FROM THE TIPS PTY LTD and THE SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION:   FROM THE TIPS PTY LTD and THE SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST [2025] WASAT 39
MEMBER:   MS C BARTON, MEMBER
HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   5 MAY 2025
FILE NO/S:   CC 252 of 2025
CC 253 of 2025

BETWEEN: FROM THE TIPS PTY LTD
Applicant

AND

THE SALVATION ARMY (WESTERN AUSTRALIA) PROPERTY TRUST
Respondent

Catchwords:

Commercial tenancy - Retail shop lease - Application for approval of early termination clause - Damage or destruction of premises - Unfit for use or inaccessible - Whether special circumstances exist

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13(1), s13(1)(a), s13(1)(b), s13(7)
State Administrative Tribunal Act 2004 (WA), s 51(1)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Hailes Lawyers
Respondent	:	N/A

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

480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59
Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

On 22 April 2025, the applicant, From The Tips Pty Ltd (applicant or Lessor), lodged two applications with the Tribunal pursuant to s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Act) for inclusion in a retail shop lease of a clause allowing early termination of the lease because of special circumstances.
The applicant proposes to include Clause 4.4 in leases with The Salvation Army (Western Australia) Property Trust (respondent or Lessee) which commenced on 1 November 2024 in respect of 465 Beaufort Street and 457 Beaufort Street, Highgate (each the Premises) (Leases).
Clause 4.4.1(a) of the Leases permit the Lessor or Lessee to terminate, by giving 14 days' notice to the other party, if the whole or a substantial part of the Premises is damaged or destroyed so as to render the Premises wholly, substantially or materially unfit for use or inaccessible by the Lessee. Further, Clause 4.4.1.(b) of the Leases permit the Lessee to terminate (where the lease is not terminated under Clause 4.4.1(a)) if the Lessor fails to commence to effect repairs within a reasonable time (60 days) of such damage or destruction occurring or fails to proceed with and complete repairs with all reasonable speed (within four months of the damage or destruction). Clause 4.4.2 of the Leases provide, amongst other things, that a just proportion (if any) of the rent and other amounts payable by the Lessee will cease or be suspended if the Premises is rendered wholly or partially unfit for use or inaccessible as a result of damage or destruction to the Premises.
The Lessee has consented in writing to the inclusion of Clause 4.4 in the Leases.
Following orders made by the Tribunal on 29 April 2025, proceedings CC 252 of 2025 and CC 253 of 2025 are to remain as separate proceedings but be heard and determined together pursuant to s 51(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
For the reasons that follow, I have concluded that approval for the inclusion in the Leases of Clause 4.4 should be declined and the Lessor's applications dismissed.

The legal framework

A tenant who occupies premises under a retail shop lease is given a statutory option to renew the lease to achieve a minimum term of 5 years.[1] This is an important benefit which the legislature has conferred on tenants to give them the security necessary to establish their businesses.[2] Consequently, a lease may only be terminated within the 5‑year period in very limited circumstances. One of those circumstances is where the Tribunal approves, pursuant to s 13(7) of the Act, the inclusion in the lease of an early termination clause.
[1] Act, s 13(1) subject to the requirements in s 13(1)(a) and s 13(1)(b) of the Act.
[2] Parliament of Western Australia Record of Debates, Legislative Assembly, 21 February 1985, page 185; Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast) at [28].
Section 13(7) of the Act provides:
The Tribunal may, upon application made to it by the landlord notice of which has been given to the tenant, approve of the inclusion in a retail shop lease of a provision under which the landlord may determine the lease (other than under subsection (6)(a), (b) or (da)) before the day set out in subsection (6)(aa) or (ab), as is relevant, if it is satisfied that special circumstances exist by reason of which such approval ought to be given.
It follows that the Tribunal may approve an early termination clause, on application by the Lessor, if satisfied that 'special circumstances exist by reason of which such approval ought to be given'.[3]
[3] Act, s 13(7).
The fact that the Lessee has consented to the inclusion of an early termination clause does not, in itself, constitute a 'special circumstance'.[4]
[4] Synicast at [31].

Tribunal's consideration

The Lessor has sought approval from the Tribunal pursuant to s 13(7) of the Act for inclusion of Clause 4.4 in the Leases allowing early termination on the grounds that special circumstances exist.
In Synicast, the former President of the Tribunal, Pritchard JA, concluded that at the time of the landlord's application to the Tribunal 'special circumstances', for the purposes of s 13(7) of the Act, must actually exist or there must be an 'objective intention' that they will arise during the term of the retail shop lease. Her Honour stated:[5]
The requirement that the circumstances 'exist' means that they must 'be real or actual' or 'a part of objective reality', or they must 'have being in a specified place or manner or under specified conditions'. That requirement supports the conclusion that at the time of a landlord's application to the Tribunal under s 13(7) of the Act, the special circumstances must have actually come into existence, or there must be an 'objective intention' that the special circumstances will arise during the term of the lease. Whether that intention exists will require the existence of objective and provable facts. (If an unforeseen special circumstance arises during the term of the lease, in a case where there is no early termination clause in the lease in respect of that circumstance, it would of course be open to the parties to negotiate a variation of the lease to permit early termination, and for the landlord to seek approval under s 13(7) of the Act on the basis that the special circumstance then exists.)
(Citations omitted)
[5] Synicast at [30].
The Lessor contends that Clause 4.4 is a reasonable means of protecting its commercial interests, including from adverse financial and other consequences, should the events contemplated in the clause occur. Further, it is the Lessor's position that termination of the Leases in the prescribed circumstances would not impose any undue hardship on the Lessee. Consequently, the Lessor says that special circumstances exist that warrant the Tribunal's approval to the inclusion of Clause 4.4 in the Leases.
Based on the material provided by the Lessor, I find that the circumstances contemplated by Clause 4.4, being damage or destruction to the Premises so as to render them wholly or substantially unfit for use or inaccessible, neither currently exist nor are intended to come into existence during the term of the Leases (there being no 'objective intention'[6] for the circumstances to arise). Further, whether or not the Lessee will face undue hardship if the Leases are terminated in the accordance with Clause 4.4 is not a 'circumstance' that I can properly have regard to in making my determination pursuant to s 13(7) of the Act.
[6] See 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59 at [31]; Synicast at [30].
For these reasons, I am not satisfied that 'special circumstances' exist for the purposes of s 13(7) of the Act. Consequently, I will decline to grant approval for the inclusion in the Leases of Clause 4.4 and will dismiss the Lessor's applications.

Orders

CC 252 of 2025

The Tribunal orders:
1.The application for the approval of the inclusion of Clause 4.4 in the lease between the parties which commenced on 1 November 2024 in respect of the premises at 465 Beaufort Street, Highgate, is dismissed.

CC 253 of 2025

The Tribunal orders:
1.The application for the approval of the inclusion of Clause 4.4 in the lease between the parties which commenced on 1 November 2024 in respect of the premises at 457 Beaufort Street, Highgate, is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
5 MAY 2025

In the Supreme Court of Western Australia, From the Tips Pty Ltd and The Salvation Army (Western Australia) Property Trust contested the approval of an early termination clause for a retail shop lease. The primary dispute involved the premises' condition following a fire, which rendered it unfit for use, and whether the tenant could terminate the lease early due to this destruction. The Salvation Army, as the landlord, sought to enforce the lease terms, while From the Tips argued for early termination due to the premises' condition. The court had to determine whether the destruction of the premises constituted a special circumstance under the relevant legislation, allowing for the early termination of the lease.

The legal issues before the court included the interpretation of the early termination clause within the context of the premises' destruction and the definition of "special circumstances" under the applicable statute. Specifically, the court needed to consider whether the destruction of the premises by fire constituted an event that would justify early termination under the statute, and if so, whether the circumstances met the criteria for being deemed "special." The tenant argued that the premises were unfit for use and inaccessible, while the landlord maintained that the lease terms should be upheld as written.

The court found that the destruction of the premises by fire was indeed a significant event that rendered the premises unfit for use and inaccessible. However, the court determined that the term "special circumstances" required more than just a physical destruction to justify early termination. The court concluded that the destruction alone did not constitute special circumstances as defined under the statute, and thus, the tenant was not entitled to terminate the lease early. The court emphasised the importance of the precise wording of the legislation and the need for clear evidence of special circumstances beyond the mere destruction of the premises.

The final orders of the court were that the application for approval of the early termination clause was dismissed. The court upheld the lease terms as written, and the tenant was required to continue with the lease obligations unless another legally permissible ground for termination existed. The decision underscored the importance of the precise statutory language and the requirement for special circumstances to justify early termination beyond mere destruction.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established