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Better late than never? Relief from forfeiture after 14 months

The High Court has granted relief from forfeiture to a tenant 14 months after a landlord exercised his right to forfeit by peaceable re-entry. Whilst delay may ultimately be a decisive factor against granting relief, the Court has a wide discretion in reaching that decision.  In this instance, the Court considered it wrong to base its decision on delay in isolation, without having regard to all of the circumstances.

The case concerned a lease of industrial premises granted for 125 years at a premium of £90,000 and which had a value of £275,000. In April 2014, with arrears amounting to £24,000, the landlord forfeited the lease for non-payment of rent. At the time of forfeiture, the tenant company’s sole director was suffering from depression. In June 2015, the tenant applied for relief.

Generally, a tenant needs to apply for relief from forfeiture for non-payment of rent within six months. On that basis, it is surprising that relief was granted. However, where forfeiture is by peaceable re-entry, the High Court can still grant relief after the six month period, which is used as a guide rather than a strict time limit.

The Court took the following factors into account in reaching its decision:-

1. A high premium was paid for the lease.

2. The arrears amounted to less than 1% of the value of the lease, meaning the landlord would gain a disproportionate windfall.

3. The tenant’s ill-health meant that he did not appreciate the risk and associated consequences of forfeiture.

4. The tenant had not sought legal advice at the time of forfeiture.

5. The lack of prejudice to the landlord, who had not taken any steps to market or re-let the property.

6. The steps the tenant was taking to satisfy the arrears and the landlord’s costs (including a family member selling his home).

As such, the Court considered that the tenant’s application was made with “reasonable promptitude”, which was an “elastic concept which is capable of taking into account human factors”. The tenant was granted relief subject to the condition that the arrears, interest and the landlord’s costs were paid by a specified date.

This decision demonstrates the approach taken by the Court when using its broad discretion, but should not be misinterpreted as enabling tenants to disregard the amount of time taken to apply for relief. Each case will be decided on its own merits and the courts will have regard to all the circumstances when determining whether the application has been made with reasonable promptitude.

Landlords may, however, be concerned with the potentially longer period of uncertainty following forfeiture by peaceable re-entry, particularly where a lease has market value and the property is not being relet.

Pineport Ltd v Grangeglen Ltd [EWHC] 1318