Keshwala & Anor v Bhalsod & Anor

Where a lease is forfeited for non-payment of rent, the proviso for re-entry is ordinarily treated in equity as security for the rent. Once rent and costs are paid or tendered, relief should generally follow unless exceptional circumstances make relief unjust.

An application made within six months of peaceable re-entry should ordinarily be treated as made with reasonable promptitude. Delay within that period is not, without more, an exceptional circumstance justifying refusal of relief. A subsequent re-letting is not necessarily a bar, particularly where appropriate provision can be made through a reversionary lease.

The appellants were joint tenants of commercial and residential premises under a 20-year lease. The landlords forfeited the lease by peaceable re-entry after a £500 shortfall in quarterly rent. The appellants paid the arrears and sought relief from forfeiture.

The County Court accepted that forfeiture had been harsh and that a prompt application would probably have succeeded, but refused relief because the appellants had not adequately explained their delay between October 2018 and January 2019, together with other concerns concerning the tenancy. The appellants appealed, arguing that the judge had applied an overly general discretion and had failed to give proper weight to the statutory six-month period.

1. Appeal allowed. Relief from forfeiture was granted.
2. The argument that the claim failed because both joint tenants had not applied was rejected. The issue had not been adequately pleaded. In any event, the first claimant had authorised the proceedings, as shown by his signed witness statement confirming his consent to the claim.
3. The County Court had erred by treating the matter as the exercise of an unrestricted general discretion. In the equitable jurisdiction relating to forfeiture for non-payment of rent, the proviso for re-entry is treated as security for the rent. If the rent and costs are paid or tendered, relief should follow unless exceptional circumstances make it unjust.
4. The relevant question was whether the delay amounted to such exceptional circumstances. The statutory six-month period provides the principal guidance. Although an application may sometimes be made after six months while reasonable promptitude remains elastic, an application made within six months should be treated as having been made with reasonable promptitude.
5. The delay relied upon by the County Court occurred within six months and therefore could not, by itself, amount to the exceptional circumstance required to refuse relief. The County Court had not referred to the guidance supplied by the statutory time limit.
6. The subsequent re-letting did not bar relief. The residential premises had been vacated, and the appellants were willing to accept a reversionary lease of the business premises. Appropriate terms could therefore be included in the order granting relief.

• High Court (Queen's Bench Division): Appeal from the Leicester County Court allowed; relief from forfeiture granted.
• Leicester County Court: HHJ Hampton refused relief from forfeiture on 10 January 2020.