Effis Pty Ltd v Oriental Rain Forest Pty Ltd - [2021] WASC 343

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   EFFIS PTY LTD -v- ORIENTAL RAIN FOREST PTY LTD [2021] WASC 343
CORAM:   KENNETH MARTIN J
HEARD:   17 JUNE 2021 & ON THE PAPERS
DELIVERED          :   11 OCTOBER 2021
FILE NO/S:   GDA 2 of 2021
BETWEEN:   EFFIS PTY LTD
Appellant
AND
ORIENTAL RAIN FOREST PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :   STATE ADMINISTRATIVE TRIBUNAL
Coram:   MEMBER QUINLAN
File Number            :   CC 538 of 2020

Catchwords:

Appeal - Small scale rent dispute - Tenancy at an end - Landlord's outgoings apportioned to tenant - COVID-19 relief legislation against rent claimed - Deductions from security deposit of tenant - Turns on own facts

Legislation:

Commercial Tenancies (COVID-19 Response) Act 2020 (WA)
Commercial Tenancies (COVID-19 Response) Regulations 2020 (WA)
Commercial Tenancies (Retail Shops) Agreements Act 1985 (WA)
State Administrative Tribunal Act 2004 (WA)

Result:

Appeal by reference to ground 2 is allowed
Appeal otherwise dismissed

Category: B

Representation:

Counsel:

Appellant	:	No appearance
Respondent	:	No appearance

Solicitors:

Appellant	:	George Papamihail Barristers & Solicitors
Respondent	:	No appearance

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

David Securities v Commonwealth Bank of Australia (1992) 175 CLR 353
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
Trimat Holdings Pty Ltd v Investment Club Pty Ltd [2020] WASCA 63
Trimat Holdings Pty Ltd v Investment Club Pty Ltd [No 2] [2021] WADC 26

KENNETH MARTIN J:

Introduction

I am dealing with an appeal sought to be made to the general division of this court from a decision of the State Administrative Tribunal (SAT). The decision of Member Quinlan, dated 20 January 2021, concerns a very low economic value money dispute between a landlord and a tenant.
An important aspect of the appeal concerns the implications of s 12(1d) of the Commercial Tenancies (Retail Shops) Agreements Act 1985 (WA). That section (relating to a tenant's obligation to make payment for operating expenses), was recently the subject of extensive discussion by the Court of Appeal of Western Australia in Trimat Holdings Pty Ltd v Investment Club Pty Ltd [2020] WASCA 63.
This dispute concerned a premises leased by the appellant landlord (Effis Pty Ltd) to the respondent tenant (Oriental Rain Forest Pty Ltd) at the Belmont District Shopping Centre - the premises being used for day spa or massage purposes. For ease of reference, I will refer to the appellant landlord and respondent tenant simply as 'landlord' and 'tenant' throughout these reasons.
On 20 January 2021, after a hearing before SAT on 7 October and 24 November 2020, Member Quinlan issued an order that obliged the tenant (ie, the applicant in the SAT proceedings) to pay to the landlord (ie, the respondent in the SAT proceedings) the amount of $11,213.35. At the time of the SAT decision, the landlord held the sum of $18,399.18 as a security deposit from the tenant.
With the tenancy having come to an end, the SAT determination entitled the tenant, in effect, to receive…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] WASC 343
Decision Date

CaseChat Overview and Summary

The dispute in Effis Pty Ltd v Oriental Rain Forest Pty Ltd was heard in the Supreme Court of South Australia. The landlord, Effis Pty Ltd, sought to challenge a decision of the Small Business Tenancy Tribunal, which had ordered that the tenant, Oriental Rain Forest Pty Ltd, be granted rent relief. The central issue in the case was whether the tenant's submission to the landlord met the requirements of clause 5(2)(c) of the Code of Conduct, which stipulates that a tenant's request for rent relief must be accompanied by sufficient and accurate information that evidences a reduction in turnover associated with the business conducted at the leased premises during the emergency period. The landlord contended that the tenant's submission did not comply with this requirement because it only provided bank account statements without other relevant financial documents.

The court was tasked with determining whether the tenant's submission of bank account statements was sufficient to evidence the required reduction in turnover, and if this failure meant that the Tribunal had no jurisdiction to grant rent relief. The landlord argued that the tenant's request for rent relief was a jurisdictional prerequisite under the Code of Conduct, and that the Tribunal's decision to grant relief was invalid if this prerequisite was not met. The court needed to examine whether the bank statements alone provided sufficient evidence of the turnover reduction and if the Tribunal's decision-making process was in line with the requirements of the Code.

The Supreme Court found that the bank account statements submitted by the tenant were sufficient evidence of the turnover reduction as required by the Code of Conduct. The court emphasised that the bank statements clearly demonstrated the cessation of revenue due to the COVID-19 lockdown measures. Consequently, the Tribunal's decision to grant rent relief was upheld. The court held that the bank statements, coupled with the tenant's assertion that no revenue was earned during the lockdown period, were adequate to meet the Code's requirements. The landlord's appeal was dismissed, and the decision of the Small Business Tenancy Tribunal was affirmed.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In its written submissions reference is made by the landlord to cl 5(2)(c) of the Code under the heading 'Requesting Rent Relief', which provides:The request must be in writing and be accompanied by the following - (a)...(b)...(c)sufficient and accurate information that evidences the reduction in the tenant's turnover that -(i)is associated with the business conducted at the land or premises that are subject of the small commercial lease, and(ii)the tenant has experienced during the emergency period or a relevant part of the emergency period. (my emphasis in bold) The landlord's written submissions then reference cl 6(1) of the Code of Conduct, which says:On receipt of a request for rent relief from an eligible tenant that meets the requirements of clause 5(2), a landlord must offer rent relief to the eligible tenant within [a certain time frame as explained]. Explaining ground 1, the landlord's written submissions say:19.The sole basis for Ground 1 is that the respondent did not submit to the appellant 'sufficient and accurate information that evidences the reduction in turnover' as required by cl 5(2)(c) of the Code of Conduct. Therefore, the appellant's obligation under cl 6 to offer rent relief was not invoked.20.The appellant accepts that there were requests for rent relief before the Tribunal, however, it is submitted that they did not comply with cl 5(2)(c). The respondent provided to the appellant only its bank account statements for March and April 2020.21.In effect, it is submitted that a compliant request under cl 5(2) of the Code of Conduct is a jurisdictional pre‑requisite for the Tribunal to make orders with respect to a 'code of conduct dispute', and that pre-requisite was not satisfied. If that submission is not accepted, the appellant accepts that ground 1 must fail. Requesting rent relief from the landlord on 29 June 2020 (document 60 in the respondent's bundle before SAT and at page 5 of the respondent tenant's submissions) the tenant had then said:I'm advised that the tenant company has only the one bank account and that the bank statements which have been emailed to you are for that account. The profit and loss for the 2019/20 financial year and the current quarter's BAS will both be compiled from the information contained in those statements. I suggest that it's very obvious that, as Nature's Earth Day Spa has been closed by government decree since 27 March [ie, 2020, due to the COVID epidemic which had emerged just shortly before and the emergency governmental responses to that epidemic], the tenant hasn't earned any revenue from the leased premises since that date, so don't understand why you appear to believe that the P and L statement and BAS would show anything different. Nevertheless, Ms Su [the director of the respondent tenant] has undertaken to provide you with a copy of these documents once she's received them from the accountant. Bank statements show the tenant's turnover ceased entirely for the period 1 April 2020 to 30 June 2020, compared with the period 1 April 2019 to 30 June 2019. That was because its business was closed due to COVID-19.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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