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Using IRAC format answer this question
Coronet Casino operates on a recently redeveloped area of Sydney Harbour.
When Coronet vacated its previous premises 2 years ago, it leased the premisesvia a commercial lease, to a hotel company called Loire for a term of 2 years. It was a term of the lease that Loire would undertake refurbishment of the building at its own cost. This amounted to several hundred thousand dollars. There was no right of renewal for a further term in the lease but Sophie who was negotiating the lease on behalf of Coronet said, “You don’t need to worry, it is in our interest for you to be operating this hotel. We are in this for the long haul. You will be looked after at renewal time.”
You are employed in Coronet’s property management office. Sophie seeks your advice. She tells you that Loire has requested a renewal of the lease for a further 2 year term but that Coronet does not want to renew the lease as it has other plans for the building. Advise Sophie whether or not Coronet is legally entitled to refuse to renew the lease. Give reasons and provide legal authority for your advice.
Consider an alternative scenario where the lease to Loire contained a right of renewal for a term of 2 years subject to compliance with the lease conditions. One of those conditions was that Coronet would accommodate their high rollers (gamblers who bring a minimum $50,000 to the table) and other corporate guests in the Loire hotel for a minimum of 20 nights per month. Three months into the term Loire complained that Coronet was not booking the minimum number of nights agreed. Loire settled the matter by deducting the shortfall from the rent due for the 4th month. Coronet had not agreed to this deduction but did not raise any issues at the time.
How, if at all, would your advice differ if Sophie sought the same advice as in part (a) in this alternative scenario? Advise Sophie whether or not Coronet is legally entitled to refuse to renew the lease giving reasons and providing legal authority for your advice.
Expert Answer
– Coronet is not legally binding to renew the lease when the lease period is expired.Though Loire invested huge amount in refurbishment of the building ,it does not mentioned in the lease contract about such expenditure.What Sophie gave assurance was oraly and it cannot be treated as valid evidence and terms and contract.Coronet can do what ever they want after the expiry of lease and there willnot be any legal repurcusion for them.
– In this case it is to be analysed that lease condition has been complied or not.Agreed number of business was not provided by the Coronet to the hotel,so though they settle the matter by deduction, so in paper every compliance has been done becaue no one raise objection to it.Now it is the right of Loire to renew the lease or not.
