Cassegrain alleges that tenant breached some sublease
The defendant, Cassegrain, leased the winery located at 764
Fernbank Creek Road, Port Macquarie, from Hastings Estate Pty
Limited pursuant to a registered lease. In 2011, Cassegrain granted
a registered sublease over the restaurant premises that form part
of the winery to the plaintiff, Allsvelte. The sublease was for a
period of three years with a three-year option. On 11 June 2014,
Allsvelte purported to exercise the option.
In response, on 18 June 2014, Cassegrain served a notice
section 133E of the Conveyancing Act 1919 (NSW) specifying a number of
breaches of the sublease by Allsvelte that it claimed disentitled
Allsvelte from exercising the option. Allsvelte then commenced
proceedings seeking relief under section
133F of the Conveyancing Act against the effect of the
alleged breaches. As a result, the term of the original sublease
was extended in accordance with section
133G of the Conveyancing Act.
Subsequently, Cassegrain served two notices under
section 129 of the Conveyancing Act alleging that
Allsvelte was in breach of a number of provisions of the
Late payment of rent found to meet section 133E standard
The court found that only one of the nine alleged breaches was
sufficiently accurate and detailed. The court expressed that a
section 133E notice "must be specified with sufficient
particularity to enable the lessee to make a decision whether or
not to seek relief under s 133F and to seek that relief if it
decides to do so..." (at ). The only alleged breach that
met this standard was the one in relation to late payment of one
month's base rent.
The court specified that in any proceedings for relief under
section 133E of the Conveyancing Act, which specifies that
the tenant's breach of the relevant obligation and stating that
the landlord proposes to treat the breach as preventing the tenant
from exercising an option, the burden of proof of a breach lies
upon the landlord, while the burden of demonstrating that relief
should be granted, assuming that the alleged breaches are made out,
lies upon the tenant.
Supreme Court considers tenant's relationship with landlord
and its "wilful" breaches
The late payment breach that the court found to be sufficient
was still relatively minor and was found to be "clearly
inadvertent". However, the court did not grant relief under
section 133F to allow the lease to continue because:
The relationship between the landlord and the tenant had
clearly deteriorated, and it seemed likely that they would not
cooperate in the future.
The tenant "wilfully" failed to provide relevant
records, which included failing to provide the landlord with sales
The tenant "wilfully" failed to follow rules that the
landlord wished to enforce under the terms of the lease.
Parties to a lease must understand their contractual
The lessons for landlords and tenants from this case are that it
is important to ensure that formal lease documents are drafted
correctly, and that both parties completely understand the
agreement and its contractual obligations.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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