Running a profitable business from a shop premises requires the right balance between demand, supply, and foot traffic – especially if you are operating from a shopping centre. A change in any of these three variables could impact your bottom line. We assume that you have the supply and demand under control, but what about unforeseeable circumstances where the shopping centre escalators stop working and interfere with shoppers accessing your premises. Can a landlord simply show up unexpectedly, close your shop and commence repairs? We set out below how this scenario interplays with the right to quiet enjoyment under the Retail Leases Act 1994 (NSW) (‘the Act’)
The Right to Quiet Enjoyment
Under the common law (judge-made law), you have the right to quiet enjoyment meaning that your landlord cannot interfere with your rights to trade from your shop during the term of your lease. This includes limiting the landlord’s right to enter your premises for repairs or inspection unless he or she provide you with notice. In a retail lease, this is subject to a reasonable notice period (i.e., not five minutes beforehand unless in an emergency) and a time agreed between the parties – perhaps during a quiet time of the day and not peak hour shopping.
Rights Under Retail Legislation
In several states, the retail legislation extends the scope of quiet enjoyment to a right to compensation if the landlord restricts access to your premises or fails to rectify the breakdown of equipment that is critical to your business. For example, if your air conditioner or lifts to access your premises stop working.
Under section 34(1) of the Act, a tenant is entitled to compensation if:
- The landlord inhibits access to the shop in a substantial manner (such as erecting boards near the entrance so as to restrict the flow of pedestrians);
- The landlord fails to take reasonable steps to prevent or stop anything that causes significant disruption on trading of the tenant’s shop that is within their control. For example, a landlord fails to take action against other tenants causing disruption;
- The landlord fails to rectify any breakdown of plant or equipment under their care and maintenance.
Your right to compensation will depend on the facts and what disclosure the landlord made to you at the commencement of your lease. Did the landlord draw your attention to any anticipated disturbance before entering into the lease?
An interruption could be costly to your business and impact its ability to survive in an increasingly competitive retail environment. It’s prudent that before signing your retail lease that you know what rights you have regarding compensation if your landlord causes any interference or business interruption to your shop premise. If you require any assistance with reviewing your retail lease, or have questions about your rights as a tenant, get in touch with our commercial leasing lawyers on 1300 544 755.