Landlords make your choice: forfeiture or CRAR

Whether a landlord waives its right to forfeit a lease if commercial rent arrears recovery is exercised

The background

Thirunavukkrasu v Brar and another [2018] concerned a property let to the respondent tenant by the appellant landlords. Enforcement agents exercised the CRAR procedure against the tenant for non-payment of rent in the sum of £8,270. Several days later, the landlords purported to re-enter the property and forfeit the lease.

The tenant’s argument stated that the landlords had acknowledged the existence of the lease and waived their right to forfeit it by exercising the CRAR procedure. The tenant brought proceedings in the County Court on grounds that the purported forfeiture had been unlawful, to seek damages for trespass and/or breach of covenant and to seek damages for the seizure and subsequent conversion of goods.

 

The decision

The judge held that the purported forfeiture had been unlawful; the landlords’ right of forfeiture had been waived by their exercise of CRAR. Where a right to forfeit existed, the landlords must choose either:

  • to exercise a right of forfeiture and treat the lease as now terminated; or
  • not to exercise a right of forfeiture and to treat the lease as continuing to exist, thereby waiving the right to forfeit.

CRAR could only be exercised while the lease continued. The Court also considered whether CRAR had replaced distress, or whether it was an equivalent remedy, finding that it was not the equivalent. The CRAR procedure was narrower than distress and replaced it. The landlords’ appeal was dismissed.

 

Advice and action for landlords

Whilst this case considers in further depth the status of CRAR, the important note for landlords arising from the judgment is to ensure that, where forfeiture or CRAR is an option, careful consideration is given as to whether exercise of forfeiture would be unlawful. CRAR is not the equivalent of distress, and a landlord’s right of forfeiture is waived in circumstances where CRAR has also been exercised.

The Court found that the landlords’ purported forfeiture had been unlawful; their right to forfeit the lease had been waived by their earlier exercise of CRAR.

Author

Richard Owen
Richard Owen
Associate

Recent articles by Richard Owen

Enforcement Covenants and ensuring that the landlord does not end up in breach itself
Enforcement Covenants and ensuring that the landlord does not end up in breach itself
Read more
Forfeiture of residential leases: is incorrect format of a demand fatal to validity?
Forfeiture of residential leases: is incorrect format of a demand fatal to validity?
Read more
Alienation Covenants: is registration of an assignment a prerequisite of breach?
Alienation Covenants: is registration of an assignment a prerequisite of breach?
Read more

Related articles

West Lancashire Investments Limited v Duckworth [2017]:
West Lancashire Investments Limited v Duckworth [2017]:
Read more
General Motors UK Ltd v Manchester Ship Canal Company Ltd [2016]:
General Motors UK Ltd v Manchester Ship Canal Company Ltd [2016]:
Read more
Waiver
Waiver
Read more