South Australia’s retail and commercial leasing framework has recently undergone significant reform. The Statutes Amendment (Small Business Commission and Retail and Commercial Leases) Act 2024 and the Statutes Amendment (Tobacco and E-Cigarette Products—Closure Orders and Offences) Act 2025, which came into effect on 1 July 2025 and 5 June 2025 respectively, introduce key changes to the Retail and Commercial Leases Act 1995 (SA) (Act) aimed at enhancing legal certainty, expanding alternative dispute resolution mechanisms, and strengthening protections during long-term health-related closures.
This article outlines these amendments and examines their implications for lease management and dispute resolution in South Australia.
Foreign Entities Exemption
Amendments to section 4 of the Act introduces an exemption to the application of the Act for foreign corporate tenants and their subsidiaries. The Act no longer applies to a lease that is entered into on or after 1 July 2025 where the tenant is:
- a body corporate incorporated outside Australia, or
- a body corporate that is a subsidiary of, or otherwise controlled by, a body corporate that is incorporated outside Australia.
This replaces the previous, narrower exemption, which applied only to tenants whose securities were listed on a foreign stock exchange or their subsidiaries. Rather than relying on stock exchange listings – which can be difficult to verify – it now uses incorporation and control as the threshold. This simplifies the assessments and removes ambiguity in cross-border leasing arrangements.
Landlords now benefit from greater contractual freedom when dealing with foreign entities. They are no longer bound by the Act’s obligations such as mandatory disclosure statements, rent review limitations, or dispute resolution procedures.
Foreign corporate tenants and their subsidiaries lose access to the Act’s statutory protections. While this may expose them to less favourable lease conditions, the legislative intent assumes these entities possess sufficient commercial sophistication and legal resources to negotiate on equal footing.
Property professionals should now take proactive steps to align with the amended Act. Recommended actions include:
- Reviewing tenant corporate structures – Conduct detailed assessments of tenants’ ownership and control arrangements, particularly where foreign entities are involved, to determine continued applicability of the Act.
- Auditing lease portfolios – Identify any existing leases that may now fall outside the scope of the Act under the expanded exemption framework.
- Updating legal advice and client materials – Ensure that all legal guidance and client communications reflect the amended exemption criteria and align with the updated statutory obligations.
This reform responds to longstanding calls for clarity in determining the Act’s reach. It ensures that protections originally designed for small to medium South Australian enterprises are not inadvertently extended to large, well-resourced international entities with significant bargaining power.
Extended Exclusion of Fitness for Purpose Warranty
Amendments to section 18 of the Act clarify and extend the operation of exclusion notices relating to the statutory warranty of fitness for purpose. Under this section, if a landlord under a lease had, before entering into the lease, notice from the tenant that the premises were required for carrying on a particular business, the lease is taken to include a warranty that the premises will be structurally suitable for the purpose, unless this warranty is excluded if the landlord gives notice of the exclusion before the execution of the lease by the tenant.
Regulation 6 of the Retail and Commercial Leases Regulations 2010 (SA) sets out the manner and form required for the notice of the exclusion:
- the notice must be given in writing; and
- the notice must be specifically drawn to the attention of the tenant at the time that the disclosure statement is given to the tenant.
The newly inserted subsection 18(2a) now provides that a valid exclusion of this warranty will:
- apply to any renewal or extension of the lease; and
- apply to any new lease between the same parties for the same premises, even where the lease terms have changed.
This means that if the landlord properly excludes the warranty of fitness for purpose before the original lease is signed, that exclusion will automatically apply to:
- any renewal or extension of that lease; and
- any new lease between the same parties for the same premises, even if the terms are different.
In practical terms, the landlord does not need to issue a new exclusion notice for future lease arrangement involving the same parties and premises, as the original exclusion carries forward.
Reforms to Alternative Dispute Resolution Procedure
Several reforms expand the Small Business Commission’s powers and refine the procedural framework for alternative dispute resolution (ADR) under Part 9 of the Act:
1. Section 63 – Broader ADR Jurisdiction
The amended section 63 now allows parties to apply for ADR not only for lease disputes but also for broader issues relating to premises occupation and business operations. The Commission is empowered to determine the most appropriate ADR method (such as mediation) and may refuse to hear disputes that are trivial, vexatious, already before a court, or more suitably addressed by another body. These changes increase procedural efficiency and ensure ADR resources are allocated to meritorious disputes.
2. Section 64 – Confidentiality of ADR Communications
Section 64 has been replaced entirely to focus solely on the confidentiality of ADR proceedings. Statements made during ADR are now inadmissible in court. While the right to apply for mediation has shifted to section 63, this amendment strengthens ADR by encouraging open and honest dialogue without fear of future litigation consequences.
3. New Enforcement Mechanisms and Commission Powers
The insertion of Division 1B under Part 9 introduces critical compliance tools:
- Notice of Designated Alternative Dispute Resolution
Under Section 66, the Commission may direct certain disputes to be resolved through a designated ADR process. Once such a determination is made, all parties must be notified in writing. Parties have 10 business days to refuse to participate in the process by notifying the Commission. If the Commission receives that notice, the Commission must, within three business days, decide whether to discontinue or proceed with the ADR process.
- Compulsory Attendance at ADR
Section 66A empowers the Commission to require individuals to attend meetings or produce documents as part of a designated ADR process. The production of documents must relate to materials that could assist in resolving the dispute. However, documents protected by legal professional privilege, commercial confidentiality, or other statutory confidentiality obligations are exempt. Failure to comply without reasonable excuse is an offence, carrying a maximum penalty of $20,000 or an expiation fee of $1,200.
- Certificate of Non-Compliance
Under Section 66B, the Commission is required to issue a certificate within 21 business days (or longer in exceptional circumstances) following the commencement of a designated ADR process. The certificate must identify the parties involved, outline the nature of the dispute, and confirm whether the matter was resolved. It may also record any party’s refusal or failure to attend a meeting, along with reasons if provided. These certificates are admissible as evidence in court or tribunal proceedings.
- Enforceability of ADR Agreements
Section 68A provides that if an agreement reached through ADR is documented in writing and signed by both the Commission and the parties involved, it becomes enforceable. Each party must receive a copy of the signed agreement, and if one party fails to meet their obligations, the other may apply to the Magistrates Court to enforce the terms of the agreement.
Health-Related Closures
The Tobacco and E-Cigarette Products—Closure Orders and Offences Act 2025 introduced a new section 47 to address lease implications during long-term government-ordered closures under section 69CC of the Tobacco and E-Cigarette Products Act 1997.
Section 69CC of that Act empowers the Magistrates Court to issue long-term closure orders for up to 12 months where prescribed products – including tobacco or e-cigarette products – have been, or are likely to be, unlawfully sold or supplied at the premises.
Where a long-term closure order is issued under that Act in relation to premises subject to a retail shop lease, the lease is deemed to include specific provisions allowing either party (the landlord or tenant) to terminate the lease with at least 28 days’ written notice (or a shorter period if mutually agreed). If a dispute arises as a result of the closure order, either party may apply to the Magistrates Court for appropriate orders, including compensation, to resolve the matter. These provisions aim to provide clarity and flexibility for landlords and tenants affected by extended closures due to regulatory action.
Prescribed Threshold
The Retail and Commercial Leases Regulations 2010 have been amended by inserting a new regulation 3A, which increases the prescribed annual rent threshold under section 3(1a) of the Act from $400,000 to $420,000 (exclusive of GST). This change was made using the statutory mechanism that allows threshold adjustments by regulation.
For a detailed analysis of this change and its implications, refer to our earlier article here.
How Can We Help?
At Mellor Olsson, we have extensive experience advising both landlords and tenants on navigating the application of the Retail and Commercial Leases Act 1995 (SA) and the implications of regulatory changes. We can assist you in reviewing your current leasing arrangements, assessing whether your leases fall within or outside the scope of the Act under the updated threshold, and advising on any necessary amendments or compliance steps. For further information, please contact Michael Stannard directly, email us at [email protected], or call (08) 8414 3400.