In Keshwala v Bhalsod [2021] EWCA Civ 492, the Court of Appeal, overturning a decision of the High Court, has held that there is no legal principle that an application for relief from forfeiture made within 6 months of re-entry will be deemed to have been made reasonably promptly.
The Facts
The tenants had a 20-year lease of a lock up shop with residential accommodation above. In the County Court, relief was refused on the grounds that the equitable discretion to grant relief should not be exercised due to the delay of over 5 months in applying. On appeal the High Court held that as the tenants had applied for relief within 6 months after the forfeiture, they should be treated as having applied with reasonable promptitude. The delay in applying until nearly the end of the 6-month window was not capable of amounting to exceptional circumstances so as to defeat the claim for relief. The landlords appealed.
The Court of Appeal’s decision
- Most of the authorities concerned delay in seeking relief beyond 6 months under the Court’s equitable jurisdiction, but there were repeated indications in the authorities that a tenant who leaves it to the end of the 6-month window will not necessarily be taken to have acted promptly, and such a delay can be a relevant factor;
- Therefore there is no principle that a tenant will be deemed to have acted with reasonable promptitude so long as an application for relief is made before the expiry of 6 months. Accordingly the judge had erred in finding that the tenants’ delay was of no relevance;
- Relief from forfeiture for non-payment of rent after peaceable re-entry is discretionary and is based on equitable principles. These include that the right of re-entry is security for the payment of rent and, other things being equal, relief will ordinarily be granted if the tenant pays all sums due;
- However, although the mere fact of delay by itself is unlikely to be sufficient cause for refusing relief where the landlord has taken possession and done nothing with the premises, the longer the delay, the more likely it is that the Court will conclude that the tenant has not acted in a timely manner, and that intervening events will make relief inequitable. The lack of any good explanation for the delay and failure to keep the landlord informed are aggravating factors in this respect;
- If the landlord has altered his position acting reasonably and not precipitously, or if third party rights have intervened, it may be unjust to grant relief.
Important factors:
For tenants:
- Any application for relief from forfeiture should be made as soon as possible to maximise chances of success; the longer the delay, the greater the risk of refusal;
- It is important both clearly to signal an intention to seek relief to the landlord and to keep the landlord informed in order to guard against an alteration in position by either the landlord or third parties which may make it unjust to grant relief.
- Where there has been a delay in applying for relief, this must be fully explained.
For landlords:
- Provided that he acts reasonably and ‘not precipitously’, a landlord can safely proceed to relet during the 6-month window.
For details and advice on forfeiture, re-letting or relief please contact our Commercial Property Team headed up by Anna Duffy. Or call on 0151 230 1219
