SYNICAST PTY LTD AS TRUSTEE FOR THE QUENTIN AVENUE UNIT TRUST -v- SHOWROOM X PTY LTD [2021] WASC 449 (10 December 2021)

4 Section 13 of the Retail Shops Act relevantly provides:

13. Tenant entitled to at least 5 year term in some cases etc.

(1) Subject to this section, where under a retail shop lease -

(a) the term of the lease (in this section called the current term) is more than 6 months but less than 5 years; and

(b) the current term plus any term (in this section called the option term) that may be obtained by the tenant by way of an option to renew the lease totals more than 6 months but less than 5 years,

the lease shall be taken to give the tenant an option to renew the lease for a term commencing immediately after the expiry of the current term and the option term, if any, and ending on a day specified by the tenant that is not later than 5 years after the day of commencement of the current term.

...

(6) The landlord under a retail shop lease is not entitled to determine the lease -

(aa) if the lease is a lease referred to in subsection (1), before the day on which the term that may be obtained by the tenant under that subsection expires; or

(ab) if the lease is a lease the current term of which, or the current term plus the option term, is 5 years or longer, before the day that is 5 years after the day on which the current term commenced,

except -

(a) by reason of default by the tenant or failure of the tenant to remedy any such default in accordance with the lease; or

(b) by reason that -

(i) it would be inconsistent with a head lease under which the premises are held by the landlord for the retail shop lease to continue; and

(ii) that inconsistency is not, by reason of section 13A(1), removed;

or

(c) under and in accordance with a provision that is included in the lease with the approval in writing of the Tribunal given under subsection (7) or (7a); or

(da) under and in accordance with a provision of the lease that is the same, or substantially the same, as a provision prescribed for the purposes of this section; or

(d) where the Tribunal has granted an application by the tenant under subsection (7b), in relation to a lease referred to in paragraph (aa).

(7) The Tribunal may, upon application made to it by the landlord notice of which has been given to the tenant, approve of the inclusion in a retail shop lease of a provision under which the landlord may determine the lease (other than under subsection (6)(a), (b) or (da)) before the day set out in subsection (6)(aa) or (ab), as is relevant, if it is satisfied that special circumstances exist by reason of which such approval ought to be given.

14A. Relocation of tenant's business, provision in lease for is void in some cases

(1) A provision of a retail shop lease about the relocation of the tenant's business is void unless -

(a) it is in the form prescribed for the purposes of this section; or

(b) it is in a form approved by the Tribunal under subsection (3); or

(c) if 5 years of the term of the lease (including any period during the extension of the term under an option to renew) have already expired, it is in accordance with subsection (2).

(2) A provision of a retail shop lease about the relocation of the tenant's business is in accordance with this subsection if it contains provisions to the following effect -

(a) the tenant's business cannot be required to be relocated unless the landlord has given the tenant at least 6 months written notice of relocation (a relocation notice);

(b) the relocation notice is to give details of an alternative retail shop (the alternative shop) to be made available to the tenant, and if the existing retail shop is situated in a retail shopping centre, the alternative shop is to be situated in that shopping centre;

(c) the tenant is to be offered a new lease of the alternative shop -

(i) on the same, or better, terms and conditions as the existing lease except that the term of the new lease is to be no shorter than the remainder of the term of the existing lease; and

(ii) the rent for the alternative shop is to be no more than the rent for the existing retail shop, adjusted to take into account any difference in the commercial values of the existing retail shop and the alternative shop at the time of relocation;

(d) the landlord is to pay the tenant's reasonable costs of the relocation, including but not limited to -

(i) costs incurred by the tenant in dismantling fittings, equipment or services; and

(ii) costs incurred by the tenant in replacing, re‑installing or modifying finishes, fittings, equipment or services to the standard existing in the existing retail shop immediately before the relocation, but only to the extent that they are reasonably required in the alternative shop; and

(iii) packaging and removal costs incurred by the tenant; and

(e) if the landlord does not offer the tenant a new lease of an alternative retail shop then the landlord is liable to pay to the tenant such reasonable compensation as is agreed in writing between the parties, or determined by the Tribunal.

(3) The Tribunal may, on application made to it by the landlord, notice of which has been given to the tenant, approve of the inclusion in a retail shop lease of another form of relocation provision under subsection (1)(b) if the Tribunal is satisfied that special circumstances exist by reason of which such approval ought to be given.

(4) A landlord in relation to a retail shopping centre may make an application under subsection (3) as to any number of retail shop leases in respect of that centre where the landlord is of the opinion that the same special circumstances exist in relation to each lease the subject of the application, and the Tribunal may exercise its powers under that subsection accordingly.

An appeal under the State Administrative Tribunal Act

6 Section 105 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) relevantly[2] provides:

(1) A party to a proceeding may appeal from a decision of the Tribunal in the proceeding, but only if the court to which the appeal lies gives leave to appeal.

(2) The appeal can only be brought on a question of law.

(a) the Court of Appeal, if the decision was made by -

(ii) the Tribunal constituted by members who include a judicial member;

(b) the Supreme Court exercising its other jurisdiction, in any other case.

(5) An application for leave to appeal has to be made in accordance with the rules of the Supreme Court and within the period of 28 days after -

(a) the day on which the Tribunal's decision is given; or

(b) if the Tribunal gives its decision without giving written reasons for its decision and the party then requests it to give written reasons under section 78, the day on which the written reasons are given to the party.

(6) If leave is granted, the appeal has to be instituted in accordance with the rules of the Supreme Court and within the period of 21 days after the day on which leave is granted.

(7) The court to which the appeal lies may extend a time limit fixed by this section, and the extension may be given even though the time limit has passed.

(8) A party instituting an appeal is to notify the executive officer but the Tribunal is not a party to the appeal and nor is any Tribunal member.

(a) affirm, vary, or set aside the decision of the Tribunal; or

(b) make any decision that the Tribunal could have made in the proceeding; or

(c) send the matter back to the Tribunal for reconsideration, either with or without the hearing of further evidence, in accordance with any directions or recommendations that the court considers appropriate,

and, in any case, may make any order the court considers appropriate.

(10) If the court sends the matter back to the Tribunal under subsection (9)(c), it is to give directions as to whether or not the Tribunal reconsidering the matter is to be constituted by the member or members who made the original decision.

(11) If the Tribunal's decision is made in a proceeding prescribed by the regulations, a party cannot apply for leave to appeal under this section unless the party agrees to indemnify each other party to the proceeding against that other party's reasonable legal costs of the appeal.

(12) In the case of a decision in a proceeding coming within the Tribunal's review jurisdiction, any leave to appeal granted to the decision‑maker is to be granted on the condition that the costs of each other party are to be met by the decision‑maker, unless the court considers that it would be unjust or unreasonable to impose that condition, whether generally or in respect of the costs of a particular party.

The nature of the appeal and the court's powers

7 The following principles have been established as to the nature of an appeal under s 105(2) and the court's powers.[3]

8 While called an 'appeal', the court is exercising original jurisdiction; the proceedings are in the nature of judicial review. However, the questions of law are not confined to jurisdictional errors, and extend to non‑jurisdictional questions of law.

9 The power in s 105(9)(b) to 'make any decision that the Tribunal could have made in the proceeding' must be exercised having regard to the limited nature of an appeal under s 105(1).

1. It may be exercised where only one conclusion is reasonably open on the correct application of the law to the facts found by the Tribunal.

2. It may be exercised where there is a factual matter that has to be determined as a consequence of the appeal which can be determined upon uncontested evidence or primary facts already found by the Tribunal.

3. Ordinarily, it should not be exercised when the outstanding issue involves the formation of an opinion which is based upon considerations of public interest. Such a case should ordinarily be remitted to the body established for the purpose of making that judgment.

10 There is no power to receive additional evidence in the 'appeal'.

11 In considering whether to grant leave, the court should consider:[4]

2. the merit of the argument to be put on the question of law; and

3. the extent of any injustice the appellant would suffer if the error was not corrected.

12 Ultimately, leave should be granted if it is in the interests of justice to do so.[5]

13 Ordinarily, whether found facts fall within the provision of a statutory enactment properly construed will be a question of law.[6]

14 The clause for which the appellant sought the Tribunal's approval under s 13(7) of the Retail Shops Act was Special Condition 5 in Item 20 (Condition 5) of the lease between Synicast and the respondent. It provided:

5.1 The Landlord intends to build a mixed retail, commercial and residential tower on the Land in the future. If the Landlord builds a mixed retail, commercial and residential tower, then either the Landlord or the Tenant will have the right to terminate this Lease at any time after the date being eighteen (18) months after the Lease Commencement Date by giving the other at least three (3) months' written notice whereupon the Landlord may retake possession of the Premises.

5.2 The Landlord and the Tenant agree that in consideration of the Landlord's and Tenant's right to terminate this Lease, the Landlord has agreed to charge the Base Rent inclusive of the Tenant's Proportion of Outgoings which is substantially less than the market rent for the Premises at the Lease Commencement Date;

5.3 The concession provided in respect of the Base Rent and Tenant's Proportion of Outgoings constitute compensation to the Tenant if the Landlord exercises its right to terminate this Lease during the Term to build a mixed retail, commercial and residential tower on the Land. As a result, if the Landlord terminates this Lease in accordance with this special condition, neither party will be liable to the other except in respect of any prior breach of this Lease.

5.4 If the Landlord or the Tenant terminate this Lease under special condition 5.1, then:

5.4.1 as part of vacating the Premises, the Tenant may (but is not required to) remove any of the Tenant's Property from the Premises; and

5.4.2 the Tenant is not required to make good the Premises in accordance with clause 38 of this Lease.

15 Attached to the application to the Tribunal was the respondent's written consent to the inclusion of Condition 5.

16 The day after the application was lodged, Sessional Member Mr Bales issued the Tribunal's decision, giving brief reasons:

The Tribunal has no power to consider special condition 5 in Item 20 of the Schedule in an application under s 13(7) of the Act, as a redevelopment or relocation clause falls exclusively within the provisions of s 14A of the Act, and a separate application is required under s 14A(3).

17 By s 105(5) of the SAT Act, an application for leave to appeal was required to be made within 28 days after the date of the Tribunal's decision. The Tribunal's decision was delivered on 24 March 2021. The notice of appeal was filed on 23 April 2021, two days out of time.

18 Synicast filed an affidavit of its director, Mr Lim, explaining why the appeal was filed late. Mr Lim said there was a short delay in Synicast obtaining a cost estimate for the appeal. Given the appeal was filed only two days late, it is appropriate that leave be granted to extend the time within which to appeal.

Did the Tribunal have the power to consider Condition 5 under s 13(7)?

19 In 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd,[7] Curthoys J was considering an appeal from another decision of Sessional Member Mr Bales, the member who made the decision under appeal in these proceedings. Curthoys J concluded that a clause similar to Condition 5 fell within s 13(7) of the Retail Shops Act.

20 The clause under consideration by Curthoys J (Clause 14) provided:

14.1 The Landlord intends to build an office tower on the Land in the future. If the Landlord builds an office tower, the Landlord will have the right to terminate this Lease by giving the Tenant at least 6 months' written notice, and retake possession of the Premises.

14.2 The Landlord and the Tenant agree that in consideration of the Landlord's right to terminate this Lease, the Landlord:

14.2.1 has agreed to charge the Rent, which is one half of the market rent for the Premises at the Commencement Date;

14.2.2 agrees that the discounted Rent will also apply during any period of extension specified in Item 10, meaning that the Rent payable on and from the commencement date of each period of extension (each commencement date being a 'Market Review Date' under Schedule 1) until again reviewed in accordance with this Lease will be 50% of the amount of the market rent determined in accordance with Schedule 1 on the relevant Market Review Date (thereafter, the Rent (being half of the market rent) will be reviewed to CPI. On each CPI Adjustment Date under Schedule 1); and

14.2.3 provide a contribution to the Tenant's fitout of $250,000.00 plus GST as set out in the financial assistance deed entered into between the parties contemporaneously with this Lease.

14.3 The concessions provided in respect of the Rent and the Landlord's contribution to the Tenant's fitout constitute compensation to the Tenant if the Landlord exercises its right to terminate this Lease during the Term to build an office tower on the Land. As a result, if the Landlord terminates this Lease in accordance with this special condition, neither party will be liable to the other except in respect of any prior breach of this Lease.

14.4 If the Landlord terminates this Lease under special condition 14.1, then:

14.4.1 as part of vacating the Premises, the Tenant may (but is not required to) remove any of the Tenant's Property from the Premises;

14.4.2 the Tenant is not required to Make Good the Premises; and

14.4.3 clause 15.2.4 does not apply.

Contrary to the finding of SAT, I am also of the view that, clause 14 does not deal with the relocation of Irwin Street Lower upon a redevelopment of 480 Hay Street. The lease provides for the termination of the lease of the premises not for the relocation of Irwin Street Lower.

Section 14A of the Act is concerned with forced relocation and is silent with respect to the issue of redevelopment or demolition. Further it does not deal with the early termination of the Lease.

22 There is no material difference between Condition 5 and cl 14. I should follow Curthoys J's decision unless I am satisfied it is plainly wrong.[9] I am not.

23 In my view, Condition 5 falls within s 13(7). It permits the landlord to terminate the lease before five years have elapsed. Accordingly, I consider that the Tribunal made an error of law in finding it did not have power to approve that condition under s 13(7).

24 I am unable to evaluate the importance of the question of law or the prejudice the appellant would suffer if the error was uncorrected. However, as my conclusion shows, the appellant's argument had merit. In my view, it is in the interests of justice to grant leave to appeal.

26 By s 105(9) of the SAT Act, I may make any decision that the Tribunal could have made in the proceeding.

27 Synicast asks that, if the appeal is allowed, this Court approve the inclusion of Condition 5 in the lease under s 13(7) of the Retails Shops Act. This would require me to find that 'special circumstances exist' by reason of which approval ought to be given. In WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd,[10] Allanson J said:

The words 'special circumstances' are found in many contexts and 'will always take their colour from their surroundings'. In whatever context the phrase appears, the circumstances must be 'special', that is, 'out of the ordinary', 'unusual'. In the context of s 13(7), the term requires some circumstances be shown which are special in this sense, and sufficient to justify a departure from the ordinary rule that a lease may not include a provision which permits its early determination.

28 Synicast sought leave to adduce an affidavit filed by its solicitor, Mr Butler, to demonstrate that special circumstances exist. However, as noted earlier, I do not have the power to receive this evidence.

29 Accordingly, the only material upon which the finding could be made is the application itself. The application does not add anything substantive to the terms of Condition 5.

30 Synicast's written submissions did not appear to assert that, in the absence of the evidence it sought to adduce, I could find that special circumstances existed. As, however, it appeared that Synicast had not appreciated that the new evidence would not be admissible, I considered it appropriate to list the matter to determine whether Synicast did wish to make such a submission and, if so, the basis for it.

31 During the hearing, counsel for Synicast advised that Synicast did submit that I could find that special circumstances existed based on Condition 5 itself and the fact that the tenant consented. Counsel submitted that, if Condition 5 was not included then, self-evidently, the contemplated development could not proceed within what would then be the five-year term of the lease. Counsel accepted that the tenant had consented to Condition 5 and may agree in the future to terminate the lease when Synicast was ready to redevelop. He pointed out, however, that the tenant could change its mind. It would also leave matters in a state of uncertainty.

32 While I accept that there is force in these submissions, these matters are not sufficient to satisfy me that there are special circumstances.

33 Accordingly, it is appropriate that I send the matter back to the Tribunal for reconsideration, with the hearing of further evidence in relation to whether special circumstances exist.

34 By s 105(10) of the SAT Act, I am required to give directions as to whether or not the Tribunal reconsidering the matter is to be constituted by the member or members who made the original decision. In my view, it is appropriate that the reconsideration be done by a different member.

35 For these reasons, I would grant an extension of time within which to appeal, grant leave to appeal and allow the appeal.

36 I will send the matter back to the Tribunal for reconsideration, for the hearing of further evidence in relation to whether special circumstances exist, and with a direction that the Tribunal reconsidering the matter be constituted by a different member.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

Research Associate to the Honourable Justice Archer

[1] A decision made on the papers would be a provisional decision - see O 65 r 4(2)(b) and 7.

[2] Section 105(13) provides a broader right of appeal where the decision, among other things, has the effect of depriving a person of their capacity to pursue their vocation.

[3] Osland v Secretary, Department of Justice (No 2) [2010] HCA 24; (2010) 241 CLR 320, 331 - 332 [18] (French CJ, Gummow and Bell JJ); Commissioner for Consumer Protection v Carey [2014] WASCA 7 [67] ‑ [72] (McLure P, with whom Buss JA, as his Honour then was, and Murphy JA agreed) and [161] ‑ [168] (Buss JA).

[4] Paridis v Settlement Agents Supervisory Board [2007] WASCA 97 [17] - [18].

[6] Hope v Council of the City of Bathurst [1980] HCA 16; (1980) 144 CLR 1, 7; WASCF Alliances Pty Ltd v Bowling Centres Australia Pty Ltd [2020] WASC 41 [18].

[7] 480 Hay Street Pty Ltd v Irwin St Lower Pty Ltd [2020] WASC 59.

[9] See Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185 [31] (Edelman J).