Whether an Earlier Settlement Agreement Prevented a Landlord from Seeking Forfeiture (29 Buckland Crescent Management Company Ltd v White – 2024)

Where a leaseholder has breached the repair covenants in its lease, is the landlord prevented from seeking forfeiture as a remedy where an earlier settlement agreement is in place?

The background

In 29 Buckland Crescent Management Company Ltd v White [2024], the leaseholder occupied a flat in a building containing four residential units. The landlord alleged that the leaseholder had breached the repairing covenants in its lease, and sought to forfeit the lease.

Several years earlier, a leak from the leaseholder’s flat had caused problems in the wider building. Despite repairs being undertaken, the leak persisted and resulted in a dispute between the landlord and the leaseholder. The landlord brought proceedings in the First-tier Tribunal for a determination in respect of the breaches of covenant, while the leaseholder made a claim on his insurance in respect of the repairs. A settlement agreement was eventually negotiated, whereby the leaseholder admitted certain breaches and agreed to carry out remedial works.

The leaseholder did not complete the works in accordance with the terms of the agreement. The landlord proceeded to serve a s.146 notice and commenced forfeiture proceedings. At first instance, the County Court found that the earlier settlement agreement prevented the landlord from pursuing forfeiture. The landlord appealed.

The decision

The High Court allowed the landlord’s appeal, allowing the forfeiture proceedings to continue.

Reviewing the terms of the settlement agreement, the court concluded that the agreement did not prevent the landlord from seeking forfeiture. Although clauses 6 and 7 released claims and effected an agreement between the parties not to sue, the settlement agreement resolved certain specific areas of dispute but there was no limitation on the landlord’s right to seek forfeiture as a means of enforcement.

The judge stated that he did not consider the point to be a straightforward one. Focusing on the ‘ordinary meaning’ of the settlement agreement was inconclusive, resulting in meanings which supported both the landlord and the leaseholder’s interpretations.

Advice and action for landlords

This decision will be reassuring to landlords, determining that a prior settlement agreement need not prevent a landlord from seeking forfeiture proceedings later.

The judge made his decision based on the facts of the case, concluding that these were more consistent with the landlord’s interpretation overall. Landlords should take care when agreeing the terms of a settlement agreement that they expressly state the extent to which the settlement agreement should apply to future claims, and ensure they allow themselves flexibility in order to make a claim where the terms of a settlement agreement are breached.