Posted: January 2nd, 2025

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.

Part A

 

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Coronet Casino operates on a recently redeveloped area of Sydney Harbour.

When Coronet vacated its previous premises 2 years ago, it leased the premises, via 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.

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 (10 marks)

Part B

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.

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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. (10 marks)

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