What is fair wear and tear?
In a lease the tenant is often required to keep the premises in a certain condition.
This condition is often included as an express term in the lease. One example is that the tenant must 'keep the premises in good repair (fair wear and tear excepted)'.
I am often asked what this 'fair wear and tear' exemption means. A basic interpretation is that a tenant will be required to keep the premises in good repair except for wear or tear to the condition of the premises that has occurred because of the tenant’s fair use of the premises over time. The wear and tear must be ‘fair’ for a tenant to be relieved from its obligation to return the premises in good repair without exception.
Is there a definition?
There is no definition of this term in the Retail Leases Act 2003 ("Act"), but it has been discussed in case law. Some examples include:
'The phrase 'fair wear and tear' has been interpreted as the reasonable use of the premises by the tenant and the ordinary operation of natural forces' (observation by Tamberlin J in Westpac Insurance v Cooper  ACTSC 91);
In relation to the meaning of the exception: 'it exempts the tenant from liability for repairs that are decorative and for remedying parts that wear out or come adrift in the course of reasonable use, but it does not exempt him (tenant) from anything else' (Lord Denning in Regis Property Co Ltd v Dudley  AC 370);
When commenting on whether wear and tear on a pavement was fair wear and tear: 'in my view, the deterioration of the Pavement arises because of the reasonable use by the tenant coupled with the ordinary operation of natural forces' (Senior Member E. Riegler in Bretair Pty Ltd v Cave (No 2) (Retail Tenancies)  VCAT 1808).
It is important to understand this obligation because it will affect the gross cost of the lease, including costs of maintaining, repairing and returning the premises to the landlord in a particular condition at the end of the lease.
Tips for tenants:
When negotiating a lease it is best to set out in detail both the tenant and landlord's repair and maintenance obligations in the lease so both parties are clear on their respective obligations. If the obligations are not clear then you might find yourself in Court or a Tribunal to determine who is responsible for maintaining and/or repairing the premises.
Get a condition report! This will be evidence of the condition of the premises at the start of the lease. Why? You don't want to be obligated to keep the premises in a condition of good repair if the premises are provided to you in a dilapidated condition.
If you have a lease look for the clause in the lease that states your repair and maintenance obligations.
If the lease is a retail lease the Act will affect your repair and maintenance obligations and the landlord has maintenance obligations that can't be changed by a lease.
8 March 2016
The contents of this blog is for reference purposes only. This blog post does not constitute legal advice and should not be relied upon as such. If you require legal advice on your specific circumstances please contact me at Aitken Partners on Ph: (03) 8600 6056.