Termination of Tenancies for Tenant Default - Law Commission

of the parties. 78 Proportionality in the CPR context refers to the way in which the
court manages each case. It is essentially concerned with procedure.
5.105 The element of proportionality that we recommend in our scheme builds on the
CPR’s procedural proportionality to apply the principle to the determination of the
outcome of the case. Broadly, the court should consider the effect on all the
parties of making a termination order or of refusing to make a termination order
(or indeed any other order at its disposal). It should ask itself: “What does the
tenant or the landlord stand to lose if an order is made or refused?” The court
must then consider whether various consequences are a proportionate response
to the circumstances.
5.106 For example, is the tenant likely to lose a significant capital asset (or the ability to
carry on business) as a result of a relatively trivial breach of the tenancy
agreement which has not caused the landlord any substantial loss? Is the
landlord likely to obtain a windfall gain out of proportion to the loss which is being
occasioned as a result of the tenant’s default? Is the landlord likely to be
seriously prejudiced (perhaps in terms of a diminution in the value of the
reversion) by the tenancy being allowed to continue in the event that the court
refuses to make an order? It is important that the court considers the potential
harm which may be incurred in all cases.
5.107 Proportionality is therefore a key principle but it is equally important, in our view,
that any order made under the scheme should be appropriate in the
circumstances. An order that was proportionate but inappropriate would clearly
be unsatisfactory.
5.108 For example, a court considering a claim might decide that a proportionate
response to the tenant default would be to make an order that removed the
tenancy from the hands of the tenant, but which protected the interests of
qualifying interest holders. An order for sale would have such an effect. If,
however, the tenancy in question had little or no capital value, the court should
not make an order for sale. Although such an order might be proportionate, it
would not be appropriate.
5.109 We recommend that, on a termination claim made on the ground of a tenant
default, where the court is satisfied that the default has occurred, it may
make such order as it thinks would be appropriate and proportionate. 79
The statutory checklist
5.110 On the basis of comments made during the consultation process we have been
persuaded that it would be useful to provide a statutory statement of the factors
that the court should take into account in deciding what order would be
appropriate and proportionate in the circumstances. Not only would this assist the
court in the exercise of its discretion, it would also promote consistency of
outcome.
78 Civil Procedure Rules, r 1.1(1)(c).
79 Draft Bill, cl 9(1).
98