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Leasehold Covenant: Remedies

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Leasehold Covenants: Remedies

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Remedies: non-payment of rent

  • usually implied covenant by T to pay rent to L / L sue for debt if breach of contractual promise to pay rent / action 6 yrs from arrears due Limitation Act 1980
  • L levy distress: seizing T's goods on demised premises & recovering debt by selling goods / human rights concerns Fuller v Happy Shopper / Tribunals, Courts & Enforcement Act 2007 s.71: distress for rent arrears abolished (April 2014)

Remedies: breaches of other covenants

  • damages : basic contract principles apply / amount fairly & reasonably be considered: arising naturally from breach / or reasonably contemplated at time contract made as probable consequence of breach Hadley v Baxendale
  • specific performance of obligation: discretionary equitable remedy / only if damages inadequate
  • keep open covenants: specific performance not available / would require continued court supervision / continual supervision: failure to perform give rise to ongoing actions for non-compliance / expensive & time consuming / damages better Co-operative Insurance Society v Argyll Stores
  • specific performance: repairing covenants / statutory control / issue L buying poor repair property & renting to T with covenant to repair / Leasehold Property (Repairs) Act 1938 / applies leases 7 yrs or more with 3 yrs left to run / proceedings to recover damages or forfeit lease only brought with permission of court (satisfied repairs must take place before end of lease)
  • traditionally: specific performance / repairing covenants / not available against L or T Hill v Barclay / if L in breach: T carry out & sue for damages or withhold rent Lee Parker v Izzet / Landlord and Tenant Act 1985 s.17 : T order specific performance of L's repairing covenant / against T rare to avoid injustice or oppression Rainbow Estates v Tokenhold
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Leasehold Covenants: Remedies

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Remedies: breaches of other covenants

  • injunction: for restrictive covenant / discretionary remedy / ordering D not to contravene
  • damages for T's breach of repairs duty / Landlord and Tenant Act 1927 s.18(1): limited to diminution in value of reversion / L cannot recover damages if premises are to be pulled down (make any repair valueless) / L can enter premises make repairs (if express permission in lease) / & recover damages for full cost of repairs (s.18 LTA 1927 not apply) Jervis v Harris
  • if L fails repair: T generally cannot withhold rent (at risk of L forfeiting lease) / limited common law right to withhold: possible
  • set off repair cost Taylor v Beal
  • to set off: T must inform L repairs need carrying out & if L fails (breach covenant) / T may repair & deduct cost from rent owed (amount seeking must be liquidated or fixed sum) / or T may withhold rent & if L sues / equity allow unliquidated claim set off against liability for rent (if sufficiently direct connection not manifestly unjust to allow) British Anzani v International Marine Management

Remedy: forfeiture

  • forfeiture: L terminate / fixed term lease / before due to end under contract / terminates any interests derived from lease (underlease)
  • L right to forfeit if: lease contains forfeiture clause (L right re-enter property if breach of covenant by tenant) / lease subject to condition L may forfeit on certain event / T denies L's title
  • if forfeiture clause & T breaches covenant: lease not end automatically / L decides to forfeit or continue / if continues L waives the breach / binding once L communicates decision
  • waived right to forfeit: if L or agent demands or accepts rent (intention irrelevant) / if breach continuing one (repairing covenant) / L may still decide to forfeit after accepting rent Central Estates v Woolgar
  • L show intention to forfeit by peaceable re-entry or service of proceedings / T seek relief from court
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Leasehold Covenants: Remedies

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Forfeiture: non-payment of rent

  • forfeiture for breach rent covenant / differs: L must make formal demand for rent Duppa v Mayo / forfeiture clause: states L right to re-enter if rent overdue without formal demand / if no forfeiture clause formal demand must be made
  • unless statute assists / Common Law Procedure Act 1852 s.210: lease gives L right to re-enter & rent 6 months in arrears / proceedings served without formal demand / County Courts Act 1984 s.139: lease gives L right to re-enter & rent 6 months in arrears & no sufficient distress on premises
  • L required issue court proceedings to commence forfeiture / Protection from Eviction Act 1977 s.2: unlawful forfeit lease / dwelling / while person lawfully residing at premises
  • Commonhold and Leasehold Reform Act 2002 s.166: T under long lease (21 yrs or more) / dwelling / not liable to pay rent / unless L given notice / notice: require payment on specified date (not before T liable for rent under lease / 30 - 60 days notice / s.167: restricts L's right forfeit long lease for non-payment of rent or charges / unless more than prescribed amount or owed more than prescribed period
  • T seek relief from forfeiture: / availability depend / method & whether relief sought in High Court or County Court

High Court: forfeiture by proceedings

  • Common Law Procedure Act 1852 s.212: if L commenced forfeiture action in High Court / discontinued if T pays all arrears & costs prior to hearing / if not: T has 6 months from execution of order for possession to apply for relief
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Leasehold Covenants: Remedies

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County Court: forfeiture by proceedings

  • County Courts Act 1984 s.138: action cease if T: no less than 5 clear days before hearing / pays arrears & all costs (& remains tenant under current lease) / if proceeds to trial: court will order possession within specified period (not less than 4 weeks) / T avoid forfeiture: pay arrears & costs before period expires / if not: L recover possession
  • if within 6 months / from L recovering possession / T still apply to court for relief / court has discretion to grant relief / subject to conditions it thinks fit / if T makes no application barred from all relief

High Court: relief sought for forfeiture by peaceable re-entry

  • s.210 - 212 Common Law Procedure Act 1852: only apply where L forfeits lease by means of proceedings / old equitable jurisdiction: no time limit for seeking relief from forfeiture by peaceable re-entry Billson v Residential Apartments

County Court: relief sought for forfeiture by peaceable re-entry

  • County Courts Act 1984 s.139: 6 month time limit for seeking relief from forfeiture by peaceable re-entry

Granting relief

  • consideration: if T delays in application / L may have re-let property / relief granted if equitable (unlikely if L altered position)
  • if T pays arrears & costs / court will grant relief / even if L complains other covenant breached Gill v Lewis
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Leasehold Covenants: Remedies

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Forfeiture: breaches of other covenants

  • L must: check lease contains right to forfeit & serve notice
  • LPA 1925 s.146: if L seeking forfeit lease / by action or peaceable re-entry / except for non-payment of rent / serve notice / valid notice: specify breach / require lessee to remedy breach if capable of being remedied / require lessee make compensation in money for breach / if L not want compensation: omission to claim not invalidate notice Lock v Pearce (confirmed in Rugby School v Tannahill)
  • Commonhold and Leasehold Reform Act 2002 s.168: landlord of long lease / dwelling / not serve notice under s.146 LPA 1925 unless: leasehold valuation tribunal determined breach of covenant or condition occurred / T admitted breach
  • once valid notice served under s.146 LPA 1925: L forfeit by serving proceedings or by peaceable re-entry / if L obtains court order: T no right to relief / if L effects peaceable re-entry: T may apply for relief Billson v Residential Apartments

Forfeiture: breaches of repairing covenant

  • if T breaches repairing covenant / L seek damages or forfeiture
  • Leasehold Property (Repairs) Act 1938 s.7: applies lease 7 yrs or more / s.1(1): if lease unexpired term exceed 3 yrs / L must serve notice under s.146 LPA 1925 & T may serve counter-notice / s.1(3): if T serves counter-notice / L must obtain leave of court to enforce right to damages or forfeit / s.1(4): notice must inform T of right to serve counter-notice (within 28 days)
  • LPRA 1938 s.1(5): court only grant leave / if immediate remedying of breach necessary to: (a) prevent substantial diminution in value of reversion or reversion been substantially diminished by breach / (b) comply with byelaw or statutory obligation / (c) lessee not in occupation of whole premises & required in interests of occupier /
    (d) postponement: much greater expense / or (e) special circumstances : just & equitable leave should be given
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Leasehold Covenants: Remedies

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Forfeiture: breaches of repairing covenant

  • L must serve s.146 LPA 1925 notice / before breach remedied / or deprived of right to seek leave of court SEDAC Investments v Tanner
  • if L obtains leave to proceed with forfeiture / T still has right to seek relief / if lease contains clause giving L right to serve notice requiring T to carryout repairs & T not respond: L may enter & carry out repairs & recover full cost / if L recovering debt (not seeking damages) neither s.18 LTA 1927 (capping damages at diminution in value of reversion) or LPRA 1938 apply Jervis v Harris

Termination of leases

  • fixed term tenancy: expires by effluxion of time / end automatically without either party needing to give notice when term expires / T no longer occupies / property passes back to L
  • period tenancy: continues indefinitely / until one party decides to end by serving notice to quit / both T & L entitled to give notice Prudential Assurance v London Residuary Body
  • length of notice: usually length of period of tenancy / should expire at end of clear period / yearly tenancy: at least 6 months' notice Queen's Club Gardens Estates v Bignell
  • Protection from Eviction Act 1977 s.5: tenancy dwelling house / minimum 4 weeks written notice
  • yearly tenancy: tenancy running from set date for 12 months with rent payable each month Adler v Blackman
  • joint tenancy: lease is a contract / periodic tenancy granted to 2 or more persons jointly / if 1 joint tenant gives notice: end tenancy of all joint tenants Hammersmith & Fulham LBC v Monk
  • surrender : T giving up lease to immediate L / merge leasehold interest with L's interest & extinguish lease / express by deed ( s. 52(1) LPA 1925 ) / implied: T accepts new lease from L or T hands back keys & L re-lets
  • merger: T acquires L's interest / T buying freehold / 3rd party buying freehold reversion & T's leasehold interest
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