Estate Acquisition & Development Ltd v Wiltshire & Another


The Message

Tenants were successful in having an order for forfeiture of their lease set aside despite having failed to attend the hearing at which the order was made.

The Case

Ms Wiltshire and Mr Chambers (the tenants) had a lease of a property under which they paid £20 ground rent a year as well as service charge and insurance premiums. By 1997 the tenants had vacated the property and moved elsewhere, although the lease continued. However, after 2000 no rent was paid.

Estate Acquisition and Development Ltd, the landlord, wrote to the tenants at the property on many occasions, submitting demands for the rent. Eventually, the landlord applied to court to have the tenants’ lease forfeited because of rent arrears of about £800. Following the landlord’s application, the Court served a claim form in accordance with the Civil Procedure Rules at the property, which was the tenants’ “usual or last known address”. The landlord had not been informed that the tenants were living at another address.

The tenants accepted that the proceedings were properly served but they did not receive notice of the issue of the proceedings or that 10 February 2004 was the date fixed by the Court for hearing the landlord’s claim for possession. On 10 February, the tenants did not appear at the hearing and were ordered by the Court to give up possession of the property.

It is a striking feature that the effect of the Court’s decision was that a property worth more than £140,000 was forfeited for a debt of £800 in proceedings in which the tenants took no part and of which they had no knowledge.

The tenants did not become aware of the state of affairs until November 2004, when they discovered they no longer owned the property. The tenants applied to the Court to set aside the 2 earlier order made in their absence. The Civil Procedure Rules provide that an order can be set aside in those circumstances if the person against whom the order was made acted promptly, had a good reason for not attending the hearing and would have had a reasonable prospect of success at the hearing.

The County Court held that the tenants did not have a good reason for their failure to attend the February 2004 hearing. The Court of Appeal, however, came to a different conclusion. If a party is unaware of the existence or imminence of proceedings (as was the case here), that may well be a good reason for not attending the hearing.

It is necessary to interpret the Civil Procedure Rules to give effect to the overriding objective of deciding cases justly and to comply with a person’s right to a fair hearing under Article 6 of the European Convention on Human Rights. The tenants acted promptly once they realised what had happened, they would have had a reasonable prospect of success if they had attended the hearing and they had a good reason for not attending.

The Court, therefore, held that the order to forfeit the tenants’ lease should be set aside.