Relief from forfeiture granted despite 14-month delay

The High Court has held that a tenant was entitled to relief from forfeiture despite the tenant’s 14-month delay in applying for relief on the condition that the tenant paid the landlord’s arrears and costs.

The case, Pineport Ltd v Grangeglen Ltd, considered whether a commercial tenant, whose long lease granted for a premium had been forfeited by peaceable re-entry for non-payment of rent, was entitled to relief given the long delay.

This claim concerned the claimant's application for relief against forfeiture of an underlease of a commercial unit on an industrial estate. The underlease, which was dated 20 July 1998, was granted to the claimant for a term of 125 years, less 10 days, from 6 April 1981 for a premium of £90,000. The reversionary interest expectant upon the termination of the lease became vested in the defendant in about March 2011. The underlease included a right of re-entry in the event of non-payment of rent for a period of 21 days, whether formally demanded or not.

On 24 April 2014 the defendant forfeited the underlease by peaceable re-entry based upon unpaid rent. However, the claim seeking relief against forfeiture was not issued until 23 June 2015.

The tenant company was incorporated on 3 March 1998 and operated its main business of providing MOT and garage services from the premises until the underlease was forfeited. It had two directors, SJ and SA, who were equal shareholders. In recent years SA had had no involvement with the running of the company and the business had been under the control of SJ.

A restraint order was made against both the claimant and SJ by a judge in Isleworth Crown Court on 2 August 2013 upon the application of the Vehicle & Operator Services Agency in a prosecution based upon the issue of MOT certificates by SJ and others, without the correct procedure being followed. SJ was later sentenced to a term of imprisonment of 18 months.

In December 2013, SJ was diagnosed with depression. In April 2014, the landlord forfeited the lease by peaceable re-entry for non-payment of rent in respect of unpaid service charges totalling £2,155. The landlord did not take any steps to re-let the premises following the forfeiture. In June 2015 (that is, 14 months after the forfeiture had occurred), the tenant company sought relief from forfeiture in the High Court under the court's equitable jurisdiction.

Chief Master Marsh said: “The very lengthy period of delay is a matter of very great difficulty for the claimant to overcome. I have to consider whether it can be said the application was made with ‘reasonable promptitude’ taking the 6 month period as a guide and having due regard to it.

“There is an explanation for the long delay. It arises from a combination of SJ’s ill health, the restraint order, the lack of money and the absence of specialist advice. His evidence that he did not believe it was possible for the lease to be taken away from the claimant rings true in view of its value. That evidence combined with the well understood effects of depression, of which I take judicial notice, which may include an inability to focus on important issues, are weighty factors to be put in the balance. The discretion to grant relief is a broad one and I am not constrained by a fixed time limit which prevents the court from granting relief.”

He said that reasonable promptitude is an elastic concept which is capable of taking into account human factors and that he was satisfied that it would be wrong to bar the claimant from obtaining relief in the circumstances of this case. “In the light of the evidence I am able to conclude that the application was made with reasonable promptitude.”

Accordingly, Chief Master Marsh made an order granting the claimant relief from forfeiture in relation to the Unit on terms that the claimant pay to the defendant the sum of £24,530 (being the arrears of rent plus the landlord’s costs) within a reasonable period following the date of handing down the judgment.

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