In brief - Landlords risk breaching the lease by failing to
A landlord's failure to effect repairs to leased premises
may result in the tenant being entitled to compensation for any
losses that it incurs as a result, particularly if the tenant's
business is affected. The landlord also risks breaching the lease
and having the tenant terminate it.
Lost stock, loss of profits and rent abatement
The Administrative Decisions Tribunal of NSW recently awarded a
tenant a total amount of $28,186.27 which represented an amount for
lost stock and loss of profit while the business had been closed
and after the business was reopened.
The amount also represented an abatement of rent which was paid
by the tenant to the landlord while the premises could not be used.
The court also ruled that the landlord was to pay the tenant's
costs of $2,400.
The effect of this decision is that a landlord must carry out
its repair obligations to premises when they are required by the
lease. If the damage to the premises is exacerbated by the passing
of time, the financial detriment could be even worse for a
landlord, who then needs to compensate the tenant for any
disruption to its business.
Eather v Nguyen
In Eather v Nguyen  NSWADT 80, the tenant had
complained to the landlord about the condition of the floor in the
premises. The condition of the floor in the premises made it
impossible for the tenant to keep the premises clean and comply
with the food regulations for the bakery operated at the
The lease required the landlord to repair and maintain the floor
to the condition at the commencement of the lease. The relevant
authority served an order under food and health legislation,
requiring the premises not to be used until the defects including
the floor had been rectified.
The floor required replacement and this was the landlord's
responsibility. Ultimately, the tenant could not use the premises
for months whilst the landlord replaced the floor. This meant that
the tenant's business was closed for that duration.
Neglecting repairs to premises can be costly for landlords
A landlord needs to ensure that it exercises its rights to
inspect the premises regularly and keeps up to date with repairs.
This includes not only those repairs required by the landlord, but
also those required by the tenant.
This avoids the situation where necessary repairs are neglected,
resulting in the deterioration of the premises, the closure of the
business and a compensation claim being made by the tenant while
the works are being done.
Depending on how a lease is drafted, such a situation may also
give rise to a tenant terminating the lease for the landlord's
breach of lease for failure to effect repairs to the premises.
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