Page 3265 - Week 11 - Wednesday, 21 September 1994

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Page 6, line 29, clause 8, after subclause (1), insert the following subclause:

"(1A) This Act applies to a dispute referred to in paragraph 6(ca) if -

(a) the relevant lease is entered into, renewed or extended under an option on or after 1 January 1994; or

(b) the dispute relates to a provision of a lease, being a provision varied on or after that date.".

Page 6, line 34, clause 8, subclause (3), omit "or (c)", substitute ",(c) or (ca)".

This is a matter of more substance which does require some minutes of explanation. This does represent some last minute negotiations that have occurred between the Government and landlord interests or, I should say, owner interests, given the use of non-sexist language, where the vexed issue of retrospectivity was once again raised. Mr Humphries indicated that it is an issue that has caused the Opposition some concern and could have got to the point of limiting their support for the legislation. Our Bill does take retrospective operation of the code further than the equivalent provisions in the States of Australia.

One area that we had applied generally retrospectively was the issue of multiple rent review clauses or ratchet clauses. A very strong argument has been put to the Government in recent days, which we have agreed has some merit, that particularly some of the smaller interests - persons who may own only one or two shops in a small suburban centre - may well have entered into financing commitments that are premised on the cash flow projections of these ratchet clauses and that to apply a ban totally retrospectively would cause undue hardship.

At the same time, we pointed out that the Government's intention to ban ratchet clauses has been around for quite some time. The amendment that we move amounts again to an attempt to balance the interests. While we think there should be an element of retrospectivity here, we are prepared to limit it to relevant leases entered into, renewed or extended after 1 January 1994; that is, from January 1994 onwards anybody who entered into a lease containing a ratchet clause should have known that it was going to be the intention of this place to ban them and they should be caught by the ban. For leases entered into before that, we accept that to retrospectively apply an absolute ban on ratchet clauses could be harsh. This amendment removes that, although the general dispute settling process which does include a general overriding issue of harshness and unconscionability does still apply. So, there does remain some protection. I could anticipate that Mr Moore may not be supportive of this amendment.


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