Arise Joondalup Pty Ltd and Loveday Corp Pty Ltd - [2015] WASAT 92

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

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

CITATION: ARISE JOONDALUP PTY LTD and LOVEDAY CORP PTY LTD [2015] WASAT 92

MEMBER: MR D AITKEN (MEMBER)

HEARD: 12 FEBRUARY, 14 AND 15 MAY 2015

DELIVERED : 27 AUGUST 2015

FILE NO/S: CC 1142 of 2014

BETWEEN: ARISE JOONDALUP PTY LTD
Applicant
AND
LOVEDAY CORP PTY LTD
First Respondent
DANIEL LOVEDAY
Second Respondent
CRISTY LOVEDAY
Third Respondent

Catchwords:

Commercial tenancy Retail shop lease Whether lease was repudiated Whether surrender of lease was repudiated Effect of party electing to terminate a contract for repudiation Damages assessed as loss-of-bargain Whether a 'condition precedent' was a condition precedent to formation of surrender of lease or a condition of performance Whether a claim for damages by a landlord against a tenant for repudiation of a surrender of lease is 'a question arising under a lease' Whether a claim for damages by a landlord against a person under an indemnity in respect of a surrender of lease is 'a question arising under a lease'

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3, s 6, s 16(1), s 16D(1), s 25C, s 25D(1), s 26(1), s 27
State Administrative Tribunal Act 2004 (WA), s 51(1)
Retail Leases Act 1994 (NSW), s 63, s 70
Interpretation Act 1984 (WA), s 18, s 19

Result:

Application successful in part

Summary of Tribunal's decision:

The applicant as landlord and the first respondent as tenant entered into a 10 year 'retail shop lease' for the purposes of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). The lease document contained a guarantee and indemnity by the second and third respondents in favour of the applicant.
Within five months of the commencement of the lease, at the request of the first respondent, the applicant entered into a surrender of lease with the first respondent. The surrender of lease document contained an indemnity by the second and third respondents in favour of the applicant.
The surrender of lease contained two 'conditions precedent'. The first condition was that the applicant must enter into a lease with a new tenant within 12 months of the execution of the surrender of lease. The second condition was that the first respondent must pay the applicant's costs in relation to the preparation of the surrender of lease, re-leasing the premises and making good and altering the premises for the new tenant, and also pay any shortfall in the rent payable by the new tenant and that paid under the first respondent's lease.
The applicant entered into a lease with a new tenant and advised the first respondent of the surrender date and that the 'surrender fee' was a total of $21,268.50.
Prior to the surrender date the respondents commenced proceeding CC 591 of 2014 in the Tribunal seeking 'relief from the lease in its entirety'. That proceeding was dismissed due to the failure of the respondents to provide a certificate from the Small Business Commissioner under s 25C of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).
The applicant then gave a 'notice of termination' to the first respondent and retook possession of the premises. The applicant subsequently commenced this proceeding, referring a number of questions to the Tribunal under s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) regarding both the lease and the surrender of lease.
The applicant contended that as both of the 'conditions precedent' had not been fulfilled the surrender of lease did not take effect, the first respondent had repudiated the lease, the applicant had terminated the lease for that repudiation and the applicant was entitled to damages from the first respondent as tenant and from the second and third respondents as guarantors for that repudiation.
In the alternative, the applicant contended that if it was not entitled to damages for termination of the lease for repudiation by the first respondent then it was entitled to damages from the first respondent as tenant and from the second and third respondents as indemnifiers for repudiation of the surrender of lease by the first respondent.
In the course of determining the referred questions the Tribunal decided:
The first 'condition precedent' was a condition precedent to the formation of the surrender of lease and it had been fulfilled by the applicant entering into a lease with a new tenant, which brought the surrender of lease into existence.
The second 'condition precedent' was a condition of performance, not a condition precedent to the formation of the surrender of lease.
The lease had been surrendered before the respondents commenced proceeding CC 591 of 2014 and therefore that was not a repudiation of the lease and the issue of damages for repudiation of the lease did not arise.
The commencement of proceeding CC 591 of 2014 by the respondents was a repudiation of the surrender of lease because it evinced an intention to no longer be bound by the surrender of lease. The applicant terminated the surrender of lease for that repudiation by giving the 'notice of termination' to the first respondent and retaking possession of the premises.
The applicant's claim for damages against the first respondent for repudiation of the surrender of lease was 'a question arising under the lease' for the purposes of s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) and the applicant was entitled to 'loss-of-bargain' damages from the first respondent in the amount of the 'surrender fee' of $21,268.50.
The applicant's claim for damages against the second and third respondents, under the indemnity included in the surrender of lease document, for the repudiation of the surrender of lease was not 'a question arising under the lease' on the proper construction of s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). Therefore the Tribunal does not have jurisdiction to determine that matter.
The Tribunal ordered the first respondent to pay the amount of $21,268.50 to the applicant.

Category: B

Representation:

Counsel:

Applicant:     Mr I Freeman
First Respondent           :     In Person
Second Respondent      :     In Person
Third Respondent          :     In Person

Solicitors:

Applicant:     Lavan Legal
First Respondent           :     N/A
Second Respondent      :     N/A
Third Respondent          :     N/A

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

Meriton Properties Pty Ltd v DCM LeasesFive Pty Ltd [2009] NSWADT 121
Minister for Transport v Edgar Enterprises Pty Ltd [2006] WASC 27
The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1958) 157 CLR 17
Western Australian Planning Commission v Dungey [2010] WASC 52

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

On 7 October 2013 Arise Joondalup Pty Ltd (Arise Joondalup) as landlord and Loveday Corp Pty Ltd (Loveday Corp) as tenant entered into a lease (lease) of Unit 5 (premises) in Joondalup Square (centre), which is situated at 3 Sundew Rise Joondalup, for a term of 10 years which commenced on 4 November 2013.
Included in the lease document was a guarantee and indemnity (lease guarantee and indemnity) by Mr Daniel Loveday and Ms Cristy Loveday (together, the Lovedays) in favour of Arise Joondalup.
The business carried on by Loveday Corp traded as 'Rain Irrigation' and the permitted use of the premises under the lease was the retail sale of irrigation products and associated items.
It is common ground that the lease was a 'retail shop lease' for the purposes of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act).
On 25 March 2014 Arise Joondalup, Loveday Corp and the Lovedays entered into a surrender of lease (surrender of lease) for the surrender of the lease. Included in the surrender of lease document was an indemnity (surrender indemnity) by the Lovedays in favour of Arise Joondalup.
A dispute subsequently arose, which resulted in this proceeding being commenced.

The application

On 8 August 2014 Arise Joondalup made an application (application) under s 16(1) of the CTRSA Act referring the following question to the Tribunal:
[Should Loveday Corp] and [the Lovedays] pay to [Arise Joondalup] monies which are owing by reason of [Loveday Corp's] repudiation of the [lease] and repudiation of the [surrender of lease?].
The application was accompanied by a certificate issued by the Small Business Commissioner under s 25C of the CTRSA Act (s 25C certificate) which was a prerequisite to the making of the application under s 25D(1) of the CTRSA Act.
The s 25C certificate states that the nature of the dispute is 'retail leasing' and that alternative dispute resolution has failed to resolve the matter.

The history of the proceeding

A number of directions hearings were held, at which orders were made for the filing of documents by the parties and then listing the matter for a final hearing on 12 February 2015.
Various documents were filed by the parties, including:
•a statement of issues, facts and contentions (Arise SIFC) was filed by Arise Joondalup, together with amended grounds for the application and a bundle of documents;
•a response to the amended grounds for the application was filed by Loveday Corp;
•a response to the Arise SIFC was filed by Loveday Corp and the Lovedays (Loveday SIFC);
•a response to the Loveday SIFC was filed by Arise Joondalup; and
•witness statements.
At the commencement of the final hearing on 12 February 2015 the Tribunal referred to Minister for Transport v Edgar Enterprises Pty Ltd [2006] WASC 27 (Edgar), which was an appeal to the Supreme Court from a decision of the Tribunal in respect of questions which had been referred to the Tribunal under s 16(1) of the CTRSA Act. In Edgar Miller J stated at [49]:
To the extent that the Tribunal answered the questions by giving answers that did not specifically relate to the questions, there was an error of law.
The Tribunal drew to the attention of counsel for Arise Joondalup that the Arise statement of issues, facts and contention (Arise SIFC) states 'questions to be determined by the Tribunal' which are different to the question referred to the Tribunal in the application. The Tribunal said that if Arise Joondalup wants the questions stated in the Arise SIFC to be determined then the application needed to be amended to refer those questions to the Tribunal. Counsel for Arise Joondalup sought leave to amend the application accordingly, which was granted.
The Tribunal also told the parties that the Loveday statement of issues, facts and contentions (Loveday SIFC) raised matters and claims by Loveday Corp against Arise Joondalup (Loveday claims) which were not matters before the Tribunal, because they were not questions referred to the Tribunal in the application. The Tribunal said that Loveday Corp could lodge its own application in respect of the Loveday claims, but it had to obtain a s 25C certificate from the Small Business Commissioner before it could do that. Mr Loveday said that a s 25C certificate had been given to Loveday Corp by the Small Business Commissioner and during a break in the hearing he filed a copy of that certificate. During a further break in the hearing Loveday Corp then filed an application under s 6(1) and s 16D(1) of the CTRSA Act in respect of the Loveday claims (proceeding CC 199 of 2015).
The Tribunal told the parties that the s 25C certificates filed by both parties did not identify whether the questions stated in the Arise SIFC and the Loveday claims were part of the matter which was before the Small Business Commissioner. The nature of the dispute was only described in both of the s 25C certificates as being 'retail leasing', which the Tribunal considered to be too vague and gave rise to a concern that the Tribunal may not have jurisdiction to deal with the questions stated in the Arise SIFC and the Loveday claims.
The Tribunal decided that the final hearing of this proceeding should not continue until an amended s 25C certificate was filed confirming that the questions stated in the Arise SIFC were part of the matter which was before the Small Business Commissioner to ensure that the Tribunal has the jurisdiction to deal with those questions in accordance with s 25D(1) of the CTRSA Act.
The Tribunal also decided that it could hear proceeding CC 199 of 2015 regarding the Loveday claims at the same as the hearing of this proceeding, subject to Loveday Corp filing an amended s 25C certificate confirming that the Loveday claims were part of the matter which was before the Small Business Commissioner to ensure that the Tribunal has the jurisdiction to deal with those claims in accordance with s 25D(1) of the CTRSA Act.
The Tribunal therefore made orders to the following effect:
1)The application in this proceeding was amended to replace the referred question set out in the application with the questions stated in the Arise SIFC.
2)Arise Joondalup was required to file an amended certificate under s 25C of the CTRSA Act.
3)This proceeding and proceeding CC 199 of 2015 were to remain as separate proceedings, but be heard together, pursuant to s 51(1) of the State Administrative Tribunal Act 2004 (WA).
4)The final hearing was adjourned to 14 May 2015 for a duration of a further two days.
5)The matter was referred to mediation on 17 March 2015.
Arise Joondalup filed an amended s 25C certificate, which confirmed that the questions stated in the Arise SIFC were part of the matter which was before the Small Business Commissioner.
The mediation did not result in a resolution of the matter and the final hearing resumed on 14 May 2015 and concluded on the following day.
A large number of documents, including witness statements, were put into evidence and marked as Exhibits 'A' to 'W'.
The following persons were questioned regarding their witness statements:
Mr Adam Lisle (director of Arise Joondalup); Mr Paul Lampropoulos (director of development of Arise Joondalup); Ms Rhiahna Taylor (employee of Loveday Corp); Mr Peter Jenkyn (employee of Loveday Corp), Ms Loveday;and Mr Loveday.
At the conclusion of the final hearing the Tribunal made an order for the parties to file written closing submissions and reserved its decision, with effect from 2 June 2015.
Arise Joondalup filed its written closing submissions (Arise closing submissions) on 22 May 2015.
Loveday Corp filed its written closing submissions (Loveday closing submissions) on 29 May 2015.

The questions to be determined

The questions which Arise Joondalup has referred to the Tribunal for determination (referred questions) under s 16(1) of the CTRSA Act are:
1.Does this dispute concern a question arising under a retail shop lease pursuant to [s 16(1)(a) of the CTRSA Act]?
2.If the answer to question 1 is yes, then:
2.1Did [Loveday Corp] and [the Lovedays] repudiate the [lease], and was such repudiation accepted by [Arise Joondalup]?
2.2Did [Loveday Corp] and [the Lovedays] repudiate the [surrender of lease], and was such repudiation accepted by [Arise Joondalup]?
2.3If the answer to question 2.2 is yes, is [Arise Joondalup] entitled to claim damages against [Loveday Corp] and [the Lovedays] in relation to the repudiation (ie under clause 10.07 of the [lease])?
2.4If the answer to question 2.2 is no, then:
(a)are the parties still bound by the terms of the [surrender of lease] or the [lease]?
(b)are [Loveday Corp] and [the Lovedays] in breach of the [surrender of lease] or the [lease] (ie by failure to pay the surrender sum under the [surrender of lease], alternatively by reason of failure to pay rent under the [lease])?
(c)If the answer to question 2.2.4(b) is yes, then is [Arise Joondalup] entitled to damages as a result of the said breach?
3.If it is found that [Loveday Corp] and [the Lovedays] have repudiated and/or breached the [lease] or [surrender of lease] and that [Arise Joondalup] is entitled to damages for such breach, should [Arise Joondalup]'s damages be assessed in terms of [Arise Joondalup]'s notice issued under clause 10.10 of the [lease]?
4.If the answer to question 3 is no, how should [Arise Joondalup]'s damages be properly assessed?
5.What amount of damages should [Loveday Corp] and [the Lovedays] pay to [Arise Joondalup] pursuant to [s 26(1) of the CTRSA Act]?

Relevant provisions of the CTRSA Act

Section 16 of the CTRSA Act provides:
(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 and the Tribunal shall
(a)determine whether or not the question referred to the Tribunal is a question arising under the lease; and
(b)if it is such a question, hear and determine it.
(2)The matter for determination referred to in subsection (1)(a) may be determined by the Tribunal in such manner as it thinks fit, subject to each party being given an opportunity to make a written submission.
What constitutes 'a question arising under a retail shop lease' is dealt with in s 3(3) of the CTRSA Act, which provides:
A reference in this Act to a question arising under a retail shop lease includes a reference to
(a)a question whether or not a lease exists or has existed, including a question as to forfeiture; or
(b)a question whether or not a lease is or was a retail shop lease; or
(c)a question arising
(i)in relation to any communication, including a disclosure statement under section 6, between the parties to the retail shop lease, prior to their entry into the retail shop lease, which communication was material to the terms and conditions of the retail shop lease; or
(ii)in relation to the retail shop lease under a provision of this Act; or
(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; or
(ii)an allocation made under section 12(1)(b) of the proportion of those operating expenses; or
(iii)a determination of the relevant proportion for the purposes of section 12; or
(e)any other matter that is in dispute between the landlord and the tenant in connection with the retail shop lease, whether or not that matter is dealt with by the provisions of the retail shop lease.
Section 26(1) of the CTRSA Act provides:
(1)Without limiting any power to make an order that is conferred by the State Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make
(a)an order that requires a party to any matter before it to pay money to a person specified in the order; or
(b)an order for a party to any matter before it to do, or refrain from doing, anything specified in the order; or
(c)an order dismissing any matter before it.
(1a)The power in subsection (1)(b) includes power for the Tribunal to order the parties to enter into an agreement varying a retail shop lease as specified in the order where the Tribunal has found that the tenant under the lease was before entering into the lease misled by the landlord as to the meaning or effect of a term or condition of the lease.
(1aa)The Tribunal may, where it considers it appropriate to do so to resolve the matter concerned, make an order terminating a retail shop lease.

Determination of the referred questions

Under s 16(1) of the CTRSA Act there is a two-step process involved in dealing with questions referred to the Tribunal. The first step is to decide whether the question referred to the Tribunal is a question arising under the lease. If that is decided in the affirmative then the second step is to determine the question.

The Tribunal will deal with each of the referred questions in turn.

Question 1

Does this dispute concern a question arising under a retail shop lease pursuant to [s 16(1)(a) of the CTRSA Act]?

It is not in contention that the lease is a retail shop lease. However, question 1 is misconceived. It asks whether 'this dispute' concerns a question arising under a retail shop lease.
The dispute between the parties in this proceeding involves a number of matters, which are detailed in questions 2, 3, 4 and 5. Each of those matters has to be considered separately as to whether it is a question arising under the lease.
Therefore, the answer to question 1 is that the question is misconceived and the Tribunal must decide whether each of questions 2, 3, 4 and 5 is a question arising under the lease.

Question 2

Question 2 consists of a series of four sub-questions (questions 2.1, 2.2, 2.3 and 2.4) which must be determined sequentially.
Before doing that, it will be useful to outline the communications which occurred by email between Mr Loveday on behalf of Loveday Corp and Mr Lampropoulos on behalf of Arise Joondalup between 14 February 2014 and 5 May 2015.
On 14 February 2014 Loveday Corp sent an email to Arise Joondalup (14 February 2014 Loveday email) which stated that it had decided to cease to trade from the premises and requested Arise Joondalup to advertise to find a new tenant.
On 18 February 2014 Arise Joondalup sent an email to Loveday Corp (18 February 2014 Loveday email) which stated that it would try to find 'an alternative tenant' (new tenant) and that Loveday Corp would be liable for the costs associated with establishing the new tenant. Those potential costs were identified as being the leasing fee for an agent to identify and secure a new tenant, costs for redesign and works to accommodate a new tenant, legal costs for documentation, and the difference in rent payable by a new tenant.
There were a number of emails between the parties from 18 February to 12 March 2014, culminating in an email from Loveday Corp to Arise Joondalup on 12 March 2014 which requested Arise Joondalup to prepare documents for the 'conditional surrender' of the lease.
It appears that the surrender of lease was prepared and sent to Loveday Corp on 17 March 2014.
On 21 March 2014 Arise Joondalup sent an email to Loveday Corp which stated that it was negotiating with a new tenant to take over the tenancy and if that was to proceed, the 'surrender fee' would be $19,335 plus GST (surrender fee).
Loveday Corp sent an email to Arise Joondalup on that same day requesting a breakdown of those costs and Arise Joondalup sent a further email to Loveday Corp, again on the same day, stating that these were a leasing fee of $11,231, legal fees of $3,000, and loss of rent and outgoings during the fit out period of the new tenant of $5,104. Those amounts total $19,335, which was the GST exclusive component of the surrender fee.
The surrender of lease was executed by Loveday Corp and the Lovedays on 25 March 2014, and Arise Joondalup then executed it and continued its negotiations with the new tenant.
On 15 April 2014 Arise Joondalup sent an email to Loveday Corp (15 April 2014 Arise email) which stated that it expected to receive the executed lease from the new tenant by the end of that week and that the surrender date would be 14 May 2014. That email also stated that Loveday Corp needed to comply with the 'make good obligation' regarding the premises and pay the surrender fee before 14 May 2014.
In response Loveday Corp sent an email to Arise Joondalup on the same day which stated that it had been agreed that the surrender fee could be paid over time. Arise Joondalup responded to that by a further email to Loveday Corp that day which stated that it had said it was prepared to consider a payment plan but this was not agreed and, given that it had worked extremely hard to find a new tenant and had made a significant concession of the amount claimed, it required the full amount of the surrender fee to be paid prior to 14 May 2014. Loveday Corp then sent a further email to Arise Joondalup that night which, amongst other things, stated that Mr Loveday did not understand why Arise Joondalup was 'being so vicious'.
On 16 April 2014 Arise Joondalup sent an email to Loveday Corp which denied that it was being vicious and stated that it was merely attempting to properly manage the situation to facilitate Loveday Corp's request to vacate the tenancy.
On 22 April 2014 Arise Joondalup sent an email to Loveday Corp (22 April 2014 Arise email) which stated that the new tenant had executed the lease and asked Loveday Corp to arrange for payment of the surrender fee and 'outstanding arrears', and to advise its availability to carry out the handover inspection on 14 May 2014. Then later that day Arise Joondalup sent another email to Loveday Corp attaching a tax invoice dated 22 April 2014 (22 April 2014 Arise invoice) for the surrender fee of $19,335 plus GST of $1,933.50, being a total of $21,268.50.
Arise Joondalup sent follow-up emails to Loveday Corp on 28 and 30 April and 1 and 5 May 2014 regarding the arrangements for the surrender of the lease. The email on 1 May 2014 referred to 'outstanding arrears' which had to be paid in addition to the surrender sum.
Loveday Corp sent an email to Arise Joondalup on 5 May 2014 in response to its email of that date stating that 'the make good works will be completed by the 14^th'. Arise Joondalup then sent a further email to Loveday Corp on that date requesting advice on the payment of the 'outstanding arrears' and the surrender fee. It seems that it was the insistence by Arise Joondalup on the payment of the surrender fee and 'outstanding arrears' which prompted Loveday Corp to lodge its application with the Tribunal to commence proceeding CC 591 of 2014 (proceeding CC 591 of 2014) on that date.
Arise Joondalup gave a 'termination notice' to Loveday Corp on 12 May 2014 (termination notice) and took possession of the premises on that date.

Question 2.1

Did [Loveday Corp] and [the Lovedays] repudiate the [lease], and was such repudiation accepted by [Arise Joondalup]?

Question 2.1 is a question arising under the lease. Whether the lease was repudiated and, if so, whether the repudiation was accepted, thereby terminating the lease, is a question arising under the lease by virtue of s 3(3)(a) of the CTRSA Act.
Loveday Corp contends that it did not repudiate the lease.
Initially Arise Joondalup contended that Loveday Corp repudiated the lease by the 14 February 2014 Loveday email. However, in the Arise closing submissions it did not maintain that contention. Instead it, quite properly, acknowledged that the 14 February 2014 Loveday email was simply the initiation by Loveday Corp of negotiations for the surrender of the lease.
The Arise closing submissions do not refer to any particular words or conduct by Loveday Corp as being a repudiation of the lease which was accepted by Arise Joondalup as a termination of the lease. Instead the Arise closing submissions contend that the lease came to an end either on 12 May 2014 when Arise Joondalup retook possession of the premises pursuant to the termination notice which it gave to Loveday Corp on that date, or on 15 May 2014 when the new tenant took possession of the premises.
Arise Joondalup contends in the Arise closing submissions that the 'conditions precedent' in the surrender of lease were not fulfilled and therefore the surrender of lease did not take effect.
The surrender of lease contains the following provision (special condition 1) in item 8 of the schedule to it:
1Conditions precedent
1.1The Tenant agrees that this Surrender of Lease is condition on:
1.1.1the Landlord entering into a new lease with an alternative tenant for the Premises, on terms acceptable to the Landlord (acting reasonably) within 12 months form the date of execution of this document; and
1.1.2the Tenant paying to the Landlord all of the Landlord's costs in relation to the Surrender of Lease, including but not limited to:
(a)the Landlord's legal costs;
(b)the costs of re-leasing the Premises inclusive of any leasing agents fees (including any incentives provided to the alternative tenant relating to the Premises);
(c)any shortfall in the rent payable by the replacement tenant under the new lease and that payable by the Tenant under the Lease for the remainder of the term of the Lease; and
(d)any costs incurred by the Landlord as a result of the Tenant's failure to carry out its make good requirements pursuant to the Lease or costs incurred in altering the Premises to make them suitable for a replacement tenant.
1.2If the Landlord is not able to enter into a replacement lease for the Premises on terms acceptable to it and in accordance with special condition 1.1 within 12 months from the execution of this document, then the Tenant agrees that this Surrender of Lease will have no effect and the terms and condition of the Lease will remain on foot and will have full effect.
1.3The Tenant provides its authority to the Landlord to complete this document by inserting the Surrender Date in the Schedule.
The ordinary principles of contract law apply to leases: The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1958) 157 CLR 17. The same can be said in respect of surrenders of lease.
Cheshire and Fifoot: Law of Contract, (10th Australian Ed LexisNexis Butterworths 2012) (Cheshire and Fifoot) at paragraph 20.3 states:
A distinction must be made between contingent conditions on which the formation of a contract depends, and conditions of the obligation to perform it:
There is an obvious difference between the condition precedent to formation of a contract and the condition which entitles the party to terminate the contract on non-fulfilment. In the first category the transaction creates no rights until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR at 551 (Mason J).
Then at paragraph 20.4 Cheshire and Fifoot states:
Whether non-fulfilment of a condition precedent prevents a contract from coming into existence, or operates as a condition of its performance, must depend on the particular contract. But at least where the parties have fully settled the terms of their transaction the court will favour the view that any contingent condition included among them is a condition of performance rather than of formation of the contract. In Perri v Coolangatta Investments Pty Ltd it was said to be the tradition of the High Court so to construe such provisions:
In most cases it is artificial to say, in the face of the details settled on, that there is no binding contract until the event in question happens. It is in conformity with the intention of the parties that there is a contract which makes the stipulated event a condition precedent to the duty of one party, or both parties, to perform. Furthermore it gives the courts greater scope in adjusting the rights of the parties. For these reasons the condition will not be construed as precedent to formation unless the contract plainly compels this conclusion: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR at 552 (Mason J).
In the Tribunal's opinion special condition 1.1.1 was clearly a condition precedent to the formation of the surrender of lease. The provisions of special condition 1.2 plainly compel that conclusion.
However, in the Tribunal's opinion, special condition 1.1.2 was not a condition precedent to the formation of the surrender of lease. Instead, it was a condition of performance. Special condition 1.2 does not state that if Loveday Corp does not pay the amount specified in special condition 1.1.2 then the surrender of lease will have no effect. Instead special condition 1.3 authorises Arise Joondalup to insert the surrender date in item 4 of the schedule of the surrender of lease and clause 4.1 of the surrender of lease provides that before 5 pm on the surrender date Loveday Corp must do certain things, including vacating the premises (leaving them in the condition required by the lease) and paying the amount specified in special condition 1.1.2. Clearly the intent was that a binding surrender of lease was to come into existence upon Arise Joondalup entering into a lease with a new tenant within 12 months of the surrender of lease being signed. If that occurred then the surrender date could be decided by Arise Joondalup, presumably to tie in with the commencement of the new tenancy, and as a condition of performance, Loveday Corp was required to do various things by that date, including vacating the premises and paying the amount specified in special condition 1.1.2 to Arise Joondalup.
The 22 April 2014 Arise email confirmed that Arise Joondalup had entered into a lease which satisfied special condition 1.1.1 and brought the surrender of lease into existence on that date. The 15 April 2014 Arise email, which indicated that the execution of the lease with the new tenant was imminent, stated that the surrender date for the surrender of lease was to be 14 May 2014 (surrender date) and the 22 April 2014 Arise email confirmed that by referring to a handover inspection on that date.
Upon the surrender of lease coming into existence on 22 April 2014 the lease was surrendered and it was not possible for Loveday Corp to repudiate the lease after that date. It does not matter that the surrender date was 14 May 2014, when Loveday Corp was to vacate the premises and comply with its various covenants under the surrender of lease. Those were conditions of performance and did not affect the existence of the surrender of the lease.
The answer to question 2.1 is therefore no.

Question 2.2

Did [Loveday Corp] and [the Lovedays] repudiate the [surrender of lease], and was such repudiation accepted by [Arise Joondalup]?

Question 2.2 is a question arising under the lease. Whether the surrender of lease was repudiated and, if so, whether the repudiation was accepted to terminate the surrender of lease is a question arising under the lease by virtue of s 3(3)(e) of the CTRSA Act because it is a matter in dispute between Arise Joondalup as landlord and Loveday Corp as tenant in connection with the lease.
The Arise closing submissions contend that Loveday Corp repudiated the surrender of lease by:
•commencing proceeding CC 591 of 2014 in the Tribunal;
•not paying the surrender fee;
•not paying the outstanding rent; and
•evincing an intention not to complete terms of the surrender of lease.
In response to those contentions, the Loveday closing submissions say that:
•proceeding CC 591 of 2014 was with regard to the deceptive and misleading conduct of Arise Joondalup;
•the surrender fee was not due when Arise Joondalup itself repudiated the surrender of lease;
•there was no outstanding rental as the lease was 'deemed to be void'; and
•Loveday Corp never showed that it was not willing to comply with the surrender of lease and that it was showing its compliance by making good the premises at the time it was locked out by Arise Joondalup.
Cheshire and Fifoot at paragraph 21.12 sets out the following relevant principles governing repudiation of a contract:
•Breach of a contract by repudiation occurs when a party evinces an intention no longer to be bound by it, or to fulfil it only in a manner substantially inconsistent with his or her obligations.
•An actual intention to repudiate is not necessary: the issue is resolved objectively by reference to the effect it would have on a reasonable person.
•Words or conduct by a party that indicates an unwillingness to perform may constitute repudiation. But if there was never any clear renunciation of the contract, or if genuine attempts to perform it, or to cure any breach, were being made, there may be no repudiation. Repudiation of a contract is a serious matter and is not to be lightly found or inferred.
•Refusal to perform the contract on the basis of an incorrect interpretation of the contract may amount to repudiation. However, if the terms of the contract are ambiguous, and there is a dispute over their meaning, bona fide insistence on a particular interpretation, even if it is contentious, may not constitute repudiation. It is otherwise where a party acted strategically to pursue its own interests, or persisted in its interpretation 'willy nilly' when given an opportunity to reconsider.
Proceeding CC 591 of 2014 was an application by Loveday Corp under s 16D(1) of the CTRSA Act which it filed with the Tribunal on 5 May 2014 seeking 'relief from the lease in its entirety' and reimbursement for various liabilities entered into and payments made by it as a result of entering into the lease. The grounds stated in the application in that proceeding were that '[Arise Joondalup] had falsely lead [sic] [Loveday Corp] into the premises and coerced handover of the premises'. That application was dismissed by the Tribunal on the basis that Loveday Corp had not complied with the requirements of s 25D(1) of the CTRSA Act, because it had not provided a certificate from the Small Business Commissioner under s 25C of the CTRSA Act. The fact that the proceeding was dismissed has no bearing on whether or not the commencement of the proceeding constituted repudiation of the surrender of lease.
It is clear from the relief sought in proceeding CC 591 of 2014 that Loveday Corp was seeking to have the lease nullified and to be put in the same position that it would have been if the lease was never entered into. It seems that Loveday Corp commenced that proceeding as a strategy to seek to avoid having to pay the surrender fee, which Arise Joondalup was insisting had to be paid on 14 May 2014.
The Tribunal does not accept Loveday Corp's contention that it never showed that it was not willing to comply with the surrender of lease. Looking at the events objectively, the Tribunal concludes that the action of Loveday Corp in commencing proceeding CC 591 of 2014 evinced an intention to no longer be bound by the surrender of lease. Seeking to nullify the lease is not compatible with the obligation of Loveday Corp to pay the surrender fee under the surrender of lease.
The Tribunal therefore, concluded that Loveday Corp repudiated the surrender of lease by commencing proceeding CC 591 of 2014.
The Arise closing submissions contend that Arise Joondalup accepted Loveday Corp's repudiation of the surrender of lease on 12 May 2014 and that by reason of that, Arise Joondalup 'is not bound by the [surrender of lease]'.
If a party to a contract repudiates the contract the other party has the right to accept that repudiation, or to put it more correctly, has the right to elect to terminate the contract.
Cheshire and Fifoot at paragraph 21.23 sets out the following relevant principles governing the exercise of the right to terminate a contract in response to repudiation:
•An unequivocal response to the repudiation is required, often referred to as 'acceptance' of the repudiation.
•However, communication of an election to terminate need not be expressed as such. Any words or conduct are sufficient if they make the election manifest to the relevant party. Imprecision in stating the reason for termination is not fatal. Indeed, it does not seem necessary to specify any ground for termination. Nor need such communication be direct. Taking action which manifests an election to treat the contract as terminated is sufficient.
•The commencement of an action claiming relief on the basis of the termination normally amounts to an election to terminate the contract, if such election has not already been made.
•An election to terminate once made cannot be retracted.

The termination notice given to Loveday Corp by Arise Joondalup on 12 May 2014 and the retaking of possession of the premises by Arise Joondalup on that date purported to terminate the lease for non-payment of rent and other monies payable under the lease by Loveday Corp.
The termination notice was misconceived because it purported to terminate the lease after the lease had already been surrendered when the surrender of lease came into existence on 22 April 2014. However, the giving of the termination notice and retaking of possession of the premises by Arise Joondalup was an unequivocal response to the commencement of proceeding CC 591 of 2014 by Loveday Corp which manifested the election of Arise Joondalup to treat the surrender of lease as being terminated. Also, the commencement of this proceeding is also a clear manifestation of an election by Arise Joondalup to terminate the surrender of lease for the repudiation of it by Loveday Corp.
The answer to question 2.2 therefore is yes.

Question 2.3

If the answer to question 2.2 is yes, is [Arise Joondalup] entitled to claim damages against [Loveday Corp] and [the Lovedays] in relation to the repudiation (ie under clause 10.07 of the [lease])?

Question 2.3 is a question arising under the lease to the extent that it relates to the entitlement of Arise Joondalup to claim damages against Loveday Corp by virtue of s 3(3)(e) of the CTRSA Act because it is clearly a matter in dispute between landlord and tenant in connection with the lease.
However, whether question 2.3 is a question arising under the lease to the extent that it relates to the entitlement of Arise Joondalup to claim damages against the Lovedays is not so clear.
Arise Joondalup has not made submissions regarding whether a claim by it against the Lovedays under the surrender of lease indemnity is a question arising under the lease.
Arise Joondalup contends in the Arise closing submissions that the liability of the Lovedays under the lease guarantee and indemnity is a question arising under the lease. That is not an issue which I need to determine since I have found that the surrender of lease came into existence on 22 April 2014 and consequently under clause 2.2.2 of the surrender of lease, the Lovedays were released from their obligations under the lease guarantee and indemnity from that date.
However, because that contention could be considered to also apply to the liability of the Lovedays under the surrender indemnity I will address it in that context.
Arise Joondalup contends that the lease guarantee and indemnity is contained in the lease and that the lease and the lease guarantee and indemnity are part of a single document, and that the performance by Loveday Corp of the lease is integral to the scope of the liability of the Lovedays under the lease guarantee and indemnity. The same contention could be made regarding the surrender indemnity.
Arise Joondalup refers to Meriton Properties Pty Ltd v DCM LeasesFive Pty Ltd [2009] NSWADT 121 (Meriton) as support for that contention.
In Meriton the New South Wales Administrative Decisions Tribunal decided that the guarantor of a lease was liable to the landlord for the damages due from the tenant as a result of the breach of the lease by the tenant. The finding that the guarantee was part of the lease document and not a separate document was an essential element of that decision. However, the other critical factor in the decision was the rejection of the argument by the guarantor that the Tribunal did not have jurisdiction to make an order against him. The guarantor argued that he was not a party to the lease and therefore the dispute between him and the landlord was not a 'retail tenancy dispute' for the purposes of s 63 of the Retail Leases Act 1994 (NSW) (RL Act) and therefore the claim against him was not a 'retail tenancy claim' under s 70 of that Act. The reason for the rejection of that argument was that 'party to a retail shop lease' is defined in s 63 of the RL Act as including a person who is a guarantor or covenantor under a retail shop lease.
There is no equivalent provision to s 63 of the RL Act in the CTRSA Act. In fact, there is no reference at all to a guarantor, indemnifier or covenantor in the CTRSA Act. The Tribunal therefore does not accept that Meriton provides any support for the proposition that the claim by Arise Joondalup against the Loveday's under the surrender indemnity is a question arising under the lease for the purposes of s 16(1) of the CTRSA Act.
The question of whether or not the claim by Arise Joondalup against the Lovedays under the surrender indemnity is 'a question arising under the lease' for the purposes of s 16(1) of the CTRSA Act turns on the proper construction of s 16(1).
The principles relevant to the process of the interpretation or construction of a statute are outlined in Western Australian Planning Commission v Dungey [2010] WASC 52 (Dungey) at [27] – [32] and may be summarised as follows:
•The starting point for the construction of a statute is a consideration of the text itself.
•The words of the statute must be interpreted having regard to their context and the legislative purpose.
•Under s 18 of the Interpretation Act 1984 (WA) (Interpretation Act) a construction that would promote the purpose underlying the statute (whether expressly stated or not) is to be preferred to a construction which would not promote that purpose. However, the section is not directed to a construction which better achieves the purpose of an Act, but rather it assists when there is a choice between a construction that would promote the underlying purpose and one which would not.
•A provision in a statute must be construed consistently with the language and purpose of all the provisions of the statute.
•Section 19 of the Interpretation Act identifies extrinsic material which may be considered to confirm the meaning of a provision in a statute or to determine the meaning where there is ambiguity or obscurity in its ordinary meaning. Such material includes any explanatory memorandum relating to the Bill and the second reading speech. However that material must not be substituted for the text of the statute.
On the face of it, looking at the text of s 16(1) of the CTRSA Act, a question arising under the surrender of a retail shop lease would not be a question arising under the lease, because a surrender of lease is a separate contract to the lease.
However, s 3(3) of the CTRSA Act provides that the questions and matters listed in paragraph (a) to (e) of that sub-section are included in the reference to a question arising under a retail shop lease in the Act. The questions and matters in s 3(3)(a) to 3(3)(d) of the Act are all directly in relation to a lease.
However, the provision in s 3(3)(e) of the CTRSA Act is broader in its scope, because it refers to 'any other matter that is in dispute between the landlord and the tenant in connection with the retail shop lease, whether or not that matter is dealt with by the provisions of the retail shop lease'.
In the Tribunal's opinion that includes a matter in dispute between a landlord and a tenant under a surrender of lease because a surrender of lease is made between a landlord and a tenant in connection with a lease to which they are parties, and s 3(3)(e) of the CTRSA Act provides that the dispute can arise from outside the provisions of the lease, which includes a surrender of lease.
The issue here though is whether, on its proper construction, s 3(3)(e) of the CTRSA Act is broad enough to also include a dispute between a landlord and a person who has given an indemnity to the landlord in respect of the obligations of a tenant under a surrender of lease.
Clause 6.1 of the surrender of lease states that '[Loveday Corp] and [the Lovedays] each indemnify [Arise Joondalup] against any loss, damage, expense or obligation suffered by reason of [Loveday Corp's] failure to perform its obligations under this document'.
Lang's Commercial Leasing in Australia (CCH Australia Limited) at paragraph 2-730 states:
An indemnity involves the assumption of a primary liability by the person giving the indemnity to the creditor. The creditor can sue the indemnifier immediately the obligation has matured without having to seek payment from the debtor.
The claim against the Lovedays as indemnifier by Arise Joondalup as landlord under the surrender of lease and a dispute between those persons regarding that claim is entirely separate at law to the dispute between Loveday Corp as tenant and Arise Joondalup as landlord under that document.
In the Tribunal's view the text itself of s 3(3)(e) of the CTRSA Act plainly only refers to a dispute between a landlord and a tenant and does not include a dispute between a landlord and an indemnifier.
With regard to the context in which s 3(3)(e) appears in the CTRSA Act, The Tribunal notes that all of the other matters set out in s 3(3) relate directly to a retail shop lease and therefore there is nothing in that context which gives support to an interpretation of the term 'a question arising under a retail shop lease' which extends to a dispute between a landlord and an indemnifier in respect of a surrender of lease.
The Tribunal's starting point in considering the legislative purpose of the CTRSA Act is its long title.
The long title may be referred to as an aid to the construction of an Act: see Pearce and Geddes, Statutory Interpretation in Australia (7th ed, 2011) at paragraph 4.46.
The long title of the CTRSA Act states as follows:
An Act to regulate commercial tenancy agreements relating to certain shops, to prohibit unconscionable conduct by landlords or tenants in relation to such agreements, to provide for the determination of questions arising under such agreements, and for connected purposes.
The purpose stated in the long title has three components; firstly, there is the regulation of certain commercial tenancy agreements; secondly, there is the prohibition of certain conduct in relation to those agreements; and thirdly, there is the determination of questions arising under those agreements.
Both the short title and the long title of the CTRSA Act use the term 'commercial tenancy agreements', but that term does not appear in the provisions of the Act. Instead, the term 'lease' is used, which is defined in the Act as meaning 'any lease, licence or agreement … that provides for the occupation of premises … for a term or by way of a periodic tenancy or a tenancy at will'.
From that, it follows that the purpose of the CTRSA Act, stated in its long title, is the regulation of retail shop leases, the prohibition of unconscionable conduct by landlords or tenants in relation to those leases, and the determination of questions arising under such leases. That purpose does not extend to the regulation of an indemnity given by a third party indemnifier under a surrender of lease, nor the determination of questions arising under such an indemnity.
If Parliament had intended to include within the ambit of the CTRSA Act matters in dispute between a landlord and an indemnifier of the obligations of a tenant then it could easily have done that by either including a reference to that in s 3(3) of the Act or by including a provision in the Act similar to that contained in s 63 of the RL Act.
The CTRSA Act is entirely silent about guarantors, indemnifiers and any other third party covenantors in respect of the obligations of a tenant under a retail shop lease.
Therefore, construing the provisions of s 3(3) and s 16(1) of the CTRSA Act consistently with the language and purpose of all the provisions of the statute, there is no reason to construe them to include a matter in dispute between a landlord and an indemnifier in respect of a surrender of lease.
The Tribunal does not consider that s 18 of the Interpretation Act provides any assistance, because this is not a situation where there is a choice between different interpretations of the words in either s 3(3) or s 16(1) of the CTRSA Act.
The Tribunal also does not consider that s 19 of the Interpretation Act provides any assistance, because this is not a situation where there is ambiguity or obscurity in the ordinary meaning of the words in either s 3(3) or s 16(1) of the CTRSA Act.
Therefore, the Tribunal has concluded that the dispute between Arise Joondalup and the Lovedays under the surrender indemnity is not a question arising under the lease on the proper construction of s 16(1) of the CTRSA Act. Accordingly, the Tribunal does not have jurisdiction to determine that matter.
The Arise closing submissions raise a point about the risk of inconsistent findings if the liability of Loveday Corp as tenant under the surrender of lease and the liability of the Lovedays as indemnifiers under the surrender indemnity are resolved separately. With regard to that, the Tribunal notes that it is not given exclusive jurisdiction to deal with questions arising under a retail shop lease. Under s 27 of the CTRSA Act a landlord has the ability in a situation such as this to seek to have both of those claims determined by a court. However, it has not chosen to do that and now that the final hearing has been completed, it is not appropriate for that course of action to now be taken in respect of the claims by Arise Joondalup against Loveday Corp and the Lovedays in this matter.
Having decided that the claim by Arise Joondalup against Loveday Corp for damages for the repudiation of the surrender of lease is a question arising under the lease the Tribunal will now turn to the issue of those damages.
The Loveday closing submissions contend that Arise Joondalup is not entitled to any damages from Loveday Corp.
The Arise closing submissions contend that Arise Joondalup is entitled to damages from Loveday Corp.
To decide whether Arise Joondalup is entitled to claim damages from Loveday Corp for the repudiation of the surrender of lease by Loveday Corp it is necessary to consider the effect of a party electing to terminate a contract for repudiation.
The Arise closing submissions contend that the effect of the termination of the surrender of lease by Arise Joondalup for the repudiation by Loveday Corp was that it 'returned the parties to the terms of the [lease]', or alternatively it 'returned the parties to the terms of the [surrender of lease] but disentitled [Loveday Corp and the Lovedays] to the benefit of the compromise proposed by the [surrender fee]'.
The Tribunal does not accept those contentions for the following reasons.
Cheshire and Fifoot at paragraph 21.38 states, relevantly, that the effect of an election to terminate a contract for repudiation is as follows:
•An election to terminate for breach puts an end to the contract from the time of its communication, as distinguished from rescission ab initio.
•Both the terminating party and the party in breach are released from all further performance of the contract.
•However, the contract is treated as valid to the moment of termination, and rights that accrued to a party under the contract before its termination remain enforceable. That includes the right to sue for damages for breach of the contract and the right to recover money that became unconditionally payable before termination.
In the Tribunal's view the termination of the surrender of lease by Arise Joondalup on 12 May 2014 put an end to that contract at that time, but preserved the right of Arise Joondalup to pursue recovery of damages and money that had become unconditionally due to it prior to that date under the surrender of lease.
Accordingly, the answer to question 2.3 is yes, but only to the extent that it is concerned with the entitlement of Arise Joondalup to claim damages against Loveday Corp in relation to the repudiation of the surrender of lease.

Question 2.4

If the answer to question 2.2 is no, then:
(a)are the parties still bound by the terms of the [surrender of lease] or the [lease]?
(b)are [Loveday Corp] and [the Lovedays] in breach of the [surrender of lease] or the [lease] (by failure to pay the surrender sum under the [surrender of lease], alternatively by reason of failure to pay rent under the [lease])?
(c)if the answer to question 2.4(b) is yes, then is [Arise Joondalup] entitled to damages as a result of the said breach?

Question 2.4 is a question arising under the lease to the extent that it relates to matters between Arise Joondalup as landlord and Loveday Corp as tenant, but not to the extent that it relates to matters between Arise Joondalup and the Lovedays as indemnifiers.
However, because the answer to question 2.2 is yes, it is not necessary to answer question 2.4.

Question 3

If it is found that [Loveday Corp] and [the Lovedays] have repudiated and/or breached the [lease] or [surrender of lease] and that [Arise Joondalup] is entitled to damages for such breach, should [Arise Joondalup's] damages be assessed in terms of [Arise Joondalup's] notice issued under clause 10.10 of the [lease]?

To the extent that this question relates to the entitlement of Arise Joondalup to damages against Loveday Corp for repudiation of the surrender of lease, it is a question arising under the lease for the reasons stated above in respect of question 2.3.
However, for the reasons stated above in respect of question 2.3, to the extent that the question relates to damages against the Lovedays it is not a question arising under the lease and cannot be determined by the Tribunal.
The Loveday closing submissions contend that Arise Joondalup is not entitled to any damages from Loveday Corp.
The Arise closing submissions contend that Arise Joondalup is entitled to damages from Loveday Corp assessed in terms of the certificate it issued under clause 10.10 of the lease. That certificate was given to Loveday Corp by the lawyers for Arise Joondalup on 16 May 2014 and claims damages of $244,850.28 for the repudiation of the lease by Loveday Corp.
Clause 10.10 of the lease provides that a certificate signed by Arise Joondalup is prima facie proof of the amount due to it under clause 10.07 of the lease.
Clause 10.07 of the lease provides that if the lease is terminated by Arise Joondalup for breach of an essential term or repudiation of the lease by Loveday Corp then it must pay to Arise Joondalup the monies referred to in that clause.
Clause 10.10 has no application to the assessment of the damages to which Arise Joondalup is entitled against Loveday Corp for the repudiation of the surrender of lease, because it only applies to the assessment of damages to which Arise Joondalup would have been entitled for a breach of an essential term or repudiation of the lease by Loveday Corp. As I have already stated above, upon the surrender of lease coming into existence on 22 April 2014, the lease was surrendered and the future rights and obligations of Arise Joondalup and Loveday Corp were thereafter to be determined under the surrender of lease, not under the lease.
The answer to question 3 therefore is no.

Question 4

If the answer to question 3 is no, how should [Arise Joondalup]'s damages be properly assessed?

The Loveday closing submissions contend that Arise Joondalup is not entitled to any damages from it.
The Arise closing submissions contend that if Arise Joondalup is not entitled to damages from Loveday Corp assessed in terms of the certificate it issued under clause 10.10 of the lease then the damages should be assessed as the amount payable by Loveday Corp under the 22 April 2014 Arise invoice, which is $21,268.50.
Cheshire and Fifoot at paragraph 23.22 states in respect of damages after a contract has been terminated:
If termination was justified in law, the terminating party may claim damages equivalent to the full value of the lost performance, including expected income and other benefits that would have been gained. Such damages are commonly called loss-of-bargain damages.

The termination of the surrender of lease by Arise Joondalup was justified in law and therefore the answer to question 4 is that Arise Joondalup's damages should be assessed as the loss-of-bargain damages which it has suffered as a result of the repudiation of the surrender of lease by Loveday Corp.
The amount of those damages will be assessed in response to question 5.

Question 5

What amount of damages should [Loveday Corp] and [the Lovedays] pay to [Arise Joondalup] pursuant to [s 26(1) of the CTRSA Act]?

The Loveday closing submissions contend that Arise Joondalup is not entitled to any damages from Loveday Corp.
The Arise closing submissions contend that Loveday Corp should pay damages of $244,850.28 to Arise Joondalup, being the amount stated in the certificate it issued under clause 10.10 of the lease, but if Arise Joondalup is not entitled to damages on that basis then the damages should be assessed as the amount payable by Loveday Corp under the 22 April 2014 Arise invoice, which is $21,268.50.
As stated above, clause 10.10 of the lease has no application to the assessment of the damages to which Arise Joondalup is entitled against Loveday Corp for the repudiation of the surrender of lease.
The 22 April 2014 Arise invoice for the amount of $21,268.50 falls within what is described above as loss-of-bargain damages. That amount was expected to be received by Arise Joondalup under the surrender of lease.
The Tribunal therefore accepts the contention in the Arise closing submissions that the damages which Arise Joondalup is entitled to receive from Loveday Corp is the amount of $21,268.50.
The Tribunal notes that the period of time between the date on which the 22 April 2014 Arise invoice was given to Loveday Corp and the date on which it was due to be paid (14 May 2014) was 22 days and the Tribunal has decided that Loveday Corp should be given the same period of time to pay that amount to Arise Joondalup pursuant to the order which will be made as a result of this decision.
Finally the Tribunal notes that there was reference to outstanding arrears of rent under the lease in the emails sent by Arise Joondalup to Loveday Corp on 22 April 2014, 1 May 2014 and 5 May 2015 which have been referred to above. However the Arise closing submissions do not claim any amount for such arrears of rent as part of the arrears for the repudiation of the surrender of lease. Therefore the Tribunal has not considered that issue.

Order

The Tribunal will accordingly order as follows:
1.The questions referred to the Tribunal are answered as follows:
Q1.Does this dispute concern a question arising under a retail shop lease pursuant to s 16(1)(a) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)?
A.The question is misconceived and the Tribunal must decide whether each of questions 2, 3, 4 and 5 is a question arising under the lease, and if it is, then the Tribunal will determine it.
Q2.1.Did the respondents repudiate the lease, and was such repudiation accepted by the applicant?
A.No.
Q2.2.Did the respondents repudiate the surrender of lease, and was such repudiation accepted by the applicant?
A.Yes.
Q2.3.If the answer to question 2.2 is yes, is the applicant entitled to claim damages against the respondents in relation to the repudiation (that is, under clause 10.07 of the lease)?
A.Yes, but only to the extent that it is concerned with the entitlement of the applicant to claim damages against the first respondent in relation to the repudiation of the surrender of lease.
Q2.4.If the answer to question 2.2 is no, then:
(a)are the parties still bound by the terms of the surrender of lease or the lease?
(b)are the respondents in breach of the surrender of lease or the lease (that is, by failure to pay the surrender sum under the surrender of lease, or alternatively, by reason of failure to pay rent under the lease)?
(c)If the answer to question 2.2.4(b) is yes, then is the applicant entitled to damages as a result of the said breach?

A.Because the answer to question 2.2 is yes it is not necessary to answer this question.
Q3.If it is found that the respondents have repudiated and/or breached the lease or surrender of lease and that the applicant is entitled to damages for such breach, should the applicant's damages be assessed in terms of the applicant’s notice issued under clause 10.10 of the lease?
A.No.
Q4.If the answer to question 3 is no, how should the applicant's damages be properly assessed?
A.The applicant's damages should be assessed as the loss-of-bargain damages which it has suffered as a result of the repudiation of the surrender of lease by the first respondent.
Q5.What amount of damages should the respondents pay to the applicant pursuant to s 26(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)?
A.The first respondent should pay the amount of $21,268.50 to the applicant pursuant to s 26(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).

2.Loveday Corp must pay the amount of $21,268.50 to the applicant by no later than 18 September 2015.

I certify that this and the preceding [142] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR D AITKEN, MEMBER