TRICHILO and VERMEULEN

[2023] WASAT 125

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985

CITATION:   TRICHILO and VERMEULEN [2023] WASAT 125

MEMBER:   MS N OLDFIELD, MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   15 DECEMBER 2023

FILE NO/S:   CC 1413 of 2023

BETWEEN:   COSIMO AND SAMANTHA MAREE TRICHILO

Applicants

AND

BARBARA DEBORAH VERMEULEN

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)(da), s 13(7)
Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA), Sch 1

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicants	:	N/A
Respondent	:	N/A

Solicitors:

Applicants	:	Philip Wyatt 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 are the landlords, and the respondent is the proposed tenant in relation to a proposed lease of retail premises located 9 Albany Highway, Albany.

2. The applicants have 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

1. 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.

2. 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

1. The application was lodged with the Tribunal on 1 December 2023.

2. The parties have not signed a lease, pending the outcome of this application.  The applicants and the proposed tenant each signed a schedule to the application agreeing to the insertion into the proposed lease of the following clause:

   1.Liquidation and Bankruptcy

   If:

   1.1The rent hereby reserved or any part thereof is at any time be unpaid for fourteen (14) days after becoming due whether formally demanded or not; or

   1.2There is a breach or non-observance of any of the other covenants conditions or stipulations on the Tenant's part contained or implied and any breach or non-performance continuing after the expiration of fourteen (14) days written notice to the Tenant to remedy the same; or

   1.3The Tenant shall go into compulsory or voluntary liquidation or become bankrupt or enters into any composition arrangement with or assignment for the benefit of the Tenant's creditors or have appointed under any acts or instrument or by order of any court a manager or an administrator or a trustee or a receiver or a receiver and manager or liquidator in relation to any part of the Tenant's undertakings or assets or property; or

   1.4Any execution be issued against the Tenant; or

   1.5The Leased Premises are deserted or vacated,

   THEN (but subject to the provision of the Bankruptcy Act 1966) the Landlord may at the Landlord's option re-enter upon occupy and resume possession of the Leased Premises or any part of the Leased Premises in the name of the whole and thereupon this lease and the term hereby created will cease and determine but without releasing the Tenant from rental accrued up to the time of re-entry and without prejudice to the right of action of the Landlord in respect of any breach of the covenants conditions and stipulations on the Tenant's part contained or implied in this lease.

3. The other provisions of the proposed lease between the parties were not included in the application.

Consideration

1. The applicants submit that the events described in the proposed clause constitute 'special circumstances' within the meaning of s 13(7) thus justifying early termination of the lease were any such circumstance to arise.

2. To the extent the proposed clause refers to a breach of the lease or an inability of the tenant to pay its debts, the application is unnecessary.  This is because the prohibition against termination of the lease prior to the expiration of 5 years does not apply where:

   (a)the tenant is in default of the lease;[1] or

   (b)the tenant is bankrupt or subject to insolvency laws.[2]

   [1] CTRSA Act, s 13(6)(a).

   [2] CTRSA Act, s 13(6)(da), Item 1 Schedule 1 Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA).

3. 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]:

   … 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[.]

   [Footnote omitted]

4. In that decision, President Prichard also cited the decision of Allanson J in WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41 at [23]:

   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.

5. I am not satisfied special circumstances exist as required by s 13(7) of the CTRSA Act. My reason is there is nothing in the application which suggests any of the circumstances described in the proposed clause currently exist, or are intended to come into existence during the term of the lease. Furthermore, there is nothing in the application which suggests to me that, were any of the described events to occur, they could not be appropriately managed by the parties according to ordinary terms of a retail shop lease.

Orders

The Tribunal orders:

1.On the application in respect of a proposed retail shop lease between the parties relating to 9 Albany Highway, Albany, it is ordered that the application for approval of the inclusion in the proposed lease of a clause entitled 'Liquidation and Bankruptcy' is dismissed.

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

MS N Oldfield, MEMBER

15 DECEMBER 2023