The situation: The tenant has leased premises to produce cakes and bakery products, and has done so for a number of years. The premises include a cool room that is critical to the operation of the business.

The compressor to the cool room has stopped working. A technician told the tenant that the compressor was beyond repair and would cost $7000 to fix. The tenant agreed, and a new compressor was installed.

The tenant seeks full reimbursement from the landlord. The landlord refuses, arguing that it is the tenant’s responsibility to maintain and repair the compressor.

The VSBC: The dispute progresses to mediation with the VSBC. At first, both parties refuse to budge: The tenant wants to be repaid in full. Meanwhile, the landlord argues that the compressor had not been kept in good repair.

It emerges during mediation that the compressor is more than 20 years old and at the end of its functioning life. The landlord is also informed that the tenant could take the compressor with him at lease end, as he has paid for it. Once this information comes to light, the landlord offers to pay the tenant $5000.

The tenant is willing to accept $6000 to end the matter. But neither party will budge further.

The resolution: The mediator proposes an option whereby the landlord offers the tenant a rent-free period by way of reimbursement. Both parties agree to this and the sum of $6000 is decided upon.

The tenant is happy with a $6000 reduction in rent, and the landlord recognises that, after tax, the amount is less than the $5000 the landlord was prepared to pay.

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