{"content":"\u003cdiv id=\"node-10\" class=\"node clear-block\"\u003e\u003ch2\u003eDeemed Agreement for Lease\u003c\/h2\u003e\u003cdiv class=\"content\"\u003e\u003cdiv class=\"field field-type-text field-field-subtitle\"\u003e\n\t\t\t  \t\t\t\t\u003cdiv class=\"field-items\"\u003e\n\t\t\t              \t\t\u003cdiv class=\"field-item odd\"\u003eAgreement for lease established by conduct of property manager and acts of part performance\u003c\/div\u003e\n\t\t\t              \t\u003c\/div\u003e\n\t\t\t            \u003c\/div\u003e\u003cp\u003eThe appellant had an unregistered seven year lease of commercial premises with a further five year option.\u0026nbsp; The premises were sold to the respondent (Cannington)- the tenant knew of the sale.\u003c\/p\u003e\u003cp\u003eCannington had received legal advice that it was not bound by the Lease.\u0026nbsp; After settlement, Cannington advised its property manager for the premises (also the vendor\/lessor\u0026#39;s property manager) of its position and that it intended to relet the property at the current market rental, although this position was not communicated to Lighting.\u0026nbsp; The Lease was unenforceable against Cannington, but the tenant remained in possession of the premises, ie it became a tenant at will.\u0026nbsp; The tenant incorrectly believed that Cannington would take the place of the lessor under the Lease.\u0026nbsp; It did not register the lease or lodge a caveat to protect its interest.\u003c\/p\u003e\u003cp\u003eThe property manager sent an invoice to the tenant, which included charges for management fees, GST and \u0026quot;retail rent\u0026quot; at the same monthly rate as under the Lease.\u003c\/p\u003e\u003cp\u003eCannington appointed new agents to look for a new lessee.\u0026nbsp; Cannington\u0026#39;s solicitors wrote to the tenant to terminate any lease held by the tenant.\u003c\/p\u003e\u003cp\u003eThe tenant claimed that an agreement to lease arose where the tenant and Cannington\u0026#39;s property manager (as agent) agreed, by their conduct, that the continuing occupation of the premises was to be subject to the terms and conditions of the Lease (with appropriate modifications, such as the commencement date).\u003c\/p\u003e\u003cp\u003eThe court reviewed the criteria for determining whether a contract could be established in the absence of express offer and acceptance, and noted that the subjective intention of the parties was irrelevant.\u0026nbsp; The test requires an objective assessment of the dealings between the parties to determine whether it may be inferred that the parties entered into a contract and, if so, its terms.\u003c\/p\u003e\u003cp\u003eThe judge identified the following relevant circumstances:\u003c\/p\u003e\u003cul\u003e\u003cli\u003ethe Lease did not bind Cannington\u003c\/li\u003e\u003cli\u003ethe tenant was a tenant at will; a monthly period tenant\u003c\/li\u003e\u003cli\u003ethe Lease was a tripartite deed (three guarantors were parties)\u003c\/li\u003e\u003cli\u003eone of the guarantors was not involved in the communications between the tenant and Cannington\u0026sbquo;\u00c4\u00f4s property manager\u003c\/li\u003e\u003cli\u003ethere was no suggestion of, or negotiation relating to, a new lease between the parties; in particular, there was no discussion of the proposed term for such a lease.\u003c\/li\u003e\u003c\/ul\u003e\u003cp\u003eOn appeal the Court allowed the appeal, holding that the tenant has proven the alleged agreement for lease, and that it had been partly performed.\u0026nbsp; They ordered that the agreement be specifically performed - ie that the parties execute and exchange a lease of the premises containing (as far as possible) the same terms and conditions as the Lease, subject to the tenant also procuring and delivering equivalent guarantees and indemnities as were provided under the Lease.\u003c\/p\u003e\u003cp\u003eThe case also highlights the role of a managing agent in binding its principal.\u0026nbsp; In this case the new owner of the property had received clear legal advice that it was not bound by the lease negotiated between the previous owner and the tenant.\u0026nbsp; The owner had advised its agent that it intended to relet the premises.\u0026nbsp; However, due to the actions of the managing agent through various correspondence with the tenant, the tenant was able to establish that an agreement for lease should be binding on the new owner.\u003c\/p\u003e\u003cp\u003eThe court outlined steps that could have been taken by the managing agent to avoid this situation arising, including:\u003c\/p\u003e\u003cul\u003e\u003cli\u003ein all correspondence reserving the rights of the lessor to require vacant possession of the property and not to be bound by an prior lease\u003c\/li\u003e\u003cli\u003econfirming in writing to the tenant that the new owner did not consider there was any agreement for lease in place between the those parties.\u003c\/li\u003e\u003c\/ul\u003e\u003c\/div\u003e\u003c\/div\u003e","type":"update"}