Shams v 357 Thornleigh Place Pty Ltd

In accordance with your lease, your rent is in arrears and you are currently in breach. I have made efforts to work with you during this time of disruption due to Covid-19, as mandated by the Government Code of Conduct. Allowances have been made for late payment due to supply disruption, however please be aware that your rent is due in full for April 20 and payment is required within 7 days, 30/04/20. Should this deadline not be met, the current abatement you are receiving of 40% will be withdrawn from April 20 onwards. In regards to your request for Covid-19 relief, the Requirements are as follows; A proven successful jobkeeper application; 30% drop in audited sales, Given that the current lease is on an abated rent the landlord will not be applying a further30% discount to the already abated rent."

1. On 7 May 2020 the applicant applies to ATO for Jobkeeper.
2. On 1 July 2020 the respondent reverses the agreed rent credits and ceases applying the agreed 30% abatement going forward.
3. On 7 August 2020 the applicant provides to Colliers the April, May and June 2020 BAS with hard copy delivered to Colliers' office for JobKeeper status.
4. On August 2020 ATO JobKeeper documents emailed to Colliers, and Liz Chuck confirms receipt by email.
5. Between August and November 2020 the applicant seeks the 30% abatement be reinstated by the respondent.
6. On 11 December 2020 the respondent applies for mediation via the Office of the Small Business Commissioner.
7. By agreement on 11 December 2020, the mediation date is extended to a second session.
8. On 17 December 2020 the respondent refuses any further mediation.
9. Between 5 and 7 January 2021 the applicant provides to Colliers further JobKeeper confirmation and accountant's letter regarding decline in sales together with information of the Business' renaming and new signage.
10. The applicant during January 2021 provides to Colliers a further bank guarantee template seeking an expiry date for the bank guarantee at the request of her bank without response from Colliers.
11. On or about 1 February 2021 Colliers confirms receipt of JobKeeper records.
12. On 3 February 2021 the applicant's legal advisors write to the respondent in effort to resolve the abatement issues, COVID-19 rental relief and the provision of a bank guarantee with an expiry date.
13. The applicant's JobKeeper status ceases on the March quarter of 2021.
14. The respondent disallows the Business rename and prevents applicant's work for painting and signage. Applicant indicates details have been provided twice, once at the mediation and on 5 January 2021 which shows the new signage.
15. On 12 May 2021 the applicant advises Colliers that the premises are no longer Discount Drug Store and seeks permission to change signage and external brand name to 'Inform Pharmacy.'
16. On 10 May 2021 the applicant's legal advisors again write to Colliers acting for the respondent in an effort to resolve the abatement issues, COVID-19 rental relief and the bank guarantee.
17. On 14 May 2021 Colliers on behalf of the respondent serves a Notice of Breach for 'rebranding' the Business.
18. On 20 May 2021 the respondent retakes possession of the Premises, the locks are changed and the applicant is excluded from the Premises.
19. On 3 June 2021 on the application of the applicant Principal Member Rosser orders the respondent to restore possession of the Premises to the applicant on the proviso that rent is paid regularly on a rebate of 30% of the rent payable under the Lease.
20. In June 2021 the State of NSW commences hard lockdown due to COVID-19 Delta outbreak.
21. On 30 June 2021 the Retail and Other Commercial Leases (COVID-19) Regulation Regulations from 2020 cease to apply.
22. On 13 July 2021 the Retail and Other Commercial Leases (COVID-19) Regulation 2021 commences for COVID-19 impacted leases and to enact the Code.
23. On 2 August 2021 the respondent unilaterally issues rent credits for August, September and October 2021 at 30% and also issues rent increase notices for 14 September 2021.
24. On 2 August 2021 the applicant applies for COVID-19 JobSaver.
25. On 4 August 2021 the applicant receives payment under COVID-19 Jobsaver.
26. On 4 august 2021 the applicant successfully receives COVlD-19 JobSaver payment.

Claims by the Applicant

1. Pursuant to the Amended Retail Lease Application, the applicant in summary seeks:

• a 30% abatement of gross rent calculated for the period from 1 January 2019 to the expiration of the Lease on 13 September 2023 or such other date as the Tribunal may determine, pursuant to sections 72, 62B and 62E of the Retail Leases Act 1994 (N SW) (the Act) to be off set against any alleged arrears and credited towards any future rent properly due and payable;
• an order that the respondent pay to the applicant damages in the sum of $91,214 for breach of the Lease by reason of its purported termination of the Lease and re-entry of the Premises; and
• relief against forfeiture pursuant to section 72 of the Act on such terms and conditions as the Tribunal thinks fit:

1. The applicant withdrew her claim for relief under section 34 of the Act during the hearing on 31 March 2022.
2. Mr O'Sullivan submits that if the applicant is entitled to an extension of the rebate as claimed, it is unnecessary to determine her claim for relief under the COVID Regulations as she only seeks in total rebate of no more than 30%, whether pursuant to her claims for unconscionable conduct or otherwise.

Unconscionable Conduct

1. In paragraph 6 of her Amended Application the applicant claims a declaration pursuant to section 72(1)(f) (iii) of the Act, that in: (1) purporting to withdraw the 30% Reduction; (2) refusing to negotiate in good faith for any abatement of rent due to the impact of the construction works, the closure of other shops and the impacts of the pandemic; and (3) purporting to terminate the lease and re-enter the premises without any proper notice; the respondent has engaged in conduct that is unconscionable in contravention of section 62B of the Act and seeks compensation pursuant to sections 62B(8) and (9) and 72(1)(a) of the Act.
2. It was submitted by the applicant that it was unconscionable for the respondent to withdraw the 30% rebate where:

• the respondent inhibited the flow of customers to the premises by the erection of the hoarding;
• the respondent failed to take all reasonable steps to ensure that the Centre did not have a large number of vacant shops and an appropriate mix of tenants that resulted in a significant decline in foot traffic to the Centre;
• as a result the applicant suffered an approximate 30% decline in sales: and that Mr DeGraaf of Colliers on behalf of the respondent acknowledged this as the rationale for the abatement of 30%;
• the applicant first asked the respondent in writing to address these issues on 14 November 2018: and again on 29 January 2019;
• the 30% rebate was commensurate with the approximately 30% downturn that the applicant's business had suffered as a result of ongoing decline of the Centre and foot traffic to it;
• the respondent extended the rebate in recognition of the downturn in sales that the applicant had suffered;
• having recognised the deterioration in trading conditions at the Centre by applying the rebate, the respondent's conscience was bound not to revoke the rebate unless trading conditions in the Centre improved;
• if, as the respondent contends, that the rebate was merely a gratuitous act of "good faith", it did not act in good faith in withdrawing the rebate when there had been no improvement in trading conditions;
• there is no objective evidence to suggest that foot traffic to the Centre had improved or that the respondent had taken any adequate steps within a reasonable time to address these issues since it first applied the rebate;
• in withdrawing the rebate, the respondent was not acting in good conscience or in good faith but rather, exploiting its superior bargaining position in that, in the absence of any formal agreement between the parties or an order of the Tribunal varying the Lease, the applicant was wholly at the mercy of respondent's discretion as to whether it applied or revoked any rent rebate;
• as a further indicator of the respondent's lack of "good faith", the respondent withdrew the rebate shortly after the onset of COVID, regardless of the consequences to the applicant's business at a time of unprecedented business disruption and uncertainty; and
• the withdrawal of the rebate at such a time and purported termination of the Lease was not reasonably necessary to protect the respondent's position, given that with the onset of COVID and the long standing vacancies of some shops of several years in the Centre, it may be inferred that the respondent was unlikely to find a tenant willing to pay rent as high as that demanded by the respondent of the applicant before the expiration of the Lease on 13 September 2023.

1. The submission continues that the respondent did not negotiate in good faith for any continuation of the rebate past June 2020, notwithstanding that there was no improvement in trading circumstances over at least the preceding year from June 2019 to June 2020 and where COVID gave rise to unprecedented business disruption and uncertainty.
2. Mr O'Sullivan further submitted that it would be appropriate for the Tribunal to order that the respondent apply an abatement of at least 30% of the applicant's gross (or at the minimum, base) rent for the period from 1 January 2019 to the date of any determination by the Tribunal as requested by the applicant in the letter from her agent, Bruce Engeman on 18 September 2019 to the respondent.

Evidence and witnesses

1. Mr Fernon SC on behalf of the respondent made submissions on credit against the applicant and Mr Khaira. In summary the submissions were that these two witnesses continually avoided answering questions and tried to promote their positions when answering questions. There were inconsistencies in their evidence and in particular the evidence of the applicant in cross examination was frequently contrary to the objective evidence contained within affidavits regarding when meetings took place and who was in attendance.
2. The Tribunal notes the submission but makes no finding on credit given the lapse in time and poor recollections and will treat the evidence of each witness on their own merits.

Unconscionable conduct

1. Section 62B of the Act states as follows: 62B Unconscionable conduct in retail shop lease transactions (1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable. (2) A lessee must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable. (3) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessor has contravened subsection (1) in connection with a retail shop lease, the Tribunal may have regard to - (a) the relative strengths of the bargaining positions of the lessor and the lessee, and (b) whether, as a result of conduct engaged in by the lessor, the lessee was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessor, and (c) whether the lessee was able to understand any documents relating to the lease, and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessee or a person acting on behalf of the lessee by the lessor or a person acting on behalf of the lessor in relation to the lease, and (e) the amount for which, and the circumstances under which, the lessee could have acquired an identical or equivalent lease from a person other than the lessor, and (f) the extent to which the lessor's conduct towards the lessee was consistent with the lessor's conduct in similar transactions between the lessor and other like lessees, and (g) the requirements of any applicable industry code, and (h) the requirements of any other industry code, if the lessee acted on the reasonable belief that the lessor would comply with that code, and (i) the extent to which the lessor unreasonably failed to disclose to the lessee - (i) any intended conduct of the lessor that might affect the interests of the lessee, and (ii) any risks to the lessee arising from the lessor's intended conduct (being risks that the lessor should have foreseen would not be apparent to the lessee), and (j) the extent to which the lessor was willing to negotiate the terms and conditions of any lease with the lessee, and (k) the extent to which the lessor and the lessee acted in good faith. (4) Without in any way limiting the matters to which the Tribunal may have regard for the purpose of determining whether a lessee has contravened subsection (2) in connection with a retail shop lease, the Tribunal may have regard to - (a) the relative strengths of the bargaining positions of the lessee and the lessor, and (b) whether, as a result of conduct engaged in by the lessee, the lessor was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the lessee, and (c) whether the lessor was able to understand any documents relating to the lease, and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the lessor or a person acting on behalf of the lessor by the lessee or a person acting on behalf of the lessee in relation to the lease, and (e) the amount for which, and the circumstances under which, the lessor could have granted an identical or equivalent lease to a person other than the lessee, and (f) the extent to which the lessee's conduct towards the lessor was consistent with the lessee's conduct in similar transactions between the lessee and other like lessors, and (g) the requirements of any applicable industry code, and (h) the requirements of any other industry code, if the lessor acted on the reasonable belief that the lessee would comply with that code, and (i) the extent to which the lessee unreasonably failed to disclose to the lessor - (i) any intended conduct of the lessee that might affect the interests of the lessor, and (ii) any risks to the lessor arising from the lessee's intended conduct (being risks that the lessee should have foreseen would not be apparent to the lessor), and (j) the extent to which the lessee was willing to negotiate the terms and conditions of any lease with the lessor, and (k) the extent to which the lessee and the lessor acted in good faith. (5) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person institutes legal proceedings in relation to that lease or refers to arbitration a dispute or claim in relation to that lease. (6) A person is not to be taken for the purposes of this section to engage in unconscionable conduct in connection with a retail shop lease by reason only that the first-mentioned person fails to renew the lease or issue a new lease. (7) For the purpose of determining whether a lessor has contravened subsection (1) or whether a lessee has contravened subsection (2) - the Tribunal must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and the Tribunal may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement. (8) A lessor or lessee, or former lessor or lessee, who suffers loss or damage by reason of unconscionable conduct of another person that is in contravention of this section may recover the amount of the loss or damage by lodging a claim against the other person under section 71A. (9) If the matter of such loss or damage arises in connection with a matter the subject of proceedings in the Tribunal, the Tribunal may proceed to decide it, and in so doing may award such sum as it thinks fit. (10) In this section - lessee or former lessee includes a person who is a guarantor or covenantor under a lease or former lease.
2. Mr Fernon SC helpfully submitted that the applicable legal principles of unconscionability in a statutory context have recently been considered by the High Court in Australian Securities and Investment Commission v Kobelt [2019] HCA 18; (2019) 368 ALR 1 (in respect of s 12CB of the Australian Securities and In vestment Commission Act 2001 (C'th) ('Kobelt') and the Appeal Panel of the Tribunal in Forbes v Wan [2020] NSWCATAP 129 (in respect of s 21 of the Australian ConsumerLaw 2010 (NSW) ('Forbes') and the Appeal Panel of the Tribunal in Norsk Dor Pty Limited v Tuxfund Pty Limited [2020] NSWCATAP 183 ('Norsk').
3. As outlined by the Appeal Panel in Norsk ( 66), the principles can be relevantly summarised as follows:
4. Determination of unconscionability involves a multi-factorial evaluative judgment as to whether conduct contravenes the statutory norm of conscience. Mere unfairness is insufficient. (Kobelt, per Kiefel CJ and Bell J at [47]; Keane J at [120]; Nettle and Gordon JJ at [234]). 1. There must be some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person's legal rights (Kobelt per Gaegler J at [88]). 2. The values that inform the standard of conscience include certainty in commercial transactions; the absence of trickery and sharp practice; fairness in dealing with customers; the faithful performance of bargains and promises freely made and the protection of persons at a special disadvantage from being victimised or exploited (Kobelt per Kiefel CJ and Bell J at [14]); 3. For there to be unconscionable conduct it is essential that one party is at special disadvantage or position of vulnerability to the other party, and the other party unconscientiously takes advantage of that special disadvantage or vulnerability (Kobelt per Kiefel CJ and Bell J at [15]; Gaegler J at [111]; Keane J at [118]; Nettle and Gordon JJ at [147]); 4. It is not possible to conclusively define what factors constitute a special disadvantage or vulnerability, but they must sufficiently affect the weaker party's ability to protect its own interests and extend beyond mere inequality of bargaining power (Kobelt per Nettle and Gordon JJ at [147]); 5. The taking advantage of the special disadvantage or vulnerability requires conduct of such a degree that it can be characterised as victimisation, exploitation, predatory, or conduct so outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience (Kobelt per Kiefel CJ and Bell J at [14]; Gaegler J at [92]; Keane J at [118]).
5. Conduct which is merely outside the norms of acceptable commercial behaviour is insufficient, without the further elements of unconscionable conduct (Forbes at [60]).

The Appeal Panel at (67-68) stated

1. Kobelt is a challenging decision to distil because the High Court divided 4-3 on whether the relevant conduct was unconscionable, and the various judgments focus upon different aspects of the principles of statutory unconscionability under s 12CB of the ASIC Act 2001 (C'th).
2. Kobelt has recently been considered by the Federal Court in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (No 2) [2020] FCA 802 (in the context of ss 21 and 22 of the ACL). Colvin J stated at [28]-[30]: The members of the Court who were in the minority in finding that the conduct of Mr Kobelt was unconscionable (Nettle, Gordon and Edelman JJ), did not favour an interpretation of the standard that required a high degree of moral disapprobation. Kiefel CJ, Bell and Keane JJ emphasised the need for victim isation, exploitation, or a predatory state of mind. Kiefel CJ and Bell J referred, with apparent approval, to the view of the Full Court of this Court that moral obloquy had a role to play but was not a substitute for the statutory words: at [60]. Keane J found that the statute 'imports the 'high level of moral obloquy" associated with the victimisation of the vulnerable': at [118]. Gageler J recanted the use of the term moral obloquy for the reason that it 'has the potential to be misleading to the extent that it might be taken to suggest a requirement for conscious wrongdoing': at [91]. However, as noted above, his Honour expressed the view that for conduct to be unconscionable it must be so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. Therefore, the majority view supports the adoption of a standard that requires exploitation of disadvantage by a party in a stronger position by conduct that is well outside the bounds of what is generally seen to be moral, right, or acceptable commercial behaviour. It is not every instance where a person in a stronger commercial position gains an advantage by reason of that position over a person in a weaker or disadvantaged position that is unconscionable. It is not enough that the dealing might be described as unfair or unreasonable. Rather, unconscionable conduct involves dealing with those who are vulnerable in a manner that exploits that vulnerability by engaging in conduct that may be plainly or obviously criticised when viewed through the lens of an understanding of proper commercial behaviour according to prevailing norms and standards. In making the evaluation as to whether conduct is unconscionable, there must be regard to the non-exhaustive and non-prescriptive list in s 22 of the ACL, although the presence of one or more of those matters will not be determinative. However, the statutory list is to be considered for the purpose of determining whether the conduct was unconscionable. The nature of the list is such that it describes aspects that may be present in many types of commercial dealings. Ultimately, the statutory prescription is against engaging in unconscionable conduct not against conduct which takes places in circumstances of the kind described in the list.
3. The question facing the Tribunal in response to the claim for unconscionable conduct is to consider what conduct of the respondent is actually complained of and then whether such conduct was unconscionable.
4. There appears to be three conduct actions of the respondent to be considered. The first is the withdrawing of the 30% rent rebate as flagged by Ms Liz Chuck in her email of 23 April 2020 and the subsequent withdrawal of the rent rebate on 1 July 2020.
5. The next conduct to be examined is in fact non conduct in the sense that the respondent refused to reinstall the rent rebate upon repeated requests by the applicant between August and November 2020.
6. The third conduct of the respondent to be looked at is the re-entry and taking of possession of the Premises on 20 May 2021.
7. Mr Fernon SC submits that the applicant repeatedly did not keep to the arrangement regarding rent rebate in that payments were always late. That the rebate was always given by the respondent on terms and it was the applicant who continuously did not comply with those terms, so the respondent was entitled to withdraw the rebate. There was no unconscionable conduct by the respondent in withdrawing the rebate.
8. However, the above does not take into account the overall circumstances in which the parties were operating, the COVID pandemic. Ms Chuck in her email of 23 April 2020 notes that the applicant was trading "during the time of disruptions due to COVID-19 as mandated by the Government Code of Conduct" and "that allowances have been made for late payment due to the supply disruption". Here is an acknowledgement that the parties were operating in unprecedented times as a consequence of the COVlD-19 pandemic.
9. Ms Chuck then says in her email that the rent due is the full rent, unabated, due on 30 April 2020 with a 7 day allowance for late payment.
10. Later in the email Ms Chuck appears to be responding to the request from the applicant for COVID rent relief under the Code by setting out the minimum requirements to qualify for relief being a successful Jobkeeper application and a 30% drop in audited sales.
11. In the last paragraph of the email she states "Given that the current lease is on an abated rent the landlord will not be applying a further 30% discount to the already abated rent."
12. This paragraph leads to number of interpretations. It seems contrary to the first part of the email where the rent is to be restored to the full amount, but yet here she talks about the Lease being on an abated rent reduction. It is an acknowledgement that the rent abatement is still operative and will be for some time notwithstanding the earlier statement of intention to withdraw.
13. A further interpretation is that even if the applicant was successful in qualifying for rent relief under the Code, the respondent was not going to consider providing rent relief. Such a bald statement of intention appears to be contrary to the spirit and the requirements of the Code.
14. The Purpose of the Code is as follows "the purpose of this Code of Conduct ('the Code") is to impose a set of good faith leasing principles for application to commercial tenancies ... These principles will apply to negotiating amendments in good faith to existing leasing arrangements-to aid the management of cashflow for SME tenants and landlords on a proportionate basis-as a result of the impact and commercial disruption caused by the economic impacts of industry and government responses to the declared pandemic.
15. Further the Overarching Principles of the Code are OVERARCHING PRINCIPLES The objective of the Code is to share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period, whilst seeking to appropriately balance the interests of tenants and landlords. It is intended that landlords will agree tailored, bespoke and appropriate temporary arrangements for each SME tenant, taking into account their particular circumstances on a case-by-case basis. The following overarching principles of this Code will apply in guiding such arrangements: . Landlords and tenants share a common interest in working together, to ensure business continuity, and to facilitate the resumption of normal trading activities at the end of the COVID-19 pandemic during a reasonable recovery period. Landlords and tenants will be required to discuss relevant issues, to negotiate appropriate temporary leasing arrangements, and to work towards achieving mutually satisfactory outcomes. . Landlords and tenants will negotiate in good faith. Landlords and tenants will act in an open, honest and transparent manner, and will each provide sufficient and accurate information within the context of negotiations to achieve outcomes consistent with this Code. Any agreed arrangements will take into account the impact of the COVID-19 pandemic on the tenant, with specific regard to its revenue, expenses, and profitability. Such arrangements will be proportionate and appropriate based on the impact of the COVID-19 pandemic plus a reasonable recovery period. The Parties will assist each other in their respective dealings with other stakeholders including governments, utility companies, and banks/other financial institutions in order to achieve outcomes consistent with the objectives of this Code. All premises are different, as are their commercial arrangements; it is therefore not possible to form a collective industry position. All parties recognise the intended application, legal constraints and spirit of the Competition and Consumer Act 2010. The Parties will take into account the fact that the risk of default on commercial leases is ultimately (and already) borne by the landlord. The landlord must not seek to permanently mitigate this risk in negotiating temporary arrangements envisaged under this Code. All leases must be dealt with on a case-by-case basis, considering factors such as whether the SME tenant has suffered financial hardship due to the COVID-19 pandemic; whether the tenant's lease has expired or is soon to expire; and whether the tenant is in administration or receivership. Leases have different structures, different periods of tenure, and different mechanisms for determining rent. Leases may already be in arrears. Leases may already have expired and be in "hold-over." These factors should also be taken into account in formulating any temporary arrangements in line with this Code. As the objective of this Code is to mitigate the impact of the COVID-19 pandemic on the tenant, due regard should be given to whether the tenant is in administration or receivership, and the application of the Code modified accordingly.
16. The discussion between the parties regarding trading conditions in the Centre and a rebate were conducted over some years starting in 2018. It is helpful to understand on what basis the respondent granted the rebate to look at these discussions. However, they were many and varied and it is hard to come to arrive at an agreed position, if an agreed position is necessary.
17. The position of the applicant regarding the trading position of the applicant and the request for a rebate is in my view, best described by the email dated 18 September 2019 from Bruce Engeman, the retail consultant engaged by the applicant sent to Colliers set out below, I provide a response on the 4 matters you have raised in your email dated 13 September. Using your system of numbering I respond as follows: Engeman Authority I confirm that I have been appointed as a consultant to act on behalf of Halimah Shams and Sanj Khaira. Sanj and Halimah have also provided the attached document for your records. Outstanding September rent The rent for the month of September was paid on Wednesday (10 September). 1 attach a copy of that payment receipt. Outstanding arrears and payment plan The rental arrears including the rent for September 2019 is $ 84,297.73. We note that the rental abatement of 30% per month commenced only in April this year. My clients had requested that the rental abatement would commence on 1 July, 2018. However, my clients are prepared to accept rental abatement actually commence on 1 January this year as a compromise. They actually need this additional assistance to survive. As you can understand the trading conditions at the Centre have been very poor and they have been deteriorating for a long period of time now. My clients Want to work with you but this is not an easy and straight forward process. As you can see from the customers trends we have provided, we are experiencing a downward trend since Oct 2015 due to factors outside our control, and our current 8 months are the worst trading conditions to dale since Halimah and Sanj started ownership of the shop in 2010. This in turn has decreased their cashflow significantly and while they are in the midst of very fragile negotiations with the bank, it is obvious that any turnaround for the shopping centre is going to take years. The shopping centre appears to have lost core clientele to other centres in the area and this can be demonstrated in the dispensary data which shows patients of Halirnah no longer visiting Thomleigh Marketplace. As you are aware, this downturn is despite them making a significant effort in marketing campaigns in the shop and even in the arcade (health promotions and events) over the last 12 months alone. We say this as there is no logical reason for the pharmacy to loose clientele at such a rapid rate especially since it's the same owners, with good staff, extensive product range and value pricing. This has also been supported by various pharmacy consultants within the industry. The declining sales generally correlates with these events: 1. The installation of hoarding at the old news agency site (Shop 7A and &B) that blocked their visibility. 2. Closing of the Newsagency, Lotto and other tenancies, 3. Opening of Beecroft Shopping Centre, upgrade of Pennant Hills Marketplace, upgrade of Westleigh Shopping Precinct - all these have been significant events in Thornleigh Marketplace losing clientele. 4. Essential tenancies within the marketplace are now closed (fish monger, bakery). 5 The ongoing empty sites do not help with the perception of the Marketplace. Please refer to the comments on Google review. If the owners were able to grant this additional assistance then Halimah and Sanj would be prepared to relocate into the 79 square metre tenancy to essentially try to rebuild and restart their business at the Centre, This would also help build confidence within the Centre and to the Centre's customer base in addition to them better managing their cashflow while keep servicing rental at a reasonable market level and appeasing the banks. It is proposed that the arrears (what ever is the new figure after the adjustment of rent; estimate to be (which would need to be confirm upon review of the ledger) then the rental payments will be paid fortnightly moving forward from 1/10/2019 in line with my clients PBS payments from the Government. My clients don't have $ 84, 297.73 to pay by the total outstanding debt by Wednesday (18/9) which also appears to include part of the rental abatements which has been reversed, We should also mention that if the Lessors of the Centre elect to 'cash in" the Bank Guarantee then it will trigger a default with my client's bank which will mean the end of the Pharmacy in the Centre. Lease proposal for Pharmacy Relocation to Shop 7A (79 square metres). My clients will pay a starting gross total rental of 5 70,000,00 pa. + GST (made up of base rent, outgoings and promotional levy). They could achieve a handover of 1/4/2020 My clients would need a 12 month rental free period to enable this new lease to happen. Please also note the attached customers number charts which show how poor the Centre has been performing over the last few years. I look forward to working with you both to see if there is a way of keeping the Pharmacy at the Centre. Regards, Bruce Engeman
18. The respondent's position seems to be best put forward by Mr Whittaker in his response on 30 September 2019 Lessee: Halimah Shams Lessor: 357 Thornleigh Place Pty Ltd as trustee of the Thornleigh Place Unit Trust Premises: Shop 8 at Thornleigh Marketplace, 242 the Comenarra Parkway, Thornleigh NSW 2120 The Landlord has reviewed the email received from your adviser, Mr Bruce Engeman. The Landlord is still unclear as to what you are offering to clear the outstanding arrears of rent as you previously agreed. However, to show that the Landlord is willing to work with you we advise that the Landlord requires the following: 1. The landlord requires you to Provide a payment plan showing how you propose to pay all outstanding arrears of rent and monies owing by June 30, 2020. The landlord requires you to provide this to us by close of business on Thursday 3 October 2019, 2. The Landlord will continue to give you a 30% rent abatement effective from 1 January 2019 on the condition that prompt payment of rent is made on the 1st day of each month (rent in advance), This means that you must pay rent on 1 October 2019 of $13,147.62 3. You must provide full financial details of your business and personal accounts to us by close of business Thursday 3 October 2019. This relates to all your assets and liabilities, whether owned directly or indirectly through corporate entities and trusts. We also require written proof of any outstanding loans or financial accommodation given to you or secured on the business carried out in Thornleigh Marketplace. We note that the above conditions are non-negotiable and time of the essence. If you provide the above information to us by the due date, the Landlord is willing to consider your offer to relocate to other premises in the centre. Should the above conditions not be satisfied by the deadline specified above the Landlord intends to exercise its rights under the lease, including (but not limited to) calling on the bank guarantee. The Landlord reserves its rights. Yours faithfully, Colliers International (NSW) Pty Ltd
19. To further understand the position of the respondent regarding the granting of the rent rebate the leasing executives were cross examined. Mr Whittaker was asked about the discussions regarding the rebate (4756 and following of the Transcript) Mr O'Sullivan: And do you recall Halimah saying to you, in about July of 2018, words to the effect that "Our sales are down significantly, and according to our accountant's advice, our rent needs to be sifting at about 50% of what we're currently paying. So I would like an abatement to commence from August 2018"? Mr Whittaker: lt would have continued on with those discussions. As I said to Halimah, it would have been please provide us the evidence and the detail, I would need to go back to the owners and have a discussion in relation to that" Mr O'Sullivan : But nevertheless, at some point, and I'm suggesting to you in about January 2019 or shortly after that, you indicated that the landlord was prepared to give a 30% rebate of rent in conversations with Halimah and Sanj? Mr Whittaker: Correct, correct. Provided that they give us information. Mr O'Sullivan: Yes. And the 30% was referable to the claim made in December that Halimah's business had suffered a 30% reduction in sales - Mr Whittaker: Look, no, I don't - sorry, if I can cut in there. I don't believe that it was a deliberate or a - sorry, I don't know the wording here - but was reliant on being down in sales or being down in traffic at the centre. It was the landlord assisting, one, because the base rent had started to creep up, and they wanted to give an assistance package so that they could recover some of the rent, but not taking any of the liability in relation to traffic or sales or tenancies being down. It was purely a gesture of good faith by the landlord. Mr O'Sullivan: Well, it wasn't a gesture of good faith by the landlord. What I suggest to you is that the landlord offered to reduce Halimah's rent by 30%, because it accepted that there had been a 30% downturn in traffic to the centre. Mr Whitaker: Well, that's your assumption, but it's not true.
20. Mr De Graaf, the National Director, Real Estate Management Services was cross examined (693 and following of the transcript) Mr O'Sullivan:.. .so but you did say to the landlord that you recommended that she be given a 30% rebate in her rent in recognition of her sales slipping by about 30%. Is that a fair summary? Mr De Graaf: Correct Mr O'Sullivan:... and as at June 2020, so far as you're aware, her sales hadn't recovered for improved from the level they were as at April 2019? Correct? Mr De Graaf: ..I'd need to view their sales report, if that's in the document. We can review that and I could comment accordingly that, but I don't recall without having that information in front of me. Mr O'Sullivan: All right, so my last question on this topic is that the landlord, in offering a rebate of rent, was not engaged in any gesture of goodwill, rather it was recognising the commercial realities that if it didn't help the tenant, there was a possibility that she would have to close her pharmacy. Would you agree with that proposition? Mr De Graaf :No, sir.
21. The case for the respondent is that the 30% rebate was a gesture of goodwill which presumably could be withdrawn at any time, not linked to any particular event or circumstance such as loss of tenants in the Centre, a drop in trading by the applicant or even assistance in payment of arrears of rent. That is it was solely in the gift of the respondent, not as put by Mr O'Sullivan, that it was based on commercial consideration.
22. I believe that in fact it can be both, that a landlord can make rent concessions and in many many cases this is done as a gesture of goodwill, but there is some commercial basis for the rent concessions, depending on each circumstance, but one such commercial reality may be that any further vacancies are not desired. Landlords, like the respondent are commercial entities to make profits for the shareholders. Gestures of goodwill, as suggested by the witnesses for the respondent would appear contrary to the commercial purposes of the respondent. That is why landlords have managing agents to monitor each tenancy and try to accommodate the needs of each tenant making sure the commercial interests of the landlord are paramount. From the exchange of emails between Mr Bruce Engeman and Mr Matthew Whittaker, there can be established a clear commercial basis for the grant of the rebate and confirmed by the oral evidence of Mr De Graaf that the turnover of the applicant had declined.
23. On 28 March 2020 Ms Chuck forwarded to the applicant an update from Centre Management which stated "I wanted to let you know that we are carefully monitoring the current COVID- 19 scenario. The situation is variable at the moment and it is unclear to what extent we will all be affected. We know that irrespective of the depth or duration of this scenario, it will raise significant challenges for many businesses. For this reason we hope that as a priority, any business affected by the COVID-19 situation take advantage of the opportunities being offered to them. Any future consideration to defer payment or part payment of rent until COVID- 19 cycle abates, will require formal application by the tenant, a detailed proposal, accompanied by a current audited P & L and audited sales information. FYI the owners are only considering rent relief requests on a case by case, month to month basis. It is our desire to work together to get through the current scenario. We think we can achieve this if we're collaborative, focus on equitable outcomes for both parties and take a long term view.
24. Ms Chuck in her email of 7 April 2020 to the applicant and Mr Khaira when responding to the request for COVID relief, suggested that each tenant seek government assistance where possible and to provide to her last 2 years profit and loss statements and what was reported to the ATO and a business plan.
25. Then on 23 April 2020 Ms Chuck sent the email saying that rent is in arrears, rent in full is due on 30 April 2020, threat of withdrawal of the rent rebate of 40% (sic) and indicating notwithstanding any application for Covid rent relief, the landlord would not be applying a further 30% rent rebate. This appears quite contrary to the Centre Management update of only a month earlier where the parties are to work collaboratively and seek equitable outcomes.
26. Ms Chuck was cross examined by Mr O'Sullivan about the wording of the email of 23 April 2020 (5718 and following of the Transcript) Mr O'Sullivan: All right. And then the second last line of that email, you've written that "Given the current lease is on an abated rent, the landlord will not be applying a further 30% discount to the already abated rent". Do you see that? Ms Chuck: Yes. Mr O'Sullivan: So is that the case, irrespective of whether or not Ms Shams could demonstrate any impact on her turnover as a result of COVID or not? 5680 Ms Chuck: I think it related to the negotiations that already happened prior on that 30% abatement. So at that time, I was taking into account that there had been, well, 12 months' worth of negotiations between tenant and landlord that I wasn't involved in, that they've had ample opportunity to demonstrate that their sales figures - you know, to the landlord, and it hadn't been done. So this negotiation, whilst you're referring to COVID, it comes off the back of a previous 12 months of negotiation relating to the chemist performance. So whilst I agree that it's probably not worded in the best, I guess, thorough manner, I could have worded it better. I just, I guess it was trying to make them understand that the landlord was - it wasn't a blanket opportunity to have a reduction of 60%, okay, because all these things were open to negotiation, and they hadn't provided any reason for the landlord to negotiate. Mr O'Sullivan: All right, well, is it the case of the landlord's, I think you've agreed - sorry, withdraw that. I think you've agreed with me that the 30% rebate was nothing to do with COVID, correct? Ms Chuck: Yes. Mr O ' SuIIivan: And was what you were trying to communicate here - sorry, I'll withdraw that. As at April 2020, was it the landlord's position that in view of the fact that Halimah already had a 30% rebate, that the landlord was of the view that that was sufficient support for her, notwithstanding the impact of COVID? Ms Chuck: I don't believe that was the landlord's position. I believe that when we work in real estate, there's a lot of negotiation that has to happen. And when the tenant is telling you that they won't be paying rent for six months, you have to point out to them that the landlord has already met with considerable negotiation, in order to provide them with rent relief And I'm simply pointing out that they already have a 30% rent rebate. Now in terms of back to the landlord. That's more to do with my negotiation, my understanding of what had gone before. Going forward with negotiation, I don't exclude that, I'm not excluding that at all. But I'm just pointing out that they already had this. And I would agree it's poorly worded. But it's not relating
27. In fact the rent rebate of 30% was withdrawn on July 1 2020 and the credits reversed, so that the applicant was in arrears of rent. No Covid rent relief was provided to the applicant. The applicant provided evidence of Jobkeeper status and a drop in turnover, albeit for one month only. The parties failed to negotiate an outcome under the Code and Mediation did not really occur, as the respondent withdrew. The respondent during the unprecedented period of pandemic did not restore the 30% rebate. The applicant continued to pay 70% of the rent, but as the rebate was reversed the applicant was not paying the full rent.
28. On 19 May 2021 lawyers for the respondent served on the applicant Notice of Termination Lease for non payment of rent, being the shortfall of 30%. Re-entry took place on 21 May 2021.
29. The granting of the 30% rent rebate whilst a gesture of goodwill, was in my view grounded on commercial consideration that the respondent wished to assist the applicant considering there was a downturn in turnover, but which the respondent did not wish to be seen as responsible for. However, notwithstanding what the Colliers leasing executives maintained in their evidence, it was in the commercial interests of the landlord to make the rent rebate gesture. In normal circumstances such gesture would as some stage be withdrawn, depending again on commercial reality. That is if the turnover of the applicant improved, then there was no longer a commercial basis for continuing the rebate. Otherwise maintaining the rebate would be uncommercial for the respondent.
30. However, the COVID pandemic ensured that there were no longer normal trading conditions. Given the lock downs, and the strictures imposed by the Governments both Federal and State, the applicant could not regain the trading position it was in during 2017/8 before the closure of shops in the Centre and the erection of hoarding on adjacent shops and the applicant saw her turnover subsequently reduced by 30%.
31. Colvin J in Quantum distilled from the decision of the High Court in Kobelt that the majority view supports the adoption of a standard that requires exploitation of disadvantage by a party in a stronger position by conduct that is well outside the bounds of what is generally seen to be moral, right, or acceptable commercial behaviour, unconscionable conduct involves dealing with those who are vulnerable in a manner that exploits that vulnerability by engaging in conduct that may be plainly or obviously criticised when viewed through the lens of an understanding of proper commercial behaviour according to prevailing norms and standards."
32. The prevailing norms and standards of proper commercial behaviour can be found in the Overarching Principles of the Code as set out in paragraph 85 of these Reasons. They call for the parties to work together to ensure business continuity, negotiate in good faith and the emphasis being on landlords agreeing on tailored, bespoke and appropriate temporary arrangements for each tenant, taking into account their particular circumstances on a case -by-case basis.
33. Whilst the Code was introduced as a result of the COVID pandemic, the Code is drawn on the common and acceptable practices of expected commercial behaviour between landlords and tenants. The Update for Centre Management of 28 March 2020 appears to reflect these sentiments when referring to "collaborative focus on equitable outcomes for both parties and take a long-term view".
34. However, the email subsequently of 23 April 2020 threatening to withdraw the 30% rebate and then saying that nevertheless, even if the applicant was entitled to COVID relief, no further discount was to be applied, appears to cut across collaborative and equitable outcomes, and prejudge an outcome, based on the assumption that the 30% rebate would continue. In fact, the applicant has always maintained that if the rebate had continued, as she had requested there was no expectation of COVID rent relief on top. She was satisfied with the rebate. But neither happened. The rent rebate was withdrawn and not restored and no covid rent relief was granted.
35. The withdrawal of the rebate on 1 July 2020 and the reversal of the rent concessions to default the applicant is also contrary to the sentiments expressed in the Update from Centre Management regarding the approach to be taken in working collaboratively. The withdrawal of the rent rebate, the exercising the rights of default and re-entry in circumstances of the COVID pandemic, is not working collaboratively at all, and is not proper commercial behaviour according to the prevailing norms and standards as set by the Code.
36. The respondent maintains that it had a legal right to withdraw the rent rebate and whether the applicant complied with its terms or not, irrelevant of the circumstances, that having reversed the rent rebates the applicant was in default and the Lease could be terminated with notice. Section 129 of the Conveyancing Act 1919 (NSW) requires notice of breach to be served prior to any re-entry and forfeiture of the lease. Subsection (8) provides for an exception to rent default, when no notice is required. However, in circumstances where the rent default is manipulated in the circumstances as here, where a rent rebate is withdrawn and not restored are breaches of the Act, then the basis of the rent default by the applicant falls away.
37. The respondent points to another breach by the applicant to support the termination of the Lease and re-entry. The applicant did not provide a replacement Bank Guarantee upon repeated requests. Albeit the applicant sought to provide a guarantee from her bank with a termination date, well after the Lease termination date but the respondent insisted on a Bank Guarantee without a termination date, in accordance with the covenant under the Lease. However no notice in accordance with section 129 of the Conveyancing Act 1919 (NSW) was served on the applicant regarding this specific default and providing time to comply, so the re-entry on that basis of default is prohibited by section 129.
38. Section 62B (3) of the Act does not limit the Tribunal to the matters listed in (a-k) when having regard to determining whether a lessor has acted unconscionably. The Overarching Principles of the Code clearly indicate that lessees generally are in a poorer bargaining position compared to landlords, this being one of the main reasons for the Code. The Code specifically provides Any agreed arrangements will take into account the impact of the COVID-19 pandemic on the tenant, with specific regard to its revenue, expenses and profitability. Such arrangements will be proportionate and appropriate based on the impact of the COVID-19 pandemic plus a reasonable recovery period. Here is a clear acknowledgement, that lessees are in a disadvantage as their interests are to be considered primarily, especially during the pandemic.
39. The Tribunal in reviewing the conduct of the respondent pursuant to section 62B(3) of the Act and specifically to the extent to which the respondent acted in good faith or not, for the reasons expressed already, finds that the respondent did not in respect of its conduct towards the applicant act in good faith especially in the unprecedented circumstances of the COVID-19 pandemic. The Tribunal finds that the respondent has breached section 62B(1) of the Act.

Deceptive and Misleading Conduct

1. In paragraph 5 of her Amended Application the applicant has also sought a declaration pursuant to section 72(1)(f)(iii) of the Act that in resiling from the representation that the respondent would give the Lessee the 30% rebate, the respondent engaged in deceptive or misleading conduct in contravention of section 62D of the Act and seeks an order for compensation pursuant to section 62E of the Act.
2. Section 62D of the Act provides: A party to a retail shop lease must not, in connection with the lease, engage in conduct that it is misleading or deceptive to another party to the lease or that it is likely to mislead or deceive another party to the lease.
3. Section 62E of the Act provides: A party or former party to a retail shop lease who suffers loss or damage by reason of misleading or deceptive conduct of another party may recover the amount of the loss or damage by lodging a claim against the other party under section 71.
4. Mr O'Sullivan submitted that the conduct of the respondent was objectively likely to mislead or deceive the applicant into assuming that a 30% rebate of (at least base) rent would continue to be applied for so long as trading conditions did not improve in the Centre.
5. Mr Fernon SC submitted that there was in fact no representation made that an ongoing 30% rebate in rent would be provided, the emphasis being on "ongoing". Each iteration of the rent rebate by the leasing managers was stated to be for certain months and on certain conditions. Even though the conduct of the respondent was sometimes contrary to these stated iterations, such as extending the rebate, providing conflicting and contradictory invoices, sometimes reversing the rebate and on other times granting a 60% rebate, whilst confusing does not of themselves constitute misleading and deceptive conduct according to Mr Fernon SC.
6. The Tribunal agrees with the respondent. The respondent always had the right to withdraw the rebate based on the terms it was granted. The conditions were not met and the rent rebate was withdrawn. But this is not misleading the applicant. None of the conduct by the respondent could be said to be misleading or deceptive in the context as required by section 62D of the Act. The respondent was quite clear that the rent concession was based on certain conditions which it expected the applicant to meet. The question is regarding whether the conduct of the respondent in all the circumstances was unconscionable not misleading or deceptive. This claim is dismissed.

COVID Relief and Relied Against Forfeiture

1. In paragraph 2 of the Amended Retail Lease Application the applicant seeks a declaration pursuant to section72(1)(f)( iii) of the Act that the applicant is an "impacted lessee" and that the respondent should have or must grant the applicant relief as required under the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW).
2. Mr O'Sullivan in the Outline of Applicant's Submissions ( Part 2 Paragraph 15) submits that in that where the applicant seeks only an abatement of rent of 30% in total on any or all the bases claimed in her Application, accordingly were the Tribunal to find that she is entitled to a continuation of the 30% rebate which the respondent had previously extended, it will be unnecessary for the Tribunal to consider the claim for COVID relief.
3. I have determined that the respondent breached section 62B(1) of the Act in that it was unconscionable for the respondent to withdraw the rent rebate. Accordingly I propose to follow this submission and not further consider relief sought here.
4. The same consideration applies to the applicant's claim for Relief against Forfeiture. The lockout and termination of the Lease found to conduct that is unconscionable, then as the applicant remains in possession under the Lease on the rebated rent, for a period to be determined by the Tribunal, it is also not necessary to consider this claim.

Damages

1. The applicant has a claim for damages for two periods. The first is for the period of the lockout, 20 May 2021 to 3 June 2021, being 14 days and the second period is post the lockout until the end of the lease 13 September 2023.
2. The applicant filed a report from Mr Matthew Gwynne of PKF dated 10 December 2021. The respondent filed a report from Mr Mariano Rossetto of Vincents dated 18 March 2022. Both experts gave evidence in conclave.
3. Mr Gwynne assessed loss for the first period at $25,534 and Mr Rosssetto assessed at between $18,872 and $25,564. In relation to the second period Mr Gwynne assessed damages for the second period at $91,214.
4. However as pointed by Mr Rosssetto in his assessment of damages for the second period there is a double accounting by inclusion of the period of the lock out, in that the assessed damages of $25,534 is included in the amount of $91,214. Such amount should be deducted.
5. In relation to the claim for loss during the lockout I prefer the analysis of Mr Rossetto as set out in his report. A range is given and accordingly the Tribunal determines that the applicant is entitled to $21, 525 in damages from the respondent.
6. In relation to the second period from recommencement of trade from the Premises until the end of the lease on 13 September 2023, based on the loss of customers seeking prescriptions, Mr Gwynne assumed a specific average loss of sales per month based on historical sales from 1 May 2019 to 30 April 2021 and although not specifically stated there appears to be an assumption that the loss of customers are 1. for the whole period claimed, 2. none of the customers would have ceased purchasing from the applicant in any event due to circumstances, and 3. there was no likelihood of any recovery of these customers.
7. Mr Fernon SC submitted that the fundamental assumption made by Mr Gwynne to determine losses allegedly suffered in the second period was that some 63 customers out of nearly 2000 left because of the lock out. However on the evidence of Ms Capezzi, the manager at the Premises, she discloses by annexing the relevant customer print out of prescriptions that of the 63 customers that allegedly had left the business, almost one third in deed continued to obtain some prescription medicine once the applicant recommenced trading after 3 June 2021.
8. Mr Rossetto in his report states that no analysis was undertaken by Mr Gwynne to see how many customers stopped using the business for prescriptions over a period of time before the lock out. It may be that a reduction of 63 or lesser number of customers is a normal loss of customers. Further no analysis had been done to determine how many of those customers may no longer have need of the services of the business of the applicant for reasons such as 1. no longer needing prescriptions, 2. moved locations so the pharmacy was no longer convenient 3. decided to use another pharmacy for other reasons, 4. died or was hospitalized and would no longer be requiring prescriptions from the pharmacy.
9. Further there has been no establishment by the applicant as to this claim for damages under the principles of Hadley V Baxendale (1954) 2 CLR 517.
10. Accordingly, the Tribunal rejects the claim for damages for the second period.

Rent Rebate

1. As I have determined that it was unconscionable for the respondent in the circumstances to withdraw the rent rebate of 30%, on the application of the applicant as submitted by Mr O'Sullivan the duration of rent rebate is to be in accordance with the request by Mr Engeman in his email of 18 September 2019 to Colliers. In that email set out in full in paragraph 89 of these Reasons Mr Engamen asks for the rebate to commence on 1 January 2019 ( as a compromise from the original request to commence on 1 July 2018). However there is no end date requested in the email.
2. I do not believe that Mr Engemen was seeking the rebate to extend until the end of the Lease on 13 September 2023. The purport of his email request was to set out the deteriorating trading conditions which founds the rebate request. Mr Whittaker in his response of 30 September 2019 accedes to the compromise date of 1 January 2019 and sets out the conditions for continuance of the rebate. From these two emails I believe then there is a commencement date of 1 January 2019 for the rebate of 30%.
3. Before I consider the appropriate end date for the rebate, there is confusion between the parties as to whether the rebate of 30% applies to gross rent (including outgoings) or base rent. There is equivocal evidence either way, however upon reviewing all the correspondence and evidence I have formed a view that the respondent always considered that the rebate was for base rent only. I find that the rebate is for 30% off the base rent.
4. The rent rebate granted by the respondent was before the COVID- 19 pandemic. To determine an end date when it would be expected in normal business arrangements that the rebate be withdrawn I find that the respondent would have withdrawn the rebate when the opportunity for trading conditions for the applicant had improved. That is not to say that the rebate would be withdrawn only on the basis that the applicant was trading at an increased level of up to 30% over and above the trading for the past few years. Rather once circumstances would allow the applicant to improve trading whether the applicant did so or not then the rebate could be withdrawn.
5. The Overarching Principles of the Code call for agreed arrangements to take into account the impact of the pandemic on the tenant with specific regard to its revenue, expenses and profitability. The arrangements are proportionate and appropriate based on the impact of the pandemic plus a reasonable recovery period.
6. Whilst the rent rebate was granted before the pandemic, the pandemic lasted for over two years hampering any trading recovery for the applicant. Now that the pandemic is over for the time being the question to be considered is what is a reasonable recovery period. Trading appears to have returned to normal pre pandemic times. Accordingly I believe that a reasonable recovery period has now elapsed and the rent rebate of 30% of base rent should cease upon publication of these Reasons.

Cross Claim

1. the respondent filed a cross claim seeking recovery of outstanding rent. As I have determined that the rent rebate of 30% of base rent applies from 1 January 2019 until publication of these Reasons, there appears to be no claim. If I am incorrect in this understanding I allow liberty for the respondent to file amending Cross Claim.

Costs

1. Pursuant to s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) each party is to bear their own costs. However, Rule 38 of the Civil and Administrative Rules 2014 provides that where the amount claimed is in excess of $30,000 The Tribunal may award costs. The usual order for costs then is that costs follow the outcome, that is the successful party is entitled to its costs.
2. Without making a finding, my preliminary view is that the respondent ought to pay the costs of the applicant on an indemnity basis, having found that the conduct of the respondent was unconscionable.

Orders

1. For the reasons set out above the Tribunal makes the following orders 1. The respondent breached section 62B (1) of the Retail Leases Act 1974 (NSW). 2. The respondent is to pay to the applicant the sum of $21,525 within 7 days of publication of these orders. 3. The applicant is entitled to a rent rebate of 30% of the base rent from 1 January 2019 until the date of publication of these orders. 4. The cross claim of the respondent is dismissed. 5. The respondent is to pay the costs of the applicant on an indemnity basis. 6. Any written submissions the respondent wishes to make regarding Order no 5 are to be provided to the Tribunal and the applicant on or before 5 weeks after the date of publication of these orders. 7. If such submissions are lodged any submissions in reply are to be provided to the Tribunal and the respondent within 3 weeks of receipt of the submissions from the respondent. 8. Any such submissions are to indicate whether it is agreed that the costs should be decided on the papers without the need for a further hearing.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 14 September 2023 - Formatting amendments. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 September 2023