KEY POINTS:
Q Until recently, I leased the ground floor of a building as my business premises. A while ago, I received notice that the tiles in the entrance of the building were damaged and that it was my responsibility to fix them (as they had been damaged by my staff while moving new equipment). The notice specified that replacement tiles needed to be installed by last Wednesday. I ordered new tiles but due to my heavy workload, I haven't yet arranged for installation. Yesterday, my landlord arrived at my premises and told me that my lease has been cancelled for my failure to make good the damage by the date specified in his notice. He has changed the locks on the premises and advised me that I must immediately arrange for the removal of my fixtures and fittings.
I feel he is being quite heavy-handed in cancelling my lease simply because I did not arrange for installation of the tiles by his required date. I have always been a good tenant. Do I have to accept that my lease is now cancelled or is there anything I can do to get my lease reinstated?
In the circumstances that you describe, you have an option to apply to the court for what is called "relief against forfeiture". Section 253 of the Property Law Act 2007 gives every tenant the right to apply for relief against a landlord's forfeiture of the lease notwithstanding anything to the contrary contained in the lease (in other words, a landlord and tenant cannot contract out of this right in the lease).
In order for a landlord to exercise power of re-entry and forfeiture for breach of covenants contained in a lease which are not related to non-payment of rent, the landlord must have issued the tenant a notice of intention to cancel the lease under section 246 of the Property Law Act. This notice must specify the alleged breach and give sufficient detail as to what the tenant must do (and by when) in order to remedy that breach.
The notice must also specify that the landlord may seek to cancel the lease if the breach is not remedied by the date set out in the notice and that the tenant has the right to apply for relief against a landlord's forfeiture of the lease under section 253.
The period of time set out in the notice for the tenant to rectify the breach must be reasonable in the circumstances. It is unlikely that one week is a sufficient notice period for replacing a number of damaged tiles.
A cancellation of the lease would be invalid if a landlord re-enters without giving proper notice. From what you have told us, it sounds as if your landlord has followed the proper procedure and has given you notice that you were in breach of your covenant to repair damage and that you had to replace the tiles by a certain date in order to remedy that breach.
If you have now paid for, and are willing to arrange immediate installation of the replacement tiles in the premises, then you may have a case for relief against forfeiture, as the granting of relief is at the court's discretion and will be based on all the circumstances of the situation.
The courts have shown a tendency to grant relief against forfeiture if the property can be put into the same position as it was before the right to cancel the lease arose. The courts have, in the past, granted relief if the tenant has made good the breach and can demonstrate a willingness and ability to fulfil all obligations under the lease in future.
If you have not breached your lease before this occasion or have not shown a propensity to neglect your obligations to repair, and you are in a position to immediately remedy your breach by installing the replacement tiles, a court would likely look favourably on your application for relief against forfeiture of your lease. We assume you have the ability to meet all other obligations under the lease in the future. You may wish to approach your landlord again but, if not successful, you can apply to the court for relief against forfeiture. You would need to initiate this process with your lawyer without delay as there is a three-month time limit for an application to be lodged.
The information contained in Prime Assets is intended to provide general information in summary form current at the time of printing. The contents do not constitute legal advice and should not be relied on as such. Specialist advice should be sought in particular matters.
Each week, national law firm Simpson Grierson answers commercial property questions which can be emailed and headed "Prime Asset Question". This week's question is answered by senior associate Daniel Kelleher and associate Man Sum Chiu who can be contacted at daniel.kelleher@simpsongrierson.com and mansum.chiu@simpsongrierson.com
