Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

The Commercial Tenancy (Retail Shops) Agreements Act 1985 is a Western Australian law regulating certain retail leasing arrangements. Its long title says it regulates commercial tenancy agreements relating to certain shops, prohibits unconscionable conduct and misleading or deceptive conduct by landlords or tenants in relation to those agreements, and provides for determination of questions arising under them.

For business owners, the practical point is that a covered retail lease is not governed only by the landlord's template. The Act can change the effect of lease clauses, imply rights, make some provisions void, and create specific timing rules. It also gives a dispute pathway involving the Small Business Commissioner and the State Administrative Tribunal, which is important if a disagreement develops over disclosure, assignment, rent review, outgoings or other lease administration issues.

The Act is especially important at the moments when businesses become commercially committed. That includes signing, taking possession, starting to pay rent, ordering fitout works, accepting incentives, exercising options, assigning the lease as part of a business sale, or planning an exit. The Act itself defines when a retail shop lease is entered into, and that definition matters because several rights and deadlines run from that point.

The starting point is section 3. The Act defines a retail business as a business that wholly or predominantly involves the sale of goods by retail, or a specified business. A specified business is a business of a kind prescribed by the regulations. That means some businesses may be covered because regulations say they are, even if they are not classic goods retailers.

A retail shop includes two main categories. First, premises in a retail shopping centre that are used wholly or predominantly for carrying on a business. Second, premises outside a retail shopping centre that are used wholly or predominantly for carrying on a retail business. Premises excluded by regulation are not included.

A retail shopping centre is defined as a cluster of premises where 5 or more are used for carrying on a retail business and all have, or on being leased would have, a common head lessor, or comprise lots in a community titles scheme, or comprise lots on a single strata plan. If the building has 2 or more floor levels, only the levels where a retail business is situated are included.

A retail shop lease is a lease providing for occupation of a retail shop, unless one of the listed exclusions applies. The extract shows important exclusions. A lease is outside the definition if the retail shop has a lettable area exceeding 1,000 square metres and is not of a kind prescribed by regulations for inclusion. It is also outside the definition if the lease is held by certain listed corporations or their subsidiaries, by certain overseas listed bodies corporate or their subsidiaries, or if the lease is of a kind prescribed by regulations as exempt from the Act.

The Act's definition of lease is very broad. It includes any lease, licence or agreement, whether in writing or not, that provides for occupation of premises in WA, whether for a term, periodic tenancy or tenancy at will. It can still be covered even if entered into outside WA or expressed to be governed by another law. Businesses should therefore check substance, not just labels.

The Act itself tells businesses when a retail shop lease is entered into. Under section 3(4), that happens when the tenant enters into possession, starts paying rent, or, if the lease is in writing, when all parties have signed it, whichever first occurs. This is a practical trigger point because disclosure and termination rights are measured from when the lease is entered into, not just from the date printed on the front page.

That means businesses should not wait until after opening to check compliance. If a tenant takes early access, starts paying rent before formal execution, or moves in under an informal arrangement, the lease may already have been entered into for the Act's purposes. A landlord or agent who assumes the clock starts only on final signing can miss important steps.

Coverage should also be revisited when the deal changes. The Act specifically addresses renewals under options and assignments in the disclosure and tenant guide provisions. It also contains separate provisions on assignment, rent review, outgoings, compensation in some shopping centre cases, relocation, legal costs and refit obligations. Those are all practical trigger points for a fresh legal check.

The Act contains a number of practical obligations and restrictions that businesses should check against the lease package and the way the parties are actually dealing with each other.

Disclosure statement. Section 6 says that where a retail shop lease is entered into and the tenant has not, at least 7 days before entering into the lease, been given a disclosure statement in accordance with the Act, or the disclosure statement is incomplete or contains false or misleading information, the tenant may have rights. Those rights include giving written notice of termination within 6 months after the lease was entered into, unless the statutory exception applies, and applying to the Tribunal for compensation for pecuniary loss. The disclosure statement must be in the prescribed form, duly completed and signed by or on behalf of the landlord and the tenant, and must contain a statement notifying the tenant that independent legal advice should be sought.

Tenant guide. Section 6A says that if a retail shop lease is entered into and the lease does not incorporate a tenant guide in the required way, the tenant may give written notice of termination within 60 days after the lease was entered into, may seek compensation for pecuniary loss, and after that period may apply for an order that the lease be terminated. The tenant guide must be in the prescribed form and in the prescribed position in the lease.

Renewals and assignments. The extract is clear that a disclosure statement is not required on renewal under an option, including an option arising by reason of section 13(1), or on assignment. The tenant guide is also not required on renewal under an option or on assignment. Businesses should still check whether other obligations apply in those situations.

Turnover rent. Section 7 restricts rent determined by reference to turnover. A turnover rent provision can be void if the tenant did not first elect in writing in the prescribed form that rent should be determined that way and then objects in writing, or if the lease does not specify the formula by which rent is to be determined. If the clause is otherwise valid, the Act sets default rules about monthly turnover statements and annual or end-of-lease certified statements. It also limits what counts as turnover for these purposes.

Key-money. The extracted text shows that the Act restricts key-money and goodwill provisions in some cases. It also shows exceptions, including agreed payment for goodwill of a business carried on by the landlord in the shop immediately before the lease, expenses reasonably incurred in investigating a proposed assignee or sub-lessee, and fair and reasonable expenses for negotiating, preparing, executing or obtaining necessary consents to an assignment or sub-lease.

Assignment. Section 10 says a retail shop lease is taken to grant the tenant a right to assign, subject only to the landlord's right to withhold consent on reasonable grounds. If the tenant requests consent in writing and the landlord does not give written notice of consent or refusal within 28 days, the landlord is taken to have consented. The Act also voids certain clauses that try to make the assignor or guarantor keep paying amounts owed by the incoming tenant after assignment.

Rent review. Section 11 says a rent review clause during the currency of the lease is void unless the lease specifies, for each review occasion, a single basis for the review. For market rent reviews, the Act sets out how market rent is to be approached and says certain matters are not to be taken into account, including the goodwill of the business, the tenant's stock, fixtures or fittings that are not the landlord's property, and structural improvements or alterations carried out or paid for by the current tenant. A clause that prevents market rent from going down, or limits the extent of increase or reduction, is void. A clause preventing the tenant from voluntarily disclosing the rent is also void.

Outgoings and other lease controls. The contents show further operative provisions dealing with landlord operating expenses, sinking funds, marketing funds, opening hours, tenants' associations, minimum term issues, compensation in some shopping centre cases, relocation, landlord legal costs and refit obligations. Those topics should be checked directly in the current Act and regulations before relying on any lease clause in those areas.

The Act does not only look at the final signed lease. Section 3(2) says that if the parties enter into a written or oral agreement or arrangement containing a provision that would be void if it were in the retail shop lease, that provision is treated as if it were in the lease. This is important for side letters, incentive arrangements, fitout deals, oral promises and informal concessions.

Section 3(3) also gives a broad meaning to a question arising under a retail shop lease. It includes whether a lease exists, whether it is or was a retail shop lease, communications between the parties before entry into the lease that were material to the lease terms, disputes about operating expenses under section 12, and any other matter in dispute between landlord and tenant in connection with the lease, whether or not dealt with by the lease itself.

In practice, businesses should keep a full file. That includes the draft lease, signed lease, disclosure statement, tenant guide, heads of agreement, incentive letters, fitout approvals, turnover statements, rent review notices, assignment requests and responses, outgoings material and key correspondence. Because the Act reaches pre-lease communications and side arrangements, a clean document trail can be critical.

These are three of the most commercially sensitive areas under the Act.

Assignment. For a tenant selling a business, section 10 is central. The lease is taken to grant a right to assign, with consent only able to be withheld on reasonable grounds. Silence can count as consent after 28 days if the tenant has made the written request required by the Act. This means both sides should use a clear written process and keep proof of when the request was received.

Rent review. Section 11 is aimed at certainty and fairness in review mechanisms. A lease cannot simply provide multiple review bases for the same review event. For market rent reviews, the Act directs attention to rent obtainable in a free and open market on similar lease terms, while excluding goodwill, the tenant's non-landlord fixtures and fittings, and tenant-funded structural improvements or alterations. The extract also shows that if the parties do not agree on the reviewed rent, the lease is taken to provide a dispute resolution mechanism involving a licensed valuer agreed by the parties or nominated at the request of each party by the Small Business Commissioner, although the later text is truncated and should be checked in the current Act.

Outgoings. The contents show a detailed section 12 on landlord operating expenses and later sections on sinking funds and marketing funds. The definitions also matter. The Act defines management fees and group of premises, and section 3(3) expressly includes disputes about operating expenses and allocation questions as questions arising under a retail shop lease. For shopping centre and grouped premises, businesses should therefore check not only the lease wording but also how expenses are allocated across the premises and whether the allocation method is supportable under the Act.

The Act points to a specialist pathway rather than assuming every dispute starts in court. The definitions identify the Tribunal as the State Administrative Tribunal and the Small Business Commissioner by reference to the Small Business Development Corporation Act 1983. The contents also show provisions for resolution of a matter using section 15C or 15E of that Act, issue of a certificate if the matter is not resolved, restrictions on applications to SAT in certain circumstances, intervention by the Commissioner in SAT proceedings, and SAT powers to make orders.

The contents also show a specific provision allowing a party to a lease to refer a question to SAT, as well as SAT powers in relation to unconscionable conduct and misleading or deceptive conduct. That means a dispute may involve more than a simple contractual argument about rent or consent. It may also involve statutory conduct standards and a specialist forum.

For businesses, the practical step is to identify the issue early and use the correct pathway. A dispute about whether the Act applies, whether disclosure was properly given, whether a turnover rent clause is void, whether assignment consent was unreasonably withheld, or whether outgoings were properly allocated may all need to be approached through this framework.

The Act is titled the Commercial Tenancy (Retail Shops) Agreements Act 1985. The published version used for this page is marked As at 30 Jun 2021 Version 04-g0-00. The record also identifies an assent date of 13 May 1985.

Those dates should not be confused. The assent date is the original enactment date. The version date tells you the consolidation date of the text used here. Before relying on this page for a live lease, renewal, assignment or dispute, businesses should check the current consolidated Act and any regulations and prescribed forms then in force.

This page explains the Act using the published WA legislation version dated 30 June 2021. It is strongest on the definitions in section 3, the application rule in section 4, the disclosure and tenant guide provisions in sections 6 and 6A, and the extracted parts of sections 7, 9, 10 and 11.

Some later text is not fully available here. Because of that, businesses should confirm the current wording of later provisions, regulations, prescribed forms and any procedural requirements before acting on a lease clause or starting a dispute.