Commercial Landlords and Tenants: impacts of pandemic lockdowns

April 9th, 2020

The Commonwealth Government yesterday announced the mandatory code of conduct for commercial leasing.

The code is intended to alleviate the impact of government implemented measures to combat the COVID-19 pandemic.

To be eligible for the code to apply, an individual, business or company must show:

  1. a 30% reduction in revenue compared to a similar time last year; and
  2. an annual turnover of less than $50 million.

Businesses eligible for the JobKeeper program are automatically eligible for the code of conduct.

The code encourages tenants and landlords to adhere to, and apply as soon as practicable, good faith leasing principles for the duration of the code, which will remain in place as long as the JobKeeper program remains in place.

Among those principles are:

  1. landlords must not terminate leases due to non-payment of rent during the period of the COVID‑19 pandemic and a reasonable subsequent recovery period;
  2. tenants must remain committed to the terms of their lease, and a failure to abide to the terms of the lease may forfeit any protection by the code;
  3. landlords must offer tenants a reduction in rent proportionate to the downturn in the tenant’s business, this is likely to be between 30% and 100% of the rent;
  4. at least half of the reduction must be a waiver of rent, with the remainder able to be a deferral, where the tenant pays it to the landlord over the remaining term of the lease (or a minimum of 24 months);
  5. landlords should also pass on where practicable the effects of any financial assistance received, including alleviation of loan repayments;
  6. landlords should where appropriate seek to waive recovery of other expenses and outgoings against tenants, and can choose to reduce services provided to the tenants;
  7. landlords must not draw on a tenant’s security for the non-payment of rent during the period of the code;
  8. the tenant should be provided with the option to extend the lease for the same period as it was non-trading; and
  9. landlords must freeze rent increases (except for those based on turnover rent) for the period of the pandemic.

If agreement cannot be reached between the landlord and the tenant as to the above arrangements (including as to the amount of any waiver), the matter must be referred to mediation.

The measures prescribed above, and others in the code, seek to ensure that businesses are able to survive and continue trading when the pandemic reaches its end.

The code has an effective date as of 3 April 2020, but will not apply in Queensland until such time as it is enacted by parliament.  There is no prescribed time for this, but it is expected to be as soon as possible.

The code will only cease to apply when the JobKeeper program no longer applies and the pandemic is deemed to be over.

While this announcement will bring welcome relief for tenants, its implications in the long run may be uncertain. If you have any questions or concerns regarding your rights and obligations under the Code, you should contact our experienced commercial and property law team as soon as possible.


Checklist for Commercial Tenants

  • Get your business records in order so that you can demonstrate the impact of the COVID-19 measures on your business;
  • Speak to your accountant about the financial impact, and what can be done to minimise it and allow you to recover;
  • If applicable, register for the Jobkeeper Program;
  • Consider what you are realistically going to be able to do financially over the next six months or so, and come up with a proposal regarding the lease. Make sure it is fair, and is able to be justified based on your business records.  It may be useful to involve your accountants and lawyers in this process;
  • Start negotiations with your landlord to try to find an acceptable solution for both of you to get through this difficult period. Bother parties need to be honest and negotiate in good faith.
  • Do not just stop paying rent or expect your landlord to stop charging rent and outgoings. Doing so will mean that you lose the protection the government is offering.
  • Ensure that any agreed outcome is recorded in writing, and that changes to the leases are reflected in formal, enforceable documentation. Your lawyers should be engaged to do this.


Checklist for Commercial Landlords

  • Be pro-active. Contact your tenants and see how they are impacted.  Starting early might make the situation more manageable rather than waiting until there are few options left.
  • Speak with your bank about what your options are if the tenants are unable to pay the full rent. Can the bank help with repayment holidays or converting to interest only, or other measures?
  • Consider your outgoings and other holding costs – are there savings or deferrals which may be available?
  • If your tenants are adversely impacted, ask them to show you some financial information to show what that impact is, and what sort or relief they may be looking for;
  • Engage in negotiations with the tenant. Remember that you will both have an obligation to negotiate honestly and in good faith, and that is it likely to be better to have a viable tenant at the end of pandemic period, than be looking for a new tenant in what is likely to still be a difficult market.
  • Ensure that any agreed outcome is recorded in writing, and that changes to the leases are reflected in formal, enforceable documentation.  Your lawyers should be engaged to do this.

A gift for consumers in time for Christmas

November 5th, 2019

With the holiday season quickly approaching, legislation extending the expiry period on gift cards to a minimum of three years provides a welcome gift for consumers across Australia.

The changes will come into effect on 1 November 2019, and as a result, new obligations will be imposed on businesses that supply gift cards (see below implications for businesses).

The key changes are that:

  1. the expiry date must be a minimum of three years;
  2. the expiry date must be clearly displayed on the gift card; and
  3. a majority of ‘post purchase fees’ are banned including activation and account keeping fees.

The expiry date must be displayed as a full date or as a period of time with the date of supply e.g. ‘this card expires 5 years after supply, supply date 01/11/2019” or “valid for 3 years from 11/19″.

These changes will come in force on 1 November 2019 and if the terms and conditions of a gift card purchased on that date do not comply with the new requirements, the terms and conditions will be voided and the new requirements automatically imposed by law.

Cards and vouchers sold before 1 November 2019 will continue to have the same expiry period and applicable fees as stated at the time of purchase.

The three year expiry period does not apply to a number of gift cards or vouchers that are:

  • able to be reloaded or topped up;
  • for goods or services available for a limited time (e.g. for a temporary pop up art exhibition);
  • supplied as part of a temporary marketing promotion (e.g. a voucher valid for one month supplied as a free bonus with a purchase);
  • donated free of charge for promotional purposes (e.g. a voucher supplied on the opening day of a store to be spent on that day);
  • sold for a particular good or service at a genuine discount (e.g. a $50.00 voucher for a service worth $100.00);
  • part of an employee reward scheme;
  • part of a customer loyalty program; or
  • second-hand gift cards.

Implications for businesses

To ensure that businesses comply with these new gift card laws, the Australian Consumer Law Commission recommends that businesses should:

  • update gift card terms and conditions on the cards themselves, any promotional material and websites;
  • update internal systems, training, manuals and policies;
  • place signage on gift card displays and at the counter; and
  • note the changes on the receipt issued with the purchase of a gift card.


There are substantial fines for non-compliance of up to $6,000.00 for individuals and $30,000.00 for businesses and companies.

If you have any doubt about your compliance obligations, or whether these new laws will apply to you, please do not hesitate to contact our experienced team on 07 4036 9700.

Happy holiday shopping!


Don’t get bitten by a Zombie DA

April 26th, 2018

A recent High Court case has highlighted that development approvals are not dead and buried once a development is substantially complete.

In Pike v Tighe, some land was subdivided pursuant to a development approval which included a condition requiring an easement to be granted over part of one lot (lot 1) in favour of another (lot 2) for access, on site manoeuvring, services and utilities.  The development approval was issued in May 2009, and an easement was lodged with the council along with the plan of subdivision, but it did not comply with the condition because it did not provide for on site manoeuvring or connection of services and utilities.  Despite this, the council sealed the plan and the easement and plan were registered.  Lot 1 was sold to the Tighes in 2011.  Lot 2 was sold to the Pikes in 2012.

A dispute evidently arose between the two lot owners about whether the Pikes were entitled to an easement which included rights to manoeuvre and connect to services and utilities, and whether the council could force the Tighes, as the owners of lot 1, to grant such an easement.

Section 245 of the Sustainable Planning Act (which was then in force) provided that a development approval attaches to the land and binds successors in title and any occupier of the land.  A similar provision can now be found in section 73 of the Planning Act 2016.

The High Court ruled that the condition of a development approval obtained by the original developer did bind the current owners of the land, despite the site having since been subdivided, and the present owners (the Tighes) could be forced to grant the easement.  By failing to comply with the condition of the development approval within a reasonable time after they had become the owners of the property, they committed a development offence.

The case was somewhat unusual in that the council involved had sealed the plan without the condition having been properly complied with, but this can occur from time to time for a variety of reasons.  It is not uncommon for a property owner or occupier to have failed to comply with development conditions.  For example, this can be the case where there is a material change of use approval, and the council has no “hold point” such as plan sealing to ensure compliance before the use starts, or perhaps the condition was originally complied with but circumstances have since changed so that the property is no longer compliant.

Development conditions for commercial properties in particular can have a substantial impact on the owner of the property by, for example, requiring a substantial easement to be granted over the land, or requiring the owner to upgrade the road providing access to the property.  It is certainly worth having your lawyer check the planning position out thoroughly as part of your due diligence process before you complete a purchase.  If you do not, an approval which you thought was finished off by a previous owner or occupier might just come back to bite you.

For more information about this issue and all commercial property matters please contact our partner and accredited property law specialist, Nigel Hales on 07 4036 9700.


Beware Before Consenting to Development Approvals

April 24th, 2018

In a recent case, a property owner was stuck with a $400,000 infrastructure charges bill because he consented to a development application without paying proper attention to the possible consequences.

An infrastructure charge is something which councils can impose for new development.  They are usually triggered by a development application, and become payable when the rights under the development approval are exercised, such as when the change of use occurs.   Although the planning legislation in its various recent forms has not specified that infrastructure charges run with the land, it has for some time said that they are recoverable as rates.

In the case, an owner consented to a tenant making a development application to use his land as a refuse transfer station.   The use had actually already, unlawfully, commenced.  The application was approved by the council, and council issued an infrastructure charges notice to the tenant (not the owner) for $356,718.84.  The tenant did not pay it, and presumably was insolvent because it was not joined in the proceedings.  Four years later the council issued a rates notice to the owner for $400,574.94, which included the infrastructure charges.   Ultimately the Court of Appeal held that council could do this, and the owner had to pay.

In my experience property owners are often fairly flippant in granting consent to tenants, purchasers and option holders to enable them to make development applications.  Often in the case of contracts and options, there is no real description of what it is that the owner is required to consent to  – just a development application of some sort.  It is worth remembering though that development approvals, and their conditions, run with the land and so will bind the owner.  As this case shows, infrastructure charges are treated similarly.  Owners should be cautious about what they are consenting to, especially if there is a prospect of the development commencing while they are still the owner of the land, thus triggering the need to comply with conditions and pay infrastructure charges.

For more information, please contact Partner, Nigel Hales.


Lauren Doktor joins QLS Early Career Lawyers Committee

April 24th, 2018

Congratulations to Lauren Doktor on becoming a member of the QLS Early Career Lawyers Committee



Buying a Franchise – 5 Top Tips

March 20th, 2018

Entering into a franchise arrangement and running your own business can be a very exciting time.  You receive the benefits of the established brand, and usually a well-documented operations manual to assist you to run the franchised business.  However, before you take that big step, consider my 5 Top Tips before entering into a franchise.

1.  Read the disclosure statement

Yes, this document has been provided for a very good reason, so you should read it.  Franchisors are required by law to give prospective franchisees a disclosure statement and the law prescribes what must be included in the statement.  Whilst the statement provides numerous pieces of useful information, I suggest you pay particular attention to the number of franchises that have been terminated in the last few years, whether there is any litigation that the franchisor is involved in, and carefully peruse the table provided by the franchisor outlining all estimated franchise costs.  The disclosure statement provides really useful and important information about the franchise – be sure to read it!

2.  Contact other franchisees

The disclosure statement also contains details of other franchisees operating the franchise in other territories throughout Australia.  Ring at least five other franchisees including the ones in the territories closest to you.  Ask them how their franchise is going, how much support they receive operationally, marketing-wise and in relation to training from the franchisor.  Ask them if they would enter into the franchise if they had their time again.  In my experience, this is often where you will receive the most honest and practical information in relation to the franchise you propose to purchase.

3.  Do a business plan and budget

A business plan is integral to the success of any business – especially a franchised business.  As part of the plan, consider your operating budget – this is often where other franchisees can assist, identifying costs of the franchised business that were not necessarily clear from the outset.  For example, how much did it cost to fit out the premises with the franchisors corporate branding, and what do they spend on marketing and training annually.

4.  Get the right advice

A lawyer and an accountant play an important role in advising a prospective franchisee before entering into a franchise agreement.  As professional advisors who have often read many franchise agreements, they are qualified to know when a clause is unusual or uncertain.  When advising my clients in relation to a franchise I provide a comprehensive review of the franchise agreement and draw to the attention of the franchisee any critical clauses and relevant dates.  Whilst a majority of franchisors are reluctant to agree to any changes to their franchise agreement, I always highlight changes that I would recommend be made to the agreement to benefit the franchise and encourage the franchisee to negotiate the proposed changes directly with the franchisor to save costs in the first instance.  I have found that franchisors of newer franchises are often more agreeable to discussing changes to a franchise agreement than those that are well-established.

Further, it is at this time, I would recommend the franchisee seek clarification from the franchisor in relation to any clauses that are uncertain or lacking in detail.  It is always best that a franchisee finds out this information before signing on the dotted line.

5.  Do not rush in

Entry into a new franchise or the purchase of an existing franchise is a big and often costly exercise.  Therefore, it is important that you do not rush into this decision.  It is vital that you complete your due diligence investigations in relation to the franchise and the business first, draft your business plan and budget, obtain independent legal and financial advice and spend a good amount of time reading the proposed agreement before you proceed.

For more information about franchise agreements, please contact Partner, Melissa Nielsen.


Short term (holiday) accommodation in community title schemes – an international issue

February 6th, 2018

For years there has been tension in some community (strata) title schemes involving conflicts between holiday makers and permanent residents. There have been attempts by schemes which are predominantly permanent residential complexes to outlaw holiday letting via by-laws, and even some attempts by schemes which are predominantly holiday let to outlaw permanent residence.  So far, these attempts have failed in Queensland, with the by-laws being found to be invalid.  The town planning and development approval laws are effectively the only controls, but many local planning schemes and approvals are not sufficiently clear to offer any help.

The popularity of short term accommodation booking services like Airbnb have added further fuel to the fire, and last year saw some significant decisions about the issue. In fact, the issue went all the way to the Privy Council in London, the highest court in the British Commonwealth[1], in an appeal from a case in the Turks and Caicos Islands[2].  The Turks and Caicos Islands are a collection of islands located in the northern Caribbean, almost as beautiful as Far North Queensland. In that case, a body corporate was attempting to enforce a by-law which said that units in the complex could only be used for the private residence of the owner, or the owner’s guests and visitors, but could be rented out for periods of not less than one month.

One of the owners was letting his unit for a week at a time to holiday makers. He argued that the by-law was invalid, because it was a restriction on the sale, disposition or letting of the unit, and contravened a prohibition on such restrictions contained in the relevant strata title legislation. A similar restriction can be found in the strata title legislation in most states of Australia, including Queensland.

The Privy Council found that the by-law was valid, because it did not restrict or prohibit letting, but rather related to the use of the lot, and sought to preserve the fundamentally residential character of the complex.  In doing so, the Privy Council had regard to a similar decision made by the Court of Appeal in Western Australia in June 2017[3].

So will this decision help bodies corporate in Australia who want to impose such by-laws?  Well in some jurisdictions, yes, but not in all.  New South Wales, Western Australia, Northern Territory and ACT will all benefit, as they all have directly comparable legislation to that considered in the Privy Council decision. South Australia has a similar provision, but also has a section allowing a court to strike out a by-law which reduces the value of a lot, which might prove problematic.  The Privy Council decision might also be helpful in Victoria, but the by-law will have to be very carefully worded due to differences in the legislation.  Tasmania has a section in its legislation which specifically allows by-laws to prohibit short term letting, so it should be less of an issue there.  Queensland is different again.

In Queensland we have a section of the Body Corporate and Community Management Act which corresponds with the legislation considered by the Privy Council[4].  However, we also have sections which prohibit by-laws restricting the type of residential use[5], and prohibit by-laws which discriminate between types of occupiers[6].  Short term and long term accommodation have both been regarded as residential uses in Queensland, and there have been several examples of by-laws dealing with the issue having been declared invalid.  There is also a possible argument that it is unreasonable for a body corporate to adopt a by-law which prohibits a use of a lot which would otherwise be lawful, and that doing so breaches the body corporate’s duty to act reasonably under section 94(2) of the act.  That argument has been successfully used to invalidate by-laws which prohibit having animals in a community titles scheme. So whilst the recent decisions offer hope to much of the rest of Australia, it is likely that Queensland will need to await legislative change before bodies corporate can regulate short term letting through by-laws.

[1] It was once possible to appeal to the Privy Council from Australian Courts, but that was abolished in 1986.

[2] O’Connor (Senior) and Others v The Proprietors, Strata Plan No. 51 [2017] UKPC45

[3] Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASC 104

[4] Section 180(4) Body Corporate and Community Management Act

[5] Section 180(3)

[6] Section 180(5)

For more information about this article, please contact Partner Nigel Hales.

Nigel is also the only Accredited Property Law Specialist in Cairns.