143Relief against loss of lessee's option

143 Relief against loss of lessee's option (a) a reference to an option in a lease is a reference to a right on the part of the lessee to require the lessor to: (i) sell, or offer to sell, to the lessee the reversion expectant on the lease; or (ii) grant, or offer to grant, to the lessee a renewal or extension of the lease or a further lease of the leased premises or a part of the leased premises, whether the right is conferred by the lease or by an agreement collateral to the lease; (b) a reference to a breach by the lessee of an obligation of the lessee under a lease containing an option is a reference to a breach of the obligation by an act done or omitted to be done before or after the commencement of this Act to the extent that the act or omission would constitute a breach of the obligation if there were no option contained in the lease; and (c) notice means a written notice served by a lessor on a lessee that: (i) specifies an act or omission; and (ii) states that, subject to an order of the Court made under subsection (5), the lessor proposes to treat the act or omission as precluding the lessee from exercising an option contained in the lease. (2) If an act or omission that constitutes a breach by a lessee of an obligation of the lessee under a lease containing an option would, but for this section, have the effect of precluding the lessee from exercising the option, the act or omission is to be taken not to have that effect if the lessee purports to exercise the option unless, not later than 14 days after the purported exercise of the option, the lessor serves on the lessee a notice in respect of the act or omission and: (a) neither the lessor nor lessee applies to the Court for an order for relief against the effect of the breach in relation to the purported exercise of the option before the expiry of one month after service of the notice on the lessee; or Law of Property Act 2000 97 (b) if the lessor or lessee applies to the Court for an order for relief and: (i) the relief is not granted; or (ii) the relief is granted subject to the lessee complying with conditions specified in the order (one of which is to be the time within which the lessee must comply with the conditions) and the lessee fails to comply with the conditions. (3) A lessor or lessee may apply to the Court for an order for relief referred to in subsection (2): (a) in proceedings instituted for that purpose; (b) in proceedings concerning the existence of an alleged breach by the lessee of the lessee's obligations under the lease; or (c) in proceedings concerning the effect of the breach in respect of which relief is sought. (4) In proceedings referred to in subsection (3), the Court may: (a) make the orders it thinks just that will grant relief; or (b) make an order refusing to grant relief, and may make any consequential or ancillary order it considers necessary to give effect to the order or orders. (5) In making an order granting relief or refusing to grant relief, the Court may consider: (a) the nature of the breach complained of; (b) the extent that the lessor was prejudiced by the breach at the date the proceedings were instituted; (c) the conduct of the lessor and the lessee, before and after the service of the notice; (d) the rights of persons other than the lessor or lessee; (e) the operation of subsection (7); and (f) any other matter the Court considers relevant. (6) An order under subsection (4) may include terms as to costs, damages or compensation as the Court thinks just. Law of Property Act 2000 98 (7) Subject to an order made under subsection (4) and to subsections (8) and (9): (a) if: (i) an option is contained in a lease; (ii) the lessee exercises or purports to exercise the option; and (iii) the lease would, but for this paragraph, terminate before the expiry of 14 days after the exercise or purported exercise of the option, the lease is to be taken to continue in force until the expiry of 14 days after the exercise or purported exercise of the option; (b) if: (i) a notice is served on a lessee; and (ii) the lease to which the notice relates would, but for this paragraph, terminate before the expiry of one month after service of the notice on the lessee, the lease is to be taken to continue in force until the expiry of 1 month after the service of the notice; or (c) if a lessee referred to in paragraph (b) applies to the Court for relief under this section, the lease is to be taken to continue in force until: (i) the Court makes an order refusing to grant relief; or (ii) the Court makes the orders it thinks just granting relief and effect is given to the orders to the extent that they affect the lessor or relate to a conveyance to the lessee. (8) Subsection (7)(c) does not: (a) apply to or in relation to a lease that, but for that paragraph, would continue in force for a longer period than it would be in force by virtue of the operation of that paragraph; and (b) if the lessee fails to comply with an order of the Court made under this section, operate to continue the lease in force after the lessee's failure to comply. Law of Property Act 2000 99 (9) If a lease is continued in force by operation of subsection (7) after the day on which, but for that subsection, it would terminate: (a) the lease continues in force subject to the terms, provisions, covenants and conditions of the lease, except those relating to the term of the lease and the option contained in the lease, without prejudice to the rights or remedies of the lessor or lessee in relation to the lease; and (b) if the lease is of registered land and the lessee is in possession of the land, the lessee has the protection given by the Land Title Act 2000 to: (i) in the case of a registered lease – the registered proprietor, within the meaning of section 4 of the Land Title Act 2000, of the land; or (ii) in the case of an unregistered lease – the interest of a lessee under a short lease. (10) If a lease that is continued in force by operation of subsection (7) is renewed or a new lease is granted under the option contained in it: (a) the period for which the lease was continued in force is to be taken to be part of the term of the renewed lease or the new lease; and (b) subject to subsection (11), in the case of the grant of a new lease – the new lease is to state that it commenced on the date that the lease continued in force by operation of subsection (7) would, but for that subsection, have terminated. (11) Subsection (10)(b) does not apply to a lease that provides for the commencement of a new lease granted under an option contained in the lease on a date after the date that the new lease would have commenced under that paragraph. (12) This section: (a) applies to and in respect of: (i) leases granted before or after the commencement of this Act; and (ii) an obligation contained in a lease referred to in subparagraph (i); and (b) has effect despite any term of a lease to the contrary. Law of Property Act 2000 100