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Benchmark - Real Estate Cases & Commentary
Tenancy matters
    •  Rent
        -  GST
            >  Landlord not bound by earlier mistake in collection of rent



New landlord not bound by earlier mistake in collection of rent   

Great care needs to be taken over GST obligations in leases. Disputes can arise over the calculation of GST if the lease does not state the rent specified in the lease is inclusive or exclusive of GST. Agents need to be aware of this issue because they often receive rent on behalf of landlords.

A tenant signed lease agreeing to a rental amount which he incorrectly thought included GST. The tenant then paid rent to the landlord which was received by the landlord’s agents as including GST.

The landlord subsequently sold the property. Fifteen months later, the new landlord discovered that the tenant was not paying the GST. The new landlord demanded the outstanding GST from the tenant.

The tenant brought proceedings against the new landlord seeking that the lease be rectified for the GST on the basis that the tenant made a mistake when he signed the lease. The tenant tendered in court, as proof that the new landlord had accepted payment of the lower amount by the tenant, trust account receipts issued by the agent which showed no GST was payable.

The Court found for the new landlord. The Court held that the tenant had signed the lease without properly reading it. The Court held that the evidence did not show any wrongful conduct on the part of the new landlord, which had not been put on notice by either the old landlord or the tenant that the lease did not represent the real intention of the parties.

Randi Wixs Pty Limited v Kennedy [2009] NSWSC 933