Lease Terminology

•    Leases are not estates like fee simple type estates
•    The rights granted under a lease are not inalienable
•    Leases can be assigned a lease by a landlord
•    Subleases can be granted, often granted for technical reasons, ie so as not to assign the lease
•    Landlord and Tenant Amendment Act 1948 (The Rent Control Act) only applies where there is a lease and not a licence

•    Lessor
o    Landlord
•    Lessee
o    Tenant
•    Leasehold/Tenancy
o    Tenant’s interest
•    Reversion
o    Landlords interest in the land after the lease is granted
•    Assignment
o    Where the whole of the tenant’s interest is assigned or transferred
•    Sublease
o    Transfer of something less than the whole lease
o    Eg put sublease for one day less than their whole lease to obtain different legal rights
o    Often require landlord’s consent to sublease
    -    Landlord cannot unreasonably withhold consent (s133(b) Conveyancing Act

Requirements for a lease
1.    Certainty of term/period
2.    Exclusive Possession
3.    Certainty of premises: Interest in land rather than mere personal privilege

Rent is not an essential component
•    Burns v Dennis (1948)

Parties can stipulate rent other than money
•    Greco v Swinburne [1991]

1. Certainty of term

Commencement Date: Date on which the lease commences must be certain or capable of being rendered certain before the lease takes effect

•    This requirement is satisfied with reference to the lease commencing:
o    Tomorrow
o    From completion of the building
    -    Pirie v Saunders (1961)
o    When the gas is connected
    -    Terry v Tindale (1882)
o    When a certificate issues
    -    Panucci v Motor Body Assemblers (1958)

•    Lease with no ascertainable commencement date is void
•    Where no commencement date is expressed, on might be implied under the general principle for implying terms in contract

•    Commencement date must be within 21 years
o    Section 120(A)(3) Conveyancing Act

Duration: Maximum duration of lease must be certain or capable of being rendered certain before the lease takes effect

There is no lease if the duration is referred to as:
•    For the duration of the war
o    Lace v Chantler [1944]
•    Until the end of the peanut crop
o    Bishop v Taylor (1968)
•    For the period the lessee holds shares in the company
o    Re Lehrer and the Real Property Act[1961]
•    Until the completion of the new premises
o    Mangiola v Costanzo (1980)
•    Until the land is required by council for road widening purposes
o    Prudential Assurance Co Ltd v London Residuary Body [1992]
There is a lease if the maximum duration is known, but it may be cancelled earlier
•    “For 20 years, or sooner ending of the war”
o    Prudential Assurance Co Ltd v London Residuary Body [1992]

The requirement of certain duration does not apply to:
•    Tenancies for life
o    Greco v Swinburne [1991]
•    Tenancies at will
•    Tenancies at sufferance
•    Periodic Tenancies

If a lease is void for breach of requirement of certainty of terms, but the tenant goes into possession and begins paying rent, a valid tenancy may arise under section 127 Conveyancing Act

A lease cannot vest an interest in the tenant retrospectively, however the landlord and tenant can contract that obligations under the lease are to run from a date earlier to the actual grant of the lease
•    Cadogan v Guiness [1936]

2. Exclusive Possession
•    Exclusive possession is the main test of whether there is a lease
•    Requires that the lease give the tenant the right to exclude anyone
o    Although most leases give the landowner the right to enter the premises

In determining whether it is a lease or a licence, the court looks to the substance, not the form of the textual agreement: Exclusive possession is a lease rather than a licence
•    Radich v Smith (1959) 101 CLR 209 (High Court Australia)
o    FACTS
    -    Rent control legislation only applied to leases and not licences
    -    Lawyer carefully drafted agreement in form of licence, using language of licence not lease
    -    Radich brought forward claim that she was tenant, rather than licencee
o    HELD - It was a lease, and thus Radich had the protection of the Act

Radich applied in England
•    Street v Mountford [1985] AC 809
o    FACTS
    -    Similar facts to Radich
    -    Agreement included a clause saying “I the occupant agree that this gives me rights of a licensee and not a tenant”
o    HELD - Exclusive possession meant lease existed

Exclusive possession can be implied by the nature of the rights granted
•    Lewis v Bell (1985)

3. Certainty
of premises: Interest in land rather than mere personal privilege
•    When rooms leased are not exactly specified, there will be a licence rather than a lease

Precision of language suggests lease rather than licence – poorly specified aspects, such as the area and manner of payment suggest licence
•    National Advertising Pty Ltd v Wavon Pty Ltd (1988)
o    Imprecise description of the area and manner of payment suggest licence

Sham provisions

An agreement that is in substance a lease cannot be converted into a licence merely by calling it one – (substance rather than form)

•    Radich v Smith (1959) (Australia)
•    Street v Mountford [1985] (England)
 
Types of Leases

Tenancy for a fixed term
•    Lease for a given term

Periodic Tenancy
•    Tenancy which rolls over from one period to the next
•    Usually arises out of the way rent is paid
•    Either party can bring periodic tenancy to an end by giving notice for the period of the lease
o    Eg weekly tenancy – 1 weeks notice
o    Exception: - Only six months notice required for annual lease

Equitable Leases
•    Courts of equity not so concerned with whether a lease has met the formal requirements
    -    No need for actual order of specific performance of the agreement to grant the lease
    -    Sufficient that parties entitled to obtain such an order
o    Walsh v Lonsdale  (1882) (English) - ie if landlord does not have title, it is irrelevant if the tenant gets everything they require out of the lease
    -    Estoppel
•    An equitable lease is similar to any equitable interest
o    Liable to be defeated by a bona fide purchaser of a legal estate in the land without notice of the equitable lease
•    Court of equity will grant specific performance of an equitable lease, but the legal interest survives if there is no notice
o    As long as tenant is in possession, there will be notice

Tenancy at will
•    Lease where either party can terminate at their will without prior notice
•    Can be granted expressly or by implication
o    Eg when tenant stays on after lease has expired

Usually no notice requirement, but may require notice in exceptional circumstances
•    Landale v Menzies (1909) (High Court of Australia)
o    FACTS
    -    Two partes in a ‘holding over’ situation as they adopted a fence running along a stream as the boundary between properties on a give and take basis
    -    Each therefore held parcels of land from the other on a tenancy at will
    -    After giving a few days notice, but without permission, Menzies cut through the fence in order to get better access to the water
o    HELD - Reasonable notice required due to importance of access to water. There was no reasonable notice, and so agreement was still in existence, and plaintiff entitled to injunction and inquiry as damages for trespass

Tenancy at will under section 127 Conveyancing Act
•    Ie if tenant paying rent but lease does not meet statutory formalities

Formerly, under English law:

If you have a lease over three years, it must be written and signed
•    Statute of Frauds 1677

If not written and signed, takes effect as a tenancy at will
•    Statute of Frauds 1677

BUT: Common law courts of England ignored this:
•    Said that if you have a lease that does not meet the formalities, but the tenant pays rent:
o    Tenancy will be treated periodically from year to year until the full period agreed upon has transpired
    -    Terminable with 6 months notice
    -    Courts imply all terms agreed upon as long as consistent with tenancy from year to year

Under Section 127(1) Conveyancing Act
•    Courts will hold that a tenancy at will exists
•    To protect the tenant, one months notice required to bring the tenancy to an end

Courts will read into a s127 tenancy at will whatever obligations the parties originally agreed upon so long as they are consistent with a tenancy at will
•    Dockerill v Cavanagh

BUT: That relates to Common law courts
•    Courts of Equity would uphold agreements in the terms the parties had reached
•    See below, Chan v Cresdon regarding guarantors

Unsigned lease gives rise to tenancy at will, and imputes all consistent obligations
•    Wykes v Samilk Pty Ltd (1998) NSW
o    FACTS - Tenant never signed lease
•    Problem regarding s23C Conveyancing Act
    -    Landlord sued for rent owing under the lease
    -    Tenant claimed there never was a lease
o    HELD - Tenant was in possession and had paid rent, therefore lease under s127 Conveyancing Act, even though nothing in writing. In tenancy at will, obligations consistent, tenant liable to pay rent, and could be sued for unpaid rent

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