Relief against forfeiture and possession

Whether a possession order must be set aside for an ‘unjust enrichment’ claim to succeed

The background

In Gibbs v Lakeside Developments Ltd [2018], the tenant held a long 999-year lease of a flat. Whilst working abroad, she gave the managing agent her parents’ address for correspondence. She ceased to pay sums demanded in 2006, and in 2009 the landlord issued a claim for arrears of rent and insurance rent which was served at the flat. Although not good service as the landlord used the wrong address, the landlord obtained a default judgment and a possession order. The landlord re-entered the premises and marketed the flat for sale.

When the tenant discovered the flat was for sale, she unsuccessfully contacted the landlord’s solicitors and managing agents. Her own solicitors applied to HM Land Registry to enter a caution against the title, which was not completed. An application for relief against forfeiture and to set aside the possession order was made, but no application for an injunction was issued to prevent any sale of the premises.

A new long lease was granted to a third party and, as a result, the tenant’s application for relief was adjourned. She amended her claim to one for ‘unjust enrichment’ by the landlord; ie. to claim that the landlord had unjustly benefited at the tenant’s expense. At trial, the tenant was found to have abandoned the application for relief and set aside of the possession order, and this was upheld on the first appeal.

The decision

The Court of Appeal upheld the earlier decisions, finding that there was no unjust enrichment claim because the previous order for possession had not been set aside and relief from forfeiture had not been obtained.

Setting aside the possession order would not have resulted in relief from forfeiture. The landlord had physically re-entered the premises and, in this case, the tenant had not been living in the flat at the time proceedings were served, so physical re-entry by the landlord was lawful.

Further, tenants must by statute apply for relief from forfeiture within 6 months of an order being made. Whilst the Court may extend this timescale within a nevertheless reasonable period, tenants must present a strong argument.

Advice and action for landlords

It is clear from this case that the tenant did not behave proactively in order to prevent her own losses. Having accrued arrears, she did not take steps to remedy this which in turn resulted in a successful order for possession. The landlord re-entered the property lawfully and did not benefit from unjust enrichment at the tenant’s expense.

This is a welcome case for landlords; where arrears have accrued over vacant properties, landlords are within their rights to take possession steps to recover losses.