Property Law: 10 October 2023
Author: Robert Bradley - Our People
Landlords under retail leases who do not give their tenant an annual estimate of outgoings cannot recover outgoings from that tenant.
Section 46(3) of the Retail Leases Act 2003 Vic. implies a provision into every retail leaseI which requires an annual estimate which itemises outgoingsii to be given at least one month before the start of “each of the landlord’s accounting periods”iii. Section 46(4) implies a provision that the tenant is not liable to contribute to any outgoings if the required estimate has not been given.
Although the words “the landlord’s accounting periods” might seem to apply only to leases which require the tenant to make regular outgoings payments pursuant to an annual outgoings budget, section 46 does seem to also apply to leases which simply require tenants to pay (or reimburse the landlord for) rates, insurance premiums and other invoices upon receiptiv.
The requirement for the estimate to be given at least one month before the start of each of “the landlord’s accounting periods” has been interpreted by VCAT to prevent an estimate having retrospective effect – i.e. the tenant will not be liable until the estimate is givenv.
The position of the landlord is partly ameliorated because:
i A lease cannot contract out of such provisions due to section 94(1) of the Retail Leases Act 2003 Vic.
ii “Outgoings” is widely defined in s.3.
iii “Accounting Period” is defined in s.3 to mean the period of 12 months specified in the lease.
iv A search of reported cases on point has not uncovered any distinction; “Retail Lease Outgoings” R. Cocks in Oct 2019 LIJ 65.
v Phillips v Abel [ VCAT 1031; Amazing Accommodation Pty Ltd v Ou  VCAT 986 at ;.
vi Australian Asset consulting Pty Ltd v Staples Super Pty Ltd  VCAT 1726; Richmond Football Club Ltd v Verraty  VCAT 2104.
vii Or possibly earlier, see Jones v Mega Bargains Pty Ltd  VCAT 344 at  where an estimate for the current accounting period was held to be acceptable; this decision was not followed in the cases cited in endnote v above.