HAY & COLIN PTY LTD AS TRUSTEE FOR THE HAY & COLIN TRUST and SUCIPTO
[2025] WASAT 16
•21 FEBRUARY 2025
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: HAY & COLIN PTY LTD AS TRUSTEE FOR THE HAY & COLIN TRUST and SUCIPTO [2025] WASAT 16
MEMBER: DR B DE VILLIERS, MEMBER
HEARD: 13 FEBRUARY 2025
DELIVERED : 13 FEBRUARY 2025
PUBLISHED : 21 FEBRUARY 2025
FILE NO/S: CC 873 of 2024
BETWEEN: HAY & COLIN PTY LTD AS TRUSTEE FOR THE HAY & COLIN TRUST
Applicant
AND
CHRISTANADY SUCIPTO
Respondent
Catchwords:
Retail shops commercial tenancy - Construction of s 13(7) Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) - Inclusion of a clause in a lease to authorise early termination of lease by landlord - Tribunal being satisfied that special circumstances exist to give approval for inclusion of a provision for early termination of lease - What constitutes special circumstances - Is a proposal of redevelopment a precondition for a special circumstance to exist - Special circumstance exist
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13(1), s 13(1)(b), s 13(6), s 13(6)(a), s 13(6)(b), s 13(6)(c), s 13(6)(d), s 13(7)
Result:
Early termination clause approved
Category: B
Representation:
Counsel:
| Applicant | : | Mr B J Hebenton |
| Respondent | : | In Person |
Solicitors:
| Applicant | : | Michael Hughes Legal |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59
Hay & Colin Pty Ltd v West End Hospitality Pty Ltd [2021] WASC 458
Re Commercial Registrar of the Commercial Tribunal of Western Australia; ex parte Commissioner of Main Roads and Scarff and Hough (Unreported, WASC, Library No 970522, 14 October 1997)
Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47
Synicast Pty Ltd as Trustee for the Quentin Avenue Unit Trust v Showroom X Pty Ltd [2021] WASC 449
WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act) in sub-clause 13(1) provides that a tenant of a retail shopping centre is entitled to a 5-year lease. The initial lease does not have to be for 5 years, but the tenant is entitled to extend any shorter‑term lease that is more than 6 months, to 5 years (s 13(1(b) CTRSA Act). This is an important statutory protection for a tenant to be able to establish and operate their enterprise, and to recoup the costs of setting up the business.
The CTRSA Act foreshadows, however, in sub-section 13(6) that a lease may in certain circumstances be determined prior to the 5-year period. One category for early termination of a lease is found in sub‑section 13(7) CTRSA Act. Sub-section 13(7) CTRSA Act empowers the Tribunal to approve of the inclusion in a lease of a provision under which the landlord may determine the lease prior to the expiry of 5 years if the Tribunal is satisfied that special circumstances exist by reason of which such inclusion of a clause ought to be given.
In this proceeding the landlord says that, amongst several reasons, special circumstances exist due to the possibility that it may prior to the expiry of 5 years, decide to redevelop the retail centre. There is no definite plan yet to redevelop the centre, but it is a possibility. The respondent (tenant) supports the application. The parties have also agreed on a period of notice to be given to the tenant and the compensation payable by the landlord to the tenant should redevelopment occur within 5 years.
The lease is conditional on approval being granted pursuant to sub‑section 13(7) CTRSA Act. I must decide if the circumstances identified by the landlord to justify the inclusion of the special condition satisfy the statutory requirement of 'special circumstances' of sub‑section 13(7) CTRSA Act.
Background
This proceeding concerns an application by Hay and Colin Pty Ltd for the Hay and Colin Trust (landlord) which in turn is the registered proprietor of 1228 Hay Street, West Perth, WA (premises) for approval of a condition of a lease whereby in the event of the redevelopment of the premises, the applicant may terminate the lease before the expiry of 5 years from the commencement of the initial period of the lease. The premises forms part of a commercial retail shopping centre with several retail tenancies. The special condition is found in Special Clause 10.8 in the Schedule to the lease which provides for early termination of the lease in the event of a redevelopment. The parties have negotiated the notice period to be given in the event of an early termination (12 months) as well as compensation to be paid to the respondent (tenant) should an early termination take place due to redevelopment.
The application is brought pursuant to s13(7) CTRSA Act. I can approve the inclusion of Special Clause 10.8 if I am satisfied that a special circumstance exists by reason of which the approval ought to be given. The approval of the Tribunal is required for inclusion of an early termination clause because the starting point in considering the exercise of jurisdiction in s 13(7) of the CTRSA Act, is that early termination 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 pursuant to s 13(1) CTRSA Act. The risks of an early termination of lease to the tenant are obvious, but principally the tenant may find itself in a situation where a lease is terminated before it could recoup its investment. The security of tenure sought to be given to the tenant by the CTRSA Act is therefore potentially affected by Special Clause 10.8 and hence the inclusion in the lease thereof requires approval by the Tribunal. The approval by the tenant of Special Clause 10.8 and the agreement between the parties on a formula for compensation should early termination occur, are relevant but not determinative facts. I must be satisfied, when all evidence is considered, that approval ought to be given for the inclusion of Special Clause 10.8.
The landlord says the special circumstance provided for in Special Clause 10.8 is principally that the applicant may redevelop the retail shopping centre prior to the expiry of 5 years. The landlord also submits other reasons, as discussed below, in support of the approval sought. The landlord says there are no immediate plans to redevelop, but in light of several factors, such as the age of the shopping centre which was initially constructed around 1948; the approval that had already been given by the Tribunal for the inclusion of a similar clause in retail tenancy leases in other parts of the same retail shopping centre; and the commercial rationale underlying this tenancy, that approval ought to be granted. The landlord and tenant have negotiated and agreed on the inclusion of Special Clause 10.8 of the Schedule to the lease as well as the notification period for termination of the lease and compensation should the lease be terminated.
The parties executed the lease on 11 November 2024. The tenant wrote a letter to the Tribunal dated 22 January 2025 to again confirm its support for the inclusion of Special Clause 10.8. The lease is, pursuant to Special Clause 10.9 of the Schedule to the lease, subject to approval by the Tribunal of Special Clause 10.8.
The question for me to determine is whether the reasons identified by the landlord for including Special Clause 10.8 in the lease satisfy the statutory requirements of sub-section 13(7) CTRSA Act.
Issue
Should the Tribunal approve the inclusion of Special Clause 10.8 in the lease dated 11 November 2024 on the basis that it meets the requirements of special circumstances pursuant to s 13(7) CTRSA Act?
The premises
Hay and Colin Trust is the registered proprietor of 1228 Hay Street, West Perth, WA (premises). The premises is part of a retail shopping centre that comprises several retail shop tenancies. The premises is 48.5 square metres. The tenant intends to operate a beauty and nail salon. The landlord and tenant entered a lease on 11 November 2024 for the tenant to rent the premises for 5 years with an option to renew for another 3 years (Special Clause 6 of the Schedule). The lease contains in the Schedule the Special Clause 10.8 for which the approval of the Tribunal is sought. The lease is conditional on the approval by the Tribunal of Special Clause 10.8 (Special Clauses 10.1 and 10.9). The lease will commence only if I give approval for the inclusion of Special Clause 10.8.
The application
The application was received on 4 December 2024. I invited by way of order dated 30 December 2024 additional information from the landlord in respect of its actual plan for redevelopment, if any. The landlord confirmed by written submission that there was no plan for redevelopment on foot. The landlord also made submissions concerning what in its opinion generally constitutes a special circumstance, and more particularly whether an actual proposal for redevelopment must exist before sub-section 13(7) is satisfied.
After having considered the evidence and the urgency for the tenant who was waiting to take occupation, I granted approval of Special Clause 10.8 on 13 February 2025. I explained that written reasons will follow. These are the reasons for the decision.
Special Clause 10.8
Special Clause 10.8 for which approval is sought pursuant to s 13(7) CTRSA Act provides as follows:
10.8Redevelopment
(a)Notwithstanding anything to the contrary herein contained or implied, if at any time the Lessor desires to develop or redevelop the Leased Premises or a substantial part thereof, the Lessor by not less than 12 months' notice in writing to the Lessee may terminate this Lease, and this Lease shall automatically terminate on the date specified in that notice (Termination Date) without compensation to the Lessee (save only as provided in special clause 10.8(c)), but any such termination shall be without prejudice to any then existing claim by the Lessor against the Lessee. If this Lease is to terminated the Lessee shall yield up vacant possession of the Leased Premises to the Lessor, and shall deliver to the Lessor its copy of this Lease duly endorsed with a surrender thereof, on the date of the termination.
(b)The Termination Date may not be prior to the first anniversary of the Commencement Date.
(c)If during the periods specified below this Lease is terminated by the Lessor pursuant to special clause 10.8(a) then the Lessor shall pay the Lessee the amounts provided as follows:
Date on which the Lease Terminates Under Special Clause 10.8(a)
Payment Amount
During the period: the first anniversary of the Commencement Date - the second anniversary of the Commencement Date less one day
The amount equivalent to all Rent paid by the Lessee from the Commencement Date until the Termination Date.
During the period: the second anniversary of the Commencement Date - the third anniversary of the Commencement Date less one day
The amount equivalent to 75% of all Rent paid by the Lessee from the Commencement Date until the Termination Date.
During the period: the third anniversary of the Commencement Date - the fourth anniversary of the Commencement Date less one day
The amount equivalent to 50% of all Rent paid by the Lessee from the Commencement Date until the Termination Date.
During the period: the fourth anniversary of the Commencement Date - the fifth anniversary of the Commencement Date less one day
The amount equivalent to 25% of all rent paid by the Lessee from the Commencement Date until the Termination Date.
(d)For the avoidance of doubt:
(i)this special clause is only an early termination clause and nothing in this special clause 10.8 entitles the Lessor to relocate the Lessee to an alternative premises; and
(ii)the Lessor is not obliged to make any payment to the Lessee if this Lease is terminated pursuant to special clause 10.8(a) on or after the fifth anniversary of the Commencement Date.
The essential elements of Special Clause 10.8 for purposes of this proceeding are summarised as follows: the landlord shall give no less than 12 months' notice of termination of the lease in the event of an early termination (Special Clause 10.8(a)); compensation according to a formula agreed to between the parties shall be payable by the landlord to the tenant in the event of early termination (Special Clause 10.8(c)); the Special Clause only applies to redevelopment and does not give rise to the landlord being able to relocate the tenant (Special Clause 10.8(d)); and the compensation is payable only if the lease is determined during the initial 5-years (Special Clause 10.8(d)ii)). The commencement of the lease depends on approval by the Tribunal of Special Clause 10.8.
Statutory framework
The most relevant parts of s 13 CTRSA Act are those that relate to the right to a 5-year term of lease (s 13(1)); circumstances in which the lease may be determined (s 13(6)); and the special circumstances‑provision (s 13(7)) which is relied upon in this proceeding. For sake of convenience those relevant sub-sections are quoted below:
13.Tenant entitled to at least 5 year term in some cases etc.
(1)Subject to this section, where under a retail shop lease —
(a)the term of the lease (in this section called the current term) is more than 6 months but less than 5 years; and
(b)the current term plus any term (in this section called the option term) that may be obtained by the tenant by way of an option to renew the lease totals more than 6 months but less than 5 years,
the lease shall be taken to give the tenant an option to renew the lease for a term commencing immediately after the expiry of the current term and the option term, if any, and ending on a day specified by the tenant that is not later than 5 years after the day of commencement of the current term.
…
(6)The landlord under a retail shop lease is not entitled to determine the lease —
(aa)if the lease is a lease referred to in subsection (1), before the day on which the term that may be obtained by the tenant under that subsection expires; or
(ab)if the lease is a lease the current term of which, or the current term plus the option term, is 5 years or longer, before the day that is 5 years after the day on which the current term commenced,
except —
(a)by reason of default by the tenant or failure of the tenant to remedy any such default in accordance with the lease; or
(b)by reason that —
(i)it would be inconsistent with a head lease under which the premises are held by the landlord for the retail shop lease to continue; and
(ii)that inconsistency is not, by reason of section 13A(1), removed;
or
(c)under and in accordance with a provision that is included in the lease with the approval in writing of the Tribunal given under subsection (7) or (7a); or
(da)under and in accordance with a provision of the lease that is the same, or substantially the same, as a provision prescribed for the purposes of this section; or
(d)where the Tribunal has granted an application by the tenant under subsection (7b), in relation to a lease referred to in paragraph (aa).
(7)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.
Special circumstances identified by the landlord
The landlord acknowledged that it had no immediate plans for redevelopment of the premises or the retail centre, but contended that in light of the age of the building and other factors as listed below, the threshold for special circumstances in s 13(7) CTRSA Act is satisfied. The landlord explained by way of supplementary submission that if it were to decide to redevelop and then had to wait until a decision is made by the Tribunal to approve or reject the early termination of the lease, it would cause time to be wasted and it would be unnecessarily cumbersome to only at that stage seek approval for the inclusion of Special Clause 10.8. It is therefore reasonable and appropriate for the landlord, supported by the tenant, to seek approval of Special Clause 10.8 at the commencement of the lease before the tenant occupies the premises and commences its business.
The landlord explained as follows the special conditions that in its view support the inclusion of Special Clause 10.8:
1.The lessee and lessor parties have agreed commercially at arms‑length to include the relevant special clause.
2.The building in which the leased premises is situated is old and may require redevelopment works within the next five years.
3.All of the leases of premises within the lessor's building have an equivalent redevelopment clause approved by SAT.
4.If the lessor re-develops, the intention is that it can terminate the lease to enable redevelopment to occur. The lease does not contemplate, nor does the lessor require, any right to relocate the lessee's business. If the lease of is terminated, whether or not (and if so, where) the lessee chooses to re-stablish its business is a matter for the lessee alone.
5.The lessee is aware of this and that it is only commercially viable for the lessor to lease premises within the building if the special clause is included.
6.A generous compensation arrangement is included in the special clause to compensate the lessee in the event the special clause comes into effect. The lessee is also provided with 12 months prior notice should the clause be enacted by the lessor.
The tenant made no submissions other than having signed the lease and confirming its support for Special Clause 10.8 by way of separate letter dated 22 January 2025.
Submissions by the landlord
The landlord says that Special Clause 10.8 satisfies the requirements of sub-section 13(7) CTRSA Act for the following reasons:
1.The parties have negotiated the terms of the lease, including Special Clause 10.8, at arms-length;
2.The retail building in which the premises is located is old and it may undergo redevelopment in the next 5 years;
3.Other retail tenancies in the same centre have in their leases, with the approval of this Tribunal, the equivalent special circumstance of Special Clause 10.8;
4.Special Clause 10.8 does not require the tenant to relocate;
5.The inclusion of the Special Clause 10.8 in this lease as well as the other leases in the building is the only commercially viable option for the landlord;
6.If redevelopment occurs within 5 years from the commencement of the lease, compensation as agreed to between the parties will be payable to the tenant;
7.Special Clause 10.8 is similar to redevelopment clause that had previously been considered and approved in the matter of Hay & Colin Pty Ltd v West End Hospitality Pty Ltd [2021] WASC 458 (Hay & Colin).
8.There is no closed list of special circumstances, which means that each case must be dealt with according to merit. Importantly, sub-section 13(7) does not mandate an actual plan for redevelopment. In this proceeding the potential of redevelopment read with the other circumstances of this premises and the commercial interests of the parties, satisfies the statutory requirement of sub-section 13(7).
Consideration
My decision and reasons for decision are as follows:
Approval should be granted pursuant to s 13(7) CTRSA Act because of special circumstances for the inclusion in the retail shop lease for 1228 Hay Street, West Perth, of special clause 10.8 allowing for the early termination of the lease by the applicant.
Starting point
The starting point to consider the exercise of jurisdiction in s 13(7) of the CTRSA Act is that it represents a departure from the tenant's right to an option of extending the term of the lease to a period of up to 5 years. The option for an extended period of 5 years is an important and valuable right of 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) -s 13(6)(d) of the CTRSA Act. If the Tribunal is satisfied pursuant to s‑13(7) of the CTRSA Act that special circumstances exist, it may approve for inclusion in a lease the right of the landlord to terminate the lease early. In the current proceeding the landlord contends that the possibility of a redevelopment is a special circumstance that meets the inclusion in the lease of Special Clause 10.8. The landlord does not merely raise the possibility of a redevelopment, it also explains why special circumstances exist taking into consideration the age of the building, the commercial rationale for it offering the lease, and the terms of other leases in the same retail scheme.
Jurisdiction of the Tribunal
The Tribunal's jurisdiction exists in respect of an application by the landlord, where notice has been given to the tenant, and where the clause for which approval is sought falls within sub‑section 13(6)(c) of the CTRSA Act. Sub-section 13(6)(c) in turn refers to sub-section 13(7) which empowers me to consider Special Clause 10.8 for inclusion in the lease if I am satisfied that special circumstances exist.
Special circumstances
I can only approve the inclusion of a termination clause in the lease pursuant to s13(7) of the CTRSA Act if I am satisfied that a special circumstance exists by reason of which such approval ought to be given. It is important to note that the tenant does not have to consent to Special Clause 10.8, but the tenant must be informed and be made aware of the proposed inclusion of a clause pursuant to s 13(7) of the CTRSA Act. This is because the rights of the tenant are impacted by the inclusion of Special Clause 10.8. In the current proceeding the respondent has consented to inclusion of Special Clause 10.8. If a tenant is not satisfied with the approval sought by the landlord pursuant to s 13(7), the avenue is open for the tenant to object to an early termination clause being approved. The Tribunal deals with s 13(7) applications in the same way as the procedures that apply to other proceedings in the Tribunal's original jurisdiction. A tenant can, once it is notified of a s 13(7) application, object to approval of a particular clause being granted. The Tribunal will then determine the matter on its merit. In this case the tenant supports Special Clause 10.8. The tenant made no further submissions.
I can only approve the inclusion of a clause permitting the early termination of the lease if I am satisfied that a special circumstance exists. Clauses in the lease dealing with matters other than termination of the lease, for example notice of termination and compensation to be paid to the tenant, do not require approval under s 13(7) of the CTRSA Act.
Special circumstance: not ordinary, but not exceptional
The CTRSA Act does not define what is meant by 'special circumstance'. The meaning of special circumstance must be ascertained from its ordinary meaning as well as the objectives of the CTRSA Act. In WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41(WASCF Alliances),[1] Allanson J said as follows about what may constitute a special circumstance:
The words 'special circumstances' are found in many contexts and 'will always take their colour from their surroundings'. In whatever context the phrase appears, the circumstances must be 'special', that is, 'out of the ordinary', 'unusual'. In the context of s 13(7), the term requires some circumstances be shown which are special in this sense, and sufficient to justify a departure from the ordinary rule that a lease may not include a provision which permits its early determination.
(footnotes omitted)
[1] WASCF Alliances [23].
I follow the approach adopted by his Honour. In the current proceeding the landlord has explained by way of submission that the premises may be redeveloped within the next 5 years albeit there are no specific redevelopment plans on foot. Many factors influence a decision to redevelop, and it may be that commercial realities make a redevelopment feasible within 5 years. The landlord submits that the other tenancies in the premises have included in their respective leases, with the approval of the Tribunal, a similar special condition as Special Clause 10.8. It is reasonable and within the ambit of 'special circumstance' for the landlord to seek to include in all the leases of this retail tenancy a provision pursuant to s 13(7). Added thereto, the premises is relatively old, a decision to redevelop the premises of the entire centre may be made within 5 years, it is reasonable to anticipate the potential of redevelopment and to include in the lease a special condition should a redevelopment decision be made, and it would not be commercially efficient to wait until a redevelopment decision is made before approaching the Tribunal for approval of special clauses for some or all the tenancies in the centre.
I note that an approval pursuant to s13(7) can be sought before or after the parties had entered into a lease (Re Commercial Registrar of the Commercial Tribunal of Western Australia; ex parte Commissioner of Main Roads and Scarff and Hough (Unreported, WASC, Library No 970522, 14 October 1997)), but I accept the rationale of the landlord in this proceeding for Special Clause 10.8 to be included prior to the lease taking effect. This does not, however, preclude a landlord from seeking approval pursuant to s13(7) after a lease had commenced.
Potential or actual plans for redevelopment
A pertinent question that arose in this proceeding was whether the use of the phrase that a special circumstance must 'exist' in s 13(7) implies that an actual decision to redevelop has been made and added thereto, that information or plans for such a redevelopment may be tendered into evidence.
My response to the question is in the negative. Sub-section 13(7) is open ended as far as possible special circumstances are concerned, provided that those special circumstances are real and not hypothetical. The special circumstances must exist rather than only being speculative. Sub-section 13(7) clearly does not mandate that plans for a redevelopment must already be on foot at the time the approval of the Tribunal is sought. Sub-section 13(7) also does not entail a closed list of events that constitute a special circumstance. It depends on the circumstances of each case. The landlord must therefore provide the Tribunal with adequate evidence to sustain its proposition that a special circumstance exists.
The mere mention of a potential redevelopment may not be adequate to satisfy the Tribunal, but in this case the landlord satisfied me that, when all relevant facts are taken into account, special circumstances exist. The landlord does not only rely on the potential of a redevelopment, the landlord also cites the age of the building, the special conditions that have been approved by this Tribunal for other leases in the same retail scheme; the compensation package agreed to between the parties should a redevelopment occur within 5 years; the agreement of the tenant with Special Clause 10.8, and the commercial reality under which this retail premises is operating.
Agreement of tenant
As explained above, approval of Special Clause 10.8 is not conditional on support of the tenant. If the tenant opposes the inclusion of a special condition pursuant to s 13(7), the Tribunal will determine the matter in its ordinary course. Prichard J noted in Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast) that the tenant had agreed to the redevelopment clause [31]. Although the tenant's agreement is not in itself a requirement for the Tribunal's approval of Special Clause 10.8, it is a relevant fact. In this proceeding the tenant has accepted Special Clause 10.8 and again confirmed by way of separate letter the acceptance.
Other terms in the lease
The Tribunal is not required to approve the compensation arrangements or the notice to be given of the lease should the lease be terminated pursuant to s 13(7). The authority to consider the 'special circumstances' for an early termination of the lease does not enliven an investigative enquiry about other terms of the lease such as the compensation, or rent reduction, or whatever terms the parties have agreed if the lease is terminated pursuant to s 13(7). Those are matters for the parties to consider. My discretion is limited to what constitutes a special circumstance that may justify a lease period of less than 5 years. The fact that the parties agree about compensation arrangements and notice period are, however, relevant to understand the 'legitimately reached bargain between commercial partners' (Hay & Colin at [37]). The agreement between the parties on terms other than early termination but related thereto, signifies the 'overall commerciality' of the agreement reached and approval sought (Hay & Colin at [38]). I therefore agree with the applicant that it is for the parties to negotiate at arm's length the terms of the lease, including reduction of rental and any other compensation should the lease be terminated pursuant to s 13(7) of the CTRSA Act.
In my determination of the matter, I have found guidance from several judgments that had considered s 13(7) CTRSA Act:
WASCF Alliances
As stated in WASCF Alliances the question whether special circumstances exist depends on the facts of each case. There is no definition of 'special', but it does suggest that the circumstances relied upon must be out of the ordinary. A mere possibility of a redevelopment may not be adequate to satisfy s13(7). In this proceeding the combination of factors, such as the age of the building, precedents in leases in other tenancies in the same retain centre, commercial considerations of both parties, and support for the clause by the tenant, meets the standard that special circumstances exist.
480 Hay Street
Curthoys J in 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59 at [31] drew a distinction between special circumstance and an extraordinary or exceptional circumstance. A special circumstance is not intended to be highly unusual, but it must also not be ordinary. Ultimately it is a discretionary judgment for the Tribunal based on all the relevant facts. Curthoys J put it as follows:[2]
[2] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [42].
In the context of costs the term 'special circumstances' has been held to mean 'circumstances that are out of the ordinary, but without having to be extraordinary or exceptional. I have concluded that there is an appropriate manner in which to interpret that term of the Act. This recognises that the term potentially extends to a wide variety of circumstances which may arise under a tenancy.
(emphasis added)
The 'wide variety' of circumstances that may arise from specific circumstances inform the discretion of the Tribunal. The special circumstances will always take their colour from their surroundings (WASCF Alliances).
Hay & Colin
The approach adopted by Curthoys J was endorsed by Martin J in Hay & Colin in which in respect of the same retail precinct the subject of the current proceeding, his Honour accepted that the factors identified by the landlord satisfied the requirement of special circumstances pursuant to s 13(7). The grounds for orders in the proceeding before me are the same as those accepted by Martin J. His Honour found as follows in [34] - [35]:
The applicant submissions clearly identify the special circumstances that it relies on. I am satisfied such circumstances meet the requirements of section 13(7) of the Retail Shops Act …
Such considerations as enumerated above, are all effective and viable to support my finding as to an affirmative ascertainment, presently, of special circumstances.
Martin J noted that the approach adopted above 'is of paramount commercial importance under the circumstances'.[3] His Honour concluded that the circumstances 'are all effective and viable to support my finding as to affirmative ascertainment, presently, of special circumstances'.[4] His Honour further noted that the tenant consented, as in the current proceeding, to the special condition, which 'adds another ingredient to the overall commerciality underlying' the approval sought'.[5] His Honour also noted the age of the building and the commercial logic of coordinating leases to coincide with any further decision to redevelop.[6] Finally, his Honour noted that the lease in general and the special condition in particular had been the subject of negotiations between the parties and there was no reason for the court to 'second guess' or to 'probe the fairness' of deal reached.[7] In the current proceeding I follow these findings of his Honour since those are relevant and directly applicable.
[3] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [33].
[4] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [35].
[5] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [38].
[6] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [36].
[7] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [37].
Synicast
In Synicast President of the Tribunal, Prichard J, had to consider whether special circumstances as identified by the landlord met the requirements of s 13(7). In that factual matrix a decision about a redevelopment within 5 years had been made.[8] Her Honour provided an overview of prominent features of s 13(7), including that a special circumstance pursuant to s 13(7) does not include reasons for an early termination of lease already permitted pursuant to s 13(6)(a), s 13(6)(b), or s 13(6)(da).[9] The discretion of the Tribunal is 'undoubtedly broad', but it must be exercised within the context of the facts of the subject matter, the scope and purpose of the statute.[10] Importantly, the special circumstance must 'exist' at the time of application before the Tribunal.[11] As Prichard J reasoned:[12]
[8] Synicast [12] - [14]; [18].
[9] Synicast [22].
[10] Synicast [27].
[11] Synicast [30].
[12] Synicast [30].
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 s13(7) of the Act, the special circumstances must have come into existence, or there must be an 'objective intension' 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.
In Synicast a decision for redevelopment had already been made. Prichard J nevertheless noted that the planned redevelopment 'was not the only circumstance considered relevant to whether, overall, "special circumstances" existed sufficient to warrant approval for the early termination of the lease'.[13] Although the application as originally filed with the Tribunal in Synicast did not contain any detail of the proposed redevelopment, the landlord later provided by way of further evidence and submission, after the matter had been remitted to the Tribunal by the Supreme Court, information about the plan for redevelopment.[14]
[13] Synicast [54].
[14] Synicast [67].
Synicast does not imply that in each case where a possible redevelopment is relied on as a special condition under s 13(7), that an actual decision and plan must be in place to proceed with redevelopment within 5 years. Note in this respect WASCF Alliance in which the early termination was only to occur when a major tenant of the shopping centre intended to vacate. In Hay & Colin it was said by Martin J that it is 'obvious' for an old building with multiple tenants to 'coordinate works around all the tenancies in a way that was orderly and would allow that to globally occur' if the building require a 'significant future renovation, redevelopment, demolition or reconstruction'.[15] In Synicast Pty Ltd as Trustee for the Quentin Avenue Unit Trust v Showroom X Pty Ltd [2021] WASC 449 her Honour Archer J accepted a special circumstance based on the possibility of a redevelopment. Her Honour concluded as follows:[16]
[15] Hay & Colin [36].
[16] Synicast Pty Ltd as Trustee for the Quentin Unit Trust v Showroom X Pty Ltd [22].
There is no material difference between Condition 5 and cl 14 [of the 480 Hay Street]. I should follow Curthoys J's decision unless I am satisfied it is plainly wrong. I am not.
The discretion of the Tribunal is wide and is not limited to only approve as special circumstance a proposal if an actual redevelopment is planned within 5 years. It is likely to assist the Tribunal in the exercise of its discretion if an actual redevelopment is planned and evidence is submitted, but ultimately all facts must be considered before an approval pursuant to s 13(7) is given.
On the facts before me the special circumstances identified by the landlord 'exist'; they are 'real'; and they are part of 'objective reality' since the landlord has explained the entire factual matrix that, when read together, constitute 'special circumstances'. The 'totality of circumstances'[17] of the facts before me support the approval of Special Clause 10.8. The landlord does not merely raise the possibility of a redevelopment as a remote or ordinary possibility. The potential for redevelopment must be assessed within the context of the age of the premises, the commercial realities under which the parties operate, the redevelopment clauses already approved for other leases in the same scheme, and the benefit of proper planning in advance if a decision to redevelop is made.
[17] Synicast [54].
In the context of this proceeding, I agree with the landlord that there is commercial logic for the leases within the shopping centre to contain similar clauses for redevelopment. Otherwise, it could be cumbersome and commercially fraught with uncertainty for the landlord to make a decision about redevelopment and only then to seek approval from the Tribunal pursuant to s13(7). It is of course possible for a landlord to wait until a redevelopment plan is in place and then seek approval from the Tribunal, but in this proceeding the landlord for good reason sought the approval prospectively prior to any plans for redevelopment being finalised. This reflects the statement of Prichard J that there is no 'exhaustive' list of special circumstances[18] since the entirety of each application must be considered.
[18] Synicast [62].
In summary I am satisfied that approval should be granted for Special Clause 10.8 on the basis that it represents a special circumstance pursuant to s 13(7) CTRSA Act.
Order
Approval is granted pursuant to s 13(7) of the Commercial Tenancies (Retail Shops) Agreements Act 1985 because of special circumstances for the inclusion in the retail shop lease for 1228 Hay Street, West Perth between the applicant and respondent, of Special Clause 10.8 allowing for the early termination of the lease by the applicant.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
DR B DEVILLIERS, MEMBER
21 FEBRUARY 2025
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