We are often consulted by both landlords and tenants where disputes have arisen between the landlord and tenant over the landlords right to refuse to renew a lease or to cancel a lease.
In many cases a landlord declines to renew or seeks cancellation of a lease, because of the tenants breaches of lease.
The Property Law Act provides certain protections for tenants to make application to the court seeking orders preventing the landlord cancelling the lease or refusing to allow renewal.
The difficulty has often been how significant the breach needs to be for the court to refuse the tenants application for relief against cancellation.
There is a general presumption by the courts that orders preventing cancellation will be given to the tenant, except in the most extreme cases of breach by the tenant.
Recently the Court of Appeal has provided some clarification on this, in a case where the tenant had been in breach for non-payment of rent for some considerable time and was in dispute with the landlord over rights to renew the lease.
The Court of Appeal indicated that a court will usually grant relief against cancellation where the breach by the tenant is not persistent or continuous and has been fixed as soon as possible before the hearing, or where the tenants failure to renew the lease was inadvertent.
The Court of Appeal indicated that a court would be reluctant to refuse relief to the tenant where the breach was not continuous and had been remedied.
Landlords should always be cautious in assuming that they are able to cancel a lease by a tenant for breach, particularly where the tenant has taken steps to remedy that breach before cancellation, and certainly before any hearing of an application seeking relief against cancellation.
Tenants on the other hand, should not assume an automatic right to relief against cancellation, if the breach has been ongoing and it has not been remedied at the time of cancellation.
We provide advice to landlord and tenants in all areas of commercial leasing.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry Law who normally advises you, or alternatively contact:
Paul Farry
pfarry@farry.co.nz
09 353 6671
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry Law does not accept liability for any errors it may contain.