LEASES

 Commencement date must be ascertainable – otherwise void.

Lease v License
 Lease: LL confers to T right to exercise exclusive possession of land for certain period.
 License: LL confers mere personal privilege (permission to occupy).
Isaac v Hotel de Paris [1960]:
 I has liquor license and operate bar at Hotel. Paid expenses, kept profits, paid consideration to Hotel
(claimed as “rent”). Lease or license?
 HELD: license.
 Lord Denning: though I had exclusive possession and paid consideration  circumstances show he
was never intended to be T.
 ENG LAW: need to prove intention to create relationship of LL/T and not just licensor/licensee.
Radaich v Smith (1959):
 R paid rent to S. Applied under leg to get reassessment of rent (halved). S argued R not T (not under
leg jurisdiction).
 AUS LAW: test - whether exclusive possession is conferred upon T (McTiernan)
 Windeyer: intent test – only helps to interprpet doc. NOT required (cf Eng law).
Street v Mountford [1985]
 Lease: exclusive possession for fixed/periodic term in consideration of premium/periodic payment.
 NO intention to create relationship of LL/T is needed.
 ENG LAW: move towards AUS approach (approve Radaich v Smith)

Types of Leases
T at sufferance:
 Valid L expires, but T stays (not paying rent) without further agreement with LL.
 Determinable by LL at instance without notice.
T at will:
 No L (finished or never existed) but T stays with LL’s consent.
 Determinable by LL or T without notice.
T from year to year:
 L not in writing. Assumed.
 Determinable at 1 yrs notice.
 s127 CA: no T from year to year to be implied where rent is paid.
Equitable L:
 Agreement to L – with consideration or writing or part performance.
 Equity can decree specific performance to compel L to be created (Walsh v Lonsdale(1882))

Covenants in L
 Covenants – promises in L.
LL’s Covenants
1. Quiet enjoyment of land (implied):
 Does not mean free from noise. But regular excessive noise could amount to breach.
o Southwark London Council v Mills (1999): T could hear others in block (poor
insulation). Held: noises not LL’s fault, already there at commencement of L.
 LL must attend to routine affairs (eg. repairs).
o Martins Camera v Hotel Mayfair (1976): T had goods in store. LL failed to repair water
pipes – flood damaged goods.
o Haskell v Marlow [1928]: Wear and tear as naturally caused.
 LL must carry out structural repairs: Dowse v Wynyard Holdings (1962)
 LL must not derogate from grant of Prem (make unfit for purpose of L):
 o Karaggianis v Malltown (1979): LL let lift go out of operation for months. No access to
restaurant on 6th floor. Held: breach.
T’s Covenants
1. Act in T like manner:
 Keep Prem in good repair (eg. clean): Proudfoot v Hart (1890)
 Do the “little jobs about the place”. BUT not repairs for fair wear and tear over time: Warren v
Keen [1954]
 Must tell LL of repairs that are needed: Haskell v Marlow [1928]
 Yield possession of Prem back to LL after L terminates: Proudfoot v Hart (1890)
2. CA s84: T to pay rent and to do “little jobs around the place”.
3. CA s85(1): allow LL right to enter to view state of Prem and effect repairs (with prior arrangement).
4. CA s74(2): can covenant out of s84/85 in L.

Assignments/Sublease:
 Assignment: T decides to lease WHOLE land for REST of time: Assignor/assignee.
 Subletting: Sublessor/subtenant.
 T decides to lease PART of land for REST of time.
 T decides to lease ALL of land for SOME of time.
 Does NOT apply to T at will or sufferance.
Applies where:
 Presumption (if L does not say otherwise): T can assign/sublet without LL’s permission (American
Dairy Queen v Blue Rio (1981))
 LL can put absolute or qualified covenant in L to prevent this.
Absolute Covenant
 LL cannot be compelled to consent  no matter how unreasonable his refusal.
 CA s120,123: LL can consent though there is absolute covenant (this does not waive absolute
covenant for next person).
Qualified Covenant
 T can assign/sublet subject to LL’s permission.
 T must get consent – even if sure LL would have consented anyway: Barrow v Isaacs (1891).
 LL must have reasonable time to consider consent: Wilson v Fynn (1948)
 CA 133B(1)(b): LL cannot unreasonably withhold consent (this cannot be contracted out).
 If T wants to assign/sublet and LL does not agree – T should offer to surrender L altogether: Creer v
P&O (1971)
 LL not obliged to give reasons, BUT failure  infer unreasonable: Freddrick Bery and Son v Royal
Bank of Scotland.
 T can sublet/assign – anticipating that court will find LL unreasonable. LL can get injunction.
 T can get declaration from Equity Court that LL is unreasonable. LL can abduce evidence (arising
after refusal) to support why refused.
Withholding Consent
Re Gibbs and Houlder Bros [1925]
 Two prem (A, B). A wants to sublet part of his Prem to B. LL refused – worried that B would then
give up his Prem (lose tenant).
 HELD: reasonableness judged according to suitability of person to use/occupation of Prem – not
OTHER Prem (B). Thus – unreasonable.
International Drilling Fluids v Louisville [1986]
 Purpose of QC – protect LL from having undesirable assignee on Prem.
 LL cannot refuse on grounds unrelated to relationship of LL/T of the Prem.
 T bears onus of proving unreasonable.
 LL does not have to justify – if reasons were that a reasonable person would see.
 LL is reasonable to refuse proposed usage (even though L does not prohibit it).
 LL may be unreasonable – if imbalance of benefit between LL and T.
 Reasonability is question of fact – regard to all circumstances.
Ashworth Fraser v Gloucester CC [2002]
 LL refuse on grounds that assignee proposed to use Prem for purposes, which would breach L.
 HELD: LL cannot refuse on grounds that it will damage – when it is in position to protect itself.

LL R (assignee of reversion – sells with L)

T A (assignee of L)

SubL

SubT AST (assignee of SubT)

Privity of Contract:
 Exists where there are ARROWS (even after T assigns etc).
 THUS: LL can sue T (for arrears of rent from A).
 T can only be protect if Deed of Release  not liable (otherwise T becomes Guarantor for A).
Privity of Estate:
 Exists where there is a LL and T-like relationship (DOTTED LINES)
 Eg. LL and A, R and T (or A), A and AST.
 BUT – does not exist where not WHOLE of L/land is assigned (ie. In Sub L).
 THUS: No POE between R and Sub T or R and AST.
Covenants and Privity:
 POC – cov are enforceable to parties to L
 POE – cov are enforceable if they “touch and concern” the Land.
 If no POC or POE – covenants in orig. L are NOT enforceable except:
 Benefits of cov have been assigned to 3rd party (eg. beneficiary): s36C CA
 Benefit/burden of cov has been passed to person under principles of restrictive cov.

Termination
1. By breach of term – determine if term was ESSENTIAL
 Covenant to pay rent is NOT essential:
2. If T’s conduct indicates rejection of L (REPUDIATION)

If 1 (essential term) and 2 (repudiation)  LL can:

1. Waive the breach
2. Forfeit L and reenter Prem
3. Accept repudiation and terminate

WAIVER:
 Not passive.
 LL said to waive if all 3 below:
1. Knows/understands breach; and
2. Breach has to be liable to forfeiture; and
3. Unequivocal act (not omission) by LL to either wave breach or elect to end L
 Unequivocal act  oral, express, implied.

FORFEIT OR ACCEPT – depends on T’s conduct.

Progressive Mailing v Tabali (1985):
 T sublet in breach of covenant;
 Caused physical damage to roof, drain and electrical system;
 Obstructed access to Prem;
 Failed to open Prem on time;
 Fail to pay rent;
 Fail to repair things obligated to repair.
 HELD: fundamentally breached and repudiated.
a. Evident by accumulation of smaller breaches  evinced T’s intention NOT to be bound by L
(repudiation)
 REMEDIES: LL can reenter Prem and get damages (sub to mitigation – get new T and old T pays
diff, if any)
Shevill v BLB (1982):
 T struggled to pay rent but paid intermittently. Clear effort to minimize debt to LL and understood
her obligations.
 HELD: breached covenant to pay rent (not essential) BUT:
o Not repudiation of L
o Evinced clear intention to be bound by L
 LL reentered and sued for rent for remaining L.
 HELD: cannot reenter (had not repudiated). By reentering, T was no longer liable to pay rest of rent
(though had to pay arrears).

FORFEITURE:
 By Order from Supreme Court (Equity) or physical reentry of Prem.
 T can get RELIEF from this but has to (Hayes v Gumbola (1988)):
o Pay LL’s costs
o Pay arrears
o Undertake not to default again.