Brar & Anor v Thirunavukkrasu

Exercise of commercial rent arrears recovery is, in principle, an unequivocal act affirming the continuation of a commercial lease. It therefore waives a lessor’s right to forfeit for known arrears. The possibility of using CRAR after a lease ends otherwise than by forfeiture does not make its earlier exercise neutral, because CRAR cannot be exercised after forfeiture under the Tribunals, Courts and Enforcement Act 2007. Section 210 of the Common Law Procedure Act 1852 provides a statutory defence where possession proceedings are subsequently brought; it does not abolish common-law waiver. Failure to give prior enforcement notice, or technical invalidity in the attempted exercise of CRAR, does not prevent waiver where the objective facts show an intention to exercise CRAR and treat the lease as continuing.

The appellants were the lessors of commercial retail premises let to the respondent. After rent arrears accrued, enforcement agents attended the premises and took control of goods in purported exercise of commercial rent arrears recovery. The appellants subsequently purported to forfeit the lease by peaceable re-entry.

The Central London County Court, determining a preliminary issue, declared the forfeiture unlawful and ordered damages. Marcus Smith J dismissed the appellants’ appeal in the High Court: [2018] EWHC 2461 (Ch). The Court of Appeal considered whether the exercise of CRAR waived the right to forfeit, whether lack of prior notice made any difference, and whether section 210 of the Common Law Procedure Act 1852 preserved the right to forfeit.

The Court of Appeal, in a joint judgment of Sir Terence Etherton MR, Lord Justice David Richards and Lord Justice Newey, dismissed the appeal.

1. Waiver. Waiver of forfeiture requires the lessor, with knowledge of the facts giving rise to the right of re-entry, to perform an unequivocal act recognising the continued existence of the lease. The legal effect of the act is determined objectively. The lessor’s motive, subjective intention, the tenant’s understanding and any attempted reservation of rights are irrelevant: Matthews v Smallwood [1910] 1 Ch 777 and Central Estates v Woolgar (No.2) [1972] 1 WLR 1048.
2. CRAR. Although common-law distress was abolished by the Tribunals, Courts and Enforcement Act 2007 and replaced by CRAR, the common-law principles of waiver remained unchanged. CRAR is available only to a lessor and cannot be exercised after termination by forfeiture under section 79(4)(a). Its availability after other forms of termination does not make a pre-forfeiture exercise equivocal. CRAR therefore operates, in principle, like distress as an unequivocal affirmation of the lease.
3. Section 210. The authorities on the predecessor provision, including Brewer on the demise of Lord Onslow v Eaton (1783) 3 Doug 230 and Thomas v Lulham [1895] 2 QB 400, establish that section 210 gives the lessor a statutory defence where possession proceedings are subsequently brought. It does not remove common-law waiver in every case in which six months’ rent is outstanding.
4. Notice. The admitted facts showed that the appellants instructed enforcement agents to exercise CRAR and that the agents took control of the tenant’s goods. Even if prior notice under paragraph 7(1) of Schedule 12 was absent and the exercise was technically invalid, the acts objectively demonstrated an intention to treat the lease as continuing and therefore constituted waiver.

• Court of Appeal (Civil Division): In [2019] EWCA Civ 2032, the appeal was dismissed.
• High Court (Chancery Division): Marcus Smith J dismissed the appeal from the county court in [2018] EWHC 2461 (Ch).
• Central London County Court: HHJ Madge declared the purported forfeiture unlawful and ordered damages for trespass and breach of covenant, to be assessed.