Leasing Problems at the Happy Home Base - Law Assignment Help

Assignment Task:

Leasing Problems at the Happy Home Base

On March 1, 2020, Jones, owner of a local restaurant came to see you. He is very worried about the lease on his well-known restaurant and is seeking your advice (as he is aware you are doing business law). Jones’ restaurant has been an anchor tenant of Commercial Malls’ Happy Home Base shopping center for nearly two decades. His current lease is set to run out in 2021 and he has just substantially renovated the restaurant. Not surprisingly, he is keen to continue on in that location on favorable terms. On February 1, 2020, Jones emailed Dick indicating his intention to continue on in the site post-2021 and raising discussions the two had around the current lease, making it clear he considers Dick has a contractual promise of a lease extension beyond 2021. Jones was alarmed to get a letter shortly after from Dick not only indicating that no renewal would be forthcoming but, to the contrary, asserting that as Jones was in violation of a condition of their contract, CommercialMalls Pty Ltd was giving Jones notice to vacate. Under the lease term they cite, Jones must do so in 21 days with a daily liquidated damages rate of $10,000 applying to each
day beyond that date. As Jones believes he could not possibly move out (vacate) in less than a month – and absolutely does not want to go regardless – he is concerned as to:
1) Whether Dick’s termination notice is valid
2) Whether on the facts as set out below, Dick has a contractual obligation to grant Jones a renewal extension ‘as promised as part of the 2016 agreement’.
3) What options, including compensation measures, he is either entitled to recover or may be at risk of having to pay depending on the legal outcome.
4) The most commercially sensible course of action you would recommend with reference to the likely legal outcomes.

Overview:
The background to Jones’ dispute with CommercialMalls (CM) goes to the construction of the terms of their 2016 contract. Although when he entered the lease in 2001 on an ‘incentivised’ basis, his rent was $1500/commercial month based on a five year contract and including 2 renewal options subject to performance, the rent has crept up slowly since then. In 2016 Jones and Dick negotiated an extension at a rental rate of $2700 which includes the clauses extracted below. Jones is keen to stay because his restaurant is well known in that venue, the lease is reasonable and, importantly, because in line with agreements struck in 2016, he has just put a lot of money into renovating the premises.

The Task
Please advise Jones as to his likely best commercial option going forward. This should include at a minimum reference to:
• his likely legal position (highlighting the relevant legal principles and law that arise under these facts)
• the legal consequences and risks Jones faces going forward if he ignores the termination notice and goes beyond the 21 days to vacate and/or doesn’t exit until 1 April 2020.
• what legal remedies he is most likely to be entitled to on these facts
• whether Jones can claim for a further 5 year lease on existing terms for the five year period
• recommendation of a commercially sensible course of action

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