On canny contracting, admissions on affidavits, and wearing the white hat.

H is a landlord, and D his tenant. D and H signed a letter of intent ("LOI"), which stated that D would have the option to renew the lease for a further 24 months.

Subsequently, H and D entered into a tenancy agreement ("TA"), which included a clause that D would have the "right of renewal" with the "renewed rent" capped at 10% above the current rent (the "Renewal Clause").

D proceeded to occupy the property.

Towards the end of the original term, H proposed to renew the tenancy at a revised monthly rent of $76,000. But D's position was that under the Renewal Clause, it had the right to renew the tenancy at a monthly rent capped at 10% above the current monthly rent of $45,000.

Since they could not reach an agreement, parties went to Court.

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D won the case.¹

H will now have to grant D a renewed lease at a maximum monthly rent of $49,500, and cannot charge rent of $76,000.²

But that's not all.

In an affidavit, H stated that he had instructed his lawyers not to mention the duration of the renewed tenancy agreement in the TA. However, H did not draw D's attention to this "surreptitious omission".

The Court observed that:

a) H's "...sinister intention... is unethnical [sic] and inequitable";
b) H's action "lacks candour and leaves much to be desired"; and
c) H's "ominous conduct... cannot be condoned".

H would not be pleased about losing the lawsuit. I doubt that these comments would have improved his mood.

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2 observations, for those considering litigation.

1st: there's more to litigation risk than just the risk of losing.

There's also the risk of the Court making unflattering observations - which may impact one's business or career.

A mediator I know³ puts it along the following lines: "you know, if you cannot settle, and have to go for a trial, sometimes the Judge may end up saying some things about you that are not so nice, and once it's in a judgment, it's there forever".

So before proceeding to trial, consider if you're prepared to take this risk.

2nd: don't overlook the equities of the matter.

It appears that it was H himself who volunteered, in his affidavit, the fact that he had instructed his lawyers to omit part of the clause in order to try and secure an advantage over D.

While this admission may not have been decisive, it certainly did not help his case.

I wonder whether it was necessary for H to have said this on affidavit.

Of course, if he was cross-examined, he may have had to reveal this eventually. But cross-examination is unpredictable, and it is anyone's guess as to whether this admission would have come out if he had not volunteered it.

I therefore suggest that when formulating a case, consider whether the positions you take might cause the Court to form a negative impression of your character.⁴ It is not enough to merely consider the law.