In the recent case of Kids Club Rozelle Pty Ltd v European Hire Cars Pty Ltd  NSWSC 1115 the Supreme Court had to determine the validity of a Deed of Surrender and Release where the tenant had made deceptive and misleading statements in the lead up to its creation. In this case, the parties entered into a lease with the intention of the tenant building a childcare centre on the land. When the funding for the childcare centre fell through, the tenant made false and misleading statements to the land owners, saying that they had impending offers to assign the lease, while in fact no such offers existed. The land owner’s did not want the lease to be assigned, and claimed that the misleading conduct induced them into entering the deed of surrender to terminate the lease early.
The court accepted that the conduct of the tenant in claiming there were offers to take an assignment of the lease was misleading and in breach of the Australian Consumer Law, but ultimately they found that it was not the only factor that induced the defendants to sign the deed of surrender. The court found that there were other factors in the defendant’s decision, as they believed the rent being paid was below market value, they didn’t want the lease to be assigned, and wanted to end their association with the plaintiff. Therefore while the conduct was misleading, the deed of surrender was still valid.