Retail Leases Act 1994 (NSW)

Retail Leases Act 1994 No 46 An Act to make provision with respect to the leasing of certain retail shops and the rights and obligations of lessors and lessees of those shops, and for other purposes. Part 1 Preliminary Note— This Act applies to leases of retail shops, with certain limitations. To understand those limitations— * see the definition of retail shop in section 3 for the shops to which this Act applies, * see sections 5 and 6B for the retail shops that are excluded from the operation of this Act, * see sections 6, 6A and 84B for the leases that are excluded from the operation of this Act. 1 Name of Act This Act may be cited as the Retail Leases Act 1994. 2 Commencement This Act commences on a day or days to be appointed by proclamation. 3 Definitions (1) In this Act— authorised deposit-taking institution means an authorised deposit-taking institution within the meaning of the Banking Act 1959 of the Commonwealth. business day means any day except Saturday or Sunday or a day that is a public or bank holiday throughout the State. Department means the Department of Customer Service. exercise of a function includes the performance of a duty. function includes a power, authority or duty. GST has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth and includes notional GST of the kind for which payments may be made under section 5 of the Intergovernmental Agreement Implementation (GST) Act 2000 by a person who is a State entity within the meaning of that Act. key-money means any money paid to or at the direction of a lessor or lessor's agent, by way of a premium, non-repayable bond or otherwise, or any benefit that is conferred on or at the direction of a lessor or lessor's agent, in connection with the granting, renewal, extension or assignment of a lease (and a reference in this Act to the payment of key-money includes a reference to the conferral of any such benefit). lawyer means a barrister or solicitor. lease preparation expenses means legal or other expenses incurred by the lessor in connection with the preparation or entering into of a retail shop lease including expenses incurred in connection with obtaining the consent of a mortgagee but does not include registration fees under the Real Property Act 1900. lessee means the person who has the right to occupy a retail shop under a retail shop lease, and includes a sublessee and a lessee's or sublessee's heirs, executors, administrators and assigns. lessee's disclosure statement means a statement referred to in section 11A. lessor means the person who grants or proposes to grant the right to occupy a retail shop under a retail shop lease, and includes a sublessor and a lessor's or sublessor's heirs, executors, administrators and assigns. lessor's disclosure statement means a statement referred to in section 11. lettable area of a retail shop does not include— (a) car parking spaces, or (b) storage areas not attached to the retail shop premises where the business of the shop is or is to be carried on. licensed conveyancer means the holder of a licence in force under the Conveyancers Licensing Act 2003. listed business means a business prescribed for the purposes of paragraph (a) of the definition of retail shop (including a business for the time being specified in Schedule 1). outgoings—see section 3A. party means the lessor or the lessee under a retail shop lease. permanent retail market—see section 6B. premises includes a defined area (for example, a stall in a market) in a building or other permanent structure. Registrar means the Registrar of Retail Tenancy Disputes referred to in Part 8. retail shop means premises that— (a) are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or (b) are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre. Note 1— Sections 5 and 6B limit the retail shops to which this Act applies. Note 2— Clause 17 of Schedule 3 provides that the businesses specified in Schedule 1 are taken to be prescribed for the purposes of paragraph (a) of this definition until regulations prescribing businesses and repealing Schedule 1 are made. retail shop lease or lease means any agreement under which a person grants to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop— (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing. Note— Sections 6, 6A and 84B limit the retail shop leases to which this Act applies. retail shopping centre means a cluster of premises (not being the stalls in a market) that has all of the following attributes— (a) at least 5 of the premises are used wholly or predominantly for the carrying on of one or more listed businesses, (b) the premises are all owned by the same person, or have (or would if leased have) the same lessor or the same head lessor, or comprise lots within a single strata plan under the Strata Schemes Development Act 2015, (c) the premises are located in the one building or in 2 or more buildings that are either adjoining or separated only by common areas or other areas owned by the owner of the retail shops, (d) the cluster of premises is promoted as, or generally regarded as constituting, a shopping centre, shopping mall, shopping court or shopping arcade. retail specialty shop means a retail shop referred to in paragraph (a) of the definition of retail shop, other than a department store, a supermarket or premises of a kind prescribed as excluded from this definition by the regulations. Secretary means the Secretary of the Department. specialist retail valuer means— (a) for the purposes of a valuation under this Act relating to a retail specialty shop in a retail shopping centre having both— (i) 20 or more retail specialty shops, and (ii) a total of lettable areas of retail specialty shops that exceeds 1,000 square metres, a valuer having not less than 5 years' experience in valuing retail specialty shops in shopping centres of that kind, or (b) for the purposes of a valuation under this Act relating to any other retail specialty shop or any other retail shop, a valuer having not less than 5 years' experience in valuing retail shops. strata levies means contributions levied under the Strata Schemes Management Act 2015 or any other Act relating to strata schemes. Tribunal means the Civil and Administrative Tribunal. Note— Part 9 contains other provisions that affect the interpretation of this Act. Note— The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act. (2) A reference in this Act to the lessor or the lessee, in the context of a provision that has application to a proposed retail shop lease, includes a reference to the proposed lessor or proposed lessee. 3A Definition of "outgoings" (1) In this Act, outgoings means the following— (a) a lessor's outgoings on account of expenses attributable to the management, operation, maintenance or repair of the retail shop building or land, (b) a lessor's outgoings on account of rates, taxes, levies, premiums or charges payable by the lessor because the lessor is the owner or occupier of the retail shop building or land or is the supplier of a taxable supply (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth) in respect of the retail shop building or land, (c) fees charged by a lessor for services provided by the lessor in connection with the management, operation, maintenance or repair of the retail shop building or land. (2) In this section, retail shop building or land means the building in which the retail shop is located or (in the case of a retail shop in a retail shopping centre) any building in the retail shopping centre, and includes any areas used in association with any such building. 3B Application of Act to agreements to lease (1) This Act applies to and in respect of an agreement to lease in the same way as it applies to and in respect of a lease. (2) When a lease (the resulting lease) is entered into pursuant to an agreement to lease— (a) a lessor's disclosure statement given for the agreement to lease is deemed to have been given for the resulting lease, and (b) a separate lessor's disclosure statement is not required or permitted to be given for the resulting lease. 4 Notes Notes included in this Act except where occurring in Schedules 2 and 2A are explanatory notes and do not form part of this Act. 5 Certain retail shops excluded from the operation of this Act This Act does not apply to any of the following— (a) shops that have a lettable area of 1,000 square metres or more, (b) shops that are used wholly or predominantly for the carrying on of a business by the lessee on behalf of the lessor, (c) any shop within premises where the principal business carried on on those premises is the operation of a cinema, bowling alley or skating rink and the shop is operated by the person who operates the cinema, bowling alley or skating rink, (d) premises used only for any one or more of the purposes listed in Schedule 1A (Excluded uses), (e) premises of a class or description prescribed by the regulations as exempt from this Act. 6 Leases to which Act does not apply (1) This Act does not apply to any of the following leases of retail shops— (a) (Repealed) (b) leases for a term of 25 years or more (with the term of a lease taken to include any term for which the lease may be extended or renewed at the option of the lessee), (c) leases entered into before the commencement of this section, (d) leases entered into under an option granted or agreement made before the commencement of this section, (e) any other lease of a class or description prescribed by the regulations as exempt from this Act. (2) This Act does not apply to any lease referred to in this section that is assigned to another person after the commencement of this section. Note— Part 9A provides for certain exemptions regarding premises at airports. 6A Application of Act to short-term leases (1) Generally, Act not to apply to short-term leases Subject to subsection (2), this Act does not apply to a lease of a retail shop for a term of less than 6 months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise). (2) Exception for successive, extended or renewed leases for more than one year If the lessee has been in possession or entitled to be in possession of the retail shop without interruption for more than one year (whether by means of a series of 2 or more leases or by means of an extended or renewed lease or leases, or by any combination of those means), this Act applies to— (a) the lease on and from the day on which the lessee has been in possession or entitled to be in possession of the shop for more than one year, and (b) any succeeding lease or leases of the shop to the lessee, where possession or entitlement to possession is not interrupted. (3) Operation of provisions for disclosure statements Sections 11–12A do not apply to the lease referred to in subsection (2) (a), but apply to any succeeding lease referred to in subsection (2) (b). (4) (Repealed) (5) Operation of other provisions The regulations may provide that, if this Act applies to a lease because of subsection (2), specified provisions of this Act (other than section 11 and Part 2A) do not apply to or in respect of the lease or apply with prescribed modifications. (6) Certain interruptions do not break continuity The regulations may provide that interruptions for a prescribed period or of a prescribed kind are to be disregarded for the purposes of this section. (7) Holding over For the purposes of subsection (1), a provision for holding over by the lessee at the end of the term of the lease does not confer a right on the lessee to extend the lease if it operates at the discretion of each of the lessee and the lessor. (8) Assignment This section has effect in relation to a lease whether or not it is assigned to another person, but if it is assigned the period of possession or entitlement to possession by the assignee is taken to include any period of possession or entitlement to possession by the assignor and any previous assignor. 6B Application of Act to retail shops in markets (1) This Act does not apply to a retail shop that is a stall in a market unless the market is a permanent retail market. (2) A permanent retail market is an assemblage of stalls, styled or described as a market, that are predominantly used for retail businesses and that operate in a building or other permanent structure the sole or dominant use of which (or of the part in which the market operates) is the operation of the market. Note— A stall in a permanent retail market is not a retail shop to which this Act applies unless it satisfies the definition of retail shop in section 3. (3) The regulations may make provision for or with respect to modifying the operation of this Act in its application to a retail shop in a permanent retail market. (4) Regulations under this section may include provision for a mandatory code of conduct for lessors and lessees under leases of retail shops in a permanent retail market (including provision for sanctions for non-compliance with the mandatory code). 7 This Act overrides leases This Act operates despite the provisions of a lease. A provision of a lease is void to the extent that the provision is inconsistent with a provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease. 8 When the lease is entered into (1) For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first). (2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered to have been entered into as soon as both parties have executed the lease. Note— Therefore, if the lessee starts to pay rent as lessee or enters into possession as lessee, the lease is considered to have been entered into even if neither party has executed the lease at that time. Money paid in advance (purportedly as rent) as a deposit to secure premises for a proposed lease does not constitute rent paid as lessee under the lease. Part 2 Entering into a lease 9 Copy of lease and retail tenancy guide to be provided at negotiation stage (1) A person must not, as lessor or on behalf of the lessor, offer to enter into a retail shop lease, invite an offer to enter into a retail shop lease or indicate by written or broadcast advertisement that a retail shop is for lease, unless— (a) the person has in his or her possession a copy of the proposed retail shop lease (in written form, but not necessarily including particulars of the lessee, the rent or the term of the lease) for the purpose of making the lease available for inspection by a prospective lessee, and (b) the person makes— (i) a copy of the proposed lease, and (ii) if the regulations so provide—a copy of a retail tenancy guide prescribed by or identified in the regulations, available to any prospective lessee as soon as the person enters into negotiations with the prospective lessee concerning the lease. Maximum penalty—50 penalty units. (2) The copy of the retail tenancy guide to be made available to a prospective lessee may be or be a copy of— (a) the officially printed guide, or (b) a version of the guide printed from a website of a government department or authority or from a website identified in the regulations. 10 Right to compensation for pre-lease misrepresentations (1) A party to a retail shop lease is liable to pay another party to the lease (the injured party) reasonable compensation for damage suffered by the injured party that is attributable to the injured party's entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party's authority, with knowledge that it was false or misleading. (2) The giving of a lessor's disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement. (2A) The making of a representation by a prospective lessee in a lessee's disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor. (3) This section extends to apply to a statement or representation made before the commencement of this section. 11 Lessor's disclosure statement (1) At least 7 days before a retail shop lease is entered into, the lessor must give the lessee a disclosure statement for the lease (the lessor's disclosure statement) that complies with the following requirements— (a) the lessor's disclosure statement is to be in writing and is to be in or to the effect of Parts A and B of the form in Schedule 2 (the prescribed form), (b) the lessor's disclosure statement is to include Part B of the prescribed form for the purposes of Part B being completed by the lessee and provided to the lessor as the lessee's disclosure statement (under section 11A), (c) the lessor's disclosure statement must contain the information and be accompanied by the material that is required to complete or accompany Part A of the prescribed form (but only to the extent that is relevant to the lease concerned), (d) the form of the lessor's disclosure statement is not required to comply strictly with the prescribed form (including its layout) so long as it is substantially to the same effect as the prescribed form. Maximum penalty—50 penalty units. Note— Because the lessor's disclosure statement need only include information relevant to the lease, if the retail shop is not in a retail shopping centre the disclosure statement need not include information that is relevant only to shops in retail shopping centres. (2) If a lessee was not given a disclosure statement as required by subsection (1) or if the disclosure statement that was given to the lessee was incomplete or contained information that at the time it was given was materially false or misleading, the lessee may terminate the lease by notice in writing to the lessor at any time within 6 months after the lease was entered into, unless subsection (3) prevents termination. (2A) If the lessee terminates the lease in accordance with this section, the lessee is entitled to recover compensation from the lessor for costs reasonably incurred by the lessee in connection with the lessee entering into the lease, including compensation for expenditure by the lessee in connection with the fit-out of the retail shop. (3) The lessee cannot terminate the lease under this section on the ground that the disclosure statement is incomplete or contains information that is materially false or misleading if— (a) the lessor has acted honestly and reasonably and ought reasonably to be excused for the failure concerned, and (b) the lessee is in substantially as good a position as the lessee would have been if the failure had not occurred. (4) If a lease is entered into by way of the renewal of a lease, a written statement (a lessor's disclosure update) that updates the provisions of an earlier disclosure statement given to the lessee is, in conjunction with that earlier disclosure statement, considered to be a disclosure statement given for the purposes of this section at the time the lessor's disclosure update is given. (5) The termination of a lease under this section does not affect any right, privilege, obligation or liability acquired, accrued or incurred under the lease in respect of any period before its termination. (6) A lessor's disclosure statement may be amended with the agreement in writing of the lessor and the lessee before or after the lease is entered into and any such amendment has effect from the date specified in the agreement (which can be a date before the agreement is made). Note— The Tribunal also has power to order the rectification of a lessor's disclosure statement. See section 72AB. 11A Lessee's disclosure statement (1) No later than 7 days after receiving the lessor's disclosure statement from the lessor (or within such longer period as may be agreed with the lessor), the lessee must give the lessor a statement in writing (as the lessee's disclosure statement) that is in or to the effect of Part B of the form set out in Schedule 2 and completed as required by that Part. Maximum penalty—50 penalty units. (2) If a lease is entered into by way of the renewal of a lease, a written statement (a lessee's disclosure update) that updates the provisions of an earlier lessee's disclosure statement given to the lessor is, in conjunction with that earlier lessee's disclosure statement, considered to be the lessee's disclosure statement given for the purposes of this section at the time the lessee's disclosure update is given. (3) (Repealed) (4) The regulations may prescribe additional matters to be included in the form of lessee's disclosure statement for the purposes of this section. 12 Lessee not required to pay undisclosed contributions (1) A provision of a retail shop lease that requires the lessee to pay or contribute towards the cost of providing any finishes, fixtures, fittings, equipment or services in or for the shop is void unless the liability to make the payment or contribution was disclosed in a disclosure statement given to the lessee in accordance with this Part. (2) To remove doubt, this section does not apply to outgoings. 12A Lessee not required to pay undisclosed outgoings (1) The lessee under a retail shop lease is not liable to pay any amount to the lessor in respect of any outgoings unless the liability to pay the amount was disclosed in the lessor's disclosure statement for the lease. (2) If the lessor's disclosure statement provided an estimate of the amount of any outgoing and the estimated amount is less than the actual amount, the following provisions apply— (a) if there was no reasonable basis for the estimate when the lessor's disclosure statement was given, the lessee's liability for any payment in respect of the outgoing is to be determined on the basis of the amount estimated (instead of the actual amount) and is to be reduced accordingly, (b) if the lessee's liability to pay an amount (the actual amount) in respect of an outgoing is reduced because there was no reasonable basis for an estimate of the outgoing, any liability of the lessee in respect of any subsequent increase in the outgoing is to be reduced in the same proportion as the actual amount was reduced. (3) This section does not apply to an outgoing in the nature of a tax, rate or levy that is imposed by or under an Act after the lessor's disclosure statement is given and that was not an outgoing of the lessor when the lessor's disclosure statement was given. (4) A lessee is entitled to recover from the lessor any amount paid to the lessor that the lessee was not liable to pay because of this section. (5) Costs associated with the advertising or promotion of a retail shop or retail shopping centre, or of any business carried on there, are not outgoings for the purposes of this section. 13 Costs before fit-out (1) This section applies if a lessee of a retail shop is liable to pay an amount for, or associated with, any works carried out by or on behalf of the lessor (before or after the lease is entered into) to enable the proposed fit-out of the shop by the lessee. (2) The maximum amount of the costs of the works, or a basis or formula with respect to those costs, is to be agreed in writing by the lessor and lessee before the lease is entered into. (3) The lessee is not liable to pay an amount in respect of the works that is more than the agreed maximum amount. (4) (Repealed) 13A Tenancy fit-out statement or guide (1) If a prospective lessor of a retail shop in a retail shopping centre requires a particular standard of construction for fit-outs to be carried out by the lessee, the relevant information relating to the standard must be contained in a tenancy fit-out statement (which may be described as a tenancy fit-out guide)— (a) accompanying the lessor's disclosure statement, or (b) accompanying or included in the lease or any agreement for the lease of the shop. (2) The lessee is not liable to carry out any fit-out of the kind referred to in subsection (1) to the extent that it is not covered by the tenancy fit-out statement. (3) This section does not affect the operation of section 38. 14 Key-money and lease preparation expenses prohibited (1) A person must not, as lessor or on behalf of the lessor, seek or accept the payment of key-money or lease preparation expenses in connection with the granting of a retail shop lease and any provision of a retail shop lease is void to the extent that it requires or has the effect of requiring the payment of key-money or lease preparation expenses in connection with the granting of the lease. (2) If a person contravenes this section— (a) the person is guilty of an offence and liable to a penalty not exceeding 100 penalty units, and (b) (whether or not the person is convicted of an offence under paragraph (a)) the lessee is entitled to recover from the lessor as a debt any payment made or the value of any benefit conferred by the lessee and accepted by or on behalf of the lessor in contravention of this section. (3) This section does not prevent a lessor— (a) (Repealed) (b) from receiving payment of rent in advance, or (c) from securing performance of the lessee's obligations under the lease by requiring the provision of a security bond or other bond or a guarantee from the lessee or any other person (such as a requirement that the directors of a company that is the lessee guarantee performance of the company's obligations under the lease), or (d) from seeking and accepting payment for goodwill of a business from a purchaser of the business, but only to the extent that the goodwill is attributable to the conduct of the business by the lessor, or (e) from seeking and accepting payment for plant, equipment, fixtures or fittings that are sold by the lessor to the lessee in connection with the granting of the lease, or (f) from seeking and accepting payment for the grant of a franchise in connection with the granting of the lease. (4) This section does not prevent a person, as lessor or on behalf of the lessor, from requiring payment by a prospective lessee or the lessee of a reasonable sum in respect of lease preparation expenses incurred in connection with making an amendment to a proposed lease that was requested by or on behalf of the prospective lessee or the lessee, other than— (a) an amendment to insert or vary the particulars of the lessee, the rent or the term, or (b) an amendment to remedy a failure by or on behalf of the lessor to include or omit a term of the proposed lease that was, at the time of the failure to include or omit, agreed between the lessor and the proposed lessee or lessee to be included in or omitted from the proposed lease, or (c) an amendment requested before the lessor is given a lessee's disclosure statement under section 11A. (5) If a prospective lessee or the lessee is liable to pay a reasonable sum referred to in subsection (4), the lessor must provide the prospective lessee or lessee with a copy of any account presented to the lessor in respect of those expenses. The prospective lessee or lessee is not required to make any such payment until the lessor has complied with this requirement. 15 Lessee to be provided with executed copy of lease (1) A retail shop lease is taken to include a provision to the effect that the lessor must provide the lessee with an executed copy of the lease within 3 months after the lease is returned to the lessor or the lessor's lawyer or agent following its execution by the lessee. (2) That 3-month period is to be extended for any delay attributable to the need to obtain any consent from a head lessor or mortgagee (being delay not due to any failure by the lessor to make reasonable efforts to obtain consent). 16 Certain leases must be registered (1) If a retail shop lease is for a term of more than 3 years or if the parties to the lease have agreed that the lease is to be registered, the lessor must lodge the lease for registration in accordance with the Real Property Act 1900 within 3 months after the lease is returned to the lessor or the lessor's lawyer or agent following its execution by the lessee. Maximum penalty—50 penalty units. (2) The 3-month period within which a lease must be lodged for registration is to be extended for any delay attributable to— (a) the need to obtain any consent from a head lessor or mortgagee (being delay not due to any failure by the lessor to make reasonable efforts to obtain consent), or (b) requirements arising under the Real Property Act 1900 that are beyond the control of the lessor. (3) For the purposes of this section, the term of a retail shop lease includes any term for which the lease may be extended or renewed at the option of the lessee. Note— For example, a retail shop lease is for a term of more than 3 years if it is for a term of 1 year with an option to renew for a further term of greater than 2 years. (4) This section does not affect the operation of the Real Property Act 1900. Part 2A Security bonds Division 1 Preliminary 16A Definitions (1) In this Part— approved form means a form approved by the Secretary. authorised officer means— (a) the Secretary, or (b) a person appointed by the Secretary to be an authorised officer— (i) for the purposes of this Part generally, or (ii) for the purposes of a particular provision of this Part in which the expression is used. prescribed proceedings means— (a) proceedings in a court (other than a prosecution) or before the Tribunal in relation to any matter which, under the terms or conditions of a lease, could, but for this Part, have given rise to a cla