11 November 2016

Recoup your losses!

Litigation
New South Wales

Asked

I have a client trying to recover unpaid rental from a commercial tenant. The tenant operated a café from the premises. They should have had a retail lease, but a real estate agent prepared a basic commercial lease instead. This lease does not make provision for the sale of tenant's fixtures and fittings to recover unpaid rental.

We now have default judgment.

The tenant was locked out of the property and we would like to sell the tenant's fixtures and fittings to recover part of the judgment debt amount.

As my client already has possession of the goods, do we still need a writ for levy of property?

Answered

Thanks for the question.

The Retail Leases Act 1994 applies despite the form of the lease. See s 7 of the Retail Leases Act.

The following is an excerpt from our Lease commentary:

If a lessee vacates the premises, leaving goods on the premises, ownership of those goods remains with the lessee and the lessor has no claim to ownership of them. If the lessee requests access to the premises to remove the goods and is denied, the lessor will be liable to an action for detinue if he continues to hold the goods or conversion if he sells or uses the goods. Even though the lessee may owe the lessor money, at this stage the lessor has no immediate rights to the lessee's possessions ...

Whilst the lessor is entitled to remove and store the goods, the lessor is not obliged to do so and, after giving notice to the lessee, may remove the goods from the lessor’s premises ...

If the lessor does remove and store the goods and they are not claimed within three months, the lessor may arrange for sale of the goods but, after deduction of the cost of removal, storage and sale, must forward any balance to the unclaimed money fund ...

As an alternative, the lessor can obtain a judgment against the lessee for any money owing and then issue a warrant. The sheriff can be advised of the location of the goods and a sale by the sheriff may result in a payment to the lessor as a judgment creditor.

Regards

Mentor