No s.146 notice required for contractual right to terminate

Leases often provide that the landlord may re-enter premises and end the lease if a guarantor becomes bankrupt. In N.C.Reid & Co Pty Ltd v Pencarl Pty Ltd [2011] VCAT2241 the guarantor became bankrupt, the landlord re-entered the premises and leased the premises to a new tenant.

The tenant claimed, among other things, that the landlord should have served a notice under s.146 of the Property Law Act 1958 because the lease had been terminated "for repudiation" with the consequence that the tenant would have had 14 days to remedy the breach.

The tenant's claim was unsuccessful. Judge O'Neill held that the lease had been terminated pursuant to a contractual right and not because of a repudiation of the lease and therefore a notice that complied with s.146 did not have to be served. His Honour also said that in if there were a breach it could not have been rectified.