What protection do the unconscionable conduct provisions of the Retail Leases Act 2003 provide?

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Table of Contents

• Do the same rules apply to tenants?
• What happens if, as a result of the tenant/landlord’s unconscionable conduct, my property is damaged?
• Conclusion

There are certain things that landlords are prohibited from doing in terms of how they conduct themselves with tenants or potential tenants in a commercial lease.

For example, in Victoria, a landlord under such a lease must not engage in conduct that is considered unconscionable. This is explained under section 77 of the Retail Leases Act 2003 (the Act). But how is unconscionable conduct defined under the Act? If you’re currently leasing a space for your business and feel as if you have been treated unfairly by your landlord, or vice versa, a commercial leasing would be the best person to speak with. They’ll be able to review the lease if you believe it has been unfairly drafted. 

What is ‘unconscionable conduct’?

In determining whether or not such conduct is “unconscionable”, some consideration is given (but not limited to) the example of conduct detailed under section 77(2) of the Act. Some of these matters are:

• The relative strengths of the bargaining positions of the landlord and tenant; (perhaps there is a language barrier which puts the prospective tenant at an obvious disadvantage)

• Whether, as a result of conduct engaged in by the landlord, the tenant was required to comply with conditions that were not reasonably necessary for the protection of the landlord’s legitimate interests (for example, the landlord may insist on imposing unreasonable rules for using the space, such as giving the landlord access at all times); and

• Whether the tenant was able to understand all the documents relating to the lease (for example, the tenant may not be able to read, or their English might not be perfect, or perhaps the documents are difficult to understand or were damaged when received by the tenant)

Do the same rules apply to tenants?

Just as landlords are prevented from acting unconscionably towards their current or prospective tenants, a tenant under a under a retail premises lease or a proposed retail premises lease must not, in connection with the lease or proposed lease, engage in conduct that is, in all the circumstances, unconscionable. This is covered under section 78 of the Act.

Some of the scenarios where the conduct of a tenant might be deemed unconscionable are listed below:

• The relative strengths of the bargaining positions of the tenant and landlord;

• Whether, as a result of conduct engaged in by the tenant, the landlord was required to comply with conditions that were not reasonably necessary for the protection of the tenant’s legitimate interests (perhaps the tenant insisted on excluding the landlord’s right to inspect the property through intimidation or threats, for example); and

• Whether the landlord was able to understand any documents relating to the lease.

What happens if, as a result of the tenant/landlord’s unconscionable conduct, my property is damaged?

A landlord or tenant who suffers loss or damage because of unconscionable conduct of another person that contravenes section 77 or 78 may recover the amount of the loss or damage by lodging a claim with the Victorian Civil and Administrative Tribunal against the other person. This claim must be lodged within 6 years of the alleged unconscionable conduct occurring. Otherwise, it won’t fall within the Statute of Limitations period (this is the maximum period of time after an offence has been committed that a person can wait before they take action against an alleged offender).

Conclusion

The Act prohibits any unconscionable behaviour of either the landlord or tenant, especially conduct that takes advantage of things like a person’s language ability, mental health, physical health or age, to name just a few.

If you feel as if your landlord or tenant has acted unconscionably towards you, it might be time to speak with a commercial leasing lawyer. Contact LegalVision on 1300 544 755 and let us help you settle the dispute.