Whilst the above clause limits what fees can be passed on to the tenant, it does not prevent the landlord from claiming reasonable legal or other expenses. Providing the landlord expenses are associated to or in connection with the assignment of the lease, or a sub-lease and extending to the investigation of a prospective assignee or new tenant including the required consent to the transfer or sub-lease,
An increase in the legal costs passed on to small businesses was a key concern addressed in the Commercial Tenancy (Retail Shops) Agreements Amendment Bill; striving to achieve the initiative to not allow such costs to be passed on when the amendments were enacted.
Notices as to renewals of leases
Prior to the amendments and upon expiry of the lease, a tenant had no right to extend the term of the lease. All the landlord was required to do was to advise the tenant in the preceding 12 months what the landlord’s intention were within 30 days of the tenant’s request.
The amendments at sections 13B now allow a unilateral termination of the lease by a tenant because of the landlord’s failure to respond to the above request for intentions.
Previously it was the tenant’s responsibility to renew any further options as per the lease agreement within the specified timeframe.
As noted by the Hon Troy Buswell, the then Minister for Commerce, in the second reading speech to the Western Australian Legislative Assembly:
“To provide extra protection for tenants who risk losing their livelihood and substantial financial investment if they inadvertently fail to or incorrectly exercise an option to renew their lease, the bill amends the act to require landlords to provide tenants with prior notification of the expiry date of their option to renew.”
The amendments now provide that the landlord is responsible for notifying the tenant in writing of the due date for which an option to renew the lease will be no longer exercisable. The notice is required to be provided at least 6 months but no more than 12 months prior to the option expiry date. If such a notice is not provided, then the option to renew is deemed to be no less than 6 months after the date in which the landlord gives notice.
Misleading and deceptive conduct
Before the recent amendments, the Commercial Tenancies Act only contained a prohibition on either the landlord or tenant engaging in unconscionable conduct.
The Commercial Tenancies Act has been amended to insert a new Division 2, also prohibiting the landlord and tenant from engaging in misleading and deceptive conduct. The purpose of the amendments is also to ensure that the State Administrative Tribunal has the power to consider disputes when conduct is alleged to occur.
Misleading or deceptive conduct under the Commercial Tenancies Act is conduct that is misleading or deceptive to either party to the lease or conduct that is likely to mislead or deceive another party to the lease. Section 16A defines misleading and deceptive conduct.
Misleading or deceptive conduct could be: –
• Provision of incomplete or inaccurate information NOT disclosed to a tenant in relation to the lease; and
• False representations about the amount of foot traffic that goes through a shopping centre on a given day that cannot be proven and is demonstrated to be inaccurate.
Misleading or deceptive conduct is not defined in the Commercial Tenancies Act however the law in relation to misleading and deceptive conduct as a provision within the Australian Consumer Law (ACL) will apply. The State Administrative Tribunal will have the power to hear these disputes.
As per Section 16D, only a party to the lease who has suffered or likely to suffer loss or damage due to the misleading and deceptive conduct by another party, may apply to the State Administrative Tribunal for an order for compensation or other appropriate relief.
The Small Business and Retail Shop Legislation Amendment Act 2011, which came into effect on 26 March 2012, established a Small Business Commissioner in Western Australia. The Small Business Commissioner assists small business operators to resolve complaints and disputes related to commercial retail tenancies.
Whilst the Small Business Commissioner can assist the parties to reach agreements over a retail tenancy matter, the Small Business Commissioner does not have the power to decide a retail tenancy matter. The State Administrative Tribunal and the courts have the responsibility and power to decide retail tenancy matters.
Notwithstanding the powers above, alternative dispute resolution is an effective and low-cost way that parties can seek to resolve a dispute without having to go to a court or tribunal. The aim to achieve a resolution to the dispute that is practical, acceptable to all parties and is binding.
If in the event the parties are not able to resolve their dispute through the above guidance, the Commissioner may decide to commence the more formal alternative dispute resolution in an attempt to resolve the dispute. An experienced mediator can facilitate the parties to achieve a mutually acceptable outcome in order to resolve the dispute.
This article has provided a brief review on how the amendments to the Act have affected the landlord-tenant responsibilities and relationship. This effect appears to shift the balance in favour of the tenant by providing increased protection, safeguards and certainty under the Act.
A review of the Explanatory Memorandum and the Minister’s second reading speech clearly indicate that such an effect is the intended result of the amendments. The potential question remains is whether or not the amendments have gone too far so as to increase the burden of compliance with the Act on landlords so much that it makes them commercially vulnerable.