the appellant did not
    remedy its breach of covenant within a reasonable time.

    Section 146(2) of the Law of Property Act 1925 provides
    that:

    "(2) Where a lessor is proceeding, by action or otherwise, to
    enforce such a right of re-entry or forfeiture, the lessee
    may, in the lessor's action, if any, or in any action brought
    by himself, apply to the court for relief; and the court may
    grant or refuse relief, as the court, having regard to the
    proceedings and conduct of the parties under the foregoing
    provisions of this section, and to all the other
    circumstances, thinks fit; and in case of relief may grant it
    on such terms, if any, as to costs, expenses, damages,
    compensation, penalty, or otherwise, including the granting
    of an injunction to restrain any like breach in the future, as
    the court, in the circumstances of each case, thinks fit."

    On 18 July 1989 at 6 a.m. agents for the trustees peaceably
    re-entered the demised premises which were vacant and changed
    the locks. By 10 a.m. on the same day workmen engaged by the
    appellant had retaken possession of the property, as the trustees
    say, unlawfully.

    By the writ in this action dated 19 July 1989 the trustees
    claim possession, damages for breach of covenant and damages for
    trespass. By their defence and counterclaim the appellant
    counterclaims for relief against forfeiture. By their reply the
    trustees claim that the court has no jurisdiction to grant the
    appellant relief from forfeiture. The trial judge, Mummery J., and
    the Court of Appeal (Sir Nicolas Browne-Wilkinson V.-C., and

    - 2 -

    Parker and Nicholls L.JJ.) considered that they were constrained
    by authority to hold that the court had no jurisdiction to grant the
    appellant relief against forfeiture pursuant to section 146(2)
    because the appellant had not applied to the court for relief prior
    to the re-entry into possession by the trustees on 18 July 1989.
    The appellant now appeals.

    By the common law, when a tenant commits a breach of
    covenant and the lease contains a proviso for forfeiture, the
    landlord at his option may either waive the breach or determine
    the lease. In order to exercise his option to determine the lease
    the landlord must either re-enter the premises in conformity with
    the proviso or must issue and serve a writ claiming possession.
    The bringing of an action to recover possession is equivalent to an
    entry for the forfeiture. Thus in Jones v. Carter (1846) 15 M. &
    W. 718, Parke B. said at p. 726:

    "... the bringing of an ejectment for a forfeiture, and
    serving it on the lessee in possession, must be considered as
    the exercise of the lessor's option to determine the lease;
    and the option must be exercised once for all ... for after
    such an act, by which the lessor treats the lessee as a
    trespasser, the lessee would know that he was no longer to
    consider himself as holding under the lease, and bound to
    perform the covenants contained in it ... ."

    This observation was cited and applied by Lord Denning M.R. in
    Canas Property Co. Ltd. v. K. L. Television Services Ltd. [1970] 2
    Q.B. 433 at 440.

    Before the intervention of Parliament, if a landlord forfeited
    by entering into possession or by issuing and serving a writ for
    possession, equity could relieve the tenant against forfeiture but
    only in cases under the general principles of equity whereby a
    party may be relieved from the consequences of fraud, accident or
    mistake or in cases where the breach of covenant entitling the
    landlord to forfeit was a breach of the covenant for payment of
    rent.

    Mr. Reid, who appeared for the trustees, conceded that
    where equity claimed power to relieve against forfeiture, the
    tenant could apply for relief irrespective of the method by which
    the landlord had exercised his option to determine the lease.
    Relief could be granted whether the landlord had forfeited by
    entering into possession or had forfeited by issuing and serving a
    writ claiming possession.

    In 1881 Parliament interfered to supplement equity and to
    enable any tenant to be relieved from forfeiture. The need for
    such intervention was and is manifest because otherwise a tenant
    who had paid a large premium for a 999 year lease at a low rent
    could lose his asset by a breach of covenant which was remediable
    or which caused the landlord no damage. The forfeiture of any
    lease, however short, may unjustly enrich the landlord at the
    expense of the tenant. In creating a power to relieve against
    forfeiture for breach of covenant Parliament protected the landlord
    by conferring on the court a wide discretion to grant relief on
    terms or to refuse relief altogether. In practice this discretion is
    exercised with the object of ensuring that the landlord is not
    substantially prejudiced or damaged by the revival of the lease.

    - 3 -

    Section 14(1) and 14(2) of the Conveyancing and Law of
    Property Act 1881 were provisions which conferred on the court
    power to relieve against forfeiture and those provisions were
    reproduced in section 146(1) and 146(2) of the Law of Property
    Act 1925 in identical terms. In referring to a section 146 notice I
    shall therefore mean and include a notice served under section
    14(1) of the Act of 1881 and in referring to section 146(1) and
    146(2) I shall mean and include section 14(1) and 14(2) of the Act
    of 1881 where appropriate.

    Section 146(1) prevents the landlord from enforcing a right
    of re-entry or forfeiture by action or otherwise so that the
    landlord cannot determine the lease by issuing and serving a writ
    or by re-entering the premises until the tenant has failed within a
    reasonable time to remedy the breach and make reasonable
    compensation. Section 146(2) enables the tenant to apply to the
    court for relief where the landlord "is proceeding, by action or
    otherwise" to enforce his right of re-entry or forfeiture. If the
    landlord "is proceeding" to determine the lease by issuing and
    serving a writ, the tenant may apply for relief after the writ has
    been served. If the landlord "is proceeding" to determine the
    lease by re-entering into possession, the tenant may apply for
    relief after the landlord has re-entered.

    Mr. Reid submitted and referred to authority for the
    proposition that on the true construction of section 146(2) a tenant
    cannot apply for relief against forfeiture after the landlord has re-
    entered without obtaining a court order. Thereafter the landlord
    is no longer "proceeding" to enforce his rights; he has succeeded in
    enforcing them. The proposition is in my opinion historically
    unsound because the effect of issuing and serving a writ is
    precisely the same as the effect of re-entry; in each case the
    lease is determined. The landlord is entitled to remain in
    possession if he has re-entered and he is entitled to possession if
    he has issued and served a writ because the lease no longer exists.
    In each case the tenant seeks relief because the lease has been
    forfeited. The proposition is also inconsistent with the language of
    section 146(2). The tenant may apply for relief where the landlord
    is "proceeding, by action or otherwise" to enforce his rights. The
    tenant may apply for relief where the landlord is "proceeding" by
    action and also where the landlord is proceeding "otherwise" than
    by action. This can only mean that the tenant may apply for
    relief where the landlord is proceeding to forfeit by re-entry after
    the expiry of a section 146 notice. If re-entry bars relief, the
    right of the tenant to apply for relief where the landlord is
    proceeding otherwise than by action is substantially inoperative and
    the words "or otherwise" in section 146(2) have no application. In
    my opinion those words must have been included because
    Parliament intended that a tenant should be able to obtain relief
    against a landlord whether the landlord has asserted his rights by a
    writ or by re-entering. It is said that a tenant served with a
    section 146 notice could during and after the expiration of the
    notice apply for relief under section 146(2) but if he fails to do so
    he is at the mercy of the landlord who decides to re-enter and
    whose rights are therefore, it is said, quite unaffected by the
    provisions of section 146(2) designed to relieve tenants from the
    consequences of breach of covenant. In my opinion the ambiguous
    words "is proceeding" can mean "proceeds" and should not be

    - 4 -

    construed so as to produce the result that a tenant served with a
    section 146 notice can only ensure that he will be able to apply
    for relief if he does so before he knows whether or not the
    landlord intends to proceed at all or whether, if the landlord
    decides to proceed, he will issue and serve a writ or will attempt
    to re-enter.

    When a tenant receives a section 146 notice he will not
    know whether the landlord can be persuaded that there is no
    breach or persuaded to accept in due course that any breach has
    been remedied and that he has been offered adequate and
    satisfactory compensation or whether the landlord will seek to
    determine the lease by issuing and serving a writ or will seek to
    determine the lease by re-entering the premises. The tenant will
    not wish to institute proceedings seeking relief from forfeiture if
    those proceedings will be aggressive and hostile and may be
    premature and unnecessary. Parliament cannot have intended that
    if the landlord employs the civilised method of determining the
    lease by issuing and serving a writ, then the tenant will be
    entitled to apply for relief, but if the landlord employs the dubious
    and dangerous method of determining the lease by re-entering the
    premises, then the tenant will be debarred from applying for
    relief.

    Mr. Reid concedes that re-entry can only avail the landlord
    if the entry is lawful. Re-entry is unlawful where the premises
    are occupied by the tenant but not unlawful where the premises
    are occupied by the tenant's goods. If the argument of the
    trustees is correct, section 146 provides a method by which a
    landlord can sneak up on a shop at night, break into the shop, and
    install new locks so that the tenant loses his lease and can only
    press his nose against the shop window being unable to obtain the
    assistance of the court because he has become a trespasser
    entitled to no rights and to no relief. The farce in the present
    case when the landlord occupied the premises for four hours should
    not be allowed to defeat the statutory rights of the tenant.

    The right conferred by section 146(2) on a tenant to apply
    for relief against forfeiture may without violence to the language,
    be construed as a right to apply "where a lessor proceeds, by
    action or otherwise" to enforce a right of re-entry. So construed,
    section 146(2) enables the tenant to apply for relief whenever and
    however the landlord claims that the lease has been determined
    for breach of covenant. I have no doubt that this was the object
    and intention and is the effect of section 146.

    In Quilter v. Mapleson (1882) 9 QBD 672 a landlord
    forfeited a lease before the Act of 1881 came into force by
    issuing and serving a writ for possession. He recovered judgment,
    the tenant appealed and the Act of 1881 came into force before
    the appeal was heard. The Court of Appeal held that the Act was
    retrospective and granted relief to the tenant. Lindley L.J. at p.
    676 decided that section 14(2) was applicable:

    "The action was brought by the landlord on the ground of
    breaches committed before the Act, and he obtained
    judgment before the Act came into operation, but execution
    was stayed, so that he has never obtained possession. The
    original action then is not yet at an end ... so long as the

    - 5 -

    tenant has not been turned out of possession he is within
    the terms of the enactment, for the lessor is "proceeding to
    enforce" his right of re-entry. The enactment then being in
    terms retrospective must be construed according to its

    terms as being retrospective."

    The judgments of Sir George Jessel M.R. and Bowen L.J.
    were to the like effect and it is now settled law that where a
    landlord forfeits a lease by issuing and serving a writ for
    possession the tenant may apply for relief before but not after the
    landlord has recovered judgment and re-entered. But although the
    court limited the time during which a tenant could apply for relief
    against forfeiture constituted by the issue and service of the writ,
    the court had no power and in my opinion did not intend to
    deprive a tenant of any right to apply for relief after a forfeiture
    constituted by re-entry without judgment. Quilter v. Mapleson is
    authority for a case where the landlord forfeits by issue and
    service of a writ but is not authority for a case where the
    landlord forfeits by re-entry.

    In Rogers v. Rice [1892] 2 Ch 170 a landlord forfeited by
    the issue and service of a writ, recovered judgment and re-entered
    pursuant to the writ of possession then issued and was held to be
    no longer "proceeding by action" within section 164(2). The tenant
    sought and was refused leave to set aside the verdict and the
    judgment. The tenant later issued an originating summons seeking
    relief from forfeiture under section 146(2). Lord Coleridge at pp.
    171-172 said that a section 146 notice had been given and ignored,
    and continued:

    "The action proceeded to judgment, the judgment was
    executed, so far as possession was concerned, and at the
    time when the present proceeding was commenced the lessor
    was in possession. The action then, so far as related to
    enforcing the right of re-entry, was at end, and it cannot
    be said that the landlord was "proceeding" to enforce his
    right of re-entry. The case is clear on the terms of the
    Act, but I cannot omit to notice that the same view was
    taken by the judges of the Court of Appeal in Quilter v.
    Mapleson
    9 Q.B.D. 672, 677, where all three judges gave
    their opinion to this effect, though that was not the point
    on which their decision turned."

    The decision can be supported on the grounds that no court could
    properly exercise its discretion to relieve against forfeiture after
    the landlord had issued and served a writ, recovered judgment in
    the action and entered into possession pursuant to that judgment.
    The decision can also be supported on the grounds set out in the
    speech of my noble and learned friend Lord Oliver of Aylmerton.
    But the court had no power and in my opinion did not intend to
    deprive a tenant of any right to apply for relief after a forfeiture
    constituted by re-entry without judgment.

    In Pakwood Transport Ltd. v. 15 Beauchamp Place Ltd.
    (1977) 36 P. & C.R. 112 the Court of Appeal rejected an argument
    by a landlord who had served a section 146 notice that the tenant
    could not apply for relief from forfeiture until proceedings for
    forfeiture had been instituted by the landlord. All three Lords
    Justices derived from the cases of Quilter v. Mapleson (1882) 9

    - 6 -

    Q.B.D. 672 and Rogers v. Rice [1892] 2 Ch 170 the proposition
    that in the words of Orr L.J. at p. 117:'

    " ... a lessee could not apply 'for relief against re-entry or
    forfeiture after the landlord had obtained a judgment of the
    court entitling him to re-enter on a forfeiture; and it is
    claimed, and in my judgment rightly claimed, that the same
    principle must apply where the landlord has peacefully
    recovered possession. In other words, once he has either
    recovered possession or obtained an order for possession he
    can no longer be said to be 'proceeding by action or
    otherwise to enforce a right of re-entry or forfeiture'."

    My Lords, I accept that it is now settled law that a tenant
    cannot apply for relief after the landlord has recovered judgment
    for possession and has re-entered in reliance on that judgment.
    But I do not accept that any court has deprived or is entitled to
    deprive a tenant of any right to apply for relief if the landlord
    proceeds to forfeit otherwise than by an action instituted for that
    purpose.

    Orr L.J. continued:

    "On this basis the argument for the lessor appears to me to
    involve an absurdity, in that if the landlord has done no
    more than serve a section 146 notice, it is too early for the
    tenant to apply for relief; but if the landlord's next step is
    peaceably to recover possession, it is then too late for the
    tenant to apply. For my part, I am not prepared to accept
    an argument which leads to this absurdity, and I have no
    hesitation in holding that a landlord who serves a section
    146 notice is at that stage "proceeding to enforce a right of
    re-entry or forfeiture" in that the service of such a notice
    is a step which the law requires him to take in order to re-
    enter or forfeit."

    My Lords, I accept the conclusion that a landlord who
    serves a notice under section 146(1) can be said, for the purposes
    of section 146(2) to be proceeding to enforce his rights under the
    lease. A tenant authorised by section 146(2) to apply to the court
    for relief against forfeiture if he fails to comply with a section
    146 notice may make that application after service of the notice
    for the purpose of elucidating the issues raised by the notice,
    ascertaining the intentions of the landlord, and setting in train
    the machinery by which the dispute between the landlord and the
    tenant can be determined by negotiation or by the court. But the
    fact that the tenant may apply to the court for relief after
    service of the section 146 notice does not mean that if he does
    not do so he loses the right conferred on him by section 146(2) to
    apply for relief if and when the landlord proceeds, not by action
    but "otherwise" by exercising a right of re-entry. No absurdity
    follows from a construction which allows the tenant to apply for
    relief before and after a landlord re-enters without first obtaining
    a court order.

    In the words of Laskin J.A. in Re Rexdale Investments Ltd.
    and Gibson
    [1967] 1 O. R. 251 at 259 dealing with provisions in
    the Ontario legislation indistinguishable from section 146(2), the
    argument that a tenant cannot apply for relief after a landlord has
    determined the lease by re-entry:

    - 7 -

    "depends on a detached grammatical reading of the phrase
    'is proceeding' . . . which makes nonsense of the phrase ‘or
    otherwise (as covering physical re-entry)'' by making
    ineffective, in any practical sense, the provision for relief
    from forfeiture applicable to such re-entry. We do not
    construe statutes, especially when they are remedial ... to
    the point of self-contradiction. In my opinion, the phrase
    'is proceeding' is more properly read in the sense of 'has
    proceeded', and I am fortified in this view by the fact that
    the exercise of the power of termination is manifested
    effectively by the mere taking of proceedings as well as by
    physical re-entry. What [section 146(2)] means, therefore, is
    that when the landlord has terminated the lease by action
    or by actual re-entry without action, the tenant may seek
    relief from forfeiture in the pending action, if any, or, if
    none, by proceedings initiated by him. In the latter case,
    one would expect prompt reaction by the tenant . . . The
    English cases relied on ... [Rogers v. Rice [1892] 2 Ch.
    170; Locke v. Pearce [1893] 2 Ch 271 and Quilter v.
    Mapleson
    (1882) 9 QBD 672] are distinguishable, if need be
    ... by the fact . . . that they relate to re-entry in
    pursuance of a judgment for possession."

    These observations by a distinguished Canadian judge who
    subsequently became Chief Justice of the Supreme Court of
    Canada, support the views which I have formed concerning the
    construction of section 146 and the ambit and effect of the earlier
    decisions.

    Mr. Reid argued that your Lordships should not interfere
    with 19th century decisions and for my part I do not intend to do
    so on this occasion or to question the result of the decision of the
    Court of Appeal in Pakwood Transport Ltd. v. 15 Beauchamp Place
    Ltd.
    (1977) 36 P. & C. R. 112. The authorities were never
    directed to the point now in issue and certainly never decided that
    issue.

    It was suggested that Parliament in 1925 accepted the views
    expressed in the 19th century cases. I agree that Parliament
    accepted that a tenant cannot apply for relief under section 146(2)
    after the landlord has forfeited the lease by issuing and serving a
    writ for possession and in his action has recovered and enforced
    judgment. The 19th century cases were not directed to the
    problem which has now emerged.

    We were informed that the researches of counsel had not
    disclosed any reported case in which a landlord has forfeited by
    re-entry and then successfully denied the right of the tenant to
    apply for relief.

    The trustees or their advisers, perhaps incensed by the
    activities of the appellant in the present case, conceived and
    carried out a dawn raid which fortunately did not result in
    bloodshed. Since the decision of the Court of Appeal in the
    instant case there has been a proliferation of section 146 notices
    followed by pressure on tenants to surrender on terms favourable
    to the landlord. If this appeal were not allowed, the only safe
    advice for a tenant would be to issue proceedings for relief

    - 8 -

    against forfeiture as soon as a section 146 notice is received at a
    time when the tenant cannot know' whether relief will be
    necessary. A tenant ignorant of the development in the law
    pioneered by the trustees in the present case will be at the mercy
    of an aggressive landlord. The conclusions which I have reached
    will not entail these consequences and will not again involve
    Parliament in correcting judicial constructions of statute by further
    legislation.

    The results of section 146 and the authorities are as
    follows. A tenant may apply for appropriate declarations and for
    relief from forfeiture under section 146(2) after the issue of a
    section 146 notice but he is not prejudiced if he does not do so.
    A tenant cannot apply for relief after a landlord has forfeited a
    lease by issuing and serving a writ, has recovered judgment and
    has entered into possession pursuant to that judgment. If the
    judgment is set aside or successfully appealed the tenant will be
    able to apply for relief in the landlord's action but the court in
    deciding whether to grant relief will take into account any
    consequences of the original order and repossession and the delay
    of the tenant. A tenant may apply for relief after a landlord has
    forfeited by re-entry without first obtaining a court order for that
    purpose but the court in deciding whether to grant relief will take
    into account all the circumstances including delay on the part of
    the tenant. Any past judicial observations which might suggest
    that a tenant is debarred from applying for relief after the
    landlord has re-entered without first obtaining a court order for
    that purpose are not to be so construed.

    I would therefore allow the appeal and set aside the orders
    of the trial judge and the Court of Appeal. The trustees must
    pay the costs of the appellant in this House. There will be no
    order for costs in the Court of Appeal because a number of issues
    were decided against the appellant and there is no appeal from
    any decision of the Court of Appeal other than the decision on the
    right of the appellant to appeal for relief against forfeiture. The
    application of the appellant for relief against forfeiture will be
    remitted to the High Court. The judge would have been prepared
    to grant relief against foreiture except for the fact that he
    considered that he had no jurisdiction to do so. On the renewal
    of the appellant's application for relief the parties will be at
    liberty to file and adduce further evidence in order that the judge
    may consider the propriety of granting relief and the terms of
    relief on the basis of the facts as at the date of the hearing of
    the renewed application for relief. The costs of the original
    hearing of all the issues by the trial judge and the costs of the
    renewed application before the trial judge will be in the discretion
    of the judge who hears the renewed application.

    When the judge refused relief to the appellant on the
    grounds of jurisdiction he made an order for costs against the
    appellant on an indemnity basis. In my opinion such an order
    should not be made. There is no reason why an unsuccessful
    applicant for relief should be in any worse case than any other
    unsuccessful litigant. Moreover, if a landlord is entitled to costs
    on an indemnity basis whether relief is obtained or not, there will
    be no inducement to the landlord to compromise his dispute with
    the tenant.

    - 9 -

    For my part I consider that the practice of ordering
    indemnity costs as a condition of granting relief is ripe for
    reconsideration. Indemnity costs to a landlord encourage lawyers
    and surveyors and other advisers to charge large fees. I make no
    criticism of the advisers of the trustees because I do not know
    what fees and charges they intend. But it seems to me that in
    principle a tenant should not be at the mercy of an order made by
    a judge who has no means of knowing the effect of the order and
    imposes no impartial criterion by which costs can be taxed down.

    LORD OLIVER OF AYLMERTON

    My Lords,

    I have had the advantage of reading in draft the speech
    delivered by my noble and learned friend, Lord Templeman, and I
    agree that the appeal should be allowed for the reasons which he
    has given. I add a few words of my own only in deference to the
    very clear and helpful argument presented to your Lordships by
    Mr. Reid Q.C. on behalf of the respondent, which, at one point
    during the hearing, appeared to me to present an insurmountable
    obstacle in the appellant's path.

    Broadly the argument was to this effect. Rogers v. Rice
    [1892] 2 Ch 170 established that once possession had actually been
    resumed by the landlord under the forfeiture clause in a lease it
    was too late for a successful application for relief to be mounted
    under section 146(2) of the Law of Property Act 1925 (then
    section 14(2) of the Conveyancing Act 1881) since the landlord was
    no longer "proceeding" to enforce a forfeiture but had completed
    the process. That construction of the section, it was urged, had
    now stood unchallenged for the past 100 years and could be
    departed from only by overruling Rogers v. Rice. Parliament had,
    in 1925, re-enacted the section in precisely the same terms and, it
    must be assumed, had done so in the knowledge of the
    construction accorded to the words "is proceeding" by a strong
    Court of Appeal consisting of Lord Coleridge C.J., Lindley and
    Kay L.JJ. following obiter dicta to the same effect from Jessel
    M.R., Lindley and Bowen L.JJ. in Quilter v. Mapleson (1882) 9
    Q.B.D. 672. Whatever might have been the position in 1925, when
    the legislature came to reconsider the legislation, it was now too
    late for your Lordships to adopt a construction which differed
    from what must have been intended by Parliament when the self-
    same words were re-enacted. In so submitting, Mr. Reid was
    echoing what was said by Sir Wilfrid Greene M.R. in Egerton v.
    Jones
    [1939] 2 K.B. 702 at p. 707.

    I confess to having been very much troubled by this
    submission, to which, at the time, I could see no logical answer
    but which, as it seemed to me, led to a result not only manifestly
    inconvenient but also opposed to common sense. On further
    consideration, however, I think that the fallacy of the argument
    lies in the way in which the essential premise is expressed.
    Neither Rogers v. Rice nor Quilter v. Mapleson did, in fact,
    establish that the right to apply for relief under section 146(2) was
    ousted simply by a landlord's resumption of possession, however

    - 10 -

    that occurred. The expressions used by the judges in both cases
    were directed only to the position of a landlord who was the
    plaintiff in legal proceedings against his tenant for possession of
    the premises comprised in the lease on the ground of forfeiture.
    In Quilter v. Mapleson the point did not arise directly, or, indeed,
    at all, since notice of appeal by the tenant was given before
    judgment against him was executed and a stay had been granted
    pending appeal. Bowen L.J.'s statement (quoted by Lord Coleridge
    C.J. in Rogers v. Rice) that "the tenant may apply for relief until
    the landlord has re-entered" was made in the context of pending
    proceedings for possession. It was, in fact, not strictly accurate
    since the re-entry dates technically from the service of the writ;
    but it was in any event clearly directed to the enforcement of a
    final and unappealed judgment in the proceedings.

    In Rogers v. Rice, similarly, the very brief judgments were
    directed entirely to a situation in which the landlord had obtained
    a judgment for possession which had been executed and against
    which there was no appeal, either pending or possible. It was
    pointed out by Lord Coleridge C.J. that at the time when the
    tenant's originating summons for relief was taken out "the action .
    . . so far as related to enforcing the right of re-entry, was at an
    end." It could not therefore be said that the landlord was
    "proceeding" to force his right of re-entry. Now although it is
    true that Lord Coleridge also mentioned that the landlord was in
    possession, the salient point, as I read the judgment, was not the
    mere fact that the landlord had resumed possession but the fact
    that possession was held under an unassailable judgment in
    proceedings which had been litigated to the end. It is clear, for
    instance, that where a judgment for possession has been wrongfully
    obtained because, for instance, no notice was served under section
    146(1), it may, by appropriate procedure, be set aside so as to
    enable one deriving title under the lessee to defend (see Jacques
    v. Harrison
    (1884) 12 Q.B.D. 165). What defeats the claim to
    relief is not the fact of possession simpliciter but possession under
    a final and unassailable judgment. It is, in fact, worth noting that
    in Rogers v. Rice there had been, after execution of the writ of
    possession, an application to set the judgment aside. That had
    failed and it was therefore unnecessary for the court to advert to
    it in its judgment; but had it succeeded, I doubt whether the
    result would have been the same, for even though the landlord was
    in actual possession, his title to hold the property would have
    rested upon the forfeiture of the lease and not upon the judgment
    in the proceedings. He would, therefore, still be "proceeding" to
    enforce the forfeiture in seeking to restore the judgment.

    As my noble and learned friend Lord Templeman has said,
    the court was simply not directing its mind to what the position
    might be in a case where the landlord sought to enforce the right
    of re-entry, not by proceedings for possession, but by physical
    entry upon the demised premises; and I do not think that it
    necessarily follows at all, as the Court of Appeal seems to have
    assumed in Pakwood Transport Ltd. v. 15 Beauchamp Place Ltd.
    (1977) 36 P. & C.R. 112, that because legal proceedings resulting
    in a final, unappealed and fully executed judgment are then at an
    end so that the landlord is no longer enforcing his right of re-
    entry, a landlord who has entered upon the demised premises or,
    possibly, even upon a portion of the demised premises "in the
    name of the whole" (to use the time-honoured formula), is not,

    - 11 -

    once he has lawfully set foot on the premises, any longer
    "proceeding ... to enforce" his right of re-entry. I would, for
    my part, adopt the analysis suggested by Sir Nicolas Browne-
    Wilkinson V.-C. in the Court of Appeal in the instant case. A
    landlord who re-enters peaceably holds possession of the demised
    premises as against the tenant and his privies by virtue of the
    right accorded to him by the proviso for re-entry contained in the
    lease. If the lease is set up against him, he can justify keeping
    the tenant out only by pointing to the forfeiture clause and
    pleading his entry under it; and so long as that remains the
    position he is "proceeding ... to enforce" it. Obviously there is
    going to come a time when a tenant who delays applying for relief
    will find himself debarred from obtaining it, but theoretically the
    landlord who has elected to enforce his forfeiture in this way
    remains vulnerable to an application unless and until he obtains a
    final judgment for possession.

    That position is to be contrasted with that of the landlord
    who adopts the more conventional course of forfeiting by means of
    an action for possession. Once he has obtained judgment and has
    been put into possession, any attempt by the tenant to raise the
    lease against him is met by a simple plea of the judgment. The
    landlord is no longer proceeding to enforce a right of re-entry, for
    his possession rests now, not upon the exercise of a right under
    the lease, but upon a judgment of the court which, as between the
    parties and their privies, constitutes res judicata. Proceedings for
    relief under section 146(2) cannot therefore be effective unless and
    until that position is reversed and the judgment set aside, as it
    might be, for instance in the case of a default judgment or one
    obtained without proper service.

    This seems to me to be an essential distinction and it is
    one which is not touched by and was not adverted to in Rogers v.
    Rice. Accepting, therefore, that Parliament, in re-enacting section
    14(2) of the Act of 1881 as section 146(2) of the Act of 1925, was
    endorsing and perpetuating the Court of Appeal's construction that
    a landlord holding by virtue of an executed final judgment was no
    longer "proceeding to enforce" his right of re-entry but was merely
    relying upon his judgment in proceedings which had conclusively
    terminated, there is nothing in this construction which governs the
    quite different case of the landlord who elects to exercise his
    right "otherwise" by physical entry -upon the property.

    It was, of course, the ratio of the decision of the Court of
    Appeal in the Pakwood Transport case, that a peaceable entry by
    a landlord was to be equiparated with an executed judgment, the
    court's conclusion in that case that the proceedings were not
    premature being based on what they saw as the manifest absurdity
    of the right to relief being destroyed eo instante with the
    forfeiture from which it arises. It does not, however, follow from
    the rejection of that ratio that the conclusion itself was wrong.
    "Is proceeding" means, I think, no more than "is taking the
    necessary steps" or "proceeds" which would include the service of
    the necessary preliminary notice under subsection (1). Where a
    landlord has given notice of his intention to forfeit, on, for
    instance, the liquidation of a company tenant, there is obvious
    good sense in enabling the liquidator to clarify the position without
    waiting for the landlord's action so that the lease may be sold as
    soon as possible.

    - 12 -

    For these reasons and for those more fully expressed in the
    speech of my noble and learned friend, Lord Templeman, I agree
    that the appeal should be allowed and concur in the order for
    costs which he proposes.

    LORD GOFF OF CHIEVELEY

    My Lords,

    I have had the advantage of reading the speech of my noble
    and learned friend, Lord Templeman and, for the reasons which he
    gives, I too would allow this appeal.

    LORD JAUNCEY OF TULLICHETTLE

    My Lords,

    I have had the advantage of reading the speech of my noble
    and learned friend, Lord Templeman and, for the reasons which he
    gives, I, too, would allow this appeal.

    - 13 -



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