Cases - Fivecourts v JR Leisure Developments

Record details

Name

Fivecourts v JR Leisure Developments

Date

2000

Citation

Queen's Bench Division

Legislation

Law of Property Act 1925

Keywords

Estate agency

Summary

Fivecourts Ltd (the claimant) was the landlord of the Queen's Hotel (the property). In 1993 JR Leisure Development Co Ltd (the defendant) took an assignment of a headlease of the property containing full repairing covenants and a tenant's covenant to use the premises as a first-class hotel only. At that time, the property was derelict. The defendant carried out some works, but the property remained in a derelict state.

In the same year the defendant granted an underlease to its sister company, JR Licensed Properties Ltd (Properties), which permitted the use of part of the premises for a licensed nightclub and public house.

In 1995 the claimant served a forfeiture notice on the defendant in respect of its breach of the repairing covenant. Possession proceedings were commenced, and the claimant applied for a summary judgment. The defendant sought relief against forfeiture.

A consent order was agreed between the parties providing for works to be carried out in 3 phases and within specified times.

In 1998, following an inspection of the premises that revealed more widespread dry rot than had first been reported, the claimant served a second forfeiture notice. A second consent order was made that provided for further work to be done by the defendant to remedy the defects.

Neither the phase 1 or 2 works of the first order, nor the works in the second order, were fully or properly carried out. The claimant applied for the orders to be brought into force. The defendant sought more time to comply with them.

Allowing the claimant's application and granting a possession order, the master held that he had no jurisdiction to vary the consent orders and that, even if he had had jurisdiction, he would not have granted the defendant further time.

The defendant appealed, submitting that further time was required to carry out the works.

The principal issue was whether the court had jurisdiction to interfere with or vary the consent orders to extend time.

Relying on Chandless-Chandless v Nicholson [1942] 2 KB 321 and Ropac Ltd v Inntrepreneur Pub Company (CPC) [2000] PLSCS 136, the defendant submitted that the court did have the power to relieve a tenant, even where the bargain was incorporated in a consent order, if it was equitable to do so.

The claimant submitted that the court was debarred when the order dealt with the substantive rights of the parties.

In an application pursuant to section 146(4) of the Law of Property Act 1925, Properties, as subtenant, also applied for relief against forfeiture, relying on the discretion conferred on the courts by the section. Properties contended that the court's jurisdiction should be exercised sparingly on such an application, as it thrust on the landlord a tenant it had never accepted.

Held

The appeal and the application were dismissed.

1. It was not clear from the authorities whether the claimant's absolute position was justified. Applying Ropac, the court did have the jurisdiction to interfere with consent orders such as those in the present case, but only in exceptional circumstances.
   On the facts of the instant case, it would have been wrong for the court to do so. The defendant had failed to adhere to the orders in a major respect.
   Moreover, there was every reason to be sceptical about the defendant's ability to carry out the remedial works.
2. Applying Creery v Summersell [1949] Ch 751, the court's jurisdiction had to be exercised sparingly.
   Material factors weighed against the grant of relief, the subtenant was in breach of restrictive covenants in the headlease, and the property sublet was not capable of convenient occupation under a lease divorced from the remainder of the property comprised in the headlease.
   The application for relief under section 146(4) was refused.