Proposed new standard condition of pastoral leases

Previously, pastoral lease terms and condition were set out in schedules attached to now obsolete legislation. Under the Land Administration Act 1997 (LAA) there is no such form and currently the Minister for Lands has wide powers to determine the terms and conditions of each pastoral lease on a case-by-case basis as it is granted or renewed.

The changes to the LAA in 2023 introduced an ability for Parliament to proclaim standard pastoral lease terms and conditions in regulation. Once regulations are proclaimed these standard terms and conditions will be applied to all grants and renewals of pastoral leases.

Yes, part of the feedback from the 2014 pastoral lease review process was the expressed concerns of the pastoral industry, banks, financial advisors, and insurance companies pertaining to the then three-month consultation period. This timeframe was deemed to be insufficient, because a significant number of participants could not consult with their legal representatives, in order to provide meaningful comment.

DPLH’s aim is to make sure the new proposed pastoral lease is a workable document for government, pastoral lessees, and key stakeholders such as financiers and insurance companies.

Therefore DPLH is undertaking consultation and engagement over the coming 12-month period commencing April 2024, with a target audience consisting of representative bodies from the pastoral industry, pastoral lessees, banks and finance providers and insurance companies.

You are encouraged to email any questions you may have and/or provide feedback via NPLConsultation@dplh.wa.gov.au. Submissions are due by 16 December 2024. 

The pastoral industry is one of Western Australia’s oldest industries and continues to make a significant contribution to regional economic activity.

Pastoral leases are predominantly used for growing cattle and sheep for meat and wool. Many pastoralists have diversified into other activities, including horticulture, aquaculture, carbon capture and tourism.

To ensure pastoral lessees are able to maintain and build their businesses in this rapidly changing environment, it is imperative that the pastoral lease reflects modern leasing practices.

The 2023 amendments to the Land Administration Act 1997 (LAA) allows for standard pastoral lease terms and conditions to be prescribed in regulations. The intention is that all future pastoral leases will be renewed on these prescribed terms and conditions and will provide a consistency across the pastoral industry. This provides an opportunity to revisit the 2015 lease forms and develop a consistent, modernised, concise, suitable lease document available to all stakeholders and setting out each parties’ rights and responsibilities.

The drafted regulations will be subsequently proclaimed during the second half of 2025, when approved by the Minister for Lands and State Government.

The two existing pastoral lease forms, which came about as a result of a 2014 review, are no longer satisfactory or fit for purpose. The forms reflect inconsistencies and lack modern lease provisions.

The first lease form 2015 Pastoral Lease - Option 1 refers for its terms and conditions to an expired lease document which was granted under now obsolete legislation.

The second lease form 2015 Pastoral Lease - Option 2 attempted to modernise the lease terms and conditions but omitted some standard commercial terms and conditions.

DPLH has built on the work undertaken as part of the 2015 lease renewals.

After reviewing previous 2014 consultation material, associated documents, and the terms currently used in a contemporary modern lease, DPLH decided that the 2015 Pastoral Lease - Option 2 pastoral lease remains generally suitable, with some specific conditions such as a limited scope indemnity provision (Clause 9.1), appropriate insurances given the nature of the activities on leases (Clause 9.2), and a more comprehensive clause dealing with the costs a lessee may incur over the term of the lease (Clause 4.2) needed to be included.

There are also minor changes to definitions resulting from recent legislative amendments and changes to clarify or update legislation or terminology. There are also changes to reflect application of the lease to future renewals and leases.

No, DPLH believes the new proposed pastoral lease terms and conditions will reduce red tape and deliver a range of benefits that will provide greater opportunities and more security for the pastoral industry.
Having all pastoral leases with consistent terms and conditions which reflect modern contemporary leasing practices is likely to reduce administrative costs and provide a consistent basis for financiers and insurance companies alike.

DPLH understands the economic costs red tape can have on industries and how it can prevent or make it a lot more difficult for a business to grow and succeed. 

Additionally, the 2023 amendments to the Land Administration Act 1997 (LAA) were introduced to reduce red tape and facilitate a more effective administration of Crown land. For example the ability to transfer pastoral permits with a pastoral lease is a new innovation, which have been welcomed by the pastoral industry, which previously had the time and expense of having to apply for a new pastoral permit if the pastoral lease changed hands.

The State Government is committed to reducing red tape to ensure a more prosperous and viable pastoral industry.

No, your current lease terms will only change on a renewal or extension.

The proposed lease terms and conditions in their entirety are attached below. To assist you the additional indemnity insurance and costs clauses are set out in full below:

4   OTHER PAYMENTS BY LESSEE

4.2 LEGAL REPRESTRATION AND LESSOR'S COSTS AND DUTY 

(a) The Lessee must pay to the Lessor the Lessor’s reasonable legal and other costs and expenses arising out of this Lease, including those incurred:

(i) in relation to an assignment, subletting or surrender of this Lease;

(ii) in considering a request for any consent or approval by the Minister;

(iii) as a result of a default by the Lessee in performance of the Lessee’s obligations under this Lease; and

(iv) as a result of the exercise of any right, power, privilege, authority or remedy of the Lessor or the Minister in respect of this Lease, including the preparation and service of any notice referred to in clause 13.

(b) The Lessee is to pay or reimburse the Lessor on demand for:

(i) all duty, penalties or fines payable under the Duties Act 2008 in respect of any dutiable transaction or other matter to which this Lease and any extension of the Term of this Lease relates; and

(ii) all costs relating to the registration of this Lease and any extension of the Term of this Lease.

9. INDEMNITIES, RELEASE AND INSURANCE

9.1      INDEMNITY

The Lessee:

(a) agrees to occupy, use and keep the Land at the risk of the Lessee;

(b) releases and indemnifies and will keep indemnified the Lessor, the Lessor’s Agents and the Minister from and against all actions, claims, writs, proceedings, suits, demands, losses, damages, compensation, costs of remediation, legal costs, charges and expenses whatsoever which at any time may be brought, maintained or made against the Lessor, the Lessor’s Agents and the Minister arising from or relating to:

(i) the use or occupation of the Land and Improvements by the Lessee or the Lessee's Agents;

(ii) any work carried out by or on behalf of the Lessee on the Land or to the Improvements;

(iii) the Lessee's activities, operations, business or other use of the Land under the LAA, this Lease and any Permit;

(iv) the presence of any Contamination or Pollution in on or under the Land or the Surrounding Area caused or contributed to by the act, neglect or omission of the Lessee or the Lessee's Agent; and

(v) any default by the Lessee in the due and punctual performance, observance and compliance with any of the Lessee's covenants or obligations under this Lease and any Permit;

(vi) loss, damage or liability arising from the death of, injury to, or illness of, any person on the Land directly or indirectly caused by, arising out of, or in connection with the Lessee or the Lessee's Agents activities, operations, business or other use of the Land;

(vii) loss of, or damage to, the Improvements or the property of the Lessee including Stock, fixtures, fittings or other improvements on the Land, except to the extent that the same is caused by the negligence of the Lessor or the Lessor's Agents.

9.2          INSURANCE

(a) The Lessee must during the Term effect, maintain and keep current with an Insurer authorised to carry on an insurance business under the Insurance Act 1973 (Cth) and to the satisfaction of the Lessor, a public liability insurance policy in respect of the Land for the Insurance Amount for any one occurrence and unlimited in the aggregate during any one period of insurance and covers all claims and losses, consistent with usual prudent commercial practice, directly or indirectly caused by, arising out of, or in connection with the Lessee or the Lessee's Agents' activities, operations, business or other use of the Land:

(i) in respect of:

(A) the death of, or any injury or illness sustained by, any person;

(B) any loss, damage or destruction to any property including to the property of the Lessor; or

(C) the loss of use of any property, including the property of the Lessor; and

(ii) liability arising out of any Contamination or Pollution of a sudden and accidental nature (or such other form of insurance coverage as may become readily available from an Insurer carrying on business in Australia) during the Term, or of any Environmental Harm of the Land or the Surrounding Area.

(b) The Lessee must give to the Lessor a copy of the certificate of currency for the Insurance Policy on or before the Commencement Date, and the Lessee is to submit evidence to the Lessor on each anniversary of the date of execution of this Lease, or as otherwise requested by the Lessor or the Board, which shows that the Insurance Policy is still current.

(c) The Lessee must not, and must not permit the Lessee’s Agents to, do or omit to do any act or thing which adversely affects the continuation, validity, extent of cover or ability to make a claim under any Insurance Policy.

Consistent with modern business practices and risk management the lessee is required to take out insurances relevant to the activities carried out on the land.
The requirement to take out and maintain insurances is consistent with prudent business practices and a requirement also imposed by financiers.

DPLH is seeking the comments of the insurance industry in relation to this clause and in particular the usual and necessary insurances, coverage and amounts given the nature of the activities and differing scale of pastoral operations.

The indemnity provision apportions risk and loss consistent with modern lease terms and business practices.
The lessee acknowledges that it occupies the land at its own risk and releases and indemnifies the lessor in respect of claims and losses arising from the lessee’s occupation and activities on the land. This includes any contamination or pollution it causes or contributes to and losses arising from a breach of the lease. The lessee is not liable under the indemnity to the extent the lessor causes or contributes to that loss. 
The scope of the indemnity is limited to the lessees’ actions and activities and does not extend to the actions of uninvited third parties or other tenure holders. 

This clause has been expanded to provide a more comprehensive description and clarity in relation to the possible costs a lessee may be required to pay the lessor over the term of the lease in addition to initial lease preparation and registration fees.
For example the reasonable legal and other costs relating to a transfer or surrender of the lease.

We are consulting with you now so that concerns raised by the pastoral industry can be considered and any changes made to ensure a consistent workable document is achieved prior to the lease terms being prescribed in regulation.

Yes, they can be changed by Parliament if new regulations are proclaimed in the future. However no changes will be made to existing leases.

Yes, both sets of terms and conditions will apply until the second lease comes up for renewal.

The terms and conditions will continue to be at the discretion of the then Minister for Lands on renewal and until then your current lease terms and conditions will continue to apply.

Rent is determined under the Land Administration Act, not the lease terms and conditions.