Grand Junction Co v Bates [1954] 2 QB 160
The effect of forfeiture of a lease on a mortgage.
Facts:
The plaintiff, Grand Junction Canal Co, granted a lease to the first defendant, Bennett. This lease contained a covenant not to use the premises for any illegal or immoral purpose. The defendant assigned the lease with the plaintiff’s consent to the second defendant, Bates. He also granted Bates a mortgage secured as a legal charge against the lease. Subsequently, Bates was convicted of running the premises as a brothel. The plaintiff applied for forfeiture of the lease due to the breach of covenant. Bennett, the mortgagee, asked for relief against forfeiture.
Issues
If the plaintiff had been able to forfeit the lease Bennett’s charge would have been destroyed, as the lease would no longer have existed. Bennet had created the mortgage by executing a deed. Under s.87 Law of Property Act 1925 a mortgage created in this way has the same ‘protection, powers and remedies’ as if it was a lease or sublease. Under s.146(4) of the 1925 Act, a sublessee can claim relief against forfeiture. Therefore, Bennett claimed that he should be treated as a sublessee.
Decision/Outcome
The effect of s.87 of the 1925 Act was to give the mortgagee the same rights as if they were a sublessee. The court held that under s.146 the mortgagee could claim relief from forfeiture by the landlord as if he were a tenant or subtenant. The defendant Bennett had not known about the brothel and was in every way satisfactory as a tenant. Therefore, he was allowed to claim relief against forfeiture.
Updated 21 March 2026
This article accurately summarises the decision in Grand Junction Co v Bates [1954] 2 QB 160 and correctly identifies the relevant statutory provisions under sections 87 and 146(4) of the Law of Property Act 1925. Both provisions remain in force in their material respects. The principle that a mortgagee by legal charge may apply for relief against forfeiture under section 146(4) as if they were a sublessee continues to represent good law and is regularly cited in landlord and tenant disputes. No subsequent legislation or higher court authority has overturned or materially qualified the principle established in this case. Readers should note, however, that the courts’ broader approach to relief against forfeiture, and the discretionary factors considered, have been developed through later case law, including Billson v Residential Apartments Ltd [1992] 1 AC 494 (HL), which clarified when a tenant or sub-tenant may apply for relief after peaceable re-entry. This article does not address those later developments, so students should treat it as an introduction to the specific point about mortgagees and section 146(4) rather than a complete account of the law on relief against forfeiture.
