Thomas v Ken Thomas Ltd [2006] EWCA Civ 1504 (09 October 2006)

Thomas v Ken Thomas Ltd [2006] EWCA Civ 1504 (09 October 2006)

The landlord's right to forfeit was waived by acceptance of payments appropriated by the tenant to later rent periods, as the law of appropriation gives priority to the debtor's communicated appropriation. Even if not waived, the approval of the CVA extinguished the right to forfeit for pre-CVA arrears, as the landlord's right to rent was replaced by rights under the CVA. Relief from forfeiture cannot be conditioned on payment of sums in respect of which the right to forfeit was waived.

Citation
[2006] EWCA Civ 1504
Parties
Claimant/appellant: Thomas; Defendant/respondent: Ken Thomas Ltd
Jurisdiction
England and Wales
Judgment Date
09 October 2006
Procedural Posture
Civil Appeal / Appeal From County Court Judgment
Outcome
Appeal allowed
Legal Topics
Forfeiture of Lease, Waiver of Forfeiture, Company Voluntary Arrangement (cva), Relief From Forfeiture, Appropriation of Payments, Non Payment of Rent
Landlord and Tenant Insolvency Contract Forfeiture of Lease Waiver of Forfeiture Company Voluntary Arrangement (cva) Relief From Forfeiture Appropriation of Payments +1 more

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Parties

Thomas

Claimant/appellant

Ken Thomas Ltd

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From County Court Judgment

Legal Issues

  1. 1 Whether the landlord waived the right to forfeit the lease for arrears of rent by accepting payments appropriated by the tenant to later rent periods.
  2. 2 Whether the existence and approval of a Company Voluntary Arrangement (CVA) extinguished the landlord's right to forfeit for pre-CVA rent arrears.
  3. 3 On what terms relief from forfeiture should be granted, specifically whether payment of VAT arrears (in respect of which the right to forfeit had been waived) could be required.

Ratio Decidendi

The landlord's right to forfeit was waived by acceptance of payments appropriated by the tenant to later rent periods, as the law of appropriation gives priority to the debtor's communicated appropriation. Even if not waived, the approval of the CVA extinguished the right to forfeit for pre-CVA arrears, as the landlord's right to rent was replaced by rights under the CVA. Relief from forfeiture cannot be conditioned on payment of sums in respect of which the right to forfeit was waived.

Court Disposition

Appeal allowed

Orders

  • Judgment below set aside
  • Forfeiture claim dismissed