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Remedies And Enforcement Of Proprietary Rights Notes

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Class 9.2 - Remedies Forfeiture of lease by landlord

* The landlord's primary remedy lies in his/her capacity to bring the lease to an end prior to expiry - forfeiture of the lease o

Because of the drastic nature of this remedy (especially in long term leases) - strict procedural requirements must be met before this right can be exercised: I.

An express right to forfeit in the lease or implied by statute must be present

II. The tenant must have breached the lease

III. The landlord must serve notice unless the lease/breach comes within an exception to this

IV. The breach must be current at the expiry of the notice period

V. The landlord must effectively forfeit the lease

VI. The tenant must not have been granted RAF

Enforcement of the right of re-entry

* At common law a landlord had no implied right to bring the lease to an end and had to wait for effluxion of time - but leases would generally confer an express power on the landlord to terminate in the event of a breach. Due to this remedies extreme nature, equity and now statute regulated it tightly: o

o

Unless a formal demand was made for rent, failure to pay would not entitle forfeiture
- unless the landlord was entitled to by express stipulation by the lease (which was then often done)S 8 of the Landlord and Tenant Act provides that where onehalf year's rent is in arrears, reentry may be effected without formal demandS 85(1)(d) provides reentry for breach of a covenant for a month, after two months if it has not been remedied

Where a tenant breaches a covenant other than rent, legislation provides some protection for the tenant by requiring notice. S 129 (1) of the CA provides: (1) A right of reentry for breach of a covenant, condition or agreement in the lease is not enforceable unless and until the lessor serves on the lessee a notice: a.

Specifying the particular breach complained of; and

b.

IF the breach is capable of remedy, requiring the lessee remedy it; and

c.

If the lessor claims compensation, requiring the lessee to pay it

and the lessee fails within a reasonable time to remedy the breach, if it is capable of being remedied, and compensation is required to pay reasonable compensation to the lessor for it Exceptions are provided for in the Act (for example in the case of leases of one year or less (s 129(6)(a))but the section has effect notwithstanding any stipulation to the contrary (s129(10)). Furthermore the act doesn't affect the law relating to reentry in the case of nonpayment of rent (s129(8))The purpose of this is to allow tenants to remedy breaches before the matter reaches courtThis procedure has to be followed even if the breach is irremediable (in which case the notice needn't require the breach to be remedies - Horsey Estate v Steiger)The requirement of demanding compensation isn't mandatory - the landlord does not have to if he does not want to (Rugby School v Tannahill)The breach must be specified - mere identification of breach of a particular covenant without detailing the particular damage will be ineffective (Gerraty v McGavin)In the cases of breaches incapable of remedy:

*

Notice operates to give the tenant an opportunity to consider his or her position

*

In the case of assignment without consent the notice must be directed to the assignee since the assignment is effective notwithstanding the breach (Chelfield v Goldsea)

*

A test was posited by Slade LJ in Expert Clothing Service v Hillgate House for cases of positive 'once and for all ' covenants o

o

The only instance in which failure of the s 146 notice to require a remedy of a breach would be justifiable is IF "compliance with the notice, coupled with the payment of any appropriate monetary compensation" would not have effectively remedied the breach

*

This test was applied for a negative covenant (Savva v Houssein - tenant breached covenant not to display and not to make alterations without consent)

*

Scala House and Distrct v Forbes asid that breach of a covenant to sublet is never capable of remedy; this is questionable in light of the above tests

Tenants must be given a 'reasonable time to remedy the breach' (s 129(1)) which will usually be three months (Penton v Barnett) but it depends on the circumstances:

?

Billson v Residential Apartments - 14 days enough since the tenants disregarded all prior warnings and indicated no intention to remedy itFor irremediable breaches a shorter time is allowed

*

o

Civil Service Coop Society v McGrigor's Trustee - 14 days reasonable between service and reentry

Courts generally resist attempts to circumvent legislation for notice a prelude to forfeiture:?

Plymouth Corp v Harvey

*

Facts: Tenant required by landlord to execute deed of surrender of the lease in escrow - this was to become effective if the tenant breached a covenant in the lease

*

Held: The deed of surrender provided for forfeiture under the guise of surrender and since the landlord didn't comply with statutory requirements the purported surrender was void

Holden v Blaiklock

*

Facts: Residential lease in standard form provided that on breach, the tenancy should, at the landlord's option, become a tenancy from week to week terminable on a week's notice

*

Held: This comes within s 129 and hence the notice provisions must be complied with

No right to forfeit if breach is waived

* If the landlord elects to treat the lease as still in force the landlord is said to waive the breach - this can be express or implied o

It is implied if the landlord is aware of the tenant's breach and performs some act clearly recognizing its continuance (e.g. accepting rent).

o

But once the landlord has finally and unequivocally elected to treat the lease as forfeited, no subsequent act can amount to waivero

Lidsdale Nominees v Elkhardly - landlord's solicitors wrote that they have been instructed to terminate the lease and that a tender of money was to be treated as mesne profitso

NGL Properties v Harlington - the issue and service of a writ by the landlord claiming possession on the ground of the tenant's breach was effective to terminate the lease regardless of subsequent discontinuation of the action

Held: Acceptance of money tendered for rent after the breach of covenant amounts to waiver by the landlord notwithstanding the fact that it was purported to be accepted as mesne profits

Waiver of a covenant or condition does not operate as a general waiver of all breaches but only extends to the particular breach in question

o

o

Cornille v SahaFacts: Lessor, after learning that the lessee sublet in breach of a covenant, took proceedings for access and damages for failure to grant access. She then later purported to forfeit the lease for breach of the covenantHeld: The act of the lessor in seeking access was an unequivocal act of recognition of the subsisting lease and was made with knowledge of the fact that the lessee had sublet in breach of covenant - this is waiver in law

If a lessee assigns the lease, taking covenants from the assignee, the lessee can reserve a right of reentry for breach even against subsequent lessees or subtenants against whom the covenants are not directly enforceable by the original lessee (Shiloh Spinners v Harding)

Forfeiture must be effective Moore v Ullcoats Mining Co Ltd (1908) 1 Ch 575 Facts: M leased iron mines to the defendant for 23.5 years who covenanted, inter alia, to allow the lessor and his agents at all reasonable times to inspect the mines. The lease provided that on default by the lessees in performing the covenant the lessor might reenter the premises and thereupon the lease was to determine absolutely without prejudice to any claim for rent. The lessor died in 1970 and an agent of his executors was refused permission by the lessees to inspect the mine, after which notice was given to the lessee that the lease was determined by this breach and that the plaintiffs intended to reenter. The plaintiff then served a notice on the lessees demanding possession and then issued a writ claiming, inter alia, possession. Warrington J at first instance had to consider whether the plaintiffs were entitled to recover possession in consequence of the breach. Warrington J:

*

A writ claiming possession simpliciter is equivalent to reentry - the question is whether the writ is an unequivocal claim for possession o In this particular case the writ was not so equivocal - the writ claimed other relief showing that the plaintiffs reserve the decision to go for these other grounds of relief rather than possession

The next question was whether or not, if the writ wasn't an unequivocal demand, their election contained in two notices amounted to reentry.

*

Where a condition in the lease is that the landlord may reenter - he must actually reenter or he must do that which is in law equivalent to reentry (commence an action for the purpose of obtaining possession)

* The necessity of actual reentry depends on the wording of the condition - : o If it is that upon the doing of the act the reversioner may enter, there must be an entry to avoid the estate o If the estate is granted upon the condition that if the grantee do such an act, the estate shall thereupon immediately cease and determine, no entry Is necessary
? The present case falls within the first class
? Also it is not possible on any construction of the reentry proviso to say that the lessors have reentered when all they did was give a notice of intention to reenter, founded on a statement that the lease was determined (which it was not) Neither the issue of the writ nor the notices amounted to reentry. The action fails altogether.

*

The view in this case that physical reentry/reentry by writ were exclusive means of effecting reentry was not preferred in QLD in Ex Parte Whelan, an unequivocal demand communicated to the lessee being seen as enough o

*

However in NSW decisions are clearly in support - Consolidated Development v Holt

Billson v Residential Apartments - the effect of the adoption of either of these methods is to determine the lease and not merely evince an intention to do so o

In the case of reentry by writ, if pleadings admit an entitlement to forfeit, the service of the writ effects the forfeiture which is complete and cannot be undone

*

The effect of a proviso for forfeiture or reentry on breach is to render the lease voidable at the option of the landlord should the tenant breach the relevant covenant o

*

In the absence of an express proviso entitling forfeiture for breach, breach does not entitle re
entry unless the covenant breached is a fundamental term of the contract or amounts to repudiation (i.e. ordinary contractual principles apply) o

*

A breach can never render he lease void even if it is expressly stated to do so - Massart v Blight

A proviso for reentry can be implied by statute

Though unusual covenants can be expressed as 'conditions' - e.g. lease granted 'on condition' that the tenant perform acts - the landlord can then forfeit on breach of condition whether or not forfeiture is authorised o

Again this renders the lease voidable not void (Rede v Farr)*

In some cases a covenant to pay rent may be construed as a condition. There is authority for the proposition that a rent term, if breached, allows reentry even in the absence of an express proviso for reentry (Doe d Darke v Bowditch)

If a landlord decides to forfeit the leas eon breach, the lease is determined from the date the landlord unequivocally elects to forfeit the lease o

From this date the tenant is a trespasser and liable to pay mesne profits for occupation (Elliott v Boynton)

o

If the person is a tenant then for all other times the appropriate action is for arrears of rent, or if rent is not agreed then a reasonable sum in respect of use/occupation)

o

If a landlord proceeds to forfeit by a writ claiming possession, the reentry is effected by issue and service of the writ, not just by issue Canas Property v K L Television SeriesHence the landlord can claim rent until the date of service and mesne profits from thereafter until possession is relinquished; mesne profits will be calculated according to market value, even if it is higher than rent

Relief against forfeiture Stieper v Deviot Pty Ltd (1977) 2 BPR 9602 Facts: Appellant is the lessee under an unregistered lease for 6 years for construction of fibreglass boats. The lessor forfeited for breach of covenants to pay rent. A crossclaim was made for relief against forfeiture as rent was paid which was dismissed. The conduct alleged in response to tis defence was the lack of care in using the premises incl. storing inflammable liquids contrary to the Inflammable liquids act Question of Law to be decided: What circumstances warrant refusal of relief when breaches concerning payment of rent are remedies

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