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Commercial Property: Toms v Ruberry [2019] EWCA Civ 128

This is an important commercial property case, holding that, a notice under section 146(1) of the Law of Property Act 1925 (“a notice”) can not be given until the landlord’s right of re-entry has accrued under the provisions of a lease.

Issue

The only substantive judgment was handed down by David Richards LJ, with which Holroyde and Nicola Davies LJJ agreed, permission to appeal having been granted by the leading authority on property law in the Court of Appeal, Lewison LJ. It was rightly introduced it in these terms: “The point of principle raised by this second appeal is whether a notice may be served … before the right to re-entry has arisen under the provisions of the lease.”

Discussion

In dismissing the first appeal, Dingemans J accepted the tenant’s case. The landlord was not entitled to serve a notice until a default notice under the relevant clause of the lease had been given, and the period specified in that clause had passed, without the breaches being remedied. Only then would the landlord’s right of re-entry be exercisable.

This judgment was upheld for at least three reasons. First, “the authorities establish that section 146 must be given a common-sense interpretation”. Second, the two-fold purpose of section 146: 1) “to give the tenant notice of the breaches, so that he knows what needs to be remedied”; and 2) “to enable the tenant to make an application for relief against forfeiture.” Third, it would be inconsistent with section 146(2) had the breach not yet occurred, as the landlord could only be ‘proceeding, by action or otherwise, to enforce such a right of entry or forfeiture’ if the right had become enforceable under the terms of a lease.

Outcome

The landlord’s appeal – that a notice only requires the underlying breach of covenant which could give rise to a right of re-entry to have occurred before service of the notice – was dismissed. A notice: 1) must state the particular breach complained of; 2) if it is capable of remedy, require the tenant to remedy the breach; and 3) can only be given if the tenant has failed to remedy the breach within a reasonable period of time. These requirements only make sense if the relevant breach has occurred.

Dominic Bright / 26th Feb 2019


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