OBLIGATIONS OF COMMERCIAL AND RETAIL LEASES

Since the supreme court case Diakou Nomineees Pty Ltd v Gouger Street Pty Ltd and Ors [2017] SASC 72 (“Diakou”), Leases that were previously exempt from the Retail and Commercial Leases Act 1995 (SA) (“the RCLA”) by falling above the presecribed rent threshold could be subject to it immediately due to an increase this threshold. For example a $300,000 (per annum) lease entered into in 2009 was exempt from the RCLA as it was above the $250,000 threshold. However, in 2011 this threshold increased to $400,000 and as such, due to the decision in Diakou, the RCLA now immediately applied. This had wide ranging effects on the terms of leases and the rights and obligations of tenants and landlords under the lease.

As of the 1^st of July 2020, ammendments to the RCLA are in operation. These ammendments (contained in sections 4(3)(a), 4(3)(b) and 4(4) of the RCLA) attempt provide certainty in leasing and the application of the RCLA such that if certain leases are exempt from the act, they will continue to operate so.

Registered leases fulfilling the criteria in the RCLA that fall above the threshold will continue to be exempt from the act even if the rent falls under the threshold or the threshold is increased above the rent paid. This is especially important when considering the “Valuer-Generals” ability to review the rent threshold every 5 years. (the next review to be completed by october 2022)

Whilst the ammendments aid to protect tenants’ and landlords’ rights and olbigations under the lease at the time it was entered into, they do not apply to leases entered into before the 1^st of July 2021.

If you would like to find out more about your obligations under commercial and retail leases, Straits Lawyers are here to help. We are now offering online services in both English and Chinese.

Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.