Section: Security of Tenure

Abolition of the Law of Forfeiture

The Law Commission published the report and draft bill Termination of Tenancies for Tenant Default. The report recommends a new statutory scheme to replace the current law of forfeiture.

The law of forfeiture regulates a landlord's right to terminate a tenancy before the tenant's term has expired. It has been widely criticised as complicated, out-dated, and difficult to use. It affects landlords and tenants of both commercial and residential premises, together with others such as sub-tenants and mortgagees who have interests in the tenancy.

The Law Commission's scheme, set out in the draft bill, aims to provide outcomes that are proportionate and appropriate in the circumstances and balance the interests of all the parties concerned. It would apply to termination for breach of covenant, or condition in all cases save where the tenancy is subject to some other statutory regime.

Stuart Bridge, the Commissioner leading the project, said: "The case for reform of the law of forfeiture is overwhelming. The current law is excessively technical and unnecessarily complicated. It is difficult to those unfamiliar with the system to understand what is involved in a forfeiture and what they should do to protect their interests.

"We recommend the implementation of a simpler, more coherent statutory scheme. It would make the law easier to understand and more straightforward to use, and it would assist landlords and tenants to resolve their differences out of court."

Information Notes

The Law Commission is a non-political independent body, set up by Parliament in 1965 to keep all the law of England and Wales under review, and to recommend reform where it is needed.

The Law Commission published a consultation paper on Termination of Tenancies for Tenant Default in January 2004.

Case Law Update

The landlords brought a claim for possession for arrears of rent. The address given on the claim form for the defendant was 28 Brook Road. That was a mistake - the correct address was 26 Brook Road. Consequently, the claim was not served and the defendant had no knowledge of it.

At the subsequent trial, the defendant did not attend and judgement was given for possession and arrears. The defendant applied to set that aside as of right.

The Court of Appeal rejected the competing contentions that the order must be set aside as of right, or the defendant had to satisfy the strict requirements of CPR 39.3(5).

It held that the Court exercises discretion in such cases and the judgement sets out the factors to be considered in exercising it.

Nelson v Clearsprings (Management) Ltd [2006] EWCA 1252, 22 September 2006, CA

Section: Security of Tenure

Abolition of the Law of Forfeiture

Information Notes

Case Law Update

Legal Update

Reporting on Sept.-October 2006

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