By s.168, Commonhold and Leasehold Reform Act 2002, a landlord may not serve a notice under s.146, Law of Property Act 1925, or otherwise exercise a right of re-entry (i.e. forfeiture) in respect of a breach of a covenant (other than one to pay rent – which is unaffected by s.146, see s.146(11); or service/administration charges, which are dealt with under s.81, Housing Act 1996), unless the breach has been admitted by the tenant or determined by a court, LVT or arbitral tribunal.
There is a bit of a cottage industry in these applications to the LVT. Landlord says that tenant is in breach by, e.g. having a cat. A s.168 application is issued and then the LVT goes to look for the cat (or the satelite TV, wooden floors, etc, whatever the breach is). The overwhelming majority are dealt with on the papers.
We’ve already had quite a problem with LVTs getting this wrong. They went through a phase of deciding that, because forfeiture was unlikely, (i.e. that relief would be granted), there was no breach. This is wrong, as the LT/UT(LC) made clear, their task is to determine whether a breach has occured, not whether the landlord is entitled to any particular remedy (see, e.g., this decision)
In Beaufort Park Residents Management Ltd v Sabahipour [2011] UKUT 436 (LC), the leaseholder had covenanted to allow the landlord, including its agents, to enter the flat on reasonable notice for the purpose of inspecting the condition of the flat. The landlord had chosen Mr O’Brien, (who was also the Secretary and Director of the landlord company and, in practice, seems to have been the de facto manager). The tenant, Mr Sabahipour, refused to let Mr O’Brien enter, as there was a personal conflict between them. The landlord applied for a determination of breach under s.168. The LVT found there was no breach and, as the UT(LC) says, reading between the lines, seems to have thought that the landlord was being rather heavy handed.
The landlord appealed to the UT(LC). It was clear that Mr O’Brien was a properly authorised agent and so, prima facie, there was a breach of covenant. However, the UT(LC) did not determine that such a breach had occured, but, rather, hoped that Mr Sabahipour would now give access and, if not, the landlord could apply for a fresh determination of breach.
Now, no-where does the UT(LC) explain where this power to make, in effect a suspended order, comes from. Where in s.168 does that power exist? Quite simply, there is no such power in s.168. Parliament didn’t give the LVT (or UT(LC)) any sort of discretion here. There is a breach or their isn’t. I agree that forfeiture is unlikely in such a case, but that is a matter for the county court on any subsequent application and not a reason to decline to make a determination.