Consider this: a landlord agrees terms of settlement for a breach of lease by its tenant, only for the terms of the settlement to be breached. A right to forfeit as a next step is a given, right?
Well, hold up, the case of 29 Buckland Crescent Management Company Ltd v White [2024] EWHC 1480 (Ch) shows it is not quite that straightforward.
The landlord, 29 Buckland Crescent Management Company Ltd (the Landlord), sought to forfeit its tenant, Mr White's (Mr White) lease due to repeated leaks from his bathroom. Ms Yalgin, Mr White's unfortunate downstairs' neighbour, had suffered six leaks since purchasing her property in 2019.
The Landlord had previously applied to the First Tier Tribunal to obtain a declaration under Section 168(4) Commonhold and Leasehold Reform Act 2002 that a breach of a repair covenant of the Lease had occurred. In the case of a long lease of a dwelling such a declaration or admission from the tenant is required as a precursor to service of a section 146 notice and then forfeiture.
On 5 December 2021, the parties entered into a Settlement Agreement (the Settlement Agreement) in which Mr White:
- admitted the breach of the repair covenant in the Lease; and
- promised to remedy the breach by 28 January 2022.
The remedial works were not completed by the deadline, and so the Landlord served Mr White with a section 146 Notice based on the disrepair before serving a claim for forfeiture.
The Court considered at length the interpretation of the following clauses of the Settlement Agreement:
"6 Release
This agreement is in full and final settlement of, and each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the parties or to the law, and whether in law or equity, that it, its Related Parties or any of them ever had, may have or hereafter can, shall or may have against the other party or any of its Related Parties arising out of or connected with the Proceedings.
7 Agreement not to sue
7.1 Each party agrees on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Proceedings, in this jurisdiction or any other.
7.2 Clause 6 and Clause 7.1 shall not apply to any claims in respect of any breach of this agreement."
Mr White's position was that clauses 6 and 7.1 precluded the Landlord from taking forfeiture proceedings because of the disrepair. The Landlord's position was that they were entitled to the benefit of the exclusion set out in clause 7.2 thereby allowing forfeiture.
The High Court found interpretation of the Settlement Agreement difficult. They noted particularly that on the "ordinary meaning" of clause 7.2 both Mr White's and the Landlord's interpretations could be supported.
The Court found, on balance, that the Landlord's interpretation of the Settlement Agreement was more likely. The Judge was particularly persuaded that Mr White's admission to the breach in the agreement would serve no real purpose save to preserve the Landlord's right to forfeit. As such the Settlement Agreement did not preclude the Landlord from bringing forfeiture proceedings.
This case is an important reminder that terms of settlement must be drafted clearly to avoid ambiguity and it is imperative to consider what will happen if a party breaches those terms.
