SYNICAST PTY LTD and SHOWROOM X PTY LTD - [2023] WASAT 47

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985
CITATION:   SYNICAST PTY LTD and SHOWROOM X PTY LTD [2023] WASAT 47
MEMBER:   PRESIDENT PRITCHARD
HEARD:   ON THE PAPERS
DELIVERED          :   26 JUNE 2023
PUBLISHED           :   26 JUNE 2023
FILE NO/S:   CC 421 of 2021
BETWEEN:   SYNICAST PTY LTD
Applicant
AND
SHOWROOM X PTY LTD
Respondent

Catchwords:

Commercial tenancy — Retail shop lease — Commercial Tenancy (Retail Shops) Agreements Act 1985 — Application to Tribunal for approval of a clause permitting early termination in a retail shop lease for the redevelopment of a shopping centre — Construction of s 13(7) — Construction of s 14A — Redevelopment and relocation clauses — Meaning of special circumstances — Special circumstances exist

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 13, s 13(1), s 13(3), s 13(6)(a), s 13(6)(b), s 13(6)(c), s 13(6)(d), s 13(6)(da), s 13(7), s 13(7)(b), s 13(7a), s 13(7b), s 14A, s 14A(1), s 14A(1)(b), s 14A(2), s 14A(3)
State Administrative Tribunal Act 2004 (WA), s 77

Result:

Early termination clause approved

Category: B

Representation:

Counsel:

Applicant	:	N/A
Respondent	:	N/A

Solicitors:

Applicant	:	Chalmers Legal Studio
Respondent	:	N/A

Cases referred to in decision(s):

480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59
480 Hay Street Pty Ltd v Uber Australia Pty Ltd [2019] WASC 461
Hay & Colin Pty Ltd v West End Hospitality Pty Ltd [2021] WASC 458
Klein v Domus Pty Ltd (1963) 109 CLR 467
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332
Re Commercial Registrar of the Commercial Tribunal of Western Australia; ex parte Commissioner of Main Roads and Scarff and Hough (unreported, Sup Ct of WA, Lib No. 970522)
Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 44 FLR 455; 29 ALR 333
Swanville Investment Pty Ltd and Ors v Riana Pty Ltd [2003] WASCA 121
Synicast Pty Ltd as Trustee for the Quentin Avenue Unit Trust v Showroom X Pty Ltd [2021] WASC 449
WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41
Yang v Hapisun Pty Ltd [2018] SASC 17

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

Synicast Pty Ltd, as trustee for the Quentin Avenue Unit Trust (Landlord), is the owner of land at 22 St Quentin Avenue Claremont (Land) and the lessor of a premises located at suites 5 to 9, 22 St Quentin Avenue Claremont (Premises). The Premises are leased to Showroom X Pty Ltd (Tenant). The lease of the Premises (Lease) commenced on 5 March 2021, for a term of five years.
On 23 March 2021, the Landlord applied to the Tribunal, pursuant to s 13(7) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Act) for the Tribunal's approval of the inclusion in the Lease of two clauses — clause 33, and Special Condition 5 — which would permit the Landlord to terminate the Lease before the expiry of its 5 year term (Application).
On 24 March 2021, the Tribunal determined the Application (Decision). The Tribunal ordered that the inclusion of clause 33.3 in the Lease was approved, and otherwise ordered that:
… the Tribunal has no power to consider special condition 5 in item 20 of the Schedule in an application under s 13(7) of the Act, as a redevelopment or relocation clause falls exclusively within the provisions of s 14A of the Act, and a separate application is required under s 14A(3).
The Landlord appealed the Decision. The Supreme Court allowed the appeal[1] on the basis that Special Condition 5 was a clause which permitted early termination of the lease for the redevelopment of the shopping centre in which the Premises is located.[2] However, Archer J concluded that she was unable to receive additional evidence to substantiate the existence of 'special circumstances' in this case,[3] and that on its face, the Application itself did not establish the existence of 'special circumstances'. Accordingly, her Honour remitted the matter to the Tribunal, to be constituted by a different member, for reconsideration and 'for the hearing of further evidence in relation to whether special circumstances exist'.[4]
[1] Synicast Pty Ltd as Trustee for the Quentin Avenue Unit Trust v Showroom X Pty Ltd [2021] WASC 449 (Synicast).
[2] Synicast at [22] – [23] (Archer J).
[3] Synicastat [28] (Archer J).
[4] Orders of the Hon Justice Archer 2 December 2021.
For the reasons which follow, approval should be given to the inclusion in the Lease of Special Condition 5.

The Application and the basis for it

The Application, as initially filed, was supported by a letter from the Landlord's solicitors dated 23 March 2021 (Letter), which attached a three line statement described as 'acknowledgment and consent by lessee' which was, apparently, signed by a director of the Tenant on 22 March 2021 (Tenant Consent), and a document setting out what were said to be the terms of clause 33 and Special Condition 5. The Application as originally filed was not accompanied by a copy of the Lease in its entirety. Further, as explained below, the copy of Special Condition 5 which was provided with the Application did not actually reflect the terms of Special Condition 5 as it appeared in the Lease.
In the Letter, the Landlord's solicitors submitted that Special Condition 5 'constitutes special circumstances within the meaning given to that term by the Supreme Court as held in 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd.[5]
[5] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59 (480 Hay Street v Irwin St).
No further evidence or submissions were provided to the Tribunal when the Application was filed to explain why special circumstances existed warranting the grant of approval for the inclusion of Special Condition 5 in the Lease.
Following the remittal of the Application to the Tribunal for reconsideration, the Tribunal ordered that the Landlord file any further evidence on which the Landlord intended to rely, together with any submission 'about what the special circumstance is for which it seeks approval pursuant to s 13(7) of the [Act]'. In addition, the Landlord was ordered to 'clarify whether in its view proposed special condition 5.2 and 5.3 in Item 20 of the Schedule, which relate to compensation for any early termination of the lease pursuant to s 13(7) of the Act, is to be approved by the Tribunal pursuant to s 13(7)'. The Tenant was given the opportunity to file a submission and evidence in response. The Tribunal ordered that the matter be dealt with on the documents unless otherwise ordered by the Tribunal.
In reliance on those orders, the Landlord filed an affidavit of Craig Butler,[6] and an outline of submissions (Landlord's Submissions).
[6] Affidavit of Craig Butler sworn 31 January 2022.
Annexed to Mr Butler's affidavit was a copy of the Lease, executed by both the Landlord and Tenant.
Mr Butler is a real estate agent who is a director of a company (VPG Property) which is the letting agent for the Landlord. Mr Butler's evidence was unchallenged, and I accept it. On the basis of his evidence, I make the following findings:
·the Landlord acquired the Land, which comprised 30 retail shop tenancies, with a view to building a mixed retail, commercial and residential tower (Tower Development);
·if the Tower Development is pursued, it will require the demolition of the 30 retail shops, and the Tower Development will not be able to accommodate the existing tenancies;
·VPG Property negotiated the lease of Shops 5 to 9 with the Tenant, who wanted a lease for a minimum term of 18 months. Mr Butler informed the Tenant during the negotiation of the Lease that the Landlord intended to build the Tower Development on the Land;
·the lease period preferred by the Tenant in respect of the Premises was reflected in the 18 month minimum period of the Lease which was required before termination would be permitted under Special Condition 5;
·of the 25 tenancies on the Land, nine were vacant at the time Mr Butler swore his affidavit, and the last of those tenancies to expire — for Shop 15 — was due to expire on 31 March 2024;
·the lease in respect of Shop 15 (Shop 15 Lease) provides that in the event of the redevelopment of the Land, the tenant of Shop 15 will be offered an alternative retail shop or alternatively that the Shop 15 Lease will be terminated and the tenant will be paid compensation in accordance with the terms of that lease;
·For the Landlord to be able to build the Tower Development on the Land before 31 March 2024 (when the Shop 15 Lease expires) the Shop 15 Lease would require termination;
·If the Shop 15 Lease comes to an end, either by the effluxion of time on 31 March 2024, or earlier, as a result of the application of the early termination clause in that lease, the Tenant will be the only tenant in occupation on the Land which would render the Tenant's continued occupation of the Premises as 'uncommercial and contrary to the wishes of the [T]enant'.[7]
[7] Affidavit of Craig Butler sworn 31 January 2022,
The latter outcome is one of the special circumstances on which the Landlord relies as warranting approval for the inclusion of Special Condition 5 in the Lease. In that respect, the Landlord relies on WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd[8] which is discussed below.
[8] WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41 (WASCF Alliances).
In addition, the Landlord relies on three other special circumstances. First, the Landlord points to the fact that the Tenant has the right to vacate the Premises after 18 months if the Tower Development proceeds. Secondly, the Landlord says that its intention to demolish the Premises and to build the Tower Development after the expiration of 18 months from the date of execution of the Lease also constitutes part of the special circumstances warranting approval of Special Condition 5.
Thirdly, the Landlord points to Special Conditions 5.2 and 5.3 of the Lease, which it says constitute the provision of compensation to the Tenant in anticipation of the early termination of the Lease by the Landlord. The Landlord relies on the Tenant's execution of the Lease, including those compensation clauses, as indicative of the Tenant's agreement to that compensation for the early termination of the Lease which would be permitted under Special Condition 5.
The Landlord submits that the Tribunal's approval for the compensation provided for in Special Condition 5.2 and 5.3 is not required, 'because otherwise the Tribunal in so doing would be interfering with the commercial arrangements agreed between the parties at arm's length, which is not the intention of section 13(7) of the Act'.[9] The Landlord alternatively submits that if the Tribunal concludes that its approval for Special Condition 5.2 and 5.3 is also required, then the Tribunal should determine that compensation to be reasonable.[10]

The relevant terms of the Lease

[9] Applicant's Submissions at [12].

[10] Applicant's Submissions at [13].

At this point, it is convenient to set out in full the terms of clause 33 (to which the Tribunal has given its approval) and Special Condition 5 (for which the Tribunal's approval is sought):
33.Destruction of Premises or Substantial Part of Building
33.1If during the Term:
(a)either:
(i)the Premises or a substantial part of the Premises or the Building is destroyed or damaged; or
(ii)the usual access to Premises or the Building is completely or partly obstructed to such extent that the Tenant is unable to conduct its business in a reasonable manner,
then until:
(a)reinstatement of the Premises (or relevant part) or the Building (as the case may be); or
(b)the removal of the obstruction to such level that allows the Tenant to conduct its business in the Premises in a reasonable manner,
the Tenant's obligations to:
(c)pay Base Rent and the Tenant's Proportion of the Outgoings and the Outgoings that are fully payable or assessed or separately recovered in respect of the Premises will abate by a proportion equal to the proportion of the Premises that is affected by the damage, destruction or obstructed access; and
(d)repair and maintain the affected area of the Premises,
are suspended.
33.2For the purposes of this clause 33, the expression 'a substantial part of the Building' means:
(a)at least one half of the total floor area in the Premises or in the Building (as the case may be) as reasonably determined by the Landlord; or
(b)a significant part of the Premises or the Building as, in the reasonable opinion of the Landlord, renders the restoration of the Premises or the Building (as the case may be) uneconomic or undesirable or the continued occupation of the Premises or the Building impractical.
33.3If clause 33.1 applies, then at any time after three (3) months from the date of the destruction, damage or obstruction first occurring either Party may terminate this Lease by notice to the other Party unless the Landlord has within that period of three (3) months completed the reinstatement works.
33.4Neither the Tenant nor the Landlord is liable to the other solely because of the termination of this Lease under this clause 33. Termination of this Lease under this clause 33 does not, however, release the Tenant from or affect the obligations of the Tenant up to the time of termination or applying on termination.
33.5Nothing in this clause 33 imposes an obligation on the Landlord to repair or reinstate the Premises or the Building.
33.6If section 13(1) of the Retail Shops Act applies to this Lease, then unless the State Administrative Tribunal has approved the inclusion of clause 33.3 pursuant to section 13(7) of the Retail Shops Act or has required the inclusion of some other period(s) for the purposes of clause 33.3, the Landlord shall be entitled to terminate this Lease pursuant to this clause only at the time of the expiry of the minimum term that may be obtained by the Tenant under section 13(1) of the Retail Shops Act.
Clause 61 of the Lease, which deals with 'Special Conditions', provides that any special conditions in Item 20 of the Schedule to the Lease form part of and are incorporated into the Lease, and to the extent of any inconsistency between the Special Conditions and the other terms of the Lease, the Special Conditions shall prevail to the extent of the inconsistency. Item 20 contains a number of special conditions. Only Special Condition 5 is presently relevant. It is in the following terms:
5.Redevelopment
5.1The Landlord intends to build a mixed retail, commercial and residential tower on the Land in the future. If the Landlord builds a mixed retail, commercial and residential tower, then either the Landlord or the Tenant will have the right to terminate this Lease at any time after the date being eighteen (18) months after the Lease Commencement Date by giving the other at least three (3) months' written notice whereupon the Landlord may retake possession of the Premises.
5.2The Landlord and the Tenant agree that in consideration of the Landlord's and Tenant's right to terminate this Lease, the Landlord has agreed to charge the Gross Rent which is substantially less than the market rent for the Premises and the Tenant's Proportion of Outgoings at the Lease Commencement Date;
5.3The concession provided in respect of the Gross Rent constitutes compensation to the Tenant if the Landlord exercises its right to terminate this Lease during the Term to build a mixed retail, commercial and residential tower on the Land. As a result, if the Landlord terminates this Lease in accordance with this special condition, neither party will be liable to the other except in respect of any prior breach of this Lease.
5.4If the Landlord or the Tenant terminate this Lease under special condition 5.1, then:
5.4.1as part of vacating the Premises, the Tenant may (but is not required to) remove any of the Tenant's Property from the Premises; and
5.4.2the Tenant is not required to make good the Premises in accordance with clause 38 of this Lease.
As already noted, the terms of Special Condition 5, as it appears in the Lease, are not identical to the copy of Special Condition 5 which was attached to the Application (specifically in relation to the compensation the subject of clauses 5.2 and 5.3). I have relied on the terms of Special Condition 5 as it appears in the Lease, as that version reflects the terms of Special Condition 5 which was agreed by the parties, as reflected in their execution of the Lease.

The statutory framework

The Application is made pursuant to s 13(7) of the Act. That subsection is found within the rather convoluted terms of s 13 of the Act. It is convenient to set out the relevant parts of the section at the outset. Section 13 relevantly provides:
(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.
…
(3)The option that a lease is, by reason of subsection (1), taken to give a tenant —
(a)is exercisable, by notice in writing in the prescribed form given to the landlord, not less than 30 days before the expiry of the current term, or the option term, as the case may require or during such other period before the expiry of the current term, or the option term, as the case may require as the Tribunal, having regard to the term of the lease or such other circumstances as it considers relevant, approves in a particular case; but
(b)is not exercisable while there exists any unremedied default under the lease on the part of the tenant notice of which has been given by the landlord, in writing, to the tenant.
…
(4)Where
(a)the landlord under a retail shop lease holds the premises concerned under a head lease; and
(b)it would be inconsistent with the head lease for the retail shop lease to continue until the day provided for by subsection (1); and
(c)that inconsistency is not, by reason of section 13A(1), removed,
the day that may be specified under subsection (1) as the day until which the retail shop lease is to be renewed shall not be later than the last day until which the retail shop lease can lawfully continue.
(5)The terms and conditions upon which a lease is renewable under an option that a lease is, by reason of subsection (1), taken to give a tenant are the same as those upon which the lease is held at the time notice is given of the exercise of that option, except that —
(a)the tenant does not have any further option under subsection (1) to renew the lease; and
(b)where the lease does not provide for a review of rental, the lease shall be taken to provide that the rental payable during the term for which the lease is renewed shall be determined having regard to the market rent of the premises ascertained as provided in section 11(2).
(6)The landlord under a retail shop lease is not entitled to determine the lease —
(aa)if the lease is a lease referred to in subsection (1), before the day on which the term that may be obtained by the tenant under that subsection expires; or
(ab)if the lease is a lease the current term of which, or the current term plus the option term, is 5 years or longer, before the day that is 5 years after the day on which the current term commenced,
except —
(a)by reason of default by the tenant or failure of the tenant to remedy any such default in accordance with the lease; or
(b)by reason that —
(i)it would be inconsistent with a head lease under which the premises are held by the landlord for the retail shop lease to continue; and
(ii)that inconsistency is not, by reason of section 13A(1), removed;
or
(c)under and in accordance with a provision that is included in the lease with the approval in writing of the Tribunal given under subsection (7) or (7a); or
(da)under and in accordance with a provision of the lease that is the same, or substantially the same, as a provision prescribed for the purposes of this section; or
(d)where the Tribunal has granted an application by the tenant under subsection (7b), in relation to a lease referred to in paragraph (aa).
(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.
(7a)A landlord in relation to a retail shopping centre may make an application under subsection (7) as to any number of retail shop leases in respect of that centre where he is of the opinion that the same special circumstances exist in relation to each lease the subject of his application, and the Tribunal may exercise its powers under that subsection accordingly.
(7b)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.
(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.
(9)Notwithstanding any other written law, the right of a tenant under subsection (1) is not affected by any assignment or other disposition of the reversion of the premises to which the lease relates.
…

In summary, the key features of s 13 of the Act, for present purposes, are:
(a)The section applies only to a retail shop lease,[11] which has a term of more than 6 months but less than 5 years (inclusive of any option to renew under the lease);
[11] See the definition of 'retail shop' in s 3 of the Act, and the definition of 'retail shop lease' in s 3 and the exclusions from the scope of that definition, including the leases which are prescribed in the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (Regulations) r 3AB. See also 480 Hay Street Pty Ltd v Uber Australia Pty Ltd [2019] WASC 461 at [12] (480 Hay Street v Uber).
(b)For leases of that kind, s 13(1) of the Act confers on the tenant an option to renew the lease for a further period as specified by the tenant, but so that the lease period will be 5 years from the commencement of the lease. In short, s 13(1) of the Act gives the tenant the benefit of a minimum tenancy of 5 years.[12] (For convenience I will refer to this as the statutory option to renew);
[12] Retail shop leases with terms (including options to renew) of 5 years or more are not subject to s 13(1) of the Act but necessarily under those leases the tenant already has a minimum term of 5 years under the lease. It has therefore been said that the scheme of the Act is to give all tenants under retail shop leases the benefit of a minimum 5 year term: Swanville Investment Pty Ltd and Ors v Riana Pty Ltd [2003] WASCA 121 at [10] (Malcolm CJ]. The exception to that, of course, is a retail shop lease for a term of less than 6 months.
(c)The tenant must give the landlord notice of its desire to exercise the statutory option to renew;
(d)The tenant cannot exercise the statutory option to renew if there exists any unremedied default on its part, of which the tenant is on notice from the landlord;
(e)The exercise by the tenant of the statutory option to renew cannot result in an overall term of the lease that exceeds the term permitted by the head lease pursuant to which the landlord holds the premises;
(f)The landlord is not entitled to terminate the lease before the expiry of the 5 year term to which the tenant is entitled pursuant to the statutory option to renew, other than in the circumstances described in:
·s 13(6)(a) — in the event of default by the tenant;
·s 13(6)(b) — in the event that the 5 year term would be inconsistent with any head lease pursuant to which the landlord holds the premises;
·s 13(6)(c) — pursuant to an early termination clause approved by the Tribunal at the request of the landlord under s 13(7) or s 13(7a);
·s 13(6)(da) — pursuant to a provision of the lease that is in terms which are prescribed for the purposes of s 13 of the Act. When s 13(6)(da) was included in the Act, the explanatory memorandum for the relevant clause[13] indicated that 'standard classes of provisions' to permit early termination of a lease could be prescribed, and parties would be able to include those provisions in retail shop leases without the need to obtain the approval of the Tribunal. However, the only term so far prescribed[14] permits the termination of the lease in the event of the bankruptcy or insolvency of the tenant, or of the guarantor of the tenant if the tenant is a body corporate and if the guarantor is a director or majority shareholder of the tenant; or
·s 13(6)(d) — when the Tribunal has granted an application by the tenant under s 13(7b) for the statutory option to renew not to apply.
(g)The prohibition in s 13(6) of the Act is directed only to the landlord unilaterally terminating the lease prior to the minimum 5 year term provided for under s 13(1) of the Act. That subsection says nothing about other circumstances in which a retail shop lease may be terminated.[15]
[13] Explanatory Memorandum for the Commercial Tenant (Retail Shops) Agreements Amendment Bill 2011, clause 11.
[14] Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA) r 7 and Schedule 1 item 1 column 2.
[15] Cf 480 Hay Street v Irwin St at [30] (Curthoys J), referring to Yang v Hapisun Pty Ltd [2018] SASC 17 esp at [33], [53] – [54].
Turning more specifically to s 13(7), there are a number of features of that subsection which may be immediately noted:
(a)The Tribunal may approve the inclusion of a clause in a retail shop lease which permits the early termination of the lease by a landlord notwithstanding the statutory option in s 13(1);
(b)The application for the inclusion of an early termination clause is made to the Tribunal by the landlord;
(c)The tenant must be given notice of the application;
(d)The application will be for the approval of the inclusion of a specific clause in the lease which permits its early termination by the landlord before the end of the 5 year term to which the tenant is entitled pursuant to the statutory option to renew;
(e)The reasons justifying approval for an early termination clause do not include the reasons for early termination which are already permitted under s 13(6)(a), (b) or (da), namely, default by the tenant, inconsistency with the head lease, or pursuant to a clause of the lease which is in the terms prescribed for the purposes of s 13 of the Act;
(f)The Tribunal may only approve the inclusion of a clause permitting early termination by a landlord if it is satisfied 'that special circumstances exist by reason of which such approval ought to be given'.
By virtue of s 15(2) of the Act, a provision of a retail shop lease will be void, to the extent that it is contrary to, or inconsistent with, anything in the Act, or with anything that by the Act the lease is taken to provide. At first blush, that provision suggests that if a retail shop lease were to contain an early termination clause which had not received the prior approval of the Tribunal under s 13(7), that clause would be void. In turn, that might be thought to raise a question as to whether the Tribunal could give retrospective approval to such a clause in a lease.
However, it has been held that that an application for approval of an early termination clause in a lease can be made either before, or after, the lease is entered into.[16] That conclusion as to the construction of s 13(7) relies on the meaning of its terms (namely that the definitions of 'landlord' and 'tenant' in the Act refer to a landlord and tenant under a proposed lease as well as under an existing lease),[17] on the context (including the fact that s 13(7b) refers to an application by a tenant or prospective tenant, and that s 13(7a) contemplates an application in respect of multiple retail shop leases which have been entered into by the landlord),[18] and on the absence of any policy reason for why an application under s 13(7) should not be made after the lease has been entered into.[19]

The proper construction of s 13(7) of the Act

[16] Re Commercial Registrar of the Commercial Tribunal of Western Australia; ex parte Commissioner of Main Roads and Scarff and Hough (unreported, Sup Ct of WA, Lib No. 970522) (Hough's case).

[17] See Hough's case Lib No. 970522A at page 13 (Malcolm CJ and Wheeler J agreeing).

[18] See Hough's case Lib No. 970522A at page 7 (Malcolm CJ and Wheeler J agreeing).

[19] See Hough's case Lib No. 970522C at page 4 (Kennedy J).

There are few authorities in relation to the proper construction of s 13(7), and few which illustrate the kinds of circumstances which may constitute 'special circumstances'. In the latter respect, that is largely a result of the Tribunal's practice in dealing with applications under s 13(7), a subject to which I will return later in these reasons.
In WASCF Alliances,[20] Allanson J said:
The words 'special circumstances' are found in many contexts and 'will always take their colour from their surroundings'. In whatever context the phrase appears, the circumstances must be 'special', that is, 'out of the ordinary', 'unusual'. In the context of s 13(7), the term requires some circumstances be shown which are special in this sense, and sufficient to justify a departure from the ordinary rule that a lease may not include a provision which permits its early determination.
[20] WASCF Alliances at [23].
Understood in that way, the criterion of 'special circumstances' gives the Tribunal a discretion which is undoubtedly broad. But it is not unfettered. The meaning of the phrase 'special circumstances' must be understood bearing in mind that every statutory power, however widely expressed, is confined by the subject matter, scope and purpose of the statute.[21]
[21] Klein v Domus Pty Ltd (1963) 109 CLR 467, 473 (Dixon CJ), 474 (McTiernan J and Windeyer J agreeing); Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 [23] (French CJ) at [67] (Hayne, Kiefel and Bell JJ) at [90] (Gageler J).
Turning first to the subject matter and purpose of the statute, I note 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:[22]
… 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)
[22] Parliament of Western Australia Record of Debates, Legislative Assembly, 21 February 1985, page 185.
Having regard to the current economic climate, the increasing frequency of 'pop up' stores, and the growing prevalence of online retail shopping, the importance of that minimum term to tenants may have dissipated, but the statutory purpose nevertheless remains.
Turning next to the immediate statutory context — namely s 13(7) as a whole — the special circumstances said to justify approval of the early termination clause must 'exist' at the time of the application to the Tribunal. The requirement that the circumstances 'exist' means that they must 'be real or actual' or 'a part of objective reality',[23] or they must 'have being in a specified place or manner or under specified conditions'.[24] 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'[25] 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.[26] (If an unforeseen special circumstance arises during the term of the lease, in a case where there is no early termination clause in the lease in respect of that circumstance, it would of course be open to the parties to negotiate a variation of the lease to permit early termination, and for the landlord to seek approval under s 13(7) of the Act on the basis that the special circumstance then exists.)
[23] Oxford English Dictionary Online.
[24] Oxford English Dictionary Online.
[25] 480 Hay Street v Irwin St at [31] (Curthoys J).
[26] 480 Hay Street v Irwin St at [31] (Curthoys J).
In addition, under s 13(7) of the Act, the tenant must be given notice of the application to the Tribunal. Quite apart from the need to afford procedural fairness to the tenant in respect of the possible abrogation of the tenant's statutory right to the 5 year term of the lease,[27] the tenant's attitude to a proposed early termination clause will be highly relevant to the Tribunal's assessment of special circumstances. After all, the statutory option to renew, and the benefit which it entails, is an option which, under s 13(1) and s 13(3) of the Act, the tenant must choose to exercise.[28] It is, however, notable that the exercise of discretion under s 13(7) is not conditioned on the consent of the tenant. Further, the fact that the tenant consents does not, of itself, constitute a 'special circumstance'.[29] Nevertheless, if a tenant has indicated that they consent to the early termination clause, in circumstances where the Tribunal can have some confidence that the tenant has reached a free and informed view on the question, then that will be relevant to whether the circumstances are special and sufficient to warrant approval being given to the clause.[30]
[27] Cf s 13(9) of the Act.
[28] If the tenant does not wish to take up the statutory option to renew, the tenant is able to make an application under s 13(7b) of the Act.
[29] WASCF Alliances at [24].
[30] WASCF Alliances at [24].
The broader statutory context within which s 13(7) of the Act appears is also relevant in discerning the kinds of circumstances which the Parliament regarded as sufficient to warrant the termination of a retail shop lease prior to the expiry of the 5 year minimum term provided for by s 13(1) of the Act. The first thing to note is that other than pursuant to an early termination clause approved by the Tribunal, a landlord may not unilaterally terminate a lease which is subject to s 13(1) of the Act in advance of the 5 year term,[31] except in very limited circumstances: if the tenant is in breach of the lease; in the event of inconsistency between the 5 year term and any head lease pursuant to which the landlord holds the premises; in prescribed circumstances (currently limited to insolvency of the tenant or the tenant's guarantor); and in a case where the tenant has applied for an order that the option of renewal does not arise.

Redevelopment and relocation clauses and s 14A of the Act

[31] As noted at [21(g)], s 13(7) does not affect the grounds on which a lease may be terminated other than by the unilateral decision of the landlord.

A further aspect of the statutory context which may bear on the construction of s 13(7) is s 14A of the Act. That section relevantly provides:
(1)A provision of a retail shop lease about the relocation of the tenant's business is void unless —
(a)it is in the form prescribed for the purposes of this section; or
(b)it is in a form approved by the Tribunal under subsection (3); or
(c)if 5 years of the term of the lease (including any period during the extension of the term under an option to renew) have already expired, it is in accordance with subsection (2).
(2)A provision of a retail shop lease about the relocation of the tenant's business is in accordance with this subsection if it contains provisions to the following effect —
(a)the tenant's business cannot be required to be relocated unless the landlord has given the tenant at least 6 months written notice of relocation (a relocation notice);
(b)the relocation notice is to give details of an alternative retail shop (the alternative shop) to be made available to the tenant, and if the existing retail shop is situated in a retail shopping centre, the alternative shop is to be situated in that shopping centre;
(c)the tenant is to be offered a new lease of the alternative shop —
(i)on the same, or better, terms and conditions as the existing lease except that the term of the new lease is to be no shorter than the remainder of the term of the existing lease; and
(ii)the rent for the alternative shop is to be no more than the rent for the existing retail shop, adjusted to take into account any difference in the commercial values of the existing retail shop and the alternative shop at the time of relocation;
(d)the landlord is to pay the tenant's reasonable costs of the relocation …;
(e)if the landlord does not offer the tenant a new lease of an alternative retail shop then the landlord is liable to pay to the tenant such reasonable compensation as is agreed in writing between the parties, or determined by the Tribunal.
(3)The Tribunal may, on 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 another form of relocation provision under subsection (1)(b) if the Tribunal is satisfied that special circumstances exist by reason of which such approval ought to be given.
(4)A landlord in relation to a retail shopping centre may make an application under subsection (3) as to any number of retail shop leases in respect of that centre where the landlord is of the opinion that the same special circumstances exist in relation to each lease the subject of the application, and the Tribunal may exercise its powers under that subsection accordingly.
In his second reading speech for the Bill which was to include s 14A in the Act, the responsible Minister relevantly observed:[32]
The legislation currently contains a number of protections for tenants, including … a minimum five-year lease term for most leases … . These protections will continue to apply; however, a review of the legislation in 2003 identified the need for further reform in some key tenancy areas.
…
The bill includes comprehensive provisions concerning relocation clauses that may be included in retail shop leases. The bill clarifies and strengthens the tenant's rights in regard to relocation. Specifically, in relation to retail shop lease when five years of the term have not yet elapsed, a provision allowing for relocation of a tenant will be void unless it is in the prescribed form or it is approved by the … Tribunal.
[32] Parliament of Western Australia, Record of Parliamentary Debates, Legislative Assembly 16 March 2011, page 1444 (Minister Buswell MLA).
Any relocation of a tenant's business will necessarily involve the termination of the lease in respect of the particular retail shop premises, and in the case of a relocation, the landlord and tenant will enter into a new lease for the new retail shop premises. Typically, the relocation of a tenant's business will occur in circumstances where the retail shop is located in a retail shopping centre or other complex, and the landlord intends to redevelop the entire centre or complex. Clauses permitting the relocation of a tenant's business in these circumstances are sometimes referred to as 'redevelopment or relocation clauses'.
However, as s 14A(2) of the Act expressly indicates, when the Parliament referred to a lease term concerning the 'relocation' of a tenant's business, it did not have in mind only those circumstances where, in the course of a redevelopment, a retail shop lease would be terminated and a lease for another retail shop would be offered to the tenant. Rather, it was also contemplated that 'relocation' clauses covered by that section of the Act would include those in which, in the context of a redevelopment, a retail shop lease would be terminated, and the landlord would also have the option of not offering a lease of any alternative retail shop, in which case the landlord would be liable to pay compensation to the tenant.
That concept of a 'relocation' clause was not confined to leases in operation for more than five years (as is the case in relation to s 14A(2)) of the Act. The explanatory memorandum in relation to what became s 14A indicates that in so far as they referred to 'relocation', s 14A(1) and (3) of the Act were intended to operate in circumstances where the landlord was redeveloping a shopping centre or other complex, and where either the landlord wished to terminate a tenant's lease and offer a lease over another premises, or wished to terminate a retail shop lease without relocating the tenant's business:[33]
Currently, section 13(6) provides that a provision in a retail shop lease allowing a landlord to terminate the lease before the expiry of the minimum tenancy period of five years must be approved by the State Administrative Tribunal. This means that any provision in a retail shop lease allowing a landlord to relocate a tenant or terminate the lease where a shopping centre is undergoing repairs or renovations (often called redevelopment or relocation clauses) must be approved by the State Administrative Tribunal. There is currently no requirement for approval of a redevelopment or relocation clause that operates after the initial five year lease term. This clause amends the Act to insert new section 14A, which provides that a provision in a retail shop lease about the relocation of the tenant's business is void unless:
·it is in the prescribed form; or
·it is in a form approved by the State Administrative Tribunal; or
·if five years of the term of the lease has already expired, it is in accordance with subsection (2).
[33] Explanatory Memorandum for the Commercial Tenant (Retail Shops) Agreements Amendment Bill 2011, clause 14.

Furthermore, the terms prescribed for the purposes of s 14A(1)(b) of the Act[34] confirm that the executive government (in prescribing terms in the Regulations) expressly contemplated that s 14A(1) of the Act would operate in the context of redevelopments where relocation of a tenant's business was to be offered, and also in cases where no relocation of the tenant's business was to be offered and in which cases the landlord would be liable to pay compensation in accordance with the prescribed terms.
[34] Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA) r 7(b) and item 2 in Schedule 1, column 2.
It thus appears that in so far as it refers to a term of a lease dealing with the 'relocation of a tenant's business', s 14A(1) of the Act covers lease terms which deal with the following circumstances:
·A redevelopment of a retail shop, retail shopping centre or other complex is contemplated;
·The tenant's retail shop lease is to be subject to early termination by the landlord;
·The landlord will offer the tenant relocation to another premises (and a new lease over that premises) or the landlord will not offer relocation but will pay the tenant compensation.
In these reasons, for the sake of clarity, I will refer to a lease term of this kind as a 'relocation clause'.
On its face, there is nothing to suggest that s 13(7) of the Act would be incapable of application in cases where approval is sought for a relocation clause (which would necessarily contain provision for the early termination of the lease). There is also nothing in either s 13(7) or in s 14A(3) of the Act to expressly indicate that s 13(7) should give way to s 14A(3). But clearly, s 14A(3) more specifically deals with approval for relocation clauses (which also necessarily involve early termination of a retail shop lease), whereas s 13(7) deals more generally with approval for early termination clauses.
Ordinary principles of statutory construction would require that general provisions give way to specific provisions.[35] If that approach to the construction of the Act were adopted, applications for approval for relocation clauses would be dealt with under s 14A(3) rather than s 13(7) of the Act. However, a series of decisions of the Supreme Court, in appeals against Tribunal decisions, might be seen to be inconsistent with that approach. Each involved an appeal against a decision of the Tribunal refusing approval under s 13(7) of the Act. In each case, the Court found that the Tribunal had erred in law in reaching that decision, and itself proceeded to consider whether special circumstances existed, sufficient to warrant approval for an early termination clause under s 13(7) of the Act. In each case, the Court found that special circumstances existed, and granted approval for the early termination clause.
[35] Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 44 FLR 455 at [469]; 29 ALR 333 at [347].
In WASCF Alliance, special circumstances were found to exist sufficient to warrant approval under s 13(7) of the Act where the landlord had plans to redevelop and demolish a shopping centre; where the early termination clause was only to operate if the major tenant of the shopping centre intended to vacate; when that tenant had in fact done so; and where the lessee had agreed to the proposed early termination clause.[36] (I note that nothing in the Tribunal's decision which was the subject of the appeal (that is, its order) made any reference to s 14A, and there is no discussion of s 14A in the Court's reasons.)
[36] WASCF Alliance at [24].
In 480 Hay Street v Irwin St, special circumstances were found to exist sufficient to warrant approval under s 13(7) of the Act where the subject retail shop premises was located within the footprint of a proposed redevelopment of an office building; where the subject tenancy was marketed on the basis that it would be part of that future office building; where the subject premises was only accessible through the premises of another, larger tenancy and could only be tenanted in conjunction with that tenancy; where the subject lease contemplated that if the larger tenancy terminated, the subject lease would also terminate; and where the tenant of the subject lease was to be compensated by significantly reduced rent and other favourable terms.[37]
[37] 480 Hay Street v Irwin St at [41] – [43] (Curthoys J).
In that case, the Tribunal's order noted that the lease term was not approved because the Tribunal had no power to do so under s 13(7) of the Act, and a separate application was required under s 14A(3). One of the grounds of appeal was that the Tribunal had erred in finding that the lease clause was in the nature of a relocation clause, and that the Tribunal had failed to consider whether special circumstances existed for the purposes of s 13(7). Curthoys J held that the subject lease did not deal with the relocation of the tenant's business in the event of the redevelopment of the office building (that is, the subject termination clause was not a 'relocation clause' in the sense that I have defined it). His Honour found that s 14A of the Act was 'concerned with forced relocation and is silent with respect to the issue of redevelopment … Further, it does not deal with the early termination of the [l]ease.'[38] He therefore considered it open to the Tribunal to have dealt with the application for approval under s 13(7) of the Act.
[38] Cf 480 Hay Street v Irwin St at [35] (Curthoys J).
In Hay & Colin Pty Ltd v West End Hospitality Pty Ltd, special circumstances were found to exist sufficient to warrant approval under s 13(7) where the landlord proposed to redevelop the building in which the retail shop was located; where the leased premises were an adjunct to premises covered by an existing retail shop lease which itself contained an approved redevelopment clause permitting early termination of that lease; where all of the leases of premises within that building were subject to the same lease term which permitted early termination for the redevelopment; where the tenant was entitled to significant compensation for the early termination; where the landlord was required to give the tenant a substantial period of notice for the early termination; and where the application for approval of the early termination clause was supported by the tenant.[39]
[39] Hay & Colin Pty Ltd v West End Hospitality Pty Ltd [2021] WASC 458 at [34] – [35], [38] (K. Martin J) (Hay & Colin).
In that case, the Tribunal's order recorded that it found that 'the sole ground of the application is the possible redevelopment of the premises which would necessitate the relocation of the [t]enant's business', that s 14A dealt with all instances of relocation of a tenant's business, and that the Tribunal had no jurisdiction to approve the application under s 13(7) of the Act.[40]
[40] Hay & Colin at [13] (K. Martin J).
The clause for which approval was sought provided for early termination of the lease in the event that the landlord wished to develop the premises. No relocation was to be offered, but rather the tenant was to be given substantial notice of the redevelopment and paid compensation as specified in the clause.
K. Martin J held that the Tribunal's view that it was dealing with a relocation clause was unsustainable on the facts (as no relocation was in fact contemplated as a possibility)[41] and that the clause itself said nothing about relocation, and dealt entirely with the question of a potential early termination of the lease.[42] His Honour held that the Tribunal 'plainly did have the jurisdiction to consider the application under s 13(7)' and that it should have done so.[43] In considering special circumstances, his Honour also expressed support for the reasons given by Curthoys J in 480 Hay Street v Irwin St to which I referred at [43] above.[44]
[41] Hay & Colin at [15] (K. Martin J).
[42] Hay & Colin at [19], [20] and [24] (K. Martin J).
[43] Hay & Colin at [25] (K. Martin J).
[44] Hay & Colin at [31] (K. Martin J).
Finally, in the appeal from the Tribunal's decision in the present matter, Archer J concluded that Special Condition 5 clearly fell within the scope of s 13(7) of the Act and expressed her agreement with the decision of Curthoys J in 480 Hay Street v Irwin St to which I referred at [43] above.[45]
[45] Synicast at [22] (Archer J).
How, then, can the approach taken in these cases be reconciled with the construction of s 13(7) and s 14A discussed above? To my mind, the answer lies in the fact that in none of the cases (each of which involved redevelopment of the retail shop premises, or the shopping centre or complex in which the retail shop was located) did the subject clause contemplate the possibility that the landlord might relocate the tenant's business as an alternative to merely terminating the lease and payment of compensation to the tenant. In other words, the cases may be understood as supporting the proposition that a lease term which deals with the following:
·A redevelopment of a retail shop, retail shopping centre or other complex is contemplated; and
·The tenant's retail shop lease is to be subject to early termination by the landlord to enable the redevelopment to proceed;
may be approved under s 13(7) of the Act if the Tribunal is satisfied that 'special circumstances' exist to warrant approval being given. For the sake of clarity, I will refer to a lease term of this kind as a 'redevelopment clause'.
It appears that the underlying (but unexplained) concern of the Tribunal in the cases above, in dealing with an application for approval of a redevelopment clause under s 13(7) of the Act (as opposed to treating it as a kind of relocation clause, approval for which should be considered under s 14A(3) of the Act) related to the question of whether compensation must be paid to a tenant in the event of early termination of a lease for the purposes of a redevelopment. After all, on one view, a redevelopment clause is simply a subset of a relocation clause. Under the terms prescribed for s 14A(1)(b) of the Act,[46] if relocation is not offered to a tenant for early termination in the context of a redevelopment, the landlord is liable to pay compensation to the tenant. In contrast, s 13(7) of the Act does not refer to, much less expressly require, the payment of compensation in the event of the early termination of a lease.
[46] And similarly, under s 14A(2), in respect of leases with terms of greater than 5 years.
While that may be so, in light of the potential for overlap in the practical operation of a relocation clause (if relocation is not ultimately offered) and a redevelopment clause, the payment of compensation may be a relevant consideration in determining if special circumstances warrant approval being given to a redevelopment clause under s 13(7) of the Act. The provision for compensation for the tenant was a factor in the decision to grant approval in at least some of the Supreme Court authorities to which I have referred.
I turn, now, to discuss the circumstances which have been regarded as 'special circumstances' by the Supreme Court, and by the Tribunal.

What circumstances have been regarded as 'special circumstances' for the purposes of s 13(7) of the Act?

There are few Supreme Court authorities in relation to the operation of s 13(7) of the Act. As I have already explained, those cases confirm that redevelopment clauses may be the subject of an application for approval under s 13(7). As the discussion above at [42] – [48] makes clear, however, the planned redevelopment of the retail shop, shopping centre or complex was not the only circumstance considered relevant to whether, overall, 'special circumstances' existed sufficient to warrant approval for the early termination of the lease. Other factors were present in each case, including a provision for compensation to be paid to the tenant; the agreement or support of the tenant for the application; the requirement to give notice of the proposed termination; the fact that either the landlord or the tenant was entitled to terminate the lease in the circumstances described; the departure of other tenants in the retail shopping centre in light of the proposed redevelopment; and the practical context, namely the decreasing number of other tenants in view of the proposed redevelopment. In each case, clearly the totality of the circumstances were taken into account in the assessment of whether 'special circumstances' existed.
As I have already observed, the circumstances which, in the past, have been accepted by the Tribunal as constituting special circumstances warranting approval for an early termination clause under s 13(7) are virtually impossible to identify. That is because the Tribunal does not ordinarily provide reasons for its decisions under s 13(7), s 13(7a) or s 13(7b) (or under s 14A(3).
I digress to observe that the approach adopted by the Tribunal in dealing with applications under s 13(7) (and also under s 13(7a), s 13(7b) and s 14A(3)) has been heavily influenced by the approach taken to applications under s 13(7), s 13(7a) and s 13(7b) prior to the establishment of the Tribunal. Before jurisdiction to give approval was conferred on the Tribunal, jurisdiction to grant approval under those provisions of the Act was conferred on the Registrar of the Commercial Tribunal (Registrar).[47] The Registrar was the executive officer of the Commercial Tribunal, who was required to be a legal practitioner, and was employed under the Public Sector Management Act 1994 (WA).[48] In other words, the jurisdiction to deal with applications under s 13(7), s 13(7a) and s 13(7b) of the Act was not, historically, conferred on the Commercial Tribunal itself.
[47] See s 13(7), s 13(7a) and s 13(7b) of the Act in its form immediately prior to the amendments made by the State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA).
[48] See s 11 of the Commercial Tribunal Act 1984 (WA).
When the jurisdiction to deal with applications under s 13(7), s 13(7a) and s 13(7b) of the Act was conferred on this Tribunal, it adopted a process for dealing with those applications which is very similar to that previously adopted by the Registrar. That was so despite the fact that the jurisdiction was conferred on the Tribunal, rather than on a public sector officer. For present purposes, the most significant implication of that approach has been that when making decisions on applications under s 13(7), s 13(7a) and s 13(7b) of the Act, the Tribunal has not ordinarily provided reasons for its decisions.
In my respectful view, the failure by the Tribunal to give any reasons for its decisions (other than when written reasons have been expressly requested by a party) is not consistent with the requirements of s 77 of the State Administrative Tribunal Act 2004 (WA) and may constitute an error of law by the Tribunal. Equally importantly, that approach is not conducive to ensuring that landlords and tenants, their legal advisers, members of the public, and the executive government, are able to be informed about the approach taken by the Tribunal to the exercise of its jurisdiction. In that respect, the approach by the Tribunal has not been consistent with sound tribunal practice. In my respectful view, this approach should not continue.
It appears that in the past the Tribunal has approved early termination clauses which permit termination in the event of default by the tenant, which is not remedied; or where the tenant, or a guarantor which is related to a corporate tenant, becomes bankrupt or insolvent. However, approval is not (or is no longer) required in those circumstances, and the Tribunal does not have jurisdiction under s 13(7) to approve early termination clauses in the circumstances described in s 13(6)(a) or s 13(6)(da) (or, for that matter, s 13(6)(b)).
Anecdotally, the Tribunal's approach appears to have been that for the purposes of s 13(7), 'special circumstances' are those which affect the leasehold estate or fundamentally affect the commercial relationship between the landlord and tenant, in such a way as to render it unfair to hold the landlord to the 5 year term of the lease. Again, anecdotally, it appears that approval has been given to clauses which permit early termination in the event of damage to, or destruction of, the retail shop premises, where that damage is so substantial that it cannot be repaired quickly, or where the land has been resumed by a public authority. The Tribunal's approval of clause 33 of the Lease in the present case is consistent with the approval of early termination clauses in the former of those categories. Whether 'special circumstances' of that kind existed when the application for approval was sought is not clear.
As I have already explained, in this case (and in the decisions which gave rise to the appeals discussed in the cases at [42] – [48]), the Tribunal took the view that applications seeking approval for early termination clauses which were properly to be regarded as relocation clauses should be dealt with under s 14A(3) of the Act, rather than under s 13(7) of the Act.[49] In light of the Supreme Court authorities, to which I have referred, that approach can no longer be regarded as correct.
[49] See Synicast at [16] (Archer J); Hay & Colin at [13] (K. Martin J); 480 Hay Street v Irwin St at [15] (Curthoys J).
Before turning to examine the Application this case, one final point should be made. The limited jurisprudence in relation to what constitutes 'special circumstances' under s 13(7) of the Act serves to emphasise that the matters identified above, which in the past have been regarded as giving rise to 'special circumstances,' cannot be regarded as exhaustive. It is trite to observe that each application must be considered on its facts.
It is also apparent that there is little available guidance in relation to the kinds of circumstances which will warrant approval for early termination clauses. It would be highly desirable for landlords and tenants if that deficiency were addressed. That could occur in at least three ways. First, the Parliament might see fit to amend the Act to clarify the test for the grant of approval or to give further examples of when early termination clauses should be permitted. Further, or alternatively, the Parliament might see fit to clarify whether s 14A(3) is intended to apply, to the exclusion of s 13(7), in relation to redevelopment clauses, as well as to relocation clauses. Alternatively, the Parliament might see fit to clarify whether compensation should be payable if, in the event of a redevelopment, a landlord does not offer to relocate a tenant's business.
Secondly, the executive government might choose to prescribe further examples of circumstances on which early termination will be permitted, to supplement the one circumstance so far prescribed in the Regulations.
Thirdly, the Tribunal itself should provide reasons for its decisions to grant or withhold approval of early termination clauses under s 13(7) (and, for that matter, for its decisions to grant or withhold approval in applications brought under s 13(7a), s 13(7b) and s 14A(3)).
I turn, then, to consider the facts of this case.

Should approval be given in this case?

The Application, as initially filed, did not contain any evidence or submissions to explain why special circumstances existed to warrant the grant of approval for Special Condition 5. That deficiency was remedied when, following the remittal of the matter to the Tribunal after the appeal, the Landlord filed an affidavit, and an outline of submissions, in support of the Application.
In any case in which a landlord applies for approval under s 13(7) of the Act, it is incumbent upon the landlord to establish why 'special circumstances' exist which warrant approval for the early termination clause. If the special circumstances are said to arise from some factual situation which exists at the time of the application, or which it is intended will arise during the term of the lease, those facts will need to be proved by evidence. Mere assertion will not suffice.

Having regard to my findings at [12], and to the terms of the Lease, including Special Condition 5, I take into account the following matters.
First, Special Condition 5 permits the early termination of the Lease before the expiry of 5 years from its commencement. In addition, Special Condition 5 is clearly a redevelopment clause, in that it contemplates the early termination of the Lease to permit the Landlord to pursue the Tower Development, but without any obligation on the Landlord to relocate the Tenant's business. It is thus a clause which the Tribunal is able to approve pursuant to s 13(7), subject to its satisfaction as to the existence of 'special circumstances' warranting the grant of approval.
For completeness, I note that the Lease contains a relocation clause. Clause 26 of the Lease is a clause which would operate prior to the expiry of 5 years from commencement of the Lease, and which appears to be in the terms prescribed for the purposes of s 14A(1)(b) of the Act. (It thus contemplates that the Landlord may offer to relocate the Tenant's business but otherwise the Landlord will be liable to pay compensation in accordance with terms which mirror the prescribed terms.) However, Item 19(b) in the Schedule to the Lease relevantly provides that '[t]he following clauses shall be deleted from this lease: … [clause 26] to the intent that Special Condition 5 shall prevail'. The evident intention is that if the Tribunal approves Special Condition 5, clause 26 will have no operation.
Secondly, as Special Condition 5.1 makes clear, the early termination of the Lease is intended to permit the Landlord to pursue the Tower Development. Having regard to the evidence in Mr Butler's affidavit – in particular, the Tower Development has been in contemplation since the Landlord acquired the Land, and that the Tenant was on notice of the proposed Tower Development during the Lease negotiations, I am satisfied, and I find, that the Landlord intends to pursue the Tower Development during the term of the Lease, so that the Tower Development is properly considered part of the special circumstances which presently 'exist'.
Thirdly, Special Condition 5 gives either the Landlord or the Tenant the right to terminate the Lease if the Landlord seeks to commence the Tower Development. Consequently, the clause is not one which is able to be called in aid only by the Landlord.
Fourthly, having regard to the cases discussed at [43] – [48] above, the provision of compensation to a tenant for early termination of a lease is factor which may be relevant to the existence of 'special circumstances'. Special Condition 5 contemplates a financial benefit to the Tenant in consideration for the early termination of the Lease. Special Condition 5.2 states that the Tenant will be charged only the Gross Rent (as defined)[50] in consideration of the contemplated early termination of the Lease. Special Condition 5.2 states that the Gross Rent is 'substantially less' than the market rent for the Premises and the Tenant's proportion of outgoings as at the commencement date for the Lease. (There was no evidence in relation to that matter, but nothing to suggest that the Tenant demurred from that statement.) In any event, it is not appropriate to view Special Condition 5.2 in isolation from the balance of Special Condition 5, because it is Special Condition 5 as a whole which encapsulates the parties' bargain in relation to the early termination of the Lease. By way of illustration, Special Condition 5.1 prohibits early termination until at least 18 months into the term of the Lease. The effect is that the Tenant would enjoy the benefit of discounted rent for at least 18 months and would enjoy that benefit before any termination of the Lease. There is a clear commercial benefit to a tenant from an arrangement of that kind. Viewed as a whole, Special Condition 5 provides for the Landlord to compensate the Tenant in consideration for the early termination of the Lease.
[50] Gross Rent is defined in Item 7 of the Schedule to the Lease.
In addition, the 18 month minimum period before the early termination clause could be activated was requested by the Tenant. That supports the conclusion that the Tenant was satisfied with that minimum term for the Lease in all of the circumstances (including the financial benefit it would enjoy in the form of discounted rent).
If the Application had been brought under s 14A(3), the payment of compensation to the Tenant in consideration of the early termination of the Lease, and the extent to which that compensation constituted a departure from the compensation that would otherwise have been required pursuant to the terms prescribed for the purposes of s 14A(1)(b), would also have been relevant to the existence of 'special circumstances'. The terms prescribed for the purposes of s 14A(1)(b) of the Act, in circumstances where the landlord does not offer to relocate the tenant's business, include 'reasonable compensation for loss and damage (including loss of goodwill) suffered by the tenant due to the termination of this lease taking into account all relevant factors'. There is nothing to suggest that the compensation to which the Tenant is entitled under Special Condition 5 would not constitute 'reasonable compensation' in that sense.
There is nothing in the material before the Tribunal to cast any doubt on the conclusion that Special Condition 5 represents a bargain reached at arm's length between two parties to a commercial transaction. Furthermore, as the Tenant has been given the opportunity, by the Tribunal, to put on evidence or submissions, and has not done so, I am satisfied that the Tenant does not wish to contend that the compensation referred to in Special Condition 5 does not constitute reasonable compensation for the early termination of the Lease, or that it otherwise provides a basis for concluding that 'special circumstances' do not exist sufficient to warrant the grant of approval for Special Condition 5.
Fifthly, apart from the Lease, the last remaining tenancy — the subject of the Shop 15 Lease — will expire in March 2024. Further, the Shop 15 Lease contains an early termination clause which will permit its early termination before March 2024. If and when the Shop 15 Lease is terminated, the Tenant will be the only remaining Tenant in the shopping centre. I accept the Landlord's contention that that would be an 'uncommercial' outcome for the Tenant.
Taking all of these matters into account, I am satisfied that 'special circumstances' exist, by reason of which approval ought be given to the inclusion of Special Condition 5 in the Lease.

Conclusion

Special Condition 5 in Item 20 of the Schedule to the Lease is approved.

Orders

Special Condition 5 in Item 20 of the Schedule to the Lease is approved.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
PM
Associate to the Honourable Justice Pritchard
26 JUNE 2023