Section 52 – when is the lease “entered into”?

Section 52 of the Retail Leases Act 2003 is proving to be a difficult provision to apply.

Section 52 implies into a retail premises lease a term that:

“The landlord is responsible for maintaining in a condition consistent with the condition of the premises when the retail premises lease was entered into -

(a) the structures of, and fixtures in, the retal premises lease; and

(b) plant and equipment at the retail premises; and

…..” (s.52(2))

When is the lease “entered into”? If the tenant occupies premises for 5 years and exercises an option for a further 5 years what is the date at which the “condition of the premises” is assessed; at the commencement of the first term of 5 years or at the commencement of the second term of 5 years? In Ross-Hunt Pty Ltd v Cianjan Pty Ltd [2009] VCAT 829 Deputy President Macnamara held that the relevant date was the date that the new term commenced following the exercise of an option. The lessson for tenants is that a thorough assessment of the state of the premises should be undertaken when the tenant first occupies the premises; regular reviews of the state of the premises should also be undertaken during the term; and the landlord should be requested to undertake repairs during the term.