Retail Shop Tenancies: When Outgoings Can Be Withheld by Tenants

1. Summary

· A Landlord can give an estimate of operating expenses after the required 1 month period (provided it is still within the relevant year) and still recover for that year;

· If a Landlord does not provide an estimate of operating expenses until after the year expires, the Landlord may not be able to recover those expenses under the Commercial Tenancies (Retail Shops) Agreements Act 1985 (Act); and

· A Statement of Operating Expenses can be given at any time, the effect is only that the tenant’s obligation to pay outgoings for the year is suspended until the statement is given.


2. Background:

In the case of Trimat Holdings Pty Ltd v Investment Club Pty Ltd [2020] WASCA 63, Trimat Holdings Pty Ltd (Trimat) leased a retail shop from Investment Club Pty Ltd (IC) for a term of 10 years from 1 November 2010.


Section 12(1)(d)(i) of the Commercial Tenancies (Retail Shops) Agreements Act 1985 (Act) implies a term into a retail lease requiring a Landlord to provide an estimate of outgoings for that year, where a retail shop lease makes provision for the tenant to pay the operating expenses of the Landlord, otherwise the tenant is not required to pay and the landlord is not entitled to recover operating expenses for a year until 1 month after the landlord gives the tenant an estimate of outgoings for that year


IC never provided any estimates of operating expenses (outgoings).


Section 12(1)(d)(ii) of the Act implies a term into a retail lease requiring a Landlord to give a tenant a written statement of operating expenses actually incurred in that period (to be provided within 3 months of the end of the year). Section 12(1d) states the tenant is not obliuged to pay and the landlord is not entitled to recover operating expenses from the date of non-compliance until the Landlord does comply.


IC also never provided any statements of operating expenses but Trimat paid outgoings totalling over $250,000 for over 6 years.


3. Decision

The question for determination was: “Can a Landlord comply with the s12 requirements by providing the estimates of operating expenses (outgoings) or operating expenses statements for each relevant period after the prescribed time”.


The Court Found that:

a) If the Landlord does not give an estimate until some months into the year, once the landlord gives the estimates, the tenant is liable for all outgoings of that year, not just those incurred in the months after the estimate is given. This is because is suspends the obligation to pay outgoings and does not extinguish the obligation to pay.

b) If the Landlord does not give an estimate at all during the relevant year, then it is impossible for it to be an estimate of anticipated operating expenses so the Landlord is forever suspended from recovering those operating expenses. The Court said Trimat may be able to recover though the Landlord may have other causes of action to avoid repaying the expenses mistakenly paid.

c) The Court did not make a final determination on the question relating to the operating expenses statement in this case but did state that an operating expenses statement can be given more than 3 months after the relevant period.





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