New South Wales Consolidated Acts New South Wales Consolidated ActsIf a retail shop lease provides for the establishment of a sinking fund to fund provision for major items of repair or maintenance, the lease is taken to include provision to the following effect--
(a) Any amount paid by the lessee in respect of the lessor's outgoings on account of those major items of repair or maintenance is to be paid into the sinking fund.
(b) So much of the balance standing to the credit of the sinking fund as remains unexpended from time to time for any purpose for which the sinking fund was established is to be held by the lessor in an account bearing interest.
(c) Amounts paid by the lessee for credit of the sinking fund, and the net interest earned by the lessor on the sinking fund, must not be applied by the lessor for any purpose other than payment of any outgoings for which the sinking fund was established.
(d) The lessor is liable to contribute to the sinking fund any deficiency attributable to a failure by the lessor or any predecessor in title of the lessor to comply with paragraph (c).Note--: The effect of paragraph (d) will be that a purchaser of the shop from the lessor will have to ensure that the sinking fund has been properly administered and maintained by the previous lessor because the incoming lessor will be liable for any shortfall.
(e) The major items of repair or maintenance for which contribution to the sinking fund may be required by the lessee are limited to repair or maintenance of a building, or plant and equipment of a building, in which the retail shop is situated or, in the case of a retail shopping centre, to the buildings, plant and equipment and areas used in association with the retail shopping centre in which the retail shop is situated.
(f) The lessee is not liable to contribute an amount to the sinking fund that is greater than the maximum amount permitted under the Act.
(g) The lessor must keep full and accurate accounts of all money received or held by the lessor in respect of the sinking fund.
(h) The lessor must give the lessee, not later than 3 months after the end of each accounting period of the lessor during the term of the lease, a sinking fund statement containing details of expenditure during the period from the fund on items for which the lessee is required to contribute. The lessor must also provide with the statement a report on the statement prepared by a registered company auditor (within the meaning of the Corporations Act 2001 of the Commonwealth).
(i) A sinking fund statement provided by a lessor to a lessee is to be prepared in accordance with the relevant principles and disclosure requirements of applicable accounting standards made by the Australian Accounting Standards Board, as in force from time to time.