Retail Leases Act Update

By Bill DiDonna August 14, 2019

We thought you may be interested in a recent case at VCAT, Chantelle Enterprises Aust Pty Ltd v Sangster-Greenwood (Building and Property) [2019] VCAT 961 (2 July 2019).

The preliminary questions in this case involved determining whether the applicant (the tenant) held a lease interest in the premises and was therefore entitled to regain possession of the premises and whether or not goods left on the premises were abandoned by the tenant.

retail_leases_act_update

Background

  • The leased premises comprised a cafe in the Dandenong Ranges.
  • The tenant vacated the premises in November 2017 on the basis of it being unsafe for occupation due to dilapidation and structural defects.
  • When the tenant failed to pay rent the following month, the landlord issued a Section 146 notice for arrears of rent.
  • In December 2017 the Yarra Ranges Council issued a Minor Buildings Works Order requiring the landlord to carry out restumping at the premises. The landlord undertook the works to comply with the order and advised the tenant it could recommence trading in late January 2018.
  • The tenant did not recommence its business operations and ceased communicating with the landlord despite numerous attempts at contact on the landlord’s part.
  • In February 2018 the landlord re-entered the premises on the basis of surrender and/or abandonment of the lease by the tenant.
  • The tenant was given until late October 2018 to collect its good from the premises which it failed to do.

Findings

  • VCAT found the premises was unsafe and determined that the Landlord was not entitled to claim rent from the tenant for the period the building could not be occupied. Had the Landlord attempted to re-enter the premises on the basis of non-payment of rent, that re-entry would have been unlawful.
  • VCAT found that the tenant had abandoned the premises as it had no valid reason for not re-entering the premises after the building works were complete. At no time did the tenant seek relief of forfeiture (ie to regain possession). The landlord’s re-entry was therefore found to be lawful on the basis of surrender of lease.
  • VCAT found the tenant had abandoned its goods, having failed to collect them almost one year after having vacated the premises. Unlike the various provisions of the Australian Consumer Law and Fair Trading Act 2012 (mentioned in our previous post here), the VCAT member accepted the provisions of the lease, in that items abandoned by the tenant would automatically revert to the landlord.

It should be noted, that following the outcome of the initial hearing summarised above, the landlord then made an application to VCAT for costs. The VCAT member acknowledged that had the landlord’s application for costs been made under Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) it would have been successful. However, Section 92 of the Retail Leases Act 2003 (Vic) which deals with vexatious conduct over-rides Section 109 and is a much more restrictive test. The member found that the tenant’s conduct was not vexatious and the landlord’s application for costs was therefore dismissed.

You may be interested to read this article where a landlord’s application for costs was successful on the basis of vexatious conduct.

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Bill DiDonna

Written by Bill DiDonna

After some 35 years as a commercial property manager, Bill has a strong knowledge of Melbourne’s suburban property market.

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