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Property: Retail repairs

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Cite as: July 2015 89 (7) LIJ, p.75

VCAT advisory opinion has strengthened the argument that the landlord is responsible for the maintenance of essential safety measures.

Snapshot
  • Owners/landlords: Building regulations create repair and maintenance obligations in relation to essential safety measures.
  • Occupiers/tenant: Tenants may undertake repairs if the landlord fails to do so and recover those costs.
  • Passing on costs: It is contrary to the provisions of the regulations for the landlord to seek to pass on the cost of repairs and maintenance to the tenant. It is also contrary to s52 of the Retail Leases Act 2003 to pass on those costs.
  • VCAT has published an advisory opinion (www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VCAT/2015/478) on the interaction between the obligations created in respect of essential safety measures by the Building Regulations 2006 and the landlord’s repair obligations pursuant to s52 of the Retail Leases Act 2003. While nominally only an advisory opinion and therefore not binding, the fact that the opinion was given by VCAT president Justice Greg Garde makes it reasonable to expect that it will carry significant weight if these matters come to be considered by VCAT or the Supreme Court in the future.

    Building Regulations 2006 and preceding regulations create obligations to maintain essential safety measures in respect of various categories of premises. These regulations in turn rely on s250 of the Building Act 1993 to allocate responsibility for the carrying out of those works on the owners of the premises and s251 provides that if the owner does not carry out the work, the occupier may do so and recover the cost from the owner.

    Section 52 of the Retail Leases Act creates repair obligations on the owner of the premises in respect to the structure, the fixtures, the equipment and the fittings. The obligation is to maintain the premises in a condition consistent with the condition of the premises when the lease was entered into, however if the lease was renewed the relevant comparative condition is the condition at the time of renewal (Ross-Hunt P/L v Cianjan P/L [2009] VCAT 829).

    At first blush it would appear that these two obligations are entirely consistent and place those obligations firmly on the owner/landlord. However, it was suggested that while the obligation to perform the work fell on the landlord, the lease might nevertheless allow the landlord to recover the cost of those works from the occupier/tenant as “outgoings”. The advisory opinion decided that such a provision in a lease would be inconsistent with s251(6) that provides that s251 applies “despite any covenant or agreement to the contrary”. This principle would apply equally to a lease that was covered by the Retail Leases Act as to one that was not covered by that Act.

    Further, the advisory opinion concluded that s52 of the Retail Leases Act strengthened the argument that the landlord was responsible for the maintenance of essential safety measures and is prohibited from seeking to pass those costs on to the tenant.

    It may therefore be concluded that any attempt in a lease of commercial premises to pass to the tenant the cost of compliance with the landlord’s obligations under the Building Regulations will be void. This is because such a provision is inconsistent with s251 of the Building Act and, in respect of premises subject to the Retail Leases Act, is also contrary to s52 of that Act.


    Russell Cocks is author of 1001 Conveyancing Answers. For more information go to www.russellcocks.com.au.

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