Ayela & Anor v London Borough of Newham

On an application to set aside a judgment entered after non-attendance at trial, Civil Procedure Rules rule 39.3(5) requires prompt action, a good reason for absence, and a reasonable prospect of success at trial. Whether there is a good reason is assessed in the round, having regard to all relevant circumstances. Relief against forfeiture for rent arrears generally requires evidence that the arrears will be paid within a reasonable period. A landlord’s correspondence about future rent arrangements will not necessarily waive the right to forfeit, particularly where further rent subsequently falls due and remains unpaid.

The appellants were commercial tenants of premises owned by the respondent. After substantial rent arrears accrued, the respondent peaceably re-entered and forfeited the tenancies. The appellants obtained interim relief but later failed to attend the trial, at which their claims were dismissed and judgment was entered for the respondent on its counterclaims.

They applied unsuccessfully to set aside that judgment before HHJ Bailey. On appeal, they challenged the findings that they had no reasonable prospect of success on waiver and discretionary relief against forfeiture. The respondent sought to challenge the finding that the appellants had a good reason for failing to attend. The central issues were whether the set-aside criteria were met and whether the appellants had a realistic prospect of obtaining relief.

1. Non-attendance. Under Civil Procedure Rules rule 39.3(5), the court must consider promptness, the reason for non-attendance and the reasonable prospect of success. The question whether there was a good reason is assessed in the light of all relevant circumstances and in the round. HHJ Bailey’s generous conclusion that the appellants had a good reason fell within the proper discretionary range, despite the weaknesses in their explanation. Permission to cross-appeal was refused.
2. Fresh evidence. The applicable test was that in Ladd v Marshall [1954] 1 WLR 1489: the evidence must not reasonably have been obtainable for use at trial, must probably have an important influence on the result, and must be apparently credible. The evidence was nevertheless considered de bene esse.
3. Waiver. The correspondence relied upon did not amount to waiver of the right to forfeit for rent arrears. In any event, further rent fell due in June 2007 and was not paid. Any previous waiver could not prevent forfeiture for those later breaches. The promissory-estoppel argument was a new ground not pleaded or permitted and was disregarded.
4. Relief against forfeiture. The appellants had substantial arrears and could not show that they would pay them within a reasonable time. The court accepted the relevance of the principle illustrated by Inntrepreneur Pub Co (CPC) Limited v Langton [2000] 1 EGLR 34, namely that payment of arrears within a period specified by the court is an invariable condition of relief for non-payment of rent. Allegations concerning the rent-collection system, repairs and unequal treatment did not establish a reasonable prospect of relief.
5. The appeal was dismissed.

• High Court (Queen’s Bench Division): The appeal from HHJ Bailey’s order was dismissed. Permission to cross-appeal the finding that the appellants had a good reason for non-attendance was refused.
• Central London County Court: HHJ Bailey dismissed the applications to set aside the judgments entered after the appellants failed to attend trial.
• Central London County Court: HHJ Collender QC dismissed the appellants’ claims and gave judgment for the respondent on its counterclaims.