The Leases (Commercial and Retail) Act 2001 (ACT) (the Act) sets out some of the rights and responsibilities of tenants and lessors in relation to commercial and retail leases. The Act applies to almost all retail premises, to commercial premises less than 300m2 and to a number of other types of leases, including leases to an incorporated association and leases for business accommodation, secretarial services, child care centres, sports centres and garden supply centres. The Act also sets out a regime for dealing with disputes that arise between lessors and tenants.
Disputes between a tenant and a lessor of commercial or retail premises can have a significant impact on both the tenant’s and the lessor’s business. Disputes that commonly arise during the term of a lease include disputes about the tenant’s failure to pay rent, what happens when the premises are damaged, what representations or promises were made to a tenant during negotiations and the termination of a lease.
Dispute Resolution and Jurisdiction
Almost all disputes relating to a lease or the negotiation of a lease will be governed by the Act. The Magistrates Court has jurisdiction to decide applications made under the Act, regardless of the amount in dispute.
To avoid delay or unnecessary expense, the Court deals with a leasing dispute application consistent with the urgency of the matter, its complexity and the interests of justice. Less complex matters will be “fast-tracked” and parties will be encouraged to considered alternate methods of dispute resolution.
Applications and Timing
If a party wishes to bring a leasing dispute before the Court, it must make an application using the appropriate forms and setting out the nature of the dispute. In some cases strict timeframes will apply. For example, a tenant who makes an application regarding a rent increase must make the application 28 days before the increase takes effect unless the Court waives the requirement. A tenant wishing to challenge a lease termination has 14 days from receiving the notice of termination to make an application. Consequently parties to a lease dispute need to act promptly once the dispute has arisen and must ensure they are aware of and meet the time limits imposed by the Act.
Once an application has been received, the Court will hold a case management conference with the parties to assess the likelihood of the parties resolving the dispute without the need for a hearing. These conferences are conducted by the Court’s Registrar around a table and not in a court room. They are informal and without prejudice to the parties’ legal positions.
If the Registrar considers that the parties may resolve the dispute, the application will likely be adjourned to a later date to allow the parties time to settle the dispute out of court.
If at the case management conference the Registrar considers it unlikely that the parties will resolve the dispute, the application will be listed before a Magistrate and the Magistrate will make directions about how the proceeding will be conducted.
Hearings and Procedures
The Act requires the Court to act quickly, aim to minimise costs for the parties and ensure that all relevant material is disclosed to the Court to allow it to decide the matters in dispute. The Act provides that, if appropriate, the Magistrates Court may transfer the proceeding to the Supreme Court.
Unlike other commercial disputes, each party to a leasing dispute will bear its own costs unless the Court orders otherwise. This makes it critical that parties consider costs prior to making an application. The costs of a proceeding, particularly if the parties are legally represented, may outweigh the benefits.
Notwithstanding the default position that each party bears its own costs, there are a number of circumstances in which the Court will make an order for costs against a party. These circumstances include:
- failure by a party to comply with the orders of the Court;
- where a party has brought a matter before the Court that is hopeless;
- where a party has refused to accept a reasonable offer of compromise; and
- where a party conducted itself in the litigation in an unreasonable manner, for example, failing to provide relevant documents in a timely manner to the other party.
If you are a party to a commercial or retail lease in the ACT and you are in dispute with another party to the lease, it is important to seek advice early in the dispute to ensure you are informed about your rights and obligations, that you don’t miss any time limits and that you make practical and commercial decisions about how to proceed.