ALFIFIO ANTONIO PATANE AND BIAGINA PATANE and ALL HOURS ENTERPRISES PTY LTD AND IAN DAVID BRIAN - [2005] WASAT 257

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)

CITATION: ALFIFIO ANTONIO PATANE AND BIAGINA PATANE and ALL HOURS ENTERPRISES PTY LTD AND IAN DAVID BRIAN [2005] WASAT 257

MEMBER: MR M SPILLANE (MEMBER)

HEARD: DETERMINED ON THE PAPERS

DELIVERED : 22 SEPTEMBER 2005

FILE NO/S: CC 506 of 2005

BETWEEN: ALFIFIO ANTONIO PATANE AND BIAGINA PATANE
Applicant
AND
ALL HOURS ENTERPRISES PTY LTD AND IAN DAVID BRIAN
Respondent

Catchwords:

Question arising under a lease - Management fees - Transitional provisions

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3, s 3(3), s 3(4), s 12(1f), s 16

Commercial Tenancy (Retail Shops) Agreements Amendment Act 1998 (WA), s 2, s 8, s 14, s 14(1), s 14(2)

State Administrative Tribunal Act 2004 (WA), s 60

Result:

Application successful

Category: B

Representation:

Counsel:

Applicant: Self-represented
Respondent: Selfrepresented

Solicitors:

Applicant: Self-represented
Respondent: Self-represented

Case(s) referred to in decision(s):

Nil

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of the Tribunal's decision

The issue in this matter related to a lease originally entered into in 1999 for premises in Bunbury.
Two questions were put to the Tribunal for determination namely:
1.Does the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) apply to the lease; and
2.Does the current lessee have to pay management fees even though the lease has been assigned?
Once the provisions of the Act were applied the answer to the first question was yes. However the answer to the second question was not straightforward. The reason being that the relevant issue was not that the lease had been assigned but rather whether s 12(1f) of the Act applied to the lease and would prevent the landlord from collecting Management fees from the tenant.
The Tribunal found that s 12(1f) of the Act does not apply to the lease for the reasons outlined.

Application

The application is brought by Alfifio Antonio Patane and Biagina Patane (applicants) pursuant to s 16 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Act) in respect of a lease originally entered into in 1999 between Vicliffe Investments Pty Ltd as landlord (Landlord) and Fast Eddies Café Australia Pty Ltd as tenant (Lease) as to whether:
1.The Act applies to the lease; and
2.The current lessee has to pay managing agents fees even though the lease has been assigned?
The matter has been determined on the papers filed pursuant to s 60 of the State Administrative Tribunal Act 2004 (WA).

Facts

The copy of the Lease furnished to the State Administrative Tribunal (the Tribunal) was undated, but stamped 4 May 1999 and related to premises described as Lot 32, Corner of Victoria and Clifton Street, Bunbury in certificate of title Vol 1055 Folio 94.
By deed of Amendment and Assignment again undated, but stamped 25 May 1999 (the First Assignment), the tenants interest was assigned from Fast Eddies Café Australia Pty Ltd to Jarelle Pty Ltd. The same deed contained an amendment to the terms of the Lease relating to the timing of the rent review.
A further Assignment of Lease, again undated but stamped 11 May 2001 (the Second Assignment), assigned the tenants interest from Jarelle Pty Ltd (Administrator Appointed) to Fast Eddies Café Australia Pty Ltd. It was also noted in that deed that the current applicants were now the owner of the premises and the landlord.
By deed of Assignment and Variation of Lease again undated, but stamped 18 June 2003 (the Third Assignment), the tenants interest was assigned from Fast Eddies Café Australia Pty Ltd to Global Food Services Pty Ltd. That deed also varied the original lease in respect of the goods and services tax.
By deed of assignment dated 30 January 2004 and stamped 3 February 2004 (the Fourth Assignment), the tenants interest was assigned from Global Food Services Pty Ltd to the first respondent, in this matter All Hours Enterprises Pty Ltd, with the second respondent Mr Ian Brian being one of the first respondent's guarantors.
Clause 5.2 of the Lease, under the heading "Operating Expenses" states:
"The term 'operating expenses' means the total of those amounts payable by the Landlord (or for which the Landlord may be or become liable) relating to each operating expenses year in connection with the Building whether or not by direct assessment being:
(1)rates and charges
…
(2)water, waste etc
…
(3)insurances
…
(4)light, fuel and power
…
(5)services
…
(6)management fees
…"
Under the sub heading 5.2(6) "management fees" the Lease states:
"fees paid to a Managing Agent for active management of the Premises for the benefit of both the Landlord and the Tenant."
Clause 5.4 of the Lease headed "Payment by the Tenant of Operating Expenses" states:
"The Tenant must pay each of the operating expenses to the landlord within 30 days after demand."
Although the Lease was stamped with the State Revenue stamp 4 May 1999, under the definitions clause 1.1 subparagraph (5) "Commencement Date" was described as meaning:
"The date of commencement of this Lease as stated in Item 5 of the Schedule;
At Item 5 of the Schedule under the heading "Commencement Date" the date inserted was 24 March 1999.
It should also be noted that under Item 6 of the same Schedule the termination date is 23 March 2009, which confirms that it was a Lease for ten years.
Submissions were also received from Mr D Buckley on 4 July 2005 and 5 August 2005 on behalf of the applicant who confirmed:
(a)The first tenant entered into possession of the premises under the lease on 24 March 1999 and the payment of rent commenced from that date; and
(b)The total retail floor to which the lease applies is 747.7 squared and therefore less than 1000 square metres.

Consideration

The Act was originally introduced as stated in its short title "to regulate commercial tenancy agreements relating to certain shops, to provide for determination of questions arising under such agreements, and for connected purposes".
"Retail shop" is defined in the Act as meaning:
"(a)…
(b)any premises not situated in a retail shopping centre that are used wholly or predominately for the carrying on of –
(i)a business involving the sale of goods by retail …"
"Retail shop lease" is defined as meaning a lease that provides for the occupation of a retail shop other than where:
"(a)the total retail floor area to which that lease applies (including, in the case of a building with 2 or more floor levels, the area of every floor level or part thereof to which that lease applies) exceeds 1000 square metres; or
(b)the lease is held by a corporation (within the meaning of the Corporations Act 2001 of the Commonwealth) that would not be eligible to be incorporated as a proprietary company, or that is held by a subsidiary of such a corporation."
Section 16 of the Act under the heading "Part III – Determination of questions" states:
"(1)Subject to section 11(5), a party to a retail shop lease may refer to the Tribunal any question between the parties which he believes to be a question arising under the lease …"
Section 3(3) of the Act states:
"(3) A reference in this Act to a question arising under a retail shop lease includes a reference to —
(a)…
(b)…
(c)…
(d)a matter that is in dispute between the landlord and the tenant under section 12 in relation to —
(i)operating expenses of the landlord under the retail shop lease generally;
…"
Based on the facts set out earlier and those portions of the Act just outlined it is possible to answer the first question put to the Tribunal which was:
1.Does the Act apply to the lease in question?
It is clear from a reading of the Lease that although the premises are not situated in a retail shopping centre they are used wholly or predominantly for the carrying on of a business involving the sale of goods by retail and are therefore a retail shop as defined in the Act.
Furthermore it has been confirmed that the total retail floor area to which that Lease applies is less than 1000 square metres.
In the circumstances the Tribunal is satisfied that the Lease is a Retail Shop Lease to which the Act applies.
The answer to Question 2 however is more complicated. What is important in assessing whether the landlord is entitled to charge and the tenant is obliged to pay management fees, is not whether the lease was assigned, but whether s 12(1f) of the Act applies to the lease.
Section 12(1f) of the Act, was introduced by the Commercial Tenancy (Retail Shops) Amendment Act 1998 (WA) (the Amendment Act) and stated:
"If there is a provision in a retail shop lease in respect of any premises to the effect that the tenant is obliged to make a payment to or for the benefit of the landlord for management fees, the landlord is not entitled to recover, and the tenant is not obliged to make, that payment."
The Amendment Act also introduced a definition of "management fees" into s 3 of the Act which states:
" 'Management Fees' means fees in respect of costs for or incidental to the collection of rent or other moneys or the management of premises including, but not limited to, such of those costs –
(a)in respect of –
(i)management offices;
(ii)plant and equipment;
(iii)staff; and
(b)as are of a kind prescribed;
…"
The effect of the amendments introduced by the Amendment Act prevented landlords, from charging and/or recouping from tenants, management fees of the type referred to at cl 5.2(6) of the lease.
However, the Amendment Act also contained saving/transitional provisions at s 14(1) and s 14(2), which in effect exempted particular leases from the provisions of s 12(1f).
Section 14(1) and s 14(2) state:
"(1)In this section –
'existing lease' in relation to a provision of this Act means a retail shop lease entered into –
(a)before the coming into operation of that provision; or
(b)pursuant to an option granted in a retail shop lease entered into before the coming into operation of that provision,
but does not include a retail shop lease to which the provision does not apply by reasons of section 4 of the principal Act;
'new lease' in relation to a provision of this Act means a retail shop lease entered into on or after the coming into operation of that provision and –
(a)includes an extension of the term of a retail shop lease entered into before the coming into operation of that provision if the extension is granted on or after the coming into operation of that provision; but
(b)does not include a retail shop lease so entered into pursuant to an option granted in a retail shop lease entered into before the coming into operation of that provision;
'retail shop lease' has the same meaning as it has in the principal Act.
(2)Subject to subsection (3), the principal Act as amended by a provision of this Act applies only to and in relation to a new lease and the principal Act applies to and in relation to an existing lease as if that provision had not been enacted."
In essence therefore, if the Lease in this case could be classified as an "existing lease" for the purposes of s 14(2) of the Amendment Act then s 12(1f) of the Act would not apply to it and the landlord could continue to charge management fees for the duration of the Lease regardless of whether the Lease had been assigned.
However, if the Lease is classified as a "New Lease" for the purposes of s 14(2) of the Amendment Act then s 12(1f) would apply and the landlord could not continue to charge management fees.
It is therefore critical, whether the Lease is an "existing lease" or a "new lease" for the purposes of s 14(2) of the Amendment Act:
There was also a rider in s 14(1) of the Amendment Act which stated that the definition of existing lease (set out above) does not include a retail shop lease to which the provisions do not apply by reason of s 4 of the Act. However, the Tribunal is satisfied that s 4 of the principal Act has no relevance to the present circumstances.
What is important in deciding whether the Lease is an "existing lease", is the reference in s 14(1) of the Amendment Act to "the coming into operation of that provision".
This is because, if the Lease came into existence and was an "existing lease" prior to the date of "the coming into operation of that provision", then the provisions of s 12(1f) of the Act as introduced by the Amending Act will not apply.
However, if the lease came into existence after the date of "the coming into operation of that provision" then it would be regarded as a "new lease" and the provisions of s 12(1f) would apply.
The words "coming into operation of that provision" are a reference to the date the provisions of the Amending Act became operational.
In this regard s 2 of the Amendment Act states:
"This Act comes into operation on such day as is, or days, as are respectively, fixed by proclamation."
At page 2629 of the Government Gazette of WA dated 18 June 1999 under the heading "Proclamations", the Governor fixed 1 July 1999 as the day on which the provisions of the Amendment Act came into operation.
In the circumstances therefore for the purposes of s 14 of the Amendment Act the reference to "coming into operation of that provision" is a reference to 1 July 1999.
Having confirmed that the relevant provisions came into operation on 1 July 1999 what then needs to be confirmed is that the Lease itself was entered into prior to that date and is therefore an "existing lease" for the purposes of s 14(1) of the Amendment Act and in respect of which the provisions of s 12(1f) of the Act would not apply.
In this regard s 3(4) of the Act states –
"(4)For the purposes of this Act a retail shop lease is entered into when —
(a)under the retail shop lease, the tenant enters into possession of, or commences to pay rent in respect of, the premises the subject thereof; or
(b)where the retail shop lease is in writing, all of the parties thereto have signed the retail shop lease,
whichever first occurs."
In the circumstances of the present case the Lease is undated but is stamped 4 May 1999, and the stamped copy has clearly been signed by all of the parties to the lease.
Furthermore, it has been confirmed by Mr Buckley the representative of the applicants that the tenant entered into possession on 24 March 1999 and commenced to pay rent in respect of the premises from that date.
In the circumstances the Tribunal is satisfied in respect of Question 2 that the Lease was entered into prior to 1 July 1999 and is therefore an "existing lease" for the purposes of s 14 of the Amendment Act and that the provisions of s 12(1f) of the Act do not apply to the Lease and the landlord is not prevented from collecting management fees.

Orders

1.The Lease is a Lease to which the Act applies.
2.The lessee is obliged to pay management fees as per the provisions of the Lease.

I certify that this and the preceding [49] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR M SPILLANE, MEMBER