Homework Question - Leases: Outstanding Rent and Loss of Trade

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3 September 2019
Hi, I'm doing a homework question on IRAC about the following scenario:

- Jess takes out a 3 term lease for tenancy in a shopping centre to open a cafe at $4,000 payable at the beginning of each month. After having conversations with the landlord, Matt , she is told that she'd be eligible for a 3 year option at the end of the least. Jess was also told a butcher and bakery would be opening up a month after Jess' lease would commence and that the impression she'd be the only cafe operating in the centre. Taking this into account, Jess signs a lease that doesn't state anything about a 3 year option or the activities of other businesses.

- The butcher doesn't open.

- A year later, the supermarket goes bankrupt and Jess' cafe is severely impacted with loss of trade unto 50% for 2 months commencing the closure. Jess contacts Matt and states her issues with paying the rent. Matt gives Jess a reduction to $2,000 a month for 2 months only (after the supermarket closure).

- The baker in the centre also struggles and begins to start selling takeaway coffee and places tables and chairs inside the baker. Jess contact Matts and complains about the bakery selling coffee. Matt replies to Jess that he can't force them to stop selling coffee as there is nothing in the lease preventing them from doing so and to stop complaining and she had received a 2 month rent reduction.

- 6 months later, the cafe earnings return to normal, a new supermarket has opened and other vacant tenancies are now leased. Matt contacts Jess and tell her that she will need to repay the outstanding $4,000 during the period when the supermarket was closed and that he won't be renewing her lease at the end of the 3 years. Jess has just undergone renovations to the cafe under the presumption she'd be able to exercise an option to renew for 3 years.

Jess want to know if;
- A she has to repay to $4,000 in outstanding rent?
- And whether she has a claim or not against the landlord for the; supermarket closure, butcher never opening and the baker serving coffee?

Any help would be greatly appreciated!
Cheers, Bma

Rob Legat - SBPL

LawConnect (LawTap) Verified
16 February 2017
Gold Coast, Queensland
We won't do the homework for you. You show us your reasoning and ask questions about that, and we'll provide feedback. That's how it works.
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