Cheng v Sydney Markets Ltd; Gao v Sydney Markets Ltd; Weng v Sydney Markets Ltd [2024] NSWSC 755
A recent court case has highlighted the limited protection available to tenants who receive relocation notices under NSW retail leasing laws.
Part of Paddy’s Market was recently redeveloped into the new Hay St Market, a modern food and beverage hub. To enable the redevelopment, the landlord issued relocation notices to 25 stallholders under section 34A of the Retail Leases Act 1994 (NSW). Three of these tenants unsuccessfully challenged the validity of the notices in the NSW Supreme Court in Cheng v Sydney Markets Ltd; Gao v Sydney Markets Ltd; Weng v Sydney Markets Ltd [2024] NSWSC 755.
What Does Section 34A Require?
Under section 34A, a landlord can relocate a tenant if:
- there is a relocation clause in the lease;
- there is a genuine proposal to refurbish, redevelop, or extend the premises, with sufficient detail provided;
- the tenant is given at least three months’ written notice, including details of the alternative premises;
- the tenant is offered a new lease on the same terms as their current lease (with rent adjusted for any difference in value), for the remainder of the original lease term.
What Did the Court Decide?
The Court considered the following issues and held that:
Q1. Were the relocation notices valid?
The relocation notices were valid because they included enough detail about a genuine redevelopment proposal. Full details of the proposal did not have to be included at the same time as the notice and the timing of the redevelopment did not need to be precise.
Q2. Was the redevelopment proposal genuine?
Yes, other factors were considered to determine the genuineness of the redevelopment proposal including the media coverage, the submission and availability of the development application, the prepared plans and reports and the approval by the head lessee.
Q3. Do the alternative premises offered needed to be commercially similar to the current ones?
No, as long as the tenant can operate their existing business in the alternative premises.
Key takeaway
Relocation clauses are standard in many retail leases but are often not closely reviewed until a tenant receives a relocation notice. This case shows how much flexibility landlords have under current laws, as they can issue valid three-month notices without providing full details or formal development approval upfront. Even minimal evidence of a genuine reason can make the notice valid, leaving tenants with few defences unless specific lease terms apply.
Vincent Young specialises in commercial, retail and industrial leases can help you to minimise the risk involved.
If you would like to discuss this article with us, please contact Venice Leung, Senior Associate or Petar Vladeta, Senior Legal Consultant on (02) 9261 5900.