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A number of recent cases in NCAT have explored the consequences of terminating leases due to mould, highlighting the circumstances in which it is the landlord’s responsibility to deal with mould within a residential rental property. In Andrew Fletcher and Song Fletcher v Luke Bunbury [2015] NSWCATCD 60, the tenants gave a 14 day termination notice after an expert issued a report that the property in question was not fit for habitation. While the landlord had taken steps to install sub-floor vents, and the tenant had kept the property cleaned and the windows open for ventilation, the mould problem was still prevalent. The landlord argued that the tenant had misused the property by failing to ventilate, but the Court ultimately held that it was the landlord’s responsibility to ensure the premises was habitable. As compensation, the tenant was given a refund of excessive rent for the rooms they could not use due to the mould and $15,000 for the cost of professionally decontaminating their affected goods.

The government has announced it will support all of the 76 recommendations made in the final report from the Banking Royal Commission, suggesting that there is likely to be significant changes to home loans, mortgage brokers and compliance bodies in the financial sector by the end of the year. In relation to the property industry, Commissioner Hayne heavily criticized the lending practices of banks with home loans, particularly their reliance on the inaccurate household expenditure benchmark (HEM). While various banks have pledged to reduce their use of the HEM, home loan applicants may find their regular discretionary expenses playing a greater role in home loan applications from now on, potentially making it harder to get a loan. Mortgage brokers were also a key focus of the report, with Hayne recommending that the current commission based system be replaced with an upfront fee paid by home loan applicants, as well as an obligation for brokers to act in their clients best interests.

A recent decision in the Victorian Civil and Administrative Tribunal (VCAT) has examined whether a premises primarily used for the production, packing and storage of goods sold online fell within the definition of ‘retail premises’. In Bulk Powders Pty Ltd v Seicon Pty Ltd [2018] VCAT 2000, the tenant used the property in question to create and store health supplements that it mostly sold online, however customers also had the option of picking up their products from the premises itself. Notably, only about 5% of sales were conducted in this way. Whether the property was being used for retail purposes was a key issue, as the lease in question specifically stated that the tenant could ‘produce, package and store online health supplements (not retail).’

Ultimately the VCAT held that the premises was not being used for a retail purpose. Weight was given to the fact that generally the premises was not open to the public, and there was no advertising or signage indicating the property was a retailer.

The NSW Government has passed the Building and Construction Industry Security of Payment Amendment Bill 2018, that will make many changes to the operation of security of payment (SOP) practices in the construction industry. An important change includes the removal of reference dates, instead allowing a payment claim to be served from the last day of the month in which the construction work was first carried out or an earlier date as specified in the contract. Other changes include the insertion of a variety of new offences and increased penalties for non-compliance, a code of practice, a reduction of the maximum time for payment from 30 to 20 business days, and the creation of an express right to withdraw from an adjudication application.

In the wake of the Opal Tower scare in Sydney, the NSW government has announced a new compliance operation that will see 25 to 30 per cent of building certification work audited every year. Any certifiers that are found to have acted negligently, breached the industry’s code of conduct or engaged in corrupt conduct will be banned from working from new strata developments for 12 months as a result of the new scheme.

In the recent case of Kegran Pty Ltd v Warrik Pty Ltd [2018] NSWSC 1357 the Supreme Court was asked to determine whether the exercise of an option to renew a commercial lease was valid, despite the fact it did not expressly meet the conditions laid out in the contract. In this case, the tenant had an option to renew for an additional 5 years if they gave notice no less than` six months before the expiration of the lease. The tenant sent an email to the defendant seven months prior to the leases expiration, saying ‘please accept this as us wishing to take up the next 5 year option.’

However, in a separate clause dealing with notices more generally, the lease stated that ‘all notices must be addressed to the landlord at the address stated in this lease’ and the landlord argued that this requirement was not met in the email sent by the tenant. Ultimately the Court held that this separate clause did not impose conditions on the option to renew. Therefore the fact that the notice was delivered personally via email rather than to the address stated in the lease did not invalidate the exercise of the option.

In the recent case of The Owners – Strata Plan 81837 v Multiplex Hurstville Pty Ltd [2018] NSWSC 1488, Baron + Associates successfully argued that a development manager and a trustee did not fall within the definition of an owner in relation to the warranties within the Home Building Act 1989 (HBA). In this case, the registered proprietor of a site had obtained development consent to redevelop the land into seven residential, commercial and retail towers. SLH and eleven other companies entered into a Development Management Agreement (DMA) with Multiplex, the development manager.

More than six years later, the Owners Corporation of one of the finished towers sued both Multiplex and SLH 22 (a trustee entity) for defects within the building. They argued they were owed statutory warranties under s18B and s18C in the HBA because both Multiplex and SLH 22 fell within the definition of an ‘owner’ or ‘developer’. Under the Act, an owner is defined as a person who is entitled to the land for an estate of freehold in possession, or is entitled to receive the rents and profits of the land, whether as beneficial owner, trustee, mortgagee in possession or otherwise.

While Multiplex had extensive rights over the property in its capacity as the development manager, including selecting a builder, exclusive access to the property, entitlement to a Management Fee, and a call option that entitled Multiplex to any parts of the property that had not been transferred to other purchasers, the court held it did not fall within the strict definition of an owner under the HBA.

The Court also found that SLH 22 did not fall within the definition of an owner under the HBA as there was not enough evidence on the facts that the registered proprietor was holding the land on trust, which would have created an equitable interest the property. SLH 22 did not enter into a deed of trust, any oral agreement or other document that would have created a trust, and the wording of the DMA was not sufficient to imply one.

The Supreme Court of Queensland has held that an unsent text message can constitute a Will in the recent case of Re Nichol; Nichol v Nichol [2017] QSC 220. In this case, the deceased had written a message shortly before he committed suicide stating that his brother and nephew should have all of his assets, with instructions on how to access his assets and where to bury his ashes. In addition the text actually stated ‘my will’ and the date. The Court had the power to declare this will valid if they are satisfied that it embodies the ‘testamentary intentions of the deceased to operate as his will’ under s18 of the Succession Act 1981. Considering that the message was created very shortly before the death, contained the words “My Will” and was sufficiently detailed, the Judge ultimately found that the unsent text message was valid and enforceable under s18.

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.

Bank guarantees are a common part of commercial and retail leases, where a bank promises to pay a sum specified when certain events occur, such as where a tenant breaches a lease, but the Supreme Court of NSW has ruled that a landlord can, in some situations, be restrained from relying on such a guarantee.

In the case of Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021 the court was asked to determine whether the landlord could call on the bank guarantee where the landlord claimed in good faith that the tenant was in breach of the lease, rather than an actual breach in fact. This was the key issue, as the landlord wanted to call upon the bank guarantee before proceedings relating to the breach had been finalised in court. Ultimately the court constructed the contract as meaning that that the bank guarantee could only be relied upon where there was an actual breach of the lease, which cannot be found if there is a genuine dispute as to whether the tenant had breached the contract.