Derwent Lodge v Signature Living: Andrew Williams succeeds in relief from forfeiture appeal

Andrew Williams, real estate barrister at Exchange Chambers in Liverpool, has succeeded in an appeal relating to the principles upon which the courts will grant relief from forfeiture to sub-tenants.

In Derwent Lodge Estates Ltd v Signature Living Hotel Ltd & 54 others [2025] 3 WLUK 402, the headlease to West Africa House, a seven-storey building in Liverpool, was forfeited. This resulted in all the sub-leases in the building being terminated. Those who held the 42 apartments in the building, and others, applied for relief from forfeiture under s. 146(4) of the Law of Property Act 1925.

Derwent, the freeholder, did not object to relief being granted but opposed the particular relief sought by the sub-tenants as it would have resulted in the grant of a new headlease of only part of the building. Furthermore, that new headlease would have imposed obligations on Derwent which, in practical terms, it had not been subject to before. Most notably, it would have rendered Derwent an "Accountable Person" for the purposes of the Building Safety Act 2022.

At first instance, the court found in favour of Andrew’s client, Derwent, while noting that there was no authority particularly close to the facts of this case. The court’s decision involved holding that the apartment holders should be entitled to relief but only by way of the grant of a new lease that mirrored the previous headlease of the whole building. That would see the tenants under that headlease becoming the landlord to commercial units in the building. The court held that a condition of relief was that the sub-tenants must pay the rent arrears in respect of the whole building and not just in relation to the part of the building occupied under their own sub-tenancies.

The leaseholders appealed.

The matter came before His Honour Judge Cadwallader upon appeal. He considered the principles upon which a court should grant relief where the application has been made by sub-tenants of only part of the premises demised by a headlease. In doing so, he upheld the decision at first instance in favour of Derwent.

Andrew Williams was instructed by Kevin Lee and James McHugh of Hill Dickinson Solicitors.