Successful forfeiture appeal for JB Leitch

Costs awarded in favour of client

This article focuses on a successful appeal brought by JB Leitch Ltd, against a costs order awarded by the Court in favour of a leaseholder. The leaseholder defended a forfeiture action, brought for unpaid ground rent, which totalled in excess of £350.00.

At first instance, the DDJ found that as the leaseholder had paid the ground rent arrears shortly before the possession hearing, that allowing the forfeiture claim to continue would be disproportionate. The leaseholder was awarded legal costs for defending the claim.

Permission to appeal was sought citing that:

1. Section 138(2) of the County Courts Act 1984, provides that the forfeiture action will cease if the lessee pays all the rent in arrears and the costs of the action.
2. The threshold for bringing forfeiture proceedings is clearly set by Parliament at £350 by The Rights of Re-Entry and Forfeiture (Prescribed Sum and Period) ( England) Regulations 2004, SI 3086 of 2004.

Permission to appeal was granted and at the hearing of the appeal, the costs order was successfully overturned with the HHJ awarding costs in favour of JB Leitch’s landlord client.

The appeal demonstrates that leaseholders must pay the costs of the forfeiture action as well as the ground rent arrears before they can claim relief from forfeiture. It is a further reminder that proportionality does not prevent the Court from awarding the possession order, providing the debt meets the Prescribed Sum or Prescribed Period, the order for possession must be awarded regardless of whether or not the debt (and costs of the action) are significantly less than the value of the premises.