A registered lease can end in several ways, and the route matters — because it determines what happens to the interests carved out of it.
Expiry of the term
The simplest route. The term stated in the lease runs out and the interest ends.
For a State lease, remember that the term is calculated under section 81 of the Land Act 1996 from the date of gazettal of the successful applicant, not from the date of the title. And whether you are paid for what you built turns on section 119 — which requires that you applied for a further lease and were refused.
Section 50(b) — the implied power of re-entry
The lessor may re-enter on and take possession of the demised property where:
- rent or part of it is in arrear for six calendar months; or
- default in a covenant, express or implied, continues for six calendar months; or
- the repairs required by a notice under section 50(a) are not completed within the time specified.
Section 50(a) supplies the notice machinery: the lessor may enter at reasonable times to view the state of repair, and may serve a written notice of defect on the lessee, or leave it at his last or usual place of abode or on the demised property, requiring repair within a reasonable specified time.
Compare a mortgagee, who can move on one month’s default plus one month’s notice. A lessor must wait six calendar months. Tenants have materially more room than borrowers — but these are implied powers, and under section 100 they may be negatived or modified by express declaration in the instrument. Read the lease.
Surrender
A lease may be given up by agreement between lessor and lessee. For a State lease, section 121 of the Land Act requires the written consent of the Minister, and permits surrender of the whole or any part.
The consequence for improvements is important: a surrendering lessee loses the section 119 payment entitlement and keeps only the right to remove such improvements as are severable, on or before the surrender. Surrender under a subdivision is the exception — section 130(7)(b) preserves improvement rights in the new leases.
When the head lease goes
Where a lease is determined by (a) forfeiture, (b) operation of law, or (c) disclaimer by the trustee under the Insolvency Act — a sub-lease of that lease is determined at the same time.
A sublessee cannot outlive the interest it was carved from. For a State lease, the head lease can be forfeited on any of the five grounds in section 122(1) of the Land Act — six months’ unpaid rent, unpaid fees, unpaid improvement money, breach of a covenant or condition, or a grant obtained by knowingly false statements.
Section 122(4) of the Land Act requires copies of a forfeiture notice, and of a notice to show cause, to be served on all persons who, to the knowledge of the Departmental Head, have or claim a right, title, estate or interest in the land — or such of them as can with reasonable diligence be ascertained.
Registration is what makes you findable. A registered sublessee or mortgagee gets notice and a chance to intervene — to pay the arrears, or to press for a non-compliance fee instead of forfeiture. An unregistered one may learn of it afterwards.
What each route does to derived interests
| Route | Effect on subleases | Effect on a mortgage of the lease |
|---|---|---|
| Expiry | End with the term | Security expires with the lease |
| Surrender | Depends on terms; deal with them expressly | Mortgagee consent needed in practice — security disappears |
| Re-entry (s 50(b)) | At risk | At risk |
| Forfeiture of the head lease | Determined — s 54(6)(a) | Security destroyed; hence the s 122(4) notice |
| Operation of law | Determined — s 54(6)(b) | At risk |
| Disclaimer in insolvency | Determined — s 54(6)(c) | At risk |
Clearing the entry from the Register
A lease that has ended should not be left showing on the folio. Two routes:
- Section 161 — the Registrar may, on sufficient evidence, correct errors or omissions in the Register; and under section 161(3), where satisfied a matter in a certificate of title does not affect the land, he may record its cancellation.
- Section 160 — where an instrument is wrongly held and not delivered up, the Registrar may summon the holder, and the Court has power to order delivery up, issue a warrant, and commit for up to six months.
Until the entry is removed, it remains an encumbrance notified on the folio under section 33(1)(b), and a buyer will take subject to it on its face.
If you are the tenant facing the end
- Check whether the six-month period has actually run, and whether the lease modifies section 50.
- Check any notice to repair — its time, and whether service was valid.
- Deal with arrears immediately; get any indulgence in writing.
- If the head lease is at risk, ask to see the show-cause notice and consider paying the head lessee’s arrears and setting off.
- Recovery of possession against an occupier proceeds under Part XV Division 2 of this Act and the Summary Ejectment Act (Chapter 202).
Sources
- Land Registration Act (Chapter 191) — ss 33, 49–55, 100, 160, 161; Parts VI and XV
- Land Act 1996 — ss 81, 119, 121, 122, 130
- Insolvency Act (Chapter 253)
- Summary Ejectment Act (Chapter 202)
- HQH Enterprises Ltd v Wangbao Trading Ltd [2023] PGSC 69; SC2419
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.