Where a landlord wrongfully re-enters leased premises and physically takes possession of the premises is the tenant obliged to continue to pay the rent?
This question arises where a landlord re-enters the premises and the tenant disputes the landlord’s right to do so. Where the tenant obtains an interlocutory injunction enabling it to regain possession pending a final hearing it must, of course, pay rent or an occupation fee for occupying the premises. But what if the tenant disputes the landlord’s right to re-enter but is unsuccessful in obtaining an interlocutory injunction but succeeds at the final hearing of the proceeding? Or what is the outcome if the tenant does not seek an injunction but succeeds at the final hearing? The tenant might not seek an injunction if it is not in a position to give an undertaking as to damages. Assuming the tenant succeeds at the final hearing, was the tenant which was out of possession obliged to pay rent where it contended that the lease remained on foot; what is the result if the landlord served a default notice for non-payment of rent?
The answer is that the tenant’s obligation to pay rent is suspended if it establishes that the landlord wrongfully re-entered the premises and “evicted” the tenant. Any default notice based on non-payment of rent will be ineffective.
The principle applies where the landlord has “evicted” the tenant in the sense of “any act off a permanent character done by the landlord or his agent with the intention of depriving the tenant of the enjoyment of the demised premises, or any part thereof, will operate as an eviction”: Drama Unit Pty Ltd v Fearndale Holdings Pty Ltd [2019] NSWCA 312 at [12] and [52], [63] (Meagher JA (with whom Brereton JA and Emmett AJA agreed)).
Where there has been an “eviction” the obligation to pay rent is suspended: Drama Unit.
However, the fact of eviction does not suspend the tenant’s obligations under covenants other than for the payment of rent with the result that the tenant remains liable to pay outgoing: Drama Unit
