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Mon 27 Jun 2016

Relief from Forfeiture: Pineport Ltd v Grangeglen Ltd

 

 

Relief from forfeiture is a discretionary remedy that is available to a tenant once the landlord has started the forfeiture process.

 

Whilst a tenant must apply for relief from forfeiture promptly, it is often thought that, where a landlord forfeits by peaceable re-entry, a tenant should apply to the court for relief from forfeiture within 6 months to stand a chance of having its lease restored.

 

In the recent case of Pineport Ltd v Grangeglen Ltd the High Court considered whether a commercial tenant was entitled to apply for relief from forfeiture despite a 14 month delay by the tenant in making the application.

 

Pineport was an undertenant of commercial premises from where it carried on business as an MOT garage and workshop. It had acquired the underlease in 1998 for a premium of £90,000.

 

In August 2013, a criminal restraint order was made against Pineport and its controlling director (Mr Shorab Jadunandan) upon the application of the Vehicle & Operator Services Agency based upon the issuing of over 1,400  MOT certificates by Mr Jadunandan, and others, without following the correct procedure.

 

In December 2013 Mr Jadunandan was diagnosed with depression.

 

On 24 April 2014 Grangeglen forfeited the underlease by peaceable re-entry in respect of unpaid rent of £2,155.

 

In June 2015 (14 months later) Pineport applied to the Court for relief from forfeiture.

 

The Court considered a number of factors including the delay and said that it had to consider whether the application had been made with “reasonable promptitude” taking the 6 month period as a guide. The Court acknowledged that the very lengthy period of delay was a matter of very great difficulty for Pineport to overcome but that there was an explanation for the long delay which arose from:-

 

1. Mr Jadanudan’s ill health;

2. the restraint order; 

3. lack of money; and

4. the absence of specialist advice.

 

Court decided that it was not constrained by a fixed time limit and whilst 14 months is more than double the guide of 6 months the Court was satisfied that it was wrong to bar the tenant based purely on delay, from obtaining relief.

 

Court has a very wide discretion when dealing with an application for relief from forfeiture and it will consider all the factual circumstances of the case and not treat delay as necessarily fatal.

 

It is also true to say that the fact that the underlease had been granted for a premium and not at a rack rent was an important factor in the court’s decision.

 

 

Steven Ross is a Partner at JPC Law.

For more information and advice on property litigation, please contact him:

E: sross@jpclaw.co.uk

T: 020 7644 7261

General enquiries

E: enquiries@jpclaw.co.uk

T: 020 7625 4424

 

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