Australia: Commercial and retail leases in Victoria: landlord's right to dispose of uncollected goods

In brief - Landlords should consider including provisions dealing with uncollected goods in the lease

Change is imminent in the law in Victoria relating to the landlord's removal and disposal of goods left behind by a tenant who has vacated the premises.

Landlord and Tenant Act to be repealed by the Australian Consumer Law and Fair Trading Act 2012 (Vic)

Part IVA of the Landlord and Tenant Act 1958 (Vic) (LTA) provides for the removal and disposal of goods left on vacated premises. However, the LTA will be repealed by the Australian Consumer Law and Fair Trading Act 2012 (Vic) (Act), with the effect that Part 4.2 of the Act will deal with the disposal of uncollected goods. Part 4.2 will commence on 1 December 2012 unless proclaimed earlier and will not apply to a lease to which Part IVA applied immediately before the commencement of Part 4.2.

The Part applies if there is no agreement between the parties about the disposal of uncollected goods. If there is an agreement, the Part only applies in respect of matters not dealt with by the agreement. In contrast to Part IVA, Part 4.2 expressly states that the parties can reach an agreement about the disposal of uncollected goods.

Uncollected goods under commercial leases and retail leases as defined under the Retail Leases Act 2003 (Vic) are covered by the Part, however, the Part does not apply to goods left behind at the end of a tenancy to which the Residential Tenancies Act 1997 (Vic) applies.

Part 4.2 and operation of common law relating to bailment of goods

Part 4.2 applies to "the possession of goods under a bailment..." The Part preserves the operation of the common law relating to bailment of goods and a person is entitled to exercise any rights that the person may have at common law in relation to recovery of or compensation for the loss of or damage to goods except to the extent Part 4.2 otherwise provides.

There is some difference in the terminology used in Part 4.2. Notably, the "provider" is defined as the person who gives possession of goods under a bailment (whether or not the person is the owner of the goods), taken under a lease to be the tenant. The "receiver" is defined as the person who takes possession of the goods - the landlord.

Landlord's costs related to tenant's uncollected goods

"Relevant charge" refers to the amount payable by the provider to the receiver for goods under bailment and payment of which entitles the provider to take delivery of the goods. It includes costs relating to the carriage, storage or insurance of or maintenance, repairs, cleaning, treatment, or other work done in connection with the goods as agreed by the provider and receiver or in the absence of an agreement, an amount that is reasonable. If a dispute arises either party can apply to a court for an order determining the amount of the relevant charge payable to the receiver.

Categories of value of uncollected goods

Part 4.2 introduces categories of value of uncollected goods. Uncollected goods are categorised as low value (less than $200), medium value ($200-$4999) and high value ($5000 or greater amount). Separate values and provisions apply to motor vehicles. Interestingly, there is no provision for the determination of value.

Low value goods can be disposed of if the receiver has given the provider written notice of its intention to dispose of the goods and the provider has not collected its goods upon the expiration of 28 days since giving the notice. If the receiver cannot locate the provider to give the written notice the receiver can dispose of the goods after 60 days have lapsed since the goods became uncollected goods.

For medium value goods the receiver is also required to give written notice to the owner of the goods if the receiver is aware that the provider is not the owner of the goods, and if the provider and owner cannot be located the goods may be disposed of at the expiration of 90 days.

High value goods have further additional notification requirements. The receiver must also notify in writing any person who has a publicly registered interest in the goods and any other person having or claiming an interest in the goods of which the receiver is aware, and if the provider and owner of the goods cannot be located then the goods may be disposed of at the expiration of 180 days.

Landlord's written notice of intention to dispose of goods

Written notice may be given personally or left at or posted to the person's last known address specifying in the notice information including the address at which the goods may be collected, the relevant charge payable and the date after which the goods will be disposed of if they are not collected and the relevant charge paid. Unlike Part IVA, a receiver is not required to advertise in a Melbourne newspaper his intention to sell the goods prior to disposal.

Disposal of uncollected goods

Part IVA provides one method of disposal, sale by public auction. Under Part 4.2 however, low value goods can be disposed of by sale, destruction, appropriation or by other means. Medium value and high value goods may only be disposed of by public auction or private sale. There is also a provision for perishable goods which may be disposed of by sale, appropriation or destruction.

Within seven days after disposing of the uncollected goods, the receiver must prepare a record containing information prescribed by Part 4.2 about the goods and their disposal and must retain the record for 6 years from the date of disposal.

Clauses landlords could include in the lease

Since Part 4.2 enables a provider and receiver to make an agreement about the disposal of uncollected goods, landlords should consider inserting provisions in a lease to avoid the application of any unsuitable provisions and to deal comprehensively with the disposal of uncollected goods in a manner consistent with their requirements. Some points for landlords to consider are:

  • obliging the tenant to remove its goods when vacating the premises.
  • if the goods are not removed, the period of written notice given to the tenant for the removal of abandoned or uncollected goods. The period of notice should be reasonable having regard to the nature of goods. It helps if the goods are defined in the lease.
  • who will have access to the premises for the removal of goods - the tenant, its employees or agent and whether access will be provided under the supervision of the landlord and/or its agent.
  • stipulating that while the tenant has access to the premises, the landlord remains in possession and control of the premises.
  • the period of access by the tenant and times at which access is granted.
  • the tenant's liability for any damage caused to the premises during the removal of goods and an indemnity in favour of the landlord.
  • the requirement that the tenant leave the premises clean and tidy after the collection of goods.
  • the landlord's entitlement to remove, store and dispose of the goods.
  • exempting the landlord from any liability for loss of or damage to any of the tenant's goods through the landlord's negligence while removing the goods or while in the landlord's possession.
  • the method of disposal of goods: by public auction, private or internet sale or by destruction.
  • the payment of rent and outgoings until the goods are removed and the premises cleaned or made good as prescribed by the lease.
  • the tenant paying all costs of the landlord in the removal and storage of goods.

If you require assistance in relation to the disposal of uncollected goods or in drafting suitable lease provisions, you can contact Gessica Giordano or Mark White via the contact details on the right hand side of this page.

Gessica Giordano
Leasing - commercial and retail
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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