A lessee of an accommodation business was consistently behind in paying rent and was trying to sell the business. However, the business but was unable to obtain the lessor’s assistance in negotiating with potential purchasers of the business.
The lessee had purchased the business some years earlier, but began to experience a downturn in the business which led to difficulties in making rent payments. The landlord was usually accommodating with allowing time to pay the rent, but it had become clear that the lessee would be unable to continue in the business and so must sell. Unfortunately, with the reduced income figures of the business, most interested buyers wanted to re-negotiate the rent with the landlord. After several ‘lost opportunities’ the lessee contacted the Office of the Small Business Commissioner for assistance. The Commissioner wrote to the lessor and was able to encourage him to participate in a mediation conducted by an independent mediator (at no cost to the parties). The situation was ideally suited to mediation because the interests of the lessee and the lessor were very closely aligned. If the lessee went into receivership, the lessor would be left in a situation of having no rental income while trying to re-let the premises for a type of business that seemed to be likely to fail. On the other hand, if the landlord could assist in the process of selling the business, a new operator would come in and the landlord would continue to receive rent.
The mediation process assisted both the lessor and lessee to understand how their financial situations were closely linked. The parties subsequently agreed to terminate the lease on mutually acceptable terms.