UK: Relief From Forfeiture – In The Balance

Last Updated: 15 May 2019
Article by Laura Crawford

The demise of high street retail and the insolvency of household names, including Woolworths, BHS, and more recently Debenhams and Monsoon has been a real headache for property owners.

The moratorium created by administration ties the hands of landlords, preventing them from forfeiting leases without first having obtained the consent of the administrator or the leave of the court.

When a landlord (or indeed any creditor) comes to court asking the court to exercise its discretion and dis-apply the moratorium, the court has to undertake an exercise of balancing the impact upon both parties weighing up the rights and property interests of the landlord on the one hand and the interests of creditors on the other.

If a tenant enters voluntary liquidation, a landlord can forfeit the lease without permission of the Court. But if the lease is a valuable asset an insolvency practitioner can apply to Court for relief from forfeiture to enable that asset to be sold.

A similar balancing exercise is required to ascertain whether the property should be returned to the landlord and the lease forfeit or whether the lease should remain in existence to enable the tenant to remain in occupation or, as in the case of SHB Realisations Limited v Cribbs Mall Nominee (1) Ltd [2003] WLUK 588 to enable the lease to be assigned and monies paid into the insolvent estate.

In SHB, HHJ Ralton sitting in the Bristol County Court granted conditional relief from forfeiture to the insolvent tenant of a retail unit. It was unusual order because the tenant was undeniably in breach of a covenant in its 125 year lease to keep the premises open. In such a scenario the landlord might reasonable expect the Court to allow the lease to be forfeit. Especially, as in this case, the tenant acknowledged that it was in breach of covenant and that the breach would not be remedied.

Whilst the Judge granted relief, it was subject to a condition that relief only be granted for 3 months to allow the tenant to complete an assignment of the lease and if not completed during that period the lease would be forfeit.

The Facts

In 1998, BHS took a 125-year lease of a sub-anchor unit at the Mall at Cribbs Causeway in Bristol for a peppercorn rent, but with a premium of £7.05m plus VAT. The lease included a "keep open" covenant, which required BHS to open its shop 7 days a week during specified opening hours.

Following the administration of BHS, the store closed permanently on 28 August 2016 rendering BHS (now SHB Realisations) in breach of its keep open covenant. As a result, the landlord served notice of forfeiture, on the basis that SHB could not remedy the breach or comply with the covenant going forward.

SHB and its mortgagee (GB) Europe Management Service sought relief from forfeiture for a period of 6 months, to allow further time to assign the lease. They argued that their attempts to market the lease had been hindered by the ongoing litigation and planning applications. The landlord counterclaimed requesting immediate possession, stating that the 36 months which had already elapsed was ample time in which to secure an assignment of the lease.

The Balancing Exercise

In order to exercise his discretion on whether to grant relief from forfeiture, and if so, for how long the Judge had regard to the following factors:

  1. SHB was and is in deliberate but not wilful breach of covenant not caused by third parties;
  2. SHB had an asset which was once of considerable value and it should not be deprived of the opportunity to reduce its debts;
  3. GB was a secured creditor and should not be deprived of its security;
  4. There was still a real market for the lease and a real rather than fanciful prospect of finding an assignee;
  5. The lease has a value of over £1,000,000;
  6. The breach of covenant was incurable and will continue until an assignee is found who opens their store for business;
  7. Therefore the landlord suffers ongoing damage and their other tenants some damage by being in a mall where the fourth largest store had been and continued to be boarded up;
  8. If the landlord remained unable to recover possession, they would be unable to devise and implement strategies for the mall incorporating the specific unit for their benefit and the benefit of all retailers in the mall;
  9. The landlord’s hands were not clean – they had falsely referred to a prospective purchaser.

The Decision

Balancing the positon of both parties, it was right that there should be conditional relief from forfeiture; however the main condition was that SHB must complete an assignment of the lease by 17.00 on 28 June 2019 (just under 3 months' time).

The Judge also noted that whilst the tenant was the first claimant seeking relief from forfeiture, the mortgagee (GB) who had the real financial interest in the lease was driving the action. Accordingly if an assignment does not take place, it is likely that GB will be required to pay mesne profits for the period that the landlord has been kept out of occupation.

Given the current economic climate and the ongoing fragility of the retail sector, the inherent competing interests of landlords on the one hand and Insolvency Practitioners and mortgagees on the other, is set to continue.

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

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

Similar Articles
Relevancy Powered by MondaqAI
BrookStreet des Roches
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
BrookStreet des Roches
Related Articles
Related Video
Up-coming Events Search
Font Size:
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 (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

To Use 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.


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.


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