SWA Developments Ltd v Burke

Relief from forfeiture is discretionary. Its purpose is to protect the landlord’s reversion and secure performance of covenants, rather than punish the tenant. Relief is ordinarily granted where disrepair is remedied, but serious breaches or exceptional circumstances may justify refusal. A waiver of one breach does not necessarily waive a distinct later breach, particularly where the tenant’s identity and personal involvement in managing a business matter. On review of a discretionary decision, the appellate court asks whether the decision falls within the ambit of reasonable decision-making, not whether it would have reached the same conclusion.

The tenant appealed, by a renewed application for permission, against an order of His Honour Judge Gerald in the County Court sitting at Central London on 16 July 2015. The underlying issue was whether relief from forfeiture should be granted in respect of a pub lease granted subject to extensive repair and management covenants.

The tenant argued that earlier breaches had been waived, that the landlord’s conduct and lack of interest in the repairs had been given insufficient weight, and that the judge had erred in principle. The central questions were whether there was a distinct unwaived breach and whether the refusal of relief was within the permissible range of discretionary decisions.

1. Permission refused. The question for the Court of Appeal was whether the refusal of relief from forfeiture fell within the ambit of reasonable decision-making. It was not whether the appellate judge would have reached the same decision at first instance.
2. The tenant’s apparent abandonment of possession to another person could amount to a waived breach, but the failure personally to remain actively involved in managing the pub was a distinct breach. The identity of the person managing the business was important. A previous waiver therefore did not extend to that later breach. It was also permissible to take subsequent breaches into account when exercising the discretion whether to grant relief.
3. The starting point stated in Magnic v Ul-Hassan [2015] EWCA Civ 224 was material. Forfeiture is not an additional penalty; it protects the landlord’s reversion and secures performance of the tenant’s covenants. Although relief will ordinarily be granted once disrepair is remedied, serious or irremediable breaches may justify refusal. The passage referred to Shiloh Spinners Ltd v Harding [1973] AC 691 at p. 723.
4. The first-instance judge had weighed the landlord’s aggressive approach and possible overpayment against the tenant’s prolonged disengagement, lack of evidence of any continuing interest in the lease, lack of engagement with the proceedings, and the unauthorised management of the premises. Those circumstances entitled the judge to refuse relief. No error of principle was demonstrated, and permission to appeal was declined.

1. Court of Appeal (Civil Division). The renewed application for permission to appeal was refused: [2016] EWCA Civ 389.
2. County Court sitting at Central London. His Honour Judge Gerald made an order on 16 July 2015 refusing relief from forfeiture.