Amendments to NSW’s COVID-19 Retail and Commercial Leases Regulation

On 3 July 2020, the NSW Government introduced amendments to the Regulations under the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2020 (Amendment).

The most significant change brought about by the Amendment is the insertion of a new clause in the Regulations that places the burden on the lessee to prove they are an ‘impacted lessee’ by providing the lessor with:

• a statement to the effect that the lessee is an ‘impacted lessee’; and

• evidence that the lessee is an ‘impacted lessee’.

If the lessee does not provide the above information, the lessor is taken to have complied with their obligation to renegotiate rent and therefore permitted to take a prescribed action against the lessee. Such prescribed action may include evicting the lessee from the premises, exercising a right of re-entry to premises, recovery of any security bond and terminating the lease. This amendment extends to renegotiations that commenced prior to 3 July 2020 but have not been finalised.

In its original form, the Regulations did not impose any requirement for the lessee to provide evidence to the lessor to demonstrate it meets the criteria of an ‘impacted lessee’ (that being, qualifies for the Commonwealth JobKeeper scheme and had a turnover for the 18/19 financial year of less than $50 million).

Although the Regulations now confirm the lessee must provide evidence, the Regulations remain silent on what evidence must be provided. As we have seen, frustrations arising between the parties tend not to relate to whether or not the lessee is required to provide evidence, but rather relates to what level of evidence the lessee should be providing. The Amendment does little to assist this.

It is important to note that a lessee need only qualify for JobKeeper and does necessarily need to be enrolled in JobKeeper. Where a lessee is not enrolled in JobKeeper and unable to supply evidence from the Australia Taxation Office, alternative documents to prove eligibility under this scheme will be required and may include a signed letter of correspondence by the lessee’s accountant.

Although the objective of the Amendment was to add clarity to the Regulations, the practical application of the Regulations remains challenging in these difficult times and should be considered on a case by case basis.

Henry William Lawyers can assist with any building and construction related enquires. Feel free to contact our people:

Ron Zucker +61 410 590 111

Vincent Tripodina +61 408 228 108

Chelsea Woodward +61 404 065 899

Anna Polhill +61 431 174 352

We have previously discussed the National Cabinet Mandatory Code of Conduct (Code) and its enactment into NSW legislation through the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Regulations).

These articles can be accessed here: [Code] and [Regulations].