Posted: June 25th, 2020

Samantha is the director and sole shareholder of the company

Samantha is the director and sole shareholder of the company Town and Country Australia Pty Ltd (T+C). T+C owns the Coolangatta Shopping Centre on the Gold Coast, Queensland (‘the Centre’). The Centre has 42 specialty stores, is in a unique location across from the beach and includes a Woolworths supermarket. Samantha also manages the Centre on behalf of T+C. Samantha’s responsibilities include dealing with current and potential lessees.Karen operates a hairdressing business called “Discover Yourself Salon”. Karen leased one of the shops from T+C in May 2013. The lease agreement is for three years at $30,000 per year (being the market rate) with Consumer Price Index (CPI) increments to the lease payments each year. A condition of the lease agreement is that Karen had to fit out the shop with a kitchenette, hairdressing basins, a toilet facility, and surveillance equipment for the shop (total $30,000). The lease agreement provides that the lessor retains ownership of these items when the lease ends. At the time, Karen was particularly concerned with making a profit during the short term of the lease after paying the up-front cost and sought a clause in the lease agreement which would give her the option of renewing the lease for a further three years. Samantha refused Karen’s request. Samantha said “none of the stores except Woolworths have an option in their lease agreement – it would set a precedent for the other stores if T+C gave you an option!” Samantha then said to Karen “But don’t worry! T+C wants to keep you at the Centre long term because your store will attract a lot of customers to the Centre. If you do the fit out, I can assure you that you will be taken care of when the lease is up for renewal at the end of April 2016” (‘the Statement’).Based on the Statement, Karen signed the lease agreement and did the fit out of the store. Queensland legislation requires all lease agreements to be in writing. The lease agreement provided that at the end of the lease, Karen must vacate the premises and that no renewal or extension of the lease will be granted. Discover Yourself Salon has been very successful. Karen’s business has experienced an increase in net profit of 20% each year since the lease commenced. In the period May 2013 to April 2014 the business generated a net profit of $60,000.Derrick is Samantha’s brother and is interested in leasing a shop in the Centre. Derrick has been operating a surf wear business from the back of his garage at home but now needs space to expand the business. In February 2016, Derrick e-mailed Samantha as to whether there were any available shops coming up for lease. Samantha replied by e-mail “in fact there is Derrick!” Referring to Karen’s shop, Samantha then typed “you will need to remove the hairdressing basins (at your cost), but you should be right to go from May 2016”. Samantha then remembered the Statement to Karen and sought advice from Adele at Tops Law Firm on behalf of T+C to see whether T+C could enter a lease with Derrick, despite the Statement. Prior to receiving the advice, Samantha (on behalf of T+C) signed a client agreement which set out the services to be provided by Tops Law Firm, the likely costs and an exclusion clause which provided:Tops Law Firm disclaims and excludes all liability for the provision of its services to clients, whether express or implied.Adele’s advice to Samantha was to offer Karen a renewal of the lease but at a very high rent so there would be no way that Karen would accept the terms of the lease renewal. Tops Law Firm charged T+C $1,500 for the advice. Based on Adele’s legal advice, Samantha sent Derrick a lease proposal via e-mail on 1 March 2016. The proposal set out the essential terms of a lease agreement including the lease term and rent, being three years at $35,000 per year with CPI increments each year, which was the current market rate for similar space in the Centre. In the e-mail Samantha asked Derrick, “could you please confirm via return e-mail that the terms are acceptable so that I can instruct T+C’s solicitor to prepare the lease agreement?” On 8 March 2016, Derrick advised by return e-mail that “I’m happy with the terms proposed in your e-mail of 1 March 2016. Thanks sister! Please send the lease agreement for me to sign as soon as possible”. Samantha read Derrick’s e-mail the next day. Adele at Tops Law Firm subsequently sent the lease agreement to Derrick confirming that it was “consistent with the proposal sent to you on 1 March 2016” and seeking Derrick’s signature.On 10 March 2016, Karen asked Samantha for a lease renewal. Samantha proposed a three year renewal at $85,000 per year for the first year and CPI increments in the second and third years. Samantha provided a lease agreement which included the terms of the lease renewal and gave Karen 7 days to sign the lease agreement. Karen was aghast at the lease terms and had an asthma attack brought on by the stress of potentially losing her business in the Centre and having to terminate the employment of her staff. There are very few available locations for moving her business in the Coolangatta area at such short notice, the business may need to close for a short period of time and there will be significant costs in transferring and fitting out new premises.Unhappy with Adele’s advice and thinking this may become a very serious legal matter, Samantha approaches you, an expert in contract law, on 15 March 2016 for advice. At the time of the advice, Derrick has not signed the lease agreement.Advise T+C whether:There is a binding contract between T+C and Derrick (8 marks)There is a binding collateral contract in respect of the Statement (4 marks)Karen can rely on promissory estoppel in respect of the Statement, as well as the remedies (if any) for Karen (10 marks)Tops Law Firm is in breach of its contract with T+C and if so, whether the exclusion clause prevents T+C from claiming a remedy for breach of contract (8 marks)DO NOT consider the Retail Shop Leases Act 1994 (Qld) in your answer.

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