New Bill may introduce significant Amendments to the Retail Shop Leases Act 1994 (Qld)

On 13 October 2015, the Hon D’Ath MP introduced the Retail Shop Leases Amendment Bill 2015 (Qld) (“the Bill”) to the Queensland Parliament. The Bill proposes to introduce a number of amendments to the current Retail Shop Leases Act 1994 (Qld) (“the Act”).

In her Second Reading Speech, the Hon D’Ath MP introduced the Bill with its object of promoting “efficiency and equity in the conduct of certain retail businesses” in Queensland, consistent with the Act’s objects. She further stated that the Bill “addresses imbalance in negotiating power and access to information between major shopping centre landlords and small retail tenants.”

The Bill has come about as a result of public consultation and review dating back to 2011, resulting in the former government’s introduction of the Retail Shop Leases Amendment Bill 2014 (Qld), and now, the Bill.

If passed in its current form, the Bill will introduce several new obligations on Retail Shop Landlords, which will improve the protection of Retail Shop Tenants. We note that following summary of the new measures for “enhanced lessee protection”, as described in the Explanatory Memorandum of the Bill (our emphasis added):

“requiring lessor disclosure to an existing lessee on renewal of a lease under an option;

“facilitating appropriate disclosure to franchisees

“ensuring that a lessee is only liable to refurbish the leased shop during the lease term where the lease gives sufficient details of the nature, extent and timing of the required refurbishment;

“requiring a lessor’s annual estimate and audited statement of outgoings to provide a breakdown of centre management fees;”

“requiring the lessor to make available to the lessee a marketing plan detailing the lessor’s proposed advertising/promotion expenditure;”

“providing for the release of the assignor lessee to include the assignor lessee’s guarantors;”

“ making the lessor liable for mortgagee consent costs;” and

“enhancing protection for prospective purchasers of retail businesses through assignor disclosure”.

The Bill also proposes to introduce a number of amendments benefitting Retail Shop Landlords. We note that following summary of the new measures for “amendments benefitting lessors”, as described in the Explanatory Memorandum of the Bill (our emphasis added):

“exclusion of all leases with a floor area greater than 1000m2 and the non-retail precinct exclusion;”

“clarification about when a lessor disclosure statement cannot be taken to be defective;”

“provision for lessor recovery of lease preparation costs where the lessee has negotiated, but does not proceed with, the final lease after instructing for it to be prepared;” and

“provision for lessor’s liability for compensation for business disruption to not apply where the lessor’s action is a reasonable response to an emergency; and flexibility for a lease to limit a lessee’s compensation claim for some specific business disturbances notified by the lessor.”

There are also a number of other amendments which exclude certain leases, introduce general improvements, red tape reduction and clarifications.

Our preliminary view is that the introduction of these amendments may be of benefit to Retail Shop Tenants. We will continue to provide updates on this Bill, and in particular, if it is passed through Parliament.

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