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Chapter 7

Lease Agreements

The landlady of a boarding-house is a parrallelogram - that is,
an oblong angular figure, which cannot be described,
but  which is equal to anything. 1

Property Law Table of Contents

In this chapter
  1. Generally
  2. Essential Terms of a Lease
  3. Types of Tenancy
    (a) Leases for a Term
    (b) Tenancy at Will
    (c) Tenancy at Sufferance
  4. Requirements of Form for Leases for Fixed Terms
    (a) Land under Torrens Title
    (b) Land under Common Law Title
  5. Lease Covenants
    (a) Generally
    (b) Covenants to pay rent, rates and taxes
    (c) Covenants to Insure
    (d) Covenants for User
    (e) Covenants Relating to Building or Alteration
    (f) Covenants Restricting Parting with Possession
    (g) Covenants Relating to Repair
    (h) Covenant for Quiet Enjoyment
  6. Termination of Leases
    (a) Effluxion of Time
    (b) Surrender
    (c) Forfeiture
    (d) Notice to Quit
  7. Fixtures
  8. Bond Money
  9. Landlord & Tenant (Amendment) Act, 1948
    (a) The History & Objectives of the Legislation
    (b) Prescribed Premises
    (c) Fixing or Varying the Rent of "Prescribed Premises"
    (d) Determining Fair Rent Under Division IVAA
    (e) Fixing Rent of Prescribed Premises by Agreement
    (f) Exclusion of Premises Under Section 5A
  10. Jurisdiction of the Courts
  11. Procedure for Recovery of Possession at Local Court

1.	Generally.

A lease is a grant of an interest in land, conferring on the lessee (also called 
the tenant) the legal right to exclusive possession for a specified term 
whether fixed or periodical or at will. If the grantor of the lease is the owner 
in fee simple of the land, the grantee of the lease has a lease. If the grantor 
(also called the lessor or landlord) is only a lessee of the premises a lease 
granted by him is a sublease.

Some owners or lessees do not wish to grant a leasehold interest. If the 
occupant does not have the legal right to exclusive possession but 
has a right to enter and occupy premises that is normally a licence. A 
licence does not create an interest in land and only creates a contractual 
relationship between grantor and grantee.

Shared accommodation involving the letting of a room with cleaning and 
provision of linen where the boarder does not have the legal right to 
exclusive possession normally constitutes a licence. Where the owner of the 
house in which rooms are let lives in it as his home this is a strong 
circumstance that he letting is only a licence.

The existence of a family relationship between the owner an occupant 
indicates a family arrangement constituting a licence especially if no rent or 
remuneration is payable or has been paid for occupation but this is not 
conclusive eg. a wife maybe a licence or lessee.

Where an employer lets an employee into exclusive occupation of a dwelling 
it is a question of fact whether the employee is a lessee or a licensee. Where 
occupation of the premises is necessary for the due performance of the 
employee's duties as employee or for more satisfactory performance of 
these duties then his occupation will be in the capacity of employee and 
constitutes only a licence.

A licence may be a bare licence, contractual licence or licence 
coupled with an interest.

There is also a distinction between an agreement for a lease and a 
lease. A lease comprises of a grant of the estate in land ie. the right of 
exclusive possession whether immediately or at some future date. An 
agreement for lease only constitutes a binding agreement to grant and/or to 
accept a lease without vesting in the lessee any estate in land. An indication 
that an instrument is only an agreement for a lease is where the lessor is not 
yet in a position to grant a lease eg. where work has to be done on the 
premises before the lease can commence.

2.	Essential Terms of a Lease.

An enforceable lease or agreement for lease should contain:-

(a)	The parties. The landlord and tenant should be identified or 
identifiable with certainty.

(b)	The premises. The precise premises to be leased must be 
ascertained or the agreement is unenforceable.

(c)	The duration of the lease term. The lease should specify the 
duration of the lease term or provide the means of ascertaining it, 
without further agreement between the parties, otherwise the term 
as to duration of the lease would be uncertain and being an essential 
stipulation of the agreement or the lease, it would be void for 

(d)	The rent or consideration payable. The reservation of rent is not 
essential to a valid lease nor need the rent be expressed in terms of 
money. Where some consideration is expressed in the lease it 
should be specified or be capable of being ascertained with certainty 
eg. a provision that rent should be "as is mutually agreed upon by 
the lessor and lessee" the lease is void for uncertainty.

(e)	A lease cannot exist without covenants. There can be no lease 
without some covenants whether express or implied otherwise the 
contractual elements would be lacking.

3.	Types of Tenancy.

There are the following types of tenancies:-

(a)	Tenancy for a term whether a fixed or periodical term.

(b)	Tenancy at will created at common law or by statute.

(c)	Tenancy at sufferance.

(a)	Leases for a Term.

(i)	Leases for Fixed Terms.

A lease for a fixed term must be created by agreement which must define the 
length of the lease term. The term may be as short as one day or a number 
of years. At common law a lease in perpetuity is void although it may be 
created by statute eg. Crown Lands. A lease can be created for the term of 
some persons life. A lease must have a definite commencement and 

(ii)	Periodical Tenancies.

A periodical tenancy is a lease for a fixed term (the initial period) continuing 
for an identical period repeated indefinitely until the tenancy is determined. 
The term is usually yearly, monthly or weekly. It is normally terminated by 
a notice to quit by the lessor or by notice of intention to quit by the 
lessee. Frequently periodical tenancies are created by agreement arising by 
the lessee holding over after expiry of a lease term. Periodical tenancies may 
also be inferred from the conduct of the parties eg. from payment and 
acceptance of rent weekly or monthly.

(b)	Tenancy at Will.

(i)	Common Law Tenancy at Will.

This is a tenancy which is determined at the will of either party conferring a 
lease for an indefinite period. It may be created by express words but more 
often it is inferred eg. where a purchaser is allowed into early occupation 
pending completion of a sale or pending negotiations for a lease the lessee is 
permitted to enter into possession. The Courts prefer to regard a tenancy as 
a periodical tenancy rather than a tenancy at will.

A common law tenancy at will can not be transferred nor can the lessee 
grant a sublease. The expression of will of either party is sufficient to 
terminate a tenancy at will eg. by demanding possession, asking for the 
keys or instituting proceedings for possession without requiring the service 
of any notice to quit.

(ii)	Statutory Tenancy at Will.

This tenancy arises pursuant to s. 127 of the Conveyancing Act:-

	"No tenancy from year to year shall ... be implied from the 
payment of rent; if there is a tenancy and no agreement as to its 
duration, then such tenancy shall be deemed to be a tenancy 
determinate at the will of either of the parties by one months notice 
in writing ..."

Where it may apply eg. is where there is a lessee in possession under a void 
lease, entry under agreement or option for a further lease or where the tenant 
holds over after the expiry of a tenancy for one year or a term of years.

(c)	Tenancy at Sufferance.

This tenancy arises not from agreement but from implication of law after a 
person who has entered under lawful title continues in possession after his 
title is determined without the assent or dissent of the person entitled to 
possession. The assent of the person entitled to possession converts this 
tenancy into some tenancy arising by agreement eg. a periodical tenancy. 
The dissent of the person entitled to possession makes the tenant a 

An example of a tenancy at sufferance is where a tenant for a fixed term 
remains in occupation after the term expired without holding over an 
without having paid rent. The lessor may only recover remuneration for 
such occupation when the tenancy has ben terminated by claiming it in and 
action for use and occupation being a reasonable sum for use of the 

4.	Requirements of Form for Leases for Fixed Terms.

Note should be taken of the provisions of the Conveyancing Act and Real 
Property Act in relation to leases.

The provisions of the Conveyancing Act apply to old system land as well as 
land under the Real Property Act (notwithstanding s. 23B(3), see s. 7(1).) 
A lease of a strata unit is under Torrens title. For some Crown Land where a 
certificate of title has issued the requirements of the Real Property Act must 
be complied with other wise the lease should be similar to a lease under 
common law title.

The effect of the statutory requirements are as follows:-

(a)	Land under Torrens Title.

(i)	Where the lease term exceeds 3 years it must be in the approved 
form and registered. This is because the Conveyancing Act applies 
to Torrens Title leases and sections 23B & 23D(2) of the 
Conveyancing Act and s. 53 of the Real Property Act operate. If the 
lease is not in the approved form and registered it is void. However 
s. 127 of the Conveyancing Act implies a tenancy at will 
determinable on one months notice. An unregistered lease may be 
effective in equity as an agreement for a lease. If the Court grants a 
decree of specific performance it would compel the parties to 
execute and register the lease.

(ii)	Where the lease term is 3 years or less the lease can be 
registered but need not be. The same rules apply as for leases under 
common law title. This is the proviso contained in s. 42(d) of the 
Real Property Act and only applies where the registered proprietor 
had notice of the tenancy. Presumably, if the tenant is in actual 
occupation of the premises it will be virtually impossible for the 
purchaser to deny that he had notice, actual or constructive, of the 
tenancy. The purchase is protected from notice received after 
completion of a purchase but before registration of the 
memorandum of transfer.

(iii)	Where the lease includes and option for renewal eg. a lease for 3 
years with an option for renewal for any period is effective without 
registration (s. 53 Real Property Act). However s. 42(d) only 
extends to a lease where the term and option are not greater than 3 
years. Therefore where a property subject to an unregistered leas 
for 3 years with an option for a further 3 years is sold the purchaser 
acquires an indefeasible title free from the tenants interest, even if 
he is aware of the tenant. The purchaser is entitled to recover 
immediate possession from the tenant.

	A tenant or occupant cannot prevent a vendor from selling 
premises, but this does not necessarily leave the tenant or occupant 
without recourse against the vendor in the event of later eviction by 
the purchaser. In particular, a tenant who, without relevant default 
on his part, is evicted by a purchaser prior to the expiration of the 
term granted by the vendor, has an action in damages against the 
vendor for breach of the covenant for quiet enjoyment express or 
implied in the lease. Further, a vendor faced with such an action by 
the tenant cannot call in aid the fact that the property was sold 
"subject to existing tenancies" 2.

(b)	Land under Common Law Title.

(i)	Where the lease term is for more than 3 years the lease should 
be in the form of a deed (see ss. 23B with 23C Conveyancing Act). 
It is possible to give some priority to a common law title lease by 
registration under the Registration of Deeds Act. Note also s. 127 
of the Conveyancing Act.

(ii)	Where the lease and option total less than 3 years the lease may 
be created orally or in writing. However this is only so where the 
rent is the "best rent which can reasonably be obtained without 
taking a fine" (s. 23D(2) of the Conveyancing Act.)

5.	Lease Covenants.

(a)	Generally.

In a lease there are some express covenants which are expressly agreed 
upon by the lessor and lessee. There are also some implied covenants:-

(i)	The implied terms of express covenants.

(ii)	The Court may imply terms into a contract terms which are 
necessary to give efficacy to the bargain ie. terms which parties 
would have intended to include if they had considered the matter, 
where such terms are necessary to make the contract workable. For 
some examples see Lang Leases & Tenancies 3 p. 196.

(iii)	There are some covenants implied by statute. See ss. 84 & 85 
Conveyancing Act.

(b)	Covenants to pay rent, rates and taxes.

Most leases express the rent in terms of money payable at regular weekly or 
monthly periods. The rent must be stated as a specified amount or be 
capable of determination with certainty. it is common in commercial leases 
to provide for a variation in the amount of rent in accordance with the 
Consumer Price Index.

Normally the lessor covenants to pay all rates and taxes however the lessee 
should be liable for rates and charges arising as a result of the lessee's use 
of the premises eg. garbage, excess water, electricity and telephone. 
Frequently the lessee is made responsible for increases in rates over the 
rates due at the commencement of the lease (relative to their part of the 
building) or for increases in insurance premiums because of substances 
stored on the premises by the lessee.

On non-payment of rent the lessor may take proceedings to recover rent and 
any arrears or terminate the lease for breach of the covenant to pay rent and 
recover possession of the premises. Note s. 84(1) of the Conveyancing Act 
in this regard which contains an implied covenant to pay rent including a 
proviso for abatement of rent in certain circumstances.

Tenants have no legal right to withhold rent except where the provisions of 
s.84(1) of the Conveyancing Act apply ie. the premises are wholly damaged 
by fire, lightning, flood, storm or war damage. Failure to keep up rent 
payments would allow the lessor to immediately commence eviction 

(c)	Covenants to Insure.

Unless there is some express covenant in the lease neither lessor or lessee is 
required to insure the premises. It is usual in commercial leases to require 
the lessee to insure in respect of damage to plate glass, public risk and 
workers compensation. But it is wise for the lessor to also insure for public 
risk and all possible damage.

(d)	Covenants for User.

Where no lease covenant deals with the topic the lessee can use the premises 
in anyway he wishes. However it is common to provide that the premises 
not be used for certain things or to allow only certain uses. Breach of the 
covenant relating to user entitles the lessor to claim damages for breach of 
covenant or to terminate the lease. In some cases the lessor may also be able 
to seek an injunction to prevent breach.

(e)	Covenants Relating to Building or Alteration.

Unless expressly provided for the lessee can not alter, add to or demolish 
part of the premises. If alteration was contemplated the work to be done, 
how it is to be done and who is to pay should clearly be defined. If repairs 
interfere with the lessees use and enjoyment of the premises the lessee 
would be entitled to damages or an injunction for breach of covenant for 
quiet enjoyment.

(f)	Covenants Restricting Parting with Possession.

All leasehold estates, other than tenancy at will or tenancy at sufferance, 
may be assigned or sublet. The lease may provide an absolute or qualified 
prohibition on parting with possession.

Note sections 132 and 133B of the Conveyancing Act and also the short 
form of covenant.

The general effect of such covenants is that the lessee is obliged to apply to 
the lessor for consent and should give him a reasonable time to consider the 
application. Consent should not be unreasonably withheld. However it is 
for the lessee to prove the lessor's refusal was unreasonable and the lessor 
is not bound to give reasons for his refusal.

An assignment or subletting without consent exposes the lease to forfeiture. 
The lessor may accept the assignee or subtenant and sue for breach of 
covenant or terminate the lease or seek an injunction.

Where the land is under old system title or Torrens title but the lease is 
unregistered an assignment must be by deed (s. 23B(1) Conveyancing 
Act). Where the lease is registered under the Real Property Act the 
assignment must be in the approved form of transfer of lease which should 
be registered. The effect of an assignment is not to release the assignor from 
liability under the lease covenants and if the assignee fails to pay rent the 
lessor may still sue the assignor.

A sublease should not be granted for a term equal to or exceeding the 
headlease but only for a term less (at least by one day) than the head lease. 
Subleases are subject to the same formal requirements as leases. Where a 
sublease over Torrens title land requires registration it is noted on the lease 
and not the certificate of title.

(g)	Covenants Relating to Repair.

At common law the lessor had no obligation to place the premises in fair or 
even habitable state of repair or to carry out any repairs during the term of 
the lease. At common law if the premises were furnished a condition was 
implied that the premises where fit for habitation at the commencement of 
the lease although not during the term.

Where the lessor covenants to repair the covenant usually requires the lessee 
to give five days notice to the lessor that the premises require repair. Then 
the lessor has a reasonable time in which to effect the repairs. Normally 
lessee's covenants to repair are limited by the age, condition, nature and 
character of the premises at the date of letting. That is the lessees are not 
required to leave the premises in better condition than the condition at the 
beginning of the lease term.

The typical repair obligations are as et out in ss. 84(1)(a) & 85(1)(c) of the 
Conveyancing Act. The short form of covenant in paragraph 4 of Schedule 
IV Part II of the Conveyancing Act is as follows:-

"4.	And maintain and leave the premises in good repair (having regard 
to their condition at the commencement of the lease) reasonable 
wear and tear, war damage, and damage by fire, lightning, flood 
and tempest excepted."

Normally tenants are relieved from responsibility for fair wear and tear. As 
to what is fair wear and tear see Haskell v. Marlow 4.

Note that there are also some statutory bodies dealing with local government 
and health that may have power to serve notices requiring rectification of the 
problem. Such notices may be bound by the lease to carry out work 
required by such notices but usually only where the notice arose because of 
the use of the premises by the lessee rather than defects in the premises 
because of age and dilapidation. Another example eg. is Electricity 
Development Act.

(h)	Covenant for Quiet Enjoyment.

An example of this covenant is the short form of covenant in paragraph 21 
Schedule IV Part II:-

"21.	The said (lessor) covenants with the said (lessee) for quiet 

The purpose of this covenant is to guarantee title acquired by the lessee 
under the lease and to ensure that the lessee has security of possession 
without interruption in his use.

Examples of breaches of such a covenant might be removing doors and 
windows, disconnecting essential services, interferring with access to 

The lessee may claim damages against the lessor for breach of this covenant 
including loss of profits. In some circumstances Equity may also grant an 

6.	Termination of Leases.

At common law the doctrine of frustration of contract did not apply to a 
lease ie. if some intervening event occurred beyond the contemplation of the 
parties eg. if premises destroyed by fire or war it did not entitle either party 
to terminate the lease and the lessee's obligation to pay rent continued to the 
end of the lease.

(a)	Effluxion of Time.

A lease for a fixed term comes to an end by the effluxion of time at the end 
of the lease term without requiring any notice to quit or other notice 
terminating the lease.

(b)	Surrender.

Surrender may be express or by operation of law. Express surrender 
involves a reconveyance of the lessee's leasehold interest to the lessor. This 
requires a deed for old system land (s. 23B(1) Conveyancing Act) or in the 
case of a lease registered under the Real Property Act a memorandum of 
surrender of lease should be registered.

Surrender by operation of law may occur in a number of ways when the 
parties to the lease act in ways inconsistent with the continuance of the 
tenancy and confirm the parties agreement for surrender eg. where the 
lessor relets the premises at the request of the lessee or grants a new lease 
tot he current lessee. A lessee can not force a lessor to accept a surrender of 
lease by abandoning the premises and abandonment followed by the lessor 
entering into possession does not in itself constitute a surrender.

(c)	Forfeiture.

Forfeiture is the entitlement to terminate a lease because the lessee 
committed a breach of some of its conditions. The lessor may only exercise 
such a power if the lease contains a provision entitling the lessor to 
determine the lease on breach of some or all of the lessee's covenants. Such 
a power is implied by s. 85(1)(d) Conveyancing Act. If a lessee has 
committed such a breach as would entitle the lessor to terminate the lease the 
lease becomes voidable and the lessor must elect to affirm or avoid the 

The lessor should demonstrate his election to avoid the lease by unequivocal 
conduct such as re-entering into physical possession or instituting 
proceedings for the recovery of possession. In the case of non-payment of 
rent at common law a formal demand or payment was required before 
forfeiture but this is normally dispensed with by express provision in the 
lease and also in s. 85(1)(d).

In some circumstances the lessor will be held to have waived forfeiture. 
This depends on the lessor's knowledge of the breach, whether he has 
delayed taking action and whether in other ways he has indicated an 
intention to affirm the lease.

Section 129 of the Conveyancing Act contains important provision 
regarding forfeiture. This section would not apply to most residential leases 
because of being normally for a term of one year or less.

The Supreme Court has wide discretion to grant relief against forfeiture.

(d)	Notice to Quit.

Notices to quit are only used to terminate a periodical tenancy and not a 
lease for a fixed term. A notice to quit is not a technical document as long as 
it is clear, unqualified and unequivocal that the tenancy is being terminated 
on a certain date. A notice from the tenant to the landlord is called a notice of 
intention to quit. If the premises are "prescribed premises" the notice must 
contain certain particulars.

A properly appointed managing agent can sign a notice to quit on behalf of 
the landlord. Care should be taken to correctly address the notice to the 
tenant, describe premises and define the date of expiry.

The safest method of service of the Notice is personal service upon the 
tenant. Although at common law service by ordinary post may be valid 
service the lessor may not be able to discharge the onus of proving service if 
the lessee gives evidence that he did not receive the notice. The notes on 
"Ending the Agreement" in the standard lease also provides various methods 
of service.

At common law reasonable notice was required to determine a periodical 
tenancy but parties could regulate the length of the notice required by 
express provisions in the lease. Where parties have not otherwise agreed a 
half years notice is required to determine a yearly tenancy. In respect of 
shorter periodical tenancies notice equal to the length of the period is 
required eg. one months notice to determine a monthly tenancy.

Care should be exercised with the acceptance of rent after service of a 
Notice to Quit 5. The problem is not so much accepting rent up to the expiry 
date contained in the Notice, which would be fairly safe, but after a valid 
Notice to Quit has expired. One method of inferring an agreement to create a 
new lease is from payment and receipt of rent.

Lang suggests that mere payment and receipt of rent will not be enough 
unless the Court can find an intention to create a new tenancy which will not 
easily be imputed to the lessor. Lang suggests that it would be prudent in 
the receipt for the rent received to state that it is "without prejudice" to the 
Notice to Quit. Particularly if rent is received by way of an occupation fee 
after the date of expiry of the instructions should be obtained from the 

Acceptance of arrears of rent should not be a problem but it would be wise 
to specify the period to which they relate in a without prejudice receipt.

7.	Fixtures.

A fixture is something which was originally a chattel and has become 
attached to the land or built into the premises so that it becomes part of the 
land. To decide whether an object is a chattel or a fixture one must consider 
the degree of attachment and the purpose of the attachment eg. whether 
nailed or just resting there or attached as a permanent improvement.

Tenants can remove fixtures originally their own property if the premises 
after the removal will be left in as good a condition as they were before the 
fixtures were attached. These "tenants fixtures" can only be removed during 
the tenancy or within a reasonable period thereafter. Awnings and wall 
decorations may be chattels but built-in items such as space heaters and hot 
water services may be fixtures.

Where the lease provides that the tenant deliver up premises "with all 
addition, improvements and fixtures" the tenant will not be able to remove 
"tenant's fixtures".

8.	Bond Money.

A common condition of granting a residential tenancy includes the payment 
by the prospective tenant of a cash bond (also known as a security deposit 
and rental bond). A bond is a sum of money paid by the tenant before 
moving into the house or flat. This money is held by a N.S.W. government 
body, called the Rental Bond Board, as a security against the tenant being in 
arrears of rent or for damage done to the premises by the tenant. Premiums 
paid by the tenant on any insurance policy covering damage to property and 
loss of rent or cleaning fees are also forms of bond money and must be 
lodged with the Rental Bond Board.

There is a limit on the amount of bond money a landlord or real estate agent 
can require. Bonds cannot exceed four weeks rent for an unfurnished house 
or flat, or six weeks rent for a furnished house or flat 6. There is no limit on 
the amount of the rental bond in respect of furnished premises whose 
weekly rental is in excess of$ 250.00 7. The landlord or agent should give a 
receipt when the tenant pays bond money.

The landlord or agent will ask the tenant to sign a form called "Advice of 
Lodgement". the landlord or real estate agent sends this form with the bond 
money to the Rental Bond Board. The tenant is then sent a receipt with a 
Rental Bond Number imprinted on it. If the tenant does not get this number, 
it is possible that the bond money has not been sent to the Board. It must be 
lodged within 7 days of the landlord or agent receiving it. 8

The provisions of the Act cover boarding houses, caravans and mobile 
homes leased in fixed positions, but exclude holiday lettings of less than 6 
weeks. The Act only applies to residential premises and not commercial 

The tenant is entitled to the return of the bond money if he:

(i)	has looked after the house or flat;

(ii)	is up to date in rent payments; and

(iii)	has given proper notice that he is vacating.

The tenant recovers his bond money after leaving a house or flat by:-

(i)	A joint application by the landlord and the tenant on a form called 
"Claim for Return of Bond Money" to the Rental Bond Board 
requesting it to return the bond money to the tenant. This may be 
done at any time during the tenancy if both agree. the tenant should 
never sign any blank form or one showing figures which he may 
dispute. The form is available from the Rental Bond Board and any 
branch of the State Bank.

(ii)	the landlord applying to the Board and directing it to return the 
bond money to the tenant.

(iii)	The tenant applying to the Board on the bond claim form. The 
Board must give the landlord notice in writing of this application. If 
the landlord does not inform the Board that he wishes to dispute the 
tenant's claim in Court or the Residential Tenancies Tribunal within 
10 days of the serving or posting of the notice the Board will return 
the bond money to the tenant.

If the landlord applies to the Rental Bond Board for return of the bond 
money to himself before the tenant makes any application, the Board must 
give the tenant notice in writing of this. The tenant should immediately 
lodge a claim with the Residential Tenancies Tribunal 9 and advise the Rental 
Bond Board. If the tenant does not inform the Board that he wishes to 
dispute the claim in the Tribunal within 10 days of the service or posting of 
the notice to the Board will return the bond money to the landlord.

The tenant needs to be able to show that the premises were left in a similar 
or cleaner condition than when he first moved in. If they were left in a 
dirtier condition, the tenant should ask the landlord to prove any cleaning 
fee by, say, producing a receipt from the cleaning company.

The Board will pay out the bond money as directed by the Court or tribunal 
subject to any appeals.

If the landlord does not lodge the bond money with the Rental Bond Board 
he has committed an offence. On vacating the house or flat a tenant should 
lodge a "Claim in Relation to a Rental Bond" form with the Residential 
Tenancies Tribunal under the procedure discussed above. The tenant also 
should send a letter to the Rental Bond Board advising it of the situation. 
The Board may prosecute the landlord for not forwarding this bond money 
to the Board.

In some situations a tenant can tell the landlord to use the bond money for 
the last few weeks rent. The landlord or agent may have a reputation for 
trying to claim the whole or part of a tenant's bond money, even when there 
is no legal justification for doing so. If this is the case the tenant may 
consider deducting an amount of rent equivalent to the bond money just 
prior to leaving the house or flat. However the tenant can only do this when 
there is no clause in the lease which specially forbids the use of bond money 
to cover rent.

The tenant should give the landlord or agent reasonable notice in writing that 
he intends to leave a house or flat, and, in this letter, he should state that the 
bond held is to be used to pay rent. Be sure that the two balance exactly. 
The tenant should promise that the house or flat will be left clean. The tenant 
should keep a copy of this letter. Abuse of this procedure should be 
discouraged as it creates ill-will between tenants and landlords.

9.	Landlord & Tenant (Amendment) Act, 1948.

(a)	The History & Objectives of the Legislation.

The Landlord & Tenant (Amendment) Act, 1948 is described in the 
preamble to the Act as:

	"An Act relating to ... the control of rents of certain premises and 
the recovery of possession of certain premises."

During World War II, the Commonwealth controlled the economy, 
including prices, through numerous National Security Regulations. The 
amount of rent which could be charged and the grounds for terminating 
tenancies were controlled through the National Security (Landlord & 
Tenant) Regulations. These regulations were based on the Commonwealth's 
defence power. After the end of the war the validity of these wartime 
controls was challenged and the controls finally ceased. The States adopted 
similar controls to the Commonwealth Regulations, N.S.W. in Landlord & 
Tenant (Amendment) Act, 1948.

This Act severely controlled the right of landlords and tenants to determine 
freely some major terms of their relationship. Sir Garfield Barwick referred 
to this Act as "a permanent feature of ... the social legislation of the State. In 
form it is an amendment by way of an addition to the law of landlord and 
tenant." The legislation has been changed on many occasions, the last major 
changes having been effected in 1968. This Act imposes rent control and 
controls on ejectment of tenants of "prescribed premises" and includes 
other provisions enabling premises to be excluded from these controls.

Prescribed premises are sometimes referred to as controlled premises. 
Currently there are between 20,000 and 25,000 prescribed premises in 
N.S.W 10., this number is gradually diminishing as tenants of prescribed 
premises die or surrender their rights.

These controls have been discontinued in the other States and only persist in 
N.S.W., although certain features of the legislation, requiring grounds for 
notices to quit, and certain minimum periods for notices to quit of residential 
tenancies, have re-appeared in recent legislation of some States.

(b)	Prescribed Premises.

Whether premises are "prescribed" premises determines the application of 
the major part of the Act, including the rent control provisions and the 
restrictions on terminating tenancies. In s. 8(1) "prescribed premises" is 
defined to mean a dwelling-house or boarding-house and any part of 
premises leased separately for the purposes of residence: s. 8(1A). Section 
8(1B) substantially limits the scope of what is a dwelling-house by 
excluding each of the following:-

(i)	premises that are, by the same lease, leased partly as a dwelling-
house and partly as a shop as defined in subsection (1) of section 9 
of the Factories, Shops and Industries Act, 1962, as subsequently 
amended, or that are the subject of a lease, part of the demised 
premises being a dwelling-house and the other part being such a 

(ii)	premises that are at any time, on or after the 1st January, 1969, 
used partly as a dwelling-house and partly for business or 
commercial purposes where the use of the premises for business or 
commercial purposes constitutes the principal or a substantial use of 
the premises and where the use for business or commercial 
purposes does not arises by reason that the premises are sub-let for 
residential purposes;

(iii)	holiday premises; or

(iv)	any premises, or the premises included in any class of premises, 
excluded from the operation of Parts II, III, IV and V under 
subsection (2) of section 6.

Broadly, the only premises which are still "prescribed" premises are those 
premises used solely for residences which have not been excluded from the 
Act by s. 5A.

(c)	Fixing or Varying the Rent of "Prescribed Premises".

The legislation initially pegged rent to 1939 values, this caused continuous 
protest on behalf of lessors. Sir Gordon Wallace said:

	"How a "pegging" to 1939 capital values - re-enacted as it was 
twenty-one years after the end of the Second World War - can be 
reconciled with the concept of a "fair" rent is to me a somewhat 
obscure problem ... the word "fair" in relation to the control of 
rents has now a somewhat technical meaning and its relationship to 
equal and impartial justice may seem distant."

Most premises which are "prescribed" would have at some time had a 
determination of the "base" rent under s. 18. On a first application to 
determine the fair rent, the Residential Tenancies Tribunal should determine 
the fair rent of the premises at the "prescribed date" (21st August, 1939),or 
if the premises were not then in existence, at the date when erection of the 
premises was completed (s. 20(4)). This is determined according to matters 
specified in s. 21 and the Board may increase the rent paid at the prescribed 
date if in its opinion the rent was at that date "insufficient" (s. 20(3)).

After an initial fair rent has been fixed at a particular date, subsequent fixing 
of fair rent is a variation under s. 32 or s. 24A. There is provision for 
determining the rent of shared accommodation (ss. 26B, 27) and of 
caravans (Division 4A) which are of little current significance. Traditionally, 
rent advocates have appeared before Fair Boards on applications to fix or 
vary fair rent, as these applications have certain technicalities and the Boards 
developed procedures and methods of dealing with applications which are 
not specifically defined in the Act or Regulations, requiring expertise in 
appearing before them.

Rent for controlled premises was originally based on the 1939 actual rental 
value of the premises, plus increases in costs and services since then. In 
normal circumstances an application by the landlord to the Residential 
Tenancies Tribunal would be decided this way:-

1939 Improved Capital Value (ICV) $ 500.00.

		Previous		Current
		Determination		Determination
			1962		1982
		_____________	_____________
			$		$
Municipal Rates	68.61		268.28
Water Rates		16.49		208.37
Insurance			Est.	100.00
Repairs		64.00		520.00
Bank Interest		.60		49.25 (*)
Depreciation				128.00
		_____________	_____________
			156.60		1,273.90
				Less	156.60
Plus Agent's Management fee 7 % (**)	78.21
Divide by 52	22.99

Present Rent		Add		Est. Fair Rent
$	4.15	$	22.99	$	27.14
				say	$ 28.00

*	$ 49.25 is 9.85 % of 1939 ICV where 9.85 % is the interest rate 
difference between 1939 Commonwealth Bank overdraft rate (4.5 %) 
and the 1982 rate.

**	If self managed the fee would be 2.5 %.

The relevant information can be obtained from the Department of Consumer 
Affairs by any person. There is a small charge for viewing the file. ICV is 
shown in the file and the current value can be obtained from the Valuer 
Generals Department. Amounts for repairs, bank interest and depreciation 
are set from time to time by the Residential Tenancies Tribunal.

(d)	Determining Fair Rent Under Division IVAA.

In 1968 this important Division was enacted, entitled "Determination of 
Rent of Current Values". A lessor of prescribed premises is entitled to 
require a lessee or a resident of those premises, within 28 days after service 
of a notice in writing on each of them, to furnish a statutory declaration 
stating the lessee's or resident's "attributable earnings" (as defined in s. 
31MAA). If the Board is satisfied that the attributable earnings of the lessee 
and/or any "resident" (as defined in s. 31MAA(1)) are not less than the 
"prescribed amount" (currently $ 10,000.00) or where the lessee or any 
resident fails to make the declaration and the Board is not satisfied that the 
attributable earnings of the lessee and/or resident are less than the prescribed 
amount, then the Board "shall" determine the fair rent at the "current rental 
value" (as defined in s. 31MAA) of those premises.

In other words, there may be a determination under Division IVAA Part II if 
the declarations disclose attributable earnings totalling over the prescribed 
amount or if the lessee and disclosed residents have failed to furnish 
declarations, the onus shifts to the lessee to satisfy the Board that the 
attributable earnings are below the prescribed amount. If the lessor succeeds 
on an application at current rental value, the determination is according to a 
formula which would yield, generally speaking, a considerably higher 
amount than the fair rent as determined under s. 18.

The provisions of the Division, including several of the definitions, are 
complex and are not considered in detail here. However, to take an 
illustration, if the following persons occupy a residence, the lessee, his 
spouse, children, relatives and other persons, the 'attributable earnings" will 
be the total income of the following persons. For each boarder or lodger the 
sum of $ 208.00 is added to the attributable income.

(e)	Fixing Rent of Prescribed Premises by Agreement.

A properly executed and registered agreement under section 17A Landlord 
& Tenant (Amendment) Act, 1948, can permanently increase the fair rent of 
prescribed premises to the rent stated in the agreement. There is a simple 
printed form of agreement which is normally used. The agreement cannot 
increase rent from a date prior to the date on which the lessee has executed 
the agreement, otherwise the agreement becomes wholly ineffective.

The lessee should sign the agreement personally. It is most important that 
the agreement be executed by the lessee (and probably also by the lessor or 
his duly authorised agent) no later than the day when the agreement is to 
commence, and preferably at least a day earlier.

The agreement must relate to "prescribed premises" and the rent fixed by it 
continues after the expiration of the agreement, until varied by further 
agreement, or pursuant to application under s. 17A(12) or (13) or under 
Division 4AA Part II. The lessee's execution must be witnessed by solicitor 
instructed and employed independently of the lessor or by a Clerk of the 
Local Court and the witness should complete the certificate as to execution.

The agreement must be registered in the Rent Controller's Office within 3 
months after the day on which it was executed by the lessee. Registration 
simply means sending the original and a certified copy of the agreement 
with the prescribed fee to the Rent Controller with a covering letter asking 
that the agreement be registered under s. 17A. The only means of 
overcoming this type of agreement, validly entered into, is if the lessee is 
able to rely on s. 17A(12), ie. the amount specified was harsh or 
unconscionable or that the agreement was obtained by fraud, duress, 
intimidation or improper means, allegations which would be difficult to 

(f)	Exclusion of Premises Under Section 5A.

Section 5A was entirely re-enacted in 1968, operating from the 1st January, 
1969. When considering whether pre-1969 leases comply with the 
provisions of s. 5A remain "prescribed premises" but with the exception of 
a few sections set out in s. 5A(7) & (8), Parts II V, do not apply to the 
premises, so that the fair rent and recovery of possession provisions have 
no application and the premises are effectively decontrolled.

Under s. 5A there are six so-called "categories of exclusion" or 
circumstances when premises are excluded by virtue of this section. In 
some circumstances premises are covered by more than one of these 
categories, although exclusion under any one of these categories is 
sufficient. These categories are set out in s. 5A(1) as follows:-

*	a dwelling-house that was in the course of erection at or the 
erection of which commenced after the 16th December, 1954.

*	a residential unit that came into existence on or after the 1st 
January, 1969.

*	a dwelling-house or a residential unit that was at the 1st January, 
1969 the subject of a lease that is registered under the former s. 

*	a dwelling-house or residential unit of which vacant possession 
was obtained lawfully after the 31st December, 1985.

*	a dwelling-house or residential unit of which vacant possession 
was obtained on or after the 1st January, 1969 or that was 
occupied personally by the lessor or his predecessor in title prior to 
that day. That is the subject of a lease the execution of which by the 
lessee was witnessed by a solicitor instructed and employed 
independently of the lessor or by a Clerk of the Local Court and 
bears a certificate by that solicitor or Clerk that he explained the 
lease to the lessee before it was executed by him. Also the lease is 
registered in the office of the Rent Controller.

*	a dwelling-house or residential unit of which vacant possession 
was obtained before the 1st January, 1969 that is subject f a 
lease that was executed by the lessee before that day. Where the 
execution of the lease was witnessed by a solicitor or clerk of the 
Local Court and bears a certificate by that person that he explained 
the lease to the lessee before tit was executed by him. Also that is 
registered and would have been exempt from the provisions of 
pats II, III, IV & V under the former s. 5A.

*	a dwelling-house or residential unit to which the provisions of Parts 
II, III, IV & V have at any time ceased to apply by reason of the 

The first four paragraphs above exclude premises unconditionally. For the 
other paragraphs registration is necessary unless the lessee is a company or 
body corporate. Also note that were vacant possession is to be obtained 
from a protected tenant it is not sufficient to just get the tenant to sign a s. 
5A lease. Strata units would be excluded from the Act because the strata title 
legislation was enacted in 1973. The residential units referred to would be 
older company title units.

It should be noted that leases commencing on or after the 1st January, 1986 
are automatically decontrolled and registration of the lease is not necessary 
provided that vacant possession was obtained lawfully, The tenant is no 
longer required to attend the Clerk of the Local Court or a solicitor to have 
their signature on the lease witnessed.

Section 5A leases entered into prior to 1st January, 1986 should have been 
registered before the 1st July, 1986. If registration was not applied for 
before the 1st July, 1986 the Rent Controller 11 may refer the matter to the 
Residential Tenancies Tribunal if there is reasonable excuse for the delay. 
The Residential Tenancies Tribunal may then recommend the registration of 
the lease. Under no circumstances are leases to be registered after 31st 
December, 1988. The rights of existing protected tenants are in no way 
changed by these provisions.

Once the lease ha properly excluded premises under the post-1969 
provision, an extension of the lease, even at a varied rental, would not 
necessitate registration of a fresh lease. The variation could be effected by a 
new lease which need not be registered, or by some agreement or document 
evidencing he variation. Oral agreements involving variations are also valid, 
although unwise, as there should be some document evidencing the new 
arrangement regarding term and rental.

To terminate a tenancy where the premises have been excluded under s. 5A 
a simple form of notice to quit is sufficient, when the tenant is holding over 
as weekly or monthly tenant.

In proceedings at the Local Court, where s. 5A applies to the premises, the 
onus is on the lessor to establish all the ingredients necessary to entitle him 
to an order, including that he premises have been excluded by virtue of s. 
5A. The lessor's task of bringing the premises within one of the categories 
of exclusion may involve proving the date of erection of the building, or if a 
registered lease is in issue, certificates under ss. 5A(11) and 94(3) should 
be obtained to prove the required formalities of registration and exclusion.

10.	Jurisdiction of the Courts.

The system of Courts in N.S.W. includes the Supreme Court, District 
Court and Local Court. For the recovery of rent each of these Courts has 
jurisdiction, but the Supreme Court would only be used in a very substantial 
matter, as Local Courts have jurisdiction up to $ 15,000.00 and the District 
Court up to $ 100,000.00.

A claim for rent is for a liquidated (or fixed) claim as distinct from a claim 
for damages which is unliquidated and must be proved in court even if the 
claim is for a fixed sum eg. $ 159.00, as it must be established that the cost 
of repair was reasonable and was necessitated because of the tenant's 
default. If a summons is issued for rent and the tenant does not file a 
defence, judgment can be signed and enforced eg. by execution against the 
tenant's property or garnishee against his wages.

The tenant can seek an order for payment of the judgment debt by 
instalments. Managing agents should be familiar with these procedures, but 
in cases of arrears or other problems should seek the owner's instructions 
whether they should take action or whether the owner desires that legal 
action should be instituted by his solicitor.

Each of these Courts also has jurisdiction in proceedings for possession, 
except where the premises are "residential premises", but the District Court 
is rarely used and has only limited jurisdiction, so the choice is normally 
between the Supreme Court and Local Court, Where the premises are 
"residential premises" within the terms of the Residential Tenancies Act, 
1987 the Residential Tenancies Tribunal has exclusive jurisdiction. 
Proceedings must be taken in the Local Court if the premises are 
"prescribed" or where s. 2A of the Landlord & Tenant Act, 1899 applies ie. 
the premises are or included a dwelling-house whose rental does not exceed 
$ 25.20 per week.

In all other circumstances involving proceedings for recovery of possession 
of commercial premises by the lessor against the lessee, the lessor may 
proceed in the Supreme Court or in the Local Court. Proceedings in the 
Supreme Court will require solicitors to act for the lessor, in the Local Court 
managing agents may act for the lessor.

11.	Procedure for Recovery of Possession at Local 

The recovery of possession of residential premises is now governed by the 
provisions of the Residential Tenancies Act and it may be that some of the 
former technicality of ejectment proceedings will be reduced for matters 
within the jurisdiction of the Residential Tenancies Tribunal. For matters 
that come before the Local Court the following must be proved in 
proceedings for the recovery of possession:-

1.	That the parties are in a landlord and tenant relationship.

2.	If the tenancy was determined by notice to quit, proper service of 
the notice to quit.

3.	That the notice to quit was valid in form and sufficient as to time.

4.	Proper service of the summons.

5.	The authority of the agent to "lay the information" for the issue of 
the summons.

6.	The territorial jurisdiction of the Court.

7.	That the tenant or some person claiming under him is in occupation 
of the whole or part of the land.

At the Local Court there is no procedure available to give evidence by 
affidavit, each issue being proved by oral evidence, or by producing 
documents admissible in evidence or by the tenant formally admitting that 
issue. In proceedings involving a registered s. 5A lease the  lessor must be 
able to prove valid exclusion of the premises and registration of the lease. A 
correct copy of the notice to quit should be tendered in evidence, to prove its 
form and contents. Managing agents should seek the owner's instruction 
whether he desires the agent to conduct the proceedings or his solicitor to 
act. Agents should only undertake acting if they have acquired some 
understanding of and experience in these proceedings.

For prescribed premises s. 62(5) of the Landlord & Tenant (Amendment) 
Act, 1948 sets out the grounds upon which a tenant may be evicted. All the 
grounds upon which the landlord wishes to rely must be set out in the notice 
to quit. Section 62(5) sets out 25 grounds eg. (a) the lessee fails to pay rent 
for more than 28 days.

1	Stephen Leacock 1869-1944 Literary Lapses "Boarding-House 
2	Munro v. Stuart (1924). For a discussion of this see Real Estate 
	Law in N.S.W. by Lang, 2nd Ed., p. 192 and The Standard 
	Contract for Sale of Land by Butt p. 806.
3	Law Book Co., 1976.
4	See Lang Real Estate Law & Practice 2nd Ed., Law Book Co. p. 
	204 and [1928] Leases & Tenancies in New South Wales by Prof. 
	Andrew Lang, Law Book Co., 1976 p. 142.
5	Lang Real Estate Law & Practice 2nd Ed., Law Book Co. [1625] 
	and Leases & Tenancies [1547].
6	Section 9(2) Landlord & Tenant (Rental Bonds) Act, 1977.
7	Landlord & Tenant (Rental Bonds) Regulation, 1977 clause 6.
8	Section 8(2) Landlord & Tenant (Rental Bonds) Act, 
9	Formerly the Consumer Claims Tribunal until Landlord & Tenant 
	(Amendment) Act, 1987 passed with the Residential Tenancies Act, 
10	Lang Estate Agency Law & Practice 2nd Ed., Law Book Co., 
11	Now the Residential Tenancies Tribunal since Landlord & Tenant 
	(Amendment) Act, 1987 passed with the Residential Tenancies Act, 
	1987. The same legislation abolished the Fair Rents Board and 
	replaced it with the Residential Tenancies.

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