Courtney Lodge Management Ltd. v Blake

THE VICE-CHANCELLOR: This is an appeal of the first defendant Mr Blake brought with the permission of Lord Justice Jacob from the order of Mr Recorder Hooper QC, sitting in Bow County Court, and made on 26 February 2004. By that order the Recorder ordered that the lease of Flat 322 Courtney Lodge, then vested in Mr Blake, be forfeit, but, secondly, he ordered that Mr Blake should have relief from such forfeiture on condition that he pay the costs in the action of both the claimant, Courtney Lodge Management Ltd, and the second defendant, Atlantic Lodge (London) Ltd, within 28 days of their detailed assessment.

The underlying facts start with a lease dated 7 May 1965 ("the old lease") of Flat 322 Courtney Lodge made between Matrix Property Company Ltd and Mr Leonard Antin whereby the flat was demised to Mr Antin for a term of 99 years from 26 December 1964. The old lease contained the following relevant provisions. By Clause 1 (ii) the expression "the Lessee" was defined to mean -

On 4 November 1997 was granted the new lease of Flat 322 made by Courtney Lodge Management Ltd, the claimant, by then the assignee of the reversion from Matrix Property Company Ltd, and Mr and Mrs Sluys, then the assignees of the residue of the term 99 years from Mr Antin. The new lease was made in consideration of the surrender of the old one and was for a term of 999 years from 10 November 1997. The new lease was on the same terms and conditions as the 1965 lease and including both the tenant's covenants, to which I have referred, and the right of re-entry.

Mr Blake was registered as the proprietor of the new lease on 11 April 2003 as the assignee of Mr and Mrs Sluys.

By an undated underlease which was clearly intended to take effect on and from 20 June 2003, Mr Blake, of the one part, granted to Atlantic Lodge (London) Ltd, the second defendant of the other part, a term of three years from the date of the commencement of the lease in respect of Flat 322 Courtney Lodge. The lease stated that the purpose was to enable Atlantic to use the property for temporary housing accommodation for others than itself. It contains no covenant corresponding to Clause 4 (ix) of the old lease; nor does it contain the usual covenant to perform and observe the tenant's covenants in the headlease. But by Clause 2.4 either party may terminate it on three months' written notice.

On the same day, that is 20 June 2003, there was a sub-underlease of Flat 322 granted by the second defendant, Atlantic Lodge. The name of Mr Blake inserted as lessor was, we are told, a mistake; so the grant was by Atlantic Lodge to the London Borough of Redbridge for a term of three years, less one day, commencing on 20 June 2003 for use by the London borough as temporary housing accommodation in accordance with Part VII of the Housing Act 1996. Once again, there is no covenant in this lease corresponding to Clause 4 (ix) of the old lease; nor is there a covenant to perform and observe the tenant's covenants contained in the old lease or the new lease or the underlease, and the proviso for re-entry is only exercisable in the event of a breach of covenant by the tenant.

Three days later on 23 June 2003 the London Borough of Redbridge granted a non-secure tenancy to Anna Makengo under Section 207 of the Housing Act 1996. By Clause 1.13 the tenant agreed not to cause a nuisance, annoyance or disturbance to the neighbours or others living in the locality. Almost immediately that provision of the non-secure tenancy agreement to Mrs Makengo was broken and Courtney Lodge gave Mr Blake details of the nuisances and disturbances emanating from Flat 322.

On 15 July 2003 Mr Alexandrou, a director of Atlantic Lodge, sent an e-mail to the relevant official at the London Borough of Redbridge drawing the nuisance to the attention of the London borough and requiring urgent action. On 28 July Courtney Lodge, the claimant, complained to Mr Blake about the behaviour of the occupants of the flat. They referred to Clause 4 (ix) of the old lease and asked what he intended to do to abate the nuisance. On 8 August Mr Blake was warned again by Courtney Lodge that he would be sued if he did not take steps to abate the nuisance occurring at Flat 322. On 12 August Courtney Lodge wrote again to Mr Blake warning of forfeiture if no abatement was procured. Eventually on 18 August Mr Blake's solicitors responded to the effect that Mr Blake was taking, or had taken, appropriate action to obtain possession from the occupants. Two days later, on 20 August, the solicitors for Courtney Lodge asked for details of what action had been taken by Mr Blake. This prompted a reply on 26 August from Mr Blake's solicitors to the effect that they were dealing with Atlantic Lodge with respect to obtaining possession of the flat. Two days later, on 28 August, solicitors for Courtney Lodge asked for details of the action against Atlantic Lodge which it was suggested that Mr Blake had taken. There was no reply to that letter before, on 2 September 2003, Courtney Lodge served a Section 146 notice on Mr Blake, Atlantic Lodge and Mrs Makengo.

The notice sets out the terms of Clause 4 (ix) of the old lease as incorporated in the new lease and, omitting immaterial passages, provides as follows:

On 8 September Mr Blake instructed Atlantic Lodge to terminate Mrs Makengo's tenancy agreement. The letter addressed to Atlantic Lodge (London) Ltd from Mr Blake states:

On 18 September Atlantic Lodge served notice to quit on Mrs Makengo. On 23 September Mr Blake wrote again to Courtney Lodge and said this:

These proceedings were started on 2 October 2003 when Courtney Lodge instituted proceedings in Ilford County Court against Mr Blake as the first defendant, Atlantic Lodge as the second defendant and a variety of individuals headed by Mrs Makengo as the third defendant seeking forfeiture of the lease and damages. The claim is based on domestic disturbances as particularised in the schedule which is an enlarged version of the schedule attached to the Section 146 notice.

Just over a month later, on 6 November, the London Borough of Redbridge instituted proceedings also in the Ilford County Court against Mrs Makengo for an order of possession because of her breaches of Clause 1.13 of the tenancy to her and the nuisance that had been caused to the neighbours. On 13 January 2004 the Ilford County Court made an order for possession in favour of the London Borough of Redbridge on the grounds of nuisance by Mrs Makengo in breach of the covenant in the tenancy to her, she not appearing on that hearing.

The proceedings instituted by Courtney Lodge came before the Recorder on 26 February 2004. He heard oral evidence from four occupants of other flats in the building, from Mr Blake and Mr Alexandrou, the managing director of Atlantic. He found that the tenants and occupants of the other flats were mostly elderly people. He found as a fact that there was a more or less continual state of nuisance to the other occupants within the meaning of Clause 4 (ix) of the old lease incorporated into the new lease, caused by the occupiers of Flat 322 from the time that they moved in, on 23 June 2003, to the dates of the respective witness statements of the four occupants, the earliest of which was made on 20 October 2003. He held that Mr Blake was in breach of Clause 4 (ix) because his inaction, when he had the power to prevent the activities of the occupiers of Flat 322, amounted to suffering the nuisance. The Recorder considered that the terms of the schedule in the Section 146 notice were adequate in particularising the breach requiring to be remedied. He went on to find that Mr Blake should be afforded relief from forfeiture on the grounds that he personally was a suitable tenant, but that one of the conditions of such relief would be that he should pay the costs of the action of the claimants.

The Recorder heard further argument as to what he should do in relation to the costs of the second defendant, Atlantic Lodge. He held it was appropriate for the proceedings to be pursued by Courtney Lodge against Atlantic Lodge and that the costs of Atlantic Lodge should also be paid by Mr Blake as a condition of relief and forfeiture. This unhappy saga eventually ended on 10 March 2004 when Mrs Makengo was eventually evicted from Flat 322.

The case for Mr Blake as a whole is that the judge was wrong to find that he was in breach of the covenant contained in Clause 4 (ix) of the old lease incorporated in the new lease because he had previously caused Mr Alexandrou to send the e-mail of 15 July requiring urgent action to be taken by the London Borough of Redbridge. He also submitted that the failure to write a letter before 8 September had not been pleaded as a particular of sufferance and might not have had any effect anyway. He relied on the fact that he had no power to prevent the misbehaviour by the occupants of the flat as there was no privity of contract or estate between him and them. It was contended that the notice under Section 146 was inadequate because it gave no particulars of what was alleged to cause the sufferance and that the breach was remediable so that Mr Blake was entitled to a reasonable time within which to remedy the breach. It was submitted that the issue of proceedings on 3 October 2003 was premature because Mr Blake was entitled to a reasonable time within which to remedy the breach and had in fact done so by his letter of 8 September 2003 which triggered the notice to quit served on 18 September which, in turn, led to the claim for possession and the order made for possession on 13 January 2004.

It was contended on his behalf finally that if all those points were bad there was still no reason at all why he, Mr Blake, should pay the costs of Atlantic Lodge against whom Courtney Lodge never had any cause of action.

Counsel for Atlantic Lodge was concerned to point out that there was no privity of contract or estate between Courtney Lodge and Atlantic Lodge. If the latter did not get its costs from Mr Blake because the Court of Appeal interfered with the Recorder's order, then it should get them both here and below from Courtney Lodge. He emphasised that he neither appealed nor suggested that the judgment should be affirmed on other grounds and was present only to maintain the favourable costs order received from the Recorder.

The case for Courtney Lodge as the principal respondent followed that made against him by counsel for Mr Blake. He contended that Mr Blake was indeed in breach of covenant because the inactivity of Mr Blake from 23 June to 2 September was always in issue, so that the pleading point relating to the letter of 2 September 2003 was a bad one. He pointed out that the judge did not find that the e-mail of 15 July was sent by Mr Alexandrou on the instructions of Mr Blake. Any inference to that effect would be contrary to an express finding in paragraph 46 of the Recorder's judgment. He submitted that sufferance does not require an absolute power to prevent, which he accepted Mr Blake did not have, but submitted that the non-exercise of the power to influence is enough whether or not, if exercised, it would have stopped the nuisance. He submitted that a sufficient power to influence was shown on Mr Blake's own case by the e-mail of 15 July: by Mr Blake's claim in the letter of 13 August that he had taken appropriate steps to abate the nuisance; the short period which elapsed between Mr Blake's letter of 8 September and service of the notice to quit by the London Borough of Redbridge; and Mr Blake's response to the 18 September notice to quit, sending a copy of it to Courtney Lodge. Further he submitted that the Section 146 notice was sufficiently particularised in that a breach by sufferance was clearly asserted, it not being for the landlord to specify how it may be remedied. For that proposition he relied on Fox v Jolly [1916] 1 AC 1. He submitted that the failure to remedy was found as a fact by the judge and that there was no appeal against that finding. He submitted that Atlantic Lodge was a proper party as it had a right to seek relief from forfeiture, if Mr Blake did not, and might have wished to do so.

Further, as he submitted, the costs order was an exercise of the judge's discretion and should not be interfered with.

Those being the arguments, the first issue is whether Mr Blake was in breach of covenant at all. That depends on whether it can be said that he suffered the nuisances found by the Recorder within the meaning of Clause 4 (ix) of the old lease as incorporated in the new lease. It was submitted for Mr Blake by reference to the judgment of Mr Justice Luxmoore in Barton v Reed [1932] 1 CH 362 that a covenantee cannot suffer what he cannot prevent. What Mr Justice Luxmoore said at page 375 was:

For my part, I quite accept that the failure to exercise a legal power to prevent the breach will constitute a breach of a covenant not "to permit or suffer" a particular event or state of fact. But it does not follow that a covenant not to suffer a particular state of affairs can only be broken if there is a legal power to prevent it. In my view that is putting the test higher than the normal meaning of the word "suffer" would connote.

Counsel for Courtney Lodge submits that you may suffer a nuisance even if you have no legal power to prevent it if, having influence - which, if exerted, might lead to a cesser of the nuisance - you fail to exert it at all. For my part, I would accept that submission, at least if, as a matter of fact, exertion of the influence would, on a balance of probability, have brought about an end to the offending state of affairs.

This is the way the case was put before the Recorder. It was submitted to him that the events following the service of the Section 146 notice, namely the letter from Mr Blake dated 8 September, demonstrated that he was able to exert influence on Atlantic Lodge and the London Borough of Redbridge which did lead to the abatement of the nuisance in due course. It was submitted successfully before the Recorder that the failure of Mr Blake to exert such influence in late June or July when he knew of the nuisances committed by the occupants of the flat meant that he suffered those nuisances. I would accept that submission too. In particular, I do not accept that the other matters relied on by Mr Blake negative such a conclusion. There is no evidence that the e-mail from Mr Alexandrou to the London Borough of Redbridge on 15 July was prompted by Mr Blake, and the correspondence emanating from Mr Blake's solicitors in July and August constituted evasive excuses for inaction rather than the exertion of any influence.

There are, it seems to me, other grounds which might justify the same conclusion. First, the reason why Mr Blake did not have the legal power to prevent the nuisance was because he failed to put into the underlease equivalent covenants to those found in the old lease as incorporated in the new lease. It is to my mind arguable that if a tenant thereby puts it out of his power to seek possession or an injunction against his sub-tenant, he cannot thereafter rely on that inability as precluding a sufferance of any subsequent nuisance in relation to his lessor. Second, Clause 2.4 of the underlease did enable Mr Blake to terminate the underlease. Far from exercising it, the letter from his solicitors dated 23 September suggests that he did not have that remedy at all. Neither point was argued in the court below. Indeed, the first was abandoned, and counsel for Courtney Lodge did not feel able to seek leave to take them in this court.

With regard to the pleading point, I would reject it too. The question of sufferance was in issue from the beginning. I do not understand that any such pleading point was taken before the Recorder and there is no suggestion that Mr Blake was in any way taken by surprise.

The second issue is whether the Section 146 notice gave sufficient particulars of the alleged breach. Section 146 (1) (a) of the Law of Property Act 1925 requires a notice "specifying the particular breach complained of ..... " I have read the relevant parts of the notice. In my view it complies with the section. It sets out details of the nuisances complained of and that Mr Blake "suffered" them. It is quite clear what is alleged to constitute the breach. What Mr Blake needed to do to remedy it was a matter for him, not for Courtney Lodge: see Fox v Jolly [1916] 1 AC 1, 11. If the burden is put any higher than that it will require the lessor to give particulars of what, in most cases, he cannot know and will rob such a covenant of most of its value.

The third issue relates to time allowed to Mr Blake to remedy the breach. It might have been contended that the breach was not remediable because of the stigma attached to the premises arising from Mr Blake's failure to stop the nuisances more promptly than was done. It was not so contended before the Recorder, and counsel for Courtney Lodge did not feel able to seek leave to take that point in this court.

Accordingly I must proceed on the footing that the breach by Mr Blake was remediable. On that footing, counsel for Mr Blake submitted that on receipt of the notice, on 2 or possibly 3 September, Mr Blake acted promptly in writing his letter of 8 September and that thereafter there was no undue or unreasonable delay in procuring possession of the flat. In those circumstances, he submits, the institution of proceedings was premature in that Mr Blake was not given the "reasonable time" to which he was entitled under Section 146 (1).

The response of counsel for Courtney Lodge was that the letter of 8 September was adequate to remedy the breach but that the lapse of time between the receipt of the notice dated 2 September and sending the letter of 8 September was, in the light of all that had gone before, excessive. In addition, he submitted that the Recorder had so found as a matter of fact.

I do not accept either of those submissions. The finding of the Recorder was on a different point, but even if he had so found I would have concluded that he was plainly wrong to have done so. 2 September 2003 was a Tuesday. Any lessee receiving a Section 146 notice must be allowed some time to obtain advice if he wishes to do so. The letter was dated the following Monday, 8 September. If the notice was not received until the Wednesday, Mr Blake had at most 4 working days to obtain advice and to act on it. The suggestion that that period was excessive is, in my view, absurd.

I would conclude that Mr Blake was not afforded the time to which he was entitled under Section 146 (1).

For completeness, I would add that counsel for Courtney Lodge did not rely on the letter of 23 September from the solicitors for Mr Blake as justifying the institution of proceedings on 2 October.

For all these reasons I would allow the appeal on the ground that Mr Blake was not afforded the reasonable time to which Section 146 (1) entitled him.

In consequence, I would set aside the order of the Recorder. It follows, if the other members of the court agree, that the points relating to the costs of Atlantic Lodge, on which we heard argument, do not arise. For the moment, at least, I say no more about it.

LORD JUSTICE CHADWICK: I agree that this appeal must be allowed.

The question for the Recorder below was whether, when these proceedings were commenced by the issue of claim for possession on 3 October 2003, the claimant landlord was entitled to forfeit the lease granted on 4 November 1997 under the proviso for re-entry incorporated by paragraphs (b) and (e) in Clause 3 of that lease.

To answer that question it was necessary to ask whether a valid notice had been served under Section 146 of the Law of Property Act 1925; and, if so, whether a reasonable time had elapsed since the service of that notice for the remedy of the breach or breaches specified in that notice, if capable of remedy; and, if so, whether that breach or those breaches had been remedied before the issue of proceedings.

The Vice-Chancellor has explained why a challenge to the Section 146 notice served on 7 September 2003 must fail. I respectfully agree with that conclusion and the reasons which he has given. Like him, I would regard it as arguable - indeed, I would suggest very arguable - that a tenant who, by granting a sub-lease which does not contain a covenant requiring the sub-tenant to observe the covenants in the headlease, chooses to put it out of his power to compel performance by the sub-tenant of the obligations on his own covenants (save by bringing the sub-lease to an end by notice of termination) cannot thereafter rely on his inability to bring a breach of those covenants to a speedy end as an answer to an allegation that he has suffered that breach to continue. But, it is not necessary to decide that question on this appeal, and I do not do so.

I agree, also, that it might have been argued that the breaches of Clause 4 (ix) of the headlease which had occurred before service of the Section 146 notice were not themselves capable of remedy, notwithstanding that the continuing breach of that clause, from and after the service of that notice, would be capable of remedy. But that, too, is a point which we do not need to decide.

This appeal has been argued, as the claimant argued in the court below, on the basis that the breach or breaches complained of were remediable. It is in those circumstances that the relevant question for the judge below was whether the breach had been remedied before the issue of proceedings. It was not suggested - and, in my view, it could not have been suggested - that, if capable of remedy, the period of one month which had elapsed between the service of the Section 146 notice and the issue of proceedings was not a reasonable period for that purpose.

To my mind, it could have been argued with force that, in the light of the letter of 23 September 2003 to which the Vice-Chancellor has referred, that question should have been answered in the negative. That letter asserts in terms that it is not for the appellant to take immediate steps to bring the nuisance to an end. That was the position taken by solicitors acting on the tenant's behalf on 23 September. In those circumstances I find it difficult to see why, when proceedings were issued on 3 October, the tenant should not be said to be continuing in his breach of covenant; that is to say, to be continuing to suffer the nuisance which was taking place on the premises. But that is not how the matter was put before the judge, and counsel for the landlord has not felt able to resist the appeal on that basis.

The appeal must be decided on the basis upon which it was argued in this court. The tenant accepted, through his counsel, that the letter of 8 September 2003 had the effect of bringing the breach to an end; so that, thereafter, no complaint could be made about the continuing breach.

On that basis the issue was presented as a very short one: whether the period between the service of the notice dated 3 September and the writing of the letter of 8 September was a reasonable time within which to take steps to remedy the breach.

As the Vice-Chancellor has pointed out, it is impossible to contend that that was not a reasonable period within which to take the action which was taken. But, as it seems to me, it is immaterial whether the action which was taken was taken within a reasonable period. The relevant factor is that it was taken before the issue of the claim for possession.

For those reasons the appeal must be allowed.

LORD JUSTICE SEDLEY: I agree with both judgments.