Michael Byrnes is quoted in Lawyers Weekly | Lawyers should think twice before appearing on reality TV
While it might seem like a good, fun and maybe even enriching experience to go on the reality TV show journey…
On 7 April 2020, the National Cabinet adopted the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles during COVID-19 (Code). The Code contemplated that it would be given effect through relevant State and Territory legislation or regulation.
New South Wales has now passed the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Regulation) to implement the Code’s intent. A separate regulation applies for retail leases and for commercial/industrial leases, but there are no material differences between the 2 regulations.
Below is a summary of the Regulation.
What does it do?
The object of the Regulation is to give effect to the Code and particularly to:
Yes – It is an adoption of the Code
Interestingly, although the Regulation adds specificity (beyond what was stated as general principles in the Code) to things such as the restriction on enforcement rights of landlords and the dispute resolution process, with respect to rent relief nothing of substance was added to put any gloss on the Code. In the renegotiation of rent payable under a lease that is captured by the Regulation, the parties must have regard to ‘the economic impacts of the COVID-19 pandemic’ and ‘the leasing principles set out in the National Code of Conduct’.
When does it apply?
The Regulation takes effect on 24 April 2020 and is repealed automatically on 24 October 2020 (being 6 months after it commenced) (Prescribed Period).
The Regulation applies to the exercise or enforcement of rights under affected leases (described below) in relation to circumstances occurring during the Prescribed Period.
What leases does the Regulation affect?
A retail lease or a commercial/industrial lease entered into:
What tenants does the Regulation affect?
The Regulation applies to tenants (Impacted Tenants) under any of the above leases if:
What prohibitions and restrictions apply?
Where the tenant is an Impacted Tenant:
What a landlord cannot do?
A landlord must not take action under a lease, seek orders or commence proceedings for any of the usual enforcement actions. These prohibitions (Prescribed Action) are:
Obligation to renegotiate
In any case where a Prescribed Action might be able to be taken against an Impacted Tenant for non-payment of rent during the Prescribed Period, a landlord must first comply with the following:
Dispute resolution under both retail and commercial/industrial leases
The dispute resolution process in part 8 of the Retail Leases Act 1994 (NSW) applies to commercial/industrial leases. Therefore, unless the amount in dispute is greater than $750,000, NSW Civil and Administrative Tribunal is the tribunal with jurisdiction.
Therefore, for both a retail lease and a commercial/industrial lease, a landlord must obtain certification from the Small Business Commissioner that mediation has been conducted and has failed before a landlord can:
What about non COVID-19 pandemic related breaches?
A landlord is not prevented from taking a Prescribed Action against an Impacted Tenant on grounds not related to the economic impacts of the COVID-19 pandemic.
In a practical sense, this means that if the tenant was in arrears for a period before the Regulation took effect (ie pre-April 2020 arrears) or was in breach of some other obligation before the Regulation took effect, the landlord can pursue its rights in the usual way. Therefore, the landlord (if it chooses) can re-enter and terminate the lease if the tenant does not rectify a pre-COVID-19 pandemic breach.
How can we help you?
For more of our COVID-19 property law alerts, updates and publications or to make an online enquiry please click here and we will respond to you as a matter of urgency. Alternatively just call us on +61 2 9233 5544.
The Swaab property team