Dum Dum Pty Limited & Cohen Bros Limited trading as Inland Commercial Properties

Instructions
This assignment is worth 40% of the total marks for this unit. This assignment is a
3,000 (+/- 10% of the word limit is allowed) word written practical advice.
The assessment task is designed to test your understanding of the key provisions of
the Retail Leases Act 1994 (NSW) as they apply to commercial retail lessees and
lessors. It is also designed to test your ability to apply some of the key provisions of
the Act to a factual scenario. A copy of the Act has been attached for your
reference.
Marks: Marks out of 40 will be awarded in relation to the quality of the academic
discussion of the topic set. Referencing, footnoting and bibliography are all
assessable aspects of the assignment.
Word count: The word count limit will be strictly enforced. Please write the total
word count for your assignment on the cover page. The word limit of 3000 words
does not include words in the footnotes, or bibliography. Footnotes and bibliography
will be considered in grading of the assignment. Any words beyond the allowed word
count (+/- 10% allowance being considered) will not be read. A deduction of 1 mark
will apply for every 50 words above the individual and total word limits for the
assignment.
References: You must cite a maximum of six (6) different scholarly academic
references (including one being the Act itself), which must include primary sources
(court decisions, statutes and administrative rules and regulations).
Due date: The assignment must be submitted by 6 p.m. Friday, 27th September
2019. Deductions apply for late submissions.
Late submission: Assignments cannot be submitted late without prior approval of
the unit coordinator and only in extenuating circumstances supported by evidence.
Assignments submitted late without prior approval will not be graded.
Retail Leases Act Problem Question
On 25 June 2014, Dum Dum Pty Limited & Cohen Bros Limited trading as Inland
Commercial Properties (hereafter the “Lessor”) purchased a shopping centre at
Mittagong, NSW, known as Esperanto Square with a number of tenancies, including
a monthly tenancy to Fresh Bounty Pty Ltd (“Fresh Bounty”) of Shops 2, 3 and 4 of
Esperanto Square (“the Premises”). The permitted use of the Premises under the
Fresh Bounty lease was ‘retail sale of fruit and vegetables’. Fresh Bounty carried on
business under the name of ‘Mittagong’s Fresh Fruit World”.
The registered lease to Fresh Bounty from the previous owners of the shopping
centre had expired on 5 October 2013. The lease, however, continued as a monthly
tenancy at a rental of $5,830.00 when the new operators of the business, Dario
Simpson, Walter Cameron and Iona Cameron (hereafter the “Lessees”) purchased
the business and took possession of the shops on 18 September 2014.
The Lessor held negotiations with the new operators of the business, which
confirmed:
1. the continuance of the monthly rental ($5830);
2. the Lessor’s intention to enlarge the shopping centre through a
Development Application (DA) already lodged with the Council;
3. the necessity for the Lessees to vacate the Premises during the
construction period; and
4. grant of a new lease subject to DA approval
After the DA was approved on 25 November 2014, the parties resumed negotiations
over a new lease. On 22 February 2015, the Lessor’s agent delivered a five-page
letter of that date to the Lessees. The letter formally set out terms of an agreement
for the future lease. The letter set out that the term of the lease would be 5 years,
with an option to renew for a further five years. No commencement date was
specified; but instead, the letter stated that the lease would commence ‘at handover,
estimated to be in the last three months of 2015’. The letter also asked for a “security
deposit” of $5,000 to be “credited to your rental account”.
The Lessor’s letter of 22 February 2015 also contained two separate clauses
apparently designed to defer the creation of legal obligations between the parties
until formal lease documents had been prepared and signed. One of them, which
appeared beside the subheading ‘Documentation’ read: –
“The lessor’s acceptance of this offer will not under any circumstances create a
legally enforceable lease between the parties. The lessor’s solicitors will prepare the
lease, incorporating the above terms and conditions and no agreement shall be
deemed to legally enforceable until it is accepted and executed by both parties.”
A further clause, appearing under the heading ‘Acknowledgement’, stated:
“Occupation of the premises will not be granted until the lease documentation has
been completed to the satisfaction of the lessor’s solicitors, and subject to the
provision of bank guarantee, public risk insurance and payment of all fees by the
lessees.”
Finally, another clause under the same heading purported to preclude the lessees
from relying on any promise or representation by the lessor that was not recorded in
‘this application to lease’.
On 8 March 2015 at a meeting between the parties, the Lessees signed the letter of
22 February 2015 after the Lessor agreed to and initialled an amendment (to lower
the annual rent review percentage from 4% to 3%). The Lessees also handed to the
Lessor the security deposit of $5,000 in the form of a cheque.
By about the middle of March 2015, the Lessor decided to defer plans for the
redevelopment of the centre and they re-credited the Lessee’s rental account with
$5,000. Ultimately, the Lessor served a Notice to Quit on the Lessees dated 31
August 2015 on the basis that the Lessees were still in possession on a monthly
tenancy. The Lessees filed an application with the New South Wales Civil and
Administrative Tribunal (NCAT) claiming that they had a lease for a term of 5 years
from 8 March 2015.
Answer the following questions:
a) The Retail Leases Act 1994 (NSW) was amended on 1 July 2017. Provide a brief
outline of the key changes made to the Act that affect both landlords and tenants in
NSW. (500 words) – There should be approx. 10 of them. Look at the
commentaries on the Retail Leases Act. See what cases the commentaries cite
in their explanations. Only expected to cite the Act and the case law.
Advise the Lessees as to the following issues, with reference to specific relevant
provisions of the Retail Leases Act 1994 (NSW) and case law:
2. b) Was a new lease granted in September 2014 when the Lessees (as the
new operator of the business) took possession of the monthly tenancy held by
Fresh Bounty Pty Ltd by assignment with the consent of the Lessor? (1000
words) – Is a retail lease deemed created after signing, or prepartorial
work?
3. c) Was a binding contract created when the Lessees signed the Lessor’s 22
February 2015 letter? (1000 words)
4. d) Should the term of the lease be for a period of 5 years commencing 8
March 2015? (500 words)

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