More on forfeiture of commercial leases

Posted: Monday, 6 July 2015 @ 15:22

Back on 2 June I blogged on forfeiture, and said that "Note that if the Landlord forfeits the lease he no longer has the right to seize any goods or possessions of the Tenant remaining on the premises."

But I must point out a very important distinction between "goods and possessions" and "tenants fixtures".

Normally a tenant would be allowed to remove "tenants fixtures" on or before the end of a lease, unless the Lease provided otherwise. But case law going back to the case of Pugh v Arton in 1869 has established that if the landlord forfeits a lease for breach by non payment of rent by taking peaceable possession, usually moving in overnight and changing the locks, the tenant loses the right to re-enter the premises to remove his fixtures. So unless the tenant has protected himself by express provision in the Lease contract giving him the right to take away tenants fixtures after the end of the lease term, whether by normal expiration of time or his own act such as breach resulting in forfeiture, he will lose the right if the landlord forfeits by peaceable re-entry.

The case of Pugh v Arton was upheld as recently as 1999 in the case of Re Palmeiro.

So it is very important to understand what is meant by "tenants fixtures". Free standing items will not be fixtures, but anything bolted or fixed to the fabric or structure of the premises will be "tenants fixtures". So this could include machinery with a value of tens, hundreds, or indeed millions of pounds. In those circumstances it is vital for tenants to protect themselves in the lease terms, because if subsequently the landlord forfeits in the event of non payment of rent, and takes peaceable possession, the landlord has a right to the tenants fixtures.

I must say that I do not understand the justice or logic of this case law. It seems wholly unjust that a landlord could effectively annexe goods worth a considerable amount without having to give any compensation or account against rent or other costs outstanding. It does not appear to be in line with the equitable principles which govern the decisions of English courts. It is a breath taking windfall.

It is my opinion that a tenant faced with losing fixtures of a substantial value will have a much stronger case for obtaining relief from forfeiture, provided of course he also pays all arrears and the landlord's costs.

Nigel Musgrove
Business and Litigation Solicitor
Tel: 0845 003 5639

 

 

 

Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
Call Nigel on +44 (0)1285 847 001 or by email
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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Thank you. Your response is great, very straight to the point! Hopefully this will bring an end to the matter. I will certainly be recommending your services as I am very impressed with the prompt dealing of this matter.
Janet Burbidge

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