The Queensland Parliament has finally passed the new Regulations impacting on retail and business leases across Queensland during the COVID-19 pandemic. The Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (Qld) (the regulation) was passed on 28 May 2020 and commenced on the same day. It was made under s 23 of the COVID-19 Emergency Response Act 2020 (Qld) (the Act). Due to s 23(6) of the Act, the regulation expires on 31 December 2020.

In broad terms, the Regulation implements the National Cabinet Mandatory Code of Conduct — SME Commercial Leasing Principles During COVID-19. Section 11 provides that the parties to an “affected lease” “must cooperate and act reasonably and in good faith in all discussions and actions associated with … mitigating the effects of the COVID-19 emergency on the parties to the lease”. The Regulation then goes on to provide that:

  • a Lessor under an affected lease must not take “prescribed action” against the Lessee on the ground of a failure to pay rent, a failure to pay outgoings or not keeping the Lessee’s business open during the hours specified in the lease (s 12);
  • the Lessor must not increase the rent during the “response period” and, if the rent is reviewed during the response period, the increase cannot take effect until the response period ends (s 13);
  • the parties must renegotiate the rent if one of them requests it and the Lessor must then offer the Lessee a rent reduction that, among other things, must allow for at least 50% of the reduction to take the form of a waiver of the rent (s 14 and 15).
 
In the Regulation:
  • “affected lease” means (subject to certain exceptions) a retail shop lease, or a lease for the carrying on of a business, where the Lessee is an SME entity that is eligible for the JobKeeper scheme (s 5 and 6);
  • “prescribed action” means taking action such as evicting the tenant, exercising a right of re-entry, recovering the premises, terminating the lease, recovering the security bond, taking possession or seeking damages (s 9);
  • “response period” means from 29 March 2020 to 30 September 2020 (Sch 1).
 
The Regulation also provides that:
  1. the parties may make an agreement that is inconsistent with the Regulation (s 10);
  2. if the parties agree to defer the rent, the deferred rent is not payable until after the response period and payment must be amortised over a period of two to three years (s 17);
  3. if the rent is waived or deferred, the Lessor must offer an extension of the lease equal to the period of the waiver or deferral (s 18);
  4. disputes may be resolved through mediation or, in certain circumstances, proceedings in QCAT or the courts (Pt 3); and
  5. proceedings started or prohibited actions taken by the Lessor before 29 March 2020 are stayed or suspended until after the response period.
 
For Lessors and Lessees with retail and other business leases in Queensland impacted by COVID-19 pandemic, the experienced Commercial lawyers at McKays Solicitors can provide timely and real world legal advice to assist anytime.