The recent case of Wilson v Dobson  NSWSC 697 illustrates instances in which a landlord can force a tenant to pay rent, despite the fact that no written or executed lease exists. The case involved Mr and Mrs Wilson (landlord) who purchased the Gearin Hotel Katoomba in August 2011. In early 2015, the landlords entered into an oral agreement with Mr Dobson and Ms Linton (tenants) in which they paid rent and looked after the rates and maintenance. By May 2016 the tenants had fallen behind with their payments, with the landlord agreeing to temporarily pay the rates and insurance until business improved. The landlord commenced proceedings seeking to obtain possession of the property and payment of the outstanding rent and interest from May 2016 to April 2019.
The tenants argued that due to the fact that there was no written lease, there was no indication of a landlord-tenant relationship, and therefore no requirement to pay outstanding rent. The Court held that there was sufficient evidence to indicate that there was a tenancy arrangement between the tenants and landlord as the landlord’s bank records indicated receipt of regular amounts of $2,500 described as ‘rent and GST’. Furthermore, the bank records indicated that there were several periods lacking payment of rent. The tenants argued in response that there had been various agreements between them and Mr Wilson that rent was to be forgone due to their purchase of chattels and equipment for the hotel. The Court held that there was no evidence to prove the agreement or expenditure and handed down judgement for Mr and Mrs Wilson. The tenants were ordered to pay $109,107.87 for unpaid rent and interest. They were also ordered to pay costs.