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Can lease obligations operate ‘prior’ to the commencement date of the Lease?

Will a Court enforce provisions of a lease against a party in respect of a period of time prior to the commencement date of the lease? This was one of the questions raised in Bonafair Holdings Pty Ltd v Hungry Jacks Pty Ltd.

His Honour, Sackville AJA, concluded that the language used by the parties in the relevant clauses will be determinative on the issue. “It is of course possible for a lease to contain provisions attaching consequences to events or conduct pre-dating commencement of the lease… However, in the absence of any language evincing a contrary intention, provisions in a lease for a term of years ordinarily create rights and obligations between the lessor and the lessee as and from the date the term of the lease commences“.

Therefore, unless there is a clear intention reflected in the language of the clauses, the starting position will always be that the obligations start from the commencement date of the lease and will not operate retrospectively against the parties. However, it is possible to draft clauses to operate prior to the commencement date, such as the date of the tenant taking possession.

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