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General Counsel → Leases → Retail leases
Overview — Retail leases

Catherine Hallgath, Partner, Mills Oakley Lawyers

Note: Retail leasing in NSW is governed by the Retail Leases Act 1994 (NSW) (Act). The Retail Leases Amendment (Review) Bill 2017 (NSW) (Bill) was passed by both houses of Parliament on 21 February 2017. It is to commence on a day to be appointed by proclamation and is awaiting assent. The anticipated date for assent is 1 July 2017, but this date has not been confirmed. The guidance notes within this topic will be updated to reflect these proposed changes at the time of assent. In the meantime, the NSW Practical Guidance Property author, Catherine Hallgath, has drafted an outline of the proposed changes under the bill to assist subscribers in understanding and preparing for commencement: Retail Leases Act 1994 (NSW)  proposed changes.

The object of retail tenancy legislation

The fundamental object of retail tenancy legislation enacted in the states and territories of Australia is to protect the weak against the strong, that is, the small retail tenant against the large retail lessor.

Retail tenancy legislation generally applies to “retail shop leases” subject to the exceptions in the relevant legislation. Businesses that are not traditionally “shops” are generally subject to the legislation if they occupy premises that are located in “shopping centres”.

The retail tenancy legislation for each state and territory is:

  • New South Wales — Retail Leases Act 1994 (NSW)

  • Victoria — Retail Leases Act 2003 (Vic)

  • Queensland — Retail Shop Leases Act 1994 (Qld)

  • Western Australia — Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

  • South Australia — Retail and Commercial Leases Act 1995 (SA)

  • Tasmania — Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas)

  • Northern Territory — Business Tenancies (Fair Dealings) Act 2003 (NT)

  • Australian Capital Territory — Leases (Commercial and Retail) Act 2001 (ACT).

In this subtopic, a reference to the "Act" means a reference to the Act for the relevant jurisdiction.

The above Acts have been amended and some amended sections apply to retail leases entered into before the commencement of the amendment while others do not. The sections themselves will specify whether they are intended to apply to leases entered into before the commencement of the amended section.

A breach of the Act may be an offence which is subject to a penalty. The Act specifies where a breach is an offence and the amount of the relevant penalty.

When interpreting the Act, a court, tribunal arbitrator or other body or person authorised by law or by consent or agreement of the parties to resolve an issue in dispute will generally be required to have regard to the accepted practices and interpretations within the industry concerning the leasing of retail shops.

When construing the Act one must have reference to the plain, ordinary meanings of words.

The retail tenancy legislation is managed in New South Wales by the NSW Department of Fair Trading. The Department’s website contains the required forms and also a sample inspection of premises report.

In Victoria, the retail tenancy legislation is managed by the Office of the Victorian Small Business Commissioner. The Office's website contains the required forms.

In Queensland, the retail tenancy legislation is managed by the Department of Justice and Attorney General. The Department's website contains the required forms and also retail leasing guidelines. The Retail Shop Leases Amendment Act 2016 (Qld) amended the Retail Shop Leases Act 1994 (Qld) and commenced on 25 November 2016. The purpose of the Retail Shop Leases Amendment Act 2016 (Qld) was to overhaul the retail shop leasing regime in Queensland.

In Western Australia, the retail tenancy legislation is managed by the Small Business Development Corporation, Western Australia. The Corporations' website contains the required information.

In South Australia, the retail tenancy legislation is managed by the Consumer and Business Services, Government of SA. The Government website contains the required forms.

In Tasmania, the Code is managed by the Department of Consumer Affairs and Fair Trading. The Department's website contains the required forms.

In the Northern Territory, the retail tenancy legislation is managed by Consumer Affairs Northern Territory. The Consumer Affairs website contains the required information.

When retail tenancy legislation applies

The retail tenancy legislation applies to retail shop leases in the relevant jurisdiction subject to some exceptions. In New South Wales, Queensland, Western Australia, South Australia, Tasmania, the Northern Territory and Australian Capital Territory (but not Victoria), the definition of "retail shop lease" is sufficiently broad to include licences.

In Victoria and the ACT (but not in the other states or territory), the definition of "retail premises lease" may include a use that may be seen as commercial, in circumstances where the premises are not in a retail shopping centre.

A lease of premises for a use that is not typically a retail use will be subject to the Act if the premises are located in a shopping centre.

If the Act applies to a lease, the provisions of the Act will override the provisions of the lease and, in some cases, render provisions of the lease void.

The "When retail tenancy legislation applies" guidance note examines when a lease is a retail lease and the definitions of a “retail lease”, “retail shop” and “retail shopping centre”. It also examines the types of leases that are not subject to the Act, leases for premises which become subject to the Act during the lease term and leases of premises that are only partly subject to the Act.

See When the retail tenancy legislation applies.

Procedure for entering into and finalising a lease

This guidance note provides a checklist for the procedure for entering into and finalising a retail lease in each state and territory including detail in relation to the timing for provision of and the format of the required disclosure statement, how to avoid the provisions of the Act (if any) which provide that a tenant is entitled to a minimum five year term (there are no such provisions in Queensland), the items a tenant should provide to a landlord before taking occupation of retail premises and examines the consequences of a failure to comply with the procedure.

See Procedure for entering into and finalising a lease.

Landlord's ability to require tenant to pay/spend money

A landlord's ability to require a tenant or prospective tenant to pay money is highly regulated by the retail tenancy legislation. The types of charges a landlord can and cannot require a tenant to pay and the restrictions and conditions that apply to the recovery of some charges are discussed in this guidance note.

See Landlord's ability to require tenant to pay/ spend money.

Landlord's ability to do work to the centre/premises

A landlord is able to do work to a retail shopping centre. However, it must comply with the requirements the retail tenancy legislation imposes in relation to giving tenants notice and may be required to pay compensation to tenants.

A landlord is also able in some circumstances to relocate tenants and to terminate leases without offering alternative premises. However, these rights will not be implied into a lease and so must be specified in a lease to apply. The rights are also heavily regulated.

This guidance note examines the requirements of the Act that the landlord must comply with before doing work in a retail shopping centre or exercising rights under a relocation or demolition clause, the tenant's right to compensation and the consequences of a failure of a landlord to comply with the legal requirements.

See Landlord's ability to do work to the centre/premises.

Assignment

The procedure for assigning (or transferring) a retail lease and the circumstances in which a landlord can refuse to consent to an assignment are highly regulated by the Act.

This guidance note examines the required procedure and the circumstances in which a landlord is entitled to refuse consent to assign the lease.

See Assignment.

Additional requirements for retail shopping centres

The Act regulates the circumstances in which a tenant can be required to contribute to a fund for the marketing or promotion of the centre and places reporting obligations on the landlord in relation to funds of this nature.

This guidance note examines the requirements a landlord must comply with if it requires a tenant to contribute towards a marketing or promotion fund and also other special requirements that apply to shopping centres, including strata shopping centres.

See Additional requirements for retail shopping centres.

Disputes/remedies

The retail tenancy legislation specifies a more formal procedure for dispute resolution than under many leases.

This guidance note examines the procedure for the resolution of disputes under the Act including when a party must apply to the tribunal for relief and when a party is entitled to apply to a court. It also examines the remedies that are available including for unconscionable and misleading and deceptive conduct.

See Disputes/remedies.

Rent review for retail leases

A landlord's ability to increase or review rent is highly regulated by the Act. This guidance note examines the requirements of the Act and the consequences of a failure to comply.

See Rent review for retail leases.




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