Huseyin Sik v Mohammed Abdul Malik

Relief from forfeiture for non-payment of rent is discretionary, but the discretion is circumscribed by established equitable principles. The usual condition is payment of the full rent arrears, interest and properly incurred costs of re-entry and relief proceedings. A court has no discretion to reduce the rent payable merely because the landlord resisted relief, because the tenant was out of possession, or because there was no evidence of the landlord’s use of the premises. Any benefit obtained by the landlord from re-entry must be brought into account, but the landlord cannot profit from forfeiture. Costs of re-entry must be treated separately from costs caused by contested proceedings. Where the first-instance costs discretion was exercised on an erroneous basis, the appellate court may exercise it afresh.

The appeal arose from an order of HH Judge Saunders following the peaceable re-entry by the landlord, Mr Sik, of commercial premises occupied by the tenant, Mr Malik, for non-payment of rent. The Judge granted relief from forfeiture but required payment of the rent arrears only up to re-entry and 50% of the rent thereafter until possession was restored. He also ordered Mr Sik to pay 50% of Mr Malik’s costs.

The appeal challenged the reduction of rent, the treatment of the costs of re-entry, and the resulting costs order. The central issues were whether the court could reduce the rent condition because of the landlord’s conduct or the absence of evidence of benefit from the premises, and whether the costs of forfeiture had been improperly conflated with the costs of the contested proceedings.

1. Rent condition. The appeal succeeded on the reduction of rent. Under section 139(2) of the County Courts Act 1984, the County Court may grant such relief as the High Court could have granted. The equitable jurisdiction normally requires payment of the arrears, interest and properly associated re-entry costs. The court has discretion as to the time for payment, but not as to whether the full arrears are a condition of relief.
2. The Judge was wrong to make an allowance because Mr Sik resisted relief, to adopt an equitable or fair solution on the particular facts, or to reduce rent because there was no evidence of Mr Sik’s use of the property. The authorities did not support treating strong or unreasonable opposition to relief as a reason to reduce the rent condition. A landlord must account for benefits obtained through re-entry, but no such benefit was established here.
3. Costs of forfeiture. The Judge was wrong to determine costs in the round without separately recognising Mr Sik’s entitlement to the reasonable costs of peaceable re-entry and of a short, unopposed relief application. Those costs should be identified first. Any costs award in favour of Mr Malik may then be set off against them.
4. Costs discretion. Because the first-instance costs decision was based on the erroneous conflation of re-entry costs with litigation costs, it was plainly wrong and had to be set aside. The costs discretion was exercised afresh. Mr Sik was entitled to costs of re-entry and relief-related work up to 4 October 2023; Mr Malik was entitled to costs caused by the subsequent resistance to relief; and Mr Malik was to pay Mr Sik’s costs of the waiver issue.
5. The revised conditions required payment into court of the full rent, interest and relevant costs. Payment to Mr Sik was deferred until conclusion or settlement of the identified county court proceedings. Further consequential directions, including the time for payment and possession consequences of non-compliance, were reserved for a consequential hearing.

• High Court, Chancery Appeals: On appeal from the order of HH Judge Saunders dated 18 March 2024, the court allowed the appeal on the rent and costs issues, revised the conditions of relief, and directed a consequential hearing.
• County Court at Central London: HH Judge Saunders granted relief from forfeiture following peaceable re-entry, but required payment of only 50% of rent after re-entry and ordered Mr Sik to pay 50% of Mr Malik’s costs.