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WEEK 4
LEASES
ELEMENT 1: State the Parties
ELEMENT 2: Definition

A lease is a grant of a right to exclusive possession of land for a fixed or determinate term.
Difference between a License and a Lease:
Lessee
Licensee
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Proprietary interest in the land
Able to exclude all others including the lessor
unless permission to enter onto the property
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Entry without the lessee’s permission, either
express or implied, allows the lessee to eject
him or her as a trespasser.
May register lease
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Has personal interest only
Cannot exclude the licensor, though he or she
may be able to enforce rights in contract against
the licensor.
Can only eject trespassers in the name of the
licensor
Cannot register licence.
ELEMENT 3: Is there a valid Lease?
There are TWO Essential Requirements for the creation of a Lease:
1. The lessee must have a right of exclusive possession
2. Exclusive possession must be granted for a term
1. RIGHT OF EXCLUSIVE POSSESSION

Exclusive possession requires the lessee to have the general right to exclude others, including the
lessor from the demised (leased) premises.
There has been two tests utilised by the courts to determine Exclusive Possession:
a) The TEST OF INTENTION - requires exclusive possession AND intention of the parties to enter
into a lease
Claude Neon v. Melbourne Metro
- A lease (so-called) was granted of the side of a building for an illuminated sign.
- The land was resumed by the local council and an issue arose as to whether the grantee of the interest
had an interest in land for the purpose of obtaining compensation.
Held
- The majority of the HC held that the applicable test was whether or not the parties intended to create a
lease.
- Dispite the oddity of a lease for the roof, the clear intention was that there was a lease.
b) A strict test of EXCLUSIVE POSSESSION where intention is irrelevant. (Adopted View)
Radaich v. Smith
- Mr & Mrs S were the owners of property and entered into a written agreement with R giving her the
“exclusive right and licence” to a lock-up shop and to carry on the business of a milk bar for a period
of 5 years.
- Agreement was called a licence and the parties were licensor and licensee.
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Held:
- Look at the terms of the agreement itself
- The intention of the parties is only relevant in so far as the intention is gleaned from the instrument.
- “How is it to be ascertained whether…an interest in land has been given? By seeing whether the
grantee was given a legal right of exclusive possession of the land for a term or from year to year or for
a life or lives. If he was he is a tenant…”
- Although they called it a licence, it was held to be a lease.
Street v. Mountford
- An agreement was entered b/w S and M that M would have two furnished rooms for a weekly rent
which could be terminated on two weeks notice.
- The agreement was referred to as a licence and included an express acknowledgment by the occupier
that no lease or tenancy was in existence or was intended to arise.
Held:
- Lord Templeman adopted Windeyer’s logic from Radaich and said that if exclusive possession of
residential accommodation were granted for a term, together with the periodic payment of full
economic rent, then a tenancy was created.
- The parties could not alter the effect of the agreement by insisting that only a licence was created.
AG Securities v. Vaughan
- 2 cases were heard together
- In the first case the occupants held possession under 4 separate agreements made on different dates in
consideration of different payments giving each occupant the exclusive right to use a 4 bedroom flat in
common with 3 other occupants who were granted similar rights.
- It was held that there was no grant of exclusive possession to any one occupant individually, rather
each had been granted a right to share with the others and thus these agreements constituted licences.
- In the second case, separate but contemporaneous and identical agreements were entered into b/w the
lessor and a man and the lessor and a woman giving each occupier, individually, the right to occupy a 1
bedroom flat.
- These agreements were expressed to be licences and not to amount to a grant of exclusive possession.
Held:
- The H of L considered that the 2 agreements were interdependent so as to constitute a single
agreement.
- It was considered that there was an intention to confer on the occupants exclusive possession of the flat
for a term, in consideration for periodical payments, and thus a tenancy had been created.

Therefore if exclusive possession has been granted, no further investigation is necessary.

However, where it is NOT clear from the words used by the parties whether a right to exclusive
possession has been granted, the court may use intention to see whether a lease has been granted.
Lewis v. Bell
- A trainer entered into agreement with the Aust. Jockey Club in Sydney and obtained use of horse
stables and accommodation.
- It was unclear what exactly had been granted to the trainer and so the Ct said you can look at the
intention of the parties when you’re trying to construct the document. You can look at the intention
when you’re working out the nature of the document and what terms are implied into the document.
- After that stage, intention becomes irrelevant and you look to whether exclusive possession has been
granted. Here it had not been granted, and what the trainer had was a licence.
2. IT HAS TO BE FOR A FIXED OR DETERMINATE PERIOD OF TIME.

COMMENCEMENT DATE: The commencement date of a lease must be certain, or capable of
being rendered certain before the lease takes effect. Otherwise the lease is void
South Coast Oils
- There was an agreement for a lease and it was expressed to start on the completion of the service
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station.
By the time the lessee sought to enforce the agreement the service station was completed.
Ct said that the agreement is enforceable if by the time you want to enforce it the contingency
has happened because the event has occurred (so there is certainty of commencement)

TERM OF THE LEASE: If the term of a lease is not stated, it must be able to be ascertained by
some indirect or collateral means:
Lace v. Chante
- An agreement to let premises in London during WW2.
- The relevant part of the instrument said that the letting was for the duration of the war.
- That was uncertain b/c nobody knew how long it would last. So the agreement was void.
- The govt passed legislation to make such leases valid.
Prudential Assurance v. London
- A lease was granted over a strip of land.
- This strip of land fronted a road and the lease was granted in 1930. It was granted until such time as
the council required the land for roadbuilding.
- The tenant went into possession and paid 30 pound a year.
- The land was sold to the London Residential Body (LRB) which then sold it to persons who had no
roadbuilding powers.
- So the road would never be widened and the landlord would never be able to terminate the lease
because the only ground to terminate the lease was when it was required for roadbuilding.
- If this was the case, there was no certainty of time and the lease was void.
- However, because the tenant was in possession and paying yearly rent, he became a tenant under a
yearly lease.
- All the terms of the agreement that were consistent with a yearly lease were implied.
- As the requirement about no termination unless for roadbuilding was inconsistent with a yearly lease,
either party had the right to end the lease on the period of notice which is required at CL under a yearly
lease (which is 6 months).
- Therefore, you can get out of the lease with 6 months notice to the other side.
- What the Ct also said (about Lace v. Ch) If someone had drafted the agreement better in Lv. C, it
would have been valid – a lease for ten years subject however to earlier termination by either party
when the war ends.
ELEMENT 4: What type 0f Tenancy is it?
FIXED TERM TENANCY
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For a lease for one year or two years for example.
PERIODIC TENANCY
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A periodic Tenancy is a tenancy for a specific period of time: weekly, fortnightly, yearly etc, at the
end of which time, the lease automatically restarts. There is no need to enter into a new agreement
If you want to end it – even if the tenancy is assigned or even if either party dies – you have to do it in
a special way.
Express – ‘monthly tenancy’, ‘from month to month’
By implication – by payment of rent; implied from terms of the agreement that a certain period of
notice will be given before termination.
Termination of Periodic Tenancies:
 The PLA Act 1974 deals with termination of periodic tenancies – s.129 to 137.
 Note especially ss.130, 131, 132 deal with notice and who has to sign and who can terminate.

The period of notice for a weekly tenancy is one week.
 That notice must end on the last day of the weekly tenancy. If the last day is Friday, the period of
notice must end on Friday – s.133.
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
If it’s a monthly tenancy, again it’s one month’s notice which must expire on the last day of that
tenancy (s.134)
 Eg – If a monthly tenancy commenced on the 5th day of the month and it was decided on the 10th
October to serve notice, the Notice must be given BEFORE 4th November to expire on 4 December.
 A yearly tenancy (other than one under s.129) – six months notice which must end on the last day
of the yearly tenancy (s.135).
 If it’s on the wrong day, the tenant will be in possession for another whole year.


Any other periodic tenancy, that period, which must end on the last day of that period (s.136)
There is no requirement that it has to be exactly the time, but it has to end on the last day of the period.
YEARLY TENANCY
At CL, a yearly tenancy may be created in the following ways:
Express
1. A yearly tenancy may be expressly created “from year to year”, ‘yearly tenancy’
Implied
2. By implied agreement b/w the parties
 Eg – tenant enters into possession and pays rent which is calculated or measured on a yearly basis
but the parties have NOT expressly stated the terms.
3. Holding over at the end of a fixed term lease.
 Eg – The pmt of rent constitutes evidence of the establishment of a tenancy and the fact that rent
is paid by reference to a year or part of a year affords evidence of a yearly tenancy.
4. Vague or uncertain terms when the tenant is in possession
 On the pmt of rent calculated by reference to a year the CL will imply a yearly tenancy in the
absence of any agreement to the contrary.
5. Informal lease or agreement for a lease where
- A yearly tenancy will be implied at CL where a lessee enters into possession and pays rent under
an agreement to grant a lease for a term of years but no lease is created which is effective at law.
- Alternatively, a lease for over three years is signed, but not registered.
- On entry into possession a tenancy at will is created but on payment of rent under the informal
lease, a yearly tenancy arises by implication of law.
- It continues for the period specified in the lease (either the agreement or the equitable long lease)
- It automatically terminates at the end of the agreed term in the agreement for lease or the equitable
lease.
Moore v. Dimond
- There was a fixed term lease which had expired.
- The parties entered into another 5 year agreement for a lease (in writing) but it was never formalised.
- The tenant quit during this time and the landlord sued for rent on the basis of a yearly tenancy.
- The yearly tenancy existed b/c of the informal 5 year lease.
- The yearly tenancy had not been properly ended by the tenant and the tenant argued that it was only a
weekly tenancy (which would lessen damages payable).
- The Landlord argued yearly tenancy and the HC agreed with him.
- The Ct said that when parties agreed on a 5 year term, or any long term:
1. weekly rent is part compensation for the term and does not indicate a separate and independent
weekly tenancy
2. Where the intention fails b/c of lack of a formal lease, the presumption is for a term from year to
year.
3. Such a tenancy is a tenancy implied by law.
Termination of a Yearly Lease
 At CL, six months notice is necessary to terminate a yearly tenancy. However, this is most
inconvenient, and has now been changed by s.129 PLA
 S.135 applies to a yearly lease arising by express agreement – It maintains the 6mth requirement.
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Section 129
 A yearly tenancy at CL – six months notice calculated to end on the last day of the yearly tenancy.
 S.129 creates a tenancy at will – termination is by one month’s notice expiring at any time.
 No longer can you imply a yearly tenancy by payment of rent
 There must be no agreement as to its duration (s.129 wont apply to express yearly tenancy)
When does it operate?
 Implied Tenancy – (‘year to year’), or by reference to a year; when there are vague or uncertain terms
but the tenant is in possession and paying rent on a yearly basis; when you’ve got an informal lease or
an agreement for a term for years.
 A tenancy is implied at CL b/c of payment of rent – in those three situations, s.129 will operate.
 But does s.129 operate when you’ve got an implied agreement b/w the parties ?
BCC v. Council Club Inc).
- The BCC allowed the “Council Employees Club” to have a floor of theie administration building.
They paid $100 a year rent.
- About 1994 the Council decided it was time for them to go, unless they paid the proper rent
($30000/month).
- Even when it became almost intended/acknowledged that the Council club should be there as a yearly
tenant implied by agreement b/w parties, the Ct said the presumption of yearly tenancy implied at law
from year to year was not rebutted and s.129 applied.
- Ct also said that a strong reason for deciding that the tenancy was one from year to year arising by
implication of law, was that neither the duration of the term nor the %age of profit to be paid to the
BCC was ever agreed on.
- They specifically referred to the judgment in Moore where they talk about the vague and uncertain
terms of the agreement, even though the tenant is in possession and paying rent on a yearly basis.
- Cts will be reluctant to find an implied agreement b/w the parties and if the only determinant or
substantive determinant is rent, then a yearly tenancy by implication of law will arise. The only
substantive determining factor in this case was that the rent was to be $100 a year.
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“and no agreement as to its duration” means no agreement effective at law.
TENANCY AT WILL
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The tenant remains in occupation with the landlords consent on the understanding that the
tenancy may be ended by either party at any time.
Such a tenancy gives no proprietary interest in land, it doesn’t have to comply with the requirement of
certainty of term.
However, it’s personal and it will not survive assignment and will end at the death of either party.
They arise at the landlords consent, in these three situations:
1. The tenant remains in occupation after the lease ends but before a periodic payment of rent commences
2. The tenant’s in possession b/f a lease has been formally created or where negotiations are still in
progress and b/f rent has been paid
3. The tenant allows someone to occupy the property rent free for an indefinite period of time.
Bond University v. Limgold
- Bond Uni didn’t pay rent, and the Ct said that it was a tenancy at will
- Although Bond had a tenancy at will the Ct said they had three years to vacate the premises.
Once rent is paid, it becomes that sort of periodic tenancy.
Turner v. York Motors Pty Ltd
- Lessee entered into possession of the premises while discussions in relation to the terms of a fixed
lease continued. The negotiations to result in a fixed lease being granted and no formal lease was
signed.
- Initially rent was paid weekly later was paid monthly.
- The property was sold to the plaintiff and the lessee stayed in possession paying rent on a monthly
basis
- The Plaintiff claimed that the lessee occupied as a tenant at will and gave a notice in writing requiring
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the lessee to quit the premises in one months time.
- This was an appropriate notice for a tenancy at will but not for a periodic monthly tenncy as it did not
expire on the completion of one cycle o the tenancy,.
Held
- Crt found that initially a tenancy at will was created when the lessee went into possession while
negotiations were continuing. However, as rent was paid continuously on a monthly basis a monthly
periodic tenancy arose.
- Therefore the notice to terminate was inadequate.
Termination of a Tenancy at Will
 Although a tenancy at will may be terminated by either party at any time, the notice that you give must
allow a reasonable time to vacate the premises.
 S.137(1) a notice to terminate a tenancy…must be for a reasonable period.
 S.137(2) what constitutes reasonable depends on the circumstances.
TENANCY AT SUFFERANCE
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Where a tenant holds over at the end of the tenancy, without either the landlord’s consent or dissent
If agreement is then reached b/w the parties, a tenancy starts, if not the tenant has to go.
Although there’s no rent, compensation could be payable on the basis equivalent to rent.
The view in Qld is that no notice is required to end a tenancy at sufferance.
S.137(1) does not apply to a tenancy at sufferance because it is not regarded as a tenancy .
TENANCY BY ESTOPPEL
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Where the landlord doesn’t have the right to grant the lease, but the tenant’s in possession.
Each party is unable to deny the other’s title.
A tenancy by estoppel is only affected by the parties to it.
ELEMENT 5: Is the Lease a long or Short-Term Lease??


If greater than 3 yrs Go to Element 6
If Equal or less than 3 years go to Element 7
ELEMENT 6: Creation of a Long Term Lease
FORMAL REQUIREMENTS FOR THE CREATION OF A LONG-TERM LEASE
Writing Signed by the Grantor
 s.s 10 and 11(1)(a) PLA – To create a long-term lease, it must be in writing and signed by the lessor.
 s.59 PLA – The lease must be evidenced in writing and signed by the lessor for it to be enforceable.
Registration
 s.181 LTA – states an instrument does NOT transfer of create an interest in lot until its registered.
 S.65 LTA – sets out the requirements of a lease
 S.71 – confirms that unregistered leases are NOT invalid
FAILURE TO COMPLY WITH THE LEGAL REQUIREMENTS
Effect At Law
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Failure to comply with the requirements means the lease is void at law
If the tenant goes into possession and pays rent under the terms of the void lease, an implied tenancy
from year to year is created at CL which is converted by s.129 to a tenancy at will, determinable by
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one month’s notice in writing expiring at any time. (refer above)
Dockrill v. Cavanagh
- C had been granted an option to renew but no new lease was ever entered into.
- However, the tenant was in possession and paying monthly rent.
- A tenant under a long lease (over 3 years) which did not comply with the legal requirements is a tenant
at will only. If payment of rent could be referenced to a yearly tenancy then CL implied a yearly
tenancy
1. All the terms of the agreement consistent with a yearly tenancy were treated as incorporated into it.
(Points 1 and 3 Also apply in a case where there was a holding over and where there was an agreement
for a lease and the lessee was in possession)
2. If that implied yearly tenancy is not determined by six months notice, it automatically ends at the end
of the term that the parties agreed on.
- In this case, the option to renew was for a period of 2 years. SO an implied yearly tenancy ended at the
end of two years.
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s.129 converts the implied yearly tenancy to a tenancy at will…
And no agreement as to its duration – in D v. C - there’s no agreement about the term of the lease
that’s effective at law. Here the option was for 2 years, but there was no effective document at law
that had that agreement in it.
Effect In Contract Of A Lease Void At Law

While the tenancy may be terminated by notice under s.129, the rights of the parties in K remain
independent and the innocent party may SUE FOR BREACH OF THE K AND DAMAGES.
Leitz Leeholme Stud Pty Ltd v. Robinson
- A tenant entered into a written lease for 6 years.
- It was never registered.
- He left after 3 years and he gave a termination notice under NSW equivalent to s.129.
- The landlord claimed damages for breach of K.
- The tenant argued that once he had terminated the lease under s.129, the parties rights were at an end
because you couldn’t have a lawful termination of a right to remain in possession (notice under s.129)
and at the same time, treat that notice as unlawful repudiation of the agreement.
- The Ct said that that agreement to lease was also enforceable as a K, it was a separate agreement, and
therefore the landlord could sue for damages.
Effect In Equity Of A Lease Void At Law

Where there is no lease at law, the Ct of equity will, if SP is available (and if the lease is granted
orally, where sufficient acts of PP are evidenced), treat the lease void at law as a lease for the term in
equity enforceable b/w the parties, and order SP of the agreement to make it a legal lease.
There are 3 situations where equity may be of assistance in relation to leases.
1. Where the parties have an agreement for Lease only
- The crt of equity will intervene if specific performance is available: Walsh v Lonsdale
- Therefore the agreement will be treated as an equitable lease for the term agreed upon and as between
the parties as the equivalent of a lease at law.
2. Where the instrument may purport to be a legal lease but there is a lack of form or failure to
register
- So long as an action for specific performance is available such an instrument will have the same effect
as the instruments described in the first category.
3. Where there is merely an oral agreement for lease or lease between the parties.
- Will only be enforceable as an equitable lease if you’ve got sufficient acts of PP – show possession,
payment of rent etc. Acts of PP will have to be referenced to the particular agreement set up b/w
parties.
- oral agreement will be unenforceable at K b/c of s.59 unless there is sufficient acts of PP.
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ELEMENT 7: Creation of a Short-Term Lease

Leases for a term not exceeding 3yrs have always been in a special category at CL, and the distinction
has been retained in legislation.
Common Law
 At CL, a lease for a term of 3 years or less taking effect in possession was NOT subject o provisions
requiring it to be in writing nor any statute which required leases to be made by deed.
Statute- PLA
 S.12(2) preserves the CL – a short term lease is a legal lease.
 PLA s.12(2) provides…”Nothing in this Act shall affect the creation by parol of a lease taking effect in
possession for a term not exceeding 3 years, with or without a right for the lessee to extend the term for
any period which the term would not exceed 3yrs.


Note that the lease must take “effect in possession” – s.12(2) does not apply to a lease granted today to
take effect in 3mnths time: Abjornson v Urban Newspapers
The phrase “term not exceeding 3yrs” includes periodic tenancies, such as monthly and yearly
tenancies
 The effect is such leases become legal although not indefeasible leases: Deventer Pty Ltd v BP
Australia
Statute – LTA
 Short-term leases of Torrens Land are not required to be registered under the LTA to create a valid
lease at law.
 Note s.185(1)(b) – a registered proprietor will take his or her interest in the land subject to the interest
of the lessee under a short-term lease, regardless of whether the short-term lease is registered or not.


S.185(2)(b) defines the extent of the interest which is protected – A right to renew beyond the 3yr term
is not protected. Therefore where a short-term lease contains an option to renew both the lease and
option are protected for a maximum of 3yrs.
Note s.71 LTA which states that an unregistered lease is not invalid merely b/c it is unregistered.
It’s a reference to s.185(1)(b) that allows a short term lease to be unregistered and still be legal
lease.
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