Legal Updates

Lease Renewals – Not as simple as you might think…

A right of renewal provides a commercial tenant with the option to enter into a new lease with a landlord when the current lease expires.


If a tenant fails to give notice of intention to renew the lease, the risks can be significant. The tenant may lose the right to renew and the ability to continue to operate from the premises. The Property Law Act 2007 (“PLA) gives a tenant the ability to apply for relief from the Court if the landlord refuses to renew a lease. However, resolving the issue in Court isn’t guaranteed and can be challenging for both landlord and tenant.


The recent 2022 High Court case of Storageone Kapiti (2012) Ltd v Sharja Ltd illustrates this point.


Storageone Kapiti (2012) Limited (“Storageone”) successfully applied for relief, with conditions, under the PLA from Sharja Limited (“Sharja”) for Sharja’s failure to renew the lease.


Storageone entered into an agreement to lease with Sharja in December 2014. The lease commenced in March 2015 for a period of five years with four rights of renewal of five years each, and a final expiry date of 29 February 2040 (if all such rights of renewal were exercised).


Storageone failed to give the required 3 months’ notice of its intention to renew, but the lease continued to be applied by the parties. Disagreements developed between the parties in relation to Storageone’s adherence to the terms of the lease and in December 2021, Sharja gave notice of termination to Storageone.


Storageone applied to the Court for relief under section 264 of the PLA. Part of Storageone’s argument was that Sharja was unable to argue that the lease was brought to an end by a failure to give notice of renewal.


Sharja opposed Storageone’s application and argued that it had the right to terminate the lease because Storageone had breached the terms of the lease, namely by sub-letting the first floor of the Premises to residential tenants and making structural alterations to the ground floor without Sharja’s consent and without requisite building consent, as required under the lease.


The Court granted Storageone relief finding:


  •  Storageone’s failure to give notice of renewal was inadvertent  - The mistake took place in the context of a lease where neither party strictly followed the technical requirements.


  • No suggestion that Sharja no longer wanted Storageone as a tenant - Sharja advised that it was willing to enter a new lease with Storageone for the same period, but with Storageone paying a higher rent. It also advised that the breaches of the lease that it relied upon required no remedial action if Storageone entered the new lease on the terms Sharja proposed.


  • Storageone’s argument satisfied – Rent increases had been initiated by Sharja and Storageone accepted those. The Court found these exchanges indicated Sharja accepted the lease was continuing despite Storageone not giving notice of renewal.


  • Storageone’s breaches not significant – While Storageone had breached the lease, the Court found the breaches weren’t enough to support cancellation of the lease and instead, issued conditions that Storageone must satisfy.


The Court described this as a case where the landlord sought to take advantage of the tenant’s mistake to secure a better deal, and there would have to be more compelling reasons for the Court not to grant relief in those circumstances.


This case highlights that renewing a lease isn’t always as simple as it sounds. Care and attention is required to make sure the landlord and tenant’s rights are


If you need legal advice on commercial lease matters, get in touch with the team at Ford Sumner: and