In brief

Following on from my update in November last year where a tenant was entitled to terminate the lease based on the landlord’s failure to repair the air-conditioning, the VCAT decision of Meadsview Pty Ltd v Fenton (Building and Property) [2018] VCAT 124 deemed failure by the landlord to have operative air-conditioning entitled the tenant to compensation.

 

What you need to know

If a lease provides that the premises are air-conditioned, then the landlord has an obligation to provide air-conditioning to a tenant. As a valuer, you would be entitled to assume that the premises are air-conditioned as a tenant has a right to take action against the landlord if air-conditioning fails. In other words, the rent under a determination should not be reduced because air-conditioning is intermittent or failing.

Background

In this matter, the premises were air-conditioned but the landlord had a dispute with the Owners’ Corporation as to where an air-conditioning compressor was to be placed. The lease provided that air-conditioning was included as part of the landlord’s fixtures under the lease. The landlord did not dispute that the landlord was to provide air-conditioned premises. As the premises were not air-conditioned, the tenant agreed that the rent would be reduced by $40 per week. The tenant then claimed compensation for the absence of air-conditioning. VCAT accepted that the tenant was entitled to compensation but had already accepted the $40 per week reduction and therefore could not claim further compensation.

Conclusion

If the landlord’s fixtures include air-conditioning, then VCAT is likely to determine that the premises should be air-conditioned (in the absence of a clause specifically providing that the premises should have working air-conditioning). A tenant will be entitled to compensation from the landlord if the air-conditioning is not working. As a manager, it is important that the air-conditioning is operative. As a tenant, it is important not to agree to a reduction in rent without seeking legal advice on the potential damages payable.