New emergency Act passed by Victorian Parliament

April 23, 2020

Uncategorized

The much-anticipated emergency measures Bill has been tabled in Victorian Parliament today to create legislation to give effect to the Code and was passed this afternoon.

However, the Act is only ‘enabling legislation’, ie it is legislation that allows the creation of regulations that give effect to the Code, recently published by the National Cabinet.

At this stage, we have not seen a copy of the Regulations, so do not know what they will look like, although the Act gives us some indications about what to expect.

Highlights of the Act are:

  • it allows regulations that apply to commercial licences to occupy land for the business purposes, not just to leases.  That means that a franchisee’s outlet licence should be protected by the Code;
  • it defines an ‘eligible lease’ as one that was in effect when the proposed Regulations come into operation and where the tenant is an SME entity and an employer who qualifies for and is a participant in the jobkeeper scheme;
  • it excludes from the definition of eligible lease a group of companies with an aggregate turnover above the prescribed amount.  The Act does not state the prescribed amount, but at this stage we expect that to be $50M.  The Regulations have the ability to define a group quite widely;
  • the Act allows for Regulations that affect the operation of eligible leases.  These are quite diverse, and include:
    • prohibiting the termination of eligible leases;
    • changing periods in the lease by which someone must or may do a thing;
    • changing or limiting other rights or exempting a landlord or tenant from complying with an obligation under an eligible lease or other statute;
    • modifying the operation of an eligible lease or the application of other statutes to those leases;
    • extending the term of an eligible lease;
    • deeming a provision of the regulations to form part of an eligible lease;
    • imposing new obligations on landlords and tenants under an eligible lease, including requiring them to negotiate amendments to an eligible lease;  and
    • modifying or exempting compliance with agreements related to eligible leases, which would, presumably, include guarantees and may also extend to indemnities;
  • it allows regulations that create a regime for mediation before litigation about the terms of an eligible lease at the Small Business Commission;
  • it allows Regulations imposing penalties not exceeding 20 penalty units, which may create offences for non-compliance with the Regulations;
  • regulations under the Act may have retrospective effect from a date no earlier than 29 March 2020.  Curiously, the Code purports to have effect from 3 April 2020;
  • the usual requirement for public consultation and the preparation of a regulatory impact statement are abolished, but the Regulations may be overruled by a either House of Parliament;  and
  • the Act and any Regulations will sunset in 6 months after commencement.

Unlike the WA Bill referred to in an earlier post, the Victorian Act does not expressly allow financially distressed tenants to terminate their leases, despite apparent calls for an amendment to that effect from one member of the upper house! See: https://www.commercialrealestate.com.au/news/victorian-politician-calls-for-early-termination-clause-in-covid-19-relief-bill-950088/?utm_campaign=featured-masthead&utm_source=the-age&utm_medium=link

Finally, we invite readers to admire the fact that the Bill rejoices in the name COVID-19 Omnibus (Emergency Measures) Act 2020.

Sam Hopper and Abilene Singh

About Sam Hopper

Sam is a property and insolvency barrister.

View all posts by Sam Hopper

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