MAZZA and DARCY HILL PTY LTD - [2023] WASAT 92

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION:   MAZZA and DARCY HILL PTY LTD [2023] WASAT 92
MEMBER:   MR K BALES, SESSIONAL MEMBER
HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   29 SEPTEMBER 2023
FILE NO/S:   CC 1162 of 2023
BETWEEN:   RICKY JOHN MAZZA
Applicant
AND
DARCY HILL PTY LTD
Respondent

Catchwords:

Retail commercial tenancy – Requirements for special circumstance for early termination of lease – Calculation of the cumulative continuous period of occupation for the purposes of s 13(1)

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act (1985) (WA), s 13(1), s 13(2A), s 13(2)(a), s 13(8), s 13(7),

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Solomon Brothers
Respondent	:	In Person

Case referred to in decision:

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

REASONS FOR DECISION OF THE TRIBUNAL

Introduction

On 4 September 2023, the applicant lodged an application under s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act (Act) seeking approval of the proposed clause 9.1 in the lease of premises described as 4 Mandurah Terrace, Mandurah created by a Deed of Extension and Variation made on or about 1 September 2023.
The proposed clause establishes the right of the applicant as landlord to terminate the term of the lease as a result of an intervening event causing damage to, or destruction of, the premises whether or not prior to the expiry of the term of years available to the respondent as tenant by virtue of the provisions of s 13(1) of the Act.
Under the provisions of s 13(7) of the Act, the Tribunal may make such an order 'if it is satisfied that special circumstances exist by reason of which such approval ought to be given.'
In the case of Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast) at [30] President Pritchard summarised the fundamental requirement for the existence of the special circumstances at the time of the lodgement of the application, whether "'real or actual, or 'a part of objective reality.'"
The applicant has argued that the possibility of damage or destruction of the premises is of itself an existing circumstance, and that the wording of s 13(7) of the Act should be interpreted accordingly.
However, I do not accept that the mere possibility of a future event meets the interpretive test of current existence of a special circumstance as required by the Act, and I therefore find that the application does not meet the fundamental requirement for the existence of the special circumstances at the time of the lodgement of the application. This finding is consistent with the reasoning and findings of her Honour in the case of Synicast.
Whether or not that finding is correct, it is relevant to examine the assertion by the applicant that as an extension of the term of a lease prior to the expiry of the existing term may be interpreted as an implied surrender of the existing term and the grant of a new term, it is appropriate for an application for approval of a provision in the lease for that new term to be made to the Tribunal under s 13(7) of the Act..
The history of the lease of the premises is as follows:
1.The lease was granted by the applicant to Beclint Pty Ltd on 18 June 2021 for a term of five (5) years and six (6) months from 7 June 2021 to 6 December 2026 with an option to renew the term for a further term of three (3) years from 7 December 2026 to 6 December 2029.
2.By a Deed of Assignment dated 31 August 2023 between Beclint Pty Ltd, the Respondent and others, Beclint Pty Ltd assigned to the Respondent the balance of the current term of the lease and the option to renew the term of the lease.
3.By a Deed of Variation made between the applicant and the respondent on or after the Deed of Assignment certain of the provisions of the lease were varied, the term of the lease was extended, and a new option to renew the term of the lease was granted.
The following sections in the Act are relevant:
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.
This section creates the statutory option for the tenant to retain possession of the premises for up to five years if the tenant so wishes.
13. Tenant entitled to at least 5 year term in some cases etc.
…
(2A) For the purposes of subsection (1), a lease for a term of more than 6 months includes a tenancy where the tenant has been continuously in possession of the retail shop for more than 6 months as a result of either or both of the following —
(a) the lease being renewed (one or more times);
(b) the lease being continued.
This section above confirms for the purposes of s 13(1) of the Act that the test of continuous possession applies notwithstanding any number of extensions or continuations.
13. Tenant entitled to at least 5 year term in some cases etc.
…
(2) Subsection (1) does not apply to a retail shop lease in respect of premises —
(a) if the tenant occupied the premises as a retail shop for a period, including any time prior to the commencement of this Act, ending immediately before the commencement of the current term and that period plus the current term and the option term, if any, totals 5 years or longer; …
This section above also confirms the test of cumulative continuous periods of occupation for the purposes of calculating the total period of occupation in the applying the provisions of s 13(1) of the Act.
13. Tenant entitled to at least 5 year term in some cases etc.
…
(8) Where the tenant under a retail shop lease assigns the lease, the term to which the assignee becomes entitled is the balance of the term of the assigning tenant, determined as provided by the lease including, where applicable, the option arising under subsection (1), as at the date of the assignment.
This section above clarifies that the statutory rights of renewal which an assignee takes from the assignor is limited to any remainder of the rights of renewal held by the assignor which were provided pursuant to the provisions of s 13(1) of the Act.
Notwithstanding the assertion by the applicant that the undated Deed of Variation made, between the applicant and the respondent, resulted in an implied surrender of the current lease by the respondent, and the grant of a new lease by the applicant, I find that the current term of the lease which was assigned to the respondent extended from 7 June 2021 to 6 December 2029 did not include any rights under s 13(1) of the Act, so that an Order in s 13(7) cannot be made.
For the reason stated in paragraph 6, the application is not granted.
For the reason stated in paragraph 10, the application is not granted.

Orders

The Tribunal orders:
1.The application is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MR K Bales, SESSIONAL MEMBER
29 SEPTEMBER 2023