Keshwala & Anor v Bhalsod & Anor

In a County Court claim for relief from forfeiture after peaceable re-entry for non-payment of rent, the six-month period in the County Courts Act 1984, section 139(2), is a jurisdictional limit, not a rule that any application made within it is prompt. Relief remains discretionary and is ordinarily granted where arrears and costs are paid, but delay may be relevant with other circumstances. Relevant matters include whether the tenant explained the delay and kept the landlord informed, and whether the landlord reasonably altered its position or third-party rights intervened. Mere delay alone is unlikely to suffice where the landlord simply waits. An appellate court must respect the first-instance discretion unless a demonstrable error in principle is shown.

The Tenants held a 20-year mixed commercial and residential lease. The Landlords forfeited it by peaceable re-entry on 13 September 2018 for a £500 rent shortfall. The Tenants applied for relief on 26 February 2019, after the premises had been re-let.

HHJ Hampton dismissed the claim. On appeal, Martin Spencer J allowed the appeal, holding that an application made within six months was to be treated as brought with reasonable promptitude. The Landlords brought a second appeal limited to the treatment of delay. The central issue was whether the County Court judge had erred in refusing relief after considering delay, lack of notice, the re-letting and the position of the co-tenant.

Appeal allowed. The Court restored HHJ Hampton’s order dismissing the claim for relief from forfeiture.

1. Statutory jurisdiction. Section 139(2) of the County Courts Act 1984 gives the County Court jurisdiction to entertain an application made within six months after peaceable re-entry for non-payment of rent. The wording leaves the grant of relief discretionary. The separate regime in section 138(9A), which concerns possession recovered after a court order, did not apply.
2. Equitable principles. The right of re-entry is ordinarily treated as security for rent. In a simple case, where rent and costs are paid and there has been no intervening change of position, relief will ordinarily be granted. Other breaches of covenant are generally irrelevant. Mere delay alone is unlikely to justify refusal where the landlord has simply taken possession and waited. This approach was supported by Gill v Lewis [1956] 2 QB 1, Newbolt v Bingham (1895) 72 LT 852 and the discussion of Pineport Ltd v Grangeglen Ltd [2016] L&TR 28.
3. Promptitude and intervening events. An application made within six months is not automatically prompt. The court may consider the length and explanation of the delay, whether the tenant kept the landlord informed, and whether the landlord reasonably altered its position or third-party rights intervened. A reasonable and non-precipitate re-letting may make relief inequitable. The approach in Stanhope v Haworth (1886) 3 TLR 34, Silverman v A.F.C.O. (U.K.) Ltd (1988) 56 P&CR 185 and Bank of Ireland Home Mortgages Ltd v South Lodge Developments [1996] 1 EGLR 91 supported that conclusion.
4. Appellate restraint. An appellate court must not substitute its own discretion for that of the trial judge. Intervention requires a demonstrable error in principle. HHJ Hampton had considered not merely the delay, but also the unexplained silence, failure to notify the Landlords, the reasonable re-letting prompted by financial liabilities, and Mr Keshwala’s reluctance and elusiveness. Martin Spencer J therefore erred in treating the delay as immaterial merely because the application was made within six months.

• Court of Appeal (Civil Division): On 15 April 2021, the appeal was allowed and the County Court judgment was restored.
• High Court, Martin Spencer J: In [2020] EWHC 2372 (QB), the Tenants’ appeal was allowed and relief from forfeiture was granted.
• County Court, HHJ Hampton: The claim for relief from forfeiture was dismissed on 10 January 2020.