The recent decision in the NSW Court of Appeal (World Best
Holdings v Sarker (2010)) highlighted some of the issues that
landlords need to be aware of when negotiating and fulfilling
retail leases.
Permitted Use Provisions
The case concerned a retail lease in a shopping mall which
provided that the tenant could use the premises as an 'Asian
grocery shop'. The landlord thought that this did not entitle
the tenant to sell Indian groceries and halal meats, and
subsequently sought to terminate the lease when he realised this
was happening by issuing notices for breach of the permitted use
provision.
The Court of Appeal held that the term 'Asian' included
all nations within that continent, and that since India was such a
nation, there was no breach by the tenant in selling Indian
groceries. This resulted in the notice of termination being
ineffective, and the landlord being held liable for damages to the
tenant.
