Gerraty v McGavin

The case of *Gerraty v McGavin* involved an appeal from the Supreme Court of Victoria to the High Court of Australia. The plaintiffs, Andrew Ingram McGavin and Clara Malinda McGavin, as assignees of a portion of the reversionary estate in leased land, sought possession of the land, mesne profits, and damages for alleged breaches of covenants in a lease. The defendant, Mary Catherine Gerraty, was the lessee. The original lease, dated 1899, was for a term of eleven years with an option for renewal, and it was not registered under the Transfer of Land Act 1890. The plaintiffs acquired the reversion in part of the land in 1911, after the lessee exercised the option to renew the lease in 1910.

The High Court was required to determine several legal issues. Firstly, whether section 15 of the *Conveyancing Act 1904* (Vic.) applied to a lease created before the Act came into operation, but where the severance of the reversion occurred after the Act commenced. Secondly, the court had to consider whether the assignee of a part of the reversion could enforce conditions of re-entry contained in the lease. Thirdly, the court examined the validity of a notice served on the lessee under section 19 of the *Conveyancing Act 1904* (Vic.) for alleged breaches of covenant, specifically concerning the repair of internal parts of the premises and the carrying on of a baking business. Finally, the court considered whether the performance of a covenant to keep a baking business alive had become impossible by law due to subsequent legislation.

The court held that section 15 of the *Conveyancing Act 1904* (Vic.) applied to leases created before the Act, provided the severance of the reversion occurred after the Act commenced. This was because the section's provisions regarding apportionment were considered to operate prospectively from the date of severance. The court also found that the exercise of the option to renew the lease in 1910 constituted a new demise, further supporting the application of section 15. Regarding the covenant to repair, the court determined that the internal dividing fences of saleyards were not "internal parts of the premises" as contemplated by the lease. Furthermore, the notice to remedy breaches of covenant was deemed insufficient as it failed to specify the particular condition of the premises requiring repair, as mandated by section 19 of the *Conveyancing Act 1904* (Vic.). As to the baking business covenant, the court found that the lessor had waived the breach by accepting rent after knowledge of the discontinuance. Crucially, the court held that subsequent legislative changes under the *Factories and Shops Act 1905* (Vic.) rendered the re-establishment of the baking business in the existing bakehouse impossible by law, thus excusing the lessee from performance.

Consequently, the High Court reversed the decision of the Supreme Court of Victoria. The appeal was allowed, and the plaintiffs were awarded nominal damages of one shilling for a minor breach of covenant regarding the repair of the premises, as no evidence was presented to establish damage to the reversion.