Lease agreements are typically weighted in favour of landlords and often contain clauses stating that no representations were made about the premises. The Australian Consumer Law (ACL) – and in particular section 18 – is a separate source of protection that operates independently of those contractual provisions.
Section 18 – Misleading or Deceptive Conduct
Section 18(1) of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Section 236 allows a party who suffers loss as a result to recover that loss. Courts also have broad remedial powers under section 243, including the ability to declare a contract void or vary its terms.
The word 'conduct' is defined broadly – it includes express statements, silence, half-truths, implied representations and contractual warranties. A contravention does not require the landlord to have intended to mislead. The test is objective, focused on the effect of the conduct.
When Can Silence Be Misleading?
There is no general duty on a landlord to disclose information. However, silence may constitute misleading conduct where the circumstances give rise to a reasonable expectation of disclosure – for example, where a statement that was true when made later becomes false before the lease is signed. Whether such an expectation arises depends on the specific facts.
What These Claims Commonly Involve
Pre-lease representation claims are the most frequent ACL claims in leasing disputes. They have commonly arisen in connection with:
- Statements about the condition or suitability of premises for a particular use
- Representations about occupancy levels or tenancy mix in a shopping centre
- Exclusivity assurances – representations that a tenant will be the sole retailer of a category of goods
- Projections about foot traffic or trading performance
- The existence of third-party rights affecting the premises
How Courts Have Approached These Claims
Tenancy mix – Mister Figgins v Centrepoint Freeholds (1981)
A tenant succeeded on claims relating to statements about the number of leases taken, the quality of other traders, and the appearance and amenity of the mall.
Exclusivity – Baillieu Knight Frank v Susan Pender Jewellery (1997)
The Full Federal Court upheld a finding of misleading conduct where a landlord represented that a tenant would be the sole retailer of a specific category of goods, then permitted a competitor to operate in the same centre.
Outgoings estimates – Murphy v Overton Investments (2004)
The High Court considered a situation where outgoings estimates did not reflect the actual costs to be charged. The Court's approach focused on the difference between the financial obligation the tenant was led to expect and the obligation actually imposed.
Planning restrictions – Kizbeau v W.G. & B (1995)
The High Court considered a case where a motel was purchased in reliance on a representation that part of the premises could lawfully be used for seminars and conferences. That representation was false. The Court awarded damages and varied the contract by reducing the commencing rent.
Unconscionable Conduct
The ACL also addresses unconscionable conduct under sections 20 and 21. Successful claims in leasing disputes are less common, but the provisions can be relevant where a landlord exploits a tenant's vulnerability, applies undue pressure, or enforces contractual rights in circumstances that may be characterised as seriously unfair or unreasonable.
Points Worth Keeping in Mind
- Keep records of all pre-lease representations – emails, brochures, agents' statements and anything said during negotiations
- Exclusion clauses in leases do not automatically defeat an ACL claim, though they remain relevant to the overall assessment
- Both landlords and their agents should ensure that statements made during negotiations are accurate and have a proper factual basis
- VCAT has jurisdiction to hear ACL claims in leasing disputes as consumer and trader disputes under the Australian Consumer and Fair Trading Act 2012
- Time limits apply to ACL claims – seek advice promptly if a dispute arises
How Abbots Legal Can Help
Our leasing team advises landlords and tenants across retail and commercial leasing disputes, including claims under the Australian Consumer Law. Whether you are a tenant who believes you were misled before signing a lease, or a landlord seeking to understand your exposure, we can help you assess the position and identify the options available to you.
Contact us on (03) 9427 7641 or fill out the enquiry form on our website – we'll be in touch within one business day.
This article is general information only and does not constitute legal advice. Contact Abbots Legal on (03) 9427 7641 for advice specific to your situation.