Termination of Tenancies for Tenant Default - Law Commission

perfectly legitimate if the tenancy makes appropriate provision to that effect, and
the giving of notice is in accordance with the terms of the tenancy.
3.15 In addition, under the current law a tenancy may reserve a right of re-entry to a
landlord which will arise on the insolvency of a person who has guaranteed the
obligations of the tenant under the tenancy. 11 We do not intend to deprive
landlords under pre-commencement tenancies of the right to take termination
action in a case where they would have been entitled to forfeit under an express
provision of this kind. Nor do we want to prevent landlords under postcommencement
tenancies from using the scheme where the breach complained
of is a breach of an express provision that concerns a surety or some other party
who has agreed to guarantee the tenant’s obligations under the tenancy.
3.16 We recommend that a tenant default should comprise a breach by the
tenant, or a person who has agreed to guarantee the tenant’s obligations
under the tenancy, of any covenant of the tenancy (other than an excepted
covenant). A reference to a covenant should include a condition, agreement
or term, whether express, implied or imposed by law. 12
3.17 We recommend that for the purposes of the statutory scheme “breach of
covenant” by a person should be broadly defined to include:
(1) the occurrence in relation to him of an event on the occurrence of
which a right to forfeit the tenancy would, but for clause 1, become
exercisable; 13
(2) the occurrence of an event, the occurrence of which is attributable
to his conduct and on the non-occurrence of which the continuation
of the tenancy is purported to depend; 14 and
(3) the non-occurrence of an event, the non-occurrence of which is
attributable to his conduct and on the occurrence of which the
continuation of the tenancy is purported to depend. 15
3.18 We recommend that “breach of covenant” should not however include
circumstances where the landlord gives notice to terminate the tenancy in
accordance with its provisions. 16
NO EXPRESS RESERVATION OF RIGHT TO TERMINATE NECESSARY
3.19 Under the current law, a breach of covenant allows the landlord to forfeit only if,
and in so far as, the tenancy includes a forfeiture clause (or equivalent provision,
whether express or implied) which covers the particular breach complained of. It
has been our policy throughout this project to remove the necessity for tenancies
11 See, by way of example, Halliard Property Co Ltd v Jack Segal Ltd [1978] 1 WLR 377.
12 Draft Bill, cls 2(1) and 1(4).
13 Draft Bill, cl 28(6)(a) and (7).
14 Draft Bill, cl 28(6)(b) and (7).
15 Draft Bill, cl 28(6)(c) and (7).
16 Draft Bill, cl 28(8).
33