Australia: Relocation Clauses – How Do They Work?

Last Updated: 16 April 2009
Article by Campbell Paine

The retail tenancy legislation in all jurisdictions in Australia, apart from Western Australia, include provisions relating to relocation clauses. All require notice of the intended relocation. In addition, most require details to be given to the tenant of a genuine proposal to redevelop or renovate within a reasonable time frame and which proposal requires possession of the tenant's premises. Most also require the offer of alternative premises.

The description of the nature of the premises to which the relocation is proposed varies:

  • In Queensland, it is 'reasonably comparable alternative retail shop'.
  • In ACT, it is 'alternative comparable premises'.
  • In New South Wales, Northern Territory and South Australia, it is merely 'alternative premises' or 'alternative shop'.
  • In Tasmania, the tenant must be satisfied that the new premises are 'equivalent to the current premises', or that it will be 'returned to the current premises'.
  • In Victoria, the alternative premises have to be 'reasonably comparable alternative premises'.


There have been a number of cases, one of which went to the High Court, which give landlords and tenants some guidance as to the requirements of these provisions. The most recent decision is by the Victorian Civil and Administrative Tribunal (VCAT) in Davinski Nominees Pty Ltd v I & A Bowler Holdings Pty Ltd [2009] VCAT 166. This decision relates to premises in Little Mallop Street, Geelong. Senior VCAT Member Cremean heard the matter on site at the request of the parties.

Section 55(3) of the Retail Leases Act 2003 (Vic) reads:

'The landlord cannot require the tenant's business to be relocated or terminate the lease and offer a new lease of alternative retail premises unless the landlord has given the tenant at least three months' written notice of the relocation with details of reasonable comparable alternative retail premises to be made available to the tenant.'

In considering whether the notices given to the tenant supplied 'details' as required by section 55(3), Senior Member Cremean said (at paragraph 11):

'A tenant is being notified of a need to relocate – to give up tenure – and this is an important step. In my view, a tenant is entitled to more information than merely the address of the new location. These are food premises and I would have thought information about the new premises, directed to that end, would be reasonably required. Perhaps details of gas linkages, water outlets, cooking facilities, seating facilities, toilet facilities and so on would be reasonably required, as things that come immediately to mind.'

Accordingly, he held that neither of the notices that had been given by the landlord complied with section 55(3) in that respect.

Having inspected the premises proposed under the relocation notice, Senior Member Cremean also decided that those being offered were not 'reasonably comparable alternative premises'. He considered there were many significant differences between the current and the proposed premises, not the least of which was that the proposed premises were out of the building itself. This meant that, although there may have been increased pedestrian traffic, there was an exposure to adverse security, there having been an apparent history of incidents of antisocial behaviour in Little Mallop Street, such as fights, alcohol consumption, criminal damage and graffiti.


Most of the legislation dealing with relocation requires, as a prerequisite to relocation, that the tenant's premises are required as a consequence of a proposed refurbishment, redevelopment or extension, and that the notice to the tenant is sufficient to indicate a genuine proposal that:

  • Is to be carried out within a reasonably practicable time after relocation; and
  • Cannot be carried out practicably without vacant possession of the retail premises.

The above was considered in the landmark case, Blackler v Felpure Pty Ltd (1999) NSWSC 958. The case involved a dispute over a demolition clause as opposed to a relocation cause. In handing down his decision, Justice Bryson said it is enough if the details provided are sufficient to indicate a genuine proposal to demolish. It does not matter if the landlord proposes to do other works at the same time as those referred to in the notice. His Honour said that the purpose of providing the details is so the tenant can come to a conclusion about whether the termination will be effective, and whether the tenant should accept that it will be effective or disputed:

'The question is whether the details provided are sufficient to indicate a genuine proposal to demolish the building; if they are not, the termination cannot take place and if they are it will be effective no matter what other details of the proposed demolition exist or could have been provided'.

In considering whether what was proposed was a 'genuine proposal', Justice Bryson said:

[61] 'It is not in my view open to contention by the lessee whether the lessor's decision to demolish, repair, renovate or reconstruct the building is reasonable or appropriate; it is sufficient if there is a genuine proposal. Nor in my opinion is it open to debate whether the lessor could in some way modify the lessor's proposal so as to continue to accommodate the lessee after the premises have been demolished, repaired, renovated or reconstructed'.

The consideration of whether a relocation notice involved a 'genuine proposal' was also considered in Skiwing Pty Ltd v Trust Co of Australia Pty Ltd (No. 3) [2004] NSWADT 94.

In that case, the Tribunal held that:

'Two of the notices under consideration were invalid because they were for the purpose of securing a preferred tenant in a prime location within the Arcade with a two level shop fronting the Mall and not for the permitted purposes. ... Neither was a genuine proposal for "refurbishment, redevelopment or extension". Instead, it was the attempted use of the right under those provisions to replace an existing tenant ...'

However the appeal division of the New South Wales Administrative Decisions Tribunal took a different view (Trust Company of Australia Ltd (trading as Stockland Property Management) v Skiwing Pty Ltd [2005] NSWADTAP 9) and said:

[225] 'We endorse, however, Mr Briscoe's submission that this statement of principle is at odds with the judgment of Bryson J in Blackler v Felpure Pty Ltd (1999) NSWSC 958. In construing the phrase "genuine proposal" in section 35 of the [Retail Leases Act 1994 (NSW)] (this provision provides for demolition of these premises in similar terms to section 34A) Bryson J stated that the lessor may use the power conferred by the section to terminate the lease, "with a view to its own advantage". This of itself does not prevent a proposal for demolition from being "genuine".'

[Note - while the above is quoted in the Court of Appeal decision mentioned next, you will not find them in the online report cited above.]

This decision was upheld by the New South Wales Court of Appeal in Skiwing Pty Ltd v Trust Company of Australia (trading as Stockland Property Management) [2006] NSWCA 276. Chief Justice Spigelman (Justices Hodgson and Bryson agreeing) said:

[22] '... A proposed "refurbishment, redevelopment or extension" does not lose the character of a "genuine proposal" by reason of the fact that the commercial motivation of the lessor is to attract a tenant or a particular kind of tenant.'

The High Court refused the tenant leave to appeal (Skiwing Pty Ltd v Trust Company of Australia (trading as Stockland Property Management) [2007] HCATrans 488).


It is obvious from these cases that landlords should provide tenants with as much information as is reasonably practicable in the circumstances. For example, information should include the nature of the proposed works and as much detail as is possible in relation to the proposed new tenancy in order to demonstrate that it is 'reasonably comparable' or whatever the legislation provides. While the list is by no means exhaustive our experience indicates that tenants would want to know:

  • The area of the new tenancy, its shape and dimensions, in particular length of its frontage.
  • The tenancy mix of the other tenancies that are or will be in the vicinity of the new premises.
  • What services and landlord's fixtures and fittings are to be provided to the new tenancy, and the nature and quality of the finishes to be provided within the new tenancy.
  • If they are available, comparable traffic counts past the existing premises and the proposed new premises.
  • Advice as to how the other requirements of the legislation are to be complied with, for example, that the terms of the lease of the new premises will be otherwise on the terms of the tenant's existing lease.
  • The proposed rent and how it has been adjusted to take into account any difference in the commercial values of the premises at the time of relocation if that adjustment is permitted under the legislation.


  • Be conscious of what your options are under the relevant legislation and the time within which you must make a decision as to whether you will elect to terminate the lease or accept the relocation.
  • Make sure that the notice received contains all of the information required by the Act with details sufficient to enable you to make an informed decision.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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