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A new COVID-19 Code of Conduct compendium aims to offer clarity to SME landlords and tenants experiencing financial hardship.
Law firm MinterEllison has published a new Code of Conduct compendium in response to the concern experienced by commercial landlords and their SME tenants who operate in more than one jurisdiction in Australia over the federal government’s Mandatory Code of Conduct.
“The compendium explains how the code is applied by each state and territory government and offers guidance for landlords and tenants in each jurisdiction to assist them in navigating these differences. The compendium will be updated as any remaining jurisdictions move to pass regulations dealing with the code,” a statement provided by Minters explained.
Briggs, managing partner for infrastructure, construction and property at MinterEllison, noted that the disruption faced by landlords and tenants has impacted their commercial leases, affecting offices, retail and logistics.
The federal government responded with a Mandatory Code of Conduct, outlining a set of good faith leasing principles to support negotiations between landlords and their tenants, she noted.
“We believe landlords are genuinely trying to apply a spirit of good faith approach and look after their SME tenants, but they are challenged by complexities that arise due to the differences in how the various states and territories have separately legislated the code,” Ms Briggs said.
While the code aims to balance the interests of landlords and tenants, Ms Briggs said each state and territory has been tasked to legislate as appropriate, creating uncertainty as regulations are applied in slightly different ways.
The ambiguity, Ms Briggs said, creates complications for landlords who either have operations in multiple states or who negotiate agreements with tenants whose leasing footprint spans multiple jurisdictions.
“The code allows for protections to apply during the pandemic period and recovery, but the recovery period has not been defined by the federal government, and the pandemic period and any recovery period has been inconsistently applied by the states/territories,” she said.
In conclusion, MinterEllison hopes the compendium will assist landlords and tenants navigate their position “in the spirit in which the code was introduced”.
“The pathway through uncertainty is mutual trust between the parties and a focus on good-faith principles,” said Ms Briggs.