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Tasmania – Landlord and Tenants – Covid-19 Disease Emergency Act

Written by Leisha de Aboitiz and Joseph Consalvi on March 30, 2020

Tasmania has acted first in relation to introducing laws regarding rental and eviction relief in Australia as a result of Covid-19 impacts. The Covid-19 Disease Emergency (Miscellaneous Provisions) Act (Tas) 2020 (Covid-19 Emergency Act) is in force and valid from 27 March 2020.

Eviction freeze

From a commercial property perspective, the key points of the Tasmanian Covid-19 Emergency Act are:

  • the new legislation contemplates a prohibition on termination and rental increases for certain leases – this appears to be intended to cover commercial/retail (and potentially other non-residential) leases
  • the Minister may, by notice, prohibit termination or rental increases for leases within a class of lease in specified circumstances during the “emergency period” – we do not yet know what “class of leases” are affected
  • the emergency period (ie the eviction “freeze period” will be at least 120 days from commencement of the Act, but it might be longer – we do not yet know what the period will be)
  • the Act doesn’t appear to provide for any form of rent abatement (with the effect presumably to be that any unpaid rent will continue to accrue throughout the emergency period) – this is likely to be of limited benefit to tenants in the long run if revenue has been seriously affected by Covid-19 (ie these measures might just delay the inevitable termination of the lease if the arrears can’t be paid at the end of the “freeze” period).
  • the Act does not (at this stage) appear to restrict the landlord from drawing down on bank guarantees for a failure to pay rent during the emergency period, and it may be that landlords do choose to use the security to protect themselves for the arrears during any freeze period.

Note that the “emergency period” during which specific protections appear to apply starts on (and from) the date of commencement of the Covid-19 Emergency Act, therefore arguably a termination notice issued prior to 27 March 2020 should remain valid.

Land tax measures

The Tasmanian Government has also announced that Land Tax will be waived for commercial property for the 2020-21 financial year, where the business owner:

  • is liable for the land tax; and
  • can demonstrate that their business operations have been affected by COVID-19.

It’s unclear at the moment who might be captured by the definition of ‘business owner’ but we expect that it would target commercial tenants who are liable to pay land tax via outgoings under their lease.

We will update this article as further developments arise.

Insights

Changes to the Corporations Act 2001 (Cth) in response to COVID-19: section 127 execution

The Federal Government has introduced welcome changes to the Corporations Act 2001 (Cth) by way of the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 to amongst other things permit companies to execute documents pursuant to section 127 electronically (for example, by Docusign).

At this stage, the changes apply from 6 May 2020 and will be in force for 6 months.

Companies will still need to ensure the electronic execution method complies with the Determination and the relevant electronic transaction legislation in each State (for example, using an appropriate electronic execution method and obtaining consent from parties to the transaction).  We suggest it may be appropriate to include additional drafting in contracts to ensure the electronic execution arrangements are compliant.

May 6, 2020

ACCC Interim authorisation for collective negotiations by retail tenants

On 22 April 2020, the ACCC granted interim authorisation for tenants who are members of the Australian Retailers Association to collectively negotiate with landlords regarding the support to be provided to retail tenants who are adversely impacted by COVID-19 – including information sharing for the purposes of those negotiations.

This interim authorisation protects retail tenants from legal action for certain conduct which might otherwise breach the Competition and Consumer Act 2010 (Cth) and remains in place until it is revoked or the date that the ACCC has made its final determination.  The public consultation process is currently open and the final determination is anticipated in September 2020.

This interim authorisation will be especially helpful for tenants in retail shopping centres and will impact how retail landlords approach rent relief negotiations with their tenants.

April 24, 2020

New South Wales - COVID-19 New regulation - Witnessing documents via audio visual link

New regulation introduced in NSW (applicable to documents governed by state laws) allows for documents to be witnessed by audio visual link for an anticipated period of 6 months commencing from 22 April 2020. Find full copy of regulation here:

Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020

April 24, 2020

Victoria - COVID-19 Omnibus legislation - What it means for commercial/retail tenancies now

The COVID-19 Omnibus (Emergency Measures) Bill 2020 was passed by the Victorian Government yesterday and came into effect today. The Act gives the Governor powers to enact Regulations to prohibit termination rights and limit/modify rights under an ‘eligible lease’.

What we do know now

  • The Regulations (which we have not yet seen) may be retrospective, but they wont apply before 29 March 2020 (so consider whether any April arrangement should remain subject to future rights that you may have under the regulations).
  • For now, the Regulations will only have effect for a maximum 6 months (ie. until 24 October 2020).
  • The Victorian Small Business Commission can make recommendations on the Regulations (so keep an eye out on the VSBC website).
  • The criteria for the Regulations to apply to your lease (ie to be an ‘eligible lease’) includes:
    • the tenant must have less than $50 million annual turnover (current or previous year)
    • the tenant must qualify for and participate in the JobKeeper scheme (eg. at least 30% fall in turnover)
    • the lease must be in effect on the date the first regulation operates (ie. a future date – so consider the impact on leases being/about to be entered into now)

What we don’t know yet

  • We still have to wait for Regulations from the Governor to know the details on how this may impact your rights under a lease.
  • No update on Victoria’s version of the commercial/retail tenancy rent relief framework (the Commonwealth’s Mandatory Code of Conduct is still not law yet in Victoria…).
  • The Regulations may apply to other occupancy arrangements like licences, but we won’t know exactly what that will mean in practice until we see the Regulations.

April 24, 2020

Western Australia - COVID-19 Legislation - Commercial tenancies

Covid-19 legislation for commercial tenancies appears one step closer in WA, with proposed legislation successfully passing both houses of Parliament this week.  Enactment of legislation should be imminent. Interesting to see that WA has also taken the further step of introducing proposed additional legislation (which hasn’t passed Parliament yet) giving certain tenants in ‘severe financial distress’ a regime for early termination of their lease.  This is in contrast to some other States’ views against providing tenants with early termination measures.  Stay tuned for further updates.

Eviction moratorium and code of conduct to protect WA businesses

April 23, 2020

NSW - Strata management during COVID-19 crisis

Many strata schemes in NSW are presently stuck between a rock (face to face meeting obligations) and a hard place (Covid-19 meeting restrictions). NSW Fair Trading acknowledges that whilst meetings for smaller schemes may be able to comply with social distancing orders, meeting requirements are likely to be problematic for larger schemes and so it is “reviewing the situation”. There has been some talk of relying on the “no quorum” default provisions in the legislation to push through approval for alternative/electronic meeting arrangements at a 2-person meeting. Whilst this might seem a little cheeky, query whether this might just meet the dual objectives of staying safe whilst complying with face to face meeting requirements. Guidance notes from NSW Fair Trading Trading can be found here:

Fair Trading – Guidance notes

April 17, 2020

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