What you need to know
The State and Federal Governments have introduced new measures to bring relief to commercial tenancies that have been disrupted by the Covid-19 pandemic.
In response to the COVID-19 pandemic, the Federal Government released a Mandatory Code of Conduct (National Code) on 7 April 2020, setting out 14 good faith leasing principles for application to small commercial leases. The individual States and Territories have agreed to introduce their own legislation to implement the National Code.
On 23 April 2020, WA passed the Commercial Tenancies (COVID-19 Response) Act 2020 (Act), which incorporates some, but not all, of the 14 leasing principles set out in the National Code.
Application of the WA Act
The Act will only apply to a “small commercial lease”, which includes:
A retail shop lease under the Commercial Tenancy (Retail Shops) Act 1985;
A lease where the tenant uses the premises for operating a “small business” as defined in the Small Business Development Corporation Act 1983;
A lease to an incorporated association; or
Any other lease of a class prescribed by the regulations.
The Emergency Period
The prohibited action measures in the Act relate to the emergency period commencing on 30 March 2020 and ending on 29 September 2020 (with the possibility of extension).
Under the Act, during the emergency period, if the tenant:
fails to pay rent, landlord’s outgoings or any other money due under the lease;
doesn’t open for business during the hours or times specified in the lease; or
is responsible for any other act or omission of a kind prescribed by WA regulations;
then the landlord cannot (unless otherwise allowed by WA regulations or a tribunal), amongst other things:
evict the tenant
re-enter the premises;
terminate the lease;
sue for damages;
require the payment of interest;
call upon any security or personal guarantee; or
exercise any other remedy that would otherwise have been available to the landlord.
Additionally, rent (other than rent based on turnover) cannot be increased during the emergency period.
Actions taken between 30 March 2020 and 23 April 2020
Any prohibited action carried out by a landlord prior to 23 April 2020 will be stayed or suspended to the end of the emergency period to the extent that it has not already been carried out.
WA Regulations – Watch this Space!
Given that WA regulations are expected, in the coming days or weeks, to introduce some or all of the 14 leasing principles set out in the National Code that were not already included in the Act, it is understandable that many landlords and tenants are currently feeling uncertain where they stand.
Under the Act, if parties have not been able to resolve disputes amongst themselves then they will generally need to seek resolution by the Small Business Commissioner, and where that fails then the matter may be referred to the State Administrative Tribunal.
About the author
Ken is a Partner in Taylor Smart's commercial team. He has in-depth legal knowledge in many diverse areas including business sales, rent roll sales, commercial leasing, transport and logistics, all aspects of estate and trust planning, and probate matters. He is a member of the Law Society of Western Australia.