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You are here: BAILII >> Databases >> The Law Commission >> Termination of Tenancies for Tenant Default (Consultation Paper) [2004] EWLC 174(2) (15 December 2003) URL: http://www.bailii.org/ew/other/EWLC/2003/174(2).html Cite as: [2004] EWLC 174(2) |
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PART II
THE CURRENT LAW
This statement of the current law was first published in the First Report in 1985. It has been up-dated to take account of subsequent developments.
The grounds of forfeiture
2.1 The right of a landlord to forfeit a tenancy may arise in several different ways, of which the most important is on breach of covenant.
(a) Breach of covenant
2.2 If, as a term of his tenancy, a tenant agrees with his landlord (expressly or impliedly) that he will do or refrain from doing certain things (for example, that he will pay rent or keep the property in repair, or that he will not change its use), he is said to enter into a covenant[1] and a failure to comply with it is a breach of covenant. A breach of covenant will always give rise to a claim in damages, but a tenant's breach of covenant does not entitle the landlord to take action to forfeit the tenancy unless the tenancy itself embodies an express provision allowing him to do so. This provision is usually called a forfeiture clause, and a tenancy created by a formal document will in practice almost always contain one.
(b) Breach of condition
2.3 Tenancies may also be granted upon condition. This means that the tenancy, though granted for a specific period (or until ended by notice), is made terminable within that period or before the notice is given on the happening of some particular event. If the event occurs, that by itself entitles the landlord to forfeit the tenancy: there is no need for a forfeiture clause.2.4 The event may be an entirely neutral one,[2] or it may be an act or omission on the part of the tenant. So although a condition does not of itself impose any directly enforceable obligation it may, by attaching the penalty of forfeiture to the tenant's failure to do or refrain from doing certain things, be used to impose an obligation indirectly. Thus a landlord who wished to impose upon his tenant an obligation to insure could do so either by taking from him an ordinary covenant to insure or by granting the tenancy "upon condition that" he insured. But it is more usual to impose such obligations by means of a covenant coupled with a forfeiture clause, because a breach of condition, unlike a breach of covenant, does not entitle the landlord to damages as well as (or instead of) forfeiture.
2.5 The only present day example of a condition being commonly included amongst the terms of a tenancy occurs when the landlord wants power to end the tenancy prematurely if the tenant becomes bankrupt. This power is usually obtained through a variation in the wording of the forfeiture clause which is included in any case in order to permit forfeiture for breach of covenant. The variation simply provides that forfeiture may also take place if the tenant becomes bankrupt (or on the happening of associated or similar events, such as the tenant entering into an arrangement or composition for the benefit of creditors). Although it seems clear that the effect of this variation is technically to impose a condition, it is not a typical condition in the classical sense because conditions of the latter kind are imposed independently of any forfeiture clause and give rise (as we have seen) to an automatic right of forfeiture. No doubt this is why section 146 of the Law of Property Act 1925 (of which we shall have more to say later) calls it "a condition for forfeiture on ...bankruptcy"[3] or "a condition of forfeiture on ... bankruptcy".[4]
2.6 Conditions must be distinguished from limitations. There is unfortunately some confusion of terminology in this area of the law, but the distinction plainly exists. As we have noted, a condition is said to exist when a landlord grants a tenancy for a specified period (or until ended by notice) but includes a provision making it terminable if the event in question should occur during that period (or before notice is given). In the case of a limitation, the tenancy is again granted for a specified maximum period, but the terms of the tenancy provide for its earlier termination on the happening of a particular event. Since the event is built into the primary formula which limits the length of the tenancy, the tenancy will end automatically if and when the event occurs. There is no question of forfeiture.[5] So whereas, in the case of a condition, the happening of the event leaves the landlord with a choice as to whether the tenancy should be ended through forfeiture or allowed to continue, in the case of a limitation its occurrence serves of itself to end the tenancy and so leaves him no choice.[6] In other respects limitations resemble conditions: the event in question may or may not involve an act or omission on the part of the tenant[7] and, whether it does or not, will give rise to no claim for damages.
(c) Denial of title
2.7 A tenant who denies or disclaims his landlord's title to the property comprised in the tenancy is automatically made liable to forfeiture. This has been described as an "outmoded doctrine"[8] and it derives from the feudal principle that repudiation of the lord destroys the tenure. Nowadays it is said that a tenant makes himself liable to forfeiture if he alleges[9] that the title to the land is in himself, or in anyone other than the landlord, or if he assists someone to set up a title against the landlord.
Nature and operation of forfeiture
2.8 Although it is sometimes said that the coming into existence of one of the grounds for forfeiture amounts of itself to "a forfeiture" of the tenancy, it is clear that the tenancy is not actually forfeited unless and until the landlord takes unequivocal action to forfeit it. This action takes the form of "re-entry". Re-entry may take place in either one or two ways, which for convenience we call "actual" and "constructive".2.9 A landlord who practises actual re-entry normally does so by entering physically upon the property let;[10] but the re-entry must be peaceable, and if any violence is used or threatened (whether it is violence to the person or to property) the landlord may be criminally liable.[11] Secondly it is not lawful to adopt this method at all if the premises are let as a dwelling and there is someone lawfully residing in them or in part of them.[12]
2.10 But a landlord may also re-enter by a means which we think it convenient to call "constructive": by commencing an action for possession. The service[13] of the writ (or summons) operates in law as a re-entry.
2.11 The tenant may obtain relief against forfeiture[14] and, if he does, the forfeiture which has taken place is apparently undone. Subject to that, however, the forfeiture occurs as soon as the actual re-entry is effected or (in the case of constructive re-entry) as soon as the writ or summons is served. This has important consequences because, subject again to the possibility that the tenant will obtain relief, it means that the tenant is no longer bound by the covenants in the tenancy.[15] In particular, he is no longer bound to pay the rent; but if he continues in possession he will be liable for "mesne profits" which are technically payable as damages for trespass. Where the rent payable under the tenancy represents the fair rental value of the property, the mesne profits will be payable at the same rate; but if the fair rental value is higher or lower than the rent, the mesne profits will be different.[16]
Waiver
2.12 Even though a ground for forfeiture exists, the landlord may deprive himself by "waiver" of the rights to forfeit the tenancy. A landlord is said to waive a ground for forfeiture if, being aware of the facts which constitute it,[17] he nonetheless does some unequivocal act recognising the continued existence of the tenancy.2.13 It is important to note the words italicised; for waiver to occur it is not necessary that the act should manifest an intention to waive. Nor is it necessary that the landlord should have such an intention.[18] All that is necessary is that the act should recognise that the tenancy still exists. Thus if the landlord, with knowledge of a ground for forfeiture, demands or accepts rent accrued due since the ground arose, he waives his right to forfeit on that ground.
2.14 Thus in Central Estates (Belgravia) Ltd. v Woolgar (No. 2)[19] the landlords' managing agents, learning that the tenant had been convicted of keeping a brothel at the premises, served notice on him (under section 146 of the Law of Property Act 1925) preliminary to claiming forfeiture of the tenancy. A memorandum was circulated amongst the agents' staff informing them of the decision to forfeit the tenancy and instructing them not to demand or accept rent from the tenant. But this instruction did not reach one of the clerks, who did demand the rent and subsequently gave a receipt for it. Although the tenant knew, when he paid the rent, that the landlords' intention to forfeit remained unchanged, it was held that their right to do so had been waived. Even an acceptance of rent which is expressly "without prejudice" will effect a waiver.[20]
2.15 But once the landlord has shown a final determination to forfeit the tenancy, as by commencing an action for possession, no subsequent act will operate as a waiver.[21] And waiver, if it does take place, operates only in respect of existing breaches of covenant or condition of which the landlord is aware: it does not extend to unknown or future breaches, whether or not they are breaches of the same covenant or condition.[22] It is important to note, too, that if the breach is a "continuing" one - as for example in the case of a covenant to repair or to use the premises in a particular way, which is broken anew on every day for which want of repair or misuse continues - there is a continually recurring ground for forfeiture and the landlord will normally be able to take advantage of it if it continues beyond the date of the waiver.[23]
Relief against forfeiture
2.16 Even if a ground for forfeiture exists, and has not been waived, it by no means follows that the landlord will be successful in an attempt to recover the property let. Both equity and statute law have intervened, in various ways and at various times, so as to provide tenants with relief against forfeiture and allow them to keep their tenancies. Forms of relief vary according to the circumstances, but the main division is between cases where the landlord seeks forfeiture for non-payment of rent and cases where he seeks it for other reasons, and so we deal with these separately.2.17 It is not easy to state the present law about relief in a way which is both brief and accurate. The substantive rights of the parties vary in some respects according to whether proceedings are brought in the High Court or in a county court. There are uncertainties and anomalies. And the law is in part statutory and in part non- statutory, the statutory part being contained in a number of different enactments, some of which are old and even (in parts) obsolete. The main enactments which are directly relevant are:
(1) Forfeiture for non-payment of rent:
Common Law Procedure Act 1852, sections 210-212
Law of Property Act 1925, section 146(4)
Supreme Court Act 1981, section 38
County Courts Act 1984, sections 138-140[24]
(2) Forfeiture on other grounds:
Law of Property Act 1925, sections 146 and 147
Landlord and Tenant Act 1927, section 18(2) and (3)[25]
Leasehold Property (Repairs) Act 1938.[26]
These enactments are all set out, in chronological order, in Appendix A to the First Report. What follows is not intended as a comprehensive statement of the law. It is an outline, in which particular attention is drawn to some of the difficulties and complexities.
(a) Forfeiture for non-payment of rent
(i) Historical
2.18 From an early date the Courts of Chancery gave relief against forfeiture for non-payment of rent. They considered that the landlord's right to forfeit the tenancy on this ground was really no more than "security" for the payment, so they allowed the tenant to keep his tenancy provided that he paid the arrears of rent and the landlord's expenses and provided that relief was "just and equitable".2.19 This old jurisdiction still remains,[27] and section 38 of the Supreme Court Act 1981 (formerly section 46 of the Judicature Act 1925), though it applies only to actions for forfeiture brought in the High Court, confirms that it exists and that it extends beyond the old Court of Chancery. But successive statutes have served to modify this jurisdiction in certain circumstances and to extend it in others, and the two systems must now be considered together.
(ii) The need for a formal demand
2.20 Even though the terms of the tenancy include a covenant to pay rent and a forfeiture clause, the landlord is not entitled to forfeit for non-payment of rent until he has made a formal demand for rent. But this rule is subject to two exceptions.2.21 First, a formal demand is unnecessary if a half year's rent is in arrear and any goods to be found on the premises available for distress[28] are not sufficient to satisfy all the arrears which are due. This is clear, at least, if the landlord takes proceedings in a county court, because section 139(1) of the County Courts Act 1984 is unequivocal. In the High Court, however, the matter is governed by section 210 of the Common Law Procedure Act 1852, and that provision is more ambiguous because it seems to state the rule twice over and to omit the requirement as to lack of goods for distress from the first statement. Neither of these provisions applies unless there are proceedings, so it would seem that they do not assist a landlord who wishes to practise peaceable re-entry.
2.22 The second exception relates to cases where the terms of the tenancy itself exempt the landlord from making a formal demand. Since the conditions for making such a demand are stringent - it must, for example, be made at the demised premises before sunset and must continue until sunset - every well drawn tenancy does in fact contain such an exemption. It is normally included in the forfeiture clause and provides that forfeiture may take place if the rent is unpaid for a specified period whether formally demanded or not.
(iii) Payment before trial
2.23 Assuming that the landlord has made his formal demand or is absolved from doing so, the tenant still has a right to avoid forfeiture by paying all arrears and costs before trial; and if he does this any court proceedings will stop. For actions in the High Court the authority for this proposition is section 212 of the Common Law Procedure Act 1852, and it has been held, as a matter of construction, that the section applies only if a half year's rent is in arrears.[29] No such limitation is to be found in section 138(3) of the County Courts Act 1984 which governs actions in the county court.2.24 There are other differences between the two provisions. Section 212 permits the money either to be paid or tendered to the landlord (or his representatives) or to be paid into court, and allows this to be done at any time, whereas section 138(2) requires it to be paid into court or to the landlord[30] at least five clear days before the return day. Subsection (6) of section 138 expressly disapplied subsection (2) in cases where the landlord is proceeding on other grounds as well as for non-payment of rent, but section 212 is not disapplied in such cases. Whereas section 138(2) operates simply to stop court proceedings by the landlord, it has been held that section 212 allows relief to be given even when the landlord has re-entered peacefully and is not bringing any action.[31]
(iv) Other relief for the tenant
2.25 Even if the tenant fails to pay the arrears and costs before trial, he may still claim relief against forfeiture.2.26 So far as the High Court is concerned, the jurisdiction to grant relief in these circumstances remains that which was developed by the old Courts of Chancery and which now applies through the High Court.[32] Statute has served only to impose a limitation upon its exercise. The second limb of section 210 of the Common Law Procedure Act 1852 provides that if the landlord has obtained judgment for possession, the tenant must seek relief within six months of execution of the judgment. Of course this limitation does not apply where the landlord, having re-entered peaceably, has brought no action: in those circumstances there is no set time limit, though unjustifable delay may operate to bar relief.[33] What is less clear is whether the limitation applies only to cases where the rent is six months in arrear. It seems to be implicit in the reasoning of Wilberforce J. in Standard Pattern Co. Ltd. v Ivey,[34] in which it was decided that section 212 is confined to such cases,[35] that section 210 is similarly confined, but textbooks do not clearly confirm this.[36] Relief in the High Court is discretionary and will be granted where it is "just and equitable".[37]
2.27 The situation in the county court is different in a number of ways. It is based upon the making of suspended orders. Where an action by the landlord comes to trial, and the court is satisfied that he is entitled to forfeit, section 138(3) of the County Courts Act 1984 requires it to order that possession shall be given at the expiry of a specified period, unless within that period the tenant pays into court or to the lessor[38] all arrears and costs. The period must not be less than four weeks from the date of the order, and subsection (4) of section 138 makes provision for it to be extended at any time before possession of the land is recovered in pursuance of the order. Then subsections (5) and (7) provide that if the tenant makes the payment within the period fixed by the order (as extended, if extended), the tenancy continues: otherwise the tenant is "so long as the order remains unreversed ... subject to subsections (8) and (9A) barred from all relief". Subsection (10)(a) adds, however, that if the landlord claims forfeiture on some other ground as well as for non-payment of rent, none of these provisions is to affect the power of the court to make any order which it could otherwise make. Section 139(2) of the 1984 Act goes on to deal with cases where the landlord has re-entered peaceably and so is not bringing any action for possession. In that situation the county court may grant relief to the tenant if, but only if, he applies for it within six months of the re-entry.
2.28 When the First Report was published, two cases had recently highlighted one particular difference which then existed between the jurisdiction of the High Court and that of the county court. Both began as county court cases. In both, the court made an order for the payment of arrears by the tenant, the tenant failed to comply within the time limit and the landlord took possession, the tenant being in consequence "barred from all relief". In both cases the tenant then sought relief from the High Court in exercise of its wider powers to grant it.[39] In the first case, Di Palma v Victoria Square Property Co. Ltd.[40] the Court held that it had no power to grant relief, though it would have liked to do so. In the second, Jones v Barnett,[41] the High Court declined to follow this decision and granted relief. In the First Report,[42] we said that it could not be right that a tenant in a county court case should be able to obtain in the High Court relief which he could not obtain in the county court. The Court of Appeal in Di Palma v Victoria Square Property Co. Ltd.[43] overruled Jones v Barnett,[44] and held that the phrase "barred from all relief" in section 191(c) had the effect that where a possession order had been obtained from a county court the tenant could not then apply to the High Court for relief from forfeiture. However, subsequently section 138 of the County Courts Act 1984 was amended by section 55 of the Administration of Justice Act 1985.[45] The county court now has power to grant relief if the lessee[46] makes an application within six months of the lessor's recovery of possession after the making of an order for possession under section 138(3) of the County Courts Act 1984.[47] In the result, the county court's jurisdiction to relieve from forfeiture for non-payment of rent is now in line with the High Court's jurisdiction.
(v) Derivative interests
2.29 It remains to consider briefly a question which arises only if the tenant himself does not obtain relief: whether relief can be granted to sub-tenants and mortgagees who derive title from him. The question arises because if the tenancy ends through forfeiture these derivative interests end with it - unless some form of relief is available.2.30 In the High Court, relief is available from two sources. There is, first, the old jurisdiction of the Courts of Chancery (which seems to have extended to the granting of relief to sub-tenants and mortgagees[48]), which is reinforced by section 38 of the Supreme Court Act 1981 (formerly section 46 of the Judicature Act 1925), but made subject to a six months' limitation by section 210 of the Common Law Procedure Act 1852.[49] The situation is much the same as that described in paragraph 2.26 above. If relief is sought at a time when the head tenancy has already been determined, the original tenant under the tenancy, and the last assignee of it, must be brought before the court, because relief involves the revival of the head tenancy and the reimposition of liability upon those persons.[50]
2.31 The second source of relief in the High Court, and the only source in the county court, is provided by subsection (4) of section 146 of the Law of Property Act 1925 (the only part of that section which applies to forfeiture for non-payment of rent). Here relief always takes the form of a new tenancy granted to the applicant, and so there is no need for the original tenant or the last assignee to be before the court,[51] but the application must be made before the landlord has regained possession.[52] The court has a wide discretion as to the granting of relief,[53] but it will be exercised on the same principles as those which apply to an application under the old equitable jurisdiction.[54]
2.32 The difficulties of the overlapping statutory provisions and the inherent jurisdiction have been highlighted by recent reported litigation concerning the status of equitable chargees.[55] Section 3(4) of the Charging Orders Act 1979 provides that
2.33 An equitable charge confers on the chargee the right to apply to the court for an order for sale or the appointment of a receiver, but it does not entitle the chargee to take possession or to foreclose.[56] There is a clear distinction between a mortgage and an equitable charge. "A mortgage involves the transfer of legal and equitable ownership to the creditor, whereas an equitable charge does not."[57]a charge imposed by a charging order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand.
2.34 Although in Ladup Ltd v Williams & Glyn's Bank plc,[58] Warner J held that the court could grant relief to an equitable chargee in the exercise of its inherent jurisdiction, this decision has now been effectively overruled by the Court of Appeal. In Bland v Ingrams Estates Ltd,[59] the Court held that the inherent jurisdiction to grant relief against forfeiture for non-payment of rent was restricted to applications by those who are entitled to possession of the land or who have a legal estate or equitable interest in it. As the equitable chargee did not come within that definition, the claim for "direct" relief was rejected.
2.35 The Court of Appeal recognised, however, that a chargor under an equitable charge owes an implied obligation to take reasonable steps to preserve the chargee's security.[60] This obligation, analogous to the obligation owed by a trustee to protect the trust property and the interests of the beneficiaries,[61] requires the chargor to initiate and pursue an application for relief where the tenancy has been forfeited for non-payment of rent.[62] "Only in that way can the security be preserved from annihilation".[63] The remedy for the chargee is therefore to intervene in the forfeiture proceedings, to join the chargor as a defendant, and to claim relief in their shoes.[64]
2.36 It must be acknowledged, however, that this route to relief is circuitous, and, as yet, relatively unsophisticated. It has only been applied to cases of forfeiture for non-payment of rent, and it may prove much more difficult in cases where the preservation of the chargee's security would involve the taking of steps other than the payment of money, for example the carrying out of repairs to the demised premises.[65] As "indirect relief" would appear to be available only in the form of preservation of the chargee's security, the jurisdiction of the court is limited to the restoration or revival of the tenancy which has been forfeited. It does not seem that the court would be entitled to order the grant of a new tenancy in favour of the equitable chargee.[66]
2.37 Under current law, the statutory powers of the county court to grant relief to equitable chargees appear to be considerably wider than the statutory powers of the High Court. Section 146(4) of the Law of Property Act 1925 (applicable in the High Court) is of no utility, as an equitable chargee is not a person "claiming as underlessee any estate or interest in the property comprised in the lease."[67] The County Courts Act 1984 is, however, wider in its application. By section 138(9C), it permits claims to be made by "a person with an interest under a lease of the land derived (whether immediately or otherwise) from the lessee's interest therein." This provision applies both to claims for relief from forfeiture for non-payment of rent by court proceedings (governed by section 138) and by peaceable re-entry (section 139). In Croydon (Unique) Ltd v Wright,[68] the Court of Appeal (by a majority) held that an equitable chargee came within this definition for the purposes of a section 138 claim. In Bland v Ingrams Estates Ltd, the Court of Appeal considered, albeit obiter,[69] that the same reasoning would inevitably apply for the purposes of a section 139 claim.[70]
(b) Forfeiture other than for non-payment of rent
(i) Historical
2.38 The jurisdiction of the Courts of Chancery to grant relief against forfeiture for non-payment of rent was extensive, as we have seen; but their jurisdiction to grant relief in the case of other breaches of covenant or condition was much more narrow.[71] Relief in these cases is now governed almost entirely by statute, and it seems that the old jurisdiction will only apply in cases wholly outside the statutory code,[72] for example, where the relationship of landlord and tenant does not exist.[73] With cases of the latter kind this report is not, of course, concerned.2.39 The general statutory provisions relevant to the topic are contained in section 146 of the Law of Property Act 1925, and we deal with these under the next four sub-headings. We then deal with certain special provisions which apply when the landlord seeks to forfeit on the ground of the tenant's failure to repair.
(ii) General provisions about notice
2.40 Subsection (1) of section 146 provides:
A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice -
(a) specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and
2.41 One of the main differences which had existed between forfeiture for reasons other than non-payment of rent and forfeiture for non-payment of rent no longer exists, in that a tenant may now apply for relief after the landlord has actually re-entered the property in all cases, and not only in cases involving the non-payment of rent.[74] Nonetheless, the notice not only still performs the function of giving the tenant an opportunity to seek relief in good time, but may also enable the tenant, through compliance with its terms, to forestall further action by the landlord altogether.(c) in any case, requiring the lessee to make compensation in money for the breach; and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.
2.42 It is appropriate here to note briefly some points which are relevant to section 146(1). Most of them will be examined in greater detail later in this report.
2.43 First, the words "by action or otherwise" which appear in the subsection make it clear that it extends to cases where the landlord wishes to forfeit by means of peaceable re-entry: such re-entry will be void if the subsection has not been complied with.[75]
2.44 Second, although the wording of the subsection itself[76] covers only breaches of covenant or condition, it extends (as does section 146 as a whole) to certain cases involving limitations.[77] Subsection (7) provides:
2.45 Third, although the subsection requires compensation to be sought "in any case", it has been held that a landlord need not ask for it if he does not want it.[78]For the purposes of this section a lease limited to continue as long only as the lessee abstains from committing a breach of covenant shall be and take effect as a lease to continue for any longer term for which it could subsist, but determinable by a proviso for re-entry on such a breach.
2.46 Fourth, it is to be noted that the landlord must require the breach to be remedied if, but only if, it is "capable of remedy". This introduces the concept of the "irremediable breach". In certain categories of case, the courts have decided that breaches are in fact incapable of remedy. One such category is that where the breach consists in the tenant having put the property to an immoral or illegal use, as where it has been used as a brothel[79] or for unlawful gambling,[80] or where the tenant has run catering premises in breach of the licensing laws[81] or the food and drugs regulations[82] or permitted obscene articles to be kept there for publication[83] or where the tenant has committed acts preparatory to a breach of the Official Secrets Act 1989[84] or the supply of racist material.[85] In such cases the tenant's activities are said to have cast a stigma on the property. Another category is that where the breach is a "once and for all breach", because it is said that such breaches, once they have happened, cannot be put right. Thus a subletting in breach of covenant is an irremediable breach even though it may have happened by mistake and even though the sub-tenancy can be ended.[86] If a breach is irremediable it follows that the landlord need not require it to be remedied, and it follows also that there is nothing the tenant can do to stop the landlord proceeding with an action for possession; but it does not necessarily follow that the tenant will be unable to obtain relief.[87]
2.47 Fifth, it may be noted that the subsection allows the landlord to proceed (by actual re-entry in those cases in which it is permitted, or by constructive re-entry through court proceedings) only if the tenant fails within a reasonable time "to remedy the breach, if it is capable of remedy". If the breach is irremediable, it has been held that the landlord must still give the tenant time to consider his position:[88] in one case two days was held too short a period,[89] and in another a fortnight was held sufficient.[90] If the breach is remediable, the period of time in which it is reasonable to remedy it will depend on the facts. If the landlord misjudges this period and proceeds too soon his action will fail (or his actual re-entry will be ineffective, as the case may be).
(iii) General provisions about relief for the tenant
2.48 If the landlord duly serves on the tenant a notice under section 146(1) and the tenant cannot or does not forestall future action by complying with its terms, relief may still be available to the tenant under subsection (2) of section 146.2.49 This applies while the landlord "is proceeding" to enforce the forfeiture by action or otherwise, so relief is not available to a tenant after the landlord has recovered judgment for possession and has re-entered in reliance on that judgment.[91] However, the tenant may apply for relief after the landlord has forfeited by re-entry without first obtaining a court order.[92] The court has a discretion as to the granting of relief and may do so on terms as to costs, damages, compensation, etc. If relief is granted, the effect is as if the tenancy had never been forfeited.[93] If the premises are held by joint tenants, all must apply for relief.[94]
2.50 By subsection (3), the landlord is entitled to recover his reasonable costs and expenses from the tenant if relief is granted (or if the landlord waives the breach at the tenant's request).
2.51 There are no fixed rules according to which relief will be granted or refused.[95] The court will have regard to all the circumstances.[96] It is almost certain to be granted if the tenant makes good the breach and is able and willing to fulfil his obligations in the future. But the fact that the breach is "irremediable"[97] does not necessarily mean that no relief will be available: it may still be granted if the circumstances are thought to justify it, though the court takes a particularly strict view about breaches involving immoral[98] or illegal[99] user.
(iv) General provisions about derivative interests
2.52 If the tenant does not obtain relief, relief may be available to the holders of interests deriving from his tenancy (including sub-tenants and their and his mortgagees) under subsection (4) of section 146. This has already been outlined in the context of relief against forfeiture for non-payment of rent[100] (to which it also applies). It seems likely that relief is available after the landlord has re-taken actual possession,[101] and takes the form of a new tenancy granted to the applicant.
(v) Exceptions to the general provisions
2.53 There are certain cases in which the provisions of section 146, summarised under the last three sub-headings, do not apply, or do not apply in full. In these cases, therefore, the landlord may forfeit the tenancy without serving a preliminary notice on the tenant, and the tenant cannot apply for relief.2.54 Denial of title. First, it has been held[102] that the section does not apply at all if the landlord seeks to forfeit on the ground of denial of title by the tenant:[103] the section applies only to forfeiture "under any proviso or stipulation in a lease", and denial of title amounts to breach of a condition which is implied and so not actually contained in the tenancy document. However, the matter is not free from doubt. More recently, it has been held,[104] obiter, that the section applies to the case of denial of title by the tenant and that he may apply for relief under subsection (2).
2.55 Non-payment of rent. Section 146 provides,[105] as we have already noted, that with the sole exception of the provision about derivative interests,[106] its provisions do not apply where forfeiture is sought on the ground of non-payment of rent.
2.56 Assignments, etc., before 1926. The section does not apply to "a covenant or condition against assigning, underletting, parting with the possession, or disposing of the land leased where the breach occurred before the commencement of [the 1925] Act".[107] This exception was made for historical reasons into which we need not go and the passage of time has now made it obsolete.
2.57 Mining tenancies: inspection. The section does not apply, "[i]n the case of a mining lease, to a covenant or condition for allowing the lessor to have access to or inspect books, accounts, records, weighing machines or other things, or to enter or inspect the mine or the workings therefore".[108] The justification for this exception is said to lie in the fact that the amount of rent payable under a mining tenancy is usually made to depend upon the amounts of mineral which the mine produces, so that the covenant in question is of particular importance.
2.58 Bankruptcy: complete exception in special cases. The provisions of section 146 do not apply to a condition of forfeiture on the tenant's bankruptcy,[109] or the taking in execution of his interest under the tenancy, if the property left falls into any one of five special categories.[110]
These categories are:
(a) Agricultural or pastoral land;
(b) Mines or minerals;
(c) A house used or intended to be used as a public-house or beershop;
(d) A house let as a dwelling-house, with the use of any furniture, books, works of art, or other chattels not being in the nature of fixtures;
2.59 Bankruptcy: partial exception in all other cases. If the same situation exists, but the property let does not fall into any of these special categories, there is a complex provision[111] the effect of which may be summarised as follows. The protection of section 146 applies for one year from the date of the bankruptcy.[112] If the tenant's interest is not sold within that year, the protection ceases and the section applies no longer. But if the tenant's interest is sold during the year, the protection continues indefinitely for the benefit of the new tenant. The effect is to encourage sale within the year (in those cases in which sale is not precluded by the terms of the tenancy), and to enable a sale within that period to be made at a price which is not depressed by the purchaser's fear of having to face an action for possession by the landlord without statutory protection.(e) Any property with respect to which the personal qualifications of the tenant are of importance for the preservation of the value or character of the property, or on the ground of neighbourhood to the lessor, or to any person holding under him."
2.60 There are no other exceptions to section 146. In particular, it cannot be excluded by agreement and "has effect notwithstanding any stipulation to the contrary".[113]
(vi) Special provisions about repairing obligations
2.61 The legislature has shown particular concern about cases in which the tenant may lose his tenancy through forfeiture because he has broken an obligation to repair. Three enactments have to be considered. All of them are built upon the notice provisions of section 146(1) of the Law of Property Act 1925.[114]2.62 The first section is 18(2) of the Landlord and Tenant Act 1927. This is designed, broadly, to make certain that the notice served under section 146(1) is actually received by the tenant. Normally the notice is served effectively if the general provisions governing the service of notices under the 1925 Act are complied with,[115] and it is enough to send it by registered or recorded delivery[116] post, as long as it is not returned undelivered by the Post Office. But when the breach is of an obligation to repair, section 18(2) requires the landlord to prove that the service of the notice was actually known to the tenant (or to a sub-tenant holding under a sub-tenancy, which reserved only a nominal reversion to the tenant, or to the person who last paid the rent).[117] Section 18(2) also provides, in effect, that the reasonable time which must be allowed for the repairs to be carried out[118] is to run from the date when service became known to the tenant (or other persons mentioned above).
2.63 The two remaining enactments come into operation after notice under section 146(1) has been served.
2.64 Section 147 of the Law of Property Act 1925 applies when the notice relates to internal decorative repairs to a house or other building. It enables the tenant to apply to the court for relief and the court may, if satisfied that the notice is unreasonable, relieve the tenant wholly or partly from liability for the repairs. The court's power, therefore, is to grant relief not merely from forfeiture but from the need to do the repairs at all. In reaching its decision the court must have regard to all the circumstances including in particular the length of time for which the tenancy has still to run.[119]
2.65 Section 147 does not apply:[120]
(i) Where the liability arises under an express covenant or agreement to put the property in a decorative state of repair and the covenant or agreement has never been performed;
(ii) to any matter necessary or proper-
(a) for putting or keeping the property in a sanitary condition, or
(b) for the maintenance or preservation of the structure;
(iii) to any statutory liability to keep a house in all respects reasonably fit for human habitation;
2.66 The Leasehold Property (Repairs) Act 1938[121] is not confined to internal decorative repair but applies (subject to exceptions mentioned later) in the case of a breach of any covenant or agreement to keep or put in repair[122] during the currency of the tenancy all or any part of the property let. It does not apply unless the tenancy was granted for a term of 7 years or more, of which 3 at least have still to run at the time when the landlord serves notice under section 146(1).[123] Nor does it apply if the tenancy is of an agricultural holding within the meaning of the Agricultural Holdings Act 1986.[124] Nor does it apply if and in so far as the breach is of an obligation to put premises in repair which is to be performed upon the tenant taking possession or within a reasonable time afterwards.[125](iv) to any covenant or stipulation to yield up the house or other building in a specified state of repair at the end of the term.
2.67 If the notice served by the landlord under section 146(1) relates to a breach to which the 1938 Act applies, the tenant may serve a counter notice within 28 days, and if he does so the landlord may not proceed, by action or otherwise, to enforce forfeiture unless he obtains the leave of the court.[126] The landlord's original notice is not valid unless it contains a statement telling the tenant of his right to serve this counter notice.[127] In granting or refusing leave, the court may impose such terms and conditions on the landlord or the tenant as it thinks fit.[128] The landlord's right, under section 146(3) of the Law of Property Act 1925,[129] to recover expenses, does not arise unless he applies for leave to proceed, and on such an application the court may nullify or limit it.[130]
2.68 The Act of 1938 also provides[131] that the court is not to give the landlord leave to proceed unless he proves[132] one or more of a number of specified things. These are as follows:
(a) that the immediate remedying of the breach in question is requisite for preventing substantial diminution in the value of his reversion, or that the value thereof has been substantially diminished by the breach;
(b) that the immediate remedying of the breach is required for giving effect in relation to the premises to the purposes of any enactment, or of any byelaw or other provision having effect under an enactment, or for giving effect to any order of a court or requirement of any authority under any enactment or any such byelaw or other provision as aforesaid;
(c) in a case in which the lessee is not in occupation of the whole of the premises as respects which the covenant or agreement is proposed to be enforced, that the immediate remedying of the breach is required in the interests of the occupier of those premises or of part thereof;
(d) that the breach can be immediately remedied at an expense that is relatively small in comparison with the much greater expense that would probably be occasioned by postponement of the necessary work; or
2.69 It will be noted that, in so far as the subject matter of the 1938 Act overlaps with that of section 147 of the Law of Property Act 1925, individual tenants are provided with two alternative ways of seeking modification of their legal liabilities.(e) special circumstances which in the opinion of the court, render it just and equitable that leave should be given.
(vii) Special provisions about service charges
2.70 Recent statutory provisions have sought to restrict the extent to which landlords may forfeit tenancies for failure to pay service and administration charges.2.71 Section 81 of the Housing Act 1996 applies in relation to "premises let as a dwelling". A landlord of such premises may not exercise a right of re-entry or forfeiture for failure to pay a service charge unless the amount of the service charge has been "agreed or admitted by the tenant" or it has been the subject of determination by a court or by an arbitral tribunal. As a result of amendments contained in the Commonhold and Leasehold Reform Act 2002, this provision has been extended in its application to administration charges as well as service charges.[133] The amount of the relevant charge must now have been "admitted", not merely "agreed". Express mention is now made of leasehold valuation tribunals, and the determination by the court, an LVT or an arbitral tribunal must be "final". The amendment confirms that a period of 14 days must elapse from the date of that final determination before the landlord may exercise the rights in question.
2.72 This provision is clearly directed against the mischief of landlords seeking to terminate residential tenancies based on failure to pay service or administration charges which are still the subject of dispute with the tenant concerned. Only in circumstances where the dispute has been finally resolved is the landlord entitled to use forfeiture as a means of enforcing payment of the sums due.
2.73 Sections 167 to 169 of the Commonhold and Leasehold Reform Act 2002 apply to a narrower range of residential tenancies, that is "long leases" of dwellings.[134] Section 167 prohibits landlords from exercising a right of re-entry or forfeiture for failure by a tenant to pay rent, service charges or administration charges unless the total amount unpaid exceeds "the prescribed sum" or some or all of the amount due has been payable for more than "the prescribed period"[135]. This provision therefore prevents landlords from seeking to terminate long leases for non-payment of relatively small sums, at least where the tenant has not been persistent in failing to discharge his or her financial obligations. Section 168 prohibits landlords from serving notice under section 146 of the Law of Property Act 1925 unless the occurrence of the breach of covenant or condition has been finally determined by a leasehold valuation tribunal, a court or an arbitral tribunal or the tenant has admitted the breach. Leasehold valuation tribunals are to have jurisdiction to make such determinations on application by the landlord. This, a more sweeping protective provision than section 167, overlaps to some considerable extent with section 81 of the 1996 Act.
Note 1 Strictly speaking an obligation of this kind is not a “covenant” unless it is undertaken by deed, but the term is commonly used to describe all such obligations undertaken in any tenancy (whether formal or informal) and we use it in this comprehensive sense. [Back] Note 2 For example, the grant of planning permission for a particular use. [Back] Note 3 Subs (9) (emphasis added). [Back] Note 4 Subs (10) (emphasis added). [Back] Note 5 But subs (7) of s 146 of the Law of Property Act 1925 applies the provisions of that section, which give relief against forfeiture, to certain kinds of limitation, by deeming the events in question to be breaches of covenant: see para 2.44 below. [Back] Note 6 Thus a tenancy granted upon condition that planning permission for a specified change of use is not given would be terminable at the landlord’s option on the giving of the permission. But a tenancy granted for a fixed period or until such permission is given would end automatically once permission was given. [Back] Note 7 It has been suggested, however, that the courts will apply the principle that a person may not take advantage of his own wrong so as to prevent the tenant from asserting that the tenancy has terminated through an act or omission of his; that the tenancy therefore cannot be allowed to end automatically in such an event; and that it must therefore be merely voidable at the landlord’s option: P.R. Crane, Automatic Determination of Leases? (1963) 27 Conv. (N.S) 111. [Back] Note 8 R.E. Megarry and H.W.R. Wade, The Law of Real Property (6th ed. 2000), p 812, para 14-119. In Warner v Sampson [1959] 1 Q.B. 297, 315, Lord Denning M.R. said that the doctrine “is quite inappropriate at the present day. All the circumstances which gave rise to this medieval law have now disappeared.” [Back] Note 9 If the tenancy is for a term of years, the allegation will give rise to forfeiture only if it is in writing: Doe d. Graves v Wells (1839) 10. Ad. & El. 427. The disclaimer of the landlord’s title by the tenant must be clear and unambiguous; partial disclaimer is not enough to constitute a disclaimer as to the whole: WG Clark (Properties) Ltd. v Dupre Properties Ltd. [1992] Ch. 297. [Back] Note 10 Occasionally actual re-entry may take place in other ways, as where the premises are in the possession of a sub-tenant and the landlord “re-enters” by re-letting them to him: Baylis v Le Gros (1858) 4 C.B. (N.S.) 537. But it is otherwise if the landlord re-lets to a stranger to whose entry the sub-tenant objects: Parker v Jones [1910] 2 KB 32. The act of re-entry must be unequivocal. Accordingly, actual re-entry (e.g. by changing the locks by arrangement with a sub-tenant in possession) will not suffice if the landlord agrees to allow the sub-tenant to remain in possession under the terms of his existing lease: Ashton v Sobelman [1987] 1 W.L.R. 177. See also Hammersmith and Fulham London Borough Council v Tops Shop Centres Ltd. [1990] Ch. 237. [Back] Note 11 Criminal Law Act 1977, s 6, replacing in this respect the Forcible Entry Acts. [Back] Note 12 Protection from Eviction Act 1977, s 2, replacing s 31 of the Rent Act 1965. [Back] Note 13 Canas Property Co. Ltd. v K.L. Television Services Ltd. [1970] 2 QB 433 (CA). [Back] Note 14 See paras 2.16- 2.51 below. [Back] Note 15 See, e.g. Jones v Carter (1846) 15 M. 7 W. 718; Wheeler v Keeble [1920] 1 Ch. 57. [Back] Note 16 Clifton Securities Ltd. v Huntley [1948] 2 All E.R. 283, 284. [Back] Note 17 For cases dealing with such awareness, see Official Custodian for Charities v Parway Estates Developments Ltd. [1985] Ch 151 (CA) and Chrisdell Ltd. v Johnson and Another (1987) 54 P & CR 257 (CA). [Back] Note 18 Although in Creery v Summersell & Flowerdew & Co. Ltd. [1949] Ch 751, at p 761, Harman J (as he then was) said that the basic question was always “quo animo was the act done”, and although the case is sometimes still cited for that proposition, the Court of Appeal made it quite clear, in Central Estates (Belgravia) Ltd. v Woolgar (No.2) [1972] 1 WLR 1048, that the intentions of the parties are wholly irrelevant. The position may be otherwise, however, in relation to statutory tenancies within the Rent Act 1977: Trustees of Henry Smith’s Charity v Willson [1983] 1 All ER 73 (CA). [Back] Note 19 [1972] 1 WLR 1048 (CA). [Back] Note 20 Davenport v R. (1877) 3 App Cas 115; Segal Securities Ltd. v Thoseby [1963] 1 QB 887. However, in cases not involving the demand or acceptance of rent, the court is “free to look at all the circumstances of the case”: Expert Clothing Service and Selas v Highgate House Ltd. [1986] Ch 340 (proferring of a mere negotiating document by the landlord does not of itself amount to waiver). See also Re National Jazz Centre [1988] 2 EGLR 57, where Peter Gibson J held that a mere entry into, and continuation of negotiations, does not in itself constitute a waiver. [Back] Note 21 Grimwood v Moss (1872) LR 7 CP 360. But acceptance of rent may be evidence of an intention to create a new tenancy: Evans v Wyatt (1880) 43 LT 176. [Back] Note 22 And see Law of Property Act 1925, s 148. [Back] Note 23 For an example, see Cooper v Henderson (1982) 263 EG 592 (CA). Where a notice under s 146 of the Law of Property Act 1925 has been served in respect of a breach of a repairing covenant, it is not necessary to serve a further notice under s 146 if there has been no change in the condition of the premises or if they have deteriorated: Greenwich London Borough Council v Discreet Selling Estates [1990] 2 EGLR 65. [Back] Note 24 As amended by Administration of Justice Act 1985, s 55 and Courts and Legal Services Act 1990. [Back] Note 25 Although subs (1) of s 18 is not relevant to forfeiture, the section is to be read as a whole and is therefore set out in full in Appendix A to the First Report. [Back] Note 26 Since this Part was first published two major enactments regulating forfeiture should be noted: the Housing Act 1996, ss 81 and 82 and the Commonhold Leasehold Reform Act 2002, Part V. See also paras 2.71 et seq below. [Back] Note 27 Howard v Fanshawe [1895] 2 Ch 581; Lovelock v Margo [1963] 2 QB 786; Thatcher v C.H. Pearce & Sons (Contractors) Ltd. [1968] 1 WLR 748. See also Abbey National Building Society v Maybeech Ltd. [1985] Ch 190; Ladup Ltd. v Williams & Glyn’s Bank Plc [1985] 1 WLR 851. [Back] Note 28 Distress is a means of recovering money due through the seizure and realisation of the tenant’s goods. It is not often used today for the recovery of rent. [Back] Note 29 Standard Pattern Co. Ltd. v Ivey [1962] Ch 432. This is because the section is so drafted as to refer back to s 210. It also appears from this case that if a half year’s rent is not in arrear discretionary relief may be sought from the High Court according to the principle stated in s 46 of the Judicature Act 1925 (now replaced by s 38 of the Supreme Court Act 1981). [Back] Note 30 This provision was extended by the Courts and Legal Services Act 1990, Sched 17. [Back] Note 31 Howard v Fanshawe [1895] 2 Ch 581. [Back] Note 32 Paras. 2.18 and 2.19 above. [Back] Note 33 Thatcher v C.H. Pearce & Sons (Contractors) Ltd. [1968] 1 WLR 748. Section 46 of the Judicature Act 1925 (now replaced by s 38 of the Supreme Court Act 1981) seems not to apply where there has been peaceable re-entry, but relief appears to be available on the same principles. [Back] Note 35 See para 2.23 above. [Back] Note 36 Compare, e.g. R.E. Megarry and H.W.R. Wade, The Law of Real Property (6th ed, 2000), p 821, para 14-129; Woodfall’s Law of Landlord and Tenant (28th ed., 1978) p.17/91, para 17.186, and Hill and Redman’s Law of Landlord and Tenant (18th ed., 1988), para 9326. [Back] Note 37 The court may, in the exercise of its discretion, refuse relief (even to a tenant who belatedly tenders the full amount of the outstanding rent and costs) if, during the interim period, the landlord has reasonably re-let the premises to a third party: Silverman v AFCO (UK) Ltd. (1988) 56 P & CR 185. [Back] Note 38 County Courts Act 1984 s 138(7) (as amended by Courts and Legal Services Act 1990, Sched 17). [Back] Note 39 Para. 2.26 above. [Back] Note 42 (1985) Law Com No 142. [Back] Note 43 [1986] Ch 150. This decision was reported after the publication of our First Report. [Back] Note 45 This was brought into force on 1 October 1986 (The Administration of Justice Act 1985 (Commencement No 2) Order (SI 1986 No 1503)). [Back] Note 46 County Courts Act 1984, s 138(9A). Subs (9C) enables any other person with an interest in the lease to apply for relief. [Back] Note 47 See para 2.27 above. [Back] Note 48 See Doe d. Wyatt v Byron (1845) 1 C.B. 623. See also Abbey National Building Society v Maybeech Ltd. [1985] Ch 190 and cases there cited. [Back] Note 49 The six months’ time limit also applies to an application for relief by a tenant’s mortgagee: United Dominions Trust Ltd. v. Shellpoint Trustees Ltd. [1993] 4 All ER 310. [Back] Note 50 Hare v Elms [1893] 1 QB 604; and see, e.g. Hill and Redman’s Law of Landlord and Tenant (18th ed, 1988) page A 1004, para 9226. The presence of these people is not required, however, if their absence can be satisfactorily explained: Humphreys v Morten [1905] 1 Ch 739. See also Abbey National Building Society v Maybeech Ltd. [1985] Ch 190. [Back] Note 51 Belgravia Insurance Co. Ltd. v Meah [1964] 1QB 436 (CA), at p 446. [Back] Note 52 Rogers v Rice [1892] 2 Ch 170 (CA). Although this case was distinguished in the House of Lords in Billson v Residential Apartments Ltd. [1992] 1 AC 494, it has not yet been held that a sub-tenant or mortgagee may apply for relief after the landlord has re-entered the property. However, the reasoning in Billson suggests that actual re-entry by the landlord will not exclude the statutory jurisdiction to claim relief, i.e., it would seem that “is proceeding” in s 146(4) bears the same meaning as in s 146(2). See also Hammersmith and Fulham London Borough Council v Tops Shop Centres Ltd. [1990] Ch 237, in which it was held that the mere receipt by the landlords of rent payable under erstwhile underleases was not an assertion of a right of re-entry, and that therefore the underlessees were still entitled to apply for relief under s 146(4), because the landlord was still “proceeding” within the terms of the subsection. [Back] Note 53 As to the class in whose favour it can be exercised, see paras 10.23 and 10.25 of the First Report. [Back] Note 54 Belgravia Insurance Co. Ltd. v Meah [1964] 1 QB 43(CA). [Back] Note 55 See para 7.13 et seq below. [Back] Note 56 Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd [1985] Ch 207, 227, per Peter Gibson J. [Back] Note 57 In re Cosslett (Contractors) Ltd [1998] Ch 495, 508, per Millett LJ. [Back] Note 58 [1985] 1 WLR 851. [Back] Note 60 Ibid., para 32, p780, per Nourse LJ; para 70, p788, per Chadwick LJ [Back] Note 61 Hayim v Citibank NA [1987] AC 730. [Back] Note 62 Bland v Ingram’s Estates Ltd, above, para 32, p780, per Nourse LJ; para 72, p789, per Chadwick LJ [Back] Note 63 Ibid., para 32, p780, per Nourse LJ [Back] Note 64 Ibid., para 34, p781, per Nourse LJ; paras 71- 73, p789, per Chadwick LJ (citing Harmer v Armstrong [1934] Ch 65). [Back] Note 65 Ibid., paras 32-33, p780-781, per Nourse LJ. [Back] Note 66 Although see ibid., per Hale LJ, at para 82, p790. [Back] Note 67 Bland v Ingrams Estates Ltd [2001] Ch 767, 776 (para 14, per Nourse LJ), 786 (para 60, per Chadwick LJ). [Back] Note 69 The claim for relief was before the High Court. It had been transferred there from the county court to enable the claimant to invoke the inherent jurisdiction of the High Court, the first instance judge taking the view, which proved to be incorrect, that the county court was not empowered to grant relief in favour of an equitable chargee. It is indeed a fine example of the chaos which can be caused by the existence of parallel but distinct jurisdictions. [Back] Note 70 See per Chadwick LJ, para 64, at p787 and per Hale LJ, para 83, at p791. [Back] Note 71 For a review, see Shiloh Spinners Ltd. v Harding [1973] AC 691. [Back] Note 72 See Official Custodian for Charities v Parway Estates Departments Ltd. [1985] Ch 151 (CA), Smith v Metropolitan City Properties Ltd. [1986] 1 EGLR 52, and Billson v Residential Apartments Ltd. [1992] 1 AC 494. See also Woodfall’s Landlord and Tenant (28th ed., 1978) para. 17.153 at p 17/74/1 and Hill and Redman’s Law of Landlord and Tenant (18th ed., 1988) paras 9081 - 9082. [Back] Note 73 Shiloh Spinners v Harding [1973] AC 691. See further paras 15.6-16.16 of the First Report. [Back] Note 74 Billson v Residential Apartments Ltd. [1992] 1 AC 494. [Back] Note 75 Re Riggs, ex parte Lovell [1901] 2 KB 16. [Back] Note 76 See para 2.40 above. [Back] Note 77 The nature of a limitation is explained in para 2.6 above. [Back] Note 78 Lock v Pearce [1893] 2 Ch 271. [Back] Note 79 Rugby School (Governors) v Tannahill [1935] 1 KB 87 (CA); Egerton v Esplanade Hotels, London, Ltd. [1947] 2 All ER 88. A breach of a positive covenant will normally be remediable; some breaches of negative covenant may be remediable: “To stop doing what is forbidden by a negative covenant may or may not remedy the breach even if accompanied by compensation in money. Thus to remove the window boxes and pay for the repair of any damage done will remedy the breach, but to stop using the house as a brothel will not, because the taint lingers on and will not dissipate within a reasonable time.”: Expert Clothing Service and Sales Ltd. v Hillgate Housing Ltd. [1986] Ch 340, per O’Connor LJ. [Back] Note 80 Hoffman v Fineberg [1949] Ch 245. [Back] Note 81 Bickerton’s Aerodromes v Young (1958) 108 LJ 217. [Back] Note 82 Ali v Booth (1966) 110 Sol J 708 (CA) [Back] Note 83 Dunraven Securities Ltd. v. Holloway (1982) 264 EG 709 (CA) [Back] Note 84 Van Haarlam v Kasner (1992) 64 P & CR 214. [Back] Note 85 Coigley v Benjamin (1989) CSW 13 July. [Back] Note 86 Scala House and District Property Co. Ltd. v Forbes [1974] QB 575 (CA). However, a breach of a positive covenant (even if it be a once and for all breach) will ordinarily be capable of remedy: “[i]n the ordinary case, the breach of a promise to do something by a certain time can for practical purposes be remedied by the thing being done, even out of time.”: Expert Clothing Service & Sales Ltd. v. Hillgate House Ltd. [1986] Ch 340, 355 per Slade L.J. [Back] Note 87 See further para 2.51 below. [Back] Note 88 Horsey Estate Ltd. v Steiger [1899] 2 QB 79 (CA), at p 91. [Back] Note 90 Civil Service Co-operative Society v McGrigor’s Trustee [1923] 2 Ch 347. [Back] Note 91 If the judgment is set aside or successfully appealed the tenant will be able to apply for relief in the landlord’s action but the court in deciding whether to grant relief will take into account any consequences of the original order and repossession and the delay of the tenant. Billson v Residential Apartments Ltd. [1992] 1 AC 494, 538 per Lord Templeman. [Back] Note 92 Billson v Residential Apartments Ltd. [1992] 1 AC 494. It was held that, in this situation, the landlord would still be “proceeding” (i.e., taking the necessary steps) to enforce his right of forfeiture within the meaning of s 146(2) until such time as he obtained a judgment for possession. In deciding whether to grant relief, the court will take into account all the circumstances, including delay on the part of the tenant: ibid, at p 540. [Back] Note 93 Dendy v Evans [1910] 1 KB 263 (CA). Where a third party purchaser without notice has acquired an interest in the property in the interim, the terms of any relief against forfeiture must recognise the priority of that interest: Fuller v Judy Properties Ltd. (1992) 64 P & CR 176 (tenant granted a reversionary lease on an application for relief, the premises having been re-let). [Back] Note 94 Fairclough & Sons Ltd. v Berliner [1931] 1 Ch 60. [Back] Note 95 Hyman v Rose [1912] AC 623. [Back] Note 96 See para 2.49, n 91and 92. [Back] Note 97 See para 2.46 above. [Back] Note 98 See, e.g., Borthwick-Norton v Romney Warwick Estates Ltd. [1950] 1 All ER 798 (CA). See also G.MS Syndicate Ltd. v Gary Elliot Ltd. [1981] 1 All ER 619, per Nourse J. at p 624: “It is the established practice of the Court not to grant relief in cases where the breach involves immoral user, save in very exceptional circumstances such as those which were considered in Central Estates (Belgravia) Ltd. v Woolgar (No. 2) [1972] 1 WLR 1048 (CA)”. For a recent example of such exceptional circumstances, see Ropemaker Properties v Noonhaven (1989) 2 EGLR 50, where the lease was of substantial value; the immoral user had ceased and was unlikely to be renewed; any stigma attaching to the premises was likely to be shortlived; and the substantial financial loss to the lessees would have been out of all proportion to their offence or to any conceivable damage to the landlords. [Back] Note 99 See e.g., Hoffman v Fineberg [1949] Ch 245. [Back] Note 100 Para 2.30 above. Where the court makes an order under s 146(4) vesting a new lease in a former sub-lessee, all interests deriving from his original sub-lease are not automatically reinstated: Hammersmith and Fulham London Borough Council v Tops Shop Centres Ltd. [1990] Ch 237. [Back] Note 101 It seems from Abbey National Building Society v Maybeech Ltd. [1985] Ch 190 that the court’s ancient equitable jurisdiction to grant relief extended in some circumstances to cases not involving non-payment of rent (e.g., to cases involving the non-payment of other sums of money), and that derivative interest holders may still be granted relief under this jurisdiction even after possession has been re-taken. This issue was not expressly dealt with in Billson v Residential Apartments Ltd. [1992] 1 AC 494, but if (as seems likely) the words “is proceeding” in s 146(4) have the same meaning as in s 146(2), forfeiture by peaceable re-entry rather than by writ would not debar sub-tenants and mortgagees from applying for relief. [Back] Note 102 Warner v Sampson [1958] 1 QB 404 (reversed on other grounds,[1959] 1 QB 297). [Back] Note 103 Para 2.7 above. [Back] Note 104 WG Clark (Properties) Ltd. v Dupre Properties Ltd. [1992] Ch 297 (T.R.A. Morison QC., sitting as a Deputy Judge of the High Court). [Back] Note 106 Paras 2.31 and 2.52 above. [Back] Note 107 Subs (8)(i). But s 1 of the Law of Property (Amendment) Act 1929 provides that nothing in subss (8), (9) or (10) of s146 of the 1925 Act is to affect the provisions of subs (4) of s 146, which deals with relief for those holding derivative interests (paras 2.31 and 2.46). [Back] Note 108 Subs 8(ii). But see n 107 to para 2.56 above. [Back] Note 109 “Bankruptcy” includes liquidation by arrangement and, in relation to a corporation, means its winding up: Law of Property Act 1925, s 205(1)(i). While an administration order is in force or when a winding up order has been made in relation to a tenant company, the leave of the court is required to forfeit the lease: Insolvency Act 1986, ss 11(3) and 130(2). See also Exchange Travel Agency v Triton Property Trust [1991] 2 EGLR 50. [Back] Note 110 Subs (9). But see n 107 to para. 2.56 above. [Back] Note 111 Subs (10). And see n 107 to para 2.56 above. [Back] Note 112 Or taking in execution; and see n 109 to para 2.58 above. [Back] Note 114 Paras 2.40- 2.47 above. [Back] Note 115 Law of Property Act 1925, s 196. [Back] Note 116 Recorded Delivery Service Act 1962, s 1. [Back] Note 117 Sending it by registered or recorded delivery post is only prima facie proof of knowledge on the part of the addressee. [Back] Note 118 Para 2.47 above. [Back] Note 119 Section 147(1). [Back] Note 121 The effect of the Act was altered in certain respects by s 51 of the Landlord and Tenant Act 1954, and the summary given in the text is of the Act as amended by that section. [Back] Note 122 In deciding whether a covenant or agreement relates to “repair” the court will look at the substance of the breach: Starrokate Ltd. v Burry (1982) 265 EG 871 (CA), where it was also suggested that if a notice under s 146(1) failed to comply with the 1938 Act and related partly to repair and partly to other matters it might be severable. [Back] Note 123 Sections 1(1) and 7(1). [Back] Note 126 Sections 1(1) and (3). [Back] Note 129 Para 2.50 above. [Back] Note 130 Section 2 of the 1938 Act. [Back] Note 131 Section 1(5) (as amended by the Landlord and Tenant Act 1954, s 51(2)(c)). [Back] Note 132 In Associated British Ports v C.H. Bailey Plc [1990] 2 AC 703, the House of Lords held that the landlord must prove a ground on the balance of probabilities, and not merely make out a prima facie or arguable case. [Back] Note 133 “Service charge” is defined in s 18(1) of the Landlord and Tenant Act 1985, “administration charge” in Part 1 of Sched 11 to the Commonhold and Leasehold Reform Act 2002. The amendments came into force on 13 October 2003. [Back] Note 134 “Long lease” is defined in ss 76 and 77 of the 2002 Act. For the purposes of s 167 (but not apparently s 168), it does not include tenancies to which the Landlord and Tenant Act 1954 applies (business tenancies), tenancies of agricultural holdings within the Agricultural Holdings Act 1986, and farm business tenancies within the Agricultural Tenancies Act 1995: 2002 Act, s 167(4). [Back] Note 135 Both the sum and the period have yet to be prescribed. The sum to be prescribed cannot exceed £500: 2002 Act, s 167(2). In calculating the amount unpaid, default charges ( additional administration charges payable under the tenancy in respect of the tenant’s failure to pay etc) are to be disregarded: Ibid., s 167(3). [Back]
