What is a reasonable time to respond to a breach notice,
or an acceptable response, will depend on the circumstances at
Landlords who want to re-enter the premises and terminate a
lease for a breach of covenant for a non-rent breach generally must
serve a breach notice on the tenant, and give the tenant reasonable
time to remedy the breach (if it is capable of remedy), or to pay
reasonable compensation – but what is a reasonable time?
There is surprisingly little guidance on this, but it is an
important point, because failure to give reasonable time could give
the tenant reasonable grounds to challenge the validity of the
termination notice and leave the landlord unable to terminate the
Some help can be found in Primary RE Limited v Great Southern
Property Holdings Limited (Receivers and Managers Appointed) (In
Liquidation)  VSC 242. In that case, the Victorian Supreme
Court held that it will depend on the circumstances, but crucially
the breach notice should not leave the tenant speculating about
what action it should take (and by when) to prevent the landlord
from terminating the lease.
The lease, the breach notice and the time given to remedy the
breach before termination
The case stemmed from a complicated managed investment scheme
involving forestry assets in various States. The scheme's
responsible entity leased land for forestry activity purposes. It
then subleased the land to a number of growers (effectively,
The forestry scheme experienced difficult times and the tenant
was unable or unwilling to comply with its obligations under the
lease (to manage the plantation).
The landlord served breach notices on the tenant across several
states for failure to establish, tend and manage the plantation
crop in accordance with sound silvicultural and environmental
practices; spray herbicide and insecticide where appropriate;
fertilise and harvest the plantation crop; conduct appropriate weed
control where appropriate and remediate land erosion.
These breach notices were followed by termination notices served
at varying dates, but generally one month after the initial breach
notice was served (the shortest period being one month and two
The tenant then challenged the validity of the termination
notices because, among other things, they failed to allow a
"reasonable time" for the tenant to remedy the breaches
and that properly tending and managing the plantation could take
over a year.
What was a reasonable time before terminating the lease?
The Court held that the following factors should be considered
in determining "reasonable time":
the purpose for which the notice is given;
the nature of the breach alleged; and
what is required to be done to avoid forfeiture.
The Court also held that the time it takes to remediate the
breach is not the critical point. The purpose of the notice in this
case was to allow the tenant to consider its position and give a
The response did not require "foliar and soil
tests...mixing and application of fertiliser, weed and insect
control regimes, the creation of firebreaks or replanting to take
What the Court deemed a "sufficient response" to avoid
forfeiture was for the tenant to:
recommence management of the plantations in compliance with the
lease and forestry agreement;
propose to pay compensation for any injury to the reversion;
communicate a genuine intention to do as proposed.
The Court decided that one month was a "reasonable
time" to remedy the breach.
Lessons for landlords serving breach notices
What is a reasonable time to respond to a breach notice, or an
acceptable response, will depend on the circumstances at hand.
In the above circumstances, although there was a lot of
time-consuming work to be done to remedy the breaches, the Court
held it reasonable for the tenant, within one month of being served
with a breach notice, to do the few things the Court suggested to
evidence "remorse" and an intention to fully comply each
the breach notice.
When contemplating issuing a breach notice, you should be clear
why you are giving the notice;
the nature of the breach alleged;
what your tenant has to do to avoid forfeiture; and
what, in all the circumstances would be an adequate response,
and when it is reasonable to expect it.
If you don't, you run the risk of a successful court
challenge to any termination notice you might then give – and
even an unsuccessful challenge could prove expensive.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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