Hemer Pty Ltd v Benni

The appeal concerned a 99-year lease entered into in 1962, which was subsequently registered. The parcel of land subject to the lease was divided, resulting in multiple lessors and a single lessee, Hemer Pty Ltd. The dispute centred on the interpretation of the second covenant of the lease, which stipulated that the lessee was responsible for "rates and taxes proportional to the land herein leased" if demanded by the lessor. The lessors demanded payment based on the proportion of the leased area to the whole allotment, while the lessee argued it should be based on the proportion of the unimproved value of the leased area to the unimproved value of the whole allotment. The appeal also addressed whether the lessors' demands and subsequent actions constituted a valid re-entry and forfeiture of the lease, and whether relief against forfeiture should be granted.

The court was required to determine several legal issues. Firstly, whether the rates and taxes payable under the second covenant were to be calculated based on a proportion of the land's area or its site value. Secondly, whether the lessors' demands satisfied the notice requirements under section 10 of the *Landlord and Tenant Act 1936* (SA) before re-entry. Thirdly, whether the lessors' actions, including instituting proceedings in the Magistrates Court, amounted to an election to enforce the lease rather than forfeit it. Finally, the court had to consider whether the trial judge erred in refusing to grant relief against forfeiture.

The majority of the Full Court, comprising Gray and Sulan JJ, held that rates and taxes under the second covenant were payable based on the site value of the leased land, as determined by the Valuer-General. They further found that the letters demanding payment did not satisfy the requirements of section 10 of the *Landlord and Tenant Act 1936* (SA), meaning there was no valid re-entry and thus no forfeiture. Consequently, as there was no valid forfeiture, the court determined there was no need to grant relief against forfeiture. Doyle CJ dissented on the interpretation of the covenant and the validity of the re-entry, but concurred with the majority on the issue of election.

The appeal was allowed, and the trial judge's order dismissing the proceedings was set aside. The court refused to make orders sought by the lessors that would have been contingent on forfeiture being effective. Instead, the court made an order for relief against forfeiture, indicating that submissions would be heard on the terms of that order. The court also granted liberty to Hemer to serve notice on the Registrar-General regarding applications to reverse an entry on a certificate of title and indicated that further submissions would be heard on this matter. The parties were to be heard on the costs of the proceedings and the appeal, with the court noting that Hemer's success on its alternative claim for relief against forfeiture would be reflected in the costs order.