The decision in Universal Publishers Pty Ltd v Australia Executor Trustees Limited [2013] NSWSC2021 suggests that the ability of a landlord to call upon a bank guarantee for the purpose of reinstating and remediating the premises depends upon the terms of the lease.
If the lease provides that the landlord can call upon the bank guarantee for an actual breach of the lease or an actual default by the tenant, however the landlord cannot call upon the bank guarantee where there is only claimed or alleged breach or default by the tenant.
If there is a dispute as to the breach or default, the landlord may be liable for damages to the tenant if they call upon the bank guarantee and the tenant is found not to have been in breach or default.
Whether you are a landlord or tenant you should seek the advice of a commercial lawyer before entering into a lease. Our commercial lawyers at Matthews Folbigg can provide comprehensive advice and assist in lease negotiations and preparation.
Phillip Brophy – phillipb@matthewsfolbigg.com.au or 9635 7966
