Leasing and Property Newsletter – March 2018
Published on March 7, 2018 by Matthew Rafferty
March 2018
INTRODUCTION
In this edition our team report on the following topics:
1. Outgoings and the amendments to the Retail Leases Act (NSW);
2. Applicability of Retail Legislation – is GST part of occupancy costs?; and
3. Can a landlord force a tenant to trade?
The Carroll & O’Dea Leasing and Property Team
Outgoings and the amendments to the Retail Leases Act (NSW)
Summary
How do the recent changes to the Retail Leases Act 1994 (NSW) affect landlords and tenants with respect to outgoings. Estimates need to be accurate as these new sections give a tenant the right to only pay the estimate if the actual outgoing is higher than the estimate.
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Gillian Kirwan, Lawyer
Paul Carroll, Partner
Applicability of Retail Legislation – is GST part of occupancy costs?
In NSW, premises fall outside the scope of the Retail Leases Act if they are greater than 1,000 square metres. That test also applies in the Northern Territory, Western Australia, Tasmania, and Queensland. In Victoria and South Australia, the test is whether occupancy costs exceed a certain amount per annum ($1,000,000 in Victoria, $400,000 in South Australia). The ACT employs a hybrid model.
There is ample caselaw in each jurisdiction about what space is to be included in the area tests and what costs are to be included in the costs tests. This article summarises a recent case in Victoria which had to determine whether the Retail Leases Act applied – if it did apply, the lessee would have been entitled to a refund of approximately $250,000 it had paid the lessor as a contribution to land tax as part of outgoings.
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Matthew Rafferty, Partner
Can a landlord force a tenant to trade?
A landlord is almost certain to lose a case if they seek to force a loss-making tenant to trade. Courts consider such an order:
- imposes unhelpful court supervision on the business;
- forces the tenant to incur further debt (eg to staff, suppliers and the ATO) that it may not be able to pay; and
- is against public policy.
