Tenants who are seeking protection from competition, by excluding new competitors from the same retail space with the aid of Retail Shop Lease Legislation, will be disappointed to know that several states including New South Wales, South Australia, Western Australia and Queensland have reached a uniform decision that relevant state legislation does not provide for the prevention of competition from leasing within a neighboring shop.
Despite section 38 subsection (1)(d) of the Retail and Commercial leases Act 1995 (SA), which outlines: if a landlord “fails to take all reasonable steps to prevent or put a stop to anything attributable to causes within the lessor’s control that causes significant disruption of, or which has a significant adverse effect on, trading in the shop”, the court upheld that the above provision was intended to protect the lessee from physical disruptions as opposed to trading potential.
As such, retail lessees will not be able to use s38 to be able to limit a landlord from allowing further competition within the same retail space, unless a contractual obligation is provided for in the lease.
If you would like to discuss this topic further, you should contact our commercial team at Matthews Folbigg on 9635 7966.
Director, Property and Commercial Groups
Phone: 02 9806 7461
DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.