Forfeiture of lease: Whether exercise of CRAR waived a landlord’s right to forfeit a lease (Brar v Thirunavukkrasu – 2019)

The Court of Appeal is asked to consider whether the exercise by a landlord of Commercial Rent Arrears Recovery (CRAR) resulted in the landlord having waived its right to forfeit the lease.

The background

In Brar v Thirunavukkrasu [2019], a tenant occupied and ran a convenience store, held under a 20-year lease. The lease contained no option for either party to break, and the tenancy enjoyed security of tenure protection under the Landlord and Tenant Act 1954. The tenant fell into financial difficulties and accrued rent arrears.

The landlord exercised its right to CRAR through agents who seized goods from the tenant. Subsequently, the tenant sent a payment to the landlord which was intended to cover the amount of arrears together with the fees of the agents. The landlord had in fact miscalculated the fees due to the agents and, concluding that arrears were therefore still outstanding, changed the locks and claimed to have retaken possession of the premises. The tenant brought a claim for damages, arguing that the landlord had waived its right to forfeiture by exercising CRAR.

At first instance, it was found that the landlord, through CRAR, had waived the right to forfeit. The High Court upheld this decision on appeal, and a further appeal was brought by the landlord in the Court of Appeal.

The decision

The Court of Appeal upheld earlier decisions, finding that the landlord had waived its right to forfeit the lease by exercising CRAR. The landlord argued that CRAR was a ‘neutral act’ which did not uphold the existence of the lease, but the Court rejected this. Further, the landlord stated that no notice had been provided to the tenant prior to the exercise of CRAR, meaning that the exercise of CRAR was invalid in any event and that therefore the right to forfeit had not been waived.

The Court of Appeal could find no merit in this argument; even where no formal notice had been provided, the tenant knew that CRAR had been exercised by virtue of the arrival of the enforcement agents at the premises.

Advice and action

Brar is a clear warning to landlords to consider carefully the enforcement actions they take. In this case, by taking steps to seize goods the landlord prejudiced its right to reclaim possession of the premises entirely.

Landlords are particularly advised to take legal advice prior to any enforcement action, and to consider the impact of any actions on its later ability to bring – and succeed in – a claim for forfeiture.