In what circumstances may a landlord successfully take forfeiture proceedings against a tenant and what procedural requirements must he follow?
A landlord has a right of forfeiture in all leases containing a forfeiture clause. In practice, all fixed-term tenancies (of greater than a few weeks) will contain a forfeiture clause. Any act of the tenant which gives rise to a right of forfeiture makes the lease voidable, but not void.
The effect of an act of forfeiture is to determine the relationship of landlord and tenant under the original lease, but not necessarily to grant the landlord possession of the premises. The schemes of protection contained in Part II of the Landlord and Tenant Act 1954 and in the Rent Act 1977 exist outside the landlord’s common law right to forfeit the lease and, therefore, it will be necessary (before gaining possession) for the landlord to show a ground of possession under the relevant Act as well as executing a valid forfeiture. If the tenant is a protected tenant (under the Rent Act 1977) at the time of the forfeiture, he will automatically become a statutory tenant after forfeiture has taken place.
Because of the complexity of the law in this area it will be easier, in all cases, to terminate a periodic term. Therefore, if the landlord grants a periodic term, he will be able to terminate the contractual term with greater speed and with a saving in costs.
“Re-entry”
A landlord may “re-enter” upon the premises by either of two main methods: (1) he may physically re-enter the premises with the intention of terminating the term, or (2) he may commence forfeiture proceedings, in which case the service of the proceedings will terminate the term and will amount to actual re-entry: Canas Property Co Ltd v K L Television Services Ltd [0] 2 QB 433. The forfeiture does not become final until a court orders possession if the latter course is followed. The former course is no longer a valid method of determining a residential tenancy: section 2, Protection from Eviction Act 1977.
A landlord can forfeit the lease on breach of any of the covenants which the forfeiture clause expressly covers. In practice, the landlord will try for forfeiture only if there is a substantial breach which the tenant is unlikely or unable to make good, or where the tenant has a bad record for breaking his covenants (for example, by repeatedly being in arrears with his rent).
Dangers to the landlord
Since forfeiture must be an unequivocal act by the landlord (to the effect that he wishes to terminate the lease and to regain possession) it is essential for him not to do any act, after re-entry, which tends to suggest that he regards the tenancy as still being on foot. The landlord must not, after service of the proceedings, accept any rent from the tenant nor must he give any indication that he regards the relationship of landlord and tenant as still subsisting. In a case of disrepair, the landlord must not give any indication to the tenant that he regards some act of repair by the tenant as satisfying his obligation under the tenant’s covenant.
These rules of waiver could work a great hardship to a landlord waiting to regain possession, so the common law is mitigated in its effects by Order 29, rule 12, Rules of the Supreme Court, and Order 13, rule 12, County Court Rules. These rules provide for the making of interim payments of rent, pending the outcome of future proceedings, on the application of the landlord.
Types of breach
A “once-and-for-all” breach is one which occurs on the happening of an event; for example, the breaking of an absolute covenant against assignment. Continuing breaches are those (such as disrepair) which the tenant continues to be in breach of for so long as the property remains in that state. The nature of the obligation should be looked at to decide whether the breach is a continuing breach or a “once-and-for-all” breach. This distinction is important because if the breach is a “once-and-for-all” breach, then an act of waiver by the landlord will deprive him of any further right of action over the breach. If, however, the breach is of a continuing nature (for example, nonpayment of rent) then the landlord will have a right of action every time the tenant fails to obey the covenant.
Most breaches are capable of being relieved by the courts but, historically, some breaches are considered, by their nature, permanently to taint the property and, therefore, never to be relievable — for example, the keeping of an immoral house:
Rugby School v Tannahill [5] 1 KB 87. Procedure
At common law, to execute a valid forfeiture the landlord had to serve a formal notice on the tenant stating the amount owing and requiring payment. However, by section 210 of the Common Law Procedure Act 1852 (for the High Court) and section 138 of the County Courts Act 1984, where six months’ rent is owing (and no sufficient distress can be levied on the premises) the need for a formal notice is dispensed with.
In cases where the tenant is six months in arrears with his rent he will be able to get automatic relief against forfeiture if he pays all the rent owing (plus costs) before the trial: section 212, Common Law Procedure Act 1852. However, this restrictive requirement of six months’ rent owing before the tenant can get automatic relief is dispensed with in the case of county court proceedings. Section 138 of the County Courts Act 1984 allows the tenant automatic relief if he pays the rent owing (plus costs) at any time up to five days before the return day.
Relief against forfeiture after judgment
In the High Court the tenant has six months after judgment for possession has been executed against him to apply to the court for relief against forfeiture. The court will award relief on such terms as it thinks fit, but it may not do so after the six-month period has expired. When the tenant has paid all the rent and costs that are due from him (within the six-month period) the court will, in general, disregard all other causes of complaint that the landlord may have against the tenant. “The view that is taken by the court is that [the landlord] . . . has got all he is entitled to so far as rent is concerned and extraneous matters of breach of covenant are, generally speaking, irrelevant”: per Jenkins LJ in Gill v Lewis [6] 1 All ER 844 at p 852.
In the county courts the judge has power to order possession against the tenant not less than four weeks from the judgment: section 138, County Courts Act 1984. The judge may, therefore, give the tenant such period as he wishes before possession be granted to the landlord. Under section 100 of the Rent Act 1977, where (as here) the county court has a discretion to grant or to refuse possession of a dwelling-house, it also has the power to stay or postpone an order for possession indefinitely. If within this period the tenant pays the rent owing (plus costs) then he will be granted relief against forfeiture. If he does not do so, he is no longer barred from any relief, because the Administration of Justice Act 1985 changes the law to bring county court procedure into line with that of the High Court. Thus the tenant will have six months after possession has been given up to apply to the court for relief.
Covenants not involving rent
To forfeit the lease of a tenant who is in breach of a covenant other than one to pay rent, the landlord must first serve a notice under section 146 of the Law of Property Act 1925. The notice must state the breach of covenant complained of, stating whether it is capable of remedy, and (if so) requiring it to be remedied, and requiring the payment of compensation in any event. The form of the notice will vary according to the type of property and the nature of the breach. Further, the notice should state the nature of any works needed to comply with the covenant and that the remedy is required within a reasonable period of time. (Where the breach consists of disrepair, a schedule of dilapidations may be served with or without a statement of the remedial work required and with or without a claim for monetary compensation: Fox v Jolly [6] 1 AC 1.) Relief against forfeiture for breach of a covenant (other than the covenant to pay rent) may be given by the court on such terms as to expenses, costs, damages, compensation etc as it thinks fit.
In the case of repairing covenants, the landlord should also beware of the Leasehold Property (Repairs) Act 1938 (which applies to leases of seven years or more, where there are at least three years left to run). Section 1(1) of the Act provides that the landlord must serve the section 146 notice at least one month before commencing proceedings and must inform the tenant of his right to serve a counternotice. This counternotice will prevent the landlord from bringing proceedings without first applying for the leave of the court. When the lease has less than three years left to run, the need for leave automatically ceases.
Subtenancies
Subtenancies will automatically get carried away with the head lease on forfeiture. However, the subtenant has a right to apply to the court under section 146(4) of the Law of Property Act 1925 to have the remainder of the term vested in him, or to have a new lease granted to him provided that he shall not get a greater term than that which he originally had. The principle applied to the vesting in the subtenant is that the landlord is entitled, so far as possible, to be restored to his original position, but is not entitled to require from the subtenant more than the subtenant was liable for under his lease with the head tenant. In other words, the subtenant is not liable for the head tenant’s breaches of covenants if they do not relate to his own demise. Similarly, a breach of covenant which would have been irremediable (and unrelievable) if committed by the head tenant may (so far as he is concerned) be remediable and relievable if committed by his subtenant. In such circumstances, the head tenant will be able to remedy the breach (eg immoral user of the premises) by taking forfeiture proceedings against his subtenant within a reasonable time of discovering the subtenant’s misconduct: Glass v Kencakes Ltd [4] 3 All ER 807.
