The tenants' new weapon - s.251 of the Building Act 1993

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Recently I have attended a number of mediations at which tenants have invoked s.251 of the Building Act 1993 as part of the bargaining process. Section 251 affords tenants a powerful weapon. Section 251 provides that:

(1) If the owner of a building or land is required under this Act or the
      regulations to carry out any work or do any other thing and the owner does not carry out the work or do       the thing, the occupier of that building or land or
      any registered mortgagee of the land or the land on which the building is
      situated, may carry out the work or do the thing.

(2) An occupier may-

   (a)  recover any expenses necessarily incurred under subsection (1) from
        the owner as a debt due to the occupier; or

   (b)  deduct those expenses from or set them off against any rent due or to
         become due to the owner.

.....
(6) This section applies despite any covenant or agreement to the contrary.

      The effect of s.251 is that if the owner is required by the Act or by the Building Regulations 2006 to           keep premises in a specified state:

(i)  the owner cannot contract out of those obligations by, for example, including provisions in a lease that            make the tenant liable to repair the particular items (Chen v Panmure Hotel Pty Ltd [2007] VCAT            2463);

(ii)  a tenant can do the work that the landlord was obliged to do and recover the costs from the landlord             owner; and

(iii) a tenant can set-off the costs of doing the work that the landlord owner was obliged to do against the             rent.

The usual rent covenant that rent must be paid "without deduction" will not avail the landlord if it fails to comply with s.251 and the tenant does the work that the landlord was obliged to do.

Regulations 1212-1217 require the owner to maintain essential safety measures for a specified class of building built before 1 July 1994.

Regulations 1201-1211 require the owner to maintain essential safety measures for the same classes of buildings built after 1 July 1994.

Regulation 1217 requires the owner of a building to maintain essential safety measures in a state that enables them to fulfil their purpose. 

Under regulation 1205 the owner of a building or place of public entertainment must comply with a maintenance determination regarding a building built after 1 July 1994. 

Regulations 1202 and 1213 define essential safety measures. Regulations 1208 and 1214 requires an owner of a building to prepare an annual essential safety measure report.

Section 251 imposes more significant obligations on a landlord than those implied into leases by s.52 of the Retail Leases Act 2003.

Before entering into a commercial lease both landlords and tenants should consider the effect of s.251 of the Act.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Is a purchaser of land bound by covenants in a lease?

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When premises are sold the question often arises as to whether a tenant can enforce  covenants contained in the lease against the new owner?

At common law, unaffected by statute, an assignee of the reversion is not bound by any of the covenants and conditions of the lease. See: In re Hunter's Lease [1942] 1 Ch 124 at 128. In Victoria, s 142 of the Property Law Act 1958 altered this position and an assignee of the reversion is bound by covenants contained in the lease that "touch and concern" the land. In Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2010] VSC 44 Croft J held that a restraint of trade clause contained in a lease did not "touch and concern" the leased land and therefore did not bind the assignee of the reversion.


The case contains a detailed analysis of the type of covenants that "touch and concern" land (see [52] - [67]). In broad terms any covenant that affects the landlord as a landlord or the tenant as a tenant will probably be within the class of covenants that touch and concern the land. See: Bradbrook, Coft & Hay Commercial Tenancy Law, 3rd ed, paragraph 15.20, p. 483.

My clerk can be contacted via this link for bookings  http://www.greenslist.com.au/