CH-2024-000151 - [2025] EWHC 2604 (Ch)

Ground 1 of the grounds of appeal deals with this aspect of the appeal. It alleges the following errors by the judge:

In order to understand the first of those points it is necessary to consider the wording of section 146 and how the relief jurisdiction operates after the decision in Billson. Sections 146(2) and (4) give the court jurisdiction to grant relief in the following terms respectively:

“(2)

Where a lessor is proceeding, by action or otherwise, to enforce such a right of re-entry or forfeiture, the lessee may, in the lessor’s action, if any, or in any action brought by himself, apply to the court for relief …”

(4)

“Where a lessor is proceeding, by action or otherwise, to enforce such a right of re-entry or forfeiture, the lessee may, in the lessor’s action, if any, or in any action brought by himself, apply to the court for relief …”

Both sections apply only “where a lessor is proceeding, by action or otherwise, to enforce [a right of forfeiture]”. Billson provides clarification as to the period during which a landlord is still proceeding and when it is that it is no longer proceeding. In Billson the House of Lords had to consider the application of section 146(2) to the not infrequent case of a landlord effecting a forfeiture by peaceable re-entry rather than by obtaining and executing an order for possession in legal proceedings for possession. The question was when, in those two cases, a landlord was still “proceeding” to enforce its rights. If it was no longer “proceeding” then a claim for relief could not be made under the section. If it was still “proceeding” then a claim could be made. Their Lordships held that where an order (and particularly a regular order) was obtained and executed, thereafter a landlord was not “proceeding” to enforce the forfeiture rights, but where the landlord enforced by re-entry as a self-help measure then even after re-entry the landlord was still “proceeding”. The same logic applies to an application under section 146(4).

As pointed out by the judge below in this case, Lords Templeman and Oliver described the situation where an order was obtained and executed. Lord Templeman said:

“…a tenant cannot apply for relief under section 146(2) after the landlord has forfeited the lease by issuing and serving a writ … has recovered and … entered into possession pursuant to that judgment … If the judgment is set aside or successfully appealed the tenant will be able to apply for relief in the landlord’s action but the court in deciding whether to grant relief will take into account any consequences of the original order and repossession and the delay of the tenant …” (p540E)

Lord Oliver said:

“That position [viz the position of a landlord who re-enters without a court order] is to be contrasted with that of the landlord who adopts the more conventional course of forfeiting by means of an action for possession. Once he has obtained judgment and has been put into possession, any attempt by the tenant to raise the lease against him is met by a simple plea of the judgment. The landlord is no longer proceeding to enforce a right of re-entry, for his possession rests now, not upon the exercise of a right under the lease, but upon a judgment of the court which, as between the parties and their privies, constitutes res judicata. Proceedings for relief under section 146(2) cannot therefore be effective unless and until that position is reversed and the judgment set aside, as it might be, for instance in the case of a default judgment or one obtained without proper service.” (p543)

None of that was controversial on this appeal. Nor was it controversial that if an application for relief had been made after the possession order in this case was executed, then Investments would have had to apply to set aside the order before it could make an application for relief. Successfully setting it aside would mean that the landlord was, after all, still proceeding to enforce the forfeiture rights. That possibility seems to have been countenanced by the House of Lords in Billson and was certainly contemplated by HHJ Colyer QC (sitting as a judge of the High Court) in Rexhaven, albeit that he considered that a successful application by a mortgagee would be difficult to achieve, especially where the mortgagee had been given notice of the proceedings at an early stage and had not sought to intervene.

However, Mr McGhee’s first contention on this appeal is that such a step was not necessary in this case because his client had applied in time. The timetable above shows that the application for relief was made some days before the order was executed. Accordingly, he submitted, it was made in time because the important date for the application was when it was made, and at that time the landlord was still “proceeding” to forfeit. It was thereafter irrelevant to the invoking of the relief jurisdiction that the landlord then executed the possession order – at the time of the application the mortgagee was entitled to apply. Ms Wicks submitted otherwise. She submitted that once the landlord executed the possession order he was no longer “proceeding” so that even if an application for relief was made before that event, that event deprives the court of jurisdiction at that point (unless it is set aside).

I take as a starting point what the judge decided, and he seemed to be dealing with two things. The first part of his reasoning (in paragraph 48 of his judgment) relies on a failure to make an application to set aside the possession order (and, by extension, the execution). That would be a reference to a separate stand-alone application under CPR 40.9. The second part deals with an application to set aside introduced into the proceedings in the pleadings and by amendment - he refers to a “benevolent reading of the particulars of claim” as not leading to an implied application to set aside. Those are two different procedural things leading to the same end. In essence he held that in the absence of either of them the proceedings were bound to fail. It is also likely that in stating that he accepted “the reasons advanced on behalf of the defendant” he was also accepting an argument of Ms Wicks that he recorded at paragraph 41 that “there is no further evidence as to why it is that the application should succeed”.

Mr McGhee’s submission involves his saying that the judge was wrong on both counts - neither a stand-alone application nor an amendment is necessary because he has applied in time - he has applied while the landlord is proceeding and that is sufficient. The mortgagee has its cause of action which is complete at that time and nothing that happens thereafter can deprive it of that. In so saying he relies on the wording of section 146(2), in the light of which subs (4) should be interpreted, and on the decision of North J in Lock v Pearce [1892] 2 Ch 328.

The question can be described in this way. The two subsections of section 146 confer a jurisdiction on the court with a time qualification (couched in terms of conduct) which requires that the landlord is still proceeding to forfeit. The question is - is it sufficient for that time qualification to be fulfilled merely when the application is being made, so that the application is good and has to be dealt with on its merits, or does it also have to be fulfilled at the time the court considers the application because of the reasoning in Billson? If the former is the case then the landlord’s completing the forfeiture by executing the possession order does not destroy the jurisdiction; if the latter then it does and a mortgagee would have to mount a successful application to set aside before it could proceed further with its relief claim.

The wording of subs (2) tends to point to the former. Leaving out irrelevant words for this purpose, subsection (2) provides that “Where the lessor is proceeding … to enforce [a right to forfeit] … the lessee may … apply to the court for relief…”. The provision goes on to provide that the court may grant or refuse it etc. The natural meaning of those quoted words is such as to point to the time of the making of the application, and nothing is said which would indicate that relief cannot be granted if subsequently the landlord completes (is no longer proceeding with) the forfeiture by executing a possession order.

The wording of subs (4) points more to the latter. The relevant words are “Where a lessor is proceeding … to enforce [a right to forfeit] , the court may, on application by any person claiming as under-lessee … make an order vesting [etc]”. That seems to refer to the point of time at which the court is considering the grant of relief rather than the time the application is made.

Both sides before me acknowledged this potential inconsistency. Not surprisingly, each side relied on the interpretation of the subsection which supported its case, and invited me to use that to inform the interpretation of the other. However, both agreed that despite the difference in wording each section should be taken to have the same effect. I am sure they are right about that.

I consider that the interpretation and statutory reconciliation process should start with subsection (2), because of the legislative history.

Subsection (2) has its origins in, and takes its wording from, section 14(2) of the Conveyancing and Law of Property Act 1881. Its natural construction is that which I have referred to above. If that was the sole source of the relief jurisdiction the result would be that an execution after the issue of proceedings would not per se deprive the court of jurisdiction because the application was made in time. That is Mr McGhee’s case.

Subsection (4) has its origins in, and takes its wording from, the Conveyancing and Law of Property Act 1892 section 4. As both parties accepted before me, it is unlikely that Parliament intended the two subsections to have different effects in this context, so section 4 should be taken to reflect the same intention as the earlier section 14(2). That means that under both provisions (and therefore both modern subsections, which should not be taken to change the law) it is sufficient for the landlord to be still proceeding at the date of the issue of proceedings. That is the interpretation I consider to be correct looking at the wording of the statute.

There is some support for this in authority. On the facts of Lock v Pearce [1892] 2 Ch 328 the point arose (albeit that in the end the case went off on a different point). That case was an application for relief made under section 14(2) of the 1881 Act, which as I have pointed out is the predecessor to section 146(2) in effectively the same terms. The sequencing of events was the same as in the present case - orders for possession in the county court on 25th November 1891, with the application for relief by the mortgagee made in the High Court on the same day. On 9th December 1891 the landlord obtained possession under the possession orders, and the mortgagee’s application for relief came before the court on 4th May 1892. The landlord took the point that relief could only be given before possession was given (page 330). On that point North J simply said this:

“Then it is said that this application was too late because possession had already been recovered. In my opinion, that contention is not well founded. I think the application was made when the summons was taken out; and relief can be given on the summons, as far as time is concerned, if in other respects the mode of procedure is right.”

In the end the application for relief failed on the merits (p335). Ms Wicks said the remarks about sequencing were obiter but I am not sure that that is correct. The decision was part of the judge’s reasoning on the way to his final conclusion, which he reached on the facts. At all events, it is a clear decision of a judge of the High Court deserving of appropriate respect.

The case went to the Court of Appeal - [1893] 2 Ch 271. The appeal was dismissed on the technical ground that the application for relief was wrongly brought by originating summons and not by writ, and was therefore faulty. The Court of Appeal did not deal with the question of timing; it decided the appeal on different grounds.

Mr McGhee also relied on Gee v Harwood [1933]Ch 712. The provision in issue in that case was s146(10), relating to forfeiture on the grounds of bankruptcy or execution:

“(10)

Where a condition of forfeiture on the bankruptcy of the lessee or on taking in execution of the lessee's interest is contained in any lease, other than a lease of any of the classes mentioned in the last sub-section, then—

(a)

if the lessee's interest is sold within one year from the bankruptcy or taking in execution, this section applies to the forfeiture condition aforesaid;

(b)

if the lessee's interest is not sold before the expiration of that year, this section only applies to the forfeiture condition aforesaid during the first year from the date of the bankruptcy or taking in execution.”

In Gee the landlord took a point about timing (at 738):

“It is said, however, that the relief must be not only applied for but also granted within the time limit of twelve months. I do not so hold. I think that when once the initial step of commencing the proceedings has been taken, the reasoning which is to be found in Diment v. Roberts in the Court of Appeal, as well as in the judgment delivered by Swift J. on behalf of the Divisional Court, applies in the present case. I quote some words from my own judgment: " It is impossible to suppose that the Legislature intended to leave the tenant to the chance of his right to recover falling within the area of a very busy court, or to be determined by the changes or chances of the court's business. I think the object of the Act was to maintain the right of the tenant or mortgagor, but at the same time to impose some limit on the time for taking proceedings." The same reasoning applies to the present case. All that could be done or ought to be done by the lessee had been done by October 23 within the limit of twelve months.”

Mr McGhee relied on this case as a parallel case in which the important thing was to apply within the one year provided for by paragraph (b), and not to have a result within that period, and also on the policy or practical reasons behind this decision (not leaving timing to the uncertainties of court listing). I do not think that this case helps him that much. Subsection (10) is different in its wording to subsections (2) and (4) and the time limit (1 year) does not depend on an elective act such as enforcing a judgment.

No other useful authority was put before me. Mr McGhee relied on Hammersmith & Fulham LBC v Tops Shop Centres Ltd [1990] Ch 237 as demonstrating that one should not construe section 146 and its rights to relief in a restrictive manner, which he says favours his construction. I do not think that this case helps him. The passage relied on at p251 is in fact a citation from Ewart v Fryer [1901] Ch 499. That passage emphasises the breadth of the discretion of the court when relief is being considered and granted (or not granted), which is a different point to the question of the effect of the two subsections which arises on this appeal.

However, in my view Mr McGhee does not need that case anyway, because I consider that he is correct on the short point of analysis and interpretation that I have set out above. The natural meaning of section 146(2) is that it is sufficient that an application be launched in time, so his application was technically good. That is supported by the High Court authority to which I have referred. The issue of proceedings is the point of time at which the right to apply falls to be tested, and the mortgagee applied in time.

That means that ground 1 of the Grounds of Appeal succeeds. Nonetheless, that does not mean that the execution of the possession order is going to be entirely irrelevant to the relief claim. Its circumstances and effect may well be relevant to the exercise of discretion, and prima facie one would have thought that the same factors would come into play, with the same effect, as if there were a separate set-aside application. In order to get relief the mortgagee is going to have to get the possession order, and the possession, set aside in order to make the relief effective. What my decision does mean is that the execution is not an extra bar which has to be overcome before the proceedings can progress further, with such additional burdens as flow from HHJ Collyer QC’s reasoning in Rexhaven.

In this context I should deal briefly with a submission made by Ms Wicks about the form of proceedings. She submitted that where a landlord was proceeding to forfeit by action, any application by a sub-lessee/mortgagee for relief ought to be made in the landlord’s action. This was a point taken in paragraph 2(iii) of her respondent’s notice. Investments’ application was made in a separate action and, she submitted, was faulty for that reason.

The submission seems to be based on the wording of the two subsections. Taking subsection (2) , Ms Wicks emphasised the following:

“(2)

Where a lessor is proceeding, by action or otherwise, to

enforce such a right of re-entry or forfeiture, the lessee may, in

the lessor’s action, if any, or in any action brought by himself,

apply to the court for relief.”

Similar wording appears in subs (4). That made sense, she said, because it avoided a multiplicity of proceedings and reflected the fact that relief could operate as a defence or counterclaim and a claim for it is therefore inextricably bound up with the landlord’s proceedings. A multiplicity of proceedings would be likely to frustrate the need to achieve a speedy resolution of the proceedings and to lead to sterilisation of land while proceedings remained pending. It is the case that the CPR requires the identification, in the possession proceedings, of those with a right to claim relief from forfeiture, and under the old RSC (RSC 6(2)) notice had to be given to those persons. The purpose of that was to enable that person to apply to be joined into the landlord’s proceedings if it wished to claim relief. Under the CPR (CPR PD55A para 2.1) the name and address of anyone entitled to relief under subsection (2) must be provided in the Particulars of Claim and a copy of the Particulars of Claim must be filed for service by the Court, emphasising the importance of the provision, though now (unlike under the RSC) this obligation for service applies only to residential tenancies and not all tenancies.

I do not consider that Ms Wicks has made out her case in this respect. The true interpretation of the subsections does not point in the direction of a mandatory requirement to apply in the landlord’s proceedings. The wording naturally reads as being permissive. A mortgagee “may” apply in the landlord’s proceedings - a word of permission which in my view allows both the application itself and the forum for the application. The words “if any” reflect the fact that there may be no such proceedings. The following words to not contain or imply the sense that they only apply if there are no landlord’s proceedings. If such a serious procedural requirement were intended one would have expected much clearer words. Nor do Ms Wicks’ policy reasons seem particularly strong. The fact that a separate set of proceedings has been started does not give rise to any particularly serious level of complication or resource use, and in some ways it might make the procedural position neater to cope with. The fact that relatively recent procedural provisions require particulars and notice or service (which are not even consistent over time) does not assist at all in relation to Parliament’s intention in 1925, much less in 1881 where the legislative chain starts.

In fact the background to the source legislation is much more informative and is against Ms Wicks. It was common ground that in 1881 and 1892 the county court had no jurisdiction to grant relief under the provisions of the Acts of those years. Accordingly, if possession proceedings were commenced in the county court then an application for relief under subsection (4) had to be brought in separate proceedings in the High Court. This state of affairs was common ground between the parties, and was in fact what happened in Pearce v Lock. So the predecessors of the two subsections were enacted in circumstances which necessarily contemplated the possibility, indeed necessity, of the relief claim being made in separate proceedings, and there is nothing in the 1925 legislation which suggests that somehow the two later subsections somehow had some different and more restrictive procedural effect.

I therefore find that this averment of Ms Wicks fails. Ms Wicks’ respondent’s notice also averred that Investments was a privy of Greenland and was therefore bound by the order for possession and dismissal of Greenland’s claim for relief, but in her oral argument she did not pursue the claim of privity formulated in that way.