Retail lease bonds and dis­pute res­o­lu­tion options

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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. 

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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.