Background
DS Developing Limited owned the freehold reversion of Jerusalem Farm, where A Hughes and Son (Skellingthorpe) Limited operated an animal-by-products rendering plant under a lease granted in 2004. The parties were also competitors in the meat-rendering industry, and their relationship had deteriorated after Developing acquired the reversion in 2016.
After serving a notice under section 146 of the Law of Property Act 1925, Developing sought possession on the basis that Hughes had breached the lease by depositing untreated condensate in lagoons or a settlement pond, installing a thermal oxidiser without consent, and failing to provide requested information. Hughes denied the principal allegations and counterclaimed, alleging breach of the covenant for quiet enjoyment and unreasonable withholding of consent for several proposed alterations.
The Court’s Holding
HH Judge Klein dismissed Developing’s possession claim. The court found that Hughes had not deposited, or allowed the deposit of, untreated condensate in the lagoons or settlement pond during the relevant period. Developing also had not established that such deposits would have been illegal or contrary to Hughes’s environmental permit. Developing had waived its right to forfeit for the unauthorised thermal oxidiser by accepting rent, while Hughes had remedied its information-related breach before proceedings by supplying the information to which Developing was entitled.
The court dismissed most of Hughes’s counterclaim. Developing’s conduct had not substantially interfered with Hughes’s enjoyment of the premises, so there was no breach of the covenant for quiet enjoyment and no need to consider appointing a receiver and manager. The court nevertheless declared that Developing had unreasonably withheld consent to the installation of a portacabin and the addition of an airlock, because sufficient information had been supplied and Developing had failed for almost nine years to give a substantive response or identify a good reason for withholding consent.
The court declined to make equivalent declarations concerning the other proposed works. Developing had consented to the demolition of Building J; Hughes had not proved that consent was withheld for the mains-gas installation; and Hughes had supplied insufficient information concerning the proposed trailer garage and other buildings. Except for the declarations concerning the portacabin and airlock, both the claim and counterclaim were dismissed.
Key Takeaways
- A landlord seeking forfeiture must prove the alleged lease breach; suspicion and disputed observations did not establish that untreated condensate had been deposited.
- Acceptance of rent with knowledge of a breach can waive the right to forfeit for that breach, as occurred with the unauthorised thermal oxidiser.
- A prolonged failure to answer a sufficiently detailed alteration request may support an inference that consent was withheld, and withholding consent without a reason may be unreasonable.
Why It Matters
The judgment illustrates the evidential and procedural obstacles facing a commercial landlord seeking forfeiture, including waiver through acceptance of rent and the tenant’s ability to remedy a remediable breach before proceedings under section 146 of the Law of Property Act 1925.
It also distinguishes mere delay from legally unreasonable withholding of consent. A tenant must provide a sufficiently clear proposal and ordinarily prove that consent was positively withheld; here, that threshold was met for the long-unanswered portacabin and airlock requests but not for proposals lacking adequate detail or still subject to licence negotiations.