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Retail Leases Bill
Circulation Print
EXPLANATORY MEMORANDUM
PART 1--PRELIMINARY
Clause 1 provides that the main purpose of the Act is to replace the
existing legislative scheme for retail tenancies and to enhance
certainty in the law that governs relationships between landlords
and tenants in a retail setting and the mechanisms to resolve
disputes between landlords and tenants concerning leases of retail
premises.
Clause 2 provides for the commencement of the Act.
PART 2--DEFINITIONS AND KEY CONCEPTS
Clause 3 defines various terms used in the Act.
Clause 4 defines the meaning of "retail premises" as premises which are
used wholly or predominantly for businesses which involve
trading of goods by retail or the retail provision of services or
businesses determined by the Minister to be covered by the Act.
The clause specifies that the definition of "retail premises" does
not include--
(i) premises where the occupancy costs under the lease are
more than the amount prescribed by regulations made under
the Act;
(ii) premises that are used wholly or predominantly by a tenant
on behalf of a landlord for carrying on his or her business;
(iii) premises which are connected with the landlord or a
company of the landlord--this includes when the landlord
is a franchisor and the tenant is a franchisee;
(iv) premises where the tenant is a listed corporation or
subsidiary of a listed corporation;
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551014 BILL LA CIRCULATION 28/2/2003
(v) premises used wholly or predominantly as businesses
determined by the Minister not to be covered by the Act;
(vi) premises of a kind determined by the Minister not to be
covered by the Act.
Clause 5 provides that the Minister may, by notice published in the
Government Gazette, determine whether a business is or is not
covered by the Act. The Minister's notice of determination is an
instrument subject to disallowance by the Parliament and is
subject to the tabling and scrutiny provisions of the Subordinate
Legislation Act 1994.
Clause 6 defines the "common areas" of a shopping centre to refer to those
areas of a shopping centre, either inside or outside, that are not
actually shops but are for public use and facilitate the running of
the shopping centre (e.g. escalators, car parks, restrooms).
Clause 7 provides that a lease is entered into or assigned when the tenant
takes possession or commences paying rent or the lease or
assignment is signed by all parties.
Clause 8 provides that if a lease is assigned to another party it is taken to
be a continuation of the lease--and not the entering into of a new
lease.
Clause 9 defines how a lease can be renewed and that a renewal of a lease
is taken to be a continuation of a lease and not the entering into
of a lease for the purposes of the disclosure statement provisions.
The exception is if a lease expires and the tenant does not retain
possession of the premises for a period of time, and then resumes
possession, the resumption of possession will be taken to be the
commencement of a new lease.
Clause 10 provides that if a tenant maintains possession after the expiry of
the lease, the lease and the provisions of the Act are taken to
continue as long as the tenant retains possession.
PART 3--APPLICATION OF THE ACT
Clause 11 provides that the Act applies to leases that are entered into after
the commencement of this clause or leases renewed after that
commencement.
Clause 12 makes provision with respect to short term and continuously
renewed short tem leases. The intention of the provision is to
prevent avoidance of the Act by means of devices involving a
series of leases that are for periods less than one year. Whilst the
Act generally does not apply to leases that are for a period of less
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than one year, the Act will apply if the lease is one where it is
initially for a period of less than one year but it is renewed one or
more times so that the tenant is continuously in possession of the
premises for more than one year. Where a lease has been
continuously renewed for a period of one year, the landlord must,
within 60 days, provide a disclosure statement in accordance with
the requirements in clause 26 for disclosure on renewal of a
lease.
Clause 13 provides that the Act applies to all leases that concern retail
premises in Victoria, regardless of where the lease was made or
any provisions of the lease to the effect that it is governed by
other than Victorian law.
Clause 14 provides for the Act to bind the Crown.
PART 4--ENTERING INTO OR RENEWING A RETAIL
PREMISES LEASE
Division 1--Entering into a Retail Premises Lease
Clause 15 provides that the landlord, or agent of the landlord, who
advertises or commences negotiations of a lease, must provide a
copy of the lease and a copy of any information brochure
published by the Small Business Commissioner.
Clause 16 provides a penalty for a landlord or tenant who enters into a lease
that is not in writing and signed by all parties. However, the
lease is not illegal, invalid or unenforceable if it is not in writing.
Clause 17 requires the landlord to give the tenant a disclosure statement in
accordance with the form contained in the regulations.
This statement must be accompanied by a copy of the lease and
must be given to the tenant at least 7 days before the lease is
signed and possession of the premises taken.
If the tenant has not received this statement 7 days after the
commencement of the lease then the tenant may give the landlord
a written notice that the disclosure statement has not been given.
This written notice has to be given to the landlord within 90 days
after the commencement of the lease or the tenant may withhold
the rent until the disclosure statement is received or give a written
notice of termination.
Once the landlord gives the disclosure statement to the tenant
then the tenant resumes paying rent and the tenant has the right to
terminate the lease after receiving the disclosure statement, but
must do so within 7 days after receiving the statement.
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The tenant does not have to pay rent where the premises are not
available for handover on the date specified in the disclosure
statement.
The tenant can terminate the lease if any information provided by
the landlord in the disclosure statement is shown to be
misleading, false or materially incomplete, or if the tenant is not
given a copy of the lease in accordance with clause 17(1)(b).
The tenant also has a general right to terminate the agreement so
long as it is within 28 days from when he or she receives the
disclosure statement, copy of the lease or the lease is entered into,
whichever happens last.
Clause 18 provides that, in respect of termination for contravention of the
requirements with respect to disclosure statements, a lease
terminates 14 days after a notice of termination is received by the
landlord--unless the landlord gives the tenant a "notice of
objection" to the termination--
· the landlord must be able to say that he or she has acted
honestly and reasonably and ought fairly to be excused,
and that the tenant has not been substantially affected by
the landlord's failure to comply with the requirements
for disclosure statements;
· if the tenant accepts the notice of objection, or the
notice is upheld under the provisions of Part 10 of the
Act, the lease is deemed to have continued and to not
have terminated at any time during this process;
· if the tenant fails to make a decision or notify the
landlord as to his or her decision within 14 days after
receiving the notice, the tenant is taken to have accepted
the notice and the lease remains in existence;
· a notice of termination does not take effect until a notice
of objection has been determined.
Clause 19 provides that any rights or liabilities accrued by either party
under a lease are not affected by a notice of termination, unless
the parties agree or the Act otherwise provides or the matter is
determined under Part 10.
Clause 20 provides that a tenant will not pay any costs of fit out that were
not set out in the disclosure statement of the landlord.
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Clause 21 provides that a lease must be for a minimum term of 5 years--
· if a lease is entered into that is for less than 5 years then
it will be adjusted so that the initial term of the lease
(not including options to renew) amounts to 5 years;
· the renewal of a lease does not have to be for a 5 year
period, but the initial lease must accord with this
required period;
· the period of 5 years can be altered if at the tenant's
request the Small Business Commissioner certifies that
an explanation has been given to the tenant of the effect
of the section and that the giving of the certificate will
result in the tenant's waiving his or her right to the
benefits of this section;
· the 5 year minimum term does not apply where its
application would be inconsistent with the terms of a
genuine head lease.
Clause 22 provides that the landlord has 28 days from the tenant entering
into a lease in which to give the tenant a copy of the lease that
has been signed by both parties--
· the tenant can terminate the lease at any time within
28 days of either receiving a copy of the lease or
entering into the lease and the lease terminates 14 days
after the notice is given;
· the same provisions regarding notices of termination
and notices of objection apply to the giving a copy of a
lease as in section 18 of this Act.
Clause 23 provides that "key-money" is prohibited or any form of payment
by a tenant to a landlord that is free of consideration and operates
like the payment of a premium--
· the lease will be void if this occurs, but only to the
extent of the extra payment, and it may otherwise
continue on foot;
· various other payments, which do not constitute rent,
but are valid, are also set out in this clause;
· if any payment is made that is contrary to this section
then it is to be repaid by the landlord to the tenant.
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Clause 24 provides for the arrangements with respect to security deposits
including that any security deposit held by the landlord is to be
held in an interest-bearing account and the accounting of such
deposits.
Clause 25 provides that details of a lease, or the renewal of a lease, are to be
given to the Small Business Commissioner within 14 days after
the tenant enters into the lease.
Division 2--Renewal of a Retail Premises Lease
Clause 26 sets out the requirements for the landlord's disclosure on renewal
of a lease--
· if a tenant has exercised or is entitled to exercise an
option to renew the landlord must provide the tenant
with a disclosure statement 21 days before the end of
the first term;
· if a disclosure statement is not given to the tenant then
the tenant is permitted to withhold rent;
· the same provisions in relation to a notice of termination
also apply to the renewal of a lease.
Clause 27 provides for options to renew a lease--
· an option to renew contained in the original lease must
contain details such as for how long the option is open
to acceptance, how it is to be accepted and the terms and
conditions of the new lease;
· an option to renew is binding unless the tenant has not
remedied any default made during the previous term, or
if the tenant persistently defaulted during the previous
term despite the landlord giving written notice of
default.
Clause 28 provides for the landlord's obligation to notify the tenant in
writing of the tenant's option to renew at least 6 months before,
and no more than 12 months before, the date by which the option
is to be exercised--
· this is not required if the tenant has already exercised, or
purported to exercise, the option to renew;
· if a landlord fails to comply with this section then the
date by which acceptance is required is taken to be
6 months from the date when the landlord actually
notified the tenant of the option;
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· a lease will continue until the date of renewal arrives,
and the clause also provides for the tenant to be able to
give a notice of termination under these circumstances
where the landlord defaults.
PART 5--RENT AND OUTGOINGS
Division 1--The Fit Out of the Premises
Clause 29 defines "outgoings" to be those costs incurred by the landlord
which contribute to the operation, maintenance and repair of the
premises in respect of which the tenant is liable to pay.
Clause 30 provides for the way in which alterations to parts of a shopping
centre are to occur where the tenant is liable for the costs of the
alterations--
· those parts of the shopping centre are set out in the
clause but include things such as electrical circuits,
sprinkler systems, power or gas supply, air-conditioning
ducts or exhausts;
· the work must be carried out by a qualified person;
· if the maximum cost of alterations cannot be agreed by
the landlord and tenant then an independent quantity
surveyor will be appointed by the parties or the Small
Business Commissioner, and the parties have to pay the
cost of this surveyor;
· the tenant is only liable up to the maximum cost agreed
upon by the two parties.
Clause 31 provides that if the landlord is responsible for providing some or
all of the fit-out, and his or her obligations have not been met by
the time the tenant is to occupy the premises, then the tenant is
not liable to pay rent while those obligations are unmet, and
except on the grounds of safety, the landlord cannot refuse the
tenant possession just because he or she has not met their
obligations.
Clause 32 provides that a lease may require a "special rent" to be paid by
the tenant to the landlord if the landlord has to complete a fit-out
of the premises.
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Division 2--Determination of the Rent
Clause 33 makes provision in respect of the circumstances where rent is
based on turnover. If the rent is to be determined by reference to
the turnover of the business then the process for determining the
rent needs to be set out completely in the lease itself--
· if rent is to be determined by reference to turnover, and
the process is set out in the lease, then the tenant needs
to provide a statement of turnover within 14 days after
the end of each month;
· at the end of each year the tenant also needs to supply
the landlord with a statement of turnover, certified by an
independent accountant, of the last year within 28 days
of the end of that year;
· these dates and periods may be extended by agreement
between the parties--but need to be stated in the lease;
· factors that do not amount to "turnover" are also listed
in this clause.
Clause 34 provides that if a provision that rent is to be determined in
relation to turnover is void because of section 33, then the rent is
to be agreed in writing between the two parties. If this cannot be
agreed, then a specialist retail valuer is appointed to determine
the rent and the cost of this valuer is paid by the two parties
equally.
Division 3--Review of the Rent
Clause 35 provides that if there is a provision in a lease for the rent to be
reviewed at a particular time during the period of the lease then
the time and formula for this review taking place need to be set
out in the lease--
· the basis or formula on which a rent review is to be
made must be one of those listed in this section;
· ratchet clauses are specifically prohibited;
· if a rent review does not have one of the bases or
formulas listed in this section, the rent is to be as agreed
between the landlord and tenant, or failing agreement,
determined by a specialist retail valuer.
Clause 36 provides for the rent review provisions to apply to the
determination of the commencing rent for a renewed term of a
lease entered into before the commencement of this section.
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Clause 37 provides for rent reviews based on current market rent--
· current market rent refers to the rent that would be paid
between a landlord and tenant having regard to factors
that are set out in this section;
· these factors include taking account of a landlord's
outgoings, any rent concessions usually given, and the
reasonable rent for unoccupied premises similar to those
to which the lease applies;
· goodwill and the value of the tenant's fixtures and
fittings are not to be taken into account;
· if the landlord and tenant do not agree on the current
market rent then it is to be determined by a specialist
retail valuer at the expense of both parties;
· a landlord is required to provide relevant information
about other premises in the same building or the
shopping centre to the specialist valuer to aid in the
determination of the rent;
· the proceedings of any rent review must be carried out
by the specialist retail valuer within 45 days of the
appointment.
Clause 38 provides that if a tenant or landlord supplies information to a
specialist retail valuer, in order for that valuer to determine the
current market rent, then that information is to be kept
confidential--
· however, an exception is if the information is
communicated to a court, the Tribunal or Small
Business Commissioner--or if the landlord or tenant
gives permission for the information to be released--or
if the information is released in a way that means that
the identity of a tenant or tenant's lease is not disclosed;
· any specialist retail valuer who breaches this
confidentiality arrangement is liable to compensate the
party to whom they caused damage.
Division 4--Outgoings
Clause 39 provides for the circumstances where a landlord can recover
outgoings from the tenant. A tenant is only liable to those
outgoings that are set out fully in the lease. In addition the means
of determining the outgoings and how they will be paid by the
tenant also need to be set out in the lease.
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Clause 40 provides that only if the tenant benefits from an outgoing of the
landlord is the tenant required to pay a contribution towards it.
Clause 41 provides that a provision in a retail premises lease is void if it
requires the tenant to pay an amount in respect of the capital
costs of a building or any building within the shopping centre.
Clause 42 provides that tenants cannot be forced to pay for depreciation.
Clause 43 provides that a tenant does not have to contribute to a sinking
fund to provide for capital works.
Clause 44 provides that a landlord cannot force a tenant to pay for the
interest that the landlord incurs when he or she has borrowed
money.
Clause 45 provides that rent and other associated costs must be directly
referable to the land that the tenant uses and must not relate to
other land, etc.
Clause 46 provides that the landlord must give the tenant a written estimate
of those costs that the tenant will have to contribute towards
during the term of the lease.
Clause 47 provides that the landlord must make available to the tenant a
written statement of expenditure in each accounting period
during the term of the lease and give such a statement to the
tenant at the end of the year. The end of the year statement is to
be accompanied by an auditor's report and the auditor must
ensure that the tenant is given a reasonable opportunity to make a
written submission on the accuracy of the statement.
Clause 48 provides for an adjustment between the landlord and tenant
where the tenant has not paid enough or paid too much in relation
to the outgoings for a specific accounting period.
Clause 49 provides that a landlord can only charge the tenant for
"management fees" if the fees relate to the management of the
building or shopping centre and the amount of the fees is
specified in the lease as well as the method for calculating the
fee--
· a maximum fee, not exceeding CPI, is established in
this section, and no provision of a retail premises lease
can exceed this limit;
· the provisions of this Act that relate to the payment of a
management fee may be disregarded if one-half of
tenants in the shopping centre agree that the formula in
this section does not apply to their group of tenants.
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Clause 50 provides that a tenant cannot be made to pay land tax that is
incurred by the landlord under the Land Tax Act 1958.
Clause 51 provides that a landlord cannot recover from the tenant the legal
or other costs of a landlord in preparing a lease or complying
with the Act. However, if the landlord incurs costs in connection
with the assignment of the lease then the tenant may be liable to
pay for these expenses.
Clause 52 provides for the circumstances where urgent repairs to the
premises have to be made. The landlord is responsible for
maintaining the premises in good repair, (except for tenants'
fixtures, etc or where the repairs result from the tenants' misuse
of the premises) but tenants are allowed to arrange urgent repairs,
at the landlord's expense, where the fault affects their business
substantially and they made reasonable efforts to get the landlord
to fix the problem. Tenants must give the landlord a written
notice of the repairs and costs within 14 days of the repairs being
made.
PART 6--REFURBISHMENT, RELOCATION AND OTHER
INTERFERENCES WITH TENANCY
Division 1--Refurbishment, Relocation, etc.
Clause 53 provides that the landlord cannot start alterations that will be
likely adversely to affect the tenant's business unless he or she
has given the tenant at least 60 days notice, unless the alteration
is an emergency and notice was given as soon as was possible in
the circumstances.
Clause 54 provides for the circumstances when a landlord will have to pay
compensation to a tenant for his or her actions--
· the clause covers circumstances when the landlord
limits the tenant's access to his or her premises, or the
landlord unreasonably inhibits the flow of customers to
the premises, or disturbs the tenant's trade or does not
take care of the building or shopping centre or does not
rectify any defects in the building or shopping centre as
soon as possible;
· the tenant must notify the landlord as to the loss or
damage as soon as practicable, but a failure to do so
does not affect any right of the tenant to compensation;
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· this section does not apply when the landlord is
responding to an emergency situation or obeying a
statutory requirement;
· if the amount of compensation cannot be agreed upon
then the matter will be resolved under Part 10 of the
Act.
Clause 55 governs relocation of a tenant's business. A landlord cannot
relocate the tenant's premises or terminate the lease and offer a
new lease of alternative premises unless he or she provides the
tenant with details of the renovation/alteration and with evidence
that it will be done in a reasonable timeframe and could not be
done without the premises being vacant--
· the landlord must give at least 3 months notice of this
relocation;
· the tenant is entitled to be offered a new lease of
alternative premises but the same term remains and the
same level of rent remains for the new premises
adjusted to account for commercial differences;
· the tenant has the right to terminate the lease within
1 month of being given a relocation notice;
· any reasonable costs of relocation will be paid by the
landlord, and where this amount cannot be agreed, it
will be determined by an independent quantity surveyor.
Clause 56 governs the demolition of a building. Any proposal by the
landlord to demolish the building needs to be a genuine proposal
and means that the landlord is terminating the lease.
The landlord must give at least 6 months' written notice of the
termination. The tenant can respond to this notice of termination
by terminating before the proposed date. The landlord must
demolish the building as soon as possible after the termination of
the lease otherwise he or she must pay compensation to the tenant
for early termination of the lease and the landlord must pay for
the fit out of the tenant's premises as well, even if the building is
not ultimately demolished. The landlord may not have to pay
compensation if he or she can prove that there was a genuine
proposal to demolish the building.
Clause 57 provides that the tenant does not have to pay rent if damage to the
building results in their premises not being able to be used and
makes other provision with respect to reduction in outgoings,
termination and payment of compensation.
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Clause 58 provides that a tenant can only be required to refurbish or refit
premises if the details and timing of this are set out in the lease to
start with.
Division 2--Other Interferences with Tenancy
Clause 59 prohibits provisions in a lease limiting the tenant's right to choose
who to employ. However, the lease can specify minimum
standards to be observed by the employees, prohibit work on
specified items and require compliance with any award or
agreement affecting a shopping centre.
PART 7--ASSIGNMENT AND TERMINATION OF A RETAIL
PREMISES LEASE
Clause 60 provides for the circumstances when the landlord will be allowed
to withhold his or her consent to the assignment of a lease.
These circumstances relate to the permitted use of the premises,
the sufficiency of the assignee's financial resources or business
experience, the assignor's compliance with reasonable
assignment provisions of the lease and the assignor's compliance
with a requirement to supply business records to the assignee for
the last 3 years of the business. If the landlord incurs legal or
other necessary costs in the process of giving his or her consent
payments of these costs can be required from the tenant.
Clause 61 provides the procedure for obtaining consent to an assignment.
The tenant's request to assign the lease must be in writing and
accompanied by information of the proposed assignee in relation
to their financial resources and business experience. Further,
provision is made with respect to the giving of disclosure
statements and requirements as to time.
Clause 62 provides that the tenant, or guarantor, will not have to pay the
landlord any money for any costs payable by the assignee,
provided that any disclosure statement made by the tenant is not
false, misleading or materially incomplete.
Clause 63 provides that a lease is allowed to contain a provision that gives
the landlord an absolute right to refuse consent when the tenant
wants to divest certain of his or her own interest in the premises.
Clause 64 provides for the obligations and procedures with respect to the
circumstances where the lease or other agreement between the
landlord and tenant does not contain a provision in regard to
renewal of the lease. The landlord must give the tenant notice of
intention to offer or not offer renewal of the lease. This notice
must be in writing and must be given at least 6 months, but no
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more than 12 months, from the date the lease ends. Provision is
also made as to an offer to renew the lease and the effect of not
giving required notices.
PART 8--ADDITIONAL REQUIREMENTS FOR RETAIL
SHOPPING CENTRES
Clause 65 makes it clear that Part 8 is only to apply to those premises that
are contained in a retail shopping centre.
Clause 66 provides that if a lease says that a shop must be open for certain
core trading hours, the landlord cannot change those hours unless
he or she has the consent of the majority of tenants in the
shopping centre.
Clause 67 prohibits a landlord from providing information of the turnover
of a business within the shopping centre to another person/entity,
except in certain circumstances.
Clause 68 provides that where the landlord prepares information and
statistics on the operations of a shopping centre, and the tenant is
required to contribute to the preparation of this information, the
tenant is entitled to a copy of this information.
Clause 69 provides that tenants cannot be forced to advertise their business.
However, if the parties agree, the landlord may advertise the
shopping centre and the tenant may agree to contribute to this
advertising as being a legitimate outgoing.
Clause 70 requires that a landlord has to provide information and details of
the money that he or she is intending to spend on advertising and
promotion to the tenant at least 1 month before the start of the
landlord's accounting period and, where the lease provides for the
tenant to contribute to the landlord's costs of advertising and
marketing, to give the tenant a copy of any marketing plan.
Clause 71 provides for the landlord's obligations, and the procedure, in
respect of provision of a written statement of expenditure in each
accounting period of the landlord where the tenant is required to
contribute towards the advertising and promotional costs of the
landlord.
Clause 72 provides for any excess contribution by a tenant to the
advertising or promotional costs of a shopping centre to be
carried over by the landlord to pay for future advertising or
promotion or refunded to the tenant at the end of the lease.
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Clause 73 provides that a lease cannot be terminated by the landlord
because the tenant or the tenant's business did not achieve
specified sales or turnover levels.
Clause 74 provides that a lease cannot prevent or restrict the tenant from
carrying on other business outside of the shopping centre during
or after the term of the lease. The only restriction is if the name
of the shopping centre is used by the business that is outside of
the centre.
Clause 75 provides that a landlord cannot prevent a tenant from joining a
tenants' association or similar body, or treat tenants differently if
they chose to join one of these associations.
PART 9--UNCONSCIONABLE CONDUCT
Clause 76 provides that Part 9 applies not only to retail leases commenced
or renewed after the commencement of the Act, but also to those
leases commenced or renewed before the commencement of the
Act if the Act would have been applicable to them had it been in
operation. The conduct in question has to have occurred after the
Act comes into operation.
Clause 77 provides that a landlord cannot act unconscionably. This clause,
in effect, constitutes a drawdown of section 51AC of the Trade
Practices Act 1974 (Cth), tailored to the circumstances of retail
leases, together with the inclusion of additional matters to which
the Victorian Civil and Administrative Tribunal (VCAT) will
have regard in determining whether a landlord has engaged in
conduct that is unconscionable--
· the matters to which VCAT may have regard when
deciding whether a landlord has acted unconscionably
include--
· the bargaining strength of the landlord and the
tenant;
· whether the landlord forced the tenant to engage
in conduct that was not necessary to protect the
landlord's interests;
· if the tenant was able to understand all
documents relating to the lease;
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· whether the landlord exerted undue influence or
pressure on the tenant in relation to terms and
provisions of a lease such as Sunday trading,
trading on public holidays or leases for less than
5 years;
· whether the tenant could have acquired the same
premises under the same conditions for the same
rate;
· if the landlord treated the tenant the same as
other tenants in the tenant's position and
circumstance;
· whether any applicable industry code was
contravened, or if the tenant reasonably expected
the landlord to comply with a code and the
landlord failed to do this;
· if the landlord failed to disclose to the tenant
intended conduct that would affect or risk the
tenant's interests;
· the extent to which the landlord was willing to
negotiate terms and conditions of the lease;
· the extent to which the landlord acted in good
faith;
· the extent to which the landlord was reasonably
willing to negotiate rent;
· if the landlord unreasonably used the turnover of
the tenant's business (or previous tenant) to
negotiate the rent;
· if the landlord required the tenant to incur
unreasonable fit out costs--
· VCAT cannot consider circumstances that were not
reasonably foreseeable at the time of the conduct in
question;
· VCAT can consider circumstances (but not conduct)
that existed before the commencement of the Act.
Clause 78 provides that a tenant cannot act unconscionably and makes
complementary provision (to clause 77) concerning the matters to
which VCAT may have regard in determining whether a tenant
acted unconscionably.
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Clause 79 provides that conduct is not to be deemed unconscionable merely
because a person failed to enter or renew a lease, or if the person
instituted proceedings or referred a matter to some form of
alternative dispute resolution, or if the person did not agree to the
conduct of an independent valuation of current market rent.
Clause 80 provides that a landlord or tenant, or former landlord or tenant,
who suffers loss or damage as a result of unconscionable conduct
may recover compensation by lodging a claim with VCAT--
· the claim with VCAT must be lodged within 6 years of
the conduct alleged;
· if a matter of unconscionable conduct arises in the
course of other proceedings before VCAT, then VCAT
may dispose of the matter there and then.
PART 10--DISPUTE RESOLUTION
Division 1--Retail Tenancy Disputes
Clause 81 defines the meaning of "retail tenancy dispute" as disputes
between landlord and tenant arising under or in relation to a retail
premises lease to which this Act applies, disputes arising under a
provision of the Retail Tenancies Reform Act 1998 or the
Retail Tenancies Act 1986, or any dispute that involves retail
premises in Victoria not governed by any of these Acts--
· proceedings that were already in progress before this
Act commenced are governed by section 119(2) of this
Act;
· a "retail tenancy dispute" does not include a dispute
which a specialist retail valuer can resolve under
section 34 or 37;
Clause 82 provides that the dispute resolution provisions will also apply
where a lease was covered by the Act at any time during the
lease, even if not so covered at the time the dispute is referred to
the Small Business Commissioner.
Clause 83 provides that Part 10 applies to former as well as current
landlords, tenants and leases.
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Division 2--The Small Business Commissioner
Clause 84 provides for the functions of the Small Business Commissioner,
including--
· to organise resolution of disputes through
alternative dispute resolution;
· to prosecute any offences against this Act;
· to report to the Minister on the operation of this
Act;
· to endorse standard form leases (and charge
a fee);
· to confirm certificates given in accordance with
section 21(5);
· to prepare guidelines and information about retail
leases that the public can purchase on demand;
· to prepare a register for information about leases
required to be lodged with the Commissioner
under section 25;
· to perform such other functions as may be
conferred or imposed by or under this Act or any
other Act (e.g. the function to investigate
compliance with a liquor licensing code of
conduct imposed by s. 122 (1)).
· the Commissioner should have a preference for having
disputes resolved via mediation and other such forms of
dispute resolution before using VCAT;
· the Commissioner may himself or herself conduct a
mediator or other form of dispute resolution;
· in exercising mediation or other dispute resolution
functions or in prosecuting offences, the Commissioner
is not subject to the Minister's control or direction.
Division 3--Alternative Dispute Resolution
Clause 85 provides that mediation and alternative dispute resolution
processes are not limited to formal procedures but extend to
preliminary assistance designed to ensure the parties are aware of
their full legal rights and that there is full and open lines of
communication between the parties.
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Clause 86 provides for the procedures for the referral of disputes to the
Small Business Commissioner. Any or all parties to a lease may
refer a dispute to the Commissioner for mediation or alternative
dispute resolution--
· any referral must be accompanied by the required fee to
have the matter mediated by the Commissioner,
although the Commissioner can provide preliminary
assistance before this under section 85 of this Act;
· the Commissioner must arrange for each dispute to be
mediated by a suitably qualified person;
· the parties may be represented by a legal practitioner
but the mediator or person resolving the dispute may
meet a party or the parties together without legal
representatives being present;
· the costs of mediation or other form of alternative
dispute resolution are to paid by the parties according to
proportions they agree upon between themselves, or
otherwise in equal shares;
· mediators or qualified persons are not liable civilly or
criminally for the functions they perform under this Act
unless they acted in bad faith.
Clause 87 provides that a dispute can only proceed to VCAT if the
Commissioner certifies that mediation or alternative dispute
resolution has failed or is not likely to succeed.
Clause 88 provides that statements made during mediation or alternative
dispute resolution cannot be used in court or other proceedings as
evidence, etc.
Division 4--The Tribunal
Clause 89 provides that landlords, tenants or specialist retail valuers can
apply to have a dispute determined by VCAT--
· VCAT is given the same powers and jurisdiction as the
Supreme Court to deal with matters of forfeiture or
relief against forfeiture in disputes over retail leases;
· the parties to an application to VCAT bear their own
costs;
· other than applications in respect of relief against
forfeiture and claims of unconscionable conduct, a
dispute is only justiciable in VCAT;
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· VCAT may determine disputes under this Act, the
Retail Tenancies Reform Act 1998 or the Retail
Tenancies Act 1986.
Clause 90 provides that parties in the proceeding are the applicant, the other
party to the dispute and any party that VCAT considers
appropriate to join to the proceeding.
Clause 91 provides that VCAT can make any orders it deems to be
necessary to resolve the dispute, including--
· requiring a party to provide facilities, services, etc.;
· requiring a party to pay money;
· orders which rectify a lease;
· ordering a tenant to surrender possession of the
premises;
· anything else VCAT is authorised to do under the
Victorian Civil and Administrative Tribunal Act
1998.
Clause 92 provides that each party is to bear its own costs despite what the
Victorian Civil and Administrative Tribunal Act 1998 might
allow.
However, if VCAT believes that one party conducted the
proceedings in a vexatious way that unnecessarily disadvantaged
the other side or refused to participate in mediation, then it may
order that party to pay all or a specific part of the costs of the
proceeding.
Costs, in this section, includes fees, disbursements and charges.
PART 11--OTHER MATTERS
Clause 93 provides for a provision in a lease to be void if it requires
indemnities to be given in respect of certain circumstances.
Clause 94 provides that a lease, or agreement between the parties to the
lease, is void to the extent that it is contrary to the provisions of
this Act or seeks to prevent the Act governing the lease or to the
extent that the lease tries to prevent access to methods of dispute
resolution.
Parties to a lease cannot make arrangements outside of the lease
that would be void if they were inside the lease.
20
Clause 95 provides that if a retail premises lease allows the tenant to occupy
space in the building for residential purposes, and the lease is not
covered by the Residential Tenancies Act 1997, then this Act
provides that the landlord must keep the residential area in good
repair.
Clause 96 provides for the provision of disclosure statements in respect of
franchise arrangements.
Clause 97 provides for the serving or giving of notices under the Act.
Any notice under this Act may be served on, or given to, a person
by the following means--
· personal delivery to the person;
· leaving it at the usual or last known residential or
business address with someone over 16 years and either
a resident or employee of that place;
· sending it via mail to the usual or last known residential
or business address of the person;
· in any way authorised by the lease, this Act or any other
Act.
Clause 98 expresses the clear intent of Parliament that section 89(4) alters
or varies section 85 of the Constitution Act 1975.
Clause 99 gives authority to the Governor-in-Council to make regulations in
regards to specific areas of this Act, including--
· disclosure statements referred to in ss. 17, 26 and 61
(and the information they must contain);
· codes of conduct for landlords and tenants including
concerning casual mall leasing arrangements in
shopping centres;
· matters of a transitional nature including any issues that
arise as a result of this Act coming into operation and
other Acts being repealed or amended;
· anything necessary or required so as to give effect to
this Act.
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PART 12--AMENDMENT OF RETAIL TENANCIES REFORM
ACT 1998
Part 12 is intended to make amendments to the Retail Tenancies Reform
Act 1998 (to the extent that it has continuing operation) to achieve to the
greatest extent practicable consistency with this Act, and therefore
consistency in laws that affect retail tenancies in Victoria.
Clause 100 inserts certain definitions into the 1998 Act to enable consistency
of laws with this Act.
Clause 101 provides for consistency with respect to assignments and
establishes a commencement date of 1 November 2003 for the
consistent laws to operate. The date of 1 November 2003 is
intended to provide sufficient notice to those under 1998 Act
leases to prepare for the consistent laws.
Clause 102 provides for rent review provisions to be consistent with this Act.
Clause 103 provides for rent reviews based on current market rent,
confidentiality provisions and provisions relating to rent based on
turnover to be consistent with this Act.
Clause 104 provides for provisions relating to notice of a landlord's
intentions concerning renewal to be consistent with this Act.
Clause 105 provides for provisions relating to options to renew to be
consistent with this Act.
Clause 106 substitutes new provisions relating to outgoings to be consistent
with this Act.
Clause 107 substitutes new provisions relating to alterations, refurbishments
and repairs to be consistent with this Act.
Clause 108 substitutes new provisions relating to relocation of the tenant's
business to be consistent with this Act.
Clause 109 makes minor amendments of a technical nature.
PART 13--AMENDMENT OF RETAIL TENANCIES ACT 1986
Part 13 is intended to make amendments to the Retail Tenancies Act 1986
(to the extent that it has continuing operation) to achieve to the greatest extent
practicable consistency with this Act, and therefore consistency in laws that
affect retail tenancies in Victoria.
Clause 110 inserts certain definitions into the 1986 Act to enable consistency
of laws with this Act.
22
Clause 111 provides for consistency with respect to assignments and
establishes a commencement date of 1 November 2003 for the
consistent laws to operate. The date of 1 November 2003 is
intended to provide sufficient notice to those under 1986 Act
leases to prepare for the consistent laws.
Clause 112 provides for rent review provisions to be consistent with this Act.
Clause 113 provides for provisions relating to rent based on turnover to be
consistent with this Act.
Clause 114 provides for provisions relating to options to renew to be
consistent with this Act.
Clause 115 substitutes new provisions relating to outgoings to be consistent
with this Act.
Clause 116 substitutes new provisions relating to relocation of the tenant's
business to be consistent with this Act.
Clause 117 makes minor amendments of a technical nature.
PART 14--REPEAL OF 1998 ACT AND TRANSITIONAL
PROVISIONS
Clause 118 provides that the Retail Tenancies Reform Act 1998 is repealed.
Clause 119 provides that the Retail Tenancies Reform Act 1998 will still
have effect on those retail leases to which it applied (except for
the procedures laid down in Part 10 of this Act)--
· if proceedings have commenced under the Retail
Tenancies Reform Act 1998 then they will continue
according to Part 3 of that Act--and Part 10 of this Act
will not apply;
· sections 39 and 52 of the Retail Tenancies Reform Act
1998 continue to operate despite the Act itself having
been repealed.
Clause 120 clarifies that disclosure statements under the 1998 Act that
provide the information required by the Act comply with the Act
even if the layout of the statement did not conform with the
Schedule.
Clause 121 provides that although under section 50 a tenant is not liable to
pay land tax for which the landlord is being charged, if the lease
was entered into or renewed or assigned before the
commencement of this section then section 50 will not apply and
the tenant will be liable to pay the land tax as set out in the lease.
23
However, in such circumstances, the landlord must notify the
tenant within 21 days of receiving the tax assessment for the land
tax of the amount of tax payable.
PART 15--CONSEQUENTIAL AND OTHER AMENDMENTS
Clause 122 amends the Shop Trading Reform Act 1996 so that a provision
in a lease is void if it requires a shop to open on a public holiday.
Clause 123 amends the Victorian Civil and Administrative Tribunal Act
1998 to provide for VCAT to make a declaration under this Act
when constituted by a legal practitioner.
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