Relief against Forfeiture

Relief against Forfeiture

Relief against forfeiture is a remedy allowing a tenant to return to leased premises where the landlord has re-entered due to breach of a lease. A court will usually grant relief on the condition that payment is made of any outstanding rent.

Our firm has recently acted in two significant matters with published decisions where relief against forfeiture was granted without payment of outstanding rent being required.

Sneakerboy Retail Pty Ltd v Georges Properties Pty Ltd [2020] NSWSC 996 was a relief against forfeiture case set in the context of the early stages of the COVID-19 pandemic. There was a misunderstanding as to the apparent abandonment of the premises by the lessor. Despite a considerable history of rent owing under the contract, the court held that the lessor had the benefit of drawing down upon a substantial bank guarantee which was sufficient to bring the matter within the application within the general principal that relief  will usually be granted where outstanding rent will be paid notwithstanding delinquency in payment. The Court was concerned that it would be unable to quantify or predict the effects of the COVID-19 relief regime and required the parties to agree a suitable and process for implementing good faith negotiations including the eventual reinstatement of the bank guarantee.

In 711 Hogben Pty Ltd v Tadros [2021] NSWSC 1463, there was an extraordinary history of delay in the landlord’s construction works which resulting in the lessees being unable to occupy the premises and operate their business. Here the court was dealing with the lessees’ application to pursue a cross claim for damages and to offset those damages against outstanding rent in the context of a pending relief against forfeiture claim. The lessees Stevenson J observed that “the discretion to grant relief against forfeiture is a wide one and is to be considered in the context of all the facts …There have been cases where relief against forfeiture has been granted notwithstanding the insolvency of the lessee, and thus in circumstances where the lessee cannot pay rent.” Due to the considerable expense the lessees had already invested in the fitout of the premises, and the lessor’s conduct causing lost income so as to make it difficult to pay rent, leave was granted to the lessee to proceed.

Scroll to Top