Lockdown mark 2 …

Hi all and welcome to lockdown mark 2.

I am not yet aware of any new measures for landlords and tenants coming out of the second wave of this awful pandemic.  Practitioners already operating in this area should be familiar by now with the basic layout of the Commercial Tenancy Relief Scheme and the materials that are available.

However, with the new lockdowns there are likely to be more tenants seeking rent relief and more practitioners being asked to help their clients through this process.

As a reminder for those already practicing in the area, and to assist those who are just entering the fray, the basic materials consist of:

1. The National Cabinet Mandatory Code of Conduct.
2. Part 2.2 of the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic).
3. The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic).
4. The Ministerial policy guideline titled Victoria’s commercial tenancies relief scheme: Policy guidance on eligible participants and documentation requirements.
5. The Office of the Small Business Commission’s FAQ’s, which are being regularly updated as the situation evolves.

Also, a link to a CPD and paper that I presented to the LIV outlining the scheme and some of the issues associated with it is available here.

This blog is Victorian-based, so takes a Victorian perspective on these issues.  However, the lawyers at Minter Ellison have published an excellent compendium of Victorian and  interstate legislation that gives effect to the Code, available here.

There is only one part of the Regulations that I want to highlight at this stage, and that’s reg 11, which states that:

(1)  If the financial circumstances of a tenant under an eligible lease materially change after a variation to the eligible lease has been made or an agreement has been reached as mentioned in regulation 10(6)—

(a)  the tenant may make a further request to the landlord under that lease for rent relief under regulation 10;  and

(b)  subject to subregulation (2), the landlord and the tenant must follow the process set out in regulation 10 in relation to that request.

(2)  A landlord’s offer of rent relief need not comply with regulation 10(4)(b).

Note

An eligible lease has effect subject to this regulation—see section 17(1) of the Act.

The upshot is that:

1. a tenant who has already reached agreement about rent relief with their landlord can start the process again and request more rent relief if their financial circumstances materially change;
2. the process is the same as previously, save that the landlord is not required under regulation 10(4)(b) to provide a minimum level of rent relief by way of waiver, suggesting that further deferrals are expected (if warranted in the circumstances);  and
3. the Regulations do not provide any guidance on what is a ‘material change’ in the tenant’s financial circumstances.  Practitioners should expect to hear more about this in the coming weeks.

As usual, I will try to update everyone on developments as they occur.