High Court grants application to renew lease

In the recent High Court decision Kuoch v Ganda, the Court granted an application by the lessee (Kuoch) pursuant to section 261(1)(a)(i) of the Property Law Act 2007 (PLA) to renew his lease of premises used for his laundromat business, despite his failure to give notice of intention to renew within the time period specified in the lease.

Why did the Court grant the application?

The Court directed the lessor (Ganda) to renew the lease in favour of the lessee, because the Court found that:

  • the lessee simply overlooked the requirement to renew the lease and failed to do so through pure inadvertence;
  • the failure to renew was neither the result of any ulterior motive on the part of the lessee, nor was it caused by any action of the lessor;
  • the parties continued to proceed on the basis that the lease was continuing after the lease had expired;
  • as soon as the issue of the non-renewal of the lease was raised, the lessee made it clear that he wished to renew the lease;
  • the lessee was a good tenant;
  • the prejudice that would be faced by the lessee if the lease was not renewed was self-evident; and
  • there was no evidence of any prejudice to the lessor if the lease was renewed.

The Court also stated that the lessor’s opposition was fundamentally an opportunistic attempt to take advantage of the lessee’s inadvertent failure to renew the lease in time, in order to strengthen the lessor’s own position with regard to obtaining a contribution from the lessee for additional water charges relating to the property.

Conclusion

This case is a good example of the Court’s discretion to grant relief under section 261 of the PLA.  Notwithstanding the formal requirements of the lease, where notice of a renewal is to be given within a specified period, inadvertence to renew is not necessarily fatal considering the factors considered above.  Each situation will turn on its own facts however and an inadvertence to renew may not always result in the Court granting relief.

 

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