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LETS GET DOWN TO BUSINESS.

Question :
Hi, I run a hairdressing salon and we sublet to a coffee cart style operation.  We were unable to trade at all through levels 3 and 4 and the coffee shop operated a takeaway at level 3 only.  Our rent is currently $12,503 per month and the landlord initially advised we had to pay the entire amount.  We do have a no access clause enabling us to determine fair rent and when I pointed this out he had indicated that 50% is fair.  However our revenue is down 100% and I have offered him 25% for the level 3 and 4 period and full rent from yesterday.  He has not agreed to that and we are now looking into mediation.  However, the fees for the mediator are $3000 + GST while the amount disputed is just shy of $3k – he seems happy to proceed but I don’t want to pay this sort of fee.  Do I have to proceed to mediation and what are my options from here?  We still have 19 months on the lease and have signed personal guarantees so walking away is not an option.  He is aware that the rent is a struggle and we currently pay between $50 and 70k a year to keep the salon at a nil loss position.

Question submitted 15/05/20 @ 01:03pm
Industry: Legal
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    Hi Clare and sorry to hear your having this challenge. One quick question is this the cost of the joint mediator or your share? and what are the conditions of hours this would cover as $3k feels on the light side.

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    The best method is if you can work it out together – that does not cost anyone other than your time. Mediation and Lawyers are ultimately if you can’t resolve it or one party is not prepared to come to the table. Sometimes the extreme measure of not paying your rent can cause the landlord to come to the table – what do you know about your landlord – do they have multiple properties – and could you talk to other tenants to see if they have the same issues as you do. What we know from others is (1) good tenants and good landlords sit down and sort it out openly and come to terms (2) when you have one of the sides not playing ball, the question is ‘how to get the other to play ball’ – that could be getting a mediator or a lawyer or even being extreme and holding payment.

    I know in our situation for one of the people I work with – we could not get the landlord to terms, so we just sent them a note saying we think 50% is fair and we are going to pay you that.

    Final thing – make sure you know the terms of your lease and have read them. In case there are some fishooks in there.

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