In a recent Supreme Court decision, it was held that a notice of breach of covenant served on a tenant was invalid because it was signed by the landlord's lawyer rather than the landlord itself.
Facts
The facts of Enviro Remote Sensing Australia Pty Limited v Bankstown Airport Limited1 involved the landlord serving on the tenant a notice of breach of covenant, said to be under section 129 of the Conveyancing Act 1919, alleging breach of a clause in the lease in failing to complete works in a workmanlike manner, and requiring the breach to be remedied.
The notice served on the tenant stated that the landlord would be entitled to re-enter and forfeit the lease in the event that the tenant failed to comply with the notice within a reasonable time.
The landlord subsequently re-entered and terminated the lease after it deemed that the tenant had not complied with the section 129 notice.
The tenant argued that the termination was without grounds and wrongful, constituting a repudiation of the lease and that the tenant accepted the repudiation and considered the lease at an end.
Defective Notice
While there were a number of claims made by the tenant, the one we consider here is the claim that the section 129 notice was defective on the basis that it was not properly signed.
The notices provision within the lease provided that a "notice in connection with the lease could be given by the Tenant (if an individual), the Corporation (if an individual) or an authorised officer of the relevant party".
The solicitor who signed the section 129 notice was not an authorised officer and it was not suggested that the solicitor was appointed by the landlord to act as an authorised officer for the purposes of the lease.
The Court noted that the ordinary authority of a solicitor would not extend to signing a notice on behalf of a landlord client nor would that solicitor, without other authorisation, be the agent of the client for that purpose (the landlord was not mentioned by name in the notice and the landlord's solicitor did not claim to sign as agent of the landlord).
Further, no argument was raised in respect of any ostensible authority. That is, that the landlord had held out its solicitors as its agent to the tenant.
It was therefore concluded on technical grounds that the section 129 notice was not a valid notice.
This meant that the landlord's re-entry for the tenant's failure to comply with the section 129 notice constituted a repudiation of the lease by the landlord.
Comment
The lesson here for landlords and in-house counsel is to ensure that any notice (particularly a notice of breach under section 129 of the Conveyancing Act 1919) is signed and served strictly in accordance with the notices' provision contained in the lease and any statutory requirements.
Footnote
1 [2008] NSW SC 1001 (25 September 2008)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.