Keshwala & Anor v Bhalsod & Anor (2021) EWCA Civ 492

This was the second appeal, to the Court of Appeal, of a relief from forfeiture matter for commercial property that we have previously seen in the High Court (our report here). The issue was whether a relief from forfeiture application made just within 6 months of the date of forfeiture was brought with ‘reasonable promptitude’ for the purposes of the equitable relief from from forfeiture.

The High Court had held that, given the statutory six months in the Common Law Procedure Act 1852, this formed the baseline of what was reasonable in equity also, and so, effectively, any relief application made within the 6 months should be treated as being brought with ‘reasonable promptitude’.

The Court of Appeal allowed the landlord’s appeal. Delay in bringing the application could be a factor in the discretion to grant relief, even within the 6 months, if the landlord had changed their position in the meantime, for instance in grant of a new lease.

If a landlord has forfeited for non-payment of rent and taken possession by peaceable re-entry, the grant of relief is always discretionary, either, in the County Court, because of the express terms of s. 139(2) (“may, if it thinks fit, grant … relief”), or, in the High Court, because it is exercising an equitable jurisdiction. In the County Court the application must be brought within 6 months; in the High Court there is no strict time limit, but the Court will have regard to the 6 months.

The discretion is to be exercised (in both the High Court and the County Court) in accordance with equitable principles, including the well-established principle that equity regards the right of re-entry as a security for the payment of the rent, and, other things being equal, the Court will ordinarily grant relief if the tenant pays all that is due in terms of rent and costs. If therefore all that has happened is that the landlord has taken possession and then done nothing with the premises, simply sitting back to see what happens, then the mere fact that the tenant has delayed is unlikely to be regarded as sufficient by itself to cause the Court to refuse relief.

But that does not mean that so long only as the tenant brings his application before the end of the 6 months, he will be treated as having acted with reasonable promptitude, or that his delay will always be regarded as immaterial. The longer that the tenant leaves it – and a fortiori if he does not have a good explanation for the delay, and fails to keep the landlord informed of his intention – the more likely it is that he will find that the Court will conclude that he has failed to act with reasonable promptitude, and the more likely it will be that intervening events will make it inequitable to grant relief. If the landlord, acting reasonably and not precipitately, has altered his position, it may be unjust to grant relief; as also it may be if the rights of third parties have intervened.

The tenant in the present case had done nothing for 5 and a half months, not even informing the landlord of its intention to seek relief. The landlord had acted on the tenant’s apparent lack of interest by granting a new lease. The application had not been brought with reasonable promptitude and the delay was unexplained. Appeal allowed and the first instance court’s refusal of relief was re-instated.