QLD Commercial Property Incorrectly Advertised - Void Commercial Lease?

[john-atw]

In July 2013, I signed a 3-year commercial lease to run my automotive retail business from but due to insufficient funds by July 2015, I could not pay my rent anymore & moved out in December 2015, still being 5-6 months in arrears & 6 months remaining on the lease.

The tenant to take over the lease realised that the size of the building was about 30 square meters short of what it was advertised at when I moved in. My question is, can this discrepancy void the lease as I have been overpaying for 2 years at $100+/square meter?

Also, I am in the process of refinancing my home loan to repay the arrears to the landlord but he is proceeding with legal action. I thought my finance broker told me that while I am in the process of trying to get the money, no legal proceedings can take place, is this correct?

 

[Sophea]

Providing false information about the size of premises for lease would likely amount to negligent misstatement or false representation, entitling the injured party to compensatory damages. The amount you would be entitled to would generally be the difference between the price paid and the true value of the property. Therefore, if the lease value was calculated based on square meterage, then you may have suffered "loss" which could be compensated.

Since you are so far into the contract, however, your failure to action it sooner may be deemed a waiver of your right to recover compensation.

If the guy is suing you it's worth raising as a defence, at least, to reduce the quantum of the claim. And yes he can institute legal proceedings notwithstanding the fact that you are taking steps to get the money to pay him, although it may ultimately end up costing him legal fees unnecessarily if you come through with the money and the proceedings are no longer required. You will also be liable to pay some legal costs in addition to the rent that is overdue if he has instituted proceedings too. It will be calculated on a court scale, though, not what his lawyers charged.

 

[john-atw]

Providing false information about the size of premises for lease would likely amount to negligent misstatement or false representation, entitling the injured party to compensatory damages. The amount you would be entitled to would generally be the difference between the price paid and the true value of the property. Therefore, if the lease value was calculated based on square meterage, then you may have suffered "loss" which could be compensated.

Since you are so far into the contract, however, your failure to action it sooner may be deemed a waiver of your right to recover compensation.

If the guy is suing you it's worth raising as a defence, at least, to reduce the quantum of the claim. And yes he can institute legal proceedings notwithstanding the fact that you are taking steps to get the money to pay him, although it may ultimately end up costing him legal fees unnecessarily if you come through with the money and the proceedings are no longer required. You will also be liable to pay some legal costs in addition to the rent that is overdue if he has instituted proceedings too. It will be calculated on a court scale, though, not what his lawyers charged.

Thank you for your reply Sophea, so you don't think I have a case for misleading or false information on the lease forms re the size of the building? As for not taking action earlier, I don't think most people measure the building size when they move in, you would think the real estate agent and/or the landlord would make sure that information is correct before advertising it.

As for legal proceedings, he may be in his rights to proceed but it would be in everyone's best interest to wait as the settlement will be in about 2 weeks time & it seems silly to spend money unnecessarily until then.

 

[Sophea]

You may have a case for misrepresentation if you can prove that the misrepresentation induced you to enter into the lease. However, I don't know how long after the fact you can make a claim. I'm a little unpolished on that area of law.

Did you actually sign a settlement agreement? Or have you just told him that you are getting the money together. If you actually came to a settlement and agreed to pay a settlement amount by a certain date, then proceedings should be halted, however if no settlement agreement was signed he is free to proceed with the action.