Mandatory Code of Conduct: “…. Due to COVID-19”

23 APR 2020

 

Federal Government Reform to Retail Leases. What does this mean for you?

Due to COVID-19, the Federal Government has implemented sweeping changes that impact businesses across Australia, in an attempt to provide relief to tenants and landlords.

Purpose of the Code of Conduct

Whilst not yet codified the intention of the Government introducing the Code of Conduct was to impose a set of good faith principles between the landlord and the commercial tenants whom are genuinely affected by the COVID-19 pandemic.

Evildoers Beware

Common question: if you are in a situation where you have a tenant or a landlord attempting to manipulate the system and intentionally breach the lease, what can you do?

It is crucial to note the Code of Conduct only intends to cover eligible parties affected by the consequence of COVID-19. It does not apply to every lease agreement.

Specifically, it does not intend to cover breaches of leases not flowing from the impact of COVID-19. Examples of breaches which would be non-compliant include illegal activities or purposes, serious damages to the property or injury to the landlord or neighbours and non-compliance of rectification orders.

Parties, not in any way affected by COVID-19, are still required to honour the existing commercial tenancy agreement. This will include generally complying with the terms of the lease, paying rent, any outgoings and other agreed payments. Any non-COVID-19 related breaches of the lease will directly cause the offending party to be liable and not protected by the Code of Conduct.

Legislation still applies to the lease agreements

The Code of Conduct does not supersede any State or Territory legislation. This means other State laws that govern commercial tenancy agreements still apply. For example, the Retail Leases Act 1994 (NSW) will still apply. In addition, the Code of Conduct is meant to run parallel with the Competition and Consumer Act 2010 (Cth).

The devil is in the details

Commercial and retail leasing are made more complex with the introduction of the Code of Conduct. While many parties will see the Code as a welcome relief, there is an inherent ability for some parties to fraudulently try to protect themselves under the Code of Conduct, where it does not apply to them.

If you are facing a dispute with your tenant or landlord, or if you require tailored legal advice specific to your situation, please contact Aaran Johnson on ajohnson@marsdens.net.au or Bharath Balasubramanian on bbalasubramanian@marsdens.net.au or by phoning 02 4626 5077 to have a short discussion about your issues.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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