Commercial Tenancy (Retail Shops) Agreements Act 1985

If provision is made in a retail shop lease for payment by the tenant, in addition to rent, of all or any of the operating expenses of the landlord —

the amount payable by the tenant under the retail shop lease is limited to the items of operating expenses that the retail shop lease specifies are to be paid wholly or in part by the tenant and does not include an amount in respect of which the retail shop lease does not specify both —

how that amount is to be determined and, when applicable, apportioned to the tenant; and

how and when that amount is to be paid by the tenant;

and

subject to subsection (1e), the proportion of those operating expenses payable by the tenant under the retail shop lease shall not be greater than the relevant proportion without the approval of the Tribunal; and

where —

the premises the subject of the retail shop lease are part of a group of premises; and

any part of the operating expenses is expenditure incurred as a result of some only of the premises in the group being open outside the standard trading hours,

the retail shop lease shall be taken to provide that a tenant whose retail shop was not so open is not required to make any payment of, and the landlord is not entitled to recover, the expenditure referred to in subparagraph (ii); and

the retail shop lease shall be taken to provide that —

the tenant is not required to make any payment of, and the landlord is not entitled to recover, any such operating expenses in respect of a year or part of a year until at least one month after the landlord has given to the tenant annual estimates of expenditure under each item of operating expenses in respect of the year; and

the landlord is required to give to the tenant a written statement in accordance with subsection (1a) (an operating expenses statement) that details all expenditure by the landlord in each accounting period of the landlord during the term of the lease on account of operating expenses to which the tenant is required to contribute.

An operating expenses statement —

is to be given to the tenant within 3 months after the end of the accounting period to which it relates; and

if the relevant retail shop is in a retail shopping centre, must include a statement of the current total lettable area of the retail shopping centre and details of any material change in that total lettable area during the period to which the statement relates; and

is to be prepared in accordance with relevant principles and disclosure requirements of the applicable accounting standards made by the Australian Accounting Standards Board, as in force from time to time; and

may be a composite statement (that is, it may relate to more than one tenant) if each tenant to which it relates is able to ascertain from the statement the information required by subsection (1)(d)(ii) that is relevant to that tenant; and

is to be accompanied by a report on the statement prepared by a registered company auditor within the meaning of the Corporations Act 2001 of the Commonwealth which includes a statement by the auditor as to whether or not the operating expenses statement correctly states expenditure by the landlord during the accounting period concerned in respect of operating expenses to which the tenant is required to contribute, and as to whether or not the total amount of estimated operating expenses for that period (as shown in the estimate of operating expenses given to the tenant) exceeded the total actual expenditure by the landlord in respect of those operating expenses during that period.

The landlord shall bear half of the cost of an audit referred to in subsection (1a)(e) and the other half of that cost shall be borne by —

the tenant to whose premises that audit relates; or

if there is more than one tenant to whose premises that audit relates, jointly in the relevant proportions.

An operating expenses statement is not required to be accompanied by an auditor’s report if the statement does not relate to any operating expenses other than land tax (unless subsection (1g) applies), water, sewerage and drainage charges, local government rates and charges or insurance premiums and it is accompanied by copies of assessments, invoices, receipts or other proof of payment in respect of all expenditure by the landlord referred to in subsection (1)(d)(ii).

If a landlord does not comply with the requirement referred to in subsection (1)(d)(ii), the tenant is not obliged to pay, and the landlord is not entitled to recover, operating expenses from the date of that noncompliance until the landlord complies with that requirement.

A tenant under a retail shop lease in respect of a retail shop in a group of premises —

is not liable to contribute towards an operating expense of the landlord that is not specifically referable to any particular premises in the group of premises unless the shop is one of the premises to which the operating expense is referable; and

is not liable to contribute an amount in excess of an amount calculated by multiplying the total amount of that operating expense by the proportion that the lettable area of the shop bears to the total lettable area of all of the premises in the group of premises to which the operating expense is referable, without the approval of the Tribunal.

If there is a provision in a retail shop lease in respect of any premises to the effect that the tenant is obliged to make a payment to or for the benefit of the landlord for management fees, the landlord is not entitled to recover, and the tenant is not obliged to make, that payment.

If provision is made in a retail shop lease for payment by the tenant of all or any of the land tax or metropolitan region improvement tax imposed in relation to the land on which the retail shop is situated it is a term of that retail shop lease that the tenant shall only be obliged to pay, and the landlord shall only be able to recover, whether directly or indirectly, from the tenant in relation to that land —

where the premises the subject of the retail shop lease comprise the whole of the land, the notional land tax imposed; and

where the premises the subject of the retail shop lease do not comprise the whole of the land, the relevant proportion of the notional land tax imposed.

A provision in a retail shop lease in respect of premises in a retail shopping centre to the effect that the tenant is obliged to make a payment to or for the benefit of the landlord, whether by way of contribution to a sinking fund or otherwise, for or in respect of the amortisation of all or part of the costs of or incidental to —

the construction of the retail shopping centre; or

any extension of the centre or structural improvement to the centre; or

any plant or equipment that is or becomes the property of the owner of the retail shopping centre,

is void.

A provision in a retail shop lease to the effect that the tenant is obliged to contribute towards the cost of any of the landlord’s finishes, fixtures, fittings, equipment or services is void unless the disclosure statement given to the tenant under section 6 contains a statement notifying the tenant of the effect of the provision.

In this section and section 12A —

group of premises includes a part of a group of premises;

land tax means tax imposed by the Land Tax Act 2002;

metropolitan region improvement tax means metropolitan region improvement tax under the Planning and Development Act 2005;

notional land tax means land tax and metropolitan region improvement tax calculated on the basis that the land on which the tax is assessed is the only land of which the landlord is the owner within the meaning of that term in the Land Tax Assessment Act 2002;

operating expenses, in relation to a landlord, means expenses of the landlord in operating, repairing or maintaining —

a building of which a retail shop the subject of a retail shop lease to which the landlord is a party forms the whole or a part; or

if that retail shop is in a retail shopping centre, the building or buildings of which a retail shop the subject of a retail shop lease to which the landlord is a party forms the whole or a part and the common area,

and includes, if contributions are levied under the Community Titles Act 2018 or the Strata Titles Act 1985 on the landlord, that part of the contributions that relates to expenses of the landlord in operating, repairing or maintaining the building or buildings of which the retail shop forms part or that building or those buildings and the common area, as the case requires;

referable, in relation to an operating expense for a retail shop, means the retail shop enjoys or shares the benefit resulting from the operating expense;

relevant proportion, in relation to a retail shop that is part of a group of premises, means the proportion that the lettable area of the retail shop bears to the total lettable area of the group of premises at the commencement of the accounting year;

standard trading hours means the hours prescribed for the purposes of subsection (1)(c);

total lettable area, of a group of premises, or part of a group of premises, means the aggregate of —

the lettable areas of the premises that are retail shops (or areas set aside for retail shops); and

if any of the premises are not retail shops, the lettable area of those premises defined or calculated in such manner as is prescribed by the regulations.

[Section 12 amended: No. 48 of 1990 s. 9; No. 66 of 1998 s. 8; No. 10 of 2001 s. 220; No. 45 of 2002 s. 10; No. 55 of 2004 s. 121; No. 38 of 2005 s. 15; No. 59 of 2011 s. 10; No. 32 of 2018 s. 195.]

12A. Sinking fund for repairs etc., effect of lease requiring payment by tenant into etc.

This section applies if provision is made in a retail shop lease in respect of premises in a retail shopping centre for payments to be made by the tenant into a sinking fund for repairs or maintenance or any similar purpose.

The purpose of the sinking fund is to be specified in the retail shop lease.

The lease shall be taken to provide that —

the landlord is to, as soon as practicable, pay amounts paid by the tenant for the credit of the sinking fund into one or more appropriately designated interest bearing accounts held by the landlord with a bank in the State; and

the landlord may only apply amounts standing to the credit of the sinking fund and interest earned on the fund for —

the purpose mentioned in subsection (2); and

taxes and imposts payable on the fund; and

the cost of an audit referred to in paragraph (c)(iii); and

accounting, legal and other professional costs reasonably incurred in the preparation and approval of the scheme of repayment referred to in paragraph (e);

and

the landlord is to —

keep full and accurate accounts of all money received or held by the landlord in respect of the sinking fund; and

keep the accounts in such manner that they can be conveniently and properly audited; and

at the end of each accounting year cause the accounts to be audited by an auditor who is a registered company auditor within the meaning of the Corporations Act 2001 of the Commonwealth; and

within 3 months after the end of each accounting year deliver a copy of that report to the tenant;

and

subject to subsection (5), the landlord is liable to pay into the sinking fund any deficiency attributable to the failure by the landlord or any predecessor in title of the landlord to comply with paragraph (a) or (b); and

if the retail shopping centre is destroyed, demolished or ceases to operate the landlord is to —

prepare a scheme of repayment detailing —

the amount standing to the credit of the sinking fund (including any interest earned on the fund); and

the relevant proportion of that amount to which each former tenant is entitled; and

the way in which the landlord proposes to distribute that amount based upon the relevant proportion;

and

submit the scheme of repayment to the Tribunal for approval under subsection (4).

The Tribunal is to examine a scheme of repayment submitted under subsection (3)(e)(ii) and may approve the scheme or require such amendments to be made to the scheme as the Tribunal thinks fit and the landlord is to repay to each former tenant the amount set forth in the scheme of repayment or amended scheme of repayment, as the case requires.

A landlord is only liable for a deficiency under subsection (3)(d) in respect of a claim for that deficiency notified to the landlord by the tenant within a period of 3 years following the receipt by the tenant of the copy of the report of the auditor referred to in subsection (3)(c)(iv) disclosing the deficiency.

If a landlord does not comply with the requirement referred to in subsection (3)(c)(iv), the tenant is not obliged to pay, and the landlord is not entitled to recover, payments to the sinking fund from the date of that noncompliance until the landlord complies with that requirement.

In this section and in section 12B —

bank means —

an ADI (authorised deposit‑taking institution) as defined in section 5 of the Banking Act 1959 of the Commonwealth; or

a bank constituted by a law of a State, a Territory or the Commonwealth;

former tenant in relation to premises means the last tenant to carry on business at those premises.

[Section 12A inserted: No. 66 of 1998 s. 9; amended: No. 26 of 1999 s. 65(2) and (3); No. 10 of 2001 s. 220; No. 55 of 2004 s. 122.]

12B. Fund for marketing etc. retail shopping centre, effect of lease requiring payment by tenant into etc.

This section applies if provision is made in a retail shop lease in respect of premises in a retail shopping centre for payments to be made by the tenant into a fund (other than a fund referred to in section 12A) or a reserve for marketing or promotion of the retail shopping centre or any similar purpose.

The purpose of the fund or reserve is to be specified in the retail shop lease.

The lease shall be taken to provide that —

the landlord is to, as soon as practicable, pay amounts paid by the tenant for the credit of the fund or reserve into one or more appropriately designated interest bearing accounts held by the landlord with a bank in the State; and

the landlord may only apply amounts standing to the credit of the fund or reserve and interest earned on the fund or reserve for —

the purpose mentioned in subsection (2); and

taxes and imposts payable on the fund or reserve; and

the cost of an audit referred to in paragraph (c)(iii); and

accounting, legal and other professional costs reasonably incurred in the preparation and approval of the scheme of repayment referred to in paragraph (e);

and

the landlord is to —

keep full and accurate accounts of all money received or held by the landlord in respect of the fund or reserve; and

keep the accounts in such manner that they can be conveniently and properly audited; and

at the end of each accounting year cause the accounts to be audited by an auditor who is a registered company auditor within the meaning of the Corporations Act 2001 of the Commonwealth; and

within 3 months after the end of each accounting year deliver a copy of that report to the tenant;

and

subject to subsection (5), the landlord is liable to pay into the fund or reserve any deficiency attributable to the failure by the landlord or any predecessor in title of the landlord to comply with paragraph (a) or (b); and

if the retail shopping centre is destroyed, demolished or ceases to operate the landlord is to —

prepare a scheme of repayment detailing —

the amount standing to the credit of the fund or reserve (including any interest earned on the fund or reserve); and

the proportion of that amount to which each former tenant is entitled; and

the way in which the landlord proposes to distribute that amount;

and

submit the scheme of repayment to the Tribunal for approval under subsection (4).

The Tribunal is to examine a scheme of repayment submitted under subsection (3)(e)(ii) and may approve the scheme or require such amendments to be made to the scheme as the Tribunal thinks fit and the landlord is to repay to each former tenant the amount set forth in the scheme of repayment or amended scheme of repayment, as the case requires.

A landlord is only liable for a deficiency under subsection (3)(d) in respect of a claim for that deficiency notified to the landlord by the tenant within a period of 3 years following the receipt by the tenant of the copy of the report of the auditor referred to in subsection (3)(c)(iv) disclosing the deficiency.

If a landlord does not comply with the requirement referred to in subsection (3)(c)(iv), the tenant is not obliged to pay, and the landlord is not entitled to recover, payments to the fund or reserve from the date of that noncompliance until the landlord complies with that requirement.

[Section 12B inserted: No. 66 of 1998 s. 9; amended: No. 26 of 1999 s. 65(4); No. 10 of 2001 s. 220; No. 55 of 2004 s. 123.]

12C. Opening hours, provision in lease for is void etc.

A provision in a retail shop lease which requires a tenant to open the retail shop the subject of the lease at specified hours or specified times is void.

Where —

a landlord has refused to renew a retail shop lease; and

the tenant under the retail shop lease believes that the refusal was because the tenant did not open the retail shop the subject of the lease at specified hours or specified times,

the tenant may apply in writing to the Tribunal for an order that the landlord pay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of the failure to renew the retail shop lease.

[Section 12C inserted: No. 66 of 1998 s. 9.]

12D. Tenants’ association etc., provision in lease preventing tenant from forming etc. is void etc.

A provision in a retail shop lease is void to the extent that it has the effect of preventing or restricting the tenant from forming, joining or taking part in any activities of a tenants’ association, chamber of commerce or similar body.

If a tenant under a retail shop lease —

forms or joins; or

proposes to form or join,

a tenants’ association, chamber of commerce or similar body, the landlord is not to treat or propose to treat the tenant less favourably than a tenant in similar circumstances who does not do or propose to do any of those things.

A tenant under a retail shop lease may apply in writing to the Tribunal in respect of a failure by the landlord to comply with subsection (2) for one or both of the following orders —

an order that the landlord pay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of the failure;

an order that the landlord do, or refrain from doing, anything specified in the application.

[Section 12D inserted: No. 47 of 2006 s. 22.]

13. Tenant entitled to at least 5 year term in some cases etc.

Subject to this section, where under a retail shop lease —

the term of the lease (in this section called the current term) is more than 6 months but less than 5 years; and

the current term plus any term (in this section called the option term) that may be obtained by the tenant by way of an option to renew the lease totals more than 6 months but less than 5 years,

the lease shall be taken to give the tenant an option to renew the lease for a term commencing immediately after the expiry of the current term and the option term, if any, and ending on a day specified by the tenant that is not later than 5 years after the day of commencement of the current term.

For the purposes of subsection (1), a lease for a term of more than 6 months includes a tenancy where the tenant has been continuously in possession of the retail shop for more than 6 months as a result of either or both of the following —

the lease being renewed (one or more times);

the lease being continued.

Subsection (1) does not apply to a retail shop lease in respect of premises —

if the tenant occupied the premises as a retail shop for a period, including any time prior to the commencement of this Act, ending immediately before the commencement of the current term and that period plus the current term and the option term, if any, totals 5 years or longer; or

if the landlord holds the premises under a lease (in this section and section 13A called the head lease) and renewal of the retail shop lease or, in the case of a retail shop lease containing an option to renew, renewal for a term longer than the option term, would be inconsistent with the head lease.

The option that a lease is, by reason of subsection (1), taken to give a tenant —

is exercisable, by notice in writing in the prescribed form given to the landlord, not less than 30 days before the expiry of the current term, or the option term, as the case may require or during such other period before the expiry of the current term, or the option term, as the case may require as the Tribunal, having regard to the term of the lease or such other circumstances as it considers relevant, approves in a particular case; but

is not exercisable while there exists any unremedied default under the lease on the part of the tenant notice of which has been given by the landlord, in writing, to the tenant.

Notwithstanding subsection (3), where a party to a retail shop lease has referred to the Tribunal a question as to whether there is an unremedied default under the lease by the tenant (being a default of which written notice has been given by the landlord to the tenant), the Tribunal, after considering all the circumstances of the case, may determine, by written notice to each party, that the tenant is not required to exercise the option referred to in subsection (3) before the expiry of the current term or the option term, as the case may be, if the question referred to the Tribunal has not been decided by the time of such expiry; and where the Tribunal makes that determination and the question is not decided by the time of such expiry, the current term or the option term, as the case requires, is deemed to be extended —

if the question is decided in favour of the landlord, to the time when the question is decided; or

if the question is decided in favour of the tenant, to a period ending 7 days after the tenant receives notification of the decision,

and where paragraph (b) applies, the tenant may exercise the option referred to in subsection (3) during the period designated in that paragraph.

Where the current term or the option term of a lease has been extended under subsection (3a)(b) and the tenant exercises the option referred to in subsection (3) during the period of the extension, the lease is deemed to have been renewed for a term commencing immediately after the time when the current term or the option term, as the case may be, would have expired if it had not been so extended.

Where —

the landlord under a retail shop lease holds the premises concerned under a head lease; and

it would be inconsistent with the head lease for the retail shop lease to continue until the day provided for by subsection (1); and

that inconsistency is not, by reason of section 13A(1), removed,

the day that may be specified under subsection (1) as the day until which the retail shop lease is to be renewed shall be not later than the last day until which the retail shop lease can lawfully continue.

The terms and conditions upon which a lease is renewable under an option that a lease is, by reason of subsection (1), taken to give a tenant are the same as those upon which the lease is held at the time notice is given of the exercise of that option, except that —

the tenant does not have any further option under subsection (1) to renew the lease; and

where the lease does not provide for a review of rental, the lease shall be taken to provide that the rental payable during the term for which the lease is renewed shall be determined having regard to the market rent of the premises ascertained as provided in section 11(2).

The landlord under a retail shop lease is not entitled to determine the lease —

if the lease is a lease referred to in subsection (1), before the day on which the term that may be obtained by the tenant under that subsection expires; or

if the lease is a lease the current term of which, or the current term plus the option term, is 5 years or longer, before the day that is 5 years after the day on which the current term commenced,

except —

by reason of default by the tenant or failure of the tenant to remedy any such default in accordance with the lease; or

by reason that —

it would be inconsistent with a head lease under which the premises are held by the landlord for the retail shop lease to continue; and

that inconsistency is not, by reason of section 13A(1), removed;

or

under and in accordance with a provision that is included in the lease with the approval in writing of the Tribunal given under subsection (7) or (7a); or

under and in accordance with a provision of the lease that is the same, or substantially the same, as a provision prescribed for the purposes of this section; or

where the Tribunal has granted an application by the tenant under subsection (7b), in relation to a lease referred to in paragraph (aa).

The Tribunal may, upon application made to it by the landlord notice of which has been given to the tenant, approve of the inclusion in a retail shop lease of a provision under which the landlord may determine the lease (other than under subsection (6)(a), (b) or (da)) before the day set out in subsection (6)(aa) or (ab), as is relevant, if it is satisfied that special circumstances exist by reason of which such approval ought to be given.

A landlord in relation to a retail shopping centre may make an application under subsection (7) as to any number of retail shop leases in respect of that centre where he is of the opinion that the same special circumstances exist in relation to each lease the subject of his application, and the Tribunal may exercise its powers under that subsection accordingly.

The Tribunal may, on application in writing by a tenant or prospective tenant, order that an option of renewal does not arise under subsection (1), if it is satisfied that —

the application was made by the tenant or prospective tenant of his own free will; and

the circumstances of the case warrant the granting of the application.

Where the tenant under a retail shop lease assigns the lease, the term to which the assignee becomes entitled is the balance of the term of the assigning tenant, determined as provided by the lease including, where applicable, the option arising under subsection (1), as at the date of the assignment.

Notwithstanding any other written law, the right of a tenant under subsection (1) is not affected by any assignment or other disposition of the reversion of the premises to which the lease relates.

For the purposes of this section and notwithstanding section 68 of the Transfer of Land Act 1893, an option in a retail shop lease for the tenant to renew the lease is exercisable against any person with a reversionary interest in the premises the subject of the lease whether or not the lease is registered or protected by caveat.

[Section 13 amended: No. 49 of 1985 s. 4; No. 48 of 1990 s. 10; No. 55 of 2004 s. 124; No. 59 of 2011 s. 11.]