What is a ‘reasonable time’ when terminating a lease?

When landlords wish to terminate a lease for a breach unrelated to rent, they must usually serve a breach notice upon the tenant and give the tenant a reasonable time to remedy the breach before they can terminate the contract. However in the case of Primary RE Limited v Great Southern Property Holdings Limited [2011] VSC 242 the court had to determine what constituted a ‘reasonable time’ for the tenant to remedy the breach before the contract can be terminated. In this case, a managed investment scheme leased land to the tenant for forestry activities, but the tenant was unable or unwilling to manage the plantation in accordance with the terms of the lease. The landlord served breach notices related to the plantation’s management, and one month later served a termination notice.  The tenant argued that properly maintaining the plantation could take up to a year, and one month was not a ‘reasonable time’ to remedy the breach.

The court considered the purpose of the notice, the nature of the breach and what the tenant could have done to avoid forfeiture, such as recommencing management of the land in compliance with the lease or communicate a genuine intention to do as proposed. They did not believe that the tenants had to completely remedy the breaches in order to give a meaningful response to the beach notices that would have stopped termination. Ultimately the Court held these steps could have been taken within a month, not a year, and therefore the landlord’s termination was reasonable under the circumstances.

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