Termination of Tenancies for Tenant Default - Law Commission

6.6 We recommend that where a tenancy comes to an end as a result of
termination action, any interest derived from the tenancy shall come to an
end simultaneously with it. 4
6.7 It seems to us equally clear that, just as under the current law the holders of
certain derivative interests may apply to the court for relief from forfeiture, the
scheme must give the court jurisdiction to make an order in appropriate
circumstances in favour of the holders of a derivative interest which is threatened
with termination.
6.8 We no longer recommend referring to this as “relief” from termination. Not only
would the use of this terminology preserve a potentially confusing link with the
current law of forfeiture, it would also be inaccurate. Under current law, forfeiture
terminates the tenancy at the moment of service of forfeiture proceedings (or
physical re-entry of the demised premises). A derivative interest holder must
therefore seek relief from the consequences of an event that has already taken
place. Under our scheme, the tenancy continues until an order of the court
terminating it takes effect (except where the summary termination procedure is
used). 5 A qualifying derivative interest holder who applies to join the court
proceedings will therefore be seeking to persuade the court to make an order that
does not terminate the interest, such as an order for sale, a transfer order or a
new tenancy order.
6.9 A further modification to the terminology adopted in the CP is that those who
come within the scope of the statutory protection that the termination scheme
incorporates are now referred to as holders of “qualifying interests” rather than
members of the “derivative class”. Transfer orders and new tenancy orders may
only be made by the court on application by a person who has a qualifying
interest in the tenancy.
6.10 We recommend that those who hold qualifying interests in the tenancy and
who wish to protect their interests should be entitled to apply to the court
for any order, other than a termination order.
6.11 This Part will consider:
(1) what interests should be “qualifying interests”;
(2) how qualifying interest holders are to be informed of the landlord’s
actions and their right to apply to the court for an order; and
(3) what forms of order may be made by the court on the application of a
qualifying interest holder.
WHAT INTERESTS SHOULD BE QUALIFYING INTERESTS?
6.12 The First Report and the CP described how the current law does not clearly
define those who may apply for relief from forfeiture. The statutory jurisdiction to
grant relief from forfeiture provided by section 146 of the Law of Property Act
4 Draft Bill, cl 12(7).
5 See Part 7.
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