Northbridge’s Mustang Bar has won a dispute with its landlord at the State Administrative Tribunal over the determination of its rent.
Northbridge’s Mustang Bar has won a dispute with its landlord at the State Administrative Tribunal over the determination of its rent.
The dispute emerged in early 2005 when Mustang’s landlord, Major Holdings Pty Ltd, more than doubled the Lake Street bar’s rent from just over $110,000 a year to $280,000, determined on the basis of its profitability as a licensed tavern.
Mustang objected, and the tribunal found in its favour last month, ruling the appropriate valuation method was by reference to rent paid by similar premises in the area.
The tribunal then set the market rental for the property at just over $133,000 a year from January 11 2005, equating to $230/square metre.
Central to the landlord’s case was the perceived lack of comparable premises in the area, specifically a tavern, from which to derive an accurate market rent.
According to the tribunal’s judgment report, Mustang was required to carry on the business of a “restaurant and licensed tavern” under terms of its lease, and was obliged to obtain its own liquor licence.
The tribunal found that Novak’s Tavern in Northbridge provided good comparable evidence, and said establishments such as the Hog’s Breath Café, Jade Dynasty Chinese Restaurant and the former Vino Vino premises would also lend themselves to a business of the nature carried on as the Mustang Bar.
Another point of contention between the parties was a special condition contained in the lease that required Mustang to provide its landlord with annual financial statements for audit, an inclusion the latter believed implied it could therefore use that material to determine future rent reviews.
It is understood the condition was originally included in the lease as a consequence of Mustang obtaining its own liquor licence, where it had agreed to give the landlord an option to buy the licence at the conclusion of the lease.
But the tribunal ruled the lease was not determined in any way that suggested the market rental should be assessed taking the profitability of the business into consideration.
The Mustang Bar is owned by businessmen Michael Rasheed and Michael Keiller.
