VAN DER FELTZ and RISPOLI

Case •

[2021] WASAT 84

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: COMMERCIAL TENANCIES (COVID-19 RESPONSE) ACT 2020 (WA)

CITATION:   VAN DER FELTZ and RISPOLI [2021] WASAT 84

MEMBER:   JUDGE K GLANCY, DEPUTY PRESIDENT

MS C BARTON, MEMBER

HEARD:   26 FEBRUARY 2021

DELIVERED          :   15 JUNE 2021

FILE NO/S:   CC 1216 of 2020

BETWEEN:   RIC VAN DER FELTZ

First Applicant

STEPHAN MATTHAUS

Second Applicant

AND

ROSA RISPOLI

Respondent


Catchwords:

Retail shops - Commercial tenancies - COVID-19 response - Small commercial lease - Code of conduct dispute - Application for rent relief - Emergency period - Eligible tenant - Jobkeeper - Decline in turnover - Tenant's turnover derived from rent ­ Rental shortfall subsequently paid by sub­tenant ­ Sufficient and accurate information - Onerous demands for information - Exercise of discretion

Legislation:

Commercial Tenancies (COVID-19 Response) Act 2020 (WA), s 3, s 14, s 16(1), s 16(2), s 16(3), s 16(4), s 17(2), s 17(2)(c), s 17(4), s 18, s 19, s 19(1)
Commercial Tenancies (COVID-19 Response) Amendment Regulations 2020 (WA)
Commercial Tenancies (COVID-19 Response) Amendment Regulations 2021 (WA)
Commercial Tenancies (COVID-19 Response) Regulations 2020 (WA), Sch 1, cl 1, cl 2, cl 2(1)(a), cl 2(1)(a)(iii), cl 2(1)(b)(ii), cl 2(1A), cl 4, cl 5(1), cl5(2), reg 2B
Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules (No. 2) 2020 (Cth)
Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth), s 6, s 7, s 8, s 8(7), cl 5
State Administrative Tribunal Act 2004 (WA), s 9, s 87(1), s 87(2), s 87(3)

Result:

The application is allowed in part
No order as to costs

Category:    B

Representation:

Counsel:

First Applicant : In Person
Second Applicant : In Person
Respondent : Mr AM Houghton

Solicitors:

First Applicant : N/A
Second Applicant : N/A
Respondent : Arns & Associates

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

Chew and Director General of the Department of Education and Training [2006] WASAT 248; (2006) 44 SR(WA) 174

Glew v Frank Jasper Pty Ltd [2010] WASCA 87

Ibrahim v The Honourable Justice Carolyn Martin [2012] WASC 338

Quah & Anor and AMP Life Limited [2005] WASAT 169

Re Cooper and Boroondara CC [2001] VCAT 2429

Smart v Prisoner Review Board (WA) [2012] WASC 48

Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32

Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 21

Mohammadi v Bethune [2018] WASCA 98

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

City of Fremantle v Imago Holdings Pty Ltd [2020] WASCA 61

Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32

Quah & Anor and AMP Life Limited [2005] WASAT 169

Re Cooper and Boroondara CC [2001] VCAT 2429

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

  1. Mr Ric van der Feltz and Mr Stephen Matthaus (applicants) are joint lessees of premises at 42 King Edward Road, Osborne Park (premises).  The applicants entered into a lease with Ms Rosa Rispoli (respondent/landlord) in relation to the premises on 11 April 2006 (Lease).

  2. On 27 September 2020, the applicants applied to the Tribunal under s 16(1) of the Commercial Tenancies (COVID-19 Response) Act 2020 (WA) (COVID ResponseAct).  The applicants seek rent relief from the landlord at a rate of 46.62% for the whole of the first COVID­19 pandemic emergency period, being the period from 30 March 2020 to 29 September 2020 (emergency period).[1]  The rate at which the applicants seek rent relief for the emergency period is based on the decline in turnover they claimed to have experienced for the month of July 2020.

    [1] The emergency period in s 3 of the COVID Response Act was extended to 28 March 2021 by reg 2B, Commercial Tenancies (COVID-19 Response) Regulations 2020 (WA).

  3. The applicants contend that they are eligible for rent relief because they satisfy the decline in turnover test for the relevant periods set out in cl 2 of the Code of Conduct which is schedule 1 to the Commercial Tenancies (COVID­19 Response) Regulations 2020 (WA) (Code) and which apply in their case.  The landlord says that the applicants have not proved that they are eligible for any rent relief.

  4. The applicants have paid to the landlord all rent owing under the Lease.

Outcome

  1. In the exercise of our discretion and for the reasons that follow, we grant rent relief to the applicants for the emergency period in the sum of $3,192.63 plus GST.

The issues for determination

  1. As can be seen from what we have said above, the ultimate issues which we need to determine to resolve the application are:

    1.Are the applicants entitled to any rent relief?

    2.If so;

    (a)    how much should they be granted? and

    (b)    how should it be awarded?

    Resolving those issues requires us to determine the following additional matters:

    3.Have the applicants established that they are 'eligible tenants' having regard to:

    (a)   the reliance by the applicants on a decline in turnover of 46.62% that occurred in only one month of the emergency period; and

    (b)   the decline in turnover of 46.62% that occurred in one month of the emergency period was 'caught up' in subsequent months?

    4.What is the proper basis for calculating rent relief for the entire emergency period having regard to 3(a) and (b) above?

    5.Should we exercise our discretion to grant rent relief to the applicants taking into account the factors set out in s 17(4) of the COVID Response Act?

  2. The respondent is seeking its costs of the application.  We will also have to resolve the issue of their entitlement to costs.

Tribunal's jurisdiction to determine the application

  1. Section 16(1) of the COVID Response Act provides that a party to a dispute may apply to the Tribunal to have the dispute determined. The term 'dispute' is defined in s 14 of the COVID Response Act. It includes a 'code of conduct dispute' as that term is defined in s 14 of the COVID Response Act. It is not necessary to set out the definitions of the terms 'dispute' and 'code of conduct dispute' here because it was accepted that there was a code of conduct dispute between the parties.

  2. Section 16(2) of the COVID Response Act conditions or limits the entitlement in s 16(1) by requiring that an application to determine a dispute must be made to the Tribunal during the emergency period unless the Small Business Commissioner (Commissioner) has issued a certificate under s 19 in respect of the dispute. The emergency period commenced on 30 March 2020 and ended on 28 March 2021.[2]  It is not in dispute and we find that the application, having been made on 27 September 2020, was made within the requisite period.

    [2] Section 3, COVID Response Act and reg 2B, Commercial Tenancies (COVID Response) Regulations 2020 (WA).

  3. Sections 16(3) and 16(4) of the COVID Response Act provide, among other things, that an application cannot be made to the Tribunal in respect of a dispute concerning a small commercial lease unless none of the parties to the dispute has made a request to the Commissioner under s 18 in respect of the dispute and the parties agree that the application can be made, or the Commissioner has issued a certificate in respect of the dispute under s 19 of the COVID Response Act. There is no dispute, and we find, that the Lease is a 'small commercial lease' for the purposes of s 16(3) of the COVID Response Act.[3] There was also no dispute, and we find, that the Commissioner issued certificate M20200504 to the applicants under s 19(1) of the COVID Response Act on 24 September 2020.[4]

    [3] The term 'small commercial lease' is defined in s 3, COVID Response Act.

    [4] Exhibit 6, page 119.

  4. We are also satisfied, based on the findings above, although we note there was no dispute between the parties about the matter, that we have jurisdiction to determine the application.

  5. Under s 17(2) of the COVID Response Act, the Tribunal may exercise its discretion to make any order that it considers appropriate to resolve the dispute. Relevantly, without limiting the discretion of the Tribunal, the Tribunal has power under s 17(3) of the COVID Response Act to order a party to the proceeding to pay money to a specified person. Further, without limitation, the Tribunal may make an order in relation to a 'code of conduct dispute' that a specified amount of rent payable under the Lease be waived for a specified period and/or a specified amount of rent payable under the Lease be deferred and paid in a specified timeframe.[5]

Onus and standard of proof

[5] Section 17(3)(c), COVID Response Act.

  1. At the outset, it is important to state that as this is a civil proceeding the applicants bear the onus of proving that they are entitled to rent relief.  The standard of proof required is the civil standard, that is, proof on the balance of probabilities.  The 'balance of probabilities' can be stated as requiring the Tribunal to be satisfied, on the evidence, that the matter found to have occurred is more likely than not to have occurred.  It is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the Tribunal.

Relevant findings of fact

  1. Many relevant factual matters were not in dispute between the parties.  We make the findings set out in this paragraph in relation to those matters.

    1)The parties entered into the Lease in respect of the premises on 11 April 2006.[6]

    [6] Exhibit 6, pages 101-118.

    2)The Lease was entered into for a term of five years, commencing on 1 May 2006, with two options to extend.  The final option expiring on 30 April 2021.

    3)The applicants subleased the premises to three businesses: a landscaping supply yard (landscaping business), a furniture manufacturer (furniture business) and a drive-through coffee shop (coffee shop).

    4)The applicants are neither a franchisee nor a corporation that is a member of a group.

    5)In 2011, a dispute arose between the parties in relation to the Lease and proceedings were commenced by the applicants in the Supreme Court of Western Australia.  The dispute was settled by way of a Deed of Settlement of Claim on 11 April 2013 which resulted in amendments to the terms of the Lease.[7]

    [7] Exhibit 6, pages 83-100.

    6)A further dispute arose between the parties in 2019 and, on 6 December 2019, the applicants commenced proceedings in the Supreme Court of Western Australia.  A Deed of Settlement and Deed of Variation of Lease (Deed) were signed by the parties on 30 June 2020 for the purposes of resolving the dispute.[8]

    [8] Exhibit 6, pages 57-82.

    7)Under the terms of the Deed, the Lease was extended for a final period of two years commencing on 1 May 2021 and expiring on 30 April 2023.  The rent and outgoings payable by the tenants were varied from 1 May 2021.

    8)The current rent payable under the terms of the Lease (as varied) is $5,604.05 including all outgoings plus GST per month.

    9)On 3 August 2020, the applicants requested rent relief from the landlord on the basis of a decline in turnover.[9]  The email stated that the applicants were prepared to support their request by obtaining a statement from their accountant.

    [9] Exhibit 6, pages 51-52.

    10)Mr Tzavellas operated the coffee shop business.  He sought rent relief from the applicants during the emergency period.

    11)The applicants and Mr Tzavellas resolved their dispute regarding rent relief at the Tribunal.  The terms of the settlement are reflected in an agreement between them[10] that the Tribunal would make orders as follows:

    [10] Exhibit 7, witness statement of Frank Tzavellas, Attachment 'A'.

    1.The Lease the subject of the proceeding is terminated by agreement at 4pm on 9 October 2020.

    2.The tenant shall give vacant possession of the premises the subject of the lease and hand over the keys for all locks by not later than 4pm on 9 October 2020.

    3.The tenant undertakes not to remove any plant or equipment from the premises and not cause any damage to the premises to ensure that the business remains fully operational as a going concern.

    4.The landlord shall pay to the tenant the amount of $21,000 in full and final settlement of the proceeding in regard to any claim or action the tenant may have under the Lease or otherwise for rent relief, return of bond or any other payment for early termination of the Lease.  The amount shall be paid in two instalments namely:  $10,000 shall be paid by not later than 4pm on 16 October 2020 and $11,000 shall be paid by not later than 4pm on 30 October 2020.

    12)The applicants subsequently advertised the coffee shop business for sale for $45,000.

    13)On 18 August 2020, the applicants provided to the landlord a letter from their accountant dated 12 August 2020 (accountant's letter) asserting that turnover for the month of July 2020 was reduced by 46.62% on a cash basis compared to the previous year.[11]  The accountant's letter further notes that rent had been received by the applicants on 1 July 2020 which if receipted on 30 June 2020 would result in a decline in turnover for July 2020 of 35%.

    14)On 24 August 2020, the landlord offered the applicants a 46.62% rent reduction for the month of July 2020, half of which was to be waived and half deferred.[12]

    15)On 24 August 2020, the applicants wrote to the landlord rejecting the proposal.  The applicants also stated that they preferred a further extension of the Lease over rent waiver and deferral.[13]

    16)On 28 August 2020, the applicants requested a one year extension of the Lease at the 'current rent'.[14]

    17)On 16 September 2020, the landlord responded to the applicants stating that she would provide rent relief in accordance with the Code but required GST turnover figures for April to September 2019 and April to September 2020.  The response also stated that there would be no further extension of the Lease term.[15]

    18)On 16 September 2020, the applicants responded to the landlord by stating that they would not provide the information requested on the basis that the turnover figures were 'privileged information' and that the landlord had 'breached confidentiality before' and that the request for GST turnover figures constituted 'onerous demands for information'.[16]

Credibility of witnesses and coffee shop dispute

[11] Exhibit 6, pages 50-51; pages 35-37.

[12] Exhibit 6, page 47.

[13] Exhibit 6, page 46.

[14] Exhibit 6, page 44.

[15] Exhibit 6, pages 41-42.

[16] Exhibit 6, page 42. See cl 4(e), Code.

  1. Mr van der Feltz and Mr Matthaus prepared witness statements which were tendered in evidence.[17]  Mr van der Feltz also gave oral evidence at the hearing.  Mr Matthaus' evidence was brief and unchallenged by the respondent.

    [17] Exhibit 5 and 1 respectively.

  2. Mr Tzavellas also prepared a witness statement which was tendered at the hearing.[18]  He also gave oral evidence.

    [18] Exhibit 7.

  3. Mr Tzavellas' evidence was concerned with the terms of the settlement of his dispute with the applicants regarding the coffee shop.  His evidence was that he agreed to sell the business to the applicants for $41,000 but that he would receive only $21,000 with the remainder being retained by the applicants in settlement of any claim for rental arrears, claims concerning the bond or any other claims they may have had under the Lease.  His evidence was that the effect of the settlement on those terms was that all rent arrears for the period 1 May 2020 to 30 September 2020 were effectively made up, as they were included with the $20,000 the applicants retained from the agreed purchase price.

  4. The orders agreed to by the parties to which we referred at [13] do not precisely reflect Mr Tzavellas' oral evidence.

  5. In his evidence Mr van der Feltz disputed that the settlement terms were as Mr Tzavellas had described them.  In cross­examination, however, he did accept that the settlement terms took account of the sub­tenant's rent arrears.[19]

    [19] ts 77, 26 February 2021.

  6. It was clear that there was a degree of animosity between Mr van der Feltz and Mr Tzavellas.  It was also clear they disagreed about precisely the terms of their settlement.  However, on the crucial issues of whether the terms were such as to take account of the unpaid rent, they were in agreement.

  7. We do not need to resolve the issue of the disputed evidence because it is not relevant to these proceedings.

  8. We do find that Mr van der Feltz was an honest witness generally.  In so finding, we do not intend to suggest that we regarded Mr Tzavellas to have been untruthful in his evidence.  The agreement does not identify what the payment would have been had there been no rent arrears, issues of early termination, bond and other claims arising under the Lease and it may be that one or the other or both Mr van der Feltz or Mr Tzavellas were mistaken in their recollection as to that issue.

Reliability of the accountant's documentary evidence

  1. The applicants rely on two letters from their accountant[20] to establish their decline in turnover and entitlement to rent relief.  The accountant was not called to give evidence and did not provide a witness statement.  The landlord contends that there is no evidence before the Tribunal as to how the accountant calculated the percentages set out in that correspondence, or the primary source documents relied upon to arrive at those figures other than extracts from the applicants' accounting system for the months of July and September 2019 and July and September 2020.

    [20] Exhibits 4 and 6, page 37.

  2. Whilst having the accountant give evidence may have assisted the Tribunal, there was nothing that arose from the evidence of Mr van der Feltz, who we found to be a credible witness, that led us to have any doubt as to the authenticity of the accountant's correspondence. Further, as we are not bound by the rules of evidence,[21] and bearing in mind that accountants are professionals who have ethical obligations of their own, we accept that correspondence can be relied upon for the truth of its contents.

Entitlement to rent relief

[21] Section 32(2)(a), State Administrative Tribunal Act 2004 (WA).

  1. We now turn to the question of whether the applicants have established an entitlement to rent relief.

  2. The applicants seek rent relief for the period from 30 March 2020 to 29 September 2020, based on a 46.62% decline in turnover, as follows:

    (1)rent waiver of $7,837.82 + GST; and

    (2)rent deferral of $7,837.82 + GST with the Lease to remain on the same terms until April 2023 and deferred rent to be repaid in 24 equal payments from April 2021.[22]

    [22] Email from Mr van der Feltz to the Tribunal dated 21 October 2020 in response to orders made by the Tribunal on 20 October 2020.

  3. Pursuant to cl 5(1) of the Code, a tenant under a small commercial lease may, during the emergency period, request rent relief from the landlord under the lease. The request must be made in writing and be accompanied by, amongst other things, 'sufficient and accurate information' that evidences that the tenant is an eligible tenant.[23]

'Eligible tenant'

[23] Clause 5(2)(b) Code.

  1. To be entitled to rent relief under cl 5(1) of the Code, the applicants must be 'eligible tenants'. The term 'eligible tenant' is defined in cl 2 of the Code which provides:

    (1)During the period beginning on 30 May 2020 and ending on 27 September 2020 (the relevant period), a tenant under a small commercial lease is an eligible tenant in relation to the small commercial lease if -

    (a)the following turnover in the financial year ending on 30 June 2019 was less than $50,000,000 -

    (i)if the tenant is a franchisee - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;

    (ii)if the tenant is a corporation that is a member of a group - the turnover of the group;

    (iii)in any other case - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;

    and

    (b)the tenant -

    (i)qualifies for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Commonwealth) section 7 during the relevant period; or

    (ii)has, at any time during the emergency period before 28 September 2020, satisfied the decline in turnover test set out in section 8 of those Rules.

    (1A)During the period beginning on 28 September 2020 and ending on 3 January 2021 (the relevant period), a tenant under a small commercial lease is an eligible tenant in relation to the small commercial lease if -

    (a)the tenant meets the requirements of subclause (1C); and

    (b)the tenant -

    (i)qualifies for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Commonwealth) during the relevant period; or

    (ii)does not qualify for the jobkeeper scheme during the relevant period, but nevertheless satisfies any test relating to turnover during July, August and September 2020 by which a person can qualify for the jobkeeper scheme during the relevant period.

    …

    (1C)For the purposes of subclauses (1A)(a) and (1B)(a), a tenant meets the requirements of this subclause if the following turnover in the financial year ending on 30 June 2020 was less than $50,000,000 -

    (a)if the tenant is a franchisee - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease;

    (b)if the tenant is a corporation that is a member of a group - the turnover of the group;

    (c)in any other case - the turnover of the business conducted by the tenant at the land or premises that are the subject of the small commercial lease[.]

  1. There are several matters of which the applicants must satisfy us in order for us to find that they are eligible tenants.  There are also two relevant time periods covered by the period for which the applicants seek rent relief.  We will deal with the matters in relation to each of those time periods in turn below. 

Relevant period from 30 May 2020 to 27 September 2020

(a)      Turnover in the financial year ending 30 June 2019

  1. The applicants (not being a franchisee or a corporation that is a member of a group) must first establish that the turnover of the business conducted by them at the Premises that are the subject of the Lease was less than $50,000,000 in the financial year ending 30 June 2019[24].

    [24] Clause 2(1)(a)(iii) Code.

  2. We have previously found that the applicants are not a franchisee or a corporation that is a member of a group. The landlord did not dispute, and we accept, that the applicants' turnover in the financial year ending on 30 June 2019 was less than $50,000,000 for the purposes of cl 2(1)(a) of the Code.[25]

(b)      Qualifies for jobkeeper

[25] Exhibit 6, page 51.

  1. Next, the applicants must establish that they qualified for the jobkeeper scheme during the relevant period or, if not, that they nevertheless satisfy any test relating to turnover during July, August and September 2020 by which a person can qualify for the jobkeeper scheme in that relevant period.  The applicants will be eligible to qualify for the jobkeeper scheme under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (CERP(PB) Rules) if they carried on business in Australia on 1 March 2020, employed eligible employees, and satisfy the decline in turnover test in s 8 of the CERP(PB) Rules.[26]

    [26] Section 6 and s 7 CERP(PB) Rules.

  2. It is not in issue, and we find, that the applicants carried on business in Australia on 1 March 2020.

  3. Mr van der Feltz gave evidence that the applicants were not eligible for jobkeeper because they do not employ any staff.[27]  Clause 5 of the CERP(PB) Rules provides as follows:

    A business that has suffered a substantial decline in turnover can be entitled to a jobkeeper payment of $1,500 per fortnight for each eligible employee.  It is a condition of entitlement that the business has paid salary and wages of at least that amount to the employee in the fortnight.

    [27] ts 21, 26 February 2021.

  4. Accordingly, we find that the applicants did not qualify for jobkeeper because they had not paid salary and wages to any employees in the relevant period before September 2020.

(c)      Not eligible for jobkeeper but nonetheless satisfied the decline in turnover test

  1. We next turn to consider whether the applicants have at any time during the emergency period before 28 September 2020 satisfied the decline in turnover test in s 8 of the CERP(PB) Rules for the purposes of cl 2(1)(b)(ii) of the Code. That is, the question for the Tribunal is whether or not the applicant satisfied the decline in turnover test between 30 March 2020 and 27 September 2020.

  2. The decline in turnover test, set out in s 8 of the CERP(PB) Rules, is satisfied where there is a shortfall in projected GST turnover for a turnover test period that equals or exceeds 30% for a relevant comparison period of current GST turnover.  Section 8(7) of the CERP(PB) Rules defines the expression 'turnover test period' as a calendar month that ends after 30 March 2020 and before 1 October 2020 or a quarter that starts on 1 April 2020 or 1 July 2020.  It also defines the expression 'relevant comparison period' as the corresponding period in 2019; that is, the same month or quarter in 2019.

  3. The applicants contend that their revenue declined by more than 30% in two months, being July 2020 and September 2020.  In support of their position, the applicants relied on their accountant's letter dated 12 August 2020[28] and a further letter from their accountant dated 3 November 2020[29] which sets out the percentage change in monthly turnover from April 2019 to September 2019 compared to April 2020 to September 2020.  In addition, the applicants relied on extracts from their accounting system for the months of July 2019 and the relevant comparison month of July 2020, and September 2019 and the relevant comparison month of September 2020 (bank register).[30]

    [28] Exhibit 6, page 37.

    [29] Exhibit 4.

    [30] Exhibit 3.

  4. On this basis, the applicants say that they are entitled to rent relief at the rate of 46.62% for the entire emergency period between 30 March 2020 and 29 September 2020.[31]

    [31] Exhibit 6, page 25.

  5. The bank register produced by the applicants is a record of the receipt of funds in the applicants' bank accounts from their tenants on a cash basis. The bank register shows that the applicants received revenue of $36,076.31 in July 2019 and $19,260.60 in July 2020.  The applicants contend that this results in a decline in revenue for the July comparison period of 46.6%.  Further, the bank records show that the applicants received revenue of $25,336.93 in September 2019 and $16,723.86 in September 2020.  The applicants contend that this results in a decline in revenue for the September comparison period of 34%.  The applicants did not provide a bank register for any other calendar months in 2019 or 2020.

  6. It is the landlord's position that the decline in revenue that appears on the face of the bank register must be interpreted in light of the evidence provided by Mr van der Feltz, specifically:

    (1)the July bank register recorded two payments of $5,493.58 being the monthly rent payable by the furniture business for two months, due to a payment being made on Sunday, 30 June 2019, which was then recorded as being received on 1 July 2018;[32]

    (2)the July bank register did not record all of the monthly payments of $3,316.62 received from the landscaping business, as some payments were made late, although all payments were subsequently 'caught up';[33]

    (3)the September 2020 bank register did not record a payment of $5,493.58, being the monthly rent payable by the furniture business, although that payment was received by the landlord subsequently;[34]

    (4)it was only the coffee shop sub-tenant that sought rent relief from the applicants, not the furniture business or the landscaping business.  The weekly rental payment of the coffee shop declined from $1,545.29 to $772.63 per week;[35]

    (5)other than the coffee shop, the other sub-tenants paid their rent and were 'up to speed';[36] and

    (6)the actual reduction in revenue between September 2019 and September 2020 is the difference between the rental payments of $1,545.27 per week and $772.63 per week.[37]

    [32] ts 72, 26 February 2021.

    [33] ts 73-74, 26 February 2021.

    [34] ts 74, 26 February 2021.

    [35] ts 71, 26 February 2021.

    [36] ts 70, 26 February 2021.

    [37] ts 74, 26 February 2021.

  7. On the basis of the evidence of Mr van der Feltz, the landlord contends that a proper analysis of the applicants' financial position reveals that the true decline in turnover that the applicants suffered in July 2020 and September 2020 (compared with July 2019 and September 2019) is solely the drop in revenue from the coffee shop sub-tenant.  The drop in revenue, the landlord submits, is 12.6%.  The landlord therefore contends that the applicant does not satisfy the decline in turnover test.

  8. A tenant, with a turnover of less than $50,000,000, who satisfies the decline in turnover test in relation to a calendar month that ends after 30 March 2020 and before 1 October 2020, will be eligible for rent relief under the COVID Response Act.

  9. The purpose of the COVID Response Act is to 'support the continuity of commercial tenancies during what is likely to be a period of significant social and economic upheaval for all Western Australians'[38] caused by changes in behaviour resulting from the spread of, or risk of spread of, COVID-19 in our State.  The Code imposes a set of leasing principles to provide protection and relief to tenants, in relation to commercial tenancies, aimed at mitigating and limiting the hardship suffered by the community as a result of the spread of COVID-19 in our State.  The Code requires tenants and landlords to negotiate in good faith and agree measures in relation to rent relief.  The rent relief granted by landlords should be proportionate to the losses suffered by the tenant due to a reduction in trade.[39]  Failing agreement, the parties can seek the assistance of the Commissioner in conciliating or mediating disputes, and, ultimately, a party to a dispute may apply to the Tribunal for relief.[40]

    [38] Western Australia, Parliamentary Debates, Legislative Assembly, 16 April 2020, 2273 (J R Quigley, Minister for Commerce).

    [39] Western Australia, Parliamentary Debates, Legislative Assembly, 16 April 2020, 2273 (J R Quigley, Minister for Commerce).

    [40] Western Australia, Parliamentary Debates, Legislative Assembly, 16 April 2020, 2274 (J R Quigley, Minister for Commerce).

  10. We accept that the bank registers produced by the applicants establish that their sub-tenants 'caught up' on rent payments. However, the CERP(PB) Rules require no assessment of whether a 30% decline in turnover in any particular calendar month was 'caught up' in a subsequent calendar month in the determination of eligibility. Having regard to purpose of the COVID Response Act, we are satisfied that the legislature did not intend that income in subsequent months that offset losses in the month that meets the decline in turnover test would be taken into account in determining eligibility for rent relief. That would be inconsistent with the intention that the parties negotiate at the time of the reduction in trade. It would also, in our view, be impossible to determine a date at which eligibility is to be assessed given that the decline in Mr van der Feltz's case, which was entirely a result of unpaid rent by his sub-tenants, might be repaid at any indeterminate date in the future. Consequently, we conclude that the applicants need only establish a decline in turnover of 30% or more on a cash basis in any one calendar month within the relevant period to satisfy the decline in turnover test.

  11. We accept the evidence of Mr van der Feltz in relation to the payments made by the applicants' sub-tenants in the months of July 2019 and September 2019 and the comparison months of July 2020 and September 2020.  Based on the bank registers and the oral evidence of Mr van der Feltz, we find that the applicants did satisfy the decline in turnover test for the relevant period beginning on 30 May 2020 and ending on 27 September 2020.  This is because the drop in revenue evidenced by the bank registers supports a finding that, calculated on a cash basis, the applicants suffered a decline in turnover of more than 30% in July 2020 and September 2020.

Relevant period from 28 September 2020 to 3 January 2021

  1. The applicants seek rent relief for the whole of the emergency period. Consequently, there are two days for which the applicant is seeking rent relief that fall within the relevant period from 28 September 2020 to 3 January 2021 for the purposes of cl 2(1A) of the Code.

  2. For the reasons in paragraph [24] - [25] above, we accept that the turnover of the applicants' business was less than $50,000,000 and that the applicants did not qualify for jobkeeper.

  3. We next consider whether the applicants, despite not qualifying for jobkeeper, nevertheless established that they satisfy any test relating to turnover during July, August and September 2020 by which a person can qualify for jobkeeper during the relevant period.  A basic decline in turnover is provided in s 8 of the CERP(PB) Rules as set out above.[41]

    [41] An alternative turnover test can be used by a business during July, August and September 2020 if it does not satisfy the basic decline in turnover test:  see Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules (No. 2) 2020 (Cth).

  4. Based on the bank registers and the oral evidence provided by Mr van der Feltz, we find that the applicants do satisfy the decline in turnover test in s 8 of the CERP(PB) Rules during July, August and September 2020.  This is because the drop in revenue evidenced by the bank register supports a finding that, calculated on a cash basis, the applicants suffered more than a 30% decline in turnover in July 2020 and September 2020 (compared with July 2019 and September 2019).  Accordingly, we find that the applicants have demonstrated that they satisfy the decline in turnover test for the relevant period from 28 September 2020 to 3 January 2021.

  5. The landlord contends that the value of the business received by the applicants as part of the settlement of the Tribunal proceedings with their sub-tenant should be taken into consideration in our determination.  This is because it would have the effect of further reducing the decline in turnover of the applicants' business. 

  6. We find that the sum of $21,000 was not received in July 2020 or September 2020 because the settlement of the Tribunal proceedings occurred on 30 September 2020 and required payment of the funds in October 2020.  Consequently, for the reasons we have already set out regarding payments received outside of the relevant periods, we find that the receipt by the applicants of the settlement funds does not alter the status of the applicants as 'eligible tenants' because we are satisfied that the CERP(PB) Rules require no assessment of whether a 30% decline in turnover in any particular calendar month was 'caught up' in a subsequent calendar month.

Conclusion - eligible tenant

  1. For the reasons set out above, we find that the applicants have satisfied us that in respect of the relevant period they were eligible tenants for the purposes of cl 2 of the Code. Accordingly, we conclude that the applicants are prima facie entitled to rent relief for that period under the Code.

  2. We turn then to consider how much rent relief the applicants should be granted in light of their capacity to meet their obligations under the Lease and the other factors to which we must have regard in the exercise of our discretion.

Factors relevant to the exercise of discretion to grant rent relief – s 17(4) COVID Response Act

  1. The Tribunal's discretion to make an order for rent relief is not limited by any power conferred by the State Administrative Tribunal Act 2004 (WA) (SAT Act). Section 17(2) of the COVID Response Act provides that the Tribunal may make any order that it considers appropriate to resolve the dispute or proceedings.

  2. Section 17(4) of the COVID Response Act provides that in making an order relating to a code of conduct dispute under s 17(2), the Tribunal must have regard to the financial impact of the COVID-19 pandemic on the tenant's business and capacity to meet the tenant's obligations under the lease, the landlord's financial capacity, and the principles of proportionality and fairness and other relevant principles set out in the Code.[42]  We will consider each of these relevant factors below.

[42] Section 17(4), COVID Response Act.

  1. The overarching obligations of landlords and tenants when participating in negotiations under the Code are provided in cl 4 of the Code. They include requirements to cooperate, to act reasonably and in good faith and to provide each other with sufficient and accurate information that is reasonable for them to provide in the circumstances. These are not matters to which the Tribunal must have regard under s 17(4) but in our view may be relevant matters to which a Tribunal could have regard in exercising its discretion in particular cases. Apart from the issue of sufficient and accurate information, these were not matters which either party asserted the other had failed to do.

(a)Provision of / Lack of 'sufficient and accurate information'

  1. One consideration that is relevant to the exercise of the Tribunal's discretion under s 17(2) of the COVID Response Act is whether the applicants have provided 'sufficient and accurate information' in support of their request for rent relief. Pursuant to cl 5(2) of the Code, a tenant must provide to the landlord sufficient and accurate information that evidences that the tenant is an eligible tenant, and that evidences the reduction in the tenant's turnover.

  2. The landlord contends that the applicants did not provide sufficient and accurate financial information in support of their claim for rent relief and that we should have regard to this failure when exercising our discretion under s 17(2) of the COVID Response Act. We must therefore consider the proper construction of the expression 'sufficient and accurate information' in cl 5(2) of the Code in order to assess whether the applicants met the relevant threshold.

  3. The modern approach to statutory construction in Western Australia was summarised by Buss JA in Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 at [160]:

    The modern approach to statutory construction is purposive. The statutory text is the surest guide to Parliament's intention. A decision as to the meaning of the text must begin by considering the context, in its widest sense. This will include the general purpose and policy of the provision[.]

  4. Accordingly, the starting point in relation to the construction of cl 5(2) of the Code and, specifically, the meaning of the expression 'sufficient and accurate information' is consideration of the text of the provision, in its statutory context, including the statute's purpose or object. The provision must be construed so that it is consistent with the language and purpose of all the provisions of the statute: Mohammadi v Bethune [2018] WASCA 98 at [32]; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69].

  5. In City of Fremantle v Imago Holdings Pty Ltd [2020] WASCA 61 at [66], the Western Australian Court of Appeal referred to the following passage from Mohammadi:

    … The objective discernment of the statutory purpose is integral to contextual construction. The statutory purpose may be discerned from an express statement of purpose in the statute, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose must be discerned from what the legislation says, as distinct from any assumptions about the desired or desirable reach or operation of the provisions.

  6. Because the terms 'sufficient' and 'accurate' are not defined in the COVID Response Act or Code, it is necessary for the Tribunal to consider both their ordinary meaning and the context in which they are used having regard to the purpose of the COVID Response Act and the Code.

  7. The Macquarie Dictionary Online (as at 26 May 2021) defines 'sufficient' to mean:

    adjective 1.  that suffices; enough or adequate: sufficient proof; sufficient protection.

  8. The Macquarie Dictionary Online (as at 26 May 2021) defines 'accurate' as:

    adjective 1.  exactly conforming to truth, to a standard or rule, or to a model; free from error or defect: an accurate account of the incident.

    2.  showing precision; meticulous: an accurate typist.

  9. Relevantly, cl 4 of the Code provides, by way of an example, the type of information that may evidence a reduction in turnover. The examples include information generated from an accounting system or business activity statements submitted to the Australian Taxation Office. It does not, however, state whether that information is considered 'sufficient and accurate' for the purposes of cl 5(2) of the Code. The example in cl 4 of the Code provides:

    Information evidencing a reduction in turnover of a business might include information relating to turnover generated from an accounting system or business activity statement submitted to the Australian Taxation Office.

  10. It is clear from the provisions of the COVID Response Act that the primary objectives of the Act is to provide speedy relief for tenants under commercial leases experiencing a decline in turnover as a direct result of the COVID-19 pandemic and for landlords and tenants to act in good faith in determining the nature of that relief in the hope that doing so will allow businesses to remain viable so that the economy will recover more quickly once the COVID-19 pandemic is resolved. That purpose is confirmed by reference to the Second Reading Speech to which we have referred earlier. We find that the expression 'sufficient and accurate information' should be interpreted broadly in light of this objective. Consequently, we find that when applying the ordinary meaning of the terms 'sufficient' and 'accurate', the type of financial information that would satisfy cl 5(2) of the Code is wide ranging but must be adequate in the circumstances to properly support a tenant's request for rent relief.

  1. It is not in dispute, and we find, that the applicants first requested rent relief from the respondent by email on 3 August 2020.  In that email, the applicants claimed that they had experienced a decline in turnover of at least 30% during the emergency period.  The applicants also claimed that they satisfied the decline in turnover test and qualified for jobkeeper but did not provide any further information to support these claims. 

  2. We find that the content of that email of 3 August 2020 did not constitute sufficient and accurate information in support of the applicants' request for rent relief because it incorrectly stated that the applicants qualified for jobkeeper and did not contain any financial information that evidenced that the applicants' turnover had declined by 30% or more during the emergency period.  It was no more than an assertion of particular facts.

  3. The landlord responded to the applicants' request for rent relief by email on 7 August 2020.[43]  The email seeks from the applicants a statement from their accountant (which the applicants had offered to produce) as evidence in support of the applicants' request for rent relief.

    [43] Exhibit 6, Applicant's bundle, page 51.

  4. On 18 August 2020, the applicants sent to the landlord an accountant's letter to support their request for rent relief.[44]  The accountant's letter states that turnover in July 2019 compared with July 2020 showed a decline of 46.62% on a cash basis (or alternatively 35% if rent had been properly receipted in June 2019).  We find that this letter was sufficient to demonstrate the applicants' eligibility for rent relief because it showed a decline in turnover of more than 30% in the month of July 2020 compared with July 2019.  However, we find that it was not adequate to allow for proper negotiations by the parties for rent relief for the whole of the emergency period because it only provided information in respect of July 2019 and July 2020.

    [44] Exhibit 6, Applicant's bundle, page 48.

  5. The Code requires that a tenant provide sufficient and accurate information in support of its claim for rent relief.  We are not satisfied that the applicants, in seeking rent relief under the Code, met this threshold.

  6. Clause 4 of the Code also requires tenants and landlords to act reasonably and in good faith, and not to request onerous information, in an open, honest and transparent manner in negotiations.[45]

    [45] Clause 4, Code.

  7. The applicants produced, at the hearing, a letter from their accountant dated 3 November 2020.[46]  The applicants had genuine concerns about providing the letter and other financial information about their business to the landlord for the purposes of negotiating rent relief and, about producing it to the Tribunal in this proceeding.  It is the applicants' position that information concerning their turnover is privileged and confidential and that disclosing BAS statements would reveal everything about their business.  The applicants claim that there have been previous confidentiality breaches by the landlord.

    [46] Exhibit 4.

  8. Notwithstanding the applicants' contention, the Tribunal did not require the accountant's letter dated 3 November 2020 or any other financial information to be produced in the proceeding.  It was open to the applicants not to produce the accountant's letter.  However, when the applicants resisted producing the information, we indicated to them at a directions hearing that if they had financial information that supported their application it may be in their interest to produce it because without it the Tribunal may not be able to be satisfied that they were entitled to any relief.  As we noted at [12], the applicants have the burden of establishing an entitlement to rent relief and this necessarily requires the production of relevant and adequate financial information so that the Tribunal may be satisfied of the applicants' entitlement on the balance of probabilities.  It would be unfair to the landlord if the position were otherwise.  We find that in failing to provide additional financial information in the course of negotiations the applicants did not act reasonably although we do not find that they acted in bad faith.

  9. The landlord has a corresponding obligation under cl 4 of the Code to act reasonably in negotiations with the applicants and not to request onerous information or to make use of the financial information provided for purposes other than the determination of rent relief. The applicants contend that the landlord made unduly onerous requests for financial information in the course of the negotiations.

  10. We find that, in the circumstances of this case, the request by the landlord for further financial information (including the accountant's letter and GST turnover figures) in support of the applicants' claim for rent relief was not unduly onerous.  The landlord required further financial information from the applicants because, as we have already found, the applicant's request for rent relief by email of 3 August 2020 was not accompanied by sufficient and accurate information. 

  11. The applicants' failure to provide sufficient and accurate information is a matter that could justify a reduction in relief to which the applicants may otherwise have been entitled.  However, we consider it would be unduly harsh of us to place significant weight on this factor in circumstances where the applicants had genuine concerns about disclosing financial information to the landlord, where the principles set out in the Code are relatively new, and where there is little, if any, authority to guide the parties as to what constituted sufficient and accurate information.

(b)Applicants' financial capacity to meet their obligations under the Lease

  1. In making an order in proceedings under the COVID Response Act, the Tribunal must have regard to the applicants' capacity to meet their obligations under the lease and the landlord's financial capacity generally.[47] 

    [47] Section 17(4)(b), Covid Response Act.

  2. Based on the unchallenged evidence of Mr van der Feltz, which we accept, we find that the applicants met their financial obligations under the Lease during the emergency period.[48]

    [48] ts 29, 26 February 2021.

  3. Mr van der Feltz gave evidence that the landlord owns a number of properties.[49] The landlord's counsel stated from the bar table that it was accepted that his client owned property but his instructions were that his client would face financial difficulties if all that was being claimed by the applicants in rent relief was granted.[50]  However, there was no evidence tendered regarding the landlord's financial position and no evidence tendered by the landlord to establish that she would face financial difficulties if rent relief were ordered.  These are matters that would be uniquely within the knowledge of the landlord and in respect of which we find, therefore, that she would bear the onus of proof.[51]  In the absence of any such evidence, we will proceed on the basis that providing rent relief to the applicants would not be unreasonably burdensome on the landlord.

(c)     Principles of proportionality and fairness

[49] ts 15, 26 February 2021.

[50] ts 16, 26 February 2021.

[51] Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164 at 167-168.

  1. Clause 7(3) of the Code provides that rent relief offered by the landlord must be proportionate to the reduction in the tenant's turnover that the tenant has experienced in the emergency period.  We consider that the principles of proportionality and fairness that apply under the Code should also guide the Tribunal in the exercise of its discretion to order rent relief.  We have also had regard to the other provisions of the Code that apply to rent relief, including cl 7(3A) of the Code which provides that rent relief provided by the landlord must be adjusted from time to time (but not more frequently than monthly) during the emergency period, to take into account any variation in the reduction in the tenant's turnover.

What was the decline in turnover during the period for which rent relief was sought?

  1. Based on the evidence before us, we find that the anticipated monthly rent from the applicants' sub-tenants during the emergency period was as follows:

Sub-tenant

         Monthly rent

         Furniture business

         $5,493.58

         Landscaping business

         $3,316.62

         Coffee shop

         $6,181.16 (based on $1,545.29 per week)

         Total

         $14,991.36

  1. Mr van der Feltz gave evidence that, of the three sub-tenants, it had been only the coffee shop tenants that had sought rent relief[52] and that he had granted rent relief to them for the whole of the emergency period.[53] Under cross-examination, Mr van der Feltz stated that the weekly rental payment from the coffee shop tenants declined from $1,545.29 to $772.63 per week.[54]  Mr van der Feltz also gave evidence that other than the coffee shop, the other sub-tenants paid their rent and were 'up to speed'.[55] We accept the evidence of Mr van der Feltz and find that the reduction in the applicants' turnover during the emergency period was caused solely by the drop in revenue from the coffee shop sub-tenant.

    [52] ts 71, 26 February 2021.

    [53] ts 67, 26 February 2021.

    [54] ts 73, 26 February 2021.

    [55] ts 70, 26 February 2021.

  2. The accountant's letter of 3 November 2020 includes a table showing a comparison monthly turnover for 2019 and 2020 (expressed in percentage terms) for each month between April and September as follows:

Month

         %

         April

         -23.35

         May

         -18.58

         June

         +31.36

         July

         -46.61

         Aug

         +1.04

         Sep

         -33.99

         Total

         -18.99

  1. The above table shows a decline in turnover of more than 30% for the months of July 2020 and September 2020, and other losses the applicants suffered in April and May. 

  2. Having regard to the principles applying to rent relief set out in the Code, the applicants are entitled to seek rent relief for the whole of the emergency period.  However, we find that despite evidence of a decline in turnover in the months of April, May, July and September 2020, the decline in turnover suffered by the applicants in July 2020 and September 2020 was largely 'caught up' over the course of the emergency period and the only reduction in turnover during that period was attributable to the drop in revenue from the coffee shop sub-tenant.  For these reasons we do not accept the applicants' contention that they are entitled to rent relief for the whole of the emergency period at the rate of 46.62%.  Because we now know the true nature of applicants' financial position over the emergency period, it would be unfair to require the landlord to pay rent relief which exceeds the decline in turnover actually suffered by the applicants in that time.

  3. Applying the principle of proportionality in cl 7(3) of the Code, we find that the applicants are prima facie entitled to rent relief for the emergency period proportionate to the loss suffered by the applicants as a result of the reduction in rent from the coffee shop sub-tenant.  Whether we would order rent relief in that amount in the exercise of our discretion would depend upon a number of factors including the parties' conduct in the course of their negotiations.  We find, based on the evidence of Mr van der Feltz, that the coffee shop sub-tenant rental payments during the emergency period were reduced to approximately $3,090.52 per month.  We also find, based on the accountant's letter of 3 November 2020 that this represented a total decline in turnover in the emergency period of 18.99%.

  4. It is open to us in the circumstances of this case, to take into consideration the terms of the settlement of the Tribunal proceedings between the applicants and their sub-tenant because Mr van der Feltz gave evidence that a portion of it was to make up rental arrears.  It is not clear on the evidence what proportion of the settlement comprised rent that was owed to the applicants.  On the basis of the evidence before us, we are unable to determine how much of the rental arrears would have been 'made up' in this way.  While we could make a notional adjustment to reflect the repayment of rental arrears as part of the settlement of the dispute with Mr Tzavellas, we decline to do so in this case given the sums involved in this case are relatively small.

How much relief should the applicants be granted for the emergency period?

  1. In making an order to grant rent relief, s 17(4) of the COVID Response Act requires the Tribunal to have regard to the financial impact of the COVID-19 pandemic on the applicants' business and capacity to meet their obligations under the Lease. The Tribunal must also have regard to the landlord's financial capacity, the principles of proportionality and fairness, and other relevant principles set out in the Code.

  2. We have already found that the applicants' rent under the Lease is $5,604.05 inclusive of outgoings plus GST per month. Having regard to the matters listed in s 17(4) of the COVID Response Act, we find that the applicants' are entitled to rent relief at a rate of 18.99% of $5,604.05 plus GST, being $1,064.21 plus GST per month, covered by the emergency period, being six months.

  3. Given our findings, there is nothing in the conduct of the parties or their financial positions that would cause us to refuse to award or to reduce the award of rent relief from that which we find to be proportionate, applying the principles in cl 7(2) of the Code.

  4. Subject to making orders for rent relief in a manner consistent with the principles that apply under the Code, we conclude that for the six months of the emergency period, the applicants should be granted rent relief totalling $6,385.25 plus GST.

How should the relief be awarded in light of the fact that the applicants have paid all rent owing under the Lease?

  1. Clause 7(5) of the Code provides that an offer of rent relief may relate to up to 100% of the rent payable under the Lease.  Also, under cl 7(6) of the Code, not less than 50% of the rent relief granted must be in the form of waiver of rent unless the landlord and tenant otherwise agree in writing.  If rent is to be deferred, then the provisions of cl 9 of the Code apply.

  2. As the applicants have paid all rent owing under the Lease, it is only feasible for the Tribunal to order that the landlord repay rent to the applicants.

  3. Having regard to cl 7(6) of the Code, which provides that the rent waived should not be less than 50% of the rent relief granted, we find that the 50% of the rent paid to the landlord should be reimbursed to the applicants.

  4. We acknowledge that the applicants have paid all rent owing under the Lease and, therefore, the landlord has received and benefitted from those funds, the payment of which might otherwise have been deferred.  However, due to the relatively modest amount of rent that is to be reimbursed by the landlord, we are satisfied that the benefit that the landlord has derived from being in possession of the funds has not been so substantial that we should make an adjustment in favour of the applicants to reflect that fact.

  5. Accordingly, in the exercise of our discretion under s 17(2) of the COVID Response Act, we find that the landlord should pay to the applicants the sum of $3,192.63 plus GST within 30 days of the date of our decision.

Costs

  1. The applicants have sought no order for costs to be paid to them by the respondent.  That is appropriate given they were self­represented. 

  2. The respondent has however sought an order that the applicants pay its costs of the proceedings.

  3. The Tribunal has power under s 87(2) of the SAT Act to order the payment of costs unless otherwise specified in the enabling Act. The enabling Act, being the COVID Response Act, does not contain any provision in respect of the making of costs orders and, therefore, the costs provisions in Div 5 of the SAT Act apply.

  4. The fact that a party is unsuccessful, or fails on a contention advanced during the course of the hearing, does not automatically support the making of a costs order unfavourable to that party.  The presumptive position is that each party will bear its own costs in proceedings before the Tribunal.[56]

    [56] Section 87(1), SAT Act.

  5. In Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale), the WA Court of Appeal observed that s 87(2) of the SAT Act is to be construed in the context that the legal rationale for an order for costs is to compensate the party in whose favour it is made and not to punish the party the subject of the order.[57] This rationale is evident in s 87(3) of the SAT Act which provides that the power of the Tribunal to make an order for the payment of costs includes 'the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought'.

    [57] Questdale at [51].

  6. The question for the Tribunal is whether it is fair and reasonable in the circumstances of the case that a party should be reimbursed for the costs it has incurred.

  7. The onus of proof is on the party seeking an order in its favour.[58]

    [58] Questdale at [51].

  8. It is relevant to the exercise of our discretion under s 87(2) of the SAT Act whether, and to what extent, the respondent can establish that the conduct of the applicants has impaired the attainment of the Tribunal's objectives under s 9 of the SAT Act. [59] One of the objectives of the Tribunal in s 9 of the SAT Act is achieve the resolution of disputes, fairly, and according to the substantial merits of the case. Another objective is to act speedily and with as little formality and technicality as is practicable, and minimise the costs to the parties.

    [59] Questdale at [54].

  9. The landlord contends that the following matters support a costs order in her favour:

    1.When the applicants first requested rent relief, they provided only a letter from their accountant which referred to a decline in turnover for July of 46.6%.  The applicants stated that they had 'suffered reduced turnover since April 2020' without specifying the extent of that reduced turnover.[60]

    2.The landlord proposed rent relief in accordance with the Code for the month of July 2020, being the only figures the landlord had been provided.[61] That proposal was not accepted by the applicants,[62] and the landlord requested GST turnover figures for April to September.[63]  The applicants declined to provide that information.

    3.It is apparent from Exhibit 4 that, even on the calculations from the applicants' accountant (which the respondent submits are not correct) the applicants had not suffered a 46.6% reduction in turnover throughout the emergency period.

    4.Notwithstanding this, on 21 October 2020, the applicants wrote to the Tribunal seeking an order for rent relief for the whole period from 30 March 2020 to 29 September 2020.[64]

    5.The applicants elected to withhold any further information about their turnover until December 2020 when they produced Exhibit 4.  The applicants declined to provide any supporting documentation until midway through the hearing on 26 February 2021 and, even then, only produced accounting records in relation to two months.

    6.A crucial element of the applicants' claim is the actual decline in turnover of their business.  In order for the Tribunal (and the landlord) to be in any position to assess this, it requires a consideration of the applicants' financial records which, prior to 26 February 2021, the applicants consistently refused to produce.

    7.The applicants' decision to withhold supporting information until partway through the hearing on 26 February 2021 unnecessarily disadvantaged the landlord.  Alternatively, by reason that the true decline in the applicants' turnover was less than 30%, the landlord contends that the application was frivolous or vexatious.

    [60] Exhibit 6, page 51.

    [61] Exhibit 6, page 47.

    [62] Exhibit 6, page 46.

    [63] Exhibit 6, page 42.

    [64] Exhibit 6, page 25.

  1. The landlord contends that a relevant factor in favour of an award of costs is where a dispute concerns a commercial venture: Quah & Anor and AMP Life Limited [2005] WASAT 169 (Quah).  The landlord also referred to Chew and Director General of the Department of Education and Training [2006] WASAT 248; (2006) 44 SR (WA) 174 (Chew), which referred to the following circumstances that may support a departure from the usual position that each party pays its own costs:[65]

    … the Tribunal should not generally make an award for costs unless a party has conducted itself in such a way as to unnecessarily prolong the hearing; has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious; or the proceedings in some other way constitute an abuse of process.  The Tribunal might also make an order as to costs where a matter has been brought vexatiously or for improper purposes.

    [65] Chew at [85]. See also Pearce & Anor v Germain [2007] WASAT 291 at [24].

  2. The applicants contend that there is no provision in the enabling Act to award costs and that the COVID Response Act is aimed at protecting and aiding tenants. Consequently, the applicants contend that a costs order against them would be contrary to this legislative purpose. The applicants referred the Tribunal Re Cooper and Boroondara CC [2001] VCAT 2429 that was cited in the following passage from Quah:[66]

    … great care should be taken in exercising a power to award costs in order to ensure that the Tribunal remained readily accessible to the public at relatively low cost, particularly having regard to the Tribunals obligations to act fairly and according to the substantial merits of the dispute and to conduct proceedings with as little formality and technicality, and to determine such proceedings with as much speed as the applicable legislation permitted. These are obligations also enshrined in s 9 of the SAT Act[.]

    [66] Quah, pages 7-8

  3. In truth although the applicant has succeeded in its application for rent relief, they were only partially successful in that the award is less than that sought by the applicants.

  4. The nature of the dispute is relevant to the Tribunal's exercise of discretion under s 87(2) of the SAT Act. In this proceeding, a dispute arose between a landlord and tenants in relation to the tenants' eligibility for rent relief under the COVID Response Act.

  5. The applicants sought hypothetical answers from us in relation to matters that would allow them to negotiate rent relief with the landlord. It is the role of the Tribunal in its original jurisdiction under the COVID Response Act to assist in resolving disputes but this does not extend to providing hypothetical advice on the issues in dispute. The Tribunal's role is to resolve the dispute which the parties have been unable to resolve by determining the applicants' application for rent relief.

  6. We acknowledge that the landlord was frustrated by the applicants' reluctance to produce financial information in support of their request for rent relief.  However, the conduct of the applicants prior to the commencement of the proceeding, while relevant to the issue of whether or not to make an order for rent relief, is not a matter to which we could properly have regard when determining a costs application.  It is the conduct of the parties in the course of the proceeding which is relevant to the Tribunal's exercise of discretion in relation to costs.

  7. We observe that it would have assisted in the faster resolution of the dispute if additional financial information had been provided by the applicants for the purposes of the compulsory conference and subsequent mediation.  Notwithstanding their reluctance to reveal what they considered to be privileged and confidential information, the applicants did ultimately produce the financial information on which they intended to rely at the hearing on 26 February 2021.

  8. The COVID Response Act and Code were enacted urgently in response to the COVID-19 pandemic. The COVID Response Act, and its subsidiary legislation, has not been the subject of extensive judicial consideration that would have assisted the applicants in understanding what was required of them and to what rent relief they may have been entitled.

  9. We also consider that it would be inconsistent with the objectives of the COVID Response Act and its subsidiary legislation if parties to a dispute were discouraged from bringing an application before the Tribunal due to the fear of costs order against them.

  10. In the circumstances of this proceeding, we conclude that it would not be fair or reasonable for the landlord to be reimbursed for its legal costs.  Accordingly, we decline to make a costs order.

Conclusion

  1. We are satisfied, based on the information provided by the applicants in support of their request for rent relief, that they suffered a decline in turnover of 30% or more in the relevant periods set out in cl 2 of the Code. Therefore, the applicants have established that they are eligible tenants for the purposes of the Code.

  2. We have concluded that the applicants are entitled to rent relief proportionate to the decline in turnover they suffered in the emergency period.  Because the applicants have paid all rent owing under the Lease, the Tribunal is only able to order that the landlord repay rent to the applicants to reflect that relief.

  3. Accordingly, the landlord must pay the applicants the sum of $3,192.63 plus GST being rent relief for the whole of the emergency period so that the total amount payable is $3,511.89.

  4. We have declined to make the costs order sought by the respondent.

Proposed orders

Subject to hearing from the parties, the Tribunal proposes to make the following orders:

1.The respondent must pay to the applicants the sum of $3,511.89 within 30 days of the date of this order.

2.There is no order as to costs.

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

CH
Associate to Judge Glancy

14 JUNE 2021


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JASHAN TECHNOLOGY PTY LTD and PHOENIX PROPERTIES INTERNATIONAL PTY LTD [2022] WASAT 61
Cases Cited

9

Statutory Material Cited

0

Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211
Mohammadi v Bethune [2018] WASCA 98
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28