MISTER ZIMI and BILIKIKI PTY LTD ATF PRICELINE TRUST
[2024] WASAT 4
•30 JANUARY 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: MISTER ZIMI and BILIKIKI PTY LTD ATF PRICELINE TRUST [2024] WASAT 4
MEMBER: MR E CADE, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 30 JANUARY 2024
FILE NO/S: CC 1444 of 2023
BETWEEN: MISTER ZIMI
Applicant
AND
BILIKIKI PTY LTD ATF PRICELINE TRUST
Respondent
Catchwords:
Retail shop commercial tenancy - Shorter than 5 year term of lease - Make application of free will - Circumstances warrant the granting of the application
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3, s 13(1), s 13(6)(a), s 13(6)(b), s 13(6)(c), s 13(6)(d), s 13(7b), s 13(7b)(a), s 13(7b)(b)
Result:
Application allowed
Category: B
Representation:
Counsel:
| Applicant | : | In Person |
| Respondent | : | In Person |
Solicitors:
| Applicant | : | N/A |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Alyssa Catherine Garrett and GPT RE Limited [2023] WASAT 85
Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47
REASONS FOR DECISION OF THE TRIBUNAL:
Background
On 14 December 2023 the applicant filed with the Tribunal an application for an order pursuant to s 13(7b) of the Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) (CTRSA Act). The order sought is 'that an option of renewal does not arise in [the respondent's] favor (sic) under s 13(1)' of the CTRSA Act.
Sub-section 13(7b) of the CTRSA Act provides as follows:
The Tribunal may, on application in writing by a tenant or prospective tenant, order that an option of renewal does not arise under subsection (1), if it is satisfied that —
(a)the application was made by the tenant or prospective tenant of his own free will; and
(b)the circumstances of the case warrant the granting of the application.
The Tribunal explained the function of this sub-section in Alyssa Catherine Garrett and GPT RE Limited [2023] WASAT 85 (Garrett and GPT RE Limited) at [1]:
… The sub-section 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. The option for an extended period is an important and valuable right to 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)-(d) of the CTRSA Act (Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47). The tenant may however seek approval from the Tribunal that the option for renewal does not arise under subsection 13(1). The Tribunal must be satisfied that the tenant makes the application on their free will and that the circumstances of the case justify granting the application.
Annexed to the application is a copy of a 'casual licence agreement' signed by the parties on 30 November 2023 in respect of a premises described as Shop GF 38 Bay View Terrace, Claremont, WA 6010 and a letter from the applicant dated 14 December 2023 setting out its grounds for the application.
The licence agreement contained the following relevant descriptions and terms:
(1)The licence is a 'periodic casual licence commencing 1st December 2023';
(2)The permitted use is 'retail' and the applicant's business is 'fashion retail'; and
(3)The licence expires on 'Friday 31st May 2024' which is stated to be a period of '5 months, 30 days'.
The applicant's letter contained the following grounds in support of the application:
(a)The 'continuance of the licence will confer on [the applicant] an option of renewal';
(b)The respondent 'would welcome [the applicant] to stay in continuous possession, were it not for the option to renew that would be granted to the tenant and if exercised could impede on the [respondent's] DA in progress to redevelop the premises'; and
(c)The applicant 'does not seek or intend to remain in the current premises for more than 1 year'.
The letters 'DA' in the grounds is an initialism for 'development application'. It is commonly used in the commercial tenancy industry.
By orders made on 21 December 2023 the Tribunal notified the parties the application did not sufficiently address the criteria set out in s 13(7b) of the CTRSA Act in that it did not make any submission as to:
(a)whether the application was made by the tenant or prospective tenant of his or her own free will; and
(b)the circumstances of the case which warrant the granting of the application.
The Tribunal's order also noted evidence is required to support any submissions as to these criteria, and proof of service of the application on the respondent is also required.
The proceeding was then adjourned to 4 January 2024 for the purpose of enabling the applicant to file an amended submission and to provide any evidence on which it sought to rely.
As the applicant did not file an amended submission and nor did it file any evidence by 4 January 2024, the application proceeded to a directions hearing on 12 January 2024. At the directions hearing the applicant was represented by its Head of Operations and the respondent was represented by its Chief Executive Officer.
At the directions hearing the Tribunal drew the parties attention to the decision in Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 (Synicast Pty Ltd and Showroom X Pty Ltd), in particular to the changes in the Tribunal's practice indicated in the decision (for example at [58] to [61]) and to the requirement that submissions are to be supported by evidence (e.g. at [68]).
The applicant explained the reason that no amended submissions had been filed by 4 January 2024 was because the representatives of both the applicant and the respondent had been on leave over the Christmas period. The applicant also stated it made the application of its own free will. In response the respondent stated it was aware of the application and it supported the application.
The Tribunal then made the following orders:
1.The parties are to file the materials they intend to rely upon pursuant to order 2 of the Tribunal made on 21 December 2023 by no later than 4.00 pm on 19 January 2024.
2.Subject to any further order the matter is then to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
On 15 January 2024 the respondent filed with the Tribunal correspondence which stated:
This is a letter indicating that we currently have a proposal in the SDAU pathway for the Development of our site in Claremont. This is the reason for not being able to provide the tenant with a lease at 38 Bay View Terrace as we intend to develop the site in the short term[.]
This correspondence contained a link to the Department of Planning, Lands and Heritage website which confirmed a development application in respect of the site had been filed, the period allowed for public comment has ended and that the development application was under assessment. The website also showed SDAU is the initialism of the State Development Assessment Unit.
On 17 January 2024 the applicant filed with the Tribunal correspondence which stated:
…
I wish to confirm that I lodged this matter of my own free will and under no pressure or duress from any other party.
My intention is to trade from the noted premises indefinitely until such a time as the outcome of the pending Development Application is known, at which point we will have secured a more appropriate site to trade from long term[.]
Issues for consideration
The issues which arise for determination in this application are:
(a)Is the 'casual licence agreement' signed by the parties on 30 November 2023 a 'retail shops lease';
(b)Is either the 'current term' or the 'option term' of the casual licence agreement more than 6 months but less than 5 years;
(c)Did the applicant make this application of its own free will; and
(d)Do the circumstances of the case warrant the granting of the application.
If the Tribunal is satisfied as to each of these matters, it must then decide whether in exercise of the discretion conferred by s 13(7b) of the CTRSA Act it will make the order sought by the applicant.
Is the 'casual licence agreement' signed by the parties on 30 November 2023 a 'retail shops lease'?
A 'lease' is defined in s 3 of the CTRSA Act as a 'lease, licence, or agreement, whether in writing or not, that provides for the occupation of premises situated within the State whether for a term or by way of a periodic tenancy or a tenancy at will …'.
The Tribunal is satisfied the casual licence agreement the parties entered into does grant the applicant a right to occupy the premises at Shop GF 38 Bay View Terrace, Claremont, Western Australia, and that it is therefore a lease within the meaning of the CTRSA Act.
A 'retail shops lease' is defined in s 3 of the CTRSA Act as a 'lease that provides for the occupation of a retail shop …'. The definition excludes a lease for a certain size shop or a lease held by certain types of lease holders from being a 'retail shops lease', however, none of the excluded circumstances is applicable to this application.
The Tribunal is satisfied the casual licence agreement is for a premises which is a retail shop premises and the business being conducted at the premises is a retail fashion business, and that it is therefore a retail shops lease within the meaning of the CTRSA Act.
Is either the 'current term' or the 'option term' of the casual licence agreement more than 6 months but less than 5 years
The casual licence agreement is for a term of 5 months and 30 days with the result it is neither for a current term of more than 6 months and less than 5 years, and neither is it an option term that totals more than 6 months but less than 5 years.
However, the applicant stated in its grounds that the respondent 'would welcome [the applicant] to stay in continuous possession, were it not for the option to renew that would be granted to the tenant and if exercised could impede on the [respondent's] DA in progress to redevelop the premises'. The applicant has stated it does not wish to occupy the shop premises for more than 1 year.
The Tribunal is therefore satisfied it is the intention of the parties expressed in writing that upon the expiration of the term of the casual licence agreement on 31 May 2024 the respondent will, if the Tribunal makes the order sought, grant to the applicant an option to continue in occupation of the shop premises either by way of a periodic tenancy or a tenancy at will for a period that will then exceed 6 months but will be less than 5 years.
The Tribunal is therefore satisfied that the casual licence agreement as amended by the correspondence of the parties does confer on the applicant a conditional option to extend the term of the licence such that should the Tribunal make the order sought that the term of the licence agreement is longer than 6 months but is less than 5 years.
Did the applicant make this application of its own free will?
The applicant both orally at a directions hearing and in writing filed with the Tribunal stated it made this application in the exercise of its own free will. The Tribunal is therefore satisfied that the applicant did make the application in the exercise of its own free will.
Do the circumstances of the case warrant the granting of the application?
The respondent provided evidence that confirms it made a development application in respect of the site at 38 Bay View Terrace, Claremont. The details of the application published on the SDAU website shows that the proposed development is a major development which will necessitate the demolition of all existing structures on the site. Such a development will clearly be incompatible with the applicant's continued occupation of the retail shop.
The respondent stated that if the development is approved it intends to proceed with the development in the 'short term'. The Tribunal understands this to mean that the respondent wishes to develop the site as soon as practicable should the proposed development be approved.
The applicant in turn stated that it wishes to trade at the shop premises until the outcome of the development application is known, and it is aware that should the application be approved it will have to move to an alternative premises.
For these reasons the Tribunal is satisfied that the respondent does intend to develop the site at 38 Bay View Terrace, Claremont. It is also satisfied that the applicant knew of the development application before it entered into the casual licence agreement, it believes it is in its commercial interest to conduct business at the retail shop during the period during which the development application is being considered, and that it is aware that it will need to move to another premises should development approval be given.
Exercise of discretion
The Tribunal is granted a broad discretion as to whether to make the order sought by the applicant. That is, even once the Tribunal is satisfied of the matters set out in s 13(7b)(a) and (b) of the CTRSA Act, the making of an order is a matter of discretion.
As was observed by this Tribunal in Synicast Pty Ltd and Showroom X Pty Ltd at [27] with respect to a related subsection within the CTRSA Act, 'every statutory power, however widely expressed, is confined by the subject matter, scope and purpose of the statute'.
As the Tribunal in Garrett and GPT RE Limited noted at [3]:
… The discretion of the Tribunal is wide, which means I can consider the totality of circumstances to assess whether they meet the threshold. There is no exhaustive list of circumstances since it depends on the situation of each tenancy.
When exercising such a broad discretion the Tribunal is to also act in accordance with:
(a)The principles of reasonableness and fairness;
(b)The interests of the parties;
(c)Equity; and
(d)Due consideration of all the information at its disposal.
The Tribunal must now consider each of these factors and then apply its mind to the facts of this particular application to decide if it should, in exercise of the discretion conferred on it, make an order pursuant to s 13(7b) of the CTRSA Act.
When considering the subject matter and purpose of the CTRSA Act the Tribunal in Synicast Pty Ltd and Showroom X Pty Ltd at [28] noted that:
… the legislative purpose behind s 13(1) of the Act was to confer on the tenant of a retail shop lease what was regarded as an important benefit, in the form of a minimum 5 year lease. When the Commercial Tenancy (Retail Shops) Agreements Bill 1985 was introduced into the Legislative Assembly the then Minister for Small Business identified the main features of the Bill. One of those (which was clearly reflected in what became s 13(1) of the Act) was that:[1]
… it is intended that a tenant shall be given an implied option to extend his lease period to a minimum five-year period. This measure will give the small business tenant the initial security necessary to establish his or her business.
(emphasis added)
[1] Parliament of Western Australia Record of Debates, Legislative Assembly, 21 February 1985, page 185.
After considering these factors the Tribunal is satisfied the applicant:
(a)is an established business;
(b)understands the nature of the application it is making;
(c)has made the application of its own free will;
(d)is aware if development approval is given for the site it will have to move its business to an alternative premises;
(e)does not intend to occupy the premises for more than 12 months; and
(f)believes it is in its commercial interests to make the application.
The Tribunal is therefore satisfied that pursuant to subsection 13(7b) of the CTRSA Act it should make the order sought by the applicant.
Orders
The Tribunal orders:
1.On the application in respect of the retail shop lease entered into between the parties on 30 November 2023 relating to Shop GF 38 Bay View Terrace, Claremont, WA, 6010, it is ordered that an option of renewal does not arise under s 13(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MR E Cade, MEMBER
30 JANUARY 2024
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