Urban farm operator backed by developer loses High Court bid for relief as council seeks forfeiture of lease

The operator of an urban farm in London has lost a High Court bid to avoid the forfeiture of its lease for non-compliance with relevant covenants.

The case of Tropical Zoo Ltd v Mayor and Burgesses of the London Borough of Hounslow [2024] EWHC 1240 (Ch) concerned a dispute about a lease of approximately 25 acres of land currently designated as green belt (the Site), which was granted by Hounslow to the claimant (TZL) in March 2012 for the purposes of use as a centre for education, conservation and leisure including a tropical zoo visitor attraction and associated facilities.

The lease included covenants requiring TZL to construct a zoo building and education centre within two years of the grant of the lease.

Since taking on the lease TZL has run Hounslow Urban Farm on the Site, with a collection of (currently) around 489 vertebrates, including mammals, birds and reptiles, plus 73 invertebrates. It has not, however, constructed the zoo, or commenced construction of the proposed zoo building.

Hounslow is now seeking the forfeiture of the lease for non-compliance with the relevant covenants.

TZL contended that the council had waived its right to forfeit, or alternatively that the court should grant relief from forfeiture.

It initiated proceedings on 3 August 2022 with a claim for declaratory relief that the lease was not liable to be forfeited, alternatively requesting relief from forfeiture.

The council defended the claim on the basis that it had not waived its right to forfeit, and that the court should not grant relief. The local authority has since issued a claim for possession in the County Court at Central London, which is stayed pending the determination of TZL’s claim.

Mrs Justice Bacon noted that while TZL is the tenant under the lease and the claimant in the proceedings, the litigation was in fact being funded and run by a property development company called Canmoor.

The judge added that a subsidiary of Canmoor, Hounslow Ventures Ltd (HVL), had entered into a Call Option Agreement with TZL which provided an option for it to purchase TZL’s shares, and it was said that the option would be exercised if TZL was successful in the litigation.

“Canmoor’s hope is that it will ultimately be able to exploit the lease in order to use most of the Site for an industrial park serving Heathrow airport. In reality and substance, therefore, this is litigation between Canmoor and LBH,” Mrs Justice Bacon said.

Mrs Justice Bacon concluded that:

• Schedule 2, paragraph 9.1 of the lease [headed “Covenants by the Tenant”] constituted a freestanding tenant covenant, material breach of which triggered a right of re-entry and forfeiture under clause 5.1.1 [which set out the proviso for re-entry for breach of the Tenant Covenants]. TZL materially breached that covenant by failing to comply with a paragraph 9.1 notice served by the council on 6 November 2020. That notice had refering to TZL’s obligations to complete the construction of the zoo building within two years from the date of the lease. 
• Clause 5.1.1 of the lease did not exclude the operation of the common law of waiver in relation to the lease.
• Delays in returning the March 2021 and September 2022 rent payments to TZL did not, however, constitute the acceptance of rent by Hounslow, and the council did not thereby waive its right of forfeiture.

The judge refused relief from forfeiture.