Author: Matthew Curran
The Marshall Government has recently proposed a number of significant changes to the legislation which regulates the retail and commercial property sector in South Australia.
On 3 July 2019, the Honourable Vicki Chapman (Deputy Premier and Attorney General) introduced into Parliament and moved the second reading of the Retail and Commercial Leases (Miscellaneous Amendment Bill) 2019 (SA) (Bill). The Bill proposes a number of substantive amendments to the Retail and Commercial Leases Act 1995 (SA) (Retail Act).
The Bill incorporates and builds on the previous iteration of the legislation introduced into Parliament by the former Wetherill Government, which subsequently lapsed when Parliament was prorogued prior to the State election in 2018.
Matthew Curran, Senior Associate, examines the proposed amendments to the Retail Act and the impact that such changes are likely to have on the property sector in South Australia.
Application of the Retail Act
Under the Retail Act as it currently stands, if the annual rent of a retail shop lease exceeds the ‘prescribed threshold’, the Retail Act will not apply to such lease.
Since the ‘prescribed threshold’ under the Retail Act was increased in 2011 to $400,000 per annum, there has been much debate and judicial consideration as to whether a retail shop lease may move into, or out of the jurisdiction of the Retail Act.
Importantly, the Bill seeks to address this issue by amending section 4 of the Retail Act to make it explicitly clear that the Retail Act may apply, or cease to apply during the term of a retail shop lease. So in other words, a retail shop lease may move into, or out of the jurisdiction of the Retail Act.
Such movement may be ‘triggered’ by way of an adjustment to the ‘prescribed threshold’ (which may then bring a retail shop lease within the application of the Retail Act), or alternatively, by way of a rent review where the annual rent payable under a retail shop lease subsequently exceeds the ‘prescribed threshold’ (and such lease may then fall outside of the application of the Retail Act).
In addition, a retail shop lease may also move into, or out of the jurisdiction of the Retail Act as a result of a landlord or tenant either becoming, or ceasing to be the kind of landlord or tenant referred to within the Retail Act.
Specifically, the Retail Act may not apply to a retail shop lease entered into after the Bill becomes law, if:
- the landlord is the Crown (or instrumentality of the Crown) in South Australia, or a municipal or district council (or other local government authority); or
- the tenant is a body corporate whose securities are listed on a stock exchange outside of Australia and the external territories; or
- the tenant is a ‘public company’ or a ‘subsidiary’ of a public company (as defined in section 9 of the Corporations Act 2001 (Cth).
