Osibanjo & Another v Seahive Investments Limited [2008] EWCA Civ 1282 involved a dispute over whether the landlord had waived its right to forfeit the lease by accepting rent or, alternatively, by serving a statutory demand (i.e. commencing bankruptcy proceedings).


If a tenant is in breach of a covenant in its lease and the landlord accepts rent with knowledge of that breach, then the landlord may have waived its right to forfeit in respect of that breach. To amount to a waiver, the rent must have:

  • Accrued since the landlord became aware of the forfeiture event.
  • Been offered and accepted as rent by the landlord.

The test is an objective one: did the landlord’s actions amount to recognition of the continued existence of the lease and the landlord and tenant relationship?

If the breach is a continuing one, then a right to forfeit accrues each day the breach continues.


The tenant occupied a public house under a lease. The lease contained prohibitive covenants and the usual provision for forfeiture inthe event of a breach of covenant or the bankruptcy of the tenant.

The landlord served a statutory demand for rent arrears. The debt remained outstanding and the landlord filed a bankruptcy petition against the tenant. The landlord later discovered that the tenant was also in breach of the covenants in the lease.

The tenant sent a cheque in settlement of the statutory demand and in part payment of the rent arrears. The cheque was banked but only those monies required to settle the statutory demand, were retained. The balance was returned to the tenant and the bankruptcy petition was dismissed.

The landlord subsequently issued forfeiture proceedings and obtained a possession order. The tenant appealed. The Court of Appeal dismissed the appeal and held that:


  • The processing of the cheque was not conclusive evidence that the payment had been accepted as rent.
  • The bankruptcy proceedings were not in themselves a waiver of forfeiture.
  • The acceptance of the sum due under the bankruptcy petition did not amount to a waiver of forfeiture since the petition was presented before the landlord knew about the breaches of covenant.
  • The landlord was entitled to forfeit the lease for the continuing breach of covenant.

This case serves as a useful reminder of the potential pitfalls, for both parties, when a tenant that is in breach of covenant, makes a payment to the landlord. The tenant needs to specify the precise debt that is to be settled and the landlord must consider whether accepting the monies could amount to a waiver of the right to forfeit.

Michael Davies is a senior associate in the dispute resolution team in Exeter and is a specialist in property and land disputes. To contact Michael, please call 01392 210700 or email drx@stephens-scown.co.uk