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01 September 2020

PRESS RELEASE: Small business set for extended rent relief after COVID-19 court ruling

Related articles include: COVID-19 rent relief lasts until April: Sneakerboy case by Sue Mitchell (AFR – 1 Sept 2020); Sneakerboy’s win in court opens the door to six months of more rent relief for SMEs by Matthew Elmas (Smart Company - 2 Sept 2020) and Court decision could extend rent relief for SMEs by Adrian Flores (MyBusiness 2 Sept 2020).

Thousands of small businesses may get an additional six months rental relief after a landmark judgement grappling with COVID-19 rental protections.

Bartier Perry Partner Adam Cutri said a win for the firm’s retail client, Sneakerboy, in court against the actions of their landlord was set to have far wider ramifications.

“The Federal Government enacted the Retail and Other Commercial Leases (COVID-19) Regulation in April to help businesses generating under $50 million a year navigate the pandemic with their commercial landlords.

While those protections are set to end in late October the New South Wales Supreme Court has now said landlords cannot effectively kick out a tenant they’re in dispute with until after the expiration of a reasonable subsequent recovery period.”

Mr Cutri said the multi-layered and complex judgement was the first to test the national Code and in particular wording around how long small business had to get back on their feet when it ended.

“This decision has significant implications for both NSW landlords and retailers leading into the key Christmas trading period. The Court has made it clear that come October 24th when the regime is due to be repealed, tenants may still be protected under the COVID-19 Regulations, with the Court indicating that the subsequent reasonable recovery period would likely be at the minimum a further six months after the end of the Pandemic period.

Given this decision addresses the National Cabinet Mandatory Code it’s likely to have national implications” he said.

Mr Cutri said the judgement also highlighted that landlords and small business must come to the table and negotiate sensible rental agreements.

“The risk is if you use this rental regulation as a sword instead of a shield you’ll put yourself in a very perilous position.

The judgement indicates if you don’t you negotiate before the regulations are due to be repealed in October you may not gain the benefit of an additional six months of protection.

It’s incredibly important for both landlords and small business to talk now rather than sleepwalk to the precipice in the hope someone else will work it out for them” said Mr Cutri.