Libra Motors Pty Ltd & Anor and Life88 Pty Ltd

[2023] WASAT 128

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

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

CITATION:   LIBRA MOTORS PTY LTD & ANOR and LIFE88 PTY LTD [2023] WASAT 128

MEMBER:   MS C BARTON, MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   20 DECEMBER 2023

FILE NO/S:   CC 1424 of 2023

BETWEEN:   LIBRA MOTORS PTY LTD & ANOR

Applicant

AND

LIFE88 PTY LTD

Respondent

Catchwords:

Commercial tenancy - Retail shop lease - Application for approval of early termination clause - Damage and destruction - Complete or partial obstruction of access - Meaning of special circumstances

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13(1), s 13(1)(a), s 13(1)(b), s 13(7)

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Chalmers Legal Studio Pty Ltd
Respondent	:	N/A

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

480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59

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

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1. On 6 December 2023, the applicant, Libra Motors Pty Ltd and Wellman Enterprises Pty Ltd (applicant or Lessor), lodged an application with the Tribunal pursuant to s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Act) for inclusion in a retail shop lease of a clause allowing early termination of the lease because of special circumstances.

2. The applicant proposes the inclusion of clause 33 (Clause 33) in its lease with Life88 Pty Ltd (respondent or Lessee) commencing on 15 January 2024 in respect of Unit 5, 117 Murray Street, Perth (Premises) (Lease). 

3. Clause 33 allows the Lessor to terminate the Lease by giving three months' notice in the event that the building at 117 Murray Street, Perth, (Centre)[1] or any part of the Centre is destroyed or damaged so as to require reinstatement of the Premises or Centre, or access to the Premises or Centre is completely or partially obstructed to such an extent that the Lessee is unable to conduct its business in a reasonable manner.

   [1] The 'Centre' is the 'Building' defined in the Lease to mean the building situated on the land within which the Premises is located.

4. The Lessee has granted its consent to the inclusion of an early termination clause in the Lease in the form of Clause 33.

5. For the reasons that follow, I have concluded that approval for the inclusion of Clause 33 in the Lease should be declined and the Lessor's application dismissed.

Statutory regime

1. Subject to 13(1)(a) and s 13(1)(b) of the Act, a tenant who occupies premises under a retail shop lease is given a statutory option to renew the lease to achieve a minimum term of 5 years.[2] A lease may only be terminated within that 5 year period in very limited circumstances. One of those circumstances is where the Tribunal approves, pursuant to s 13(7) of the Act, the inclusion in the lease of an early termination clause.

   [2] Act, s 13(1).

2. An application to the Tribunal pursuant to s 13(7) of the Act is made by the landlord after notice is given to the tenant. The Tribunal may approve an early termination clause if satisfied that 'special circumstances exist by reason of which such approval ought to be given'.[3] Section 13(7) of the Act provides:

   (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.

Tribunal's consideration

[3] Act, s 13(7).

1. In Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast), her Honour Justice Pritchard concluded that 'special circumstances' for the purposes of s 13(7) of the Act must exist at the time of the landlord's application to the Tribunal. Her Honour stated:[4]

   The requirement that the circumstances 'exist' means that they must 'be real or actual' or 'a part of objective reality', or they must 'have being in a specified place or manner or under specified conditions'. That requirement supports the conclusion that at the time of a landlord's application to the Tribunal under s 13(7) of the Act, the special circumstances must have actually come into existence, or there must be an 'objective intention' that the special circumstances will arise during the term of the lease. Whether that intention exists will require the existence of objective and provable facts.

   (Citations omitted)

   [4] Synicast at [30].

2. The Lessor says that Clause 33 is a necessary and reasonable means of protecting its commercial interests from adverse financial and other consequences should any of the events in Clause 33 occur.  The Lessor further says that the termination of the Lease in the circumstances prescribed by Clause 33 would not impose undue hardship on the Lessee.  Consequently, it is the Lessor's position that special circumstances exist that warrant the Tribunal's approval to the inclusion in the Lease of Clause 33.

3. Based on the material before me, I am not satisfied that 'special circumstances' exist for the purposes of s 13(7) of the Act. I have reached this conclusion because the circumstances contemplated by Clause 33, being the destruction or damage to the Premises or a substantial part of the Premises or Centre, or the complete or partial obstruction of access to the Premises or Centre, neither currently exist nor are intended to come into existence during the term of the Lease (there being no 'objective intention'[5] for them to arise).  Further, the fact that the Lessee has consented to the inclusion of Clause 33 in the Lease does not, in itself, constitute a 'special circumstance'.[6]

   [5] See 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59 at [31]; Synicast at [30].

   [6] Synicast at [31].

4. Consequently, for these reasons, I will decline to grant approval to the inclusion in the Lease of Clause 33 and will dismiss the Lessor's application.

Orders

The Tribunal orders:

1.The application for the approval of the inclusion of clause 33 in the lease between the parties commencing on 15 January 2024 in respect of the premises at Unit 5, 117 Murray Street, Perth, is dismissed.

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

MS C BARTON, MEMBER

20 DECEMBER 2023