ByLawyers News and Updates

Leasing precedents – QLD

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New and updated leasing precedents have been added to the By Lawyers Leases QLD publication.

Queensland practitioners will find these leasing precedents helpful with a range of common transactions in retail and commercial leases.

The new and updated precedents include:

  • Assignment deed.
  • Guarantee document.
  • Variation deed.
  • Deed of surrender.
  • Deed of variation of lease – deferral of rental payments. This deals with rental relief prompted by the economic impacts of COVID-19 in accordance with the National Cabinet Mandatory Code of Conduct.

The new and updated leasing precedents include clauses addressing common leasing scenarios such as:

  • First right of refusal.
  • Demolition and relocation.
  • Covenants protecting mortgagee’s interests.
  • Liquor licencing requirements such as transfer of licence, and consent to licence.
  • Execution clauses for individuals and corporations tailored for use in deeds, agreements, and contracts.

Also included are precedent letters for standard lease transactions such as:

  • Covering letters to lessee’s solicitor submitting a lease, deed of surrender, deed of assignment, or deed of variation. These precedent letters include execution instructions and a checklist of items to be returned to a lessor before a tenant is allowed to take possession of the premises.
  • Letter to a lessor client enclosing a lease with instructions on how to sign.
  • Letter to titles office enclosing a lease for registration.

The full commentary in the Leases QLD publication covers key practical issues and considerations for landlords and tenants. These include renewals, subleases, interruptions, and outgoings. The specific legislative requirements under the Retail Shop Leases Act are also addressed extensively.

1 January updates – All states

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The By Lawyers has attended to the following 1 January updates required by legislation and practice in all relevant jurisdictions:

Land tax – Increases to threshold values – NSW

Land tax thresholds in NSW are indexed to rise on 1 January each year.

The 2021 threshold combined land value has increased to $755,000 for all liable land. Special trusts and non-concessional companies are excepted.

A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold plus $100 applies.

If the aggregate taxable value exceeds the premium rate threshold of $4,616,000 then $60,164 is payable plus a marginal tax rate of 2% over that amount.

All relevant commentary and precedents in the By Lawyers Conveyancing & Property and Trusts guides have been updated accordingly.

By Lawyers Contract for sale of land

The 2021 edition is now available on the Sale of real property matter plan in the Contract section.

Leases and subleases – NSW, VIC, QLD, SA and WA

The 2021 editions are now available on the Leases – Act for Lessor matter plan for each jurisdiction.

These additions form part of our continuing commitment to enhancing our content and helping our subscribers enjoy practice more.

Bankruptcy

In response to the COVID-19 pandemic temporary changes were made to bankruptcy law, increasing the debt threshold to $20,000 from $5,000 and increasing the time frame for a debtor to respond to a bankruptcy notice to 6 months from 21 days.

As of 1 January 2021 these changes have ceased and a new permanent bankruptcy threshold has been implemented.

The current debt requirement for bankruptcy is a minimum debt of $10,000 and the current time to respond to a bankruptcy notice is 21 days.

The By Lawyers Insolvency – Bankruptcy of individuals publication has been updated accordingly.

Always up to date

In addition to our annual 1 January updates, By Lawyers ensures our publications are updated for 1 June and any other statutory or regulated adjustments where necessary. We also promptly  update our content for all relevant legislative amendments and other legal developments throughout the year, in all jurisdictions.

The team at By Lawyers wishes everyone a prosperous and safe 2021.

Lease – Retail lease

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One for the Little Guy

By Russell Cocks, Solicitor
First published in the Law Institute Journal

The recent case of Xiao v Perpetual Trustee Company Limited and Macquarie Office Management Limited [2008] VSC 412 is a typical ‘David versus Goliath’ scenario, with the outcome complying with biblical expectations.

Xiao (the tenant) operated a café/restaurant in the ground floor of a substantial office building that was owned by Perpetual (the landlord) and managed by Macquarie (the manager), which employed an estate agent to manage tenancies (the agent). The tenant had paid $320,000 for the business in 2006, taking over a lease due to expire on 30 September 2008. Importantly the lease provided for an option of five years and the question to be decided by the Court was whether the tenant had validly exercised the option. If not, the tenant would be obliged to vacate the premises on 30 September 2008.

Jurisdiction

Most disputes involving retail premises, as these premises were, are heard in VCAT. An exception exists if the tenant is seeking relief against forfeiture and the Court was satisfied that a claim for relief against forfeiture of an option came within this exception. Once the jurisdiction of the Court is enlivened, appropriate remedies, such as a declaration or specific performance, become available.

The option

The central issue was whether the tenant had exercised the option within the applicable time limits. Certainly the tenant had exercised the option, on 19 June 2008, but the landlord argued that this was inoperative as it was outside of the applicable time limit. The provisions in the lease required the tenant to exercise the option ‘not less than six (6) months prior to the expiry of the Term’. The term was due to expire on 30 September 2008, so the lease required the tenant to exercise the option prior to 31 March 2008 and there is no doubt that the tenant’s notice on 19 June failed to comply with this time limit. However the tenant sought to rely upon the landlord’s overriding statutory obligation (s 28 Retail Leases Act) to give notice to the tenant of the need to exercise the option. The Act requires the landlord to give this notice to the tenant between 6 and 12 months before the last day for exercise of the option; in this case between 30 September 2007 (6 months before the last day) and 30 March 2007 (12 months before the last day). Failure by the landlord to give notice within these time limits results in the tenant being entitled to exercise the option at any time within 6 months of the landlord in fact giving the notice.

Notice

The landlord was ‘late’ with the option notice. The agent purported to send the option notice to the tenant on 4 December 2008, meaning that the ‘statutory extension’ gave the tenant 6 months from that date (4 June 2008) to exercise the option. On 12 June the lawyers for the landlord wrote to the tenant advising that the tenant had lost the right to exercise the option, as the tenant had failed to exercise the option within 6 months of the option notice and that the tenant was required to vacate the premises at the expiration of the term, namely 30 September 2008. The tenant gave notice of exercise of the option on 18 June and shortly after issued these proceedings seeking enforcement of the option.

At this point the judgment entered ‘the twilight zone’ as far as practising lawyers (and agents) are concerned – an intimate analysis of the minutia of service. Nobody wants to think that a document that they have served may in fact be held to have not been served, but that was the outcome in this case. The landlord’s responsibility was to ‘notify’ and the Court held that that meant that the information had to in fact come to the attention of the tenant. It was not the act of the landlord ‘serving’ the document that was the touchstone; rather it was proof of the fact that the information had reached the tenant that was necessary. The agent gave evidence that the notice had been posted to the tenant, both in the normal mail and by registered mail, on 4 December 2007. But the Court was not satisfied that the normal mail letter had been received (or indeed posted) and was satisfied that the tenant had not collected the registered mail until 31 December 2007, which was when the landlord had fulfilled the obligation to ‘notify’. This made the tenant’s exercise of the option on 19 June 2008 within the 6 months extended period for exercise and thus enforceable.

The Court drew the crucial distinction between ‘service’ and ‘notification’, placing a higher onus in respect of the latter. However it also concluded that even if the lower threshold of ‘service’ was all that was required, then ‘service’ had not been achieved as the letter referred to 3 June 2008, whereas 6 months from ‘service’ would have been 6 or 7 June, depending upon the definition of ‘service’ adopted. As Maxwell Smart would say, ‘Missed by that much!’

The outcome was a win for the little guy, who would have, perhaps unfairly, lost a business that had cost a significant amount of money. No doubt that did not influence the outcome, but nevertheless it is a pleasing happenstance.

Tip Box

Whilst written for Victoria this article has interest and relevance for practitioners in all states.

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