COVID-19 National Cabinet Mandatory Code of Conduct - A jurisdictional compendium of commercial leasing principles during COVID-19 - Minter Ellison
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COVID-19 National
Cabinet Mandatory
Code of Conduct
A jurisdictional
compendium of
commercial leasing
principles during
COVID-19
––
28 April 2021
Version 23
minterellison.com
ME_177164839_12
Foreword
––
The COVID-19 pandemic has had a significant impact on businesses and the economy across Australia and the world.
Aside from health and societal concerns, the pandemic, social distancing regulation and business restrictions have
resulted in an economic downturn, with individuals, businesses and governments looking for ways to alleviate the short
and long term impacts.
The disruption faced by landlords and tenants has impacted their commercial leases, affecting offices, retail and industrial.
In response, the federal government released a Mandatory Code of Conduct, outlining a set of good faith leasing
principles to support negotiations between landlords and their tenants.
While the Code aims to balance the interests of landlords and tenants, each state and territory has been tasked to
legislate as appropriate. This scenario has resulted in uncertainty across the industry as each state has set out to
implement legislation in their own different ways.
This compendium outlines the key aspects of the legislation as it applies to each jurisdiction in a themed and logical
manner. We have also outlined the state based approach for landlords and tenants navigating land tax and also drawing
out the importance of Foreign Investment Review Board considerations.
The pace of change can be unnerving for the industry, as so much is unknown about how the Code and the state based
legislation will play out in the future – there is no precedent for a situation like this! For lawyers, we feel there is an
ongoing need to come up with practical and pragmatic solutions to help protect landlords' and tenants' interests.
In order to rise above the uncertainty, however, it is critical to remember the spirit in which the Code was introduced and
despite this uncertainty that sentiment that should guide our recommendations and behaviour.
We hope this compendium will assist you to navigate your position during these unprecedented times. Please do get in
touch with any of the members of our team if we can support you further.
Virginia Briggs
Acting Chief Executive Officer & Managing Partner of the Firm
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19
ME_177164839_12Contents Proportionate rent reduction ........................................................................................ 27
Rent waivers ................................................................................................................... 28
LEASING PRINCIPLES .................................................................................... 4 Amortisation of rent deferral ........................................................................................ 29
STATE/TERRITORY LEGISLATION .............................................................................. 4 Statutory charges .......................................................................................................... 29
Principal Act ..................................................................................................................... 4 Loan repayments ........................................................................................................... 30
Delegated Legislation ...................................................................................................... 4 Waiver of expenses ....................................................................................................... 30
Amendment/ Extension Legislation ............................................................................... 4 Repayment period ......................................................................................................... 31
Useful External Resources.............................................................................................. 5 Interest and charges ..................................................................................................... 32
PANDEMIC PERIODS ..................................................................................................... 5 Security ........................................................................................................................... 32
Initial period ...................................................................................................................... 5 Lease extension ............................................................................................................. 33
Starts ................................................................................................................................. 5 Rent increase freeze ..................................................................................................... 35
Ends ................................................................................................................................... 5 Reduced trade................................................................................................................ 35
Extended period ............................................................................................................... 5 MEDIATION .................................................................................................................... 36
Starts ................................................................................................................................. 5 LAND TAX RELIEF ......................................................................................... 50
Ends ................................................................................................................................... 5 Scheme ........................................................................................................................... 50
ELIGIBILITY ...................................................................................................................... 6 Eligibility .......................................................................................................................... 50
Eligible Lease ................................................................................................................... 6 FOREIGN INVESTMENT REVIEW BOARD (FIRB) ........................................ 52
Eligible Tenant .................................................................................................................. 7 Commonwealth Legislation .......................................................................................... 52
Definition of Turnover .................................................................................................... 10 Period of Coverage ....................................................................................................... 52
RENT RELIEF PROCESS .............................................................................................. 11 Applies to ........................................................................................................................ 52
Process to initiating rent relief...................................................................................... 11 Threshold ........................................................................................................................ 52
Factors to take into account when negotiating rent .................................................. 15 Timing and Fees ............................................................................................................ 53
Can a tenant seek rent relief more than once? ......................................................... 17 Definition of Private Foreign Investors ........................................................................ 53
Confidentiality requirements ........................................................................................ 18 Definition of Foreign Government Investor ................................................................ 53
ADDITIONAL POINTS ................................................................................................... 19
This communication was prepared by MinterEllison for information only. This is not intended to be legal advice.
Prohibited enforcement actions ................................................................................... 19 Whilst this compendium is comprehensive and detailed, it is by no means exhaustive. Moreover, by paraphrasing the
When a landlord may take enforcement action ......................................................... 21 legislation, its meaning may at times be open to interpretation. Accordingly, this compendium must only be used as a
guide and not as an in-depth analysis of the finer legal points of the COVID-19 commercial tenancy legislation in
APPLICATION OF LEASING PRINCIPLES ................................................................. 26 Australia. If you require professional legal advice, please contact our experts listed at the end of this compendium
We strive to keep the information posted here accurate and up to date – but we cannot guarantee that it is error-free
Termination ..................................................................................................................... 26 or completely current. We use your personal data (such as your name, address and email) to send you the latest
Lease compliance .......................................................................................................... 26 legal developments, firm news, and invitations to events and legal briefings that may be of interest to you. View our
privacy policy online at https://www.minterellison.com/privacypolicy
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19 MinterEllison | 3
ME_177164839_12Leasing Principles
NSW QLD ACT VIC TAS SA WA NT
STATE/TERRITORY LEGISLATION
Principal Act COVID-19 Legislation COVID-19 Emergency COVID-19 Emergency COVID-19 Omnibus COVID-19 Disease COVID-19 Emergency Commercial Tenancies Tenancies Legislation
Amendment (Emergency Response Act 2020 (as Response Act 2020 (Emergency Measures) Act Emergency (Miscellaneous Response Act 2020 (COVID-19 Response) Act Amendment Act 2020
Measures) Act 2020 amended by the COVID- 2020 Provisions) Act 2020 2020
19 Emergency Response
and Other Legislation
Amendment Act 2021)
(Extension Act)
Delegated Retail and Other Retail Shop Leases and Leases (Commercial and COVID-19 Omnibus COVID-19 Disease COVID-19 Emergency Commercial Tenancies Nil.
Legislation Commercial Leases Other Commercial Retail) COVID-19 (Emergency Measures) Emergency (Miscellaneous Response (Commercial (COVID-19 Response)
(COVID-19) Regulation Leases (COVID-19 Emergency Response (Commercial Leases and Provisions) Act 2020 Notice Leases No 2) Regulations Regulations 2020
2020 (Regulation) Emergency Response) Declaration 2020 [repealed Licences) Regulations Under Section 22 2020 (Regulation) (Regulation)
Conveyancing (General) Regulation 2020 by Declaration (No 2) and 2020 (Regulation)
Regulation 2018 Sch 5 (Regulation) no longer available]
Amendment/ Retail and Other COVID-19 Emergency Leases (Commercial and COVID-19 Commercial and COVID-19 Disease COVID-19 Emergency Commercial Tenancies Business Tenancies
Extension Commercial Leases Response – Waiver and Retail) COVID-19 Residential Tenancies Emergency (Commercial Response (Expiry and (COVID-19 Response) COVID-19 Modification
Legislation (COVID-19) Amendment Deferral of Rents and Emergency Response Legislation Amendment Leases) Act 2020 Rent) Amendment Bill Amendment Notice 2020
Regulation 2020 Instalments) Regulation Declaration 2020 (Extension) Act 2020 (Commercial Leases Act) 2020 Regulations 2020 [This notice does not
(Amendment Regulation) 2020 (No 2) (Extension Regulation) implement the leasing
[This Regulation does not COVID-19 Omnibus COVID-19 Emergency principles but mandates
COVID-19 Disease
Retail and Other implement the leasing (Emergency Measures) Response (Commercial Commercial Tenancies that a landlord must not
Emergency (Commercial
Commercial Leases principles but commits (Commercial Leases and Leases No 2) (Prescribed (COVID-19 Response) give a tenant a notice to
Leases) Regulations 2020
(COVID-19) Regulation (No the Queensland Licences) Miscellaneous Period) Variation Amendment Regulations quit unless the landlord
(Regulation)
2) 2020 (Extension Government to providing Amendments Regulations Regulations 2020 2021 (Amendment has for at least 30
Regulation) rent relief for businesses 2020 (Extension (Extension Regulation) Regulation) business day, made good
who rent premises from Regulation) COVID-19 Disease faith efforts to negotiate
the State government to Emergency (Commercial with the tenant to allow
Retail and Other mitigate the financial Leases) (Financial Hardship Commercial Tenancies the tenant to remain in
Commercial Leases impact arising from the COVID-19 Omnibus Cessation Day) Notice 2021 (COVID-19 Response) the premises (some
(COVID-19) Regulation (No COVID-19 pandemic.] (Emergency Measures) Amendment Regulations exceptions apply). The
3) 2020 (Further Extension (Commercial Leases and (No. 2) 2021 (Further notice also provides the
Regulation) Licences) Amendment Amendment Regulation) Local Court with various
Retail Shop Leases and Regulations 2020 (Further powers to make
Other Commercial Extension Regulation)
COVID-19 Recovery Bill appropriate cost orders in
Leases (COVID-19
2021 leasing disputes due to
Emergency Response)
COVID-19 Omnibus COVID-19.]
Amendment Regulation
2020 (Extension (Emergency Measures)
Regulation) (Commercial Leases and
Licences) Amendment
Regulations 2021 (SME
Retail Shop Leases and Amendment Regulation)
Other Commercial
Leases (COVID-19
Emergency Response)
Amendment Regulation
2021 (Amendment
Regulation)
COVID-19 Emergency
Response and Other
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19 MinterEllison | 4
ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
Legislation Amendment
Act 2021 (Amendment
Act)
Useful External New South Wales Small Queensland Small ACT Government – Victorian Small Business Consumer, Building and Small Business Small Business Northern Territory
Resources Business Commissioner – Business Commissioner - COVID-19 commercial Commission - commercial Occupation Services Commissioner South Development Corporation – Consumer Affairs –
commercial leases and Small business leasing tenancies information tenancy relief scheme - Tasmania – Changes to Australia – Essential FAQs – COVID-19 commercial leases
COVID-19 FAQs advice and dispute (including a PDF document support for tenants and commercial tenancies during Information for Lessees commercial tenancy affected by COVID-19
resolution with guidance notes for landlords in response to COVID-19 (including advice and Lessors dealing with changes
landlords and tenants) COVID-19 FAQs pages for landlords and COVID-19.
tenants)
State Administrative
Tribunal – Commercial
Tenancy COVID-19
Response
PANDEMIC PERIODS
Initial period
Starts 24 April 2020 29 March 2020 1 April 2020 29 March 2020 1 April 2020 30 March 2020 30 March 2020 18 March 2020
Ends 23 October 2020 30 September 2020 28 September 2020 29 September 2020 31 January 2021 30 September 2020 29 September 2020 26 June 2020
Extended period
Starts 24 October 2020 1 October 2020 28 September 2020 30 September 2020 Currently no plans for 1 October 2020 30 September 2020 Currently no plans for an
(revoking the first extension extended period
Declaration)
Ends 31 December 2020 31 December 2020 The earlier of either the 28 March 2021 N/A 3 January 2021 28 March 2021 N/A
Note: The Regulation has first day no COVID-19
been extended by the emergency is in force or
Note 1: There is a second
Extension Act until any later day notified by
extended period to 28
30 September 2021 or the Minister; or 31 January
March 2021 for retail
such earlier date as 2021.
tenants only which have an
annual turnover of up to $5 prescribed by regulation.
million (Second Extended The period during which
Period). the leasing principles
apply expires on
31 December 2020
Note 2: On 25 March 2021,
the New South Wales
Parliament passed the
COVID-19 Recovery Bill,
which, inter alia, introduced
s 88 of the Retail Leases
Act 1994. The effect of this
is to preserve the statutory
protections afforded by the
Further Extension
Regulation upon its repeal
(which will occur on 1 July
2021). The practical
consequence of this is that,
if a tenant's leases is an
"impacted lease" during the
currency of the Further
Extension Regulation, then
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19 MinterEllison | 5
ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
the provisions of the Further
Extension Regulation
continue to apply, despite
its repeal. This is to ensure
that landlords cannot take
action against eligible
tenants for circumstances
arising during the
prescribed period unless
they comply with their
obligations under the
Further Extension
Regulation. This does not
impact a landlord's rights in
relation to breaches of a
lease that occur either
before or after the
prescribed period.
ELIGIBILITY
Eligible Lease ▪ retail shop lease under Initial period: ▪ any lease subject to ▪ a lease of retail ▪ tenancies where the ▪ retail shop lease 'small commercial lease' ▪ retail shop leases or
the Retail Leases Act provided that the tenant the Leases premises within the premises, or the part of under the Retail and which is a: any other agreement
1994 (this includes any is an eligible tenant, and (Commercial and meaning of the Retail premises, to which the Commercial Leases ▪ retail shop lease under (including sublease)
agreement under which the lease (or an Retail) Act 2001 that Leases Act 2003 (Vic); lease relates are being Act 1995; or the Commercial under which business
a person grants to agreement to enter into was entered into ▪ a lease of premises used (or were, at any ▪ a lease under the Tenancy (Retail Shops) premises are let or
another person for the lease) is binding on before 7 April 2020 which are let for the time during the period Landlord and Tenant Agreements Act 1985 hired to a person
value a right of the tenant (whether or (including leases sole or predominant from 1 February 2020 to Act 1936; or (under section 3 of that (whether or not for
occupation of premises not the lease has usually excluded from purpose of carrying on 9 April 2020, being Act, a retail shop lease exclusive possession
▪ any other agreement
for the purpose of the commenced) as at 28 application of the Act a business; or used) by the tenant, means a lease that or in writing); and
for value for the right
use of the premises as May 2020, then: under section 12(2)(a) wholly or predominantly provides for the ▪ business leases that
▪ a licence, sub-licence to occupy premises
a retail shop, whether or and (b). for the carrying on of any occupation of a retail do not fall within the
▪ a retail shop lease (or agreement for a for carrying on a
not the right is a right of business, trade or Business Tenancies
under the Retail Shop (s 3(2) of the Declaration). licence or sub-licence), business (whether or shop. This definition is
exclusive occupation, profession. subject to some (Fair Dealings) Act
Leases Act 1994; or whether or not in not the right is a right
whether the agreement (cl (a) of the 9 April 2020 exceptions, including 2003 such as a shop
▪ a lease, other than a writing or partly in of exclusive
is express or implied, Notice under Section 22 of where the retail shop that has a lettable
retail shop lease, writing, and whether occupation; whether
and whether the the Principal Act). has a lettable area that area of 1,000 m2 or
under which the express or implied, the agreement is
agreement is oral or in exceeds 1000 square more, or a shop that
premises are to be under which a person The Commercial Leases Act expressed or implied;
writing, or partly oral metres.); is leased to a listed
wholly or has the right to occupy, covers commercial leases, whether the
and partly in writing); or corporation) are still
predominantly used non-exclusively, a part meaning: agreement is oral or ▪ lease of premises that
▪ any agreement of premises for the sole in writing, or partly is used by a tenant eligible.
for carrying on a ▪ a lease to which
regarding the leasing of or predominant oral and partly in who owns or operates (s 5(1) of the Principal
business (a Schedule 1 to the Fair
premises or land for purpose of carrying on writing). a small business; or Act).
prescribed lease); Trading (Code of
commercial purposes to a business.
and Practice for Retail ▪ a lease where the
which the
if a tenant under an Does not apply to a retail Tenancies) Regulations does not apply to a tenant is an
Conveyancing Act 1919 ▪ ▪
affected lease is a lease or a non-retail 1998 (Tas) applies; or lease under the incorporated
applies.
franchisee, then a commercial lease if: ▪ a lease of premises Pastoral Land association under the
lease under which ▪ the tenant is occupied, or to be Management and Associations
▪ does not apply to non- the franchisor is the 'connected with' or an occupied, wholly or Conservation Act Incorporation Act 2015;
retail licences. tenant of the 'affiliate' of one or more predominantly for 1989 or a lease under ▪ or a lease prescribed
▪ does not apply to leases premises occupied entities (within the business purposes. the Crown Land by the Regulation,
entered into after 24 by the franchisee is meaning of sections The Act does not apply in Management Act which includes a lease
April 2020 (but does also an affected 328-125 and 328-130 relation to: 2009. where the tenant is a
apply to options or any lease. the Income Tax (r 3(1) of the Regulation). corporation registered
▪ a lease that is within a
other extension or ▪ does not include a Assessment Act 1997 under the Corporations
class of leases
renewal of a lease on lease under which (Cth), respectively) and (Aboriginal and Torres
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19 MinterEllison | 6
ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
the same terms as the the premises are to the aggregate turnover prescribed by Strait Islander) Act
existing lease). be used wholly or of the group of entities Regulation; and 2006 (Cth) and uses
▪ does not apply to leases predominantly for a exceeds $50 million; ▪ a commercial lease in the land or premises
under the Agrictulural farming business ▪ the premises may be relation to premises for a commercial
Tenancies Act 1990. under the Farm used wholly or being occupied wholly or purpose.
Business Debt predominantly for predominantly for (s 3 of the Principal Act).
(r 3 of the Retail Regulation
Mediation Act 2017. agricultural, pastoral, business purposes by a
,Extension Retail Regulation ▪ note that a 'small
and Further Extension ▪ does not include a horticultural, lessee on behalf of the business' is a business
Regulation, r 1 of the lease, permit, licence apicultural, poultry lessor. that: has a relatively
Commercial Regulation and or sublease under the farming, dairy farming (s 4, 5 and 9(2) of the small share of the
Extension Commercial Land Act 1994 unless or similar activities; or Commercial Leases Act). market in which it
Regulation). it is a sublease of ▪ an entity has a competes; is managed
premises under a prescribed method of personally by the
lease that has a rental control or influence, owner or directors; is
category of 13 or 16 through the holding of not a subsidiary of a
under that Act, or the prescribed interest, larger business; or is
sublessor under the right or power, in declared to be a small
sublease is not a relation to acts or business.
government leasing decisions relating to
entity within the the ownership,
meaning of the Land [The Principal Act
management or affairs
Regulation 2009. stipulates that the
of a tenant that is a
provisions of any lease or
(s 23(8) of the Principal body corporate.
any other contract or
Act, r 5 of the (s 12-14 of the Principal agreement are taken to be
Regulation). Act, r 5 and 6 of the modified to the extent
Regulation and new r 4A necessary to give effect to
Extended period: created by r 5 of the the operation of the
Extension Regulation). Principal Act. A lease or
In addition to the above,
the lessee must also be any other contract or
eligible for JobKeeper for agreement is also of no
the period starting on 28 effect to the extent that it
September 2020 and purports to exclude or
ending on 4 January restrict the operation of the
2021. Principal Act. A purported
waiver of a right, remedy or
(new r 5(3A) created by r
benefit conferred on a
3 of the Extension
person under the Act is
Regulation).
also of no effect.]
(s 6 and 7 of the Principal
Act).
Eligible Tenant Initial period: Initial period: tenants that: Initial period: a tenant whose: a tenant that: Initial period:
tenants that: the tenant under the ▪ qualify for the a tenant that: ▪ turnover, in a continuous ▪ is suffering financial ▪ have a turnover in the
▪ qualify for the lease: JobKeeper scheme ▪ is an employer who one month period since hardship as a result 2018-2019 financial
JobKeeper scheme ▪ is an SME entity* under the Coronavirus qualifies for the 1 February 2020, has of the COVID-19 year of less than
under sections 7 and 8 (being an entity that Economic Response JobKeeper scheme reduced by more than pandemic; and $50 million; and
of the Coronavirus carries on business Package (Payments and is a participant in 30% in at least one ▪ has a turnover in a ▪ during that relevant
Economic Response or is a non-profit and Benefits) Rules the JobKeeper continuous one month relevant year of less period, qualify for the
Package (Payments and body during the 2020 (Cth), sections 7 scheme; and period since 1 February than $50 million, JobKeeper scheme
Benefits) Rules 2020 current financial year and 8; and 2020; and under section 7 of the
▪ is an SME entity. is an 'affected lessee'.
(Cth); and and one or both of ▪ have a turnover in the ▪ the turnover for the Coronavirus Economic
Note that an SME entity is (r 3(2) of the Regulation).
▪ have a turnover in the the following apply: 2018-2019 financial period from 1 February Response Package
an entity that carries on
2018-2019 financial ▪ the entity has a likely year of less than 2019 to 31 January 2020 (Payments and
business or is a non-profit
year of less than annual turnover of $50 million. is not more than $50 A tenant will be taken to Benefits) Rules 2020
body during the current
$50 million. less than $50 million (s 3(1) of the Declaration). million. be suffering financial (Cth), or has at any
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ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
(r 4 of the Retail Regulation, for the current financial year and one or (cl (b) and (c) of the 9 April hardship as a result of the time prior to 28
r 2 of the Commercial financial year; or both of the following apply: 2020 Notice under Section COVID-19 pandemic if September 2020
Regulation). ▪ the entity or non- ▪ it has a likely annual 22 of the Principal Act). the tenant is eligible for, during the initial period,
profit body had an turnover of less than or receiving, a JobKeeper satisfied the decline in
annual turnover of $50 million for the payment in respect of the turnover test set out in
Extended period: Under the Commercial
less than $50 million current financial year; business of the tenant section 8 of those
tenants that: Leases Act a lessee is an
in the previous or (whether in their capacity Rules.
eligible person at a time if
▪ qualify for the financial year); and as an employer or on (Schedule 1 cl 2(1) of the
▪ it had an annual the time occurs after the
JobKeeper scheme their own behalf). Regulation).
▪ the tenant or an entity turnover of less than person is or:
under sections 7, 8, 8A (r 3(5) of the Regulation).
that is connected $50 million in the ▪ becomes entitled, under
and 8B of the
with, or an affiliate of, previous financial year. the Jobkeeper Rules, for The Court may make a Extended periods:
Coronavirus Economic
the tenant (s 13 of the Principal Act, r a JobKeeper payment or determination as to
Response Package For the period beginning
responsible for, or 3 of the SME Amendment becomes qualified, whether or not a tenant is
(Payments and on 28 September 2020 and
involved in, Regulation and s 5(1) of under the JobKeeper an affected lessee and in
Benefits) Rules 2020 ending on 3 January 2021,
employing staff for the Guarantee of Lending Rules, for the JobKeeper making such a
(Cth); and tenants that:
the business carried to Small and Medium scheme; and determination may have
▪ have a turnover in the on at the leased regard to: ▪ have a turnover in the
Enterprises (Coronavirus ▪ becomes an SME entity;
2018-2019 financial premises, is eligible 2019-2020 financial
Economic Response or ▪ whether or not the
year of less than for the JobKeeper year of less than
Package) Rules 2020 (Cth) tenant is eligible for,
$50 million. scheme (but note that ▪ the person satisfies the $50 million; and
(SME Rules)). or receiving, a
(r 4 of the Extension Retail an entity that is a criteria prescribed by the ▪ during that relevant
JobKeeper payment
Regulation, r 2 of the franchisee is not Extended period: Regulation, period, qualify for the
in respect of the
Extension Commercial connected with, or an a tenant that: even if any of the criteria business of the JobKeeper scheme or
Regulation). affiliate of, the ceases to apply to the tenant (whether in nevertheless satisfy
▪ is an entity entitled
franchisor merely person during the financial their capacity as an any test relating to
under section 6, 11 or
because the entity is hardship period. employer or on their turnover during July,
Second extended period: 12A of the Coronavirus
a franchisee). (s 6(1) of the Commercial own behalf); August and September
retail tenants that: Economic Response
(r 5 of the Regulation). Leases Act). 2020 by which a
Package (Payments ▪ any reduction in
▪ qualify for the person can qualify for
and Benefits) Rules Note that an SME entity is an turnover of the
JobKeeper scheme the JobKeeper scheme
Extended period: 2020 (Cth) entity that carries on business of the
under sections 7, 8, 8A during these months.
(JobKeeper Rules) for business or is a non-profit tenant (as verified by
and 8B of the the tenant under the (new Schedule 1 cl 2(1A)
a JobKeeper payment; body during the current financial records or
Coronavirus Economic lease: and Schedule 1 cl 2(1C)
and financial year and one or statements provided
Response Package ▪ is an SME entity* created by r 7(2) of the
▪ is an SME entity. both of the following apply: by the tenant) during
(Payments and (being an entity that Extension Regulation).
it has a likely annual a specified period as
Benefits) Rules 2020 carries on business Note that an SME entity is ▪
turnover of less than $50 compared with
(Cth); and or is a non-profit an entity that carries on
million for the current another specified For the period beginning
▪ have a turnover in the body during the business or is a non-profit
financial year; or period determined by on 4 January 2021 and
2018-2019 financial current financial year body during the current
the Court as being ending on 28 March 2021,
year of less than and one or both of financial year and one or ▪ it had an annual
relevant to the tenants that:
$5 million. the following apply: both of the following apply: turnover of less than $50
circumstances of ▪ have a turnover in the
▪ it has a likely annual million in the previous
(r 4 of the Further Extension ▪ the entity has a likely whether or not a 2019-2020 financial
turnover of less than financial year.
Regulation). annual turnover of tenant is a suffering year of less than
less than $50 million $50 million for the (s 5(1) of the Guarantee of financial hardship as $50 million; and
for the current current financial year; Lending to Small and a result of the
or Medium Enterprises ▪ during that relevant
financial year; or COVID-19 pandemic.
(Coronavirus Economic period, qualify for the
▪ the entity or non- ▪ it had an annual (r 9(3) and r 9(4) of the
Response Package) Rules JobKeeper scheme or
profit body had an turnover of less than Regulation).
2020 (Cth)). nevertheless satisfy
annual turnover of $50 million in the
any test relating to
less than $50 million previous financial year.
turnover during
in the previous (s 13 of the Principal Act, October, November
financial year); and new r 4A created by r 5 of and December 2020
▪ the tenant under the the Extension Regulation, r by which a person can
lease or an entity that 3 of the SME Amendment qualify for the
is connected with, or
COVID-19 National Cabinet Mandatory Code of Conduct | A jurisdictional compendium of commercial leasing principles during COVID-19 MinterEllison | 8
ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
an affiliate of, the Regulation and s 5(1) of JobKeeper scheme
tenant responsible the SME Rules). during these months.
for, or involved in, (new Schedule 1 cl 2(1B)
employing staff for and Schedule 1 cl 2(1C)
the business carried created by r 7(2) of the
on at the leased Extension Regulation).
premises, must also
be eligible for the
JobKeeper scheme
for the period starting
on 28 September
2020 and ending on 4
January 2021.
(r 5 of the Regulation,
new r 5(3A) created by r
3 of the Extension
Regulation).
*Note: The definition of
SME Entity was amended
in November 2020 by the
Guarantee of Lending to
Small and Medium
Enterprises (Coronavirus
Economic Response
Package) Amendment
Rules 2020 (Cth) to
increase the turnover
threshold for SME entities
from $50 million to $120
million. The Amendment
Regulation amended the
definition of SME Entity to
clarify that the $50 million
threshold applies and
was always intended to
apply.
The Amendment
Regulation also includes
transitional provisions to
address any steps taken
regarding leases which
may have become an
'affected lease' as a result
of the threshold change.
Those leases (defined in
the Amendment
Regulation as 'ineligible
leases') are deemed to
never have been an
'affected lease', and are
not afforded the
protections under the
Regulation. Further
amending regulations are
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ME_177164839_12NSW QLD ACT VIC TAS SA WA NT
expected to be released
shortly.
Definition of ▪ for franchisees, this is ▪ the annual turnover ▪ for franchisees, this is Initial period: The annual turnover of an The following turnover in ▪ for franchisees, this is
Turnover the turnover of the of the business the turnover of the The annual turnover of an entity for a financial year is a relevant year was less the turnover of the
business conducted at carried on by the business conducted at entity for a financial year is the total of the following that than $50 million: business conducted at
the premises or land tenant at the the premises or land the total of the following is earned in the year in the ▪ if the lessee is a the premises or land
concerned; premises; or concerned; that is earned or received course of the business: franchisee - the concerned;
▪ for entities that are ▪ if the tenant is an ▪ for corporations that by an entity in the most ▪ the proceeds of sales of turnover of the ▪ for corporations that
members of a group entity connected with, are members of a recent financial year in the goods and/or services; business conducted are members of a
(i.e. related bodies or an affiliate of, group (i.e. related course of the business: ▪ commission income; at the premises the group (i.e. related
corporate), this is the another entity, the bodies corporate), this ▪ the proceeds of sales subject of the bodies corporate), this
▪ repair and service
group turnover; aggregate turnover of is the group turnover; of goods and/or commercial lease; is the group turnover;
income;
▪ in any other case, this is the entities; ▪ in any other case, this services; ▪ if the lessee is a and
▪ rent, leasing and hiring
the turnover of the ▪ the turnover of a is the turnover of the ▪ commission income; corporation that is a ▪ in any other case, this
income;
business conducted by business includes business conducted by member of a group is the turnover of the
▪ repair and service ▪ government bounties
the tenant; and income earned from the tenant. (i.e. related bodies business conducted by
income; and subsidies;
▪ turnover includes internet sales but (s 3(1) of the Declaration). corporate) - the the tenant at the land
does not include a ▪ rent, leasing and hiring ▪ interest, royalties and turnover of the group; or premises that are
internet sales of goods
grant or assistance income; dividends; and the subject of the small
and services. ▪ in any other case -
given by the ▪ government bounties ▪ other operating income. the turnover of the commercial lease.
(r 4 of the Retail Regulation,
Commonwealth, and subsidies; business conducted (Schedule 1 cl 2(1) of the
Extension Retail Regulation (s 5(2) of Guarantee of
State or a local ▪ interest, royalties and by the lessee at the Regulation, new Schedule
and Further Extension Lending to Small and
government to dividends; and premises the subject 1 cl 2 (1C) created by r
Regulation, r 2 of the Medium Enterprises
mitigate the effects of of the commercial 7(2) of the Extension
Commercial Regulation and ▪ other operating (Coronavirus Economic
the COVID-19 lease; and Regulation).
Extension Commercial income. Response Package) Rules
emergency.
Regulation). (s 5(2) of the SME Rules, r 2020 (Cth)). ▪ turnover includes
(r 5(3) and 5(5) of the internet sales of
5 of the Regulation and r 3
Regulation). goods and services.
of the SME Amendment
Regulation). (r 3(2)(b) and r 3(4) of the
Regulation).
Extended period:
'Relevant year' means:
The annual turnover of an
▪ the 2018/19 financial
entity for a financial year is
year; or
the total of the following
that is earned or received ▪ a 12 month period or
by an entity in the most such lesser period as
recent financial year in the determined by the
course of the business: Court; or
▪ the proceeds of sales ▪ a 12 month period or
of goods and/or such lesser period
services; determined by the
Minister by notice in
▪ commission income;
the Gazette.
▪ repair and service
(r 3(1) of the Regulation).
income;
▪ rent, leasing and hiring
income;
▪ government bounties
and subsidies;
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▪ interest, royalties and
dividends; and
▪ other operating
income.
A 'coronavirus economic
response payment' (as
defined in section 6 of the
Coronavirus Economic
Response Package
(Payments and Benefits)
Act 2020 (Cth)
(JobKeeper Act)) should
not be included for the
purposes of calculating
'turnover' under the
Regulation and Extension
Regulation. This includes
all of the kinds of payments
provided for by the
JobKeeper Rules.
(s 5(2) of the SME Rules, r
5 of the Regulation, new r
5(2) and 5(3) created by r
6 of the Extension
Regulation and s 6 of the
JobKeeper Act).
RENT RELIEF PROCESS
Process to Initial period: Initial period and Either party may initiate, Initial period: A party to a protected lease The parties to a Initial period and
initiating rent Any party to a commercial extended period: but the obligation is on the A tenant under an eligible must, as soon as possible commercial lease and extended period:
relief lease to which an impacted A party (the initiator) to landlord to have engaged lease may request rent after the commencement any guarantor or other A tenant may request rent
lessee is a party (an an affected lease may, in with the tenant about rent relief from the landlord. day (being 3 June 2020), person with an interest in relief from the landlord. As
impacted lease), may writing, ask another party relief. As set out in the A tenant's request for rent
continue to conduct, or enter the lease must make a a result of the Further
request the other parties to to the lease to negotiate Declaration, a landlord relief must be in writing
into and conduct, genuine attempt to Amended Regulations, the
renegotiate the rent payable the rent payable under, must not give a termination negotiations during the negotiate in good faith final day for an eligible
and accompanied by:
under, and other terms of, and other stated notice to an impacted financial hardship period in the rent payable under, tenant to make a rent relief
tenant in relation to a ▪ a statement that the relation to the rent payable and other terms of, the
the impacted lease. conditions of, the lease. request relating to the
prescribed breach unless tenant's lease is an under the lease. commercial lease during
A party to an impacted After the initiator's emergency period is 27
the landlord has engaged eligible lease and not the applicable prescribed
lease must, if requested, request is made, the A party to a protected lease May 2021.
in good faith negotiations excluded from the period.
renegotiate in good faith the parties must, as soon as may request the other party (Schedule 1 cl 5, 6 and 8 of
with the tenant. operation of the
rent payable under, and practicable, give each to the lease to renegotiate (r 6 of the Regulation). the Regulation).
Regulation; and
other terms of, the impacted other information relating (s 6(1) of the Declaration). the rent payable under the
▪ information that lease.
lease. to the request that is:
evidences that the A tenant's request must be
An impacted lessee must ▪ true, accurate, A party to a protected lease
tenant is an SME entity in writing and accompanied
give the lessor the following correct and not must, if such request is
and qualifies for and is by:
in respect of the impacted misleading; and made, renegotiate in good
a participant in the ▪ a statement that the
lease: faith the rent payable under
▪ sufficient to enable JobKeeper scheme. tenant's lease is a small
the lease.
▪ a statement to the effect the parties to On receipt of such a commercial lease, and
that the tenant is an negotiate in a fair and (s 12(1) and s 18 of the
request, the landlord must the tenant is an eligible
impacted lessee; and transparent way. Commercial Leases Act).
offer rent relief to the tenant in relation to the
▪ evidence that the Examples of sufficient tenant within 14 days after small commercial
lesssee is an impacted information include: receiving that request (or a lease;
lessee. ▪ a clear statement different timeframe as ▪ sufficient and accurate
about the terms of agreed between the information that
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If the impacted lessee does the lease the initiator landlord and the tenant in evidences that the
not provide such a is seeking to writing). tenant is an eligible
statement and evidence of negotiate; and The offer must apply tenant in relation to the
their impacted lessee ▪ a statement by the during the relevant period small commercial
status, the lessor is deemed tenant that and be based on all the lease;
to have complied with these demostrates why the circumstances of the lease. ▪ sufficient and accurate
requirements. As these lease is an affected It must relate to up to information that
evidentiary obligations were lease, accompanied 100% of the rent payable evidences the
introduced under the by supporting during the relevant period. reduction in the
Amendment Regulation, information and No less than 50% of the tenant's turnover that
they only extend to evidence, such as: relief offered must be in the the tenant has
renegotiations commenced form of a waiver, unless experienced during the
▪ accurate financial
but not completed before otherwise agreed in initial period and the
information or
the amendments writing. extended period (if
statements about the
commenced (on 3 July applicable) or relevant
turnover of the Following receipt of a
2020). part of the initial period
tenant's business; landlord's offer by the
Under the Retail Regulation, tenant, the tenant and the and the extended
▪ information
the evidentiary landlord must negotiate in period (if applicable),
demonstrating that
requirements do not extend good faith with a view to for which the tenant is
the tenant is an SME
to a matter for agreeing on the rent relief eligible and is
entity, having regard
which a retail tenancy claim to apply during the relevant associated with the
to any entities that
has been made pursuant to period. business conducted at
the tenant is
section 71 of the Retail the land or premises
connected with, or an (r 10 of the Regulation).
Leases Act 1994. Similarly, that are the subject of
affiliate of;
under the Commercial Extended period: the small commercial
Regulation, the new ▪ evidence of the lease.
tenant's eligibility for, A tenant under an eligible
obligations do not extend to Upon receipt of a request
or participation in, the lease may request rent
proceedings which have for rent relief a landlord
jobkeeper scheme; relief from the landlord.
commenced in a court. must offer relief within 14
(r 4(1), 7 and 13 of the ▪ information about any A tenant's request for rent
days of receiving the
Retail Regulation as steps the tenant has relief must be in writing
request or such other
amended by the taken to mitigate the and accompanied by:
agreed period.
Amendment Regulation, r effects of the COVID- ▪ a statement from the
A landlord's offer must be
2(1), 5 and 11 of the 19 emergency on the tenant:
in writing and in
Commercial Regulation as tenant's business, – that the tenant's lease is accordance with the
amended by the including the details an eligible lease; principles set out in
Amendment Regulation). of any assistance – that the lease is not Schedule 1 cl 7 of the
being received by the excluded from the Regulation.
Extended period: tenant from the operation of the
Commonwealth, [See below: Factors to take
Any party to a commercial Regulation; and
State or a local into account when
lease to which an impacted – setting out the tenant's
government; and negotiating rent]
lessee is a party (an decline in turnover that
impacted lease) may ▪ in relation to a Following receipt of the
is associated with only
request the other parties to franchisor, landlord's offer, the tenant
the premises,
renegotiate the rent payable information about any and landlord must
▪ information that negotiate with a view to
under, and other terms of, concession or benefit
evidences that the agreeing on rent relief to
the impacted lease. provided to or by the
tenant is an SME entity apply during the initial
A party to an impacted franchisor in relation
and is an entity entitled period and the extended
lease must, if requested, to rent or outgoings
to a JobKeeper period (if applicable).
renegotiate in good faith the for the premises
payment under section
rent payable under, and occupied by the Rent relief under the
6, 11 or 12A of the
other terms of, the impacted franchisee, and any Regulation may be given
JobKeeper Rules,
lease. Renegotiations must undertakings to pass effect by the landlord and
including:
commence within 14 days those concessions or tenant by a written
benefits on to the – the receipt number variation or any other
of receiving the request or
franchisee. issued by the written agreement between
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another period agreed to by Once a request has been Commissioner of the landlord and tenant that
the parties. made: Taxation when the gives effect to the rent
A party to the impacted ▪ the parties must tenant elected to relief, either directly or
lease may make a second negotiate the participate in the indirectly.
or subsequent request for conditions of the JobKeeper scheme;
renegotiation if the request lease the subject of and
is made during the the initiator's request; – a copy of the tenant's
prescribed period, and does ▪ most recent notice
within 30 days after a
not relate to rent for a under the JobKeeper
party receives
period which rent has Rules to the
sufficient information
already been reduced, Commissioner of
about a request, the
waived or deferred following Taxation, as evidence
landlord must offer
a previous renegotiation. that the tenant is an
the tenant a
entity entitled under
An impacted lessee must reduction in the
section 6, 11 or 12A of
give the lessor the following amount of rent
the JobKeeper Rules
in respect of the impacted payable under the
for a JobKeeper
lease: lease, and any
payment, and
▪ a statement to the effect proposed changes to
other stated ▪ information that
that the tenant is an
conditions; evidences the tenant's
impacted lessee; and
stated decline in
▪ evidence that the ▪ the offer must relate
turnover, including at
lesssee is an impacted to any or all of the
least one of the
lessee. rent payable under
following:
the affected lease
If the impacted lessee does – extracts from the
during the initial
not provide such a tenant's accounting
period and the
statement and evidence of records; or
extended period (if
their impacted lessee
applicable) and in – the tenant’s business
status, the lessor is deemed
respect of the initial activity statement
to have complied with these relating to the relevant
period, provide for no
requirements. turnover test period; or
less than 50% of the
An impacted lessee will also rent reduction offered – statements issued by
need to provide evidence to be in the form of a an ADI in respect of the
that they are eligible for the waiver of rent (this tenant’s account; or
second stage of JobKeeper obligation does not – a statement prepared
in order to request a apply during the by a practising
renegotiation of the lease extended period) and accountant.
for the extended period. have regard to the A tenant's decline in
A renegotiation commenced factors set out in the turnover must be:
but not concluded under row below.
the Regulation (i.e. prior to ▪ expressed as a whole
On receiving the percentage; and
24 October 2020) may be landlord's offer, the
continued and concluded tenant and landlord must ▪ calculated consistently
under the Extension cooperate and act with the actual 'decline
Regulation. Similarly, a reasonably and in good in turnover test'
renegotiation commenced faith in negotiating a applying to the tenant
but not concluded before 31 reduction in the amount and in relation to the
December 2020 under the of rent paybale under the most recent turnover
Extension Regulation, may lease for the initial period test period applying to
be continued and and the extended period the tenant (see
concluded after this date. (if applicable), including sections 8 and 8A of
Under the Extension Retail any conditions relating to the JobKeeper Rules).
Regulation, the evidentiary the reduction in rent. On receipt of such a
requirements do not extend (r 14 and 15 of the request, the landlord must
to a matter for Regulation, amendment offer rent relief to the
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which a retail tenancy claim of r 15 by r 7 of the tenant within 14 days after
has been made pursuant to Extension Regulation). receiving that request (or a
section 71 of the Retail different timeframe as
Leases agreed between the
Act 1994. Similarly, under landlord and the tenant in
the Extension Commercial writing).
Regulation, the new The offer must apply to the
obligations do not extend to period starting on the date
proceedings which have of the tenant's request for
commenced in a court. rent relief and ending on
(r 4(1), 7 and 13 of the 28 March 2021, and be
Extension Retail Regulation, based on all the
r 2(1), 5 and 11 of the circumstances of the lease.
Extension Commercial It must relate to up to
Regulation). 100% of the rent payable
during the period starting
Second extended period: on the date of the tenant's
Any party to a commercial request for rent relief and
lease to which an impacted ending on 28 March 2021.
lessee is a party (an No less than 50% of the
impacted lease) may relief offered must be in the
request the other parties to form of a waiver, unless
renegotiate the rent payable otherwise agreed in
under, and other terms of, writing.
the impacted lease. The landlord's request for
A party to an impacted rent relief must be, at a
lease must, if requested, minimum, proportional to
renegotiate in good faith the the decline in the tenant's
rent payable under, and turnover associated with
other terms of, the impacted only the premises.
lease. Renegotiations must Following receipt of a
commence within 14 days landlord's offer by the
of receiving the request or tenant, the tenant and the
another period agreed to by landlord must negotiate in
the parties. good faith with a view to
A party to the impacted agreeing on the rent relief
lease may make a second to apply during the period
or subsequent request for starting on the date of the
renegotiation if the request tenant's request for rent
is made during the relief and ending on 28
prescribed period, and does March 2021.
not relate to rent for a (r 10 of the Regulation,
period which rent has amendment of r 10 by r 8
already been reduced, of the Extension Regulation
waived or deferred following and r 5 of the Further
a previous renegotiation. Extension Regulation).
An impacted lessee must
give the lessor the following
in respect of the impacted
lease:
▪ a statement to the effect
that the tenant is an
impacted lessee; and
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▪ evidence that the
lesssee is an impacted
lessee.
If the impacted lessee does
not provide such a
statement and evidence of
their impacted lessee
status, the lessor is deemed
to have complied with these
requirements.
An impacted lessee will also
need to provide evidence
that they are eligible for the
third stage of JobKeeper
which will commence on 4
January 2021 in order to
request a renegotiation of
the lease for the Second
Extended Period.
A renegotiation commenced
but not concluded under
the Further Extension
Regulation (i.e. prior to 28
March 2021) may be
continued and concluded
after 28 March 2021.
Under the Further Extension
Regulation, the evidentiary
requirements do not extend
to a matter for
which a retail tenancy claim
has been made pursuant to
section 71 of the Retail
Leases
Act 1994.
(r 4, 7 and 13 of the Further
Extension Regulation).
Factors to take Negotiations of both the When making an offer of A landlord engages in good Initial period: Negotiations for rent relief Negotiations of both the The following principles
into account rent and other terms must rent relief, landlords must faith negotiations with an A landlord's offer of rent must have regard to the rent and other terms apply to a landlord's offer
when have regard to: have regard to: impacted tenant if the relief must take into individual circumstances of must have regard to: of rent relief and
negotiating rent ▪ the economic impacts ▪ all the circumstances landlord, in acknowledging account: the protected lessee and of ▪ the economic negotiations between
of the COVID-19 of the tenant and the the financial hardship ▪ the reduction in a the lessor, taking into impacts of the landlords and tenants in
pandemic; and affected lease, suffered by the tenant tenant's turnover account such matters as: COVID-19 pandemic relation to rent relief:
including the because of the economic associated with the ▪ the degree of financial on the parties to the ▪ an offer of rent relief
▪ the Leasing Principles
set out in the Code. reduction in turnover impact of COVID-19, premises during the hardship of the lessee lease; must apply to the
of the business negotiates with the tenant relevant period; and of the lessor; applicable prescribed
(r 7(4) of the Retail ▪ the provisions of the
carried on at the having regard to the period;
Regulation and r 7(6) of the ▪ any waiver given in ▪ whether the lease has Act and the
leased premises overarching principles and
Extension Retail Regulation respect of outgoings or expired and the lease is Regulation; and ▪ the rent relief offered
during the initial leasing principles set out in
and Further Extension other expenses being held over or ▪ the National Cabinet's must be at least
period and during the the Code. payable under the whether the lease is proportionate to the
Regulation, r 5(4) of the code of conduct.
extended period (if (s 4 of the Declaration). lease (pursuant to r about to expire; reduction in the
Commercial Regulation and [See comments in
applicable); [See comments in relation 14(2) of the tenant's turnover that is
r 5(6) of the Extension ▪ whether the lessee, or relation to the Leasing
Commercial Regulation). ▪ the extent to which a to the Leasing Principles] Regulation); the lessor, is in associated with the
Principles.]
failure to reduce the administration or business conducted at
rent payable under the land or premises
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