Damages Under Commercial Leases – Part II

<CCLast week we looked at a landlords rights under a commercial lease where the tenant left the property and stopped making rental payments mid way through a lease.

Our firm brought the matter before the Tamworth Local Court before the lease term expired.

In short there were three periods in which the court had to consider the landlord’s right to damages under the lease.  To recap they were as follows:

  1. the time between the tenant ceasing to make rental payments and surrendering the keys;
  2. the time between the tenant surrendering the keys and the date the matter was brought before the court; and
  3. the time between the court date and the end of the lease which was not due to expire for a further six months.

In the first period, the tenant simply owes the landlord the rent not paid, as discussed last week.

In regard to the second period, the landlord could recover the unpaid rent because he was entitled to be compensated as though the contract had been completed without default.  During this period however, the landlord needed to show that he had taken reasonable steps to mitigate his loss. This meant demonstrating that steps had been taken to encourage other tenants to lease the empty premises.

The third period is legally tricky.  For that period, the court could not be sure that the landlord would continue to advertise the property or that the premises would remain empty.

There is no NSW case law on the point.  We researched and relied on a Western Australian case of Luxer Holdings v Glentham which stated that:

Where the matter is decided in court before the term of the lease expired, the normal damages are the total rent that would otherwise have been paid, less any amount the landlord has, or is likely to obtain, as profits from the use of the premises until the date the lease would have otherwise expired.”

We were able to prove that the landlord had taken all possible steps to mitigate its loss up to the date of the court hearing and that it was unlikely that the landlord would obtain any profit from the premises between the date of the court hearing and the expiry of the lease.

Our client was awarded the full value of the rent that he would have been paid had the tenant stayed in place until the end of the lease.

Should you wish to discuss any aspect of commercial leasing please contact Everingham Solomons, because Helping You is Our Business.

Click here for more information on Clint Coles.

The Employment Contract Checklist

jmhMany employers use employment contracts that are out-dated, or may not have employment contracts for their staff at all. Are the employment contracts your business uses up to scratch?

Employers need to ensure their employment contracts comply with the current legal requirements. This means contracts need to be compliant with the National Employment Standards and the applicable Modern Award.

The National Employment Standards provide for minimum entitlements, such as hours of work, leave entitlements, flexible working arrangements and more.

For example, Business Pty Ltd is employing a new full-time administrative assistant. All Business Pty Ltd’s full-time staff work a 40 hour week. Business Pty Ltd has been using the same style employment contract since 2003. The employment contract states that the new administrative assistant must work 40 hours per week, and anything more than that is considered overtime.

Business Pty Ltd hasn’t realised that the National Employment Standards provide that full-time employees are to work a maximum of 38 hours per week. While an extra 2 hours work per week will likely be considered to be ‘reasonable additional hours’ which the employer may reasonably ask the employee to work, the appropriate award overtime provisions will apply to those 2 hours.

For example, if the new administrative assistant will be covered by the Clerks – Private Sector Award, then he or she will need to be paid time and a half for those extra 2 hours of work every week.

Business Pty Ltd needs to ensure that their employment contract is amended to meet these minimum requirements.

So, are the employment contracts your business uses up to scratch?

The Employment Law team at Everingham Solomons is well equipped to assist you with all your workplace relations issues from contracts of employment and policy updates to termination of employees, redundancy correspondence and warning letters because Helping You is Our Business.

Click here for more information on Jessica Simmonds.