1. NQLA 2008 Presented by Donnie Harris

2. The Generation Y Disclaimer I am not responsible for anything that I say here today. If I say something that is incorrect or misleading, it is someone else’s fault and not mine.

3. RETAIL SHOP LEASING – A BRIDGE TOO FAR?

4. Purpose of the Presentation?

5. Agenda 1.What is a retail shop lease? 2. Excluded retail shops 3. Disclosure obligations 4.Options to renew 5.Rent Reviews 6. Outgoings 7. Unconscionable conduct 8.False or misleading statement or misrepresentation

6. What is a Retail Shop? Example Mr and Mrs Smith have just finished building 3 new shops which they will lease to a hairdresser, newsagent and an accountant. Mr and Mrs Smith also own 4 existing shops (convenience store, bakery, liquor shop and pharmacy) which are located across the road from the new shops. The area will be known as the “Upper Vale Road Shopping Centre”.

7. Excluded Retail Shops 1.1000 square metres and publicly listed 2. Term less than six months 3.Flee market, trade show, carnival, festival, theme or amusement park 4. Periodic tenancy/tenancy at will – only to the extent that the disclosure requirements do not apply 5. South Bank Corporation lease 6. Lease to a service station if the Petroleum Retail Marketing Franchise Act 1980 applies

8. Disclosure Obligations New Lease 1.7 days before lessee enters into the lease - draft of the lease and a disclosure statement 2.What happens if the lessor does not comply or the statement is a defective statement? 3. Major lessee qualification 4. Lessee’s disclosure obligation

9. Disclosure Obligations Assignment of Lease 1.Assignor’s disclosure 2.Assignee’s disclosure 3.Lessor’s disclosure 4.Major lessee can waive entitlement to receive disclosure statement within disclosure period 5.Financial and legal advice reports

10. Disclosure Obligations Assignment – what are the consequences of non compliance? 1.Retail Tenancy Dispute 2.Compensation 3. Section 50A

11. Options to Renew 1.Section 27 – early determination 2.Section 46 – obligation to remind the lessee of the option 3.Section 46AA – if there is no option, the lessor must give the lessee notice that the lessor will or will not offer a renewal

12. Rent Reviews 1. Section 27 2. Consequence of an invalid review (a)leases entered into before 1 July 2000; (b)leases entered into after 1 July 2000

13. Outgoings 1.Reasonable expenses directly attributable to the operation, maintenance and repair 2.Lease must specify the outgoings payable, how the outgoings are determined and apportioned and how the outgoings may be recovered 3.Must not pay more than the proportion that the area of the lessee’s shop bears to the total area of all premises in the centre or building 4. Audited annual statement

14. Unconscionable Conduct Lessor or lessee must not “in connection with a retail shop engage in conduct, that is, in all the circumstances unconscionable”.

15. Conduct which could be unconscionable? 1.Exploiting contractual terms for ulterior motives 2. Renewals/extensions/options 3. Failing to enforce contractual terms

16. How to avoid Unconscionable Conduct? 1.Be prepared to negotiate 2.Disclose material information 3.Answer questions truthfully 4.Lessees should be encouraged to seek independent advice 5.Honour contractual terms 6.Be familiar with and make use of dispute resolution procedures

17. False/Misleading Statement or Misrepresentation 1. Section 43 (2) (a) applies when a lessee “entered into the lease, or a renewal of it” 2.Section 43A applies to an “assignment” of the lease but only for a false or misleading statement or representation “in a disclosure statement”.

18. Leasing in Practice 1.Develop checklists and procedures 2.Review precedents to ensure that they don’t offend the Act

19. Summing Up 1.Critique 2.Questions?

20. A Roberts Nehmer McKee Presentation