Termination of Tenancies for Tenant Default - Law Commission

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landlord assigns the reversion, he or she loses the right to forfeit. But that right can be expressly reserved on an assignment of the reversion. 3 18. There is no corresponding provision under the new scheme. Subsection (6)(a) and (b) provides that the person entitled to the immediate reversion will be entitled to take termination action only if he or she is also entitled to enforce the covenant concerned. 19. Subsection (5) ensures that the tenant cannot terminate the tenancy under the new scheme. Clause 4: Tenant default notice 20. Before making a termination claim, a landlord must serve a tenant default notice in accordance with this clause (unless the need to do so has been dispensed with by the court under clause 8). The references to giving and delivering a notice are, as a result of clause 32(4), to be read with Schedule 3 (which makes detailed provision about how a notice may be given and when it is to be treated as given). 21. The tenant default notice must be given within the default period. Subsection (3) explains how the default period is to be calculated. The day on which the default period commences will in practice depend on whether the breach is a “once and for all” breach or a continuing breach. The question of what amounts to knowledge for the purposes of subsection (3) is dealt with in clause 31. 22. Subsection (4) operates where section 168 of the Commonhold and Leasehold Reform Act 2002 applies. That is where, under a long residential lease (generally speaking, one granted for a term of over 21 years), there has been a breach of covenant by the tenant other than non-payment of rent. In that case, the default period does not begin until it has been finally determined by a Leasehold Valuation Tribunal that a breach has occurred, or the tenant has admitted the breach, or a court or arbitral tribunal has finally determined that a breach has occurred. 23. Subsections (5) and (6) enable the parties to agree to extend the period for serving a tenant default notice. Any such agreement must be made before the end of the original six-month period or, if such an agreement has already been made, before the end of the extended period set by the agreement. The agreement cannot revive a default period which has already expired. The mechanism is similar to that under section 29B of the Landlord and Tenant Act 1954. Clause 5: Explanatory statement 24. This clause applies only to post-commencement tenancies (defined by clause 28(4)). The explanatory statement must be given to the tenant before the 3 Shiloh Spinners Ltd v Harding [1973] AC 691, 717, per Lord Wilberforce. See also London and County (A&D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764 and Kataria v Safeland [1998] 1 EGLR 39. 220
landlord gives the tenant default notice (unless the court dispenses with the need to do this). The exact timing will be prescribed by regulations (and may vary according to the circumstances). It is likely that, in some cases, the statement will have to be given at or before the time the tenancy is entered into. 25. Subsection (1)(a) permits the statement to be given by persons other than the landlord (for example, by a previous tenant on assignment of the demised premises). 26. Subsection (1)(b) gives the court power to dispense with the need for an explanatory statement if it thinks that it would be “just and equitable” to do so. The courts will be familiar with such a test: section 8 of the Housing Act 1988 makes similar provision in relation to possession notices. In construing that section, the courts have looked back to earlier authorities on the meaning of “just and equitable” (with particular reference to the Rent Act 1977). 4 27. The court can also exercise its power under subsection (1)(b) in order to regularise an imperfect explanatory statement. Although a statement that does not comply with the requirements of subsection (3) will not be an explanatory statement, the court may nevertheless feel that the statement given is in practical terms adequate and exercise its dispensation power. Clause 6: Contents of notice 28. Under subsection (1), the landlord must give details of the default concerned. 29. A tenant under a residential tenancy may be able to argue that the covenant to which a specified default relates contravenes the Unfair Terms in Consumer Contracts Regulations 1999. 5 If the tenant succeeds in that argument, then the covenant will be held not to bind him or her. A covenant which does not bind the tenant will be incapable of giving rise to a tenant default. 30. Subsection (2) does not oblige the landlord to specify a remedy. The landlord may feel that the breach is not capable of remedy and he or she may know that the tenant would be unable to pay compensation. In such a case, the landlord would be satisfied only with a termination order. 31. If the tenant default notice does specify remedial action, it must also specify the deadline by which the tenant is to complete that action. The extent to which the deadline is reasonable is a matter the court must take into account under clause 9(3)(d) when deciding what order to make. 32. A single tenant default notice may refer to more than one tenant default, and therefore it may include more than one deadline. That will then have an impact on the date when, under clause 7, the landlord becomes entitled to bring a termination claim in respect of any of the defaults specified in the notice. 4 Knowsley Housing Trust v Revell [2003] EWCA Civ 496, [2003] HLR 63. 5 SI 1999/2083. See R (Khatun) v Newham Borough Council [2004] EWCA Civ 55, [2005] QB 37. 221
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The Law Commission (LAW COM No 303)
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THE LAW COMMISSION TERMINATION OF T
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Consultation 40 Reform recommendati
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Consultation 68 Reform recommendati
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(7) Any other matter 102 THE LEASEH
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Restrictions on using the summary t
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where appropriate using the various
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etains an equitable jurisdiction to
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of the law”. A number of leading
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procedure, the tenancy will not ter
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Part 6 examines the position of tho
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2.7 When a tenancy is terminated un
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unless valid notices have been give
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Transfer order 2.30 Only a qualifyi
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2.41 Where a landlord serves a summ
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PART 3 TENANT DEFAULT INTRODUCTION
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scheme by characterising the obliga
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to include such clauses and to allo
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perform their obligations under the
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SPECIAL CASES OF TENANT DEFAULT Den
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Assignment 3.51 Most tenancies cont
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the incoming tenant of the assigned
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often stipulate that a right to for
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insolvency process having the same
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3.93 In addition, section 81 of the
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1996 and Chapter 5 of the Commonhol
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covenant is non-payment of rent, a
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Reform recommendations 3.132 We rec
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The CP’s provisional proposals 4.
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do so by delaying until the default
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it is unlikely that a tenant would
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(4) give the date by which action m
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Specify the time for remedial actio
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(3) must specify in respect of the
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agreement (subject to a maximum ext
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underlying principle that qualifyin
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all tenancies granted for seven or
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4.92 As we intend to retain the sam
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PART 5 MAKING A TERMINATION CLAIM (
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e set off against the cost of carry
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future liabilities under the terms
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(6) where a tenancy comes to an end
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5.43 During the period of the stay,
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described. During the consultation
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termination of a tenancy under the
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5.69 We recommend that the proceeds
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5.75 The First Report therefore rec
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making any order under the scheme t
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5.93 The CP provisionally proposed
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of the parties. 78 Proportionality
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past conduct of the parties. This m
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(7) Any other matter 5.127 It would
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PART 6 QUALIFYING INTERESTS INTRODU
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1925 extends to lessees, under-less
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according to the lease without any
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interchangeably by the courts, by s
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entitled to use the scheme to prote
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(2) if not in occupation, a right w
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property. The simplest means of ens
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(1) What should the landlord be exp
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claim with the court for service on
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have to apply for relief, which, if
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qualified covenant not to assign th
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that it is both appropriate and pro
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order unless the person who holds t
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CP suggested, close down any potent
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PART 7 SUMMARY TERMINATION PROCEDUR
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action rather than by physical re-e
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Paper was published. 22 It proposed
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7.28 It was hoped that this recomme
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equirement for service of a notice
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7.51 The final restriction was: It
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in the sub-tenant being removed fro
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termination claim, the summary term
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7.71 The summary termination proced
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Repairing covenants 7.79 The repair
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7.88 We do not wish to discourage t
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dispensation power will only be exe
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to costs under the summary terminat
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7.112 We recommend that: specifying
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PART 8 LIST OF RECOMMENDATIONS PART
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8.13 We recommend that the Insolven
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(a) the day after the deadline spec
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(6) if the court dismisses an appli
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8.39 We recommend that, where a ten
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Page 176 and 177: APPENDIX A DRAFT LANDLORD AND TENAN
Page 178 and 179: ii Interpretation, etc. 28 Meaning
Page 180 and 181: 2 178 Landlord and Tenant (Terminat
Page 182 and 183: 4 180 Landlord and Tenant (Terminat
Page 184 and 185: 6 (8) This section is subject to se
Page 186 and 187: 8 13 Remedial order 184 Landlord an
Page 188 and 189: 10 186 Landlord and Tenant (Termina
Page 194 and 195: 16 30 Meaning of “qualifying inte
Page 198 and 199: 20 Preliminary 196 Landlord and Ten
Page 200 and 201: 22 Proper address 198 Landlord and
Page 204 and 205: 26 Settled Land Act 1925 (c. 18) 4
Page 210 and 211: 32 Protection from Eviction Act 197
Page 212 and 213: 34 Landlord and Tenant Act 1985 (c.
Page 216 and 217: 38 (2) After that subsection, inser
Page 218 and 219: 40 Settled Land Act 1925 (c. 18)—
Page 220 and 221: APPENDIX B EXPLANATORY NOTES TO THE
Page 224 and 225: 33. For example, if a tenant defaul
Page 226 and 227: 53. Subsection (5), although broadl
Page 228 and 229: If the court is satisfied of this,
Page 230 and 231: 91. Subsection (4) mitigates the ef
Page 232 and 233: 108. Under the current law, forfeit
Page 234 and 235: 126. Subsection (2) applies where t
Page 236 and 237: 145. Subsection (1)(d) includes wit
Page 238 and 239: unless he or she obtains a court or
Page 240 and 241: person who is the tenant as a resul
Page 242 and 243: termination notice (except where th
Page 244: Robin Sinclair, Solicitor Slaughter
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