When entering into a lease, the law automatically implies an obligation on the landlord not to substantially deprive the lessee of the benefit being given under the lease. By this obligation, landlords are prevented from takes steps that derogate (ie: detract or take away from) the grant of the lease by making the property materially less fit for the purposes for which it was leased. There are a number of factors that must be considered when determining whether a tenant’s rights have been infringed in this way. These include the purposes for which the property was intended by the parties to be used, the length of the lease and the circumstances in which the property was leased. A short lease entered into for nominal rent, is less likely to be protected under by the implied covenant.

The sorts of actions that give rise to a derogation from grant include failure to provide a reliable power supply, interfering with the ability to physically occupy the premises or substantially obstructing the intended use of the premises.

The obligation does not protect a tenant in relation to uses that were not intended at the time the lease was entered into, or steps or omissions that cause inconvenience.

Depending on the situation, it may be possible for a tenant to recover loss of capital investment or the profit they could have expected to make had the lease been able to be enjoyed.

Finn Roache Lawyers has extensive experience in acting in tenancy disputes and we are ready to help if you have a leasing dispute.