The Queensland Parliament has enacted a second stage of reforms to address the COVID-19 emergency via the COVID-19 Emergency Response Act 2020 (the Act).
The Act received Royal Assent and commenced on 23 April 2020. Parts 6 and 7 of the Act will be of particular interest to commercial landlords and tenants.
Small Business Commissioner
Part 6 of the Act provides for the establishment of a temporary Queensland Small Business Commissioner.
The establishment of a Small Business Commissioner in Queensland is expected to increase the likelihood of small business non-residential lease disputes being resolved earlier, avoid protracted negotiation and costs for small businesses, and reduce the strain on existing mediation and resolution services.
The Small Business Commissioner’s function will be to:
(a) provide information and advisory services to the public about matters relevant to “small businesses”, particularly in relation to any measures taken to minimise the health and safety risks caused by the public health emergency that has been declared under the Health Act 2005 (Qld) in relation to COVID-19 (COVID-19 emergency), or to assist in responding to that emergency;
(b) assist small businesses in reaching an informal resolution for disputes relating to “small business leases”; and
(c) to administer a mediation process prescribed under Part 7 of the Act in relation to small business tenancy disputes.
The Act does not contain any definition of what constitute a “small business”. Presumably a small business is one that has a significantly smaller turnover than the $50 million dollar threshold for the small to medium enterprises to which the National Cabinet’s mandatory code of conduct for commercial leases relates. By way of comparison, s6D of the Privacy Act 1988 (Cth) essentially defines a small business as one with an annual turnover of $3 million or less.
The Act defines a “small business lease” to mean a lease of premises used wholly or predominantly for carrying on a small business. A “small business tenancy dispute” is defined to mean a dispute about a small business lease, or about the use or occupation of the leased premises, regardless of when the lease as entered into. The last limb of the latter definition means that a small business tenancy dispute will not be confined to lease disputes involving small business leases entered into prior to the commencement of the COVID-19 emergency.
Henry VIII clause – a broad regulation-making power
Part 7 of the Act contains just one provision: s23.
Section 23 introduces a new regulation making power for “prescribed leases”. This term is defined to mean a retail shop lease under the Retail Shop Leases Act 1994 (Qld) (RSLA) or a lease prescribed by regulation for the purposes of the new definition. A “lease” includes any lease, sub-lease, licence or other agreement granting a person a right to occupy “premises”, which is separately defined to include land, other than as a residence. Clearly, the new regulation power is broad enough to extend to all non-residential leases, whether or not subject to the RSLA. This will provide some relief to non-retail tenants who would not otherwise be able to access the existing RSLA dispute resolution mechanisms.
The regulation making power contained in s23(1) is broad. Such a regulation can:
- prohibit recovery of possession or termination (by a lessor) of a relevant lease: s23(a) and (b);
- regulate or prevent the exercise or enforcement of another right of a lessor under a relevant lease “or other agreement relating to the premises” (other agreement): s23(c);
- exempt a lessee or class of lessees from the operation of an Act or a relevant lease or other agreement: s23(d);
- require parties to a relevant agreement to have regard to particular matters or principles, or a prescribed standard, code or other document in negotiating or disputing a matter under or relating to a relevant lease, or require a mediator, conciliator, arbitrator, tribunal, court or other decision-maker to have regard those same matters in mediating, conciliating, hearing or deciding a matter or proceeding relating to a relevant lease: s23(e) and (f);
- provide for to a dispute resolution process for disputes relating to relevant leases, including appointment and jurisdiction of mediators, conferral of jurisdiction on a tribunal to hear a dispute and referral of disputes to a court or tribunal: s23(g); or
- prescribe any other necessary or incidental matter: s23(i).
An “other agreement” for the purposes of the above provisions would seem to include incentive agreements.
Subsection 23(2) of the Act expressly provides that a regulation made under s23 may be inconsistent with an Act or law, except the Human Rights Act 2019 (Qld), to the extent necessary to achieve a purpose of the regulation and the Act. It also provides that any such regulation may have retrospective operation, but not earlier than the date of commencement of the Act. Section 23(6) provides that a regulation made under s23 expires on 31 December 2020.
Section 23 is a Henry VIII clause. ‘“Henry VIII clauses” appear to be so named because that King is regarded popularly as the impersonation of executive autocracy and because of its actual use by that monarch’: Report by the Committee on Ministers’ Powers (the Donoughmore Committee), His Majesty’s Stationary Office, London 1932 at 36 cited in The Scrutiny of Legislation Committee, ‘The Use of “Henry VIII Clauses” in Queensland Legislation’, Legislative Assembly of Queensland, 1997, at 2.
Henry VIII clauses permit an Act of Parliament to be amended by subordinate legislation and have historically been viewed as failing to pay sufficient regard to the institution of Parliament. Nevertheless, they are considered to be justified in certain circumstances. According to the Explanatory Notes for the Covid-19 Emergency Response Bill 2020,
“The regulation-making power … allows for regulations to be made that may be inconsistent with a provision of an Act or a law … and that interferes with and overrides the legal rights of landlords under current legislation and lease arrangements.
The wide regulation-making power is justified because there needs to be flexibility in providing for the detail of the implementation of the National Cabinet decision in relation to good faith leasing principles and this may involve overriding Acts and laws that would ordinarily apply.
Overriding landlords (sic) ordinary rights is justified by the need to respond to the financial hardship being experience by some tenants due to closures and restrictions on movements and social distancing which the COVID-19 emergency has caused … and to provide a fair sharing of the burden of the pandemic between landlords and tenants.”
No regulation appears to have been made as yet. Obviously, any such regulation has the potential to significantly undermine the rights of landlords with only the Human Rights Act as protection. Since only individuals have human rights, corporate landlords will have no protection where that is concerned in any event: cf Human Rights Act, s11(2).
Landlords will no doubt shudder as the ghost of Henry VIII makes its presence felt in the coming days.
24 April 2020
Author: Brian Lambert
Contact: + 61 7 3251 6777.
Warning: The content of this post is intended only to raise the awareness of readers to the issues discussed. It is not intended to constitute, and should not be relied upon as advice of any kind. Readers should seek specific legal advice regarding their particular circumstances.