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Forfeiture: Whether it was sufficient for a tenant’s application for relief from forfeiture to be made within the 6-month time limit (Keshwala and another v Bhalsod and another (2020)

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Where a tenant applied for relief from forfeiture, was it sufficient for the application to have been made within the 6-month time limit or should it have made the application sooner?

The background

In Keshwala and another v Bhalsod and another [2020], the tenants occupied property comprising a ground floor retail shop with a residential flat above under a 20-year lease, of which the defendants were landlord.

The tenants’ rent for the June 2018 quarter was £2,000 but only £1,500 was paid to the landlords and the tenants therefore immediately went into arrears of £500. Rent was paid by a third party and the tenants were not aware of the underpayment. The September quarter demand was made by the landlord but this did not include a demand for the underpayment or make any other reference to it.

The landlord effected forfeiture by re-entry on 13th September as a result of the £500 arrears. The tenant paid the £500 sum and confirmed it was happy to pay the September quarter’s rent as demanded. The tenants’ solicitors contacted the landlords in January 2019 by email, confirming that the tenants were willing to pay any sums outstanding and indicating that there was a delay in obtaining the tenants’ signatures to the claim form for application for relief from forfeiture. The landlords never received this email and relet the premises in February 2019. The tenants commenced relief from forfeiture proceedings on 26th February 2019, over 5 months after the landlords re-entered the premises.

In the County Court, the judge found that the application for relief had not been made promptly and refused the application. The tenants appealed in the High Court.

The decision

The High Court allowed the appeal, finding in favour of the tenants.

Under the County Court Act 1984 and the Common Law Procedure Act 1852, time limits are placed on the court in granting relief over 6 months after the date of re-entry and it is accepted that courts will use the 6-month time limit as guidance in considering applications for relief. Moreover, where the rent which was outstanding has been paid, relief should be granted.

The court may refuse to grant relief where an application is made within 6 months where a landlord can demonstrate ‘exceptional circumstances’. The High Court found that the delay here was not sufficient evidence of ‘exceptional circumstances’. The application, having been made within 6 months, was made with reasonable promptitude and the County Court judge had erred in finding that a delay of less than 6 months constituted ‘exceptional circumstances’.

Advice and action

Although a delay of over 5 months in making the application seeking relief from forfeiture may seem protracted, the tenant was nevertheless protected by the 6-month time limit in this decision. With the application made within that timeframe, the landlord was unable to demonstrate sufficient ‘exceptional circumstances’ by reference to this delay to give rise to a refusal to grant relief.

The tenant in this case had the means to rectify the default, which the landlord will have been well advised to consider before effecting re-entry. An additional point observed by the County Court judge was that forfeiture by re-entry was unduly harsh given the arrears amounted to only £500. Landlords are advised to ensure actions taken with regards to forfeiture are proportionate to the breach suffered.

The High Court allowed the appeal, finding in favour of the tenants. The High Court found that the delay of 5 months was not sufficient evidence of ‘exceptional circumstances’. The application was made with reasonable promptitude.

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