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Leases And Covenants Notes

Law Notes > Property and Equity 2 Notes

This is an extract of our Leases And Covenants document, which we sell as part of our Property and Equity 2 Notes collection written by the top tier of University Of New South Wales students.

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Concept

Key Cases

Issue

Principle

Requirements of Leases

Key words to remember:Lessor (Landlord) - Lessee/Tenant'Lets/Leases/Demises';Assigning the reversion - the lessor's interestAssigning the lease/sublet - the lessee's interest

Ratio

Comments

How are leases created?In Old System - Conveyancing Act s 23B, C, s 23 DIn Torrens - registration by s 53 (1) RPA [except 3 years or less - s 23D CA and s 42(1)(d))

o

These short term leases can have terms proven and enforced (Bolton v Tomlin) - this works for periodic tenanciesoThe 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 - CertaintyFixed 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 limitationPeriodic Tenancies - fixed-term lease with superadded provision that it continues until terminated by notice.o

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

o

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) -

o

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

oTenant 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 possessionChaka Holdings - the label is one of a number of factors to take into accountWA 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

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

Radaich v Smith

Document keeps saying 'license' - was a lease created nonetheless?

*

McTiernan J - Save in exceptional cases, the fact of exclusive possession if not decisive against a license is a consideration of the first importance

*

Windeyer J - look at intention in the sense of an intention to grant exclusive possession

* Carrying on a milk bar through a 'lock up shop' arrangement can only be done with exclusive possession

* The agreement contemplates that the "licensee" has control of the premises

* This amounts "in truth and in substance to a lease"

Concept

Key Cases

Issue

Implied Tenancies

Dockrill v Cavanag h

The operation of s 127

Principle

*

Ratio 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

*

*

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

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

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

Under such a case a tenancy

terminable at one month's notice is created

*

*

Comments

(Does this become a tenancy at sufferance?)

Can ariseWhere the parties have no agreement or the leas e is voidWhere the lease did not comply with formalitiesWhere 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 rentIf 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

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

*

A specifically performable

*

agreement for a lease and a tenancy at will implied by law are independent sources of rights

*

The tenancy at will will contain the

terms of the unregistered memorandum as applicable

The agreement under contract was repudiated (expressly by the tenant's letter saying they would vacate)

*

Even though there would be no damages at law the agreement will be enforced in equity and damages awarded in lieu of specific performance

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 yearTurner 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 Tenancy by estoppel and Tenancy created by equitable estoppel

Estoppel asserted by tenantWhere 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)

o

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

o

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

Estoppel asserted by landlordIndustrial 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 Concurrent Leases If a landlord grants two leases over the same period is he is said to created concurrent leases by granting a lease of the reversion

Reversionary LeasesIf the period of the second grant exceeds that of the first, the holder of the reversion collects rent etc. as a landlord until the first lease expires, upon which he gets a leaseIn the alternate situation he gets the reversion for the whole period granted and collects rent etc.

Leases to commence in the future are called reversionary leasesS 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)

Note: Interressee termini (no interest until the lessee enters pursuant to the lease) does not apply under s 120A of the CA

Concept

Key Cases

Issue

Principle

Ratio

Comments

Covenants implied by law
- Quiet enjoyment

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 responsibleBroken 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 title paramount (e.g. business in lease restrained by injunction by title paramount; no remedy for quiet enjoyment from landlord)

Martins Camera Corner v Hotel MayfairBreach of quiet enjoyment by downpipes blocked with rubbish causing rain to overflow the shop; similar incident happened before and no inspection was undertaken. A clause provided that he would only be liable if there was an accident or if a request was made to fix something by reason of neglect.? Court held the clause couldn't exclude liability for negligence or for his acts not relating to the premises actually demised

Famous Makers Confectionary v Sengos - quiet enjoyment can be modified - e.g. permission to exhibit to purchasers Remedies

Covenants implied by Law - Obligation not to derogate from the grantPunitive damages may be available where the breach of covenant constitutes a separate and identifiable tort (Lavender v Betts) but not where it does not (Perera v Vandiyar) or breach of contract?Even if harassing amounts to criminal conduct, the breach of covenant is available (McCall v Abelesz)

Aldin v Clark - applies where landlord demises premises to carry on a particular business. The landlord must abstain from doing anything on the remaining land that renders the first unfit for carrying on the business how it is ordinarily carried on (but not for special branches of the business that call for extraordinary protection) Instances:Aldin v - Purpose: Timber business; Alleged breach: Erecting equipment for supply of electricity which interfere with air required for timber; Held: Breach (extends to assignees of the original landlord)Cable v Bryant: P: Stable AB: constructing hoardings interfering with ventilation H: BreachLend Lease v Zemlicka: P: Warehousing, AB: demolishing part of the warehouse and allowing burglars to break in H: breachTelex v Thomas Cook & Sons: P: Servicing audiometric equipment and dental/optical equipment AB: Complying with council notices to alter lifts/sprinklers and installing an AC system, H: Whether it was characterized as breach of quiet enjoyment or obligation not to derogate is immaterial. Here it was breached since a lessor can't do anything to render the premises

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