Retail Shop Lease Disputes update

The Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (RSL COVID-19 Regulation) commenced on 28 May 2020. The provisions of the RSL COVID-19 Regulation apply during the response period, that is, from 29 March 2020 until 30 September 2020.

The RSL COVID-19 Regulation provides that a lessor under an affected lease (a retail shop lease or a lease under which the leased premises are to be wholly or predominantly used for carrying on a business as prescribed – sections 5 and 6) must not take a prescribed action (s 9 – includes recovery of possession, termination of the lease, eviction of the lessee etc.) on any of the following grounds during the response period (s 12):

12      Lessor under affected lease must not take prescribed action during response period

(1) …

  1. a failure to pay rent for a period occurring wholly or partly during the response period;
  2. a failure to pay outgoings for a period occurring wholly or partly during the response period;
  3. the business carried on at the leased premises not being open for business during the hours required under the lease during the response period.

(2) However, subsection (1) does not prevent the lessor taking prescribed action for the following –

  1. in accordance with –
    1. a variation of the lease made under Division 3; or
    2. a settlement agreement or other agreement between the lessor and lessee entered into about a matter mentioned in (a) to (c) above; or
    3. an order of a court or tribunal; or
  2. if, despite a genuine attempt by the lessor to negotiate rent payable and other conditions of the lease under Division 3, the lessee has substantially failed to comply with the lessee’s obligations under that division in relation to the negotiations; or
  3. on a ground that is not related to the effects of the COVID-19 emergency.

An affected lease dispute means any dispute concerning the liabilities or obligations of the parties to an affected lease arising during the response period, and includes a dispute about negotiating, or a failure to negotiate, rent. (schedule)

An eligible lease dispute includes an affected lease dispute (s 21). In relation to eligible lease disputes the dispute resolution provisions of the RSL COVID-19 Regulation apply and NOT the dispute resolution provisions of the RSL Act.

Similar to the process adopted for residential tenancy disputes, a party to an affected lease who is involved in an eligible lease dispute may, in writing, request another party to the lease negotiate the rent payable under, and other stated conditions of, the lease. The parties must first attempt to negotiate the dispute (s 25).

The parties may give the Small Business Commissioner notice of the dispute following which the Small Business Commissioner:

  • must as soon as practicable after receiving the notice, accept or dismiss the notice (s 26).
  • must arrange a mediation between the parties (s 27).

The parties must attend the mediation, unless there is a reasonable excuse (s 30).

Additionally,

  • if a provision of an affected lease or a small business lease requires or permits a dispute under or about the lease to be dealt with using a particular procedure, the provision does not prevent a party from commencing mediation under Part 3 of the RSL COVID-19 Regulation, even if the procedure under the lease has not been complied with (s 22).
  • Part 3 of the RSL COVID-19 Regulation does not prevent parties agreeing to undertake a dispute resolution process other than that provided (s 23).
  • The RSL COVID-19 Regulation does not prohibit parties from entering into an agreement about an affected lease which is inconsistent with Part 2 of the RSL COVID-19 Regulation (s 10).

Of particular relevance to QCAT:

  • if a dispute notice is lodged with the Small Business Commissioner after 28 May 2020, the dispute cannot be heard by QCAT or a court until either a settlement agreement is entered into; or a notice is given to the parties about the outcome of the mediation; or the dispute notice is withdrawn (s 36).
  • an application in relation to a retail tenancy dispute may be made to QCAT if the parties cannot reach an agreement at mediation; a party to the dispute does not attend the mediation and does not have a reasonable excuse; the dispute is not settled within 30 days after the dispute notice is given to the Small Business Commissioner; a party to a settlement agreement claims another party to the agreement has not complied with the agreement within the stated period, or if no stated period, within 14 days (s 41) after the agreement is signed.
  • the lessee under an affected lease may apply to QCAT or a court with jurisdiction for an order requiring the lessor to comply with subsection 12(1) – that is, an order in relation to prescribed action by a lessor. QCAT or a court may make any order it considers appropriate and award costs against the lessor or the lessee in the proceeding (s 12(3) and 12(5)).
  • QCAT may make orders, including declaratory orders, that it considers appropriate. The (non-exhaustive list of) orders QCAT may make are found in subsection 44(3).
  • The RSL COVID-19 Regulation does not apply to a retail tenancy dispute in which a notice of dispute was lodged before 29 March 2020 and which has not been resolved. In this regard, Part 8 of the Retail Shop Leases Act 1994 continues to apply and matters currently in QCAT are not affected. However, it does not prevent a person from starting a mediation under the RSL COVID-19 Regulation. See s 49 RSL COVID-19 Regulation.
  • If, between 29 March 2020 and 28 May 2020, a notice of dispute was lodged by a lessor or a proceeding commenced in QCAT (by a lessor or lessee), and the subject matter of the dispute would otherwise have constituted a prescribed action, the proceeding or action is stayed or suspended (insofar as it relates to taking the prescribed action) until after 30 September 2020. However this does not prevent the parties to the dispute attempting to resolve the dispute under Part 2 or Part 3 or any other method available to the parties (s 48).
  • In relation to those disputes to which the RSL COVID Regulation does not apply, the process in relation to retail tenancy disputes continues as per usual.

Please note that this is a summary only. The RSL COVID-19 Regulation should be referred to in every case to determine its application and effect.

Retail shop lease disputes

Retail shop lease disputes

Disputes can arise from a disagreement between a tenant and landlord about a retail shop lease.

These disputes are resolved through a two-step process which involves:

  • mediation and
  • if the dispute is not resolved at mediation, a hearing by QCAT.

To assist with your matter you may request a search of register of proceedings (list of cases before QCAT) for retail shop lease matters. To request a search of the QCAT register of proceedings, you must provide a request in writing which includes the name of at least one party to the proceeding.

You can submit a request in writing via:

  • email: searches@qcat.qld.gov.au
  • post: QCAT, GPO Box 1639, Brisbane, QLD 4001
  • in person: QCAT, Level 9, BOQ Centre, 259 Queen Street, Brisbane

You can ask for the results of the search to be delivered in writing (via email or post) or at the counter if you make a request in person.