Pineport Limited v Grangeglen Limited [2016] EWHC 1318 (Ch)

Blaser Mills acted in a decision by the High Court, which provided a surprising decision on relief from forfeiture and clarification of the circumstances in which the Court may exercise its equitable discretion to grant relief from forfeiture.

The facts of the case are that the tenant applied for relief from forfeiture 14 months after the landlord forfeited by peaceable re-entry. In April 2014, the landlord forfeited the lease due to unpaid rent of £2,155. The tenant did not issue their claim until 23 June 2015. One of the reasons for the delay was that a Director of the tenant company had been convicted and was serving a prison sentence for MOT fraud carried out at the premises. The same Director was also suffering from depression. The original lease was a long lease granted at a premium and the lease was valued at £275,000.

The Court heard evidence from the tenant’s Director’s brother and was satisfied there was a reasonable prospect of the brother providing funds to discharge the outstanding liabilities and arrears owing to the landlord within a reasonable period of time. The payment of the arrears would be a condition of relief from forfeiture.

The Court ultimately granted the tenant for relief from forfeiture. Master Marsh’s judgment set out guidance on how the Courts should approach applications for relief. The 14 month time period for the application for relief was a huge departure from the previous longest time in a reported case of 6 months and 7 days.

The Court decided that an application for relief from forfeiture on equitable grounds need to be made with “reasonable promptitude”. The judgement goes on to explain that “reasonable promptitude” is an elastic concept and 14 months was near to the breaking point for the concept’s elasticity.

On balance, the Court concluded that the elasticity was stretched by two factors. One was that the tenant had paid a substantial premium for the long lease. The other was the tenant’s Director’s personal situation that caused the delay in the application for relief.  The Court also paid heed to the fact that the Landlord had not marketed the unit after the forfeiture and suffered no prejudice.

Edward Thompson, Associate Solicitor, acted for Grangeglen Limited in the High Court. If you would like more information on the decision, please contact Edward on 01494 478676 or email him at edt@blasermills.co.uk