BLAND v INGRAM'S ESTATES LIMITED and others [2001] EWCA Civ 1088

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR PETER LEAVER QC (sitting as a Deputy Judge)
[2001] EWCA Civ 1088Case No Case No: CHANF 1999/0870/A3Venue Royal Courts of Justice, Strand, London, WC2A 2LL, Wednesday 11th July 2001
Between
BLANDAppellantINGRAM'S ESTATES LIMITED and othersRespondents
Before
Lord Justice ChadwickLady Justice HaleMr R Denman (instructed by Messrs Joseph Aaron & Co, Ilford for the Appellant)Mr T Fancourt (instructed by Messrs Collyer Bristow, London for the 1st Respondent)Mr J Althaus (instructed by Messrs Armstrong & Co, London for the 2nd and 3rd Respondents)Date 11 July 2001

LORD JUSTICE CHADWICK:

This

[1]appeal came before the Court (Lord Justice Nourse, Lady Justice Hale and myself) at the end of last year. In judgments which we handed down on 21 December 2000, reported at [2001] 2 WLR 1638, we indicated that the appeal would be allowed and that we were minded to grant the appellant the relief from forfeiture which she sought; but that further consideration needed to be given to the terms upon which that relief should be ordered. Lady Justice Hale and I have now heard full argument as to the terms for relief. This judgment is directed to that question. The underlying facts .[2]The first named respondent, Ingram's Estates Limited, is the freehold owner of premises known as 54/56, The Parade, Bourne End. On 12 May 1994 Ingram's Estates granted a lease of those premises to Mr Franco Beer and his wife, Mrs Caroline Beer, for a term of 16 years from 25 March 1994 at an annual rent, subject to review, of £14,000. The lease contained the usual proviso for re-entry in the event of non-payment of rent.[3]On 30 November 1995 the appellant, Mrs Davina Bland, obtained summary judgment against Mr and Mrs Beer in the Queen's Bench Division in an amount of £24,000, together with interest and costs. On the same day she obtained a charging order nisi over the Beers' interest under the 1994 lease. The charging order took effect as an equitable charge created by the debtors.[4]By the end of April 1996 there were substantial arrears of rent due from the Beers under the 1994 lease. It is not in dispute that, on 26 April 1996, Ingram's Estates was entitled to, and did, forfeit the 1994 lease by peaceable re-entry. Three days later, on 29 April 1996, Ingram's Estates granted a new lease of the premises to the second and third respondents, Mr Fogir Uddin and his wife, Mrs Ripon Chowdhery Fogir. The 1996 lease was for a term of 24 years from 25 March 1996 at an annual rent, subject to review, of £14,000. The lease was granted in consideration of the payment by the Uddins to Ingram's Estates of a premium of £12,000. It is common ground that, before they took the 1996 lease, the Uddins had actual notice of the 1994 lease and of the circumstances in which it had been forfeited by re-entry. It follows that they had constructive notice of the Beers' right to claim relief from forfeiture; and so took subject to that right. These proceedings .[5]The present proceedings were commenced by Mrs Bland on 26 August 1996. By a summons issued in the High Wycombe County Court she claimed relief from forfeiture of the 1994 lease. The action came before His Honour Judge Hull QC, sitting at Epsom, on 17 September 1998. He held that he had no jurisdiction to grant relief from forfeiture at the suit of Mrs Bland either under section 146(4) of the Law of Property Act 1925 or under section 139 of the County Courts Act 1984. But he did not dismiss the claim. He took the view that the action should be transferred to the High Court. The purpose of that transfer was to enable the High Court to consider whether relief should be granted under the inherent jurisdiction of that court; that is to say under an inherent jurisdiction which lies in the High Court but not in the County Court.[6]The action came before Mr Peter Leaver QC, sitting as a Deputy Judge of the High Court in the Chancery Division. His judgment, delivered on 13 April 1999, is reported at [1999] 2 EGLR 49. He rejected Mrs Bland's claim for relief from forfeiture and dismissed the action. On 30 July 1999 Mrs Bland obtained permission to appeal to this Court.[7]As I have said, the judgments in this Court were handed down on 21 December 2000. The only question then before us for decision was whether the Deputy Judge had been right to hold that he had no inherent jurisdiction to grant relief from forfeiture at the suit of a claimant who neither had, nor had had, any estate in the land or any interest other than as equitable chargee of the former lease. For the reasons which we gave, we held that his conclusion was wrong. But, in the course of my judgment, I expressed the view (with which Lady Justice Hale agreed) that, upon a true analysis of the position, it had never been necessary to invoke the inherent jurisdiction. Relief could have been granted in the County Court under section 139(2) of the County Courts Act 1984 – read in conjunction with sections 139(3) and 138(9C). If that had been recognised at an earlier stage, the very considerable costs that have been incurred in the High Court and in this Court in relation to the claim under the inherent jurisdiction could have been avoided.[8]The basis of our decision on 21 December 2000 was that there was inherent jurisdiction, at the suit of an equitable chargee and in proceedings to which the former lessees and the landlord are parties, to grant relief from forfeiture by restoring the former leasehold interest which had been the subject of the charge. We rejected the submission, so far as it was pursued, that there was any inherent jurisdiction to grant relief by vesting a new lease in the claimant; although(i) there would be jurisdiction to make such an order under section 138(9C) of the County Courts Act 1984 and(ii) if relief were granted by the restoration of the former lease, there would be jurisdiction under section 90 of the Law of Property Act 1925 to vest a new lease in the chargee for the purpose of enabling the property to be sold.[9]Following delivery of our judgments on 21 December 2000, the further hearing of the appeal was adjourned so that consideration could be given to joining the Beers (and, if appropriate, Mr Beer's trustee in bankruptcy) as parties to the proceedings; and, after hearing such submissions (if any) as they might wish to make and the further submissions of the existing parties, to the terms upon which relief from forfeiture should be granted in this case. That further hearing has now taken place.[10]It is clear from the correspondence and attendance notes now before us that Mr and Mrs Beer were given notice of the further hearing; and were given notice that the Court was minded to join them as parties to these proceedings. They have not appeared, either in person or through legal representatives. They were invited, by the appellant's solicitors in a letter dated 4 May 2001, to put in writing any observations to which they wished the attention of the Court to be drawn. Their response, in a letter dated 14 May 2001, does not suggest that they have any objection to being joined as parties. In those circumstances we indicated that we would treat them as parties and would make an order that they be joined. I would propose that they be given a short time – say, 14 days after service of the order upon them – to make such application (if any) to vary the order that we will make today as they may be advised is necessary in order to protect their interests.[11]It is clear, also, that Mr Beer's trustee in bankruptcy has been kept informed of the position. He does not appear today. By a letter dated 31 April 2001 he informed the appellant's solicitors that he held signed notices of intended disclaimer which he proposed to serve on "the landlord, mortgagee and your client" as soon as he heard that the appellant had been granted relief from forfeiture. It is not at all clear (at least to me) to whom the trustee intends to refer by the expression "the mortgagee" unless it is the appellant herself, as chargee. Nor is it clear why the trustee takes the view that he is in a position to disclaim the leasehold estate; as distinct from Mr Beer's beneficial interest under the trust for sale upon which the lease was (and would, if restored) be held by Mr and Mrs Beer. Prima facie, at least, the leasehold estate did not vest in the trustee in bankruptcy upon appointment under section 306(1) of the Insolvency Act 1986. It was property which Mr Beer held upon trust for himself and another (Mrs Beer); and so it did not form part of the bankrupt's estate – see section 283(3) of that Act. In those circumstances we have not thought it necessary to treat Mr Beer's trustee as a party to this appeal. We do not order him to be joined; but, for my part, I would think it right to give him the same opportunity to apply for a variation of the order which we will make today as that which is to be given to Mr and Mrs Beer. The principles applicable to relief from forfeiture .[12]I turn now to the terms upon which relief from forfeiture should be granted. The principles are not, I think, in doubt. First, the proviso for re-entry on non-payment of rent is treated in equity as a security for the rent – see Howard v Fanshawe [1895] 2 Ch 581 , 588. Accordingly, relief will normally be granted upon terms that the arrears of rent and any costs properly associated with the re-entry are discharged – see Newbolt v Bingham and others (1895) 72 Law Times 852, 854. Lord Justice Jenkins put the point in these terms, in Gill and another v Lewis and another [1956] 2 QB 1 , at page 13:
". . . save in exceptional circumstances, the function of the court in exercising this equitable jurisdiction is to grant relief when all that is due for rent and costs has been paid up, and (in general) to disregard any other causes of complaint that the landlord may have against the tenant. The question is whether, provided all is paid up, the landlord will not have been fully compensated; and the view taken by the court is that if he gets the whole of his rent and costs, then he had got all that he is entitled to so far as rent is concerned, and extraneous matters of breach of covenant, and so forth, are, generally speaking, irrelevant."
See, also, the observations of Mr Justice Pennycuick in Barton Thompson and Co. Ltd v Stapling Machines Co. [1966] Ch 499, at page 510:
"It is an invariable condition for relief from forfeiture for non-payment of rent that the arrears, if not already available to the lessor, shall be paid within a time specified by the court. The precise length of time is a matter of discretion . . . but the imposition of the condition is not a matter of discretion; it is a requirement of law rooted in the principle upon which relief is granted."
[13]Second, the effect of an order granting relief from forfeiture is to restore the lease for all purposes; the original lease continues as if there had been no interruption by re-entry – see Dendy v Evans [1910] 1 KB 263 , 269, 270, and Driscoll v Church Commissioners for England [1957] 1 QB 330, 340, 344, 348. The consequence, in the present case, of the grant of relief from the forfeiture of the 1994 lease will be that the 1996 lease takes effect as a lease of the reversion. As from 29 April 1996 Mr and Mrs Uddin will have been the persons immediately entitled in reversion on the determination of the 1994 lease. They will have been interposed as intermediate landlord between Mr and Mrs Beer and Ingram's Estates.[14]Third, the object of the court when granting relief is to put the lessor (as well as the lessee) back in the position in which he would have been if there had been no forfeiture – see Egerton v Jones [1939] 2 KB 702, 706. It is this principle which underlies the practice of requiring the applicant, as a term of relief, to pay the costs properly incurred by the lessor in connection with the re-entry and the proceedings for relief. Accordingly, the applicant will normally be required to pay the lessor's costs of the forfeiture proceedings, save in so far as those costs have been increased by the lessor's opposition to the grant of relief, upon appropriate terms – see Howard v Fanshawe [1895] 2 Ch 581 , 592, and Abbey National Building Society v Maybeech Ltd and another [1985] Ch 190, 206. Prima facie , the costs which the applicant will be required to pay to the lessor as a term of obtaining relief will be assessed on an indemnity basis; if it were otherwise the lessor would not obtain the indemnity against proper expenses to which he is entitled – see Egerton v Jones [1939] 2 KB 702, 710. But, to the extent that costs have been increased by the lessor's unnecessary opposition to the grant of relief, the normal rules apply: the lessor will normally be ordered to pay the applicant's costs on the standard basis, and the applicant will be able to set those costs off against what he would otherwise be required to pay to the lessor as a term of obtaining relief from forfeiture.[15]Fourth – and by way of further application of the principles(i) that, on relief being granted, the lease is restored for all purposes and(ii) that the object of the court is to put the lessor back into the position in which he would have been if there had been no forfeiture – the court must take into account the fact (if it be so) that the lease contains a provision for rent review at a date between the date of forfeiture and the date of relief. The lessor is not to be denied the benefit of any increased rent which would have resulted from the operation of the rent review provisions during the period prior to the grant of relief from forfeiture – see Soteri and another v Psylides and another [1991] EGLR 138, 140. The issues to be decided .[16]The starting point, therefore, is that the applicants in the present case – that is to say, Mr and Mrs Beer and Mrs Bland collectively – should have the relief from forfeiture which they seek upon payment to the respondents – that is to say, Ingram's Estates and Mr and Mrs Uddin collectively (as the persons from time to time entitled as immediate landlords) – of an amount equal to(i) the arrears of rent down to the date of payment and(ii) the respondents' costs of these proceedings, save in so far as those costs have been increased by unnecessary opposition to the grant of relief. To that must be added(iii) interest on arrears of rent - itself recoverable as rent in arrears under the provisions in clause 3(2) of the 1994 lease – at the contractual rate there provided. And some provision must be made to take account of any increased rent that will or may become payable on the rent review which was due, under clause 5 of the 1994 lease, on 25 March 1998.[17]The amount of the arrears of rent as at 26 April 1996 (£15,217.16) is not in dispute; nor is there any dispute as to the amount of interest which had accrued on those arrears of rent as at 26 April 1996 (£1,314.91). The costs of effecting forfeiture are agreed at £310.39. Interest on the amount of arrears as at 26 April 1996 up to 26 April 1996 has been agreed at £1,314.91 and interest from 26 April 1996 on those arrears, the amount of rent which would, but for the forfeiture, have been due to be paid between 26 and 29 April 1996 (agreed at £76.72) and the costs of effecting forfeiture, has been agreed at £5,280.72, giving a total sum for interest on these items as at 16 May 2001 of £6,495.63. Those figures will require some adjustment to carry the position down to the date of payment under any order which we shall make and to cover the three days between 26 and 29 April 1996. But, subject to that necessary adjustment, the terms upon which relief from forfeiture can be granted to the applicants must include payment (or credit) to the respondents of an amount equal to the aggregate of those amounts – that is to say, £23,023.18 Further, there must be added to that amount of £23,000 odd – at least prima facie –(i) rent at the rate of £14,000 per annum from 29 April 1996 to the date of payment (an amount in excess of £70,000),(ii) interest at the contractual rate on arrears of rent accruing after 29 April 1996 from the due dates for payment, and(iii) such part of the respondents' costs of these proceedings as the applicants ought to pay as a term of obtaining relief from forfeiture. But there must be deducted from the aggregate amount which the applicants would otherwise be required to pay as the price for relief such part of the applicants' costs of these proceedings (or, more precisely, Mrs Bland's costs – as there is no reason to think that the Beers have incurred any costs in these proceedings) as are properly attributable to the respondents' unnecessary opposition to relief and which the respondents ought to pay.[18]The issues which this Court now needs to decide are:(i) whether the respondents should be required to give credit against the rent from 29 April 1996 (including any increase in that rent that will or may be payable as the result of the rent review due on 25 March 1998) and the interest on that rent in order to take account of the fact that the Uddins have been in actual occupation of the property since 29 April 1996 for the purposes of the restaurant business which they have carried on there; and(ii) what provision in respect of costs should be reflected in the terms for relief. There is a further (but subsidiary) issue: whether the Court should make an order under section 90 of the Law of Property Act 1925 vesting a new lease in Mrs Bland, as chargee, for the purpose of enabling the property to be sold. Issue (i): Should the respondents be required to give credit in respect of their actual occupation of the property since 29 April 1996?[19]Since 29 April 1996 the Uddins have been entitled to possession of the property, as against Ingram's Estates, under the 1996 lease. They have been in actual occupation of the property, and have carried on business there. They have, of course, paid rent (or been liable to pay rent) to Ingram's Estates. There is no doubt that, if the applicants are required to pay the arrears of rent and interest which have accrued under the 1994 lease since 29 April 1996 as a condition of relief from forfeiture, it will be the Uddins (rather than Ingram's Estates) who will be entitled to receive such payment. Indeed, it is, in my view, plain that it is Mr and Mrs Uddin (rather than Ingram's Estates) who, on relief from forfeiture being granted, would be entitled to any payment which the applicants are required to make in respect of arrears of rent and interest which accrued under the 1994 lease before 29 April 1996 – see section 141 of the Law of Property Act 1925 and the observations of this Court in In re King, Robinson v Gray [1963] Ch 459 and London and County (A & D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764. The question is whether, in determining what payment should be made to the Uddins as a condition of relief from forfeiture, it is right to bring into account the benefits they have enjoyed as the persons in actual occupation during the period (or part of the period) in respect of which that payment is made.[20]It is said on behalf of the respondents that nothing need be brought into account against the payment in respect of arrears of rent (and, in this case, interest on such arrears) which equity requires as the price of relief from forfeiture. It is said that if relief from forfeiture is granted upon terms that the applicants pay all the arrears of rent and interest – and, if they comply with those terms – then the Beers, as the persons who, following relief from forfeiture, will be treated as if they had been entitled to possession under the 1994 lease throughout (under the principle of relation back), will have an action against the Uddins as trespassers in which they may expect to recover damages or mesne profits. But, it is said, before such an action could be brought, the applicants must first obtain relief from forfeiture. Absent relief, there is no basis upon which Mr and Mrs Beer could bring an action in trespass. And, even if relief were obtained, there could be no basis upon which Mrs Bland could bring an action for trespass; for she would have no right to possession. But, in order to obtain relief from forfeiture, the applicants must comply with the terms for relief; and those terms must require payment of all arrears of rent and interest.[21]It might be thought that there was some unnecessary circuity in requiring the applicants to pay to the Uddins a sum representing all arrears of rent and interest in respect of the period from 29 April 1996 in order to put the Beers in a position where they could bring proceedings in trespass against the Uddins to which there would be no defence and in which the Beers would recover mesne profits which – prima facie at least – would be likely to equal the market rent and interest under statute. But, of course, the reason why the Uddins urge the Court to adopt that circuitous approach lies in the figures. The amount to be paid in respect of all arrears of rent and interest (if no credit can be taken for the benefits enjoyed by the Uddins as the persons in actual occupation since 29 April 1996) is likely to be well in excess of £100,000. Substantial costs are sought in addition. Plainly, the respondents take the view that Mrs Bland (who brings these proceedings with the assistance of the Legal Services Commission) can have no prospect of finding that amount. So, if the Court can be persuaded to grant relief on those terms, she will be forced to abandon her claim. The proceedings which she commenced nearly five years ago in the High Wycombe County Court will have proved fruitless.[22]I do not find that an attractive result. I find it doubly unattractive in the circumstances that, for the reasons that I sought to explain in my earlier judgment, this is a case in which relief from forfeiture could and should have been granted in the County Court under section 139(2) of the County Courts Act 1984 with the minimum of delay and expense. If the respondents were correct in their contention that equity requires the applicants first to pay the whole of the arrears of rent and interest (without bringing into account the benefits which the Uddins have enjoyed from their actual occupation) before the Beers can be in a position to claim mesne profits at law in respect of that occupation, the applicants' claim for relief in these proceedings (which this Court has upheld) will have proved illusory; the relief to which this Court has held them entitled will have been frustrated by the course which the proceedings have taken.[23]I am satisfied that that result is not merely unattractive; it is based on an approach which is wrong in principle. The respondents are not correct in their contention that equity requires payment by the lessee of the whole of the arrears of rent and interest (without bringing into account the benefits enjoyed by the lessor) as the price of relief from forfeiture. It is important to keep in mind that the foundation of the equitable jurisdiction to relieve from forfeiture on non-payment of rent is that the right of re-entry reserved by the lease in the event of non-payment of the rent is regarded as a security for the rent – see Howard v Fanshawe [1895] 2 Ch 581 , 588. It would be inconsistent with that principle to grant relief from forfeiture on terms which enabled the lessor to profit from the exercise of the right of re-entry. The lessor is entitled to be restored to the position in which he would have been if the default which gave rise to the exercise of the right of re-entry had not occurred; but that leads to the conclusion that he should give credit for benefits which he has enjoyed as a consequence of the re-entry. In so far as those are benefits which he would not have enjoyed if he had not re-entered, he should bring them into account.[24]The need to bring into account benefits enjoyed by the lessor as a consequence of the re-entry when determining the sum to be paid by the lessee as the price of relief from forfeiture was treated by the Divisional Court in Ireland, in Wilson v Burne (1888) 24 L.R.Ir. 14, as so well established as to be beyond doubt. The facts provide a convenient illustration of the principles upon which equity acts in these cases. Property was held by the lessee on a lease for an unexpired term of years at a reserved rent of £205 per annum payable half yearly. The rent due on 25 March 1887 was not paid. On 23 August 1887 the lessor re-entered and remained in possession until 27 September 1887. It was found as a fact that, if the lessee had claimed an account of mesne profits in respect of that period, the lessor would have been chargeable with the sum of £34 – attributable to the grazing, meadowing and cropping of the land which he had carried out during those five weeks. On 27 September 1887 the lessee paid the arrears of rent due as at 25 March 1887, without claiming an account of mesne profits in respect of the period between 23 August and 27 September 1887, and went back into possession. In a subsequent action by the lessor to recover possession on the grounds of non-payment of the following year's rent, due on 25 March 1888, the lessee sought to set off the £34 in reduction of the rent due. The importance of the point, in context, was that, under the statute applicable in Ireland at the time, the lessor could not proceed to ejectment unless a year's rent were in arrear; and so, it was said, the set-off of £34 in respect of the period between 23 August and 27 September 1887 would reduce the outstanding rent to an amount which was below that threshold. That argument failed. But the reason why it failed was that the lessee's right to have the lessor's mesne profits taken into account in determining what the lessee should pay in an action for relief from forfeiture – or a redemption action as it is described in the judgments in that case – was not capable of being advanced as a separate claim. It was a right which could only arise in the context of the taking of the account which equity required in order to determine the terms upon which relief from forfeiture should be granted. That the right to set-off the lessor's mesne profits did arise in that context was unquestioned[25]In Wilson v Burne Mr Justice Johnson explained the practice applicable to these cases in nineteenth century Ireland. He said this, at page 28:
"Under the Landlord and Tenant Act, 1860, sections 70, 71, the application for redemption is now made in a summary manner to the Division in which the ejectment is brought, and the lessee or tenant is by writ of restitution restored to the possession of the premises and given such relief "as a Court of Equity might have given": this, in substance, is that the lessee or tenant on his part shall account for the rent and costs in the ejectment, and for the rent which subsequently became due up to the date of the report of the Master to whom the Court refers the account, and that the lessor or landlord for his part shall account for the profits, without wilful default, during his possession ; that a balance shall be struck on foot of these two accounts, and the party against whom the balance is found shall pay that balance to the other party. . . . By redemption . . . the interest of the lessee or tenant which was divested by the execution of the habere is revested in the lessee or tenant, and continued as of his former estate, the inchoate forfeiture (as it is termed in some of the cases) being wiped out; by the redemption he is restored to the possession, as if he had not been dispossessed, on terms not only of payment of rent and costs in the ejectment, but also that he is liable for and bound to pay all rent accruing after the rent in the ejectment, and is also given an account against the lessor or landlord for the rents and profits . The landlord's possession under the judgment in the ejectment and the habere is lawful, and is given by statute on the tenant's default. If the tenant redeems, the rent is not suspended, and the only liability of the lessor or landlord to the lessee or tenant on redemption is to account for the rents and profits during his possession ."
[emphasis added] There are passages to the like effect in the judgments of the other two members of the Divisional Court – see at pages 18 and 21 in the judgment of Mr Justice O'Brien, and at pages 32 and 34 in the judgment of Mr Justice Gibson. It is, of course, true that the court was concerned with the position under a statute applicable only to Ireland - the Landlord and Tenant (Ireland) Act 1860 (23 &24 Vict. C.154) – but nothing turns on that. There were similar statutory provisions in force here. The statute was essentially procedural; it empowered the court in which the ejectment was brought to give such relief "as a Court of Equity might have given". In that context there was no relevant distinction between the principles applicable in Ireland and those applicable in England and Wales. Nor is there any reason why those principles should not remain applicable today.[26]The reasoning and the decision in Wilson v Burne provides the answer not only to the question whether the lessor had to bring into account the benefits which he has derived from his occupation of the land during the period of "inchoate forfeiture", but also to the question whether the lessee should be left to bring an action in trespass after the lease has been restored. There can be no such action, for the reason that, during the period of inchoate forfeiture, the lessor's possession of the land is lawful. The appropriate way of dealing with mesne profits during the period of inchoate forfeiture is by bringing them into account in determining the amount which the lessee should pay as the price of relief from forfeiture.[27]If, as I would hold, the Uddins must give credit in respect of their actual occupation of the property since 29 April 1996, the question arises: "in what amount?". In my view, it is pertinent to consider, by way of analogy, the position of a mortgagee who goes into possession of mortgaged property. It is unnecessary to hold that the lessor should account on the basis of wilful default (and I do not do so); it is enough to hold (as I do) that, as in the case of a mortgagee who goes into possession of mortgaged property for his own benefit, a lessor who uses the property for his own business during a period of inchoate forfeiture should be charged with a full occupation rent – see the observations of Lord Justice Turner in Marriott v The Anchor Reversionary Company (1861) 3 De Gex Fisher & Jones 177, 193.[28]In the present case, I am satisfied that there is sufficient material to enable this Court to reach the conclusion that a full occupation rent during the period from 29 April 1996 until 25 March 1998 (the rent review date under the 1994 lease) was not less than £14,000 per annum. That was the rent reserved over the first four years of the 1994 lease; and that was the initial rent reserved under the 1996 lease, for which the Uddins were willing to pay a premium of £12,000. Further, I think it appropriate to assume that a full occupation rent since 25 March 1998 will have been not less than the "market rent" to which the rent under the 1994 lease would be reviewed under the provisions of clause 5 of the 1994 lease. Accordingly, I would hold that the respondents should bring into account an amount in respect of mesne profits equal to the amount which would otherwise be payable by the applicants in respect of rent (and any revised rent payable on a review under clause 5 of the 1994 lease) for the period since 29 April 1996. Further, the respondents should bring into account in respect of mesne profits an additional amount equal to the interest which would otherwise be payable by the applicants on rent accruing since that date. The interest payable under the 1994 lease is treated as additional rent and, as it seems to me, mesne profits should be assessed on a similar basis.[29]The effect of assessing the amount to be brought into account in respect of mesne profits on the basis which I have indicated is that, subject to the question of costs (to which I am about to turn), the amount to be paid by the applicants as a term of the grant of relief from forfeiture is limited to the figure of £23,000 odd (subject to adjustment) to which I have referred earlier in this judgment. The amount that would otherwise be payable by the applicants in respect of rent and interest since 29 April 1996 is matched by the amount for which the respondents must give credit in respect of mesne profits. Issue (ii): what provision in respect of costs should be reflected in the terms for relief?[30]The costs incurred in these proceedings have been substantial. It is convenient to set out the figures with which we have been provided; whilst recognising, of course, that they have not yet been subject to taxation or detailed assessment. Mrs Bland's costs are put at £90,808; of which £23,043 is attributable to the County Court hearing, £20,204 to the hearing in the High Court and £47,561 to the hearing in this Court. The respondents' costs (taken together) amount to £100,009; of which £31,524 is attributable to the County Court hearing, £21,196 to the hearing in the High Court and £47,289 to the hearing in this Court. Ingram's Estates (on the one hand) and Mr and Mrs Uddin (on the other hand) were separately represented throughout; with the result that the respondents have incurred two sets of costs between them.[31]The proceedings were commenced on 22 August 1996. The claim was for relief from forfeiture under section 146(4) of the Law of Property Act 1925. Thereafter the following dates are said to be of significance:(i) 16 September 1998, the first day of the hearing before His Honour Judge Hull QC in the County Court, when Mrs Bland amended her claim to seek relief, in the alternative, under section 139(2) of the County Courts Act 1984;(ii) 27 October 1998, when Mrs Bland (who was bringing her claim under a legal aid certificate) provided evidence that the arrears of rent would be paid by her son;(iii) 17 March 1999, the second day of the hearing before Mr Leaver QC, when Mrs Bland produced consents from Mrs Beer and from Mr Beer's trustee in bankruptcy to the relief from forfeiture which she sought;(iv) 12 October 2000, when, on opening the appeal in this Court, counsel for Mrs Bland sought to rely (it is said for the first time) on the charging order nisi (as distinct from the two separate charging orders absolute) and on her right, as equitable chargee, to claim through the Beers. On the basis of that chronology the respondents submit that it was not until 10 October 2000 that Mrs Bland was in a position to persuade a court to grant the relief which she sought. Accordingly, they submit, she should pay all the costs incurred before that date; and, in particular, that it should be a term of relief from forfeiture that she does so.[32]There would be greater force in those submissions if it were not for three factors which they ignore. First, it is impossible to avoid the conclusion that Mrs Bland's claim for relief from forfeiture would not have been resisted with the tenacity which has been a feature of this litigation if it had not been for the fact that, within three days of re-entry, a new lease of the property had been granted to the Uddins. It is important to keep in mind that that step was taken by Ingram's Estates in the knowledge that the Beers were asserting an intention to apply for relief from forfeiture; and that the Uddins took the 1996 lease with constructive notice of the Beer's right to such relief. It is, to my mind, beyond argument that the circumstances in which re-entry took place and the new lease was granted, over the period of three days between 26 and 29 April 1996, were intended (at least by Ingram's Estates) to impede or frustrate any claim to relief from forfeiture by or on behalf of the Beers; and that, the new lease having been granted in those circumstances, the commercial need to maintain the Uddins in occupation under the new lease has dictated the respondents' conduct of the litigation thereafter. But for the grant of the 1996 lease, there is no reason to think that Mrs Bland's claim to relief from forfeiture would have been resisted by Ingram's Estates; and, of course, the Uddins would have had no interest in the matter. Either Mrs Bland could pay the arrears of rent and costs which, following forfeiture on 26 April 1996, would, plainly, have been payable as a condition of relief; or she could not. If she could pay, Ingram's Estates had no reason (absent the new lease) to oppose relief on the usual terms – it being plain that, as a term of relief, Mrs Bland would be required to sell the 1994 lease and that, on such a sale, the assignee would be a person in respect of whom Ingram's Estates (acting reasonably) would have the right to withhold consent under the usual covenant against assignment without consent which the 1994 lease contained. If she could not pay, Ingram's Estates could enter into a new lease with impunity. It was the attempt to impede or frustrate a legitimate claim to relief from forfeiture which has led to this extensive litigation.[33]Second, for the reasons which I have given in my earlier judgment, I remain of the view that the County Court had jurisdiction, under section 139(2) of the County Courts Act 1984 read in conjunction with sections 139(3) and 138(9C), to grant the relief which Mrs Bland sought. The hearing in the High Court seems to me to have been the cause of unnecessary expense and delay. And, in any event, this Court has reversed the decision in the High Court.[34]Third, I can see no reason why it was necessary for the respondents to incur two sets of separate costs in relation to the claim to relief from forfeiture. Given that the 1996 lease had been granted, the effective defendants to the claim to relief from forfeiture were the Uddins as the immediate lessors. There is no reason, as it seems to me, why the applicants should be required to make any payment to Ingram's Estates as a condition for the grant of relief – see section 141 of the Law of Property Act 1925 and the cases to which I have already referred, In re King, Robinson v Gray [1963] Ch 459 and London and County (A & D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764. For Ingram's Estates to choose to expend in excess of £68,000 in defending a claim to relief from forfeiture in relation to a lease in which it does not appear to have any direct commercial or financial interest may seem bizarre. More pertinently, there is no good reason why Mrs Bland should be required to reimburse that expenditure.[35]In my view, it would be right for Mrs Bland to have her costs in this Court (such costs to include the whole costs of counsel's appearance at the hearing of the appeal) . I would make a joint and several order to that effect; but I would direct that, as between Ingram's Estates and the Uddins the burden of those costs should be borne equally. I do not think that it would be right to make an order requiring the respondents to pay any costs incurred by Mrs Bland before 10 October 2000 other than those directly attributable the issues actually argued at the hearing of the appeal. In reaching that conclusion, I have had in mind(i) that there has been no appeal against the decision of His Honour Judge Hull QC to refuse relief under section 139 of the County Courts Act 1984,(ii) that, in my view, the High Court proceedings could have been avoided if there had been an appeal against the decision in the County Court,(iii) that the arguments presented to the High Court were different from those which succeeded in this Court, and(iv) that there is some force in the point that it was not until the appeal was opened in this Court that Mrs Bland was formally in a position to obtain the relief which she claimed.[36]It does not follow, in the circumstances of this case, that the respondents should have all their costs of the proceedings prior to 10 October 2000. For the reasons which I have sought to explain, I can see no reason why Ingram's Estates should have any costs in relation to the claim to relief from forfeiture. There was no need for Ingram's Estates to take any active role in resisting that claim. Further, I am satisfied that the defence of this litigation has been dictated by an ill-considered attempt, in April 1996, to which the Uddins (through their advisers) were party, to impede and frustrate a legitimate claim to relief from forfeiture. The litigation has taken the course which it has because the Uddins have sought to defend the position which arose from their over-hasty entry into the 1996 lease at a time when the Beers had given notice of their intention to seek relief from forfeiture. It would be appropriate to require the applicants to pay the costs that would have been incurred on a short and unopposed application to the County Court for relief from forfeiture; but it would not be appropriate to require the applicants to pay the costs which flow from the respondents' attempt to defend the indefensible. Section 90 of the Law of Property Act 1925[37]Section 90 of the Law of Property Act 1925 enables the court, where it has made an order for sale of property subject to an equitable charge, to vest in the chargee a legal term of years absolute so as to enable him (or her) to carry out the sale in like manner as if the charge had been created by deed by way of legal mortgage pursuant to section 87 of the Act. The effect of such an order, in the present case, would be that Mrs Bland could, herself, transfer the interest under the 1994 lease to a purchaser – see section 89(1) of that Act. If relief from forfeiture is granted it will be on terms that the 1994 lease is sold; but - prima facie , at least - the transfer on sale can be effected by the Beers, with the consent of Mrs Bland, without the need for an order under section 90 of the 1925 Act. I am not persuaded that there is any reason to make such an order at this stage. I would give liberty to apply in case some difficulty arises in the future. Conclusion.[38]For the reasons which I have set out, I would grant relief from forfeiture on terms that Mrs Bland pays to Mr and Mrs Uddin a sum equal to the aggregate of(i) the £23,000 odd to which I have referred (adjusted to take account of the period between 26 and 29 April 1996 and to carry the interest down to the date of payment) in respect of rent accruing before 29 April 1996, the costs of effecting re-entry and interest thereon to the date of payment and(ii) an amount in respect of their costs equal to the amount of costs that would have been incurred on an unopposed application for relief in the County Court, but after deduction of(iii) one half of her costs in this Court. For the avoidance of doubt I should make it clear that, if (as may be the case) the amount to be deducted under (iii) exceeds the aggregate of the amounts under (i) and (ii), then no sum will be payable. If the parties are unable to agree the amount to be paid (if any) the matter should be remitted to the County Court for an account to be taken.

LADY JUSTICE HALE:

[39]I agree.

ORDER

Appeal allowed. Minute of order to be agreed between counsel. The part 20 claim to be heard in the County Court. Permission to appeal to the House of Lords refused. (Order does not form part of approved Judgment)

Cited in 4 later judgments