A recent case highlights the importance for property owners in ensuring they are aware of uses of their properties by lessees and take appropriate steps to deal with any residual issues once the lessee decides to move on.
Background
A holding company in Victoria leased property to a skip bin company that intended to use the premises as a rubbish sorting facility.
The skip bin company ceased operating from the premises and the holding company took over occupation and control of the premises.
Non-compliance with improvement notice
WorkSafe Victoria confirmed (as earlier reported to it) the presence of non-friable asbestos from an inspection and sample tests of waste stored at the premises. This material was placed on the premises prior to the holding company taking control of the site.
The regulator issued an improvement notice to the holding company to arrange for a licenced asbestos removalist to remove the asbestos-containing waste but this was not completed by the date specified in the improvement notice.
The holding company pleaded guilty to breaching the Victorian Dangerous Goods Act 1985 and was convicted and fined $5,000 plus costs.
The reported cost to the holding company of removing the asbestos-containing materials was approximately $880,000.
Lessons
- Duties of property owners: whilst the holding company didn’t place the asbestos contaminated waste at the premises, it was required to make enquiries about the nature of the waste and whether it contained asbestos when it took back control of the site. It had a duty to deal with the asbestos-containing materials but failed to do so.
- Compliance with notices: a corporate entity served with an improvement notice by the regulator should obtain legal advice promptly as a failure to comply with such notice can result in a prosecution, criminal record and financial penalties.
- Conduct inspections: property owners should arrange inspection of premises at the end of the lease, and before releasing any security, to ensure the lessee has complied with obligations under the lease agreement to make good the condition of the premises.
- Obtain a guarantee: there is likely to be a debt recovery provision in the lease agreement to recover the costs of removing any waste left on the premises. In the above matter, the cost of removing the waste was $880,000. The recovery of a significant debt from a lessee who has absconded may be challenging. A personal guarantee is worth considering at the time of entering into the lease in case the lessee is insolvent at the time recovery is sought.
If you have any questions about your duties and obligations in relation to the clean-up of properties you own, please don’t hesitate to contact us.
This article was written by Gina Capasso (Principal Solicitor).
