Crisp v Eastaugh

The principal issues on this appeal are first, whether the judge was right to refuse relief from forfeiture to the appellant, Mr Eastaugh, in respect of a lease dated 3 March 1972 and originally made between him and the late Mr Harry Alfred Poulton, and secondly, whether the judge was right to dismiss the contention of the current landlord, the respondent, Mr Crisp, that Mr Eastaugh had denied the landlord’s title and that the lease was subject to forfeiture accordingly.

These issues are but some of the many issues decided by Mr John Randall QC, sitting as a Deputy Judge of the Chancery Division, in his careful and lucid judgment covering more than 200 pages and given on 12 July 2006, following a six-day action. He had three sets of proceedings before him. The full facts can be found in the judge’s judgment and I will confine myself to that part of the factual background, which I need to describe in order to set out my conclusions on the two issues which I have identified.

We have heard helpful submissions from Mr Perhar, for Mr Eastaugh, and Mr Brett for Mr Crisp. I have carefully considered those matters and in addition their skeleton arguments. For the reasons which I will set out below, in my judgment, the judge should have made an order for relief from forfeiture on conditions because there was reason to believe that satisfactory payment could be made of the sums due to the Landlord, so that the Landlord could be put back into the position he would have been in if there had been no breaches of covenant.

On the second issue the judge was, in my judgment, correct to hold that the challenges to the Landlord’s title on which Mr Crisp relied were equivocal and did not amount to repudiation of the lease entitling him to forfeit the lease accordingly.

I now turn to the factual background. In 1953 Mr Harry Poulton acquired a property known as Three Gates Farm. On 4 June 1958 he conveyed part of this property, Land Registry Title Number BN246735, to his brother, Mr Edward Poulton. On 23 February 1972, Mr Harry Poulton leased to Mr John Eastaugh, the appellant, field 30 and field 3. The lease was by an agreement in writing and the Land Registry Title appears to have been Title Number BN289820. On 26 March 1972, Mr Harry Poulton died. On 3 February 1974 Mr Edward Poulton conveyed to Mr John Eastaugh a 15½ acre field, which I understand to be field 28. On 3 February 1977 Mr Edward Poulton conveyed the property to Mr John Eastaugh under Title Number 246735. Mr Crisp did not admit the authenticity of this document as he contends that it was not executed under seal and therefore could not transfer the legal estate. On 16 February 1978 Mr Edward Poulton died.

I can now move forward to 2002. In April 2002, Mr Michael Crisp and Miss Marie Craft erected gates which prevented Mr Eastaugh from accessing the land which had been leased to him under the 1972 lease. I should add that in August 2002 Mr Crisp asked Mr Eastaugh to remove his possessions from the land and, in addition, at some point in time in this period, Mr Crisp caused trees on the property leased to be felled. On 14 November 2003, Mr Stuart Poulton, grandson of Mr Harry Poulton, obtained letters of administration to Mr Harry Poulton’s estate under Section 116 of the Supreme Court Act 1981. The judge does not state whether notice of this was then given to Mr Eastaugh. On 28 November 2003 Mr Stuart Poulton, in his capacity as an administrator, sold the Three Gates Farm to Mr Michael Crisp. Mr Crisp was registered as owner of Three Gates Farm on 3 March 2004. On 25 May 2005, or possibly in June 2005, Mr Eastaugh issued his particulars of claim against Mr Crisp and Miss Marie Craft, claiming that he had inherited part of Mr Harry Poulton’s land from Mr Edward Poulton, to whom Mr Harry Poulton had transferred it. This piece of land was a field of three acres which was not included in the 1972 lease. Mr John Eastaugh pleaded that the defendants had registered a possessory title to Three Gates Farm and that the plan showed that farm to be the land of Mr Edward Poulton. Mr Eastaugh also contended that Mr Crisp had acquired the rest of Mr Harry Poulton’s property by a transfer executed by Mr Poulton, who had purported to act as administrator and that the property had, as I have already described, been registered in the name of Mr Crisp. Mr Eastaugh pleaded that he had only become aware of this in April 2002.

In July 2005, Mr Crisp and Miss Craft served their defence and counterclaim. They accepted that Mr Eastaugh was the tenant of Mr Harry Poulton’s land. They counterclaimed for arrears of rent and damages for breach of covenant and they contended that the arrears amounted to some £16,750. On 9 September 2005, Mr Eastaugh served his reply and defence to the counterclaim. He denied that the defendants were or could be freehold owners of Mr Harry Poulton’s land. He contended that the title was vested in himself. He denied that Mr Stuart Poulton was the administrator of Harry Poulton’s estate and he also denied the breaches of covenant.

On 10 October 2005 Mr Michael Crisp served a notice under section 146 of the Law and Property Act 1925 on Mr Eastaugh. He relied on the breaches of covenant and the failure to pay rent and, in addition, asserted that there had been a denial of his title as Landlord.

On 20 October 2005 Mr Crisp served a notice under section 48 of the Landlord and Tenant Act 1987, giving his name as the name and address of the Landlord. On 26 January 2006 he started possession proceedings against Mr Eastaugh for forfeiture under the 1972 lease. On 28 March 2006 Mr Eastaugh served his defence in which he denied that Mr Michael Crisp was the Landlord under the lease of 23 March 1972. He repeated his entitlement to the premises set out in the particulars of claim of 23 May. He contended that since 1 January 2000 he had suffered from heart problems. On 12 July 2006, following the giving of judgment, the judge gave judgment in the three sets of proceedings and made an order, in essence, to the following effect, first, that the conveyance of 3 February 1977 was void under Section 52 of the Law of Property Act 1925 against Mr Crisp and that it was void also as against Mr Crisp and Miss Craft by virtue of Section 4(6) of the Law of Property Act 1972.

Secondly, he ordered that Mr Eastaugh was entitled to property Title Number BN 246735, as a result of adverse possession and this is the property which I have called field 28. The judge further ordered, on the counterclaim, that there be judgment for £1,798.44 for arrears of rent. He also gave judgment for damages in respect of breach of covenant under the 1972 lease, such damages to be assessed. The judge further ordered that the claimant should have 40 per cent of their costs less the defendant’s costs for the counterclaim, in respect of the proceedings with which we are not concerned. He pronounced against the validity of the alleged will of Mr Edward Poulton dated 7 December 1977 and he further declared that the 1972 lease was forfeited to Mr Michael Crisp. The judge ordered Mr Eastaugh to pay to Mr Crisp 25 per cent of Mr Crisp’s costs of the action for forfeiture subject to the effect of a public funding certificate which had been issued to Mr Eastaugh.

Following argument, the judge dealt with the question of costs. He made the orders which I have referred to above. He considered that much of the time in the forfeiture proceedings had been taken up with the denial of title point and it was for that reason that he awarded Mr Crisp 25 per cent only of his costs of the action.

I would add that we understand that Mr Eastaugh is a gentleman in his seventies and I would point out that the judge, in making his findings in the action, made careful findings about the parties and he particularly found that Mr Eastaugh was an honest witness. The judge said at paragraph 11 of his judgment:

I should also refer to the terms of the lease. I need not set out the provisions as to rent in view of the judge’s findings, which are not challenged. The tenant entered into certain covenants which included, according to Mr Harry Poulton, free accommodation during his lifetime. He also agreed to permit the Landlord or other person authorised by him to enter on the premises to view the state and condition of the property. He further covenanted to reside personally in the farmhouse and not to assign, underlet or part with possession of the premises or any part thereof without the previous license in writing of the Landlord.

The unexpired term of the lease is some 65 years. As I have already indicated, in the course of his judgment, the judge found that Mr Eastaugh was entitled to field 28, consisting of some 15½ acres and Mr Brett has fairly accepted that this property is worth at least £30,000.

So with that introduction I now turn to the issue of relief against forfeiture for non-payment of rent and other breaches of covenant. The judge found that the arrears of rent were £1,798.44, rather than the sum of £16,750 claimed by Mr Crisp. There is no appeal from this holding and as I have said, it is not necessary for me to explain how the judge came to his conclusion. As to other breaches of covenant, the only matter relied upon were the breaches of the covenant for good husbandry, for which Mr Crisp had claimed damages of £10,000. The judge held that such damages would have to be assessed by a Master. The position was that Mr Crisp had discovered that the land was, as put by counsel, derelict, and that for instance trees had been seeded and the hedges had not been attended to. Mr Crisp’s case is that he spent substantial sums of money on putting the property, that is Three Gates Farm, into good condition again. He did this by going onto the land without permission, although the lease gave him the right to go on the land with permission. He had no contractual right to spend money on the land, but he would have had a right to claim damages for any damage to the reversion. In the circumstances of his judgment, the judge did not find it necessary to assess the possible value of this claim, although he did express some doubts as to the claim.

On the question of whether he should grant relief from forfeiture on the grounds of non-payment of rent, the judge set out a passage from Woodfall’s Landlord and Tenant which states that it appears that there must be evidence before the court that the arrears of rent would definitely be paid, rather than that they may be payable in the future, and there is no discretion otherwise to grant relief. There is then a footnote in Woodfall which refers to a decision of mine in the case of Inntrepreneur v Langton [2000] 8 Estates Gazette 169. In order to understand the principle on which the judge proceeded, I propose to set out some of the material parts of that judgment.

In that case, the tenant, Mrs Langton, contended that she had a claim against the Landlord, based on promises that she would be released from a beer tie contained in her lease and that, if she was entitled to a rent review, she would be able to find a purchaser for the lease which would enable her to pay off the rent arrears and other costs. I had to consider the principles on which relief from forfeiture should be given and I held as follows:

I then made the point that if I had followed the Master’s approach, I would have granted relief for a limited period only. That is down to the judgment at trial not to its final determination. I then continued by saying that I allowed the appeal. However, I added:

I now return to the judgment of the judge in this case. The judge held that if he was giving relief from forfeiture he would do so on payment of the arrears of rent and on terms that the compensation for breach of covenant was paid within a fixed and relatively short period of time specified by the court. As regards future compliance, the judge expressed scepticism as to whether Mr Eastaugh could recommence farming but he made no finding on that point. I am not concerned with that point on this appeal, as Mr Brett has fairly not contended that there would be a breach of covenant alternatively that relief would not be given if the land were to be farmed by a manager or if Mr Eastaugh failed to occupy the house on the property leased, as required by its terms. Moreover, as May LJ pointed out in the course of oral argument, it would be open to the tenant to assign the lease in accordance with its terms in any event.

The judge further held that Mr Crisp was likely to be entitled only to a modest net entitlement to costs. The implication of this in his judgment is that he would have required those costs to be paid as a condition of relief from forfeiture. The critical paragraphs in his judgment are however paragraphs 202 and 203:

In my judgment the judge fell into error in paragraph 202 of his judgment. The position at the trial was that Mr Brett cross-examined Mr Eastaugh as to his means and in particular as to the existence of an offer for £60,000 in relation to a claim which Mr Eastaugh was making to another piece of land; not connected with the land the subject of the proceedings being heard by the judge. We do not have a transcript of the cross-examination or a note of it. It would appear from what we are told that Mr Eastaugh accepted that he had no money from which to pay the arrears of rent and that when he had so accepted, he was referring to the offer of £60,000 or to the existence of cash in hand. It is to be borne in mind that Mr Eastaugh had informed the Legal Services Commission of that offer and the judge held in the course of cross-examination that Mr Eastaugh was not bound to answer such questions as whether he had accepted that offer on the grounds that it might incriminate him. In the event Mr Eastaugh did not answer any further questions.

Be that as it may, as it seems to me, the judge has clearly overlooked in paragraph 202 of his judgment. The fact that on his earlier findings in the action, Mr Eastaugh was entitled to field 28 and in addition that he was also entitled under the 1972 lease to occupy a property which with the consent of the Landlord could be let for rent. We are told that this house is in fact without services, in particular electricity, but no doubt that is a matter which could be attended to. Accordingly, in my judgment, the judge was not correct to hold that he had no alternative but to refuse relief from forfeiture. There was, in my judgment, sufficient material before him on his findings to suggest that the necessary money to pay the amounts that ought to be paid to the Landlord could be found.

Since judgment was given Mr Eastaugh has in fact filed a witness statement, which he seeks to adduce on the hearing of this appeal, saying that he did not have an opportunity to say whether he could pay the reduced amount of rent found by the judge to be due. Mr Brett disputes the accuracy of that statement. In the light of the conclusion come to above, it is unnecessary for the appellant to rely on this statement. Mr Eastaugh goes on to say that he has in fact already deposited the sum of £5,000 with his solicitors. Mr Perhar informs us that Mr Eastaugh has raised a loan of this amount and also that he has in fact subsequently settled the proceedings to which the £60,000 offer related and about which he was cross-examined by Mr Brett.

In the light of the conclusion to which I have come, it is in my judgment necessary for this court to re-exercise the discretion to grant relief from forfeiture. I am satisfied that the court has on the judge’s extensive judgment all the findings necessary to enable the judge to do this. I agree with the judge that relief from forfeiture should be conditional on a number of matters. In particular, it should be conditional on paying the arrears of rent and the compensation which the judge found Mr Eastaugh was liable to pay to Mr Crisp when it has been assessed, and the percentage of costs of the proceedings claiming forfeiture to which Mr Crisp is entitled. In my judgment, the conditions should provide for payment of the arrears of rent within 14 days from today since those arrears could clearly be paid from the monies held by his solicitors.

As to the compensation for breach of covenant the condition should as stated in the Notice of Appeal provide for payment of that amount within 21 days from that amount being assessed. I would like to make a like order in respect of the costs of the proceedings before the judge relating to forfeiture, to which Mr Crisp is entitled.

In addition, as there clearly will be a passage of time before those amounts are assessed, I would direct that there should be a sum of £3,000 held by Mr Eastaugh’s solicitors to abide the outcome of those assessment proceedings respectively. I reach that figure of £3,000 on the basis that the sum of £1,000 should be sufficient to provide security for the costs of the assessment of damages and on the basis that the balance is sufficient security for the costs of the forfeiture proceedings. We understand that Mr Crisp’s total costs of those proceedings were some £4,000, on present estimates. The holding of monies by Mr Eastaugh’s solicitor would give Mr Crisp some security in cash for the amounts found to be due to him. In view of my conclusion as to the position of Mr Eastaugh, there is no reason to believe that the modest rent due under the lease will not be paid for the future.

At the time when the judge gave his judgment Mr Eastaugh was publicly funded. He is no longer publicly funded. However, it is clear from the judge’s findings that Mr Eastaugh is entitled to not insubstantial assets. In my judgment, nothing in Section 11 of the Access to Justice Act 1999, which protects publicly funded litigants, prevents this court from providing that as a condition of obtaining relief from forfeiture Mr Eastaugh should pay not merely the costs which could be ordered against him under Section 11, but the difference between those costs and the percentage of the costs which the Landlord has incurred. In my judgment it would be fair, in these circumstances, to make an order to that effect for the reasons that I have given. In concluding that relief from forfeiture should be given, I take into account that the sums due to Mr Crisp are relatively minor and in addition that the lease has a considerable period yet to run.

The points which I have made above about the availability of funds to meet the sums due to Mr Crisp could of course have been made in the course of the trial, or indeed after judgment was given, or indeed at any time before the order was entered, as it was not entered for some two months after the judgment was delivered. However, in addition they were not formulated until the actual hearing of this appeal. In those circumstances, the Landlord was, in my judgment, entitled to come to this court to defend the appeal and I would award the respondent its costs of this appeal to be assessed by this court today, if not agreed. I would make it a further condition of this appeal that those costs should be paid as a condition of forfeiture within a period to be fixed by the court and I would hear submissions on that period.

Mr Brett submits that the judge’s order as to costs below was incorrect. The judge took the view, as I have explained, that the percentage of the costs in the forfeiture action should be but 25 per cent of the total costs incurred by Mr Crisp in that action. He ordered accordingly that Mr Eastaugh should pay Mr Crisp that percentage subject to Section 11 of the Access to Justice Act 1999.

This point only arises if Mr Brett is correct that the lease was forfeit on the grounds of denial of title. I say this because, in my judgment, there can be no successful appeal against a judge’s evaluation of that percentage of the costs for which Mr Eastaugh should be liable if the denial of title was not a sound point, unless it can be shown that the judge’s apportionment of costs was perverse. We have not been shown any material which would support a conclusion that the judge’s apportionment was perverse.

Accordingly, I now turn to the question of denial of title. The judge dealt with denial of title at paragraphs 170 to 179 of his judgment. He concluded that there had been no denial of title and he then went on to consider in the alternative what relief he would have given if he had not come to that conclusion. In fact he found that he would not have given relief because of the claimant’s admitted inability to make any financial payment to the defendants within the reasonably near future. For the reasons given above, that conclusion cannot in my judgment stand with his earlier findings in the action.

Returning however to the judge’s analysis of denial of title, he took the view that the relevant test was whether the tenant had repudiated the relationship of Landlord and tenant by clearly and unambiguously demonstrating that he would no longer be bound by it. In this connection, he relied upon the decision of this court in Abidogun v Frolan [2002] L & TR 275. The judge accepted that under ordinary contract principles a party may threaten to act in a particular way, or act in a particular way, because he is mistaken in good faith as to the true contractual position and that in those circumstances, he will not, without more, be taken to have repudiated the contract, particularly if he makes it clear by his words and actions that he is ready and willing to abide by his true contractual obligations as determined by the court. The court referred to the decision of the House of Lords in Woodar v Wimpey [1980] 1 WLR at 277. In that case, a purchaser of property, considering that he had a contractual right to rescind the contract of purchase, gave notice of termination of the contract. The vendors disputed this and took out proceedings to establish that the notice of rescission was wrongly given. The trial judge held that the purchasers were not entitled to invoke the position and that by doing so they had wrongly repudiated the contract and that they were accordingly liable for damages.

I need not go further into what the damages were. The Court of Appeal affirmed the decision but on appeal to the House of Lords, the House of Lords allowed the appeal. In his speech, Lord Wilberforce dealt with the position at paragraph 282. He held:

When turning to the judgment in this case, the judge also referred to a passage from my judgment in the Abidogan case as follows:

The judge then considered the pleadings in the proceedings before him. He noted that in the proceedings for declaration of ownership Mr Eastaugh had denied that Mr Crisp could be the freehold owner of Mr Harry Poulton’s land. The objection was based on the allegation that Mr Poulton had not and had still not applied for a grant of representation in respect of Mr Harry Poulton’s estate and had previously signed a deed renouncing any right to apply for that. He admitted that there had been a transfer by Mr Poulton to Mr Crisp but he denied that that transfer was valid. In the forfeiture proceedings, Mr Eastaugh admitted the existence of a lease but contended that Mr Crisp was not the Landlord under the lease. The judge noted that the claimant did not assert title in himself or in any other party other than by implication the late Mr Harry Poulton. The judge’s conclusion was at paragraph 179:

Mr Brett submits that the judge was wrong to determine this question on the basis that there was no denial of title, if Mr Eastaugh accepted that he was a tenant of someone other than Mr Crisp. He submits that there is still a denial of title if the tenant denies the title of the true Landlord.

In my judgment, the key to the judge’s conclusion in paragraph 179 is the conclusion that there was no “unequivocal demonstration” by Mr Eastaugh that he was not bound by the 1972 lease. Mr Eastaugh accepted that that lease was valid. His case was that for many years there had been no Landlord because Mr Harry Poulton had died and no person had taken out letters of administration of his estate. Indeed, he knew about the renunciation by Mr Stuart Poulton.

In addition there was no notice under Section 48 of the Landlord and Tenant Act 1987 until 2005. As I have recounted, Mr Crisp purported to exclude Mr Eastaugh from the property leased to him in 2002. Mr Crisp did this without getting any order of the court. Mr Eastaugh’s reaction was not to take the property back by force. He took proceedings for a declaration of ownership in 2005. Those proceedings were, as I have endeavoured to explain, complex in terms of the facts, which extended over some 30 years. Even at the trial we are told there was still some issue about Mr Poulton’s ability to make a transfer to Mr Crisp. It may be that Mr Eastaugh should have been advised before the trial that Mr Poulton had that ability. We have not investigated that question and the argument has not been addressed to that effect. But, we have not been shown any finding by the judge that Mr Eastaugh in defending the proceedings on the basis of the defect in Mr Stuart Poulton’s title was acting in bad faith. Indeed, as I have explained, the judge found that he was an honest but mistaken witness.

In my judgment, short of a finding on those lines, Mr Eastaugh was entitled to place his dispute with Mr Crisp before the court. There was nothing to suggest that he would not abide by the decision of the court; therefore, in my judgment, the judge was entitled to conclude that until the matter was determined his challenge to the Landlord’s title was equivocal.

Accordingly, I would dismiss the respondent’s notice on this point. The question of relief against forfeiture on the basis of denial of title in my judgment does not arise.

For these reasons I would make the order which I have already indicated.

I agree.

I agree that this appeal should be allowed for the reasons which my Lady, Lady Justice Arden has given. The court should make in favour of Mr Eastaugh an order for relief from forfeiture of the 1972 lease of the blue land on conditions as to payment of arrears of rent, damages, and costs, to be embodied in an order of this court as my Lady has outlined.

I would only add a few general words not necessary to this decision relating to the contention on behalf of Mr Crisp that he was entitled to forfeit the 1972 lease because Mr Eastaugh had been so bold as to deny in his pleadings in these proceedings Mr Crisp’s title as Landlord. Forfeiture of a lease for denial of title is a largely outdated medieval procedure; see for example, the judgment of Lord Denning in Warner v Sampson [1959] 1 QB 297. Insofar as it survives at all, as it may, it does so if the denial of title may properly be seen as in the nature of a repudiation of the lease and if there has been an acceptance of that repudiation; see Abidogun v Frolam Healthcare Limited [2002] L & TR 16, page 275.

A contention that a Landlord is entitled to forfeit a lease because of the form or content of a pleading in proceedings between the Landlord and the tenant has now to be seen in the context of modern practice and the recently introduced Civil Procedure Rules whose central philosophy is to facilitate proper access to justice.

In my judgment, there are two clear general reasons why the form or content of a pleading will normally now not be a proper basis for a Landlord to be entitled to forfeit a lease for denial of title. First, the tenant may have one or more properly pleadable reasons for promoting or defending court proceedings against a Landlord which may or may risk being seen as questioning or denying the Landlord’s title. Proper access to justice, in my view, must mean that the tenant must be able to advance those reasons in a pleading without for that reason alone risking forfeiture of the lease. If that were not so, the tenant would not be properly able to bring before the court what may in truth, at least until the court has decided the matter, be a perfectly arguable case and which may in some cases in fact be correct.

Second, I cannot see, and certainly it does not arise in this case in my judgment, that a pleading containing material of this kind would normally be seen as a repudiation of the lease, unless possibly and exceptionally the Landlord was able to establish that the relevant part of the pleading was advanced in bad faith. Parties are constitutionally entitled to bring their disputes before a court for determination. By doing so, they are inviting the court to determine the disputes but are normally to be regarded as content to abide by the court’s decision. That, in my judgment, is a process which can scarcely result in an upholdable plea of repudiation.