20 October, 2020
Keshwala & Anor v Bhalsod & Anor (2020) EWHC 2372 (QB)
This is an interesting case on relief against forfeiture and contains some useful pointers on the nuances of forfeiture by physical re-entry.
The lessee had taken a 20 year lease of the property in 2008. It was a commercial lease but with living accommodation above. In June 2018, the rent account fell into arrears of £500 due to a mistake in payment. The next quarterly rent demand was served on 1 September 2018 (payable by 29 September 2018) however no note of the arrears was made. On 13 September 2018, the freeholder forfeited the lease by re-entry and this was the first time the lessee had become aware of the arrears. The lessee promptly sent payment of £500 with the next quarter's rent to the freeholder's agent but payment was not accepted.
In January 2019, the lessee's solicitor tried to contact the freeholder regarding an application for relief, but the email address was incorrect. On 26 February 2019, the lessee applied for relief from forfeiture, by which time the property had been re-let.
In the first instance, the Circuit Judge dismissed the application due to the delay by the lessee in making the application. The Judge noted that to forfeit a 20 year lease with 10 years left to run for £500 arrears which had only been in arrears for a short period of time was very harsh, albeit lawful. She also said that had the lessee made a prompt application, or at least promptly forewarned the freeholder of their intention, she would have granted relief. In exercising an equitable discretion, Judge Hampton found the lessee's inactivity between October and January was not sufficiently explained and although she considered the matter finely balanced, she held it was not appropriate to grant relief from forfeiture.
On appeal, the lessee argued the refusal to grant relief was wrong in law and the Judge had failed to apply the authorities and principles referred to. It was also asserted that statutory provisions require applications for relief to be made within six months from the date of re-entry, which was the case here.
The High Court held:
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.
The six month period is considered a base line for what is reasonable. The court should consider whether the delay comprises such exceptional circumstances as to justify the refusal to grant relief.
The High Court held the delay within six months here was not capable of amounting to the kind of exceptional circumstances which it is necessary for a landlord to show when inviting the court to refuse relief despite the application having been brought within six months. It was also considered that re-letting of the property was no bar to granting relief from forfeiture.
The appeal was allowed and relief granted.
This appeal provides clarity on the delay factor for equitable relief. Lessees should however be prompt in making applications for relief and be ready to explain the reason for any substantial delays. Arrears should also be paid at the earliest opportunity.
For more information contact Emily Jordan in our Housing & Regeneration department via email or phone on 0333 207 1130. Alternatively send any question through to Forbes Solicitors via our online Contact Form.