Bedford v Paragon: subletting and shared ownership leases

In Bedford v Paragon Asra Housing Ltd [2021] UKUT 266 (LC), the Upper Tribunal (UT) considered an appeal against the First Tier Tribunal’s (FTT) refusal to strike out as an abuse of process the landlord’s application for a s.168 determination that the tenant breached the covenant prohibiting subletting contained in their shared ownership lease.

Facts

Mr Bedford had a 99-year shared ownership lease from Paragon which contained an absolute covenant prohibiting the tenant to underlet the property. Within a year of obtaining the lease Mr Bedford decided to move temporarily to the USA in the hope of being selected for the USA national rugby team prior to the 2011 World Cup. Before he moved he sought and obtained permission from Paragon to sublet the property for a year while he was away and he gave a specific assurance that he would return to the property at the end of 2011.

Mr Bedford did not return to the property at the end of 2011 and the property appears to have been sublet continuously since 2010. Paragon became aware of this in 2018 when notified by Mr Bedford’s mortgage lender that he was in arrears. Between August 2018 and May 2020 Paragon had been demanding and receiving rent from Mr Bedford.

Paragon brought an application in the FTT for a determination for a breach of lease under s.168(4) Commonhold and Leasehold Reform Act 2002. Mr Bedford applied to have the proceedings struck out as an abuse of process as the right to forfeit the lease had been waived by Paragon’s acceptance of rent with full knowledge of the subletting. The FTT dismissed the application and Mr Bedford appealed and the UT dismissed his appeal.

Summary of judgement

The FTT refused the initial application to strike out, as the FTT has jurisdiction to determine if a breach has taken place not whether there is a defence to the forfeiture claim that may or may not follow. The FTT further held that even if there had been a waiver as to possible forfeiture there are other remedies that flow from the determination of a breach of lease. Also, the FTT held that they did not have jurisdiction to make a determination as to the waiver of forfeiture.

The UT held that the consideration of alternative remedies was an appropriate consideration for the FTT to have had in their minds when refusing to strike out the matter. The UT held that while the FTT did have jurisdiction to make a determination on the waiver it does not move the matter much further as there is clearly no abuse of process.

If you have any questions about the judgement in this article or how Birketts can help you as a landlord with subletting and shared ownership lease issues, please contact Clive Adams or another member of the Social Housing Team.