Madison Marcus | Lease Agreements – Are you protected? - Madison Marcus

Lease Agreements – Are you protected?

Author: David Low, Partner Commercial & Corporate Law – Madison Marcus Law Firm

Disputes between landowners and tenants are not uncommon. When this happens, a signed lease agreement is the best way a landowner can enforce the terms of a lease agreement. But what if a signed lease agreement doesn’t exist? A recent decision in the NSW Civil and Administrative Tribunal (NCAT) provides some clues.

Recent case of Le v Gallego [2017] NSWCATAP 58

In this recent 2017 decision, the Appeal Panel of the NCAT considered an appeal by a landowner from an earlier Tribunal decision involving a lease dispute. The earlier decision found that no lease had come into effect between the occupant of the premises and the landowner prior to a lease agreement being signed. Therefore the occupant was not liable to pay rent for the period prior to the lease agreement being signed.

The Tribunal came to this conclusion despite the occupant:

  • ●  being in some occupation of the premises prior to and after the landowner purchased the property from another person;
  • ●  paying a refundable deposit to the previous owner of the property; and
  • ●  having commenced negotiations for a rental agreement with the previous owner.

In considering the issue, the Appeal Panel acknowledged that under the common law and the Retail Leases Act, a person may be found to have entered into a lease agreement despite not having signed a formal lease agreement. However, the Court highlighted the requirement of establishing an objective intention of both parties to enter a lease agreement in order for this principle to be established.

The Appeal Panel found that the requirement to establish an objective intention to enter into a lease was not satisfied. Therefore the landowners appeal was dismissed. The dismissal was based on:

  • ●  The Heads of Agreement (non-binding document outlining proposed terms of an agreement) was expressed as being “subject to lessor’s approval and lease contract”;
  • ●  There was doubt as to whether the occupant was provided with an unsigned lease agreement;
  • ●  The deposit paid was refundable subject to final agreement; and
  • ●  There is inconsistency between the four documents listed above.

What this decision means for landowners

The decision shows us that it is crucial for landowners and purchasers to understand what is required in order to be legally protected should a lease dispute arise. It is important to have a signed agreement, or in the absence of a signed agreement, to have some form of evidence to demonstrate a clear intention by the landowner and the occupant of the premises to enter into a lease agreement. Mere occupation of the premises by the tenant will not automatically evidence an intention to enter into a lease.

We at Madison Marcus are often asked to assist clients with lease agreements. If you would like advice specific to your particular circumstances, please contact:

David Low Madison Marcus

David Low, Partner – Commercial Litigation & Corporate Law
david.low@madisonmarcus.co
+61 2 8022 1222

or

Robert Lewis Madison Marcus

Robert Lewis, Partner – Commercial & Retail Leasing
robert.lewis@madisonmarcus.co
+61 2 8022 1222

Madison Marcus Law Firm produced this article. It is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

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