Pineport Ltd v Grangeglen Ltd
[2016] EWHC 1318 (Ch)
How long can a tenant wait before seeking relief from forfeiture?
In this case a commercial tenant, whose long lease had been forfeited by peaceable re-entry for non-payment of rent, was entitled to relief from forfeiture despite its 14-month delay in applying for relief.
Facts
The tenant took a lease of premises on an industrial estate for a term of 125 years for a premium of £90,000. In April 2014 the landlord forfeited the lease by peaceable re-entry for non-payment of service charges.
The tenant did not seek relief until June the following year when it sought relief on the basis that the tenant was ready and willing to pay the arrears. The court heard the Director of the tenant company had suffered from depression.
Held
The High Court granted relief on terms.
The Court noted that where a landlord forfeits a lease by peaceable re-entry, the court’s jurisdiction to grant relief from forfeiture is not circumscribed by statute. The court has an inherent equitable jurisdiction to grant relief at any time.
The 6-month time limit laid down in s210 of the Common Law Procedure Act 1852 did not apply as the landlord had not issued forfeiture proceedings. But the court noted that it will take this period as a guide.
The Court also noted that in considering any application it should:
- Refuse only in exceptional circumstances, where the arrears have been paid;
- Save in exceptional circumstances, ignore any other breaches; and
- Consider the impact on any 3rd party who has acquired rights
The Chief Master said:
Although 14 months is more than double the guide period of 6 months (and near to the breaking point for the concept's elasticity), I am satisfied that it would be wrong to bar [the tenant] from obtaining relief in the circumstances of this case
Comment
- This is an example of where the court is more likely to allow relief from forfeiture where the lease is valuable to avoid the ‘windfall’ effect - it does not seem just that the landlord should be obtain a valuable property without having to pay for it.
- The decision is a reminder of the need for landlords to consider carefully whether to forfeit by peaceable re-entry or court proceedings where the need for certainty for possession arises.