How Quick Is Quick When Applying For Relief From Forfeiture
As we approach a year since my colleague, Stuart Miles wrote his very useful guidance on What Happens if a Lease is Forfeited. I thought it would be helpful to continue with this piece, and to consider how quickly one must act on an application for relief from forfeiture, especially in light of recent guidance and case law.
The case of Keshwala v Bhalsod [2020] EWHC 2372 (QB) looked at the situation where the county court refused an application for relief from forfeiture, citing delay. The High Court considered whether bringing an application towards the end of the usual 6 month time limit was reasonable in order to grant relief.
Background
In this case, the tenant had a 20 year lease for a commercial and residential mixed use premises. The tenant accidentally paid £500 less for the June 2018 rent quarter, and this was not noticed by the tenant when making payment. Thereafter, in September 2018 the landlord’s agent issued the tenant with a rent demand for September 2018 quarter, without mentioning the rental shortfall.
On 13th September 2018, the landlord effected forfeiture by re-entry due to the tenant’s rent arrears. When the tenant became aware of the rent arrears, they settled the shortfall on 24th September, and advised the landlord that the September 2018 quarter would be paid as requested. On 18th October 2018, the landlord’s agent replied to the tenant and advised that no action would be taken as the landlord was dealing with it themselves. No further communication or correspondence was had, nor was the payment made until January 2019 when the tenant’s solicitors made contact with the landlord and advised that all rent would be paid and explained the delay in responding earlier. This email was never received by the landlord, and on 4th February 2019 the landlord re-let the premises under separate lease for the commercial unit and assured shorthold tenancy agreement for the residential part.
Following the premises being re-let on 26th February 2019 the tenant issued his application for relief from forfeiture in the county court. The application for relief was made 5 months and 13 days after the lease had been forfeited.
Decision at first instance
On 9th January 2020 HHJ Hampton criticised the landlord’s “harsh business practice” but nonetheless refused the tenant’s application for relief from forfeiture. She did not believe that the tenant had properly explained their delays and did not accept the explanation of the tenant as to why they did not issue proceedings sooner. The Judge concluded that had the tenant made the application for relief promptly or if the landlord was forewarned then the application would have been granted, and so she dismissed the tenant’s claim for relief despite the application being brought within the 6 month statutory time limit.
Tenant’s Appeal
The tenant then appealed to the High Court. The Judge allowed the appeal and granted relief from forfeiture to the tenant. The Judge considered that so long as rent is paid then relief should follow unless the landlord could demonstrate that there is an “exceptional” reason why it would be unjust, and therefore the issue for the court was whether or not the delay in this case comprised an “exceptional circumstance” to then justify the refusal of relief. The concept of reasonable promptitude was considered further.
The court looked at the “principle guidance” for considering delay and aligned that with the statutory 6 month time limit for bringing a claim for relief from forfeiture. The court confirmed that
“although an application for relief from forfeiture may be brought more than six months after possession has been taken by the landlords so long as the elasticity of “reasonable promptitude” has not snapped, an application brought within six months is to be taken as having been brought with “reasonable promptitude”. In those circumstances, the factor relied upon by the learned judge in refusing to grant the relief sought, namely the delay within six months, 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 may be of significance that, in reaching her decision, the learned judge made no reference to the guidance to be derived from the statutory six-month time limit.”
The landlord’s Appeal to the Court of Appeal is pending.
Therefore, even if your application for relief is not brought immediately, so long as you demonstrate reasonable promptitude the court is likely to grant you relief. However, every case is unique on its own facts and merits of any application depending on your individual circumstances.
If you’re in need of expert advice relating to Relief from Forfeiture please call our highly experienced property disputes team today on 0808 271 9413 to talk through your situation with us. Alternatively, you can request a call back online.