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Case law: Tenant successful in obtaining relief from forfeiture of lease, despite waiting 14 months to apply

Landlords considering forfeiture of a lease should consider the possibility the tenant could apply for relief from forfeiture, even if their application is made many months after forfeiture has taken place, following a recent High Court decision.

Legal Alert

This update was published in Legal Alert - November 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A landlord of an industrial unit forfeited the lease for non-payment of rent. Fourteen months later, the tenant applied to the court for relief from forfeiture. If forfeiture is granted, the relief means the tenant can carry on as if the lease had never been forfeited. In this case, the tenant claimed it could now pay the arrears of rent and there were good reasons why it had not done so before. The landlord argued such applications had to be made with 'reasonable promptitude', which usually meant within six months - particularly as the application had increased the costs and expenses it had already incurred during that period.

The High Court said that the reason the law gave landlord's a right of forfeiture was to provide security for unpaid rent, but this was tempered by the court's ability to grant relief if the circumstances warranted it.

In this case, the court took into account:

  • the tenant's mental health/depression, and its effect on his ability to make decisions about and take action to tackle his business affairs;
  • his family's potential to sell other assets so he could bring payments to the landlord up-to-date;
  • the fact that the amount owed (around £24k at the time of hearing) was small compared to the value of the lease (around £275k);
  • the fact that the tenant had not had professional advice;
  • the fact that the prejudice to the landlord was small;
  • the fact that the landlord had not marketed the property.

It therefore ruled that making the application after 14 months was still making it with 'reasonable promptitude'.

Operative date

  • Now

Recommendation

  • Landlords considering forfeiture of a lease should factor in the possibility the tenant could apply for relief from forfeiture, even if the application is made many months after forfeiture has taken place

Case ref: Pineport Ltd v Grangeglen Ltd [2016] EWHC 1318

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.