The tenant had allowed an equitable charge over his lease in favour of a creditor. The lease was forfeited by peaceable re-entry for non-payment of rent, and the chargee sought relief from forfeiture. A new tenancy had been granted in the mean-time.
Held: If relief was on the basis of payment of arrears, some part would be payable to the new tenant. The aim was to re-instate the landlord as if the rent had been paid, but what account was to be taken of the benefits of the new tenancy? The position was compared to a mortgagee having taken possession, and the lessor should be charged for a full occupation rent.
Chadwick LJ said: ‘Third, the object of the court when granting relief is to put the lessor (as well as the lessee) back in the position in which he would have been if there had been no forfeiture – see Egerton v Jones [1939] 2 KB 702, 706. It is this principle which underlies the practice of requiring the applicant, as a term of relief, to pay the costs properly incurred by the lessor in connection with the re-entry and the proceedings for relief. Accordingly, the applicant will normally be required to pay the lessor’s costs of the forfeiture proceedings, save in so far as those costs have been increased by the lessor’s opposition to the grant of relief, upon appropriate terms – see Howard v Fanshawe [1895] 2 Ch 581, 592, and Abbey National Building Society v Maybeech Ltd and another [1985] Ch 190, 206. Prima facie, the costs which the applicant will be required to pay to the lessor as a term of obtaining relief will be assessed on an indemnity basis; if it were otherwise the lessor would not obtain the indemnity against proper expenses to which he is entitled – see Egerton v Jones [1939] 2 KB 702, 710. But, to the extent that costs have been increased by the lessor’s unnecessary opposition to the grant of relief, the normal rules apply: the lessor will normally be ordered to pay the applicant’s costs on the standard basis, and the applicant will be able to set those costs off against what he would otherwise be required to pay to the lessor as a term of obtaining relief from forfeiture.’
Judges:
Chadwick LJ, Hale J
Citations:
Times 29-Aug-2001, Gazette 13-Sep-2001, [2001] EWCA Civ 1088, [2002] 1 P and CR 33, [2001] NPC 115, [2001] 3 EGLR 34, [2002] 1 All ER 244, [2001] 50 EG 92, [2002] Ch 177, [2002] L and TR 4, [2002] 2 WLR 361
Links:
Jurisdiction:
England and Wales
Citing:
See Also – Bland v Ingrams Estates Ltd and Others (1) CA 18-Jan-2001
An equitable charge of a lease has standing to apply to court for relief from forfeiture for non-payment of rent, where the tenant did not himself seek relief, but only indirectly on the basis that the lessee and chargor has a duty to take . .
Cited by:
Cited – Patel and Another v K and J Restaurants Ltd and Another CA 28-Oct-2010
The landlord appealed against refusal of forfeiture for breaches of the lease. A covenant provided against use for immoral purposes, and the sub-tenant had been found to be running a brothel. The tenant said that he had been concerned of an action . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 28 June 2022; Ref: scu.162926