Retail lease may be binding even if not executed or registered
By Faith Laube
In brief - A retail lease was found to be binding despite not being executed by both parties or registered
The New South Wales Administrative Decisions Tribunal Appeal Panel (ADTAP) recently upheld the decision that a retail lease was binding even though it had not been executed by both parties or registered.
No lease documents sent for execution
Ms Roach leased a retail premises in Turramurra from Ms Kirkwood for a period of five years from 1 May 1998, with an option to renew for a further five years. In 2003 Ms Roach wrote to the executor of Ms Kirkwood's estate, Mr Braun, seeking to exercise the option. Despite the fact that no lease documents were ever sent to her for execution, Ms Roach nonetheless believed that she had a second five year lease.
Offer of a lease withdrawn
After lengthy correspondence, Ms Roach eventually executed a lease for one year, commencing 1 November 2007, with the rent payable in advance by monthly instalments of $3,198.58. This was $103.18 higher than the original lease executed in 1998.
On 28 March 2008 Mr Braun executed the lease. However, this was two days after the solicitors for Ms Roach emailed him withdrawing Ms Roach's offer of a lease.
Initial decision: lease repudiated
The Administrative Decisions Tribunal held that the parties entered into a lease for twelve months from 1 November 2007, that Ms Roach repudiated the lease and that Mr Braun accepted the repudiation, thereby terminating the lease on 28 March 2008. Ms Roach was ordered to pay damages for repudiation of the lease.
Ms Roach appealed this decision, arguing that the lease was not binding because it had not been executed by both parties and it had not been registered as required by the Retail Leases Act.
Actions signal clear intention to be bound by the lease
The ADTAP held that Ms Roach's actions signalled a clear intention to be bound by the lease, even though it had not yet been executed by both parties.
The ADTAP found that by executing the lease, instructing her solicitors to send it to the lessors' solicitors and raising no objection to Mr Braun's email stating that it 'does not matter really [when I execute the lease]' and that 'the lease is effective from the November date [stipulated in the lease]', Ms Roach had signalled her consent to be bound immediately by the lease.
Unregistered lease may still be enforceable as an agreement
The ADTAP found that the events giving rise to the obligations for registration under the Act had not occurred in this case. The ADTAP also held that the definition of lease under the Act indicates that an enforceable lease may arise under the Act even though it is not registered.
Furthermore, they reasoned that an unregistered lease of any kind will still be enforceable as an agreement between the parties to it.