Commercial Lease Forfeiture: UPDATE

The recent Supreme Court decision in the case of The Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd serves as a timely reminder that the right of forfeiture (and relief from it) is not reserved solely for leases.

Although the facts of the case are highly specific, the decision reiterates that even a licence or easement could give rise to the right to forfeit: the key, in that case, was that Vauxhall, the occupier, had virtually exclusive possession of the site and the rights granted in the licence were in perpetuity.

Tenants and occupiers should also be mindful that failure to comply with provisions in a rent deposit deed, such as topping up the deposit following the withdrawal by the landlord or agreement of revised rent (where the deposit level is linked to rent), may also give the landlord the right to forfeit.

The Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd is also a fine example of the fact that the right to forfeit can arise irrespective of the level of the sums due – Vauxhall had only omitted to pay £50! – or severity of the breach, although in such cases where the tenant acts promptly to rectify the omission and breaches are inconsequential, relief is more likely to be forth-coming.