Monthly Archives

August 2023

Exercising Lease Options: Landlords and Tenants must exercise caution to ensure it is done correctly!

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In July, the NSW Court of Appeal delivered judgement in Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSCA 158 in which the Court upheld Willis Australia Ltd (Willis) appeal against the initial Supreme Court decision in favour of AMP Capital Investors Ltd (AMP).

The Supreme Court had initially held that Willis was liable for the losses incurred by AMP on the basis that an option to renew was a conditional contract and AMP had validly waived the performance of the other conditions not fulfilled by Willis on the basis that they were for the sole benefit of AMP.


Willis entered a Lease with AMP with an initial Term of six (6) years expiring on 30 September 2020.  The Lease contained two (2) further Options to Renew as follows:

  1. An Option to Renew the existing Lease for the premises for a further four (4) year term (First Option); and
  2. An additional option for the Tenant to take a lease for the remainder of the level the premises was located on for a four (4) year term (Second Option).

In late 2019, Willis served AMP with two notices in writing (satisfying some, but not all contractual conditions outlined in the Lease) advising that they intended to exercise both options.

In August 2020, Willis sought to withdraw its notice for the Second Option to which AMP responded stating that the exercise of the Second Option was an irrevocable offer, and Willis therefore could not withdraw their notice.


  1. Whether, on the proper construction of the Lease, an option to renew the Lease with the expanded space was exercised only when all five conditions specified in the clause were satisfied or alternatively, whether the option to renew was exercised (and a binding agreement to proceed to a formal lease arose) when there was compliance with merely three of the five conditions outlined in the relevant clause.
  2. Whether the option to renew should be characterised as an irrevocable offer or, alternatively, as a conditional contract.


In rendering its decision, the Court held in favour of Willis, overturning the initial decision of the Supreme Court in favour of AMP. The Court’s primary reasoning for their decision being that when ‘exercising’ the Second Option, Willis had only satisfied three of the five stipulated conditions in the clause. Despite AMP’s assertion that they could waive some of the conditions, the Court found that the language of both the clause and the Lease did not support AMP’s interpretation, and the conditions needed to be met for the exercise of the option to be valid.

Regarding the issue of whether an option to renew should be characterised as an irrevocable offer or a conditional contract, the Court decided it was not necessary to make a definitive ruling on this matter in this case. This was on the basis that the reading of the clause and the Lease were sufficient to demonstrate that Willis did not properly exercise the Second Option and therefore were not bound to proceed with the Lease.

So, what does this mean?

Overall, the case highlights the importance of carefully interpreting and fulfilling the conditions specified in the Lease when exercising an option to renew for both landlords and tenants, as in the event of any dispute the Court will consider the specific language and context of the Lease when determining the validity of any exercise of an option.

Specifically, the case highlights the importance for landlords to ensure that when they accept a tenants notice to exercise that they also review the terms of the Lease to ensure that they receive every other condition outlined in the clause. Otherwise, there may be the ability for the tenant to withdraw their notice in the same manner as Willis in this case. Equally, tenants need to exercise caution when it comes to exercising their option to renew to ensure that they have not missed a condition specified in the relevant clause, which would give the landlord the potential ability to invalidate the exercising of the option.

Enhanced Transparency: New foreign ownership register, are you impacted?

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In connection with ongoing changes to Australia’s foreign investment regime under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (the Act), a new register of foreign ownership of Australian assets (the Register) has been introduced. The new Register is administered by the Commissioner of Taxation (the Registrar).

The Register came into effect on 1 July 2023.

The Register requires foreign investors and Australian entities that qualify as “foreign persons”, to notify the Registrar within 30 days of acquiring specific investments held in Australian land, entities, and businesses. These reporting requirements are in addition to the existing approval processes and reporting requirements outlined in the Act.

It is important to note that the term ‘foreign person’ is broadly defined and includes Australian companies and trusts with foreign interests as low as 20% and Australian subsidiaries of foreign entities.

What are the key functions of the Register?

The Register:

  • replaces and amalgamates existing foreign investment registers relating to agriculture, residential land, water and business interests (where applicable) and mining, production and exploration tenements);
  • expands on the types of assets that must be registered;
  • streamlines the management of foreign investors’ investments, and
  • enhances government viability.

The Register is not public and will be subject to the same rules as those that apply to other information relating to foreign investment under the Act.

What are the reporting requirements?

The Register is a post-acquisition recording system, and foreign persons are required to register their direct investments within 30 days of acquisition, rather than proposed acquisitions.

Penalties for failure to notify?

Failure to notify the Registrar within 30 days may result in a civil penalty of 250 penalty units, currently amounting to a hefty $68,750.

What should you do, and how can we help?

Division 3 of Part 7A of the Act outlines when a foreign person is required to notify a transaction or a relevant change in circumstances to the Registrar.

Please get in touch with our office if you are unsure whether your foreign investment is the kind of acquisition that must be notified to the Registrar or where you or your entity experience a change in circumstance, and you become or cease to be a foreign person.

Important Dates

17 – 25 June 2023

The ATO Land and Water Registration Form was retired on 17 June 2023, and other FIRB forms will be removed as the ATO transitions to the new FIRB platform.

26 June 2023

The new FIRB platform was made available to foreign investors on 26 June 2023.

1 July 2023

The Register commenced on 1 July 2023.