Harlap Nominees Pty Ltd as Trustee for the Harlap No 2 Family Trust v Povey
[2022] WADC 1
•13 JANUARY 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: HARLAP NOMINEES PTY LTD as Trustee for the HARLAP NO 2 FAMILY TRUST -v- POVEY [2022] WADC 1
CORAM: DEPUTY REGISTRAR HEWITT
HEARD: 16 DECEMBER 2021
DELIVERED : 13 JANUARY 2022
FILE NO/S: CIV 1735 of 2021
BETWEEN: HARLAP NOMINEES PTY LTD as Trustee for the HARLAP NO 2 FAMILY TRUST
Plaintiff
AND
ROSS WILLIAM POVEY
First Defendant
SALLY IRENE POVEY
Second Defendant
Catchwords:
Practice and procedure - Summary judgment application by the plaintiff - Application of Commercial Tenancies (COVID-19 Response) Act2020 (WA) - Whether termination of tenancy from month to month was in the circumstances unlawful - Turns on its own facts
Legislation:
Commercial Tenancies (COVID-19 Response) Act 2020 (WA)
Result:
Application dismissed
Representation:
Counsel:
| Plaintiff | : | Ms K R Walawski |
| First Defendant | : | In person |
| Second Defendant | : | In person |
Solicitors:
| Plaintiff | : | MDS Legal |
| First Defendant | : | Not applicable |
| Second Defendant | : | Not applicable |
Case(s) referred to in decision(s):
Nil
DEPUTY REGISTRAR HEWITT:
This action was commenced by lodging an endorsed writ on 19 May 2021. An appearance to it was filed on 18 June 2021 and a statement of claim was lodged on 24 September 2021. On 14 October 2021 the plaintiff filed a summary judgment application and it is that application with which I am required to deal.
I pause to mention that although the various steps I have mentioned regarding filing a statement of claim and bringing a summary judgment application were outside the time prescribed by the rules, that time was extended by consent.
The plaintiff's cause of action arises through the occupation by the defendants of a property known as 6 Hazelhurst Street, Kewdale as monthly tenants. The monthly tenancy arose under the terms of a lease which was entered between the defendants, a predecessor in title in 2011. The defendants remained in possession of the premises as lessees until 2014 and although a deed of extension of lease was prepared it was never signed, and they therefore remained thereafter as monthly tenants under the terms of the holding over provision in the lease. On 24 April 2020 the plaintiff served a notice of termination of the lease by giving one month's notice. The claim which is brought by the plaintiff is for monies said to be due by the tenants to the plaintiff following the termination. A large proportion of the claim relates to monthly charges from 1 March 2020 to the end of June 2020. The first two monthly charges comprise the rental remaining unpaid at the date of termination of the lease and the balance for two other monthly payments it being the contention of the plaintiff that until make good requirements have been completed the plaintiff is entitled to charge the defendants the full rental of the property until that deficiency is overcome. A further large component of the amount claimed is the cost of painting the premises which is quantified at $32,747, which is said to be due under the make good provisions. There are one or two other minor amounts claimed and there are some deductions and the final amount claimed is $110,682, and that is the sum for which the writ has been issued.
The defendants have raised in their defence the protection which has been afforded to tenants under the provisions of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) (the Act). It is not in dispute that the Act is potentially relevant to the tenancy of the defendants. The relevant provisions of that Act are the definition of 'lease' in s 3 which is as follows:
lease -
(a)means any lease, sub‑lease, licence or other agreement under which a person grants a right to another person to occupy land or premises -
(i)whether or not the right is a right of exclusive occupation; and
(ii)whether the lease, sub‑lease, licence or agreement is made orally or in writing;
but
(b)does not include any of the following -
(i)a long‑stay agreement to which the Residential Parks (Long‑stay Tenants) Act 2006 applies;
(ii)a residential tenancy agreement to which the Residential Tenancies Act 1987 applies;
(iii)a pastoral lease as defined in the Land Administration Act 1997 section 3;
(iv)a mining tenement as defined in the Mining Act 1978 section 8;
(v)any other lease, sub‑lease, licence or other agreement that is of a class prescribed by regulations for the purposes of this paragraph;
Section 8, s 9 and s 10 of the Act which are as follows, also apply:
8.Term used: prohibited action
In this Part -
prohibited action means action under, or in respect of, a small commercial lease (including seeking orders, or commencing proceedings, in a court or tribunal) for any of the following -
(a)eviction of the tenant from the land or premises that are the subject of the small commercial lease;
(b)exercising a right of re‑entry to the land or premises that are the subject of the small commercial lease;
(c)possession;
(d)recovery of land;
(e)distraint of goods;
(f)forfeiture;
(g)termination of the small commercial lease;
(h)damages;
(i)requiring a payment of interest on unpaid rent or on any other unpaid amount of money payable by the tenant to the landlord under the small commercial lease (including, without limitation, operating expenses);
(j)recovery of the whole or part of any security for the performance of the tenant's obligations under the small commercial lease (including, without limitation, a security bond);
(k)performance of obligations by the tenant or any other person under a guarantee given in respect of the small commercial lease (including, without limitation, making a demand on a bank guarantee);
(l)any other remedy otherwise available to the landlord against the tenant at common law or under a written law.
9.Prohibited action cannot be taken during emergency period
Except in the circumstances (if any) prescribed by regulations for the purposes of this section, a landlord cannot take prohibited action during the emergency period on the grounds of a breach by the tenant of a small commercial lease that occurs during the emergency period if the breach consists of -
(a)a failure to pay rent or any other amount of money payable by the tenant to the landlord under the small commercial lease (including, without limitation, a requirement under the lease to pay all or any of the landlord's operating expenses); or
(b)the land or premises that are the subject of the small commercial lease, or the business carried on there, not being open for business at hours or times specified in the small commercial lease; or
(c)any act or omission of a kind prescribed by regulations for the purposes of this paragraph.
[Section 9: modified by the Commercial Tenancies (COVID-19 Response) Regulations 2020 r. 4AA. See endnote 1M.]
(endnote omitted)
10.Acts and omissions of tenants required under law in response to COVID‑19 pandemic
An act or omission of a tenant during the emergency period that is required under a written law in response to the COVID‑19 pandemic is not to be regarded as -
(a)a breach of a small commercial lease; or
(b)grounds for termination of a small commercial lease; or
(c)grounds for the taking of any prohibited action under, or in respect of, a small commercial lease.
The Act came into effect from 30 March 2020 and ceased to have effect on 28 March 2021.
It is the contention of the defendants that the notice of termination was in breach of the provisions of the Act and confers upon them a defence to their present claim. On my analysis, the tenancy from month to month arising by virtue of holding over after the expiration of the term of the original lease falls within the definition of a lease under the Act because it grants a right to occupy land or premises. Of course, as a matter of law a tenancy from month to month may be terminated upon notice. The position adopted by the plaintiff is that the termination of the tenancy was an exercise of the power to give notice and was not a breach of s 9 of the Act, that is, a termination of the tenancy or a breach by failing to pay rent or other monies.
The question immediately arises whether or not the termination was in fact for failing to pay rent or was it in truth an exercise of the right of the landlord to terminate the monthly tenancy on one month's notice. It is a contest between form and substance. There is no doubt that when the termination notice was given the defendants were in arrears. If that were in truth the motivation for terminating the tenancy, then it would have been a prohibited act.
The breadth of the definition of a lease under the Act suggests to me that a landlord is not allowed to disguise a termination for failing to pay rent as being an exercise of a landlord's right to terminate on one month's notice. If it were to be otherwise, then monthly tenancies would have no protection at all. If the tenant fell into arrears, the landlord would simply be able to exercise his or her power to terminate the tenancy, thus escaping the impact of the Act.
The situation is one which in my view requires investigation. The landlord has stated that he wanted to obtain a long-term tenant and that was his motivation in terminating the tenancy. In the affidavit of Mr Ben Clarke lodged 17 November 2021, there are emails dated 21 June and 24 June 2019 which in my view make it clear that any negotiations in regard to a long term lease to the present defendants was well and truly buried by that time, and in truth, according to the affidavit of Mr Nahum Harlap, negotiations took place in about August 2019 and led to the landlord agreeing that the defendants could continue to occupy the premises beyond the expiration of the term on a periodic basis. The ambitions of the plaintiff for a long-term arrangement were therefore of longstanding.
On my analysis it is a possibility that the motive of the plaintiff in terminating the tenancy was the concern over the defendants falling into arrears and the likelihood that they would fall further into arrears. The timing looks more than coincidental.
If this line of thought is accurate then the termination of the lease, although purporting to be an exercise of the right of a landlord under a periodic tenancy, was in fact motivated by the arrears which were accumulating and therefore unlawful. One effect of the termination of the tenancy was to destroy the defendants' business. If in fact the termination of the tenancy was unlawful then the defendants might well have a substantial counterclaim which could be pleaded as an equitable set‑off against the plaintiff's claim. I also have considerable doubts that if the termination was unlawful, the plaintiff was entitled to continue charging full rent until it had completed painting the premises which it is alleged was the responsibility of the defendants.
A summary judgment should only be granted if the plaintiff's entitlement to judgment is clear and there is no defence, or alternatively, there is no other reason why the matter should go to trial. In my opinion, there is a good reason why this matter should go to trial, that being the considerable question mark which relates to the reality of the reason the periodic tenancy was terminated, and the defendants should have the opportunity to explore that issue, both by way of obtaining discovery, issuing interrogatories if required, and cross‑examining witnesses at trial. For that reason, I am not prepared to grant the plaintiff a summary judgment and instead this matter must go to trial and the application for summary judgment dismissed. I see no reason why the normal order for costs in the cause should not be made but invite the parties to make submissions in that regard.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
FN
Court Officer
12 JANUARY 2022
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