4: Leases and Licences
4: Leases and Licences
Lease: an agreement to allow someone to use land for a period
- Many types: pastoral lease, agricultural lease etc
- older term: a demise - simply means a lease
- Lessor (or landlord): granter of the lease
- Lessee (or tenant): person that takes the lease
- Reversion: lessors’ interest during the currency of the lease
Types of tenancies
Periodic tenancies
Tenancy that runs from one period to another period of the same duration & to yet another of the
same duration and so on until determined
- May arise by express agreement but term normally implied by the payment interval
- Not a new tenancy at beginning of each period but a single tenancy, term of which continuously
grows until determined by some appropriate means
Determination
- Notice to quit given by either party or other appropriate method (e.g. termination following
default)
- Giving of notice must be equivalent to the tenancy period
o Exception: period tenancy from year to year requires on 6 months’ notice to quit
- Parties free to vary common law period of notice by agreeing on what will be a sufficient period
of notice – but a provision that neither party or one party only may determine tenancy is
repugnant to concept of a period tenancy
- Joint lessees: continuance of period tenancy as each new period arrives depends on continued
concurrence of all joint lessees
o Notice to quit by one only of joint lessees determines tenancy even without other lessees’
knowledge or consent
- Unclear whether after determination: period tenancy remains on foot until expiry of notice or;
ends existing period tenancy from date of notice & creates new tenancy for a fixed term
- Doubt about effect of withdrawing a notice to quit before it expires (i.e. when with consent of
both lessor & lessee)
- If during currency of notice to quit, tenant assigns lease, all that assignee receives is a term for
balance of unexpired period of notice to quit – assignee acquires no rights
Tenancies from year to year (implied by law)
- Originally, no formalities required to grant a lease  Statute of Frauds in 1677
- Common law courts: implied a tenancy from year to year where (absence compliance with
statute), parties agreed on a lease and, under that agreement, tenant had gone into possession &
paid rent
o On payment of rent, ceased to be a lease at will & became a tenancy from year to year
determinable by six months’ notice
- Payment of rent had to be referable to a yearly tenancy (paid annually or paid by instalments
calculated as a proportionate (aliquot) part of a yearly rent): Chan v Cresdon, Mason CJ, Brennan,
Deane & McHugh JJ
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4: Leases and Licences
- Reasoning: to prevent landlord ripping off tenants (e.g. if crops about to be harvested & evicted)
- Tenancy expired automatically at the end of the period which parties had agreed upon the lease
(unless determined by 6 months’ notice)
- Statutory obligations & powers implied into leases incorporated into tenancy from year to year
Other circumstances where tenancy from year to year implied:
- where the parties had agreed on a fixed term lease exceeding a year but had not fulfilled the
requirements to enforce that obligation in law & tenant paid by reference to a year or an aliquot
part of the year: Moore v Dimond - In these circumstances, courts will infer an intention to create
a yearly tenancy (so yearly tenancy is the longest, the common law will recognise outside a legally
enforceable contract)
- Where a tenant held over at the end of a lease with no agreement for grant of a new lease & paid
rent by reference to a year or an aliquot part of the year: Moore v Dimond
Equity
- Position different: equity generally regarded an agreement for a lease as specifically enforceable
& would order landlord to execute a legal lease so as effectively to vest in tenant a legal term fro
duration agreed upon
- Equity would treat tenant as having an equitable lease for duration agreed upon & restrain
landlord from exercising common law right of giving 6 months’ notice to terminate legal
leasehold interest
Effect under Conveyancing Act 1919, s 127(1)
s 127(1): creates a tenancy at will (determinable by one month’s notice) only in those situations
where, at common law, for lack of compliance with statutory formalities, a tenancy from eyar to
year would have been implied by entry into possession & payment of rent
- The words “no agreement as to duration” interpreted in Dockrill v Cavanagh (1944) 45 SR (NSW)
78 to mean “no agreement as to its duration which is effective to create a legal lease for the
period agreed.”
o s 127 applies where the parties have agreed to a longer term but have not created an
enforceable agreement
o Does not apply where:
• Parties have reached a binding agreement for a lease & tenant has entered into possession
under agreement but not yet begun paying rent
• Prospective tenant entered into possession & paying rent without landlord & tenant having
yet reached a binding agreement for a lease
- Terms applicable to a tenancy at will determinable by one month’s notice implied incorporated
into a tenancy at will arising under s 127(1)
- Tenant’s contractual obligation to pay rent for full period agreed upon remains enforceable
(could sue at common law for damages for loss of lease for full period originally agreed upon)
- Determine automatically at end of period originally agreed without need for notice
- Notice must be in writing (s 127(1))
- Tenancy may be assigned
- Leaves principles of equity untouched
s 127(1): “No tenancy from year to year shall, after the commencement of this Act, be implied by
payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall
be deemed to be a tenancy determinable at the will of either of the parties by one month's notice in
writing expiring at any time.”
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4: Leases and Licences
Tenancy at sufferance
- Arises where a person who entered into possession under a lawful right remains in possession
after that right ceases and without either assert or dissent of person entitled to property
o If landlord objects, trespasser
o If landlord assents, a tenancy at will
o Grey area: in possession of property, then if pay rent, it may become a periodic tenancy
- Issue: rights during period
o No obligation to pay rent, although tenant at sufferance liable to claim for “use & occupation”
o Can only arise by operation of law (as lack of agreement between lessor & lessee)
o Person can be removed at any time without need for prior notice
- Some authors suggest that tenancy at sufferance is a legal fiction to prevent a finding that tenant
in occupation in these circumstances is a trespasser
o I.e. tenancy at sufferance cannot be assigned or subleased
o But has sufficient possession to maintain an action against third parties
Tenancy at will
- Arises whenever a person occupies land with the owner’s consent as tenant on terms that either
party may terminate the tenancy at any time
- While lessor is entitled to compensation for period of occupancy, generally, tenant does not pay
rent
- May be created by express agreement, but usually arise by implication when:
State of transition
o tenant “holds over” after expiration of their lease with landlord’s consent but without having
paid rent on an agreed or a periodic basis
• Unless lease expressly provides for terms that will apply to any tenancy t will, terms of
lease will apply to the tenancy at will as appropriate (covenant to maintain premises etc)
o where a prospective tenant is let into possession pending a concluded agreement of a grant of
a lease without yet having paid rent on an agreed or a periodic basis
(For above: Once rent paid on a periodic basis, tenancy at will ceases  periodic tenancy)
After contract of sale
o Where a purchaser under a contract of sale is allowed into possession before completion
Termination (determination)
- Right of either landlord or tenant to terminate tenancy as desired, without prior notice
- Tenancy at will determined by any act of landlord inconsistent with will that tenancy should
continue
o If act done off the land, does not determine until tenant has notice of the act
Tenancies for a term of years
- Tenancy which from the outset is fixed to expire at an agreed, certain time
o May be for any fixed period shorter/longer than a year – even for discontinuous periods
- s 134 CA: lease for a term not less than 300 years with not less than 200 years to run may in
certain circumstances be enlarged into a fee simple
o No rent payable under lease, or if payable, has no “money value” or if more than nominal,
liability to pay has been released or recovery has become statute-barred
o Lease not liable to be determined by re-entry for breach of condition: s 134(4)(a)
o Needs registration of deed under Div 1, Pt 23, CA – lease enlarged into fee simple which
automatically vests into (former) tenant: s 134(3)
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4: Leases and Licences
Equitable leases
Rule in Walsh v Lonsdale
- Original rule in equity: provided parties’ agreement was for value & was evidenced in writing or
supported by sufficient acts of part performance, equity would decree specific performance of
the agreement, compelling grant of a formal lease (for term agreed on) complying with
formalities for creating a lease at common law  pending execution of formal lease, equity
would by injunction restrain landowner from acting in a manner inconsistent with obligations
imposed by agreement
- Walsh v Lonsdale: no need for any actual order for specific performance of agreement to grant
the lease - sufficient that parties were entitled to obtain such an order
o Enough that specific performance would have been granted if it had been sought
- Equity will not grant specific performance of an agreement that has already been validly
terminated at law
- Differences to a legal lease:
o Insecurity from defeat at hands of a BFPVWN
o Can be invoked only in a court having equitable jurisdiction
o Specific performance is a discretionary remedy
o Jurisdiction to “backdate” specific performance to date agreement for lease should have ben
performed: Chan v Cresdon
Tenancy by estoppel
Types:
- Tenancy by want of title (“true” tenancy by estoppel): when landlord had no title to grant a lease
but nevertheless purported to grant one
o Does not bind true owner but does bind successors in title
- Estoppel by convention: where parties conduct themselves on the assumption that a lease, or
right to grant of a lease, exists between them & detriment caused to one if other were allowed to
depart from that assumption makes it unconscionable to allow the departure (see p308)
- Equitable estoppel: Where landowner represents to a prospective tenant that a lease will be
granted or induces in T assumption that a lease will be granted & T acts to his/her detriment on
that representation or assumption – allowing L to depart from rep would be unconscionable:
Waltons Interstate (Stores) v Maher (1988) 164 CLR 387
o Lack of writing is no bar to relief- estoppel outflanks s 54 CA
Other leases
Concurrent tenancies
Esp for valuable property – C wants to be tenant after first tenancy finishes
Privity of estate: successors in property rights can enforce rights against each other
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