Thankfully, the law of appropriation is relatively clear and established. It was explained in good detail in the Court of Appeal case[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest'] Thomas v Ken Thomas Ltd [2006] EWCA Civ 1504 where at para 19 it was stated (author added words [landlord] and [tenant]):

19.  The relevant principles are accurately set out in Chitty on Contracts, 29th Edition Vol 1 at paragraph 21.059-21.061:

“21.059: Rights to appropriate payments. Where several separate debts are due from the [tenant] to the [landlord], the [tenant] may, when making a payment, appropriate the money paid to a particular debt or debts, and if the [landlord] accepts the payment so appropriated, he must apply it in the manner directed by the [tenant]; if, however, the [tenant] makes no appropriation when making the payment, the [landlord] may do so.

“21.060: Debtor’s rights to appropriate. It is essential that an appropriation by the [tenant] should take the form of a communication, express or implied, to the [landlord] of the [tenant's] intention to appropriate the payment to a specific debt (or debts) so that the [landlord] may know that his rights of appropriation as [landlord] cannot arise. It is not essential that the [tenant] should expressly specify at the time of the payment, which debt or account intended the payment to be applied to. His intention may be collected from other circumstances showing that he intended at the time of the payment to appropriate to a specific debt or account. ….

“21.061: Creditors’ right to appropriate. Where the [tenant] has not exercised his option, and the right to appropriate has therefore devolved upon the [landlord], he may exercise it at any time “up to the very last moment” or until something happens which makes it inequitable for him to exercise it. [I omit the rest of the paragraph].”

Therefore, if the tenant when paying the £200.00 says “this payment is for my new tenancy” (or similar) then, the landlord is bound by that statement. However, if the tenant remains silent, it is for the landlord to decide where to appropriate the amount (unless it can be somehow implied as to which tenancy the payment was for). Of course, the landlord should always appropriate to the previous tenancy because that way the new tenancy is developing arrears making the section 8 notice on rent arrears grounds easier.

Where an appropriation is done by the landlord, it would very wise to insert details of the appropriation on any receipt issued as this would assist with any questions that may arise later and would also help with any question of “implied” appropriation.

Housing Benefit

One unanswered question (by the courts) though is what about a housing benefit payment? The cheque or statement will always contain the dates to which the payment relates. Are these dates appropriating the amount to those specific dates and no other? I would respectfully submit no. Our view is that the law of appropriation remains as described above and that the dates on the cheque or statement are nothing more than showing the dates of the tenant’s “entitlement” to housing benefit and are not necessarily dates showing the actual “rent” being paid. It is therefore still acceptable for a landlord to appropriate a housing benefit payment to an earlier tenancy for example in our view.

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Where a tenant wishes to leave during a fixed term, or simply vacates without notice, this is an offer to surrender. A landlord may accept such a surrender or refuse to accept (see this article for much more detail).

In the case that the landlord is willing to accept the surrender, it is best to have a notice to surrender from the tenants.

A suitable notice to surrender is available here

Notice to surrender by tenant to landlord guidance

Where a tenancy is running periodic, a NOTICE TO QUIT from tenant is normally more suitable than this notice (Guild Form F019, see this group of posts). This notice should only be used on rare occasion and you should contact us before using this notice to clarify the reasons for using this notice.

A few key points to note:

This notice should be used where ALL parties agree that the tenancy is to end, that is to say [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']ALL tenants and the landlord must agree for this notice to have effect. By agreeing with this notice, the landlord will be no longer entitled to claim any further rent after the expiry of this notice. (But if the tenant remains in occupation, damages for use and occupation will be payable by the tenants)

Anything less than ALL tenants signing this notice will render the notice invalid.

This notice is normally used where a notice to quit is not possible for example if a tenant wishes to leave during a fixed term (where the landlord agrees), or if a tenant has already vacated without notice and the landlord is seeking clarification that the tenant has indeed surrendered the tenancy.

If the tenant is wishing to simply give short notice (i.e. less than four weeks) during a periodic tenancy, a notice to quit is equally suitable because a landlord may accept an invalid notice to quit.

The tenant does not have to give any specific length of time with this notice so it could be an agreement to give one days notice or one months notice. Nor, does this notice need expire on any particular date.

If the tenants fail to vacate on the date given in this notice, a court order will still be required to gain possession.

If a landlord asks the tenant to sign this notice on the same date or before the tenancy is granted, it will have no effect [s.5(5) Housing Act 1988].

Completing the notice (in order of form fields)

• Insert name and address of landlord
• Insert names of all tenants
• Insert tenancy address
• Insert the date the tenancy is to be surrendered and the premises given back to landlord
• Insert date of the notice
• All tenants to sign, each signature must be witnessed
• Landlord to sign and must be witnessed
• Both landlord and tenant should retain a copy each

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Surrender by operation of law

An agreement by the landlord and the tenant that the term shall be put an end to, acted upon by the tenant’s quitting the premises and the landlord by some  unequivocal act taking possession, amounts to a surrender by operation of law. [Phene v Popplewell (1862) 12 C.B.N.S. 334.] But the giving and acceptance of possession must be unequivocal.

So there was no surrender where:

(a) the landlord accepted the keys “without prejudice” [Re Panther Lead Co. [1896] Ch. 978.] ;

(b) the landlord accepted the keys by mistake [Proudreed v Microgen [1996] 1 E.G.L.R. 89.] ;

(c) the landlord attempted unsuccessfully to relet [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']the premises [Oastler v Henderson (1877) 2 Q.B.D. 575. See also Redpath v Roberts (1800) 3 Esp. 225.] ;

(d) the landlord evicted squatters after abandonment by the tenant but did not intend to accept a surrender [McDougalls v BSE Trading [1997] 2 E.G.L.R. 65.] ;

(e) the landlord changed the locks of the premises in order to secure them against intruders, while maintaining a claim against the tenant for rent [Relvok Properties v Dixon (1973) 25 P. & C.R. 1.]
;

(f) the landlord carried out necessary repairs [Bessell v Landsberg (1845) 7 Q.B. 638.] and attempted to let the premises, although when the landlord did relet, the tenant’s liability for rent ceased as from the start of the new letting [Smith v Blackstone (1885) 1 T.L.R. 267.]
;

(g) the landlord put a caretaker into the property in order to prevent depredations. [Bird v Defonvielle (1846) 2 Car. & K. 415.]

(h) the tenant abandoned part of the premises. [Chamberlain v Scalley (1994) 26 H.L.R. 26.]

(i) the landlord accepted rent from a third party occupier other than the tenant with no intention of effecting a surrender. [Mattey Securities v Ervin [1998] 2 E.G.L.R. 66; Bhogal v Cheema [1991] L. & T.R. 59.]

(j) the tenant vacated the premises and told the landlord that it could take her to court. [Bellcourt Estates v Adesina [2005] 2 E.G.L.R. 33.]

However, the landlord’s conduct was sufficient to amount to the acceptance of a surrender where:

(a) he accepted possession unreservedly [Grimman v Legge (1828) 8 B. & C. 324.] ;

(b) the tenant vacated at the request of the landlord who afterwards demolished the property [Furnivall v Grove (1860) 8 C.B.N.S. 496.] ;

(c) the landlord went into beneficial occupation of the property [Bird v Defonville (1846) 2 Car. & Kir. 415.] ;

(d) the landlord accepted rent from sub-tenants who had been directed by the tenant to attorn to the landlord and pay their rent to him [Gray v Balls (1861) 5 L.T. 395.] ;

(e) the tenant left giving notice of intention to surrender and the landlord acquiesced without demur for a considerable period. [Brent L.B.C. v Sharma (1993) 25 H.L.R. 257.]

A collection of facts which, though equivocal if looked at singly, may collectively point unequivocally to an acceptance of possession. [Reeve v Bird (1834) 1 C.M. & R. 31.]

The giving and acceptance of possession may be symbolic, e.g. by the giving and acceptance of keys. This is considered in the next paragraph.

Acceptance of key

The acceptance of the key by the landlord is not necessarily evidence of a surrender; it depends why the key was accepted. If it is accepted merely for the purpose of attempting to relet in the interests of the tenant, [Oastler v. Henderson (1877) 2 Q.B.D. 575.] or to secure the premises against intruders, [Relvok Properties v Dixon (1973) 25 P. & C.R. 1.] or to carry out repairs, [Boynton-Wood v Trueman (1961) 177 E.G. 191.] or by mistake [Proudreed v Microgen [1996] 1 E.G.L.R. 89.] there is no surrender.

But if the key is accepted as part of an agreement that the tenant shall give up possession and that the rent shall cease, the acceptance of the key marks the moment of surrender. [Whitehead v Clifford (1814) 5 Taunt. 518; Furnivall v Grove (1860) 8 C.B.N.S. 496.] Where the tenant left the key at the landlord’s office, and the landlord at first refused to accept it, there was nevertheless a surrender when the landlord subsequently put up a letting board, used the key to show the property to prospective tenants and painted out the tenant’s name from the front of the property. [Phene v Popplewell (1862) 12 C.B.N.S. 334.]

The key must be given to a person authorised to accept it. So where the key was given to the clerk of the landlord’s trustee in bankruptcy, but no further communication took place, there was no surrender. [Cannan v Hartley (1850) 9 C.B. 634.] However, one of two joint landlords may have authority to accept a surrender as agent for both of them. [Dodd v Acklom (1843) 6 Man. & G. 672.]

Where a surrender is offered, the landlord has no duty to the tenant to mitigate the tenant’s loss by reletting to the first comer irrespective of other considerations affecting the landlord’s interests. [Boyer v Warbey [1953] 1 Q.B. 234, per Romer L.J.]

Rent in lieu of notice [Laine v Cadwallader (2001) 33 H.L.R. 36]

Abstract: In January 1998 L granted an assured shorthold tenancy to C for six months at a rent of GBP 390 per calendar month, payable in advance at two monthly intervals. The tenancy agreement contained a clause requiring C to give one calendar month’s notice of termination.
The tenancy continued after the end of the six months, and in September 1998 C left the property, depositing the keys through L’s letterbox. L’s applications to the court to recover rent arrears and funds to repair damage caused by C were successful, although her associated claim for four weeks’ rent in lieu of notice was refused. L appealed.

Summary: Held, allowing the appeal, that at the end of the term certain the tenancy took effect as a periodic assured tenancy under the Housing Act 1988 s. 5 , the periods being calendar months. Although the notice clause in the tenancy agreement no longer applied after the expiration of the term certain, C was required by the Protection from Eviction Act 1977 s. 5(1) to give at least four weeks notice to quit. The act of putting the keys through L’s letterbox amounted to an offer by C to terminate the tenancy, which L by implication accepted as four weeks’ notice commencing on that day. L was therefore entitled to recover rent equivalent to that four week notice period.

Notice to Surrender

Where a landlord wishes to accept a surrender, a suitable notice can be found here

Mitigate the Loss?

Where the tenant had failed to pay rent due under the lease and had abandoned the demised premises, the landlord was under no duty to mitigate his loss when seeking to recover arrears of rent [Reichman v Beveridge [2007] 1 P & CR 358].

Where a surrender is offered, the landlord has no duty to the tenant to mitigate the tenant’s loss by reletting to the first comer irrespective of other considerations affecting the landlord’s interests. [Boyer v Warbey [1953] 1 Q.B. 234]

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Sanctions for non-compliance

From 6 April 2009 the practice direction for pre action conduct was amended and now encapsulates all proceedings where no pre action protocol applies. As there is no pre action protocol for rent arrears and possession cases for private landlords (there is a protocol for rent arrears where the landlord is a social landlord or local authority), this protocol will apply to all section 8, section 21 cases although it’s application could be fairly limited.

The full practice direction is available here: http://www.justice.gov.uk/civil/procrules_fin/contents/practice_directio…

What is a pre action protocol?

The Civil Procedure Rules 1998 governing court procedure have several pre action protocols for several different scenarios. For example there is a pre action protocol for personal injury claims, housing disrepair claims and others.

A pre action protocol prescribes a procedure that should be followed before any claim is made. The intention is to try to avoid claims going to court wherever possible

What has changed from 6 April 2009?

It was always the case that a letter before claim must be sent by a claimant before proceedings issued in the court. However, there was no specific protocol to follow. This latest amendment (known as the 49th edition) brings in a pre action protocol for ALL cases where there is no other protocol to follow.

Where can I obtain sample pre action letters?

We have a selection of sample letters on this site:[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']

Standard pre action letter – Rent arrears AST (tenant in occupation)

Standard pre action letter – Arrears or damages, tenant or guarantor after vacated

Standard pre action letter – after section 21 served

What are the principles of the protocol?

The principles that should govern the conduct of the parties are that, unless the circumstances make it inappropriate, before starting proceedings the parties should–

(1) exchange sufficient information about the matter to allow them to understand each other’s position and make informed decisions about settlement and how to proceed

(2) make appropriate attempts to resolve the matter without starting proceedings, and in particular consider the use of an appropriate form of ADR in order to do so.

The parties should act in a reasonable and proportionate manner in all dealings with one another. In particular, the costs incurred in complying should be proportionate to the complexity of the matter and any money at stake. The parties must not use this Practice Direction as a tactical device to secure an unfair advantage for one party or to generate unnecessary costs.

Exchanging Information Before Starting Proceedings

Before starting proceedings–

(1) the claimant should set out the details of the matter in writing by sending a letter before claim to the defendant. This letter before claim is not the start of proceedings; and

(2) the defendant should give a full written response within a reasonable period, preceded, if appropriate, by a written acknowledgment of the letter before claim.

A ‘reasonable period of time’ will vary depending on the matter. As a general guide–

(1) the defendant should send a letter of acknowledgment within 14 days of receipt of the letter before claim (if a full response has not been sent within that period);

(2)where the matter is straightforward, for example an undisputed debt, then a full response should normally be provided within 14 days;

(3) where a matter requires the involvement of an insurer or other third party or where there are issues about evidence, then a full response should normally be provided within 30 days;

(4) where the matter is particularly complex, for example requiring specialist advice, then a period of longer than 30 days may be appropriate;

(5) a period of longer than 90 days in which to provide a full response will only be considered reasonable in exceptional circumstances.

Alternative Dispute Resolution

Starting proceedings should usually be a step of last resort, and proceedings should not normally be started when a settlement is still actively being explored. Although ADR is not compulsory, the parties should consider whether some form of ADR procedure might enable them to settle the matter without starting proceedings. The court may require evidence that the parties considered some form of ADR.

The Legal Services Commission has published a booklet on ‘Alternatives to Court’, CLS Direct Information Leaflet 23 (www.clsdirect.org.uk) which lists a number of organisations that provide alternative dispute resolution services. The National Mediation Helpline on 0845 603 0809 or at www.nationalmediationhelpline.com can provide information about mediation.

Claimants letter before claim

The claimant’s letter should give concise details about the matter. This should enable the defendant to understand and investigate the issues without needing to request further information. The letter should include–

(1) the claimant’s full name and address;

(2) the basis on which the claim is made (i.e. why the claimant says the defendant is liable);

(3) a clear summary of the facts on which the claim is based;

(4) what the claimant wants from the defendant;

(5) if financial loss is claimed, an explanation of how the amount has been calculated; and

(6) details of any funding arrangement (within the meaning of rule 43.2(1)(k) of the CPR) that has been entered into by the claimant.

The letter should also–

(1) list the essential documents on which the claimant intends to rely;

(2) set out the form of ADR (if any) that the claimant considers the most suitable and invite the defendant to agree to this;

(3) state the date by which the claimant considers it reasonable for a full response to be provided by the defendant; and

(4) identify and ask for copies of any relevant documents not in the claimant’s possession and which the claimant wishes to see.

Unless the defendant is known to be legally represented the letter should–

(1) refer the defendant to this Practice Direction and in particular draw attention to paragraph 4 concerning the court’s powers to impose sanctions for failure to comply with the Practice Direction; and

(2) inform the defendant that ignoring the letter before claim may lead to the claimant starting proceedings and may increase the defendant’s liability for costs.

Debt claims by a business (most landlords) where the tenant is an individual should additionally

(1) provide details of how the money can be paid (for example the method of payment and the address to which it can be sent); (2) state that the defendant can contact the claimant to discuss possible repayment options, and provide the relevant contact details; and (3) inform the defendant that free independent advice and assistance can be obtained from organisations including those listed in the table below.

Defendant’s acknowledgement of the letter before claim

Where the defendant is unable to provide a full written response within 14 days of receipt of the letter before claim the defendant should, instead, provide a written acknowledgment within 14 days.

The acknowledgment–

(1) should state whether an insurer is or may be involved;

(2) should state the date by which the defendant (or insurer) will provide a full written response; and

(3) may request further information to enable the defendant to provide a full response.

A claimant should allow a reasonable period of time of up to 14 days for a defendant to obtain advice.

Defendant’s full response

The defendant’s full written response should–

(1) accept the claim in whole or in part; or

(2) state that the claim is not accepted.

Unless the defendant accepts the whole of the claim, the response should–

(1) give reasons why the claim is not accepted, identifying which facts and which parts of the claim (if any) are accepted and which are disputed, and the basis of that dispute;

(2) state whether the defendant intends to make a counterclaim against the claimant (and, if so, provide information equivalent to a claimant’s letter before claim);

(3) state whether the defendant alleges that the claimant was wholly or partly to blame for the problem that led to the dispute and, if so, summarise the facts relied on;

(4) state whether the defendant agrees to the claimant’s proposals for ADR and if not, state why not and suggest an alternative form of ADR (or state why none is considered appropriate);

(5) list the essential documents on which the defendant intends to rely;

(6) enclose copies of documents requested by the claimant, or explain why they will not be provided; and

(7) identify and ask for copies of any further relevant documents, not in the defendant’s possession and which the defendant wishes to see.

If the defendant (or insurer) does not provide a full response within the period stated in the claimant’s letter before claim (or any longer period stated in the defendant’s letter of acknowledgement), and a claim is subsequently started, then the court is likely to consider that the claimant has complied.[/amember_protect]

This is not always the case. If a person did not attend trial and has a good reason for failing to attend, it is possible for the judgement or order to be set aside.

It is then possible for a court to vary or revoke the previously made order.

Rule 3.1(7) reads: A power of the court under these Rules to make an order includes a power to vary or revoke the order.