Bankruptcy as Statutory Tenant

Cadogan Estates Ltd v McMahon (TLR 1 November H of L; NLJ 3 November p1625)

Where on the expiry of his tenancy the tenant of a protected tenancy remained in possession as a statutory tenant under the Rent Act 1977 a provision in the lease that the landlord might re-enter if the tenant became bankrupt was, within the meaning of Case 1 of Schedule 15 to the Rent Act 1977, an ‘obligation of the previous protected tenancy … applicable to the statutory tenancy …’ which, if broken, entitled the landlord to seek possession under that Case. For the statutory tenant it was argued that the lease did not create any obligation not to become bankrupt, that the re-entry laws had merely specified the events which would entitle the landlord to re-enter and determine the tenancy; but one of them was bankruptcy but that was not at all the same thing as an obligation not to become bankrupt. If the Act were an ordinary conveyancing statute there would be much force in that argument. But it was not. It was the Rent Act, a consolidation of a remarkable sequence of enactments which went back to the First World War; the relevant provisions coming, with minor verbal changes from the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. The judiciary had soon found that they could not interpret the Rent Acts in the same way as ordinary legislation and that it was essential wherever possible that they should be construed in a broad practical common sense manner so as to effect the intention of the legislature.