Office of Public Sector Information
292.This section empowers the Lord Chancellor (after consultation with the Lord Chief Justice and the JAC) to extend the list of relevant qualifications for the purpose of the judicial-appointment eligibility condition in section 50. The power is exercisable by order made under the affirmative resolution procedure.
293.Orders made under this section would say which qualifications – other than being a barrister or a solicitor – would be “relevant qualifications” for the purpose of eligibility for particular judicial offices. The only qualifications which it would be permitted to specify in this way would be those awarded by the Institute of Legal Executives or by other bodies authorised to confer rights of audience or rights to conduct litigation under sections 27 and 28 of the Courts and Legal Services Act 1990. This would provide assurance that the bodies concerned had in place approved training and qualification arrangements for their members. The section also provides for a qualification to cease to be relevant if the body which awarded it ceases to be an authorised body under the procedure set down in the 1990 Act. The Legal Services Bill currently (i.e. Summer 2007) before Parliament would, if enacted in its current form, amend the references to the 1990 Act that are contained in this section.
294.It is envisaged that the power given to the Lord Chancellor under this section will be exercised in the first instance to extend eligibility for specified appointments to Fellows of the Institute of Legal Executives and to registered patents agents and trade mark attorneys. It also provides flexibility to extend eligibility to duly qualified members of other authorised bodies, should that become appropriate as a result of future developments in the legal profession.
295.This section defines various ways in which an individual may gain post- qualification experience in law so as to satisfy the “qualifying period” element of the judicial-appointment eligibility condition in section 50. Consistent with the aim of encouraging applications from a wide range of suitably qualified people, these include not only those activities traditionally regarded as part of a lawyer’s practice (e.g. legal advice and assistance) but also exercising judicial functions in a court or tribunal, arbitration and teaching or researching law. Broadly similar activities are also included. Such work need not be performed full-time or for remuneration.
296.It should be noted that at the same time as gaining experience by undertaking these activities, an individual must also possess a “relevant qualification” – i.e. as a barrister, a solicitor or as a holder of a qualification awarded by one of the bodies to be specified by order under section 51.
297.This section makes provision for the appointment to fee-paid judicial offices of those who have previously held corresponding salaried appointments. It adds two new sections, 94A and 94B, to the Constitutional Reform Act 2005. Subsections (1) and (2) of the new section 94A enable the Lord Chancellor to make appointments to fee-paid offices in the ordinary courts below the rank of circuit judge (and to fee-paid offices in courts established under armed forces legislation), without the JAC selection process applying. Such appointments may be made only with the concurrence of the Lord Chief Justice and provided the person holds a corresponding qualifying salaried office or has ceased to hold such an office within the two years immediately preceding the proposed appointment. Subsection (3) enables the Lord Chief Justice to delegate his power of concurrence. Section 94B makes corresponding provision to enable the Lord Chancellor to make such appointments in tribunals, covering the existing tribunals listed in Part 3 of Schedule 14 to the Constitutional Reform Act 2005 and the new tribunals created by Part 1 of this Act. These appointments require the concurrence of the Senior President of Tribunals. Where it is proposed to appoint a person as a deputy judge of the Upper Tribunal, and that person holds or held an office listed in section 6(1), the Lord Chancellor must also consult the Lord Chief Justice. The general 2-year limit is disapplied in relation to former judges of the High Court and above (and equivalents in Scotland and Northern Ireland) being appointed as deputy judges of the Upper Tribunal.
298.Section 54 amends section 26 of the Judicial Pensions and Retirement Act 1993 to rectify a lacuna resulting from its modification by the Constitutional Reform Act 2005. Section 26 makes provision for the extension of service of judicial office holders beyond the retirement age otherwise prescribed by that Act. The modification made by the 2005 Act catered for the extension of service of judicial office holders exercising jurisdiction exclusively in one of the three legal jurisdictions of the United Kingdom but inadvertently omitted to cater for those exercising jurisdiction in two or all three of those legal jurisdictions. The new sub-sections of section 26 of the 1993 Act added by this section rectify the problem by conferring the power to extend service in such circumstances on the Senior President of Tribunals in respect of Tribunal offices listed in the new section 26 (12A) of the 1993 Act or otherwise by the Lord Chief Justice, in both cases subject to the concurrence of the Lord Chancellor.
299.Section 55 modifies section 24 of the Courts Act 1971 (as previously modified by the Constitutional Reform Act 2005) so that the responsibility for appointing as a deputy circuit judge someone who has previously held office as a judge of the Court of Appeal or of the High Court, or as a circuit judge, is vested in the Lord Chancellor, with the concurrence of the Lord Chief Justice, rather than the other way round.
300.Section 56 gives effect to Schedule 11.
301.District judges and deputy district judges exercise jurisdiction, in England and Wales, in both the High Court and the county courts. For deputy district judges there are parallel appointment provisions in the Supreme Court Act 1981 (for deputy district judges in the High Court) and the County Courts Act 1984 (for deputy district judges in the county courts).
302.Paragraph 2 enables the Lord Chief Justice to delegate to another judicial office holder his powers to assign district judges to one or more district registries of the High Court and his powers to change assignments. Paragraph 6 makes similar provision about the assignment of district judges to county court districts.
303.Paragraph 3 amends the provisions in section 102 of the Supreme Court Act 1981 about the appointment of deputy district judges.
304.Provision is made for appointments to be made by the Lord Chancellor, normally subject to the Judicial Appointments Commission (JAC) selection process as prescribed under the Constitutional Reform Act 2005. A retirement age of 70 will apply to these post-holders (with the possibility of extension up to age 75).
305.Further provision is made however that where a person holds or has previously within the last two years held the office of district judge, the Lord Chancellor may appoint that person as a deputy district judge, with the concurrence of the Lord Chief Justice, without that appointment being subject to selection by the JAC. Such persons may be appointed up to (but will have to retire by) the age of 75.
306.The Lord Chief Justice is also given powers, after consulting the Lord Chancellor, to assign any deputy district judge to one or more district registries of the High Court, and to change the assignment. Deputy district judges are given powers to act in district registries to which they have not been assigned, but only in accordance with arrangements made by or on behalf of the Lord Chief Justice.
307.Paragraph 4 makes transitional provision about existing deputy district judges: they continue to be deputy district judges, and are treated as having been assigned to the district registries for which they were appointed. In paragraph 4, the label “the commencement date” is given to the point in time at which paragraph 3 comes into force, not to the entire day at the beginning of which paragraph 3 comes into force.
308.Paragraphs 7 and 10 make, for deputy district judges appointed under section 8 of the County Courts Act 1984, provision similar to that made by paragraphs 3 and 4. The paragraphs respectively modify the provisions in section 8 of the 1984 Act and make transitional provision.
309.Paragraphs 8 and 9 make consequential amendments to the County Courts Act 1984. Paragraphs 11 to 13 make consequential amendments to the judicial-retirement provisions of the Judicial Pensions and Retirement Act 1993. Paragraphs 14 and 15 consequentially amend references to these appointments in other legislation.
310.Section 57 amends the provisions in section 91 of the Supreme Court Act 1981 for appointing deputies and temporary officers to certain posts, including masters and registrars of the Supreme Court. Section 91 of the Supreme Court Act 1981 was amended by paragraph 139 of Schedule 4 to the Constitutional Reform Act 2005 to enable the Lord Chief Justice, after consulting the Lord Chancellor, to make appointments to these posts. Section 57 further amends the Supreme Court Act 1981, and the Constitutional Reform Act 2005, to provide that these appointments are now to be made by the Lord Chancellor, and will normally be subject to the JAC selection process under the 2005 Act. These appointments are added to Schedule 14 to the 2005 Act. However, provision is also made that where a person holds or has within the last two years held equivalent office on a salaried basis, the Lord Chancellor may with the concurrence of the Lord Chief Justice appoint him to a deputy or additional temporary office under section 91 of the Supreme Court Act 1981 without a JAC selection process. The section makes consequential amendments to the Supreme Court Act 1981, so that a retirement age of 75 will apply to those who have previously held salaried office. (The usual retirement age for appointments under section 91 is 70, with the possibility of annual extensions up to the age of 75.)
311.The purpose of section 58 is to enable certain judicial office-holders and lawyers, who already have considerable experience of sitting as judge advocates in courts-martial, to continue to be eligible to sit as judge advocates once the Armed Forces Act 2006 is in force, without the need for selection by the Judicial Appointments Commission (JAC).
312.A judge advocate is appointed by the Judge Advocate General to an individual court-martial. Under the current law, judge advocates must have a 5-year legal qualification, and the JAC is not involved in their selection.
313.That position will change once section 362 of the Armed Forces Act 2006 (AFA) comes into force, which is expected to be in January 2009. The AFA defines Judges Advocates as (a) the Judge Advocate General (JAG); (b) a person appointed under section 30(1)(a) or (b) or (2) of the Court-Martial (Appeals) Act 1951 (“the 1951 Act”) (Vice JAG, Assistant JAG, and temporary assistants to JAG); or (c) a puisne judge of the High Court of England and Wales who, following advice from the Judge Advocate General, is nominated by or on behalf of the Lord Chief Justice of England and Wales to sit as a Judge Advocate.
314.Once implemented this provision will mean that, apart from High Court judges and the Judge Advocate General himself, only persons appointed under s. 30 of the 1951 Act may be appointed as judge advocates. However, appointments under s. 30 of the 1951 Act require a selection by the JAC.
315.Over the past few years, the Judge Advocate General has adopted the practice of appointing judge advocates both from persons holding salaried office under s. 30 of the 1951 Act (ie Vice JAG and Assistant JAG), and also from a pool of qualified lawyers and judicial office holders, which currently numbers 12 individuals. The purpose of these amendments is to enable this pool to carry on sitting as judge advocates once the AFA is in force, without the need for a JAC competition. This section will amend the 1951 Act so that no JAC selection will be required for appointments to the position of temporary assistant to the Judge Advocate General under s.30(2) of the 1951 Act where the appointee has, within the last two years, been appointed as a judge advocate to a court-martial by the Judge Advocate General. However, the concurrence of the Lord Chief Justice is required for such appointments. Once a person has been appointed to the position of temporary assistant to the Judge Advocate General, he will be eligible to sit as judge advocate in a Court Martial when the Armed Forces Act 2006 is in force. This section will enable the pool of 12 judicial office-holders or lawyers, from which appointments as judge advocates are currently made, to continue sitting as judge advocates.
316.Section 59 amends Part 3 of Schedule 14 to the Constitutional Reform Act 2005 to remove references to the offices of member, and Chairman, of: the Special Immigration Appeals Commission; the Proscribed Organisations Appeal Commission; and the Pathogens Access Appeal Commission. Candidates for these appointments will no longer be required to go through the Judicial Appointments Commission selection process. In practice, the legally qualified members and the Chairmen of these Commissions are appointed only from among serving senior judges. Once section 59 is in force, appointments will continue to be made by the Lord Chancellor, but it is intended that he will seek nominations for these posts from the Lord Chief Justice. If the Lord Chancellor wishes to be given assistance in making appointments to these Commissions, it will be possible for him to ask for assistance from the Judicial Appointments Commission under section 98 of the Constitutional Reform Act 2005.
317.This section makes provision for the Lord Chancellor to select the Chairman of the Law Commission from serving members of the senior judiciary only, by making changes to section 1 of the Law Commissions Act 1965 (c.22). The ‘senior judiciary’ for these purposes are the judges of the High Court and the judges of the Court of Appeal in England and Wales. This change reflects what has happened in practice since the establishment of the Law Commission.
318.Section 5A of the Justice (Northern Ireland) Act 2002 (‘the 2002 Act’) confers power to disclose information to the Northern Ireland Judicial Appointments Commission for the purposes of selection for appointment to judicial office in Northern Ireland. Section 5A(1) of the 2002 Act provides that information held by ‘permitted persons’ may be disclosed to the Commission for the purposes of making any such selection. Section 5A(5) of that Act specifies a number of ‘permitted persons’ for the purpose of section 5A. Section 5A(6), which has yet to be commenced, provides that the Lord Chancellor may by order designate other persons, who exercise functions which he considers are of a public nature, as ‘permitted persons’. The order-making power contained in section 5A(6) is not, however, currently subject to any Parliamentary control. Section 61 remedies this anomaly by subjecting the order-making power contained in section 5A(6) to the negative resolution procedure.
319.Part 3 of the Act unifies the law governing the activities of enforcement agents when taking control of and selling goods, and requires such agents (with certain exceptions) to hold a valid certificate issued by a county court. It also modernises and unifies most of the terminology used in various pieces of legislation where the new unified procedure will apply.
320.Part 3 also abolishes the common law right to distrain for rent arrears and replaces it with a new, more limited right and a modified ‘out of court’ regime for recovering rent arrears due under a lease of commercial premises.
321.At present the law relating to enforcement by the seizure and sale of goods is complex and can be unclear and confusing. It is contained in numerous statutes, secondary legislation and common law and its language is old fashioned. There are various terms that describe this enforcement process, for example execution, distress and levy and various different procedures depending on the type of debt which is being recovered. Effective Enforcement recommended the terminology should be modernised and the procedure reformed.
322.Effective Enforcement also identified that persons who currently take control of goods are not subject to any uniform regulatory system and highlighted anecdotal evidence of some enforcement agents threatening and intimidating vulnerable debtors. Effective Enforcement therefore proposed a system to guard against malpractice and to protect debtors. It is intended (in the longer term) that a licensing regime will be put in place, implemented via a regulatory body. While this is being taken forward independently, as detailed below, as an interim measure the Act replaces (and extends and modifies) the certification process that currently exists for bailiffs under the Law of Distress Amendment Act 1888. The extended and modified certification process will apply to persons taking control of goods who are not Crown employees or constables (the justification for such an exclusion being that Crown employees and constables, by virtue of their status, are already subject to adequate systems of control). A consultative Partial Regulatory Impact Assessment was issued on 30 January 2007 exploring the costs and impact of a licensing regime via a regulatory body. This sets out the options for the future regulation of enforcement agents who are not Crown employees.
323.Distress for rent is a summary remedy which enables landlords to recover rent arrears without going to court, by taking goods from the let premises and either holding them until the arrears are paid or selling them. It is an ancient common law remedy which, over time, has been extended and modified by successive statutes.
324.The Law Commission’s Report concluded that distress for rent has a number of features which make it inherently unjust to tenants, to third parties and to other creditors and recommended its abolition.
325.Following a period of consultation, the Government decided to accept the Law Commission’s recommendation. However, the consultation revealed that distress for rent is an effective remedy for recovering rent arrears, particularly for commercial properties. If it were to be abolished without any replacement, the Government concluded that there could be disadvantages both to landlords and to tenants of commercial properties.
326.The Act therefore abolishes the current law on distress for rent and replaces it with a modified regime (called Commercial Rent Arrears Recovery or CRAR) for recovering rent arrears due under leases of commercial premises.
327.This section gives effect to Schedules 12 and 13 to the Act. Certain current powers to seize and sell goods can only be exercised according to the procedure for taking control of and selling goods detailed in Schedule 12.
328.The terminology in the various pieces of primary legislation relating to these powers has been amended, and some of the warrants and writs which give these powers, namely warrants of execution, warrants of distress and writs of fieri facias (except writs of fieri facias de bonis ecclesiasticis), are renamed warrants of control and writs of control.
329.A warrant of execution empowers a district judge to seize and sell a debtor’s goods for the purpose of recovering money payable under a county court judgment or order. A warrant of distress may be issued by a magistrates’ court for the purpose of recovering a sum adjudged to be paid by a conviction or order of the court. The warrant requires the sum to be recovered by seizure and sale of the debtor’s goods. A writ of fieri facias requires a sheriff or enforcement officer to seize and sell a debtor’s goods for the purpose of recovering a sum due under a High Court judgment or order. A writ of fieri facias de bonis ecclesiasticis requires the bishop to seize a debtor’s ecclesiastical property in order to satisfy a High Court judgment. As writs of fieri facias de bonis ecclesiasticis are unique and because of the special role of the bishop, they are not renamed (nor are they subject to the new unified procedure detailed in Schedule 12).
330.A writ or warrant of delivery is a writ/warrant to enforce an order for the delivery of particular goods that are identified in the writ/warrant. A writ or warrant of possession is a writ/warrant issued to enforce an order for possession of land.
331.Schedule 13 makes amendments to existing primary legislation, which are necessary to give effect to these changes or as a result of them.
332.This Schedule prescribes a new procedure to be followed by enforcement agents when seizing and selling goods pursuant to powers under High Court writs of execution, county court warrants of execution, certain magistrates’ court warrants of distress, High Court writs and county court warrants of delivery and possession which contain a power to seize and sell goods and the following enactments as amended by Schedule 13:
Sections 4 and 16 of the Inclosure Act 1773;
Section 91 of the Lands Clauses Consolidation Act 1845;
Sections 151 and 159 of the Inclosure Act 1845;
Section 33 of the Railways Clauses Act 1863;
Section 13 of the Compulsory Purchase Act 1965;
Section 61 of the Taxes Management Act 1970;
Section 76 of the Magistrates’ Court Act 1980;
Section 85 of the County Courts Act 1984;
Section 62A of the Local Government Finance Act 1988;
Section 35 of the Child Support Act 1991;
Schedule 15, paragraph 12 of the Water Resources Act 1991;
Section 54 of the Land Drainage Act 1991;
Section 121A of the Social Security Administration Act 1992;
Section 14 of the Local Government Finance Act 1992;
Section 51 of the Finance Act 1997;
Schedule 12, paragraph 1A of the Finance Act 2003;
Section 72 of the Tribunals, Courts and Enforcement Act 2007.
333.The Schedule prescribes, or enables regulations to prescribe, the entire process to be followed by enforcement agents when taking control of and selling goods under the above mentioned powers, from the serving of a notice, to taking control of goods (including which goods may be taken), powers of entry, goods which may be seized, care of goods seized, the sale of goods seized and the distribution of the sale proceeds.
334.On the issue of which goods may be taken, the Schedule provides that all goods of the debtor may be seized other than those which are exempt (as prescribed in regulations) or protected under any other enactment. Examples of protection from seizure are:
any statutory state or diplomatic immunity;
personal property of a trustee pursuant to section 23 of the Trade Union and Labour Relations (Consolidation) Act 1992;
works of art from abroad loaned for temporary exhibitions and protected under section 135 of the Tribunals, Courts and Enforcement Act 2007.
335.The Schedule also enables regulations to specify fees, charges and expenses that can be charged by a person in connection with taking control of goods (by way of example, the fees charged by an enforcement agent for taking control of goods). Such regulations will specify when and how such fees, charges and expenses will be recoverable from the debtor, to include when such amounts can be deducted from the proceeds of sale of any goods. The regulations may also specify that any disputed amount of such fees, costs and expenses is to be assessed in accordance with rules of court.
336.In addition, the Schedule sets out the remedial action and the level of damages available to a debtor against an enforcement agent who breaches the procedure. The Schedule does not make any provision for the debtor’s right to bring a claim against an enforcement agent whose actions were not authorised at the outset because this is already covered by the existing law of tort. The Schedule also specifies the circumstances when a creditor can bring a claim against the debtor and it creates offences of intentionally obstructing an enforcement agent in the lawful exercise of his power and interfering with goods seized.
337.This Schedule amends the existing legislation referred to in paragraph 332 under which the unified procedure in Schedule 12 will be used. It also contains amendments consequential on the introduction of the new procedure and terminology. So, where appropriate, references to warrants of execution and warrants of distress are amended to warrants of control, references to writs of fieri facias are amended to writs of control, references to distrain and distraint are amended to taking control of goods and references to walking possession agreements are amended to controlled goods agreements.
338.A walking possession agreement is an agreement between the person who has the power to seize the goods (“the distrainor”) and the debtor. The distrainor agrees that the debtor can retain possession of the goods without anyone being left on the premises to guard them. In return, the debtor agrees not to remove the goods until he makes payment for the debt and that the distrainor may return to the premises at a later date to remove the goods for sale if payment is not made.
339.In addition, where a power to distrain is not currently set out on the face of an Act, but instead secondary legislation under the Act authorises distraint, the Schedule amends the Act so that the power to distrain (which becomes a power to use the procedure in Schedule 12) is on the face of the Act rather than in secondary legislation.
340.This section specifies the criteria to be met for an individual to act as an enforcement agent. This includes acting under a certificate under section 64. The section also creates an offence where an individual acts as an enforcement agent and does not meet any of the specified criteria.
341.This section specifies who may issue a certificate under which an enforcement agent can act. The section also provides that the Lord Chancellor must make provision about certificates by regulations. The provision may include, for example, conditions that may apply to issued certificates, provision about the suspension and cancellation of certificates, and provision for reasonable fees to be charged for applications for certificates.
342.Subsection (4) enables enforcement agents who currently hold a certificate issued under section 7 of the Law of Distress Amendment Act 1888 to continue to operate under that certificate. After the certificate expires, regulations will specify that a certificate will need to be issued in accordance with the new certification provisions under this section.
343.This section provides for the replacement of the common law rules about how the powers to take control of and sell goods are exercised. The provisions in Chapter 1, in particular Schedule 12, replace these common law rules. The replacement of the common law rules includes those that relate to remedies that are currently available to debtors (including replevin) and offences by debtors (such as rescuing goods seized). Replevin is a process by which the owner can recover goods seized in return for an undertaking to bring proceedings to determine the right to seize the goods and for tendering sufficient security for the debt and the proceedings. Rescuing goods is where a person interferes with goods seized.
344.Under section 66 these common law rules will continue to apply in relation to those goods that have been distrained before the new procedure comes into force.
345.This section provides that the new procedure for taking control of and selling goods does not affect any power to distrain where the goods were distrained against or made subject to a walking possession agreement before the new procedure comes into force.
346.This section transfers the district judge’s responsibility for the execution of warrants of control issued by a county court to any person authorised by or on behalf of the Lord Chancellor. (Section 85(2) of the County Courts Act 1984 refers to the “registrar” but, by virtue of section 74 of the Courts and Legal Services Act 1990, the office of “registrar” is now abolished and replaced by “district judge”.) In practice, the warrants will be executed by county court bailiffs (who will continue to be known as county court bailiffs).
347.This section creates a new section 125ZA of the Magistrates’ Courts Act 1980 so as to provide for the endorsement of warrants of control issued by the magistrates’ court in line with the endorsement process for High Court writs under Schedule 7 to the Courts Act 2003 (and in line with section 69 on county court warrants). The new section is referred to in paragraph 4 of Schedule 12.
348.This section replaces the existing section 99 of the County Courts Act 1984. It applies to warrants of control issued by a county court and warrants of delivery and warrants of possession which include a power to take control of goods and sell them. It details the procedure for endorsing county court warrants in line with High Court writs. The order of priority in execution is dictated by the date and time of endorsement. The new section is referred to in paragraph 4 of Schedule 12.
349.This section gives the High Court the power to stay execution of a writ of control for such period of time and on such conditions as the court determines in line with the county court’s power to stay execution. The power may only be exercised where the court is satisfied that the debtor is unable to pay any sum or instalment of any sum recovered against him.
350.This section abolishes the common law right to distrain for arrears of rent. Statutory repeals are dealt with in Schedule 14 and Part 4 of Schedule 22. Taken together, these provisions will sweep away the existing law on distress for rent.
351.Distress for rent is a summary remedy which enables landlords to recover rent arrears, without going to court, by taking goods from the demised premises and either holding them until the arrears are paid or selling them. At common law, the right of distress for rent arises automatically by virtue of the landlord and tenant relationship. So the remedy is almost always available to the landlord of premises, whether residential or commercial premises, when rent is in arrears. Distress for rent is an ancient common law remedy which, over time, has been extended and modified by statute.
352.The right to distrain has applied to different kinds of rent, including rentcharges. This section and the statutory repeals will abolish distress for all forms of rent (see, for example, the repeal of section 121(1) of the Law of Property Act 1925, which confers statutory power to distrain for a rentcharge).
353.This section creates a new statutory right for a landlord of commercial premises to recover rent arrears by using the procedure in Schedule 12 for taking control of the tenant’s goods. This allows the landlord to enter the let premises in order to take goods belonging to the tenant, then sell those goods and recover the rent arrears from the proceeds of sale. The right, which is called CRAR (commercial rent arrears recovery), replaces the existing right of distress for rent. But in contrast to distress, CRAR is available only to landlords of commercial premises.
354.This section defines “landlord” for the purposes of CRAR and accordingly identifies the person to whom CRAR is available. The definition in this section reflects the position in the current law of distress for rent as to who can distrain for rent arrears.
355.Subsection (1) sets out the general rule that the landlord is the person entitled to the immediate reversion in the property comprised in the lease. This is the person to whom the property will revert at the end of the lease.
356.In most cases it will be clear who is entitled to the immediate reversion of the property. However, subsections (3) to (7) clarify the position in four particular circumstances, each reflecting the current law on distress for rent. The circumstances are:
(in subsection (3)) where the premises are let under a tenancy by estoppel;
(in subsection (4)) where the premises are let by joint landlords;
(in subsection (5) and (6)) where the let premises have been mortgaged;
(in subsection (7)) where the court has appointed a receiver to deal with the let premises.
357.In the case of a tenancy by estoppel, the landlord may not have a legal estate in the land comprised in the lease, in which case he will not be entitled to the immediate reversion in that property. Subsection (3) makes it clear that such a person will nevertheless be a “landlord” for the purposes of CRAR and may therefore use CRAR to recover rent arrears from his tenant, provided that all the other conditions are satisfied.
358.Subsection (4) provides that if the premises are let under a joint tenancy, then any one of the persons who hold the legal estate will be the “landlord” for the purposes of CRAR. This means that any one of them may exercise CRAR and may do so to recover the rent due to all of them.
359.Subsections (5) and (6) deal with mortgaged properties. If the premises are let by a person who has taken out a mortgage on the property, then that person (who is the “mortgagor” or borrower) will normally be the “landlord” who is entitled to use CRAR to recover rent due under that lease. But if, at any time, the mortgagee (the lender) gives notice of his intention to repossess the property, then he will become the landlord thereafter in relation to that existing lease.
360.However, as with the current law on distress for rent, a mortgagee who becomes the landlord in this way will not be able to use CRAR to recover rent due under the existing lease if that lease is not binding on the mortgagee. This is because there will be no relationship of landlord and tenant between the mortgagee and the tenant under the existing lease. A lease will not be binding on the mortgagee if it is made after the mortgage was created, and if it is not made under either:
an express leasing power contained in the mortgage deed, or
section 99 of the Law of the Property Act 1925 (leasing powers of mortgagor and mortgagee in possession).
361.By virtue of subsection (7), a receiver who has been appointed by the court in relation to the property that is subject to the lease may exercise CRAR in the name of the landlord.
362.Subsection (8) provides that a landlord who has a right to use CRAR will need to authorise a certificated enforcement agent to exercise CRAR on his behalf (unless he himself is a certificated enforcement agent; see paragraph 2 of Schedule 12). The landlord will need to instruct the enforcement agent in writing. The form, content, and other requirements in relation to the written instructions from the landlord to the enforcement agent will be prescribed by way of secondary legislation.
363.Subsection (9) provides that any person who has a statutory right under any other legislation to use CRAR, is to be treated as “the landlord” for the purposes of CRAR.
364.This section defines the term “lease”. A lease means any lease that may exist in law or in equity. This section makes it clear that a “lease” includes a tenancy at will, but does not include a tenancy at sufferance. So, for the purposes of CRAR, a “lease” includes all forms of lease, including long leases, short tenancies, tenancies by estoppel and other equitable leases.
365.A lease must, however, be evidenced in writing. The intention is to ensure that CRAR can only be used in circumstances where the main terms of the lease (particularly the rent) are clear and certain to the parties concerned.
366.This section defines what is meant by “a lease of commercial premises”. A lease (lease A) will not be “a lease of commercial premises” if any part of the let premises is let under lease A (or let under any sublease B) as a dwelling, or occupied as a dwelling. So, for example, a lease of property comprising a shop and a flat will not be a lease of commercial premises if the flat is used, or is required by the lease to be used, as a dwelling. But if that lease does not impose any requirements as to the use of the flat, and the tenant chooses to use it either as a storeroom or office for the shop, then the lease will be one of commercial premises because no part of the demised premises is let or occupied as a dwelling.
367.This section makes it clear that any occupation as a dwelling will not count if it is in breach of the terms of lease A or any lease that is superior to lease A. Similarly if the property has been sublet then any sub-letting as a dwelling will not count if it is in breach of the terms of a lease that is superior to lease B. The purpose of these provisions is to ensure that a commercial tenant cannot seek to prevent his landlord from using CRAR against him by, for example, allowing a third party to occupy part of the premises as a dwelling. So the landlord can still use CRAR against his tenant in those circumstances, even though there are residential occupiers present. But the provisions are also designed to ensure that a landlord (who is himself a commercial tenant under lease A) cannot rely on his own breach of lease A to use CRAR against the tenants to whom he has sublet the property as a dwelling under lease B. So in those circumstances, the landlord cannot use CRAR because lease B will not be a lease of commercial premises.
368.This section defines rent for the purposes of its recovery by CRAR, as the sum payable by the tenant for the possession and use of the premises under the lease, including any interest payable on that sum and any VAT chargeable on the sum or the interest.
369.Any amounts not directly attributable to the tenant’s possession and use of the premises do not qualify e.g. council tax. This is the case even if the lease defines them as rent.
370.The rent may be merged with other sums so that it is payable as a combined figure, the individual figure not being known or able to be ascertained. In this situation, the rent will be considered to be that portion of the total sum as reasonably reflects the amount payable for the possession and use of the premises.
371.Rent which is payable under or by virtue of Part 2 of the Landlord and Tenant Act 1954 (c. 56) is deemed to be rent as defined by the section, and is therefore recoverable by CRAR. Part 2 of the 1954 Act gives security of tenure to business leases, so that they are not ended by the expiry of the contractual term, but continue until terminated in accordance with the provisions of Part 2.
372.The definition of rent given by this section, however, is not congruent with the meaning of rent at section 71 (abolition of common law right) because section 71 relates to a wider range of rents for which the right to the old remedy of distress for rent exists. For that reason, the interpretation of “rent” in this section does not apply to section 71 (see section 87). The definition also does not apply to section 85 which defines “rent” for its own purposes.
373.This section sets out the conditions that must be met for the right to CRAR to become exercisable. The conditions are:
the tenant is in arrears of rent before notice of enforcement is given;
the amount of the arrears owed by the tenant is certain, or capable of being calculated with certainty; and
the “net unpaid rent” equals or exceeds a set amount to be prescribed in regulations.
374.The requirement that the net unpaid rent must equal or exceed the prescribed minimum is a condition that must be satisfied at two stages: first, before the landlord gives notice of enforcement and, second, before he takes control of goods under Schedule 12. This means that the landlord will need to recalculate the “net unpaid rent” immediately before he takes control of goods. If the recalculated figure is lower than the prescribed minimum, it will not be permissible for the landlord to proceed to take control of goods.
Tribunals, Courts and Enforcement Act 2007