In the case of Mather v Abbott [No 2] [2013], the following five lessons for a Landlord were established:
- Make sure that you understand which clauses of your lease agreement will remain binding on both parties after the agreement is terminated;
- Never enter into a lease agreement that does not have a specific clause requiring the tenant to leave the premises in a state of tenantable repair when they vacate the premises;
- Keep proper records of all transactions and correspondence so that your potential claim does not fail on an evidentiary ground;
- Always monitor any unauthorised changes made to your premises; and
- Understand your rights against a tenant who makes unauthorised alterations to leased premises. Your measure of damages would likely be the reasonable cost of work necessary to produce conformity to the pre-existing appearance of the premises.
Background
In this case, the Defendant leased to the Plaintiff commercial premises under a lease agreement. The lease agreement was terminated by the Defendant for non-payment of rent.
The defendant brought a counter-claim against the Plaintiff for damages resulting from ten alleged breaches of the agreement – namely physical damage to the premises. At trial, Sleight DCJ decided each of the ten items of damages on a case by case basis.
Of the 10 items of damages claimed, only 2 items were awarded in full as there was a clear breach of the agreement which resulted in a loss for the Defendant. Six of the items were wholly or partially denied on the basis that there was insufficient evidence to prove liability, quantum or both.
The judge affirmed the principle of ‘reinstatement costs’ established in the High Court case of Tabcorp Holidings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009)83 ALJR 390 which provides that if a tenant makes unauthorised alterations to leased premises then the measure of damages is the reasonable cost of work necessary to produce conformity to the pre-existing appearance of the premises.
One claim was denied on the basis that the agreement did not contain a term requiring the Plaintiff to deliver the premises in tenantable repair upon vacation. As a result, upon termination the lease ceased except to the extent that the lease provided for a continuing obligation. Any damage to the property which occurred after the lease was terminated was therefore not suffered as a result of a breach of contract.
If you require further advice relating to lease agreements, please don’t hesitate to contact our offices and request a free initial appointment to discuss your circumstances.
