SU-RAMA HOLDINGS PTY LTD and TIM COOTE JEWELLERY PTY LTD
[2024] WASAT 29
•18 APRIL 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: SU-RAMA HOLDINGS PTY LTD and TIM COOTE JEWELLERY PTY LTD [2024] WASAT 29
MEMBER: MS N OLDFIELD, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 18 APRIL 2024
FILE NO/S: CC 184 of 2024
BETWEEN: SU-RAMA HOLDINGS PTY LTD
Applicant
AND
TIM COOTE JEWELLERY PTY LTD
Respondent
Catchwords:
Retail commercial tenancy - Requirements for special circumstances for early termination of lease
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13, s 13(6)(a), s 13(6)(b), s 13(6)(da), s 13(7)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Applicant | : | Mr A McGuiness |
| Respondent | : | No appearance |
Solicitors:
| Applicant | : | AMCG Legal |
| 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
The applicant is the landlord, and the respondent is the tenant in relation to a lease of retail premises located at Shop 13, Glengarry Shopping Centre, 59 Arnisdale Road, Duncraig.
The applicant has made an application pursuant to s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act) for approval of a term of the proposed lease allowing for early termination of the lease.
Legislation
Section 13 of the CTRSA Act confers on tenants an option to renew a retail shop lease so there is a minimum term of 5 years. This is considered to be an important and valuable right to a tenant, such that a landlord may only terminate the lease prior to the ending of the 5 year term in limited circumstances. One of those limited circumstances is where this Tribunal approves a ground of early termination pursuant to s 13(7) of the CTRSA Act.
Section 13(7) provides as follows:
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.
Facts
The application was lodged with the Tribunal on 25 March 2024. Attached to the standard application form was a schedule ('the schedule') signed by the applicant requesting approval of the following clause 25:
25Destruction or Damage of Centre
25.1Reduction in Rent
If the Centre or any part of the Centre is destroyed or damaged to the extent that the Tenant cannot use or have access to the Premises (except if the Tenant causes or contributes to the destruction or damage, or the Landlord's insurer is not legally required to reinstate the Centre because the Tenant caused or contributed to the destruction or damage) then the Landlord will reduce the Rent and the Tenant's Proportion of Operating Expenses by a reasonable amount depending upon the nature and extent of destruction or damage until the Tenant can use or have access to the Premises.
25.2Reinstatement of Premises
If the Premises of any part of the Premises are destroyed or damaged, the Landlord may, within 3 months from the date of such damage or destruction, give notice to the Tenant:
25.2.1terminating this Lease, where the Landlord considers that the damage or destruction is such that repairing it is impracticable or undesirable; or
25.2.2that the Landlord will complete the reinstatement of the Premises within three months of the date of damage or destruction to a condition where the Tenant can use or have access to the Premises.
25.3Tenant's Right of Termination
The Tenant may give written notice to the Landlord terminating this Lease where the Landlord does not:
25.3.1give notice to the Tenant pursuant to clause 25.2; or
25.3.2commence reinstatement within 12 months of the date of damage or destruction.
The Landlord does not have to reinstate the Premises and will not be liable to pay the Tenant any compensation.
25.4Dispute Resolution
Unless the Act applies, in which case any dispute must be referred for determination in accordance with the provisions of the Act, if a dispute arises under this clause about the amount of the Rent or Operating Expenses payable by the Tenant, then the following procedure applies:
25.4.1the Landlord must provide to the Tenant the names of at least three independent valuers suitably qualified to determine the amount of Rent and Operating Expenses payable by the Tenant;
25.4.2the Tenant must give written notice to the Landlord of its preferred valuer, from the valuers nominated by the Landlord, within 7 days of receipt of the names of the nominated valuers;
25.4.3the Landlord must appoint the valuer selected by the Tenant pursuant to the preceding subclause (Valuer) to determine the amount of Rent and Operating Expenses payable by the Tenant;
25.4.4the Tenant must pay one-half of the Valuer's estimated costs within 7 days of a written request by the Landlord;
25.4.5If the Valuer is unable, unwilling or falls to determine the amount of Rent and Operating Expenses payable by the Tenant within 42 days of being appointed by the Landlord, the provisions of sub-clauses 25.4.1 - 25.4.5 (inclusive) applies.
The Tenant acknowledges that if the Tenant does not nominate a Valuer and pay its share of the Valuer's costs within the time prescribed by this clause 25.4, then the Tenant will be deemed to have accepted the amount of Rent and Operating Expenses as nominated by the Landlord pursuant to sub-clause 25.1 and will not be entitled to raise any objection to that amount.
The respondent signed a consent to the making of the present application, which simply stated it had been served with a copy of the application and consented to the provision being included in the lease.
Following a directions hearing on 10 April 2024, there were orders permitting the filing of further information by the applicant. A letter from the solicitor for the applicant dated and lodged on 12 April 2024 stated they were instructed the lease containing clause 25 and the consent to this application were signed by the respondent on or about 1 September 2022 and the applicant signed the lease and the schedule on or about 1 March 2024.
The following statement by the applicant was lodged in support of the application:
The Landlord applies under Section 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act for approval of the inclusion in the Lease of the premises between the Lessor and the Lessee of clause 25 – clause 25 provides for termination of the Lease in the event of damage or destruction of the premises.
It is submitted that there may be a number of unexpected circumstances that may unfold regarding the leased premises and or the shopping centre itself, where it is important this clause be permitted.
Should there be a fire or accident of some nature that results in significant damage to the centre or premises, both parties may feel that as the cost or nature of repairs could be so extensive or given the current unusual circumstances of a shortage of tradespeople able to undertake any necessary works, the fair position might be to allow the lease to be ended in a period of less than the 5 year term otherwise afforded by the legislation.
In such circumstances it is submitted that it will be of mutual benefit to both the Landlord and the Tenant to be able to have the Lease terminated. The rights of the Landlord are discretionary and may not be exercised in every situation.
Consideration
There is nothing which indicates s 13(6)(a), s 13(6)(b) or s 13(6)(da) are relevant here. It appears therefore the application contains an implicit submission that the events described in clause 25 (the leased premises are destroyed or so damaged the applicant considers it impracticable or undesirable to repair the same) constitute 'special circumstances' within the meaning of s 13(7) thus justifying early termination of the lease were those events to occur.
The meaning of 'special circumstances' as required by s 13(7) of the CTRSA Act was considered by President Prichard in Synicast Pty Ltd and Showroom X Pty Ltd [2023] WASAT 47. In that decision Her Honour stated (at [30]):
[A]t 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[.]
(Footnote omitted)
At the directions hearing I enquired whether the applicant had any information which indicated the damage or destruction of the relevant premises was a current issue or was likely to become an issue during the term of the lease. The answer to that question was in the negative.
I am not satisfied the evidence establishes the existence of special circumstances as required by s 13(7) of the CTRSA Act. My reason being there is insufficient evidence to establish the circumstances described in clause 25 currently exist or are intended to come into existence during the term of the lease.
Orders
The Tribunal orders:
1.On the application in respect of a retail shop lease between the parties relating to Shop 13, Glengarry Shopping Centre, 59 Arnisdale Road, Duncraig, it is ordered that the application for approval of the inclusion in the lease of clause 25 is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS N Oldfield, MEMBER
18 APRIL 2024
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