RADI and DREAMWORLD ENTERTAINMENT PTY LTD

[2024] WASAT 70

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

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

CITATION:   RADI and DREAMWORLD ENTERTAINMENT PTY LTD [2024] WASAT 70

MEMBER:   MS R HARTLEY, MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   22 JULY 2024

FILE NO/S:   CC 345 of 2024

BETWEEN:   MARIO RADI

First Applicant

MARIA ROSA RADI

Second Applicant

AND

DREAMWORLD ENTERTAINMENT PTY LTD

Respondent

Catchwords:

Retail commercial tenancy - Application for approval of early termination clause - Requirements for special circumstances for early termination of lease - Destruction of building

Legislation:

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

Result:

Application dismissed

Category:    B

Representation:

Counsel:

First Applicant	:	N/A
Second Applicant	:	N/A
Respondent	:	N/A

Solicitors:

First Applicant	:	GV Lawyers
Second Applicant	:	GV Lawyers
Respondent	:	N/A

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

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

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1. The applicants Mario Radi and Maria Rosa Radi are the lessor (Lessor) and the respondent Dreamworld Entertainment Pty Ltd is the lessee (Lessee) in relation to a lease of retail premises located at Shop 7, 1451 - 1463 Albany Highway, Cannington which commenced on 2 April 2024 (Lease).

2. On 29 May 2024 the Lessor applied to the Tribunal pursuant to s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Act) for approval of the inclusion of clause 16.2 in the Lease allowing for early termination of the Lease if the Building is destroyed.

3. The proposed clause provides:

   Clause 16.2 - Destruction of the Building

   If the whole or any substantial part of the Building is destroyed then the Lessor at any time within 3 months of the date of such occurrence and thereafter the Lessee (unless the Lessor shall have elected by notice in writing given within such 3 month period to the Lessee to reinstate the Building to as nearly as practicable its original design and shall have completed such reinstatement so as to render the Leased Premises fit for occupation within 3 months of the date of such occurrence) shall be at liberty by notice in writing to the other to terminate the Term as from the date of giving of such notice without prejudice to the right of the Lessor for any antecedent breach by the Lessee of any term covenant condition or stipulation contained or implied in this Lease.  For the purposes of this Clause 16.2 the expression a substantial part of the Building shall mean one-third or more of the gross leasable area (as defined from time to time by the Lessor) of the Building and as determined by the Lessor or such a significant part of the balance of the Building as renders the restoration of the Building uneconomic or undesirable or the continued occupation of the Leased Premises impracticable in the absolute discretion of the Lessor.

4. The Lessee has consented in writing to the inclusion of clause 16.2 in the Lease.

5. On 1 July 2024 the Tribunal ordered:

   1.The Tribunal finds that the application does not sufficiently address the criteria in the case of Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47 relating inter alia to the current or future existence of the special circumstances by reason of which approval of the application ought to be given, nor does it provide the evidence required to support such submissions. The applicant has until 15 July 2024 to either file submissions and supporting evidence detailing the current or future existence of the special circumstances by reason of which approval of the application ought to be given, together with evidence of service of the submissions on the respondent, or to withdraw the application.

   2.Subject to any further order the matter is to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).

6. Having received no further documentation from the applicant by 15 July 2024 I have proceeded to determine this application on the basis of the information filed with the application on 29 May 2024.

7. For the reasons which follow, I have concluded that approval for inclusion of clause 16.2 in the Lease should be declined and the Lessor's application dismissed.

Legislation

1. Section 13(1) of the Act provides a Lessee who occupies premises under a retail shop lease the statutory option to renew the lease to achieve a minimum term of 5 years. This is a valuable right that can only be abrogated in 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. Importantly, the Tribunal will only approve such an application when it is satisfied that special circumstances exist.

2. Section 13(7) provides as follows:

   (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

1. Implicit in the Lessor's application is the submission that the events described in clause 16.2 constitute 'special circumstances within the meaning of s 13(7) so as to justify the early termination of the Lease if those events were to occur'.

2. In Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47, President Prichard 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 (at [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 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)

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 come to this conclusion because the applicant has not provided the Tribunal with any evidence to suggest that the circumstances contemplated by clause 16.2, being the destruction of the whole or a substantial part of the Building, either currently exist or are likely to come into existence during the term of the Lease.

4. Accordingly, for these reasons, I will decline to grant approval for the inclusion of clause 16.2 in the Lease and will dismiss the application.

Orders

The Tribunal orders:

1.The application for the approval of the inclusion of clause 16.2 in the Lease between the parties which commenced on 2 April 2024 in respect of premises Shop 7, 1451 - 1463 Albany Highway, Cannington, is dismissed.

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

MS R HARTLEY, MEMBER

22 JULY 2024