Annual Report of the Victorian Small Business Commissioner … · 2019. 6. 26. · 5.5 major...

Annual Report of the Victorian Small Business Commissioner 2003/04

EDUCATION

INVESTIGATION

MEDIATION

REPRESENTATION

SMALL BUSINESS COMMISSIONER 1

2 SMALL BUSINESS COMMISSIONER EDUCATION

INVESTIGATION

MEDIATION

REPRESENTATION

Index

1. STRATEGY AND OBJECTIVES 6

2. BUSINESS PLAN 8

3. CLIENT SERVICE CHARTER 9

4. OSBC FUNCTIONS AND REPORT OF OPERATIONS 10

4.1 Information and Education 104.1.1 Overview 104.1.2 OSBC Website 104.1.3 Section 25 Notifications 124.1.4 Preliminary Assistance 144.1.5 Regional and Community Presentations 154.1.6 Journal Articles 164.1.7 Information Brochure 164.1.8 Relationship with Industry Associations 16

4.2 Investigations 184.2.1 Overview 18

Case Study 1 19Case Study 2 20

4.2.2 Section 21 Certificates 20Case Study 1 21Case Study 2 21Case Study 3 22

4.3 Mediation and Alternative Dispute Resolution 22

4.3.1 Overview 224.3.2 Disputes 23

OSBC Mediation and Alternative DisputeResolution Process 25Case Study 1 26Case Study 2 26Case Study 3 27Case Study 4 27Case Study 5 28Case Study 6 28Case Study 7 29

4.3.3 Specialist Retail Valuers 294.3.4 Independent Quantity Surveyors 304.4 Government Practices 30

Case Study 1 31Case Study 2 31

5. ORGANISATION 325.1 Overview 325.2 Systems 325.3 Freedom of Information 325.4 Whistleblowers Procedures 325.5 Major Contracts 325.6 Consultancies 32

6. STAFFING 33

7. FINANCIAL STATEMENT 35

APPENDIX A – CLIENT SERVICE CHARTER 36

APPENDIX B - SMALL BUSINESS COMMISSIONER INFORMATION BROCHURE 39

APPENDIX C – INFORMATION NOTE PROVIDED TO PERSONS ENQUIRING AS TOLISTING ON THE PANEL OF MEDIATORS 43

APPENDIX D – WHISTLEBLOWERS ACT PROCEDURES 46


Tables

TABLE 1. GROUPS WITH AN INTEREST IN OSBC ACTIVITIES 8

TABLE 2. OSBC WEBSITE VISITS 11

TABLE 3. SECTION 25 NOTIFICATIONS 13

TABLE 4. PRELIMINARY ASSISTANCE 15

TABLE 5. OSBC PRESENTATIONS TO INDUSTRY, BUSINESS AND COMMUNITY GROUPS 16

TABLE 6. SECTION 21 CERTIFICATES 21

TABLE 7. DISPUTE REFERRALS 23

TABLE 8. RESULTS OF REFERRED DISPUTES CONCLUDED IN THE PERIOD 1 MAY 2003 TO 30 JUNE 2004 24

TABLE 9. SECTION 87 CERTIFICATES BY MONTH 24

TABLE 10. STAFFING ESTABLISHMENT AT 30 JUNE 2004 34

TABLE 11. FINANCIAL STATEMENT 1 MAY 2003 TO 30 JUNE 2004 35

4 SMALL BUSINESS COMMISSIONER

This Report covers the activities of the Small BusinessCommissioner for the period from 1 May 2003 to 30 June 2004.

This period has seen the entry into force of the SmallBusiness Commissioner Act 2003 and the Retail LeasesAct 2003, the establishment of the Office of the SmallBusiness Commissioner (OSBC) and processes toimplement the responsibilities of the Small BusinessCommissioner under those and other Acts.

A primary focus for the OSBC has been its disputeresolution function. Results over the period (in disputesreferred to the Small Business Commissioner) show thatthe number of retail tenancy disputes resolved is around150% higher than would have been the case withoutOSBC involvement. By the end of the period, disputeswere being handled significantly faster (7 weeks fromapplication to mediation) than was the case previouslythrough the former Victorian Civil and AdministrativeTribunal (VCAT) process. Similarly, a significant numberof matters in the nature of business to business disputeswere also handled in circumstances where, withoutOSBC involvement, the parties would have faced lengthyand costly litigation.

An independent consultant estimated that in the period 1 May 2003 to 30 April 2004 the Small BusinessCommissioner dealt with retail tenancy and businessdisputes of a total value up to $30 million. The OSBCsuccessfully resolved nearly 70% of these disputes, and in doing so relieved disputants of the costs ofprotracted court and tribunal proceedings. The SmallBusiness Commissioner achieved this within a budget of $2.0 million per year.

The impact on the Victorian economy of the freeing up of disputed funds is not insignificant. The experience of the OSBC in its first year suggests an expected growthin demand for the Small Business Commissioner’sservices and scope for a commensurate increase inimpact on the economy.

Both the Small Business Commissioner Act 2003 and the Retail Leases Act 2003 were given Royal Assent on 15 April 2003 and entered into force on 1 May 2003.

Also on 15 April 2003, the Governor in Council, under theprovisions of the Small Business Commissioner Act 2003,appointed the Small Business Commissioner for theterm 1 May 2003 to 1 May 2005.

The principal aims of the two Acts are to enhance acompetitive and fair operating environment for smallbusiness and to facilitate the identification and resolutionof disputes between parties to retail tenancy and SmallBusiness Commissioner Act disputes.

The OSBC has responsibility to encourage the fairtreatment of small business in the marketplace, promote informed decision-making by small business to minimise disputes, investigate complaints about unfair market practices by other businesses andpromote initiatives that ensure that small businessesreceive high-quality services from government agencies.

Accordingly, the OSBC is the primary vehicle fordelivering on the Government’s commitments to:

• enhance a competitive and fair operating environment for small business;

• seek to ensure that a party does not unfairly takeadvantage of its superior information and negotiatingpower to the detriment of another party;

• help parties to a retail premises lease adopt good andfair business practices; and

• facilitate the identification and resolution of disputesbetween parties to retail tenancy and small businessdisputes

The Small Business Commissioner exercises statutoryindependence in pursuing the functions set out in theSmall Business Commissioner Act 2003, and in sections of the Retail Leases Act 2003, but reports to the Ministerfor Small Business in respect of the operations of theOSBC, and in accordance with requests made by theMinister under certain sections of the Small BusinessCommissioner Act 2003.

Message from the Small Business Commissioner

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The Secretary of the Department of Innovation, Industryand Regional Development (DIIRD) must take reasonablesteps to ensure that adequate resources are madeavailable to the Small Business Commissioner to enablehim to carry out his functions and exercise his powers.

Valuable support is being given by Mr Peter Harmsworth,the Secretary of DIIRD and his Department, and thereare many opportunities for OSBC and branches of DIIRDto support each other’s work.

Building a high quality focused team underpinned byrobust networks, relationships with small and bigbusiness and other organisations, and support servicesenables us to deliver on the objectives set out for theSmall Business Commissioner in both the SmallBusiness Commissioner and Retail Leases Acts.

There has also been a focus on opportunities forconstructive connections between the work of the OSBC and that of other organisations at Commonwealth,State and local government level.

It is extremely pleasing that so many retail premiseslease disputes have been resolved through interventionby the OSBC or at mediation organised by the SmallBusiness Commissioner. The focus of the mediation and alternative dispute resolution activities of the SmallBusiness Commissioner is on pragmatic commercialsettlements. These must be consistent with the law, but allow all parties concerned to re-establish fracturedlandlord/tenant or business relationships or to move on without the debilitating effects of a lingeringcommercial dispute.

The low cost, informal nature of the process establishedby the OSBC is appreciated by most parties, andsignificant retail tenancy or commercial disputes notamenable to mediation can still proceed through Courtor Tribunal processes.

Just over one year of operation is insufficient time to determine where major improvement (if any) could be made to the legislation, or the application of thelegislation by the Small Business Commissioner.Nevertheless, some areas are being examined with a view to providing advice to the Minister for SmallBusiness. One area currently being examined is thescope for improvements to be made to the scheme of lease notifications under s25 of the Retail Leases Act 2003.

The first year of operation of the OSBC has been achallenging and rewarding experience for the SmallBusiness Commissioner, the OSBC and small businessin Victoria.

The coming year will see the OSBC maintain the level of support that it is providing to landlords, tenants andsmall businesses in dispute resolution, while workingwith government Departments and agencies to developsmall business service charters to ensure the needs ofsmall business are met and that small businessesreceive high quality service. With an increasingcommunity awareness of the role and functions of theSmall Business Commissioner, it is expected that theOSBC investigation function will be further expandedthroughout 2004.

MARK BRENNANSmall Business Commissioner


The establishment of the Small Business Commissionerrecognises the vital contribution that small businessesmake to the Victorian economy.

The aim of the Small Business Commissioner is to assistsmall and medium sized businesses where they arefaced with unfair market conduct by other businesses.

The Small Business Commissioner also has a role inworking with Government Departments and agencies toestablish small business friendly practices and conduct,and to monitor the performance of Departments andagencies against agreed standards of service.

Recognising the importance of retail tenancies to theestablishment and viability of small businesses, theSmall Business Commissioner has been givensubstantial responsibilities under the Retail Leases Act2003, and specific powers under that Act to registerleases, ensure that tenants are aware of theirentitlement to an initial 5 year lease term, and to resolvedisputes between landlords and tenants in an informal,low cost way.

The powers and functions of the Small BusinessCommissioner arise from provisions in, or relating to, a number of Acts:

• The Small Business Commissioner Act 2003• The Retail Leases Act 2003• The Retail Tenancies Reform Act 1998 (as amended)• The Retail Tenancies Act 1986 (as amended)• The Liquor Control Reform Act 1998 (as amended)• The Victorian Civil and Administrative Tribunal Act 1998

(as amended)• The Fair Trading Act 1999

SMALL BUSINESS COMMISSIONER ACT 2003Under the Small Business Commissioner Act 2003(the SBC Act) the functions of the Small BusinessCommissioner are to:

• facilitate and encourage the fair treatment of smallbusinesses in their commercial dealings with otherbusinesses in the marketplace;

• promote informed decision-making by smallbusinesses in order to minimise disputes with otherbusinesses;

• receive and investigate complaints by small businessesregarding unfair market practices and mediate betweenthe parties involved in the complaint;

• make representations to an appropriate person or bodyon behalf of a small business that has made a complaintregarding unfair market practices;

• monitor and report to the Minister on any emergingtrends in market practices that have an adverse effecton small businesses;

• encourage the development and implementation ofsmall business service charters within government toensure small businesses receive high quality service;

• monitor the operation and effectiveness of those smallbusiness service charters;

• as required by the Minister, monitor and report to theMinister on the impact that legislation in Victoria,government procedures and administration have on small businesses;

• as required by the Minister, assist other branches andagencies of government to develop legislation,government procedures and administration that providealternative ways in which small businesses can complywith the requirements of the legislation, procedures and administration;

• investigate compliance with industry codes;• advise the Minister on matters for which the

Commissioner is responsible.

1. Strategy and Objectives

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RETAIL LEASES ACT 2003Under the Retail Leases Act 2003 (the RLA) the functions of the Small Business Commissioner are to:

• facilitate the resolution by mediation, or other form of alternative dispute resolution, of retail tenancydisputes;

• take proceedings for an offence against the RLA;• endorse a form of standard lease;• confirm whether a certificate has been given under

s21(5) of the RLA;• prepare and publish an information booklet or

guidelines about retail leases that may be purchasedon demand by members of the public;

• for the purposes of the Commissioner performingfunctions under the RLA, create and maintain aregister of the information provided under s25.

Flowing from these functions, the Small BusinessCommissioner has the responsibilities of:

• issuing certificates under s21 of the RLA enabling the tenant to enter into a lease for less than 5 years;

• receiving and recording notifications of leases made by landlords under s25 of the RLA;

• appointing a specialist retail valuer under s34, s35 or s37 of the RLA;

• appointing an independent quantity surveyor under s30 or s55 of the RLA; and

• making arrangements pursuant to s84 or s85 of theRLA for the resolution by mediation or other alternativedispute resolution process of retail tenancy disputes.

RETAIL TENANCIES REFORM ACT 1998Under the Retail Tenancies Reform Act 1998 (as amended)the Small Business Commissioner was provided with the responsibility, from 1 November 2003, of appointing a specialist retail valuer under s12 or s13 of that Act.

RETAIL TENANCIES ACT 1986Under the Retail Tenancies Act 1986 (as amended) theSmall Business Commissioner was provided with theresponsibility, from 1 November 2003, of appointing aspecialist retail valuer under s10 or s11 of that Act.

LIQUOR CONTROL REFORM ACT 1998Under s11 (8) of the Liquor Control Reform Act 1998 (asamended), the Small Business Commissioner has thepower to investigate compliance by licencees ofpackaged liquor licences with a code of conductestablished under s11 (5) of that Act.

As at 30 June 2004, no code of conduct had beenestablished under s11 (5) of the Liquor Control Reform Act1998 (as amended), therefore no compliance investigationwas undertaken by the Small Business Commissioner onpackaged liquor licences during 2003/04.

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNALACT 1998Section 73 (2A) of the Victorian Civil and AdministrativeTribunal Act 1998 (as amended) provides that the SmallBusiness Commissioner may intervene at any stage inproceedings before the Tribunal concerning a retailtenancy dispute or proceedings under s8A of the FairTrading Act 1999. If the Small Business Commissionerintervenes in such proceedings he becomes a party to the proceedings and has all the rights of a party, including rights of appeal.

During 2003/04 the Small Business Commissioner didnot intervene in any proceedings before the Tribunal.

FAIR TRADING ACT 1999Section 8A of the Fair Trading Act 1999 provides that aperson must not, in trade or commerce, engage inunconscionable conduct in connection with the supply orpossible supply of goods or services to a person, or theacquisition or possible acquisition of goods or servicesby a person. As outlined above, the Small BusinessCommissioner may intervene in any proceedings taken inthe Victorian Civil and Administrative Tribunal under s8A.


During 2003/04 the OSBC developed a Business Plan for the establishment stage of its operations. TheOSBC’s vision is a:

• business environment that promotes competitivenessand fairness for Victorian small businesses.

• business and regulatory environment supportinginformed decision-making by small businesses.

• retail tenancies regulatory framework that promotesgreater certainty, fairness and clarity in thecommercial relationship between landlords andtenants of retail premises, and provides an appropriate mechanism for the prevention or earlyresolution of disputes.

• dispute resolution mechanism which assists parties to retail leases disputes, or commercial disputesreferred to the OSBC, to settle such disputes in a low cost, non-adversarial, environment.

Achievement of the elements set out in the vision for the OSBC will directly improve the business environmentof the State.

Certain core groups have been identified as having asignificant interest in the operations and success of the OSBC. These main groups are set out in Table 1.

The OSBC is seeking to establish strong and continuinglinks with each of these groups. The information andeducation strategy developed and implemented by theOSBC seeks to establish multiple channels ofcommunication, to enable individual parties with a needfor the services of the Small Business Commissioner toeasily and directly contact the OSBC and access theassistance available through it.

At the same time, ongoing informal links have beenestablished with organisations having similar orcomplementary functions. These organisations includeConsumer Affairs Victoria, the Victorian Civil andAdministrative Tribunal and the Australian Competitionand Consumer Commission. In the coming year it isintended to develop a sound relationship with theVictorian Competition and Efficiency Commission.

2. Business Plan

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TABLE 1

GROUPS WITH AN INTEREST IN OSBC ACTIVITIES

Small business particularly small business facing an imbalance of power, or where the costs of seeking specific legal redress is prohibitive

Tenants individually and collectively

Landlords individually and collectively

Professionals and professional associations having dealings with small business, tenants or landlords

Government State, local and Commonwealth Governments, government Departments and agencies


The OSBC has extensive direct contact with members of the public, small businesses, lawyers and agentsrepresenting individuals and companies. In addition, the OSBC has extensive dealings with governmentDepartments and agencies.

Given the external focus of so much of the OSBC’s work,the Small Business Commissioner determined that theOSBC should articulate the service experience that allexternal parties can expect in dealings with it.

Accordingly, the OSBC has developed, and published onits website, a Service Charter setting out its serviceundertakings, and the service expectations which othersmay have of it. The Service Charter also sets out how to contact and communicate with the OSBC; standards of service that clients may expect; client’s rights andresponsibilities; and feedback and complaint avenues.

The Client Service Charter adopted by the OSBC is setout in Appendix A.

In publicly expressing its commitment to client service,the OSBC has prepared the way for discussions withgovernment Departments and agencies on developmentand implementation of Small Business Service Chartersin accordance with s5 (2)(f) of the Small BusinessCommissioner Act 2003 (discussed in the GovernmentPractices section of this report).

3. Client Service Charter


OverviewConsistent with its legislative obligations andresponsibilities, the functions of the OSBC divide into the broad areas of:

• Information and Education;• Investigations;• Mediation and Alternative Dispute Resolution; and• Government Practices.

The staffing structure of the OSBC has been developedto support these broad areas, recognising andmaximising the linkages between the areas.

4.1 INFORMATION AND EDUCATION

4.1.1 OverviewFrom the outset the OSBC recognised that a major andongoing information and education program would beneeded to enable all those affected by Victorian retailleases legislation to be aware of the changed legalenvironment following entry into force of the 2003legislation, and for development of a general communityawareness of the functions and powers of the SmallBusiness Commissioner, in particular of the role of theSmall Business Commissioner in oversighting the areaand providing low cost informal mechanisms for disputeresolution.

Monitoring of the awareness level among smallbusinesses of the role and functions of the SmallBusiness Commissioner shows that such awareness is building, but that significant continuing efforts willneed to be made by the OSBC.

In developing a strategy for communicating to keyaudiences, the OSBC has recognised the role thatbusiness and professional associations can play inadvising members of the Small BusinessCommissioner’s activities and functions. At the sametime, communications strategies take into account that not all small business people are members of such associations, and not all landlords or tenantsutilise agents or solicitors.

As well as developing and implementing an activeprogram of information and education targeted atprofessional bodies, real estate agents, legalpractitioners, individual small businesses, landlords and tenants, the OSBC has developed a significant set of information resources accessible by interested parties, and a capability for responding to individualqueries directed to the OSBC.

Information brochures are available in 10 languagesother than English, and information advertisements wereplaced in 17 non-English publications during the year.

4.1.2 OSBC WebsiteInformation has been made available to persons whoapproach the OSBC with specific queries either throughthe telephone or through accessing the OSBC website(www.sbc.vic.gov.au). Recognising the importance of theavailability of online information on the new legislation(the Small Business Commissioner Act 2003 and the RetailLeases Act 2003) which entered into force on 1 May 2003,the OSBC website was established and operational from 1 May 2003.

Since then the website has been significantly enhancedto provide detailed information on the legislation coveredby the activities of the Small Business Commissioner,and on the operations of the OSBC.

Integration of the website with the OSBC’s internaldatabases was achieved enabling direct online lodgementof lease notifications under section 25 of the Retail LeasesAct 2003, and of referrals to the Small BusinessCommissioner of retail tenancy disputes.

Small business owners, landlords, tenants, solicitors andreal estate agents can use the website to subscribe (at nocost) for online information updates.

Statistics of site visits to the OSBC website show theusefulness of the site, as it has enabled many in theVictorian community to become aware of the specifics of the new legislation. Visits to the website peaked in the month of entry into force of the Small BusinessCommissioner Act 2003, and of the Retail Leases Act 2003,and then declined slightly over following months. Sitevisits increased again into 2004 as the range ofinformation available on the website expanded. It is theintention of the OSBC to ensure that the website remainscurrent and a growing resource and information sourcefor small business people, landlords, tenants and agentsand representatives of landlords and tenants.

4. OSBC Functions and Report of Operations

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In order to develop the awareness of the small businesscommunity of the role of the Small BusinessCommissioner, and the awareness of landlords andtenants of the role of the Small Business Commissionerunder the new retail tenancy legislation, an awarenessadvertisement campaign was conducted over the periodMay to August 2003. This campaign targetedmetropolitan and regional radio and press, as well as the ethnic press. The increase in website visits in themonths following this campaign is possibly a result of the campaign increasing the level of communityawareness of the Small Business Commissioner, and of the relevance of the Small Business Commissioner’srole to small business, landlords and tenants.

To gauge the extent to which Victorian small andmedium businesses were aware of the role and functions of the Small Business Commissioner, theOSBC commissioned Sensis to investigate the level of such awareness during interviews of Victorian smalland medium enterprises undertaken in preparing theFebruary 2004 Sensis Business Index. In this context,Sensis was also commissioned to investigate the attitudeof small and medium enterprises to dispute resolutionservices in Victoria.

TABLE 2

OSBC WEBSITE VISITS

Month OSBC Website total visits OSBC website individual OSBC website visitors (taking account visitors per day

of repeat visits)

May 2003 5935 2589 191

June 2003 3966 1951 132

July 2003 3883 1970 125

Aug 2003 2739 1361 88

Sept 2003 2882 1577 96

Oct 2003 3091 1620 99

Nov 2003 2590 1420 86

Dec 2003 2221 1216 71

Jan 2004 2540 1365 81

Feb 2004 2700 1419 93

Mar 2004 3497 1791 112

Apr 2004 2789 1464 92

May 2004 3571 1643 115

June 2004 3300 1531 110


Overall, Sensis found that over half (54%) of Victoriansmall and medium businesses (SMEs) had heard of theSBC, although the extent of knowledge of the SmallBusiness Commissioner’s role and powers was variable.In the report, Sensis noted that "this represents solidawareness for a relatively new organisation.". Of thosesurveyed, 13% had heard of the Small BusinessCommissioner’s dispute resolution service. The Sensisreport commented, "It is positive to note, however, that ofthose services that SMEs felt the OSBC provided, many ofthem are related to dispute resolution, which forms thebasis of the core business for the OSBC, and differentiatesit from other SME-focussed organisations that SMEs wouldbe likely to confuse the Office with.". Further, 71%indicated that they would consider using such a disputeresolution service if it was available.

While the overall awareness rate of the Small BusinessCommissioner is creditable for an organisation whichhad not then been in existence for 12 months, thesignificant proportion of respondents who were notaware of the Small Business Commissioner at all clearlyunderlines the continuing need for proactive andtargeted information campaigns to raise the extent ofcommunity awareness, and to allow information on theSmall Business Commissioner to be readily available forsmall businesses, landlords and tenants at times whenissues or disputes arise where they may usefully callupon the services of the Small Business Commissioner.

Sensis also found that 6% of SMEs had experienced aserious business dispute during the previous year, withregional SMEs slightly more likely than metropolitanbusinesses to be involved in such disputes. Wheredisputes had arisen, businesses usually attempted toresolve the dispute by sending a letter from a solicitor orlawyer (nearly three quarters of disputes were handledthis way). Such action did not resolve many disputes byitself, as nearly half of the disputes then went to a Courtor Tribunal hearing. Mediation had been used in aroundone third of disputes, with some 40% of mediationsreported by those interviewed as being successful.

The findings of the Sensis report indicate the scopeavailable to the OSBC to meet the dispute resolutiondemands of SMEs.

4.1.3 Section 25 NotificationsSection 25 of the Retail Leases Act 2003 requires that,within 14 days of the signing by all parties of a retailpremises lease, the landlord must notify the SmallBusiness Commissioner in writing of the address of thepremises, the names and addresses of the landlord andtenant, and other information set out in the Retail LeasesRegulations 2003.

Section 84(1)(g) of the Retail Leases Act 2003 providesthat the Commissioner has the function “for the purposesonly of the Commissioner performing his or her functionsunder this Act, to create and maintain a register of theinformation provided under section 25.”

To simplify the process of landlords or their agents lodgings25 notifications, a direct lodgement facility wasestablished on the Small Business Commissioner website.Over the period 1 May 2003 to 30 June 2004 a total of10,674 notifications were made under s25.

Section 25 enables the Small Business Commissioner to agree with a landlord on a period other than 14 dayswithin which a retail premises lease will be notified tothe Small Business Commissioner. There has been 1 agreement made between the Small BusinessCommissioner and a landlord as to the period in which the landlord must provide the lease details. Theparticular circumstances involve a landlord who holdsmultiple leases. The agreement is that the landlord canprovide the lease details within 90 days after all theparties have signed the lease. The agreement is subjectto review after 12 months.

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The introduction of the new OSBC website format in the final week of February 2004 clearly improved theusability of the on-line notification facility. During thecoming year further investigation will be made as to how to minimise the cost to landlords of making s25notifications, through greater use of the online lodgement facility.

Further, investigation will be made as to use of the register to assist performance of the Commissioner’sfunctions and thereby enhance benefit to the businesscommunity. In this context, there appears to be scope toimprove the system of lease notification and assure theintegrity of the lease register.

Consideration should be given to improve the currency of information on the lease register. At present, the lease register contains information submitted bylandlords after a lease is signed. However, changes in the lease relationship may occur which affect thecurrency of the information submitted by a landlord.Concerns about currency serve to restrict use of thelease register and consequently limit the potentialbenefit to the business community. Furthermore, theutility of the system is open to question. Accordingly, a measure could be introduced to ensure that theregister is updated where a lease is assigned or wherethe names, addresses or contact details of the partieschange. Perhaps, this measure can be readily achievedby the making of a regulation.

TABLE 3

SECTION 25 NOTIFICATIONS

Month S25 S25 Total % lodged Notifications Notifications via via on-linevia hard copy on-line facility facility

May 2003 69 na 69 na

June 2003 412 na 412 na

July 2003 456 108 564 19.1

Aug 2003 440 305 745 40.9

Sept 2003 499 431 930 46.3

Oct 2003 467 428 895 47.8

Nov 2003 612 421 1033 40.8

Dec 2003 462 372 834 44.6

Jan 2004 263 203 466 43.6

Feb 2004 258 253 511 49.5

Mar 2004 277 735 1012 72.6

April 2004 276 604 880 68.6

May 2004 398 651 1049 62.1

June 2004 493 781 1274 61.3

Total 5382 5292 10674


It is clear that the Parliament intended that the Small Business Commissioner should use the leasenotifications for the purpose of performing his functionsunder the Retail Leases Act 2003. Opportunities toimprove the system of lease notifications will bewelcomed.

4.1.4 Preliminary AssistancePrior to establishment of the OSBC, a prime point ofcontact for landlords, tenants and small businessesseeking guidance on problems, disputes and issues was the Victorian Business Line (VBL). VBL operatorsare able to provide assistance in many cases and, inother cases, direct callers to areas within DIIRD or inother organisations where more specialised or difficultproblems may be addressed.

Since establishment of the OSBC the VBL has remainedas a primary point of contact for business queries onmatters within the responsibility of the Small BusinessCommissioner. Where difficult circumstances areinvolved, the VBL refers callers through to an appropriate OSBC officer.

At the same time, many callers have increasingly takento calling the OSBC directly and speaking to an OSBCinvestigation officer.

Callers include landlords, tenants (including prospectivetenants), government agencies and professional advisorssuch as solicitors and barristers, estate agents andaccountants.

In the retail tenancy area, preliminary assistance helpscallers to fully understand their rights and obligationsunder retail tenancy legislation with a view to fullcompliance with the legislation and avoidance ofdisputes. When disputes arise and cannot be settledbetween the parties, information is provided as to theappropriate ways of settlement of those disputes eitherby mediation through the OSBC, proceeding to theVictorian Civil and Administrative Tribunal, or otherappropriate jurisdictions.

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Small businesses may also call to discuss difficultmarket circumstances that they may face. These marketcircumstances may or may not involve unfair marketpractices by other parties. If a call does raise the questionof whether there has been an unfair market practice, theOSBC officer taking the call attempts to ascertain thecircumstances and advise on the appropriate course of action. This may involve formal referral of the matter to the Small Business Commissioner, or it may involve a direct approach by the caller to another appropriate body (eg the ACCC).

Even where the difficult market circumstances do not involve unfair market practices, OSBC officers are able to provide guidance and assistance.

Examples of preliminary assistance are:

• Informing landlords of the procedure and obligations in preparing leases and disclosure statements.

• Informing tenants as to their right to appropriatenotices at the end of a lease or to exercise options.

• Informing landlords as to their obligation to repair and maintain the premises.

• Assistance in resolving disputes between the partieswithout the need for a formal dispute process.

Overall, the role of the OSBC in providing preliminaryassistance has proven to be an effective measure forsmall businesses, and aids in achieving primarypurposes of the Small Business Commissioner Act 2003and Retail Leases Act 2003 of enhancing the mechanismsavailable to resolve retail tenancy and business disputes.

Over the course of the period 1 May 2003 to 30 June2004 a clear trend emerged of increasing numbers ofqueries, as knowledge of the activities and expertise of the OSBC became more widespread.

The monthly breakdown of preliminary assistance given by telephone over the period is shown in Table 4.


4.1.5 Regional and Community Presentations The OSBC has conducted a comprehensive regionalprogram during 2004 as a means of giving regional small businesses an opportunity to hear from the SmallBusiness Commissioner about the role of the office andchanges introduced by the Retail Leases Act 2003. Theregional program involved:

• targeted visits;• formal presentations to industry or • professional groups or meetings;• establishing stands at regional field days and

business expos; and• informal presentations.

TABLE 4

PRELIMINARY ASSISTANCE

Month Victorian Business Line calls Preliminary Assistance -calls taken on matters Phone enquiries handled

where the Small Business by the OSBC * Commissioner has jurisdiction

May 2003 761 275

June 2003 467 207

July 2003 510 276

Aug 2003 359 227

Sept 2003 233 256

Oct 2003 231 271

Nov 2003 218 199

Dec 2003 313 199

Jan 2004 272 181

Feb 2004 290 270

Mar 2004 299 377

April 2004 200 334

May 2004 267 421

June 2004 359 452

Total 4779 3945

* Some enquiries may be initially taken by the VBL and then referred to the OSBC. Similarly, phone enquiries may sometimes lead to lodgement of a retail leases dispute, or a dispute referral may be reclassified as Preliminary Assistance following discussion with the applicant.

Small business people, retail landlords and tenants, real estate agents and solicitors were encouraged toattend the various organised sessions. In addition, the Small Business Commissioner addressed localbusiness incubators, and met with local councils andbusiness associations.

In the period 1 May 2003 to 30 June 2004 the OSBCmade 45 presentations to industry, business andcommunity groups in Melbourne and regional Victoria,and attended 8 regional Field Days and Expos.

TABLE 5

OSBC PRESENTATIONS TO INDUSTRY, BUSINESS AND COMMUNITY GROUPS

1 May 2003 1 July 2003 – 30 June 2003 – 30 June 2004

Presentations 1 6to Governmentagencies and local government bodies

Presentations 5 16to Industry and Professional organisations

Presentations 17to Business andCommunity Groups

Attendance at Field 8Days and Expos

Total 6 47


4.1.6 Journal Articles

Articles on the functions and operations of the OSBCwere written and contributed to:

• The April 2004 edition of “Food Shop”, the Journal of theRetail Confectionary and Mixed Business Association;

• The May 2004 edition of “The Estate Agent”, the journal of the Real Estate Institute of Victoria; and

• The May 2004 edition of “Property Victoria”, themagazine of the Property Council of Australia (Victorian Division).

4.1.7 Information BrochureAn information brochure on the Retail Leases Act 2003was developed in order to provide landlords and tenantswith a succinct summary of their rights and obligations.Section 15 of the Act provides that this informationbrochure be provided to a prospective tenant as soon asnegotiations are entered into in respect of a lease. The information brochure is at Appendix B.

Section 84 (1) (f) of the Retail Leases Act 2003 gives theSmall Business Commissioner the function of preparingand publishing an information booklet or guidelinesabout retail leases that may be purchased on demand bymembers of the public. In the first establishment year ofthe OSBC, neither an information booklet nor guidelineswere produced. Information was made available tomembers of the public through the informationcampaign conducted by the OSBC, through informativearticles posted on the Small Business Commissionerwebsite, and through responses to queries directedthrough the VBL or to the OSBC phone line (see 4.1.4).

4.1.8 Relationship with Industry Associations A key part of the OSBC’s information and educationprogram is promoting its services and ensuring there is a credible OSBC presence throughout the State.

To achieve this, the OSBC has developed relationshipswith various industry bodies representing small businessacross the State.

The OSBC deals with some of these industryassociations as a consequence of provisions in the Retail Leases Act 2003 – the Real Estate Institute ofVictoria and the Australian Property Institute in the case of the appointment of specialist retail valuers, and the Australian Institute of Quantity Surveyors in the case of the appointment of quantity surveyors.

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0

100

200

300

400

500

May

-03

Jun-

03

Jul-

03

Aug-

03

Sep-

03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb-

04

Mar

-04

Apr-

04

May

-04

Jun-

04

FIGURE 1

PRELIMINARY ASSISTANCE - PHONE ENQUIRIES HANDLED BY THE OSBC


The OSBC has met often with various industryassociations and professional organisations since theOSBC began operations on 1 May 2003, in particular theAustralian Retailers Association of Victoria, the VictorianAutomobile Chamber of Commerce, the Confectionaryand Mixed Business Association, the Victorian EmployersChamber of Commerce and Industry and the Law Instituteof Victoria. The relationships developed have been animportant means for the OSBC to inform small business,retail landlords, retail tenants, solicitors and real estateagents about their requirements under the Retail Leases Act 2003 and the Small Business Commissioner Act 2003.

In the interests of small business, the OSBC considers it appropriate to maintain sound relations with bigbusiness to ensure awareness of broader businessissues. Accordingly, meetings are held on a regular

FIGURE 2

REGIONAL PRESENTATIONS AND ATTENDANCE AT FIELD DAYS AND EXPOS

1 May 2003 – 30 June 2004

basis with business stakeholder groups (for example theShopping Centre Council of Australia and the PropertyCouncil of Australia) to discuss the operations of theOSBC and issues relating to the Retail Leases Act 2003.

Disseminating information to the smallest of smallbusinesses was an important focus of the OSBC in theperiod to 30 June 2004. The Small BusinessCommissioner addressed a number of small businessincubators with a message about the importance of beinginformed prior to making decisions in small business.

From 1 May 2003 to 30 June 2004, the Commissioneraddressed small business incubators in Eaglehawk,Ballarat and Horsham. A program of visits to businessincubators will continue in the 2004/05 year.


Section 5 (2) (h) of the Small Business Commissioner Act2003 provides that, as required by the Minister, the Small Business Commissioner monitor and report to the Minister on the impact that legislation in Victoria,government procedures and administration have onsmall business. During the course of the year requestsin accordance with s5 (2) (h) were received from theMinister for Small Business in relation to:

• Cemetery TrustsOn 15 October 2003, the Minister for Small Business, in light of the passage of new Cemeteries andCrematoria legislation, requested the Small BusinessCommissioner to monitor the market practices ofcemetery trusts in Victoria and the impact of thesepractices on small businesses to ensure that theycomply with the principles of competitive neutrality.The Minister indicated that the investigation was to be ongoing and that the Small Business Commissionerwas required to report on compliance.

• Packaged Liquor On 27 May 2004, the Minister for Small Business alsorequested the Small Business Commissioner toinvestigate the operation of the transitionalarrangements under the Liquor Control Reform Act 1998in terms of their effectiveness and the outcomesachieved. This request concerns the process for thebuy-out of packaged liquor licences under the LiquorControl Reform (Packaged Liquor Licences) Act 2002.

These investigations had not been concluded by 30 June 2004.

Under s84 (1) (b) of the Retail Leases Act 2003 the Small Business Commissioner has the function of taking proceedings against offences under the Act. In undertaking this function the Small BusinessCommissioner is not subject to the Minister’s control or direction. In the reporting period 1 May 2003 to 30 June 2004, no proceedings had been commencedagainst any party for an offence against the Act.However, over that period, 85 warning letters were sentto persons in respect of possible breaches of the Act.

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4.2 INVESTIGATIONS

4.2.1 OverviewThe Small Business Commissioner has been given wide-ranging and important functions to conductinvestigations and resolve disputes under both the SmallBusiness Commissioner Act 2003 and the Retail LeasesAct 2003. The objective is to enhance an equitable andcompetitive business environment in the State.

Under the Small Business Commissioner Act 2003, the Small Business Commissioner is responsible forinvestigating unfair market practices and mediatingdisputes arising out of those practices. The SmallBusiness Commissioner may also report to the Minister in respect of those matters he has investigated.Under the Retail Leases Act 2003, the Small BusinessCommissioner has a regulatory function, beingresponsible for the prosecution of offences. Under the Retail Leases Act 2003, the Small BusinessCommissioner is also responsible for conducting dispute resolution between parties in a dispute. Both the Small Business Commissioner’s prosecution anddispute resolution roles necessarily involve aninvestigative function.

In the first year, with limited resources, the investigationfunction has yielded outcomes that have promoted acompetitive and fair environment for small business.

The OSBC has investigated 34 referrals to the SmallBusiness Commissioner under the Small BusinessCommissioner Act 2003, alleging matters such as anti-competitive conduct by larger competitors againstindependent small businesses.

In undertaking investigations in relation to individualmatters, the aim of the OSBC is primarily directed atresolving the problem experienced by the small businesscomplainant. To this end initial enquiries are undertakenin a consultative manner, seeking the co-operation of allparties in achieving a workable commercial outcome.Establishing and enhancing a reputation for fair dealingswith all parties is seen as crucial to the long termeffectiveness of the role and operations of the OSBC.

Section 5 (2) (d) of the Small Business Commissioner Act2003 gives the Small Business Commissioner thefunction of making representations to an appropriateperson or body on behalf of a small business that hasmade a complaint regarding unfair market practices.During the period 1 May 2003 to 30 June 2004 the SmallBusiness Commissioner made representations based on complaints regarding unfair market practices to:

• The Australian Competition and ConsumerCommission;

• The Banking and Financial Services Ombudsman;• The Legal Ombudsman; and• The Real Estate Institute of Victoria.

Section 84 (1) (d) of the Retail Leases Act 2003 enablesthe Small Business Commissioner to authorise a body to represent that a form of standard lease (to be madeavailable to the public) is endorsed by the SmallBusiness Commissioner. No form of such a lease wasput to the Small Business Commissioner in the period1 May 2003 to 30 June 2004. Accordingly, the SmallBusiness Commissioner did not endorse any form of lease.


INVESTIGATION CASE STUDY 1

A real estate agent wrote to a tenant who hadsought mediation of a retail tenancy dispute overrent by the OSBC stating in part:

“We are of the belief that if you intend to force thelandlord into mediation or perhaps a tribunal, thenthe landlord may not act so favourably towardsoffering you a new lease or further terms when thattime comes”

The OSBC considers that bullying conduct of thiskind is unacceptable in the Victorian businesscommunity. Accordingly, the OSBC commenced aninvestigation into the matter.

The OSBC wrote to the agent concerned advisingthat the agent’s conduct raised potentialunconscionable conduct issues, and seeking theagent’s response. The OSBC also wrote to theReal Estate Institute of Victoria and the PropertyCouncil of Australia (Victoria Division) requestingthat those organizations educate their membersconcerning the undesirable nature of this type of conduct.

As a result of the OSBC’s action, the REIV’s BestPractice Committee formally raised thecomplainant’s concerns with the agent, and theProperty Council also took action to advise itsmembers against engaging in similar behaviour.

The OSBC investigation had not been concluded by 30 June 2004.


During the period 1 May 2003 to 30 June 2004, 597applications were received from tenants requesting s21certificates. Following consultations with the applicantsby the OSBC, 50 applications were withdrawn, and 547certificates were issued under s21 of the Retail LeasesAct 2003, enabling the applicant to enter into a lease forless than 5 years.

The most common reason for a tenant requesting acertificate was because of the tenant’s desire to test thebusiness environment or because the tenant was unsureof their future needs.

In those cases where applications were withdrawn, thiswas done most often because the proposed lease was arenewal of a lease, and a 5 year minimum term does notapply (by operation of s21 (3)) to a renewal of a lease ifthere is no break in the tenant’s entitlement to possessionof the premises. Another common reason for withdrawalof a s21 application was because option periods extendedthe term of the lease to 5 years or more. Section 21(1)provides that the minimum 5 year term applies to the totalperiod, including all option periods. In some casesapplications were withdrawn after it was determined thatthe lease in question was not a lease covered by the RetailLeases Act 2003.

A function of the Small Business Commissioner unders84 (1) (e) is to confirm whether a s21 certificate hasbeen given. No formal requests were received for suchconfirmation in the period 1 May 2003 to 30 June 2004.

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4.2.2 Section 21 Certificates

Section 21 of the Retail Leases Act 2003 provides that theterm of a retail premises lease (not being a renewal of alease, and including all option periods) must be at least5 years and any initial lease entered into for a period ofless than 5 years is extended by the Act to a 5 year term.

This extension by the Act to a 5 year term does not apply if the Small Business Commissioner has issued a certificate to the tenant that he or a person acting onhis behalf, has explained to the tenant the effect of the 5 year minimum term provisions of the Act, and thetenant has then given written notice to the landlordwaiving the application of the 5 year minimum termprovision to the lease.

INVESTIGATION CASE STUDY 2

An ex-employee of a national company set up asmall business to undertake contract work referredto him by the company, using goods supplied by thecompany. It was alleged that the ex-employee oweda debt to the company, and as a consequence thecompany refused to supply the complainant’s smallbusiness with referrals for work or spare parts. The complainant also sought supply of spare partsat trade rates.

The OSBC arranged for the parties to attendmediation which resulted in the settlement ofissues relating to the disputed outstanding debtand referral of work thus ensuring the smallbusiness had an ongoing supply of work. Thesettlement also resulted in the small businessbeing able to buy the requested spare parts atdiscounted rates (albeit not at trade rates).


TABLE 6

SECTION 21 CERTIFICATES

Month Certificates Certificate not issued because Certificate not Total Issued of lease period (including options) issued for

over 5 years, or lease is a renewal other reasonof a lease with no break in tenancy

May 2003 4 4

June 2003 29 29

July 2003 51 51

Aug 2003 46 46

Sept 2003 45 45

Oct 2003 49 49

Nov 2003 48 48

Dec 2003 43 43

Jan 2004 22 4 8 34

Feb 2004 45 5 50

Mar 2004 44 3 4 51

April 2004 48 5 7 60

May 2004 31 2 5 38

June 2004 42 4 3 49

Total 547 18 32 597

SECTION 21 CERTIFICATE CASE STUDY 1

A tenant applied to the Small BusinessCommissioner for a s21 certificate as he intendedto enter into a lease for less than 5 years. Oninvestigation it was found that the tenant had beenin continuous possession of the premises for 57years, and had taken over from his father - whosetenancy had commenced more than 100 years ago.

It was explained to the tenant, and to the legalrepresentative of the landlord, that a s21certificate was not needed as the tenant had beenin continuous possession of the premises for over5 years.


A tenant leased a shop in a suburban shoppingstrip and had been in business at that site formany years. An opportunity arose for the tenant toexpand his business by leasing the shop next doorfrom the same landlord and expanding into thatspace. The tenant wished to take a lease on thenew premises for less than 5 years in order toestablish coterminous leases for his existingpremises and the new premises.

A s21 certificate was provided to the tenant.

Mediation is also not available where the dispute solelyrelates to the payment of rent or for disputes betweenlandlord and tenant on the rental level to apply as aresult of a market review of the rent. In the latter case,the Retail Leases Act 2003 provides that, in the event of a failure of the landlord and tenant to agree on the levelof rent to apply as a result of a market review, and afailure of the landlord and tenant to agree on anindependent specialist retail valuer to determine therent, the Small Business Commissioner may appoint asuitably experienced and qualified valuer as a specialistretail valuer in the matter.

The Small Business Commissioner has the function of making arrangements for the resolution by mediationor other appropriate form of alternative disputeresolution of retail tenancy disputes. While the Actprovides that the Small Business Commissioner maypersonally undertake a mediation or alternative form ofdispute resolution, during 2003/04 the Small BusinessCommissioner did not personally conduct such amediation or other dispute resolution process.

In May 2003 the Small Business Commissioneradvertised publicly for expressions of interest fromqualified persons for listing on a Panel of DisputeResolution, from which the Small BusinessCommissioner would be able to select a suitablyqualified person to undertake mediation or alternativedispute resolution in disputes referred to him.Experience in the field of retail premises leases isnecessary in order for a Panel member to be selected bythe Small Business Commissioner to mediate in a retaillease dispute. The information note provided to personsinterested in being listed on the Panel is at Appendix C.At 30 June 2004, 95 mediators had expressed interest in being listed on the Panel of Dispute Resolution.


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4.3 MEDIATION AND ALTERNATIVE DISPUTERESOLUTION

4.3.1 OverviewOf central importance to the role of the Small BusinessCommissioner is the mediation and alternative disputeresolution function assigned to him under the RetailLeases Act 2003. The objective of the legislation, and ofthe processes which have been established by the OSBC,is the timely low cost resolution of retail lease disputesthrough facilitated agreement between the parties.

The Retail Leases Act 2003 provides that where a disputearises in relation to a retail lease covered by the Act,action cannot be commenced in the VCAT unless thedispute has been referred to the Small BusinessCommissioner and he certifies that mediation or otheralternative dispute resolution has not been possible, orhas been attempted and has failed. The requirement forsuch certification does not apply to proceedings for anorder in the nature of an injunction.


A person applied to the Small BusinessCommissioner for a s21 certificate in order to establish a clothing boutique in a suburbanshopping strip. The prospective tenant had agreed with the landlord that a short lease (2 year lease with a 2 year option) was appropriateto ascertain whether a viable business could bebuilt at that location.

A s21 certificate was provided to the tenant.


TABLE 7

DISPUTE REFERRALS

Month Dispute Referrals received

May 2003 12

June 2003 35

July 2003 42

Aug 2003 34

Sept 2003 33

Oct 2003 34

Nov 2003 35

Dec 2003 40

Jan 2004 23

Feb 2004 45

Mar 2004 56

April 2004 42

May 2004 53

June 2004 43

Total 527

0

10

20

30

40

50

60

May

-03

Jun-

03

Jul-

03

Aug-

03

Sep-

03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb-

04

Mar

-04

Apr-

04

May

-04

Jun-

04

FIGURE 3

DISPUTE REFERRALS RECEIVED

4.3.2 DisputesIn the period 1 May 2003 to 30 June 2004, 527 disputeswere referred to the Small Business Commissioner,including complaints regarding unfair market practicesunder the Small Business Commissioner Act 2003. Dispute referrals by month received are shown in Table 7.

Of the 527 disputes referred, 420 were taken through theOSBC dispute resolution process prior to 30 June 2004. At 30 June 2004, 107 disputes were at a stage in the disputeresolution process prior to finalisation by the OSBC.

Three hundred and forty (340) of the 527 disputes (64.5%) were referred by a tenant, 153 (29.0%) werereferred by a landlord and 34 (6.5%) were referred byanother party.

Shopping Centres were involved in 91 dispute referrals(17.3%), with the Shopping Centre owner being theapplicant in 29 cases (31.9% of the referrals involvingShopping Centres) and the respondent in 62 cases(68.1% of referrals involving Shopping Centres).

During the course of the period 1 May 2003 to 30 June2004, 249 disputes went to mediation organised by theOSBC (1 in the period 1 May 2003 to 30 June 2003).

It can be seen from Table 8 on page 24 that 69% ofreferred disputes were successfully resolved throughOSBC pre-mediation activities or at OSBC organisedmediation.

The OSBC is sensitive to the needs of parties inarranging mediations. Sixteen (16) mediations werearranged in locations outside the Melbourne area, 3 mediations were held in metropolitan locations otherthan Melbourne city, and interpreter services werearranged for one mediation.


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TABLE 9

DISPUTE REFERRALS

Month Section 87 Certificates Issued

May 2003 0

June 2003 3

July 2003 6

Aug 2003 9

Sept 2003 8

Oct 2003 9

Nov 2003 12

Dec 2003 10

Jan 2004 3

Feb 2004 5

Mar 2004 13

April 2004 12

May 2004 7

June 2004 17

Total 114

One hundred and fourteen (114) certificates were issuedunder s87 of the Retail Leases Act 2003, enabling theapplicant to commence proceedings before VCAT inrespect of the dispute. Of these, 48 certificates wereissued prior to mediation, as the Small BusinessCommissioner was satisfied that circumstances weresuch that mediation would be unsuccessful, or that theapplicant should be enabled to commence VCAT actionwithout delay. Fifty nine (59) certificates were issuedfollowing failed mediation. Seven (7) certificates wereissued to an applicant following the refusal of arespondent to engage in mediation, but with therespondent subsequently agreeing to mediation and the matter being resolved successfully either at the pre-mediation stage, or at mediation.

Successfully settled prior to mediation

Successfully settled at mediation

Mediation unsuccessful

Not mediated, unsuccessful

14%17%

43%

26%

FIGURE 4

DISPUTE OUTCOMES

TABLE 8

RESULTS OF REFERRED DISPUTES CONCLUDED IN THE PERIOD 1 MAY 2003 TO 30 JUNE 2004

Result Number %

Successfully settled prior to mediation 111 26.4

Successfully settled at mediation 179 42.6

Mediation unsuccessful 71 16.9

Not mediated, unsuccessful 59 14.0

Total 420 100


The Small Business Commissioner has powersunder the Retail Leases Act 2003 to arrange formediation in disputes relating to retail leases, and under the Small Business Commissioner Act2003 in matters where a small business hascomplained of unfair market practices by anotherorganisation or person.

In the case of disputes relating to retail leases, no action may be taken in the Victorian Civil andAdministrative Tribunal (VCAT) other than anaction in the nature of an injunction, unless theSmall Business Commissioner certifies thatmediation has not been attempted or has failed.

A dispute relating to a retail lease is referred to the Small Business Commissioner by anapplicant filling in a “Referral of a Dispute” formand mailing, faxing or delivering it to the SmallBusiness Commissioner, or by an applicant fillingin a similar form online via the OSBC website(www.sbc.vic.gov.au).

The referral of dispute form seeks details whichwill enable the OSBC, or a mediator, tounderstand the issues and parties involved.

The form seeks details of the tenancy, beinginformation on the premises and on the lease (as the date of signing of the lease determineswhich retail tenancy legislation applies to thelease). It also seeks details of the applicant, the respondent, their representatives (if any) and of the dispute.

An investigation officer within the OSBC willconsider the referral form, and may contact theparties to ascertain if the matter may be simplyresolved. A letter will be sent to the respondentadvising of the referral of a dispute and requestingthe respondent to agree to mediation before anindependent mediator appointed by the SmallBusiness Commissioner.

In keeping with the intention of the Government of providing an informal, low cost disputeresolution process, mediation charges to theapplicant and respondent have been kept minimal– $61/party to 30 April 2004 and $70/party from 1 May 2004 to 30 June 2004.

If the respondent agrees to mediation, the OSBCarranges a mediator from the Panel of DisputeResolution and a venue for the mediation. Thisvenue can be outside Melbourne if such a locationwould be more convenient for the parties.

The mediation itself is confidential to the parties,although any settlement agreement reachedduring mediation may be taken to VCAT or anappropriate Court for enforcement if necessary.

Mediation in a Small Business Commissioner Act complaint regarding an alleged unfair market practice is similar, but normally involvesmore investigatory work by the OSBC. Notification of such complaints may also be madeusing a form available on the Small BusinessCommissioner website.

OSBC Mediation and Alternative Dispute Resolution Process


MEDIATION AND ALTERNATIVE DISPUTERESOLUTION CASE STUDY 1

A tenant referred a dispute to the Small BusinessCommissioner concerning the quantum of fit-outcharges billed to the tenant by the landlord. Theinitial fit-out agreement between the landlord,tenant and architect was partly documented andpartly oral and covered responsibility for, andtiming of, construction payments, rental off-set,joint contributions and reimbursements. The fit-out cost exceeded the initial budget by $120,000.The tenant claimed that the landlord’s failure toperform resulted in increased costs and businesslosses. The landlord claimed that the tenant hadaltered the specifications for the project.

The Small Business Commissioner organisedmediation between the parties that resulted in asettlement, which included creation of a new leaseredefining the premises and altered terms andconditions from the original lease. The settlementalso provided for the landlord re-taking possession of a portion of the premises which had been fittedout as part of the original project, and which wasseparated from the remainder of the property byminor structural works.


A shopping centre landlord referred a dispute tothe Small Business Commissioner as a result of a refusal by a tenant to disclose trading figureswhich would enable a business valuation of theproperty to be obtained. The landlord had giventhe tenant notice to surrender his lease due to the intention of the head tenant at the shoppingcentre to exercise an option to purchase theproperty. However, the landlord had established a business at the shopping centre which was indirect competition with the tenant, and the tenantbelieved that the landlord was attempting to endthe tenancy without any genuine intention ofselling the property.

Mediation organised by the Small BusinessCommissioner resulted in agreement that anindependent valuer would be appointed whowould have confidential access to the tenant’strading figures for the purpose of valuation of the business. A compensation scale was agreedsubject to sale of the property, and it was furtheragreed that if there was no sale of the property to the head tenant within a nominated period, the existing lease would be redrafted with newcompensation provisions.

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Premises had been fitted out as a hairdressingsalon with fixed chairs, plumbing for hair washing,a false ceiling, stud walls with mirrors, additionalelectrical wiring etc. On leaving the premises thetenant had removed the chairs, sealed off theplumbing and replaced floor tiles. However thelandlord required that the property be returned to its original condition, including removal ofplumbing and electrical wiring and replacement of the floor with a new concrete slab. All interiorfit-out was to be removed leaving the building asthe shell described in the original lease.

The premises had subsequently been re-tenantedand there were claims and counter-claims as tothe original condition of the premises andresponsibilities for make good. Neither the existing landlord nor tenant had been parties to the original lease.

At mediation organised by the Small BusinessCommissioner, agreement was reached on allissues other than the re-instatement of theconcrete slab.

As mediation could not succeed, the SmallBusiness Commissioner issued a section 87certificate enabling the matter to be pursued at VCAT.


A tenant had been successfully operating licensedpremises for 6 years and had contracted to sellthe business. After weeks of negotiations betweenthe landlord and tenant the landlord refused toassign the lease.

At mediation organised by the Small BusinessCommissioner the landlord met the purchaser of the business for the first time. After discussionbetween the landlord, tenant and purchaser thelandlord agreed to assign the lease and the saleof the business was achieved.



A 5 year lease with an option of a further 3 yearshad been entered into between a tenant and alandlord. premises comprised a shop on theground floor and residential accommodationupstairs which was used by the tenants as office space.On expiry of the original term the tenantsexercised their option, and wanted to negotiatefurther option periods in order to be able to sellthe business. The landlord refused to negotiate,claiming the tenants had not maintained thepremises as required under the lease and that all communication between landlord and tenanthad broken down.At mediation organised by the Small BusinessCommissioner, agreement was reached that anadditional option period of 5 years be granted to the tenant, and the method and means of all futurecommunications. Provisions were agreed whichwould enable the landlord to move into part of theupstairs residence, if specified notice was given. If the landlord moved into part of the premises, the settlement provided for a reduction in the rentpayable. If the business was sold there wasagreement that the lease would be assigned with a further 5 year option period (thus providing apurchaser with two 5 year options.


During 2000 a tenant entered into a lease with thethen owner of a shopping centre. Six weeks aftera new owner took possession of the centre in2002, the tenant was locked out for failing to paythe rent. The landlord claimed 6 months rentalplus interest and costs. The tenant claimed thatthe premises were not as represented by theprevious landlord and that the previous landlordhad unreasonably refused to assign the lease. The tenant also claimed that the new landlord had failed to respond to any of their attempts at communication prior to taking possession of the premises.

At mediation organised by the Small BusinessCommissioner, an agreement was reached thatterminated the lease, settled the amount owed tothe landlord, allowed the tenant a period to paythe settlement amount and released the tenantfrom any further demands, liabilities or costs.

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4.3.3 Specialist Retail ValuersThe Small Business Commissioner has responsibilityunder s34, 35 and 37 of the Retail Leases Act 2003, s12and s13 of the Retail Tenancies Reform Act 1998 (asamended) and s10 and s11 of the Retail Tenancies Act1986 (as amended) for appointing a specialist retail valuerin cases where a landlord and tenant are unable to agreeon the rent to apply as a result of certain circumstances(usually following the application of a rent reviewprovision of the lease), and the landlord and the tenantare unable to agree between themselves on a specialistretail valuer.

The Retail Leases Act 2003 defines a specialist retailvaluer as being:

(a) for the purposes of a valuation relating to retailpremises in a retail shopping centre, a valuer havingnot less than 5 years experience in valuing retailpremises located in regional or sub-regionalshopping centres; or

(b) for the purposes of a valuation relating to any otherretail premises, a valuer having not less than 5 yearsexperience in valuing retail premises.

In order that the Small Business Commissioner wouldbe able to identify the most appropriate experiencedvaluer in a particular case, agreement was reached withboth the Australian Property Institute and the RealEstate Institute of Victoria enabling the Small BusinessCommissioner to draw on the expertise of eitherInstitute in selecting a specialist retail valuer.

Amendments to s12 and s13 of the Retail TenanciesReform Act 1998 and s10 and s11 of the Retail TenanciesAct 1986 which took effect from 1 November 2003extended the power of the Small BusinessCommissioner to appoint a specialist retail valuer toleases covered by those Acts.

Overall, 27 requests were received by the Small Business Commissioner for appointment of a specialistretail valuer:1 May 2003 – 30 June 2003 21 July 2003 – 30 June 2004 25

In the case of thirteen (13) requests, the matter wassuccessfully resolved prior to formal appointment of a specialist retail valuer.


The tenant operating a retail store paid theamount set out in the lease each month as rent.When the property was sold, the new landlordrealised that the rent had never been increased to cover GST payable on the rent, and sought torecover GST payable on the rent from the tenant.While the lease contained a provision enablingrecovery of GST, the tenant claimed to rely on anagreement with the old landlord that the rentalamount expressed in the lease would be the total rental liability of the tenant.

Legal advice to the tenant was that to proceed toCourt would be disproportionately expensive inrelation to the possible GST saving (some $500 per annum).

Following the tenant’s referral of a dispute to theSmall Business Commissioner, and receipt by thelandlord of the Small Business Commissioner’sinvitation to participate in mediation, the landlordcontacted the tenant and agreed to drop the claimfor recovery of GST on the rent. The dispute wasthus settled prior to mediation.


4.3.4 Independent Quantity SurveyorsThe Small Business Commissioner has responsibilityunder s30 and s55 of the Retail Leases Act 2003 forappointing an independent quantity surveyor in caseswhere a landlord and tenant are unable to agree on thequantum of certain costs to be borne by the tenant andwhich are permitted under the lease and under the Act, and where the landlord and the tenant are unable to agree between themselves on an independent quantity surveyor.

In order that the Small Business Commissioner wouldbe able to identify the most appropriate experiencedindependent quantity surveyor in a particular case,agreement was reached with the Australian Institute of Quantity Surveyors enabling the Small BusinessCommissioner to draw on the expertise of the Institute in selecting an independent quantity surveyor.

No requests were received by the Small BusinessCommissioner for appointment of an independentquantity surveyor.

4.4 GOVERNMENT PRACTICESA key function of the Small Business Commissioner is to seek to ensure Government Departments andagencies recognise the needs of small businesses and adopt policies and practices which ensure that small businesses receive high quality services. TheCommissioner has a specific power to work withDepartments and agencies in the development of smallbusiness service charters, and to subsequently monitorthe operation and effectiveness of those charters.

During the reporting period 1 May 2003 to 30 June 2004work commenced on establishing an appropriateframework for small business service charters within the Victorian government sector. Significant preparatorywork was undertaken in establishing the areas of smallbusiness interaction with government that would mostbenefit from the introduction of service charters.

Specific issues addressed during the year included:

• Investigating and reporting to the Minister for SmallBusiness on the effect on Victorian small business ofthe late payment of debt by Departments and agencies;

• Small Business dealings with Councils;• Preferential treatment given to businesses; and• Advice to certain government Departments of the effect

of the Retail Leases Act 2003 on Crown leases

During 2004/05, the OSBC will proactively implement theSmall Business Commissioner’s statutory obligations inrespect of State Government practices which impact onVictorian small businesses. These obligations ariseunder ss.5(2)(f)-(i) of the Small Business CommissionerAct 2003. By virtue of these provisions, a major focus forthe OSBC over the coming year will be the development,implementation and monitoring of small businessservice charters across the Victorian public sector.

These charters will ensure that Victorian smallbusinesses receive high quality service across the State Government. In giving effect to this legislativerequirement, the Small Business Commissioner willliaise with a broad range of small business anddepartmental stakeholders. In additional to thisimportant work, the OSBC will continue to monitorgovernment Departments over the issue of cash flow for small businesses, specifically, the late payment of commercial debts to small business.

Further, the OSBC will respond to Ministerial requests to examine, investigate and report on governmentpractices impacting on small businesses.

Finally, in order to avoid any duplication of service, and ensure a range of complementary services, theOSBC will continue to develop and maintain goodworking relations with various other statutory and non-statutory Victorian, and Commonwealth bodieswhose role also impacts on small business. Thisincludes the newly established Victorian Competition and Efficiency Commission.

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GOVERNMENT PRACTICES CASE STUDY 2

A firm of funeral directors in a regional centrealleged that it was unable to compete fairly forfuneral work for the reason that a public hospitalwas referring funeral inquiries exclusively to thefuneral director’s sole competitor. The OSBC wroteto the hospital expressing concern about practicesof preferential treatment and subsequently metwith the hospital's CEO to discuss the allegations.As a result of the OSBC’s inquiries, the CEO of thehospital accepted that practices of preferentialtreatment did not conform with hospital policy andre-affirmed its ‘no-referral’ policy in writing to itsstaff. The hospital also undertook to meet with the complainant to explain and clarify thehospital's policy.

GOVERNMENT PRACTICES CASE STUDY 1

A small business consultant claimed that he haddeveloped a business idea and presented the ideato a local council with the hope of tendering for the opportunity to develop the idea further, butbefore being able to do so, another local counciltook over his concept and developed it withoutgiving any recognition.

The OSBC has written to the two local councilsconcerning the allegations. As at 30 June 2004 the investigation had not concluded.


5.1 OVERVIEWThe position of Small Business Commissioner isestablished under the Small Business Commissioner Act 2003, and is a statutory appointment by the Governorin Council.

Staff of the OSBC are employed under Part 3 of thePublic Sector Management and Employment Act 1998, by the Department of Innovation, Industry and RegionalDevelopment (DIIRD).

DIIRD provides corporate support services to the OSBC,and the OSBC makes a contribution to DIIRD corporatecosts on the same basis as DIIRD divisions andbranches. OSBC staff participate in DIIRD corporatetraining, performance management and HR activitiesand conform to DIIRD financial and other policies.

5.2 SYSTEMS Financial, IT and records management services areprovided to the OSBC by the DIIRD corporate servicesDivision. Specific database applications for use by theOSBC have been developed by it, in consultation with the DIIRD IT branch, in the areas of:

• Disputes;• Preliminary Assistance;• Legal Matters; and• Lease Registration.

5.3 FREEDOM OF INFORMATIONNo Freedom of Information requests were directed to the activities of the OSBC during the year.

5.4 WHISTLEBLOWERS PROCEDURESThe OSBC has appointed a protected disclosure co-ordinator and developed procedures in accordancewith Part 6 of the Whistleblowers Protection Act 2001. The OSBC Whistleblowers procedures are set out atAppendix D.

As at 30 June 2004, the OSBC had not received anydisclosures made under the Whistleblowers Protection Act,nor had the Ombudsman referred any disclosures madeunder the Whistleblowers Protection Act to the SmallBusiness Commissioner for investigation.

5.5 MAJOR CONTRACTSThe OSBC did not enter into any contracts over $10 million in the period 1 May 2003 to 30 June 2004.

5.6 CONSULTANCIESThe OSBC did not enter into any consultancy over$100,000 in the period 1 May 2003 to 30 June 2004.

5. Organisation

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Under the Small Business Commissioner the staff of the office separate into four functional areas:

FUNCTIONAL AREA OBJECTIVES

Information, Education • Facilitate and encourage fair treatment of small businessand Government • Promote informed decision making by small business

• Establish a credible OSBC presence in the small business sector• Inform business about retail leases laws • Improve government practices in dealing with small businesses • Encourage development by public sector agencies and Departments

of small business service charters• Work with Government Departments (as required by the Minister) to

encourage flexible regulation and government procedures that make compliance by small business easier

• Assess impact of legislation on small business (as required by the Minister)

Disputes and Investigation • Investigate complaints by small businesses regarding unfair market practices and mediate between parties to a complaint

• Promote a conciliatory approach to dispute resolution and reduce the burden of disputes on all parties by providing a low cost and time effectivedispute resolution facility

• Establish co-operative relationships with other agencies and bodies involved in the resolution of disputes

• Receive and investigate complaints about unfair market practices impacting on small business

• Create a level playing field for small business• Establish cooperative arrangements with other agencies such as ACCC,

Consumer Affairs Victoria and the Victorian Ombudsman• Monitor compliance with industry codes of practice

Research • Monitor emerging trends in market practices• Undertake review and analysis of data and information enabling the

Small Business Commissioner to fulfil the analytical and advisingresponsibilities set out in the Small Business Commissioner Act 2003

Co-ordination and • Establish and support organisational arrangements allowing achievementAdministration of OSBC objectives, particularly in the facilitation of dispute resolution

• Monitor and report on the activities and operations of the OSBC• Maintain appropriate external relationships of the OSBC

6. Staffing


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TABLE 10

STAFF ESTABLISHMENT AT 30 JUNE 2004*

Month M F Total

SBC 1 0 1

VPSG6 4 2 6

VPSG5 0 4 4

VPSG4 0 1 1

VPSG3 0 1 1

VPSG2 1 0 1

VPSG1 0 0 0

Total 6 8 14

* In addition to the OSBC’s core staff of 14, at 30 June 2004 there were 2 fixed term contractors working with the OSBC.


The OSBC operates on an accrual output managementframework, in accordance with guidelines issued by the Department of Treasury and Finance. Financialaccounting is undertaken for the OSBC by DIIRD. In the first year of operations, the measures and targetsincluded in the 2003/04 Budget and against which OSBCoperated and reported on a quarterly basis had beendeveloped prior to establishment of the OSBC. Theseoutput measures will be reviewed in the light ofexperience for future Budget periods.

7. Financial Statement

Note 1: Operating costs for the period 1 May 2003 to 30 June 2003 included significant start-up and office establishment costs.

Note 2: Operating costs included provision of rooms and facilities for the conduct of mediations, and a net contribution to the overall cost of mediation. One (1) mediation was arranged during the period 1 May 2003 to 30 June 2003 and 286 mediations during the period 1 July 2003 to 30 June 2004.

Note 3: No application fee was charged during the period 1 May 2003 to 30 June 2004 for the referral of disputes to the Small Business Commissioner.

TABLE 11

FINANCIAL STATEMENT 1 MAY 2003 – 30 JUNE 2004

1/5/2003-30/6/2003 1/7/2003-30/6/2004$m $m

Funding Appropriation 0.650 2.000

Expenditure Employee Costs 0.105 1.306 Operating Costs 0.545 0.694

Total 0.650 2.000


BACKGROUNDFlowing from the Small Business Commissioner Act 2003 and the Retail Leases Act 2003, our objectives are to enhance a competitive and fair operating environmentfor small business and facilitate the identification andresolution of disputes between parties to retail tenancydisputes, and disputes involving an allegation by a smallbusiness of an unfair market practice.

We undertake lease notification and dispute resolutionactivities required by the Retail Leases Act, encouragethe fair treatment of small business in the marketplace,promote informed decision-making by small business tominimise disputes, investigate complaints about unfairmarket practices by other businesses and promoteinitiatives that ensure that small businesses receivehigh-quality services from government agencies.

MISSION AND VALUESWe seek:• A business environment that promotes competitiveness

and fairness for Victorian small businesses.• A supportive business and regulatory environment

supporting informed decision-making by smallbusinesses.

• A retail tenancies regulatory framework that promotesgreater certainty, fairness and clarity in the commercialrelationship between landlords and tenants of retailpremises, and that provides an appropriate mechanismfor the prevention or early resolution of disputes.

• A dispute resolution mechanism which assists partiesto retail leases disputes, or commercial disputesreferred to us, to settle such disputes in a low cost,non-adversarial, environment.

Our work is based on the values of:

• open and honest communication;• integrity;• client focus;• teamwork;• achievement orientation;• creativity and innovation; personal growth; and• accountability.

We recognise that certain groups have a significantvested interest in our operations and success. These main groups are:

• small businesses;• tenants;• landlords;• professionals and professional associations

having dealings with small businesses, tenants or landlords; and

• government

SERVICES WE PROVIDEWe aim to:

• facilitate and encourage the fair treatment of smallbusinesses in their commercial dealings with otherbusinesses;

• promote informed decision-making by smallbusinesses, to minimise disputes with otherbusinesses;

• investigate complaints by small businesses aboutunfair market practices, and mediate between partiesinvolved in a complaint;

• where justified, make representations on behalf of a small business that has made a complaint about an unfair market practice;

• record retail leases registered with us;• resolve retail tenancy disputes by mediation or

alternative dispute resolution;• issue a Certificate enabling VCAT action, if mediation

in a retail tenancy dispute is unsuccessful;• where justified, issue a Certificate enabling a lease

to be entered into for less than the minimum 5 yearperiod set out in the Retail Leases Act;

• encourage the development and implementation ofsmall business service charters within government toensure small businesses receive high quality service,and monitor the operation and effectiveness of thosesmall business service charters;

• investigate compliance with industry codes;

Appendix A – Client Service Charter

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• monitor and report to the Minister for Small Business on:– any emerging trends in market practices that

have an adverse effect on small businesses; – the operation of the Small Business Commissioner

Act; and – other matters for which the Commissioner is

responsible; • as required by the Minister for Small Business:

– monitor and report to the Minister on the impact that legislation in Victoria, government proceduresand administration have on small businesses;

– assist other branches and agencies of government to develop legislation, government procedures andadministration that provide alternative ways in whichsmall businesses can comply with the requirementsof legislation, and government procedures andadministration.

SERVICE STANDARDS YOU CAN EXPECT• Professionalism

We will treat you with courtesy and respect and willendeavour to understand the full circumstances of yourissue in order to help you. Your queries and enquirieswill be dealt with promptly. We will be punctual for allappointments and meetings.Where we are seeking information from you, we willprovide you with a reasonable time period in which torespond to our request.

• Gifts and BenefitsWe will not accept gifts or benefits where there couldbe any reasonable perception that acceptance couldinfluence our views, decisions or behaviours.

• Conflict of InterestIndividual officers will not deal with any matter wherethere are any circumstances known or made known tous that might reasonably be considered to affect thatofficer’s capacity to act impartially.

• Formal repliesWe will respond to your letters with a timely, accuratereply. Where a full reply will take some time to develop,we will acknowledge receipt of your letter within 2working days and advise you of the steps we are takingto deal with the matter raised by you.

• Phone responseYour phone calls will be answered promptly, and theperson who answers your call will identify him or herself and either deal with your query, takeresponsibility for passing you to the relevant actionofficer, or ensure that the relevant officer contacts you as soon as possible. Where a phone is unattended, we will ensure thatanother officer is able to answer the call. Where a callcannot be answered by another officer, an answeringservice will enable you to leave a message and yourcall will be promptly returned.

• InternetWe will utilise the internet as far as possible to enableyou to access accurate up-to-date information, and toallow you to communicate via email, and lodgenotifications online. However, for those who cannot ordo not wish to use the internet, all information,communications and notifications available online willalso be available through non-internet mechanisms.We will integrate our own systems so thatcommunications received by internet are dealt with onthe same basis as those received by other means. Ourweb pages will be designed to be informative, easy tonavigate and fast loading. We will design our internet communications andnotifications facilities so that a printable receipt isgenerated for you with an identifier that you could use in any further communications on the matter.


• Confidentiality and privacyPrivate information passed to us will be treated asconfidential, unless it is clear from the context that we will need to disclose some information to anotherperson on the course of an investigation. Where it isnecessary for private information to be passed toanother person (eg a mediator), such a person will alsobe required to treat the information as confidential. Inother cases (eg in making representations on yourbehalf) we will ask your permission before using theinformation you passed to us.We will adhere to all requirements of Commonwealthand State Privacy legislation, subject to the State’sFreedom of Information legislation.

• Feedback

We value and invite feedback on our performance andsuggestions for improvement. In the first instance,feedback should be directed to the person with whomyou have been dealing. Feedback may also be directedto the Small Business Commissioner.

Performance MonitoringWe are committed to developing measures of ourperformance that can be monitored and regularlyreported upon. This includes developing measures of performance against the standards set out in thisService Charter.

ComplaintsIf you are dissatisfied with any aspect of the dealingsthat you have with any person in our office, you shouldfirstly tell the person with whom you are dealing of yourdissatisfaction. If you remain dissatisfied then you shouldadvise the Small Business Commissioner of the matter.Your complaint will be investigated and you will beadvised of the outcome and of any further avenues whichmight be open to you to pursue the matter if it is notresolved to your satisfaction.

CONTACT INFORMATIONAddressSmall Business Commissioner55 Collins StreetMelbourne VIC 3000

[email protected]

Phone13 22 151800 136 034

Fax03 9651 9943

Hearing, sight or speech impaired

If you have a hearing, sight or speech impairment, wewill seek to make arrangements so that your dealingswith us or in any mediation arranged by us are notaffected in substance by this.

English as a second language

If you have difficulty with communication through use of English as a second language, we will seek to make arrangements so that your dealings with us or in any mediation arranged by us are not affected in substance by this.

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THE RETAIL LEASES ACT 2003

New laws covering retail tenants and landlords in Victoria

Major reforms that give small business a fairer go

THE RETAIL LEASES ACT 2003From 1 May 2003 the Retail Leases Act 2003 will be themain governing legislation for retail leasing in Victoria.

When current leases under the Retail Tenancies Act 1986or the Retail Tenancies Reform Act 1998 are renewed, theywill also become subject to the new Act.

COVERAGE OF THE ACTThe Retail Leases Act 2003 does not apply to all premisesor businesses. It applies to ‘retail premises’ but excludessome premises and businesses.

Meaning of 'retail premises'Retail leases legislation applies to a retail premiseslease used for the sale or hire of goods by retail or theretail provision of services and where the occupancy cost is less than $1 million per year. The occupancy cost of retail premises is the combined cost of rent and outgoings.

Exclusion from coverage of the ActRetail leases legislation will not apply to tenants that are in the business of wholesaling, manufacturing orstorage.

The Retail Leases Act 2003 will not apply to:

• retail tenants whose occupancy cost threshold exceeds$1M per annum

• tenants that are listed corporations or subsidiaries of listed corporations

• leases for a term of less than one year, unlessconsecutively renewed

• premises or businesses as determined by the Minister.

IMPORTANCE OF RETAIL LEASINGA lease is an important document which impacts abusiness in a number of ways. It’s also a legally bindingdocument which holds the parties to its terms andconditions. Prospective tenants should ensure theyunderstand all provisions of the lease they are about to enter and should obtain advice from an experiencedsolicitor before signing any documentation.

ENTERING INTO A LEASEA lease is entered into or assigned when the tenantenters into possession of the premises with the consentof the landlord or starts paying rent or the lease orassignment is signed by all parties.

DISCLOSURE – THE IMPORTANCE OF KNOWING THE FACTS UP-FRONTAn important tenet of the Retail Leases Act 2003 is that the parties know what they are getting into beforeentering into the lease.

Before a lease is entered into or renewed, landlords mustprovide a disclosure statement to prospective tenants.

A disclosure statement details important aspects of thelease, such as rent, outgoings and other obligations.Prospective tenants should ensure they carefullyexamine the details of the disclosure statement; itscontents can have a significant impact on the lease and the viability of the business.

New leasesWhere there is a new lease for retail premises, the landlord must give the tenant:

• a disclosure statement, and• the completed proposed lease.

Renewed leasesWhere a tenant exercises an option to renew a lease, the landlord must give the tenant a disclosure statement21 days before the end of the current lease.

Where a lease does not contain further options but the parties agree to renew the lease, the landlord mustgive the tenant a disclosure statement within 14 days ofentering into the agreement for renewal.

Why it is important for landlords to provide a disclosure statementWhere the landlord fails to provide a disclosurestatement the tenant may:

• withhold rent, and is not liable to pay rent untildisclosure statement is given, and

• terminate the lease.

Appendix B – Small Business Commissioner Information Brochure


Tenants may only exercise the right to withhold rent aftergiving the landlord written notice to say that they have notreceived the disclosure statement. This must be done noearlier than 7 days and no later than 90 days after thelease commenced. Tenants who have given such a noticemay exercise the right to terminate the lease if they givethe landlord written notice within 7 days after receiving thedisclosure statement.

The tenant may also terminate where a completed copyof the lease was not given or the disclosure statementcontains information that is misleading, false ormaterially incomplete.

LANDLORD OBLIGATION TO PROVIDE A COPY OF LEASELandlords are required to provide tenants with a copy of the proposed lease, a disclosure statement and afurther copy of the proposed lease and a copy of thisinformation brochure.

The copy of the lease and the information brochure must be given by the landlord or his agent as soon asnegotiations are commenced, and failure to do so will be an offence.

Copy of signed leaseWithin 28 days after the retail premises lease is signedby the tenant, the landlord must give the tenant a copy(which may be a photocopy) of the lease that has beensigned by both the landlord and the tenant.

LEASING COSTSLeases are important documents because they detailcosts incurred by retail tenants. Rent is only acomponent of the total costs, and landlords will pass on most other costs to tenants. These will be detailed in the disclosure statement and shown as outgoings.

Under the Retail Leases Act 2003, landlords cannot passon their land tax liability to tenants or their legal costsassociated with preparation of the lease. However, if thelandlord incurs costs in connection with the assignmentof the lease, then the tenant may be liable to pay forthese expenses.

BEFORE SIGNING A LEASEA lease deals with many matters. A prospective tenantshould ensure that its main features are acceptable.These include:

• the term of the lease and options to renew• rent and the basis of rental reviews• outgoings or shared operating expenses• obligations to repair/maintenance• the disclosure statement• permitted use• assignment.

UNCONSCIONABLE CONDUCTThe Retail Leases Act 2003 introduces a new Part 9dealing with unconscionable conduct. Landlords andtenants under retail premises lease must not, inconnection with the lease, engage in conduct that is, in all the circumstances, unconscionable.

Certain conduct is not unconscionableConduct is not to be deemed unconscionable merelybecause a person failed to enter or renew a lease, or ifthe person instituted proceedings or referred a matter to some form of alternative dispute resolution, or if theperson did not agree to the conduct of an independentvaluation of current market rent.

Benefit of unconscionable conduct provisionsUnconscionable conduct provisions of the Retail LeasesAct 2003 protect tenants against grossly unfair conductby landlords such as unwillingness to negotiate and useof unfair tactics.

One of the factors to be considered in whether a landlordhas acted unconscionably is if a landlord has unreasonablyused turnover information in rent negotiation. The Act also improves provisions relating to protection for tenantsagainst relocation, demolition and damaged premises.

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OFFICE OF THE SMALL BUSINESS COMMISSIONERThe Office of the Small Business Commissioner willfacilitate the capacity of Victorian businesses to compete in a fair marketplace.

The Small Business Commissioner will:

• undertake investigations and mediation for disputesbetween landlords and tenants

• provide information and guidelines to tenants andlandlords on retail leasing

• issue certificates for the purpose of waiving the 5-year initial term provisions for leases

• maintain a register of retail leases• undertake education programs.

Landlords have an obligation to notify the Small BusinessCommissioner with the details of the lease within 14 daysafter a retail premises lease is signed by all of the partiesto it.

A Notification of Lease Details form is available at theOffice of the Small Business Commissioner websitewww.sbc.vic.gov.au

Dispute resolutionA key function of the Small Business Commissioner is to facilitate, by mediation or another form of alternativedispute resolution, retail tenancy disputes.

An important tenet of dispute resolution under the RetailLeases Act 2003 is that a retail tenancy dispute aboutcompensation must first be referred to theCommissioner before it can proceed to the Victorian Civil and Administrative Tribunal.

A Referral of Retail Tenancy Dispute form is on the website.

CHECKLIST

Before entering into a lease:• landlord must provide a copy of lease at

negotiation stage• lease must be in writing • landlord to provide a copy of disclosure statement

to tenant at least 7 days prior to entering into a lease• if disclosure statement not given, tenant can

withhold rent, provided the tenant notifies landlordwithin 90 days

• if disclosure statement not given (or ismisleading/false), the tenant can terminate the leasewithin 28 days (although the landlord can object)

• if tenant is later given disclosure statement, they canterminate within 7 days of receipt

• minimum 5-year term for lease (unless tenant getsSmall Business Commissioner certificate waiving right to 5-year initial term).

After entering into the lease:• landlord must give tenant a copy of lease 28 days

after it is entered into• landlords have an obligation to notify the Small

Business Commissioner with the details of the leasewithin 14 days after a retail premises lease is signed by all of the parties to it

• if landlord and tenant cannot agree on maximum fit-out, it is to be determined by an independentQuantity Surveyor nominated by the Small BusinessCommissioner

• landlord can only charge outgoings which are detailedin the disclosure statement

• rent can be based fully or partly on turnover, but thelease must specify how rent is to be determined. Rentreviews must be based on one of the methods detailedin the Act

• landlords must provide disclosure statement wheretenant exercises an option or lease is renewed

• landlord cannot refuse assignment of lease unlessunder certain situations

• tenant must follow procedure for obtaining consent for assignment from landlord.


THROUGHOUT THE LIFE OF THE LEASETenants and landlords cannot act unconscionably in theirdealings with one another. The Office of the SmallBusiness Commissioner will promote informed decision-making, and undertake investigations and mediation fordisputes between landlords and tenants.

FURTHER INFORMATION

Office of the Small Business CommissionerThe Small Business Commissioner is dedicated topromoting a competitive and fair environment for retail tenants and landlords.

PhoneCall 13 22 15 (local call) or Toll Free 1800 136 034Internetwww.sbc.vic.gov.auAddress55 Collins Street, Melbourne 3000

Please NoteThis brochure constitutes the important informationbrochure about retail leases published by the SmallBusiness Commissioner for the purposes of section 15 of the Retail Leases Act 2003.

Important DisclaimerLeasing law is complex, and it is vital that anyoneproposing to enter into a lease or vary a lease or who is experiencing difficulties with other parties in relationto a lease, obtain professional advice from anexperienced solicitor. The Small BusinessCommissioner expressly disclaims all and any liability to any person in respect of anything and of consequenceof anything done or omitted to be done by any person inreliance, whether whole or partial, upon the whole or any part of the contents of this brochure.

Office of the Small Business Commissioner: 1 July 2003

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PANEL OF DISPUTE RESOLUTION

To undertake mediation or alternative disputeresolution under the Small Business CommissionerAct 2003 and Retail Leases Act 2003

Background Information

THE SMALL BUSINESS COMMISSIONEROn 1 May 2003, the Small Business Commissioner Act2003 (the “SBC Act”) commenced operation. Amongother functions and powers given to the Small BusinessCommissioner is the function under s.5 (2)(c) of the SBC Act:

“to receive and investigate complaints by smallbusinesses regarding unfair market practices andmediate between the parties involved in the complaint.”

Also on 1 May 2003, the Retail Leases Act 2003 (the “RLAct”) commenced operation. Under s.84 (1)(a) of the RLAct, the Small Business Commissioner has the function:

“to make arrangements to facilitate the resolution bymediation, or by another appropriate form of alternativedispute resolution, of retail tenancy disputes (whether ornot a dispute has been formally referred under this Act tothe Commissioner).”

Under s.86 (1) of the RL Act, retail tenancy disputes arereferred to the Small Business Commissioner formediation or alternative dispute resolution. Section 87(1)of the RL Act provides that a dispute may only be thesubject of proceedings before the Victorian Civil andAdministrative Tribunal if the Small BusinessCommissioner has certified in writing that mediation oranother appropriate form of alternative disputeresolution has failed, or is unlikely to resolve the dispute(the requirement for such certification does not apply toproceedings for an order in the nature of an injunction).

ROLE OF THE OFFICE OF THE SMALL BUSINESSCOMMISSIONERIn respect of mediation and dispute resolution functions,the Small Business Commissioner is supported by anOffice which:

• Under s.85 of the RL Act, provides preliminaryassistance to parties in dispute, such as the giving of advice designed to ensure that the parties are fullyaware of their rights and obligations, and that there is full and open communication between the partiesconcerning the dispute;

• Provides administrative support to the Commissionerin establishing and maintaining a Panel of DisputeResolution from which the Commissioner may appointa mediator or person to undertake alternative disputeresolution;

• Provides administrative support to mediators orpersons appointed to undertake alternative disputeresolution;

• Receives reports from mediators and persons whohave undertaken alternative dispute resolution;

• Advises the Small Business Commissioner on theissuing of certificates, under s.87 (1) of the RL Act,where mediation or alternative dispute resolution has failed, or is unlikely to resolve the dispute.

OBJECTIVE OF MEDIATION OR ALTERNATIVEDISPUTE RESOLUTIONThe objective of mediation or alternative disputeresolution under the provisions of the SBC Act and theRL Act is to provide an informal, independent and costeffective means of facilitating the resolution ofcomplaints and disputes.

Mediation or alternative dispute resolution processes will focus on the substance of the dispute, attempting toreach agreement between the parties. It is not the role of persons appointed to mediate or undertake alternativedispute resolution to adjudicate on questions of law.

PANEL OF DISPUTE RESOLUTIONThe Panel of Dispute Resolution has been established tofacilitate the process by which complaints are mediatedunder the SBC Act and retail tenancy disputes referredto the Small Business Commissioner are mediated orotherwise assisted through alternative dispute resolutionunder the RL Act. The Small Business Commissionerwill select from the Panel a suitably qualified person toundertake mediation or alternative dispute resolution inrespect of particular complaints and disputes referred to the Commissioner.

Appendix C – Information Note provided to Persons enquiring as to listing on the Panel of Mediators


Persons selected from the Panel of Dispute Resolutionto assist the Commissioner will be fit and properpersons to undertake mediation or alternative disputeresolution, with experience in mediation or the resolutionof disputes. In relation to retail tenancy disputes underthe RL Act, s.84 (2) provides that:

“In arranging for the resolution of retail tenancy disputes,the Commissioner is to have regard to the need for themediation or other form of alternative dispute resolutionto be conducted by persons who are experienced in thefield of retail premises leases.”

Accordingly, where a retail tenancy dispute is referred to the Commissioner, the person selected from thePanel to mediate or resolve the dispute will be a personexperienced in the field of retail premises leases.

In selecting a person from the Panel of DisputeResolution to undertake mediation or alternative disputeresolution the Commissioner will have sole discretion.However, he will take into account, in selecting theperson to undertake mediation or alternative disputeresolution:

• the nature of the dispute;• the qualifications or expertise required for resolution

of the dispute; and• the availability of persons to be selected from the Panel

of Dispute Resolution.

SECRETARIAL SUPPORT FOR MEDIATION ORALTERNATIVE DISPUTE RESOLUTIONThe mediator or person appointed to undertakealternative dispute resolution of a particular matter is incharge of the mediation or dispute resolution process forthat matter, and is expected to oversight arrangementsand tasks associated with setting up and conducting themediation or dispute resolution. To assist this process,administrative support will be available from the Office of the Small Business Commissioner.

In this context, the Office of the Small BusinessCommissioner will assist the mediator or personappointed to undertake alternative dispute resolution to:

• establish contact with the parties, • request any necessary documentation, • arrange times and venues, • prepare mediation agreements, and• advise the parties prior to the mediation or dispute

resolution process of any matter which will facilitatethe resolution of the dispute.

Initial contact with the parties, followed by mediation oralternative dispute resolution, should proceed as rapidly as possible following acceptance by a person of the roleof mediator or person to undertake alternative disputeresolution.

The mediator or person appointed to undertakealternative dispute resolution should immediatelysuspend the mediation or alternative dispute resolutionprocess and advise the Small Business Commissioner if at any stage that person should identify a conflict ofinterest or other impediment to the full and impartialconduct of the mediation or alternative dispute resolutionprocess.

As a guide, mediators or persons undertaking alternativedispute resolution should suspend the process andadvise the Small Business Commissioner if they have:

• Any direct or indirect pecuniary involvement; or• Any direct or indirect association with any of the

parties.

SUCCESS OR FAILURE OF THE MEDIATION ORALTERNATIVE DISPUTE RESOLUTION PROCESSIf the mediator or person appointed to undertakealternative dispute resolution forms an opinion at anystage that mediation or alternative dispute resolutionhas failed or is unlikely to resolve the complaint ordispute, then the mediation or alternative disputeresolution process should be terminated and the SmallBusiness Commissioner so advised.

A successful resolution to a dispute should be advised to the office of the Small Business Commissioner assoon as practicable upon completion of the mediation or dispute resolution process.

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FEES AND EXPENSESSection 86(5) of the RL Act provides that the costs of, and associated with, mediation by a mediator or otherform of alternative dispute resolution (including the feesand expenses of the mediator or person undertakingalternative dispute resolution) are to be determined bythe mediator or other person and paid by the parties inthe proportions that they agree among themselves or, ifthey cannot agree, in equal shares. There is no similarprovision in the SBC Act.

In facilitating administrative effect of s.86 (5) of the RL Act and having regard to the absence of a similar provisionin the SBC Act, consideration has been given to observingthe policy principles of:

• Consistency in fees; and• Low cost processes.

In this context, substantial variances in fees amongdifferent Panel members may be perceived asinequitable and forbidding levels of fees may have achilling effect on use of the mediation and disputeresolution processes.

Further, the Parliament invested the functions ofmediation and alternative dispute resolution in the Small Business Commissioner with an expectation that a low cost scheme of resolution would result.

It will be expected that persons accepting appointmentto the Panel of Dispute Resolution will recognise theneed for a low cost mediation and dispute resolutionscheme. In this regard, an appropriate fee has beenbased on the fee structure that is currently applied inmediations in the Victorian Civil and AdministrativeTribunal (VCAT). The fees payable to mediators are setout in the table that follows. Although based on the VCATscale, the table is not identical and is considered moreadvantageous to mediators in some respects.

The VCAT fee is $590 per day (inclusive of GST). This isconsidered an appropriate fee for SBC Act and RL Actmediation and dispute resolution. However, consistent with the policy intention of low cost mediation and disputeresolution, it is intended that the parties to the dispute willbe required to contribute, between them, $140 per day(inclusive of GST) to the process.

It is also intended that the person selected from thePanel of Dispute Resolution in respect of a particularmatter will receive the $140 daily payment from theparties and will invoice the Small Business Commissionerin the amount of $450 per day (inclusive of GST) for themediation or alternative dispute resolution.

If a scheduled mediation is cancelled or settled prior to the date of the mediation, the office of the SmallBusiness Commissioner will advise if an alternativemediation can be arranged for the same date. If this is not possible, you will be advised and should forward a cancellation invoice for $200 (inclusive of GST) to theoffice. If any party advises that the matter has beensettled and that the mediation should be cancelled, this office should be advised of that fact as soon as thisinformation is received.

It is recognised that the exceptional circumstances of a particular matter may justify a more substantial fee. In such instances, it is likely that the parties to thematter will be required to make a corresponding moresubstantial contribution. Where such exceptionalcircumstances arise, it is intended that there will be aprocess in place where the Panel member discusses the question of a suitable fee with the Small BusinessCommissioner.

Mediators or persons undertaking alternative disputeresolution will be entitled to claim payment for allreasonable expenses incurred by them in association with mediation, alternative dispute resolution or attempted resolution of a dispute. Costs eligible forexpenses claim include reasonable costs foraccommodation, meals, private vehicle usage, andother verifiable out-of-pocket expenses.

Persons who expressed interest in appointment to the Panel of Dispute Resolution do so on theunderstanding that they agree to the abovearrangements for payment of fees.


WHISTLEBLOWER PROCEDURES

1. STATEMENT OF SUPPORT TO WHISTLEBLOWERSThe Office of the Small Business Commissioner (OSBC)is committed to the aims and objectives of theWhistleblowers Protection Act 2001 (the Act). It does not tolerate improper conduct by its officers or staffmembers, nor the taking of reprisals against those who come forward to disclose such conduct.

The OSBC recognises the value of transparency andaccountability in its administrative and managementpractices, and supports the making of disclosures thatreveal corrupt conduct, conduct involving a substantialmismanagement of public resources, or conductinvolving a substantial risk to public health and safety or the environment.

The OSBC will take all reasonable steps to protectpeople who make such disclosures from any detrimentalaction in reprisal for making the disclosure. It will alsoafford natural justice to the person who is the subject ofthe disclosure.

2. PURPOSE OF THESE PROCEDURESThese procedures establish a system for reportingdisclosures of improper conduct or detrimental action bythe OSBC or staff. The system enables such disclosuresto be made to the Small Business Commissioner actingas protected disclosure coordinator. Disclosures may bemade by employees or by members of the public.

These procedures are designed to complement normalcommunication channels between supervisors and staff.Staff are encouraged to continue to raise appropriatematters at any time with their supervisor. As an alternative,staff may make a disclosure of improper conduct ordetrimental action under the Act in accordance with these procedures.

Conforming with Guidelines established by theOmbudsman for small public bodies, these proceduresassign the CEO, protected disclosure officer, protecteddisclosure co-ordinator and investigator functions to theSmall Business Commissioner. Pursuant to theOmbudsman’s Guidelines, the welfare manager functionwill be separately handled, with assignment of a welfaremanager on a case by case basis by the Small BusinessCommissioner.

3. OBJECTS OF THE ACTThe Whistleblowers Protection Act 2001 commencedoperation on 1 January 2002. The purpose of the Act is to encourage and facilitate the making of disclosures ofimproper conduct by public officers and public bodies.The Act provides protection to whistleblowers who makedisclosures in accordance with the Act, and establishes asystem for the matters disclosed to be investigated andrectifying action to be taken.

4. DEFINITIONS OF KEY TERMSThree key concepts in the reporting system are improperconduct, corrupt conduct and detrimental action.Definitions of these terms are set out below.

4.1 Improper conductA disclosure may be made about improper conduct by apublic body or public official. Improper conduct meansconduct that is corrupt, a substantial mismanagement ofpublic resources, or conduct involving substantial risk topublic health or safety or to the environment. Theconduct must be serious enough to constitute, if proved,a criminal offence or reasonable grounds for dismissal.

Examples

To avoid closure of a town’s only industry, an environmentalhealth officer ignores or conceals evidence of illegaldumping of waste.An agricultural officer delays or declines imposingquarantine to allow a financially distressed farmer to selldiseased stock.A building inspector tolerates poor practices and structuraldefects in the work of a leading local builder.

See 4.2 for specific examples of corrupt conduct.

Appendix D – Whistleblowers Act Procedures

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4.2 Corrupt conductCorrupt conduct means:

• Conduct of any person (whether or not a public official)that adversely affects the honest performance of apublic officer’s or public body’s functions;

• The performance of a public officer’s functionsdishonestly or with inappropriate partiality;

• Conduct of a public officer, former public officer or apublic body that amounts to a breach of public trust;

• Conduct by a public officer, former public officer or apublic body that amounts to the misuse of informationor material acquired in the course of the performanceof their official functions; or

• A conspiracy or attempt to engage in the aboveconduct.

Examples

A public officer takes a bribe or receives a payment otherthan his or her wages or salary in exchange for thedischarge of a public duty.A public officer favours unmeritorious applications for jobs or permits by friends and relatives.A public officer sells confidential information.

4.3 Detrimental actionThe Act makes it an offence for a person to takedetrimental action against a person in reprisal for aprotected disclosure. Detrimental action includes:

• Action causing injury, loss or damage; • Intimidation or harassment; and• Discrimination, disadvantage or adverse treatment

in relation to a person’s employment, career, profession, trade or business, including the taking of disciplinary action.

Examples

A public body refuses a deserved promotion of a person whomakes a disclosure.A public body demotes transfers, isolates in the workplaceor changes the duties of a whistleblower due to the makingof a disclosure.A person threatens abuses or carries out other forms ofharassment directly or indirectly against the whistleblower,his or her family or friends. A public body discriminates against the whistleblower orhis or her family and associates in subsequent applicationsfor jobs, permits or tenders.

5. THE REPORTING SYSTEM

5.1 Contact persons within the Office of the SmallBusiness CommissionerDisclosures of improper conduct or detrimental action bythe OSBC, or its staff, may be made to the protecteddisclosure coordinator, (Mr Mark Brennan, Small BusinessCommissioner, Level 4, 55 Collins Street, Melbourne, VIC3000, ph (03) 9651 9967).

All correspondence, phone calls and emails frominternal or external whistleblowers will be referred to the Small Business Commissioner as protecteddisclosure coordinator.

Where a person is contemplating making a disclosureand is concerned about approaching the Small BusinessCommissioner in the workplace, he or she can call theSmall Business Commissioner and request a meeting in a discreet location away from the workplace.

6. ROLES AND RESPONSIBILITIES

6.1 StaffStaff are encouraged to report known or suspectedincidences of improper conduct or detrimental action in accordance with these procedures.

All staff of the OSBC have an important role to play insupporting those who have made a legitimate disclosure.They must refrain from any activity that is, or could beperceived to be, victimisation or harassment of a personwho makes a disclosure. Furthermore, they shouldprotect and maintain the confidentiality of a person they know or suspect to have made a disclosure.

6.2 The Small Business CommissionerThe Small Business Commissioner will:

• Be a contact point for general advice about theoperation of the Act for any person wishing to make a disclosure about improper conduct or detrimentalaction;

• Make arrangements for a disclosure to be madeprivately and discreetly and, if necessary, away fromthe workplace;

• Receive any disclosure made orally or in writing (from internal and external whistleblowers);


5.2 Alternative contact personsA disclosure about improper conduct or detrimentalaction by the OSBC or its staff may also be made directly to the Ombudsman:

The Ombudsman VictoriaAddressLevel 22, 459 Collins StreetMelbourne Victoria 3000(DX 210174)Internetwww.ombudsman.vic.gov.auEmailombudvic@ombudsman.vic.gov.auPhone(03) 9613 6222Toll Free: 1800 806 314

OmbudsmanMr George BrouwerPhone(03) 9613 6202

The following table sets out where disclosures aboutpersons other than employees of the OSBC should be made.

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PERSON WHO IS THE SUBJECT PERSON/BODY TO WHOM THEOF THE DISCLOSURE DISCLOSURE MUST BE MADE

Employee of a public body That public body or the Ombudsman

Member of Parliament (Legislative Assembly) Speaker of the Legislative Assembly

Member of Parliament (Legislative Council) President of the Legislative Council

Councillor The Ombudsman

Chief Commissioner of Police The Ombudsman or Deputy Ombudsman

Member of the police force The Ombudsman, Deputy Ombudsman or Chief Commissioner of Police


• Commit to writing any disclosure made orally;• Impartially assess the allegation and determine

whether it is a disclosure made in accordance with Part 2 of the Act (that is, ‘a protected disclosure’);

• Take all necessary steps to ensure the identity of thewhistleblower and the identity of the person who is the subject of the disclosure are kept confidential;

• Receive all phone calls, emails and letters frommembers of the public or staff seeking to make adisclosure;

• Impartially assess each disclosure to determinewhether it is a public interest disclosure;

• Refer all public interest disclosures to theOmbudsman;

• Be responsible for carrying out an investigationreferred to the public body by the Ombudsman;

• Appoint a welfare manager to support thewhistleblower and to protect him or her from anyreprisals;

• Advise the whistleblower of the progress of aninvestigation into the disclosed matter;

• Establish and manage a confidential filing system; and• Collate and publish statistics on disclosures made.

6.3 Welfare managerThe welfare manager is responsible for looking after the general welfare of the whistleblower. The welfaremanager will:

• Examine the immediate welfare and protection needsof a whistleblower who has made a disclosure andseek to foster a supportive work environment;

• Advise the whistleblower of the legislative andadministrative protections available to him or her;

• Listen and respond to any concerns of harassment,intimidation or victimisation in reprisal for makingdisclosure; and

• Ensure the expectations of the whistleblower arerealistic.

7. CONFIDENTIALITYThe OSBC will take all reasonable steps to protect theidentity of the whistleblower. Maintaining confidentialityis crucial in ensuring reprisals are not made against

a whistleblower.

The Act requires any person who receives informationdue to the handling or investigation of a protecteddisclosure, not to disclose that information except incertain limited circumstances. Disclosure of informationin breach of section 22 constitutes an offence that ispunishable by a maximum fine of 60 penalty units($6000) or six months imprisonment or both.

The circumstances in which a person may discloseinformation obtained about a protected disclosureinclude:

• Where exercising the functions of the public bodyunder the Act;

• When making a report or recommendation under the Act;

• When publishing statistics in the annual report of apublic body; and

• In criminal proceedings for certain offences in the Act.

However, the Act prohibits the inclusion of particulars inany report or recommendation that is likely to lead to theidentification of the whistleblower. The Act also prohibitsthe identification of the person who is the subject of thedisclosure in any particulars included in an annualreport.

The OSBC will ensure all files, whether paper orelectronic, are kept in a secure room and can only beaccessed by the Small Business Commissioner orwelfare manager (in relation to welfare matters). Allprinted material will be kept in files that are clearlymarked as a Whistleblower Protection Act matter, andwarn of the criminal penalties that apply to anyunauthorised divulging information concerning aprotected disclosure. All electronic files will be producedand stored on a stand-alone computer and be givenpassword protection. Backup files will be kept on floppydisc. All materials relevant to an investigation, such astapes from interviews, will also be stored securely withthe whistleblower files.

The OSBC will not email documents relevant to awhistleblower matter and will ensure all phone calls and meetings are conducted in private.


8. COLLATING AND PUBLISHING STATISTICSThe Small Business Commissioner will establish asecure register to record the information required to bepublished in the annual report, and to generally keepaccount of the status of whistleblower disclosures. Theregister will be confidential and will not record anyinformation that may identify the whistleblower.

The register will contain the following information:

• The number and types of disclosures made to publicbodies during the year;

• The number of disclosures referred to the Ombudsmanfor determination as to whether they are public interestdisclosures;

• The number and types of disclosed matters referred tothe public body by the Ombudsman for investigation;

• The number and types of disclosures referred by thepublic body to the Ombudsman for investigation;

• The number and types of investigations taken overfrom the public body by the Ombudsman;

• The number of requests made by a whistleblower tothe Ombudsman to take over an investigation by thepublic body;

• The number and types of disclosed matters that thepublic body has declined to investigate;

• The number and types of disclosed matters that weresubstantiated upon investigation and the action takenon completion of the investigation; and

• Any recommendations made by the Ombudsman thatrelate to the public body.

9. RECEIVING AND ASSESSING DISCLOSURES

9.1 Has the disclosure been made in accordance with Part 2 of the Act?Where a disclosure has been received by the SmallBusiness Commissioner, he will assess whether thedisclosure has been made in accordance with Part 2 of the Act and is, therefore, a protected disclosure.

9.1.1 Has the disclosure been made to the appropriateperson?

For the disclosure to be responded to by the OSBC, itmust concern a staff member or officer of the OSBC. Ifthe disclosure concerns an employee, officer or memberof another public body, the person who has made thedisclosure must be advised of the correct person or bodyto whom the disclosure should be directed. (See thetable in 5.2). If the disclosure has been madeanonymously, it should be referred to the Ombudsman.

9.1.2 Does the disclosure contain the essentialelements of a protected disclosure?

To be a protected disclosure, a disclosure must satisfy the following criteria:

• Did a natural person (that is, an individual personrather than a corporation) make the disclosure?

• Does the disclosure relate to conduct of a public bodyor public officer acting in their official capacity?

• Is the alleged conduct either improper conduct ordetrimental action taken against a person in reprisalfor making a protected disclosure?

• Does the person making a disclosure have reasonablegrounds for believing the alleged conduct hasoccurred?

Where a disclosure is assessed to be a protecteddisclosure, it is then assessed as to whether it is a public interest disclosure.

Where a disclosure is assessed not to be a protecteddisclosure, the matter does not need to be dealt withunder the Act. The Small Business Commissioner willthen decide how to respond to the matter.

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9.2 Is the disclosure a public interest disclosure?Where the Small Business Commissioner has received adisclosure that has been assessed to be a protecteddisclosure, he will determine whether the disclosureamounts to a public interest disclosure. This assessmentwill be made within 45 days of the receipt of the disclosure.

In reaching a conclusion as to whether a protecteddisclosure is a public interest disclosure, the SmallBusiness Commissioner will consider whether thedisclosure shows, or tends to show, that the publicofficer to whom the disclosure relates:

• Has engaged, is engaging or proposes to engage inimproper conduct in his or her capacity as a publicofficer; or

• Has taken, is taking or proposes to take detrimentalaction in reprisal for the making of the protecteddisclosure.

Where the Small Business Commissioner concludes that the disclosure amounts to a public interestdisclosure, he will:

• Notify the person who made the disclosure of thatconclusion; and

• Refer the disclosure to the Ombudsman for formaldetermination as to whether it is indeed a publicinterest disclosure.

Where the Small Business Commissioner concludes thatthe disclosure is not a public interest disclosure, he will:

• Notify the person who made the disclosure of thatconclusion; and

• Advise that person that he or she may request thepublic body to refer the disclosure to the Ombudsmanfor a formal determination as to whether the disclosureis a public interest disclosure, and that this requestmust be made within 28 days of the notification.

In either case, the Small Business Commissioner willmake the notification and the referral within 14 days of theconclusion being reached by the public body. Notification tothe whistleblower is not necessary where the disclosurehas been made anonymously.

10. INVESTIGATIONS

10.1 IntroductionWhere the Ombudsman refers a protected disclosure tothe OSBC for investigation, the Small BusinessCommissioner will investigate the matter.

The objectives of an investigation will be:

• To collate information relating to the allegation asquickly as possible. This may involve taking steps toprotect or preserve documents, materials andequipment;

• To consider the information collected and to drawconclusions objectively and impartially;

• To maintain procedural fairness in the treatment ofwitnesses and the person who is the subject of thedisclosure; and

• To make recommendations arising from theconclusions drawn concerning remedial or otherappropriate action.

10.2 Terms of referenceBefore commencing an investigation, the Small BusinessCommissioner will draw up terms of reference, whichwill set a date by which the investigation report is to beconcluded, and will describe the resources available tohim to complete the investigation within the time set.The Small Business Commissioner may, if reasonable,extend the time for completion of the investigation. The Ombudsman will be kept informed of generalprogress in the investigation.


10.3 Investigation planThe investigation plan will list the issues to besubstantiated and describe the avenue of inquiry. It willaddress the following issues:

• What is being alleged?• What are the possible findings or offences?• What are the facts in issue?• How is the inquiry to be conducted? • What resources are required?

At the commencement of the investigation, thewhistleblower should be:

• Notified that the Small Business Commissioner willconduct the investigation;

• Asked to clarify any matters; and• Provide any additional material he or she might have.

The Small Business Commissioner will be sensitive tothe whistleblower’s possible fear of reprisals and will beaware of the statutory protections provided to thewhistleblower.

10.4 Natural justiceThe principles of natural justice will be followed in anyinvestigation of a public interest disclosure. The principlesof natural justice concern procedural fairness and ensurea fair decision is reached by an objective decision maker.Maintaining procedural fairness protects the rights ofindividuals and enhances public confidence in the process.

The OSBC will have regard to the following issues inensuring procedural fairness:

• The person who is the subject of the disclosure isentitled to know the allegations made against him or herand must be given the right to respond. (This does notmean the person must be advised of the allegation assoon as the disclosure is received or the investigationhas commenced);

• If the Small Business Commissioner is contemplatingmaking a report adverse to the interests of any person,that person should be given the opportunity to putforward further material that may influence theoutcome of the report and that person’s defence shouldbe fairly set out in the report;

• All relevant parties to a matter shouldbe heard and all submissions should be considered;

• A decision should not be made until all reasonableinquiries have been made;

• The Small Business Commissioner should not have apersonal or direct interest in the matter beinginvestigated;

• All proceedings must be carried out fairly and withoutbias. Care should be taken to exclude perceived biasfrom the process; and

• The Small Business Commissioner must be impartialin assessing the credibility of the whistleblowers andany witnesses. Where appropriate, conclusions as tocredibility should be included in the investigationreport.

10.5 Conduct of the investigationThe Small Business Commissioner will makecontemporaneous notes of all discussions and phonecalls, and all interviews with witnesses will be taped. Allinformation gathered in an investigation will be storedsecurely. Interviews will be conducted in private and theSmall Business Commissioner will take all reasonablesteps to protect the identity of the whistleblower. Wheredisclosure of the identity of the whistleblower cannot beavoided, due to the nature of the allegations, the SmallBusiness Commissioner will warn the whistleblower andhis or her welfare manager of this probability.

It is in the discretion of the Small BusinessCommissioner to allow any witness to have legal orother representation or support during an interview. If awitness has a special need for legal representation orsupport, permission should be granted.

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10.6 Referral of an investigation to the OmbudsmanThe Small Business Commissioner will make a decisionregarding the referral of an investigation to theOmbudsman where:

• The investigation is being obstructed by, for example,the non-cooperation of key witnesses; or

• The investigation has revealed conduct that mayconstitute a criminal offence.

10.7 Reporting requirementsThe Small Business Commissioner will ensure thewhistleblower is kept regularly informed concerning thehandling of a protected disclosure and an investigation.

The Small Business Commissioner will report to theOmbudsman about the progress of an investigation.

Where the Ombudsman or the whistleblower requestsinformation about the progress of an investigation, thatinformation will be provided within 28 days of the date ofthe request.

11. ACTION TAKEN AFTER AN INVESTIGATION

11.1 Final reportAt the conclusion of the investigation, the SmallBusiness Commissioner will finalise a written report ofhis findings which will contain:

• The allegation/s:• An account of all relevant information received and, if

the Small Business Commissioner has rejectedevidence as being unreliable, the reasons for thisopinion being formed;

• The conclusions reached and the basis for them; and• Any recommendations arising from the conclusions.

Where the Small Business Commissioner has found thatthe conduct disclosed by the whistleblower has occurred,recommendations made by the Small BusinessCommissioner will include:

• The steps that need to be taken by the OSBC to preventthe conduct from continuing or occurring in the future;and

• Any action that should be taken by the OSBC to remedyany harm or loss arising from the conduct. This actionmay include bringing disciplinary proceedings againstthe person responsible for the conduct, and referringthe matter to an appropriate authority for furtherconsideration.

The report will be accompanied by:

• The transcript or other record of any oral evidencetaken, including tape recordings; and

• All documents, statements or other exhibits receivedby the officer and accepted as evidence during thecourse of the investigation.

Where the Small Business Commissioner’s report is toinclude an adverse comment against any person, thatperson will be given the opportunity to respond and hisor her defence will be fairly included in the report.

The report will not disclose particulars likely to lead tothe identification of the whistleblower.

11.2 Action to be takenIf the Small Business Commissioner is satisfied that theinvestigation has found that the disclosed conduct hasoccurred, he will establish and implement actionsnecessary to prevent the conduct from continuing oroccurring in the future, and actions necessary to remedyany harm or loss arising from the conduct.

The Small Business Commissioner will provide a writtenreport to the Minister for Small Business, theOmbudsman and the whistleblower setting out thefindings of the investigation and any remedial stepstaken.

Where the investigation concludes that the disclosedconduct did not occur, the Small BusinessCommissioner will report these findings to theOmbudsman and to the whistleblower.

12. MANAGING THE WELFARE OF THEWHISTLEBLOWER

12.1 Commitment to protecting whistleblowersThe OSBC is committed to the protection of genuinewhistleblowers against detrimental action taken inreprisal for the making of protected disclosures. The Small Business Commissioner is responsible for ensuring whistleblowers are protected from directand indirect detrimental action, and that the culture ofthe workplace is supportive of protected disclosuresbeing made.


The Small Business Commissioner will appoint a welfaremanager to all whistleblowers who have made aprotected disclosure. The welfare manager will:

• Examine the immediate welfare and protection needsof a whistleblower who has made a disclosure and,where the whistleblower is an employee, seek to fostera supportive work environment;

• Advise the whistleblower of the legislative andadministrative protections available to him or her;

• Listen and respond to any concerns of harassment,intimidation or victimisation in reprisal for makingdisclosure;

• Keep a contemporaneous record of all aspects of thecase management of the whistleblower including allcontact and follow-up action; and

• Ensure the expectations of the whistleblower arerealistic.

All employees will be advised that it is an offence for aperson to take detrimental action in reprisal for aprotected disclosure. The maximum penalty is a fine of240 penalty units ($24,000) or two years imprisonment or both. The taking of detrimental action in breach ofthis provision can also be grounds for making adisclosure under the Act and can result in an investigation.

• Detrimental action includes:• Causing injury, loss or damage;• Intimidation or harassment; and

Discrimination, disadvantage or adverse treatment inrelation to a person’s employment, career, profession,trade or business (including the taking of disciplinaryaction).

12.2 Keeping the whistleblower informedThe Small Business Commissioner will ensure thewhistleblower is kept informed of action taken in relation to his or her disclosure, and the time frames that apply.The whistleblower will be informed of the objectives ofan investigation, the findings of an investigation, and thesteps taken by the OSBC to address any improperconduct that has been found to have occurred. Thewhistleblower will be given reasons for decisions madeby the Small Business Commissioner in relation to aprotected disclosure. All communication with thewhistleblower will be in plain English.

12.3 Occurrence of detrimental actionIf a whistleblower reports an incident of harassment,discrimination or adverse treatment that would amountto detrimental action taken in reprisal for the making of the disclosure, the welfare manager will:

• Record details of the incident;• Advise the whistleblower of his or her rights under

the Act; and• Advise the Small Business Commissioner of the

detrimental action.

The taking of detrimental action in reprisal for themaking of a disclosure can be an offence against the Act as well as grounds for making a further disclosure.Where such detrimental action is reported, the SmallBusiness Commissioner will assess the report as a newdisclosure under the Act. Where the Small BusinessCommissioner is satisfied that the disclosure is a publicinterest disclosure, he or she will refer it to theOmbudsman. If the Ombudsman subsequentlydetermines the matter to be a public interest disclosure,the Ombudsman may investigate the matter or refer it toanother body for investigation as outlined in the Act.

12.4 Whistleblowers implicated in improper conductWhere a person who makes a disclosure is implicated inmisconduct, the OSBC will handle the disclosure andprotect the whistleblower from reprisals in accordancewith the Act, the Ombudsman’s guidelines and theseprocedures. The OSBC acknowledges that the act ofwhistleblowing should not shield whistleblowers fromthe reasonable consequences flowing from anyinvolvement in improper conduct. Section 17 of the Actspecifically provides that a person’s liability for his or herown conduct is not affected by the person’s disclosure of that conduct under the Act. However, in somecircumstances, an admission may be a mitigating factorwhen considering disciplinary or other action.

The Small Business Commissioner will decide whetherdisciplinary or other action will be taken against awhistleblower. Where disciplinary or other action relatesto conduct that is the subject of the whistleblower’sdisclosure, the disciplinary or other action will only betaken after the disclosed matter has been appropriatelydealt with.

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In all cases where disciplinary or other action is beingcontemplated, the Small Business Commissioner mustbe satisfied that it has been clearly demonstrated that:

• The intention to proceed with disciplinary action is notcausally connected to the making of the disclosure (asopposed to the content of the disclosure or otheravailable information);

• There are good and sufficient grounds that would fullyjustify action against any non-whistleblower in thesame circumstances; and

• There are good and sufficient grounds that justifyexercising any discretion to institute disciplinary orother action.

The Small Business Commissioner will thoroughlydocument the process including recording the reasonswhy the disciplinary or other action is being taken, andthe reasons why the action is not in retribution for themaking of the disclosure. The Small BusinessCommissioner will clearly advise the whistleblower ofthe proposed action to be taken, and of any mitigatingfactors that have been taken into account.

13. MANAGEMENT OF THE PERSON AGAINST WHOM A DISCLOSURE HAS BEEN MADEThe OSBC recognises that employees against whomdisclosures are made must also be supported during the handling and investigation of disclosures. The OSBC will take all reasonable steps to ensure theconfidentiality of the person who is the subject of thedisclosure during the assessment and investigationprocess. Where investigations do not substantiatedisclosures, the fact that the investigation has beencarried out, the results of the investigation, and theidentity of the person who is the subject of the disclosure will remain confidential.

The Small Business Commissioner will ensure theperson who is the subject of any disclosure investigatedby or on behalf of a public body is:

• Informed as to the substance of the allegations;• Given the opportunity to answer the allegations

before a final decision is made;• Informed as to the substance of any adverse comment

that may be included in any report arising from theinvestigation; and has

• His or her defence set out fairly in any report.

Where the allegations in a disclosure have beeninvestigated, and the person who is the subject of thedisclosure is aware of the allegations or the fact of theinvestigation, the Small Business Commissioner willformally advise the person who is the subject of thedisclosure of the outcome of the investigation.

The OSBC will give its full support to a person who is thesubject of a disclosure where the allegations containedin a disclosure are clearly wrong or unsubstantiated. Ifthe matter has been publicly disclosed, the SmallBusiness Commissioner will consider any request bythat person to issue a statement of support setting outthat the allegations were clearly wrong orunsubstantiated.

14. CRIMINAL OFFENCESThe OSBC will ensure officers appointed to handleprotected disclosures and all other employees are awareof the following offences created by the Act:

1. It is an offence for a person to take detrimental actionagainst a person in reprisal for a protected disclosurebeing made. The Act provides a maximum penalty of a fine of 240 penalty units ($24,000) or two yearsimprisonment or both.

2. It is an offence for a person to divulge informationobtained as a result of the handling or investigation of a protected disclosure without legislative authority.The Act provides a maximum penalty of 60 penaltyunits ($6,000) or six months imprisonment or both.

3. It is an offence for a person to obstruct theOmbudsman in performing his responsibilities underthe Act. The Act provides a maximum penalty of 240penalty units ($24,000) or two years imprisonment or both.

4. It is an offence for a person to knowingly provide false information under the Act with the intention thatit be acted on as a disclosed matter. The Act providesa maximum penalty of 240 penalty units ($24,000) ortwo years imprisonment or both.

15. REVIEWThese procedures will be reviewed annually to ensurethey meet the objectives of the Act and accord with theOmbudsman’s guidelines.


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PUBLISHED BY THE OFFICE OF THE VICTORIANSMALL BUSINESS COMMISSIONER October 2004

Annual Report 2003/04

The report is available at www.sbc.vic.gov.au

© State of Victoria 2004

This publication is copyright. No part may bereproduced by any process except in accordance with the provisions of the Copyright Act 1968.

AUTHORISED BY THE OFFICE OF THE VICTORIANSMALL BUSINESS COMMISSIONER Level 4 55 Collins Street Melbourne Victoria 3000Telephone: 13 22 15Toll Free: 1800 136 034Investigations enquiries: 03 9651 9316Email: [email protected]: www.sbc.vic.gov.au

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