Written by Ben Malone and Leisha de Aboitiz on August 1, 2016
A look at a recent High Court case highlighting the importance of ensuring that any option to renew is properly documented: Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor  HCA 26
Lease negotiations can often be lengthy and take place over a number of weeks and months. It’s not unusual for there to be an abundance of emails back and forth, telecons, face to face meetings between the parties (and their representatives) from the early initial commercial discussions to the time that the lease is signed up.
A recent High Court case (Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor  HCA 26) has considered whether an informal verbal assurance from the landlord to an arguably anxious tenant during negotiations was sufficient to bind the landlord to grant a further 5 year lease once the initial term had expired.
“(a) the Landlord will renew this Lease, and on what terms (this may include a requirement to refurbish the Premises or to move to different premises…);
(b) the Landlord will allow the Tenant to occupy the Premises on a monthly tenancy after the Expiry Date; or
(c) the Landlord will require the Tenant to vacate the Premises by the Expiry Date.”
There were 2 main issues that the High Court had to consider, namely:
1. whether there was a collateral contract created by Crown’s representations under which Crown was obliged to offer Cosmopolitan a further 5 year lease; or
2. alternatively, whether Crown was estopped from denying an obligation to grant a further 5 year lease.
Having regard to the assessments carried out by the lower Courts, a majority of the High Court determined that:
Although in this case the landlord’s statement was not of sufficient quality to amount to a contractual promise, this case is a good reminder for landlords (and leasing agents) to be careful about the statements or assurances made to tenants during lease negotiations. An “entire agreement” clause in the HOA or the lease itself is not “bulletproof”, and a Court will look beyond this to consider objectively (not subjectively) whether a party intended for its separate promise or assurance to be contractually binding.
Likewise, it is important for tenants to ensure that any assurance given by the landlord is adequately reflected in the lease documentation. Failure to do so may have significant financial consequences – in this regard, we note that Cosmopolitan entered into external administration shortly after the leases ended in 2010.
For further information, please contact Leisha De Aboitiz or Ben Malone.
Disclaimer: This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought having regard to any particular facts or circumstances.
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February 10, 2023
We are delighted that Massons has been selected as an “Excellence Awardee” in the category of “Boutique Firm of the Year” at the 2022 Australasian Law Awards.
Thank you to all of our wonderful clients who have supported our nomination in this category, and to our amazing lawyers and support staff for making this possible!
Wishing all the other Awardees the best of luck and looking forward to the Gala Dinner. A night out with our team is always cause for celebration – win, lose or draw!!
March 23, 2022
We are excited about our inclusion in Doyle’s Guide for 2022 for NSW in the following categories:
Massons – Leading Property & Real Estate Law Firms
Jodie Masson – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Leisha de Aboitiz – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Ben Malone – Property & Real Estate Law Rising Stars
Thank you to all of our peers and wonderful clients who have helped to achieve this recognition.
March 14, 2022
February 28, 2022
We are excited to announce the appointment of Alex Ho as a Senior Associate at Massons. Alex started with us as a paralegal and has achieved this milestone in record time due to his hard work, his ability to develop and sustain fantastic relationships with clients, his engagement in constantly seeking to improve himself and others in equal measure, and his absolutely infectious enthusiasm. We couldn’t be prouder! Congratulations Alex!
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