25
Nov
20
Articles, Property, Chancery & Commercial
Well, that’s a relief

When a landlord forfeits a lease of commercial premises for non-payment of rent and does so by peaceable re-entry the tenant can seek relief from the forfeiture by applying either to the County Court under section 139(2) of the County Courts Act 1984 or to the High Court under its inherent jurisdiction.  The county court has unlimited jurisdiction.  The value of the premises does not matter.

There is no time limit for an application to the High Court but the tenant must act with “reasonable promptitude” (Thatcher v C. H. Pearce & Sons (Contractors) Ltd [1968] 1 WLR 748) and the court will use as a guide the 6 month time limit found in section 210 of the Common Law Procedure Act 1852.

In the County Court, however, an application must be brought within 6 months from the date of re-entry: section 139(2) of the 1984 Act.  Even if it is brought within that time-limit, can the court still refuse relief on the ground that the tenant delayed?  That was discussed on appeal in Keshwala v. Bhalsod [2020] EWHC 2372 (QB).

On 13th September 2018, the tenants being £500 in arrears of rent, the landlords without warning effected forfeiture by re-entry.  By 24th September 2018 the tenants had paid the arrears into the landlords’ agents’ bank account.  They then tried to communicate with the agents as to payment of the next quarter’s rent.  Unfortunately, no contact was made and on 4th February 2019 the landlords re-let the premises.  The second claimant had difficulty too making contact with his co-tenant and it was not until 26th February 2019 that the tenants together issued their claim for relief from forfeiture.  That was of course within the 6 month time limit.

The county court judge in the exercise of her discretion refused relief.  The principal reason by far was that the tenants had not made a prompt application.  Had they done so, it was “highly likely” that the court would have granted the application.  As it was, she felt that the delay had not been properly explained and considered that, even if they did not start court proceedings, the tenants through their solicitors should have made it clear to the landlords that once contact had been made with the first claimant an application would follow.  The landlords would then have been put on notice that any re-letting would be at their own risk.

Martin Spencer J. allowed the tenants’ appeal.  The judge below had erred in treating the matter as simply one involving the exercise of a general discretion.  He said at para.16:

“The starting point…is that, in exercising the discretionary remedy of relief from forfeiture, the proviso for re-entry is to be treated as no more than security for the payment of rent, so that if rent is paid (or tendered) relief should follow unless there is some exceptional reason why it would be unjust to grant relief.”

Thus the question for decision was whether or not the delay “comprised such exceptional circumstances as to justify the refusal to grant the relief sought.”  He went on:

“In this context…the principal guidance for the learned judge should have been the statutory six month limit for the bringing of a claim for relief from forfeiture.”

What the relevant authorities showed, he said, was that an application brought within six months is to be taken as having been brought with reasonable promptitude.  So the factor relied upon by the judge below could not amount to the kind of exceptional circumstances justifying a refusal of relief, despite the application having been made within 6 months.

It seems therefore that in the county court at least, if an application for relief from forfeiture is brought within the statutory 6 month time limit, it is highly unlikely, if ever, to be refused for not having been made with reasonable promptitude.

The lesson for landlords is this.  Physical re-entry for non-payment of rent carries the risk that at some time later the tenant might regain possession.  On the other hand, if the landlord takes court proceedings, it is likely to become apparent sooner whether or not the tenant will seek relief.

 

Written by or involving: John Bryant

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