Lessons for Landlords in Australia

Landlords are often frustrated because of the time and paperwork required to evict defaulting tenants from properties. A landlord in Western Australia who decided to take the law into his own hands found himself liable for damages of $50,000 to his tenant

What Happened?

Marchese owned a petrol station which he leased to Capelinha. As tenant, Capelinha paid a percentage of his gross profit from petrol sales as part of his rent. Although the lease did not give the landlord any say in the pump price at which petrol should be sold from the petrol station, there was prolonged and animated argument over that issue. The landlord also complained that the property was not being maintained by Capelinha as tenant. Marchese lost his temper and without sufficient legal grounds for doing so he gave notice terminating the lease.

"...this case proves that landlords can render themselves liable for damages if they attempt to re-take possession of their property without going through the appropriate procedure."

Capelinha disputed the landlord's notice and resisted the landlord's contractors who came to remove his property from the service station. To make matters worse, the landlord physically assaulted the tenant. Not surprisingly the tenant sued for damages.

What was Decided?

The Court decided that the landlord was acting illegally in attempting to evict the tenant without giving the required legal notice. The judge was scathing of the landlord's conduct and awarded exemplary damages. He said "the use of violence or the threat of use of violence to overcome opposition is to be deplored in any event, let alone in circumstances where a person is acting completely within their rights. The defendant deserves to be penalised and should be made an example to others." As a result, the judge awarded damages to Capelinha as tenant for his loss of goodwill, damage to and loss of stock and equipment, and the personal injuries which he suffered as a result of Marchese's assault. The judge also took the damages one step further by awarding $10,000 exemplary damages to punish the landlord for his conduct and making him an example to other landlords.

Lessons to be Learned

The law in each state of Australia lays down procedures for terminating a lease due to the default of a tenant. Tenants are usually given a "reasonable time" to remedy a breach before the landlord will be able to terminate the lease and re-take possession

Legally, there are 3 ways of re-taking possession of premises from a defaulting tenant:

formally demand possession from the tenant;
issue court proceedings seeking an order for vacant possession; and
physically retake possession of the premises usually by changing the locks.

Of these, the last one is the most effective because it avoids the obvious risk of confrontation at an emotive time.

What should you do?

Even where landlords think they are correct in taking the law into their own hands, this case proves that landlords can render themselves liable for damages if they attempt to re-take possession of the property without going through the appropriate procedure. The better course of action is to call us to advise you on the appropriate steps you should take.