We are conscious that many in the Whitsundays community may have been severely impacted by the recent fire at Whitsunday Shopping Centre and its aftermath. There are tenants whose premises may have been fully or partially destroyed or damaged by the fire, and others who are or have been unable to access or use their premises for a period of time. This situation can be very distressing to tenants and leave many wondering what their rights are and what they will do following these events. Before you make any decisions, we recommend that you obtain legal advice concerning your rights and obligations, however, in the meantime, we have set out below some general information that might assist you in the immediate aftermath.
What about my Rent and Outgoings?
The Property Law Act implies a standard condition in leases, that if a premises or part of it is destroyed or damaged by fire without fault on the part of the tenant such that it becomes unfit for occupation and use of the tenant, then the rent, or a proportionate part of it (determined according to the nature and extent of the damage) will not be payable until the premises are rebuilt or made fit for occupation and use of the tenant. This means that a tenant will be entitled to relief from paying rent while their premises cannot be occupied and used where they are not at fault for the destruction or damage.
It is possible for parties to contract out of these provisions, however, and most leases provide that this particular part of the Property Law Act doesn’t apply. Instead, leases may incorporate their own terms which will apply where part of a premises or shopping centre is destroyed or damaged and the tenant is unable to use their premises or trade from it.
Generally, the express terms in the lease will be similar to those provided in the Property Law Act although they may be more favourable to the tenant. For example, the lease terms may provide, not just for rent, but also outgoings (if the tenant is paying them), to cease for the period that the tenant cannot use their premises. The lease terms may also more specifically allow the rent relief where the premises, even though not affected directly by the fire or other damage, is unable to be accessed due to events that have occurred in other parts of the centre.
Compensation
In addition to the immediate concern of what happens with rent while the premises is unable to be used, tenants may also face many other losses. For those whose premises have been damaged by or as a result of the fire, these may include lost profits for the period that the business is unable to trade and costs of replacing property and equipment damaged by fire or damaged by water used to fight the fire.
Those tenants with premises in the Centre which have not been damaged by the fire, over time, may experience a loss of profits, for example, as a result of a reduction in the number of customers in the Centre.
Until the cause of the fire is determined, liability and the potential causes of action available to an affected tenant remain unknown.
Those tenants with insurance will be able to make a claim against their insurer with respect to their losses. The amount and nature of any claim depends on the type of the insurances held by the tenants and the terms and conditions of the policy documents. We recommend that tenants consider their position under their insurance policies as soon as possible, as if an insurance claim can be made, it should be made promptly.
There are also a few provisions under the Retail Shop Leases Act which may assist tenants to obtain compensation from the landlord.
Section 43 of the Retail Shop Leases Act provides specific circumstances where compensation can be claimed from a landlord. These generally apply where the landlord or a person acting under their authority takes specific action which affects the tenant’s access to the shop, or their trade. For example, this may apply if the damage is not repaired promptly or the work is done in a way that unreasonably obstructs access to a tenant’s premises.
The Retail Shop Leases Act also provides a procedure where disputes between landlords and tenants may, in the first instance, be referred to mediation and then, to the Queensland Civil and Administrative Tribunal (QCAT) for resolution. There are few limits on the types of disputes that may be referred to QCAT. The lease itself may also provide a procedure for resolving disputes.
We expect that Centre Management and the landlord will try to assist tenants to minimise the disruption and impact of the fire on their businesses. Ideally, affected tenants would be able to reach some sort of agreement with the landlord that would adequately compensate them for the losses they experience as a result of the closure of part of the Centre and/or any construction work. Tenants will need to show evidence of their loss in order to justify any claim or request for compensation or relief. We recommend tenants prepare or collate their financial records for the few years prior to the fire and, once they are able to recommence trading, the period after the fire. This will assist you to demonstrate your loss as a result of the fire. It will also assist you to calculate an appropriate amount of rent that could be sustained in the changed conditions that will apply following the fire.
If agreement could not be reached with the landlord, tenants may wish to use the dispute resolution procedures provided in their lease and the Retail Shop Leases Act to negotiate an agreement with the landlord with respect to a reduction of rent or some other relief to compensate them for their loss. Further information about the dispute resolution procedures available under the Retail Shop Leases Act may be accessed by using the following link:-
http://www.qcat.qld.gov.au/__data/assets/pdf_file/0004/101200/guide-to-dispute-resolution.pdf
Further Advice
It is not possible to consider all the potential impacts of the fire in this article. The individual circumstances of each tenant within the Centre also vary considerably. If you have been affected by the fire and are concerned about your rights, we encourage you to contact us so that we can obtain details of your specific circumstances and provide you with personalised advice to assist you to ascertain your legal position at this difficult time.
