The NSW Government has gazetted a Regulation to implement the National Code of Conduct for Commercial Leases (24 April 2020) The Regulation is made under two separate Acts the Retail Leases Act 1994 and the Conveyancing Act 1919 with non-retail leases covered under section 202 of the latter Act. The Regulation: - Commences (24 April 2020) and does not purport to be retrospective in application. - Does not cover leases entered into after today. - Lasts for six months. - Only applies to lessees who qualify for JobKeeper with turnover of less than $50 million in
the 2018/19 financial year. - Applies, for franchisee lessees, the turnover test at the individual premises level but for
lessees that are companies within a group, the turnover test applies at the group level. In
all other cases, the turnover test is applied to the business per se. - Includes internet sales within the definition of turnover. - Sets out the action a lessor cannot take (“prescribed action”) for certain breaches of
commercial leases during the six month period, including for failure to pay rent or
outgoings or not being open and limits rent increases. - Preserves the right of lessors and lessees to agreeing to take the actions which would
otherwise be prescribed, including terminating the lease. - Does not include a right for a lessee to unilaterally terminate a lease. - Imports the proportionality principle created by the National Code, specifically, by
requiring lessors to offer rent reductions, in the form of waivers or deferrals of rent,
proportionate to the reduction in turnover. - Creates a new dispute resolution forum in the Office of Small Business Commissioner and
requires lessors to submit to that process before they seek to recover possession, terminate
the lease or exercise or enforce any other right under the lease. - Preserves the right of either party to have the matter reviewed by a NSW court. - Ensures that landlords can exercise rights under the lease for grounds not relating to the
economic impacts of the COVID-19 pandemic.
The full Retail and Other Commercial Leases (COVID-19) Regulation 2020 can be viewed here