Termination of Tenancies for Tenant Default - Law Commission

these subsections is to capture events which are in some sense attributable to
the tenant’s conduct and on the occurrence of which the tenancy is liable to
terminate (either automatically or at the landlord’s election).
137. The most common examples of this relate to insolvency. Forfeiture
provisions typically operate where a bankruptcy order is made against the tenant
(or a person who has agreed to guarantee the tenant’s obligations under the
tenancy). It may be difficult in some cases to analyse such events in terms of a
“breach”. The Bill makes express provision in such cases so as to provide, in
effect, that the occurrence of such an event is a breach of covenant (and
therefore a ground on which a landlord may take termination action).
138. Where a tenancy is granted on condition that, or is to continue so long as,
the tenant remains solvent, the insolvency of the tenant may not be a “breach” of
that condition as the tenant has not expressly promised to stay solvent (or not to
become insolvent). Such circumstances would, however, fall within subsection
(6).
139. Subsections (6) and (7) do not extend the application of the scheme to
events that arise otherwise than as a result of the tenant’s conduct (a “neutral”
condition). An example would be a tenancy granted to continue until the landlord
obtains planning permission.
140. Subsection (8) permits the landlord to give notice to quit (for example, by
exercising rights under a break clause) in accordance with the provisions of the
tenancy. Such termination is outside the scope of the new scheme.
Clause 29: Meaning of “landlord”, “tenant”, etc.
141. The definition of “tenant” at subsection (3) is wide and will include a tenant
who became a tenant subsequent to an unlawful assignment or subletting.
142. Subsection (4) ensures that the scheme applies to tenancies and
reversions of part of a demise as it applies to tenancies and reversions of the
whole. It is therefore open to a landlord of part of premises demised by a tenancy
to take termination action in respect of that part only.
143. Although the practical implications of doing so may not be straightforward,
provision to this effect does not break new ground. Section 21 of the Landlord
and Tenant (Covenants) Act 1995 proceeds on the basis that a forfeiture of part
is possible. This principle is also supported by case law, albeit in unusual
circumstances, where two pieces of land were demised by the same tenancy but
were not adjacent and so could very well have been let separately. 7
Clause 30: Meaning of “qualifying interest”
144. The reference to “sub-tenant” will include a sub-tenant who became a subtenant
subsequent to an unlawful assignment.
7 GMS Syndicate Ltd v Gary Elliott Ltd [1982] Ch 1.
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