The Appeal of Sik v Malik [2025] EWHC 383 (Ch) offers guidance on the interplay between relief from forfeiture and lease renewal proceedings and a warning about tactical applications and procedural delays.
The landlord sought to terminate the tenancy under the Landlord and Tenant Act 1954 on the basis that he planned to redevelop the property (ground (f)). The tenant issued lease renewal proceedings, challenging the landlord's ground of opposition and seeking a new lease.
During those proceedings the tenant failed to pay the rent due. In response, the landlord forfeited the lease by peaceable re-entry. The tenant filed an application for relief from forfeiture. This was later amended to include a claim in the alternative that the landlord had waived his right to forfeit so that the forfeiture had been wrongful.
Court of First Instance - procedural delays and order for relief
While the judge found that the tenant had filed his application for relief from forfeiture promptly, for unexplained reasons, the court did not issue that claim for more than 5 months. A further delay in the listing of a hearing to determine that application resulted in the tenant being out of possession of its business premises (a restaurant and takeaway) for approximately 6 months.
In the meantime, the landlord applied to strike out the tenant's lease renewal claim.
However, ultimately the judge at first instance granted the tenant relief from forfeiture, on the basis that the tenant pay 50% of the rent payable for the unoccupied period and awarding the tenant 50% of his costs. The landlord appealed.
Court's jurisdiction – relief from forfeiture
In the appeal, the High Court overturned the lower court's decision to reduce the rent and the costs award, upholding the following 3 grounds of appeal (at [22]), namely:
Whether the judge in the court of first instance had erred by:
- reducing the rent due as a condition of relief from forfeiture to 50% between peaceable re-entry and the grant of relief from forfeiture;
- awarding the tenant 50% of his costs; and
- conflating legal costs with re-entry costs.
Ground 1 – 50% rent reduction for the period in which the tenant was out of occupation
The appeal judge observed that the court's discretion is governed by principles of equity and that relief should not be granted on terms which enable the landlord to profit from the exercise of the right of re-entry (such as profiting from the re-letting of premises from the period between the landlord obtaining possession of the property and the tenant obtaining relief). But the Judge observed that "nowhere is it suggested that this conduct is relevant to anything other than costs." (at [30]).
In exercising its discretion to grant relief, the court does not have jurisdiction to change the value of the rent owed under a pre-existing lease, though it may determine the "precise length of time within which the arrears of rent and any costs must be paid"(at [28(iii)]) and it may make provision in its costs award to address any inequity of the parties arising out of particular facts, such as a landlord contributing to unnecessary procedural delays. There was no evidence of this in this case.
Ground 2 - awarding the tenant 50% of his costs
The appeal judge overturned the costs award and proceeded to exercise his discretion afresh, granting an 'issues based' costs award and ordering:
- the landlord to pay the tenant's costs of dealing with the landlord's application to strike out the tenant's lease renewal claim, because this had been made after it became clear that the tenant intended to pursue a claim for relief; and
- the tenant to pay the landlord's costs incurred by the tenant seeking to raise a waiver argument which it later transpired was ill founded and which hindered the landlord's ability to consent to the application for relief for fear of granting a new lease by accepting overdue rent.
Ground 3 - conflating legal costs with re-entry costs
The appeal judge determined that the judge at first instance should have ordered as a condition of relief being granted that the tenant pay the landlord's forfeiture costs and its costs of responding to an unopposed application for relief from forfeiture. Any subsequent apportionment against costs incurred in relation to the interim applications or set off requests could have then been dealt with.
A tenant, having had the lease forfeited for failing to pay rent, will expect to pay (as conditions of the court granting relief): (1) the full rent arrears falling due to the date relief is granted: (2) interest on those arrears; (3) the landlords costs of recovering possession of the property by peaceable re-entry; and (4) the landlord's costs in the forfeiture proceedings. The appeal case affirms this position.
It is also worth noting that: (1) even timely relief applications can face significant court delays (sometimes months) before being heard meaning that a tenant may be out of possession for some time between the date of forfeiture and any order for relief; and (2) tactical interim applications should be used sparingly to reduce the risk of derailing proceedings, exacerbating procedural delays and facing adverse costs orders.
