Rejected Lease

[David77]

Hi, Just wondering on any help in regards to a Rejected lease renewal.

We lease a "restaurant" property, and the lease was up for "option to renew" by the 2nd August 2012 for another 5years (lease expires 12th November 2012).

We bought the business approx 15months ago and took over the lease from the previous owner with the permission of the lessor.
Our solicitor gave notice of intention to renew the current lease on the 2nd of August to the lessors solicitor.

Approx 4 months ago we went into partnership with another person and before papers were signed, the partner had a discussion with the Lessor and was told their was no problem with continuing the current lease.

The lessor has stated in the rejection letter that we are in breach of the current lease. We did receive a letter in May 2012 stating that we were being cautioned that the we will be in risk of forfeiture of the lease for not staying open to the "minimum stated time in the lease clause". Also in this letter said "the lease renewal should have been served a day earlier".
Since that letter we have stayed open to the minimum time required to close of an evening.
I have asked for proof of us not following the lease terms (still waiting for a response).
I have also found out that the lessor has gone on hearsay of his staff members and another business attached to the same building of our times.
The only proof i have of our closing times is our Eftpos settlement time.

Any help in this situation or guidance would be appreciated

 

[HotRod]

Hi, Just wondering on any help in regards to a Rejected lease renewal.

We lease a "restaurant" property, and the lease was up for "option to renew" by the 2nd August 2012 for another 5years (lease expires 12th November 2012).

We bought the business approx 15months ago and took over the lease from the previous owner with the permission of the lessor.
Our solicitor gave notice of intention to renew the current lease on the 2nd of August to the lessors solicitor.

Approx 4 months ago we went into partnership with another person and before papers were signed, the partner had a discussion with the Lessor and was told their was no problem with continuing the current lease.

The lessor has stated in the rejection letter that we are in breach of the current lease. We did receive a letter in May 2012 stating that we were being cautioned that the we will be in risk of forfeiture of the lease for not staying open to the "minimum stated time in the lease clause". Also in this letter said "the lease renewal should have been served a day earlier".
Since that letter we have stayed open to the minimum time required to close of an evening.
I have asked for proof of us not following the lease terms (still waiting for a response).
I have also found out that the lessor has gone on hearsay of his staff members and another business attached to the same building of our times.
The only proof i have of our closing times is our Eftpos settlement time.

Any help in this situation or guidance would be appreciated

Lawyer up.

 

[M.Investigator]

Sounds like a very complex situation, and quite frustrating too.

Also, a rejected lease will seem to have negative effects on running your business.

So complicated , that I really do think it's best to talk to your solicitor about it.
What has your solicitor recommended?

Also, how long have you been waiting for the proof from the lessor?

 

[David77]

We are currently dealing through our solicitor in regards to this problem.

We have been waiting only a couple of days currently for the proof from the lessor's solicitor.
It did take the Lessor's solicitor 17 days to send the rejection letter to my solicitor ,also I have the opinion that the lessor is trying to drag it out as long as possible (This is a personal opinion though).

 

[Terry_w]

Notice to exercise the option must be strictly followed and if you were a day late that may be enough to invalidate the notice to renew.

Something similar happened to a large restaurant in Sydney and they took the matter to the Supreme Court and lost.

 

[jim1964]

Sounds like your landlord is a complete "Tool".Call their bluff,seriously,a long term,good paying tenant is surely better than none.Sounds like the landlord may not be telling you everything,having a underlying agenda maybe.

 

[David77]

Notice to exercise the option must be strictly followed and if you were a day late that may be enough to invalidate the notice to renew.

Something similar happened to a large restaurant in Sydney and they took the matter to the Supreme Court and lost.

The option to renew the lease was to be done by the end of the trading day on 2nd of August as stated in the lease.
Our solicitor served the notice to renew the lease to the lessor's solicitor on the 2nd of August, also a letter was given to main Business office of the lessor and a letter also was delivered to the lessor's personal address on the same day.

In my understanding the meaning of "option to renew by the 2nd of August" meant by the close of business on that day??

 

[Terry_w]

The option to renew the lease was to be done by the end of the trading day on 2nd of August as stated in the lease.
Our solicitor served the notice to renew the lease to the lessor's solicitor on the 2nd of August, also a letter was given to main Business office of the lessor and a letter also was delivered to the lessor's personal address on the same day.

In my understanding the meaning of "option to renew by the 2nd of August" meant by the close of business on that day??

Unless there was a time specified in the lease then it would be, generally, close of business - you could even argue until 11.59pm perhaps.

Wonder why the landlord wrote "the lease renewal should have been served a day earlier".

 

[HotRod]

The option to renew the lease was to be done by the end of the trading day on 2nd of August as stated in the lease.
Our solicitor served the notice to renew the lease to the lessor's solicitor on the 2nd of August, also a letter was given to main Business office of the lessor and a letter also was delivered to the lessor's personal address on the same day.

In my understanding the meaning of "option to renew by the 2nd of August" meant by the close of business on that day??

Could be construed to be the 1st. Maybe should have said "by 4pm on 2nd August"?????

I'm no lawyer, just saying.

 

[Terry_w]

I see where they are coming from now.

By means before. eg By 2pm means any time up to 2pm.

By 2 Aug could therefore mean anytime up to 2 Aug.

Alternatively, by 2 Aug could be up to and including 2 Aug.

You need to carefully read the contract and see if there are any further clauses which shed light on which interpretation is used.

There is case law on this too.

Ideally, in hindsight, a time should have been listed.

 

[HotRod]

At the same time, it will be a big PITA spending money on lawyers, going to court, just on the interpretation, that has the effect of adding/removing 12 or so hours in the contract.

Just wish perspective, pragmatism and commone sense prevailed more often in this world.

 

[chilliblue]

Is the property privately managed or is there an agent?

 

[David77]

Is the property privately managed or is there an agent?

The property is on the same property as a resort and owned by the resort "whom is a company". So the agent is the resort.

 

[Scott No Mates]

To ask a stupid question or 3, why was the option to be exercised 3 months 10 days prior to expiry? Was there any other subsisting breach of lease? Are there any other monies owing to the Lessor?

 

[David77]

To ask a stupid question or 3, why was the option to be exercised 3 months 10 days prior to expiry? Was there any other subsisting breach of lease? Are there any other monies owing to the Lessor?

In the lease it state's. "option to renew lease must be excised a max of 6months to a min of 3months prior to expiry of lease"

There is no money owing to the lessor.

There was just the 1 letter as said earlier for cautioning us on the hours required by the lease, but there has been no further letters of saying "we have official Breached the lease" just the caution.
Also in the lease after reading it a few more times yesterday, i noticed in the clauses to do with the breach's. it state's, "If any breach of the lease is confirmed and written notice is given, the lessor WILL take possession of the leased property"

And my apologise, i stated the lease expired 12th November originally in start but the expiry of the lease was the 2nd November.

 

[Scott No Mates]

Generally speaking if it is 3 months prior this is from the expiry date & includes the last day not the last day minus one.

To ask another silly question, why did you wait to the last moment to exercise the option?

 

[David77]

Generally speaking if it is 3 months prior this is from the expiry date & includes the last day not the last day minus one.

To ask another silly question, why did you wait to the last moment to exercise the option?

It was an over sight on our part to leave it to the last day, we were in the middle of a partnership agreement and until the finalisation of the lease it was noticed.

 

[Scott No Mates]

Dave, go back over the option clause, there will be conditions for acceptance. There will also be a condition that you are not in breach of the lease (eg trading hours) and note a time for compliance/remedy of the breach.

If you have complied with the timeframe, submit copies of eftpos transaction report in evidence (I trust you're not paying turnover rent & having to declare your figures).

 

[jrc]

If the lease is in NSW look at Section 129 Conveyancing Act re relief against forfeiture. There was an article in API several years ago

 

[Terry_w]

If the lease is in NSW look at Section 129 Conveyancing Act re relief against forfeiture. There was an article in API several years ago

Interesting, but would forfeiture include loss by the landlord not renewing the lease? Possibly.