ENFORCEMENT OF LEGAL OBLIGATIONS Flashcards
What other remedies does the Landlord have?
- Forfeiture is only for fixed term leases
- Notice can be given for Periodic Tenancies
- Damages for breach of contract if T is in breach of covenant
- Damages for repudiation or fundamental breach of contract.
Can a Lessor recover prospective losses for forfeiture?
No, damages are only up until the time of forfeiture
What is the doctrine of repudiation?
Repudiation arises where one party’s actions (usually the tenants) shows an intention not to be bound by the lease. This is where the breach is so serious so as to amount to repudiation.
What is the effect of repudiation?
- The LL has to accept it and upon acceptance, this terminates the lease. The acceptance must be communicated in writing.
What can be recovered from repudiation?
- Damages; and
2. Prospective losses.
In what case did the doctrine of Repudiation (DR) arise?
Highway Properties v Kelly Douglas
A lease of a shopping centre was for a term of 15 years. The tenant abandoned possession after two years.
The LL was only able to fully lease out the land 3 and a half years later.
The LL wanted:
- Damages for all the losses up to the date of the full re-letting
- PRospective losses for the unexpired period of the lease.
Court held:
- Prospective losses were recoverable.
- They held there were four options where a tenant abandon’s possession and stops paying rent:
- LL could still treat the lease as valid and enforce the rent when it was due
- LL terminates on the basis of forfeiture and claims prospective loss up until time of forfeiture
- LL entitled to damage for prospective losses where tenant has repudiated. This will happen WHERE THE TENANT HAS ABANDONED POSSESSION AND HAS STOPPED PAYING RENT.
In which case the the HCA recognise DR?
Shevill v Builders Licensing Board.
Due to financial difficulties, the tenants were struggling to pay rent.
Tenant was repeatedly late and was in arrears.
LL re-entered and forfeted lease for breach of covenant to pay rent.
The LL then re-let premises for a much lesser amount.
LL wanted prospective damages and wanted loss of rent for the unexpired term of the lease
Court held:
- Claim for prospective damages rejected. LL entitled to recover losses only up until time of forfeiture.
- There was no repudiation by the tenant. They did not SHOW AN INTENTION not to be bound by the lease.
- They were still in possession, but were just struggling to meet obligations
- The covenant to pay rent was NOT an essential term that allowed the LL to rescind breach, therefore no fundamental breach to allow repudiation.
What amounts to repudiation?
- Depends on circumstances
- Consistent and deliberate breaches of fundamental terms
- A tenant who abandon’s possession and stops paying rent will have repudiated lease obligations; AND - Shevill’s case
- an intention to no longer be bound by the contract must be shown by the Tenant - Tabali’s case
- It must be fundamental breach that goes to the root of the contract so as to make commercial performance impossible. - Gumland Properties
What is the relevance of Tabali’s case?
In this case, the tenant was in breach of several covenants.
They were in possession, but they had not maintained good repair, arrears of rent, he had sublet without Ll’s consent.
HC held: multiple breaches amount to repudiation and it amounted to fundamental breach of contract.
This showed an intention not to be bound by the contract.
What happened in Gumland Properties?
The arrears of rent was held to be fundamental breach because the obligation to pay rent was an ‘essential term’ under the contract.
Can the Landlord just wait to sue the tenant?
No, the LL has a duty to mitigate losses. For all claims of PROSPECTIVE LOSSES, the LL must mitigate losses: Wood Factory v Kiritos.
