Retail leases are often complex, and when retail tenancy disputes occur, parties are often unaware of the precise nature of their rights and obligations. This article outlines how the law governing retail tenancy disputes in New South Wales operates, and canvasses the best method to ensure all rights and obligations are upheld.
What is a retail tenancy dispute?
A retail tenancy dispute (RTD) includes any dispute concerning the liabilities or obligations of a party to a retail shop lease. This includes parties to a former lease and their liabilities or obligations which arose under the former lease. RTD’s will also encompass disputes arising in connection with the use or occupation of the retail shop to which the lease or former lease relates, including those concerning disputes about security bonds.
A retail shop refers to premises used wholly or predominantly for carrying on one or more businesses, or premises used to carry on business in a retail shopping centre.
A retail lease includes any agreement under which a person grants or agrees to grant another person (for value) a right to occupy a premises for the purpose of using the premises as a retail shop. This broad definition includes implied and oral agreements, sub-leases and potentially licences.
NCAT and Retail Tenancy Disputes:
Under s 75 of the Retail Leases Act (RLA), retail tenancy disputes should be resolved by the NSW Civil and Administrative Tribunal (NCAT) rather than a court. This means, for example, that if a dispute proceeding commences in a court and the dispute may be dealt with as a claim under the RLA in a just and effective manner, then the court must transfer the proceedings, provided the claim is not for an amount greater than $400,000.
The Gate-Keeping Role of Mediation in Retail Tenancy Disputes:
Mediation is a central process in resolving retail tenancy disputes. This is reflected in section 68 of the RLA which states that a party may not commence proceedings in NCAT or in court without attempting mediation in the first instance. This mediation must be attempted with the NSW Small Business Commissioner (More information at: http://www.smallbusiness.nsw.gov.au/).
The benefits of mediation should not be understated. Mediation offers the potential for a level of party control over the dispute, and can often be a more cost effective choice. Additionally, mediation emphasises the relationship between parties. This is pertinent in retail tenancy disputes when parties often have an ongoing business relationship.
Applying to NCAT:
Failing mediation, the party should apply to NCAT. NCAT handles two types of claims under the RLA: retail tenancy claims and unconscionable conduct claims.
Retail tenancy claims refer to disputes about payment of money, claims for repairs, amendments to leases, appointment of a specialist value retailer etc. An unconscionable conduct claim is where unethical conduct, like relying unfairly on greater bargaining power, unfair tactics or unreasonable omissions, leads to financial loss. Regarding time limits, applications about retail tenancy may not be lodged more than 3 years after the liability or obligation that forms subject of the claim arose. Applications about unconscionable conduct may not be lodged more than 3 years after the conduct occurred unless NCAT orders otherwise and it is within 6 years of the conduct having occurred.
Generally, in order to commence proceedings, there must be an Application for an Original Decision. (See: http://www.ncat.nsw.gov.au/Documents/ccd_form_retail_leases_original_decision_application.pdf)
Sometimes, there is a need for urgent interim orders. Circumstances that may warrant such orders include where there is a threat by a landlord to re-enter and possess premises or threatened conduct that might cause irreparable harm to a party. In such instances, it is possible to apply to NCAT for an interim order in addition to the Application for Original Decision. (See: http://www.ncat.nsw.gov.au/Documents/ccd_form_retail_leases_interim_order_application.pdf)
These outcomes can be facilitated as NCAT operates in an informal manner and is granted the flexibility to determine its own procedure, exempt from rules of evidence.
Costs, Money Orders and Enforceability:
NCAT has the power to make orders such as compelling a party to pay/refund money, to perform a specified obligation or to refrain from a specific act. Additionally, NCAT can, and often does, make orders declaring provisions of a lease to be void or declare explicitly the rights and liabilities of a party.
Each party is to bear its own costs for the proceedings, however NCAT is empowered to award costs where it has decided that it is ‘fair to do so.’ This could be where a party has acted in a way that unnecessarily disadvantages the other party, for example, failing to comply with orders.
Keep in mind that while the tribunal has wide powers to make money orders, these orders do not automatically become enforceable. To remedy this issue, a certificate must be provided from NCAT which can then be filed in the registry of a court which allows the judgment to be enforced by the relevant court.
At Etheringtons Solicitors, we are experienced in resolving retail tenancy disputes. Our expert team can assist you in resolving your dispute in an efficient manner, preserving your relations and allowing you to get back to business as soon as possible. For more information, call us on (02) 9963 9800 or email us at firstname.lastname@example.org.
For more information we encourage you to visit: http://www.ncat.nsw.gov.au/Pages/cc/Divisions/Retail_leases.page.aspx