Assignment without consent is not necessarily irremediable

June 1, 2011

Property / leasing

The last statement of the law in Victoria suggests that an assignment without seeking the landlord’s consent is a breach not capable of remedy (see IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 at [143] per Nettle J, as he was then, citing Scala House and District Property Co Ltd v Forbes [1974] QB 575 and David Blackstone v Burnetts (West End) Pty Ltd [1973] 1 WLR 1487 at 1496; see also Bradbrook, Croft and Hay, 2009, at [15.16], p 468).

This line of authorities was questioned in Giacomi v Nashvying Pty Ltd [2007] QCA 454, where the Queensland Court of Appeal considered an assignment without consent, reviewed the authorities (at [59]ff) and concluded at [76] that:

The weight of authority thus supports the conclusion that “once and for all” breaches, whether of negative covenants or otherwise, are not necessarily incapable of remedy …

The decision has not been applied in Victoria.  This creates a degree of uncertainty.

Solicitors advising landlords seeking to terminate a lease relying on an assignment without consent should:

  1. adopt the position, as far as possible, that the breach is incapable of remedy;  and
  2. advise their clients of the uncertainty in the law.
Lawyers advising tenants served with a s. 146 notice alleging assignment without consent should:
  1. take whatever steps are possible to remedy the breach or at least minimise any prejudice to the landlord.  The steps available will depend on the circumstances (although, admittedly, they may be limited);
  2. advise their clients of the risk that the breach is incapable of remedy;  and
  3. be prepared to make an application for relief from forfeiture.  That application will face the hurdle of seeking relief from forfeiture without remedying the breach.  However, relief from forfeiture may still be available.

About Sam Hopper

Sam is a property and insolvency barrister.

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3 Comments on “Assignment without consent is not necessarily irremediable”

  1. Melissa Says:

    Really clear and informative article. Was wondering what happens to the assignee in this situation? Are they liable for any breaches committed during their lease even if the assignment is deemed to be void? Is it possible for the tenant to sign an authorised guarantee agreement after the the assignment has taken place (where the landlord decided to give consent to the assignment after it has taken place but wants to be covered under the 1995 law)?

    Reply

    • Sam Hopper Says:

      Melissa,

      Thanks for the feedback.

      The assignment is not void, but it gives the landlord the ability to terminate the lease (or at least attempt to).

      The assignee can try to resist the termination by arguing that the breach was not irremediable and the landlord would not have been entitled to withhold its consent. Alternatively, the assignee can seek relief from forfeiture.

      It is difficult to see how the landlord could terminate the lease after providing consent to the assignment, even if the consent was provided retrospectively.

      I am not sure what the 1995 law is referring to – could it be a UK law? I am in Australia, so, unfortunately, don’t know much about UK tenancy statutes.

      Reply

      • Melissa Says:

        Yes I was referring to the Law of Property Act 1995 which is indeed a UK law.
        Thank you for your help, I’ve gained a much clearer understanding of this area of leases.

        Reply

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