A recent High Court decision has made it clear that Lessee’s face potential liability in the event they alter leased premises without the Lessor’s consent.
In 1996, the applicant Tabcorp Holdings Ltd (“Tabcorp”) and the respondent Bowen Investments Pty Ltd (“Bowen”) entered into a ten year lease term with two five year options to renew. Prior to entering into the lease, Bowen had taken considerable care and expense in the construction of the foyer to the leased premises, with the foyer containing specialised materials (such as San Francisco Green Granite). In or around June 1997, Tabcorp approached Bowen regarding making alterations to the foyer area. Bowen responded in turn saying that consent was not given.
Bowen subsequently attended the premises and discovered that the glass and stone partition, timber paneling and stone floor tiles had been removed and what remained of the floor work was in the process of being jack-hammered. Despite protests on the part of Bowen, Tabcorp completed the alterations to the foyer area around August 1997. The Lease between Bowen and Tabcorp contained the following lease provision by which the Tenant covenanted:
“Not without the written approval of the Landlord first obtained (which consent shall not be unreasonably withheld or delayed) to make or permit to be made any substantial alteration or addition to the Demised Premises”
The lease also contained covenants that the Tenant will:
- Keep the premises in repair;
- To yield up the premises on the determination of the lease in good repair; and
- To make good any breakage or damage.
These provisions are considered standard lease terms.
The Federal Court originally found in favour of Bowen and awarded damages in the amount of $34,820.00 (which represented the difference in the value of the property with the old foyer and the value with the new foyer. Bowen appealed this decision. On ...