12 Days of Christmas – Day 2

As the festive season is now upon us, our team of Real Estate Litigation elves have been searching through the archives for the most interesting and important legal developments this year. In our "12 Days of Christmas" feature, we take you on a whistlestop tour of the most interesting of developments that haven't made it into our new blog.

In day 2, we look at the Upper Tribunal decision in Clemente v Mindmere, which considered whether pursuing a money judgment for unpaid service charges constituted a waiver of the landlord's right to forfeit the lease for non-payment of those charges. The case is important as (surprisingly) there was no decided case on this issue up to this point.

The background

Mr Clemente was a tenant under a long lease that included provisions for paying service charges and ground rent. Mr Clemente failed to make the required payments, and the landlord, Mindmere Ltd, issued debt proceedings in the County Court for the outstanding sums. In defence of the debt claim, Mr Clemente challenged the reasonableness of the service charge and the claim was sent to the First Tier Tribunal to be decided.

The FTT found the service charges to be reasonable and ordered that costs incurred by the landlord in taking steps to forfeit the lease were payable by Mr Clemente. Mr Clemente appealed that decision on a number of grounds, including on the basis that costs relating to forfeiture could not be recovered under the lease, as the commencement of debt proceedings had waived the landlord's right to forfeit.

The decision

The Upper Tribunal ruled that pursuing a money judgment for arrears that had already arisen did not waive the right to forfeit the lease for those arrears. In coming to its decision, the Tribunal noted that waiver of a right to forfeit occurs when the landlord does something that acknowledges the continuing existence of the lease. An important part of the Tribunal's decision was that Mindmere had only sought to pursue the arrears, and had made no demands for rent and service charge after it had made clear that it was issuing debt proceedings. The Tribunal accepted that Mindmere would have waived the right to forfeit for the arrears if it had "demanded, or sued, for rent or service charges falling due after that date". However, as Mindmere did not do that, the right to forfeit for the existing arrears was preserved.

In summary, this decision is a welcome development for landlords, as it reinforces their ability to enforce lease terms and recover unpaid charges without compromising their right to forfeit the lease.

If you have managed to read this far, we thought we would reward you with a festive joke to get you in the Christmas spirit: What do you get if you eat Christmas decorations? Tinsilitis!