The Retail Shop Leases Act 1994 (Qld) has recently been amended by the Criminal Code and Other Legislation Amendment Act 2011 (Qld), which came into effect on 4 April 2011. These changes include a prohibition on the use of ratchet rent clauses in retail shop leases and also a clarification of compensation provisions.

Ratchet rent provisions

The introduction of the new section 36A to the The Retail Shop Leases Act 1994 (Qld) (RSLA) makes any ratchet rent provisions in a lease void. A transitional provision, section 134, provides that section 36A will apply to a retail shop lease entered into after 4 April 2011.  

Under section 36A, the types of ratchet rent provisions that will be made void under the RSLA are those that:  

  1. prevent a decrease in the rent under a rent review  
  2. specify or limit the amount by which the rent may decrease under a rent review  
  3. prevent, or allow the evasion of, the rent review by the lessor or another person for a purpose mentioned in paragraphs (a) or (b).  

Compensation

Section 43 of the RSLA has been amended to provide that compensation is payable by a lessor to an assignee in circumstances of a misrepresentation or false or misleading statement.

Section 44 of the RSLA has been amended to provide:  

  1. if the amount of compensation payable is unable to be agreed upon between the parties, the dispute resolution process is to be used to decide the amount. This involves submitting to a mediation process or a hearing by the Queensland Civil and Administrative Tribunal of the retail tenancy dispute  
  2. an agreement under the lease or an assignment of the lease which limits the amount of compensation payable is void.  

A transitional provision, section 135, makes the amendments outlined above under sections 43 and 44 of the RSLA apply to a retail shop lease entered into, or assigned after, 4 April 2011.