IOPPOLO NOMINEES PTY LTD and MAJOR - [2021] WASAT 88

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCIES (COVID-19 RESPONSE) ACT 2020 (WA)
CITATION:   IOPPOLO NOMINEES PTY LTD and MAJOR [2021] WASAT 88
MEMBER:   MS C BARTON, MEMBER
HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   25 JUNE 2021
FILE NO/S:   CC 1702 of 2020
BETWEEN:   IOPPOLO NOMINEES PTY LTD
Applicant
AND
PETER JOHN MAJOR
Respondent

Catchwords:

Retail shops - Commercial tenancies - COVID-19 pandemic - Small commercial lease - Relief sought by landlord - Code of conduct dispute - Financial hardship dispute - Emergency period - Whether application for rent relief - Whether eligible tenant - Jobkeeper - Decline in turnover - Sufficient and accurate information - Unpaid rent and outgoings - Termination of lease - Exercise of discretion

Legislation:

Commercial Tenancies (COVID-19 Response) Act 2020 (WA), s 3, s 14, s 14(2), s 16, s 17, s 18, s 19, s 19(1)
Commercial Tenancies (COVID-19 Response) Regulations 2020 (WA), reg 2B, reg 5, Sch 1, cl 2, cl 5,
Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth), s 6, s 7, s 8, s 8(7)
State Administrative Tribunal Act 2004 (WA), s 15(1), s 16(2), s 60(2)

Result:

Application allowed

Category: B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Rowe Bristol Lawyers
Respondent	:	N/A

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

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

Ioppolo Nominees Pty Ltd (applicant) is the landlord of premises at Unit 1, 33 Hector Street, Osborne Park (premises). On 13 July 2018, the applicant entered into a lease with Mr Peter Major (respondent) in relation to the premises (Lease).
On 27 September 2020, the applicant applied to the Tribunal under s 16(1) of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) (COVID Response Act). The applicant seeks a determination as whether the respondent is an 'eligible tenant' under cl 2 of the Code of Conduct in Sch 1 to the Commercial Tenancies (COVID19 Response) Regulations 2020 (WA) (Code).
The applicant also seeks an order from the Tribunal terminating the Lease and a further order that the respondent pay any unpaid rent, variable outgoings and other outstanding charges due under the Lease to the date of termination.
At a directions hearing held on 13 January 2021, an order was made by the Tribunal that the matter is to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The parties were required to file written submissions and any documents, including affidavits, on which they proposed to rely.
The respondent did not participate in the proceeding and did not file any documents as required by the orders made on 13 January 2021. In making its determination, the Tribunal relies on the affidavit evidence and supporting documents filed by the applicant.

The issues for determination

The issues that require determination are:
1)Is the dispute arising under the Code a 'code of conduct dispute' or a 'financial hardship dispute' or both?
2)If the dispute is a 'code of conduct dispute':
a)Did the respondent make a request for rent relief with 'sufficient and accurate information' in support of his request as required by cl 5 of the Code?
b)Is the respondent an 'eligible tenant' for the purposes of cl 2 of the Code and, therefore, entitled to rent relief?
3)If the dispute is a 'financial hardship dispute':
a)Did the respondent breach the terms of the Lease by failing to pay rent or any other amount payable to the applicant during the emergency period?
b)Was the respondent's failure to pay to the applicant rent or any other amount payable under the Lease the result of the respondent suffering financial hardship?
4)Should the Tribunal exercise its discretion to grant relief to the applicant taking into account the factors set out in s 17 of the COVID Response Act?

The Tribunal's jurisdiction

Section 16(1) of the COVID Response Act provides that a party to a dispute may apply to the Tribunal to have the dispute determined. The term 'dispute' is defined in s 14 of the COVID Response Act. It includes a 'code of conduct dispute' and a 'financial hardship dispute.'
Section 14 provides that for the purposes of the COVID Response Act 'dispute':
(a)means a dispute between the parties to a lease, or 1 or more parties to a lease and a person who has given a guarantee in respect of the lease, that arises out of, or in relation to, the operation of this Act; and
(b)includes –
(i)a code of conduct dispute; and
(ii)a financial hardship dispute[.]
The expression 'financial hardship', is also defined in s 14 of the COVID Response Act. Its definition is:
[I]n relation to a tenant, financial hardship suffered by the tenant as a result of 1 or more of the following –
(a)a restriction imposed under a written law in response to the COVID-19 pandemic;
(b)changes in societal behaviour in response to the COVID19 pandemic;
(c)any other consequences of the COVID-19 pandemic[.]
The expression 'financial hardship dispute' is defined in s 14(2) of the COVID Response Act as follows:
[A] financial hardship dispute is a dispute between the parties to a small commercial lease in the following situation –
(a)during the emergency period, the tenant has breached the small commercial lease by failing 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); and
(b)the landlord claims that the breach was not a result of the tenant suffering financial hardship; and
(c)the landlord has not granted the tenant a waiver, deferral or reduction in respect of the unpaid rent or other unpaid amount of money.
I am satisfied that there is a 'financial hardship dispute' between the parties for the purposes of the COVID Response Act because:
a)the respondent is not up to date with all rent and outgoings due under the Lease;[1]
b)the applicant contends that the failure to pay the rent and outgoings is not the result of the respondent having suffered financial hardship as defined in s 14 of the COVID Response Act;[2] and
c)the applicant has not granted to the respondent any waiver or deferral of unpaid rent and outgoings due under the Lease.[3]
[1] Affidavit of Sandra Chaplyn, sworn 10 February 2021, SSC-28, paras 46-47.
[2] Applicant's submissions dated 10 February 2021, para 57(b).
[3] Applicant's submissions dated 10 February 2021, para 57(c).
The expression 'code of conduct dispute' is also defined in s 14 of the COVID Response Act. The definition is:
[A] dispute that arises out of, or in relation to, the application of the adopted code of conduct in relation to a lease (including, without limitation, a dispute about the waiver or deferral of rent payable under a lease)[.]
The applicant has applied to the Tribunal in relation to the application of the Code to the Lease. Specifically, the applicant seeks a determination from the Tribunal as to whether the respondent is an eligible tenant and, if so, whether he is entitled to any waiver or deferral of rent payable under the Lease for any or all of the emergency period. Consequently, I am satisfied that there is a 'code of conduct' dispute between the parties as that term is defined in the COVID Response Act notwithstanding the respondent did not make the application to the Tribunal.
Section 16(2) of the COVID Response Act conditions or limits the entitlement in s 16(1) of the COVID Response Act by requiring that an application to determine a dispute must be made to the Tribunal during the emergency period unless the Small Business Commissioner (Commissioner) has issued a certificate under s 19 of the COVID Response Act in respect of the dispute. The emergency period commenced on 30 March 2020 and ended on 28 March 2021 (emergency period).[4] I find that the application, having been made to the Tribunal on 11 December 2020, was made within the requisite period.
[4] Section 3 COVID Response Act and reg 2B, Commercial Tenancies (COVID Response) Regulations 2020 (WA).
Sections 16(3) and 16(4) of the COVID Response Act provides, among other things, that an application cannot be made to the Tribunal in respect of a dispute concerning a 'small commercial lease'[5] unless none of the parties to the dispute has made a request to the Commissioner under s 18 of the COVID Response Act in respect of the dispute and the parties agree that the application can be made, or the Commissioner has issued a certificate in respect of the dispute under s 19 of the COVID Response Act. I find that the Lease is a 'small commercial lease' for the purposes of s 16(3) of the COVID Response Act because the respondent operates a 'small business'[6] in the nature of a tyre store and uses the premises that is the subject of the Lease for the purposes of carrying on that business. I further find that the Commissioner issued a certificate to the parties under s 19(1) of the COVID Response Act on 18 November 2020.[7]
[5] The term 'small commercial lease' is defined in s 3, COVID Response Act.
[6] Section s 3 of the COVID Response Act provides that the expression 'small business' has the meaning given in s 3(1) of the Small Business Development Corporation Act 1983 (WA).
[7] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 26, VSI-14.
Based on the findings above, I am satisfied that the Tribunal has jurisdiction to determine the application.
The application falls within the Tribunal's original jurisdiction.[8]
[8] SAT Act, s 15(1).
Pursuant to s 16(1) of the SAT Act, the Tribunal is to deal with a matter falling within its original jurisdiction in accordance with the provisions of the SAT Act and the enabling Act, which in this case is the COVID Response Act. Where there is an inconsistency between the SAT Act and the COVID Response Act, the latter Act prevails.[9]

Onus and burden of proof

[9] SAT Act, s 16(2).

The applicant bears the onus of proving that it is entitled to relief under the COVID Response Act. The standard of proof required to be met by the applicant is the civil standard, that is, proof on the balance of probabilities. The 'balance of probabilities' requires the Tribunal to be satisfied, on the evidence before it, that the matter found to have occurred is more likely than not to have occurred.
Because the respondent has not participated in the proceeding and, therefore, has not provided any information in support of his case, the Tribunal is limited to the affidavit evidence and supporting documents provided by the applicant. Nevertheless, the Tribunal must be satisfied, on the basis of the information submitted by the applicant, that the applicant has proved its case to the relevant civil standard.

Relevant findings of fact

Certain relevant factual matters were not challenged by the respondent because he did not participate in the proceeding. Based on the evidence adduced by the applicant, I make the findings set out in this paragraph:
1)The applicant is a corporation, having been incorporated on 24 May 1977, in the State of Western Australia.[10]
[10] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 2, VSI-1.
2)The premises forms part of the property described as Lot 70 on Diagram 49463, being the whole of the property in Volume 1426, folio 139 (property).[11]
[11] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 3, VSI-2.
3)On 13 July 2017, the applicant entered into the Lease with the respondent in respect of part of the property referred to in the Lease as the premises, being Unit 1, 33 Hector Street, Osborne Park.[12] The Lease is for an initial term of five years, commencing on 1 August 2019 and expiring on 31 July 2022 with one option to renew for a further term of five years.[13]
[12] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 4, VSI-3.
[13] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 5, VSI-3. Schedule to Lease, item 4 and 5.
4)The premises is approximately 1,091m² with 18 car bays.[14]
[14] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 4, VSI-3.
5)Under the terms of the Lease, the premises is designated for commercial use as office/warehouse and more specifically, 'automotive workshop, with the principal business covering tyre supply/replacement/fitting, automotive suspension supply/repair/replacement and supply/storage of associated materials, equipment and automotive parts and accessories'.[15]
[15] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 4, VSI-3. Schedule to Lease, item 9.
6)As at 9 October 2020, the respondent was a director of Automotive Equipment Pty Ltd. He operates a small business (or businesses) known as 'Totally 4x4' and 'Wheels World Tyres & More' from the premises.[16]
[16] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 5, VSI-3A. Affidavit of Tiffany Lau sworn 10 February 2021, para 5, TTL-3; para 8, TTL-6.
7)Pursuant to the Lease, the respondent is liable to pay rent (as adjusted on 1 August 2019 under clause 3.2 of the Lease) in the sum of $7,429.91 plus GST per month, plus operating expenses and other charges.[17]
[17] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 7, VSI-4.
8)The parties are involved in a dispute relating to unpaid rent, variable outgoings and other costs incurred by the applicant. As at 10 February 2020, the total sum owing by the respondent is $109,803.80 (inc GST) which comprises:
a)$83,138.46 (inc GST) in respect of unpaid rent for the period 1 April 2020 to 28 February 2021;[18]
[18] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 44 to 47, SSC-27 and SSC-28.
b)$14,385.84 (inc GST) in respect of variable outgoings;[19]
c)$10,098.75 (inc GST) in respect of adjusted operating expenses for the 2019/2020 financial year; [20] and
d)$2,180.75 (inc GST) for costs and charges incurred by the applicant in respect of the premises, including costs arising from the investigation of hydrocarbon contamination in soil and waste removal.[21]
9)Following attempts by the applicant to resolve the dispute with the respondent, the applicant lodged an application with the Small Business Development Corporation (SBDC) under s 18 of the COVID Response Act to request that the Commissioner provide assistance with resolving the dispute.[22]
10)The respondent failed to reply to the SBDC application and did not respond to attempts made by the SBDC case manager to contact the respondent directly.[23]
11)The SBDC issued a certificate under s 19(1) of the COVID Response Act to enable the applicant to proceed to the Tribunal for determination of the dispute.[24]

Entitlement to rent relief under the Code

[19] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 44 to 47, SSC-27 and SSC-28.

[20] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 40 to 43, SSC-26 as modified by email from applicant's solicitor dated 30 April 2021.

[21] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 26 to 39, SSC-16 to SSC-25.

[22] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 22, VSI-11.

[23] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 25, VSI-13.

[24] Affidavit of Vincent Ioppolo, sworn 10 February 2021, para 26, VSI-14.

Pursuant to cl 5(1) of the Code, a tenant under a small commercial lease may, during the emergency period, request rent relief from the landlord under the lease. A request for rent relief by a tenant must be in writing and be accompanied by, amongst other things, 'sufficient and accurate information' that evidences that the tenant is an 'eligible tenant'.[25]
[25] Clause 5(2)(b), Code.
Clause 5(2) of the Code provides:
…
(a)a statement by the tenant that:
(i)the tenant's lease is a small commercial lease; and
(ii)the tenant is an eligible tenant in relation to the small commercial lease;
(b)sufficient and accurate information that evidences that the tenant is an eligible tenant in relation to the small commercial lease;
(c)sufficient and accurate information that evidences the reduction in the tenant's turnover that -
(i)is associated with the business conducted on the land or premises that are the subject of the small commercial lease; and
(ii)the tenant has experienced during the emergency period or a relevant part of the emergency period.
The terms 'sufficient' and 'accurate' in cl 5(2)(b) and cl 5(2)(c) of the Code are not defined in the COVID Response Act or the Code. In order to determine if the respondent provided 'sufficient and accurate information' to the applicant as required by cl 5(2) of the Code, it is necessary for me to consider both the ordinary meaning of the terms 'sufficient' and 'accurate' and the context in which they are used having regard to the purpose of the COVID Response Act and the Code.
The Macquarie Dictionary Online (as at 22 June 2021) defines 'sufficient' to mean:
adjective1. that suffices; enough or adequate: sufficient proof; sufficient protection[.]
The Macquarie Dictionary Online (as at 22 June 2021) defines 'accurate' as:
adjective 1.exactly conforming to truth, to a standard or rule, or to a model; free from error or defect: an accurate account of the incident.
2. showing precision; meticulous: an accurate typist.
The purpose of the COVID Response Act is to 'support the continuity of commercial tenancies during what is likely to be a period of significant social and economic upheaval for all Western Australians'[26] caused by changes in behaviour resulting from the spread of, or risk of spread of, COVID-19 in our State.
[26] Western Australia, Parliamentary Debates, Legislative Assembly, 16 April 2020, page 2273 (JR Quigley, Minister for Commerce).
From the provisions of the COVID Response Act and the Code, it is clear that the primary purpose of the COVID Response Act is to provide speedy relief for tenants under commercial leases experiencing a decline in turnover as a direct result of the COVID-19 pandemic and that Parliament intended that landlords and tenants would act in good faith in negotiating that relief, whether it be in the form of a waiver and/or deferral of rent.
Have regard to the purpose of the COVID Response Act and applying the ordinary meaning of the terms 'sufficient' and 'accurate', the Tribunal accepts that the type of financial information that would satisfy cl 5(2)(b) and cl 5(2)(c) of the Code might vary from case to case but must be adequate in the circumstances to properly support a tenant's request for rent relief.

'Eligible tenant'

To be entitled to rent relief under cl 5(1) of the Code, the respondent must be an 'eligible tenant'. The term 'eligible tenant' is defined in cl 2 of the Code which provides:
(1)During the period beginning on 30 May 2020 and ending on 27 September 2020 (the relevant period), a tenant under a small commercial lease is an eligible tenant in relation to the small commercial lease if -
(a)the following turnover in the financial year ending on 30 June 2019 was less than $50,000,000 -
(i)if the tenant is a franchisee - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;
(ii)if the tenant is a corporation that is a member of a group - the turnover of the group;
(iii)in any other case - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;
and
(b)the tenant -
(i)qualifies for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Commonwealth) section 7 during the relevant period; or
(ii)has, at any time during the emergency period before 28 September 2020, satisfied the decline in turnover test set out in section 8 of those Rules.
(1A)During the period beginning on 28 September 2020 and ending on 3 January 2021 (the relevant period), a tenant under a small commercial lease is an eligible tenant in relation to the small commercial lease if -
(a)the tenant meets the requirements of subclause (1C); and
(b)the tenant -
(i)qualifies for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Commonwealth) during the relevant period; or
(ii)does not qualify for the jobkeeper scheme during the relevant period, but nevertheless satisfies any test relating to turnover during July, August and September 2020 by which a person can qualify for the jobkeeper scheme during the relevant period.
(1C)For the purposes of subclauses (1A)(a) and (1B)(a), a tenant meets the requirements of this subclause if the following turnover in the financial year ending on 30 June 2020 was less than $50,000,000 -
(a)if the tenant is a franchisee - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;
(b)if the tenant is a corporation that is a member of a group - the turnover of the group;
(c)in any other case - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease[.]

The respondent will be eligible to qualify for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (CERP(PB) Rules) if he carried on a business in Australia on 1 March 2020, employed eligible employees, and satisfied the decline in turnover test in s 8 of the CERP(PB) Rules.[27]
[27] Section 6 and s 7 CERP(PB) Rules.
The decline in turnover test, set out in s 8 of the CERP(PB) Rules, is satisfied where there is a shortfall in projected GST turnover for a turnover test period that equals or exceeds 30% for a relevant comparison period of current GST turnover. Section 8(7) of the CERP(PB) Rules defines the expression 'turnover test period' as a calendar month that ends after 30 March 2020 and before 1 October 2020 or a quarter that starts on 1 April 2020 or 1 July 2020. It also defines the expression 'relevant comparison period' as the corresponding period in 2019; that is, the same month or quarter in 2019.

The applicant's contentions

The applicant contends that the respondent failed to make a proper request for rent relief to the applicant in accordance with cl 5(2) of the Code. By email of 8 April 2020, the respondent advised the applicant that his business had a 56% drop in sales since 16 March 2020, he had to lay off half his staff, and asked for a reduction in rent.[28] However, the applicant says it is unable to point to a formal request by the respondent for rent relief.
[28] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 7, SSC-3.
The applicant further contends that the respondent is not an 'eligible tenant' because the respondent has not provided 'sufficient and accurate information' that evidences that the respondent meets the criteria set out in cl 2 of the Code, namely:
(a)the turnover of the respondent's business conducted at the premises is less than $50,000,000; and
(b)the respondent:
(i)qualifies for the jobkeeper scheme under s 7 of the CERP(PB) Rules during the relevant period; or
(ii)has, at any time during the relevant period satisfied the decline in turnover test in s 8 of the CERP(PB) Rules (decline in turnover test).
The applicant says that the only documentation in support of the respondent's purported decline in turnover is in the form of two screenshots that were attached to an email to the applicant's property manager dated 12 May 2020 (screenshots).[29] In that email, the respondent asserted that he had suffered a reduction in turnover since March 2020 and that his business was 'enrolled in Jobkeeper' and payments have 'just started'.[30]
[29] Applicant's submissions dated 10 February 2021, para 24. Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 10 SSC-6.
[30] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 10 SSC-6.
The screenshots purportedly show the current GST turnover for April 2020 and projected GST turnover for May 2020 for Automotive Equipment Pty Ltd. The screenshots also refer to a projected 64% fall in turnover for May 2020 compared with May 2019.[31]
[31] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 10 SSC-6.
The applicant contends that the respondent has not provided any evidence that his business qualified for and was receiving jobkeeper payments. Apart from the screenshots, the applicant says that the respondent has not provided any information to demonstrate a reduction in business turnover for the relevant period despite repeated requests to do so.[32]

Findings entitlement to rent relief

[32] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 11-20, SSC-7 to SSC-12.

I will next consider whether the respondent requested rent relief in accordance with the Code, including whether he provided 'sufficient and accurate information' to the applicant in support of his request as required by cl 5(2)(b) and cl 5(2)(c) of the Code.
The Tribunal finds that the emails of 8 April 2020 and 12 May 2020 from the respondent to the applicant did not amount to a request for rent relief under the Code. Even if the statements made by the respondent that he was registered for jobkeeper and had a 56% drop in sales satisfied cl 5(2)(a)(ii) of the Code, he did not meet the other requirements in cl 5(2) of the Code, including that the request contain a statement that the Lease is a small commercial lease[33] and that the request be accompanied by sufficient and accurate information that evidences the matters in cl 5(2)(b) and cl 5(2)(c) of the Code.
[33] Clause 5(2)(a)(i), Code.
I am not satisfied that the respondent's emails of 8 April and 12 May 2020 were accompanied by 'sufficient and accurate information' as required by cl 5(2)(b) of the Code to enable the applicant to determine if the respondent was an 'eligible tenant' because:
1)notwithstanding the respondent's email of 12 May 2020 refers to his business being 'enrolled in jobkeeper', it was not accompanied by any further information that demonstrated that his business was receiving jobkeeper. I cannot accept the position that a landlord would be satisfied by a mere assertion of that fact without proof of the tenant's eligibility for jobkeeper; and
2)further, the screenshots do nothing more than show the actual turnover for April 2020 and a projected decline in turnover for May 2020 compared with May 2019 of 64%. Consequently, I am not satisfied that the screenshots demonstrate any actual decline in the respondent's turnover for April 2020 or May 2020 compared with the same calendar months in 2019 for the purposes of the decline in turnover test.
I am also not satisfied, for the reasons just stated, that the respondent provided the applicant with sufficient and accurate information that evidences the reduction in turnover that he experienced during the emergency period or a relevant part of the emergency period for the purposes of cl 5(2)(c) of the Code.
Based on the above, I find that the respondent did not make a proper request for rent relief under the Code, which included a failure to provide sufficient and accurate financial information to enable the applicant to assess if he was entitled to any relief. No additional information which may support an entitlement to rent relief has been proffered by the respondent in this proceeding.
Accordingly, I find that the respondent did not establish that he was an 'eligible tenant' for the purposes of cl 2 of the Code.
It follows from this finding that the respondent is not entitled to rent relief under the Code.

Respondent's breach due to unpaid rent and outgoings

The applicant contends that the respondent has breached the terms of the Lease because he is liable to pay to the applicant unpaid rent, variable outgoings and expenses incurred with respect to the Lease and premises.[34] As at 10 February 2020, the total sum owing by the respondent is $109,803.80 (inc GST). The sum of $109,803.80 (inc GST) does not include any calculation of interest on overdue monies owed by the respondent to the applicant or in respect of legal costs.[35]
[34] Lease, clause 3.1 and clauses 4.1 4.3.
[35] The applicant says it reserves all its rights in relation to the recovery of interest and legal costs.
The applicant seeks the following orders from the Tribunal to resolve the dispute:[36]
1)the respondent is to pay to the applicant the total sum of $109,803.80 (inc GST) for rent, variable outgoings and other outstanding charges for the period 1 April 2020 to 28 February 2021 within seven days of the date of the Tribunal's orders;
2)that the Lease is terminated and that the respondent pay any rent and variable outgoings in accordance with the Lease, calculated to the date of termination; and
3)the respondent provide vacant possession of the premises within seven days of the date of the Tribunal's orders, or other time frame that the Tribunal considers reasonable and appropriate.

Findings – breach

[36] Applicant's written submissions dated 13 January 2021, para 14.

On the basis of the undisputed evidence of the applicant which I accept, I find that the respondent has breached the terms of the Lease in that he has failed to pay to the applicant, as those payments fell due, the total sum of $109,803.80 (inc GST) comprising unpaid rent and variable outgoings and other outstanding charges.
I will next consider whether the applicant should be granted relief in the manner that it has sought having regard to the factors set out in the COVID Response Act that are relevant to the exercise of my discretion.

Factors relevant to the exercise of discretion to grant relief

Under s 17(2) of the COVID Response Act, the Tribunal may exercise its discretion to make any order that it considers appropriate to resolve the dispute or proceeding. The Tribunal's discretion to make an order in respect of a dispute under the COVID Response Act is not limited by any power conferred by the SAT Act.
Without limiting the discretion of the Tribunal, the Tribunal has power under s 17(3) of the COVID Response Act to order a party to the proceeding to pay money to a specified person. Further, without limitation, the Tribunal may make an order in relation to a 'code of conduct dispute' that a specified amount of rent payable under the lease to which the dispute relates be waived for a specified period and/or a specified amount of rent payable under the lease be deferred and paid in a specified time frame.[37] If the proceeding relates to a financial hardship dispute, the Tribunal may make an order terminating the small commercial lease.[38]
[37] Section 17(3)(c), COVID Response Act.
[38] Section 17(3)(d), COVID Response Act
In making an order relating to a code of conduct dispute under s 17(2) of the COVID Response Act, the Tribunal must have regard to the financial impact of the COVID-19 pandemic on the tenant's business and capacity to meet the tenant's obligations under the lease, the landlord's financial capacity, and the principles of proportionality and fairness and other relevant principles set out in the Code.[39]
[39] Section 17(4), COVID Response Act.
It is unnecessary for me to consider these matters in determining the code of conduct dispute in the circumstances of this case because I have found that the respondent did not establish that he was an 'eligible tenant' and, therefore, he has not established an entitlement to rent relief during the emergency period. There was also no evidence of a decline in turnover for any relevant period on which any rent relief could be based. Consequently, I decline to make an order granting rent relief to the respondent.
In a proceeding relating to a financial hardship dispute, the Tribunal cannot make an order under s 17(2) and s 17(3)(d) of the COVID Response Act terminating the small commercial lease, or any other order to the disadvantage of the tenant, unless satisfied that the tenant's breach was not a result of the tenant suffering financial hardship.[40] The Tribunal must make an order dismissing the application if it is satisfied that the tenant's breach was a result of the tenant suffering financial hardship unless the Tribunal considers it appropriate to make another type of order that is to the advantage of the tenant in order to determine the application.[41]
[40] Section 17(5)(a), COVID Response Act.
[41] Section 17(5)(b), COVID Response Act; reg 5, Commercial Tenancies (COVID Response) Regulations 2020 (WA).
I must, therefore, consider whether the failure by the respondent to pay rent that is due under the Lease was a result of him suffering 'financial hardship' as that expression is defined in s 14 of the COVID Response Act.

Was the respondent's failure to pay rent a result of him suffering financial hardship?

The respondent will have suffered 'financial hardship' for the purposes of s 14 of the COVID Response Act if it was a result of one or more of the following:
1)a restriction imposed under a written law in response to the COVID-19 pandemic;
2)changes in societal behaviour in response to the COVID-19 pandemic; and/or
3)any other consequences of the COVID-19 pandemic.
The applicant contends that the respondent was in arrears before the commencement of the emergency period on 30 March 2020.[42] In support of its contention, the applicant points to emails that it sent to the respondent on 7 February 2020 and 12 March 2020 relating to the overdue rent with respect to calendar months which pre-date the introduction of the COVID Response Act, the Code and the state of emergency declared on 15 March 2020 by the Minister of Emergency Services.[43]
[42] Applicant's written submissions dated 13 January 2021, para 16.
[43] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 5, SSC-2A. Affidavit of Vincent Ioppolo sworn 10 February 2021, para 9, VSI-5. Affidavit of Tiffany Lau sworn 10 February 2021, para 3, TTL-1.
The applicant further contends that any purported reduction in the respondent's business is more likely to be attributable to factors unrelated to the COVID-19 pandemic, such as the respondent being absent from his place of business for significant periods of time due to ill health.[44]
[44] Affidavit of Sandra Chaplyn, sworn 10 February 2021, paras 5-6, SSC-2 and SSC-2A; para 10, SSC-6. Affidavit of Vincent Ioppolo sworn 10 February 2021, para 9, VSI-5; para 16.
There was no evidence tendered by the respondent in relation to the cause of the decline in turnover of his business or whether he suffered financial hardship as a result of the COVID-19 pandemic. These are matters that are uniquely within his knowledge and in respect of which I find that he would bear the onus of proof. In the absence of any such evidence from the respondent, I accept the reasons provided by the applicant for the respondent's failure to meet his obligations under the Lease.
I find that the respondent was in rental arrears and, therefore, in breach of the Lease, prior to the state of emergency being declared and the commencement of the emergency period.[45] I further find that the respondent suffered ill health and was absent from the business at various times during the emergency period.[46]
[45] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 5, SSC-2A. Affidavit of Vincent Ioppolo sworn 10 February 2021, para 9, VSI-5. Affidavit of Tiffany Lau sworn 10 February 2021, para 3, TTL-1.
[46] Affidavit of Sandra Chaplyn, sworn 10 February 2021, para 10, SSC-6; para 19, SSC-12.
Accordingly, I am satisfied that the respondent's failure to meet his obligations under the Lease, based on the evidence before me, was not as a result of the respondent suffering financial hardship for the purposes of s 14 of the COVID Response Act.

Exercise of discretion in this case

In making an order to grant relief to the applicant under s 17(2) of the COVID Response Act, the Tribunal may make any order that it considers appropriate to resolve the dispute or proceeding. In relation to a financial hardship dispute, the Tribunal cannot make an order terminating the Lease, or any other order to the disadvantage of the respondent, unless satisfied that the respondent's breach was not the result of the tenant suffering financial hardship.[47]
[47] Section 17(5), COVID Response Act.
For the reasons set out in [55]-[60], I am satisfied that the respondent's breach of the Lease was not the result of the tenant suffering financial hardship and, therefore, it is open to me to make the orders sought by the applicant which include orders requiring the payment of unpaid rent and other monies due by the respondent under the Lease and an order terminating the Lease.
The applicant has sought a monetary order for the payment of unpaid rent and variable outgoings and other outstanding charges due under the Lease totalling $109,803.80 (inc GST) within seven days of the date of the Tribunal's orders. I am satisfied that this amount is due and payable by the respondent under the terms of the Lease. However, in light of the substantial sum involved, I consider it reasonable that the respondent be given 28 days to pay. Therefore, I order that the respondent pay the sum of $109,803.80 (inc GST) to the applicant within 28 days of the date of this decision pursuant to s 17(2) and s 17(3)(a) of the COVID Response Act.
The respondent has not paid rent or variable outgoings to the applicant for almost 12 months, being the period from 1 April 2020 to 28 February 2021. In light of the substantial sum that is owing to the applicant and because the respondent has not engaged with the applicant in relation to the amount due, I will grant relief in the manner that is sought by the applicant. Accordingly, the Tribunal will make an order terminating the Lease under s 17(2) and s 17(3)(d) of the COVID Response Act.
The applicant has sought an ancillary order that the respondent provide vacant possession of the premises within seven days of the Tribunal's orders, or other time frame that the Tribunal considers reasonable and appropriate. The Tribunal has power under s 17(3)(f) of the COVID Response Act to make any ancillary order that the Tribunal considers necessary for the purposes of enabling an order to have full affect.
To give full effect to the orders I have made under s 17(3)(d) of the COVID Response Act, I consider it reasonable in the circumstances of this case that the date of termination of the Lease is seven days from the date of this decision, being 5 pm on 2 July 2021 and that the respondent is to provide vacant possession of the premises to the applicant at that time. Accordingly, I make ancillary orders under s 17(2) and s 17(3)(f) of the COVID Response Act in those terms.
The applicant seeks further relief that the respondent pay to it any rent and variable outgoings in accordance with the Lease, calculated from the date of termination. There is no evidence before me that the respondent has failed to pay the rent and variable outgoings since 28 February 2021. Therefore, I will give leave to the applicant to provide further particulars of its claim for rent and variable outgoings from 1 March 2021 to 2 July 2021 within 14 days of the date of this decision.

Orders

The Tribunal orders:
1.Pursuant to s 17(2) and s 17(3)(d) of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) the lease dated 13 July 2017 between the applicant and the respondent in respect of premises at Unit 1, 33 Hector Street, Osborne Park (Lease) is terminated as at 5 pm on 2 July 2021.
2.Pursuant to s 17(2) and s 17(3)(f) of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) the respondent must provide to the applicant vacant possession of the premises at Unit 1, 33 Hector Street, Osborne Park by no later than 5 pm on 2 July 2021.
3.Pursuant to s 17(2) and s 17(3)(a) of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) the respondent must pay to the applicant the sum of $109,803.80 (inc GST) in respect of unpaid rent and variable outgoings and other outstanding charges for the period 1 April 2020 to 28 February 2021 within 28 days of the date of this order.
4.The applicant is given leave to file with the Tribunal and give to the respondent a statement of the rent and variable outgoings in respect of the premises that remain unpaid by the respondent under the Lease for the period 1 March 2021 to 2 July 2021 within 14 days of the date of this order.
5.The respondent may file with the Tribunal and give to the applicant any documents in reply to the statement filed by the applicant in accordance with order 4 within 14 days of receipt of the statement.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
25 JUNE 2021