Tasmanian Numbered Regulations

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FAIR TRADING (CODE OF PRACTICE FOR RETAIL TENANCIES) REGULATIONS 1998 (S.R. 1998, NO. 118) - SCHEDULE 1

SCHEDULE 1 - Code of Practice for Retail Tenancies

Regulation 3

1.  TABLE OF CONTENTS

PART 1 – PRELIMINARY

1. Interpretation

2. Application

PART 2 – REQUIREMENTS APPLICABLE TO ALL PREMISES

3. Unconscionable conduct

4. Clarity of documentation

5. Negotiation of leases

6. Disclosure statements

7. Failure to give accurate statement

8. Lease costs

9. Key money

10. Lease terms

11. Lease documentation

12. Rent adjustments

13. Market value adjustments

14. Negotiation of adjustment

15. Turnover rent

16. Special rent

17. Commencement of rent

18. Recoverable outgoings and operating expenses

19. Report of recoverable outgoings

20. Exercise of options

21. Market rent review

22. Alterations of premises

23. Compensation

24. Demolition

25. Damaged premises

26. Employment restriction

27. Refurbishment of premises

28. Assignments

29. Termination and renewal of leases

30. Security deposits

31. Indemnities

32. Independent advice

PART 3 – PREMISES IN SHOPPING CENTRES

33. Costs of obtaining information

34. Advertising and promotion

35. Relocation

36. Inadequate sales

37. Tenants' association

38. Trading hours

PART 4 – DISPUTE RESOLUTION

39. Disputes

PART 5 – MONITORING COMMITTEE

40. Monitoring Committee

41. Vacation of office

42. Committee functions and powers

43. Committee proceedings

44. Remuneration of members

APPENDIX A – VALUATION PRINCIPLES FOR MARKET VALUE RENT

APPENDIX B – DISCLOSURE STATEMENT DETAILS

APPENDIX C – SPECIFIED BUSINESSES

PART 1 - Preliminary

1. Interpretation

In this Code –

"accounting year" means –

(a) an accounting year as set out in a lease for premises; or

(b) if an accounting year is not so set out, a financial year;

"assessed annual value" means the assessed annual value within the meaning of the Land Valuation Act 1971 ;
"auditor" means an auditor who is –

(a) a registered company auditor within the meaning of the Corporations Law; and

(b) a member of –

(i) the Institute of Chartered Accountants; or

(ii) the Australian Society of Certified Practising Accountants;

"Committee" means the Retail Tenancies Code of Practice Monitoring Committee established under clause 40;
"demolition clause" means a clause in a lease for retail premises permitting a property owner to terminate the lease on the ground that all or part of a building incorporating those premises is to be demolished;
"disclosure statement" means a statement referred to in clause 6;
"key money" means any money paid to or at the discretion of a property owner or property owner's agent, or any benefit that is conferred on or at the direction of a property owner or property owner's agent, in connection with the granting, renewal, extension or assignment of a lease, and a reference in this Code to payment of key money includes a reference to the conferral of any such benefit;
"lease" means –

(a) any agreement providing for the occupation of retail premises, whether for a term, periodically or at will; and

(b) a licence or other agreement to use the common area of a shopping centre for a term of more than 6 months;

"lettable area" means an area measured in square metres and set out in a lease as the area upon which a tenant pays rent;
"market value rent" means the rent determined in accordance with the principles set out in Appendix A to this Code;
"option" means an option contained in a lease for a further lease on substantially the same terms and conditions as the lease;
"property owner" means a person who grants a right of occupancy of premises under a lease;
"renewal" , in relation to a lease, does not include the exercise of an option;
"retail premises" means any premises that are used –

(a) wholly or predominantly for one or more of the businesses listed in Appendix C; or

(b) for any business in a shopping centre;

"shopping centre" means a group of premises –

(a) at least 5 of which are retail premises; and

(b) which have, or if leased would have, a common property owner; and

(c) which are located in one building or adjoining buildings; and

(d) which are generally regarded as a shopping centre;

"sinking fund" means a fund into which a tenant is required to make regular payments to cover the costs associated with the maintenance of, or repairs to, any area, building, plant or equipment associated with the retail premises;
"small business tenant" means a tenant of retail premises with a floor area of not more than 1 000 square metres;
"turnover" means the amount of gross sales derived from the retail premises defined in the lease;
"valuer" means a valuer who –

(a) is a member of the Australian Institute of Valuers and Land Economists; and

(b) has expertise in determining market value rentals of the kind required by clause 21; and

(c) has at least 5 years' experience in retail valuations in Tasmania.

2. Application

      (1) This Code applies to –

(a) all property owners and small business tenants of retail premises within Tasmania, regardless of where the lease was entered into and notwithstanding that the lease purports to be governed by the law of a jurisdiction other than Tasmania; and

(b) all agreements to lease and all leases of retail premises entered into on or after the commencement of the Code; and

(c) any variation, including a sub-lease, made on or after the commencement of the Code to an existing agreement to lease or lease; and

(d) a new lease resulting from the exercise of an option contained in a lease that was entered into before the commencement of this Code, if the period of the new lease is not specified in the original lease.

      (2) The provisions of Part 3 apply only to retail premises within a shopping centre.

      (3) The Code does not apply to –

(a) a lease entered into in accordance with an agreement to lease where the agreement to lease expires on or after the commencement of this Code; or

(b) a lease that is entered into in accordance with an agreement to lease that was dated before the commencement of this Code and expired on or after the commencement of this Code; or

(c) a new lease resulting from the exercise of an option contained in a lease that was entered into before the commencement of this Code, if the period of the new lease is specified in the original lease.

      (4) This Code does not apply to a lease for retail premises –

(a) used wholly or predominantly for a business by a tenant on behalf of a property owner; or

(b) within premises in which the principal business carried on is the operation of a business including, but not limited to –

(i) a cinema; or

(ii) a bowling alley; or

(iii) a skating rink; or

(iv) an indoor cricket centre; or

(v) a basketball stadium; or

(vi) a netball centre –

if the business in the retail premises is carried on by the person who operates the principal business.

      (5) A written lease is to contain a provision to the effect that this Code and the disclosure required in clause 6(1) form a part of that lease.

      (6) Except as otherwise provided in this Code, if there is an inconsistency between the provisions of this Code and a lease or an agreement to lease, the provisions of the Code prevail.

PART 2 - Requirements applicable to all premises

3. Unconscionable conduct

      (1) A person must not engage in conduct that is harsh, unjust or unconscionable.

      (2) Without limiting the generality of subclause (1), unconscionable conduct may include the threat by a property owner –

(a) to subsidise a competitor to the tenant in nearby premises; or

(b) not to renew a lease unless the tenant –

(i) agrees to a proposal of the property owner; or

(ii) is prepared to pay a rental in excess of the market value rent.

4. Clarity of documentation

A disclosure statement, lease or other document is to be –

(a) easily legible and clearly expressed; and

(b) printed clearly in a minimum print size of 10 point.

5. Negotiation of leases

      (1) A person must not make a representation to another party that the person knows is not accurate, truthful and without omission of any material matter at the time it is made.

      (2) A property owner is to provide to a tenant a copy of the proposed lease and a copy of this Code as early as practicable in the negotiations.

      (3) A person must not offer to enter into a lease or invite an offer to enter into a lease unless the person has a written copy of the proposed lease available for inspection by a prospective lessee.

6. Disclosure statements

      (1) A property owner is to give a tenant a disclosure statement at least 7 days before the earliest of the following:

(a) the signing of a written lease;

(b) the signing of a written agreement to lease;

(c) the entering into occupation of premises by a tenant;

(d) the paying of rent by a tenant.

      (2) A disclosure statement –

(a) is to contain the information set out in Appendix B; and

(b) is to be signed by or on behalf of both the property owner and the prospective tenant.

      (3) A person must not disclose any information contained in a disclosure statement other than to his or her independent advisor.

7. Failure to give accurate statement

      (1) A property owner must notify a tenant in writing of any material change to the information in the disclosure statement that occurs after the disclosure statement is given to the tenant but before a lease is signed or the tenant enters into possession of the premises, whichever is the earlier.

      (2) Notification under subclause (1) is to be provided to the tenant before the tenant signs the lease or enters into possession of the premises.

      (3) Where a property owner fails to notify the tenant of any material changes, or the notification contains false or misleading information, the tenant, in addition to exercising any other rights, may give the property owner written notice of termination of the lease at any time within 3 months after its commencement.

      (4) Subject to subclauses (5), (6) and (7), a notice of termination takes effect from the date it is served and both the property owner and the tenant are released from their future obligations under the lease after that date.

      (5) A property owner, within 7 days after receiving notice of termination, may contest the termination on the grounds that –

(a) the property owner has acted honestly and reasonably; and

(b) the property owner ought fairly to be excused for the contravention; and

(c) the tenant is substantially in as good a position as he or she would have been if there had been no contravention.

      (6) A property owner may contest a notice of termination by invoking the dispute resolution procedures set out in Part 4 of this Code.

      (7) If a property owner successfully challenges a notice, the notice is taken never to have been served.

      (8) A tenant is entitled to recover from the property owner any loss the tenant incurs as a result of the termination under this clause of a lease.

      (9) The tenant is to take all reasonable steps to mitigate any loss or damage he or she incurs and is not entitled to be paid for any loss that could have been avoided by taking those steps.

      (10) A tenant is not required to contribute towards the cost of any fixtures, fittings, equipment or services provided by the property owner which are not set out in the lease and the disclosure statement.

8. Lease costs

      (1) A party to a proposed lease is to bear his or her own costs incurred in the preparation of the lease.

      (2) The property owner may charge the tenant the cost of any alterations the tenant requires to be made to the lease.

      (3) If a prospective tenant gives written authority for the preparation of a lease, the property owner may require a provision in the written authority stating that if the prospective tenant withdraws from lease negotiations he or she is responsible for the costs of preparing the lease.

      (4) The parties are to negotiate the payment of disbursements such as stamp duty and the cost of obtaining the mortgagee's consent.

9. Key money

      (1) A person must not require a tenant to pay key money.

      (2) If a tenant pays key money in contravention of subclause (1), the tenant, in addition to exercising any other rights, may recover that money from the property owner.

      (3) Subclause (1) does not prevent a property owner and a proposed assignee agreeing to –

(a) a rent review, refurbishment or refitting in the event of an assignment; or

(b) the proposed assignee entering into a new lease.

10. Lease terms

      (1) Immediately above the space for the tenant's signature to a lease the following statement is to appear in bold print and a minimum print size of 12 point:

"Tenants should read all documents closely and obtain independent legal and financial advice before signing this lease. Failure to seek advice may place full responsibility for the consequences of this signing upon the tenant. Tenants should ensure that they have received a disclosure statement at least 7 days before entering this lease."

      (2) Lease documents are to contain all terms and conditions agreed to during lease negotiations.

      (3) Subject to subclause (4), the minimum term of a lease is 5 years.

      (4) A lease may be for a period of less than 5 years if a prospective tenant obtains a certificate from his or her legal advisor certifying that the legal advisor has explained to the prospective tenant the effect of a reduced lease period.

      (5) The amount of rent or the basis of calculation of rent must be clearly shown in the lease documentation and the disclosure statement.

      (6) A tenant is not required to disclose turnover figures unless any part of the rent is calculated on the basis of the turnover of the tenant's business.

      (7) The property owner must not disclose to any person any information provided by the tenant otherwise than –

(a) with the tenant's consent; or

(b) in a document giving the aggregate turnover information about a shopping centre in a manner that does not disclose information relating to the turnover of an individual tenant's business; or

(c) to a court or arbitrator in the course of any mediation or valuation under this code or a lease; or

(d) in compliance with a requirement under this code; or

(e) in good faith to the property owner's legal or financial advisers or the proper officer of a bank, building society or credit union to enable the lessor to obtain finance; or

(f) in good faith to a prospective purchaser of the retail premises or building of which it forms part.

      (8) A person who suffers loss resulting from the release of confidential information to any other person is entitled to take action to recover the loss.

11. Lease documentation

A property owner is to provide a tenant with an executed copy of a written lease as soon as practicable after it is signed by the tenant.

12. Rent adjustments

      (1) If a lease provides for an adjustment of rent during the lease term, the lease is to state the method by which the rent is to be adjusted on each occasion.

      (2) Rent is to be adjusted by one of the following methods:

(a) in accordance with the Consumer Price Index (All Groups Hobart) or other agreed consumer price index issued by the Australian Bureau of Statistics;

(b) by an agreed percentage;

(c) to an amount equal to the current market value rent;

(d) by an agreed amount;

(e) in accordance with an agreed formula, other than a formula that involves a combination of any of 2 or more of the methods specified in paragraph (a), (b) or (c).

      (3) If a provision in a lease contravenes this clause –

(a) the provision is invalid; and

(b) the rent is to be determined in accordance with clause 21.

      (4) A provision in a lease is invalid if it permits any one adjustment of the rent by –

(a) reference to more than one of the methods specified in subclause (2); or

(b) reserving a discretion to apply more than one method specified in that subclause.

      (5) Subject to clause 16, a provision in a lease is invalid if it allows an adjustment to be made to the rent –

(a) during the first 12 months of the lease; or

(b) more frequently than once in each 12 month period after the first anniversary of the commencement of the lease.

      (6) A lease is to state the date on which each adjustment to the rent is due.

      (7) If a lease does not state the date on which a proposed adjustment is due, the adjustment is not to be made.

      (8) A provision in a lease which prohibits a decrease in rent is invalid.

13. Market value adjustments

      (1) If a lease provides for an adjustment of rent at market value rent, a tenant may write to the property owner asking that the property owner state the amount that the property owner believes is the market value rent for the premises at the date the adjustment is due.

      (2) A written request is to be delivered to the property owner no less than 4 months and no more than 6 months before the date on which the adjustment is due.

      (3) If a tenant makes a request in accordance with subclause (1), or the property owner wishes to adjust the market value rent, the property owner is to give to the tenant written notice of the amount the property owner believes would be the market value rent.

      (4) Notice of the amount is to be delivered to the tenant no less than 3 months before the date on which the adjustment is due.

      (5) If the property owner fails to deliver the notice he or she may not seek the adjustment to the rent.

      (6) Within 21 days after notice being delivered under subclause (3), the tenant is to notify the property owner in writing that he or she –

(a) agrees with the rent proposed; or

(b) does not agree with the rent proposed but wishes to negotiate an amount; or

(c) requires the rent to be determined in accordance with clause 21.

      (7) If a tenant fails to comply with this section, the rent proposed by the property owner is to be the rent that is payable by the tenant from the date the adjustment is due.

      (8) A property owner may not claim retrospective payment for a review of rent relating to an earlier period.

14. Negotiation of adjustment

      (1) If a tenant does not make a request under clause 13(1), or notifies the property owner under clause 13(6)(b), the property owner and tenant may agree what adjustment should be made to the rent at any time before the adjustment is due.

      (2) If the property owner and tenant cannot agree on the market value rent payable, either party may initiate an independent valuation in accordance with clause 21 at any time before the adjustment is due.

      (3) Rent is not to be adjusted if –

(a) a tenant makes a request under clause 13(1), but does not agree with the rent proposed under clause 13(3); and

(b) the property owner and tenant cannot agree on a market value rent for the premises; and

(c) the due date for the adjustment of the rent passes before either party has initiated a review of the rent in accordance with clause 21.

15. Turnover rent

      (1) Rent calculated as a percentage of turnover is to be calculated excluding the following items:

(a) any loss incurred in the resale or disposal of goods reasonably and properly purchased from a customer as a trade-in in the usual course of business;

(b) any deposit or instalment received on account of a lay-by, hire-purchase or credit sale which is refunded to a customer;

(c) any payment for merchandise or services that is refunded;

(d) any services, finance or interest charge payable by the tenant to any financier in connection with provision of credit to a customer, other than a commission on credit or store cards;

(e) the exchange of merchandise between shops of the tenant if the exchange is made solely for the convenient operation of the business of the tenant and not for the purpose of consummating a sale made at the premises;

(f) any return to a shipper, wholesaler or manufacturer;

(g) any sale of the tenant's fixtures and fittings after their use in the conduct of the business at the premises;

(h) any discount allowed to customers in the normal course of business;

(i) any uncollected credit account that is written off;

(j) any purchase tax, receipt tax or other similar tax imposed on the purchase price or cost of hire of merchandise or services at the point of sale or hire;

(k) any delivery charge;

(l) any sale of lottery tickets or similar tickets other than commissions.

      (2) A property owner may require that the turnover figures provided by a tenant be audited.

      (3) If an audit reveals the initial information provided by the tenant to be at least 95% accurate, the cost of the audit is to be borne by the property owner.

      (4) If the audit reveals the initial information provided by the tenant to be less than 95% accurate, the cost of the audit is to be borne by the tenant.

16. Special rent

      (1) The tenant and property owner may agree to a special rent, in addition to any other rental, to cover the cost of fit out or fixtures, fittings and equipment installed by the property owner at the property owner's cost.

      (2) An agreement under subclause (1) is to be in writing.

      (3) If a property owner requires a bank guarantee, the amount of the guarantee must not exceed the cost incurred by the property owner under subclause (1).

17. Commencement of rent

Unless otherwise agreed, rent and outgoings are to commence from the date of handing over possession with all finishes provided by the property owner in accordance with the lease.

18. Recoverable outgoings and operating expenses

      (1) In relation to any outgoings that are directly attributable to the operation of premises, a lease is to state in detail –

(a) which outgoings are recoverable and how any unforeseen outgoings are generally to be dealt with; and

(b) the method to be used for calculating that part of the outgoings to be met by the tenant; and

(c) the time for payment of the outgoings.

      (2) A tenant is not liable for the following outgoings:

(a) capital expenditure in relation to the premises;

(b) any contribution by the property owner to depreciation or a sinking fund;

(c) any contribution by a property owner to promotion and advertising;

(d) any interest or charge on money borrowed by the property owner;

(e) any insurance premium for loss of income by the property owner;

(f) any outgoings not specified in the lease that were reasonably foreseeable at the time the lease was entered into.

      (3) The proportion of outgoings to be paid by a tenant is to be calculated as –

(a) the ratio of the lettable area of the tenant's premises to the lettable area of all lettable premises sharing the benefit of a particular outgoing; or

(b) the ratio of the assessed annual value of the tenant's premises to the assessed annual value of all lettable premises sharing the benefit of a particular outgoing.

      (4) A property owner may not recover depreciation from the tenant.

      (5) A lease may provide for –

(a) the funding of major items of repair and maintenance to the premises to be charged as outgoings if the funds are set aside in a separate account for use only for the purposes specified in the lease; and

(b) an estimate of outgoings and payments for a particular period, with a reconciliation of those outgoings and payments to be made between the parties at the end of the period.

      (6) If requested by a tenant in writing, a property owner is to give the tenant –

(a) a detailed list of estimated recoverable outgoings for the next accounting year for the premises at least one month before the start of the accounting year; and

(b) a statement showing the recoverable outgoings expenditure for a specified period of the accounting year for the premises.

      (7) A property owner may refuse a request under this clause if the property owner considers it to be unreasonable or overly frequent.

      (8) Any dispute arising under subclause (7) is to be resolved by the Committee.

19. Report of recoverable outgoings

      (1) If requested by a tenant in writing, a property owner is to appoint an auditor to provide a report for the tenant within 3 months of the end of each accounting year.

      (2) A report is to contain a statement, prepared in accordance with recognised accounting principles, showing that outgoings have been properly charged and the manner in which they have been expended.

      (3) A report is to state whether any amount recoverable from the tenant, as provided in clause 18(1), exceeds any amount incurred by the property owner.

      (4) The cost of the audit is to be paid by the tenant if the statement is found to be at least 95% accurate.

20. Exercise of options

      (1) A lease which includes an option to renew is to specify the period for which the renewed lease may apply.

      (2) If an option is to be exercised at current market value rent, the tenant, no less than 4 months or more than 6 months before the expiry of the period to exercise the option, may request the property owner to state the proposed rent to apply from the commencement of the new term.

      (3) A request is to be in writing.

      (4) If a request is made under subclause (2), the property owner is to give written notice of the amount of the proposed rent not less than 3 months before the expiry of the period to exercise the option.

      (5) Within 30 days after receiving the property owner's notice, the tenant is to notify the property owner that the tenant –

(a) exercises the option at the rent proposed; or

(b) does not agree with the rent proposed, but wishes to negotiate an amount in accordance with subclause (8); or

(c) requires the rent to be determined in accordance with clause 21.

      (6) If the property owner fails to comply with this clause, the rent to apply in the first year of the option term is to be determined in accordance with clause 21.

      (7) If a tenant fails to comply with this clause, the rent proposed by the property owner is to be the rent that is payable in the first year of the option term.

      (8) If a tenant does not make a request under subclause (2), or notifies the property owner that he or she wishes to negotiate the rent under subclause (5)(b), the property owner and tenant may agree at any time before the option is due to be exercised what rent is to apply in the first year of the option term.

      (9) If a property owner and tenant cannot agree on a rent to apply under an option, either party may initiate an independent valuation in accordance with clause 21 before the expiry of the date for exercising the option.

      (10) A property owner may refuse to grant a new lease if –

(a) the tenant does not exercise the option by the required date; or

(b) at the time of exercising the option or before the commencement of the new lease, the tenant is in default under the existing lease.

21. Market rent review

      (1) Except where a dispute over market value rent is determined in accordance with clause 39, such a dispute is to be determined by an independent valuation.

      (2) An independent valuation is to be initiated by the appointment of valuers in accordance with subclause (3).

      (3) For the purposes of subclause (1), an independent valuation is to be made –

(a) by a valuer selected by both parties; or

(b) by 2 valuers, one being selected by each party; or

(c) if the valuers cannot agree on a valuation or if a party fails to select a valuer, by a third valuer appointed by the Director of Consumer Affairs after consulting with the President of the Australian Institute of Valuers and Land Economists.

      (4) The Director of Consumer Affairs is not to appoint a valuer unless –

(a) requested by the property owner or the tenant; and

(b) the parties agree that the valuer's decision is binding.

      (5) A valuer must make a valuation in accordance with the principles set out in Appendix A to this code.

      (6) Each party is to pay the costs of the valuer the party selects and the costs of the third valuer are to be shared evenly by the parties.

      (7) If the date for the exercise of an option, or the renewal of a lease, passes while an independent valuation is being carried out, the date for exercising the option or for renewing the lease is to be deferred until one month after the tenant receives written notice of the rent.

      (8) Within one month of receiving an independent valuation, the tenant must give the property owner one month's notice of the tenant's decision to exercise the option or not.

      (9) The rent charged for premises is not to be adjusted until the tenant is given written notice of any independent valuation.

      (10) A rent determined by an independent valuation is applicable from the due date of the rent adjustment or the date of the commencement of the new lease, whichever is applicable.

22. Alterations of premises

      (1) A property owner is to notify, in writing, any tenant likely to be affected by any proposed major alteration or major refurbishment to a building owned by the property owner incorporating the premises rented by the tenant of the proposed alteration or refurbishment a reasonable time, being not less than 6 months, before the alterations or refurbishment are commenced.

      (2) In the case of minor repairs or an emergency, the property owner is to give reasonable notice to the tenant of any proposed alteration or refurbishment.

23. Compensation

      (1) A property owner is to compensate a tenant if the owner –

(a) inhibits access of the tenant to the premises rented by the tenant in any substantial manner; or

(b) takes any action, other than action required under any legislation that would substantially alter or inhibit the flow of customers to the premises; or

(c) causes, or fails to make reasonable efforts to prevent or remove, anything which adversely affects the tenant's trading; or

(d) fails to have rectified as soon as practicable any breakdown of plant or equipment –

(i) which is under the property owner's care and maintenance; and

(ii) the breakdown of which causes a loss of profits to the tenant; or

(e) acts in a manner which, in all the circumstances, is unconscionable; or

(f) terminates a lease dishonestly, maliciously or for a purpose that is not genuine; or

(g) in relation to a shopping centre, fails to take reasonable steps to ensure the cleaning, maintenance or repair of the shopping centre, including any common area; or

(h) fails to take reasonable steps to ensure the premises are kept in good order and repair; or

(i) relocates the tenant's business to other premises during the term of the lease or any renewal of it; or

(j) fails to take reasonable steps to ensure that any defect in the shopping centre or retail premises is rectified; or

(k) causes the tenant to vacate the premises before the end of the lease or any renewal of it because of any extensions, refurbishment or demolition.

      (2) A lease is not to limit liability for compensation in the circumstances referred to in subclause (1)(a), (b), (c), (d) or (g) unless –

(a) before the execution of the lease, the property owner brings the specific disturbance to the tenant's quiet enjoyment during the term or currency of the lease to the tenant's attention; and

(b) there is a clause in the lease that specifies a formula for compensation in the event of that specific disturbance occurring.

      (3) A provision in a lease that purports to limit liability for compensation under subclause (1)(e) or (f) is invalid.

      (4) The enlargement of a shopping centre or a change in its tenancy is not, of itself, a ground for compensation.

24. Demolition

      (1) If a lease provides for termination on the grounds of intended demolition, a demolition clause is not to be invoked unless the property owner produces to the tenant firm proposals for the demolition which affect the tenancy concerned.

      (2) A property owner is to give a tenant at least 6 months' written notice of the termination of a lease on the grounds of intended demolition.

      (3) If a property owner gives written notice of termination to a tenant under a demolition clause, the tenant may terminate the lease on one month's written notice to the property owner.

      (4) The tenant may give notice of the termination of a lease at any time within 6 months before the termination date notified by the property owner.

25. Damaged premises

      (1) A tenant is not required to pay rent and outgoings if the premises rented by the tenant are unuseable for the purposes described in the lease or inaccessible due to damage unless the tenant –

(a) is responsible for the damage; or

(b) contributes substantially to the damage; or

(c) takes some action which results in the termination of the property owner's insurance policy.

      (2) If premises that are damaged are useable for the purposes described in the lease, the rent and outgoings are to be reduced having regard to the nature and extent of the damage.

      (3) If, after a written request from a tenant, a property owner fails to repair, within a reasonable time, premises that are damaged so as to be unuseable for the purposes described in the lease or that are inaccessible due to damage, the tenant, in addition to any other rights, may terminate the lease.

26. Employment restriction

      (1) Subject to subclause (2), a lease is not to limit a tenant's freedom to employ contractors or staff.

      (2) A lease may do one or more of the following:

(a) specify minimum standards of competence;

(b) prohibit work from being carried out on or to specified items of the property owner's property;

(c) require tenants to conform with any construction site agreement or other industrial award affecting the shopping centre;

(d) require work carried out by or on behalf of the tenant to be in accordance with the law.

27. Refurbishment of premises

If a lease states the general form and timing of the refurbishment or refitting of premises, a property owner may require a tenant to refurbish or refit the premises.

28. Assignments

      (1) A tenant may request in writing a property owner to consent to the assignment of a lease.

      (2) A property owner must not unreasonably withhold consent to the assignment.

      (3) A property owner, within 14 days of receiving a request to consent to an assignment, is to advise the tenant in writing of the information that the property owner requires to make a decision concerning the assignment.

      (4) A property owner may require a tenant to provide the following:

(a) information on the financial standing of the prospective assignees, including any approval for finance;

(b) information on the relevant business skills of the prospective assignees;

(c) information on the financial standing of any prospective guarantors;

(d) information as to the proposed use of the premises by the proposed assignee;

(e) 2 references.

      (5) A property owner is to give written notice of his or her approval or rejection of an assignment within 21 days of receiving all information required to be given.

      (6) If no objection is made within the 21 day period, the property owner is taken to have approved the application.

      (7) A property owner may reject the assignment of a lease if –

(a) the proposed assignee intends to change the use of the premises; or

(b) the proposed assignee does not have the financial standing to conduct the business; or

(c) the proposed assignee does not have the necessary business skills to conduct the business;

(d) the proposed assignee does not enter into a written agreement with the property owner in accordance with some or all of the terms of the lease or as otherwise reasonably requested by the property owner.

      (8) A property owner is entitled to recover from an outgoing tenant the reasonable costs of investigating any assignee and processing assignments.

      (9) A tenant, by notice in writing, may require the owner to substantiate the costs.

      (10) A property owner is to advise all parties to a tenancy of any changes made to a lease following any assignment of the lease.

      (11) If, on an assignment, the property owner changes the terms of a lease with the agreement of the original tenants and their guarantors, the original tenants and their guarantors remain liable for any pre-existing guarantees.

      (12) The original tenants and guarantors are released from any liability if the terms of a lease, other than the rent, are changed after an assignment without their agreement.

29. Termination and renewal of leases

      (1) A lease may be terminated or renewed at any time before its expiry by written agreement between the property owner and the tenant.

      (2) In the absence of any agreement, and subject to subclause (3), not less than 3 months before the expiry of a lease the property owner is to give to the tenant notice in writing stating –

(a) the conditions on which he or she is prepared to renew the lease; or

(b) that the lease will not be renewed; or

(c) that the tenant will be able to remain as a periodical tenant under the terms of the lease; or

(d) that the tenant may continue to occupy the premises on a monthly tenancy for the time being on terms to be agreed.

      (3) Within 30 days of receiving a notice under subclause (2)(a), the tenant is to give to the property owner notice in writing stating that he or she –

(a) accepts the conditions for the renewal; or

(b) wishes to negotiate the conditions, stating the alterations to the conditions the tenant seeks; or

(c) does not wish to renew.

      (4) If a tenant fails to give notice under subclause (3), the lease is not renewed.

      (5) Within 30 days of receiving a notice under subclause (2)(c) or (d), the tenant is to give to the property owner notice in writing stating whether he or she agrees to the continuation of the lease as proposed.

      (6) If the property owner fails to provide the information set out in subclause (2), the term of the lease, at the tenant's election, may be extended so that, before being required to vacate the premises, the tenant has the information for the period required under that subclause.

      (7) The tenant's election is exercisable by notice in writing given to the owner within 2 weeks after the last date on which notice under subclause (2) may be given.

      (8) If the tenant fails to give the notice required under subclause (5) or (7), the tenant is taken to not wish to renew.

      (9) If a property owner offers to renew a lease, the rent under the renewed lease is to be the market value rent for those premises determined in accordance with clause 21 unless there is agreement to the contrary.

30. Security deposits

      (1) A security deposit is not to be greater than 3 months' rent.

      (2) A security deposit provided by the tenant is to be held in an account bearing interest on trust by the property owner for the tenant.

      (3) The property owner –

(a) must account to the tenant for any interest earned on the deposit; and

(b) may retain any such interest and deal with it as money paid by the tenant as part of the deposit; and

(c) must advise the tenant in writing of –

(i) the terms and conditions on which the deposit is held; and

(ii) the grounds on which the property owner may refuse to refund all or part of the deposit.

      (4) The property owner may accept, and must not unreasonably refuse to accept, a bank guarantee instead of a security deposit.

      (5) This clause does not prevent the property owner appropriating security money in accordance with any lawful entitlement to do so.

31. Indemnities

      (1) Any provision in a retail lease that purports to indemnify, or requires a tenant to indemnify, the property owner against any action, liability, penalty, claim or demand to which the property owner would otherwise be liable is void.

      (2) A person must not enforce, or attempt to enforce, a provision which purports, or requires a tenant, to indemnify a property owner.

32. Independent advice

      (1) A property owner must not compel a tenant or a person negotiating with the property owner to become a tenant under a lease to use the services of a solicitor or other person nominated by the property owner.

      (2) If the tenant or person is so compelled, the tenant or person is not required to pay any fees for the solicitor's services.

      (3) A tenant when negotiating with a property owner may be accompanied or represented by an independent advisor.

      (4) The independent advisor must not be a lessee within the same shopping centre unless the property owner agrees to that person being present.

PART 3 - Premises in shopping centres

33. Costs of obtaining information

If the costs of obtaining information relating to a shopping centre are charged to tenants, any resulting report –

(a) is to be made available to those tenants; and

(b) is to remain confidential; and

(c) must not identify any individual tenant, unless the tenant has given written consent to be identified..

34. Advertising and promotion

      (1) A property owner is not to charge a tenant for any advertising or promotion costs incurred in the promotion of the property owner only.

      (2) If a property owner charges a tenant for advertising or promotion costs, the property owner is to provide an annual marketing plan, including a budget, to the tenant.

      (3) The property owner, if requested by a tenant, is to make available to the tenant an unaudited advertising and promotion expenditure statement within one month of the end of each 6 months of the accounting year for the premises rented by the tenant.

      (4) The property owner is to appoint an auditor to provide a report for tenants.

      (5) The report –

(a) is to be given within 3 months of the end of each accounting year for the premises; and

(b) is to contain a statement, prepared in accordance with recognised accounting principles, showing how the advertising and promotion costs have been charged and expended.

      (6) Any money collected from tenants as advertising and promotion costs which is not expended in the current year is to be retained in a marketing fund for their benefit.

      (7) If a levy is charged for an opening promotion, the budget referred to in subclause (2) is to be presented to contributors before the opening.

      (8) A property owner is not to require a tenant to undertake any advertising of his or her business in addition to the tenant's contribution to outgoings for advertising and promotion specified in the lease.

35. Relocation

      (1) A relocation clause in a lease may be invoked only after presentation to the tenant of plans for refurbishment, redevelopment or extension of the shopping centre showing that –

(a) a genuine proposal is to be carried out within a reasonably practicable time after relocation of the tenant; and

(b) the proposal cannot be carried out practicably without vacant possession of the tenant’s premises.

      (2) A provision in a lease allowing relocation of the tenant is to –

(a) require the property owner to give the tenant at least 6 months' written notice of the date for relocation, including an offer of alternative premises and the terms and conditions on which they are offered; and

(b) provide for the tenant to be compensated for actual reduction in, or loss of, profit during relocation from the point of closure to the point of opening; and

(c) provide for the tenant to remain at the existing premises unless the tenant is satisfied that –

(i) the new premises are equivalent to the existing premises; or

(ii) the tenant will be returned to his or her existing premises within a mutually agreed period; and

(d) require the area and the configuration of the new premises to be materially the same as the existing premises, unless otherwise agreed by the tenant; and

(e) include the right of the tenant to terminate the lease if the alternative premises or the terms or conditions of the lease of those premises are not acceptable; and

(f) provide for the issue of a new lease on the same terms as the existing lease except as to rent which, unless otherwise agreed, is to be the market value rent; and

(g) provide for the property owner to pay the tenant's reasonable costs of relocation.

      (3) Notwithstanding subclauses (1) and (2), the parties may negotiate a new lease as an alternative to relocation.

36. Inadequate sales

A provision in a lease that allows for a property owner to terminate a lease if a tenant fails to meet criteria based on sales performance or turnover is invalid.

37. Tenants' association

A person must not take any action to discourage or prevent a tenant from forming or joining a tenants' association.

38. Trading hours

      (1) The trading hours for a shopping centre are to be divided into the following categories:

(a) core hours;

(b) centre trading hours;

(c) special trading hours.

      (2) Core trading hours are the minimum times of trading during which all shops must open and may be negotiated with individual tenants.

      (3) Centre trading hours are the times during which all centre facilities are to be available and during which any shop may trade.

      (4) Special trading hours –

(a) are the times outside the centre trading hours and negotiable between property owners and tenants; and

(b) are not compulsory, so that tenants may open if they wish.

      (5) Any costs involved in special trading hours operations should be shared only between those tenants who actually open.

      (6) A property owner may set the trading hours in a new shopping centre.

      (7) A property owner is not to change the centre trading hours without obtaining the approval of tenants in accordance with subclause (8).

      (8) The process for obtaining the approval of tenants for a change in trading hours is as follows:

(a) a resolution to change the hours is to be drawn up by either the property owner or a tenant;

(b) the resolution is to be put to a meeting of tenants occupying retail premises within the shopping complex, with a minimum of 7 days' notice of the time, place and business of the meeting being given;

(c) voting is to be by secret ballot on the basis of one vote per tenancy, with only tenants occupying retail premises within the shopping complex, or their proxies, having the right to cast a vote;

(d) any resolution must be supported by a number of votes equal to or exceeding two thirds of the total number of tenants voting on the resolution at the meeting.

      (9) A property owner may agree to tenants trading outside accepted trading hours if those tenants meet the costs of opening the shopping centre for the additional hours.

PART 4 - Dispute resolution

39. Disputes

      (1) A property owner and a tenant must attempt to resolve any dispute between them by direct negotiation.

      (2) If the parties fail to resolve a dispute by direct negotiation, either party may request the Office of Consumer Affairs to investigate the dispute and attempt to negotiate a mutually acceptable solution.

      (3) If a dispute remains unresolved following investigation and negotiation by the Office of Consumer Affairs, either party may refer the dispute to the Committee for conciliation.

      (4) If the dispute remains unresolved, either party may refer the dispute to a court of competent jurisdiction.

PART 5 - Monitoring committee

40. Monitoring Committee

      (1) A Retail Tenancies Code of Practice Monitoring Committee is established.

      (2) The Committee consists of at least 5 members appointed by the Minister of whom –

(a) one is appointed as chairperson; and

(b) one is appointed in consultation with retail associations to represent retail businesses; and

(c) one is appointed in consultation with the Property Council of Australia to represent members of the Property Council; and

(d) one is appointed to represent valuers; and

(e) one is appointed to represent any other relevant industry group.

      (3) For each member appointed under subclause (2), the Minister may appoint 2 delegates.

      (4) One of a member's delegates may attend a meeting if the member is unable to attend.

41. Vacation of office

      (1) A member of the Committee vacates office –

(a) when that member dies; or

(b) if that member becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with creditors or makes an assignment of remuneration or estate for their benefit; or

(c) if that member is convicted in Tasmania of a crime or an offence which is punishable by imprisonment for a period of not less than 12 months, or if that member is convicted outside Tasmania of an offence which, if committed in Tasmania, would be a crime or an offence so punishable; or

(d) if that member resigns office by writing addressed to the Minister and the Minister accepts that resignation; or

(e) if that member is removed from office by the Minister under subclause (2).

      (2) The Minister may remove a member of the Committee from office if the Minister is satisfied that the member –

(a) is incapable of properly performing the duties of that office; or

(b) is incompetent in performing those duties; or

(c) has neglected to perform those duties; or

(d) has been guilty of misconduct of a nature which, in the opinion of the Minister, makes the person unsuitable to hold that office.

42. Committee functions and powers

      (1) The Committee has the following functions:

(a) to consider any matter referred to it by –

(i) the Minister; or

(ii) the Office of Consumer Affairs; or

(iii) an owner or manager of retail premises; or

(iv) a tenant of retail premises;

(b) to recommend to the Minister any amendments to this Code;

(c) to oversee the operation of this Code;

(d) to collect and analyse data relating to complaints in relation to the failure of tenants and property owners to comply with this Code;

(e) to review and advise the Minister on the effectiveness of this Code;

(f) to refer any contraventions of this Code to the Office of Consumer Affairs with any recommendation the Committee thinks fit;

(g) to attempt to resolve disputes between owners and tenants;

(h) to recommend fair and reasonable resolutions to a dispute, after taking into account the provisions of this Code and the circumstances surrounding the dispute;

(i) to appoint independent experts to make recommendations to the Committee on particular matters.

      (2) The Committee may do all things necessary or convenient to perform its functions.

43. Committee proceedings

The Committee may regulate its own procedures in respect of the conduct of its meetings.

44. Remuneration of members

A member of the Committee may be paid such remuneration, including allowances, as the Minister determines.

APPENDIX A – VALUATION PRINCIPLES FOR MARKET VALUE RENT

Clauses 1 and 21

1.  A valuer determining the market value rent for premises covered by the Code of Practice for Retail Tenancies must not take into account –

(a) any special interest or anxieties of the landlord or tenant; or

(b) any goodwill of the tenant attached to the premises; or

(c) the tenant's fixtures and fittings; or

(d) any enhancement or deleterious effect due to the existence of the current lease agreement.

2.  A valuer determining the market value rent for premises covered by the Code of Practice for Retail Tenancies must take into account the following:

(a) the fact that market value rent may fall as well as rise in accordance with changing market conditions;

(b) the total market value rent, which is rent plus outgoings other than any promotional levy or advertising commitment inferred by the lease;

(c) gross occupancy costs;

(d) any covenant or restriction on the use of the premises;

(e) any court precedent that guides valuation practice;

(f) the period that the rent applies to until the next rent review;

(g) all relevant market evidence from any source, with the evidence being fully investigated and any appropriate adjustment made;

(h) if a lease is not in place, the highest and best use value, having regard to the probable and realistic possible use of the premises;

(i) the level of any incentive or inducement to lease being offered in the marketplace for comparable premises between comparable parties in comparable circumstances;

(j) the extent of all building services and improvements offered by the property owner other than any services or improvements that are capable of removal by an outgoing tenant or by a third party;

(k) the condition of the premises provided by the property owner;

(l) any factor required by this Code to be disclosed in a disclosure statement that impacts on the market value rent of the premises, in particular, any obligation on the tenant to contribute towards building services and any other tenants' costs or responsibilities;

(m) any relevant legislative requirement;

(n) the definition of market value rent used by the Australian Institute of Valuers and Land Economists;

(o) any conditions or rules of the lease that are consistent with this Code.

3.  A valuation report must state the factual basis and rationale for any variation in market value rent for the period to which the report relates.

4.  A valuer may take into account submissions from either party.

5.  A valuation report must –

(a) be in writing; and

(b) identify the location of the retail shop lease; and

(c) give detailed reasons for the determination; and

(d) specify the matters taken into account in making the determination; and

(e) include details of the methodology used and any calculations involved.

APPENDIX B  – DISCLOSURE STATEMENT DETAILS

Clause 6

1.  The following statements are to be displayed at the top of a disclosure statement:

(a) the information provided is confidential;

(b) tenants should ensure that they understand the statement before signing, and should seek independent advice if in doubt;

(c) on entering a lease, the disclosure statement forms part of the lease agreement.

2.  The following information is to be included in each statement:

(a) the rent and the method of calculation;

(b) the items to be included in turnover calculations;

(c) the commencement date for rental payments;

(d) rental reviews and options, how they are conducted, and their frequency;

(e) the term of the lease and any option period;

(f) any rental premium charged;

(g) a list of general outgoings, with an estimate of the costs and the basis on which the costs are apportioned to the tenant;

(h) a list of all other costs with an estimate of their amounts and, where appropriate, the basis on which they are calculated and how they are to be paid;

(i) the identity of the property owner, the name and address of the agent and an emergency contact point;

(j) a description of the premises, including the total lettable area and what is included in the area and fit out;

(k) trading hours;

(l) access to the premises;

(m) the permitted or required use of the premises;

(n) the date of availability for occupation;

(o) the tenancy mix in a shopping centre complex.

3.  The following statement should appear in at least 12 point print immediately above the place for the tenant's signature:

"Failure to seek independent advice may place full responsibility for the consequences of this signing upon the tenant."

APPENDIX C – SPECIFIED BUSINESSES

Clause 1

Antique shop

Art gallery

Art supplies shop

Arts and crafts shop

Barber

Barbecue equipment shop

Beautician

Beauty shop

Beauty therapist

Beachwear shop

Beer, wine and spirit shop (except where goods are for consumption on the premises)

Bicycle shop

Bicycle accessories shop

Biscuit bar shop

Bookshop

Boot and shoe repairer

Bridalwear sales and hire shop

Building supplies shop

Business machines and equipment shop

Butcher shop

Cake shop

Camping equipment shop

Card shop

Carpet shop

Casket shop

Cigarette shop

Clock shop

Coin and coin collection shop

Confectionery shop

Convenience food shop

Cookie shop

Copper fitting shop

Cosmetics shop

Costumes and formal wear hire shop

Craft shop

Curtain shop

Delicatessen shop

Department store

Dinnerware shop

Disposals shop

Drapery shop

Dry cleaner

Duty free shop

Electrical appliance shop

Electronic equipment and supplies shop

Engraver

Equestrian equipment and supplies shop

Equipment hire shop

Fast food shop

Fast photo processor

Flag shop

Floor covering shop

Florist shop

Flower shop

Fruit and vegetable shop

Fruit juice shop

Furniture shop

Games and hobbies shop

General store

Gift shop

Giftwrapping shop

Grocery shop

Greengrocer shop

Haberdashery shop

Hairdresser

Hardware shop

Health food shop

Hearing aid shop

Hot bread kitchen shop

Hot water system shop

Household appliance shop

Household fixtures and fittings shop

Ice cream shop

Interior decoration shop

Jewellery shop

Key cutting shop

Kitchenware shop

Kite shop

Leather goods shop

Lighting shop

Linen shop

Lingerie shop

Lottery agency

Manchester shop

Martial arts supplies shop

Mixed business shop

Motor vehicle and motorcycle accessories shop, other than a tyre shop or battery shop

Music shop

Newsagency shop

Nick-nack shop

Nut bar shop

Optometrist

Organ shop

Paint and paper shop

Pastry shop

Pet shop

Pharmacy shop

Phone shop

Photographic equipment and supplies shop

Picture frame shop

Plumbing supplies shop

Pool and spa shop

Poultry shop (whether fresh or frozen poultry or both fresh and frozen poultry)

Precious stones shop

Prints and posters shop

Restaurant, cafeteria, coffee lounge and other eating place

Rock shop

Rubber stamp supply shop

Seafood shop

Second-hand goods shop

Service station

Shoe shop

Shops selling or engaged in any one or more of the following goods or services in relation to girls, women and infants:

(a) accessories

(b) baby wear

(c) bags

(d) caps

(e) clothing

(f) clothing alterations

(g) sunshades

Shops selling or engaged in any one or more of the following goods or services in relation to men and boys:

(a) accessories

(b) caps

(c) clothing

(d) clothing alterations

(e) sunshades

Shops selling any one or more of the following goods:

(a) cassettes

(b) musical instruments

(c) pre-recorded tapes

(d) records

(e) compact discs

(f) sheet music

Silverware shop

Sleepware shop

Smallgoods shop

Snack bar

Soft drink shop

Soft furnishing shop

Souvenir shop

Sporting goods shop

Stamp and stamp collection shop (whether for purchase or sale or both)

Stationery shop

Supermarket

Surfboard shop

Surfing accessories shop

Takeaway food shop

Television, video equipment and other household appliance hire shop

Tobacconist shop

Toy shop

Umbrella shop

Underwear shop

Variety store

Videotape and pre-recorded music library

Vitamin shop

Wall decoration shop

Watch shop

Writing materials shop



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