Landlord waived right to forfeit where it exercised CRAR (Court of Appeal)

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17 February, 2020

Brar v Thirunavukkrasu [2019] EWCA Civ 2032

What happened in this case?

The landlord (Brar) let commercial retail premises to the tenant (Thirunavukkrasu) for a term of 21 years from 2013. The landlord had a right to forfeit if the rent went unpaid.

The tenant fell into arrears and the landlord instructed enforcement agents to exercise the commercial rent arrears recovery (CRAR) process, which is the new statutory process of sending bailiffs to recovery goods in satisfaction of the debt.

The enforcement agents entered the premises on 1 February 2016 and took control of the respondent's goods to recover rent arrears. They returned on 12 February purporting to forfeit the lease by peaceable re-entry.

The tenant issued court proceedings and obtained a declaration that the appellants' purported forfeiture of the lease was unlawful, stating that the CRAR process waived the landlord's right to forfeit. The landlord appealed.

What was decided?

The High Court upheld the decision that the exercise of CRAR contained an unequivocal representation that the lease was continuing i.e. a waiver.

Even though the concept of waiver is a common law (case law based) principle, it applied equally to the new, statutory equivalent of distraint (sending in the bailiffs).

What have we learnt from this case?

Whilst CRAR was a statutory remedy and common law distress no longer exists, waiver of forfeiture was a common law principle, the conditions of which had not been altered with the statutory introduction of CRAR. A landlord chooses whether to accept the lease as continuing or to forfeit. Steps to accept that the lease is continuing, such as using CRAR, is an act which will waive the landlord's right to forfeit.

To attempt to circumvent this issue in practice, lawyers acting on behalf of landlords should draft leases ao that if CRAR is used, it is classed as an act of insolvency.

For a more detailed analysis of waiver, read this article.

For more information contact Laura Hallett Lea in our Dispute Resolution department via email or phone on 0333 207 1141. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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