Summer trading hours and leases

by | Dec 19, 2011 | General property Law, Leasing

At this time of year with Christmas trading and summer there may be lessors who are approached by lessees requesting a change to their trading hours.  Leaving aside resource management restrictions, retail leases commonly give the lessor an unqualified right to approve any modification in trading hours.  Further these retail leases tend to include a "keep open" covenant. 

The standard ADLS 2008 5th Edition Lease and standard Property Council Retail Lease (2001) require retail premises to be kept open during usual trading hours.  The Property Council form includes strict penalties for non-compliance, imposing liquidated damages of $1,000 for the first hour of each day and $100 for each subsequent hour. 

The Property Law Act 2007 implies qualified consent to all covenants of the lessee not to do a thing without the lessor’s consent (i.e. the lessor’s consent is not to be unreasonably withheld or delayed), unless the context otherwise requires.  So it is possible for the lessor to contract out of qualified consent where decisions over trading hours, signage, alterations and additions are concerned. You will recall if the matter falls within section 225 (i.e. assignment, transfer, subletting, change of use, parting with possession, creating a mortgage over the lease) then the Property Law Act 2007 allows a lessor to absolutely prohibit or include qualified consent only (refer The Reasonable Landlord)

There is an old High Court case (1988) concerned with a lessee being refused consent to change their trading hours.  Brandy’s Bar (1987) Limited sought a declaration from the High Court that this refusal was unreasonable and that consent should not be withheld.  Brandy’s Bar had a sublease and operated a BYO restaurant.  They wanted to extend their trading hours to Sundays and to open at 9am instead of 11am.  The lease gave the lessor an unqualified right to prevent any modification in trading hours.  The Court said that therefore the lessor’s refusal could not be challenged. Neither did the lessor have to justify its decision, based on the normal rules of interpretation of leases.  This case would still be good law today if the lease made clear that a decision about changing trading hours was a matter for the lessor’s sole discretion, contracting out of the requirement for qualified consent.

By <a href="" target="_self">Denise Marsden</a>

By Denise Marsden