Validity of Relocation Notices for Retail Leases in NSW

Key Takeaways 

The key takeaways of a recent Supreme Court of NSW case called Cheng v Sydney Markets Ltd are that:

• A relocation notice does not need to specify a relocation date, only that it provides at least 3 months’ notice.

• It’s not necessary to provide every detail of the proposed development or have a development approval (DA) at the time of issuing relocation notices. However, enough information must be provided to determine if there is a genuine need to relocate.

• The Court assessed the ‘genuineness’ of the relocation notice by considering factors such as a submitted DA, availability of the DA online, prepared plans and reports, approval by the head lessee, and media coverage of the proposal.

• The alternative premises does not need to be commercially similar. The focus is on providing a tenant with a shop that allows the same business operations.  

Case Study

The newly vamped Paddy’s Market in Haymarket in New South Wales opened early April 2025, and a recent 2024 NSW Supreme Court case of Cheng v Sydney Markets Ltd[1] considered the validity of the relocation notices issued to the 25 stall holders under section 34A of the Retail Leases Act 1994 (NSW) (RLA).

The development at Paddy’s Market required the relocation of 25 stall holders (Plaintiffs) from their existing stall locations to other stall locations within the market. The Plaintiffs challenged the validity of the relocation notices under section 34A of the RLA.

Section 34A of the RLA provides that a relocation clause in a lease implies certain conditions. The tenant cannot be relocated unless:

• details of a genuine refurbishment, redevelopment or extension are provided;

• the landlord gives at least 3 months written notice with details of an alternative shop; and

• the tenant receives an offer for a new lease on the same terms, with rent adjusted for value differences.

The tenant can terminate the lease within 1 month of the notice, ending the lease 3 months after that notice. The landlord must cover reasonable relocation costs of the tenant, including legal fees. If the tenant does not terminate the lease, the tenant accepts the new lease of the alternative premises. A dispute over costs is to be resolved by a quantity surveyor.

Held 

The Supreme Court (Court) considered whether the relocation notices provided sufficient details of a genuine redevelopment proposal and whether the alternative premises offered were commercially similar to the current premises.[2]

The Court held that the relocation notices were valid as the notices provided sufficient details to indicate a genuine redevelopment proposal before the relocation was required. The Court held that ‘the focus on the time frame is on the genuineness of the proposal, rather than on specific timing, in which a redevelopment could practically take place’. [3]

The Court rejected the Plaintiffs' argument that the alternative premises must be "commercially similar" to the current premises, stating that the term "alternative" does not imply "commercial similarity"[4].

The Court concluded that the Plaintiffs did not demonstrate that the relocated stalls were not "commercially similar" to invalidate the relocation notices. The proper construction of section 34A of the RLA is whether the alternative premises offered each Plaintiff “the same ability to operate its existing business”[5].

For assistance with your retail leases or relocation notices, please contact one of our people.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202

[1] Cheng v Sydney Markets Ltd; [2024] NSWSC 755; BC202408067;

[2] At [29].

[3] At [47].

[4] At [56].

[5] At [60].