In Short
- Misleading and deceptive conduct is prohibited in leasing under both Commonwealth and state laws.
- Tenants can recover damages for losses caused by misleading or deceptive conduct in leases or disclosure statements.
- Specific remedies and time limits apply, varying by state.
Tips for Businesses
Ensure all lease-related information you provide is accurate and not misleading, especially in lease disclosure statements. Misleading conduct can lead to costly legal disputes, with tenants potentially claiming damages. If you’re unsure about the accuracy of any statements, seek legal advice to avoid liability.
Both Commonwealth and state law prohibit misleading and deceptive conduct. Additionally, a range of remedies are available for a tenant suffering from misleading and deceptive conduct. This liability against a landlord will arise whether or not the landlord intended to mislead or deceive the tenant with their conduct. Therefore, you must understand what kind of conduct these laws prohibit to avoid responsibility. This article will explain what you need to know about misleading and deceptive conduct in the context of leasing.
This guide will help you to understand your options when you purchase a business with leased premises.
Prohibition on Misleading and Deceptive Conduct in Leasing & Remedies Available
Section 18 of the Australian Consumer Law prohibits misleading and deceptive conduct. This prohibition extends to all leases in all states. However, some states, namely New South Wales and Western Australia, specifically address misleading and deceptive conduct in leases within their respective retail legislation.
The prohibitions in New South Wales and Western Australia are explained in more detail below:
1. New South Wales
The Retail Leases Act provides explicitly that a retail shop must not, in connection with the lease, engage in conduct that is:
- misleading or deceptive to another party to the lease; or
- likely to mislead or deceive another party to the lease.
Further, the legislation provides that any party or former party of a retail shop lease who suffers loss or damage because of misleading or deceptive conduct may recover the amount of loss or damage by lodging a claim under the Act.
2. Western Australia
Similar to NSW, the Commercial Tenancy (Retail Shops) Agreements Act specifically prohibits misleading and deceptive conduct. The definition of misleading and deceptive conduct is conduct that is:
- misleading or deceptive conduct to another party to the lease; or
- likely to mislead or deceive another party to the lease.
Lease Disclosure Statements
Additionally, most states have laws concerning misleading, deceptive, or false information provided in lease disclosure statements. Indeed, all information provided to the tenant within the lease disclosure statement must be accurate. Remedies are in place for tenants who receive incorrect information or misleading and deceptive conduct within their lease disclosure statement, including monetary damages.
This window to recover damages for any misleading or deceptive statements provided in a disclosure statement is typically between 3 to 6 months. Take note that this is state-dependent. If you seek to recover specific amounts related to a disclosure statement, contact a legal professional. The statement may be materially different from the provided lease. This allows you to be advised on available remedies.
Some examples can include:
- the rent being a different figure;
- outgoings being excluded when they are not; and
- any fit-out works not being as described within a lease,
Common Misleading and Deceptive Conduct in Leasing
The range of conduct that can be considered misleading and deceptive in the leasing context is broad and not limited to specific conduct. However, representations are often involved in conduct that has misled or deceived or is likely to have misled or deceived a tenant. We cover what representations mean and provide some specific examples below.
Representations
Representations can be statements about a present or future fact. In the leasing context, some statements that will likely be considered representations include, for example, that:
- a tenant will be the sole retailer for a specified category of goods in a shopping centre (otherwise known as exclusive use);
- the shopping centre attracts a specific number of customers;
- the lease will not commence until at least 2 major retailers will be trading in the exact centre;
- the centre will be open by a particular date;
- a representation that the premises are fit for your permitted use as a tenant; or
- 80% of the shopping centre has been leased.
Notably, the above examples, or any similar representations, will not be misleading or deceptive or likely to mislead or deceive if they are factual and accurate. Alternatively, where the statement is about a future fact, and you had reasonable grounds to believe such a fact will occur, it may not be misleading and deceptive. Essentially, this means that if you are making a statement to a potential or current tenant, you can do so as long as it is factual and accurate.
If the above statements do not occur or turn out to be false, you may have alternative remedies available to you. This means the landlord must either fulfil their obligations under the lease or provide you with rightful compensation.
The misleading and deceptive statement does not need to come from the landlord. It may also come from an authorised representative of the landlord.
Key Takeaways
The law prohibits misleading and deceptive conduct. This prohibition extends to all leases in all states. If you are facing a claim for misleading and deceptive conduct in your lease, or you have been subject to misleading and deceptive conduct, you should seek legal advice to be aware of your rights and remedies as a retail tenant.
If you require assistance understanding misleading and deceptive conduct in leasing, our experienced leasing lawyers can help. As part of our LegalVision membership, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today at 1300 544 755 or visit our membership page.
Frequently Asked Questions
It covers conduct that is misleading or deceptive conduct to another party to the lease or that is likely to mislead or deceive another party to the lease.
Representations can be statements about a present or future fact. For example, in leasing a representation may be ‘that 80% of the shopping centre has been leased’.
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