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Insights

On 12 August 2021 the NSW Civil and Administrative Tribunal handed down its judgment in relation to a matter concerning a retail lease dispute in which Kells commercial lawyer Kyle Bridge acted for the lessor.

In 2015 the lessor and the lessee entered into a retail lease of a restaurant premises located within a strata-titled building. The two directors of the lessee provided personal guarantees for the lessee’s obligations under the lease, which was on bespoke terms specifically prepared by Kells commercial property lawyers.

In early 2019 the lessor terminated the lease and regained possession of the premises, alleging that the lessee had failed to comply with a number of essential terms of the lease, including (among other things) a failure to pay rent and outgoings and a failure to trade in accordance with the lease. A claim for damages was made against the lessee and both guarantors.

The lessee cross-claimed, seeking damages on a number of fronts; including an alleged failure by the lessor to mitigate its loss, a failure by the lessor to comply with alleged implied terms of the lease requiring the lessor to:

  1. consent to the lessee’s application for a liquor licence;
  2. allow the lessee to remove its goods from the premises following the termination of the lease, beyond the period provided for by the lease; and
  3. allow the lessee’s financiers to remove goods that were the subject of hire-purchase and/or lease agreements following the termination of the lease, beyond the period provided for by the lease.

The lessee also claimed that false and misleading representations were made by the lessor’s agents prior to the execution of the lease, ultimately leading to losses and damages.

In preparation for the hearing of the matter appropriate expert witnesses were engaged to provide opinions as to the market rent for the premises, together with the value of the goods left on the premises by the lessee. A number of lay witnesses were also called to give evidence in relation to the other claims made by the lessee.

The final hearing of the matter took place over two days in March 2021 and judgment was subsequently delivered on 12 August 2021 following the filing by the parties of final written submissions.

The Tribunal found the lessor to have been “wholly successful” in its claim. Among other findings the Tribunal determined that:

  1. following a number of fundamental breaches of essential lease terms, the lessor was entitled to terminate the lease, and did so validly;
  2. consistently with the lessor’s submissions, there was no positive “duty” on the lessor to mitigate its losses, as had been argued by the lessee;
  3. even if such a duty did exist, the lessor discharged that duty through the actions it took;
  4. the expenses incurred by the lessor following the termination of the lease were damages attributable to, and payable by, the lessee;
  5. based on the evidence prepared and heard at the hearing, no false representations of the kind alleged by the lessees had been made by any person on behalf of the lessor;
  6. the lease prepared and registered by Kells left no room for implied terms to form any part of the agreement that had been entered into.

Ultimately, the Tribunal ordered the lessee and its guarantor-directors to pay the whole of the lessor’s damages claim, as well as all of the lessor’s costs of the proceedings.

Taking care to obtain all instructions and including all agreed terms at the beginning of a lease matter (or any other commercial matter) go a very long way to protecting your position should a dispute arise down the track.

Kells commercial lawyers take great care to understand your needs and your business. We utilise our extensive experience and foresight to protect our clients’ interests in any possible circumstance.