The Law Commission

The Law Commission
Consultation Paper No 174

TERMINATION OF TENANCIES FOR TENANT DEFAULT

A Consultation Paper

London: TSO

The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law.

The Law Commissioners are:

The Honourable Mr Justice Toulson, Chairman
Professor Hugh Beale QC
Mr Stuart Bridge
Professor Martin Partington CBE
Judge Alan Wilkie QC

The Chief Executive of the Law Commission is Stephen Humphreys and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1N 2BQ.

This consultation paper, completed on 15 December 2003, is circulated for comment and criticism only. It does not represent the final views of the Law Commission.

The Law Commission would be grateful for comments on this consultation paper before 30 April 2004. Comments may be sent either –

By post to:
Matthew Jolley
Law Commission
Conquest House
37-38 John Street
Theobalds Road
London
WC1N 2BQ
Tel: 020-7453-1251
Fax: 020-7453-1297

By e-mail to: matthew.jolley@lawcommission.gsi.gov.uk


It would be helpful if, where possible, comments sent by post could also be sent on disk, or by e-mail to the above address, in any commonly used format.

All responses to this consultation paper will be treated as public documents, and may be made available to third parties, unless the respondent specifically asks that the response, or a particular part of it, should be treated as confidential.

The text of this consultation paper is available on the Internet at:

http://www.lawcom.gov.uk

CONTENTS

Paragraph	Page
Executive Summary	Summary
PART I: INTRODUCTION	1.1
The function of this Consultation Paper	1.1
The legal background	1.4
The scope and extent of this project	1.7
The work of the Commission to date	1.16
The 1968 Working Paper	1.16
The First Report	1.17
The main features of the scheme in the First Report	1.19
Reception of the First Report	1.20
The 1998 Consultative Document	1.23
The civil justice review	1.27
The current Consultation Paper	1.30
Why we are publishing this Paper	1.30
The need for a notice before action	1.34
Summary of other modifications	1.36
Structure of the Consultation Paper	1.37
PART II: THE CURRENT LAW	2.1
The grounds of forfeiture	2.2
Breach of covenant	2.2
Breach of condition	2.3
Denial of title	2.7
Nature and operation of forfeiture	2.8
Waiver	2.12
Relief against forfeiture	2.16
Forfeiture for non-payment of rent	2.18
Historical	2.18
The need for a formal demand	2.20
Payment before trial	2.23
Other relief for the tenant	2.25
Derivative interests	2.29
Forfeiture other than for non-payment of rent	2.38
Historical	2.38
General provisions about notice	2.40
General provisions about relief for the tenant	2.48
General provisions about derivative interests	2.52
Exceptions to the general provision	2.53
Special provisions about repairing obligations	2.61
Special provisions about service charges	2.70
PART III: AN OVERVIEW OF THE PROPOSED
SCHEME	3.1
Introduction	3.1
Termination of tenancy	3.2
Tenant default (Part IV)	3.8
Notice before action (Part V)	3.13
Orders of the court (Part VI)	3.22
Derivative interests (Part VII)	3.30
Unilateral recovery of possession (Part VIII)	3.35
Joint tenants (Part IX)	3.43
Tenant insolvency (Part X)	3.46
Service and administration charges (Part XI)	3.48
PART IV: TENANT DEFAULT	4.1
Breaches of covenant	4.4
New tenancies	4.4
Existing tenancies	4.7
"Disguising" breaches of covenant	4.9
Special considerations	4.13
Non payment of rent	4.13
Denial of title	4.16
Severance of the tenancy	4.17
Should there be exceptions ?	4.19
Remedied breaches	4.20
Waiver	4.27
Tenant insolvency	4.33
Summary of provisional proposals
PART V: NOTICE BEFORE ACTION	5.1
Date of service	5.11
Contents of the pre-action notice	5.13
Date of commencement of proceedings	5.17
Limited period of validity	5.18
Remedying breach	5.19
Notice procedure for repairs	5.24
Summary of provisional proposals
PART VI: ORDERS OF THE COURT	6.1
The Civil Procedure Rules	6.3
Termination orders	6.6
Absolute termination orders	6.6
Remedial orders	6.13
Guidelines for the court's decision	6.22
Case 1	6.23
Case 2	6.27
Case 3	6.29
Case 4	6.31
Ancillary claims	6.34
Costs incurred in relation to tenant default	6.34
Rent	6.36
Mesne profits	6.38
Damages,injunctions and other relief	6.42
Summary of provisional proposals
PART VII: DERIVATIVE INTERESTS	7.1
Who may apply for relief	7.9
How claimants can be better informed of the landlord's actions	7.23
What forms of relief may the court grant ?	7.33
Preservation of the derivative interest	7.37
Vesting the old tenancy in the claimant	7.43
Granting a new tenancy to the claimant	7.45
Relief for sub-tenants	7.47
Relief for mortgagees	7.49
Dealing with the extinction of the mortgaged interest	7.53
The mortgagee as tenant	7.58
Summary of provisional proposals
PART VIII: UNILATERAL RECOVERY OF
POSSESSION	8.1
Statutory nature of the right	8.9
Restriction on statutory right unilaterally to recover possession	8.13
Recovery of possession must be peaceable	8.17
Recovery of possession inapplicable to residential premises	8.18
Excluded tenancies	8.19
Effect of unilateral recovery of possession	8.23
Circumstances in which the statutory right may be exercised	8.29
Notice to the tenant	8.32
Notice to the derivative class	8.33
Method of recovery of possession	8.34
Rights and obligations during the continuation period	8.36
Abandoned premises	8.37
Human Rights Act 1998	8.43
Article 8	8.44
Article 6	8.45
Article 1 of the First Protocol	8.48
Summary of provisional proposals
PART IX: JOINT TENANTS	9.1
Release of joint tenant during termination order proceedings	9.2
Derivative interests	9.9
Summary of provisional proposals
PART X: TENANT INSOLVENCY	10.1
The statutory restrictions	10.4
Bankruptcy	10.5
Compulsory liquidation	10.6
Creditors' voluntary liquidation	10.7
Administrative receiver	10.8
Administration	10.9
Individual voluntary arrangement	10.10
Company voluntary arrangement	10.11
Concurrent proceedings	10.12
Should "tenant insolvency" comprise "tenant default"?	10.15
Unilateral recovery of possession	10.18
Definition of tenant insolvency	10.20
Summary of provisional proposals
PART XI: SERVICE AND ADMINISTRATION
CHARGES	11.1
Residential tenancies	11.1
Restricting the exercise of forfeiture	11.2
Restricting the contents of pre-action notices	11.4
Commercial tenancies	11.7
Summary of provisional proposals
PART XII: SUMMARY OF PROVISIONAL PROPOSALS
AND CONSULTATION QUESTIONS	12.1
Regulatory impact	12.2
Part I: Introduction	12.3
Part IV: Tenant default	12.4
Part V: Notice before action	12.5
Part VI: Orders of the court	12.6
Part VII: Derivative interests	12.7
Part VIII: Unilateral recovery of possession	12.8
Part IX: Joint tenants	12.9
Part X: Tenant insolvency	12.10
Part XI: Service and administration charges	12.12
APPENDIX A: DERIVATIONS	Appendix A
APPENDIX B: PRE-ACTION NOTICE	Appendix B