Most people are aware that the Pandemic first came to light in 2020. The government at both the national level and the state level passed laws which, amongst other things, gave protection to tenants under Commercial Leases who may not have been able to pay rent or otherwise strictly comply with the terms of their Leases. As a result, it impacted their businesses during the Pandemic.
The general opinion seems to be, incorrectly as it turns out, that those protections ceased on the 31st December 2020. For several reasons that is not correct. Firstly, in New South Wales, the government passed a specific Regulation called the Retail and Other Commercial Leases (COVID-19) Regulation (3) 2020, which came into effect on the 1 January 2021. That Regulation continued the previous protections and extended the time for it to apply to at least the 28 March 2021.
However, because the Regulation states that if a party to an impacted Lease requests that the other party renegotiate the terms of the Lease, they must do so on or before the 28 March 2021. The parties to that Lease must then enter into negotiations, in good faith, in regard to varying the terms of the Lease into the future. How far into the future those amended terms would apply is not defined.
When the first of these Covid-19 protections was passed by the then National Cabinet as a Mandatory Code of Conduct, it was specifically stated that the Code was to apply not only for the period that the Commonwealth Governments Job Keeper program existed, but also “during a reasonable recovery period”.
So, both New South Wales and National laws clearly intend the protections to be continuing at the present time.
Parties to such an impacted Lease should therefore not hesitate. If the circumstances are appropriate, request a renegotiation of the Lease terms. This for business being operated is adversely affected as a result of the Pandemic.
At Adams, we are in a position to provide advice to both tenants and landlords in regard to their obligations in these situations.
Written by Bruce Coode.