Lent Term 2012 Land Law Tripos

Dr Mika Oldham Jesus College

LEASES AND LEASEHOLD ESTATES (II) LEASEHOLD COVENANTS VII. LEASEHOLD COVENANTS

NB: 'New tenancies' i.e., leases created on or a ter Januar! 1, 1""# $ in leases granted a ter 1""%, &oth the lia&ilit! o the parties under the co'enants o the tenanc! and the circumstances in which the &ene it and &urden o those co'enants will pass on an assignment o the lease or re'ersion are determined according to the pro'isions o the Landlord and Tenants (Co'enants) *ct 1""%. +mplements, (1) in modi ied orm the recommendations o the LC or the a&olition o the rule that the original tenant remains lia&le throughout the duration o the lease or the per ormance o the co'enants o the tenanc! (2) gi'es e ect to the unpu&lished recommendations o the LC or modernising and rationalising the rules on the transmission o the &ene it and &urden o co'enants in tenancies and or integrating the proposals or the a&olition o pri'it! o contract into the law on co'enants (-) it incorporates the results o an agreement made &etween representati'es o the propert! industr! which were thought to &e necessar! to make the a&olition o pri'it! o contract accepta&le to landlords. Law Commission, Landlord and Tenant, .ri'it! o Contract and .ri'it! o /state (Law Com 0eport 1o. 123, 1"44) Law Commission, Landlord and Tenant, 0esponsi&ilit! or 5tate and Condition o .ropert! (Law Com 1o. 2-4, 1""#) Law Commission, Termination o Tenancies or Tenant De ault (Cm #"3#, 200#) 678irst tenant lia&ilit!9 $0estrict the circumstances in which all tenants, and those who guarantee their lia&ilit!, are lia&le once the! ha'e law ull! assigned the lease. $/nsure that ormer tenants and guarantors are gi'en earl! notice i the landlord wishes to en orce such lia&ilit! that the! do ha'e. 67Touch and concern9 $.ro'ide airer, and more easil! applica&le, rules to determine whether a particular co'enant o the lease should &ind successors in title 6Lia&ilit! o landlords $.ro'ide or landlords who remain lia&le under the co'enants o the lease a ter the! ha'e assigned their re'ersion, a means to o&tain a release rom such lia&ilit! A LEASEHOLD RIGHTS AND OBLIGATIONS

Leasehold co'enants are commonl! e:pressl! agreed, &ut man! are implied &! law or imposed &! statute. 1. (i) LANDLORD COVENANTS Co enant !o" #$iet en%o&'ent

+mplied in e'er! lease $ there is in e'er! lease an implied co'enant or contractual term that the landlord shall permit the tenant ;<uiet en=o!ment> o the premises let. This co'enant or <uiet en=o!ment has nothing necessaril! to do with reedom rom acoustic inter erence, &ut is rooted in the concern to protect the tenant in sta&le and uninterrupted possession. +t is this guarantee that ultimatel! gi'es meaning to the tenant>s right to e:clusi'e possession.

Southwark LBC '. Tanner ?2001@ 1 *C 1 (AL) B...an!thing that su&stantiall! inter eres with the tenantCs title to or possession o the demised premises or with his ordinar! and law ul en=o!ment o the demised premises.B Lavender '. Betts ?1"32@ 2 *ll /0 22 (remo'al o doors and windows) Owen '. Gadd ?1"%#@ 2 DE "" (erection o sca olding outside shop) Kenny '. Preen ?1"#-@ 1 DE 3"" (threatening &eha'iour towards elderl! widow) The o&ligation has &een narrowl! construed. +t is prospecti'e in nature and does not appl! to things done &e ore the tenanc! with a continuing e ect. The co'enant imposes no positi'e o&ligation on the landlord to per orm repairs and it cannot &e ele'ated into a warrant! that the land is it to &e used or some special purpose. Southwark LBC '. Mills ?2001@ 1 *C 1 (AL) $ a L* granted lettings o council lats in a =err!F&uilt &lock where inade<uate sound insulation &etween the lats caused &ad dail! transmission o noise. AL held unanimousl! that there had &een no &reach o co'enant. +t was held that this was an ;inherent structural de ect or which the landlord assumed no responsi&ilit!>. (ii) Co enant a(ainst )e"o(ation !"o' ("ant

+mplied in e'er! lease. .re'ents L rom acting in a manner that reduces the usa&ilit! o the land &! T, gi'en the purpose or which the tenanc! was granted. Chartered Trust plc '. Davies ?1""2@ 2# .GC0 -"# (C*) (pawn&roker in mall) $ ailure &! a landlord to restrain a nuisance committed &! other tenants o his in the common parts o a shopping mall can constitute a derogation rom the landlord>s grant. Aldin '. Lati er Clark Muirhead ! Co ?14"3@ 2 Ch 3-2 (tim&er merchant) F ;where a landlord demises part o his propert! or carr!ing on a particular &usiness, he is &ound to a&stain rom doing an!thing on the remaining portion which would render the demised premises un it or carr!ing on such &usiness un it or carr!ing on such &usiness in the wa! in which it is ordinar! carried on, &ut that this o&ligation does not e:tend to special &ranches o the &usiness which call or e:traordinar! protection>. (iii) Re*ai"in( co enants

O ten e:press, &ut ma! &e implied &! common law or statute, depending on the nature o the tenanc!. + i'*,ie) co enant t-at !$"nis-e) "esi)entia, *"e'ises a"e !it !o" -$'an -a.itation at t-e sta"t o! t-e tenanc& S ith '. Marra"le (143-) 11 M G H % (&ug in estation) $ court o e:che<uer held it to &e an implied condition in the letting o an! urnished dwellingFhouse that the premises should &e reasona&l! it or ha&itation at the commencement o the term. * ter the start o the tenanc!, lia&ilit! in nuisance andIor negligence ma! &e rele'ant, Sharpe '. Council o# the City o# Manchester ?1"41F42@ % AL0 21 (C*) (cockroaches rom ser'ice ducts J DDT) + i'*,ie) co enant to /ee* co''on a"eas in "easona.,e "e*ai" an) $sa.i,it& Liverpool CC '. $rwin ?1"22@ *C 2-" (AL) (essential acilities onl!K test o necessit!) $the AL ruled that a L* landlord o a highFrise &lock o lats had a contractual dut! to ;take reasona&le care to keep in reasona&le repair and usa&ilit!> the common parts and

acilities in the &lock $ could &e implied as a matter o necessit!. + stat$to"&0 i'*,ie) co enant to /ee* ,ow "ent -o$sin( !it !o" -$'an -a.itation Landlord and Tenant *ct 1"4%, s.4(1) $ imposes 2 implied contractual terms in the letting o a dwellingFhouse (1) the house is ; it or human ha&itation at the commencement o the tenanc! (2) ;will &e kept &! the landlord it or human ha&itation during the tenanc!> These cannot &e e:cluded &! e:press contractual pro'ision. This is now circumscri&ed $ pro'ision has no application i the propert! cannot &e rendered ir or human ha&itation at reasona&le e:pense $ Buswell v Goodwin. 1ow onl! i landlord is noti ied and the statutor! rent limits on eligi&le tenancies now make the section 'irtuall! ine ecti'e e:cept in respect o properties which are it onl! or demolition rather than repair. + stat$to"&0 i'*,ie) co enant !o" "e*ai" an) 'aintenance Landlord and Tenant *ct 1"4%, s.11 (dwellings leased or a term o less than 2 !earsK cannot &e e:cluded) $ not until noti ied, notice must &e reasona&le and precludes tenant rom relie under the implied statutor! co'enants where in=ur! or loss has resulted suddenl! rom a latent and pre'iousl! in'isi&le de ect. De ecti'e .remises *ct 1"22, s.3 (landlordCs statutor! dut! o care where repairing right or o&ligation e:ists) $ imposes on the landlord a statutor! dut! to take reasona&le care to pre'ent personal in=ur! or propert! damage which ma! &e caused &! de ects in the state o the demised premises. F i'*act o! ECHR0 a"t 1 %atcli##e '. Sandwell MBC& Lee '. Leeds CC ?2002@ /HC* Ci' # at ?34@, ?%0@ per Chadwick LJ, L7take steps to ensure that the condition o a dwelling house which it has let or social housing is such that the tenant>s Con'ention right under article 4 is not in ringed.9 2. TENANT COVENANTS

/:press and implied tenant co'enants. Commonl! included e:press terms are co'enants to pa! a ser'ice charge and not to assign or su&Flet (either a&solute or <uali ied). (i) Co enant not to )isc,ai' L's tit,e +mplied into e'er! lease $ it is almost in'aria&le in a written lease or the landlord to retain control o'er uture assignment or su&letting &! his tenant. This control ma! take an a&solute orm or a <uali ied orm $ as where the tenant undertakes not to assign or su&let without the landlord>s prior consent. (ii) Co enant not to co''it waste Moluntar! and permissi'e waste, (1) a tenant holding under a i:ed term o !ears is, in the a&sence o contrar! agreement, lia&le or &oth 'oluntar! and permissi'e waste. On this &asis a tenant or !ears is lia&le or an! repair or which his landlord is not e:pressl! or impliedl! responsi&le. (2) The lia&ilit! o a !earl! tenant is pro&a&l! di erent rom that o other periodic tenants. * !earl! tenant is lia&le or 'oluntar! waste, &ut is lia&le or permissi'e waste onl! i he ails to weatherproo the premises. Ae is not lia&le or ; air wear and tear>. Mancetter Develop ents Ltd '. Gar anson Ltd ?1"4#@ DE 1212 (C*) (remo'al o

e:tractor an) (iii) Co enant to $se t-e *"o*e"t& in a 'tenant,i/e 'anne"' +mplied into e'er! lease. 'arren '. Keen ?1"%3@ 1 DE 1% (Ctake proper care o the placeC) F this means merel! that the tenant ;must do the little =o&s a&out the place which a reasona&le tenant would do>.

THE EN3ORCE4ENT O3 LEASEHOLD COVENANTS

Landlord and Tenant LawF .ri'it! o Contract and /state, Law Com 1o 123 (1"44) * leasehold or term o !ears ma! endure or man! !ears, and the re'ersion and the term are normall! reel! trans era&le. +t there ore &ecomes important that the co'enants in a lease should &e en orcea&le &etween the successors in title o the original landlord and tenant. The Landlord and Tenant (Co'enants) *ct 1""% applies to all 7new tenancies9 $ ie., tenancies entered into on or a ter 1""#. Terminolog!, alienation &! assignment or su&letting pri'it! o contractK pri'it! o estate (old tenancies) Mil o '. Carreras ?1"3#@ NE -0#, a purported grant &! T o a su&lease or a term as long as or longer than the term held &! T operates as an outright assignment 1. (i) L5T(C) A 1667 + GENERAL *pplication to &oth legal and e<uita&le tenancies and assignments, Landlord and Tenant (Co'enants) *ct 1""%, s. 24(1) de ines Ctenanc!C to include Can agreement or a tenanc!C. *pplies to all landlord and tenant co'enants s2(1) The &ene it and &urden o all co'enants, legal and e<uita&le, will pass on assignment o the land (s-), unless the co'enants are e:pressed to &e personal s-(#) The &ene it o the landlord>s right o reFentr! will also pass s3 * tenant is released rom the &urden and ceases to &e entitled to the &ene it o his co'enants &! his assignee s1#. This is known as an ;authorised guarantee agreement. * landlord s# or ormer landlord s2 ma! appl! to &e release rom the &ene it and &urden o his co'enants i he assigns the re'ersion. *n! o&=ection to the release must &e reasona&le s4. (ii) (iii) CLandlord co'enantsC and Ctenant co'enantsC, section 24(1) The *ct applies to co'enants whether e:press, implied or imposed &! law, section 2(1) (&). There is no re<uirement that the co'enant must Ctouch and concernC or Cha'e re erence to the su&=ect matter o the leaseC, sections 2(1)(a), -0(3)(&). Joint and se'eral lia&ilit! is imposed in relation to co'enants &inding two or more persons, section 1*ntiFa'oidance pro'ision, section 2%

(i') (')

s.2%(1), *n! agreement relating to a tenanc! is 'oid to the e:tent thatF (a) it would apart rom this section ha'e e ect to e:clude, modi ! or otherwise rustrate the operation o an! pro'ision o this *ct, or (&) it pro'ides orF (i) the termination or surrender o the tenanc!, or (ii) the imposition on the tenant o an! penalt!, disa&ilit!, or lia&ilit!, in the e'ent o the operation o an! pro'ision o this *ct ...

Avonrid(e Property Co Ltd '. Mashru ?200%@ ONAL 20, Lord 1ichollsC stated that that the antiF a'oidance pro'isions in the 1""% *ct should &e Binterpreted generousl! so as to ensure that the operation o the 1""% *ct is not rustrated either directl! or indirectl!B. Good )arvest Partnership LLP '. Centaur Services Ltd ?2010@ /HAC --0 (Ch) 8acts The original tenant was supported &! a contractual guarantor. *s a condition o the landlord>s consent to assign, &oth the tenant and its guarantor were re<uired &! the lease to enter into an authorised guarantee agreement (*P*) or the lia&ilities o the assignee. The assignee ailed to pa! the rent and the landlord claimed against the contractual guarantor. Hhat>s an *P*Q Onder the Landlord and Tenant (Co'enants) *ct 1""% (the 1""% *ct) tenants are released rom lia&ilit! under a lease on law ul assignment and their contractual guarantors are released 7to the same e:tent9. The onl! e:ception is that the landlord can re<uire the assignor to gi'e an *P* (a limited statutor! orm o guarantee) or its immediate successor. Hhat has ne'er &een clear is whether the lia&ilit! o a tenant>s contractual guarantor (t!picall! its parent compan!) can &e e:tended to include the period during which the assignor is &ound &! an *P*. Decision The Aigh Court held that, Onl! a ormer tenant can gi'e an *P*. * contractual guarantor or the assignor cannot gi'e a direct guarantee or the assignee. The 1""% *ct ma! not allow a contractual guarantor to stand &ehind the assignor>s *P*. The most common orm o dra ting onl! re<uires the contractual guarantor to guarantee the assignor>s *P*, not to guarantee the assignee directl!. The =udge did not ha'e to decide this point &ut his comments do indicate the 'iew which another court might take when aced with the <uestion. K*S +ictoria Street '. )ouse o# ,raser -Stores Mana(e ent. Ltd ?2011@ /HC* Ci' "03 F The Court o *ppeal ha'e appro'ed the contro'ersial decision in Pood Aar'est .artnership LL. '. Centaur 5er'ices Ltd ?2010@ Ch 32# and also gi'en important urther guidance in respect o the circumstances in which the Landlord and Tenant (Co'enants) *ct 1""% permits an assignor tenant>s guarantor to accept lia&ilities in respect o a su&se<uent assignee tenant. The Court has held that a guarantor who has gi'en a guarantee in respect o the lia&ilities o a tenant cannot &e contractuall! o&liged or re<uired to gi'e a guarantee in respect o that tenant>s immediate assignee.The Court also held that it was irrele'ant that the guarantor might &e willing to gi'e such a guarantee. Ais moti'es, and the circumstances in which the guarantee was gi'en, are neither here nor there, as the *ct looks at the e ect o an agreement, not the reasons &ehind it. Aowe'er, the Court has also decided that the *ct does not in'alidate an agreement which re<uires the guarantor to stand as su&Fguarantor to an! *uthorised Puarantee *greement which the assignor tenant might gi'e in respect o his immediate assignee. Moreo'er, there is nothing to pre'ent the guarantor o the assignor rom guaranteeing later assignees. +n other words, the guarantor to 7T19 cannot gi'e a guarantee to 7T29, &ut can stand as guarantor to 7T-9.

2. (i)

STAT8TOR9 TRANS4ISSION O3 BENE3IT AND B8RDEN O3 COVENANTS The general rule is set out in section -(1),

The &ene it and &urden o all landlord and tenant co'enants o a tenanc!FF (a) shall &e anne:ed and incident to the whole, and to each and e'er! part, o the premises demised &! the tenanc! and o the re'ersion in them, and (&) shall in accordance with this section pass on an assignment o the whole or an! part o those premises or o the re'ersion in them.

(ii)

/:ceptions to the general rule, (a) Co'enants Ce:pressed to &e personalC do not run. 5ection -(#)(a) e:cludes rom the am&it o section -,

... a co'enant which (in whate'er terms) is e:pressed to &e personal to an! person...

The e ect o this pro'ision is to impose on dra ters o co'enants a dut! to identi ! those co'enants not intended to run. .ersonal co'enants remain en orcea&le against the original co'enantee e'en a ter assignment andIor release (later) B)P Petroleu Ltd '. Chester#ield Properties ?2001@ /HC* Ci' 12"2 F L1 cannot appl! to &e released rom co'enants which were e:pressed to &e personal to him, such co'enants do not constitute ;landlord co'enants> or the purpose o the 1""% *ct. To this e:tent, it remains possi&le or landlord and tenant to place a contractual limit on the transmissi&ilit! o &urdens under a tenanc!. c . /dlin(ton Properties Ltd ' 0) ,enner ! Co Ltd ?200#@ /HC* Ci' 30- (e<uita&le right o setF o against L1 does not run) The case concerned a actor! in Hales, constructed on the site o a ormer collier!. The Helsh De'elopment *genc! (HD*) (L1) came into possession o the site a ter closure o the collier!, and in 1""# entered into an agreement or lease with JA 8enner G Co Ltd (T). Onder the agreement, HD* was o&liged to construct the actor!, and practical completion triggered the grant o a long lease to 8enner. E! 200-, the re'ersion to the lease had &een ac<uired &! /dlington .roperties Ltd (L2). 8enner claims that the construction was seriousl! de ecti'e, and its damages claim against L1, or some R%2m, is to &e heard later this !ear. +n the meantime, rent is running at some R%40,000 per !ear, and 8enner has withheld rent rom L2, claiming to &e a&le to e:ercise an e<uita&le setF o in respect o the damages claim. 5etFo F the permutations The =udge at irst instance identi ied three possi&le sets o circumstances, and it is use ul to &e clear a&out the di erences &etween them, 1) L1 constructs &uilding and grants lease. T claims damages or de ecti'e construction, and sets o that claim against the rent. 2) *s in case one, &ut L1 then disposes o its re'ersion to L2, with some rent still owing rom T. L2 claims rom T the rent arrears or the period &e ore it ac<uired the re'ersion, and T sets o the damages claim against the arrears. -) *s in case two, &ut L2 also claims rom T rent alling due a ter it ac<uired the re'ersion, and T sets o the damages claim against that rent.

Case one, no assignment o re'ersion +t is well esta&lished that a claim or setFo is a'aila&le in case one, see Eritish *nSani ' +nternational Marine Management. Case two, preFassignment rent 5etFo is also a'aila&le in case two, see Muscat ' 5mith. The Court o *ppeal in Muscat considered it un air that L2 should &e a&le to sue or arrears dating &ack to the time o L1, without &eing lia&le or the &reaches o co'enant committed &! L1. Aowe'er, there was no authorit! or a principle that setFo could &e a'aila&le where the de endant had a claim against someone other than the claimant. +n order to make it a'aila&le, the Court held that the trans er to L2 o the right to sue or the arrears (which occurred automaticall! under s131 o the Law o .ropert! *ct 1"2%) amounted to an assignment o a chose in action. The assignee o a chose in action cannot ac<uire a &etter right than the assignor had, and takes it su&=ect to all the e<uities a ecting it in the hands o the assignor, including the a'aila&ilit! o setFo . Case three, postFassignment rent +n case three, howe'er, the right to sue or arrears alling due a ter L2 ac<uired the re'ersion does not arise &! 'irtue o assignment o a chose in action, &ut &! 'irtue o assignment o an interest in propert!. 5ince an e<uita&le setFo is personal in nature, the propert! is not trans erred su&=ect to it. This was the decision in /dlington .roperties. (&) The *ct does not pre'ent the parties rom limiting their lia&ilit! under their co'enants, Avonrid(e Property Co Ltd '. Mashru ?200%@ ONAL 20 (c) *n! co'enant that re<uires registration under L0* 2002 (e.g., an option to renew or to purchase the re'ersion) will &e en orcea&le onl! i either it is registered or it has o'erriding status, section -(#)(&). (iii) Transmission o co'enants on assignment, Assi(n ent "y the tenant (section -(2)), T2 &ound &! tenant co'enants and entitled to &ene it o landlord co'enants, e:cept or, F the &urden o an! co'enant that did not &urden the assignor immediatel! &e ore the assignment (s.-(2)(a)(i))K F the &urden or &ene it o an! co'enant that relates to premises not assigned to him (s.-(2)(a)(ii), (2)(&)) Assi(n ent "y landlord (section -(-)), L2 &ound &! landlord co'enants and entitled to &ene it o tenant co'enants, e:cept or, F the &urden o an! co'enant that did not &urden the assignor immediatel! &e ore the assignment (s.-(-)(a)(i))K F the &urden or &ene it o an! co'enant that relates to premises not assigned to him (s.-(-)(a)(iii), (2)(&)). (i') The &ene it o an! "i(-t o! "e+ent"& and o an! s$"et& co enant entered into &! a guarantor also pass to L2. LT(C)* 1""%, s.2-(-), in the a&sence o wai'er or release, the right to e:ercise the right o reFentr! applies to &reaches o co'enant that occur either "e#ore or a#ter the date o the assignment.

:.

T1 ON ASSIGN4ENT TO T2

(i) Consent to assi(n'ent: Consent to assignment must not &e unreasona&l! withheld. Ee ore statutor! inter'ention, landlords could a&use the power to re use consent to a proposed assignment. Desi(n Pro(ression Ltd '. Thurloe Properties Ltd ?2003@ /HAC -23 (Ch) per .eter 5mith J, BThe <uali ied co'enant against assigning is a power ul weapon in the hands o unscrupulous landlords. The need to o&tain licence to assign rom a landlord has &een regularl! e:ploited &! unscrupulous landlords or their own de'ices. The a&ilit! to dela! a transaction and thus to cause it to go o was regularl! a&used &! landlords i the! desired to o&tain possession o premises or desired to e:tract collateral ad'antages or their own &ene it unrelated to the considerations that were properl! rele'ant to the granting o a licence to assign.B +n Ashworth ,ra1er Ltd ' Gloucester City Council ?2001@ ONAL %"1 the Aouse o Lords set out the ollowing o'erriding principles in determining whether or not a landlord had unreasona&l! withheld consent, 1. * landlord is not entitled to re use his consent to an assignment on grounds which ha'e nothing whate'er to do with the relationship o landlord and tenant in regard to the su&=ect matter o the lease. 2. +t is not necessar! or the landlord to pro'e that the conclusions which led him to re use to consent were =usti ied, i the! were conclusions which might &e reached &! a reasona&le man in the circumstances. -. +n each case it is a <uestion o act, depending on all the circumstances, whether the landlordCs consent to an assignment has &een unreasona&l! withheld. (ii) T1 "e,ease) on assi(n'ent: LT(C)A 16670 s.7(2) On assignment, F T1 is released rom tenant co'enants (section %(2)(a)) Avonrid(e Property Co Ltd '. Mashru ?200%@ ONAL 20 EOT &! section 23(1), release o T1 Cdoes not a ect an! lia&ilit! o his arising rom a &reach o the co'enant occurring &e ore the release.C F T1 ceases to &e entitled to &ene it o landlord co'enants (section %(2)(&)). EOT &! section 23(3), T1 retains an! rights he had in respect o &reaches o co'enant occurring &e ore assignment. (5ection %(-) in cases o assignment o part o the demised premises) (iii) T1's ($a"anto" "e,ease): LT(C)A 16670 s.2;(2) P is released to the same e:tent as T1. Good )arvest Partnership LLP '. Centaur Services Ltd ?2010@ /HAC --0 (Ch) K*S +ictoria Street '. )ouse o# ,raser -Stores Mana(e ent. Ltd ?2011@ /HC* Ci' "03

(i )

E<CE=TIONS: (i) *ssignment in &reach o co'enant , section 11(1)F(2) Keydon /states Ltd '. 'estern Power Distri"ution -South 'ales. Ltd ?2003@ /HAC ""# (Ch) $ T leased to H.D or 2% !ears $ called it a su&lease with N>s consent, &ut it was or the whole rest o the term. T then assigned to N. F1ot an assignment ;in &reach o co'enant> (s.11(1)F(2)) F1ot an assignment ;&! operation o law> (so s.11 limited to death, &ankruptc!, etc) FA insol'entK H.D released &! operation o s.%(2) (ii) (iii) *ssignment &! operation o law, section 11(1)F(2) T1 enters into an Cauthorised guarantee agreementC (*P*), section 1#

AGAs: + the lease contains a co'enant against assignment (a&solute or <uali ied) L1 ma! re<uire T1 to enter into an *P*, which guarantees the due per ormance &! T2 o the co'enants o the lease. The imposition o the *P* must &e Creasona&leC. 'allis ,ashion Group Ltd '. CG2 Li#e Assurance (2000) 41 .GC0 24 F The Claimant applied or a new lease pursuant to .art ++ o the Landlord and Tenant *ct 1"%3. The onl! issue &etween the parties concerned the alienation pro'isions to &e contained in the new tenanc! and, in particular, whether those terms should gi'e the landlord an automatic right to re<uire an *uthorised Puarantee *greement upon assignment (no). F *n *P* is en orcea&le O1LU against the direct assignee (T2), section 1#(3). Aowe'er, on a urther assignment (T2 to T-), T2 can &e re<uired to enter into an *P* to guarantee T-Cs per ormance o the leasehold co'enants * guarantor cannot &e a part! to an *P*, Good )arvest Partnership LLP '. Centaur Services Ltd ?2010@ /HAC --0 (Ch)

F *n *P* does not e:tend to 'ariations o the lease occurring a ter assignment (&ut does e:tend to changes resulting rom the co'enants o the lease itsel , eg, rent re'iew clauses) F T1Cs e:posure to an! C i:ed chargeC lia&ilit! o T2 is limited to lia&ilit! incurred during the si: months immediatel! preceding ser'ice on T2 o a statutor! notice, section 12(1)(a), (2), (3). 1E C i:ed chargeC includes rent, s.12(#). Scottish ! 3ewcastle plc ' %a(u1 ?2004@ ONAL #% F +n respect o unli<uidated lia&ilities (eg an e:press or implied repairing co'enant, where the <uantum pa!a&le is not ascertained in the lease), T1Cs potential lia&ilit! is not <uali ied &! the si:Fmonth restriction that applies to C i:ed chargeC lia&ilities. Moule '. Garret (1422) L0 2 /: 101 (right to indemnit!) F *n! ormer tenant who is compelled, pursuant to an *P*, to meet the lia&ilit! o another tenant, ma! &e a&le to call or the grant to himsel o an Co'erriding leaseC, section 1"(1).

;. (i)

L1 ON ASSIGN4ENT TO L2 L1 not a$to'atica,,& "e,ease) on assi(n'ent

L1 is not automaticall! released on assignment, &ut heIshe ma! appl! to T1 or a release under section #(2), &e ore or within 3 weeks o an assignment. Ae will &e released (section 4(2)) i , F T1 ails to ser'e on L1 a written notice o o&=ection within 3 weeksK or F T1 o&=ects &ut court issues declaration that L1>s release is ;reasona&le>K or F T1 consents &! written notice. 1E, The parties ma! a'oid these pro'isions &! contrar! e:press term, Avonrid(e Property Co Ltd '. Mashru ?200%@ ONAL 20 (cp. Avon"rid(e Property Co Ltd ' Mashru and Others ?2003@ /HC* Ci' 1-0#) (ii) On "e,ease0 L1 ceases to .e entit,e) to t-e .ene!it o! t-e tenant co enants 5ection #(2)(&) (iii) No "e,ease !"o' co enants e>*"esse) to .e *e"sona, to L1 5ection -(#)(a) B)P Petroleu GB Ltd '. Chester#ield Properties Ltd ?2001@ /HC* Ci' 12"2 (i ) No "e,ease !"o' ,ia.i,it& !o" ."eac-es t-at occ$""e) .e!o"e t-e "e,ease LGT(C)* 1""%, s.23(1)

7. (i)

L1?L2 AS AGAINST S Gene"a, *"inci*,e t-at co enants $nen!o"cea.,e @ the su&tenant is not pri'! to the estate o the original head lease. +n principle, there ore, e'en those co'enants o the head lease which touch and concern the land are unen orcea&le &etween the head landlord and the holders o in erior estates. 1either L1 nor L2 ma! reco'er a mone! remed! directl! rom 5t, The appropriate remed! lies in an action against the person who does currentl! stand in a relationship o pri'it! to the estate o head lease. Moreo'er, or eiture o the head lease has the automatic e ect o destro!ing an! su&lease. +t is possi&le that s24(1) L.* ena&les a su&tenant o a preF1""# head lease to claim at least the &ene it o co'enants contained in that lease.

(ii)

Cont"acts (Ri(-ts o! T-i") =a"ties) Act 16660 s.1 Contracts ma! &e en orced &! third parties, (i) where the contract itsel e:pressl! so pro'idesK or (ii) where the term purports to con er a &ene it on the third part! unless it appears on a proper construction o the contract that the contracting parties did not intend him to ha'e the right to en orce it.

(iii)

H$'an Ri(-ts Act 1661

+t is possi&le to argue that the traditional doctrine o pri'it! o estate, &! limiting the range o en orcement within the leasehold ramework, constitutes an in ringement o the head landlord>s right to ;peace ul en=o!ment o his possessions> art 1.

10

P' ! Co '. Milton Gate $nvest ents Ltd ?2003@ Ch 132 $ a 2% !ear lease o an o ice &uilding ga'e T1 the right to terminate the lease a ter 12 !ears on ser'ice o a &reak notice. Consonantl! with common law principle, 1eu&erger J held that T1>s su&se<uent e:ercise o the &reak clause immediatel! terminated a num&er o long term su&leases which T1 had created in a'our o 5T1, there&! triggering a clause in the head lease which o&liged T1 to pa! L1 a penalt! o some R%m. Aeld that it was impossi&le or L1 and T1 to contract out o the general rule that termination o a head lease also terminates all deri'ati'e leases. Ae indicated, howe'er, that i the su&leases had sur'i'ed the termination o the head lease, L2 and 5T1 would ha'e &een lia&le to each other on the co'enants o those su&leases. *n! other approach, it was concluded, would ha'e le t the land encum&ered or man! !ears &! a su&tenant rom whom no rent was legall! reco'era&le $ against art1. (i ) Non+'oneta"& "e'e)ies

Certain remedies can &e pursued against underFtenants outside the am&it o pri'it! o estate in relation to the head lease. 1. 0estricti'e co'enants

The head landlord ma! &e a&le to o&tain an in=unction restraining holders o in erior estates rom &reach o an! restricti'e co'enant contained in the head lease, e'en though these persons are not pri'! to the head lease. +t is a deri'ati'e principle o Tulk '. Mo4hay (1434) 2 .h 223, where Lord Cottenham LC e ecti'el! con'erted restricti'e co'enants into a species o proprietar! interest en orcea&le against all e:cept a purchaser o a legal estate or 'alue without notice. The! are protected &! L0* 2002. +n relation to unregistered land the doctrine ensures that restricti'e co'enants contained in a head lease are en orcea&le &! in=unction ()all '. /win (1444) -2 Ch D 23) against an! occupier who takes possession o the demised premises with notice o the co'enants. LGT(C)* 1""%, s.-(%) LGT(C)* 1""%, s.--(c) (incapa&le o protection &! entr! o notice) LGT(C)* 1""%, s.2"(1), (2)(&) (automaticall! &inding on trans eree or underlessee) 2. 8or eiture $ an underFtenant is also 'ulnera&le to the head lessor>s e:ercise o an! right o reFentr! which was e:pressl! reser'ed in the head lease. Shiloh Spinners '. )ardin( ?1"2-@ *C #"1

C 1. (i)

RE4EDIES RE4EDIES AVAILABLE TO L 3OR3EIT8RE

8or eiture (the right to reFenter the demised premises and or eit the lease) is the most draconian o the remedies a'aila&le to L and its a'aila&ilit! and e:ercise are care ull! circumscri&ed &! the law. 1otwithstanding the e:plicit terms o most or eiture clauses, &reach &! the tenant does not automaticall! terminate. The landlord must elect whether to wai'e or en orce. The onl! wa! to terminate is &! reFentering (Billson.5

11

(a) F F F 1E (.)

A-en is !o"!eit$"e a ai,a.,eB Disclaimer o title &! the tenant, Clarke '. Dupre Ltd ?1""2@ Ch 2"2 Hhere a co'enant &reached &! T is e:pressed to &e a CconditionC on which the tenanc! depends, Doe d Lockwood '. Clarke (1402) 4 /ast 14% Hhere a le(a, lease contains an e>*"ess pro'iso or reFentr!. * right o reFentr! is normall! i plied in an e#$ita.,e lease. T-e "i(-t o! "e+ent"&

/:ercise o the right o reFentr! means retaking possession o the land &! ph!sical entr! or, in some conte:ts, ser'ice o possession proceedings. Billson '. %esidential Apart ents Ltd ?1""2@ 1 *C 3"3 $ ph!sical reFentr! is regarded as a du&ious and dangerous method o determining a lease. The landlord sought to or eit against tenants who were in &reach o a repairing co'enant. Ae orci&l! entered the premises earl! one morning, changed the locks and le t a notice to the tenants. AL disappro'ed &! accepted it was still e ecti'e. Aowe'er, the court does ha'e discretion to grant relie to the tenant e'en a ter the landlord has succeeded in reFentering the premises. Shiloh Spinners Ltd '. )ardin( ?1"2-@ *C #"1 $ this reFentr! is en orcea&le against the entire world $ e'en against persons who are not in strict terms &ound &! the co'enants to which the right o reFentr! relates. L.* 1"2%, s.1(2)(e) $ i a right o reFentr! is e:ercisa&le ;o'er or in respect o a legal term o !ears a&solute>, the right o reFentr! is itsel a legal right. 51(-) $ i e<uita&le term o !ears, e<uita&le onl! and &inding on onl! some third parties. 1E 5ection 2-(-), in the a&sence o wai'er or release, the right to e:ercise the right o reFentr! applies to &reaches o co'enant that occur either "e#ore or a#ter the date o the assignment. (c) Rest"ictions on e>e"cise o! "i(-t o! "e+ent"& (i) Aai e"

L will not &e permitted to or eit the lease i he has e:pressl! or impliedl! wai'ed TCs &reach o co'enant (other remedies will still &e a'aila&le). Matthews '. S allwood ?1"10@ 1 Ch 222 per .arker J, BHai'er o a right o reFentr! can onl! occur where the lessor, with knowledge o the acts upon which his right to reFentr! arises, does some une<ui'ocal act recognising the continued e:istence o the lease.B The election need not &e made immediatel! ( Owendale Pty Ltd) &ut once made it cannot &e retracted $ Billson. Hai'erma! either &e e:press or implied Central /states -Bel(ravia. Ltd $ to &e considered o&=ecti'el! Ka ins Ballroo s Ltd '. 6enith $nvest ents ?1"21@ *C 4%0 (AL) Se(al Securities Ltd '. Those"y ?1"#-@ 1 DE 442 (continued acceptance o rent) David Blackstone Ltd '. Burnetts -'est /nd. Ltd ?1"2-@ 1 HL0 1342 (rent demand) Greenwood %eversions Ltd '. 'orld /nviron ent ,oundation Ltd ?2004@ /HC* Ci' 32 (e<ui'ocal letters) /4pert Clothin( Ltd '. )ill(ate )ouse ?1"4#@ Ch -30 (acts other than receipt o rent) Cornillie v5 Saha -7889. 24 AL0 %#1 (intention to wai'e not re<uired) F a tenant had su&Flet parts o a lat in &reach o co'enant. The landlord, knowing o the &reaches,

12

&rought proceedings to re<uire the tenant to allow the landlord to ha'e access to the propert!. +t then ser'ed the e<ui'alent o a notice under section %4 o the Con'e!ancing and .ropert! Ordinance and &rought or eiture proceedings. The /nglish Court o *ppeal decided that the &ringing o the earlier proceedings (seeking access or inspection) amounted to a wai'er o the &reaches o co'enant not to su&Flet. * landlord wai'es a &reach o co'enant, and cannot or eit a lease &ecause o it, when (i) he knows o the &reach, and (ii) with that knowledge he does some act that une<ui'ocall! recognises the continued e:istence o the lease, and (iii) that recognition is communicated to the tenant. (ii) Resi)entia, ,eases .rotection rom /'iction *ct 1"22, s.1(2), (-), 2 , 5ection 2, Hhere an! premises are let as a dwelling on a lease which is su&=ect to a right o reFentr! or or eiture it shall not &e law ul to en orce that right otherwise than &! proceedings in the court while an! person is law ull! residing in the premises or part o them.

Aousing *ct 1"44, ss.22F24 (damages reco'era&le &! T in case o wrong ul e'iction or harassment.) )arrow LBC '. :a1i ?200-@ ONAL 3;Manchester City Council '. Pinnock ?2010@ ON5C 3% (/CA0) $ since this case the courts need to consider proportionalit! under art4 &e ore granting possession orders against indi'iduals the re<uest o pu&lic authorities. (iii) Co''e"cia, ,eases Criminal Law *ct 1"22, s.# (o ence to use or threaten 'iolence) ;Billson '. %esidential Apart ents Ltd ?1""2@ 1 *C 3"3 (ph!sical reFentr! Bdu&ious and dangerousB)

())

="e,i'ina"ies to !o"!eit$"e (i) 3o"'a, )e'an)s !o" "ent Common Law .rocedure *ct 14%2, s.210 (ii) S*ecia, "$,es !o" "esi)entia, te"'s in e>cess o! 21 &ea"s Commonhold and Leasehold 0e orm *ct 2002, ss.2#F22, 1## (ser'ice o notice speci !ing a date or pa!ment within -0F#0 da!s) C*L0* 2002, s.1#2(1)F(2) (no reFentr! or or eiture unless the unpaid amounts o rent or ser'ice or administration charges e:ceed a prescri&ed sum or ha'e &een due or more than a prescri&ed period).

(e)

Section 1;C notices

Ereach o co'enants other than the co'enant to pa! rent L.* 1"2%, s.13#(1),

13

* right o reFentr! or or eiture under an! pro'iso or stipulation in a lease or a &reach o an! co'enant or condition in the lease shall not &e en orcea&le, &! action or otherwise, unless and until the lessor ser'es on the lessee a noticeFF (a) speci !ing the particular &reach complained o K and (&) i the &reach is capa&le o remed!, re<uiring the lessee to remed! the &reachK and (c) in an! caseK re<uiring the lessee to make compensation in mone! or the &reachK and the lessee ails, within a reasona&le time therea ter, to remed! the &reach, i it is capa&le o remed!, and to make reasona&le compensation in mone!, to the satis action o the lessor, or the &reach.

/:pert Clothing Ltd '. Aillgate Aouse ?1"4#@ Ch -30 (Bone last chanceB) F One o the reasons or ser'ing a section 13# notice is, ... to gi'e e'en tenants who ha'e hitherto lacked the will or the means to compl! with their o&ligations one last chance... &e ore the landlord reFenters... Leasehold .ropert! (0epairs) *ct 1"-4, ss. 1(-), 2(1), additional protection in cases o &reach o TCs repairing co'enant in leases or a term o se'en !ears or more, with at least three !ears still une:pired. C*L0* 2002, s.1#4, additional protection in cases o long residential leases B"eac-es ca*a.,e o! "e'e)&: a &reach is Ccapa&le o remed!C i L can &e restored within a reasona&le time to the position he would ha'e &een in i no &reach had occurred. -i. Positive covenants< /4pert Clothin( Ltd '. )ill(ate )ouse ?1"4#@ Ch -30 (normall! capa&le o remed!) -ii. 3e(ative covenants< F * Conce and or allC &reach is not capa&le o remed!, Scala )ouse and District Property Co Ltd '. ,or"es ?1"23@ DE %2% (C*) F an unlaw ul su&Fletting in &reach o this co'enant was incapa&le o remed! (and so the landlord>s notice under the /nglish e<ui'alent o C.O, s.%4 need not gi'e a reasona&le time or the &reach to &e remedied). The reason ad'anced &! the Court o *ppeal was that the su&Flease had &een created and that act could not &e altered e'en i the su&Flease were surrendered. The tenant did in act take steps to put things right and the Court o *ppeal granted relie rom or eiture. Savva and Savva '. )ussein (1""2) 2- .GC0 1%0 (C*) F held that a &reach o co'enant carr!ing out alterations without consent was remedia&le &! restoring the propert! to its original position and pa!ing appropriate compensation to the lessor. F Ereaches Co a continuing natureC ma! &e remedia&le i the &reach can &e stopped and an! harm su ered &! L e ecti'el! remedied. /4pert Clothin( Ltd '. )ill(ate )ouse ?1"4#@ Ch -30 per OCConnor LJ, BTo stop what is or&idden &! a negati'e co'enant ma! or ma! not remed! the &reach e'en i accompanied &! compensation in mone!. Thus to remo'e the window &o:es and pa! or the repair o an! damage done will remed! the &reach, &ut to stop using the house as a &rothel will not, &ecause the taint lingers on and will not dissipate within a reasona&le time.B

14

+an )aarla v5 Kasner -788=) #3 .GC0 213 (use o lat or espionage) F the landlord ser'ed notice under s13# L.* 1"2% &! putting it through the letter &o: o the tenant>s lat, despite knowing ull well that the tenant had &een committed to prison or ten !ears. Aarman J commented, Mr Nasner>s ser'ice was attacked on the ground that it was not a proper or reasona&le thing to do when it was well known at that date that Mr Man Aaarlem was locked up in prisonL it ma! not &e 'er! attracti'e &ut it is per ectl! law ul according to the letter o the law. %u("y School -Governors. '. Tannahill ?1"-3@ 1 NE #"% (&rothel) Master and ,ellows o# 0esus Colle(e> Ca "rid(e '. Strauss ?1"%1@ 1%2 /P 3"4 (!) Re,ie! a(ainst !o"!eit$"e

1E That relie ma! &e a'aila&le e'en in cases where the &reach is Cirremedia&leC F the court weighs the harm caused to L &! the &reach against the ad'antage he will gain &! reco'er! o the land. +an )aarla '. Kasner (1""2) #3 .GC0 213 $ held it was disproportionate to add the dou&le penalt! o or eiture o a lat where the tenant>s illegal user o the lat or purposes o espionage had alread! caused him to &e imprisoned. Scala )ouse and District Property Co Ltd '. ,or"es ?1"23@ DE %2% (C*) (1) (i) Non+*a&'ent o! "ent 5tatutor! ri(ht to relie , Common Law .rocedure *ct 14%2, s.212 , .ossession proceedings sta!ed i T pa!s arrears J LCs costs &e ore date o =udgment. Must &e at least # months in arrears. Count! Courts *ct 1"43, s.1-4(2) (ii) Discretionary relie e'en a ter repossession or reFentr! Common Law .rocedure *ct 14%2, s.210, + T pa!s rent due J LCs costs within si: months o e:ecution o =udgment. Count! Courts *ct 1"43, ss.1-4(-)F(%), ("*), 1-"(2) (iii) (2) /<uita&le =urisdiction to grant relie where T has paid all arrears J costs B"eac- ot-e" t-an non+*a&'ent o! "ent

L.* 1"2%, s.13#(2), Hhere a lessor is proceeding, &! action or otherwise, to en orce such a right o reF entr! or or eiture, the lessee ma!... appl! to the court or relie K and the court ma! grant or re use relie , as the court, ha'ing regard to the proceedings and conduct o the parties under the oregoing pro'isions o this section, and to all the other circumstances, thinks itK and in case o relie ma! grant it on such terms, i an!, as to costs, e:penses, damages, compensation, penalt!, or otherwise, including the granting o an in=unction to restrain an! like &reach in the uture, as the court, in the circumstances o each case, thinks it.

15

0elie ceases to &e a'aila&le where L has reFentered on a court order, &ut continues to &e a'aila&le i L has e ected a peacea&le reFentr! without o&taining and en orcing a =udgment. Billson '. %esidential Apart ents Ltd ?1""2@ 1 *C 3"3 To allow access to section 13#(2) to &e oreclosed &! actual reFentr! would ha'e &een Ban incitement to all landlords to reFenter orci&l! whene'er the! can do so.B (() E!!ect o! !o"!eit$"e (i) T &ecomes a trespasser Billson '. %esidential Apart ents Ltd ?1""2@ 1 *C 3"3 (ii) 5u&tenants Great 'estern %ailway Co '. S ith (142#) 2 Ch D 2-% $ automaticall! destro!s an! su&lease created out o the head lease. P' ! Co '. Milton Gate $nvest ents Ltd ?2003@ Ch 132 $ this is a common law principle which lows logicall! rom the deri'ati'e nature o the su&lease. L.* 1"2%, s.13#(3) independent right to appl! or relie . CC* 1"43, s.1-4("*) + relie is granted, 5 &ecomes an immediate tenant o L, or the period o the su&lease. (iii) / ect on mortgagee F independent right to seek relie against or eiture L.* 1"2%, s.13#(3) CC* 1"43, ss.1-4("C), 1-"(2)F(-), 130 F no direct access to relie or e<uita&le mortgagees (i') (() / ect on s<uatter Tickner '. Bu11acott ?1"#%@ Ch 32# (no access to relie )

3o"!eit$"e @ "e!o"' *"o*osa,s Law Com 1o 132 (1"4%) Law Com 1o -0- (200#)

2.

DISTRESS VTri&unals, Courts and /n orcement *ct 2002, ss.21, 2% (not !et in orce) $ implements LC>s recommendations as ar as residential tenancies are concerned $ a&olishes distress. 0etains a modi ied orm as a remed! in the commercial sense. Distraint is an ancient remed! that in'ol'es direct action &! wa! o sel Fhelp. L enters the demised premises and takes possession o TCs goods to the 'alue o the unpaid rent. L must gi'e T a notice stating the cause or the distress and stipulating the place o sale.

16

0estrictions, F distress ma! &e le'ied onl! or arrears o rent F distress and or eiture are mutuall! e:clusi'e F not: tools o tradeK clothes and &eddingK perisha&lesK TCs i:turesK things in actual useK goods o 5 F not &etween sunset and sunriseK not on 5unda!K initial entr! must &e peacea&le and with TCs consent Law Commission, Landlord and Tenant< Distress #or %ent (Law Com 1o 1"3, 1""1) Halton ?2000@ #3 Con' %04 Lord ChancellorCs Dept, /n#orce ent %eview Consultation Paper 3o ?< Distress #or %ent (2001) Law Com 1o 244 (2003) /CA0, *rts #, 4, .rotocol 1o 1, *rt. 1 ,uller '. )appy Shopper Markets Ltd ?2001@ 2 /PL0 -2 per Lightman J, BThe ancient (and perhaps anachronistic) sel Fhelp remed! o distress in'ol'es a serious inter erence with the right o the tenant, under *rticle 4 o the /CA0, to respect or his pri'ac! and home, and, under *rticle 1 o the 8irst .rotocol, to the peace ul en=o!ment o his possessions. The human rights implications o le'!ing distress must &e in the ore ront o the mind o the landlord &e ore he take this step, and he must ull! satis ! himsel that taking this action is in accordance with the law.B :. DA4AGES 3OR BREACH O3 COVENANT *ssessment o damages is on the usual contractual &asis (ie, to put L in the position in which he would ha'e &een had the &reach not occurred). Damages or &reach o TCs co'enant to repair cannot e:ceed the amount &! which the 'alue o the re'ersion has &een diminished as a result o the &reach, Landlord and Tenant *ct 1"22, s.14(1). ;. ACTION 3OR ARREARS O3 RENT Limitation *ct 1"40, s.1" (si: !earsC arrears), 1o action shall &e &rought, or distress made, to reco'er arrears o rent, or damages in respect o arrears o rent, a ter the e:piration o si: !ears rom the date on which the arrears &ecame due. 7. IND8NCTION AND S=ECI3IC =ER3OR4ANCE %ain"ow /states Ltd '. Tokenhold Ltd ?1""4@ 2 *ll /0 4#0 (speci ic per ormance a'aila&le in principle, pro'ided T not su&=ect to in=ustice or oppression) F There is no current common law &ar pre'enting en orcement o a LandlordCs repair co'enant &! speci ic per ormance and this must &e mirrored or the tenantCs o&ligations also. C. RE3OR4 Naras and Maurici ?1"""@ 12 /P 12# ELaw Co''ission0 Te"'ination o! Tenancies !o" Tenant De!a$,t ( Law Com 1o. -0-, 200#) Landlord and Tenant (Termination o Tenancies) Eill F The Law Commission inal report on BTermination o Tenancies or Tenant De aultB (Law Com 1o.-0-) recommended the a&olition o the law o or eiture and its replacement &! a new, simpler, airer and more

17

coherent statutor! scheme. This is set out in a dra t BLandlord and Tenant (Termination o Tenancies) EillB The new scheme will appl! to all cases or termination or &reach o co'enant or condition sa'e where the tenanc! is su&=ect to some other statutor! regime. Thus, it will principall! &e rele'ant to commercial premises and residential long leases. (0e orm o residential tenancies has &een recommended &! the Law Commission report on B0enting AomesB F Law Com 1o2"2). Ereach o a co'enant or condition is descri&ed as Btenant de aultB. + this arises the landlord will &e a&le to appl! or termination &e ore the end o the term. There will &e no need or a or eiture clause. Aowe'er, the parties will &e a&le to agree that particular &reaches will not comprise tenant de ault and so e:clude or limit the right to terminate. There will &e no concept o wai'er. The landlord will &e a&le to continue to accept rent a ter tenant de ault. * landlord wishing to terminate will need to ser'e a Btenant de ault noticeB. This will set out the terms o the &reach, an! remedial action re<uired and the date &! which it should &e completed. The notice will also need to &e ser'ed on mortgagees and su&Ftenants known to the landlord. +t will not &e possi&le to act on the notice until at least 2 da!s or until the date or remed! set out in the notice e:pires. The scheme encourages negotiation and the primar! purpose o the notice is to ensure that the tenant complies with the terms o the lease. Aowe'er, i the tenant does not remed! the &reach in the time pro'ided the landlord ma! make a Btermination claimB. This will also need to &e ser'ed on tenants and mortgagees known to the landlord. The court will ha'e a'aila&le to it a num&er o remedies, a Btermination orderB, a Bremedial orderB, an Border or saleB, a Btrans er orderB, a Bnew tenanc! trans er orderB and a B=oint tenanc! ad=ustment orderB. The idea is that once satis ied that the tenant is in &reach the court should make such order that it thinks appropriate and proportionate in all the circumstances. * Btermination orderB o&'iousl! terminates the tenanc!, and all deri'ati'e interestsK and a Bremedial orderB re<uires the tenant to remed! the &reach. The latter sta!s the landlordCs ermination claim or a termination order or a period o three months rom the da! &! which the tenant is re<uired to ha'e carried out the work. During that period the landlord can appl! or the sta! to &e li ted and proceed with the termination claim. *n order or saleBis an order that the tenanc! &e sold and the proceeds distri&uted. This ma! &e appropriate where the tenanc! has a signi icant capital 'alue and a termination order would pro'ide a disproportionate wind all to the landlord. 5u&Ftenants and mortgagees will &e a&le to appl! or a Btrans er order or a Bnew tenanc! orderB. Hhere the tenanc! (or su&Ftenanc!) is held &! =oint tenants and not all wish to contest the landlordCs claim, the court will &e a&le to make a B=oint tenanc! ad=ustment orderB releasing the reluctant part rom the =oint tenanc!. .eacea&le reFentr! along with the rest o or eiture is a&olished &ut will &e replaced &! a Bsummar! termination procedureB, under which the landlord can &ring a tenanc! to an end without appl!ing to the court. +t will appl! where the tenant has no realistic prospect o resisting a termination claim. The landlord will need to ser'e a Bsummar! termination noticeB that will &ring the tenanc! to an end one month a ter ser'ice notice. +n that time the tenant (or su&Ftenant or mortgagee) will &e a&le to appl! to the court to discharge the notice. The &urden will &e on the landlord to show that the tenanc! should &e terminated. 8or si: months a ter summar! termination the tenant (or su&Ftenant or mortgagee) will &e a&le to appl! or a Bpost termination orderB. This will allow the court to grant a new tenanc! or order the

18

pa!ment o compensation &ut will not allow it to re'i'e the terminated tenanc!. +t will not &e possi&le to use the summar! termination procedure where (1) someone is law ull! residing in the premises, (2) the une:pired term e:ceeds 2% !ears or (-) the tenanc! was granted or more than se'en !ears and there are three or more !ears le t and the de ault is a &reach o a repairing co'enant. 5pecial pro'ision is made to preser'e the protections con erred on tenants o long leases &! the Commonhold and Leasehold 0e orm *ct 2002K and the protections con erred &! the Leasehold .ropert! (0epairs) *ct 1"-4 and the +nsol'enc! *cts. VEridge ?2002@ 1%2 1LJ %3

B.

RE4EDIES AVAILABLE TO T

The range o remedies a'aila&le to T includes, Damages or &reach o co'enant +n=unction or speci ic per ormance 5el Fhelp and setFo (repairs co'enanted or &ut not per ormed &! L) Lee@Parker '. $11et ?1"21@ 1 HL0 1#44 F * landlord was in &reach o his repairing o&ligations. The tenants spent mone! in carr!ing out repairs, and then claimed to &e a&le to deduct the cost o the repairs rom uture rent pa!ments. A/LD, The tenants were entitled to recoup their e:penditure rom uture rents.To use rent to pa! or repairs, or to o set the cost o repairs against arrears, the tenant must care ull! ollow the steps &elow (in order),1. Pi'e the landlord notice o the repair and a reasona&le time to remed! it, then2. +n orm the landlord (pre era&l! in writing) that the tenant will do the repair themsel'es unless the landlord complies with his o&ligations, then-. *llow a urther reasona&le period or the landlord to do the work, then3. O&tain three estimates or the cost o the work rom reputa&le &uilders, then%. Hrite to the landlord again, enclosing copies o the estimates and reminding him o his o&ligation to do the work, gi'ing a urther reasona&le period to carr! it out. The letter should warn that, otherwise, the tenant will do himsel and deduct the cost rom rent, then (i there is no response)#. *rrange or the contractor who ga'e the lowest estimate to do the work, and o&tain (and send to the landlord) receipts, with a re<uest or pa!mentK then2. + the landlord does not pa!, the tenant ma! deduct the cost rom the rent (&ut not other charges such as ser'ice charges) and then send the landlord a &reakdown o the amount and period o the rent to &e withheld *ppointment o recei'er *ppointment o manager (LGT* 1"42, s.21(2)K C*L0* 2002, ss.21F11-) 5ecure tenantCs Cright to repairC (Aousing *ct 1"4%, s."#(1)) /lecti'e termination or repudiator! &reach )ussein '. Mehl an ?1""2@ 2 /PL0 42 F he de endant landlord granted the plainti a three !ear assured shorthold tenanc!. Ae now appealed a inding that he was in &reach o an implied co'enant to maintain the space heating, and otherwise. The tenant had returned the ke!s. The court was asked whether the landlord &! his &reach had committed a repudiator! &reach o the lease. Aeld, 1ormal contractual principles can &e applied to leases, since a lease is onl! a contract which creates an interest in land. * lease could &e &rought to an end &! the tenantCs acceptance o a repudiator! &reach &! the landlord, Bthe de endantCs conduct, in the classic language, e'inced an intention not to &e &ound &! the implied co'enant to repair. The &reach, in m! =udgment, 'itiated the central purpose o the contract o letting. B LCs actions ma! also amount to the o ence o harassment, contrar! to the .rotection rom /'iction *ct 1"22, s.1(-)

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