Leases

Leases
Cameron Stewart
(thanks to Jim Helman and
Shae McCrystal errors are
mine)
(c) Cameron Stewart 2009
Definition
A lease is an agreement to allow
someone to use land for a period
The granter of the lease is called a
lessor (or landlord); the person that
takes the lease is called the lessee (or
tenant). The lessors interest during the
currency of the lease is called a
reversion. You may also come across
an older term used for lease and that is
a demise. This simply means a lease.
Types of tenancies
Fixed term certain starting date and
period
Types of tenancies
Periodic tenancies for a term which
continues to roll over
The maximum duration of the periodic
tenancy is unascertainable (will continue as
long as the tenant pays rent and the
landlord accepts rent).
Tenancy can be determined by the giving
of notice equivalent to the tenancy period
the tenancy is considered to be capable of
being rendered certain - and each tenancy
period is certain in and of itself.
Types of tenancies
The common law will recognise an implied
periodic tenancy if a tenant has gone into
possession of property and started paying
rent. This might arise where the parties
have agreed to create a tenancy (they
may or may not have agreed on a term)
but have not complied with the
formalities or have created a void
agreement, or where a tenant holds over
- remains in possession and pays rent
after the expiration of a fixed term lease.
Types of tenancies
The duration of a periodic tenancy will depend on how
often the rent is paid. If the rent is paid weekly, then
you will generally have a weekly periodic tenancy
which is determinable through giving one weeks
notice. The same applies for fortnightly payments
notice equates with the period for which rent is paid.
However, if the method of calculation of the rental
payments incorporates a yearly measure, then the
court implies that the tenancy is yearly: Chan v
Cresdon (1989) 168 CLR 242 per Mason CJ, Brennan J,
Deane J and McHugh J at 248 It is well settled that
entry into occupation followed by payment of rent
brings into existence a common law tenancy from
year to year, so long as the payment of rent is
referable to a yearly tenancy.
Types of tenancies
Why? Landlord were ripping off
tenants and the common law judges
became activist
Eg Agricultural tenant at will plants
crops and is ejected
Types of tenancies
The other circumstances in which a yearly
tenancy will arise is where the parties had
agreed on a fixed term lease exceeding a
year but had not fulfilled the requirements
to enforce that obligation in law. The High
Court in Moore v Dimond (1929) 43 CLR
105 held that in these circumstances the
courts will infer an intention to create a
yearly tenancy (so the yearly tenancy is
the longest, the common law will recognise
outside a legally enforceable contract).
Types of tenancies
The period of time for termination of a yearly
tenancy is different from other periodic tenancies.
The common law states that an implied yearly
tenancy may be terminated by six-months notice
ending at the end of the year term. However this
position has been affected by the Conveyancing Act
1991. Section 127(1) provides:
No tenancy from year to year shall, after the
commencement of this Act, be implied by payment
of rent; if there is a tenancy, and no agreement as
to its duration, then such tenancy shall be deemed
to be a tenancy determinable at the will of either of
the parties by one month's notice in writing expiring
at any time.
Types of tenancies
The words no agreement as to
duration were interpreted in the
case Dockrill v Cavanagh (1944) 45
SR (NSW) 78 to mean no agreement
as to duration that complies with
legal formalities. Therefore section
127 applies where the parties have
agreed to a longer term but have not
created an enforceable agreement.
Types of tenancies
Tenancy at sufferance - a tenancy at sufferance will
arise if the tenant holds over after the expiration of a
fixed term lease without the consent or dissent of the
landlord, and will only last until the tenant pays rent
and the landlord accepts it or the landlord informs the
tenant that they must quit the premises.
The tenancy at sufferance arises where the courts
assume that there is a lack of agreement to the
continued occupancy of the tenant (because the
landlord has not consented or dissented to the ongoing
occupation of the tenant).
This means that such tenants cannot be obliged to pay
rent but equally can be evicted at any time. Some
authors suggest that the tenancy at sufferance is a
legal fiction to prevent a finding that the tenant in
occupation in these circumstances is a trespasser.
Types of tenancies
Tenancy at will - the common law will recognise an implied

tenancy at will if the tenant has gone into possession and the
parties have impliedly or expressly agreed that either party
can terminate the tenancy at any time. While the lessor is
entitled to compensation for the period of occupancy,
generally speaking the tenant does not pay rent.
Tenancies at will can be created by agreement, but they
usually arise by implication when for example a tenant holds
over after the expiration of their fixed term lease with the
consent of the landlord but before they pay rent; or where a
tenant is let into possession before the creation of a lease
and payment of rent. These tenancies usually arise where the
parties are undergoing a period of transition from one state
to another.
Types of tenancies
If a tenant holds over as a tenant at will
after the expiration of the lease, unless the
lease expressly provides for the terms that
will apply to any tenancy at will, the terms
of that lease will apply to the tenancy at
will as appropriate (covenant to maintain
premises; landlord to repair).
Types of tenancies
Tenancy by estoppel 2 kinds
Tenancy by want of title if the landlord
discovers that he/she has no title
agreement is still binding between
landlord and tenant (but not against 3rd
parties
Agreement to lease - Waltons Interstate
(Stores) v Maher (1988) 164 CLR 387
Types of tenancies
Concurrent tenancies a lease of the reversion
A (lessor) B3years
(tenant)
Reversion Leasehold
5 years
C (lease of reversion)
During 3 yrs C is the landlord, then for next 2
becomes the tenant
Types of tenancies
Reversionary leases a lease of the
reversion that comes into being at a future
time
S 120A(3) CA cannot be longer than 21
year wait
Types of tenancies
Retail Leases Act 1994 s 3
retail shop lease or lease means any
agreement under which a person grants or
agrees to grant to another person for value a
right of occupation of premises for the purpose
of the use of the premises as a retail shop:
(a)whether or not the right is a right of
exclusive occupation, and (b)whether the
agreement is express or implied, and
(c)whether the agreement is oral or in writing,
or partly oral and partly in writing.
Types of tenancies
retail shop means premises that:
(a)are used, or proposed to be used, wholly or
predominantly for the carrying on of one or more
of the businesses prescribed for the purposes of
this paragraph (whether or not in a retail shopping
centre), or (b)are used, or proposed to be used,
for the carrying on of any business (whether or not
a business prescribed for the purposes of
paragraph (a)) in a retail shopping centre.
Sched 1 - Adult books and toy shops thru to
Writing materials shops
Types of tenancies
5Certain retail shops excluded from the operation of
this Act
This Act does not apply to any of the following retail shops:
(a)shops that have a lettable area of 1,000 square metres or
more,
(b)shops that are used wholly or predominantly for the carrying
on of a business by the lessee on behalf of the lessor,
(c)any shop within premises where the principal business
carried on on those premises is the operation of a cinema,
bowling alley or skating rink and the shop is operated by the
person who operates the cinema, bowling alley or skating
rink,
(d)any premises in an office tower that forms part of a retail
shopping centre,
(e)premises of a class or description prescribed by the
regulations as exempt from this Act.
Types of tenancies
6AApplication of Act to short-term leases
(1)Generally, Act not to apply to short-term leases
Subject to subsection (2), this Act does not apply to a lease of
a retail shop for a term of less than 6 months without any
right for the lessee to extend the lease (whether by means of
an option to extend or renew the lease or otherwise).
(2)Exception for successive, extended or renewed
leases for more than one year
If the lessee has been in possession or entitled to be in
possession of the retail shop without interruption for more
than one year (whether by means of a series of 2 or more
leases or by means of an extended or renewed lease or
leases, or by any combination of those means), this Act
applies to: (a)the lease on and from the day on which the
lessee has been in possession or entitled to be in possession
of the shop for more than one year, and (b)any succeeding
lease or leases of the shop to the lessee, where possession or
entitlement to possession is not interrupted.
Types of Tenancies
The Residential Tenancies Act 1987 sets out the rights and
obligations of landlords and tenants with respect to
residential premises. The definitions of residential
premises and residential tenancy agreement in section
3 should be noted. In particular that the definition of
residential premises is:
Any premises or part of premises . . . used or intended to
be used as a place of residence . . .
Sections 5 and 6 deal with the application of the Act and set
out some agreements to which the Act does not apply. In
particular where the tenant is a party to an agreement
made in good faith for sale or purchase of the premises,
where the person is a boarder or lodger, and, where
premises are rented for purposes of holidaying. It should
also be noted that the Act does not apply to any part of a
hotel or motel, any part of a club, and some other premises
and institutions.
Requirements for a lease

A leasehold interest is created in
circumstances where a landlord or lessor
grants to a tenant or lessee:
for a term which is certain or capable of
being made certain
the right to exclusive possession of the land
for a period less than the term of the
landlords interest, and
with the intention of giving the tenant an
interest in land rather than a personal
privilege.
Certainty of term
Leases must commence on dates which are certain or

capable of determination. Usually a date is set out in the
lease, but this is not necessary and the commencement
date can be determined by reference to some event. In the
text Butt refers to several examples in [1506]:
from completion of the building
when the gas is connected
when a certificate issues
The duration of the lease must be obvious from its terms.

Usually the term is expressed in years or sometimes in
years and months or days. The need for a certain term is
not a requirement for leases for life, tenancies at will,
tenancies at sufferance or periodic tenancies, e.g. a
tenancy from week to week or month to month.
Certainty of term
The lease may be of any length so long as the length is capable of
being rendered certain and is less than the landlords estate.
The requirement that the duration of the lease be capable of being
rendered certain applies before the lease takes effect. This means
that if the duration of the lease is to be determined by reference to
an external event, that external event MUST have occurred before
the commencement of the lease.
Lace v Chandler [1944] KB 368: A lease for the duration of the
war was invalid lease because the period of time was uncertain
and not capable of being rendered certain before the
commencement of the rental term.
The simplest way to get around this problem is to have a length of
time attached to the external event. For example a lease that says
- duration for 10 years or to the end of the war (whichever comes
first). So here, the fact that the maximum term is certain means
that the fact that it could be brought to an end sooner does not
render it void. Examples of this are where the lease contains
provisions allowing either party to terminate the lease earlier upon
giving notice.
Certainty of term
The rule does not apply to:
tenancies at will
tenancies at sufferance
periodic tenancies
Certainty of term
It is quite common, but not good practice) for
tenants to sign leases at a date much later than
the date on which possession was given by the
landlord.
The problem that arises in relation to leases under
the Retail Leases Act 1994 is highlighted by the
case of Aspromonte Pty Ltd v Zagari (1999) NSW
ConvR 55-916.
Retail Leases Act, s 8 provides that a lease is
entered into when a person enters into
possession of the retail shop as lessee under the
lease or begins to pay rent under the lease
(whichever happens first).
Exclusive possession
Wik Peoples v Queensland (1996)
187 CLR 1 per Toohey J at 116 the
point is not so much that a lease
confers exclusive possession; it is
that the conferring of exclusive
possession is an indication that the
arrangement in question is a lease.
Lease or Licence?
The test of exclusive possession is
important because it allows the court to
distinguish between a person who has
been granted a licence to access property
and a person who has been granted a
lease.
A licence does not create an interest in
land and does not have the protective
covenants contained in a lease.
Licences are in personam/contractual not
proprietorial
Intention to create a lease?

In the English decision of Errington v
Errington [1952] 1 KB 290, the English
court said that you need to find both
exclusive possession AND and intention
to create the relationship of landlord and
tenant. This approach was rejected by
the High Court in Raidaich v Smith and
was also rejected by the House of Lords
in England in Street v Mountford [1985]
AC 809.
In Radaich v Smith (1959) 101 CLR 209 the High
Court was asked to consider whether a document
which was expressed to be the sole and exclusive
licence and privilege to supply refreshments to the
public was a lease or not. The document provided for
payment of a licence fee, for the licensee to pay for
gas and electricity connected to the premises. The
licence also contained a provision:
10. The License herein granted shall be deemed to be a
Lease as defined in the Landlord and Tenant (Amendment)
Act 1948-1952
The High Court came to the conclusion that if the

right conferred on the occupant of the premises is one
of exclusive possession for a set period of time then it
creates a leasehold interest, and not a licence.
Isaac v Hotel de Paris [1960] 1WLR 239 the Privy Council
considered an appeal from the Federal Supreme Court of
Trinidad. The Hotel de Paris owned an hotel and leased two
floors of premises on the other side of the road. At some point
the company allowed Isaac to occupy the first of the two floors
across the road from their hotel premises to establish what was
referred to as a night bar. Isaac took out a liquor licence in
his name and purchased a stock of liquor at his own expense.
At some point of time differences arose between them and no
contract between Isaac and the Hotel de Paris was ever
concluded. Isaac paid rent and all expenses in connection with
the running of the night bar. He retained all profits from the
operations of the bar for his own use. The question before the
Court was whether the circumstances of the arrangements
entered into, despite the contract not having been concluded
were sufficient to create a tenancy rather than a licence. After
considering the evidence and the law the judgment of the
Court was delivered by Lord Denning.
The circumstances and conduct of the
parties show that all that was intended
was that the defendant should have a
personal privilege of running a night bar
on the premises, with no interest in the
land at all. It was at first only a privilege
to be there pending the execution of a
formal contract. Later, when the contract
fell through, and notice was given to him
to remove his belongings, even that
privilege came to an end.
Street v Mountford [1985] AC 809: Street
granted to Mountford the right to occupy
two rooms at a weekly payment and subject
to conditions set out in a document referred
to as Licence Agreement.
The Court found that on its true construction
the agreement between the parties had the
effect of creating a tenancy despite the use
of the words Licence Agreement.
In coming to this conclusion the House of
Lords accepted the High Courts decision in
Radaich
Fatac Limited (In Liquidation) v
Commissioner of Inland Revenue (2003)
ANZ ConvR 243, the Court of Appeal
considered the distinction between a
tenancy and a licence. The facts are of no
great significance as they related to an
argument about whether a sale constituted
a sale of a going concern for the purposes
of the GST legislation in New Zealand. In
determining that issue however the Court
found it necessary to determine whether an
arrangement for occupation of premises
was a lease or a licence.
Fisher J, the Court said:
[29] In its conventional sense a tenancy is an interest in land
conferring the right to possess it for a limited period. A licence is a
mere permission to be on the land, with or without additional
permission to perform specified acts there. The former creates an
estate in the land; the latter does not.
...
[38] In our view first principles support the right to exclusive
possession as the litmus for tenancies. Exclusive possession allows
the occupier to use and enjoy the property to the exclusion of
strangers. Even the reversioner is excluded except to the extent
that a right of inspection and/or repair is expressly reserved by
contract or statute. A tenant enjoys those fundamental, if
temporary, rights of ownership that stem from exclusive possession
for a defined period. . . .
[39] Because the tenancy/licence distinction turns on those
substantive rights granted to the occupier, it remains unaffected by
the label which the parties choose to place upon their transaction. .
..
Bruton v London and Quadrant Housing Trust [2000]
1 AC 406. This case involved a block of flats that was
owned by Lambeth Borough Council. They were
going to tear the flats down and redevelop the land,
but until they raised the money, they granted to
London Housing Trust a licence to use the building as
short term accommodation for homeless people. The
London Housing Trust, acting pursuant to this
licence, entered into a contract with Bruton. The
contract stated that Bruton had a licence to use the
premises on payment of a set amount per week. It
said that he would vacate at any time upon being
given four weeks notice and that he would allow the
Trust to have access to the flat during business
hours for the purposes of the trust.
Bruton brought an action under UK tenancy
legislation to try and force the Trust to
undertake repairs. The relevant legislation
relied upon the common law definition of a
lease and imposed an obligation to repair
premises on lessors. In response to Brutons
argument that he was a tenant under a
lease, the Trust pointed to the licence
document which said Bruton was a licensee,
that they had all intended for Bruton to be a
licensee and any other outcome would be
absurd because the Trust itself only had a
licence.
The court found that the Trust had, in effect,
made a grant of exclusive possession to
Bruton as against the Trust; that despite
their stated intentions re licence, they had
still intended to make a grant of exclusive
possession and that the clauses in the lease
about access for the Trust supported this
because if it was only a licence, you didnt
need such clauses. This meant that Mr
Bruton could force the Trust to effect repairs
under the relevant Statute.
Problems with Brunton:
How can the Housing Trust create a
lease when it only has licensee
rights?
Exclusive possession and

Residential Tenancies
It should be noted that a residential
tenancy agreement means any
agreement under which a person
occupies premises for residential
purposes:
(a) whether or not the right is a right of
exclusive occupation,
(b) whether the agreement is express or
implied, and
(c) whether the agreement is oral or in
writing, or partly oral and partly in writing, ...
Exclusive possession and Retail

Leases
Retail Leases Act 1994 s 3
Exclusive possession not necessary
Creation of leases
Legal Leases under Old System
Section 23B of the Conveyancing Act
Section 23D (2) of the Conveyancing Act allows for the creation of
parol (or oral) interests in land by way of lease if the conditions
in 23D are met.
These conditions are:
1. that the lease must be at the best rent which can reasonably
be obtained without taking a fine
2. the lessee has taken effect in possession
3. the term of the lease including any option does not exceed 3
years.
A fine is a lump sum.
Taking effect in possession includes a right to immediate
possession: Haselhurst v Elliiot [1945] VLR 153.
The term must include any options eg 2 yrs +2 yrs = 4 year lease
Creation of leases
Equitable Leases
Part performance, Walsh v Lonsdale
(1882) 21 Ch D 9.
Agreement
Consideration
Specific Performance
Example
Sam, the owner of the fee simple in Blackacre (old
system) agrees to lease it to Dean for 5 years for a
monthly rental of $1000. No deed is executed. Dean
goes into possession and pays the agreed rent. After 2
years Sam discovers that he can earn higher rent, and
serves notice of termination of the lease on Dean.
Advise Dean of his rights.
To enter this question use a three-step process:

Is the agreement to lease legally enforceable?
If it is not legally enforceable, will equity specifically
enforce the lease?
If it is not legally enforceable and equity won't
specifically enforce it, what type of lease will the
common-law recognise? (ie - what is left over?)
Example
Is the agreement to lease legally enforceable? Deed?
No; s23D(2) No longer than three years.
If it is not legally enforceable, will equity specifically

enforce the lease? - we don't know if they have
created a written agreement which equity would
enforce; if they haven't, then Deans act of going
into possession may be considered to be a
sufficient act of part performance for equity to
enforce the agreement. If it is not specifically
enforceable (tenant has delayed or not done
equity) go to the third point:
Example
If it is not legally enforceable and equity won't
specifically enforce it, what type of lease will
the common-law recognise? (ie - what is left
over?)
Here on the basis of Deans possession of the
premises and his payment of rent there will be
an implied periodic lease. The least will be for a
period of one year due to the rule in Moore and
Dimond because they had agreed on a fixed
term of years. In New South Wales Section
127(1) of the Conveyancing Act makes legal
yearly leases terminable on one months notice,
so Sam may terminate this agreement with one
months notice.
Creation of leases
Torrens s 53 RPA
53Land under the provisions of this Acthow leased

(1) When any land under the provisions of this Act is intended to be
leased or demised for a life or lives or for any term of years
exceeding three years, the proprietor shall execute a lease in the
approved form. ...
(3) A right for or covenant by the lessee to purchase the land
therein described may be stipulated in such instrument, and in case
the lessee shall pay the purchase money stipulated and otherwise
observe the lessees covenants expressed and implied in such
instrument, the lessor shall be bound to execute a transfer of the
said land to such lessee.
(4) A lease of land which is subject to a mortgage, charge or
covenant charge is not valid or binding on the mortgagee, chargee
or covenant chargee unless the mortgagee, chargee or covenant
chargee has consented to the lease before it is registered.
(5) Subsection (1) does not apply in relation to land the subject of a
social housing tenancy agreement within the meaning of the
Residential Tenancies Act 1987 .
Creation of leases
Leases of more than 3 years must be
registered.
Leases for less can be registered
Unregistered interests for more than
3 years may be equitable
Unregistered lease for less than 3
years are legal but not indefeasible
Creation of leases
RM Hosking Properties Limited v Barnes [1971]
SASR 100. The registered proprietor of the piece of
land entered into a lease with Mr Barnes. The lease
was for a 2 year period with an option to renew for
a further 2 years. The lease was not registered on
the title. Before the expiry of the first 2 year period
under the lease, the registered proprietor sold the
land to Mr Hosking. Hosking allowed Barnes to stay
in the property and accepted rent from Barnes
after the sale. But when Barnes sought to exercise
the option to renew the lease for a further 2 years,
Hosking sought to evict Barnes. Barnes defended
the action arguing that Hosking was subject to the
lease and was therefore subject to the option to
renew.
Creation of leases
Is the lease registered?
No - unregistered lease.
Does the lease fall within the express lease
exception to indefeasible title?
No option not yet exercised 4 years (exceeds
3 in NSW). What was left at law? Legal lease
based on possession; failed four year term
Moore v Dimond 1 month notice.
Is there another exception that might apply?
Fraud - notice of a prior interest does not amount
to fraud (s 43) and no evidence of dishonesty in
the time leading up to the transfer.
No in personam
Implied Covenants in leases

Common law Implied covenants on the lessor:
Quiet enjoyment
Not to derogate from grant
(for furnished dwellings) that the premises be fit
for human habitation
Common law implied covenants on tenant:

To use the premises in a tenant-like manner
To yield up the premises
(for agricultural land) to use the premises in a
husband-like manner
No others will be implied: Warren v Keen

[1954] 1 QB 15
Quiet enjoyment
Right to occupy without disturbance

Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381. In this matter,
premises on the sixth floor of a city building were leased to the
tenant with access being provided by four lifts and by two
escalators. The common areas which included the lifts and
escalators remained under the control of the landlord with the
lease providing that the tenant should have the use of the lifts and
escalators subject to the other terms of the lease. After carrying
on the business of a cafeteria on the sixth floor for nearly a year
the landlord reduced the access to the sixth floor by stopping the
escalators at the second floor and reducing the lifts service from
four lifts to two. The landlord indicated that this had occurred
because the third, fourth and fifth floors of the building were
vacant and there was a risk of vandalism if members of the public
had access to these floors. The tenant argued that by ceasing to
operate the lifts and escalators as he had done at the
commencement of the lease that a breach had been committed of
the covenants in the lease and sought a mandatory injunction
requiring the landlord to restore the services.
Quiet enjoyment
After considering the matter in detail Wells,
J held that a covenant should be implied in
the lease that the landlord would maintain
and operate the lifts and escalators
substantially as they were when the lease
was executed. He came to this conclusion
for three reasons:
(a) Upon the terms of the lease itself.
(b) Upon the ground that such a covenant was
necessarily to be implied to give business
efficacy to the transaction between the parties.
(c) Upon the ground that the landlord should not
be permitted to derogate from his grant.
Quiet enjoyment
In Kazas and Associates Pty Limited
and Multiplex (Mountain Street) Pty
Limited (2003) ANZ ConvR 302 the
plaintiff (Kazas) sought a declaration
to restrain the defendant from
carrying on a redevelopment arguing
that it would be a breach of the
covenant for quiet enjoyment
contained in the lease.
Quiet enjoyment
Palmer, J referred to the implication of terms in a Contract and said:
Translated into the context of a lease, the test will be: in the light of
all relevant factual circumstances at the time of grant of the lease:
is the alleged term reasonable and equitable;
is it necessary to give business efficacy to the lease, business
efficacy in this context meaning implementation in a practical
and businesslike way of the intended use of the demised
premises by the lessee consistently with the reasonable use of
the whole property by the lessor and any other occupiers;
is the term so obvious that it goes without saying;
is it capable of clear expression;
does it contradict any express term of the lease.
Quiet enjoyment
In the present case, the implied term is said to be: the lessor will not,
during the term of the lease, remove or change the loading dock, the
goods lift, the first floor corridor, the passenger lift or the foyer as they
were at the commencement of the lease in such a way as will
substantially interfere with the conduct of the plaintiffs business in the
demised premises, without first providing alternative facilities to
substantially the same standard. In the light of the circumstances
existing at the commencement of the lease, does this term satisfy the
test for necessary implication?
His Honour went on to find that the term is reasonable and equitable.,
and that the term is necessary to implement, in a practical and
businesslike way, the use of the demised premises by the plaintiff., and
that the term is capable of clear expression and does not contradict any
express term of the lease. For these reasons his honour went on to say:
In the present case, I am firmly of the view that removal of the goods lift and any
obstruction to the first floor corridor will be a substantial interference with the
plaintiffs rights, in breach of the implied term
Non-derogation from grant

Did the landlord undermine the prupsoes for
which the property was let?
Similar to quiet enjoyment in many cases
Harmer v Jumbil (Nigeria) Tin Areas Ltd
[1921] 1 Ch 200 lease for area to store
explosives derogated from when landlord
rented out adjoining area which jeopardised
license for storage
Kazas goods lift
Karaggianis escalator
No breach if no knowledge of use
Fit for habitation

Only implied into lease of furnished dwellings
Issues the elements, pests
Overridden by Residential Tenancies Act to a large degree,
for eg
25Landlords responsibility for cleanliness and repairs
(1) It is a term of every residential tenancy agreement that:
(a)the landlord shall provide the residential premises in a
reasonable state of cleanliness and fit for habitation by the
tenant, and (b)the landlord shall provide and maintain the
residential premises in a reasonable state of repair, having
regard to the age of, rent payable for and prospective life of
the premises.
(2) In this section: residential premises includes everything
provided with the premises (whether under the residential
tenancy agreement or not) for use by the tenant.
Tenant-life use
Act like a reasonable tenant
Duties to clean, small repairs
Duties to refrain from damage, apart
from fair wear and tear
Fair wear and tear

In Warren v Keen [1954] 1 QB 15 the English Court of
Appeal was asked to consider whether covenants were
implied into the arrangement between the landlord and
tenant. The tenant occupied premises on a weekly
tenancy and during the time of the occupation the
landlord had carried out various repairs to the property.
The landlord was served with a notice by a local
authority requiring work to be carried out to make the
premises wind and water tight and after the work was
performed sued the tenant arguing that there was an
implied covenant that the tenant would keep the
premises in a good and tenantable repair.
No implied covenant except for use in tenant-like
manner
Tenant not liable for natural wear and tear caused by
seepage through brickwork, underlying natural forces
Fair wear and tear

In Haskell v Marlow [1928] 2 KB 45 a widow who
occupied premises pursuant to a life estate was
responsible for allowing the house to fall into disrepair.
The argument in his case was slightly different as the
house had been occupied by her pursuant to a life
estate for 42 years. The provision in the Will obligated
the widow to keep the house insured against loss by
fire and in good repair and condition (reasonable
wear and tear excepted). The widow did nothing
active to damage the premises but did nothing to
counteract the natural processes of decay.
She had failed to replace a broken tile and water
damage was caused
So fair wear and tear can include some small active
repairs
Yielding up
More than just leaving but making
sure that there is vacant possession
The landlord can claim costs of
evicting sub-tenant: Anderson v
Bowles (1951) 84 CLR 310
Husband-like manner
Cultivate in accordance with local usage

Overridden by Agricultural Tenancies Act 1990
19ACompensation for deterioration
(1) It is a term of a tenancy that the tenant must pay the owner fair
compensation for any deterioration of the farm during the tenancy
owing to the failure of the tenant to manage the farm in accordance
with good farm management or the provisions of any agreement
creating the tenancy, or both.
(2) For the purposes of determining the compensation payable for
any deterioration of the farm, the amount of compensation is an
amount representing the decrease in the value of the farm as a
result of the deterioration.
(3) The compensation is payable when the deterioration is evident.
(4) The rights of an owner under this section are displaced by an
agreement: (a)to the extent that those rights are expressly waived
by the agreement, or (b)to the extent that the management of the
farm (being management that is material to any claim for
compensation under this section) is expressly authorised by the
agreement.
Conveyancing Act Implied

Covenants
In addition to the common law there are
terms implied by the CA
Covenant to
Covenant to
Covenant to
and repair
Covenant to
rent
Covenant to
covenants
repair
pay rent
allow the landlord to inspect
re-enter for non-payment of
re-enter for breach of non-rental
Repair
Section 84 CA:
(1)(b)That the lessee or the lessees
executors, administrators and assigns will, at
all times during the continuance of the said
lease, keep and, at the termination thereof,
yield up the demised premises in good and
tenantable repair, having regard to their
condition at the commencement of the said
lease, accidents war damage and damage
from fire, flood, lightning, storm and tempest,
and reasonable wear and tear excepted.
Repair
In Proudfoot v Hart (1890) 25 QBD 42 a
house had been let for three years under a
written agreement with a covenant that
the tenant would during the said term
keep the said premises in good tenantable
repair, and so leave the same at the
expiration thereof.. At the expiration of
the term the landlord commenced an
action to recover the cost of repairs carried
out to repaper walls, repaint internal
woodwork, whitewash ceilings and
staircases, and replace a kitchen floor.
Repair
The English Court of Appeal considered the
obligations of tenants under covenants to keep in
good tenantable repair and came to the
following conclusions:
Such a state of repair that the premises might be
used and dwelt in not only with safety, but with
reasonable comfort, by the class of persons by
whom, and for the sort of purposes for which, they
were occupied.
Good tenantable repair is such repair as, having
regard to the age, character, and locality of the
house, would make it reasonably fit for the
occupation of a reasonably-minded tenant of the
class who would be likely to take it.
Repair
The extent of the repair extends to the
repair or replacement of "subsidiary parts"
of the premises but not to the renewing or
reconstructing of the premises themselves.
It is common for covenants in leases to refer
to the obligation to repair in some detail but
to then exclude any obligation for
"structural repairs". This can be different if
the use of the premises is such as to require
the tenant to make structural alterations to
the premises for the tenants use.
Rent
Section 84(1)(a)That the lessee or the lessees executors, administrators

and assigns will pay the rent thereby reserved at the time therein
mentioned:
Provided, however, that in case the demised premises or any part
thereof shall at any time during the continuance of the lease be
destroyed or damaged by fire, flood, lightning, storm, or tempest
or shall suffer war damage so, in any such event as to render the
same unfit for the occupation and use of the lessee, then and so
often as the same shall happen, the rent thereby reserved, or a
proportionate part thereof, according to the nature and extent of
the damage sustained shall abate, and all or any remedies for
recovery of the rent or such proportionate part thereof shall be
suspended until the demised premises shall have been rebuilt or
made fit for the occupation and use of the lessee, and in case of
any dispute arising under this proviso the same shall be referred
to arbitration under the provisions of the
Commercial Arbitration Act 1984 .
Inspection
(a)That the lessor, the lessors executors,
administrators or assigns, or the agent of the lessor,
the lessors executors, administrators or assigns, may,
twice in every year during the term at a
reasonable time of the day upon giving to the
lessee two days previous notice, enter upon the
demised premises and view the state of repair thereof,
and may serve upon the lessee, the lessees
executors, administrators, or assigns, or leave at the
lessees or the lessees executors, administrators or
assigns last or usual place of abode in New South
Wales, or upon the demised premises, a notice in
writing of any defect, requiring the lessee or the
lessees executors, administrators or assigns, within
a reasonable time, to repair same in accordance
with any covenant expressed or implied in the lease.
Re-entry
Section 85
(d)That, in case the rent or any part thereof is in arrear
for the space of one month (although no formal demand
therefor has been made), or in case default is made in the
fulfilment of any covenant, condition, or stipulation,
whether expressed or implied in the lease, and on the part of
the lessee to be performed or observed, and such default is
continued for the space of two months, or in case the
repairs required by such notice as aforesaid are not
completed within the time therein specified, the lessor
or the lessors executors, administrators or assigns
may re-enter upon the demised premises (or any part
thereof in the name of the whole) and thereby determine the
estate of the lessee, the lessees executors, administrators, or
assigns, therein, but without releasing the lessee or the
lessees executors, administrators or assigns from liability in
respect of the breach or non-observance of any such
covenant, condition, or stipulation.
Covenants against Assignment

or Subletting
Absolute or qualified?
Interpretation against the landlord
An absolute covenant bars the right to
assign or sub-lease
S10 an 123 allow a landlord to permit
and assignment or sublease in the face
of an absolute bar
S 133B applies to qualified covenants
eg without the landlords permission
Permission cannot be unreasonably
withheld

or Subletting
In Re Gibbs and Houlder Brothers & Company,
Limiteds, Lease [1925] Ch 198 the English Court of
Chancery laid down what is referred to by Butt as the
narrow test. The reason for the landlord refusing
consent to an assignment was set out in a letter as:
My sole reason for withholding my consent is on the
reasonable ground that by the assignment I should lose
Roneo, Ld., as good tenants of No. 12, and because I shall
have great difficulty in finding any tenant for No. 12.
The Court found that the reason for withholding

consent was unconnected with the person of the
assignee or the user occupation of the premises and
was not reasonable.
Narrow test: must relate to use of premises or new
lessee

or Subletting
Broad test: Bickel v Duke of
Westminster [1977] QB 517
Lord Denning court should not
restrict the number of factors that
may be relevant
What was the purpose of the clause
and what are the surrounding
circumstances?

or Subletting
Intermediate test
In International Drilling Fluids Ltd. v. Louisville
Investments (Uxbridge) Ltd. [1986] Ch 513 the English
Court of Appeal set out the following propositions
(quoted from Butt page 348 at [15126]):
1. The purpose of a covenant against assigning [or
subleasing] without the landlords consent, such consent
not to be unreasonably withheld, is to protect the
landlord from having the premises used or occupied in
an undesirable way, or by an undesirable assignee.
2. As a corollary to 1, a landlord is not entitled to refuse
consent on grounds unconnected with the relationship of
landlord and tenant as it relates to the leased premises.
3. The tenant bears the onus of proving that consent
was refused unreasonably.

or Subletting
4. The landlord does not have to justify the conclusions
which led to consent being refused, if they were
conclusions that a reasonable person in the landlords
position could have reached in the circumstances.
5. It may be reasonable for a landlord to refuse consent
on the ground of the purpose for which the proposed
assignee intends to use the premises, even though the
lease does not forbid that purpose.
6. Usually, landlords need consider only their own
interests; but there may be cases of such imbalance
between the benefit to the landlord and the detriment to
the tenant if consent is refused, that for the landlord to
refuse consent would be unreasonable.
7. Subject to the above propositions, whether the
landlords consent is withheld unreasonably is a question
of fact, depending on all the circumstances.

or Subletting
In this case property was leased with a proviso
that it was not to be used for any purpose
other than as offices. The lease also contained
a provision against assignment without
consent but that consent would not be
unreasonably withheld. The premises were
vacated and the tenant sought an assignment
of the lease to a company intending to use the
premises as serviced offices. The landlord
formed the view that this would be detrimental
to the investment value and refused consent.
The judge held that the evidence did not justify
a refusal of consent and the Court of Appeal
dismissed an appeal.

or Subletting
Creer and Another v P. & O. Lines of Australia Pty. Limited
(1971) 125 CLR 84. In this case the lease provided that if
the lessee desired to assign the lease then the lessee
shall before doing so offer in writing to the lessor to
surrender this lease . . . without any consideration on any
subsequent monthly rent day within two months of the
making of such offer as shall be selected by the lessor . . .
The lessee sought consent from the lessor to an
assignment but did not offer to surrender the lease as
required by the clause. The lessor refused an assignment
and advised that if an offer of surrender was made then the
offer would be accepted.
The Court held that consent was not unreasonably withheld
in the circumstances of this case as the lessee had not
offered to surrender the lease as required by the lease
provision.

or Subletting
S 132 CA No fine can be made payable for
consent may be overridden by express
clause
RTA s33 tenant may assign or sublet with
permission but no implied term that
consent cannot be unreasonably withheld
RLA s 39 consent can be withheld on basis
of use, financial resources and retail skills.
RLA s 40 key money is banned
RLA s 42 lease may contain an absolute bar
to subletting
Enforcement of covenants in
assignment
Privity of contract: Beswick v Beswick
Privity of estate : the relationship of
landlord and tenant
Enforcement of covenants in
assignment
LR
TA
ST AST
L and T privity of contract and estate
Assignment of reversion to R privity of estate bw R &T
Assignment of lease to A privity of estate between A and R
Sublease from A to ST privity of contract and estate bw A and ST and R and A srill have
privity of estate
ST assigns sublease privity of estate bw A and AST
Assignment of the leasehold

and the question of the
tenants covenants
Burden of covenants; Spencers case

covenants will run if they touch and
concern the land
Covenants which effect use value or
the relationship of landlord and tenant
EG pay rent, repair, insure, not to
assignment without consent
S 70A and intention for the burden of
covenants to pass
Assignment of the leasehold

tenants covenants
Benefit of covenants: Spencers case

Benefits also pass if they touch and
concern the land
Section 70 intention for the benefit
to pass to successors
Assignment of the reversion

tenants covenants
No equivalent of Spencers case

Benefit s 117 rent and benefit is
annexed to the reversion and goes with it
All benefits of re-entry or forfeiture also
annexed to person entitle to the income
fro the land
Must touch and concern the land
having reference to the subject matter of
the lease
Assignment of the reversion

tenants covenants
Burden s 118
Touch and concern
No liability for breaches prior to
assignment
Torrens title and assignment

Section 117 and 118 apply to RPA land
S 51 RPA on registration of transfer
transferee is subject to same liabilities
S 52 right to sue on instrument
passes to transferee
S 53 an option to purchase freehold
does not ordinarily touch and concern
the leased land, but s 53 enables this
to happen in registered leases.
Remedies for breach

Damages
Injunction
Termination
Clauses for re-entry on breach
Repudiation
Recovery of possession not possible

for dwelling house Landlord and
Tenant Act 1899, s 2AA
Relief against forfeiture

For non-payment of rent equity
jurisdiction
Need to show ability to repay
S 129 for brach of covenant other
than to pay rent
Court will consider applicants conduct,
gravity of breaches and difference
between value of lease and damage
caused

Leases

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Leases

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Leases

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Tenancy at will - the common law will recognise an implied

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Requirements for a lease

Leases must commence on dates which are certain or

The duration of the lease must be obvious from its terms.

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Intention to create a lease?

The High Court came to the conclusion that if the

(c) Cameron Stewart 2009

Exclusive possession and

Exclusive possession and Retail

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

To enter this question use a three-step process:

If it is not legally enforceable, will equity specifically

(c) Cameron Stewart 2009

53Land under the provisions of this Acthow leased

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Implied Covenants in leases

Common law implied covenants on tenant:

No others will be implied: Warren v Keen

Right to occupy without disturbance

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Non-derogation from grant

Fit for habitation

(c) Cameron Stewart 2009

Fair wear and tear

Fair wear and tear

(c) Cameron Stewart 2009

Cultivate in accordance with local usage

Conveyancing Act Implied

(c) Cameron Stewart 2009

Section 84(1)(a)That the lessee or the lessees executors, administrators

Covenants against Assignment

Covenants against Assignment

The Court found that the reason for withholding

Covenants against Assignment

Covenants against Assignment

Covenants against Assignment

Covenants against Assignment

Covenants against Assignment

(c) Cameron Stewart 2009

Covenants against Assignment

(c) Cameron Stewart 2009

(c) Cameron Stewart 2009

Assignment of the leasehold

Burden of covenants; Spencers case

Assignment of the leasehold

Benefit of covenants: Spencers case

(c) Cameron Stewart 2009

Assignment of the reversion

No equivalent of Spencers case

Assignment of the reversion