Unlawful sub-letting: relief from forfeiture

Citation

(2002), "Unlawful sub-letting: relief from forfeiture", Property Management, Vol. 20 No. 1. https://doi.org/10.1108/pm.2002.11320aab.007

Unlawful sub-letting: relief from forfeiture

Unlawful sub-letting: relief from forfeiture

Duarte v Mount Cook Land Ltd [2001] 33 EGCS 87

In this case, the lease contained a provision prohibiting the subletting of the premises without the prior written consent of the landlord. The lessee in fact entered into an arrangement with Duarte, whereby Duarte would occupy the premises, and operate it as a club (which was one of the permitted uses). The form of the agreement indicated that the transaction was intended to transfer the premises to Duarte by way of assignment of the original lease and that a "deposit" was to be paid by way of weekly installments over the first year of Duarte's occupation; subsequently a second agreement was entered into in similar terms save that the amount of the "deposit" was increased and an extended period allowed for payment. In due course, the original lessee having fallen into arrears with the rent, the landlords forfeited the lease; the landlords then sought to recover possession of the premises from Duarte contending that occupation by the latter was merely under licence. Not so, said the court: the two written agreements were shams and as such were to be disregarded; the true nature of the arrangement was that it was a weekly sub-tenancy granted in breach of the qualified covenant against sub-letting; however, the landlord had no substantial ground for objecting to such a sub-letting as had occurred and if consent had been sought at the time would have granted it. In the circumstances, although the court should normally be slow to grant relief from forfeiture to an unauthorised sub-lessee, this was a suitable occasion for such relief to be granted.