28 April 2020
COMMERCIAL TENANCIES
On 16 April 2020 we issued a Legal Update regarding the National Cabinet’s Mandatory Code of Conduct for commercial tenancies, released in response to the economic fallout from the COVID-19 pandemic. Click here to access it.
Since then, the State level legislative implementation has begun. Here we provide an update on the action taken in Queensland to implement the Code and Queensland’s own relief package.
What’s happened?
On 23 April 2020 the Queensland Parliament’s COVID-19 Emergency Response Act 2020 (Qld) commenced. The legislation is essentially enabling legislation for broad, wide ranging regulation-making powers for Ministers to minimize health and safety risks to persons and assist in responding to the Covid-19 emergency.
WHAT DOES IT MEAN FOR COMMERCIAL LEASES?
Regulations can be made under the Act itself or the Retail Shop Leases Act 1994 (Qld) in relation to a “relevant lease” in response to the COVID-19 emergency.
A “relevant lease” is a retail shop lease under the Retail Shop Leases Act 1994 (Qld) or a “lease prescribed by regulation”. Until the regulations are released, we do not know what these leases will be.
The Act does not implement the Code, instead it gives regulation making power in relation to “relevant leases” adopting principals from the Code. These regulation making powers include, for “relevant leases” for the COVID-19 emergency:
- prohibiting the recovery of possession of premises from a tenant;
- prohibiting the termination of leases by a landlord;
- regulating or preventing a landlord’s rights of enforcement under a relevant lease or agreement for the premises;
- exempting a tenant from provisions of an Act, relevant lease or other agreement;
- requiring parties to have regard for prescribed standards or codes in relation to the negotiation of disputes;
- requiring mediators, conciliators, tribunals, Courts etc to have regard to those codes; and
- providing dispute resolution processes. The Act establishes a role of Small Business Commissioner for the COVID-19 emergency, whose functions include assisting small businesses in reaching an informal resolution for disputes for small business leases and administering the small business tenancy disputes mediation processes.
WHEN DO THE REGULATIONS APPLY?
A regulation can have retrospective application to 23 April 2020 and expires on 31 December 2020. This means that, depending on the recovery and the lifting of restrictions, the regulations may apply after more usual business operations resume.
The Act refers to the “COVID-19 emergency” and “COVID-19 emergency period” which means the period of the public health emergency declared on 29 January 2020 under the Public Health Act 2005 (Qld) as extended.
WHAT RELIEF HAS BEEN PASSED?
The Queensland Parliament also passed the Appropriation (COVID-19) Act 2020 (Qld) which enables more than $4 billion worth of State government relief and stimulus measures including $400 million in land tax relief and $2.5 billion for Queensland businesses and an initial $27.5 million to assist local government, business and industry with recovery and resilience throughout the COVID-19 pandemic.
WHAT’S NEXT?
The regulations for retail and other leases has not yet been released. There is no timeframe for their release. Until we see the regulations, we will not know what leases these principles will apply to, or what the actual provisions applying to those relevant leases will be.
On presenting the draft Bill to Parliament, Premier Palaszczuk foreshadowed further consultation with key stakeholders on the development and implementation of the fair leasing principles framework in Queensland, beyond the Queensland Leasing Principles released on 9 April 2020.
In New South Wales, regulations for retail and commercial leases that came into effect on 24 April 2020 set out prohibited actions and provide for parties to renegotiate rent terms having regard to the economic impacts of the COVID-19 pandemic and the leasing principles in the Code. If the Queensland regulations are similar, unless a landlord agrees to a 100% rent reduction, to fully comply with the Code, the rent relief may need to be tested on a month on month bases, to determine the appropriate fall in turnover to provide adequate rent relief.
We recommend you continue to monitor the Queensland Government’s response and release of regulation to implement these leasing principles.