<Last 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:
the time between the tenant ceasing to make rental payments and surrendering the keys;
the time between the tenant surrendering the keys and the date the matter was brought before the court; and
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.
An interesting legal point arose recently in a case that I conducted in the Local Court. The question centred around the damages that a landlord is entitled to recover from a commercial tenant that breaches a lease.
Six months into the lease the tenant stopped making rental payments. Nine months into the lease, the tenant surrendered the keys to the premises and moved out.
Court proceedings were brought by the landlord and when the matter came before the Tamworth Local Court, about six months of the original lease term remained yet to expire.
The court had to consider whether the landlord was able to recover from the tenant, rental payments for three separate periods:
the time between the tenant ceasing to make rental payments and surrendering the keys;
the time between the tenant surrendering the keys and the date the matter was brought before the court; and
the time between the court date and the end of the lease which was not due to expire for a further six months.
Leases are contracts. There are two general contractual principles which have relevance.
Firstly, where a contract is unlawfully terminated by one party, the other party is entitled to recover damages so as to place him or her in the position that he or she would have been in, if the contract had been completed .
Secondly, the aggrieved party must take reasonable steps to mitigate his/her loss. You cannot claim for a loss that you have not attempted to avoid.
In respect to the first period of time, the application of the law is relatively simple. The tenant owes the landlord money just like a debt. The landlord cannot mitigate their loss because the tenant was still in the premises.
Establishing the landlord’s rights to damages in the second and third periods is a little more complex and requires further explanation which will be explored in an article next week.
If you have any questions regarding commercial leases, please do not hesitate to contact Everingham Solomons because, Helping You is Our Business.
The above song title written by Louis Jordan, of course, is used in a different context when the question is asked in a legal proceeding. From biblical times it is told that Solomon was required to decide the parentage of a child and to the present time, disputes continue over parentage.
Thankfully, science can, in many cases, put the question beyond dispute, following the advent of DNA testing.
When a parentage of a child is at issue under family law proceedings, the Court may require a “parenting testing procedure” to be carried out to help in determining the parentage. Such an order may be made as follows:
at the request of a party to the proceedings;
at the request of a party representing a child;
at the Court’s own initiative.
A Court will not order parenting testing merely because it has been requested to do so. The applicant must show an honest and reasonable belief that there is doubt as to paternity. The Court will objectively assess the circumstances giving rise to the applicant’s belief.
In the case of FR (1992) 15 FAMLR 533 it was held :
“…there must be an honest, bona fide, and reasonable belief as to the doubt (in relation to the parentage). An objective test is not to be applied that evidence in such an application is seldom, (if ever) sufficient to enable the Court to make an objective conclusion.”
Should a party refuse to comply with an Order for parenting testing, the Court may draw such inferences from the failure to undergo testing as appears just in the circumstances.
At Everingham Solomons we have the expertise and experience to assist you with all legal matters associated with Family Law because Helping You is Our Business.
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