Who is responsible for fire safety in a commercial lease situation? LandLord or Tenant?

Posted on Mar 19, 2020 by Dean Frith   |   Categories: Commercial & Business Law, Commercial & Retailing Leasing

Following on from one of the worst fire seasons in living memory many Australians have at the front of their
minds the issue of fire safety. Often (and rightfully) this is in the context of what can one do as a home owner
to better protect their home and loved ones. But the tragedy of fire can also strike at commercial premises and
it is in this context that this article will focus.

Many business operators run their businesses from leased premises. The vast majority of those premises will
be subject to quite stringent (and ever tightening) regulation in relation to fire safety including in relation to
meeting minimum standards, installation of equipment, maintenance of equipment and annual certification.
So, a question that often comes up in commercial leasing scenarios is – who is legally responsible for these
things (including the cost)?

It is a very important question. A fire in commercial premises can have devasting impacts on lives, property,
businesses and one’s livelihood. Therefore, whether you are a landlord or a tenant of commercial premises
then you need to turn your mind to this issue of who is responsible and is that party meeting their obligations.
Before we look at the question of who is responsible let’s look at some of the types of responsibilities that may
arise.

There are a number of fire safety measures that must be maintained in all commercial properties (for example:
smoke detectors, fire extinguishers, emergency lighting, exit signs etc.), with local councils having the authority
to close business premises that do not comply with the requirements of the Regulations. The laws in NSW are
outlined under the Environmental Planning & Assessment Regulations 2000.
Under the Regulations, the owner of premises (i.e. a landlord) has the responsibility for obtaining what is known
as an Annual Fire Safety Statement (AFSS) for the property. An AFSS sets out the assessment and inspection of
each essential fire safety measure within the premises and certifies that each is capable of performing to the
required standard.

So ultimately the legal responsibility under the Regulations sits with the owner of the property, but this is often
not the end of the story when it comes to leased premises. As a commercial leasing lawyer, I often see leases
that shift both responsibility and the cost for attending to fire safety measures to the tenant. There are a
number of things to be wary of in such a scenario.

Firstly, the parties to the lease should ensure that the lease is very clear in its terms as to who is responsible for
what. Back in 2012 there was a case that went all the way to the Supreme Court of NSW involving the Terminus
Hotel at Quirindi. In that case, the crux of the dispute was who was responsible for fire safety measures under
the lease. Ultimately the Court found in that case that while the lease purported to pass the responsibility for
fire safety measures from the landlord to the tenant, it did not do so, and the landlord was found to be
responsible. A costly and lengthy Court battle was required to determine the question and could have likely
been avoided with clear and concise lease terms on the matter.

Finally, it is imperative that landlords appreciate that while the terms of the lease may require their tenant to
ensure the property is compliant with the fire safety Regulations this does not mean that they are not still
ultimately liable. Landlords have a potential contractual claim against their tenant if they fail to meet their
obligations, but the authorities will still seek recourse against the landlord under the Regulations if there is any
breach.

Fire safety is a vital aspect of any tenancy and it is in the interests of both owners and tenants that it be front of
mind when negotiating the terms of a new lease and then throughout the terms of the lease. Where parties
are uncertain of their rights and obligations legal advice should be sought.

Dean Frith is a lawyer and partner at Baker Love Lawyers.