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An interim judgement finds special provisions introduced during the pandemic were valid.
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NSW court upholds commercial tenant protections made during COVID
22 December 2022
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The NSW Supreme Court has upheld commercial rental agreements made under special provisions during the pandemic that contain safeguards for tenants.
The decision, by Justice Stevenson in an interim judgement in the case of Alamdo Holdings Pty Ltd v Croc’s Franchising Pty Ltd, means pandemic protections for commercial tenants remain valid.
A special COVID regulation prevented landlords from taking “prescribed action” during a “prescribed period” against a tenant impacted by the pandemic for specific breaches, including a failure to pay rent.
A prescribed action was defined to mean “seeking orders or commencing proceedings for specified matters, including exercising a right of re-entry into leased premises, recovery of the leased premises, and possession or termination of the lease”.
The prescribed period was from the commencement of the regulation to 31 December 2020, subject to savings provisions.
At the time, NSW Greens Senator David Shoebridge said the regulation was to “provide protection for those facing the reality that they are unable to pay their commercial lease.”
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The NSW Supreme Court was hearing the case after Alamdo Holdings terminated Croc's lease on 3 December 2020 and looked to recover unpaid rent and outgoings.
Croc’s Franchising and its attorney Newhouse & Arnold Solicitors contended the Alamdo action was carried out in contravention of the COVID regulation.
Counsel for Almado Holdings said the COVID regulation went beyond the relevant act in attempting to prohibit recovery of possession or termination of the lease and was therefore invalid and ultra vires.
Justice Stevenson found against Alamdo.
“Alamdo has failed to establish that the COVID Regulation was ultra vires or invalid insofar as it purported to regulate Alamdo’s recovery of possession of the premises and termination of the lease; or at all,” he said.
The COVID regulation came into effect on 24 April 2020 and amended acts such as the Conveyancing Act 1919 (NSW) and section 87 of the Retail Leases Act by the COVID-19 Legislation Amendment (Emergency Measures) Act 2020.
While the interim judgement relates to commercial leases the decision could also extend to retail leases. A final ruling is expected early in the new year.
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