LEASE ON TRIAL
One real lease case. What went wrong, what the court decided, and what to do so it doesn't happen to you.
LEASE ON TRIAL
Chan v Zacharia: two partners, one lease, one option
Should a former partner be free to take the lease?
Read the transcript
Two doctors ended their partnership. Then one of them asked the landlord for a new lease of their shared rooms, just for himself.
They leased consulting rooms in Adelaide for three years, with an option for two more, by written request in time.
Dr Zacharia asked Dr Chan to join in using the option. He declined, the deadline passed, and the landlord agreed to lease the rooms to Dr Chan.
The trial judge said any interest Dr Chan took in a new lease was held for the old partnership. The Full Court agreed, two to one. Then, the High Court.
Four of five judges agreed. A partner's duties last while the partnership is wound up. Dr Chan used his place as co-tenant and former partner to seek the new lease, so he held any interest in it on trust for the partnership, to be dealt with in its winding up, not for Dr Zacharia alone.
When partners hold a lease for their business, it can be a partnership asset. Their duties over it don't simply end when they part.
We can review your lease. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Willmott Growers v Willmott Forests: the landlord's liquidator and the leases
Should a landlord's liquidator be able to end your lease?
Read the transcript
A landlord company went into liquidation. Its liquidators wanted to sell the land without the tenants' leases on it.
Investors leased plots of its land to grow trees, generally for twenty-five years. Some paid all their rent up front.
The liquidators said the law let them disclaim the leases. The tenants said the leases survived.
The trial judge sided with the tenants. Victoria's Court of Appeal sided with the liquidators. Then, the High Court.
Four of the five judges sided with the liquidators. Once it takes effect, a disclaimer ends the tenant's rights under the lease. The tenant is left with a claim in the liquidation as an unsecured creditor, with no promise of payment.
A landlord's winding up can put your business lease at risk. Challenging a disclaimer in court means a short window and a strict test.
Paid review: your lease. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Royal Botanic Gardens and Domain Trust v South Sydney City Council: was the list the whole list?
Landlord or tenant: whose reading would you pick?
Read the transcript
A council car park sat under a Sydney park. Rent on its fifty-year lease began at two thousand dollars a year.
Every three years the landlord would set the rent, and may have regard to extra costs the car park caused the park.
The council said only those costs counted. By nineteen ninety-one, five hundred thousand dollars a year was being demanded and paid.
The trial judge implied a fair and reasonable rent term. The Court of Appeal reversed. Was that list the whole list?
Six judges to one said yes. Read as a whole, the clause listed every matter. No term was implied against its words.
Both were public bodies, and the Court weighed that setting. It fixed no rent figure. Another lease, with its own words and setting, may read differently.
We can review your lease. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Perpetual Executors and Trustees Association of Australia Ltd v Russell: an option to buy that the owner never signed
Would you rely on an option to buy that only you had signed?
Read the transcript
A lease with an option to buy was drawn up. The tenant signed it. The owner never did.
In nineteen nineteen, a Victorian owner let land for three years. The option to buy: six hundred pounds.
The owner died. On time, the tenant gave written notice and offered the price. It was refused. So why did he lose the land?
Victoria's Supreme Court let the tenant stay, but would not enforce his purchase. The executor took it to four High Court judges.
All four judges allowed the appeal. The majority said the option, once used, needed writing signed on the owner's side.
New South Wales has the same rule today. Without the owner's signature, you may not be able to enforce an option to buy.
We can review your lease. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd: 99 years, rent paid up front
Landlord's reading or tenant's: which would you pick?
Read the transcript
Farm land in Victoria, leased for ninety-nine years, and all ninety-nine years of rent paid on day one.
The first parties wanted a sale. Planning rules blocked it. So, a lease, for seventy thousand dollars, about the land's value.
Years on, the new landlord and tenant fell out over who pays the rates and land tax. The clause had words crossed out by hand. So who pays?
The trial judge said the tenant pays. The Court of Appeal, the landlord. Everyone agreed the clause could be read either way.
Four of five High Court judges said this lease was meant to work like a sale. So the tenant pays the bills.
One unusual lease, not a rule for all. A court reads the whole deal, so who pays what is best said plainly.
We can draft your lease. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
ACCC v Berbatis: a new lease, on one condition
A shop sale depended on a new lease. The landlords' condition: the tenants release all claims against them.
Read the transcript
A shop sale hung on a new lease. The landlords' condition: the tenants release all claims against them.
Two tenants in Western Australia were selling their shop. Their lease was ending, no option left. The buyer needed a new lease.
Their lawyer advised against signing. They signed, the sale went ahead, and the regulator, the ACCC, took the landlords to court.
The trial judge ruled against the landlords. The Full Federal Court reversed that, and the ACCC appealed to the High Court.
Four to one, the landlords won. A weak bargaining position wasn't a special disadvantage. The tenants had advice and chose rationally.
Our tip. Today's wider laws weren't tested here. Either way, bargain for an option when you sign the lease.
Get your lease reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Gnych v Polish Club: no approval, but still a lease
Two tenants ran a restaurant inside a NSW licensed club and traded for over a year.
Read the transcript
Two tenants ran a New South Wales club's restaurant. They opened and traded for over a year. Then they were locked out.
They moved in on terms they had proposed to the club. No lease was signed, but they had one all the same.
Liquor law required the regulator's approval for the lease. The club never sought it, then said that meant there was no lease.
The trial judge backed the tenants. The Court of Appeal sided with the club. Then the High Court heard it.
All five judges agreed on the result. The club's breach did not make the lease void or unenforceable.
Our tip. Leasing space in a pub or club? Liquor law limits what can be leased, so check before you sign.
Get your lease reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Australian Gypsum v Hume Steel: signed, but not read
The tenant asked for a change to its lease. In reply, one word in the term went from "shorter" to "longer".
Read the transcript
The tenant asked for a change. In reply, the redraft changed one word. Shorter became longer.
The tenant leased premises for its pipe contracts. Draft term: four years or the contracts, whichever was shorter.
The redraft did let the tenant stay on longer, but it also made four years the minimum.
The tenant signed it unread. Its pipe contracts ended within two years. At trial, the judge corrected the lease.
All three judges reversed it. The landlord meant a four year minimum, so there was no shared mistake.
Read the final lease, every word. To correct a shared mistake, you must prove clearly what both meant.
Get your lease reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Radaich v Smith: called a licence, really a lease
The deed said licence. The rent receipts said tenant.
Read the transcript
A Mosman milk bar, 1954. The deed called her the licensee. Yet several of the owners' rent receipts referred to the tenant.
She bought the milk bar business and took a five-year deed to run it in the shop.
She asked the Fair Rents Board of the time for a fair rent. It could fix one only for a lease.
The board's magistrate said lease. The Supreme Court said only a licence. She appealed.
The High Court held it was a lease. The deed gave her the right to exclusive possession of the shop for the term, whatever it called itself.
The rights decide, not the label, and genuine licences still exist. In New South Wales, retail lease law can cover some shop licences.
Get your licence reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Cessnock City Council v 123 259 932 Pty Ltd: money spent on a promised lease
A $3.7 million hangar. The Council got it for $1.
Read the transcript
A company built a three point seven million dollar hangar. Years later, the Council got it for one dollar.
The Council agreed to a thirty-year airport lease once a subdivision was registered, and promised all reasonable steps to register it. The company built meanwhile.
The Council wouldn't spend about one point three million on the sewer. No registration, no lease. The company sued.
At trial, one dollar. In the Court of Appeal, the hangar's cost plus interest, over six million.
The High Court dismissed the appeal. The Council's breach left it unclear whether the money would have been earned back, so the court assumed it would. The Council couldn't show otherwise.
Spending before your lease is granted? Keep records, and get advice before you build.
Get your deal reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Crown v Cosmopolitan Hotel: "looked after at renewal time"
Two restaurant tenants were told they would be "looked after at renewal time". Five years later, they had to leave.
Read the transcript
Two Melbourne restaurant tenants were told they'd be looked after at renewal time. Five years on, they had to leave.
The leases ran five years, with no option. The tenants asked for ten years, or an option. The landlord said no.
The leases required a major fit-out, about four point six five million dollars. With no new lease, the tenants sued.
A tribunal awarded the tenants about one point six million. The appeals went both ways, up to the High Court.
Five judges to two, the High Court held the words were not a binding promise to offer a new lease.
Our tip. Need time to earn back a fit-out? Get the option in the lease. If you can't, budget on the term you have.
Get your lease reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Gumland v Duffy Bros: rent as an essential term
About $58,000 short on rent. The judgment: about $2.1 million.
Read the transcript
A tenant fell about fifty-eight thousand dollars short on rent. The judgment it faced: about two point one million.
Duffy Bros leased a fruit and veg shop for fifteen years. The lease made paying rent on time essential, with damages for the whole term.
A subtenant paid half its rent and the tenant didn't cover it. Gumland, the new owner, ended the lease and sued, guarantors too.
The trial judge awarded about two point one million. The Court of Appeal cut it to about three hundred and sixty thousand.
The High Court restored the full award. Breach an essential term, and damages can cover the lost years, less what the landlord relets for.
The lesson. Check for clauses making rent essential before you sign, and pay every amount on time. Leases differ, so get advice.
Get your lease reviewed. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
LEASE ON TRIAL
Tabcorp v Bowen: alterations without consent
A tenant rebuilt the foyer of a leased office without the landlord's written approval.
Read the transcript
A landlord's representative arrived for a site meeting about the foyer. The tenant's builders were already ripping it out.
Bowen leased an office building to Tabcorp for ten years. Big changes needed written approval, which couldn't be unreasonably refused.
The tenant replaced the foyer without approval. The landlord wanted it put back. The tenant said the building lost little value.
The trial judge awarded about thirty-five thousand dollars. The Full Court awarded one point three eight million, mostly rent for the restoration period.
The High Court upheld that. The landlord gets the cost of putting things back, where reinstatement is a reasonable course.
The lesson. Ask for written approval and wait for it. Rules can differ by state and lease, so get advice first.
Renovating? Get advice. theleasinglawyer.com.au
Dramatised from the published reasons of the High Court of Australia. General information, not legal advice.
YOUR LEASE, THE LAW
One rule from the NSW Retail Leases Act, in plain words, and what it means when you sign.
YOUR LEASE, THE LAW
Your turnover figures stay with the landlord
Do you know who your landlord may pass your sales figures to?
Read the transcript
If your shopping centre lease makes you report your sales figures to the landlord, who else is allowed to see them?
In a New South Wales shopping centre, a landlord must not pass on turnover figures you give it under the lease. With some exceptions.
It can share them with your consent, in centre totals that don't show any one shop, or for a court, or for a mediation or valuation for the purposes of the Act or the lease.
Or to its professional advisers, or where an Act requires it. It can also, in good faith, pass them on to a lender to get finance, or to a possible buyer. Beyond that?
Outside those exceptions, a landlord that passes your figures on commits an offence, and can be fined.
This rule is for shops in retail shopping centres that the Act covers. Elsewhere, what your lease says about your figures matters more.
We can review your lease. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
Read more: retail lease review in NSW: your rights before you sign →
YOUR LEASE, THE LAW
Mediation comes first for most retail lease disputes
Have you seen a lease dispute settle at mediation?
Read the transcript
A tenant and a landlord fall out over money or repairs. In New South Wales, most retail shop lease disputes need mediation before any hearing.
That's section sixty-eight of the Retail Leases Act. Before NCAT or a court will hear most of these disputes, one of two things must happen.
One: a written certificate from the Registrar of Retail Tenancy Disputes that mediation failed. Two: NCAT or the court finds it unlikely to work.
If satisfied either side refused or walked out, the Registrar must certify mediation failed. And one kind of court order doesn't have to wait.
That's an injunction: proceedings for one don't wait for mediation.
One more thing: most lease claims to NCAT have a three-year limit, so it's worth acting in time.
We can review your lease. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
The landlord's lawyer is not compulsory
Would you push back, or just sign to keep the deal?
Read the transcript
A landlord tells a retail shop tenant in New South Wales, you must use my lawyer. Does the tenant have to?
No. A retail shop tenant must not be compelled to use a lawyer the landlord nominates. The Act says who that covers.
That means a lawyer or licensed conveyancer the landlord nominates, even before you sign. So what if a tenant was forced?
As tenant, if forced, the landlord is liable to pay you the fees you paid that lawyer or conveyancer for those services.
So a lawyer the landlord nominates isn't compulsory. Not every lease is covered, so it's worth checking yours before you sign.
We can review your lease. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
NSW retail: notice before the landlord's works that affect your business
What would two months' notice let you plan for?
Read the transcript
Your landlord starts refurbishing the shopping centre your shop is in, and nobody warned you.
In NSW, your landlord's alterations or refurbishment of your building or centre likely to adversely affect your business need notice first. Here's how long.
Ordinarily, your landlord must notify you in writing at least two months before works start. There's one exception, which still needs notice.
The one exception is works needed because of an emergency. Even then, you get as much notice as is reasonably practicable.
It's a notice rule, not a veto. With proper notice, the landlord can still go ahead with the works.
It's a term of every retail shop lease the Act covers. Starting the works without that notice is a breach of the lease.
We can review your lease. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Under the NSW Act, a retail shop lease can be entered into when you move in or pay rent as tenant, before anyone signs
Have you seen a shop open before its lease was signed?
Read the transcript
In New South Wales, you can get the keys before anyone signs, and the Act may count the lease as entered into.
Under the Act, a lease is entered into once you move in, or pay rent, as tenant, whichever is first. Some deadlines count from it.
A note in the Act says a deposit paid in advance to hold the shop isn't rent as tenant. But sometimes, signatures decide the date.
If landlord and tenant both sign before either of those happens, the lease is entered into once both have signed.
The landlord's disclosure is due at least seven days before it. Any exit the Act gives over disclosure lasts six months from it. No market rent review within twelve months of it.
The deadlines in this film follow the Act's date, which can differ from your lease's start date.
We can review your lease. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Shopping centre leases and missed sales targets
Your NSW shopping centre lease says it can end if your sales miss a target. Can it?
Read the transcript
Your New South Wales shopping centre lease says it can end if your sales miss a target. Can it?
No. A shopping centre lease must not contain a clause ending it because specified sales or turnover figures were missed.
It's a shopping centre rule. Your shop must be in a retail shopping centre, under a lease the Act covers.
The rule only bars a missed sales target as the reason. Other grounds for ending a shopping centre lease aren't affected.
So if a shopping centre lease you're offered has a clause like that, have it reviewed before you sign.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Most NSW retail shop cash bonds must be lodged
You paid your landlord a cash bond for your NSW shop. Where is it now?
Read the transcript
Under most New South Wales retail shop leases, a landlord taking a cash bond must lodge it with the NSW Government.
Twenty business days from receiving it, or from the lease becoming binding, if that's later.
Getting it back takes an application. Apply together, and it's paid as you both direct.
If one side applies alone to be paid, the other gets a notice, and fourteen days from its service or posting to act.
Acting means both: start mediation, and tell the Secretary in writing. Miss it, and it can be paid out.
Not lodging it is an offence. So ask your landlord for proof that your bond was lodged.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Ending a NSW lease: most breaches need a notice first
A breach notice from your landlord. Is the lease over?
Read the transcript
In New South Wales, to end a business lease granted for over a year, most breaches except unpaid rent need notice.
A lease can't take this away. The notice must name the breach, require a fix if fixable, and claim any compensation.
The Act then allows a reasonable time to fix it, and sets no number of days.
Exceptions include unpaid rent, which has its own rules, and leases granted for a year or less.
Got a notice? Act fast. A court may let the lease continue, but that isn't automatic.
Get your notice reviewed. theleasinglawyer.com.au
General information, not legal advice.
YOUR LEASE, THE LAW
Radius clauses in shopping centre leases
Your shopping centre lease says you can't open another shop nearby. Does that hold in NSW?
Read the transcript
In NSW, a retail shop lease in a shopping centre can't stop or limit you running a business outside that centre. Very large shops are excluded.
That covers the lease term and the time after it ends, and it isn't limited to a set distance or similar business.
Your lease can still bar you from using the shopping centre's name for a business you run outside the centre.
A clause breaking this rule is void to that extent, and a side agreement with the landlord can't do it either.
This rule covers NSW shops in a shopping centre, as the Act defines it. For other shops, other rules may apply.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Getting your bank guarantee back
Your NSW shop lease is over. When does the landlord have to hand back your bank guarantee?
Read the transcript
In NSW, a retail landlord must give back your original bank guarantee within two months after you've done everything it secures.
The two months start once you've finished everything the guarantee secures, which can be later than the day your lease ends.
If the original is lost, the landlord can instead give the consent or release your bank needs to cancel it.
If a court or the Tribunal is deciding the landlord's right to claim on it, the two months don't run meanwhile.
Holding it too long is an offence. The landlord is liable for your resulting loss, and the Tribunal can order its return.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
When the landlord wants to move you
Your shopping centre landlord wants to move you to another shop. Can it?
Read the transcript
In a New South Wales retail shop lease, a relocation clause works only within the Act's rules.
The landlord must give you details of a genuine plan to refurbish, redevelop or extend within a reasonably practicable time, one that needs your shop empty.
Then at least three months' written notice, with details of another shop in the same centre.
You're entitled to a lease of it on the same terms, for the rest of your term, rent adjusted for value.
Rather not move? Within one month of the relocation notice, end the lease in writing. It ends three months after that notice. Silent? You're taken to accept.
If you move, the landlord pays your reasonable relocation costs, including refitting to the same standard, and legal costs.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
No key money: section 14
Signing a NSW retail shop lease? A landlord must not ask for or take key money, a payment just for granting the lease.
Read the transcript
You're taking a retail shop lease in New South Wales. The landlord wants twenty thousand dollars, just for granting it.
Section fourteen bans key money: a payment or benefit just for granting a retail lease, whatever it's called.
The landlord's lease preparation costs are theirs too, apart from a reasonable sum for some changes you ask for.
Still allowed, among other things: rent in advance, a security bond, or a guarantee.
Paid key money anyway? You can recover it from the landlord as a debt, even without a conviction. Time limits apply.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
YOUR LEASE, THE LAW
Rent review limits: section 18
Your lease is up for a market rent review, and a clause says the rent can never go down. In NSW, is that allowed?
Read the transcript
Your New South Wales shop lease is up for a market rent review. But a clause says the rent can never go down. Allowed?
Section eighteen: if the lease reviews rent in a way that could lower it, like to market, a clause stopping or capping the fall is void.
Void means that part drops out. The rest of the lease stands.
Also void: one side choosing the review method each time, or a clause taking whichever method gives the higher rent.
And rent can't change within twelve months of the lease being entered into or the last change, unless it's a fixed amount or percentage.
The lesson. Fixed increases are lawful. But a review to market must leave the rent free to fall as well as rise.
Get your lease reviewed. theleasinglawyer.com.au
Changes to the Act are proposed and not yet in force. What's changing →
General information, not legal advice.
These films are general information, not legal advice. The case films are dramatised from the courts' published reasons. The characters stand in for the parties, and the story sticks to the facts the court found.