Firm News | 21.10.20

Forfeiture – Acting with reasonable promptitude

A warning to commercial tenants:

The need to act with “reasonable promptitude” to obtain relief from forfeiture

The recent decision in the matter of Keshwala and another v Bhalsod [2020] EWHC 2372 (QB) serves as a useful reminder of the Court’s approach to granting tenants relief from forfeiture.

If a tenant occupying commercial premises falls into rent arrears and the landlord wishes to forfeit the lease, the landlord may attempt to exercise ‘peaceable re-entry’ to regain possession. In such circumstances, the tenant is burdened with the task of applying to Court promptly, and requesting relief from forfeiture. The tenant must plead its case that the lease should continue for the remainder of the term in spite of the breach (i.e. non-payment of rent).

In Keshwala, the tenants mistakenly paid a quarterly rent instalment of £1,500 to the landlords, despite £2,000 owing. With £500 rent arrears outstanding, the landlords forfeited the lease by exercising peaceable re-entry. The landlords subsequently re-let the property, before the tenants applied for relief (over five months after the landlords peaceable re-entry).

In confirming that relief will usually be granted if (1) an application is made within six months and (2) the rent (and arrears) can be satisfied, the High Court explained the starting point in considering relief from forfeiture:

if rent is paid (or tendered), relief should follow unless there is some exceptional reason why it should be unjust to grant relief… an application brought within six months is to be taken as having been brought with “reasonable promptitude”…  the re-letting of the premises is no bar to granting this application for relief from forfeiture.

This confirmation will be welcomed by tenants, but to avoid any arguments about ‘delaying’ proceedings for relief from forfeiture, tenants must act swiftly if (1) they are likely to fall into rent arrears, or (2) their landlord has exercised peaceable re-entry.

If you are party to a commercial lease and would like more advice as to your rights on termination, please get in touch with your usual contact or email: marcus.saunders@wansbroughs.com or oliver.price@wansbroughs.com.