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10 November 2011 Retail lease bonds and dispute resolution options

By Wendy Conceicao, Associate


In Brief

When the retail markets slow, disputes between landlord and tenant tend to arise and a claim on the bond money may soon follow. 

A Landlord must ensure that it complies with the provisions of the Retail Leases Act 1994 in respect to the lodgement of the bond. 


Lodgement of security

Section 16C of the Retail Leases Act 1994, provides that a landlord must deposit a bond received with the Director General within 20 business days after:

a.the date of receipt of the bond money; and
b.the date the lease became binding on both the landlord and the tenant.

Section 16C of the Retail Leases Act 1994 extends to an agent acting on behalf of the landlord.  The landlord may be liable for a penalty of up to $2,200 if the bond is not lodged within the time constraints above.

The cheque representing the bond must be accompanied by the approved form or the Director General can reject the lodgement and the landlord may face a penalty if the re-lodgement falls outside the time constraints.

Dispute resolution options

Once a dispute arises there are many dispute resolution options available to the landlord and tenant.

However, Section 68 of the Retail Leases Act 1994 provides that a landlord or tenant may not commence proceedings before a court unless and until the Registrar has certified in writing that mediation has failed to resolve the dispute or the court is satisfied that mediation is unlikely to resolve the dispute.

Mediation

Mediation is a cost and time effective way to resolve a retail tenancy dispute.  The cost to each party is less than $1,000.  Mediation is a process in which the landlord and the tenant identify the issues in dispute in the presence of a mediator and all work together to reach an agreement.  The mediator will not provide advice to the landlord or the tenant.  The mediator's role is solely to facilitate an agreement.

Section 69 of Retail Leases Act 1994 provides that any statement or admission made in the course of mediation of a retail tenancy dispute is not admissible at a hearing or in any other legal proceedings.

What other Alternative Dispute Resolutions (ADR) are available?
Arbitration

An arbitrator is capable of making a determination in a dispute once the arbitrator has heard the arguments and reviewed the evidence of both the landlord and the tenant.

Conciliation

A conciliator assists the landlord and the tenant in identifying the issues, developing options, considering options and alternatives in an attempt to resolve the dispute.  A conciliator is often legally qualified or holds professional qualifications in the area of dispute. The conciliator cannot determine the dispute. 

Early neutral evaluation

This process gives the landlord and the tenant an opportunity to present their dispute and evidence to a neutral evaluator. The evaluator determines the key issues of the dispute and advises the most effective way to resolve the dispute.  The evaluator cannot make a determination as to the facts of the dispute.

Facilitation

An impartial facilitator assists the landlord and the tenant in identifying and solving the problems by improving the landlord and tenant's ability to work together to resolve the dispute.

Conclusion

If the landlord and tenant have failed to reach an agreement to the dispute and once a certificate of failed mediation is received, a party may commence proceedings in the Retail Leases Division of the Administrative Decisions Tribunal.  Sections 70 to 77C of the Retail Leases Act 1994 outline the lodging processes and powers of the Administrative Decisions Tribunal.

Wendy Conceicao, Senior Associate  |  Phone: +61 2 9233 5544  |  Email: wsc@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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