UK: The Exercise Of CRAR And Forfeiture

Last Updated: 25 January 2019
Article by Clyde & Co LLP

Most Read Contributor in UK, March 2019

The perils of forfeiture by peaceable re-entry are illustrated in the case of Saravananthan Thirunavukkrasu v B S Brar and J K Brar [2018] EWHC 2461 Ch.

In an appeal against summary judgment given on a preliminary issue, the landlord sought to argue (amongst other things) that the exercise of CRAR did not operate to waive the right to forfeit.

Commercial rent arrears recovery - CRAR

The common law right of distress for rent was abolished in April 2014 and to some extent replaced by an enforcement procedure known as "CRAR" which is set out in the Tribunal Courts and Enforcement Act 2007 (the "Act") and the Taking Control of Goods Regulations 2013.

Waiver of the right to forfeit

Where there is a breach of a lease which gives the landlord the right to forfeit, they must make a choice. They can enforce the right and treat the lease as at an end, or decide not to enforce the right and treat the lease as continuing.

However, various acts on the part of the landlord may amount to a waiver of the right to forfeit, including the demand and acceptance of rent. Under the "old" law, levying distress waived the right to forfeit, other than in the case of forfeiture for arrears of rent under the Common Law Procedure Act 1852 (applicable in very limited circumstances). Because distress could only be exercised while the lease was alive, it waived any forfeiture up to the day of distress.

CRAR, by contrast, can be exercised after a lease ends, in the limited circumstances specified in the Act.

Background facts

A lease of premises at 101 Stanley Road Teddington was granted on 10 July 2013 for a term expiring in May 2034. According to the terms of the lease, rent was payable in equal instalments on the usual quarter days.

Although the precise amounts were not agreed, the tenant accepted that it was in arrears of rent during the course of the lease.

In January 2016, the landlord instructed enforcement agents to recover the arrears by the exercise of CRAR.

On 29 January 2016, the tenant paid a cheque for £3,000 into the landlord's bank account.

On 1 February 2016, enforcement agents instructed by the landlord exercised CRAR for stated rent arrears of £8,270. With fees, the total was £10,533.20, which amount the tenant paid to the enforcement agents on 4 February 2016.

Believing that he had cleared all the arrears of rent when he paid the enforcement agents, the tenant subsequently cancelled the cheque for £3,000 which he had paid into the landlord's bank account. The cheque was dishonoured and the landlord contended that the amount sought by the enforcement agents was reduced by the same amount.

The landlord purportedly forfeited the lease by peaceable re-entry on 12 February 2016.

Summary judgment

The question whether the landlord's purported forfeiture was lawful was determined as a preliminary issue. At first instance, His Honour Judge Madge decided that the landlord's action was unlawful, essentially because, under the "old" law, the landlord's conduct would have amounted to an election to treat the lease as continuing. The last rent payment before the forfeiture was 25 December 2015 and the next rent payment was not due until 25 March 2016. At the time of the purported forfeiture on 12 February 2016, there were no arrears supporting the landlord's re-entry of the premises, which was therefore unlawful. The judge concluded that, because CRAR effectively replaced distress for rent, the same principle applied.

The appeal

On appeal it was held that the judge had been wrong to assume that the exercise of CRAR amounted to waiver just because that had been the effect of distress. Material differences between the old and new regimes meant that CRAR was not the equivalent of distress for rent. The law of waiver and election, however, continued to be governed by the common law.

The landlord argued that the exercise of CRAR could not be an unequivocal recognition of the continuation of a lease because there were circumstances in which it could be exercised after the end of a lease.

The appeal judge dismissed the landlord's arguments based on a consideration of the facts of the case. The lease was not at an end on 1 February, when CRAR was exercised and, in addition, the statutory conditions which permit the exercise of CRAR after the end of a lease were not met. CRAR could therefore only be exercised while the lease continued. In the circumstances, the landlord's exercise of CRAR was an unequivocal communication that the lease was continuing.

The landlord's other grounds of appeal were also dismissed.

The article first appeared in our Real Estate Bulletin - January 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Wright Hassall LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Wright Hassall LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions