Repairs and maintenance
When it comes to repairs and maintenance on retail premises there can sometimes be confusion about who is responsible for what. Both parties need to know their legal obligations and what they need to do when maintenance is required.
Repairs and maintenance are a landlord’s responsibility under section 52 of the Retail Leases Act 2003 (the Act). You need to be aware that if your retail lease includes provisions for repairs or maintenance, the Act will always override them.
The landlord is required to maintain the following items in the same condition as when the lease was entered into:
- the structure of the premises (i.e. the walls and the roof)
- the fixtures in the premises (i.e. items belonging to the landlord, such as built-in shelving)
- the plant and equipment at the premises (e.g. the air conditioning system)
- the appliances, fittings and fixtures provided by the landlord under the lease and relating to services such as gas, electricity and water (i.e. powerboards, water pipes and the hot water system)
The landlord is not responsible for maintaining those items if:
- the need for the repair arises out of the tenant’s misuse of that item
- the tenant is entitled or required by the lease to remove the item at the end of the lease
The situation: A tenant had leased premises for several years. They used the space to produce cakes and bakery products. The premises included a cool room that was critical to the operation of the business.
The compressor to the cool room stopped working. A technician told the tenant that the compressor was beyond repair and would cost $7000 to replace. The tenant agreed, and a new compressor was installed.
The tenant sought full reimbursement from the landlord. The landlord refused, arguing it was the tenant’s responsibility to maintain and repair the compressor.
The process: The dispute progresses to mediation with the VSBC. At first, both parties refused to negotiate. The tenant wanted to be repaid in full. Meanwhile, the landlord argued that the compressor had not been kept in good repair.
It emerged during mediation that the compressor was more than 20 years old and at the end of its functioning life. The landlord offered to pay the tenant $5000.
The tenant was willing to accept $6000 to end the matter. But neither party would negotiate further.
The resolution: The mediator proposed an option whereby the landlord offered the tenant a rent-free period, with a value of $6,000, by way of reimbursement. Both parties agreed.
The Victorian Civil and Administrative Tribunal (VCAT) and the courts have handed down a number of decisions about how a landlord’s liability for repairs (section 52) is applied. These include:
- My Club Pty Ltd v Somalex Nominees (Retail Tenancies) (2008) VCAT 171 (31 January 2008)
- Yan and Anor v Wang & Anor VCAT 2405 (27 November 2008)
- Bretair Pty Ltd v Cave (No 2) (Retail Tenancies) (2013) VCAT 1808 (24 October 2013)
- Versus (Aus) Pty Ltd v A.N.H. Nominees Pty Ltd (2015) VSC 515 (1 October 2015)
- Anchong Nominees Pty Ltd v Rafei (Building and Property) (2015) VCAT 1313 (18 August 2015)