Leases and forfeiture in Irish land law

The principle

The relationship rests on contract

A leasehold estate is carved out of a superior estate: the lessor demises a proprietary interest to the lessee, who holds subject to rent and the covenants agreed. Deasy's Act displaced tenure as its basis. Section 3 deems it to subsist wherever one party agrees to hold land from or under another in consideration of any rent, and removes the need for a reversion — hence the Irish lease for ever.

Hayes v The Minister for the Environment, Community and Local Government [2020] IECA 54 IE · Court of Appeal restates that foundation. Baker J held that whether a tenancy exists turns on construing the written agreement, or an oral one evidenced by the parties' dealings, and that payment of rent is not necessary to create the relationship, though an agreement to occupy in consideration of rent is.

The tenant must also have exclusive possession: if the grantor keeps general control, the arrangement is a licence. Section 3 of the Land and Conveyancing Law Reform Act 2009 excludes tenancies at will and at sufferance from "tenancy", so neither now creates the relationship.

Formalities and the equitable lease

Section 4 of Deasy's Act requires a lease creating the relationship for a freehold estate, or for any definite period other than from year to year or less, to be by deed executed or by note in writing signed by the landlord or an authorised agent. Periodic tenancies and agreements for under a year fall outside it. Deed formalities are now in s.64.

Where the formalities fail, equity may still hold the parties to the bargain. In Walsh v Lonsdale (1882) 21 Ch D 9 (1882) 21 Ch D 9 Persuasive · England a tenant took possession of a mill and paid rent quarterly under an agreement for a seven-year lease never executed by deed. When the landlord distrained for a year's rent in advance, the court held the parties bound in equity on the same terms as if the lease had been granted, specific performance being available.

The rule has limits in Ireland. In Ó Siodhachain v O'Mahony [2002] 4 IR 147 IE · High Court Kearns J held it inapplicable where the parties never intended a lease, and dependent on specific performance being available.

Covenants, express and implied

Section 41 of Deasy's Act implies, unless the lease provides otherwise, that the landlord has good title and that the tenant shall have quiet and peaceable enjoyment during the term — conditional on the tenant paying rent and performing the tenant's agreements. Section 42 implies agreements by the tenant to pay rent and taxes, keep the premises in good and substantial repair, and yield up possession in that condition.

For dwellings, Siney v Dublin Corporation [1980] IR 400 IE · Supreme Court implied a warranty that the flat was fit for human habitation at the date of the letting. Section 12 of the Residential Tenancies Act 2004 adds repair, insurance and deposit duties, with tenant obligations in s.16.

Statute also rewrites express covenants. Where the premises are a tenement under section 5 of the Landlord and Tenant (Amendment) Act 1980, s.66 (alienation), s.67 (user) and s.68 (improvements) convert absolute prohibitions into prohibitions without the lessor's consent, not to be unreasonably withheld. Irish Glass Bottle Ltd v Dublin Port [2005] IEHC 89 IE · High Court puts the onus on the lessee to prove both a tenement and unreasonable refusal, and requires the lessor to consider each application on its merits rather than by blanket policy, though it may weigh its own interests. Under s.16(k) a residential landlord may withhold consent at discretion.

Determination

A fixed term ends on effluxion of time. A periodic tenancy must be ended by notice, which need take no particular form but must show intention to terminate. In default of agreement a yearly tenancy needs half a year's notice expiring at the end of a completed year, and a monthly or weekly tenancy a full period. Withdrawing a notice to quit does not terminate the underlying tenancy: Lord Inchiquin v Lyons (1887) 20 LR Ir 474 IE · pre-1922. Residential tenancies use s.62 notices of termination instead.

Section 7 of Deasy's Act requires surrender by deed, by note in writing signed by the tenant, or by act and operation of law, the routes to the last being set out in Friends First Managed Pension Funds Ltd v Smithwick [2019] IECA 83 IE · Court of Appeal. It may also end by merger, enlargement into a fee simple or frustration.

Forfeiture and relief

Forfeiture ends the lease prematurely on the tenant's breach and entitles the landlord to re-enter. It is generally confined to breaches of condition, or to leases expressly reserving a proviso for forfeiture and re-entry. Moffat v Frisby [2007] 4 IR 572 IE · High Court shows how serious the election is: once the lessor serves a forfeiture notice and seeks to enforce it, it cannot treat the lease as binding the lessee going forward, so rent review is unavailable and its entitlement is to mesne profits, now assessed at about a market rent.

Section 52 of Deasy's Act adds a statutory route where a year's rent is in arrear under a tenancy from year to year or greater: the landlord may proceed at once by ejectment, before any time limited for re-entry expires. It does not reach a dwelling house: section 27 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978. Under s.53 no demand or re-entry clause need be proved.

Outside rent cases the landlord must first serve a forfeiture notice under section 14 of the Conveyancing Act 1881, specifying the breach and the steps to remedy it. By s.14(8) it does not affect re-entry, forfeiture or relief for non-payment of rent, and Hafeez v CPM Consulting Ltd [2020] IEHC 536 IE · High Court confirms a notice is not required there, though prudent. Re Erris Investments Ltd [1991] ILRM 377 IE · High Court agrees, adding that the tenant still has equitable relief.

In FG Sweeney Ltd v Powerscourt Shopping Centre Ltd [1984] IR 501 IE · High Court Carroll J refused a displaced tenant an interlocutory injunction, observing that a lessor need not go to court and may re-enter peaceably under a valid re-entry clause for a valid cause after service of a valid notice.

Relief against forfeiture lies under s.14(2) of the 1881 Act, under section 4 of the Conveyancing Act 1892 for sub-lessees, or under the equitable jurisdiction, which must be invoked where the breach is non-payment of rent. It may be sought before or after the landlord retakes possession, unless possession was retaken on foot of a court order.

Whipp v Mackey [1927] IR 372 IE · Supreme Court indicates relief generally follows where arrears are discharged and the lessor suffers no further hardship. Campus and Stadium Ireland Development Ltd v Dublin Waterworld Ltd [2006] IEHC 200 IE · High Court lists the discretionary factors: conduct, the wilfulness of the breach, the nature of the commercial transaction, whether the essentials of the bargain can be secured, the value of the property and the parties' future prospects. Relief was refused. Forfeiture is in any event unavailable against dwellings within the Residential Tenancies Act, because s.33 allows termination only under s.34.

Statutory basis

• s.3 and s.4 Deasy's Act — contract not tenure; writing or deed for definite terms above a year.
• s.7 and s.9 — surrender and assignment formalities; s.41 and s.42 — implied covenants; s.52 and s.53 — ejectment for a year's rent in arrear.
• s.14 Conveyancing Act 1881 — forfeiture notice; s.14(2) statutory relief; s.4 of the 1892 Act for sub-lessees. Sections of the 1881 Act were repealed by the Land and Conveyancing Law Reform Act 2009.
• s.11(3) LCLRA 2009 defines the leasehold estate; s.51 requires writing for land contracts.
• ss.66–68 of the 1980 Act qualify absolute prohibitions on alienation, user and improvements for a tenement.
• ss.33 and 34 of the 2004 Act remove forfeiture for dwellings; s.62 governs termination notices.

Key authorities

• Hayes v The Minister for the Environment, Community and Local Government [2020] IECA 54 IE · Court of Appeal — the relationship rests on contract, not tenure; payment of rent is not needed to create it.
• Walsh v Lonsdale (1882) 21 Ch D 9 Persuasive · England — where an agreement for a lease is specifically enforceable and possession given, the parties hold in equity as if it had been executed.
• Irish Glass Bottle Ltd v Dublin Port [2005] IEHC 89 IE · High Court — the Irish summary of unreasonably withheld consent to a change of user.
• FG Sweeney Ltd v Powerscourt Shopping Centre Ltd [1984] IR 501 IE · High Court — a lessor may re-enter peaceably under a valid clause, without a court order.
• Whipp v Mackey [1927] IR 372 IE · Supreme Court — relief is generally granted where arrears are discharged and the landlord suffers no other hardship.
• Campus and Stadium Ireland Development Ltd v Dublin Waterworld Ltd [2006] IEHC 200 IE · High Court — the factors governing the discretion; relief was refused on the facts.

How it is examined

Forfeiture and relief are regularly set as a standalone essay on Irish land law papers, and appear inside problem questions where a tenant is in arrears, has sublet without consent, or has changed the use of the premises. The cues: a breach of covenant, a re-entry proviso, a landlord changing the locks, or an unexecuted agreement under which the occupier holds and pays rent.

Take the points in order. Is there a lease at all, or a licence, or an agreement for a lease attracting Walsh v Lonsdale? Identify exclusive possession and whether the s.4 formalities were met. Is the tenancy residential, where forfeiture is unavailable, or a business tenement bringing in the 1980 Act? Identify the covenant breached and whether it is a condition or carries a forfeiture proviso. Then procedure: a notice under the 1881 Act for non-rent breaches, or s.52 ejectment for a year's arrears of rent. Only then relief, applying Whipp v Mackey to rent cases and the Campus and Stadium factors generally.

Related Land Law notes: Walsh v Lonsdale · ground rents and tenants’ statutory rights · licences and the family home · all free Land Law notes.