Termination of Tenancies for Tenant Default - Law Commission

agreement (subject to a maximum extension of six months). 53 Such
agreement must be in or be evidenced by writing. 54
COSTS OF THE NOTICE
4.65 Under the current law, landlords are only entitled to recover the costs of the
preparation and service of a section 146 notice if they waive the relevant breach
at the tenant’s request or if the court grants the tenant relief from forfeiture. 55 For
this reason, most tenancy agreements that contain a forfeiture clause also
contain an express provision that the landlord may recover the costs of serving a
section 146 notice even if the tenant remedies the breach complained of and
pays any compensation requested. 56
The CP’s provisional proposals
4.66 The CP provisionally proposed that landlords should be able to seek to recover
the reasonable costs of preparation of a pre-action notice (now tenant default
notice), whether or not this is expressly provided for in the tenancy. These costs
would be recoverable as a debt due to the landlord from the tenant, and so would
be subject to a separate action for damages rather than forming part of the
termination claim. This right would be subject to any costs order that the court
may make, for example denying the landlord’s costs in whole or in part. In the
event that the amount of these costs were disputed, it would ultimately be for the
court to decide whether the costs claimed were reasonable. 57
Consultation
4.67 On consultation, the Association of Residential Managing Agents queried what
would prevent landlords charging excessive costs where the tenant remedies the
default and the landlord takes no further action. The chief protection is to be
found in the underlying principle that, with the exception of cases where the
summary termination procedure is used, it is necessary to obtain an order from
the court to bring the tenancy to an end. Once the landlord has served the tenant
default notice it is, unlike under the current law, for the landlord to act or lose the
opportunity to do so. If the landlord has made an unreasonable demand for costs
and then chooses to proceed to court, then the landlord takes the risk that the
court will refuse to make any order and award costs accordingly.
Reform recommendations
4.68 We recommend that:
53 Draft Bill, cl 7(3) and (4)(b).
54 Draft Bill, cl 7(4)(a).
55 Law of Property Act 1925, s 146(3).
56
Compensation in this context may not itself include the costs of the notice: Skinners’ Co v
Knight [1891] 2 QB 542.
57 A failure to give the mandatory explanatory statement of the consequences of tenant
default, or a failure to include in the explanatory statement a specific reference to the costs
consequences, may be one reason why the court would not award the landlord’s costs.
68