Termination of Tenancies for Tenant Default - Law Commission

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53. Subsection (5), although broadly drawn, will typically operate in a case where the court decides to make an order for sale, a transfer order or a new tenancy order but, at the time the order is made, the parties are not in a position to complete the transaction. The language echoes that of section 39 of the Supreme Court Act 1981 which enables the High Court to appoint another person to execute a conveyance or other document where the person specified in the order refuses to do so or has disappeared. 54. Subsection (6) applies section 39 of the Supreme Court Act 1981 to county courts so that that section will be capable of applying to any order made under this clause. 55. Subsection (7) disapplies section 9 of the Law of Property Act 1925 which might otherwise have the effect of making the order itself automatically operate as the conveyance. That could have awkward results in practice, particularly in relation to registration of title, if the order did not specify all the relevant terms. However, clauses 15(4) and 16(3) enable the court to make provision to that effect where appropriate. 56. Clause 11 imposes restrictions on the court’s power to make some of the new orders. Clause 10: Section 9: interpretation 57. Clause 10 describes the new orders that are available to the court in exercising its jurisdiction on a termination claim. Clause 11: Restrictions on the court’s power 58. This clause places a number of restrictions on the wide discretion conferred on the court by clause 9. 59. Subsection (3) provides that the court may not make an order for sale or a transfer order if the tenancy contains an absolute covenant prohibiting the tenant from assigning the demised premises, unless the landlord consents to the proposed order. 60. Subsection (4) deals with qualified covenants under which a tenant may assign but only with the consent of the landlord. Again, the court is entitled to make an order for sale or transfer order if the landlord consents. However, if no consent is forthcoming, the court may consider whether the landlord is acting unreasonably. If the court is satisfied that consent is being unreasonably withheld, it may make either of these orders. 61. Subsection (5) provides that in such a case the landlord’s consent is treated as having been given. This would preclude an argument that an assignment within subsection (4)(b) was made in breach of covenant and was therefore an excluded assignment for the purposes of section 11 of the Landlord and Tenant (Covenants) Act 1995. 62. Subsection (6) provides that where a charge contains a covenant by the tenant not to assign the demised premises, an order for sale or transfer order 224
may be made only with the consent of the party who holds the charge. There is no equivalent to subsection (4)(b) in this case. Clause 12: Termination order 63. Clause 10(2) defines a termination order as an order that the tenancy is to be terminated. This clause then provides that the termination order must specify the day on which the tenancy is to come to an end. That day must be no more than six weeks after the order is made. However, if the court is satisfied that there would be exceptional hardship were the tenancy terminated within six weeks, it may postpone termination for up to twelve weeks from the date of the order. 64. Subsection (4) provides that, where a termination order has effect, the tenancy comes to an end at the end of the day specified in the order for termination. However, subsections (5) and (10) allow the tenancy to run on if, for example, an appeal against the termination order is pending. Part 52 of the Civil Procedure Rules makes provision about the procedure on appeals. 65. Possession is not an automatic consequence of a termination order. Subsection (6)(a) therefore gives the court power to make a possession order in favour of the landlord. 66. Subsection (6)(b) enables the court to require the former tenant to make a specified payment to the landlord. This may include a payment in respect of the occupation or use of the premises by the former tenant until possession is given up. 67. The current law holds that the forfeiture of a tenancy brings to an end any interest derived from it, giving rise to the maxim that “the branches fall with the tree”. 6 Subsection (7) has similar effect in relation to termination orders under the new scheme. Note the reference to “any interest” (which is not limited to “qualifying interests” within the meaning of clause 30). 68. Subsection (8) contains exceptions to subsection (7) in relation to existing statutory provisions. 69. Subsection (9) widens the definition of “landlord” and “tenant” in order to take account of the fact that, once a termination order is made, the tenancy will cease to exist and there will, strictly speaking, no longer be a landlord or tenant. Clause 13: Remedial order 70. Clause 10(3) defines a remedial order as an order requiring the tenant to take specified action to remedy the tenant default. The order must specify the day by which the tenant is to complete the action. 71. Subsection (2) allows the landlord to apply to the court during the period in which the tenant is to take the specified action and seek a termination order on the basis that the tenant will not complete that action before the end of the period. 6 Great Western Railway v Smith (1876) 2 Ch D 235, 253; Viscount Chelsea v Hutchinson [1994] 2 EGLR 61. 225
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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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8.49 We recommend that: (1) where t
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(4) the default is a breach of cove
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 222 and 223: landlord assigns the reversion, he
Page 224 and 225: 33. For example, if a tenant defaul
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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Termination of Tenancies for Tenant Default - Law Commission

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