Question
I have just discovered my tenant unlawfully sublet his flat three months ago. This quarter’s rent fell due before I found out about the breach and remains unpaid. I think I can still demand payment of that quarter’s rent without waiving my right to forfeit because the rent fell due before I had knowledge of the unlawful subletting – is that right?
Answer
No. A demand for the payment of the rent which fell due after that breach would be inconsistent with the lease being terminated as a result of the earlier breach. The fact the rent fell due before you knew about the breach is not relevant. The position would be different if you had made the demand before you knew of the breach (or if the rent had fallen due before the breach).
Explanation
Where a breach gives rise to the right to forfeit, the landlord is put to his election to either forfeit the lease or affirm it and will be taken to have waived the right to forfeit if it does some unequivocal act which recognises the continued existence of the lease.
It is well established that a demand or acceptance of rent falling due after the landlord had knowledge of the breach would be a waiver. However, it was less clear whether a demand/acceptance with knowledge of the breach amounts to a waiver if the rent fell due after the breach but before the landlord had knowledge of it. That uncertainty was unanimously resolved by the Court of Appeal in Faiz and others v Burnley Borough Council [2021] EWCA Civ 55; [2021] PLSCS 19, which addressed a tension in the judgments in Osibanjo v Seahive Investments Ltd [2008] EWCA Civ 1282; [2009] 1 EGLR 32 (and the textbooks). The case confirmed that the critical question is whether the date on which the rent fell due preceded or post-dated the breach, not the date of the landlord’s knowledge.
It would be inconsistent for a landlord to maintain a right to forfeit in reliance on a once-and-for-all breach which it subsequently discovers, while simultaneously accepting any rent falling due thereafter, as the demand is taken as an acceptance by the landlord that the lease continues at least until the date on which the rent accrued due.
However, in order to give rise to a waiver, the landlord must have knowledge not only that the breach had been committed but also that the rent demanded or accepted fell due after the date of the breach.
Question
My landlord peaceably re-entered my business unit on 11 September 2020 for arrears of insurance rent of £500. I paid the arrears and told the landlord that I would pay future rent. However, due to the pandemic I have not been in the unit and not able to pay on time the rent for the September, December and March quarters. I now have the funds and have tried to pay the arrears but my landlord says I am too late to apply for relief from forfeiture because it has been more than six months since the re-entry. Is that correct?
Answer
Provided that the application for relief is made reasonably promptly and the arrears – and costs – are paid or tendered, relief from forfeiture should be granted unless there is an exceptional reason as to why it would be unjust to grant relief.
Explanation
The High Court considered this issue in Keshwala and another v Bhalsod and another [2020] EWHC 2372 (QB); [2020] PLSCS 168. Due to a mistake, only part payment of rent due in June 2018 was made, leaving £500 in arrears. In September 2018, the landlord forfeited by peaceable re-entry. The tenants arranged for prompt payment of the arrears and the next quarter’s rent but did not make an application for relief from forfeiture until they discovered that the landlord had relet the premises in February 2019.
The judge at first instance refused relief due to the tenants’ delay in making their application, even though the application was made within six months of the re-entry and within the statutory limit for such applications under the Common Law Procedure Act 1852.
The tenants’ appeal to the High Court succeeded. Judge Spencer decided that, in exercising the discretionary remedy of relief from forfeiture, the proviso for re-entry is to be treated as no more than security for the payment of rent, so that if rent is paid (or tendered) relief should follow unless there is some exceptional reason why it would be unjust to grant relief. The application had been made within six months of the re-entry and was deemed to have been made with reasonable promptitude.
Here, the re-entry occurred just over six months ago. If all rent due and costs have been tendered and there are no other exceptional circumstances, you should have good prospects of obtaining relief.
You will need to explain the delay and satisfy the court that your application for relief has been made reasonably promptly.
Louise Clark is a partner in the real estate disputes team at Charles Russell Speechlys LLP and Myriam Stacey QC is a barrister at Landmark Chambers
