On 8 April 2020, we wrote about the National Cabinet’s announcement introducing the Mandatory Code of Conduct for SME Commercial Leases (Code). Each of the States and Territories have since taken steps to pass legislation on an expedited basis to allow for the implementation of the Code – including, for example, Western Australia’s Commercial Tenancies (COVID-19 Response) Bill 2020 (WA) which was passed on 16 April 2020 (discussed here) and Queensland’s COVID-19 Emergency Response Act 2020 (Qld) (Emergency Response Act).
In this alert, Aaron Alcock, Jon Erbacher, Don Battams and Chris Cullen discuss the impact of the Emergency Response Act on leases in Queensland and the current status of Queensland’s implementation of the Code.
What is the effect of the Emergency Response Act?
The Emergency Response Act (accessible here) was introduced to Queensland Parliament on 22 April 2020 and received Royal Assent on 23 April 2020. The powers granted under the Act include:
- to facilitate the implementation of the Code and, particularly, the good faith leasing principles for non-residential leases in Queensland;
- to establish a power to make emergency regulations for the residential tenancy sector to address the impacts of the COVID-19 crisis; and
- to establish a temporary Small Business Commissioner to deliver advocacy functions and dispute resolution support.
What regulation-making powers are contained in the Emergency Response Act?
The Emergency Response Act provides for various regulation-making powers enabling the making of regulations which, amongst other things, implement the Code. Relevantly, the Act allows for future regulations to be made in respect of the following:
- retail leases under the Retail Shop Leases Act 1994 (Qld) (RSL Act) and any other leases that could be prescribed by the regulation (see Part 7). This includes the power to make regulations in relation to matters such as prohibiting the termination of leases and eviction of tenants, regulating or preventing the exercise of enforcement rights by landlords, requiring parties to adhere to a prescribed standard or code and establishing a dispute resolution process in respect of leasing. A regulation made under Part 7 will have retrospective effect to a day not before the commencement of the Act (i.e. 23 April 2020) and will cease to have effect on and after 31 December 2020; and
- residential tenancies and rooming accommodation under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act) (see Part 8). This regulation-making power extends to matters such as imposing a moratorium on evictions, altering the grounds on which notices to leave may be given, suspending a right or obligation under the RTRA Act, enabling conciliation for disputes and amending the terms of a residential tenancy agreement (i.e. terminating or extending the term of the agreement). A regulation made under Part 8 will have retrospective effect to a day not before 19 March 2020 and will cease to have effect on and after 31 December 2020.
For completeness, we note the Emergency Response Act also includes several other regulation-making powers, however those powers are not the subject of this alert.
What is the role of the Small Business Commissioner?
The Code prescribes a process of ‘binding mediation’ to be administered by applicable State or Territory dispute resolution processes, including a Small Business Commissioner. Unlike other States, Queensland has not previously had a Small Business Commissioner, who can act “as a single point of information and advice [to small businesses], particularly in relation to dispute resolution” (explanatory notes to the Act). This has placed Queensland small businesses at a disadvantage as compared to those in other jurisdictions, where businesses have had access to an additional source of advice and support during the COVID-19 crisis.
Part 6 of the Emergency Response Act establishes the role of Small Business Commissioner in Queensland to address this gap, by providing information and advisory services to small businesses and assisting with dispute resolution.
The Commissioner’s dispute resolution function will be to administer a mediation process prescribed under “regulation” which, at this point, has not been made. Accordingly, it remains to be seen how the mediation process will operate - for example, whether the process will be voluntary or mandatory and whether the Commissioner will have power to make a binding decision in relation to any dispute. We will continue to monitor developments in this regard and advise further on the mediation process when the relevant regulation is passed.
Has the Code now been implemented in Queensland?
While the Emergency Response Act is a positive (and fundamental) step towards implementation of the Code in Queensland, it is merely the tool by which the Government will implement the Code, rather than itself being an implementation of the Code. In other words, there will be no legislative change to leasing arrangements under the RSL Act and the RTRA Act until such time as regulations under the Emergency Response Act are passed and assented to by the Queensland Parliament (although those changes may be retrospective as noted above).
Despite the expediency we have seen with the Queensland Government introducing the Emergency Response Act, it is possible that the introduction of regulations will be a slower process. The Government must now carefully consider how the Code and leasing reform will take shape in Queensland.