Retail and Commercial Leases Act 1995

This

Act may be cited as the Retail and Commercial Leases Act 1995.

In this Act, unless the contrary intention appears—

accounting period means a period fixed as an accounting period in a retail shop lease;

alternative dispute resolution includes mediation, but does not include arbitration or expert determination;

certified exclusionary clause—see section 20K;

collateral agreement includes a guarantee under which the guarantor guarantees the performance of the obligations of a lessee under a retail shop lease;

Commission means the Small Business Commission established under section 3A of the Small

Business Commission Act 2011;

Commissioner means the person holding or acting in the office of Small Business

Commissioner;

core trading hours means the hours for which a retail shop is required under a retail shop lease to be kept open for business;

demolition of a building of which a retail shop forms part includes a substantial repair, renovation or reconstruction of the building that cannot be carried out practicably without vacant possession of the shop;

disclosure statement—see section 12;

enclosed shopping complex means a group of three or more retail shops under common ownership or management with a common area through which public access is obtained to all or some of the shops and which is locked to prevent public access through that area when those shops are closed for business;

Fund means the Retail Shop Leases Fund;

GST means the tax payable under the GST law;

GST law means—

A

New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth; and

the related legislation of the Commonwealth dealing with the imposition of a tax on the supply of goods and services;

lawyer means a person entitled to practise the profession of law in the

State;

lessee means the person who has the right to occupy a retail shop under a retail shop lease, and includes—

a sublessee; and

a prospective lessee or a former lessee;

lessor means the person who grants or proposes to grant the right to occupy a retail shop under a retail shop lease, and includes—

a sublessor; and

a prospective lessor or a former lessor;

Magistrates

Court means the Civil (Consumer and Business) Division of the Magistrates

Court;

outgoings means a lessor's outgoings on account of the expenses of operating, repairing or maintaining the retail shop or a retail shopping centre in which the retail shop is located (including rates, taxes, levies, premiums or charges payable by the lessor) but does not include outgoings which are directly proportional to the level of a lessee's consumption or use and for which the lessee is required to reimburse the lessor under the lease;

party means the lessor or the lessee under a retail shop lease;

premium means money paid, or a benefit given, to or as directed by the lessor or the lessor's agent in connection with the granting, renewal, extension or assignment of a lease (and a reference in this

Act to the payment of a premium extends to giving a benefit);

public company has the same meaning as in section 9 of the Corporations

Act 2001 of the Commonwealth;

Registrar means the Principal Registrar of the Magistrates Court of South

Australia;

renewal of a retail shop lease extends to the lessor and the lessee entering into a new retail shop lease for the retail shop (whether on the same or different terms);

retail shop means—

business premises—

at which goods are sold to the public by retail; or

at which services are provided to the public, or to which the public is invited to negotiate for the supply of services; or

business premises classified by regulation as premises to which this Act applies, but does not include business premises of a class excluded by regulation from the ambit of this definition;

retail shop lease or lease means an agreement under which a person grants or agrees to grant to another person for value a right to occupy a retail shop for carrying on a business—

whether or not the right is a right of exclusive occupation; and

whether the agreement is express or implied; and

whether the agreement is oral or in writing, or partly oral and partly in writing;

retail shopping centre means a cluster of premises with the following attributes:

at least five of the premises are retail shops; and

the premises are all owned by the same person, or have (or would if leased have) the same lessor or the same head lessor, or comprise lots within the same community plan under the Community

Titles Act 1996 or units within the same strata plan under the Strata

Titles Act 1988;

and

the premises are located in the one building or in two or more buildings that are either adjoining or separated only by common areas or other areas owned by the owner of the premises; and

the cluster of premises is promoted as, or generally regarded as constituting, a shopping centre, shopping mall, shopping court or shopping arcade;

statutory rights of security of tenure means the rights conferred on a lessee by Part 4A

Division 2 and, if the retail shop lease relates to premises in a retail shopping centre, by Part

4A Division 3;

subsidiary includes a subsidiary within the meaning of section 9 of the

Corporations

Act 2001 of the Commonwealth.

For the purposes of this Act—

prescribed threshold, in relation to rent payable under a retail shop lease, means—

the amount of $400 000 per annum exclusive of GST; or

if a greater amount is prescribed by the regulations for the purposes of this definition and the Act—the amount so prescribed.

In the interpretation of this Act, accepted practices and interpretations in the industry concerning the leasing of retail shops are to be taken into account.

This

Act applies to a retail shop lease if the premises to which the lease applies consist of a retail shop or a retail shop together with an adjacent dwelling.

However, this Act does not apply to a retail shop lease—

on or after the relevant day (whether the lease was entered into before or after that day), subject to subsection (3), during any period in respect of which the amount of rent payable under the lease exceeds the prescribed threshold (regardless of whether the Act applies or does not apply to the lease at the time the lease is entered into or renewed because of the amount of rent payable under the lease); or

if the lease is for a term of 1 month or less; or

if the right of occupation arises under—

an agreement for the sale and purchase of premises; or

a mortgage; or

a scheme under which a group of adjacent premises is owned by a company and the premises comprising the group are let by the company to persons who jointly have a controlling interest in the company;

or

if the lessee is—

an

ADI; or

a body corporate authorised by law to carry on the business of insurance; or

the

Crown or an agency or instrumentality of the Crown in right of the

State, another State or Territory, or the Commonwealth; or

a municipal or district council or other authority with powers and functions of local government; or

if the lessee is—

in the case of a lease entered into on or after the relevant day—a public company, or a subsidiary of a public company, other than a public charitable company or a subsidiary of a public charitable company; or

in the case of a lease entered into before the relevant day or a lease renewed after the relevant day (whether on the same or different terms) pursuant to a right or option conferred by a lease entered into before the relevant day—a public company, or a subsidiary of a public company (including a public charitable company or a subsidiary of a public charitable company); or

if, in the case of a lease entered into on or after the prescribed day—

the lessee is a body corporate that is incorporated in any jurisdiction outside the Commonwealth of Australia; or

the lessee is a body corporate that is a subsidiary of, or is controlled by, a body corporate that is incorporated in any jurisdiction outside the Commonwealth of Australia; or

if, in the case of a lease entered into on or after the relevant day—

the lessor is—

the

Crown or an agency or instrumentality of the Crown in right of the

State; or

a municipal or district council or other authority with powers and function of local government; and

the lessee is of a class specified by the regulations for the purposes of this paragraph.

Despite subsection (2)(a), this Act does not apply to—

a retail shop lease—

that is lodged for registration by the lessor within 3 months after both parties have executed the lease, and in relation to which the lessor has provided written notice of lodgement to the lessee within

1 month of lodgement; and

that remains registered for the term of the lease; and

under which, at the time the lease is lodged for registration, the rent payable exceeds the prescribed threshold; or

any renewal of a retail shop lease referred to in paragraph (a)—

that is, following execution by both parties, lodged for registration by the lessor not later than 2 months after the day on which the lease would, but for the renewal, expire, and in relation to which the lessor has provided written notice of lodgement to the lessee within 1 month of lodgement; and

that remains registered for the term of the renewed lease, despite the fact that—

the prescribed threshold is subsequently increased such that the rent payable under the lease or renewed lease (as the case requires) no longer exceeds the prescribed threshold (and the Act would otherwise apply in relation to the lease or renewed lease by virtue of the operation of subsection (2)(a));

or

the amount of rent payable under the lease or renewed lease (as the case requires) is decreased (for example, as a result of a review of rent under the lease), such that the rent payable under the lease or renewed lease no longer exceeds the prescribed threshold (and the

Act would otherwise apply in relation to the lease by virtue of the operation of subsection (2)(a)).

Subsection (3)—

does not apply to, or in respect of—

a retail shop lease entered into before the relevant day (regardless of any registration of the lease on or after the relevant day); or

despite any other Act or law, the renewal of a retail shop lease on or after the relevant day, pursuant to a right or option conferred by a retail shop lease entered into before the relevant day (regardless of any registration of the renewal of the lease on or after the relevant day); but

may apply to, or in respect of, a new retail shop lease (whether on the same or different terms) entered into by an existing lessee and lessor after the relevant day.

The regulations may exclude from the application of this Act (either conditionally or unconditionally) a specified class of retail shop leases.

To avoid doubt, this Act may apply, or cease to apply to a retail shop lease of a kind referred to in subsection (2)(d),

or (g) depending on whether the lessee or lessor becomes, or ceases to be, a lessee or lessor of a kind referred to in the relevant paragraph during the term of the lease—

in the case of a retail shop lease of a kind referred to in subsection (2)(d),

or

—on or after the relevant day; or

in the case of a retail shop lease of a kind referred to in subsection

2(f)—on or after the prescribed day.

In this section—

prescribed day means the day on which section 24 of the Statutes

Leases) Act 2024 comes into operation;

public charitable company means a public company limited by guarantee and registered under the

Australian

Charities and Not-for-profits Commission Act 2012 of the Commonwealth;

relevant day means the day on which this section comes into operation.

This

Act operates despite the provisions of a lease.

A provision of a lease or a collateral agreement is void to the extent that the provision is inconsistent with this Act.

For the purposes of this Act, a retail shop lease is taken to have been entered into when—

both parties have executed the lease; or

a person enters into possession of the retail shop as lessee under the lease; or

a person begins to pay rent as lessee under the lease or proposed lease (but not if the payment is an advance payment of rent made to secure the premises), (whichever happens first).

The

Valuer‑General must, within the last year of each prescribed period and in accordance with the regulations, conduct a review of the prescribed threshold for the purposes of this Act.

On completing a review, the Valuer‑General must forward to the

Minister a report on the review and the conclusions reached by the

Valuer‑General as to whether or not, as a result of the review, the Valuer‑General recommends that for the purposes of this Act the prescribed threshold in relation to rent payable under a retail shop lease should be increased.

The regulations may make provision with respect to the conduct of a review by the Valuer‑General including (without limitation), by specifying requirements (if any) in relation to—

matters to be taken into account by the Valuer‑General; and

consultation to be undertaken by the Valuer‑General.

In this section—

prescribed period means—

the period ending on 30 October next following the second anniversary of the commencement of this section; and

each successive period of 5 years thereafter.

The

Commission is responsible for the administration of this Act.

The

Commission has the following functions:

investigating and researching matters affecting the interests of parties to retail shop leases; and

publishing reports and information on subjects of interest to the parties to retail shop leases; and

giving advice (to an appropriate extent) on the provisions of this Act and other subjects of interest to the parties to retail shop leases; and

investigating suspected infringements of this Act and taking appropriate action to enforce this Act; and

making reports to the Minister on questions referred to the Commission by the Minister and other questions of importance affecting the administration of this Act; and

administering the Fund; and

any other functions assigned to the Commission by or under this Act.

A person who, as a lessor, or acting on behalf of a lessor—

offers to enter into a retail shop lease; or

invites an offer to enter into a retail shop lease; or

indicates by advertisement by any means that a retail shop is for lease, must, as soon as the person enters into negotiations with a prospective lessee (and before a retail shop lease is entered into), provide the prospective lessee with a written copy of the proposed retail shop lease (but not necessarily including the particulars of the lessee, the rent or the term of the lease).

Maximum penalty: $8 000.

At the time a copy of the proposed retail shop lease is provided to the prospective lessee under subsection (1), the lessor, or a person acting on behalf of a lessor, must also provide the prospective lessee with a copy of the information brochure (if any) about retail shop leases published by the

Commission.

Maximum penalty: $800.

Expiation fee: $120.

This section does not apply to or in respect of the renewal of a retail shop lease.

A lessor, or the lessor's agent, must, before a retail shop lease is entered into, give the lessee a disclosure statement for the lease signed by or on behalf of the lessor in accordance with the requirements set out in subsection (4).

Maximum penalty: $8 000.

A disclosure statement for a retail shop lease is not required to be given in respect of a renewal of a retail shop lease.

A disclosure statement is a written document stating or containing—

the address of the shop; and

the lettable area of the shop; and

the permitted uses of the shop; and

the term of the lease; and

the hours during which the lessee will have access to the shop outside trading hours; and

the date on which the shop will be available for occupation; and

the amount of the base rent payable under the lease and the basis on which the base rent may be changed; and

any other rent payable under the lease and the basis of its calculation;

and

each category of outgoings the lessee is to be liable to pay or reimburse (in whole or part), and an estimate of the lessee's annual liability for outgoings of each category; and

whether the amount the lessee is required to pay towards outgoing includes a margin of profit for the lessor and, if so, the percentage profit or the basis on which the profit is to be calculated; and

the nature of any other monetary obligations imposed on the lessee under the lease and, if possible, an estimate of the annual cost of complying with those obligations; and

whether any right to renew or extend the term of the lease is given by the lease and, if so, the nature of the right; and

the legal consequences of breach of a term of the lease (including the consequences of early termination of the lease by the lessee); and

a warning that oral representations made by the lessor or the lessor's agent on which the lessee has relied should be reduced to writing and signed by or on behalf of the lessor before the lessee enters into the lease; and

a warning that the lessee should obtain independent legal and financial advice before entering into the lease.

If the shop is situated in a retail shopping centre, the disclosure statement must also state—

the address of the retail shopping centre; and

the number of shops in the retail shopping centre and their total lettable area; and

the number of parking bays available for the use of customers of the shop and the number of parking bays available for use by the lessee and the lessee's employees; and

the nature of the facilities and services provided by the lessor; and

whether changes to the retail shopping centre are proposed and, if so, the nature of the changes; and

the core trading hours; and

the current tenant mix and any proposed changes to the current tenant mix; and

whether the lessor is prepared to give the lessee an assurance that the current tenant mix will not be altered to the lessee's disadvantage by the introduction of a competitor; and

whether there is a tenant association and, if so, the nature of the association, the voting rights of members, and the contributions payable by members; and

whether contributions are or may be required towards the costs of advertising and promoting the shopping centre and, if so, the estimated annual contribution to be required from the lessee.

A disclosure statement must comply with requirements of the regulations about the form in which it is to be presented.

A disclosure statement provided under subsection (1) must be served on the lessee—

by personal service on the lessee or the lessee's agent; or

by leaving it for the lessee at—

the lessee's usual or last known place of residence or business; or

in the case of a lessee that is a company, the company's registered office, with someone apparently over the age of 16 years; or

by serving it by post on the lessee or the lessee's agent at the lessee's or agent's address provided by the lessee or agent for the purpose; or

by transmitting it by fax or email to a fax number or email address provided by the lessee or lessee's agent for the purpose (in which case the disclosure statement will be taken to have been served at the time of transmission); or

in any other manner prescribed by the regulations.

Service by post is effected by addressing, prepaying and posting the disclosure statement, and service will be taken to have occurred when the disclosure statement would be delivered in the ordinary course of post.

A lessee or lessee's agent must, within 14 days of being served with the disclosure statement, return a signed acknowledgement of receipt of the disclosure statement to the lessor or the lessor's agent.

If a disclosure statement is not given as required by subsection (1), or contains information that at the time it is given is materially false or misleading, the Magistrates Court may, on application by the lessee, make one or more of the following orders as may be appropriate in the circumstances of the case—

an order avoiding the lease in whole or part;

an order varying the lease;

an order requiring the lessor to repay money paid by the lessee;

an order requiring the lessor to pay compensation to the lessee;

an order dealing with incidental or ancillary matters.

However, an order cannot be made under subsection (5) on the ground that a disclosure statement is incomplete or contains information that is materially false or misleading if—

the lessor has acted honestly and reasonably and ought reasonably to be excused; and

the lessee has not been substantially prejudiced.

An obligation to make or reimburse capital expenditure may only be imposed by or under a retail shop lease or a collateral agreement in the following cases:

a lessee may be required to pay or reimburse the cost of making good damage to the premises arising when the lessee is in possession or entitled to possession of the premises; and

a lessee may be required to fit or refit the shop, or to provide fixtures, plant or equipment, if the disclosure statement discloses the obligation and contains sufficient details to enable the lessee to obtain an estimate of the likely cost of complying with the obligation; and

a lessee may be required to contribute to a sinking fund to cover major items of repair or maintenance if reasonable details of the lessee's obligation are disclosed in the disclosure statement.

An obligation that may be imposed under this subsection is called a

permissible obligation.

A provision of a retail shop lease or a collateral agreement under which a lessee is required or may be required to make or reimburse capital expenditure is void unless the obligation imposed by or under the provision is a permissible obligation.

A provision of a retail shop lease or a collateral agreement under which the lessee is required to compensate the lessor for depreciation of the premises attributable to ordinary wear and tear is void; but this subsection is not intended to prevent such depreciation being taken into account in the calculation, or assessment, of base rent.

If the lessee is liable to pay an amount to the lessor for legal or other expenses incurred by the lessor in connection with the preparation and registration of a retail shop lease (preparatory costs), the lessee cannot be required to make the payment until provided with a copy of any account given to the lessor for the expenses.

Preparatory costs include—

fees charged by a mortgagee for producing a certificate of title for the land over which a retail shop lease is to be registered or for consenting to the lease;

the costs of attendances on the lessee by the lessor, or a lawyer or registered conveyancer acting for the lessor.

The lessee's liability for preparatory costs cannot exceed—

the actual amount of the government fees for registration of the lease;

and

one-half of the other preparatory costs.

However, this section does not limit the recovery of preparatory costs incurred by the lessor from a person who enters into and then withdraws from negotiations with the lessor.