Where a tenant is in breach of their obligations under a lease, the Property Law Act 1974 (Qld) provides a number of requirements for landlords seeking to exercise their right of re-entry of forfeiture of the lease.
The case of Tyrrell & Anor v Jesbro Enterprise Pty Ltd handed down in the Supreme Court of Queensland in April this year highlighted the importance of strict compliance with the Notice requirements under the Act, and provides guidance for landlords in these circumstances.
In this case, the tenant purchased a leasehold motel business with a substantial period remaining on the lease term. During the tenant’s occupation of the premises, the landlord undertook refurbishment works to the bathrooms in the complex.
These works were undertaken with the tenant’s knowledge and consent, however as the rooms under refurbishment were unavailable for an extended period, the tenant claimed that it was not obliged to pay the rent and council rates under the lease.
The landlord then served a Notice to Remedy Breach on the tenant in relation to the outstanding rent and council rates. The landlord also applied to the Court for a declaration that the lease was validly terminated when the Notice was not complied with by the tenant.
In ruling that the lease was not validly terminated, the Court found that the Notice served by the landlord was defective. Despite the presence of a covering letter advising that failure to remedy the breach by the specified time would give the landlord the right to terminate the lease, the Court found the Notice was not in the appropriate form under section 124(8) of the Act, and failed to properly communicate the tenant’s obligations.
The Court ruled that in failing to advise the tenant that it must comply with the Notice within a reasonable time, and that the landlord would be entitled to re-enter or forfeit the lease in the case of non-compliance, the Notice did not substantially comply with the requirements under the Act. Although some of this information was provided in the covering letter, the Notice could not be read in conjunction with the letter to claim substantial compliance.
For landlords, this decision reinforces the importance of serving Notices in accordance with the approved Property Law Act Form 7 and to include all the relevant details on the Notice. These relevant details include specifying the particular breach, requiring the tenant to remedy the breach and advising that the landlord will be entitled to re-enter or forfeit the lease if the Notice is not complied with in a reasonable time.
As noted in the decision, the approved Form 7 sets out this information in a Note at the foot of the form and draws the tenant’s attention to their obligations under section 124 of the Act. As we have seen, including this Note in your Notice is critical in enforcing your rights as landlord.