Landlord and Tenant

Statutory tenant - proviso for re-entry on tenant's bankruptcy - bankruptcy amounting to breach of obligation - ground for possessionCadogan Estates Ltd v McMahon: HL (Lord Bingham of Cornhill, Lord Steyn, Lord Hoffmann, Lord Hutton and Lord Millett): 26 October 2000

The tenant occupied a flat under a lease which contained a proviso for re-entry in the event of his bankruptcy.

On expiry of the term the tenant continued in occupation as a statutory tenant under the Rent Act 1977.

When he became bankrupt the landlord sought possession on the ground that he had broken an obligation of the tenancy within the meaning of Case 1 of Sched 15 to that Act.The judge, granting the order, concluded that the tenant's bankruptcy was a breach of an obligation for the purposes of Case 1.

The Court of Appeal [1999] 1 WLR 1689 upheld his decision and dismissed the tenant's appeal.

The tenant appealed.

Peter Griffiths (instructed by Edwin Coe) for the tenant.

Anthony Radevsky (instructed by Lee & Pembertons) for the landlord.

Held, dismissing the appeal (Lord Millett dissenting), that having regard to the practical, common sense construction given to the provisions consolidated by the 1977 Act so as to give effect to the legislative intention, namely, to allow a tenant to retain possession after expiry of his tenancy but to preserve the landlord's right to recover possession on forfeiture, breach of a condition in a lease included forfeiture for bankruptcy, and the words 'conditions' and 'obligations' were treated as equivalent to each other; that accordingly the proviso, being a condition that the tenant should not become bankrupt, was therefore an obligation of the previous protected tenancy which was applicable to the statutory tenancy and which, when broken, entitled the landlord to possession under Case 1 of Sched 15.