Does Demanding Rent Waive The Right To Forfeit? (Was Lord Neuberger Always Right?)

• Published date: 25 January 2022
• Subject Matter: Real Estate and Construction, Landlord & Tenant - Leases
• Law Firm: Gatehouse Chambers
• Author: Mr Peter Petts

Peter Petts considers whether a demand for rent should be treated with the same strictness as accepting rent when it comes to the right to forfeit a lease.

As the former President of the Supreme Court and, more importantly, the former President of this august association, it may seem impertinent to question Lord Neuberger's jurisprudential thinking on whether a demand for rent should be treated with the same strictness as accepting rent when it comes to waiving the right to forfeit a lease. However, the topic is worthy of respectful consideration.

In respect of waiver of the right to forfeit, generally (and not wishing to teach anyone to suck eggs), upon a forfeitable breach of a lease, the landlord must elect whether to treat the lease as being at an end or to continue with its performance, despite the breach. The latter is the waiver of the right to forfeit, which has three essential components: (1) with knowledge of the breach, (2) the landlord communicates to the tenant, (3) an unequivocal recognition of the subsistence of the lease.

A landlord may expressly inform the tenant that, despite the breach, he is going to continue with the performance of the lease and hold the tenant to the performance of his covenants. Such a situation is relatively straightforward. What is more complicated is whether a waiver of the right to forfeit should be inferred from the landlord's conduct, once he has knowledge of the breach.

For such conduct to amount to a waiver, it must be "so unequivocal that, when considered objectively, it could only be regarded as having been done consistently with the continued existence of a tenancy": per Slade LJ in Expert Clothing Service Sales Ltd v. Hillgate House Ltd. [1986] 1 Ch 340. The court considers all the circumstances of the case, when making its determination as to whether the landlord's conduct can only be consistent with the continuation of the lease. This is quite a high hurdle for the tenant to overcome.

However, the acceptance of rent falls into a special category. If it is accepted for a period after a breach, with knowledge of that breach, it will automatically amount to a waiver. There is no question of analysing the landlord's conduct. The strict application of this principle has its roots in the feudal system of land ownership and was developed in a time when the power to grant relief from forfeiture was much more restricted than it is now. Despite the courts' latter-day, broad, statutory and equitable discretion...