What I thought was a cordial discussion with our landlord about their new tax on us opening at 7am three days a week got legal yesterday when their company solicitor wrote pointing to where in our lease they have the right to charge this fee and the basis on which they can levy it retrospectively. Their claim for interest, if I do not pay this tax or delay payment, is a gem:
Please note that if you fail to pay these amounts in accordance with the lease, the landlord will have no other alternative but to charge you 2% interest on the outstanding amounts for every day, or part of every day that the amounts remain outstanding in accordance with clause 11.1.3 of your lease.
While the landlord may have a legal justification in the lease – I am no lawyer and cannot be sure – in today’s retail climate this tax is, in my view, an appalling imposition on a service business like a newsagency. At 7am we are a service in our centre – for other businesses in the centre, for security staff and for customers. Indeed, when I first took on this location in 1996 the landlord back then wanted to ensure that we would be open early.
While I know I could make a complaint to the Office of the Small Business Commissioner in Victoria, I have no faith in their ‘balls’ to robustly represent the interests of small business.
Since our ‘discussion’ with the landlord started, they have stopped opening the entrance doors to the centre – directly outside our shop – as they used to. Now, they open them at 8am, greatly inconveniencing other tenants and early regular shoppers. They are driving our customers away.
What I want is for commonsense to prevail. Landlords and tenants need each other. They rely on a successful newsagency to provide a service in the centre and do its fair share of lifting when it comes to attracting customers. By chasing charges such as a penalty for opening at 7am when it does not add to their costs – they say it does but I disagree – disrespects the bigger picture in play here.
Mark
This is disgraceful behaviour! It must feel like a kick in the guts and borders on dissallusion with this blatant cash grab.
I guess one must ask oneself are you up for the fight?, are you up for the cost of the fight? or look on the positive side that you have a good business and you want to continue with it.
I am no legal eagle either but I would think about paying what Colonial want and if you feel that strongly start engaging Kevin 07’s mob, Brumby’s mob anyone who will listen to get them to understand what small business is up against.
It’s wrong I know, the challenges for small business today are very diverse.
Well, surely the bigger picture includes levied businesses continuing to have better access to customers, via open doors at a convenient entrance. If they want to levy you for being open, then surely they should continue to provide the access! I guess you don’t need to engage a legal professional to tell them what a pack of @$#%s they are for being such bullies.
With newsagents, by definition, opening early, is there at least some means of dialogue via one of the umbrella bodies – or the franchise? Surlely there’s some semblance of support available from those whose own conditions/fees are imposed on members?
Personally, this is one very good reason for not being interested in centre-based retail.
For what it’s worth, I hope karma kicks in. Hell for lawyers? Buckets of blood, and a blocked proboscis..
Is the increase worth opening early? Do profits from the early opening outway the increase in rent and the back rent, the reason I ask this is because we stopped opening sundays because the cost of wages etc outwayed the profits generated on the day. We copped flack from people saying a newsagent “must open 7 days” but we stood firm because we were losing money every week. Now that we are working fewer hours we are making more money in the other 6 days then we were out of 7 days because we are fresher and staff are happier.
Hmmm,
Since first reading Mark’s original blog on this we noticed our Landlord Manager, Retail First Pty Ltd, instructing its security team to start recording open and close times. This has just resulted in them issuing extended trading charges to us and many other tenants in the centre. I suspect that Woolworths and Big W probably do not receive these like the rest of us, and we really only open to follow their hours. Our response…well coupled with impending increased penalty rates from the Fair Work Bill, we will amend our trade to only operate to their core hours…This in turn will make the centre less attractive with fewer shops opening on Sunday and ultimately reducing the foot traffic to the centre. We will be affected in some form, but the centre owners will loose significant value in their center’s value as traffic reduces…Really a no win situation for anyone and a reflection of the ongoing Retail Tenancy problems plagued by small business operators and ignored by elected politicians.
Taking this to its logical conclusion can I expect a knock on my door soon from Woolies telling me that Milk went up three months ago and I now owe them $10.00? Or pausing to board the aircraft as I must throw in another $5.00 as fuel went up yesterday. Where does retrospective charging end?
It ends when you sign a lease that says it is a charge. Why they delayed the implementation is wierd, but it appears that Mark is saying he signed a contract/lease with this as a condition? Either he or his lawyers missed this clause? Or hoped it would not be implemented?
Sorry, the Office of the Small Business Commissioner would be looking at the contract and the accompanying complaint and saying, “so you signed this and that implies you agreed to it? So your complaint is ??????”
I don’t know why Mark would think they have no balls to back up a complaint about terms that he had agreed to?
The whole saga is a sad story for sure, but Mark is a savvy business man with many companies, and either he is signing without reading, or his lawyers are not pointing out pitfalls to him before he signs.
Rather embarrasing admission that this was a clause in the contract I would have thought, but as per usual, Mark makes out like he is being unfairly charged something he did not agree to. Unfair, possibly, agreed to, he did.
Clem, the lease clause on which this matter turns is is vague. It would require interpretation. I have been in the centre for thirteen years and have not had such a charge so it was reasonable that it would not be levied.
Mark, I am in a Colonial centre and have had the same charge applied. We open at 8am and this business has done as such for the past 10 years.
I sat down with my centre manager who I have a very good relationship with. The CM has stated that Woolies and Coles are charged the early opening fee and are paying it.
I expressed more concerns over the fact that they have stated that this charge is to cover the additional costs of security staff, cleaners and electricity. The state government in QLD is looking at allowing an increase of up to 17% on electricity. This would suggest that another increase will come about in the next few months.
Also if it hasn’t happened to you be prepared for Colonial to re-charge you for a mistake in billing. They have made an error in my centre and now re-charging everybody at a higher rate.
Differences aside in opinion etc this is a very real issue for all newsagents as other will follow. And Clem the wording in the agreement has been interpreted as you must be open by 9am and stay open until 5.30pm as these are the core hours of trade. They are now saying that you can only open under core hours, outside of this you will be charged.
I think most newsagents will find a clause like Mark has described….this is not bad judgment by Mark or any of us, but a standard clause that up until now seems not to have been widely implemented by landlords…Even in older leases you will find a clause that refers to the ability of Landlords to charge for costs associated with operating out of core hours…This is often listed under the heading of trading hours in leases. The biggest issue I see Mark has is the retrospective element of his charge as it has not afforded him any discretion to open or close with the knowledge of such additional charges. The leases would not prescribe an actual cost amount, just the ability of the landlord to recover costs. Without a quantum of what the cost might be Mark was left without any level of decision making and retrospective seems unfair, unethical and potentially unlawful.
Ah, I thought the clause was new and clear, and your post was more about the interest charge. Brad and Steve make the situation much clearer. Sorry, that behaviour is horrible. I hope it can be amicably fixed, but it sounds like they are desperate to claw in any funds they can think of. A timely warning to us all.