25/02/2009

In a recent decision by the Administrative Decisions Tribunal, a retail tenant was prevented from seeking to terminate the lease or seeking compensation for misrepresentation because they delayed.

The facts of the case are summarised as follows:

-  A leasing agent made a representation to the prospective tenant that a certain chain store was going to rent a premises in the centre;

-  The tenant relied on the representation in entering into the lease;

-  The representation was false;

-  The representation was not contained in either the tenant or landlord's disclosure statements (statements required under the Retail Leases Act 1994);

-  After more than a year in occupation and with the tenant not paying rent, the landlord terminated the lease; and

-  The tenant cross-claimed against the landlord for misrepresentation and unconscionable conduct.

Amongst the reasons for the decision, the Tribunal held that the tenant's delay of more than 1 year to complain of misrepresentation and unconscionable conduct was fatal.

Under the Retail Leases Act a tenant has the right to terminate the lease within 6 months for false or incomplete information provided in a disclosure statement.  In the tenant's disclosure statement there is a space for the tenant to include any statements made to it by the landlord or the landlord's agent in the negotiation of the lease.

In this case, the Tribunal used the same 6 month period to prohibit the tenant from making a claim on a misrepresentation made prior to the lease.  Also taken into consideration was that the tenant only made the claim in response to the landlord's claim for unpaid rent.

When considering a new retail lease, the tenant should consider what statements and representations have been made to them in the negotiation and ensure those representations are included in the disclosure statements, and if a false statement or misrepresentation was made by the landlord in its disclosure statement then steps should be taken as soon as possible, and certainly within the first six months after the signing of the lease to terminate and/or seek damages.

If you would like more information, please contact David Nicoll at Townsends Business & Corporate Lawyers on (02) 8296 6222.