We thought you might be interested to know about a VCAT hearing our property management team was recently involved with.
- The tenant had not regularly paid its rent and outgoings when due and had also failed to perform other obligations under the terms of the Lease.
- The Managing Agent issued a Notice of Default, following a history of doing so, to the tenant just prior to the last date to exercise the Option.
- Prior to rectifying the Default, the tenant attempted to exercise its Option under the Lease for a further term;
- The Option was not accepted by the Landlord on the basis of the tenant being in default of the Lease.
- The tenant sought remedy at mediation via the office of the Small Business Commissioner of Victoria and was unsuccessful.
- The tenant then filed an application with VCAT seeking an injunction restraining the landlord from re-entering the premises and reinstating the Lease.
- An interlocutory injunction was granted and the matter was listed for hearing.
- The hearing was adjourned on more than one occasion due to the late delivery of material by the tenant and other delaying tactics designed to frustrate the landlord.
- VCAT found the tenant was in default of the Lease on the last day for exercising the Option. The tenant could not therefore exercise the Option under s 27 of the RLA.
- Further, VCAT found that the tenant persisted with its case when it should have been clear to the tenant that it could not succeed. The tenant conducted the proceedings in a vexatious way that unnecessarily disadvantaged the landlord. The tenant was ordered to pay the landlord’s costs.
There are a number of takeaways from this case, the most critical being:
For Landlords; this highlights the importance of proactive property management to ensure correctly issued and properly timed Notices are given to the tenant as required under the Lease.
For Tenants; if you wish to maintain your rights under the Lease, you must ensure you pay your rent and other outgoings due under the Lease promptly and that any breach of the Lease is rectified within time.
For all parties involved in litigation; choose your battles wisely, do not allow your personal vendettas to interfere with commercial and legal reality as an award for costs under section 92 of the RLA is exceedingly rare.
You can read the full Order and Reasons on VCAT’s website here:
It is never pleasant having to deal with these matters right through to VCAT, however where necessary GormanKelly will stand to ensure the rights of its clients are upheld. We pride ourselves on dotting our “i’s” and crossing our “t’s” to make sure that if our actions are ever disputed, the right outcome for our clients will be achieved.
Written by Bill DiDonna
After some 35 years as a commercial property manager, Bill has a strong knowledge of Melbourne’s suburban property market.