Retail Leases – Repair and Maintenance – Know your Rights

By Jeremy Quah
18 January 2018
The responsibility for repair to retail premises which is damaged or in some way dilapidated can often become a source of contention between the landlord and tenant in a commercial or retail lease.
Damage to business premises can have a significant impact on a tenant’s business, particularly if the damage results in part or the whole of the premises being rendered unusable for a period of time.
At the same time, tenants have often felt powerless against a landlord who either refuses to repair or who is slow in bringing repairs to premises, whilst facing the burden of meeting monthly rental payments for fear of defaulting on their lease obligations.
Section 52 of the Retail Leases Act 2003 (the “Act”), if the Act applies, sets out that the obligation is on the Landlord to maintain the structure and services of a building. Perhaps less well known, however, is the fact that as a result of relatively recent decisions in the Supreme Court and VCAT, in addition to other rights which the Tenant may have under the Act, Tenants may also have a right to terminate the lease in circumstances where a continued failure of a landlord to meet these obligations constitutes a repudiation of the contract.
In the decision of Hann-Woodlock v ADMR Pty Ltd [2011] VCAT 1776, Senior Member Walker held that the landlord’s failure to undertake work it had agreed to do before the tenant took possession resulted were a repudiation of the lease insofar as they constituted “numerous and extensive breaches in both time and effect” and ultimately demonstrated an intention “not to carry out some of the obligations imposed on it by the lease and to carry out the others only in a manner substantially inconsistent with those obligations”.
In a more recent decision in the Supreme Court of Victoria, Justice Croft held in Versus (Aus) Pty Ltd v A.N.H. Nominees Pty Ltd [2015] VSC 515 (1 October 2015) that the failure of the landlord to repair and refurbish premises affected by flooding and mould in a timely manner constituted a repudiation of a lease.
Accordingly, landlords should be aware that over and above their obligation to repair damage of a capital nature that the manner in which they fulfil such obligations can also be significant. An unreasonable delay in attending to repairs can constitute repudiatory conduct in certain circumstances which a tenant can rely on to bring an end to the lease in addition to a claim for damages.
Tenants, on the other hand, should be aware that where a landlord is dragging their feet on attending to repairs, they may have more leverage than they think to bring a resolution to their problem.
In either circumstance, a detailed analysis of the facts in the context of the Act and the various VCAT and Supreme Court authorities will be required in order to establish either party’s rights.
To that extent, if you are a landlord or tenant in need of advice in this regard, please contact Jeremy Quah or a member of our Property Team.
Related Articles
View AllSpend the time to get it right – The pitfalls of short cutting a sale or purchase of a business

By Natalie Chani
17 September 2024
We Won a Billboard!

By Rob Oxley
20 November 2023
Exercising Options
Is your retail tenant continuously in breach of your retail lease but still wants to renew the lease for another term?

By Jonathan Leung
2 August 2023
2024 Best Lawyers list out now
CTRS protections has ended. What do you do now when a tenant defaults?

By Jonathan Leung
23 August 2022
The 2022 Commercial Tenancy Relief Scheme Regulations are now in effect

By Jonathan Leung
2 February 2022
COVID-19 and the new Commercial Tenancy Relief Scheme

By Angela Kordos
29 July 2021
Head leases and the Retail Leases Act 2003

By Angela Kordos
12 March 2021
Need extra time on your retail lease? This may help you.

By Samuel McMahon
5 March 2021
COVID-19 – Commercial Tenancy Relief Scheme to be extended (again)
Amendments to the Commercial Tenancy Relief Scheme

By Rob Oxley
2 October 2020