When a commercial tenant fails to pay rent due, the landlord can take legal action to terminate the lease or can 'peaceably re-enter' the premises and take possession of them. Where a court order is made, the tenant has six months in which to apply for 'relief from forfeiture' of the lease.
A recent case has shown up an interesting anomaly when peaceable re-entry is the chosen route for repossession of let premises. In such cases, the court has discretion to allow an application for relief from the landlord's possession and that is based on whether the tenant has applied for relief with 'reasonable promptitude'.
In the case in point, the tenant company failed to make an application for relief from forfeiture for more than 14 months and the landlord opposed the application on the basis that it was not made with reasonable promptitude. Clearly, the decision in such cases will be highly fact-specific, but the range of factors taken into consideration by the court in making its decision (which was in favour of the tenant) makes interesting reading.
The court took into account:
- the loss suffered by the landlord (in this case considered to be none, because it had taken no steps to re-let the property);
- the relationship of the rent arrears to the value of the lease (in this case less than 1 per cent);
- the tenant's demonstrated ability to pay the arrears of rent; and
- the tenant company's particular circumstances, which in this case included the director being in prison and suffering from depression.