The Detail on Retail - Understanding the Retail and Commercial Leases (Miscellaneous) Amendment Bill

LG Leader November 2017

The Retail and Commercial Leases (Miscellaneous) Amendment Bill was recently introduced into the House of Assembly by Small Business Minister, Martin Hamilton-Smith.

Councils will be aware that the Act regulates “retail shop leases” (which includes informal leases and licences to occupy).  In our experience, retail shop leases granted by a council to sporting clubs and other community organisations that provide services to the community are often caught by the Act. The effect of this is that the Act implies a number of terms into those leases that can be overly constricting to councils and their tenants.

At present, retail shop leases where a council is lessee are expressly excluded from the operation of the Act. The Bill proposes to amend the Act to extend this exclusion so that the Act will also not apply to a retail shop lease where a council is lessor AND the lessee is of a class specified by the Regulations.

Draft Regulations are yet to be prepared. However, in light of the Moss Review and submissions made in relation to it, we consider it is likely, should the Bill be passed, that groups such as charities, not-for-profits, community and sporting groups will be prescribed under future Regulations for the purposes of the Act (which is consistent with what appears to be Parliament’s intention that the Act should only apply to true retail shop leases granted by councils to commercial enterprises). In this case, council leases and licences granted to not-for-profit organisations, community and sporting groups would no longer be subject to the Act, allowing increased freedom to negotiate the terms that they more accurately reflect the parties’ purposes and needs.

On the present wording, if passed, the Act will cease to apply to council leases and licences that are caught by the new extended exemption. As such, the terms currently implied into those leases and licences by operation of the Act would no longer apply unless, of course, those terms have been expressly incorporated into the lease or licence.

In the intervening period before the Bill and Regulations are passed, it is prudent for councils to take into account the amendments proposed by the Bill in preparing leases and licences so as to ensure that they do not incorporate unnecessarily restrictive terms.