Posts Tagged Property Law Act 1958

Second Notice to Complete Revives Terminated Agreement – Contract Sale of Land

A vendor who has terminated a contract for the sale of land should be wary of serving a second notice to complete because the second notice revives the agreement that has been terminated.

In Rona v Shimden [2005] NSWSC 818 a vendor under a contract of sale claiming to have terminated the contract, gave notice to complete which was expressed to be without prejudice to its contention that the contract was terminated. White J at [86] analysed the position as follows:

The giving of a notice to complete may give rise to an estoppel which precludes the party giving the notice from asserting that the contract has been terminated. Here, the purchaser did not do anything consequent upon the service of the notice which could create such an estoppel. Estoppel aside, the service of a notice to complete without prejudice to a prior notice of termination takes effect as an offer to revive the agreement, capable of being accepted by performance in accordance with the terms of the notice to complete: Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 at 9184, 9187.

In Naval and Military Club v Southraw [2008] VSC 593 Byrne J accepted this analysis. See: also Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd & Ors [2014] VSC 57.

 

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Tenants need the protection of s.146 of the Property Law Act

I have had a number of queries about a recent post concerning N.C.Reid & Co v Pencarl Pty Ltd [2011] VCAT 2241. In Reid Judge O’Neill held that before re-entering leased premises the landlord did not have to serve a notice that complied with s.146 of the Property Law Act 1958. The lease permitted the landlord to re-enter if the guarantor became bankrupt.  Section 146 requires service of a notice where a right of re-entry or forfeiture under any proviso or stipulation in a lease or otherwise arising by operation of law for “a breach of any covenant or condition in the lease, including a breach amounting to a repudiation”. Judge O’Neill held that there was no “breach” and therefore a notice under s.146 was not required. If Reid stands it has major implications for tenants who will lose the protection afforded by s.146. Judge O’Neill does not appear to have been referred to authorities that might have persuaded him to adopt a different interpretation of s.146. For example, the application of the reasoning applied by McLelland J in Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSW Conv R 55-538 might have resulted in a different outcome.  McLelland J had to consider a lease that permitted the lessor to enter premises and determine the lease without notice if the lessee entered into liquidation or was wound up. His Honour held that the right of re-entry under the lease was a “right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any….condition in the lease”, within the meaning of s.129 of the Conveyancing Act 1919 (being the NSW equivalent of s.146) which could not be enforced unless and until the lessor gave notice  under s.129 and in respect of which the tenant could apply for relief against forfeiture. His Honour held that a provision in a lease that provided for re-entry on the happening of an event, regardless of whether or not there was any obligation on the lessee to prevent that even happening, was a “condition” within the meaning of s.129 and that the word  “breach” in s.129 was equivalent to non-fulfilment”.  His Honour held that this interpretation was supported “by the evident policy of the provision [ie s.129 in NSW or s.146 in Victoria] which would otherwise be manifestly inadequate for the protection of lessees which it obviously is intended to confer”.  If Reid is the law in Victoria s.146 will need to be amended.

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Tenant’s fixtures

There is a translation key(widget) on the mirrored blog for ease of reading for non-English speaking members of the public or professionals. The mirrored blog can be found at http://roberthaybarrister.blogspot.com.au/

 

Section 28(2) of the Landlord and Tenant Act 1958 has been repealed. Section 28(2) provided that:

“If any tenant holding lands by virtue of any lease or agreement ….. at his own cost and expense erects any building either detached or otherwise or erects or puts in any building  fence engine machinery or fixtures for any purpose whatever (which are not erected or put in in pursuance of some obligation in that behalf) then, unless there is a provision to the contrary in the lease or agreement constituting the tenancy, all such buildings fences engines machinery or fixtures shall be the property of the tenant and shall be removable by him during his tenancy or during such further period of possession by him as he holds the premises ….”

Section 28(2) has been held to operate according to the plain meaning of its terms (Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue (2004) 12 VR 351 at 369-370) : while the tenant remained in possession the affixed chattels continued to be the tenant’s property and be removable by the tenant during the tenancy or during such further period of possession by the tenant holding the premises and not afterwards.

Given its comprehensive judicial consideration it is unclear why Parliament decided to tamper with the section. What was s.28(2) now appears as s.154A of the Property Law Act 1958 as follows:
“(1)    A tenant who at his or her own cost or expense has installed fixtures on, or renovated, altered or added to, a rented premises owns those fixtures, renovations, alterations or additions and may remove them before the relevant agreement terminates or during any extended period of possession of the premises, but not afterwards.

(2)    A tenant who removes any fixtures, renovations, alterations or additions under subsection (1) must-
(a)    restore the premises to the condition they were in immediately before the installation, renovation, alteration or addition, fair wear and tear excepted; or
(b)    pay the landlord an amount equal to the reasonable cost of restoring the premises to that condition.

(3)    This section does not apply to the extent that-
(a)    the lease otherwise provides; or
(b)    the landlord and the tenant otherwise agree.”

The new provision is confusing:      what is the “relevant agreement” (sub-clause (1)); is it the lease or can it be some other agreement; in sub-clause 3(a) the term “lease” is used?

In sub-clause (2) it is not clear whether the tenant’s restoration obligations:
(a)    apply only to the area of the premises where “fixtures, renovations, alterations or additions” were removed; or
(b)    extend to the whole of the premises.

 

My clerk can be contacted via this link for bookings  http://www.greenslist.com.au/

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