Victorian Bills Explanatory Memoranda

[Index] [Search] [Download] [Bill] [Help]


RETAIL LEASES (AMENDMENT) BILL 2005

            Retail Leases (Amendment) Bill

                        Introduction Print

              EXPLANATORY MEMORANDUM


                               Clause Notes

                      PART 1--PRELIMINARY
Clause 1   provides that the main purpose of the Act is to make
           miscellaneous amendments to the Retail Leases Act 2003, the
           Retail Tenancies Reform Act 1998 and the Retail Tenancies
           Act 1986, to amend section 146 of the Property Law Act 1958
           in relation to a breach of a lease amounting to repudiation and to
           repeal the Small Business Victoria (Repeal) Act 1996.

Clause 2   provides for the commencement of the Act.
           Sub-clause (1) provides that sections 1, 2, 3, 12(7), 16, 17, 23,
           37, 51 and 52 come into operation on the day after the day on
           which the Act receives Royal Assent.
           Sub-clause (2) provides that Part 4 is deemed to have come into
           operation at the last moment of 30 June 1998. Part 4 of the Act is
           necessarily deemed to have come into operation at the last
           moment of 30 June 1998 as Part 4 amends the Retail Tenancies
           Act 1986 which was repealed on 1 July 1998 by the Retail
           Tenancies Reform Act 1998.
           Sub-clause (3) provides that clause 45(2) is deemed to have come
           into operation on 1 July 1998. Clause 45(2) amends the Retail
           Tenancies Reform Act 1998 to define "prospective tenant". It is
           required to come into operation on that date to ensure that leases
           entered into under the Retail Tenancies Act 1986 which were
           renewed during the operation of the Retail Tenancies Reform
           Act 1998 are covered under the Retail Tenancies Reform Act
           1998 from the date this Act first commenced operation, being
           1 July 1998.




                                      1
551361                                       BILL LA INTRODUCTION 5/10/2005

 


 

Sub-clause (4) provides that sections 39, 40, 41, 42 and 43 are deemed to have come into operation on 15 April 2003, the date of Royal Assent of the Retail Leases Act 2003, with these sub- clauses amending the sections of the Retail Leases Act 2003 which amend the Retail Tenancies Reform Act 1998 and the Retail Tenancies Act 1986. Sub-clause (5) provides that Part 3 (other than section 45(2)) is deemed to have come into operation at the last moment of 30 April 2003. Part 3 of the Act is necessarily deemed to have come into operation as the last moment of 30 April 2003 as Part 3 amends the Retail Tenancies Reform Act 1998 which was repealed on 1 May 2003 by the Retail Leases Act 2003. Sub-clause (6) provides that the remaining provisions of this Bill are deemed to have come into operation on 1 May 2003, the date the Retail Leases Act 2003 came into operation. The amendments are mainly procedural amendments to the Retail Leases Act 2003 and it is necessary for these provisions to commence on the same date as the commencement of the Retail Leases Act 2003 to ensure that the substantive provisions of that Act have effect from their commencement as amended by this Bill. Clause 3 provides that in the Act a reference to the Principal Act means a reference to the Retail Leases Act 2003. PART 2--AMENDMENT OF RETAIL LEASES ACT 2003 Clause 4 amends section 3 of the Principal Act to insert a definition of "accounting period" as a 12 month period. Clause 5 Sub-clause (1) amends the definition of retail premises in section 4(1) of the Principal Act to ensure that a retail premises does not include any area intended for use as a residence. Sub-clause (2) makes an amendment to section 4(1) of the Principal Act which is consequent on the amendment made in sub-clause (1). Sub-clause (3) amends section 4(2)(d)(i) of the Principal Act due to an amendment made to the Corporations Act, and provides that the retail premises do not include premises where the tenant is a body corporate whose securities are listed on a stock exchange, outside Australia and the external territories, that is a member of the World Federation of Exchanges. Sub-clause (4) makes a minor amendment to section 4(2)(f) of the Principal Act as a consequence of the amendment made in sub-clause (5). 2

 


 

Sub-clause (5) inserts a new section 4(2)(g) and (h) into the Principal Act to enable the Minister to determine under section 5 of the Principal Act that certain premises are not to be included in the definition of "retail premises". Sub-clause (6) substitutes section 4(3)(b) of the Principal Act to provide that occupancy costs include outgoings as estimated by the landlord, to which the tenant is liable to contribute under the lease, and adds an explanatory note regarding section 46 of the Principal Act. Clause 6 Sub-clause (1) makes a minor amendment to section 5(1)(c) of the Principal Act consequent on the amendment in sub-clause (2). Sub-clause (2) inserts new paragraphs (d) and (e) into section 5(1) of the Principal Act to enable the Minister to determine that a kind of tenant or a kind of lease is a tenant or lease to which section 4(2)(g) and (h) applies respectively. Sub-clause (3) inserts into section 5 of the Principal Act new sub-sections (1A) and (1B). Sub-section (1A) has been inserted to facilitate an administrative arrangement to ensure that an instrument made under section 5 may leave the precise details of any matter to be certified by the relevant Minister. Sub-section (1B) provides that an instrument made under sub- section (1) may provide that it has effect on and from 1 May 2003 or such later date as specified in the instrument, and this may apply to instruments made before or after 1 May 2003. Clause 7 substitutes a new section 7 of the Principal Act to provide that a retail premises lease is entered into or assigned when the first of 3 numerated events occur. Clause 8 amends section 9(1)(b) of the Principal Act to provide that a renewal of a lease means a renewal on substantially the same terms and conditions of the lease except as to rent. Clause 9 amends section 12(2) of the Principal Act to clarify that continuous possession has to occur after the commencement of that section. Clause 10 amends section 15 of the Principal Act to insert a new sub- section (2) to provide that sub-section (1) does not apply to a renewal of a lease. 3

 


 

Clause 11 Sub-clause (1) inserts a new sub-section (1A) in section 17 of the Principal Act to provide that a tenant who has been given a disclosure statement concerning a head-lease is only required to give a sub-tenant a copy of that disclosure statement and details of any changes that have affected the information in the disclosure statement since it was given to the tenant. Sub-clause (2) amends section 17(4) of the Principal Act to make it clear that a tenant is not liable to pay rent attributable to a period before the premises are available for handover. Sub-clause (3) amends section 17(6)(b) of the Principal Act to refer to the "proposed" lease. Sub-clause (4) inserts a new sub-section (7) in section 17 of the Principal Act to provide that if a tenant has been given the disclosure statement before entering into an agreement for a retail premises lease, the landlord is not required to give a further disclosure statement before subsequently entering into a retail premises lease if that lease is substantially in accordance with the earlier agreement for lease. Clause 12 Sub-clause (1) inserts examples in the note at the foot of section 21(1) of Principal Act. Sub-clause (2) inserts a new sub-section (2A) into section 21 of the Principal Act to provide that in applying sub-section (1) to a retail premises lease to which the Principal Act applies because of section 12(2) of the Principal Act, account must be taken of any period during which the tenant was continuously entitled to possession of the retail premises before the day on which the Principal Act first applied to the lease. Sub-clause (3) amends section 21(5)(a) of the Principal Act to include a prospective tenant. Sub-clauses (4) and (5) amend sections 21(5)(a)(ii) and 21(5)(b) respectively of the Principal Act to provide that the tenant must give the landlord a copy of a certificate under this section. Sub-clause (6) amends section 21(5) and (6) of the Principal Act to include a prospective tenant. Sub-clause (7) inserts a new sub-section (5A) into section 21 of the Principal Act to set timeframes for when a tenant should make a request under sub-section (5). 4

 


 

Sub-clause (8) inserts a new sub-section (7) into section 21(6) of the Principal Act to provide that if the term of a lease is extended under section 21 of the Principal Act and no provision is made in the lease for a review of the rent payable in respect of the extended period, then the lease is taken to provide for a rent review to be made on the basis of the current market rent of the premises as at the beginning of that period. Clause 13 Sub-clause (1) amends section 22(1) of the Principal Act to provide that a landlord or tenant may agree in writing on a period other than 28 days within which the landlord must give the tenant a copy of the lease signed by the landlord and the tenant. Sub-clause (2) amends section 22(2)(a) of the Principal Act to clarify that the lease must be signed by the landlord and the tenant. Clause 14 amends section 23(4)(b) of the Principal Act to clarify that the tenant can seek to recover any payment made under Part 10 using all of the dispute resolution provisions of the Act. Clause 15 Sub-clause (1) makes a minor amendment to section 24(1)(c) of the Principal Act consequent on the amendment made in sub- clause (2). Sub-clause (2) inserts a new paragraph after section 24(1)(c) of the Principal Act to ensure that if the tenant performs all of the tenant's obligations under the lease the landlord must return the security deposit as soon as practicable after the lease ends. Sub-clause (3) repeals section 24(2) of the Principal Act consequent on the amendment made in sub-clause (2). Clause 16 Sub-clause (1) amends section 25 of the Principal Act by providing that a landlord must also notify the Small Business Commissioner in writing upon the renewal of a retail premises lease. Sub-clause (2) inserts after section 25(c) of the Principal Act a new paragraph (ca) which provides the landlord must notify the Small Business Commissioner of the date when the lease was signed by all of the parties to it, or renewed. Clause 17 Sub-clause (1) amends section 26(1) of the Principal Act to provide that a landlord must no later than 14 days after entering into an agreement to renew a lease provide a tenant with a disclosure statement. 5

 


 

Sub-clause (2) substitutes section 26(3) of the Principal Act, to link the time by which the tenant must have been given the disclosure statement back to the provisions in sub-section (1) of the Principal Act. Clause 18 makes a minor amendment to section 28(2)(c) of the Principal Act to provide that the tenant may give the landlord a written notice under this section whether or not the landlord has by then notified the tenant as required. Clause 19 Sub-clause (1) makes a minor typographical amendment to change a reference in the note at the foot of section 35(2) of the Principal Act from a reference to section 36 to section 37. Sub-clause (2) amends section 35(7) of the Principal Act to provide that if a provision in a retail premises lease is void under sub-section (6), the rent is to be calculated in the manner set out in sub-section (7). Clause 20 substitutes section 37(7) of the Principal Act to provide that the time by which a specialist retail valuer must carry out a valuation may be extended to such longer period as may be agreed between the landlord and tenant, or if there is no agreement, as determined in writing by the Small Business Commissioner. Clause 21 makes a minor typographical amendment to section 38(1) of the Principal Act to change the reference to section 36 to section 37. Clause 22 Sub-clause (1) makes a minor amendment to section 41 of the Principal Act consequent on the amendment in sub-clause (2). Sub-clause (2) inserts a new sub-section (2) in section 41 of the Principal Act which provides that sub-section (1) does not operate to render void a provision in a retail premises lease which requires a tenant to undertake capital works at the tenant's own cost. Clause 23 Sub-clause (1) substitutes section 49(1)(a) of the Principal Act and excludes from the meaning of management fees in this sub- section salaries and other administrative costs, and thereby provides that a landlord may pass on to a tenant the costs of particular salaries and other administration costs relating to the operation of the building. 6

 


 

Sub-clause (2) inserts a new sub-section (6) into section 49 of the Principal Act which provides that for the purposes of calculating amounts under sub-sections (2) and (3), salaries and other administrative costs relating to the operation of the building in which the retail premises are located or, if the retail premises are located in a retail shopping centre, in that centre, are not included. Clause 24 Sub-clause (1) amends section 50 of the Principal Act to include a head landlord in relation to liability for land tax. Sub-clause (2) inserts a new sub-section (2) in section 50 of the Principal Act, which provides that sub-section (1) does not apply, in the case of lease entered into at any time on or after 1 May 2003 and before 1 July 2003, in respect of any period before 1 July 2003. Clause 25 Sub-clause (1) amends section 52(2) of the Principal Act to require that a landlord maintain the things listed in paragraphs (a)-(c) in a condition consistent with the condition of the premises when the retail premises lease was entered into. Sub-clause (2) makes a minor amendment to section 52(2) of the Principal Act to make the list in paragraphs (a) to (c) inclusive rather than exclusive. Sub-clause (3) makes a minor amendment to section 52(3) of the Principal Act consequent on the amendment made by sub- clause (1). Sub-clause (4) amends section 52(4) of the Principal Act to confirm that a landlord is responsible either under this section of the Principal Act or under the terms and conditions of the lease. Sub-clause (5) amends section 52(5)(b) of the Principal Act to clarify that a landlord cannot recover from the tenant the cost of urgent repairs as an outgoing. Sub-clause (6) inserts a note at the foot of section 52(5) of the Principal Act regarding sections 39 and 41. The effect of the note is to highlight other provisions in the Act which, together with the application of section 52 of the Act, clarify that while the landlord is responsible to arrange and carry out the repairs under sub-section (2), the cost of those repairs, other than capital costs and the cost of urgent repairs, may be passed on to the tenant if they have been specified in the lease as recoverable outgoings under the lease. 7

 


 

Clause 26 amends section 55(3) of the Principal Act to provide that only "reasonably" comparable alternative retail premises must be made available to a tenant. Clause 27 amends section 56(4) of the Principal Act to provide that if a lease is terminated by the tenant in accordance with sub- section (3), the landlord is required to pay the tenant reasonable compensation if certain things are made out. Clause 28 amends section 60(1)(d) of the Principal Act to provide that an assignment of a lease must be in connection with a lease of retail premises that will continue to be used for the carrying on of an ongoing business, before a landlord can withhold consent to assignment if the proposed assignor has not provided business records as set out in sub-section (1)(d). Clause 29 amends section 61 of the Principal Act to change the order of the sub-sections. Clause 30 amends section 62(2) of the Principal Act to ensure that the listed persons in sub-section (2) are also not liable to perform any obligations under the lease. Clause 31 amends section 64(5) of the Principal Act to provide that a tenant may give written notice terminating the lease under this section of the Principal Act, whether or not the landlord has given the tenant a notice as required. Clause 32 Sub-clause (1) amends section 77(1) of the Principal Act to provide that the prohibition on unconscionable conduct by a landlord extends to conduct in respect of proposed leases. Sub-clause (2) amends section 77(2)(d)(ii) of the Principal Act to change the stated period of 5 years to the minimum period provided by section 21. Clause 33 amends section 78(1) of the Principal Act to provide that the prohibition on unconscionable conduct by a tenant extends to conduct in respect of proposed leases. Clause 34 amends section 81(2) of the Principal Act to provide that the definition of a "retail tenancy dispute" does not include a dispute that is capable of being determined by a specialist retail valuer under section 35 of the Principal Act, or a dispute under section 12A or 13A of the Retail Tenancies Reform Act 1998 or section 10 or 11A of the Retail Tenancies Act 1986. 8

 


 

Clause 35 amends section 84(1)(g) of the Principal Act and inserts a new sub-section (1A) to enable the Small Business Commissioner to use information provided under this Act in performing his or her functions under the Principal Act or any other Act, including the Small Business Commissioner Act 2003. Clause 36 inserts a new sub-section (2A) in section 86 of the Principal Act which provides that the Small Business Commissioner may join any person that he or she considers it appropriate to join as a party to mediation. Clause 37 inserts a new section 94A into the Principal Act which provides that to avoid doubt, section 146 of the Property Law Act 1958 applies to a retail premises lease. Clause 38 inserts a new section 97A into the Principal Act to validate instruments made under section 5(1) of the Principal Act before this Bill received Royal Assent. Clause 39 Sub-clauses (1) and (2) repeal the definition of "prospective tenant" in section 100(1) and repeal section 100(2) of the Principal Act. This has been repealed in order that the same amendment be made by clause 45(2) of this Bill and be deemed to have commenced at the earlier date of 1 July 1998. Clause 40 Sub-clause (1) amends section 103 of the Principal Act, in the proposed new section 12A(7) of the Retail Tenancies Reform Act 1998, by providing that the time by which a specialist retail valuer must carry out a valuation may be extended to such longer period as may be agreed between the landlord and tenant, or if there is no agreement, as determined in writing by the Small Business Commissioner. This amendment is to ensure consistency with section 37 of the Principal Act. Sub-clauses (2) and (3) make minor amendments to refer to the Gambling Regulation Act 2003 instead of the now repealed Public Lotteries Act 2000. Clause 41 amends section 104 of the Principal Act, in the proposed new section 16(5) of the Retail Tenancies Reform Act 1998, to provide that a tenant may give written notice terminating the lease under this section of the Retail Tenancies Reform Act 1998, whether or not the landlord has given the tenant a notice as required. This amendment is to ensure consistency with the amendments made to section 64 of the Principal Act. 9

 


 

Clause 42 Sub-clauses (1) and (3) insert a new sub-section (3A) in sections 105 and 114 of the Principal Act in respect of the proposed new section 18(3) of the Retail Tenancies Reform Act 1998 and proposed new section 14(3) of the Retail Tenancies Act 1986. This new sub-section sets out the circumstances where an option is not exercisable. Sub-clauses (2) and (4) amend section 105 and 114 of the Principal Act, in respect of the proposed new section 18(4)(c) of the Retail Tenancies Reform Act 1998 and the proposed new section 14(4)(c) of the Retail Tenancies Act 1986, to provide that a tenant may give written notice terminating the lease under this section, whether or not the landlord has given the tenant a notice as required. This amendment is to ensure consistency with the amendments made to section 64 of the Principal Act. Clause 43 Sub-clause (1) amends section 107 of the Principal Act, in the proposed new section 25(2) of the Retail Tenancies Reform Act 1998, to require that a landlord maintain the things listed in sections 25(2)(a) to (c) of the Retail Tenancies Reform Act 1998 in a condition consistent with the condition of the premises when the retail premises lease was entered into, and makes the list inclusive rather than exclusive. Sub-clause (2) makes a minor amendment to section 107 of the Principal Act, in the proposed new section 25(3) of the Retail Tenancies Reform Act 1998, consequential on the amendment made by sub-clause (1)(a). Sub-clause (3) amends section 107 of the Principal Act, in the proposed new section 25(4) of the Retail Tenancies Reform Act 1998, to confirm that a landlord is responsible either under the section of the Retail Tenancies Reform Act 1998 or under the terms and conditions of the lease for the urgent repairs. Sub-clause (4) amends section 116 of the Principal Act, in the proposed new section 17B(2) of the Retail Tenancies Act 1986, to require that a landlord maintain the things listed in sub- clauses (b) to (d) in a condition consistent with the condition of the premises when the retail premises lease was entered into. Sub-clause (5) makes a minor amendment to section 116 of the Principal Act, in the proposed new section 17B(3) of the Retail Tenancies Act 1986, consequential on the amendment made by sub-clause (1)(a). 10

 


 

Sub-clause (6) amends section 116 of the Principal Act, in the proposed new section 17B(4) of the Retail Tenancies Act 1986 to confirm that a landlord is responsible either under the section of the Retail Tenancies Act 1986 or under the terms and conditions of the lease for the urgent repairs. Clause 44 Sub-clauses (1), (2) and (3) make minor amendments to refer to the retail premises lease and to the head landlord. Sub-clause (4) extends the operation of section 121(3) to section 20A of the Retail Tenancies Reform Act 1998 and section 14A of the Retail Tenancies Act 1986. PART 3--AMENDMENT OF RETAIL TENANCIES REFORM ACT 1998 Clause 45 Sub-clause (1) inserts in section 3(1) of the Retail Tenancies Reform Act 1998, a definition of "accounting period" as a 12 month period, consistent with the definition inserted in the Principal Act. Sub-clause (2) inserts in section 3(1) of the Retail Tenancies Reform Act 1998 a definition of "prospective tenant", which is deemed to have commenced on 1 July 1998. Clause 46 inserts in section 8 of the Retail Tenancies Reform Act 1998 new sub-sections (14), (15), (16) and (17). These new sub- sections provide that after 1 May 2006 a tenant will be unable to act under sub-section (2) of the Retail Tenancies Reform Act 1998 even if they have not been given a disclosure statement by the landlord, and will be liable for any rent attributable to the period set out in sub-section (2)(b). However, if a tenant has withheld rent in accordance with section 8(2)(a) of the Retail Tenancies Reform Act 1998, or has commenced legal proceedings to recover rent which the tenant may not have been liable to pay, or has commenced a dispute under Part 10 of the Principal Act, the tenant's rights will not be affected by this amendment. These amendments have prospective effect from 1 May 2006. Clause 47 inserts in section 17 of the Retail Tenancies Reform Act 1998 new sub-sections (4), (5), (6) and (7). These new sub-sections provide that after 1 May 2006 a tenant will be unable to act under sub-section (2) of the Retail Tenancies Reform Act 1998 even if they have not been given a disclosure statement by the landlord when their lease was renewed, and will be liable for any rent attributable to the period set out in sub-section (2)(b). However, if a tenant has withheld rent in accordance with 11

 


 

section 17(2)(a) of the Retail Tenancies Reform Act 1998, or has commenced legal proceedings to recover rent which the tenant may not have been liable to pay, or has commenced a dispute under Part 10 of the Principal Act, the tenant's rights will not be affected by this amendment. These amendments have prospective effect from 1 May 2006. These amendments will only affect leases renewed before 1 May 2003, as leases renewed after that date will come under the operation of the Retail Leases Act 2003. Clause 48 amends section 23 of the Retail Tenancies Reform Act 1998 to make this section consistent with section 17 of the Retail Tenancies Reform Act 1998 and section 17 of the Principal Act, with respect to assignees. It provides that an assignee is required to give a landlord, no later than 90 days after the lease is assigned, a written notice that the assignee has not been given the disclosure statement. Proposed new sub-sections (6) to (10) provide that the amendments made by sub-clauses (1) to (3) do not apply to leases renewed before this Bill receives Royal Assent. It provides that where a lease is renewed before this Bill receives Royal Assent an assignee will liable after this date for any rent attributable to the period set out in section 23(1) of the Retail Tenancies Reform Act 1998. However, if an assignee has withheld rent in accordance with section 23(4) of the Retail Tenancies Reform Act 1998, or has commenced legal proceedings to recover rent for which the assignee may not have been liable to pay, or has commenced a dispute under Part 10 of the Principal Act, the assignee's rights will not be affected by this amendment. These amendments have prospective effect from the day after the day on which this Bill receives Royal Assent. PART 4--AMENDMENT OF RETAIL TENANCIES ACT 1986 Clause 49 inserts in section 3(1) of the Retail Tenancies Act 1986, a definition of "accounting period" as a 12 month period, consistent with the definition inserted in the Principal Act. Clause 50 inserts a new section 14AA into the Retail Tenancies Act 1986 which provides for obligations and procedures with respect to the circumstances where a lease or other agreement between the landlord and tenant does not contain a provision in regard to renewal of the lease. This has been inserted to make the Retail Tenancies Act 1986 consistent with section 16 of the Retail Tenancies Reform Act 1998. 12

 


 

PART 5--AMENDMENT OF PROPERTY LAW ACT 1958 Clause 51 amends section 146 of the Property Law Act 1958 to address the decision of the Court of Appeal in Apriaden vPty Ltd v Seacrest Pty Ltd [2005] VSCA 139, to ensure that section 146 applies in circumstances where there has been a breach amounting to repudiation which the landlord has accepted as such. PART 6--REPEAL OF SMALL BUSINESS VICTORIA (REPEAL) ACT 1996 Clause 52 repeals the Small Business Victoria (Repeal) Act 1996 as this repealing Act has now fulfilled its purpose. 13

 


 

 


[Index] [Search] [Download] [Bill] [Help]