TUTORIAL - TOPIC 9: TERMINATION OF LEASES Question 1 We continue with the facts introduced in Topic 7: Nature and Creation of Leases. The story so far: · CP Developers Pty Ltd (CP) own a multi-storey building 'Cityscape' in the middle of the CBD, which has retail tenants. CP are considering selling Cityscape. · Later, CP then sells Cityscape to Property Investors Pty Ltd and the transfer is registered. CP Sells to PI - issues after 6 months of settlement. Assume that it is now six months after settlement of the purchase from CP Developers Property Investor (PI) is having issues with the maintenance of the building and some tenants. PI is seeking your advice about their obligations in each situation. Assume that these leases include all the terms in the sample lease on QUT Readings: LLB301 sample lease (under "Sample Documents"). For each of the following factual situations: . Identify the covenants in the LLB301 sample lease that are relevant to the problem. · Consider whether PI may be in breach of the covenants of quiet enjoyment or non-derogation from grant in each case. Note that your answer may be influenced by those relevant covenants in the sample lease. a) Block The Chain Pty Ltd (BTC) has a lease of the whole of floor 9 of the building from where it operates a data security business and holds confidential data for clients. Additional security systems were installed by BTC for the front reception and individual offices. Whilst the data is backed up using sophisticated systems running on blockchain, uninterrupted electricity supply is required. One Saturday a faulty electrical circuit in the building caused the safety switch for the building to switch off the electricity. The electricity remained off until Monday morning when the property manager arrived at work. It took until 8am for the electricity to be restored. As a result BTC lost a significant amount of client data. BTC is claiming Property Investor breached the covenant for quiet enjoyment by not having an appropriate protocol for ensuring continuous electricity to the premises, which caused their loss.
Electricity remained off from Saturday until Monday 8am. BTC lost significant amount of data due to this fault .. Covenants relevant: 8.12 - supply failure, LL not liable for malfunctioning of electricity 9.1- quiet enjoyment 9.2 - no promises of services 10.1. 11.3(b) Parties: PI & BTC Statement of law: covenant is contractual obligation and may be implied Relevant covenant - 9.1 quiet enjoyment What it means: Quiet enjoyment = peaceful and free from disturbance: Hudson v Cripps, lessor will not interfere or interrupt use Is this a substantial interference sufficient to constitute a breach? Breach will occur where lawful enjoyment of the leased land is substantially interefered with by the acts if the lessor or those claiming under the lessor: Southwark London Borough Council v Baxter 3 WLR 939; Kenny v Preen. Whether the disturbance is a substantial interference is a question of fact: Brynes v Jokona Application: failure by lessor