Akici v LR Butlin Ltd [2006] 1 W.L.R. 201
Property law – Landlord and tenant – Possession
Facts
The claimant was the tenant of a commercial lease of premises which contained a covenant preventing the sub-lease or underlet of the premises. The lease contained a clause requiring forfeiture for breaking the lease. The claimant ran a pizza business which was owned by G who paid the cheques to the defendant. Following a dispute between the parties, the defendant served notice under the Law of Property Act 1925 and two weeks later re-entered the property. The basis of the landlord’s claim was that the tenant had claimed that he was the owner of the company when he was not; the shares in the company were later transferred to him and therefore he had been sharing the premises with the company and was in breach of the covenant. The appellant appealed this.
Issue
The appellant submitted that the judge was wrong to hold that the wording of the lease meant that occupation was being shared, which was the basis of the landlord’s claim and could not therefore be relied upon. The tenant also argued that the breach could be remedied if it did exist.
Decision/Outcome
The court allowed the appeal of the tenant on the basis that the covenant in the lease should be given its technical meaning and if so, the actions of the tenant did not allow possession to another. Moreover, the notice provided under the Law of Property Act 1925, section 146, did not state a particular reason, and was not effective to support re-entry. The court also agreed that if such a breach did exist, it would have been capable of remedy.
Updated 21 March 2026
This case summary remains accurate as a statement of the Court of Appeal’s decision in Akici v LR Butlin Ltd [2006] 1 WLR 201. The principles discussed — the technical construction of alienation covenants in leases, the requirements for a valid section 146 notice under the Law of Property Act 1925, and the question of whether a breach is capable of remedy — continue to represent good law. There have been no statutory amendments to section 146 of the Law of Property Act 1925 that would affect the analysis in this case. The case remains a useful authority on the distinction between sharing occupation and parting with possession, and on the general rule that most breaches of covenant (other than illegal use) are capable of remedy for section 146 purposes, in line with the earlier approach in Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] Ch 340. Readers should note that forfeiture law more broadly has been the subject of Law Commission reform proposals for many years (most recently Law Commission Report No 303, 2006), but no legislation implementing those proposals has been enacted, so the current statutory framework remains unchanged.
