the assignor has no liability to pay the arrears; or the benefit of the rent has been assigned to a third party.

Transcription

1 PETER PETTS Nature of forfeiture 1. The right of a landlord to terminate a lease prematurely upon the default of the tenant: Clays Lane Housing Cooperative Ltd v Patrick (1985) 49 P. & C.R A proprietary interest in land a. It binds the world, not just the parties to the lease. b. Landlord may forfeit even if rent owed to or by a third party, e.g. where: (a) rent is owed by an assignee, a lease may be forfeit even though the assignor has no liability to pay the arrears; or (b) the benefit of the rent has been assigned to a third party. 3. Forfeiture destroys the lessee s estate a. Including sub-tenancies b. Subject to s. 18 of the Housing Act 1988 (lawfully granted assured tenancies) Forfeiture/Repudiatory Breach/Surrender 4. Forfeiture is analogous to repudiatory breach. a. Cannot circumvent statutory restrictions of forfeiture: Bashir v Commissioner of Lands [1960] AC 44. b. Tenant may rely on repudiatory breach: Hussein v Mehlman [1992] 2 EGLR 87. c. However, breach must be of a condition of the lease. 5. Forfeiture is distinguishable from surrender. a. Surrender is consensual. b. The landlord inherits any sub-tenants. c. Surrender is a disposition of an interest in land and must be by deed: s. 52(1) of LPA d. Except by operation of law: s. 52(2)(c). Requires the intention to surrender and acceptance. Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

2 PETER PETTS Requirement for a forfeiture proviso 6. Covenants, conditions & innominate terms 7. Proviso for re-entry for any breach makes all covenants conditions: Bashir v Commissioner of Lands [1960] AC Absent proviso for re-entry, landlord may only forfeit for breach of a condition. What about breach of innominate terms? Establishing breach 9. Examples: ar. e nw t h ( D bo ( If c s ) o ( D do b. Failure to repair (a) (b) (c) (d) Is the property out of repair? Does the tenant have to put the property into repair? To what standard must the property be repaired? By reference to which date should that standard measured? c. Estoppel (a) (b) (c) Has the landlord s conduct estopped him from relying on the strict terms of the lease? If so, he needs to give the tenant reasonable notice that he will so be relying in the future. Distinguishable from variation of the lease and waiver of the right to forfeit. Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

3 PETER PETTS Waiver of the right to forfeit General considerations 10. Akin to repudiatory breach of contract: upon the tenant committing a forfeiting breach, the landlord must elect whether or not to treat the lease as at an end. May elect to treat the lease as continuing and sue for damages, specific performance, etc. 11. Cannot exclude waiver by express provision in the lease: election is a matter of fact. 12. Need not be intentional: question of objective interpretation of the circumstances. 13. Cannot waive the right to forfeit after forfeiting, e.g. the acceptance of rent after the service of proceedings will not waive the breach on which the proceedings are founded. However, beware the risk of granting a new tenancy, particularly after peaceable re-entry. 14. Distinction needs to be drawn between once and for all breaches and continuing breaches: the former is an isolated event which may be waived, whereas the latter gives rise to a fresh, daily breach, so it matters not whether the preceding day s breach is waived. 15. Beware confusion between once and for all and continuing breaches, and remediable and irremediable breaches. The latter are relevant to s. 146 notices and relief. 16. Examples of once and for all breaches: a. non-payment of rent; b. assignment; c. sub-letting; d. failure to repair by a specified date; and e. alterations. 17. Examples of continuing breaches a. failure to keep in repair; b. Sharing possession; c. failure to insure; and Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

4 PETER PETTS d. prohibited user. Essential ingredients of waiver (1) Knowledge (2) Unequivocal recognition of the continuation of the lease (3) Communication of recognition to tenant 18. Knowledge (1) Imputed. Whether the actual knowledge of an agent or employee will be imputed to the landlord will depend on the nature of the relationship between them. (2) Constructive. A landlord who has reasonable grounds to believe the tenant is in breach, but takes no steps to confirm or allay those suspicions, he will be deemed to have knowledge. However, if a tenant assures a landlord that there is no breach, the landlord is reasonably entitled to take the tenant at his word. The authorities are by no means consistent. 19. Unequivocal recognition (1) Acceptance of Rent (a) (b) (c) (d) Cannot accept without prejudice: Central Estates (Belgravia) Ltd. v. Woolgar (No. 2) [1972] 1 W.L.R If tendered, should be refused (cheques should be returned as soon as reasonably possible). If received by way of BACS or DD, should be returned as soon as reasonably possible. Appropriation to pre-breach arrears will not amount to a waiver. (2) Demand for rent (a) (b) At first instance, said to amount to a waiver, but not decided by C.A.: Greenwood Reversions Limited v World Environment Foundation Limited [2008] EWCA Civ 47. However, it has been the preferred wisdom for nearly 200 years. Demand for, or chasing of, pre-breach arrears is not a waiver. (3) Reliance on the terms of the lease, e.g.: (a) access to inspect; Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

5 PETER PETTS (b) (c) taking control of goods (formerly, levying for distress); and exercising the right to repair on tenant s failure. (4) Others: (a) (b) (c) by pleading (a claim for rent falling due after breach, an injunction or damages, without claiming forfeiture); permitting to expend money on improvements; and an offer to purchase the tenant s interest. (5) But not: (a) (b) the execution of a deed which the landlord is contractually obliged to execute (Expert Clothing Service & Sales v. Hillgate House [1986] Ch. 340, CA.); or that the landlord and tenant have been engaged in without prejudice negotiations (Re National Jazz Centre [1988] 2 E.G.L.R. 57). 20. Communication (1) Conduct on the part of the landlord capable of giving rise to a waiver will only amount to such if communicated to the tenant. The tenant needs to be induced into thinking that the tenancy continues, despite the breach: Dendy v. Nicholl (1858) 4 C.B. (N.S.) 376. (2) A written demand for rent, not received, will not, therefore, amount to a waiver. s.146 notices 21. Purpose to give the tenant the opportunity to remedy: Anders v Haralambous [2013] EWHC 2676 (QB). 22. Required in respect of breach of any condition or covenant, whether enforcement by action or otherwise (i.e. peaceable re-entry). 23. Rent not required 24. Service charge required if: (1) recoverable in the same manner as rent in arrear is not rent. (2) reserved as rent in residential leases: Freeholders of 69 Marina v Oram [2011] EWCA Civ 1258 (must be wrong). Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

6 PETER PETTS 25. Content (1) Specify breach, but not necessarily the covenant. Wrong covenant may invalidate notice if it results in uncertainty: Anders v Haralambous [2013] EWHC 2676 (QB). (2) If capable of remedy, require the tenant to remedy, within a reasonable period, but not the method of remedy (Catch all: remedy all breaches which are capable of remedy.) (3) Requirement for compensation (4) Leasehold Property (Repairs) Act 1938, where 3 years or more of the term unexpired. Methods of forfeiture 26. Only one method: re-entry. Intention to re-enter manifested by: (1) Physically re-entering (a) Not residential: Protection from Eviction Act 1977 (b) Not mixed use: Patel v Pirabakaran [2006] 1 WLR 3112 (CA) (2) Re-letting (c.f. surrender by operation of law); (3) The service of proceedings (a) Twilight period i. Landlord s covenants; ii. Tenant s covenants. Business tenancies commercial considerations 27. Peaceable re-entry: (1) cost effective; (2) fast and effective; (3) the courts do not like it; (4) get it wrong, could be costly; (5) beware mixed user. 28. Proceedings Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

7 PETER PETTS (1) if no credible defence, can be cost effective (2) if there is a possible defence, can be slow and expensive, usually with little chance of recovering any arrears, mesne profits or costs The former tenant's belongings 29. Torts (Interference with Goods) Act 1977 (1) An order for possession requires vacant possession, including the removal of chattels, to be given up. (2) An order for possession can only be enforced by warrant of possession: CCR Ord. 26, r 17. (3) When executing a warrant of possession, a bailiff is not required to, and generally does not, remove goods from the premises concerned: CCA 1984, s. 111(1). (4) The landlord, therefore, becomes a bailee of the chattels left in the property. Sometimes loosely referred to as an involuntary bailee. (5) As bailee, he still has a duty to take care of the goods in his possession, although the degree of care may vary. (6) S. 12 of the 1977 Act provides the bailee with a mechanism by which he may discharge that duty. An order of the court is not required to take advantage of s. 12; however, the bailee must follow the procedure laid down in s. 12 and the schedule to the Act. (7) S. 13 provides for an application to be made to court for an order authorizing the sale of the goods, but it is not a prerequisite to the bailee exercising his rights under s. 12. It is, in effect, a safeguard against any future dispute with the bailee. That said, if the goods left at the property are a pile of junk, it might be a disproportionately expensive safeguard. 30. s. 41 of Local Government (Miscellaneous Provisions) Act 1982 (1) If a local authority gives notice to the owner of chattels on local authority property to collect them and he does not, ownership vests in the local authority. Hall v Sandwell MBC [2008] RVR 345 (LT). Approved on appeal: [2009] EWCA Civ 1064 Hardwicke Building, New Square, Lincolns Inn, London WC2A 3SB T +44 (0) F +44 (0) E enquiries@hardwicke.co.uk

8 SIMON ALLISON Forfeiture of residential leases: Particular considerations Likelihood of windfall 18. Particularly in a residential context, it is worth remembering that if you obtain a possession order of residential premises subject to a long lease (say 125 or 999 years), and terms for relief from forfeiture (if any) are not complied with, landlord is likely to obtain a significant windfall. Sadly for them, such instances are very rare. 19. As such, Courts lean against forfeiture in particular in residential cases. 20. An increasingly used remedy, however. Types of residential lease to which forfeiture applies 21. It is worthy of mention: You don t forfeit assured tenancies You only forfeit secure tenancies if fixed term granted and still within term v. rare. Rent Act tenancies must be terminated in accordance with the Act only contractual tenancies can be forfeit. You can forfeit common law non-protected short leases (NB now v. rare) but if periodic, can serve NTQ anyway. You can forfeit long residential leases (>21 years) You can forfeit most shared ownership long leases (in all instances, generally only if there is a provision to that effect, although there are ways around this where no provision). 22. Further, if a tenant has made a claim to acquire the freehold or an extended lease (under the Leasehold Reform Act 1967), cannot forfeit unless obtain leave from the Court. Leave will only be granted if the Court is satisfied that the claim under the 67 Act was not made in good faith (see paragraph 4 of schedule 3). Similar provisions apply where tenants of flats give landlord notice of collective intention to purchase freehold under the Leasehold Reform, Housing and Urban Development Act 1993 (para 6 of schedule 12). Forfeiting for failure to pay rent 23. An efficient method of securing unpaid ground rent, and you are likely to find your costs as landlord are paid in full unless forfeiting for small sum and

9 SIMON ALLISON without the benefit of a contractual indemnity for costs in your lease. However, the Courts will examine cases (sometimes ) very carefully as open to abuse. 24. In addition to points of general applicability covered elsewhere in this talk, you should consider in particular the following questions: 25. First question: is rent due? Remember: section 48 Landlord and Tenant Act 1987 requires a notice to be given to the tenant giving an address in England and Wales for service of notices / proceedings. Until that is done, any rent (or service charge) is irrecoverable, and it would thus be unlawful to forfeit (Dallhold Estates (UK) Property Ltd v Lindlay Trading Properties [1994] 1 EGLR 93). There is no prescribed form, and typically it should be included within the lease or upon demands for payment; worth checking. 26. Further, section 47 Landlord and Tenant Act 1987 requires a similar notice containing the landlord s name and address, and if not in England and Wales, an address in England and Wales at which notices may be served. Again, until that notice is served, no service charge will be deemed due (NB technically this doesn t stop pure rent being due s47(2)). Note it must be the landlord s address, not that of a managing agent (Beitov Properties Ltd v Elliston Bentley Martin [2012] UKUT 133 (LC)). 27. To complicate matters further, section 166(1) Commonhold and Leasehold Reform Act 2002 ( CLRA02 ) provides that a tenant under a long lease (>21 years) is not liable to make payment of rent unless his landlord has given him a notice, specifying the payment and the date by which it must be made. The date must not be less than 30 days nor more than 60 days after notice is given, or before the date on which the tenant would have been liable to make it in accordance with the lease. There is a prescribed form for this purpose (Landlord and Tenant (Notice of Rent) (England) Regulations 2004 / (Wales) Regulations 2005). 28. It saves a lot of heartache if all these requirements are complied with before issuing proceedings(!), but note it is sometimes possible to correct such defects (e.g. Staunton v Kaye and Taylor [2010] UKUT 270 s.47 notice given after defence served but before LVT determination; see also Maridive & Oil Service SAE v CAN Insurance Co. (Europe) Ltd [2002] EWCA Civ 369 no rule of law or practice which precludes an amendment to rely on cause of action which arises after commencement of proceedings court has discretion whether or not to allow amendment). 29. The second question: is it enough? By section 167(1) CLRA02, landlord cannot forfeit for failure to pay an amount consisting of rent, service charges or administration charges (or a combination of them) unless the unpaid amount exceeds the prescribed sum or contains an amount payable for more than the prescribed period.

10 SIMON ALLISON 30. The prescribed sum is 350, and the prescribed period is 3 years Rights of Re-entry and Forfeiture (Prescribed Sum and Period) (England) Regulations 2004 / (Wales) Regulations You cannot include any administration charges associated with the failure of the tenant to pay any of the sums sought for the purpose of calculating 350 (section 167(3) CLRA02). 32. The third question: have you approached the lender? As a general rule, where there is a charge against the title, a lender will clear arrears of ground rent with little difficulty. Most will do so without the need for you to issue a claim, simply adding the sum to the mortgage account in order to protect their security. Forfeiting for failure to pay service charge / administration charge 33. Forfeiture for failure to pay the service charge is an increasingly used method of enforcing lease terms where tenants fail to pay. However, the number of hurdles to be passed in order to do so is now considerable: 34. Firstly: Have you properly demanded the service charge? In particular, note reference to sections 47 and 48 of the Landlord and Tenant Act 1987 set out above. Also, note requirement to serve summary of rights and obligations s. 21B Landlord and Tenant Act 1985 tenant entitled to withhold service charge for so long as landlord fails to comply. Note the content of the summary is updated from time to time and differs between properties in England and Wales. 35. Secondly: The service charge sums must be determined. By section 81 Housing Act 1996, no right of forfeiture for failure to pay a service charge may be exercised unless that sum is (a) finally determined by (or on appeal from) a tribunal or by a court, that the amount of the service charge or administration charge is payable by him; or (b) the tenant has admitted that it is so payable. 36. Note much debate over the years as to the meaning of finally determined whilst no binding authority exists on the point, it is now widely accepted that bringing a (Part 7) money claim for unpaid service charges and obtaining judgment in default is sufficient to finally determine the amount of service charge payable by the tenant (see Church Commissioners for England v Koyale Enterprises & Anor (Central London County Court, 22/9/11, HHJ Dight)). 37. If money claim and defended, claim is likely to be transferred to the Tribunal to determine the payability of the service charge.

11 SIMON ALLISON 38. Other options are summary judgment application or Part 8 claim for a declaration will be influenced in part by ability to recover costs under lease. Tactical considerations. 39. Thirdly: Are you entitled to forfeit for the charges outstanding? Must check the terms of the forfeiture provision and of the lease more generally. Note in particular that local authority leases invariably (and other leases occasionally) do not allow forfeiture for failure to pay an interim service charge, only failure to pay final sum they typically include wording hidden within the schedule containing the service charge provisions stating something like: It is hereby agreed and declared that the Lessor shall not be entitled to re-enter under the provision in that behalf hereinbefore contained by reason only of non-payment by the Lessee of any such interim payment as aforesaid prior to the signature of the Certificate 40. Fourthly: Section 146 notice must be served. Whilst it was for a long time thought that no notice was required if service charges were reserved as rent (Escalus Properties Ltd v Robinson [1996] QB 231 (CA)), this is no longer the case, and it is now necessary (after section 81 complied with) to serve a section 146 notice for failure to pay service charges in every case (see Freeholders of 69 Marina, St Leonards-on-Sea v Oram [2012] HLR 12). (NB: assists in costs recovery with some leases as well ) 41. Will generally only need to give a short period in which to clear the arrears, particularly in light of efforts landlord has to go to to obtain determination. 14 days at most typically. 42. Note that you cannot serve the s146 notice until at least 14 days after the final determination under section 81 Housing Act 1996 (above). In reality, this is at least 21 days after the order (as this is the period for lodging appeal), and determination of the appeal if appealed see section 81(2) and (3) Housing Act It is difficult to see when the time period expires where judgment in default is obtained, given that there is no time limit within which an application to set aside could be made. 43. Fifthly: Again, contact the lender. Practice varies wildly from lender to lender. A few will pay when first asked. Most will pay once you are in a position to forfeit (i.e. after determination, after section 146 notice served). A few will not pay until after proceedings have been issued, or even after order for possession granted. But all will ultimately pay up unless owed very little. 44. Last: Before issuing proceedings, note again the prescribed sum and prescribed period (above).

12 SIMON ALLISON Other breaches of residential lease 45. By section 168 CLRA02, no s.146 notice may be served by a landlord under a long lease in respect of a breach by a tenant of a covenant or condition in the lease unless (a) it has been finally determined on an application to the Tribunal that the breach has occurred, (b) the tenant has admitted the breach, or (c) a court or arbitral tribunal has finally determined that the breach has occurred. 46. In general, an application to the Tribunal is necessary. Note the Tribunal is not required to consider relief, or whether the lease allows for forfeiture in the circumstances only if there has been a breach (although note that there is currently (2016) a pilot scheme whereby the FtT also sits as part of the county court with concurrent jurisdiction). 47. Further, a period of 14 days must be allowed between the final determination and the service of the s.146 notice (s.168(3) CLRA02). Final determination in this sense is where the decision is not appealed against or otherwise challenged and the period for bringing an appeal or other challenge has passed (i.e. 21 days after judgment), or where appealed, once the appeal is disposed of or abandoned (s.169 CLRA 02). 48. Note s.168 does not apply to rent arrears, service charge or administration charges (s169(7) CLRA 02). 49. Also note Leasehold Property (Repairs) Act 1938 applies equally to residential properties as commercial properties where lease > 7 years. Other statutory restrictions method of re-entry 50. Section 2 of the Protection from Eviction Act 1977 provides that forfeiture of premises let as a dwelling cannot be effected other than by court proceedings while any person is lawfully residing in the premises or part of them. 51. Note the word lawfully - such protection would not apply to unlawful subtenants (i.e. contrary to covenants against granting the same) or trespassers who had entered into occupation. 52. Note also the wording let as a dwelling. Commercial property with annexed residential premises is caught by this definition - see Patel v Pirabakaran [2006] 1 WLR 3112 (CA), where let as a dwelling was interpreted as let wholly or partly as a dwelling and so applied to premises which were let for mixed residential and business purposes. 53. Whilst there are circumstances where the Protection from Eviction Act 1977 will not apply in a residential context (e.g. tenant has vacated), given the

13 SIMON ALLISON Costs potential criminal sanctions (under that Act and under the Criminal Law Act 1977, s.6), strongly advise against peaceable re-entry where any residential element. 54. In terms of recovery of costs, should consider (a) CPR 44.5, and (b) the terms of the Lease. Bear in mind it is arguable in rent arrears cases that the fixed costs regime under CPR45 applies, significantly limiting costs. See also Freeholders of Marina 69 steps preliminary to forfeiture (note the need to prove that costs were incurred in contemplation of forfeiture in many instances Barrett v Robinson [2014] UKUT 0322). Whether acting for landlord or tenant, ability to recover costs often hugely influences tactics in residential forfeiture cases.

14 MONTY PALFREY Relief from forfeiture 55. To obtain relief, a party must apply to the Court: a. Section 146 LPA25 and s138 CCA 1984 gives court jurisdiction to deal with relief from forfeiture. b. If relief granted, the tenant holds lease as if it had not been forfeited (so does any sub tenant - Dendy v Evans [1910] 1 KB 263). c. Application may be made as soon as s146 notice is served (Pakwood Transport Ltd v 15 Beaucamp Place (1978) 36 PCR 112). d. Can be made by unlawful tenant (Morritt J in Southern Depot Co v British Railways Board (1990) 33 EG 45 at 49). e. Must be made by all joint tenants (T M Fairclough & Sons Ltd v Berliner [1931] 1 Ch 60). f. Subtenant can apply for new lease - s146(4) LPA25. g. Subtenant can apply for relief under s146(2) however terms of relief are in the discretion of court and need careful consideration as it creates a new contractual relationship. h. Can be made by mortgagee (e.g. a bank). i. Note that in Rexhaven Ltd v Nurse (1996) 28 HLR 241 the judge held that a court could still set aside the possession order after execution (an alternative). 56. Form of Application: a. By way of a counterclaim in response to a landlord's claim for forfeiture. b. By a free standing claim. 57. Time Limit a. If the landlord has brought proceedings and obtained a possession order, before that possession order is enforced or possession is actually recovered. b. If forfeiture by peaceable re-entry, the tenant can apply at any time provided it is still equitable to grant relief.

15 MONTY PALFREY The Aim 58. The aim of the court when granting relief is to put the landlord and tenant back into the position they would have been in if there had been no forfeiture Egerton v Jones [1939] 3 All ER The Court's Powers In respect of breaches other than non-payment of rent - s.146(2) of the Law of Property Act Relief is almost always given if the applicant can make good the breach of covenant and is willing to fulfill its obligations in the future. Justified by court because the landlord otherwise gets a windfall. The following aspects make it more difficult for tenant and should be emphasised for landlord if present: a. Deliberate (wilful) breach. b. Gravity of the breach. c. The damaged caused to the landlord is proportionate to the advantage it will gain if the tenant is not granted relief. d. Immoral use by tenant. e. Delay. f. Lasting damage. g. Conduct of the parties. Other factors a. payment of compensation b. tenant will perform in the future c. the value of the lessee's interest Magnic Ltd v Ul-Hassan [2015] EWCA Civ 224 and Freifield v West Kensington Court Ltd [2015] EWCA Civ Relief will generally be granted subject to terms - "such terms, if any, as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future as the court thinks fit" - (s146(2)). Considerations: a. Tenant not to commit breach again.

16 MONTY PALFREY b. Should return the landlord to position it was in but for the breach. c. There can be no conditions on the availability of the relief. d. The Court cannot condone future breaches. e. The tenant should generally pay landlord s costs (even against publicly funded tenant - Factors (Sundries) Ltd v Miller [1952] 2 All ER 630 and Three Stars Property Holdings v Driscoll [1986] CofA Transcript 927) arguably on indemnity basis. f. Can also include an injunction to restrain any likely future breach. g. If tenant doesn't comply there will be no relief and the tenant cannot be compelled to comply with the conditions of relief. Examples of Relief in non-rent cases a. Denial of Landlord s Title can be granted. b. Repairs and redecoration special considerations, s.147 LPA and Leasehold Property (Repairs) Act 1938 may apply. c. Immoral user in a proper case exceptional Ropemaker Properties v Noonhaven [1989] 2 EGLR 50 value, financial loss compared to damage to landlord, cessation, stigma, involvement and past performance of tenant & personal circumstances of tenant. d. Unlawful alienation could landlord refuse consent? reasonable steps to correct? (If assignment, assignee). e. Bankruptcy (liquidation) special case 1 year. Relief in Rent Cases 62. Different Regimes a. Automatic relief in the County Court where the landlord is proceeding by way of a claim s.138 & 139 of the County Courts Act b. High Court s.38(1) Senior Courts Act The County Court 63. Where the only ground for forfeiture is non-payment of rent, the tenant can get relief by paying into court or to the lessor the rent and costs endorsed on the claim form not less than 5 clear days before the first hearing (not adjourned day) (s.138(2)) 64. If that doesn't happen court must order possession, but not earlier than 4 weeks (s138(3) CCA), and on terms that tenant obtains automatic relief if

17 MONTY PALFREY arrears and costs are paid by the day for possession (s.138(3)) 65. Limited discretion to adjourn possession claim only where something of real materiality which remains uncertain (R v A circuit judge ex. p. Wathen (1977) 33 P&CR 423). 66. Court can extend period of time before possession - if tenant pays all arrears and costs including any accrued since date of commencement of lease, tenant will keep lease (s138(4)-(5) CCA). If not paid, tenant is barred. 67. After possession, governed by s138(9a) on any such application the court may, if it thinks fit, grant to the lessee such relief, subject to such terms and conditions, as it thinks fit. applies for 6 months from date landlord recovers possession. The High Court 68. If forfeiture is by way of proceedings, the Court can grant relief (summary manner) provided all rent arrears and costs are paid (s.38(1) Senior Courts Act If the arrears are greater than 6 months' rent, if the tenant pays all the arrears and costs before trial, the proceedings are automatically discontinued and the tenant holds under the original lease (s.212 of the Common Law Procedure Act 1852). 70. Where the arrears are greater than 6 months, the tenant has 6 months after execution of the order for possession to obtain relief upon payment of the rent arrears, costs and interest but relief can be refused if it would be inequitable to grant relief. 71. If forfeiture by peaceable re-entry, the Court has power under its inherent equitable jurisdiction but the 6 months time limit does not apply but remains relevant as a guide see however Pineport Ltd v Grangeglen Ltd [2016] EWCA 1318 (Ch) 14 months have regard to all the circumstances. 72. Relief Generally in Rent Cases a. If all rent paid and costs, relief will only be refused in exceptional circumstances. b. In the absence of exceptional circumstances the Court will usually disregard other causes of complaint against the tenant Gill v Lewis [1956] 1 All ER 844. Other considerations 73. Proceedings for forfeiture are registerable as Notices (Selim v Bickenhall

18 MONTY PALFREY Engineering Ltd [1981] 1 WLR 1318) this can prevent a rogue tenant from trying to assign his interest to a purchaser without disclosing the landlord's intentions. 74. Undertenants and mortgages or any other person with an interest in the property subject to the forfeiture can apply for relief; s.146(4). If granted there will be a new lease on terms to be decided by the Court save that the term is not to be longer than the original underlease. It will normally be on the same terms as the head lease albeit applicable to a smaller part as appropriate. All inferior interest will also fall away. The discretion to grant relief should be exercised sparingly (Fivecourts v JR Leisure Developments [2000] 81 P&CR 292). Relief is also available under s.138 of the CCA or s.38(1) if either applies. Costs 75. Tenant can usually expect to have to have to pay these on an indemnity basis as a condition of relief Patel v K&J Restaurants Ltd [2010] L&TR Where the lease contains a covenant for the tenant to indemnify the landlord against costs incurred in or in connection with a forfeiture, the court should not exercise its discretion in such a way so as to refuse to give effect to such a covenant Church Commissioners v Ibrahim [1997] 1 EGLR 13 but only where forfeiture proceedings justified - Bland v Ingram s Estate Ltd (No.2) [2001] 3 EGLR If landlord acts unreasonably in defending relief costs can be awarded against: Bland v Ingram s Estates Ltd (No 2) [2001] 3 EGLR In terms of recovery of costs, should consider (a) CPR and (b) the terms of the Lease. Bear in mind some Judges consider the fixed costs regime applies, significantly limiting costs. The Effect of the Grant of Relief 79. Where relief is granted to the tenant, the lease will be restored as if the forfeiture had never taken place. Any lower interest (e.g. underlease) will be reinstated Dendy v Evans [1910] 1 KB If a lease has been granted to a third party in the meantime, this new lease will become an intermediate lease between the party obtaining relief and the landlord. Peter Petts Simon Allison Monty Palfrey

19 MONTY PALFREY 31 st October 2016