JOHN operates an earthmoving business.

He enters-into a lease of an industrial warehouse to store the earthmoving equipment.

Several years pass and when John wishes to relocate, a dispute arises with the landlord.

The landlord claims that John had not complied with the “permitted use” of the premises, that he had breached the “make good” provisions of the lease and that the landlord had suffered damages due to the consequential delay in re-letting the premises.

The landlord claims that the concrete slab needed to be replaced and the total damages claimed exceeds $500,000.

Although the lease permitted John to store some earthmoving equipment on the premises, the landlord claimed that this did not include some of the particularly heavy machinery that was kept on the premises.

The landlord claims that as a result of the heavy machinery, John’s use of the premises required repairs that did not arise from “fair wear and tear”.

The landlord therefore claims that it was John’s responsibility to replace large sections of the concrete slab.

In Supreme Court proceedings, the Judge rules that John’s use of the premises was in fact a “permitted use” and accordingly, the condition of the premises at the end of the lease, was in fact in good repair given the condition of the premises at the commencement of the lease, subject to “fair wear and tear”.

The Judge also states that the landlord had not taken reasonable steps to “mitigate damages” by not promptly rectifying the concrete slab nor accepting offers from prospective tenants to lease the premises.

This case demonstrates the importance of clearly defining “permitted use” clauses when entering-into a lease, the value of carefully considering clauses relating to damage caused by permitted use and the significance of the proper drafting of “make good clauses” which identify the difference between the tenant’s particular use of the premises and general wear and tear.

Email Manny Wood, Property Lawyer and Accredited Specialist in Wills and Estates at TB Law at manny@tblaw.net.au or call him on (02) 66 487 487.

This column is only accurate at today’s date and is not legal advice.

By Manny WOOD, Solicitor