Termination of Tenancies for Tenant Default - Law Commission

5.72 We recommend that:
(1) if the court makes an order for sale, it must appoint a receiver to
conduct the sale; 49
(2) unless otherwise directed by the court, the proceeds of sale are to
be applied: first, in payment of any costs properly incurred by the
receiver; 50 second in payment of any sum due to the landlord in
connection with the tenancy; 51 and third, in payment of any sum
secured by a qualifying interest in the tenancy; 52 and
(3) the remainder is to be paid to the tenant (that is, the person who
was tenant immediately before the sale). 53
JOINT TENANCY ADJUSTMENT ORDER
5.73 Where a tenancy is granted to more than one person, those persons are in law
“joint tenants”. 54 Each is said to own the whole of the tenancy and the law
regards them collectively as “the tenant”. 55 Under current law, when a landlord
forfeits a tenancy held by joint tenants, all the joint tenants must apply for relief. If
they do not make a joint application, relief must be refused and the tenancy will
remain forfeited. 56
The CP’s provisional proposals
5.74 This aspect of the current law was criticised as unfair in the First Report.
However, that Report considered that granting relief where one or more joint
tenants might not want it could cause even greater injustice. The effect would be
that the joint tenants who did not apply for relief would remain bound by the
obligations in the tenancy at the insistence of their fellow joint tenants. 57
49 Draft Bill, cl 14(1).
50 Draft Bill, cl 14(3)(a).
51 Draft Bill, cl 14(3)(b).
52 Draft Bill, cl 14(3)(c).
53 Draft Bill, cl 14(4).
54 Law of Property Act 1925, s 1(6) provides that co-ownership of any legal estate in land
must take the form of a joint tenancy. Joint tenants may, however, sever their equitable
joint tenancy to become tenants in common in equity. For the purposes of the statutory
scheme, any reference to joint tenants is to joint tenants in law, whether or not they are
also joint tenants in equity.
55 Burton v Camden LBC [2000] 2 AC 399, 408, per Millett LJ.
56 T M Fairclough and Sons v Berliner [1931] 1 Ch 60: the case concerned an application for
relief under the Law of Property Act 1925, s 146(2) but there is no reason to doubt that the
same principle would apply to an application for relief by a derivative interest holder under
s 146(4) or an application for relief from forfeiture for non-payment of rent: see the First
Report, para 12.1.
57 First Report, para 12.3.
91