Queensland Retail Shop Leases Amendment Bill 2000

02 June 2000

Extended disclosure requirements
In line with the government's objective to improve the levels of information made available to the parties to a lease, the Bill provides that disclosure statements will be extended to pass between the following parties:

• the Lessor and the Lessee;
• the Lessor and the Assignee; and
• the Assignee and the Assignor (the Assignor is also the Lessee).

The Bill outlines the circumstances in which disclosure statements must be provided, and the remedies for non-compliance.

Financial and legal advice certificates
Under the Bill, prospective lessees/assignees with less than five retail shops in Australia and who use each shop wholly or predominantly for carrying on one or more retail businesses must provide a lessor with both financial and legal advice certificates before entering into a lease. The certificates must be signed by an accountant and solicitor respectively. A working group has been formed to resolve the matters to be addressed and the certificates. The Regulations will be amended to clarify the matters to be discussed in the certificates.

Lessee's obligation to pay rent and outgoings
The Bill extends s24, which currently allows the recovery of rent and outgoings, to allow the recovery of a number of other items in addition to rent provided they are specified in the lease, in particular:

• lessor's outgoings;
• damages (for a breach of a term of a lease);
• indemnities for loss or damage suffered by the lessor as a result of actions or omissions of the lessee or a person acting for the lessee; and
• interest on arrears of rent or outgoings provided that the interest rate or the way in which the interest rate is calculated is stated in the lease.

GST
The Act is amended to make it clear that a lessor may require a lessee to pay any amount which might be attributable either directly or indirectly to GST payable for a supply made by the lessor to the lessee under the lease.

In addition, the amendments provide that where the lease allows for GST to be recoverable by the lessor as an outgoing, then the GST amount is to be treated as a specific outgoing. The intent of this provision is to ensure that GST is not treated as an apportionable outgoing to be divided among all lessees.

The Act also is amended to clarify that taxes including GST are not to be taken into account in calculating the turnover of a lessee's business.

Rent review
The Act will continue to prohibit "multiple rent review" clauses. The Bill however amends the rent review provisions so that the following methods of review may be used in combination (of two or more) to form a single basis of review:

• CPI;
• fixed percentage of base rent;
• fixed actual amount; and
• another basis prescribed by regulation.

For example, rent review under the amended provisions may be "CPI plus 2%". Market rent however has been specifically excluded from the methods of review that may be used in a combination to form a new basis of rent review.

The amendments to the Act also extend the remedies for lessees for prohibited multiple rent review clauses so that the rent will be one of the basis chosen by the lessee.

Unconscionable conduct
The "unconscionable conduct" provisions of the Trade Practices Act have been incorporated into the Act. Under these new provisions, a lessor or lessee must not in connection with a retail shop lease "engage in conduct that is in all the circumstances unconscionable".

The Bill identifies areas where a person will not be considered to have behaved unconscionably (for example if a person merely refers a dispute to arbitration) in order to clarify that "normal" lease dealings will not be interpreted as unconscionable conduct.

The Tribunal is able to consider a number of matters in determining whether a party's conduct is unconscionable including for example the relative strengths of the bargaining positions of the parties and the extent to which the party was able to negotiate the terms and conditions of any lease with the other party.

If the Tribunal finds that a party engaged unconscionably the Tribunal may make one only of the following orders:

• an order requiring the offending party to pay an amount to a stated person; or
• an order that the offending party is not required to pay an amount. (This seems to leave the Tribunal with the discretion to find that a party has acted unconscionably but still not impose a specific monetary remedy).

The purpose of this restriction is to prevent the Tribunal from taking any other kind of action such as striking out leases or parts of leases.

A party may appeal to the Supreme Court as of right where payment orders of more than $50,000 are made.

Relocation of lessee's business
The Act is amended to require a lessor who intends to relocate a lessee's business, to give three months' written notice to the lessee and state the premises to which the lessee is to be relocated. If the lessor does not do this then the lessee is entitled to compensation.

Other
The transitional provisions have been drafted to ensure that the amended provisions under the Bill are not applied retrospectively to any action that, under the Act, may have required different compliance requirements.

There are a number of other amendments to Part 8 - Retail Tenancy Dispute Resolution and several other incidental amendments.