Some comments on the new disclosure statement under the Retail Leases Act 2003 (Vic)

As most readers are aware, Victoria has had a new disclosure statement under the RLA 2003 since 1 January 2011.

A copy of the regulations with the new disclosure statement can be found here.

I previously posted some comments on the new disclosure statement here.

I have been looking at this again recently and have set out below some additional comments that readers might find useful.

Sections 17 and 18 of the RLA 2003 set out the consequences for failing to give a disclosure statement. There are also consequences for giving a statement that is ‘false, misleading or materially incomplete’.

In addition to the consequences set out in the statute, it seems to me that the main risk arising out of a landlord’s disclosure statement is their use by the tenant in a damages claim arising out of pre-contractual representations.  Damages claims are often used defensively by a tenant seeking to set-off damages against rental arrears (click here for a discussion on using a damages claim and equitable set-off defensively).  As discussed in my earlier post on the new disclosure statement, there are some parts of the disclosure statement that may be difficult to complete and may give rise to errors.  Solicitors advising landlords on the completion of the new disclosure statement should be aware of those difficult clauses and be careful to avoid inadvertent misrepresentations.

Clause 28.1 of the new disclosure statement requires the landlord to disclose ‘[a]ny other representations by the landlord or the landlord’s agent’.  I have been told that most landlords are saying something to the effect of ‘nil, other than those contained in the lease and this disclosure statement’.  This, on its own, will not absolve the landlord of any liability under the TPA or the FTA for pre-contractual representations.  However, as the statement is usually signed by the tenant, it supports an argument that the tenant did not rely on any pre-contractual representations.  For a discussion on the effect of acknowledgements of this kind, see Poulet Frai Pty Ltd v The Silver Fox Company Pty Ltd (2005) 220 ALR 211; [2005] FCAFA 131 (otherwise known as “Lenard’s Chicken case”).

Clause 16.1 of the new disclosure statement suggests that legal costs may be recoverable.  However, costs associated with the negotiation, preparation or execution of a lease cannot be recovered under s 51 of the RLA 2003 and legal costs of a retail tenancies dispute generally cannot be recovered under s 92 of the RLA 2003.

Some other issues that have been drawn to my attention by solicitors who practice in this area are:[1]

• the ‘tick-a-box’ format of the new form invites error, particularly from ‘mum and dad’ landlords;
• clause 17.1 of the statement asks for:

…any alteration works, planned or known to the landlord at this point in time, to the premises or building/centre, including the surrounding roads, during the terms or any further term or terms…

It is not clear how far this reaches.  Are the roads limited to roads within the shopping centre, or does it extend to roads outside the centre and in the control of the council?  How much investigation is required?  At this stage, again, the best that landlords can do is disclose everything they are aware of and then add an appropriate qualifier.  It may also be prudent to add that the landlord has not made any inquiries or detail the inquiries that have been made.  This will not necessarily prevent the document from being materially incomplete, but it is difficult to see what else a landlord can do;

• clause 14 asks for estimates of outgoings including GST.  I am told that landlords often give their estimates of these figures pre-GST in negotiations.  Clause 22, on the other hand, specifies the figure as both including and excluding GST.  This could give rise to errors when completing the document;
• clause 4.2 asks whether the landlord has provided a copy of any Crown lease to the tenant and clause 33.2 only allows for either a ‘yes’ or a ‘not applicable’ to be completed.  It is not clear whether the landlord is obliged to provide a copy of any Crown lease.  However, as provision of a completed disclosure statement is required under the Act, it is prudent to provide a copy of any Crown lease (if applicable);
• clause 14.10 refers to the prohibition on recovery of capital costs under s 41 of the RLA, but does not make reference to the landlord’s obligation to conduct repair and maintenance under s 52 of the RLA and the difficulties associated with recovery by the landlord of those costs (for a discussion of this issue, click here);  and
• there is no obligation to disclose the security required by the landlord.  Some practitioners include this in the landlord’s representations in clause 28.1.