Termination of Tenancies for Tenant Default - Law Commission

1925 extends to lessees, under-lessees and persons deriving title under them.
This raises but does not answer the question of what “titles” might be included in
this definition. This task has been left to the courts and recent decisions have
illustrated how this can produce inconsistent results when tackled on a case-bycase
basis. 6 One important objective of any reform must be to identify more
clearly who should and should not be able to intervene where a landlord is
seeking to terminate a tenancy.
6.13 This is an area of some difficulty. It requires the law to balance the reasonable
expectations of those who have acquired rights or interests in relation to the
tenancy against the reasonable expectations of the landlord. We take the view
that, while it is necessary to provide protection for those who would be
significantly affected by termination of the tenancy, it is undesirable to allow
applications to be made by those less seriously affected.
6.14 Inclusion on the list of qualifying interest holders confers the right to be served
with a tenant default notice (or, where appropriate, a summary termination
notice). Should the landlord go on to make a termination claim, the qualifying
interest holder must also be served with a copy of the proceedings and may
apply to the court for an order under the scheme. Failure by the landlord to
comply with these requirements may lead to the landlord’s claim being struck out
on the application of the holder of the qualifying interest or to any order that has
already been made being set aside.
The CP’s provisional proposals
6.15 The CP stated our general view that the “derivative class” should be kept within
manageable bounds. It provisionally proposed that the derivative class should
include sub-tenants, mortgagees and chargees (whether their interests are legal
or equitable). 7
6.16 This list was shorter than that proposed by the First Report, which recommended
that the derivative class should also include those holding an incorporeal
hereditament (such as the benefit of an easement over the tenanted property),
and those with enforceable rights to acquire an interest within the derivative
class. 8 The CP did, however, invite the views of consultees as to whether other
persons, in particular those holding an incorporeal hereditament, an option to
purchase or a right of pre-emption, should be included within the derivative
class. 9
6 Of particular difficulty has been the status of the equitable chargee: see Croydon (Unique)
Ltd v Wright [2001] Ch 318; Bland v Ingram’s Estates Ltd (No 1) [2001] Ch 767, discussed
in the CP, paras 7.13 to 7.16.
7 CP, para 12.7(3).
8 First Report, para 10.26. However, as noted at para 10.31, in many cases a specifically
enforceable right to acquire an interest will be an equitable version of the interest in
question and therefore a qualifying interest in its own right.
9 CP, para 12.7(4).
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