Goods left on premises after the expiry or termination of a lease

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On 1 September 2011 the law governing goods left on leased premises following the termination of a lease will be governed by Part 2D of the Fair Trading Act 1999. Part 2D replaces the repealed ss.42A to 42F of the Landlord and Tenant Act 1958. Part 2D applies to “goods under bailment” (s.32ZS(1)).

A landlord is not usually the voluntary recipient of goods left on leased premises. The drafters of the legislation have assumed that a bailment exists in the absence of a conscious and willing assumption of the possession of the goods; they do not appear to have been concerned about Palmer’s statement that the approach of the English courts has been to deny that the involuntary recipient of goods is a bailee (Palmer, N.P, Palmer on Bailment, 2009, Sweet & Maxwell, page 703).  

Part 2D also fails to include a satisfactory definition of “bailment”. Section 32ZP of the proposed Part 2D of the Fair Trading Act defines  “bailment” as including:

“bailment for reward, bailment in the course of business, gratuitous bailment, involuntary bailment and any sub-bailment”. (underlining added)

 Unfortunately the expression “involuntary bailment” is not defined. Part 2D would have no application at all if VCAT or a court were to determine that a bailment relationship did not arise between a landlord and a tenant with respect to uncollected goods in premises following the expiry or determination of the lease.

A landlord could face the risk of being liable in conversion if it disposed of the goods. The legislation appears to be mainly concerned with ensuring that the bailee is paid moneys owing in respect of goods; however, a landlord is not usually owed money with respect to goods: the landlord is usually owed rent or outgoings. Part 2D establishes different regimes for the disposal of goods with each regime dependent on the value of the goods. The relevant values are: less than $200; less than $5000 and more than $5000. Part 2D does not affect the right of parties to a lease to make an agreement about the disposal of uncollected goods (Section 32ZS(6)).

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