Bank Guarantee Called on a Commercial Lease: Your First 48 Hours

You opened your business banking app and saw the bank guarantee balance hit zero. Your landlord called on it without warning. Here is the uncomfortable truth: bank guarantees are designed to pay first and ask questions later. The bank does not investigate whether the call was justified — they pay on demand. But that is not the end of the story. If the call was wrongful, you can claw the money back, and the next 48 hours decide how easy that fight will be.

Why the bank already paid

A commercial lease bank guarantee is an “unconditional” instrument. The leading authority is Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443 — the bank’s obligation is independent of the underlying lease dispute. Unless you obtained a court injunction before the call, the money is gone. That is normal and expected.

Step 1: Demand written reasons (within 24 hours)

Send the landlord a written demand for the specific breach justifying the call, the specific lease clause they relied on, and a full accounting of how they applied the money. In every state, a landlord who calls a guarantee for a phantom or inflated breach is exposed to a claim for unconscionable conduct under the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010), the relevant state retail leases Act (New South Wales 1994, Victoria 2003, Queensland 1994, South Australia 1995, Australian Capital Territory 2001; in Western Australia, the Commercial Tenancy (Retail Shops) Agreements Act 1985), and ordinary contract law for breach of the lease.

Step 2: Preserve the evidence

Photograph the premises if you are still there. Pull every email, rent ledger, and outgoings statement. Get the bank’s written confirmation of the call and the amount drawn. If the landlord called for “make good”, document the actual condition of the premises. Tribunals and courts decide these on documents, not memory.

Step 3: Issue a cease and desist (within 48 hours)

A formal Cease and Desist letter, citing unconscionable conduct under section 21 of the ACL and the relevant Retail Leases Act, demands the landlord refund the wrongfully called amount within 14 days, ceases any further enforcement action, and reserves your right to claim damages. This is the document that signals you are not going to roll over.

Common landlord justifications and how they fail

“Unpaid rent” — only valid if the rent was actually owing on the date of the call. “Breach of covenant” — must point to a specific covenant and a documented breach with proper notice. “Make good” — the lease usually requires the make-good amount to be agreed or assessed before drawdown; a unilateral call without that process is wrongful. “Outgoings” — must be itemised, audited, and consistent with the lease.

What Claim Done delivers

For a flat fee, Claim Done drafts your Cease and Desist letter as an Australian-law-compliant PDF — citing the relevant Retail Leases Act, the ACL unconscionable conduct provisions, and the specific lease clauses, with a 14-day refund deadline and an explicit reservation of rights.

What happens after

If they refuse, you have the foundation for a tribunal application or Supreme Court claim, and the cease and desist becomes Exhibit A in your evidence.