Archive for October, 2011

Sub-tenant obtains relief against forfeiture of head lease

The termination of a lease automatically terminates any sublease.  See: Bradbrook, Croft & Hay Commercial Tenancy Law, para 19.6. Where a landlord seeks to enforce a right of re-entry or forfeiture against a tenant the Court, on application of the sub-tenant,  may vest the property in the head lease in a sub-tenant for the whole of the term of the lease or a lesser term on terms that the Court thinks fit. See: s.146(4) of the Property Law Act 1958 (Vic). In Leahy v Austin Management Services Pty Ltd [2011] QCA 186 the Queensland Court of Appeal rejected an appeal by a landlord from the granting of relief to a sub-tenant based on the Queensland equivalent of s.146(4), being  s.125 of the Property Law Act 1974.  The sub-tenant leased only part of the area of the land leased by the tenant from the landlord. The new lease awarded to the sub-tenant was on the same terms as the forfeited head lease except for the expiration date (which was the date of expiry of the sub-lease) and the area demised and the rent and outgoings which were payable in accordance with the sub-lease.  The sub-tenant had operated its workshop business for 25 years on the site. The landlord appealed on the basis that the primary judge erred by not giving due recognition to the prejudice she would suffer by not being able to lease the site to a new tenant as a whole. There also was evidence that the area occupied by the sub-tenant would have achieved a higher rental than was being paid by the sub-tenant. The appeal was unsuccessful.


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Ministerial determination valid

My previous post contended that the Ministerial Determination dated 29 April 2003 made pursuant to s. 5 of the Retail Leases Act 2003 (2003 Act) was made with power by reason of s.13(3) of the Interpretation of Legislation Act 1984. By the Determination the Minister excluded from the definition of “retail premises” in s.4 of the 2003 Act certain premises that were used wholly or predominantly for the retail provison of “services” and located above the first three storeys of a building. 

Section 5 of the 2003 Act came into effect on 1 May 2003. The Determination was made on 29 April 2003 and thus before  s.5 commenced.

Section 13 of the Interpretation Act permits the exercise of certain powers provided for in legislation the commencing date of which is postponed. In the absence this provision it would be necessary to include in an Act specific power, for example, to make regulations or appointments that have to be in place when the Act commences operation[1].

Section 13(3) was not incorporated in the Intepretation Act until April 2006.

The Minister’s Determination was effective because of s.13 of the Interpretation Act as it appeared in 2003 and not by reason of s.13(3).  When the Interpretation Act was enacted, and when the 2003 Act commenced on 1 May 2003, s.13 provided that:

“Where an Act or a provision of an Act which does not come into operation immediately on the passing of the Act will, upon its coming into operation, confer power or amend another Act so as to confer power under the other Act as so amended to make subordinate instruments, give notices, make appointments, prescribe forms or do any other thing for the purposes of the first-mentioned Act or provision or that other Act, the power may be exercised at any time after the passing of the first-mentioned Act but the exercise of the power does not confer a right or impose an obligation on a person before the coming into operation of the first mentioned Act or the provision of that Act in question except insofar as is necessary or expedient for the purpose of –

 (a)        bringing the first-mentioned Act or the provision of that Act in question into operation;

 (b)        making the first-mentioned Act or the provision of that Act in question fully effective at or after the time at which it comes into operation; or

 (c)        making the amendment made to the other Act by the first-mentioned Act or the provision of that Act in question fully effective at or after the time at which the first-mentioned Act or provision comes into operation.”

 (underlining added)

 Where an Act has passed but had not come into operation, s.13 of the Interpretation Act confers power to, among other things, “give notices” or “do any other thing for the purpose of the Act”.  This power does not confer a right or impose an obligation on a person before the Act comes into operation except so far as it is necessary to make the Act fully effective when it comes into operation.

Because of s.13 of the Interpretation Act the Minister had the power to make the Determination: although the 2003 Act had not commenced:

(a)        the 2003 Act had passed; and

(b)        the Determination was made by “notice”, or, at the very least, the Minister had done “any other thing for the purpose of the Act” within the meaning of s.13 of the Interpretation Act.

[1] See Pearce and Geddes, Statutory Interpretation in Australia, 7th ed, paragraph 6.7.

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Ministerial determination not invalid

My friend Sam Hopper has said in his blog that Judge Anderson in the County Court found that the  Ministerial Determination which effectively excludes premises above the third storey from being “retail premises” was not a valid exercise of power. While Judge Anderson did express the view that it appeared the determination was made without power, His Honour said that he did not consider it necessary to decide the matter.  See: Evans, Tapsall and Van Veen v Thurau Pty Ltd [2011] VCC 1354  at [19].  The  argument put to Judge Anderson was that s 5(1)(f) of the Retail Leases Act 2003 did not come into effect until 1 May 2003 and therefore the Ministerial Determination (which is dated 29 April 2003) could not be valid.  The determination is stated to have been made under s 5(1)(f).  In my view the argument put to Judge Anderson was not correct. The Ministerial Determination says that it does not come into effect until 1 May 2003. Section 5(1B) says that an instrument made under 5(1):

may provide that it has effect on and from 1 May 2003 or such later date (whether before, on or after the date on which the instrument is made) as is specified in the instrument as the date on which it comes into effect.

Sections 13(2) and (3) of the Interpretation of Legislation Act 1984 appear to cure any potential problems. Sam’s blog can be found here


Breach of s.52 can amount to repudiatory conduct

On 9 September 2011 I posted an article entitled “Can a landlord’s failure to comply with s.52 constitute repudiatory conduct?”.  In Hann-Woodlock v ADMR Pty Ltd [2011] VCAT 1776  Senior Member Walker held that the landlord had breached repair covenants contained in the lease and, with respect to a leaking roof, had breached the repair term imported into retail leases by s.52 of the Retail Leases Act 2003. Section 52 imposes an obligation on landlords to maintain in a condition consistent with the condition of the premises when the lease was entered “the structure” of the premises, among other things.  The Senior Member held that the breaches amounted to a repudiation which had been accepted by the tenant. Damages were awarded to the tenant.

Thanks to Jamie Bedelis for alerting me to this.

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