Tyrrell & Anor v Jesbro Enterprise Pty Ltd

This case considers the validity of a Notice to Remedy Breach purportedly served in accordance with s 124 of the Property Law Act 1974. The notice failed to include the “Note” which appears at the foot of the approved form for such a notice, but included similar content in the body of the notice. His Honour considered, notwithstanding that substantial compliance with the approved form is now permitted by s 48A of the Acts Interpretation Act 1954, that the notice was not substantially compliant with the approved form and as a result, the applicant’s purported termination based on the failure to remedy the breach in the notice was ineffective.

McMeekin J

12 April 2017

This matter concerned the validity of a Notice to Remedy Breach of Covenant (“the Notice”) served pursuant to, and in purported compliance with, s 124 of the Property Law Act 1974. [2]. The applicants sought a declaration that a lease between the parties had been validly terminated after the respondent failed to remedy its breach of the lease following the service of the Notice. [2]. Subsection 124(8) requires that the notice mentioned in the section be in the approved form. [2].

The dispute arose because of an alleged defect in the Notice, namely that it omitted the “Note” which appears at the bottom of the approved form:

“NOTE: The lessor will be entitled to re-enter or forfeit the lease in the event of the lessee failing to comply with this notice within a reasonable time – see s 124 of Property Law Act 1974.” [3].

Instead, the Notice contained “as part of its narrative and not in a separate note at the foot of the form: ‘Should you fail to remedy the breach you may be liable to forfeiture and termination of the lease and an action for damages as a consequence thereof’.” [6].

The covering letter accompanying the Notice also contained a similar statement. [6].

McMeekin J noted that it had “long been accepted that a failure to include the note was fatal to the validity of a notice given under s 124”. [4]. Nonetheless, the applicants submitted the Notice was valid because it contained the “essential information” and that “substantial compliance was sufficient”. [5]. In support of this latter submission, the applicants submitted that there had been a change to the Acts Interpretation Act 1954, inserting s 48A which had the effect of permitting substantial compliance with an approved form. [5].

McMeekin J immediately disregarded the covering letter. His Honour said it was “not possible to remedy a defective notice by such means”. As his Honour explained, “[i]t is the Notice which must be in strict or substantial compliance with the approved form”. [9]. His Honour then turned to consider whether the Notice provided substantially the same information as the approved form, and concluded that it did not for four reasons:

The information was not contained at the foot of the form. “The advantage of a note so positioned is that it highlights for the recipient the relevant and important information”. [11].

There was a substantial difference in the wording of the Notice, which provided that the lessee “may be liable to forfeiture and termination”, compared with the note in the approved form, which provides the lessor “will be entitled to re-enter or forfeit the lease”. [12].

There was no reference to “reasonable time” for compliance in the Notice. [13].

The Notice did “not draw the recipient’s attention to s 124 of the Property Law Act as the approved form requires”. [14]. Although there was a reference to the section at the top of the notice, as appears in the approved form, his Honour considered there was “good reason” for the two separate references (at the top and in the note at the bottom) in the approved form. [14].

Given the defects in the Notice, his Honour declined to give the applicants the relief sought. [23]. The application was dismissed. [26].

J English