Part 2 – Queensland government provides certainty for landlords and tenants: Dispute resolution processes

Further to our article titled Part 1 – Queensland government provides certainty for landlords and tenants: Leasing applicability and negotiation principles where we noted, on 28 May 2020, the Queensland Government released the long awaited Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (the Regulation).

The purpose of the Regulation is to give effect to the Commonwealth Government’s National Cabinet Mandatory Code of Conduct and to establish a process for resolving disputes between parties during the COVID-19 emergency.

In keeping with the stated purposes of the Regulation, we have separated this article into two parts, the first of which deals with whether the Regulation applies to your business, sets out prohibited actions of the landlord and the negotiation principles the parties must follow in attempting to reach a negotiated outcome, while the second deals with the dispute resolution process to be followed where the parties cannot reach agreement on relief to be provided despite genuine attempts by both parties to reach agreement.

Part 1 provides detail on first part of the Regulation and the ‘Applicability and Negotiation Principles’. This article is relevant to where the parties are in dispute – the ‘Dispute Resolution Process’.

In addressing the Dispute Resolution Process, we note the following key provisions:

1. Eligible Lease Dispute

An Eligible Lease Dispute is an affected lease dispute and a small business tenancy dispute.

2. Parties must attempt to resolve dispute

Prior to starting mediation under the Regulation, the parties must first attempt to resolve the dispute. Each party must co-operate, act reasonably and in good faith in all discussions and actions associated with the dispute.

3. Starting mediation

A party to an Eligible Lease Dispute may give notice of the dispute to the small business commissioner (SBC), such notice must be in the form approved by the commissioner.

As soon as possible after receiving the dispute notice the SBC must either accept or dismiss the dispute notice.

The grounds of dismissal are limited to:

• the dispute notice not relating to an Eligible Lease Dispute;
• if the dispute notice is frivolous or vexatious; or
• the dispute notice has not been given in good faith.

4. SBC to arrange mediation conference

As soon as practicable following acceptance of a dispute notice, the SMC must:

• nominate a mediator; and
• give written notice to each party providing details of the mediator and details, including time and date, of the mediation conference to be conducted.

5. Timing of mediation conference

Must be at least seven days after the notice is given.

The parties can request a change in the conference date provided it is no later than seven days from the initial date.

6. Representation at mediation conference

A party may be represented by:

• an agent; or
• if the party is a corporation – an officer or employee of the corporation.

A party may only be represented by a lawyer with the approval of the mediator.

7. Parties must attend

A party who is given a notice must attend the mediation conference unless the party has a reasonable excuse. If a party fails to attend, a court or tribunal may aware costs against the party.

8. Who else may participate in a mediation conference

Any person who the mediator determines has an interest in the resolution of the dispute.  However, before the mediation conference is held, notice of that person’s proposed attendance and participation must be given to each party to the dispute.

9. Settlement Agreements

If the parties reach agreement about the dispute at the mediation conference, the agreement must be recorded in writing and signed by the parties.

10. Notifying outcome of mediation

The mediator must after the mediation ends:

• give each party to the dispute a copy of the settlement agreement (if applicable) or a notice about the outcome of the dispute; and
• notify the SBC of the outcome of the mediation.

11. Admissions made during mediation conference

Admissions made during mediation conference are not admissible in a proceeding before a court or tribunal.

12. Withdrawal of dispute notice

A party, may by written notice to the SBC withdraw a dispute notice lodged by the person unless that person has made an application about the dispute to QCAT.

The notice may be given before or after the mediator has started mediating the dispute.

The SBC must notify the mediator of the withdrawal as soon as practicable after receiving the notice.

13. Exclusion of other proceedings if mediation started

If a dispute notice is lodged, the dispute must not be referred to arbitration or heard by QCAT or a court until:

• a settlement agreement is entered into; or
• a notice is given to the parties about the outcome of the mediation; or
• the dispute notice is withdrawn,

however, there are certain exclusions.  Generally, though, the dispute resolution processes under the RSLA, do not apply to a dispute relating to the COVID-19 emergency.

14. Costs

Each party must pay their own costs for the mediation conference, unless otherwise ordered by QCAT or a court.

The SBC must pay the mediator’s fees and costs for the mediation conference.

15. QCAT proceedings

A matter may be referred to QCAT for determination where any of the following apply:

• the parties cannot reach a settlement;
• a party does not attend the mediation and does not have a reasonable excuse;
• the dispute is not settled within 30 days after a dispute notice is given to the SBC;
• a party to a settlement agreement claims another party to the agreement has not complied with the agreement within the period stated in it or, if no period is stated, within 14 days after the agreement is signed; and
• no more than six months has elapsed since:
  
  • the affected lease ended, whether by expiry, surrender or termination; or
  • the last day the tenant was required, under an agreement, to pay deferred rent.

The release of the Regulation hopes to offer certainty to parties, by providing a manageable path to achievable outcomes and a certain dispute resolution process where communications break down.

We understand that these are certainly challenging times for all parties and confirm our commitment to you that we are here to help.  Whether you are a landlord, a tenant or an asset manager, you can contact us to discuss your position and concerns and options available to you.