Commercial Property - Lease Disputes

Termination of Commercial Leases

As a landlord (lessor) or tenant (lessee) you will be often be interested to know if you have either validly entered into a commercial lease or you may be interested to know whether it has been validly terminated. There can be serious consequences in both instances especially when it comes to terminating commercial leases given the prospect of damages being awarded and possession orders being made.

Leases can be terminated by agreement between the parties or the court can be approached for orders to declare that a lease was terminated in the applicable circumstances. The modes of termination can be specified in the lease agreement or can arise by operation of law. Common ways of ending a lease include:- a. Surrender; b. Contractual termination; c. Frustration; d. Statutory; e. Acquisition by tenant of reversion; f. Acceptance of Repudiation.

Essentially then termination of a lease is the bringing to an end of the lease (a.k.a determination of a lease).

Potential Scenarios - Commercial Lease Disputes

Landlord (Lessor) Rights

  • You are a landlord and your tenant has fallen into arrears, and you need legal advice about getting the outstanding rent (recovery of rent) and obtaining your premises back;
  • You are trying to determine if the lessee has repudiated by non-payment of rent, breach of some other covenant or conduct suggesting abandonment;
  • As landlord you have decided to hold the tenant to the bargain despite conduct being repudiatory and you want help with obtaining specific performance;
  • You need legal help to work out whether to terminate for breach of a contractual clause or perhaps for repudiatory conduct since you are uncertain of what effect it may have on your damages claim;
  • As landlord you need legal advice working out what notices, if any, you need to serve before you can terminate e.g. s 129 of Conveyancing Act 1919;
  • An administrator has been appointed to your tenant, and you need advice about whether you can take possession or not;
  • As lessor you need to restrain your lessee from: illegal (or unauthorised ) use of the premises, or subletting / assigning, altering the premises contrary to the agreement.

Tenant (Lessee) Rights

  • You are the tenant and your landlord refuses to repair the premises and you need to know if the contract has been repudiated;
  • You are the tenant and your landlord failed to register the commercial lease and you want to know if you can end the lease;
  • Your landlord has terminated the lease and you need to make an application for relief against forfeiture coupled with a claim for injunctive relief to restrain the landlord from re-letting the premises.
  • You need to restrain your landlord from: blocking access to the premises, breaching the covenant as to quiet enjoyment or from cutting off the services to the relevant premises.

Important Quotes in Disputes On Commercial Leases

"Accordingly, the balance of authority here as well as overseas, and the reasons on which it is based, support the proposition that the ordinary principles of contract law, including that of termination for repudiation or fundamental breach, apply to leases. However, it has been suggested that the presence of an express proviso for reentry in a lease excludes any other right of termination of the lease by the lessor. Thus, in Rosa Investments Pty. Ltd. v. Spencer Shier Pty. Ltd. [35] , it was held that at common law re-entry is necessary to forfeit a lease unless dispensed with by contract. The better view is, in my opinion, that re-entry is essential only where the parties stipulate that advantage shall not be taken of a forfeiture except by an entry upon the land: Liddy v. Kennedy [36] . If it be accepted that the principles of contract law apply to leases, it is not easy to see why the mere presence of an express power to terminate should be regarded as excluding the exercise of such common law rights as may otherwise be appropriate. It is, of course, open to the parties by their contract to regulate the exercise of the common law right to determine for repudiation or fundamental breach. But in this case the parties have not attempted to do so." - Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14

Let Us Help You

  • Approach the court, by way of a declaration, to determine whether or not there is a valid lease (or some other form of declaration);
  • Consider whether there are grounds for terminating a lease;
  • Seek specific performance of a lease when you choose to affirm repudiatory conduct;
  • Claim such damages as you may be entitled to for breach of contract or repudiation;
  • Seek relief against forfeiture;
  • Approach the Supreme Court for urgent injunctive relief to restrain breaches of your rights;
  • With remedies such as the misleading and deceptive conduct provisions under the Australian Consumer Law (formerly the Trade Practices Act) typically regarding matters occurring at the negotiation stage of the lease.

For more information, contact our property dispute lawyers.

* Note: we do not normally assist with disputes regarding residential tenancies, retail leases, and agricultural tenancies.

** This content does not purport to give legal advice. Readers must obtain their own legal advice, that applies to the particular circumstances of their case, before taking any action at all.

Talk to a Dispute Lawyer today!