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Section 52(2) of the Retail Leases Act 2003 provides that:

"The landlord is responsible for maintaining in a condition consistent with the condition of the premises when the retail premises lease is entered into:

(a) the structure of, and fixtures in, the retail premises;

      and

 (b)the structure of, and fixtures in, the retail premises; and

(b)                plant and equipment at the retail pemises; and

the appliances, fittings and fixtures provided under the lease by the landlord relating to the gas, electricity, water, drainage or other services.

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

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/

What is the effect of a nominee clause?

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What is the effect of a purchaser of land nominating a nominee under a nomination clause contained in the contract: what rights and obligations does the nominee have? The answer is none: the nominee has no contractual rights and no obligations. In 428 Little Bourke Street Pty Ltd v Lonsdale Street Cafe Pty Ltd [2009] VSC 133 the vendor misrepresented the lettable area of the property. The purchaser nominated the plaintiff as purchaser. The director of the purchaser was also the director of the nominee. It was alleged that the nominee purchaser relied on the representations.

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The nominee clause  provided as follows:

"If the contract says that the property is sold to a named purchaser ‘and/or nominee’ (or similar words) the named purchaser may, at least 14 days before settlement date, nominate a substitute or additional purchaser, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract."

The contract authorised a substitute or additional purchaser. The nominee purchaser brought an action for damages based on a breach of s 52 of the Trade Practices Act, s 9 of the Fair Trading Act and for negligent misstatement.  Judd J held that that the nomination did not have the effect of a novation and the plaintiff did not become a party to the contract of sale.

His Honour also found that by the time the plaintiff paid the purchase price and took the conveyance it was aware of the true lettable area of the property. Thus, the cause of the plaintiff’s loss was either an informed choice to pay a price for the property and take the conveyance or, if the payment was involuntary, it was because the plaintiff was caused by its directors, in full knowledge of the true facts to make the payment in which case but for the nomination it would not have suffered any loss. 

The loss was caused by the nomination - not the representations.  Judd J dismissed the proceeding.

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

Everything must be in writing

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It is extraordinary how often lawyers overlook the cardinal rule when dealing with land:

anything intended to have legal effect must be in writing.

See: s.53 of the Property Law Act 1958 and s.126 of the Instruments Act 1958.

The most overlooked rule appears to be that where an agent is to sign a contract or enter into an agreement that will affect an interest in land the agent must also be authorised in writing to sign the contract or enter into the agreement.

 In Federation Properties Pty Ltd v Tzioras [2001] VSC 135 Byrne J held that a contract for the sale of land was unenforceable because the agent who made the contract had not been authorised in writing. Lawyers settling court proceedings should be particularly careful about ensuring that they have written instructions to sign terms of settlement. See: Grummitt v Natalisio  [1968] VR 156; Collin v Holden [1989] VR 510.

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

Section 52 - when is the lease "entered into"?

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Section 52 of the Retail Leases Act 2003  is proving to be a difficult provision to apply. Section 52 implies into a retail premises lease a term that:

"The landlord is responsible for maintaining in a condition consistent with the condition of the premises when the retail premises lease was entered into -

(a)     the structures of, and fixtures in, the retail premises lease; and

(b)     plant and equipment at the retail premises; and

....." (s.52(2))

When is the lease "entered into"?   If the tenant occupies premises for 5 years and exercises an option for a further 5 years what is the date at which the "condition of the premises" is assessed; at the commencement of the first term of 5 years or at the commencement of the second term of 5 years? 

In Ross-Hunt Pty Ltd v Cianjan Pty Ltd [2009] VCAT 829 Deputy President Macnamara held that the relevant date was the date that the new term commenced following the exercise of an option.  The lesson for tenants is that a thorough assessment of the state of the premises should be undertaken when the tenant first occupies the premises; regular reviews of the state of the premises should also be undertaken during the term; and the landlord should be requested to undertake repairs during the term.

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

When is the rent paid?

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Disputes often arise about whether the tenant has paid the rent by the due date in accordance with the lease. The problem usually arises where a tenant posts the rent and the rent is not received by the due date.

The basic rule is that a debtor (including a tenant) must seek out his creditor (including a landlord) and is not regarded as having paid the rent until the remittance actually arrives in the landlord's possession.

The mere fact that as a matter of course the tenant had paid by post does not , without more, indicate that the creditor has authorised use of the post such that the creditor takes the risk of non-delivery or that payment was deemed to have been made from the date of posting.

The authorities are examined in detail by Deputy President MacNamara in Happy Century Pty Ltd v Nezville Pty Ltd (2000) V ConvR 58-546.

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

What is the tenant to do if the landlord unreasonbly withholds consentto an assignment?

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Where a landlord refuses consent to an assignment of the term of the lease the tenant's usual remedy is to seek a declaration that the landlord has unreasonably withheld consent. Damages are not normally available because in the absence of clear words provisions requiring the landlord's consent are construed as merely amounting to a qualification of the covenant not to assign.

See: Bradbrook, Croft & Hay Commercial Tenancy Law, para 15.9. Vickery J's decision in Xiao  v Perpetual Trustee Company Limited & Anor [2008] VSC 41 poses real problems for tenants because at [21] he held that s.124(1) of the VCAT Act only empowered VCAT to grant a declaration instead of an order it could make or in addition to an order it could make. His Honour said:

"Given that Mr Xiao does not claim damages, in order to enliven the jurisdiction of VCAT to grant a declaration, he would have needed to claim, or demonstrate that he was entitled to claim, other relief, for example by way of a permanent injunction pursuant to s 123 of the VCAT Act, before a declaration could be granted."

Because the tenant is not usually seeking other relief or not entitled to other relief what is it to do?

The same problem will arise if a tenant and landlord seek a declaration that moneys to be paid by a tenant are not key money (see s.23 of the Retail Leases Act 2003)

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

Parliament needs to clarify VCAT's powers to grant declarations.