#7191 - Leases And Covenants - Property and Equity 2

Key words to remember:

• Lessor (Landlord) – Lessee/Tenant

• ‘Lets/Leases/Demises’;

• Assigning the reversion - the lessor’s interest

• Assigning the lease/sublet - the lessee’s interest

How are leases created?

• In Old System – Conveyancing Act s 23B, C, s 23 D

• In Torrens – registration by s 53 (1) RPA [except 3 years or less - s 23D CA and s 42(1)(d))

  • These short term leases can have terms proven and enforced (Bolton v Tomlin) – this works for periodic tenancies

    • The tenant MUST have an immediate right of possession for these (s 23 D(2))

  • Perpetual Trustees v Smith (VIC)– unregistered lessee and unregistered fee simple can be treated as a priorities dispute

• Can also be implied by law

Requirements for a Lease - Certainty

• Fixed Term Tenancies - Duration must be certain/capable of being rendered as such – tying it up to something uncertain does not suffice (end of war – Lace v Chantler, ownership of shares – Wilson v Meudon) but you can have a maximum period and a determinable limitation

• Periodic Tenancies – fixed-term lease with superadded provision that it continues until terminated by notice.

  • Can be combined with a fixed term (at least 3 years – Amad v Grant) or contingent (until land required – Re Midland Railway)

  • Void if stipulates that only one party can determine (Centaplay v Matlodge)

• Tenancy at will – terminated by notice but can require reasonable notice through a packing up period (Landale v Menzies) –

  • Created by implication of law, determined by death or an attempt to assign.

  • Tenant is liable to pay reasonable some for occupation (Zegir v Woop

• Tenancy at sufferance – created by holding over without assent/dissent of landlord

Requirements – Exclusive Possession (See Radaich below)

• Somma v Hazle Hurst – unmarried couple sign license agreement for bedsitter to use a room and nominate another who could use it No lease, no exclusive possession

• Chaka Holdings – the label is one of a number of factors to take into account

• WA Club v Nullagine Investments – absence of quiet possession does not amount to license if the ‘common sense of the matter’ shows a lease

• **Cobb v Lane – Familial arrangement to provide financial assistance did not suggest a binding legal relationship – an ‘exceptional case’

• AU Convention & Exhibition v SCC – employer granting possession to perform duties not a lease but a grant of exclusive possession is remuneration then it does (HA Warner v Williams)

Agreements for a Lease

• Can be enforceable under Walsh v Lonsdale but there are discretionary considerations – grantor breaching the head lease (Warmington v Miller) tenant persistently breaching (Marshall v Snowy River Shire Council) these leases contain an implied term that the lease contains the ‘usual covenants’ (rent, delivery of premises in repair, quiet enjoyment, taxes) to be found in leases (Hampshire v Wickens)

• Specific performance can be granted on two agreements (Industrial Properties v Associated Electric Industries) – landlord enters into agreement for lease without title

• Ordinary requirements apply – contract must be final and enforceable, sufficiently certain (parties, location of premises, rent), writing OR part performance + court willing to grant SP

• The state of affairs to which s 127 applies is when a tenant enters into possession with no agreement and pays rent AND under the common law there would be a presumption of a year to year tenancy

• Under such a case a tenancy terminable at one month’s notice is created

• But this tenancy incorporates all the terms of the lease without agreement unless it is inconsistent with the one month’s notice – this includes an implied end date

Note: Agreements as to duration are only relevant to whether rent is paid by reference to an aliquot part of a year

• In the absence of other evidence payment of rent monthly led to a tenancy at will terminable at a month’s notice

• The duration of the lease being 2 years, was incorporated into this lease at will

• It was hence terminated at the conclusion of these 2 years since notice did not terminate it earlier

(Does this become a tenancy at sufferance?)

Can arise

• Where the parties have no agreement or the leas e is void

• Where the lease did not comply with formalities

• Where the lessee holds over

Despite the common law position s 127(1) of the CA (applied to Torrens) provides by force of statute that:

• No tenancy from year to year is implied by payment of rent

• If there is a tenancy with no agreement as to duration (as in no agreement complying with the formalities) it is terminable at will on a month’s notice expiring at any time

From Dockrill – other things can be incorporated – e.g. lessee’s covenant to repair, but not anything inconsistent with one month’s notice (Kemp v Lumeah – breach converts to terminable on week’s notice)

Moore v Dimond – “quarterly payment” is part compensation for a year’s hence it will be from year to year

• Turner v NY Motors – tenant paid rent monthly – monthly tenancy created (also even if tenant doesn’t pay rent initially, giving rise to a tenancy at will, if they start paying rent it becomes periodic)

Box v Atfield – but if there is a tenant remain in possession after a lease for a year expires and pays weekly, a year to year tenacy will be inferred

Burnham v Carrol Musgrove Theatre – holding over after a periodic tenancy creates a presumption that the same periodic tenancy is inferred

Estoppel asserted by tenant

• Where a landlord creates a tenancy (by all the formalities etc.) without authority, even though nemo dat quod non habet, the tenancy will create an estoppel (Bruton v London and Quad Housing Trust)

  • But note: Someone with title paramount can evict them, leaving their only claim to be in damages against the purported landlord

  • Note: If the landlord does acquire the title this will feed the estoppel creating a leasehold interest (Bucknell v Mann)

Estoppel asserted by landlord

• Industrial Properties v Associated Electrical – tenant is estopped from denying landlord’s title unless faced with a claim of greater title – hence cannot defeat a claim for breach of covenant for repair on the grounds that the landlord didn’t have title

Walton Stores – lease created by equitable estoppel – arises where a tenant spends money on the expectation for a new lease

Leases to commence in the future are called reversionary leases

• S 120(3) CA – leases commencing at a time too remote (21 years+) are void - but a contract to grant a lease 21 years after the contract is not reversionary lease when granted (Re Strand and Savoy Prop)

Hudson v Cripps –applies to all leases to ensure the tenant can occupy and enjoy premises without disturbance or interference from the lessor and those for whom they are responsible

• Broken by: trespass (removing windows – Lavender v Betts, threats to remove tenant – Kenny v Preen) OR other things like constructing a hoarding prejudicially effecting a business (even with statutory authorization) – JC Berndt v Walsh; contracting a roof repairer who hosed asbestos infected material off the roof – AF Textile Printers v Thalut)

• But it has to be more than trivial (not writing letters to vacate – DJs v Leventhal ; building a staircase interfering with privacy – Browne v Flower) – a substantial interference (Hawkesbury v Battik)

• Includes any lawful act of the landlord causing interference (Proper use of defective drains causing flooding – Sanderson v Berwick), the elements of negligence are unnecessary (AF Textile v Thalut) but does not extend to exercise of a...