HAZCOM PTY LTD and MIHAERE

[2023] WASAT 126

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

CITATION:   HAZCOM PTY LTD and MIHAERE [2023] WASAT 126

MEMBER:   MS N OLDFIELD, MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   15 DECEMBER 2023

FILE NO/S:   CC 1421 of 2023

BETWEEN:   HAZCOM PTY LTD

First Applicant

BARBARA RUTH HAYNES

Second Applicant

AND

TREVOR IHAKA MIHAERE

Respondent

Catchwords:

Retail commercial tenancy - Requirements for special circumstances for early termination of lease - Damage and destruction

Legislation:

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

Result:

Application is dismissed

Category:    B

Representation:

Counsel:

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

Solicitors:

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

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

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

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1. The applicants are the landlords, and the respondent is the tenant in relation to a lease of retail premises located at Unit 2, 21 Dampier Terrace, Broome.

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 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 leases 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 s13(7) of the CTRA 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 5 December 2023.

2. The lease is dated 29 November 2023 and item 2 of the Schedule to the lease states the date for commencement of the lease is 10 November 2023.

3. The landlords seek approval of clause 16.1 of the lease which reads as follows:

   16.1Destruction of Premises

   If the Leased Premises or any part of the Leased Premises are at any time destroyed or so damaged so as to be unfit for occupation or use (unless the insurance moneys relating to that damage or destruction are irrevocable through any act or default of the Lessee) then the Annual Rent or a fair and just proportion of the Annual Rent according to the nature and extent of the damage sustained shall until the Leased Premises have been rebuilt or reinstated and made fit for occupation and use be suspended and cease to be payable and in case any dispute arises as to whether the Leased Premises or any part of the Leased Premises have been destroyed or rendered unfit for occupation or use or as to what is a fair and just proportion of rent to be suspended that dispute shall be referred to the arbitration of a single arbitrator appointed by the President for the time being of the Real Estate Institute of Western Australia in accordance with the provisions of the Commercial Arbitration Act 1985 and the decision or award of the arbitrator shall be final and binding on the parties thereto PROVIDED ALWAYS THAT in case the Leased Premises are destroyed so as to be wholly unfit for occupation or use and the Leased Premises are not reinstated within three (3) months of that destruction this Lease may at the option of the Lessor or the Lessee be determined by notice in writing.

4. The parties signed a consent to the making of the present application dated 29 November 2023, which stated:

   The parties consent to the inclusion of clause 16.1 in the Lease on the grounds that in the event of the damage or destruction of the demised premises so that they are unfit for occupation and are beyond proper repair then reinstatement may not be economical or realistic.

Consideration

1. Implicit in the application is the submission that the events described in clause 16.1 (the leased premises are destroyed or so damaged they cannot be repaired within three months) constitute 'special circumstances' within the meaning of s 13(7) thus justifying early termination of the lease were those events to occur.

2. 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 s13(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]

3. I am not satisfied special circumstances exist as required by s 13(7) of the CTRSA Act. My reason being that there is nothing in the application which suggests the circumstances described in clause 16.1 currently exist or are intended to come into existence during the term of the lease.

Orders

The Tribunal orders:

1.On the application in respect of a retail shop lease between the parties relating to Unit 2, 21 Dampier Terrace, Broome, it is ordered that the application for approval of the inclusion in the lease of clause 16.1 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