PROPERTY LAW ACT 1974 - SECT 128 Relief against loss of lessee’s option

PROPERTY LAW ACT 1974 - SECT 128

128 Relief against loss of lessee’s option

(1) In this section—

(a) a reference to an option contained in a lease is a reference to a right on the part of the lessee to require the lessor—

(i) to sell, or offer to sell, to the lessee the reversion expectant on the lease; or

(ii) to grant, or offer to grant, to the lessee a renewal or extension of the lease, or a further lease, of the demised premises or a part of the demised premises, whether the right is conferred by the lease or by an agreement collateral to the lease; and

(b) a reference to a breach by a lessee of the lessee’s obligations under a lease containing an option is a reference to a breach of those obligations by an act done or omitted to be done before or after the commencement of this Act in so far as the act or omission would constitute a breach of those obligations if there were no option contained in the lease.

(2) This section applies to and in respect of leases granted before or after the commencement of this Act and options contained in such leases, and has effect despite any stipulation to the contrary.

(3) In this section—


"prescribed notice" means a notice in writing that—

(a) specifies an act or omission; and

(b) states that, subject to any order of the court under subsection (6) , a lessor giving the notice proposes to treat that act or omission as having precluded a lessee on whom the notice is served from exercising an option contained in the lease.

(4) Where an act or omission that constituted a breach by a lessee of the lessee’s obligations under a lease containing an option would, but for this section, have had the effect of precluding the lessee from exercising the option, the act or omission shall be deemed not to have had that effect where the lessee purports to exercise the option unless, during the period of 14 days next succeeding the purported exercise of the option, the lessor serves on the lessee prescribed notice of the act or omission and—

(a) an order for relief against the effect of the breach in relation to the purported exercise of the option is not sought from the court before the expiration of the period of 1 month next succeeding service of the notice; or

(b) where such relief is so sought—

(i) the proceedings in which the relief is sought are disposed of, in so far as they relate to that relief, otherwise than by granting relief; or

(ii) where relief is granted upon terms to be complied with by the lessee before compliance by the lessor with the order granting relief, the lessee fails to comply with those terms within the time stipulated by the court for the purpose.

(5) Relief referred to in subsection (4) may be sought—

(a) in proceedings instituted in the court for the purpose; or

(b) in proceedings in the court in which—

(i) the existence of an alleged breach by the lessee of the lessee’s obligations under the lease; or

(ii) the effect of the breach from which relief is sought;

is in issue.

(6) The court may, in proceedings in which relief referred to in subsection (4) is sought—

(a) make such orders (including orders affecting an assignee of the reversion) as it thinks fit for the purpose of granting the relief sought; or

(b) refuse to grant the relief sought.

(7) The court may, in proceedings referred to in subsection (6) , take into consideration—

(a) the nature of the breach complained of; and

(b) the extent to which, at the date of the institution of the proceedings, the lessor was prejudiced by the breach; and

(c) the conduct of the lessor and the lessee, including conduct after the giving of the prescribed notice; and

(d) the rights of persons other than the lessor and the lessee; and

(e) the operation of subsection (9) ; and

(f) any other circumstances considered by the court to be relevant.

(8) The court—

(a) may make an order under subsection (6) on such terms as to costs, damages, compensation or penalty, or on such other terms, as the court thinks fit; and

(b) may make any consequential or ancillary order it considers necessary to give effect to an order made under that subsection.

(9) Subject to any order of the court and to subsections (10) and (11) —

(a) where—

(i) an option is contained in a lease; and

(ii) the lessee exercises, or purports to exercise, the option; and

(iii) the lease would, but for this paragraph, expire within the period of 14 days after the exercise, or purported exercise, of the option;

the lease shall be deemed to continue in force until the expiration of that period; and

(b) where—

(i) a prescribed notice is duly served on a lessee; and

(ii) the lease in respect of which the notice is served would, but for this paragraph, expire within the period of 1 month referred to in subsection (4) (a) ;

the lease shall be deemed to continue in force until the expiration of that period; and

(c) where, in relation to a lease continued in force under paragraph (b) , relief referred to in subsection (4) is sought by a lessee, the lease shall, subject to subsections (10) and (11) be deemed to continue in force until—

(i) the proceedings in which the relief is sought are disposed of, in so far as they relate to that relief, otherwise than by granting the relief; or

(ii) effect is given to orders made by the court in granting that relief in so far as they affect the lessor or relate to an assurance to the lessee.

(10) Subsection (9) (c) —

(a) does not apply to or in respect of a lease that, but for that paragraph, would continue in force for a period longer than the period for which it is, by the operation of that paragraph, continued in force; and

(b) does not, where a lessee fails to comply with terms imposed upon the lessee under subsection (8) (a) , operate to continue the lease in force beyond the time of that failure by the lessee.

(11) Where, under subsection (9) , a lease continues in force after the day on which, but for that subsection, it would expire—

(a) the lease so continues in force subject to the provisions, stipulations, covenants, conditions and agreements in the lease (other than those relating to the term and the option contained in the lease) but without prejudice to any rights or remedies of the lessor or lessee in relation to the lease; and

(b) the lessee, if the lease is of registered land and the lessee is in possession of the leased premises, has the protection given by the Land Title Act 1994 to—

(i) if the lessee’s interest in the lease is held by the lessee as a registered proprietor—a registered proprietor; or

(ii) if the lease is an unregistered short lease (within the meaning of the Land Title Act 1994 )—the interest of a lessee under a short lease.

(12) Subject to subsection (13) , where, under an option contained in a lease continued in force under subsection (9) , the lease is renewed or a new lease is granted, the period during which the lease was so continued in force shall be deemed to be part of the term for which the lease was renewed or the new lease granted, and any lease granted under an exercise of the option shall be expressed to have commenced when the lease containing the option would, but for subsection (9) , have expired.

(13) Subsection (12) does not apply to or in respect of a lease that stipulates for the commencement of any lease granted under an exercise of the option contained in the lease on a day that is later than the day on which the lease so granted would, but for this subsection, commence under subsection (12) .