On 23 April 2020, the Victorian Parliament passed the eagerly anticipated COVID-19 Omnibus (Emergency Measures) Act 2020 (Act), the purpose of which is to modify certain laws in Victoria for the purposes of responding to the COVID-19 pandemic.
Part 2.2 of the Act sets out a number of ways in which Victoria’s laws relating to retail leases and non-retail commercial leases and licences will be modified, but it does not go so far as to enact the National Cabinet’s Mandatory Code of Conduct: SME Commercial Leasing Principles during COVID-19 (Code). Instead, the Act contains a comprehensive list of matters in respect of which the Governor can make regulations about – more on this below.
Until the regulations are made, landlords and tenants remain in the dark as to how the principles of the Code will be applied in Victoria.
However, the Act does provide important clarity in respect of some matters dealt with in the Code – particularly, which leases will be subject to the regime.
The key take away points from the Act with respect to leases in Victoria are set out below.
Which leases does it apply to?
The term used in the Act is “eligible lease”. An eligible lease is defined to be a retail lease (within the meaning of the Retail Leases Act 2003) or a non-retail commercial lease or licence (being a lease of premises which are used for the sole or predominant purpose of carrying on a business which is not retail, or a commercial licence):
(Note: the requirement to be a participant in the JobKeeper payment scheme does not appear in the Code, and at this stage appears to be unique to Victoria).
A business will meet the definition of SME entity if its annual turnover for the current year is likely to be less than $50 million, and its annual turnover in the previous year was less than $50 million.
There are, however, some exceptions. A retail or commercial lease/licence will not be an eligible lease if:
These matters are expected to be dealt with further in the regulations.
When will the Act (and the regulations) take effect?
The Act provides that any regulations made under the Act may have retrospective effect, to a day not earlier than 29 March 2020 (presumably in order to capture rent due on 1 April 2020).
They will automatically cease six months after the commencement date of the Act.
What will the regulations look like?
The Act provides that regulations may be made in respect of the following matters:
We will provide a further update on the position in Victoria when the regulations are made available. In the meantime, should you have any queries regarding these developments and how they may apply to your business, please feel free to contact us for a discussion.
Authors: Chris Brodrick & Alana Giles
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.