Thirunavukkrasu v Brar & Anor

Exercise of Commercial Rent Arrears Recovery does not automatically carry forward every consequence of the abolished common-law remedy of distress. The statutory regime must be construed on its own terms. However, whether CRAR amounts to an election to treat a lease as continuing is assessed objectively in the factual and statutory context. Where the lease has not ended and the statutory conditions for post-termination CRAR are unavailable, exercising CRAR unequivocally recognises the lease’s continuation and waives forfeiture for the relevant rent arrears. A defective enforcement notice does not necessarily prevent that waiver where the parties understood that CRAR had been commenced. A landlord cannot avoid the waiver by dividing the lease between different arrears. The court may determine the issue summarily where the material facts are sufficient and late, inadequately evidenced points would cause unfairness.

The landlords appealed against an order of the County Court at Central London declaring unlawful their purported forfeiture of a commercial lease by peaceable re-entry. The tenant had been in rent arrears. The landlords instructed enforcement agents to use CRAR, and the arrears were paid before the landlords re-entered the property. The preliminary issue was determined summarily under CPR 24. On appeal, the landlords challenged the finding of waiver, raised issues concerning insurance rent, alleged factual disputes, and challenged the indemnity costs order. The central issue was whether exercising CRAR waived the landlords’ right to forfeit and whether the preliminary issue could properly be decided without further evidence.

1. Appeal dismissed. The declaration that the purported forfeiture was unlawful was upheld.
2. The common-law right to distress was abolished by section 71 of the Tribunals, Courts and Enforcement Act 2007. CRAR is a statutory regime with material differences from distress and is not simply its legal equivalent. The court must construe the statutory scheme rather than presume that consequences of the abolished common law have been preserved.
3. Nevertheless, the common-law principles governing waiver and election remain relevant. A landlord’s conduct is assessed objectively and in context. Under section 79 of the Tribunals, Courts and Enforcement Act 2007, CRAR may in defined circumstances continue after a lease ends. In the present circumstances those conditions were not met, so CRAR could only have been exercised while the lease continued. Its exercise therefore unequivocally represented that the lease was continuing and waived forfeiture for the rent arrears to which it related.
4. The possible absence of an enforcement notice under paragraph 7 of Schedule 12 did not alter that conclusion. The landlords had instructed agents to commence CRAR, and the tenant knew that the process had begun. The defective procedure, if established, did not prevent the conduct from amounting to an election.
5. The landlords could not treat the lease as continuing for some arrears and ended for others. Nor did the alleged continuing nature of the rent default assist them: the failure to pay the earlier arrears was treated as a once-for-all breach, and in any event fewer than 21 days had elapsed before re-entry.
6. The possible availability of proceedings under section 210 of the Common Law Procedure Act 1852 did not preserve a common-law right of forfeiture after waiver. That statutory procedure was distinct and had not been invoked.
7. The insurance-rent point was inadequately pleaded and supported by fragmentary evidence. The first-instance judge was entitled under CPR 24 to determine the preliminary issue on the evidence adduced and to prevent unfairness caused by a late point. The court also declined to interfere with the first-instance costs discretion.

• County Court at Central London: On 14 November 2017, His Honour Judge Madge determined the preliminary issue summarily and declared that the purported forfeiture on 12 February 2016 was unlawful.
• High Court (Chancery Division): The appeal was dismissed. The declaration and consequential costs order were upheld.