GRANT TRADING PTY LTD and HANSEN

[2023] WASAT 61

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

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

CITATION:   GRANT TRADING PTY LTD and HANSEN [2023] WASAT 61

MEMBER:   DR B DE VILLIERS, MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   7 JULY 2023

FILE NO/S:   CC 599 of 2023

BETWEEN:   GRANT TRADING PTY LTD

Applicant

AND

TANYA JEAN HANSEN

Respondent

Catchwords:

Retail commercial tenancy - Requirements for special circumstance for early termination of sub lease - Termination of head lease - Termination of sub lease for other reasons - default - insolvency - repudiation

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13(6)(a), s 13(6)(b), s 13(6)(c), s 13(6)(da), s 13(6)(d), s 13(7)
Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA), Sch 1

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Irdi Legal
Respondent	:	In Person

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

Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47

REASONS FOR DECISION OF THE TRIBUNAL:

Background

1. The landlord of a retail commercial tenancy has requested approval for a clause to be added to allow the landlord to terminate the sub lease in a period shorter than the statutory guaranteed 5 years due to the existence of special circumstances. The approval sought relates to the right of the landlord to terminate a sub lease if, for whatever reason, the head lease is terminated. Section 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (CTRSA Act) represents a departure from the tenant's right to the option of extending the term of the lease to a period of up to 5 years. The option for an extended period is an important and valuable right to the tenant. This importance is recognised by the CTRSA Act since it prohibits the landlord from terminating the lease short of that 5 year term, save in the limited circumstances set out in s 13(6)(a)-(d) of the CTRSA Act. One of those circumstances is where the Tribunal gives approval on a ground for the termination of a lease under s 13(7) of the CTRSA Act. (Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast Pty Ltd) at [21])

2. The Tribunal is now called upon to consider the special circumstances identified by the landlord, the response, if any, by the tenant, and to determine whether the approval is granted.  The discretion of the Tribunal is wide, which means the Tribunal can take into account the totality of circumstances to assess whether they meet the threshold of 'special circumstances'.  (Synicast Pty Ltd at [27], [54] and [62]). The matter is determined on the documents. The address of the tenancy is Unit 1A, 1-5 Ennis Avenue, Cooloongup.

Facts and consideration

1. The relevant facts giving rise to the decision are as follows:

   1)The application was lodged on 29 April 2023.

   2)The landlord had declared in the application that it had informed the tenant of its intention to lodge the application.  The tenant has consented to the proposed variation.

   3)The landlord seeks approval of the following clauses 3.9(a) and 17.4 in the sub lease for reasons that a special circumstance exists pursuant to sub-section 13(7) of the CTRSA Act.

   4)The Tribunal sought from the landlord further explanation as to why it was of the view that these subsections meet the requirements of 'special circumstances in s 13(7). The landlord responded by letter of 13 June 2023.

   5)The reason why the landlord says a special circumstance exists in regard to clause 3.9(a) is that the sub lease automatically terminates if the head lease is terminated.  The landlord therefore seeks approval that the sub lease can be terminated prior to the expiry of 5 years if the head lease is 'for any reason' terminated.  The reason why the landlord says a special circumstance exists is in regard to clause 17.4 is that if any one of the events in clause 17.4(c)-(h) arises, the landlord should have the right to terminate the sub lease.  Those circumstances are in summary:  failure to pay rent; failure to comply with any obligation under the sublease; if the sublease is surrendered or the premises is abandoned; repudiation of the sublease; deregistration, insolvency or bankruptcy.

   6)I now proceed to determine the application on the documents.

   7)I am not satisfied that a special circumstance exists for approval of clauses 3.9(a) and 17.4.  It is noted that the landlord has withdrawn its application for an approval of clause 3.9(b).

   8)The reason for the finding that special circumstances as required in s 13(7) of the CTRSA Act do not exist are:

   (a)I am not satisfied that in clause 2.9(a) the termination of the head lease 'for any reason' constitutes a special circumstance pursuant to s 13(7). Firstly, the effect of termination of the head lease on the sub lease is not an event which can be regarded as a 'special circumstance' under s 13(7); secondly, the use of the words 'for any reason' in the proposed clause is too vague and general to constitute a special circumstances under s 13(7); and finally, the special circumstances does not yet 'exist' as is required by s 13(7) (Synicast Pty Ltd at [30])

   (b)I am not satisfied that the events identified in clause 17.4 constitute 'special circumstances' for purposes of s 13(7). More specifically, clause 17.4(c) is not a special circumstance since the non-payment of rent is a matter for which remedies outside the scope of s 13(7) exist; (Synicast Pty Ltd at [59]) clause 17.4(d) is not a special circumstance since the breach of an obligation arising from the sub lease of payment of rent is a matter for which remedies outside the scope of s 13(7) exist; clause 17.4(3) is not a special circumstance since the abandonment of the premises is a matter for which remedies outside the scope of s 13(7) exist; clause 17.4(f) is not a special circumstance since repudiation of the sub lease by sub tenant is a matter for which remedies outside the scope of s 13(7) exist; clause 17.4(g) and (h) are not a special circumstance since the Tribunal does not have the power to approve the clause for early termination which is the subject of s 13(d)(da) and Schedule 1, item 1 of the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA).

Orders

The Tribunal orders:

1.On the application in respect of a retail shop sub lease between the parties relating to Unit 1A, 1-5 Ennis Avenue, Cooloongup, it is ordered that the application for the approval of the inclusion of clause 3.9(a) and clause 17.4 in the Sub Lease is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.

DR B DEVILLIERS, MEMBER

7 JULY 2023