Termination of Tenancies for Tenant Default - Law Commission

Consultation
6.78 Although all those who commented upon the provisional proposal were in general
agreement with this range of remedies, some reservations were expressed.
While the Property Bar Association welcomed the proposals it felt unable to
address them in depth as it required more detail concerning the relationship that
would arise between those remaining interested in the property following the
grant of relief and the manner in which pre-existing obligations and benefits
would operate. HH John Colyer QC was concerned about “the variety of wording
used” as it seemed to preserve “the mystery of exactly what the court is doing
when it grants relief to an under-tenant, etc”. He also pointed out the “incongruity
of derivative interests terminating and yet being ‘preserved’”.
6.79 The most significant comment, made by many consultees, was not that the three
types of order proposed were in any way defective, but that they should be
augmented by one further order: a court-directed order for sale of the tenancy.
Such an order was felt to offer an equitable solution to the question of relief
where there were competing claimants with possibly diverse interests in the
demised property. We have accepted these arguments and have explained in
Part 5 how such an order will operate. 76
Preservation orders 77
6.80 The CP provisionally proposed that the landlord may seek to preserve all
interests deriving out of the tenancy which is being terminated. 78 Preservation is
not possible under the current law, even where the landlord would agree to such
an arrangement. The CP suggested that where preservation is ordered, it should
be on the basis of an entire “branch” of derivative interests being concurrently
preserved so that the landlord is not able to “cherry pick” some interests over
others.
6.81 This provisional proposal had been carried forward from the First Report, 79 in
which it was argued that a power to preserve interests would be of particular
utility where, for example, a block of flats is let on a head tenancy with individual
long sub-tenancies of each flat. 80 Under current law, the forfeiture of the head
tenancy would result in the termination of all the sub-tenancies, even if the
landlord was content for them to continue. Each sub-tenant would consequently
75 CP, para 12.7(7)(c). Under the current law, only (3) is available to a court on an application
for relief, though arguably an application under the Law of Property Act 1925, s 146(2)
reinstates the forfeited tenancy, thereby reviving and preserving the forfeited derivative
interests.
76 Paras 5.48 and following.
77 CP, para 12.7(7)(a).
78 CP, para 12.7(8).
79 Recommendation 59(a).
80 First Report, para 10.8 (see CP, para 7.37).
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