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.

In an earlier post we referred to NSW legislation giving the Minister power to create emergency regulations to prevent the termination of leases during the COVID-19 crisis.

The NSW legislation is now available here: https://www.legislation.nsw.gov.au/acts/2020-1.pdf

The text relevant to commercial and retail tenancies is set out below.

It is worth noting that:

1. Although a state-by-state approach has been suggested, we can expect something similar in Victoria.
2. The NSW legislation only allows the creation of regulations by the Minister.  We have yet found any regulations made under the new powers, but they are expected any day now.
3. The legislation allows the creation of regulations that prevent termination for more than just non-payment of rent.  For example:

• • the new sub-s 87(1)(a) of the Retail Leases Act 1994 (NSW) allows regulations that prohibit any terminations;  and
  • the new s 87(1)(c) of the Retail Leases Act 1994 (NSW) allows regulations to regulate or prevent the exercise of ‘another right of a lessor or owner of premises or land … in particular circumstances’. This could, for instance, be used to create regulations preventing a landlord calling on a guarantee during the pandemic or suing under a personal guarantee or indemnity.

4. The legislation allows regulations under residential, retail and agricultural tenancies, as well as ‘any other Act relating to the leasing of premises or land for commercial purposes’.  It is not clear what that additional legislation could be.  However:

• • in Victoria, Part II, Division 5 of the Property Law Act 1958 (Vic) regulates leases and tenancies generally;  and
  • in Victoria, the Retail Leases Act 2003 (Vic) has broader application than its NSW counterpart in light of the operation of the ‘ultimate consumer test’.

5. The regulations sunset after 6 months.

The text of the NSW legislation amending the Residential Tenancies Act 2010 (NSW) is set out below.

2.17 Residential Tenancies Act 2010 No 42 Part 13

Insert after Part 12—

Part 13 Response to COVID-19 pandemic 229 Regulation-making power

(1)  The regulations under any relevant Act may provide for the following matters for the purposes of responding to the public health emergency caused by the COVID-19 pandemic—

(a)  prohibiting the recovery of possession of premises by a landlord, owner or proprietor of premises from a tenant or resident of the premises under the relevant Act in particular circumstances,

(b)  prohibiting the termination of a residential tenancy agreement, occupancy agreement or site agreement by a landlord, proprietor of premises or operator of a community under the relevant Act in particular circumstances,

(c)  regulating or preventing the exercise or enforcement of another right of a landlord, proprietor of premises or operator of a community by the landlord, proprietor or operator under the relevant Act or an agreement relating to the premises,

(d)  exempting a tenant, resident or home owner, or a class of tenants, residents or home owners, from the operation of a provision of the relevant Act or any agreement relating to premises.

(2)  The Minister may recommend to the Governor that regulations be made under this section only if—

(a)  Parliament is not currently sitting and is not likely to sit within 2 weeks after the day the regulations are made, and

(b)  in the Minister’s opinion, the regulations are reasonable to protect the health, safety and welfare of tenants or residents under the Act.

(3)  Regulations made under this section are not limited by the regulation-making power in a relevant Act.

(4)  Regulations made under this section expire on—

(a)  the day that is 6 months after the day on which the regulation commences, or

(b)  the earlier day decided by Parliament by resolution of either House of Parliament.

(5)  In this section—

occupancy agreement has the same meaning as in the Boarding Houses Act 2012.

operator of a community has the same meaning as in the Residential (Land Lease) Communities Act 2013.

proprietor has the same meaning as in the Boarding Houses Act 2012.

relevant Act means any of the following—

(a)  Boarding Houses Act 2012,

(b)  Residential (Land Lease) Communities Act 2013,

(c)  Residential Tenancies Act 2010,

(d)  any other Act relating to the leasing of premises or land for residential purposes.

site agreement has the same meaning as in the Residential (Land Lease) Communities Act 2013.

The text of the NSW legislation amending the Retail Leases Act 1994 (NSW) is set out below.

2.18 Retail Leases Act 1994 No 46 Part 11

Insert after Part 10—

Part 11 Response to COVID-19 pandemic 87 Regulation-making power

(1)  The regulations under any relevant Act may provide for the following matters for the purposes of responding to the public health emergency caused by the COVID-19 pandemic—

(a)  prohibiting the recovery of possession of premises by a lessor or owner of premises or land from a lessee or tenant of the premises or land under the relevant Act in particular circumstances,

(b)  prohibiting the termination of a lease or tenancy by a lessor or owner of premises or land under the relevant Act in particular circumstances,

(c)  regulating or preventing the exercise or enforcement of another right of a lessor or owner of premises or land under the relevant Act or an agreement relating to the premises or land in particular circumstances,

(d)  exempting a lessee or tenant, or a class of lessees or tenants, from the operation of a provision of the relevant Act or any agreement relating to the leasing or licensing of premises or land.

(2)  The Minister may recommend to the Governor that regulations be made under this section only if—

(a)  Parliament is not currently sitting and is not likely to sit within 2 weeks after the day the regulations are made, and

(b)  in the Minister’s opinion, the regulations are reasonable to protect the health, safety and welfare of lessees or tenants under the Act.

(3)  Regulations made under this section are not limited by the regulation-making power in a relevant Act.

(4)  Regulations made under this section expire on—

(a)  the day that is 6 months after the day on which the regulation commences, or

(b)  the earlier day decided by Parliament by resolution of either House of Parliament.

(5)  In this section—
relevant Act means any of the following—

(a)  Agricultural Tenancies Act 1990,

(b)  Retail Leases Act 1994,

(c)  any other Act relating to the leasing of premises or land for commercial purposes.

Sam Hopper and Abilene Singh