When Process Becomes Power: Lessons from Gollin v Karenlee Nominees

Home › Case Studies › Case Law Library › Building Construction & Real Property › Easements, Boundary & Leases › Gollin & co. ltd. v. Karenlee Nominees Pty. Ltd. (1983) 153 CLR 455

Published: 17 November 2025 | Reviewed: 17 November 2025
(3-minute read)

Case Summary - Facts, Reasoning and Principles

This case began with a sale-and-leaseback. Gollin sold commercial premises to the lessors, then leased them back for eight years. The rent review clause set a clear mechanism: after the initial period, rent would be reset to 10% of the mean of two valuations - one valuer appointed by each party.

The problem?
Both parties quietly commissioned valuers without telling the other they had done so.

The lessors then tried to use these non-notified valuations to push rent from $144,000 to $240,000 and issued a statutory demand based on that figure.

The High Court held:

• Appointment of a valuer must be communicated to the other party.
  This is fundamental because the valuer’s determination binds both sides.

• Without notification, no valid valuation occurred - therefore the rent review had not been triggered at all.

• Even if a “reasonable time” for appointment existed, delay did not invalidate the right unless time was expressly made essential.

• The rent review mechanism is a contractual process with real consequences, not an informal step parties can take in isolation.

The principle is enduring:
Contractual machinery requires transparency, mutual communication and procedural integrity.

Why This Judgment Still Matters Today

Executives and business owners routinely operate within long-term leases, shareholder agreements, valuation mechanisms and step-based contractual frameworks. Modern commercial disputes often arise not from bad intent, but from:

• misaligned expectations,

• unclear notification processes,

• unilateral steps taken under pressure, or

• assumptions that “getting the valuation done” is enough.

Gollin teaches that:

1. Process is part of the bargain.
Courts enforce contractual machinery as tightly as financial terms.

2. Transparency is non-negotiable.
A step that binds two parties must be conducted in the open.

3. Commercial pressure invites procedural shortcuts - and shortcuts create legal risk.
Especially in volatile markets, parties may be tempted to move first and negotiate later. Gollin shows the legal limits of that instinct.

For today’s decision-makers, the relevance is profound:
poor process creates leverage for the other side.

A party relying on a flawed valuation, flawed notice, or flawed timing weakens its own position - sometimes fatally, as happened to the lessors in Gollin.

How to Avoid the Same Trap - Cost Safety (One-Path Funding)

Among Clean Law’s Client Protection Points, the highest-ranked, and most aligned with this judgment, is Cost Safety: One-Path Funding.

Why this principle for Gollin?

Because valuation and rent review disputes escalate quickly. They often become technical, expert-heavy and document-intensive. Both sides fear that engaging fully will lock them into high costs, prompting tactical delays or incomplete steps - the very behaviours that triggered the breakdown in Gollin.

Cost Safety prevents this spiral.

• One funded path means you never pay twice for trial prep and settlement work.

• Independent escrow oversight ensures no party can shift or expand the scope mid-matter.

• Two-lawyer collaboration protects clients from role-confusion and over-commitment.

• A single disciplined strategy replaces the piecemeal reactive steps that lead to flawed process.

Where Gollin shows how procedural shortcuts create legal vulnerability, Cost Safety creates the opposite: structural discipline, clarity and predictable financial footing.

Reflection

Gollin v Karenlee Nominees is not just a leasing case; it is a warning about what happens when transparency and structure collapse inside a commercial relationship.

If your matter involves valuations, notices, deadlines or anything where process and fairness intersect, the safest path is one built on clarity, stability and disciplined cost protections.

See how One-Path Funding protects you from the procedural pitfalls that derail commercial disputes like Gollin.

Request a Confidential Call
If you’re facing a valuation or rent review dispute, speak with us confidentially before assumptions or process errors escalate.

By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.

Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.