Real Estate CPD 2014

Mandatory CPD for Commercial Agents & Property Managers

Amendments to the Commercial Tenancy (Retail Shops)

Agreements Act 1985 and Associated Regulations

Participant Information Booklet – Distance Learning

2

Welcome to Mandatory CPD for 2014

The purpose of the Compulsory Professional Development (CPD) program is to

assist industry members in updating and developing their knowledge and skills in the

areas of industry practice and legislative requirements.

The Commissioner for Consumer Protection (the Commissioner) has determined the

topics for mandatory sessions in 2014.

This session topic is amendments to the Commercial Tenancy (Retail Shops)

Agreements Act 1985 and the associated Regulations for commercial property

managers and real estate and business agents.

The Small Business Development Corporation (SBDC) provides a commercial

tenancy service to assist landlords and tenants with retail lease problems and

inquiries. The SBDC can be contacted by visiting their website:

http://www.sbdc.wa.gov.au, by calling 131249 or by sending an email to

info@smallbusiness.wa.gov.au.

The Department of Commerce offers information on the website related to policy,

content and review aspects of the CT Act; however advice and assistance should be

sought from the SBDC. The following link may provide useful information.

http://www.commerce.wa.gov.au/consumerProtection/Content/Business/Commercial

_tenancy/Retail_shop_leases_in_WA.html,

Do you receive e-Bulletins?

The DOC uses electronic bulletins (e-bulletins) as a means of updating the industry

with important information including changes to and compliance with legislation and

policy.

If you are not registered to receive e-bulletins, please email:

pinews@commerce.wa.gov.au to be added to the distribution list.

Archive:

E-Bulletins

www.commerce.wa.gov.au/ConsumerProtection/PDF/Real_Estate_industry/Publicat

ions/e-Bulletins.html

Newsletters

www.commerce.wa.gov.au/ConsumerProtection/PDF/Real_Estate_industry/Publicat

ions/newsletters.html

© 2014 Department of Commerce

West Coast Property Training has produced this Mandatory CPD distance learning workbook and in

conjunction with the Consumer Protection Division of the West Australian Department of Commerce.

This document is intended for educational purposes only and does not constitute legal or business

advice by West Coast Property Training, the Department of Commerce or third parties delivering this

training session. Readers requiring legal or business advice should seek out suitably qualified and

experienced legal or business advisors.

3

Contents

Session Format ....................................................................................................... 4

Instructions ............................................................................................................. 4

The Commercial Tenancy (Retail Shops) Amendment Act 2011 ......................... 5

Part One: When does the CT Act apply? ............................................................... 6

Part Two: Changes in the CT Act: New provisions ............................................. 10

Part Three: The Disclosure Statement: ................................................................ 17

Part Four: Disputes between landlord and tenant .............................................. 19

Bibliography .......................................................................................................... 22

Resources .............................................................................................................. 23

Appendix A – Regulation 10 of the CT Regulations ............................................ 24

Appendix B – Recap on Unconscionable Conduct ............................................. 26

Appendix C - Extracts from the Commercial Tenancy (Retail Shops)

Agreements Act 1985 ............................................................................................ 28

Appendix D - Disclosure Statement – Form 1 ..................................................... 46

Appendix E - Allocation of Operating Expenses for Non-Standard Hours ........ 66

Appendix F – Face-to-Face Session Activities with Answers ............................ 70

4

Session Format

This session has been designed to build on the subject matter that was covered in a

mandatory session in 2013 for commercial and business agents entitled “Legislative

changes affecting the commercial property industry”.

The Commercial Tenancy (Retail Shops) Agreements Act 1985 (the CT Act)

regulates the relationship between landlords and tenants in retail shop premises in

Western Australia. The primary objectives of the CT Act are to promote equitable

leasing arrangements, improve communication and provide access to low cost

dispute resolution mechanisms for the retail industry.

This session has been designed to ensure a sound understanding of the key

provisions of the CT Act that have changed since the Commercial Tenancy (Retail

Shops) Agreements Amendment Act 2011 (the Amendment Act) commenced on 1

January 2013.

Disclosure and transparency are cornerstones of the CT Act; hence this session

focuses predominantly on the disclosure of pertinent information (in the form of

the disclosure statement) by the landlord to the prospective tenant before the signing

of a retail shop lease.

It is intended to be interactive with participants given the opportunity to test their own

knowledge. Participants are encouraged to work together in groups to consider

scenarios and a case study as well as respond to short answer questions.

Instructions

Review the materials in this information booklet and then complete the

accompanying assessment and feedback sheet. Additional activities from the

face-to-face session are included as an addendum; you may wish to review

these to test your understanding of the subject matter.

Return the completed assessment and feedback sheet to your training

provider. You may wish to keep the information booklet for future reference.

5

The Commercial Tenancy (Retail Shops) Amendment Act 2011

The Amendment Act commenced on 1 January 2013 and amends the CT Act to

improve the tenancy rights of small business and enhance the clarity and

effectiveness of the CT Act.

The Amendment Act implements a number of outstanding recommendations of a

review of the CT Act undertaken in 2002/3 and addresses other issues that have

arisen since that time, such as recent work to harmonise disclosure statements

across jurisdictions. This Amendment Act implements a number of important reforms

to commercial tenancy laws in Western Australia.

The amendments incorporate new provisions into the CT Act which:

o prohibit misleading and deceptive conduct;

o require landlords to include additional information in the disclosure statements

provided to tenants;

o require landlords to give tenants notice of the date on which an option to

renew a lease is no longer exercisable;

o allow for use of a prescribed relocation clause in leases (without the need to

obtain the approval of the State Administrative Tribunal) and introduce new

requirements in relation relocation clauses in leases for long term tenants

(those who have been in occupation of premises for more than 5 years);

o prohibit landlords from passing on some of their legal fees to tenants; and

o assist in the preparation of more consistent and equitable rent reviews by

requiring landlords and tenants to supply valuers with relevant leasing

information.

Amendments have also been made to the Commercial Tenancy (Retail Shops)

Agreements Regulations 1985 (the CT Regulations) to support the implementation of

the Amendment Act. These amendments, contained in the Commercial Tenancy

(Retail Shops) Agreements Amendment Regulations (No.2) 2012 include a:

o definition of lettable area;

o prescribed relocation clause;

o revised tenant guide; and

o revised disclosure statement.

The focus of the CT Act is on retail business; however leases for some non-retail use

such as businesses in shopping centres and other specified businesses are also

covered by the CT Act. The Amendment Act applies to new retail shop leases

entered into on or after

1 January 2013 and extensions of existing retail shop leases. Parts of the 2011

Amendment Act also apply to existing retail shop leases.

The Amendment Act does not generally apply to existing leases entered into before 1

January 2013 that were not covered by the CT Act as it applied before 1 January

2013 or leases entered into under an option or agreement made before 1 January

2013 that were not covered by the CT Act as it applied before 1 January 2013.

6

Part One: When does the CT Act apply?

The CT Act generally applies to leases for retail shops where the premises have a

lettable area of 1000 m2 or less that:

o are used for carrying on a business and that are in a retail shopping centre (a

group of premises, 5 or more of which are used for the sale of goods by retail

or for a specified business);

o are not in a retail shopping centre, but that are used (or predominantly used)

for the sale of goods by retail (this would include non-retail specific locations

such as a Light Industrial Area); or

o are used for conducting a ‘specified business’.

o If the premises sell goods, the RT Act applies. There are no other

exemptions or mitigating circumstances other than those described here.

The CT Act allows for some retail shops with a lettable area greater than 1000 m2 to

be prescribed as also being covered by the CT Act. As at 1 January 2013 no shops

had been prescribed.

Key Definitions in the legislation

The Amendment Act further clarified some of the key definitions included in section 3

of the CT Act. When leasing premises (either to retail businesses or within shopping

centres) landlords need to consider these definitions and determine whether the CT

Act applies. Some of these key definitions are outlined in the table opposite.

7

Key terms and definitions

Key term Definition

A retail shop

means any premises:

situated in a retail shopping centre that are used wholly or

predominantly for the carrying on of a business; or

not situated in a retail shopping centre that are used wholly

or predominantly for the carrying on of a retail business.

A retail business

is -

a business that is wholly or predominantly involves the sale

of goods by retail; or

a specified business. (Refer to the definition below).

A retail

shopping centre

is -

a cluster of premises of which 5 or more are used for the

carrying on of retail business; and

all of which have the same head lessor or comprise lots on

a single strata plan.

A retail shop

lease -

means a lease that provides for the occupation of a retail shop

and

has a lettable area that is less than 1000 m2 (some

exclusions apply as outlined above);

is not held by a listed corporation or a subsidiary of such a

corporation; and

is not of a kind prescribed as exempt by the regulations (e.g.

ATMs and vending machines).

Lettable area means -

the surface floor area of the premises as designed and available for use in carrying on the business that is, or will be, carried on at the shop.

A specified

business is -

one of the following as prescribed by Regulation 3A of the

CT Regulations to be a specified business -

o drycleaning;

o hairdressing;

o beauty therapy and treatments;

o shoe repair (which may include key cutting and

engraving); or

o sale or rental of videos tapes, DVDs, electronic

games and other similar amusements.

8

What is not considered lettable area?

Section 12(3) of the CT Act defines the total lettable area of a group of premises, or

part of a group of premises as 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 as defined by the regulations.

The lettable area of a retail shop is defined in Regulation 6A of the CT Regulations

and must be calculated in the same, or substantially the same way, as other retail

shops in the same group of premises. It should be noted that the prescribed method

of calculating the lettable area of a retail shop is consistent with the Property Council

Guidelines that are generally used by the industry. There are some areas that are

excluded and are not considered to be part of the lettable area of a retail shop unless

a particular tenant has a right to the exclusive use of the area. These areas include

but are not limited to:

a) areas covered by awnings or similar coverings;

b) balconies;

c) areas under planter boxes;

d) terraces;

e) verandahs; and

f) public spaces, thoroughfares or vehicle access ways; and

g) any other areas not reasonably capable of being used in carrying on

business.

If an area is provided as a common facility in the building where a shop is situated,

unless a particular tenant has a right to exclusive use of the area, the following are

examples of areas that would not be considered part of the lettable area of the retail

shop.

a) access ways;

b) cupboards;

c) escalators, stairwells and landings;

d) fire hose reel cupboards; and

e) lift shafts and lobbies;

9

When does the CT Act not apply?

The CT Act applies only to retail shop leases.

The definition of retail shop lease and regulation 3AB of the CT Regulations provide

for the following exclusions:

premises with a lettable area in excess of 1000m2;

leases to publicly listed companies (including those listed on a foreign stock

exchange that is a member of the World Federation of Exchanges and the

New Zealand Stock Exchange); and

leases for premises used only for the purpose of operating a vending machine

or ATM.

Certain petrol stations were specifically excluded from the previous definition of retail

shop lease by reference to a, now repealed, Commonwealth Act. A specific exclusion

is no longer included in the CT Act in relation to petrol stations. Landlords and their

agents must now consider whether a petrol station falls within the scope of the CT

Act on a case by case basis.

What is a retail shopping centre?

It is important for commercial agents and property managers to bear in mind that in

some instances it is necessary to consider the way other premises in a building are

used as this may determine whether the building is or isn’t classed as a retail

shopping centre. This, then, can impact on whether a business will be classed as a

retail shop. For example, a real estate agency is not defined as a retail business

because it provides a service rather than the sale of goods but, if the agency leases

premises in a shopping centre, it will be classed as a retail shop for the purposes of

the CT Act because it is a business within a retail shopping centre.

If premises are in a multi storey building, only those floors on which retail businesses

are situated are classed as part of the retail shopping centre (The Amendment Act

clarified this).

For example, providers of health care and insurance are often grouped together in

suburban shopping centres. Consider a four story major suburban shopping centre

that has only six premises including Medicare, HBF, Medibank Private, a podiatrist, a

dentist and a pathologist on the fourth floor. In this circumstance, the fourth floor

would not be considered part of the retail shopping centre because none of these

service providers meet the definition of a retail business. If, however, there was even

one retail business on this floor (i.e. a jeweller or a boutique), then all the businesses

on this floor would be considered retail shops.

10

Part Two: Changes in the CT Act: New provisions

If the CT Act and the CT Regulations apply to a lease, a number of requirements and

obligations arise. It is essential that landlords, agents and property managers are

aware of and comply with these requirements.

In this part of the session we will be looking at the key provisions of the CT Act that

have changed as a result of the Amendment Act.

The amendments incorporate new provisions into the Act, which are summarised

below.

The Revised Disclosure Statement

As we know, the CT Act requires the landlord to provide the tenant with a disclosure

statement at least 7 days before entering into a retail shop lease. Since 1 January

2013, landlords have been required to provide additional information in the disclosure

statement provided to tenants.

The Amendment Act made changes in relation to the consequences for inadequate

disclosure. Section 6(1) of the CT Act provides that if the landlord or property

manager fails to provide a disclosure statement or provides one that is incomplete or

false or misleading, the tenant has a limited right to terminate the lease and/or seek

an order from the State Administrative Tribunal (the SAT). If a tenant under a retail

shop lease provides the landlord with a notice of termination under section 6(1), the

lease terminates 14 days after the notice was given.

Prior to the amendments, a tenant could terminate a lease within 60 days after it was

entered into for failure to provide a correct disclosure statement. For leases entered

into after 1 January 2013, the termination period is 6 months.

A disclosure statement given for the purposes of section 6(4) of the CT Act must be

in the prescribed form and summarise the key lease details. The disclosure

statement must also contain a statement notifying the tenant that he or she should

seek independent legal advice.

The disclosure statement and tenant guide are contained in the CT Regulations.

These documents have been amended to increase some of the disclosure

requirements for landlords and to improve the clarity and form of these documents.

In Part Three of this session we will be looking in more detail at the new disclosure

requirements that have been introduced by the Amendment Act. (See Part Three

and the prescribed form at the end of this workbook for more details).

A copy of the revised disclosure form is available to be downloaded from the

Commerce website. For training purposes, a copy of the disclosure statement is at

the back of this workbook.

http://www.commerce.wa.gov.au/ConsumerProtection/Content/Business/Commercial

_tenancy/Forms_specified_by_regulations.html

11

The Revised Tenant Guide

The Tenant Guide sets out some of the tenant’s legal obligations and rights and in

accordance with section 6A of the CT Act and Regulation 9 (Form 4), it must be

provided to the tenant at the front of the lease to which it relates. A copy of the

Tenant Guide must also be attached to the disclosure statement.

The Tenant Guide has been updated and it is essential that landlords and their

agents use the correct version.

Failure to provide the Tenant Guide gives the tenant the right to terminate the lease

and or/seek an order for compensation. The tenant may terminate the lease within 60

days or by applying to the SAT at any time.

As the Tenant Guide is prescribed, it is essential that a copy be provided to the

tenant.

The right to a five year tenancy

Section 13 of CT Act creates a basic right for retail tenants in most circumstances to

be granted a minimum period of tenancy of five years. This in itself is not new,

however the CT Act has been amended to clarify that this right to a five year term

only applies in relation to leases of 6 months or more. The other requirements of the

CT Act such as disclosure still apply, even if the lease is less than 6 months.

If the term of the lease specified in the lease agreement is less than five years, the

CT Act provides that the lease will be taken to give the tenant an option to renew for

the balance of the five year period.

A landlord is prohibited from terminating a lease before the expiry of the guaranteed

five year term except in certain circumstances:

o due to the default of the tenant; or

o where it would be inconsistent with a head lease under which the

premises are held by the landlord for the retail shop to continue; or

o in accordance with a clause permitting earlier termination that is included

in the lease (either with the approval of the SAT or if such a clause is

permitted by the CT Act or Regulations).

As a result of the Amendment Act, certain termination clauses prescribed in the CT

Regulations can be included in a lease without the approval of the SAT. For

example, for leases entered into after 1 January 2013, a provision allowing for

termination of a lease on the bankruptcy or insolvency of a tenant or guarantor (of a

corporate tenant if the guarantor is a director or majority shareholder) may be

included in a lease without the approval of the SAT. The prescribed clause is set out

in the Regulations (Schedule 1, Item 1).

12

Options to renew - notification requirements

As a result of the amendments, landlords are now required to give tenants notice of

the date on which an option to renew in no longer exercisable. There can be

significant consequences for a tenant if he or she fails to exercise an option to renew

a lease on time. For example, a landlord might assume that the tenant does not

intend to continue leasing the premises and may agree to lease the premises to a

new tenant.

The landlord is now required to give the tenant written notice of the expiry date for

any options to renew. The notice does not need to be given in a specific form, but it

must be provided to the tenant in writing.

This change to the CT Act applies to all retail shop leases, including those entered

into before 1 January 2013 and those leases where an option to renew arises under

the CT Act. (i.e. the statutory right to a five year term set out in section 13).

This notice must be received by the tenant between 6 months and 12 months before

the expiry date. If the landlord fails to provide the notice, for leases entered into after

1 January 2013, the option expiry date is taken to be six months after the landlord

notifies the tenant as required.

It is important for landlords, agents and property managers to be remember that if a

lease is extended because of the landlord’s failure to notify the tenant of the option

expiry date, the tenant may terminate the lease by providing notice in writing.

Regulation 4A makes specific provision for those circumstances where the landlord

cannot comply with the notice requirements because the lease is for a short term.

It is important that commercial agents and property managers look at all their leases

to determine which tenants have an option to renew and develop systems for

ensuring that appropriate notices are given.

13

How to provide notice under section 13C?

The diagram below may be useful in determining the option expiry date and when

notice should be given.

How to identify the option expiry date:

Step Two: Determining when the section 13C notice should be given

Option expiry date Date on which notice must be given

If the option expiry date is after 1

January 2014….

Notice must be given between 6 and 12

months before the option expiry date.

If the option expiry date is within 6

months of the lease commencement…

The landlord must notify the tenant in

writing of the option expiry date before

the commencement of the lease.

Does the lease specifically provide the tenant with a contractual right to renew

the lease (that has not been exercised)?

Yes

Determine option expiry date based on

provisions of lease agreement

No

Term of lease has been 5 years or more

Section 13 does not apply - no statutory

option

Term of lease less than 5 years,

including any options

Lease entered into before 1 January

2013

If lease is more than 89 days - statutory option

applies - tenant is required to give notice 90 days before the end

of the tenancy.

Lease entered into after 1 January 2013

If tenant in possession for 6 months or more - statutory option applies - tenant is required to

give notice 30 days before the end of the

term.

14

Relocation clauses

The CT Act has been amended to include certain provisions in relation to lease

clauses concerning the relocation of a tenant or the termination of a lease on the

redevelopment of a retail shop. They only apply to leases entered into on or after 1

January 2013.

The amendments mean that the parties no longer need to obtain the approval of the

SAT for relocation clauses allowing for early termination if the parties use the

prescribed relocation clause contained in the amended regulations (for the first five

years of the lease term).

If however the parties choose to use another relocation provision they will need to

apply to the SAT to have it approved. Notice of an application of this nature must be

given to the tenant. If a landlord wished to include the same relocation clause in a

number of leases, it is not necessary to make a separate application to the SAT for

each tenant if the same circumstances apply. The landlord need only make one

application to cover the relevant leases.

The prescribed relocation clause is set out in the Regulations (Schedule 1, Item 2). A

copy of the prescribed relocation clause is at the back of your workbook, however it

can also be downloaded from the Commerce website.

http://www.commerce.wa.gov.au/ConsumerProtection/PDF/CommercialTenancies/C

omTenRelocationClause.pdf

If the relocation is within the first 5 years of the lease, the clause must be included

in the lease in the prescribed form or the relocation must be approved by the SAT.

If relocation is required after the first 5 year period, the relocation clause must meet

the requirements of Section 14A or be approved by the SAT.

Legal fees

Since 1 January 2013, in accordance with section 14B of the CT Act, landlords have been prohibited from passing on some of their legal fees to tenants. These legal fees and expenses include those relating to:

the negotiation, preparation or execution of the lease, a renewal of the lease

or an extension of the lease;

obtaining the consent of a mortgagee to the lease; and

the landlord’s compliance with the CT Act.

Remember!

It is important to remember that a landlord can only require a tenant to relocate if the

lease contains a relocation clause that the tenant has agreed to and the terms of the

clause comply with the CT Act.

15

This provision does not prevent a landlord from claiming the reasonable legal or other expenses incurred by the landlord in connection with an assignment of the lease or a sub-lease.

Rent reviews

As we know, rent review provisions must specify a single basis on which a review is

to be made (e.g. market rent or consumer price index).

The CT Act provides that “market rent” is the rent obtainable for the retail shop in a

free and open market if it were to be let on similar terms.

A provision cannot be included in the lease preventing the rent from falling below or

rising above a certain level (known as a ‘ratchet clauses’). Rent must be allowed to

rise or fall to a level supported by market evidence. For example, a lease clause

cannot provide that there is to be a market review of rental, but that the rent cannot

be decreased as a result of the review.

The Amendment Act introduces two new provisions which facilitate more accurate

and fairer valuations. Section 11 of the CT Act includes the following requirements.

1) Landlords are required to provide information to a valuer who has been

appointed to determine the market rent. So that valuer has all the necessary

information upon which to base the valuation, lease details in relation to other

premises in a shopping centre or a group of premises must be provided.

2) A market valuation of rent in relation to a retail shop is not to take into

account the value of the:

a. goodwill created by the tenant’s occupation;

b. tenant’s fixtures and fittings on the retail shop premises; or

c. works carried out to the retail shop premises at the expense of the

tenant.

The new provisions provide that for the purpose of assisting to determine the rent

payable as a result of a review, the landlord must provide information to a valuer

within 14 days of being given a written request to do so. The information requested

may include any of the following information about leases for retail shops in the same

building or retail shopping centre:

a) current rental for each lease;

b) rent free periods or any other form of incentive

c) recent or proposed variations of any lease;

d) outgoings for each lease; and/or

e) any other information prescribed for the purposes of this paragraph.

If the landlord fails to provide the requested information to the valuer in the required

timeframe without reasonable excuse, the valuer must within 7 days, advise the

tenant in writing of the landlord’s failure. The tenant may then apply in writing to the

16

SAT for an order that the landlord comply with a request made under subsection 3B

to supply the information requested.

A person given information by a landlord for the purpose of a market review of rent

must not disclose that information except in circumstances specified in section 11A

of the CT Act.

Misleading and deceptive conduct

Prior to the recent amendments, the CT Act already included a prohibition on

unconscionable conduct. The CT Act has been amended to also provide that the

parties may not engage in misleading and deceptive conduct. The purpose of the

amendments is to ensure that the SAT has the jurisdiction to deal with all matters

arising in relation to a retail shop lease.

Misleading or deceptive conduct under the CT Act is conduct that is misleading or

deceptive to another party to the lease or that is likely to mislead or deceive another

party to the lease.

Below are some examples of conduct by the landlord that may be considered

misleading or deceptive.

All of the relevant information is NOT disclosed to a tenant in relation to a

lease. For example, a prospective tenant is told that the retail shopping

centre in which they have just signed a lease has 85% occupancy but

does not disclose that the three largest tenants that make up 50% of the

centre are vacating at the expiry of their leases.

A promise is made to a prospective tenant about the amount of foot traffic

that goes through a shopping mall on a given day that cannot be

substantiated and/or proves to be inaccurate or completely false.

Representations are made about the proposed features of a new

shopping centre for example the anchor tenant will be a large department

store and there are no reasonable grounds for this statement.

Misleading or deceptive conduct is not specifically defined in the CT Act however

there is a significant amount of case law on the subject. You will recall it is a

provision within the Australian Consumer Law (ACL) (section 18).

Remember!

The important points to remember with respect to this provision of the CT Act:

- the SAT will give regard to conduct that is likely to mislead or deceive as well

as conduct that actually misleads or deceives.

- Whether conduct is misleading or deceptive is a matter of fact for the SAT to

determine after taking into consideration all of the circumstances of a case.

17

Part Three: The Disclosure Statement:

As we have already discussed, under the CT Act, a Disclosure Statement is to be

provided to a tenant in all circumstances where the CT Act applies and it must be

provided 7 days before the parties enter into a retail shop lease.

A Disclosure Statement given for the purposes of section 6(4) of the CT Act shall be

in the form of Form 1 (see the prescribed form at the end of this workbook for more

details).

The Disclosure Statement includes all the material matters that are relevant to the

lease of premises. This includes all the initial negotiations as well as all the matters

that the prescribed Disclosure Statement (Form 1) requires to be addressed. The

Disclosure Statement will include standard information such as the amount of rent,

length of the lease, and when and how rent will be reviewed. Other matters material

and specific to the lease that may be disclosed include proposed road changes, the

proximity of other relevant businesses and pedestrian flow to name just a few.

Any special conditions the tenant and landlord agree on should also be included in

the Disclosure Statement. For example, if there are rent free periods applicable when

the business commences, this should be included in the Disclosure Statement.

There is no requirement to provide a disclosure statement on:

the renewal of a retail shop lease under an option; or

the assignment of a retail shop lease.

A Disclosure Statement is not complete unless it is accompanied by:

a copy of the lease;

the current year’s annual estimates of expenditure for each item of operating

expenses; and

a copy of the Tenant Guide (see Form 4 of the Commercial Tenancy (Retail

Shops) Agreements Regulations).

If the landlord does not provide a disclosure statement or provides one that is

incomplete or incorrect the tenant may:

terminate the lease at any time up to 6 months after the lease was entered

into; and

seek an order for compensation from the State Administrative Tribunal for

any monetary loss suffered.

Under section 6(3) of the CT Act, the tenant is not able to terminate a lease on the

grounds that the disclosure statement is incomplete or incorrect, or that it contains

false or misleading information, if the landlord has acted honestly and reasonably

and ought reasonably be excused for the failure concerned and if the tenant is in

substantially as good a position as the tenant would have been had the statement

been complete or not contained the false or misleading information. These

18

exceptions do not apply if the tenant has not been provided with a Disclosure

Statement in the first place.

The Disclosure Statement contains a statement notifying the tenant that they should

obtain independent legal advice before signing the disclosure statement and the

lease. Commercial property managers and agents should advise their clients to seek

independent legal advice on Disclosure Statements and leasing documentation.

It should be noted that item 32 of the disclosure statement makes provision for the

landlord to include details of any representations made by the tenant. As we have

discussed previously in this session, misleading and deceptive conduct provisions

apply to both landlords and tenants.

It is imperative that the tenant reads and understands the Disclosure Statement. The

tenant should also make sure that ALL statements, representations and promises,

upon which the tenant is relying in entering into the lease, are recorded on the

Disclosure Statement.

19

Part Four: Disputes between landlord and tenant

If a dispute arises between a landlord and a tenant, in the first instance you should

discuss any areas of disagreement and attempt to find a workable solution that is

satisfactory to all parties. Sometimes however this is not possible. If an agreement

cannot be reached, the CT Act has a dispute resolution procedure that parties can

follow as detailed below.

Figure 1.2 - Dispute Resolution Procedures

Source: Common Questions about the Commercial Tenancy Act 4th Ed, page 47 – Small Business

Development Corporation publication, 2013.

In most cases a retail tenancy dispute with be considered by the Small Business

Commissioner (the SB Commissioner).

Are you a landlord or tenant, or former

landlord or tenant, of a retail shop lease?

Note: matters requiring an

urgent order that someone

do something or refrain

from doing something may

proceed directly to the

SAT.

YES

You may make a request to the Small

Business Commissioner to:

Provide assistance to attempt to resolve

the matter.

Undertake alternative dispute resolution

to resolve the matter.

HOWEVER – IF:

the matter is unlikely to be resolved with the assistance of alternative dispute resolution; or

it would not be reasonable to commence alternative dispute resolution; or

alternative dispute resolution has failed,

you, or another party to the proceedings, may request that the Small Business Commissioner provide

a certificate permitting the matter to proceed to the State Administrative Tribunal for determination.

State Administrative Tribunal (SAT)

20

What is Alternative Dispute Resolution?

Alternative dispute resolution is a relatively low cost and convenient way that parties

can seek to resolve a dispute without having to go to a court or tribunal. It aims to

achieve a solution to the dispute that is practical, acceptable to all parties and is

binding.

The SB Commissioner is able to provide informal assistance and guidance to the

parties in a dispute before any dispute resolution is undertaken. If however the

parties are not able to resolve their dispute through informal assistance and

guidance, the SB Commissioner may decide to commence the more formal

alternative dispute resolution in an attempt to resolve the dispute.

The SB Commissioner may appoint a facilitator (mediator) with appropriate skills and

experience to undertake the alternative dispute resolution and assist the parties to

achieve a mutually acceptable and practical solution to their dispute. One or both of

the parties may have legal representation during the dispute resolution process

however if it is appropriate, the facilitator may meet with the parties without legal

representation.

If a matter cannot be resolved through the Small Business Commissioner, it may

have to be referred to the State Administrative Tribunal (SAT) for determination. The

SAT is an independent body that deals with a broad range of administrative,

commercial and personal matters including retail shop lease disputes. In these

circumstances, the SB Commissioner will issue a certificate on the request of a party

to a dispute so that the matter can proceed to the SAT.

The certificate issued by the SB Commissioner allows the matter to proceed to the

SAT. There are some matters for which the SAT will not accept an application

without a certificate from the SB Commissioner.

What is the role of the SB Commissioner?

The SB Commissioner’s role is to assist tenants and landlords to resolve

complaints and disputes related to retail tenancies. The SB Commissioner can:

o provide assistance to attempt to resolve the matter; or

o undertake alternative dispute resolution in respect of the matter.

The SB Commissioner provides a range of services in helping the parties resolve

their dispute including advice, information and guidance. The relevant parties may

be brought together informally in an attempt to resolve the dispute or more formally

through an impartial alternative dispute resolution process.

It is important to note that the SB Commissioner cannot make determinations in

relation to a retail tenancy dispute. This is the role of the SAT and the courts.

21

There are also some matters that may proceed directly to the SAT without the need

for a certificate. These matters include those requiring an urgent order that someone

do something or refrain from doing something or matters that are administrative in

nature (e.g. approval of a lease cause).

The following are examples of matters that can proceed directly to the SAT, an

application seeking:

o an interim order pending final determination of an unconscionable conduct

claim;

o approval of a lease term providing for termination earlier than the term

required under the CT Act; or

o an order that the statutory option of renewal under the CT Act will not apply.

Regulation 10 provides a description of the types of matters that can proceed directly

to the SAT. This detailed list is provided at Appendix A.

If a dispute arises that is unable to be resolved between the landlord and the tenant,

either party can initiate action before the SAT by making an application.

22

Bibliography

Government Publications

Common Questions about the Commercial Tenancy Act: 4th

Edition - for leases entered

into on or after 1 January 2013 (advice for landlords and tenants)

Small Business Development Corporation

www.sbdc.wa.gov.au

Commercial Tenancy – information for landlords

Department of Commerce

www.commerce.wa.gov.au

Commercial Tenancy – information for landlords

Department of Commerce

www.commerce.wa.gov.au

23

Resources

The following resources will prove useful in relation to the CT Act, consumer protection and commercial tenancy dispute resolution.

Department of Commerce

An overview of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (and copies of the prescribed relocation clause; revised tenant guide; and revised disclosure statement and other resources) can be found at the Department of Commerce web site [Navigate to Home > Consumer Protection > Business > Commercial tenancy and retail shops > Commercial Tenancy (Retail Shops) Agreements Act 1985]: http://www.commerce.wa.gov.au/ConsumerProtection/Content/Business/Commercial_tenancy/Retail_shop_leases_in_WA.html

Small Business Development Corporation

The Small Business Development Corporation provides small businesses with information, support and resources concerning the leasing of commercial premises. [Navigate to Business Topics > Premises and Location > Leasing Commercial Premises] http://www.smallbusiness.wa.gov.au/leasing-commercial-premises-3/ Retail shop lease disputes can be resolved through guided resolution via the Alternative Dispute Resolution service of the Small Business Development Corporation. [Navigate to Business in WA > Alternative Dispute Resolution http://www.smallbusiness.wa.gov.au/alternative-dispute-resolution/

State Law Publisher

Current copies of the Commercial Tenancy (Retail Shops) Agreements Act 1985 and Commercial Tenancy (Retail Shops) Agreements Regulations 1985 can be found at the State Law Publisher’s web site. [Navigate to Home > Consolidated Act > Commercial Tenancy (Retail Shops) Agreements Act 1985] http://www.slp.wa.gov.au/legislation/statutes.nsf/main_mrtitle_165_homepage.html

State Administrative Tribunal

Some matters may require an application to the State Administrative Tribunal (SAT). SAT hears a range of applications under the Commercial Tenancy (Retail Shops) Agreements Act 1985. Some of these matters can come straight to SAT, while others require a certificate from the Commissioner of the Small Business Development Corporation. Details of the Applications that may be brought directly to SAT under the Act can be found at the SAT web site [Navigate to Home > Types of matters > Commercial Tenancy]

http://www.sat.justice.wa.gov.au/C/commercial_tenancy.aspx

24

Appendix A – Regulation 10 of the CT Regulations

Matters prescribed (Act s. 25D(2))

Section 25D(1) of the CT Act does not apply in respect of the matters set out in the

table below.

Item Section of Act Description of matter

1. 11(3C)(b) Application for an order that a landlord comply with a request made under section 11(3B) of the Act.

2. 12(1)(b) Application for approval for proportion of operating expenses of a landlord payable by a tenant under a retail shop lease to be greater than the relevant proportion.

3. 12(1e) Application for approval for contribution towards the operating expenses of a landlord payable by a tenant under a retail shop lease to exceed the amount calculated under section 12(1e)(b) of the Act.

4. 12A(3)(e)(ii) Submission of a scheme of repayment for approval under section 12A(4) of the Act.

5. 12B(3)(e)(ii) Submission of a scheme of repayment for approval under section 12B(4) of the Act.

6. 13(3)(a) Application for approval for variation of the period during which an option to renew a lease is exercisable.

7. 13(7) Application to approve of the inclusion in a retail shop lease of a provision under which a landlord may determine the lease at a time that is before the day set out in section 13(6)(aa) or (ab) of the Act, as is relevant.

8. 13(7b) Application for an order that an option of renewal does not arise under section 13(1) of the Act.

9. 13A(3) Application to determine that there are bona fide commercial reasons for an inconsistency referred to in section 13A(1)(a) of the Act.

10. 14A(3) Application for the approval of the inclusion in a retail shop lease of a provision about the relocation of a tenant’s business to be in a form other than a form prescribed for the purposes of section 14A of the Act.

11. 15F(6) Application for an interim order pending final determination of an unconscionable conduct application under section 15F(1) of the Act.

25

Item Section of Act Description of matter

12. 16D(6) Application for an interim order pending final determination of a misleading or deceptive conduct application under section 16D(1) of the Act.

13. 16(1) Referral of a question between the parties to a lease which a party believes to be a question arising under the lease, but only if urgent relief in the form of an order for a party to the lease to do, or refrain from doing, something is sought in conjunction with the referral.

14. 27(3)(b) Application for a matter before the Tribunal to be transferred to a court.

[Regulation 10 inserted in Gazette 23 Mar 2012 p. 1365-6; amended in Gazette

30 Nov 2012 p. 5837-9.]

26

Appendix B – Recap on Unconscionable Conduct

Section 15C of the CT Act prohibits a landlord or tenant from engaging in conduct

that in unconscionable and provides that a landlord or tenant (or former landlord or

tenant) who suffers loss or damage because of such unconscionable conduct may

apply to the SAT for an order for compensation or other appropriate relief.

Section 15C of the CT Act has not changed as a result of the amendments. As the

focus of this CPD session is on changed to the legislation and specifically the

disclosure statement, unconscionable conduct is not specifically covered as part of

this training session. However, the case study questions and knowledge check #4 do

address this provision.

Consider the revision points on unconscionable conduct with respect to commercial

tenancies below to assist you in completing the questions in this workbook.

Section 15C(2) outlines the matters the SAT may have regard to for the purpose of

determining whether a landlord has engaged in unconscionable conduct in relation to

a commercial lease.

(a) the relative strengths of the bargaining positions of the landlord and

tenant;

(b) whether the tenant was required to comply with conditions that were

not reasonably necessary for the protection of the legitimate

interests of the landlord;

(c) whether the tenant was able to understand any documents relating

to the lease; and

(d) whether any undue influence or pressure was exerted on, or any

unfair tactics were used against, the tenant by the landlord;

(e) the amount for which, and the circumstances under which, the

tenant could have acquired an identical or equivalent lease from a

person other than the landlord;

(f) the extent to which the landlord’s conduct towards the tenant was

consistent with their conduct in similar transactions with other

tenants;

(g) the requirements of any applicable industry code; and

(h) the requirements of any other industry code, if the tenant acted on

the reasonable belief that the landlord would comply with that code;

(i) the extent to which the landlord unreasonably failed to disclose to

the tenant —

(i) any intended conduct of the landlord that might affect

the interests of the tenant; and

(ii) any risks to the tenant arising from the landlord’s

intended conduct that are risks that the landlord should

have foreseen would not be apparent to the tenant;

(j) the extent to which the landlord was willing to negotiate the terms

and conditions of any lease with the tenant; and

27

(k) the extent to which the landlord acted in good faith;

(l) the extent to which the landlord was not reasonably willing to

negotiate the rent under the lease; and

(m) the extent to which the landlord unreasonably used information

about the turnover of the tenant’s or a previous tenant’s business to

negotiate the rent; and

(n) the extent to which the landlord required the tenant to incur

unreasonable refurbishment or fit out costs.

28

Appendix C - Extracts from the Commercial Tenancy (Retail

Shops) Agreements Act 1985

29

6. Disclosure statement, tenant’s rights if not given by landlord etc.

(1) Where a retail shop lease is entered into and the tenant has not, at least 7 days

before the entering into of the lease, been given a disclosure statement in

accordance with subsection (4) or the disclosure statement given is incomplete or

contains false or misleading information, the tenant may, in addition to exercising

any other right, do either or both of the following —

(a) within 6 months after the lease was entered into give to the landlord written

notice of termination of the lease, unless subsection (3) prevents

termination;

(b) 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

(i) the omission of the landlord to give a disclosure statement in

accordance with subsection(4); or

(ii) the giving of an incomplete disclosure statement by the landlord; or

(iii) the giving of false or misleading information by the landlord in the

disclosure statement.

(2) Where the tenant under a retail shop lease gives to the landlord a notice of

termination under subsection (1) the lease terminates upon the expiry of a period of

14 days after the notice was given.

(3) A tenant cannot terminate a lease under this section on the ground that the tenant

has been given a disclosure statement that is incomplete or contains false or

misleading information if —

(a) the landlord has acted honestly and reasonably and ought reasonably to be

excused for the failure concerned; and

(b) the tenant is in substantially as good a position as the tenant would have

been if the statement had been complete or had not contained the false or

misleading information.

(4) A disclosure statement given for the purposes of this section shall be in the

prescribed form duly completed and signed by or on behalf of the landlord and the

tenant and shall contain a statement notifying the tenant that he should seek

independent legal advice.

(5) Where the tenant under a retail shop lease (in this subsection referred to as the

outgoing tenant) assigns the lease to another person (in this subsection referred

to as the incoming tenant), nothing in this section gives to the incoming tenant a

right to terminate the lease that the outgoing tenant would not have had if he had

continued as the tenant under the lease.

(6) A disclosure statement is not required to be given —

(a) on the renewal of a retail shop lease under an option (including the option

arising by reason of section 13(1)); or

(b) on the assignment of a retail shop lease.

[Section 6 amended by No. 48 of 1990 s. 5; No. 59 of 2011 s. 7.]

6A. Tenant guide, tenant’s rights if not in lease etc.

(1) Where a retail shop lease is entered into and the retail shop lease does

not incorporate a tenant guide in accordance with subsection (4), the

30

tenant may, in addition to exercising any other right, do either or both of the following

—

(a) within 60 days after the lease was entered into, give to the landlord

written notice of termination of the lease;

(b) 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 incorporate the tenant guide in the

retail shop lease in accordance with subsection (4).

(2) Where the tenant under a retail shop lease gives to the landlord a notice

of termination under subsection (1) the lease terminates upon the

expiry of a period of 14 days after the notice was given.

(3) In addition to exercising the tenant’s rights under subsection (1)(b), the

tenant may, after the expiry of the period referred to in subsection

(1)(a), apply in writing to the Tribunal for an order that the retail shop

lease be terminated.

(4) The tenant guide shall be in the prescribed form and located in the

prescribed position in the retail shop lease.

(5) Where the tenant under a retail shop lease (in this subsection referred

to as the outgoing tenant) assigns the lease to another person (in this

subsection referred to as the incoming tenant), nothing in this section

gives to the incoming tenant a right to terminate the lease that the

outgoing tenant would not have had if he or she had continued as the

tenant under the lease.

(6) The tenant guide is not required to be included —

(a) on the renewal of a retail shop lease under an option (including the

option arising by reason of section 13(1)); or

(b) on the assignment of a retail shop lease.

[Section 6A inserted by No. 66 of 1998 s. 5.]

31

11. Rent review, provisions for in lease and conduct of etc.

(1) A provision in a retail shop lease for review of the amount of rent payable

under the lease during the currency of the lease is void unless the lease

specifies, in respect of each occasion on which the review is to be made, a

single basis on which the review is to be made.

(2) If a retail shop lease provides for the review during the currency of the

retail shop lease of the amount of rent payable under the retail shop lease

having regard to the market rent of the retail shop concerned —

(a) that market rent shall, for that purpose, be taken to be the rent obtainable at

the time of that review in a free and open market as if, all the relevant factors,

matters or variables used in proper land valuation practice having been taken

into account, that retail shop were vacant and to let on similar terms as are

contained in the current retail shop lease, and is not to take into account the

value of —

(i) the goodwill of the business carried on in the retail shop; or

(ii) any stock, fixtures or fittings in the retail shop that are not the property

of the landlord; or

(iii) any structural improvement, or alteration, of the retail shop carried out,

or paid for, by the current tenant;

and

(b) unless specific provision is made in the retail shop lease for the time at

which a review may be initiated, a party to the retail shop lease may not more

than 3 months before the date on which that review is to be carried out and

not more than 6 months after that date, initiate the review by notice in writing

served on the other party to the retail shop lease; and

(c) a provision in the retail shop lease purporting to preclude the increase

or reduction of that market rent or to limit the extent to which that

market rent may be increased or reduced is void.

(2a) A provision in a retail shop lease purporting to preclude the tenant

from voluntarily disclosing the rent under the lease is void.

(3) A retail shop lease that provides for review of the amount of rent

payable during the currency of the lease shall be taken to provide that

where the parties do not agree on the rent payable as a result of the

review, the question shall be resolved, subject to subsection (5), by any of

the following —

(a) a person licensed under the Land Valuer’s Licensing Act 1978 agreed

to by each of the parties;

(ba) a person licensed under that Act and nominated, at the request of each

of the parties, by the Small Business Commissioner;

(b) 2 persons licensed under that Act, one of whom is appointed by the

landlord and one of whom is appointed by the tenant.

32

(3a) If the parties to a retail shop lease referred to in subsection (3) do not

agree on the rent payable as a result of the review concerned, the rent

payable immediately before that review shall not be increased or reduced

before the question is resolved or determined under this section, but nothing

in this subsection prevents any increase or reduction in rent which takes

place after that resolution or determination from being due and payable with

effect from the date of that review.

(3B) A landlord under a retail shop lease must, to assist in determining the rent

payable as a result of the review, within 14 days after being given a written

request to do so by a person who acts under subsection (3), give that person

such relevant information as is requested, including any of the following

information, about leases for retail shops in the same building or retail

shopping centre —

(a) current rental for each lease;

(b) rent free periods or any other form of incentive;

(c) recent or proposed variations of any lease;

(d) outgoings for each lease;

(e) any other information prescribed for the purposes of this

paragraph.

(3C) If a landlord fails to comply with a request made under subsection (3B)

without reasonable excuse —

(a) the person who made the request must, within 7 days after the landlord

has failed to comply with the request, give to the tenant written notice of the

landlord’s failure; and

(b) the tenant may apply in writing to the Tribunal for an order that the

landlord comply with a request made under subsection (3B) to supply the

information requested.

(4) A person who acts under subsection (3) shall, at the request of and on

payment of the required fee by a party to the lease, provide reasons for his

decision in writing to that party.

(5) Notwithstanding subsection (3), a party to a retail shop lease may refer

to the Tribunal for determination a question as to the rent payable as a

result of the review by the parties where —

(a) the persons acting under subsection (3)(b) fail to reach an agreement

on the rent to be paid; or

(b) a person has not acted under subsection (3) and the leave of the

Tribunal has been obtained,

but otherwise such a question shall not be referred to the Tribunal.

[(6), (7) deleted]

33

(8) In determining a question under subsection (5) the Tribunal, after

considering all the circumstances of the case, may determine that any

increase or reduction in rent payable as a result of the determination of the

Tribunal under that subsection is payable over such period as the Tribunal

thinks fit.

[Section 11 amended by No. 48 of 1990 s. 8; No. 66 of 1998 s. 7; No. 55 of

2004 s. 120; No. 20 of 2011 s. 31; No. 59 of 2011 s. 8.]

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

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

(a) the term of the lease (in this section called the current term) is

more than 6 months but less than 5 years; and

(b) 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.

(2A) 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 —

(a) the lease being renewed (one or more times);

(b) the lease being continued.

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

premises —

(a) 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

(b) 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.

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

tenant —

(a) 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

34

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

(b) 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.

(3a) 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 —

(a) if the question is decided in favour of the landlord, to the time

when the question is decided; or

(b) 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.

(3b) 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.

(4) Where —

(a) the landlord under a retail shop lease holds the premises

concerned under a head lease; and

(b) it would be inconsistent with the head lease for the retail shop

lease to continue until the day provided for by subsection (1);

and

(c) 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.

35

(5) 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 —

(a) the tenant does not have any further option under subsection (1)

to renew the lease; and

(b) 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).

(6) The landlord under a retail shop lease is not entitled to determine the

lease —

(aa) 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

(ab) 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 —

(a) by reason of default by the tenant or failure of the tenant to

remedy any such default in accordance with the lease; or

(b) by reason that —

(i) 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

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

removed;

or

(c) 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

(da) 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

(d) where the Tribunal has granted an application by the tenant

under subsection (7b), in relation to a lease referred to in

paragraph (aa).

(7) 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

36

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.

(7a) 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.

(7b) 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 —

(a) the application was made by the tenant or prospective tenant of

his own free will; and

(b) the circumstances of the case warrant the granting of the

application.

(8) 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.

(9) 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.

(10) 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 by No. 49 of 1985 s. 4; No. 48 of 1990 s. 10; No. 55 of

2004 s. 124; No. 59 of 2011 s. 11.]

14A. Relocation of tenant’s business, provision in lease for is void in some cases

(1) A provision of a retail shop lease about the relocation of the tenant’s

business is void unless —

(a) it is in the form prescribed for the purposes of this section; or

(b) it is in a form approved by the Tribunal under subsection (3); or

(c) if 5 years of the term of the lease (including any period during the

extension of the term under an option to renew) have already expired,

it is in accordance with subsection (2).

(2) A provision of a retail shop lease about the relocation of the tenant’s

business is in accordance with this subsection if it contains provisions

to the following effect —

37

(a) the tenant’s business cannot be required to be relocated unless the

landlord has given the tenant at least 6 months written notice of

relocation (a relocation notice);

(b) the relocation notice is to give details of an alternative retail shop (the

alternative shop) to be made available to the tenant, and if the existing

retail shop is situated in a retail shopping centre, the alternative shop is

to be situated in that shopping centre;

(c) the tenant is to be offered a new lease of the alternative shop —

(i) on the same, or better, terms and conditions as the existing lease except

that the term of the new lease is to be no shorter than the remainder of

the term of the existing lease; and

(ii) the rent for the alternative shop is to be no more than the rent for the

existing retail shop, adjusted to take into account any difference in the

commercial values of the existing retail shop and the alternative shop

at the time of relocation;

(d) the landlord is to pay the tenant’s reasonable costs of the relocation,

including but not limited to —

(i) costs incurred by the tenant in dismantling fittings, equipment or

services; and

(ii) costs incurred by the tenant in replacing, re installing or modifying

finishes, fittings, equipment or services to the standard existing in the

existing retail shop immediately before the relocation, but only to the

extent that they are reasonably required in the alternative shop; and

(iii) packaging and removal costs incurred by the tenant; and

(iv) legal costs incurred by the tenant;

(e) if the landlord does not offer the tenant a new lease of an alternative

retail shop then the landlord is liable to pay to the tenant such

reasonable compensation as is agreed in writing between the parties, or

determined by the Tribunal.

(3) The Tribunal may, on 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 another form of relocation provision under subsection

(1)(b) if the Tribunal is satisfied that special circumstances exist by

reason of which such approval ought to be given.

(4) A landlord in relation to a retail shopping centre may make an

application under subsection (3) as to any number of retail shop leases

in respect of that centre where the landlord is of the opinion that the

same special circumstances exist in relation to each lease the subject of the

application, and the Tribunal may exercise its powers under that

subsection accordingly.

[Section 14A inserted by No. 59 of 2011 s. 14.]

38

14B. Landlord’s legal costs of lease etc. not claimable from tenant

(1) A landlord under a retail shop lease is not able to claim from any person

(including the tenant) the landlord’s legal or other expenses relating to —

(a) the negotiation, preparation or execution of —

(i) the lease; or

(ii) a renewal of the lease; or

(iii) an extension of the lease;

or

(b) obtaining the consent of a mortgagee to the lease; or

(c) the landlord’s compliance with this Act.

(2) Subsection (1) does not prevent the landlord from claiming the reasonable

legal or other expenses incurred by the landlord in connection with an

assignment of the lease or a sub-lease, including investigating a proposed

assignee or sub-lessee and obtaining any necessary consents to the

assignment or sub-lease.

[Section 14B inserted by No. 59 of 2011 s. 14.]

15C. Landlord not to engage in unconscionable conduct

(1) A landlord under a retail shop lease shall not, in connection with the lease,

engage in conduct that is, in all the circumstances, unconscionable.

(2) Without in any way limiting the matters to which the Tribunal may have

regard for the purpose of determining whether a landlord has contravened

subsection (1), the Tribunal may have regard to —

(a) the relative strengths of the bargaining positions of the landlord and

tenant; and

(b) whether, as a result of conduct engaged in by the landlord, the

tenant was required to comply with conditions that were not

reasonably necessary for the protection of the legitimate interests of

the landlord; and

(c) whether the tenant was able to understand any documents

relating to the lease; and

(d) whether any undue influence or pressure was exerted on, or any

unfair tactics were used against, the tenant (or a person acting on

behalf of the tenant) by the landlord or a person acting on behalf of

the landlord in relation to the lease; and

(e) the amount for which, and the circumstances under which, the

tenant could have acquired an identical or equivalent lease from a

person other than the landlord; and

(f) the extent to which the landlord’s conduct towards the tenant was

consistent with the landlord’s conduct in similar transactions between

the landlord and other similar tenants; and

(g) the requirements of any applicable industry code; and

(h) the requirements of any other industry code, if the tenant acted on

the reasonable belief that the landlord would comply with that code;

and

39

(i) the extent to which the landlord unreasonably failed to

disclose to the tenant —

(i) any intended conduct of the landlord that might affect the

interests of the tenant; and

(ii) any risks to the tenant arising from the landlord’s intended

conduct that are risks that the landlord should have foreseen

would not be apparent to the tenant;

and

(j) the extent to which the landlord was willing to negotiate the terms

and conditions of any lease with the tenant; and

(k) the extent to which the landlord acted in good faith; and

(l) the extent to which the landlord was not reasonably willing to

negotiate the rent under the lease; and

(m) the extent to which the landlord unreasonably used information about

the turnover of the tenant’s or a previous tenant’s business to

negotiate the rent; and

(n) the extent to which the landlord required the tenant to incur

unreasonable refurbishment or fit out costs.

(3) In considering whether a landlord has contravened subsection (1), the

Tribunal —

(a) is not to have regard to any circumstances that were not reasonably

foreseeable at the time of the alleged contravention; and

(b) may have regard to circumstances existing before the

commencement but not to conduct engaged in before the

commencement.

[Section 15C inserted by No. 47 of 2006 s. 23.]

15D. Tenant not to engage in unconscionable conduct

(1) A tenant under a retail shop lease shall not, in connection with the lease,

engage in conduct that is, in all the circumstances, unconscionable.

(2) Without in any way limiting the matters to which the Tribunal may have

regard for the purpose of determining whether a tenant has contravened

subsection (1), the Tribunal may have regard to —

(a) the relative strengths of the bargaining positions of the landlord and

tenant; and

(b) whether, as a result of conduct engaged in by the tenant, the landlord

was required to comply with conditions that were not reasonably

necessary for the protection of the legitimate interests of the tenant;

and

(c) whether the landlord was able to understand any documents relating

to the lease; and

(d) whether any undue influence or pressure was exerted on, or any

unfair tactics were used against, the landlord (or a person acting on

behalf of the landlord) by the tenant or a person acting on behalf of

the tenant in relation to the lease; and

40

(e) the amount for which, and the circumstances under which, the

landlord could have granted an identical or equivalent lease to a

person other than the tenant; and

(f) the extent to which the tenant’s conduct towards the landlord was

consistent with the tenant’s conduct in similar transactions between

the tenant and other similar landlords; and

(g) the requirements of any applicable industry code; and

(h) the requirements of any other industry code, if the landlord

acted on the reasonable belief that the tenant would comply with that

code; and

(i) the extent to which the tenant unreasonably failed to disclose to the

landlord —

(i) any intended conduct of the tenant that might affect the

interests of the landlord; and

(ii) any risks to the landlord arising from the tenant’s

intended conduct that are risks that the tenant should

have foreseen would not be apparent to the landlord;

and

(j) the extent to which the tenant was willing to negotiate the terms and

conditions of any lease with the landlord; and

(k) the extent to which the tenant acted in good faith; and

(l) the extent to which the tenant was not reasonably willing to

negotiate the rent under the lease; and

(m) the extent to which the tenant unreasonably used information

about the turnover of the tenant’s or a previous tenant’s business to

negotiate the rent; and

(n) the extent to which the tenant was willing to incur reasonable

refurbishment or fit out costs.

(3) In considering whether a tenant has contravened subsection (1), the

Tribunal —

(a) is not to have regard to any circumstances that were not reasonably

foreseeable at the time of the alleged contravention; and

(b) may have regard to circumstances existing before the

commencement but not to conduct engaged in before the

commencement.

[Section 15D inserted by No. 47 of 2006 s. 23.]

15E. Conduct that is not unconscionable for s. 15C and 15D

A person is not to be taken for the purposes of section 15C or 15D to engage in

unconscionable conduct in connection with a retail shop lease only because —

(a) the person institutes legal proceedings in relation to the lease or

refers a dispute or claim in relation to the lease to arbitration; or

(b) the person fails to renew the lease or enter into a new lease; or

(c) the person does not agree to having an independent valuation of

current market rent carried out.

[Section 15E inserted by No. 47 of 2006 s. 23.]

41

15F. SAT’s powers as to unconscionable conduct

(1) A landlord or tenant, or former landlord or tenant, under a retail shop

lease or former retail shop lease who suffers, or is likely to suffer, loss or

damage because of unconscionable conduct of another person that

contravenes section 15C or 15D may apply in writing to the Tribunal for an

order that the other person pay compensation in respect of the loss or

damage, or for other appropriate relief.

(2) An unconscionable conduct application is required to be lodged within

6 years after the alleged unconscionable conduct occurred.

(3) Without limiting section 26, in proceedings in relation to an unconscionable

conduct application, the Tribunal may make any one or more of the following

orders that it considers appropriate —

(a) an order that a party to the proceedings pay money to a specified

person, whether by way of debt, damages or restitution, or refund

any money paid by a specified person;

(b) an order that a specified amount of money is not due or owing by a

party to the proceedings to a specified person, or that a party to the

proceedings is not entitled to a refund of any money paid to another

party to the proceedings.

(4) The Tribunal may make any ancillary orders that it considers necessary for

the purpose of enabling an order under this section to have full effect.

(5) The Tribunal may impose any conditions that it considers appropriate

when making an order under this section.

(6) The Tribunal may make an interim order under this section pending final

determination of an unconscionable conduct application, if the Tribunal

considers it appropriate to do so.

(7) In this section —

specified, in relation to an order, means specified in the order.

[Section 15F inserted by No. 47 of 2006 s. 23; amended by No. 59 of 2011 s. 19.]

Division 2 — Misleading or deceptive conduct

[Heading inserted by No. 59 of 2011 s. 20.]

16A. Term used: misleading or deceptive conduct

In this Division —

misleading or deceptive conduct means conduct to which section 16C applies.

[Section 16A inserted by No. 59 of 2011 s. 20.]

16B. Application of Division

(1) In addition to a retail shop lease to which or in relation to which this

Division would otherwise apply, this Division also applies to or in relation to a

retail shop lease that was entered into —

(a) before the relevant day; or

42

(b) pursuant to an option granted or agreement made before the

relevant day,

if this Act would have applied to the lease had it been entered into on or after

that day.

(2) In subsection (1) —

relevant day has the meaning given to that term by section 4(3).

(3) This Division does not apply to conduct that occurred before the

commencement of the Commercial Tenancy (Retail Shops) Agreements

Amendment Act 2011 section 20 1.

(4) Nothing in this Division affects the operation of Division 1.

[Section 16B inserted by No. 59 of 2011 s. 20.]

16C. Parties to lease not to engage in misleading etc. conduct

A party to a retail shop lease must not, in connection with the lease, engage in

conduct that is misleading or deceptive to another party to the lease or that is likely

to mislead or deceive another party to the lease.

[Section 16C inserted by No. 59 of 2011 s. 20.]

16D. SAT’s powers as to misleading etc. conduct

(1) A party, or former party, under a retail shop lease or former retail shop

lease who suffers, or is likely to suffer, loss or damage because of

misleading or deceptive conduct of another party or former party to the

lease may apply in writing to the Tribunal for an order that the other

party, or former party, pay compensation in respect of the loss or

damage, or for other appropriate relief.

(2) A misleading or deceptive conduct application is required to be lodged

within 6 years after the alleged misleading or deceptive conduct occurred.

(3) Without limiting section 26, in proceedings in relation to a misleading or

deceptive conduct application, the Tribunal may make any one or more of the

following orders that it considers appropriate —

(a) an order that a party to the proceedings pay money to a specified

person, whether by way of debt, damages or restitution, or refund

any money paid by a specified person;

(b) an order that a specified amount of money is not due or owing by a

party to the proceedings to a specified person, or that a party to the

proceedings is not entitled to a refund of any money paid to another

party to the proceedings.

(4) The Tribunal may make any ancillary orders that it considers necessary for

the purpose of enabling an order under this section to have full effect.

(5) The Tribunal may impose any conditions that it considers appropriate

when making an order under this section.

(6) The Tribunal may make an interim order under this section pending final

determination of a misleading or deceptive conduct application, if the Tribunal

considers it appropriate to do so.

43

(7) In this section —

specified, in relation to an order, means specified in the order.

[Section 16D inserted by No. 59 of 2011 s. 20.]

Division 3 — Reference of questions to State Administrative Tribunal

[Heading inserted by No. 59 of 2011 s. 21.]

16. Party to lease may refer question to SAT

(1) Subject to section 11(5), a party to a retail shop lease may refer to the

Tribunal any question between the parties which he believes to be a

question arising under the lease and the Tribunal shall —

(a) determine whether or not the question referred to the Tribunal is a

question arising under the lease; and

(b) if it is such a question, hear and determine it.

(2) The matter for determination referred to in subsection (1)(a) may be

determined by the Tribunal in such manner as it thinks fit, subject to

each party being given an opportunity to make a written submission.

[Section 16 inserted by No. 48 of 1990 s. 14; amended by No. 55 of 2004 s. 127;

No. 47 of 2006 s. 25; No. 5 of 2008 s. 19.]

[17. Deleted by No. 48 of 1990 s. 14.]

[18-23. Deleted by No. 55 of 2004 s. 128.]

Part III — Powers and procedure for dealing with matters

[Heading inserted by No. 5 of 2008 s. 20.]

24. Term used: matter

In this Part —

matter means any application that may be made, or any question or matter that

may be referred or submitted, to the Tribunal under this Act.

[Section 24 inserted by No. 5 of 2008 s. 20.]

25A. Resolution of matter using Small Business Development Corporation Act 1983

s. 15C or 15E, request for

A person who may, under this Act, make an application, referral or submission to

the Tribunal may request the Small Business Commissioner —

(a) to provide assistance to attempt to resolve the matter under the Small

Business Development Corporation Act 1983 section 15C; or

(b) to undertake alternative dispute resolution in respect of the matter under

the Small Business Development Corporation Act 1983 section 15E.

[Section 25A inserted by No. 20 of 2011 s. 32.]

25B. Confidential information may be disclosed to Commissioner

(1) In this section —

44

confidential information, in relation to a matter, means information

given to a person who acts under section 11(3) in the matter.

(2) A person who has confidential information in relation to a matter that is the

subject of a request under section 25A may disclose the information if the

Small Business Commissioner so requires.

[Section 25B inserted by No. 20 of 2011 s. 32.]

25C. Commissioner to issue certificate if matter not resolved etc.

(1) The Small Business Commissioner must, on the request of a person who

may, under this Act, make an application, referral or submission to the

Tribunal, issue a certificate to the person if the Commissioner is satisfied

that —

(a) the matter is unlikely to be resolved with the assistance of

alternative dispute resolution; or

(b) it would not be reasonable in the circumstances to commence an

alternative dispute resolution proceeding in respect of the

matter; or

(c) alternative dispute resolution has failed to resolve the matter.

(2) The certificate is to be in a form approved by the Small Business

Commissioner and may include any information about the conduct of the

parties that the Commissioner considers appropriate in the circumstances.

[Section 25C inserted by No. 20 of 2011 s. 32.]

25D. Application to SAT restricted in certain circumstances

(1) An application, referral or submission in respect of a matter may not be

made to the Tribunal under this Act unless the Small Business

Commissioner has issued a certificate in respect of the matter under

section 25C.

(2) Subsection (1) does not apply in respect of a matter prescribed by the

regulations for the purposes of this section.

(3) Nothing in this section prevents a person from making a request to the

Small Business Commissioner under section 25A.

[Section 25D inserted by No. 20 of 2011 s. 32.]

25E. Commissioner may intervene in SAT proceeding

The Small Business Commissioner may intervene at any time in a proceeding of

the Tribunal in relation to a matter.

[Section 25E inserted by No. 20 of 2011 s. 32.]

25. State Administrative Tribunal Act 2004, relationship of this Part to

Nothing in this Part prevents a matter from being dealt with through a compulsory

conference or mediation process under the State Administrative Tribunal Act 2004.

[Section 25 inserted by No. 5 of 2008 s. 20.]

45

26. SAT’s powers to make orders

(1) Without limiting any power to make an order that is conferred by the State

Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make —

(a) an order that requires a party to any matter before it to pay money to a

person specified in the order; or

(b) an order for a party to any matter before it to do, or refrain from doing,

anything specified in the order; or

(c) an order dismissing any matter before it.

(1a) The power in subsection (1)(b) includes power for the Tribunal to order the parties

to enter into an agreement varying a retail shop lease as specified in the order

where the Tribunal has found that the tenant under the lease was before entering

into the lease misled by the landlord as to the meaning or effect of a term or

condition of the lease.

(1aa) The Tribunal may, where it considers it appropriate to do so to resolve the matter

concerned, make an order terminating a retail shop lease.

(2) In considering whether to make an order under the State Administrative Tribunal

Act 2004 section 87(2) in a proceeding, the Tribunal may have regard to a

certificate issued under section 25C that relates to the proceeding.

(3) An order of the Tribunal requiring anything to be done or discontinued may fix the

time within which that thing is to be done or discontinued, as the case may be.

(4) The Tribunal may allow any equitable claim or defence, and give any equitable

remedy, in a matter before it that the Supreme Court may allow or give.

[Section 26 amended by No. 48 of 1990 s. 20; No. 66 of 1998 s. 11; No. 55 of 2004

s. 129; No. 5 of 2008 s. 21; No. 20 of 2011 s. 33; No. 59 of 2011 s. 22.]

46

Appendix D - Disclosure Statement – Form 1

47

DISCLOSURE STATEMENT - FORM 1

Landlord

Tenant

Premises

KEY DISCLOSURE ITEMS

1 Annual base rent under the lease

See item 10.1

$ _________ p.a.

Including/excluding GST

2 Is rent based on turnover payable by the tenant in year 1

See item 12

Yes

No

3 Total estimated outgoings/operating expenses, promotion and

marketing costs and contributions to sinking fund for the tenant

in year 1

See Item 14.2 and Part 6

$ __________ p.a.

Including/excluding GST

4 Term of the lease

See item 5.2

_____ years _____ months

5 Commencement date is

See item 5.1

____ /____/20____

Actual/estimated

[Insert the commencement date, or details of how the

commencement date is to be determined, e.g. on receipt of

council approval]

6 Handover date is

See item 7.1

____ /____/20____

Actual/estimated

[Insert the handover date, or details of how the handover date

is to be determined, e.g. on receipt of council approval]

7 Does the tenant have an option to renew for a further period

(to be exercised in the manner specified, on or before the

last date stated in the option clause)

See item 6

Yes - see item 6.1

No

8 Does the lease provide the tenant with exclusivity in

relation to the permitted use of premises

See item 2.2

Yes

No

48

--------------------------------------------------------------------------------------------------------------------------

DISCLOSURE STATEMENT - FORM 1 - CONTINUED

CONTENTS

Part 1 Premises Part 2 Lease term and option/s to renew lease Part 3 Works, fitout and refurbishment Part 4 Rent Part 5 Outgoings/Operating expenses Part 6 Other costs Part 7 Alteration works (including renovations, extensions, redevelopment, demolition) Part 8 Trading hours Part 9 Retail shopping centre details Part 10 Group of premises Part 11 Other disclosures Part 12 Landlord acknowledgments and signing Part 13 Tenant acknowledgments and signing Part 14 Attachments

PART 1 — PREMISES

1 Premises details

1.1 Street address of premises [Insert street address of premises and, as applicable, shop number, name of the building/centre in

which the premises is located, street address of the building/centre]

1.2 Plan of premises (if available) [Insert description of premises by reference to a prepared plan.]

Attach the plan to this

disclosure statement at

item 38.1

1.3 Lettable area of the premises (in m2) New premises - approximately m2

Existing premises - certified at m2

Will a survey be conducted?

Yes No

49

1.4 Existing structures, fixtures, plant and equipment in the premises provided by the landlord at the cost of the landlord (excluding any works, fitout and refurbishment described in Part 3) [Select as appropriate]

air conditioning

plastered walls

cool room/freezer

shop front

floor coverings

sink

grease trap

sprinklers

hot water service

suspended ceilings

lighting

telephone

mechanical exhaust

water supply

painted walls

waste

electrical distribution load (3 phase)

electrical distribution load (single phase)

separate utility meter — gas

separate utility meter — water

separate utility meter — electricity

other [Please specify]

1.5 Services and facilities provided by the landlord for the benefit of the premises [Select as appropriate]

tenancy cleaning

common area cleaning

common area lighting

security services

bin rooms

child minding facilities

staff toilets

other [please specify]

Note: The tenant should

ensure that the nature

of the services and

facilities are suitable to

the tenant’s

requirements.

1.6 Other special requirements of the tenant in relation to the premises [Select as appropriate]

air control

delivery access

drainage

floor loading

wall loading

other [please specify]

50

2 Permitted use

2.1 Description of permitted use

Note: The tenant should

investigate if the

proposed use of the

premises is permitted

under planning laws.

2.2 Is the permitted use described in item 2.1 exclusive to the tenant?

Yes No

2.4 Do the premises meet all requirements of current health, safety, building and fire legislation for

the permitted use?

Yes

No

Not known

3 Number of car parking spaces

3.1 Approximate total spaces spaces

3.2 Available spaces for customers of the building/centre spaces

3.3 Reserved spaces for use of the tenant only spaces

4 Head lease

4.1 Is the premises under a head lease or Crown lease?

Yes No

Note: A tenant who is a

sublessee should seek

independent legal

advice on the security of

the tenant’s tenure

4.2 If this is a Crown lease, is the Minister’s consent to the lease required?

Yes

No

Not applicable

51

4.3 Has the landlord provided a copy of the head lease or Crown lease to the tenant?

Yes

No

Not applicable

Attached at item 38.2

4.4 Current term under the head lease or Crown lease and option/s to renew

Not applicable

Details of head lease as follows:

Current term: years: / /20____ to / /20____

Options to renew: years: / /20____to / /20____

[List any options for further terms held by the landlord under the head lease]

4.5 Is the head landlord’s consent to the lease required?

Yes No

PART 2 — TERM OF LEASE AND OPTION/S TO RENEW LEASE

5 Term of lease

5.1 Date lease commences (see also date of handover at item 7)

/ /20 Actual / Estimate

[Insert the commencement date, or details of how the commencement date is to be determined, e.g.

on receipt of council approval]

5.2 Length of term: years months

5.3 Date lease expires: / /20____

(based on the date indicated at item 5.1 as the date the lease commences)

52

6 Option/s to renew lease

6.1 Option/s details

Not applicable Options as follows:

Length of option Period of option Exercise date

years / /20 to

/ /20___

Actual/ Estimate

/ /20 to

/ /20___

Actual/ Estimate

years / /20 to

/ /20___

Actual/ Estimate

/ /20 to

/ /20___

Actual/ Estimate

[List all options to renew lease.]

Note: An option to

renew a lease must be

exercised in the manner

specified in the lease

and given to the

landlord on or before

the last day stated in

the option clause of the

lease

How option is to be exercised

PART 3 — WORKS, FITOUT AND REFURBISHMENT

7 Date of handover

7.1 Date of handover on which premises will be available for occupation or fitout (if different to the

date the lease commences indicated at item 5.1)

/ /20 Actual / Estimate

[Insert the handover date, or details of how the handover date is to be determined, e.g. on receipt of

council approval]

8 Landlord’s works

8.1 Description of works to be carried out by the landlord before the date lease commences (exclude any works that form part of the tenant’s fitout at item 9)

53

8.2 Is the tenant required to contribute towards the cost of any of the landlord’s finishes, fixtures, fittings, equipment, or services?

See lease clause

[Insert details of tenant’s contribution.]

Note: The Act provides

that any clause in a

lease in respect of

premises in a retail

shopping centre

requiring a tenant to

pay costs in respect of

the amortisation of

capital costs in relation

to the shopping centre

is void (s. 12(2))

8.3 Estimate of expected contribution by the tenant towards the costs of the landlord’s works

[List items of work and costs]

Note: See also

outgoings/ operating

expenses (item 13) in

relation to any

maintenance and

repairs outgoings and

sinking fund (item 16)

9 Tenant’s fitout works

9.1 Fitout works to be carried out by the tenant (excluding the landlord’s works at item 8)

9.2 Is the landlord providing any contribution towards the cost of the tenant’s fitout?

Yes [insert details of landlord’s contribution, including any amortisation arrangements]

No

9.3 Does the landlord have requirements as to the quality and standard of shop front and fitout?

Yes [Insert details or provide fitout guide]

No

54

9.4 Are there any requirements for the tenant to refurbish or refit the premises during the term or at the end of the term of the lease?

Yes [Insert details of nature, extent and timing of the refurbishment or refitting requirements]

No

PART 4 — RENT

10 Annual base rent

10.1 Starting annual base rent

(i.e. when the lease commences)

$_____________ Including/Excluding GST

10.2 Rent free period [Describe any rent free period]

10.3 Date of rent commencement / /20_____

10.4 How rent payments are to be made?

[Insert description of how rent is paid, e.g. by equal monthly instalments in advance on the first day of each month, other than the first and last payments which are calculated on a pro-rata basis]

10.5 Is there provision for abatement of rent on damage or destruction of the premises?

Yes

See lease clause: [Insert details]

No

11 Rent adjustment (rent review)

11.1 Rent adjustment date/s and adjustment method

[Insert a list of all rent adjustment dates and adjustment methods, e.g. fixed increase by ______%, fixed increase by $_________, market rent, indexed to CPI]

55

12 Rent based on turnover

12.1 Is rent based on turnover payable by the tenant?

Yes — [Insert method of calculation for turnover rent]

No

Note: If any part of the tenant’s rent is calculated by reference to the turnover of the tenant’s business, the Act provides that the tenant must elect in writing on the form titled:

Notice of Election that Rent be Determined by Reference to Turnover (Form 2 of the Commercial Tenancy (Retail Shops) Agreements Regulations 1985) to make those payments (s. 7).

Note: The tenant should understand the full implications of this method of rent calculation, which includes a requirement that the tenant disclose its trading figures to the landlord. The tenant is encouraged to seek independent legal and accounting advice

PART 5 — OUTGOINGS/OPERATING EXPENSES

13 Contribution by tenant towards the landlord’s outgoings/operating expenses

13.1 Is the tenant required to pay or contribute towards the landlord’s outgoings/operating expenses?

Yes No

Note: The Act provides that a tenant cannot be required to contribute to the landlord’s operating expenses related to extended trading hours unless the tenant chooses to open during those hours (s. 12(1)(c))

13.2 Describe any period during which the tenant is not required to pay any outgoings/operating expenses

13.3 Date on which payment of outgoings/operating expenses is to commence

/ /20____

13.4 Frequency of operating expenses payments

[Insert details of when payments are due]

13.5 Formulae for apportioning outgoings/operating expenses

[Insert formulae of how the outgoings payable by the tenant are to be apportioned]

See lease clauses: [Insert details]

Note: The tenant’s proportion of operating expenses are to be no more than the “relevant proportion” determined in accordance with section 12 of the Act

56

13.6 Proportion of total operating expenses apportioned to the tenant (if applicable) as at the date of lease commencement

Note: The proportion of the total cost of operating expenses for the building/centre payable by the tenant may vary periodically

14 Outgoings/operating expenses estimates (annual) for the 12 month period __________ to ___________

For a list of operating expenses payable by the tenant see the annual estimate of expenditure attached and the following lease clauses: [Insert details]

Attach a copy of the annual estimate of expenditure at item 38.3

14.1 Total outgoings/operating expenses for the building/centre: $________

14.2 Estimated tenant contribution to outgoings/operating expenses: $ ________

PART 6 — OTHER COSTS

15 Advertising and promotional costs

15.1 Is the tenant required to contribute towards advertising and promotional costs (including marketing fund contributions) for the building/centre?

Yes No

15.2 Tenant’s contribution to advertising and promotional costs per annum

Not applicable

Yes — contribution per annum is $ Actual/Estimate

Yes — contribution per annum is % of the rent (excluding GST) payable from time to time

Yes — [Insert details of tenant’s contribution per annum and how this is determined]

15.3 Landlord’s contribution to advertising and promotional costs per annum

15.4 Does the tenant have any input into how the marketing and promotional fund is used? [Insert details as to how tenant can have input]

57

16 Sinking fund for repairs and maintenance

16.1 Is the tenant required to contribute towards a sinking fund for repairs or maintenance for the

building/centre?

Yes No

16.2 Tenant’s contribution to sinking fund for repairs or maintenance per annum

Not applicable

Yes — contribution per annum is $ Actual/Estimate

Yes — contribution per annum is % of the rent (excluding GST) payable from time to

time

Yes — [Insert details of tenant’s contribution per annum and how this is determined]

17 Other monetary obligations and charges

17.1 Outline any costs, arising under the lease, including upfront costs or other costs not part of the

outgoings/operating expenses and not referred to elsewhere in this disclosure statement

costs following default

legal costs (as permitted by the Act)

interest on outstanding moneys

pre-payment of rent or operating expenses

grease trap cleaning

after hours security

after hours airconditioning

wet waste removal

other [please specify]

17.2 Compulsory contributory membership of Tenants’ Association

Yes

Date on which contributions to commence: / /20____

No

58

PART 7 — ALTERATION WORKS (INCLUDING RENOVATIONS, EXTENSIONS,

REDEVELOPMENT, DEMOLITION)

18 Alteration works

18.1 Are there any alteration works, planned or known to the landlord at this point in time, to the

premises or building/centre including surrounding roads during the term or any further term/s?

Yes — [Insert details of the proposed works]

No

Note: The tenant

should make

enquiries with the

local government

and statutory

authorities relating

to all regulations

and proposed or

approved alterations

to the

centre/building or

the neighbourhood,

including changes of

zoning, roads, other

centres etc. 19 Orders of statutory or local authorities

19.1 Are there any outstanding orders of a statutory authority or a local government affecting the

premises?

[Select one of the following and provide details]

Yes — [Insert details]

No

20 Clause/s in lease dealing with relocation, demolition and destruction

20.1 Clause/s in lease providing for relocation of the tenants

Clause/s of the lease

Not applicable

20.2 Clause/s in lease which provide/s for the total or partial demolition or destruction of the

premises or building/centre

Clause/s of the lease

Not applicable

59

PART 8 — TRADING HOURS

21 Core trading hours relevant to the tenant Note: The Act

provides that any

provision in a lease

which requires a

tenant to open at

specified hours or

times is void (s. 12C).

Monday a.m. to p.m.

Tuesday a.m. to p.m.

Wednesday a.m. to p.m.

Thursday a.m. to p.m.

Friday a.m. to p.m.

Saturday a.m. to p.m.

Sunday a.m. to p.m.

Public holidays a.m. to p.m.

22 Tenant access to premises outside core trading hours

22.1 Is the tenant permitted to access the premises and building/centre outside the core trading hours?

Yes — [Provide details including cost of access]

No

PART 9 — RETAIL SHOPPING CENTRE DETAILS Note: This Part must

be completed only if

the premises are in a

retail shopping

centre as defined in

the Act (s. 3(1))

23 Retail shopping centre details

23.1 Total number of shops: shops

23.2 Number of shops leased/occupied

[Insert details for shops owned by the landlord]

Leased: • Number occupied:_________

• Number unoccupied:__________

Number unleased:_________

23.3 Total lettable area of the centre (in m2): m2 Actual/Estimate

24 Major/anchor tenants

24.1 Major/anchor tenants and lease expiry dates

[List all major and anchor tenants (e.g. department stores, discount department stores, supermarkets), and the dates on which leases held by those tenants expire]

60

25 Floor plan and tenancy mix

25.1 Floor plan showing tenancy mix, common areas, common area trading, kiosks and major tenants

Attached

Attached as per item

39.1

25.2 Does the landlord assure the tenant that the current tenant mix will not be altered by the introduction of a competitor?

Yes No

26 Customer traffic flow information

26.1 Does the landlord collect customer traffic flow information?

Yes No

Attached as per item

39.2

27 Use of common areas

27.1 Are common areas able to be used for trading?

Yes — [insert details of basis upon which trading permitted]

No

28 Casual mall licensing for common areas

28.1 Do you adhere to the Shopping Centre Council of Australia’s Casual Mall Licensing Code of

Practice?

Yes No

Casual mall licensing

policy attached as

per item 39.3

PART 10 — GROUP OF PREMISES Note: This Part must

be completed only if

the premises are in a

group of premises

that are not classed

as a retail shopping

centre as defined by

the Act (s. 3(1))

29 Details of group of premises

29.1 Total number of premises: premises

29.2 Number of premises in the group leased/occupied

[Insert details for premises owned by the landlord]

Leased: • Number occupied: .

• Number unoccupied: .

Number unleased: .

29.3 Total lettable area of the group of premises (in m2): m2 Actual/Estimate

61

PART 11 — OTHER DISCLOSURES

30 Other disclosures

30.1 Are there any current legal proceeding in relation to the lawful use of the premises or

building/centre?

Yes — [provide details]

No

31 Representations by landlord

31.1 Any other representations by the landlord or the landlord’s agent

[Landlord to insert details of any other oral or written representations made by the landlord or the

landlord’s agent]

32 Representations by the tenant

32.1 Any other representations by the tenant or the tenant’s agent

[Landlord to insert details of any other oral or written representations made by the tenant or the

tenant’s agent]

33 Other agreements

33.1 Any other agreements between the tenant and the landlord

[Insert details of any other agreements between the tenant and the landlord]

62

PART 12 — LANDLORD ACKNOWLEDGMENTS AND SIGNATURE

34 Acknowledgments by landlord

By signing this disclosure statement, the landlord confirms and acknowledges that:

this disclosure statement contains all representations in relation to the proposed lease by the landlord and the

landlord’s agents as at the date of this disclosure statement; and

this disclosure statement reflects all agreements that have been made by the parties; and

the landlord has not knowingly withheld information which is likely to have an impact on the tenant’s proposed

business.

Warnings to landlord when completing this disclosure statement:

The tenant may have remedies including termination of lease if the information in this statement is misleading,

false or materially incomplete.

35 Landlord’s signature

35.1 Name of landlord [Insert name of the landlord]

35.2 Signed by the landlord or the landlord’s agent for and on behalf of the landlord

35.3 Name of landlord’s authorised representative or landlord’s agent [Insert name of the person signing with the authority

of the landlord]

35.4 Date: / /20_____

63

PART 13 — TENANT ACKNOWLEDGMENTS AND SIGNATURE

36 Acknowledgments by the tenant

By signing this disclosure statement, the tenant confirms and acknowledges that the tenant received this disclosure statement.

Warnings to tenant:

Before signing any offer to lease, lease or associated document the tenant should ensure that it fully understands this disclosure statement, the form of lease and the operating expenses budget and that the tenant has negotiated any change that it wishes to make;

Signing any of the above documents is legally binding on the tenant.

Before entering into a lease, tenants should consider these key questions:

Does the planning authority allow your proposed use for the premises under planning law?

Is the security of your occupancy affected by:

- mortgages, charges or encumbrances granted by the landlord? - rights and obligations under a head lease?

Do the premises comply with all requirements of building and safety legislation?

Are the premises affected by outstanding notices by any authority?

Could your trading be affected by disturbances or changes to the building/centre?

Does the landlord require you to refurbish the premises regularly or at the end of the lease?

Can the landlord end the lease early even if you comply with the lease?

Are all the existing structures, fixtures and plant and equipment in good working order?

Are you required to make good the premises at the end of the lease?

Is the tenancy mix of the shopping centre (if applicable) likely to change during the course of the lease? — see item 25.2?

Who is responsible for building defects?

Who is responsible for maintenance, insurance, repairing or replacing finishes, fixtures and fittings, equipment and services?

37 Tenant’s signature

It is important that a tenant seek independent legal and financial advice before entering into a lease.

37.1 Name of Tenant [Insert name of the tenant]

37.2 Signed by the tenant or for and on behalf of the tenant

37.3 Name of the tenant’s authorised representative [Insert name of the person signing with the authority of the tenant]

64

37.4 Date: / /20_____

PART 14 — ATTACHMENTS

38 List of attachments

38.1 Plan of premises (see item 1.2)

Yes Not applicable

38.2 Head lease or Crown lease (see item 4.2)

Yes Not applicable

38.3 Annual estimate of expenditure (outgoings/operating expenses) (see item 14)

Yes Not applicable

38.4 Additional attachments [List any additional attachments]

39 List of attachments — retail shopping centre Note: This item must be completed only if the premises are in a retail shopping centre as defined by in the Act (s. 3(1))

39.1 Floor plan (see item 25.1)

Yes Not applicable

39.2 Customer traffic flow statistics (see item 26.1)

Yes Not applicable

39.3 Casual mall licensing policy (see item 28.1)

Yes Not applicable

39.4 Additional attachments relating to the retail shopping centre [List any additional attachments relating to the retail shopping centre]

65

This disclosure statement is not complete unless it is accompanied by —

a copy of the form of lease; and

the current year’s annual estimates of expenditure for each item of operating expenses; and

a copy of the tenant guide (see Form 4 of the Commercial Tenancy (Retail Shops) Agreements Regulations 1985.

66

Appendix E - Allocation of Operating Expenses for Non-Standard Hours

A Commerce Fact Sheet

67

68

69

70

Appendix F – Face-to-Face Session Activities with Answers

71

Quick Check #1 - Is it a retail shopping centre?

For each of the scenarios below, determine whether the cluster of premises is

a retail shopping centre or not. Explain the reasons for your answer in the

space provided below.

Scenario A:

Answer: This is not a retail shopping centre because less than five of the premises

above are carrying on a retail business. In the scenario above the retail shops are the

cafe, bakehouse, butcher and hair salon. The hair salon is a specified business in

accordance with Regulation 3A.

The settlement agency, real estate agency and medical centre provide a service and

are not involved in the sale of goods or retail. In this scenario these are not retail

shop leases.

Scenario B:

Answer: This is a retail shopping centre because five of the premises above are

carrying on a retail business. In the scenario above, the retail businesses include the

cafe, bakehouse, butcher, sporting goods store and hair salon. The hair salon is a

specified business in accordance with Regulation 3A and therefore a retail business.

The settlement agency and medical centre provide a service and are not involved in

the sale of goods or retail, but will be classed as retail shop leases because they are

businesses located in a retail shopping centre.

Café 101 Martha’s

Bakehouse

Bonny’s

Hair Design

Bob the

Butcher

East Coast

Realty

Westview

Medical

Speedy

Settlements

Café 101 Martha’s

Bakehouse

Bonny’s

Hair Design

Bob the

Butcher

Southport

Sports

Speedy

Settlements

Westview

Medical

72

Knowledge Check #1 – When does the CT Act apply?

1. Is the CT Act applicable to all commercial leases? Explain why.

Answer: The CT Act only applies to retail shop leases. There are some retail shops

or businesses that are excluded from the application of the CT Act. A travel agency,

retail estate agency or an accountancy practice are examples of businesses which

are non-retail and therefore would not be covered by the CT Act, unless of course

they are situated in a retail shopping centre as defined in section 3(1) of the CT Act.

If these businesses were not located in a retail shopping centre then the CT Act

would not apply.

2. The following businesses lease premises in a retail shopping centre.

Which of these are retail shop leases? Explain your answer in the

space below.

Type of business Lessee Size of premises Is it a retail shop

lease?

Supermarket Publicly listed

company 2,000m

2 No

Jewellery store Publicly listed

company 200m

2 No

Newsagency Sole proprietor 150m2 Yes

ATM Bank 3m2 No

Beauty salon Pty Ltd company 100m2 Yes

Podiatrist Partnership 100m2 Yes

The supermarket is not a retail shop lease because it is a publicly listed

company and has a lettable area that exceeds 1000 square metres.

The jewellery store has a lettable area under 1000 square metres however it

is a publicly listed company and therefore it is not considered to be a retail

shop lease in accordance with section 3 of the CT Act.

The newsagency is a retail shop lease because it has a lettable area under

1000 square metres and the lessee is not a publicly listed company.

The ATM is not a retail shop lease because Regulation 3AB(c) provides that a

lease of premises for the purpose of the lessee operating a vending machine

or automatic teller machine on those premises is excluded from the CT Act.

73

The beauty salon is a retail shop lease because it has a lettable area under

1000 square metres, the lessee is not a publicly listed company and it is

defined as a specified business in accordance with Regulation 3A. The

podiatrist would hold a retail shop lease even though it does not meet the

requirements of the definition of a retail business by virtue of the fact that it is

located in a retail shopping centre. (Refer section 3(1) of the CT Act)

The podiatrist is not a retail business however it is a retail shop lease by

virtue of the fact that it is located in a retail shopping centre.

3. Would the answers in question two be different if they were located

outside the shopping centre?

Answer: Yes. A podiatrist is an example of a business which is not retail and would

not be covered by the CT Act unless it is situated in a retail shopping centre as

defined in the CT Act. Therefore, if the podiatrist is not located in a retail shopping

centre the CT Act does not apply.

Quick Check #2 – Group Discussion

What systems and/or processes are in place in your office for ensuring

appropriate notices are given on time and in accordance with the requirements

of section 13C?

Neither the DOC, nor the SBDC or the SAT prescribes the systems or procedures

agencies should have in place to ensure they comply with the requirements of

section 13C. What is important is that you and your agency have a system/process in

place that works and you can meet your obligations under the CT Act and

Regulations.

The purpose of this question is to generate discussion about the different systems

and processes agencies use as it may be that some agencies have an approach that

is working that others may want to adopt.

Examples include but are not limited to:

- Creating a standard proforma template. As written notice is required but a form is

not prescribed, agencies may have designed their own form or standard letter.

- Some agents/property managers may diarise important dates or use a bring-up

system in Microsoft Outlook.

- Referring to a client database with key dates pertaining to leases.

74

Check #2: Application of the new provisions

4. You are about to place a new tenant into a vacant shop that you manage.

a) Who is going to pay the legal fees for preparation of the lease?

Answer: Section 14B of the CT Act provides that a landlord under a retail

shop is NOT able to claim from the tenant or any other person the landlord’s

legal or other expenses relating to the negotiation, preparation or execution of

the lease.

b) Three years later, the tenant wants to exercise an option for a further

three-year term. Who pays the legal fees for the renewal document?

Answer: Section 14B of the CT Act provides that a landlord under a retail

shop is NOT able to claim from the tenant or any other person the landlord’s

legal or other expenses relating to the negotiation, preparation or execution of

an extension of the lease or a renewal of the lease.

c) During the term of a lease, a tenant decides to sell his business and

seeks to assign the lease to the new buyer. Who pays the legal fees

for the assignment document?

Answer: Section 14B(2) allows a landlord to claim reasonable legal or other

expenses incurred in connection with an assignment of the lease or a sub-

lease, including investigating a proposed assignee or sub-lessee and

obtaining any necessary consents to the assignment or sub-lease. Therefore,

in this circumstance, the landlord is entitled to claim reasonable legal or other

expenses from the tenant for the assignment document. However, there must

be an agreement between the landlord and the party being required to pay

the costs for the payment of those costs.

75

Scenarios

Consider each of the scenarios below in small groups or individually and

answer the questions that follow.

Scenario 1:

a) Where does this leave the landlord?

b) Is there provision within the legislation for the landlord to limit

the tenant to the 3 year term?

Answer:

a) Section 13 of the CT Act provides that where a lease is for a period longer

than 6 months but less than 5 years, the tenant has a right to an option to

extend the lease to 5 years from its commencement date.

The tenant is required to give the minimum 30 days’ notice to the landlord

using the prescribed form (Form 3).

It should be noted that section 13C of the CT Act requires that a landlord

notify a tenant as to the date on which an option to renew a lease expires

(including any option that arises under section 13).The landlord needs to

provide this notification in writing between 6 and 12 months before the option

expiry date.

In this scenario, the option expiry date is 30 days before the end of the term,

so the landlord would need to have given the tenant a notice about the option

expiry date at some time between 7 and 13 months prior to the end of the

term.

b) Section 13(7a) of the CT Act provides that a landlord may apply to the SAT

for approval of a term in a lease allowing a landlord to terminate a lease

before the time that would usually apply under section 13(1) if the landlord

can demonstrate special circumstances exist. It may be possible that plans to

develop the business after a certain period of time are special circumstances.

A tenant signs a 3-year lease. He insists that he does not want any options to

extend the lease as he and his wife intend to return to the UK at the end of the three

years. This suits the landlord as he has some plans to use the premises for a

business in three years’ time.

Two years and nine months into the lease, the tenant contacts the managing agent.

He advises that the business has gone better than expected and that he intends to

delay his return to the UK and continue the business for another couple of years.

76

The CT Act provides for the tenant to make an application to the SAT under

section 13(7)(b) for an order that the option for renewal of the lease does not

arise under section 13(1). This mechanism could be used to ensure that the

lease only had duration of 3 years as agreed.

It should be noted that the SAT will examine an application made under

section 13(7)(b) on a case by case basis. The SAT will need to be 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.

Scenario 2:

What does the agent have to do in order to get vacant possession of the shop?

Answer: Section 13(6)(da) of the CT Act and Schedule 1 of the CT Regulations

allows for a lease to include provision for termination on bankruptcy or insolvency of

the tenant, however it does not provide an automatic right to termination.

The landlord can only terminate the lease by reason of bankruptcy if there is a

specific clause in the lease allowing for this. However, if the tenant defaults under the

lease (which they would likely do if they were bankrupt) section 13(6)(a) provides that

the landlord may determine the lease.

Scenario 3:

a) Is it possible to require the tenant to relocate and what are the

implications of doing so?

b) Would the answer to the question above be different if the tenant had

already been in possession for 5 years and was entering into a new

lease to extend the term for a further 5 years?

A tenant in a retail shop lease is half way through his current lease and has been

experiencing a decline in gross takings for some time. His accountant has advised

him that his business is no longer financially viable. He is in serious financial

trouble and has just advised the managing agent that he has declared

bankruptcy.

A shopping centre owner has decided that he would like to change the dynamics

of his shopping centre and is looking at entering into some new leases. There is

one tenant in particular that he would like to relocate to a different shop within the

centre.

This tenant is mid-way through the term of his 5-year lease and no extensions

have been exercised.

77

Answer:

a) Yes. The landlord can require the tenant to relocate, but only if the lease was

entered into on or after 1 January 2013, contains a relocation clause that the

tenant has agreed to and the terms of the clause comply with the CT Act in

accordance with section 14A.

If the relocation is within the first 5 years of the lease, the clause must be

included in the lease in the prescribed form or the relocation must be

approved by the SAT.

b) If relocation is required after the first 5 year period, the relocation clause must

meet the requirements of section 14A(2) or be approved by the SAT. For

leases entered into before 1 January 2013 however, this may not be

applicable.

The important thing to emphasise with this scenario is that the landlord can

only relocate a person in accordance with a relocation clause that is in a

lease.

Scenario 4:

Does the landlord/managing agent have to provide any information to the

valuer? If so, what information would they need to provide?

Answer: Yes. The lessor or agent needs to provide the valuer with any information

that they request about the lease or leases for retail shops in the same building or

retail shopping centre in accordance with the requirements of section 11(3B) of the

CT Act. Section 11(3B) provides that the landlord is required to provide the valuer

with such relevant information as is requested including any of the following

information about leases for retail shops in the same building or retail shopping

centre. This information may include:

a) current rental for each lease;

b) rent free periods or any other form of incentive;

c) recent or proposed variations of any lease;

d) outgoings for each lease; and/or

e) any other information prescribed (none prescribed at the moment)

An agent manages a small retail shopping centre for an overseas owner. All of

the leases in the shopping centre contain a market rent review clause. One of the

tenants has disagreed with the agent’s assessment of the amount of an

appropriate increase. Consequently, the tenant has appointed a valuer in

accordance with the CT Act for the purpose of determining the rent.

78

Quick Check #3 – Group discussion

Depending on the instructions of your facilitator, the questions below may be

discussed in small groups or a part of a class discussion.

What information is the landlord entitled to know about the tenant

before entering into a lease?

Answer: It is important to note that the CT Act does not address this issue

specifically. As you may know from your experience working with commercial

tenancies, very few landlords would be prepared to lease premises to tenants

unless they are fully informed of the tenant’s financial position and retail

experience, and about the type and style of retailing proposed. For example, if a

prospective tenant wanted to lease premises in a small retail shopping centre to

open a new coffee lounge, the landlord may want to know what (if any) previous

café experience the prospective tenant has.

What advice would you be giving to a landlord that has doubts about

the information they have been given by the tenant before the lease

commences?

Answer: It should be acknowledged that a landlord is not under any obligation to

lease premises to anyone. It is important that the landlord is comfortable with the

tenant and the information that the tenant has provided to them because once the

tenant and landlord have contracted to lease a premises, it is too late to withdraw

unless both parties agree.

If with respect to a lease, the information provided by the tenant is misleading or

deceptive and the landlord suffers loss or damage, the landlord may take legal

action which may include seeking compensation from the tenant for the financial

loss they have suffered.

Knowledge Check #3 – Disclosure Statement

5. Under the Commercial Tenancy (Retail Shops) Agreements Act 1985 a

Disclosure statement is (circle the correct answer(s)):

a) For all retail shop leases

b) For new retail shop leases

c) On assignment of a retail shop lease

d) On renewal of a retail shop lease under an option.

Answer: b) For new retail shop leases.

79

6. What are some examples of information, apart from rent, length of the

lease and rent reviews, that should be included in the disclosure

statement?

Answer: The prescribed disclosure statement sets out all the information that is

required.

It should be noted that the landlord should include relevant information such as any

changes to the landscape that are planned for the near future, proposed road

changes, future council plans for the area, the proximity of other businesses that may

affect the premises in question, the landlord’s financial commitment to promotions

and marketing. NOTE: This is not an exhaustive list and participants may come up

with other examples.

7. Are there any consequences for the landlord if they do not provide a

Disclosure Statement to the tenant and if you think ‘yes’, what are they?

Answer: In accordance with section 6(1) of the CT Act, if the landlord does not

provide a disclosure statement to the tenant at least 7 days before entering into the

lease, or the disclosure statement that is given is incomplete or contains false and

misleading information, the tenant may do either or both of the following:

terminate the lease at any time up to 6 months after the lease was entered

into; and/or

seek an order for compensation from the SAT for any monetary loss suffered.

8. The Disclosure Statement allows for a tenant to terminate a lease if the

incorrect information was provided in the statement.

Is this right restricted in any way?

Answer: Refer to section 6(3). Yes, this right is restricted if the landlord has acted

honestly and reasonably and ought reasonably be excused for the failure concerned,

and if the tenant is in substantially as good a position as the tenant would have been

had the statement been complete or not contained the false or misleading

information.

It should also be noted that the tenant also has the right to apply to SAT for an order

for compensation for any money the tenant may have lost.

What is the time frame for this termination?

Answer: The tenant can terminate the lease within 6 months of the lease being

entered into (provided section 6(3) does not apply).

80

Scenario 5: Disclosure Case Study

Taking into account what you know about the disclosure requirements in the CT Act,

consider the following scenario and answer the questions below. Please note, this

case study will also be referred to in Part Four: Disputes between the landlord and

the tenant.

Questions and discussion:

Read the case study and answer the questions below. This activity may be

conducted in small groups or individually depending on the instructions of your

facilitator.

Louis Lim decided to start his own business – Café 101 after immigrating to Australia from

Taiwan several years ago. English is Louis’s second language and he has no previous

business experience.

Louis Lim entered into a commercial tenancy lease (the lease) for the first time on or

about 30 November 2013 for No. 101 Cherry Tree Lane, Nedlands which has a lettable

area of 95 square metres. The premises are in a small retail shopping centre with six

premises. Five of the premises, (including Louis’s café) have been leased. There is a

butcher, a jeweller, a bakery, a hair salon and now Louis’s café in the centre. The term of

Louis’s lease was five years with a five year option to renew.

Before signing the lease, Louis did he own research into the lease, the premises and the

surrounding area. Louis was curious about what was planned for the other vacant

premises and he asked the managing agent if there had been any interest.

The managing agent responded by saying that a lady wanting to open a bookstore had all

but signed a lease on the dotted line. Louis was relieved as he was not willing to lease

premises in the group if there was another café or restaurant serving coffee in the centre.

Louis discussed this with the managing agent and he was assured that the vacant

premises was going to be a bookstore and that his would be the only café. Accordingly the

permitted use in the disclosure statement for Café 101 was described as ‘café serving

breakfast, lunch, coffee and cake.’ Item 2.2 was answered as ‘yes’.

It should be noted that Item 25.2 in the disclosure statement was not completed.

Confident and excited about his new café venture, Louis received a copy of the disclosure

statement prepared by the managing agent 10 days before the lease was due to

commence. Given the short time frame, Louis was told he needed to review the disclosure

statement, obtain legal advice and sign the document ASAP. The managing agent told

Louis “Don’t worry, it’s a simple straight forward lease. Just get it signed ASAP as I have

another party who will take this spot if you won’t!”

As Louis didn’t think he had enough time to get legal advice he decided to have a friend

who had experience with commercial leasing look over the disclosure statement quickly to

give him some peace of mind. As his friend didn’t notice any obvious flaws with the

disclosure statement, Louis read the disclosure statement carefully before signing it and

was provided with a copy.

Three months after Louis commenced trading, a bookcafe opened in the vacant premises.

Louis was furious as he had specifically told the managing agent that he was not prepared

to enter into a lease in the centre if another café or restaurant serving coffee also opened

in the centre. In the first two weeks of the bookcafe’s trade, Louis’s gross takings are

down 40%. He is concerned about the viability of his business.

Louis rings the managing agent threatening to take legal action to terminate his lease.

81

You may like to refer to the extracts from the CT Act contained at the back of this

workbook to assist you in answering the questions below. Please note, this is a

fictional case study designed only for training purposes.

9. Does Louis have grounds to terminate his lease? If you think yes, on

what grounds? (In providing an answer, consider any provisions of the CT Act

you think may have been breached).

Answer: Yes. Louis may have grounds to terminate the lease. Section 6(1) of the CT

Act provides that a tenant can provide a landlord with written notice of a termination

of the lease within 6 months of entering into it if the disclosure statement is

incomplete or if the disclosure statement contains false or misleading information.

The information provided in the case study suggests that the Disclosure Statement

contained false or misleading representations and was also incomplete.

Firstly, the managing agent has provided false and misleading information in item 1.2

of the disclosure statement by indicating that the permitted use was exclusive to Café

101 when this was not the case.

The managing agent also made oral representations in relation to who would be

taking up the lease in the vacant premises that have not eventuated. This may be a

potential breach of section 16C of the CT Act. Section 16C provides that a party to a

lease must not engage in conduct that is misleading or deceptive or likely to mislead

or deceive.

Louis specifically told the managing agent that he was not prepared to enter into a

lease if another business in the shopping centre was going to serve coffee. Item 25.2

of the disclosure statement which provides an assurance from the landlord to the

tenant that the current tenant mix will not be altered by the introduction of a

competitor was also not completed.

While the Bookcafe’s predominate source of revenue may come from book sales and

not coffee, the managing agent should have disclosed to Louis the fact that the

bookstore was going to be a Bookcafe and not just a regular bookstore. From this

point of view, it could be argued that the landlord has potentially breached the

misleading and deceptive conduct provision of the CT Act by not informing him of this

fact.

The case study is silent on whether this representation was detailed in the Disclosure

Statement. It would be difficult for Louis to prove that the conversation took place

unless it was documented in the Disclosure Statement or elsewhere. Any

representations or promises that were made by the managing agent or the landlord

during negotiations about the introduction of a competitor should have been detailed

at Item 25.2 of the Disclosure Statement.

It also seems from the information provided in the case study that the managing

agent may have engaged in unconscionable conduct in his dealings with Louis Lim.

Section 15C of the CT Act provides that a landlord under a retail shop lease cannot

engage in conduct that is, in all the circumstances, unconscionable.

82

English was Mr Lim’s second language and coupled with the fact that he had no

previous business experience or experience with commercial leasing, it could be

argued that Mr Lim did not completely understand the Disclosure Statement and he

was pressured into signing it before seeking independent legal advice. The managing

agent provided Mr Lim with the Disclosure Statement to review just 10 days before

the lease was due to commence. Notwithstanding, the CT Act provides the

disclosure statement must be provided to the tenant at least 7 days before the lease

commences, ideally it would have been preferable for the managing agent to give

Louis the disclosure statement earlier than 10 days before the lease was due to

commence to give him sufficient time to go through the Statement in detail.

It could also be argued that the managing agent misled Mr Lim by telling him that the

Disclosure Statement was “….a simple straight forward lease.” This could amount to

undue influence or pressure to get Mr Lim to sign the Disclosure Statement before

seeking legal advice.

Assume that Louis was not provided with a disclosure statement at all.

10. Does Louis have grounds to terminate his lease? If you think yes, cite

the relevant provisions of the CT Act?

Answer: Yes. Section 6(1) of the CT Act provides that a tenant can provide a landlord

with written notice of a termination of the lease within 6 months of entering into it if

within 7 days the tenant was not provided with a disclosure statement.

11. Are there any exceptions to the tenant’s right to terminate the lease in

circumstances where the disclosure statement is incomplete or

contains false or misleading information?

Answer: Yes. Section 6(3) of the CT Act provides that a tenant is not able to

terminate a lease even if the landlord has provided a Disclosure Statement that is

incomplete or contains false or misleading information if:

the landlord has acted honestly and reasonably and sought reasonably to

be excused; and

the tenant is in substantially as good a position as if the failure had not

occurred.

It is important to note that these exemptions do not apply if a Disclosure Statement is

not provided to the tenant.

83

12. a) With the benefit of hindsight, what advice would you give Louis

in his approach to signing the disclosure statement and lease?

Answer: Louis Lim should have sought independent legal advice before signing the

Disclosure Statement.

It is not sufficient to have a friend, colleague or family member for example to review

leasing documentation in place of having a lawyer review it as any feedback they

provide could not be relied upon in disciplinary proceedings.

b) Is there anything Louis could have done differently that may have

resulted in a better outcome for him?

Answer: Louis should have made sure that all of the representations and promises

that were discussed during negotiations and were material to his decision to enter the

lease, were documented in the Disclosure Statement in Part 11 – Other Disclosures.

The case study is silent on how the permitted use of Café 101 was described and

detailed. Assuming it was described as “serving coffee” the reader is not sure

whether this permitted use was exclusive to Café 101. With the benefit of hindsight

however, Louis should have made sure that it was detailed in the Disclosure

Statement that he was the only tenant that could serve coffee in the shopping centre.

The case study acknowledges that Louis Lim had done some research into the lease

and the surrounding area. Louis would have done well to speak to the other tenants

about their experience with the landlord. He could have also asked further questions

of the managing agent about the bookstore and the other businesses in the centre.

Louis should have made sure that any responses that were made that he considered

were material to his decision to lease the premises were documented in the

Disclosure Statement.

13. What advice would you give the managing agent that may have resulted

in a better outcome for both parties?

Answer: Louis Lim should have sought independent legal advice before signing the

Disclosure Statement, particularly given he didn’t have previous business experience

and English was his second language. Notwithstanding, the CT Act provides the

disclosure statement must be provided to the tenant at least 7 days before the lease

commences, ideally it would have been preferable for the managing agent to give

Louis the disclosure statement earlier than 10 days before the lease was due to

commence to give him sufficient time to go through the Statement in detail. This

would have allowed Louis more time to review the Statement and seek independent

legal advice. The managing agent should have not pressured Louis into signing the

Disclosure Statement and alleged that another prospective tenant was going to sign

if he didn’t sign the Statement as soon as possible.

The managing agent ought to have known that the bookcafe was serving coffee and

should have disclosed this to Louis and included it in the Disclosure Statement. The

managing agent should have recognised that this would have influenced Louis’s

decision to lease the premises.

84

If the managing agent was aware that Louis was having a friend look over the

Statement in place of getting independent legal advice, they should have suggested

to Louis that while this might give him peace of mind and might provide him with

some useful feedback, it was also very important that he get proper legal advice.

Knowledge Check #4 – Louis and Café 101

NOTE: The questions provided below should be answered taking into

account the information provided in the case study ‘Louis and Café 101.’

14. Is Louis able to proceed directly to the SAT with an application for an

order seeking compensation for unconscionable conduct and

misleading and deceptive conduct by the managing agent or would he

need to approach the SB Commissioner in the first instance?

Provide/discuss an explanation to support your answer.

Answer: In the first instance, Louis should approach the Small Business

Commissioner by contacting the SBDC for assistance.

Section 25D of the CT Act provides that an application, referral or submission cannot

be made to the SAT under the CT Act unless the Small Business Commissioner has

issued a certificate or the matter is prescribed in the CT Regulations as one that can

proceed directly to the SAT.

While the SAT may consider an application for an interim order immediately pending

final determination of an unconscionable conduct application under section 15F(1) of

the Act, it would not make a compensation order without a certificate from the SB

Commissioner.

Similarly, while the SAT may consider an application for an interim order immediately

pending final determination of a misleading or deceptive conduct application under

section 16D(1) of the CT Act, it would not make a compensation order without a

certificate from the SB Commissioner.

Section 25(C) requires the SB Commissioner, on the request of a person who may

under the CT Act make an application, referral or submission to the Tribunal to, issue

a certificate to the person if the SB Commissioner is satisfied that the matter is

unlikely to be resolved with the assistance of alternative dispute resolution, or if it

would not be reasonable to commence alternative dispute resolution, or if alternative

dispute resolution has failed.

You will recall the case of Louis Lim and his new business – Café 101. Louis is

furious that a new bookcafe has opened up in the small retail shopping centre

where he has recently opened Café 101. Louis was arguably led to believe that

the permitted use for Café 101 was exclusive to his café.

Now let’s look at what options and possible remedies are now available to Louis

through the SB Commissioner and the SAT.

85

15. a) If Louis did proceed with the alternative dispute resolution

process through the SB Commissioner and it was not

successful, what would he need to do to make an application to

the SAT for compensation?

Answer: If alternative dispute resolution with the SB Commissioner was not

successful or the SB Commissioner refused to commence alternative dispute

resolution, Louis may request a certificate from the SB Commissioner for the purpose

of making an application to the SAT for a determination as to compensation.

Let’s assume Louis makes an application to the SAT seeking compensation for

financial loss he suffered as a result of the bookcafe opening in the retail

shopping centre where he recently commenced trading as Café 101.

b) What are the relevant facts of the case that Louis may highlight

in his application for compensation? (Hint: Refer to the extracts

of the CT Act at the back of the workbook).

Answer: Louis may apply for compensation under several sections in the CT Act.

The relevant facts used by Louis in making his application may differ according to

which section of the Act he is relying on to seek compensation.

Section 6 – Disclosure Statement

The facts of the case study indicate that there may have been some defaults in the

disclosure statement provided by the Landlord to Louis. Therefore, Louis may apply

for compensation under section 6 of the CT Act.

In particular, section 6(1)(b) allows a tenant to apply to the Tribunal for an order that

a landlord pay compensation for any pecuniary loss suffered by the tenant as a result

of the landlord:

failing to provide a disclosure statement (s.6(1)(b)(i));

giving an incomplete disclosure statement (s.6(1)(b)(ii); or

giving false or misleading information in the disclosure statement

(s.6(1)(b)(iii)).

The case study indicates that item 25.2 of the disclosure statement provided to Louis

was not completed. Item 25.2 asks the landlord to assure the tenant that the current

tenant mix will not be altered by the introduction of a competitor. Arguably, had this

item been completed and the answer been ‘no’, Louis would not have entered into

the lease.

Further, item 2.2 which requires the landlord to indicate whether or not the permitted

use described in item 2.1 (in this case a café serving breakfast, lunch, coffee and

cake) is exclusive to the tenant was answered as ‘yes’. This item would now appear

to have been answered incorrectly because since the Bookcafe opened, Café 101 is

not operating exclusively as a café in the shopping centre in accordance with the

permitted use outlined in item 2.1.

86

Therefore, based on the facts, Louis may apply for an order seeking compensation

under section 6(1)(b)(i) & (ii).

It is also worthwhile noting that, as the duration of the lease is less than 6 months,

Louis may also have the right to terminate the lease under section 6(1)(a) of the CT

Act.

Section 15C – Unconscionable Conduct

It could also be argued that the statements made by the landlord prior to Louis

signing the lease, amounted to unconscionable conduct.

Section 15D(2) provides that in determining whether a landlord has acted

unconscionably the Tribunal can consider (amongst other things) a number of

matters listed in that section.

Some of these matters may be relevant to facts of the case study. In particular,

section 15D(2)(a) states that the Tribunal may consider the relative bargaining

positions of the landlord and tenant. To this end, Louis could argue that given this is

his first commercial lease and that English is his second language, he is in a much

weaker bargaining position than the landlord.

It could also be argued that the landlord exerted undue influence or pressure on

Louis by suggesting that Louis needed to sign the disclosure statement straight away

as he had another interested party that was ready to sign if he didn’t. This is another

matter the Tribunal can specifically consider under section 15D(2)(d).

Finally, the Tribunal is directed to consider whether the landlord acted in good faith

(section 15D(2)(k)). Louis could argue that the landlord has not acted in good faith

by not disclosing that the book shop would be operating a competing coffee

business.

In accordance with section 15F(1) of the CT Act, Louis may apply in writing to the

SAT for an order that compensation is payable in respect of the loss or damage

caused because of unconscionable conduct of the landlord.

Section 16C – Misleading or deceptive conduct

Section 16D of the Act prohibits a party to a retail shop lease from engaging in

conduct that is misleading or deceptive. The lack of full disclosure and the oral

representations made to Louis by the landlord prior to entering the lease, could also

amount to misleading and deceptive conduct.

Section 16D(1) of the CT Act provides that Louis may apply in writing to the SAT for

compensation that is payable in respect of the loss or damage caused because of

misleading or deceptive conduct by the landlord.

87

c) What would Louis need to prove to be successful in seeking an

order for compensation?

Answer: To be successful, Louis would need to satisfy the SAT that he had suffered

a pecuniary loss as a result of the actions of the landlord. The case study indicates

that Louis’s gross takings are down 40%. Louis would need to demonstrate that this

pecuniary loss was caused by the actions of the landlord in contravening either

section 6, section 15C or section 16C.

Additional space for notes: