Today the Victorian Parliament passed the Covid-19 Omnibus (Emergency Measures) Act 2020 (Act).

Relevant to commercial leases and licences, the Act is effectively the “enabling legislation” that allows the creation of Regulations that give effect to the recently published National Cabinet Mandatory Code of Conduct SME Commercial Leasing Principles during Covid-19 (Code).

Part 2.2 of the Act sets out the temporary laws relating to retail leases and non-retail commercial leases and licences:

1. That applies only to “eligible leases”:

(a) That are retail leases, or non-retail commercial leases or licences, that are not “prescribed” (or do not involve a prescribed group of entities), with an aggregate turnover over a “prescribed amount”. The Act does not provide for who the prescribed entities are or what the amount is however we note that the Regulations have the ability to define a group quite widely and we expect the prescribed amount to be $50 million;

(b) That are in effect on the day the Regulations come into operation;

(c) Under which the tenant is:

(i) An SME entity; and

(ii) An employer who qualifies for and is a participant in the JobKeeper scheme.

2. The Regulations may cover a broad range of matters:

(a) Prohibiting the termination of an eligible lease;

(b) Changing any period under an eligible lease in which someone must or may do something;

(c) Changing or limiting the rights of a landlord under an eligible lease (or a related agreement);

(d) Exempting a landlord or tenant from having to comply with an eligible lease;

(e) Modifying the operation of an eligible lease or a related agreement to that lease;

(f) Modifying the application of the common law in relation to an eligible lease;

(g) Extending the period during which an eligible lease is in effect;

(h) Deeming a provision of the Regulations as forming part of an eligible lease;

(i) Imposing new requirements on the parties to an eligible lease (including requiring them to negotiate amendments);

(j) Requiring the parties to an eligible lease who are in dispute about the terms of an eligible lease:

(i) To participate in a mediation arranged by the Small Business Commission;

(ii) To obtain a mediation certificate before commencing proceedings in court or VCAT (the Regulations may confer jurisdiction on VCAT);

(iii) To get leave of the court before commencing proceedings.

3. The Act enables the Regulations to be general or limited in application; differ according to differences in time, place or circumstances; confer a function or power or impose a duty on a specified person or body or class of persons or bodies.

4. The Regulations may have retrospective effect from a date no earlier than 29 March 2020 (noting that the Code purports to have effect from 3 April 2020).

5. No compensation is payable by the State for any loss arising from the making of the Regulations.

6. We expect the Small Business commissioner will be conferred with certain rights and powers by way of the Regulations.

7. Part 2.2 of the Act setting out these new temporary rules for commercial leases and licences will expire 6 months after its commencement.

The Regulations have not yet been released. We will provide an update when the legislative instrument is released.