When a landlord forfeits a lease for non-payment of rent by re-entering the premises without a court order, commonly known as peaceable re-entry, the tenant has the option to apply to court for relief against forfeiture which, if successful, results in the reinstatement of the lease. Relief is usually granted upon payment of all of the arrears and landlord’s costs of the relief application.
In contrast to the statutory time limits that apply to applications for relief from forfeiture by way of a court order, the court has discretion whether to grant relief where the lease has been forfeited by peaceable re-entry. In the County Court, an application for relief must be made within six months of the peaceable re-entry. The High Court has an equitable discretion to grant relief at any time.
Background:
In Pineport Limited v Grangeglen Limited [2016] EWHC 1318 (Ch), the lease was forfeit by peaceable re-entry in April 2014 for non-payment of service charges of £2,155, which were recoverable as rent. A relief application was made by the tenant to the High Court in June 2015, 14 months after the forfeiture.
Court decision:
In granting relief on condition that the arrears and costs, together totalling £24,350, were paid within a fixed period, the court took into account the following:
- The tenant should be able to pay the arrears and costs within the immediately foreseeable future.
- The imprisonment of one of the tenant’s directors for 18 months for issuing MOT certificates without following the correct procedure was not relevant and there was only limited evidence that the premises could be tainted by the tenant’s past conduct.
- As the lease had been granted for a substantial premium at a ground rent, there was a severe disproportion between the sum due to the landlord and the value obtained by the landlord if relief was refused, i.e. the landlord would receive a windfall if relief were not granted.
- There was no prejudice suffered by the landlord or any third party as a result of the failure to pay the service charge on time or the tenant’s delay in making the relief application.
- The landlord had taken no steps since the forfeiture to market the premises for the grant of a new lease.
Although delay may ultimately be the decisive factor, it was wrong to deal with that issue in isolation. A relief application must be made with “reasonable promptitude”, taking the traditional six month period as a guide. In this case, the long delay was explained by a combination of the effects of the director’s diagnosed depression, a restraint order placed over the business as a result of the identified MOT offences, the tenant’s lack of money and the tenant’s failure to obtain specialist advice.
Practice Point:
This case is a useful indication of the factors that the court will take into account when deciding whether to grant relief against forfeiture by peaceable re-entry for non-payment of rent. It illustrates to both landlords and tenants that relief can potentially still be granted after a long delay. However, it should be assumed that the decision in this case was an exceptional one and so any application for relief on behalf of a tenant should still be made promptly and on the assumption that the High Court is much less likely to grant relief when the application is made more than six months after forfeiture.
Autumn 2016
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