Landlord and tenant – Relief from forfeiture – Reasonable promptitude – Appellant landlords effecting forfeiture of lease by peaceable re-entry for non-payment of rent – Respondent tenants applying for relief from forfeiture nearly six months later – High Court granting relief from forfeiture – Appellants appealing – Whether judge wrong to conclude that respondents applying for relief with reasonable promptitude – Appeal allowed
In March 2008, the respondent tenants entered into a lease of 89 Narborough Road, Leicester, for a term of 20 years: the second respondent had always been the lessee with the main interest in, and control of, the premises. The property consisted of a lock-up shop on the ground floor with living accommodation above, on one of the main arterial roads leading into the city centre in an area of either secondary or tertiary mixed commercial and residential properties. The appellants bought the freehold in April 2015 and thereby became the respondents’ landlord.
On 13 September 2018 the appellants, taking advantage of a minor shortfall in the payment of rent for the June 2018 quarter, forfeited the lease by peaceable re-entry for non-payment of rent. Nearly five months later on 4 February 2019, no application for relief having been made, the appellants re-let the premises. On 26 February 2019 the respondents applied to the county court for relief from forfeiture. The judge considered that the matter was finely balanced, but ultimately dismissed the claim for relief; She concluded that the court’s equitable jurisdiction to grant relief from forfeiture effected by peaceable re-entry was available only to those who applied with “reasonable promptitude” and the delay in seeking relief made it inappropriate to grant relief.
The High Court allowed the respondents’ appeal against that decision, effectively on the ground that the respondents had applied for relief within six months after the forfeiture, and should be treated as having applied with reasonable promptitude; the fact that they had delayed until nearly the end of the six-month period was not capable of amounting to exceptional circumstances, such as to defeat the claim for relief: [2020] EWHC 2372 (QB); [2020] PLSCS 168. The appellants appealed.
Held: The appeal was allowed.
(1) If a landlord had forfeited for non-payment of rent and taken possession by peaceable re-entry, the grant of relief was always discretionary, either in the county court, because of the express terms of section 139(2) of the County Courts Act 1984 (“may, if it thinks fit, grant … relief”) or, in the High Court, because it was exercising an equitable jurisdiction. In the county court the application had to be brought within six months; in the High Court there was no strict time limit, but the court would have regard to the six months. The equitable jurisdiction could only be invoked by those who applied with reasonable promptitude. What was reasonable would depend on all the circumstances, having due regard to the statutory time limits. Reasonable promptitude was an elastic concept which was capable of taking into account human factors: Pineport Ltd v Grangeglen Ltd [2016] EWHC 1318 (Ch); [2016] PLSCS 172 and Gibbs v Lakeside Developments Ltd [2018] EWCA Civ 2874 considered.
(2) The discretion was to be exercised (in both the High Court and the county court) in accordance with equitable principles, including the well-established principle that equity regards the right of re-entry as a security for the payment of the rent, and, other things being equal, the court would ordinarily grant relief if the tenant paid all that was due in terms of rent and costs. If therefore all that had happened was that the landlord had taken possession and then done nothing with the premises, simply sitting back to see what happened, then the mere fact that the tenant had delayed was unlikely to be regarded as sufficient by itself to cause the court to refuse relief: Gill v Lewis [1956] 2 QB 1 considered.
But that did not mean that so long only as the tenant brought his application before the end of the six months, he would be treated as having acted with reasonable promptitude, or that his delay would always be regarded as immaterial. There was no principle that a tenant would be deemed to have acted with reasonable promptitude so long as they brought their application for relief before the expiry of six months. The longer that the tenant left it, and a fortiori if he did not have a good explanation for the delay, and failed to keep the landlord informed of his intention, the more likely it was that he would find that the court would conclude that he had failed to act with reasonable promptitude, and the more likely it would be that intervening events would make it inequitable to grant relief. If the landlord, acting reasonably and not precipitately, had altered his position, it might be unjust to grant relief; as also it might be if the rights of third parties had intervened: Stanhope v Haworth (1886) 3 TLR 34, Silverman v AFCO (UK) Ltd [1988] 1 EGLR 51, Billson v Residential Apartments Ltd [1992] 1 AC 494; [1991] 1 EGLR 70 and Bank of Ireland Home Mortgages Ltd v South Lodge Developments [1996] 1 EGLR 91 applied.
(3) In the present case, the judge erred in concluding that, because the respondents brought their application almost six months after possession was taken, they acted with reasonable promptitude and such delay was to be left out of account. The position might be different if the county court judge had refused relief on the ground of delay alone but the factors that she took into account also included: the lack of any attempt by the respondents to communicate with the appellants between October 2018 and January 2019; the fact that the delay itself had not been properly explained; the fact that the appellants were unaware that the respondents were doing anything and intended to apply for relief; the fact that the appellants re-let the premises because they needed to pay business rates; the ambivalent position of first respondent who, although willing to co-operate in principle, was evidently reluctant to have anything to do with the property; and the fact that if the appellants needed to pursue him, they might have difficulties as he had proved elusive. Accordingly, the county court had not erred in principle in taking account of the delay and its decision would be restored.
Stephen Taylor (instructed by Rich and Carr Solicitors, of Leicester) appeared for the appellants. Soofi Din (instructed by Bond Adams LLP, of Leicester) appeared for the respondents.
Eileen O’Grady, barrister
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