There has been a lot of press over the last 24 hours about the Victorian Government’s new measures for landlords and tenants.

There were two relevant press releases yesterday:

1. one announcing the emergency sitting of Victorian Parliament, available here: https://www.premier.vic.gov.au/emergency-sitting-of-the-victorian-parliament-next-week/
2. the second announcing the State government stimulus to support landlords and tenants, available here: https://www.premier.vic.gov.au/supporting-tenants-and-landlords-through-coronavirus/

The press release announcing the emergency sitting of Parliament includes the following:

The Victorian Government is drafting legislation to address issues such as the tenancy reforms agreed to by the National Cabinet ...

We do not yet know what that bill will look like, but we get some indications from the second press release.

Highlights from the second press release are:

These [new laws] include introducing a temporary ban on evictions, pausing rental increases for six months, and providing land tax relief for landlords and rent relief for tenants experiencing financial hardship as part of a plan to help Victorian families and businesses get to the other side of this unprecedented crisis.

Premier Daniel Andrews today announced a $500 million package aimed at giving certainty to residential and commercial tenants and landlords, while they struggle with the unprecedented economic disruption caused by the coronavirus pandemic – with emergency legislation to be put into the Parliament next Thursday.

…

Tenants and landlords who struggle to strike a deal over rent reductions will be given access to a fast-tracked dispute resolution service, with Consumer Affairs Victoria or the Victorian Small Business Commission mediating to ensure fair agreements are reached.

… the Government will provide $420 million in land tax relief. If a landlord provides tenants impacted by coronavirus with rent relief, they will be eligible for a 25 per cent discount on their land tax, while any remaining land tax can be deferred until March 2021.

A new Coronavirus Relief Deputy Commissioner will be established at the State Revenue Office to manage these land tax relief claims.

… evictions will be banned for residential tenancies for six months, except in some circumstances. Evictions will also be banned for six months for the non-payment of rent for commercial tenancies involving small and medium-sized businesses. Rental increases will also be banned for commercial and residential properties for the same period.

… the Government will also urgently legislate so that eligible small and medium sized businesses can be granted rental waivers or deferrals.

Businesses are eligible for these measures if they have an annual turnover under $50 million per year and have experienced more than a 30 per cent reduction in turnover due to coronavirus.

The Government will also create an $80 million rental assistance fund for renters facing hardship due of coronavirus. To be eligible, renters will need to have registered their revised agreement with Consumer Affairs Victoria or gone through mediation, have less than $5,000 in savings and still be paying at least 30 per cent of their income in rent.

As agreed by National Cabinet, these new measures will come into effect from 29 March for a period of six months.

Readers should note the start date of 29 March 2020 for the relief period, meaning the legislation will have a retrospective effect.   It is unclear how this will affect deals that have already been struck between landlords and tenants.

The Victorian Premier announced today that Parliament is sitting on Thursday, 23 April 2020 to debate ‘an ominbus of bills’.

Among those bills is expected to be a bill giving effect to the National Cabinet Mandatory Code of Conduct for landlords and tenants that was discussed in an earlier post.

As usual, I will keep my readers posted of developments as they occur.

On a similar note, the ACT Parliament has passed amendments to its Leases (Commercial and Retail) Act 2001 (ACT).  These amendments are effective as at 8 April 2020 and permit the ACT’s Attorney-General to make certain declarations.  The provision states that:

Part 17 COVID-19 emergency response

177  Declaration—COVID-19 emergency response

(1) The Minister may make a declaration in relation to the following matters for the purpose of responding to the public health emergency   caused by the COVID-19 pandemic:

(a)    prohibiting the termination of a lease to which this Act applies by a lessor in stated circumstances;

(b)    prohibiting the recovery of possession of premises under the lease by the lessor in stated circumstances;

(c)    changing any period under the lease or this Act in which someone must or may do something;

(d)    changing, limiting or preventing the exercise or enforcement of any other right of the lessor under the lease or this Act in stated circumstances;

(e)    exempting a tenant or lessor, or class of tenant or lessor, from the operation of a provision of this Act, a lease to which this Act applies or any other agreement relating to the lease of the premises.

Sam Hopper and Abilene Singh

The Prime Minister’s press release from today is available here: https://www.pm.gov.au/media/update-coronavirus-measures-070420

The paragraphs relevant to commercial tenants are as follows:

The National Cabinet agreed that states and territories would implement the attached mandatory Code of Conduct (the Code), including via legislation or regulation as appropriate, to implement the principles agreed on Friday 3 April. The Code builds on the draft codes submitted by landlord and tenant representative bodies in the commercial property sector.

The purpose of the Code is to impose a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants, in circumstances where the tenant is a small-medium sized business (annual turnover of up to $50 million) and is an eligible business for the purpose of the Commonwealth Government’s JobKeeper programme.

National Cabinet agreed that there would be a proportionality to rent reductions based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants. The Code provides a proportionate and measured burden share between the two parties while still allowing tenants and landlords to agree to tailored, bespoke and appropriate temporary arrangements that take account of their particular circumstances.

National Cabinet again noted that it expects Australian and foreign banks along with other financial institutions operating in Australia, to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code.

The Commonwealth Government is also acting as a model landlord by waiving rents for all its small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.

The Rent Relief Policy will include a mutual obligation requirement on the small and medium sized enterprises and not-for-profit tenants to continue to engage their employees through the JobKeeper initiative where eligible, and if applicable, provide rent relief to their subtenants.

A copy of the Code is also available here: https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf

I’ll have more to say about the Code in the next few days, but for now it is worth noting that:

1. the Code sets a series of guidelines for negotiated solutions to financial distress caused by the COVID-19 crisis.  These are similar to those outlined in the Prime Minister’s speech earlier today (summarised in an earlier post on this blog), but give much more detail;
2. the Code will be given effect through relevant state and territory legislation or regulation as appropriate;
3. where landlords and tenants cannot reach agreement on leasing arrangements (as a direct result of the COVID-19 pandemic), the matter should be referred and subjected (by either party) to applicable state or territory retail/commercial leasing dispute resolution processes for binding mediation, including Small Business Commissioners/Champions/Ombudsmen where applicable.  This suggests that in Victoria mediation will be conducted by the Office of the Small Business Commission;  and
4. emergency legislation has been passed in other states (NSW and Tasmania that I am aware of) allowing Regulations to be created to give effect to the moratorium period (ie preventing landlords from terminating leases), I am not aware of any legislation having been passed in Victoria or Bills before Victorian Parliament at this stage to give effect to the Code.

The Tasmanian Parliament has passed legislation allowing regulations to prevent termination for non-payment rent and rent increases in commercial tenancies during the Covid-19 emergency.

Although not as broad, it adopts a similar model to that adopted by the NSW Parliament (discussed in an earlier post here: https://samhopperbarrister.com/2020/03/30/nsw-emergency-legislation/).

Section 22 of the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 (Tas) states that:

1. 22. Provisions restricting rent increases or termination of commercial tenancies

(1)  In this section –

emergency period has the same meaning as in the  Residential Tenancy Act 1997 as amended by this Act.

(2)  The Minister may, by notice, declare that, despite any provision of a lease, a lease that is within a class of leases specified in the notice must not, within the emergency period, be terminated, and the rent payable under the lease may not be increased, in the circumstances set out in the notice.

(3)  A termination of a lease, or an increase in rent in relation to a lease, to which a notice under subsection (2) applies is void and of no effect if it is in contravention of the notice.

‘Emergency period’ in the Residential Tenancies Act 1997 (Tas) is defined as:

emergency period means the period – 

(a) beginning on the COVID-19 emergency day; and

(b) ending on whichever is the last occurring of the following:

(i) the day 120 days after the COVID-19 emergency day; 

(ii) a day to which the emergency period is extended by one or more orders under section 3A(1) ; 

(iii) the day on which an order is made under  section 3A(4) declaring that the emergency period has ended;

The same Act also contains the following definition:

COVID-19 emergency day means the day on which the COVID-19 Emergency Act commences;

It appears from the Tasmanian legislation website that the COVID-19 emergency day was 27 March 2020.

We received a circular summarising technology used by the different jurisdictions in Victoria for hearings in light the new social distancing rules.

At this stage, for retail tenancies disputes VCAT is only using telephone calls for urgent matters.  As far as I can tell, at this stage the system only allows for two-parties to call in at any one time (ie the Member plus two others on the call).

If you have an appearance in a retail tenancies matter at VCAT, you should make sure that you are prepared to only have one phone line into the Tribunal.  For example, I have been appearing at VCAT by telephone with my instructing solicitors communicating with me on FaceTime from my desk.