Proof of events of default and an overarching breach? Primary RE Ltd v Great Southern Property Holdings Ltd & Ors [2011] VSC 242

One of the more difficult issues in the Primary RE case was the argument by Primary RE that the landlord failed to adequately prove the particulars of the breach in the notice.

The text of the notices is included in another post on this blog here.

It appears from the judgment that a significant amount of argument went to the question of whether the particulars of the breach had been made out. However, it was common that the tenant had not maintained the plantations at all. The Court also found that the former RE had neither the funds nor the ability to maintain the plantations, nor had it displayed any intention to maintain them.

The Court concluded that it was common ground that there was an ‘overarching breach’ and that the notice needed to go no further than to allege that breach. Consequently, the court found that arguments about the adequacy of proof of the particulars in the notice was misplaced.

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This finding has the potential to cause some confusion in the future. For example, if a notice is served that alleges a general failure to maintain a premises, then gives particulars of, say, cracked walls and leaking pipes, can the landlord terminate the lease if the tenant hasn’t fixed broken windows? I would ordinarily expect the answer to this question to be ‘no’. However, this judgment suggests that the answer may be ‘yes’ if the landlord can maintain that the failure to fix the broken window is part of an ‘overarching breach’. Although this is a simplistic hypothetical, it is not hard to imagine more subtle examples.

I suspect that most subsequent cases, such as my simple hypothetical, will be distinguished from the Primary RE case because the nature of the overarching breach in this case was so clear – the tenant was doing nothing at all.

Also, although it arises in a very different statutory context, this aspect of the Primary RE decision does not sit comfortably with the decision in Smith v Director of Housing (2005) V ConvR 54-700; [2005] VSC 46. In that case, the landlord of a residential tenancies lease served a notice specifying breach of the endangerment provisions of the Residential Tenancies Act and giving particulars of an incident between the tenant’s grandson and Department of Housing staff (he chased them down the street with a 6 inch diving knife). However, the Act only permits termination of a residential tenancies lease if the tenant or its guest endanger the occupants of neighbouring premises. When the landlord applied for a possession order, it relied on a different incident between the tenant and a neighbour (the tenant slapped a neighbour after a different altercation). Justice Bonjiorno held that the landlord could not rely on an incident that was different to the incident particularised in the notice.

Consequently, it remains prudent to:

• provide in a s 146 notice some particulars of the breaches relied on; and
• not seek to rely on breaches outside those particulars when terminating the lease.

The relevant discussion took place at paragraphs to [94] to [104] of the judgment. There is also a useful summary at [150].