TNAU Finery Pty Ltd v SuperBurrito Pty Ltd; SuperBurrito Pty Ltd v TNAU Finery Pty Ltd

Solicitors: Accuro Maxwell (TNAU Finery Pty Ltd) KL International Lawyers (SuperBurrito Pty Ltd and Zong Yuan Qin) File Number(s): 2022/00068195 2022/00069427 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: NA Date of Decision: 10 February 2022 Before: S McDonald, Senior Member File Number(s): COM 20/49367 COM 20/52695

Introduction

1. These appeals relate to a lease over retail premises in Waterloo. TNAU Finery Pty Ltd was the lessor, SuperBurrito Pty Ltd was the lessee. It is convenient to refer to the parties as the lessor and the lessee respectively. Zong Yuan Qin is a director of the lessee, and guarantor of the lessee's obligations under the lease.
2. The lessor entered into possession of the premises and locked the lessee out on 3 July 2020, claiming to do so on the ground of non-payment of rent.
3. The lessee filed proceedings in the Tribunal on 24 November 2020 seeking, relevantly, an order for compensation by reason of the lessor's termination of the lease. In points of claim filed pursuant to directions of the Tribunal, the lessee also alleged that the lessor had engaged in unconscionable conduct within the meaning of s 62B of the Retail Leases Act 1994 (NSW). The lessor filed proceedings on 16 December 2020 seeking arrears of rent and outgoings, and damages.
4. By a decision dated 10 February 2022, the Tribunal held, at [136], that: "(1) The Lessor unlawfully re-entered the Premises and locked out the Lessee on 3 July 2022; (2) This act constituted an unlawful repudiation of the Lease by the Lessor on or about that date; (3) Although the precise timing of events after this is less clear, the Lessee elected to accept the Lessor's unlawful repudiation of the Lease and seek damages in the Tribunal; (4) These damages include relief from any further rent payments by the Lessee to the Lessor pursuant to the Lease; and (5) The Lessor must return NAB Bank Guarantee No. 704924842 dated 31 July 2019 in favour of the Lessor in the sum of $26,125.00 to the Lessee or to the relevant NAB Bank branch as appropriate so that it can be cancelled."
5. The Tribunal assessed the damages to which the lessee was entitled at $259,949.70 and ordered the lessor to pay that sum to the lessee, to return the bank guarantee, and to pay the lessee's costs. The lessor's application was dismissed.
6. Both parties lodged appeals against the Tribunal's decision. The lessor challenged the Tribunal's dismissal of the lessor's application and the award of compensation to the lessee. The lessee challenged the Tribunal's assessment of the damages to which the lessee was entitled.
7. On 17 March 2022, the orders requiring the payment of compensation and the return of the bank guarantee were stayed by consent until the final hearing and determination of the appeal proceedings.

Legislative Framework

1. A substantial, if not the critical, issue between the parties was the question whether the lessee was an "impacted lessee" for the purposes of the legislation enacted to provide relief for commercial tenants during the COVID-19 pandemic.
2. Section 87 of the Retail Leases Act was inserted by the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW). That section permitted the making of regulations: (a) prohibiting the recovery of possession of premises by a lessor or owner of premises or land from a lessee or tenant of the premises or land under the relevant Act in particular circumstances, (b) prohibiting the termination of a lease or tenancy by a lessor or owner of premises or land under the relevant Act in particular circumstances, (c) regulating or preventing the exercise or enforcement of another right of a lessor or owner of premises or land under the relevant Act or an agreement relating to the premises or land in particular circumstances,

The COVID Regulation

1. The Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (COVID Regulation) came into force on 24 April 2020. As originally enacted, that regulation relevantly provided: 3 Definitions (1) In this Regulation - … National Code of Conduct means the National Cabinet Mandatory Code of Conduct - SME Commercial Leasing Principles During COVID-19 adopted on 7 April 2020. … prescribed action means taking action under the provisions of a commercial lease or seeking orders or issuing proceedings in a court or tribunal for any of the following - (a) eviction of the lessee from premises or land the subject of the commercial lease, (b) exercising a right of re-entry to premises or land the subject of the commercial lease, (c) recovery of the premises or land, (d) distraint of goods, (e) forfeiture, (f) damages, (g) requiring a payment of interest on, or a fee or charge related to, unpaid rent otherwise payable by a lessee, (h) recovery of the whole or part of a security bond under the commercial lease, (i) performance of obligations by the lessee or any other person pursuant to a guarantee under the commercial lease, (j) possession, (k) termination of the commercial lease, (l) any other remedy otherwise available to a lessor against a lessee at common law or under the law of this State. prescribed period means the period ending at the end of the day that is 6 months after the day on which this Regulation commences. 4 Meaning of "impacted lessee" (1) A lessee is an impacted lessee if - (a) the lessee qualifies for the jobkeeper scheme under sections 7 and 8 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 of the Commonwealth, and (b) the following turnover in the 2018-2019 financial year was less than $50 million - (i) if the lessee is a franchisee - the turnover of the business conducted at the premises or land concerned, (ii) if the lessee is a corporation that is a member of a group - the turnover of the group, (iii) in any other case - the turnover of the business conducted by the lessee. (2) To avoid doubt, in this clause, turnover of a business includes any turnover derived from internet sales of goods or services. (3) In this clause, corporations constitute a group if they are related bodies corporate within the meaning of the Corporations Act 2001 of the Commonwealth. 5 Application of Regulation This Regulation applies to the exercise or enforcement of rights under a commercial lease in relation to circumstances occurring during the prescribed period. 6 Prohibitions and restrictions relating to commercial leases (1) If a lessee is an impacted lessee, a lessor must not take any prescribed action against the lessee on the grounds of a breach of the commercial lease during the prescribed period consisting of - (a) a failure to pay rent, or (b) a failure to pay outgoings, or (c) the business operating under the lease not being open for business during the hours specified in the lease. Note - See leasing principles No. 1, 11 and 14 in the National Code of Conduct. … (6) Nothing in this clause prevents a lessor and lessee agreeing to the parties taking any action in relation to the commercial lease (including the lessor taking any prescribed action or the parties agreeing to terminate the commercial lease). 7 Obligation to renegotiate rent and other terms of commercial leases before prescribed action (1) A lessor under a commercial lease must not take or continue any prescribed action against an impacted lessee on grounds of a breach of the commercial lease consisting of a failure to pay rent during the prescribed period unless the lessor has complied with this clause. Note - This clause does not prevent parties to a commercial lease coming to agreements relating to the lease. For example, an impacted lessee may voluntarily agree to pay full rent during the prescribed period. The clause prevents the lessor taking unilateral prescribed action without complying with the requirements set out in subclauses (2)-(4). (2) If an impacted lessee is a party to a commercial lease, any party to the lease may request the other parties to renegotiate the rent payable under, and other terms of, the commercial lease. (3) A party to a commercial lease must, if requested, renegotiate in good faith the rent payable under, and other terms of, the commercial lease. (4) The parties are to renegotiate the rent payable under, and other terms of, the commercial lease having regard to - (a) the economic impacts of the COVID-19 pandemic, and (b) the leasing principles set out in the National Code of Conduct. Note - See leasing principles No. 3-5, 7-10 and 12 in the National Code of Conduct. In particular, leasing principle No. 3 in the National Code of Conduct requires landlords to offer rent reductions, in the form of waivers or deferrals of rent, proportionate to lessees' reductions in turnover. 10 Lessor action for non-COVID-19 pandemic related reasons Nothing in this Regulation prevents a lessor taking a prescribed action on grounds not related to the economic impacts of the COVID-19 pandemic. Note - For example, a lessor may terminate a commercial lease if the lessee has breached the lease by damaging the premises concerned or may take action if a lessee fails to vacate premises following the expiry of a fixed term commercial lease. See leasing principle No. 2 in the National Code of Conduct.
2. The COVID Regulation was amended on 3 July 2020 by the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2020 (NSW) (2020 Amendment Regulation). Pursuant to section 24 of the Interpretation Act 1987 (NSW), an act or statutory rule is deemed to commence at the beginning of the day on which it is expressed to commence. The 2020 Amendment Regulation was expressed to commence on the day it was published on the NSW legislation website, which was 3 July 2020. Accordingly, the amendments to the COVID Regulation made by the 2020 Amendment Regulation commenced with effect from the beginning of 3 July 2020. Those amendments were therefore in force at the time that the lessor entered into possession of the premises.
3. The substantial amendments to the regulation were to clause 7, although there were also minor amendments to clause 6. The significant amendment was the inclusion of subclauses 7(1A), (3A), and (3B). Those clauses provided: (1A) This clause applies to a commercial lease to which an impacted lessee is a party (an impacted lease). (3A) An impacted lessee must give the lessor the following in respect of the impacted lease - (a) a statement to the effect that the lessee is an impacted lessee, (b) evidence that the lessee is an impacted lessee. (3B) If the impacted lessee does not comply with subclause (3A), the lessor is taken to have complied with this clause.
4. The 2020 Amendment Regulation also inserted clause 13 into the COVID Regulation. That clause provided: 13 Evidence of impacted lessee status - savings provision (1) The amendments to clause 7 made by the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2020 extend to renegotiations commenced but not completed before the commencement of the amendments. (2) For the avoidance of doubt, the amendments do not extend to a matter for which a retail tenancy claim has been made under section 71 of the Act.

Jobkeeper Rules

1. The Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) ("the Jobkeeper Rules") were amended a number of times between April 2020 and July 2020, however those amendments did not impact the situation of the lessee. During that period the Jobkeeper Rules relevantly provided: 7 When an entity qualifies for the jobkeeper scheme (1) For the purposes of paragraphs 6(1)(b) …, an entity qualifies for the jobkeeper scheme at a time if: (a) on 1 March 2020, the entity: (i) carried on a business in Australia; … and (b) the entity has satisfied the decline in turnover test at or before the time (see sections 8 and 8A). Note: Qualifying entities must report monthly turnover information to the Commissioner for the duration of the scheme: see section 16. … 8 Decline in turnover test Basic test (1) An entity satisfies the decline in turnover test at a time (the test time) if: (a) the entity's projected GST turnover for a turnover test period in which the test time occurs falls short of the entity's current GST turnover for a relevant comparison period (the comparison turnover); and (b) the shortfall, expressed as a percentage of the comparison turnover, equals or exceeds the specified percentage for the entity (see subsection (2)). Note 1: See subsection (7) for the meanings of turnover test period and relevant comparison period. Note 2: Current GST turnover and projected GST turnover are modified for the purposes of this section and section 8A: see subsection (8). Note 3: For provisions about contrived schemes, see section 19 of the Act. Example: Patrick Enterprises assesses its eligibility for jobkeeper payments on 6 April 2020 based on a projected GST turnover for April 2020 of $6 million. It considers that the comparable period is the month of April 2019 for which it had a current GST turnover of $10 million. The April 2020 turnover falls short of the April 2019 turnover by $4 million, which is 40% of the April 2019 turnover. This exceeds the specified percentage, so the decline in turnover test is satisfied. [Pursuant to clause 8(2), the specified percentage for the lessee was 30%.] (7) For the purposes of this section and section 8A: (a) … the turnover test period must be: (i) a calendar month that ends after 30 March 2020 and before 1 October 2020; or (ii) a quarter that starts on 1 April 2020 or 1 July 2020; and … (b) the relevant comparison period must be the period in 2019 that corresponds to the turnover test period. Modifications relating to GST turnover (8) In calculating an entity's current GST turnover, and projected GST turnover, for a period for the purposes of this section … the following apply: (a) sections 188‑15 and 188‑20 of the GST Act apply as if a reference to a month were a reference to the period; … (c) for calculating current GST turnover: (i) subsection 188‑15(1) of that Act is to be applied at the end of the period; and (ii) subsection 188‑15(1) of that Act has effect as if the reference in that subsection to ", or are likely to make, during the 12 months ending at the end of that month," were instead a reference to "during that period"; (d) for calculating projected GST turnover - subsection 188‑20(1) of that Act has effect as if the reference in that subsection to "during that month and the next 11 months" were instead a reference to "during that period";

The GST Act

1. Clause 4(1) of the Jobkeeper Rules defined "projected GST turnover" as having "the meaning given by the GST Act (as affected by subsection 8(8) of this instrument)". The "GST Act" is the A New Tax System (Goods and Services Tax) Act 1999 (Cth). [1]
2. Relevantly ss 188-15 and 188-20 of the GST Act, as in force between 23 April and 23 September 2020 provided: 188-15 Current GST turnover (1) Your current GST turnover at a time during a particular month is the sum of the *values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, … 188-20 Projected GST turnover (1) Your projected GST turnover at a time during a particular month is the sum of the *values of all the supplies that you have made, or are likely to make, during that month and the next 11 months …
3. The effect of clause 8(8) of the Jobkeeper Rules was that those provisions were to have effect as if they provided: 188-15(1) Your current GST turnover at a time during a particular period is the sum of the values of all the supplies that you have made during that period. 188-20(1) Your projected GST turnover at a time during a particular period is the sum of the values of all the supplies that you have made, or are likely to make, during that period

Alternative Test Rules

1. An entity which had not been in business for a full year prior to 1 March 2020 (and therefore had not been in business during a "relevant comparison period") was entitled to utilise an alternative test to determine its eligibility for the jobkeeper scheme, pursuant to the Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 (Cth) (Alternative Test Rules)
2. Clause 6 of the Alternative Test Rules provided: 6. Business commenced (1) An entity applies either of the alternative tests under this section if the entity commenced business before 1 March 2020 but after the relevant comparison period. (2) The first alternative test is: (a) if the relevant comparison period is a calendar month, the entity uses the average monthly current GST turnover instead of the entity's current GST turnover in section 8 of the Rules, or (b) if the relevant comparison period is a quarter, the entity multiplies the average monthly current GST turnover by three and uses that figure instead of the entity's current GST turnover in section 8 of the Rules. (3) The average monthly current GST turnover is: (a) if the entity commenced business before 1 February 2020, the entity's current GST turnover for each whole month after the entity commenced business and before 1 March 2020 added together and divided by the number of whole months, or (b) if the entity started business before 1 March 2020, but on or after 1 February 2020, the entity's current GST turnover before 1 March 2020, divided by the number of days the entity was in business and multiplied by 29. (4) The second alternative test is: (a) if the relevant comparison period is a calendar month, the entity divides the 3 months' current GST turnover by 3 and uses that figure instead of the entity's current GST turnover in section 8 of the Rules, or (b) if the relevant comparison period is a quarter, the entity uses the 3 months' current GST turnover instead of the entity's current GST turnover in section 8 of the Rules. (5) The second alternative test in subsection (4) is not available if the entity had not commenced business at least 3 months before 1 March 2020. (6) The 3 months' current GST turnover is the total current GST turnover in the 3 months immediately before 1 March 2020.

The Code of Conduct

1. The National Cabinet Mandatory Code of Conduct - SME Commercial Leasing Principles During COVID-19 adopted on 7 April 2020 (Code of Conduct) stated its purpose 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 (including retail, office and industrial) between owners/operators/other landlords and tenants, where the tenant is an eligible business for the purpose of the Commonwealth Government's JobKeeper programme. 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 Coronavirus ("COVID-19") pandemic. This Code applies to all tenancies that are suffering financial stress or hardship as a result of the COVID-19 pandemic as defined by their eligibility for the Commonwealth Government's JobKeeper programme, with an annual turnover of up to $50 million (herein referred to as "SME tenants").
2. The Code identified its objective as: "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."
3. The Code set out a number of "overarching principles" which were "to apply in guiding such arrangements". Relevantly, the overarching principles included: • 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. • 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.
4. The Code provided 14 "Leasing Principles" which "should be applied as soon as practicable on a case-by-case basis" in "negotiating and enacting appropriate temporary arrangements under this Code". The Leasing Principles were: 1. Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period). 2. Tenants must remain committed to the terms of their lease, subject to any amendments to their rental agreement negotiated under this Code. Material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under this Code. 3. Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals (as outlined under "definitions," below) of up to 100% of the amount ordinarily payable, on a case-by-case basis, based on the reduction in the tenant's trade during the COVID-19 pandemic period and a subsequent reasonable recovery period. 4. Rental waivers must constitute no less than 50% of the total reduction in rent payable under principle #3 above over the COVID-19 pandemic period and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant's capacity to fulfil their ongoing obligations under the lease agreement. Regard must also be had to the Landlord's financial ability to provide such additional waivers. Tenants may waive the requirement for a 50% minimum waiver by agreement. 5. Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties. 6. Any reduction in statutory charges (e.g. land tax, council rates) or insurance will be passed on to the tenant in the appropriate proportion applicable under the terms of the lease. 7. A landlord should seek to share any benefit it receives due to deferral of loan payments, provided by a financial institution as part of the Australian Bankers Association's COVID-19 response, or any other case-by-case deferral of loan repayments offered to other Landlords, with the tenant in a proportionate manner. 8. Landlords should where appropriate seek to waive recovery of any other expense (or outgoing payable) by a tenant, under lease terms, during the period the tenant is not able to trade. Landlords reserve the right to reduce services as required in such circumstances. 9. If negotiated arrangements under this Code necessitate repayment, this should occur over an extended period in order to avoid placing an undue financial burden on the tenant. No repayment should commence until the earlier of the COVID-19 pandemic ending (as defined by the Australian Government) or the existing lease expiring, and taking into account a reasonable subsequent recovery period. 10. No fees, interest or other charges should be applied with respect to rent waived in principles #3 and #4 above and no fees, charges nor punitive interest may be charged on deferrals in principles #3, #4 and #5 above. 11. Landlords must not draw on a tenant's security for the non-payment of rent (be this a cash bond, bank guarantee or personal guarantee) during the period of the COVID-19 pandemic and/or a reasonable subsequent recovery period. 12. The tenant should be provided with an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period outlined in item #2 above. This is intended to provide the tenant additional time to trade, on existing lease terms, during the recovery period after the COVID-19 pandemic concludes. 13. Landlords agree to a freeze on rent increases (except for retail leases based on turnover rent) for the duration of the COVID-19 pandemic and a reasonable subsequent recovery period, notwithstanding any arrangements between the landlord and the tenant. 14. Landlords may not apply any prohibition on levy any penalties if tenants reduce opening hours or cease to trade due to the COVID-19 pandemic.
5. The Code provided that, if landlords and tenants could not reach agreement on leasing arrangements, the matter "should be referred and subjected (by either party) to applicable state or territory retail/commercial leasing dispute resolution processes for binding mediation".

Factual background

1. The lease between the parties was for a term of five years commencing on 1 July 2019 and expiring on 30 June 2024, with an option for a further five-year term. The lessee commenced trading in December 2019. The business of the lessee conducted at the premises was the sale of dine in and take away food. A specific target market for the lessee's business was international students, in particular from China.
2. In February 2020, as the COVID-19 pandemic began to impact the economy and the Australian government closed the border to China, the lessee forwarded to the lessor an email attaching a document headed "Notice of Force Majeure". The notice referred to the suspension of flights from China and noted: "We are now in the situation of shortage of staff as they are stuck in overseas with an indefinite period. Meanwhile we have no income as a result of our customers are tourists and international students from China who are now forced to stay out of Australia as well."
3. The notice concluded: "In summary, under this situation, it is difficult for our company to bear the payment obligations in accordance with the provisions of the lease. After the above situation is eliminated, our company will continue to perform payment obligations according to the lease after our company resumes normal business."
4. The lessor responded on 11 February 2020, declining the lessee's request that the lessor not charge rent and putting the lessee on notice that the rent and outgoings for February 2020 was due on 1 February 2020 and remained unpaid.
5. The lessee thereafter paid rent for February and March 2020.
6. The lessee did not pay the rent for April 2020 by the due date, 1 April 2020. Nor did the lessee pay the rent for May 2020 by the due date, 1 May 2020.
7. On 18 May 2020 the lessor issued an invoice in respect of outgoings being council rates, water rates and Strata levies, in the amount of $3,988.74. The lessee paid the lessor that amount on 20 May 2020. The "reference" included with the payment was "5/301 outgoing".
8. The lessee made two payments of $2,612 on 1 June 2020, identified in the payment details as respectively "TNAUFineryRentApril" and "TANUFineryMaylRent". The lessee forwarded an email to the lessor on 31 May 2020 stating: "Sorry for being delay, even we are still struggling, we managed to arrange the payment of 30% of the total rent as we proposed for April and May as attached. We hope it would be a gesture with good faith while we are negotiating the rent."
9. The lessee made no other payments after 1 June 2020.
10. In the period from 6 April 2022 to 29 June 2020 the parties engaged in correspondence in relation to requests by the lessee for rent relief by reason of the COVID-19 pandemic and its consequences for the lessee's trade.
11. The correspondence was summarised in the Tribunal's decision as follows: 43 By email dated 6 April 2020 the Lessee sought rent relief including a rent-free period to the end of the Sydney shutdown [and] a 20% rent reduction after the pandemic event, on the basis it would take some time for public confidence to recover. 44 By letter dated 16 April 2020 the Lessor referred to the Code to guide the negotiations between landlord and tenant to determine the level of rent relief applicable. The Lessor sought BAS statements for the period January to June 2019 broken down into monthly amounts. 45 By email dated 23 April 2020, the Lessee produced sales figures since the first day of its trial in December 2019 to 23 April 2020 showing the impact of COVID-19. Because the Lessee had only commenced trading in December 2019 and had only been incorporated since 11 June 2019, it did not have the BAS statements for the period sought by the Lessor. 46 By letter dated 28 April 2020, the Lessor advised the Lessee that based on the documents provided to it, the Lessee did not qualify for the application of the Code in relation to its rental payments. Notwithstanding this, the Lessor offered to: (1) Waive 20% of rent for another 3 months from 1 April 2020 to 30 June 2020; (2) Defer 20% of the Lessee's rental payments for 3 months for the same period 1 April 2020 - 30 June 2020; (3) The Lessee would then resume normal rent payments plus the monthly deferred rent payment from 1 July 2020; and (4) All outgoings were to be paid up to date as the outgoings are not eligible to be waived or deferred. 47 By email dated 8 May 2020, the Lessee put the following counter proposal to the Lessor: (1) The Lessor waive 40% of rental payments for another 3 months from 1 April 2020 to 30 June 2020; (2) The Lessor defer 30% of its rental payments for the same period; (3) From 1 July 2020 the Lessor will resume 85% of its base rental payment with a blanket reduction in rent of 15% from 1 July 2020 onwards; (4) Outgoings will be paid up to date. 48 By letter dated 9 May 2020 the Lessor responded stating the best it could offer is to delay the [deferred] rent payment into 2021 namely from 1 January 2021 to 30 June 2021. 49 By email dated 18 May 2020, the Lessee responded attaching a screenshot showing the Lessee's 'eligibility' for jobkeeper payments from the Federal Government'. It is clear from this point that the Lessee considered itself an "impacted lessee" for the purposes of the Regulation and therefore entitled to rent relief in accordance with the Code. 50 By letter dated 20 May 2020 from the Lessor's solicitors to the Lessee, the Lessor acknowledged the definition of an "impacted lessee" pursuant to clause 4 of the Regulation, highlighted the Rules and outlined the basic test in the Rules. The Lessor then sought a range of further documents from the Lessee including BAS lodgement records for quarters from April 2019 on. It seems clear to the Tribunal that many of those documents did not exist either because they predate the date of incorporation of the Lessee or because notwithstanding that the Lease may have commenced its term on 1 July 2019, the Lessor would or should have known that the Lessee's business did not commence trading operations until December 2019 and after a fit-out was installed. 51 By letter dated 19 June 2020 from the Lessor's solicitors to the Lessee, the Lessee was advised that it was in formal breach of the Lease, that there was an outstanding balance of rent in the sum of $20,900.99 for the months of April, May and June 2020 and that the Lessor intended to terminate the Lease if the outstanding balance was not paid on or before 3 July 2020. Further, the Lessor gave notice that if no payment was made, the Lessor would change the locks of the Premises on Saturday morning, 4 July 2020 and enter into possession. 52 By email dated 23 June 2020, the Lessee again forwarded to the Lessor "the JobKeeper approval that I sent on 18th May". This attachment confirmed that the Lessee had enrolled as a business for JobKeeper wage subsidies. 53 By email dated 29 June 2020, the Lessee forwarded to the Lessor BAS activity statements for the periods 1 July 2019, 30 September 2019, 1 October 2019 - 31 December 2019, 1 January 2020 - 31 March 2020. 54 By letter dated 29 June 2020 the Lessor's solicitors acknowledged receipt of these BAS statements but noted that the following documents remained outstanding: (1) BAS lodgement records for April 2019 - June 2019; (2) monthly sales records for the period 1 July 2019-31 April 2020; (3) letter from the Lessee's accountant outlining the basis of calculation for the alternative test applied; (4) bank statements and point-of-sale system generated reports as evidence of sales records; and (5) evidence from the Lessee's bank account showing the deposit of funds received from the ATO for the purpose of paying the Lessee the JobKeeper payments. 55 The letter went on to say: "The documents that are outstanding made it impossible for our client to reach a conclusion that you are an impacted lessee pursuant to the COVID-19 Regulations. Given the circumstances, our client has no alternative but to maintain its original position, i.e. that you are in breach of the lease and that termination of the lease is necessary for our client to mitigate its losses. We are instructed that you have another 3 days until 2 July 2020 to provide us the documents required. In the absence of the provision of the documents required, on or before 5 pm. Thursday, 2 July 2020, our client will proceed to change locks on at (sic) 9 am Friday, 3 July 2020."
12. As noted, the lessor did change the locks and exclude the lessee from the premises on 3 July 2020.
13. The parties' correspondence continued after 3 July 2020. The Tribunal summarised that correspondence as follows: 56 By email dated Friday 3 July 2020 at 8.44 pm, the Lessee noted that the locks of the Premises had been changed by the Lessor, maintained it was an "impacted lessee" and advised the Lessor that it had no right to lock up the shop even if the rent was behind. It asked the Lessor to unlock the door immediately. Attached to that email were NAB bank statements for the Lessee showing payments on 13 May 2020 and 22 June 2020 of $3,000 from what appears to be the ATO by inter-bank credit. 57 By letter dated 10 July 2020, the Lessor's solicitors advised the Lessee that it had insufficient documentation to make any comparison in accordance with the relevant legislation to check whether the Lessee was in fact an "impacted lessee" and maintained its original position namely, that the Lessee was in breach of the Lease and that termination of the Lease is necessary for the Lessee to mitigate its losses. 58 By letter dated 14 July 2020, the Lessee retained solicitors, Diamond Conway, to write to the Lessor's solicitors stating that it was in fact an "impacted lessee" and had provided to the Lessor: (1) evidence of its enrolment in the JobKeeper Scheme to the Lessor's agent on 18 May 2020; (2) evidence of its enrolment in the JobKeeper Scheme to the Lessor's solicitors on 23 June 2020 and 3 July 2020; and (3) evidence indicating the deposit of the JobKeeper payment from the ATO into the Lessee's bank account on 3 July 2020. 59 The Lessee's solicitors alleged that the Lessor was in breach of clause 6(1) … of the Regulation by taking a prescribed action against an impacted lessee for a failure to pay rent. The Lessee's solicitor suggested a roundtable discussion between the parties. 60 By letter dated 20 July 2020 the Lessor's solicitor repeated its previous statements that the Lessee was not an impacted Lessee and that insufficient documents had been provided to the Lessor to make a relevant comparison. The Lessor declined to attend any roundtable discussion without receiving the information that it had previously sought. 61 By further letter dated 4 August 2020, the Lessor's solicitors reiterated its position, the failure of the Lessee to provide sufficient information and the flow of communications between the parties since April 2020. 62 By letter dated 4 August 2020, the Lessor's solicitors wrote: "Given that your client has provided the JobKeeper confirmation after we issued the notice of breach on 19 June 2020, we would assume that your client suffered 30% decline in turnover in absence of further disclosure. In an attempt to solve this issue in an efficient manner we would offer the following relief." 63 The offer included: (1) 30% of total reduction of rent payable in the form of waivers and deferrals for the period 1 April 2020-1 October 2020; (2) deferred rent for the period 1 April 2020 - 30 June 2020 in the sum of $7,837.50 be paid in monthly instalments over a 6 months [period] commencing 1 October 2020 at $1,306.25 per month; and (3) requirement that the Lessee pay the outstanding amount in the sum of $31,350.98 (including GST) into the Lessor's solicitors' trust account by 5 pm 10 August 2020 (within 6 days). 64 By letter dated 11 August 2020, the Lessee's solicitors highlighting the purported unreasonableness of some of these demands including: (1) the Lessee did not have legal representation until after 3 July 2020; (2) it did not comprehend the legal jargon or the nuances of the Code and the Regulation in early correspondence; and (3) it did not have some documents such as BAS statements for the period April 2019 June 2019 because it had not commenced operation. It sought access to the property. 65 By email dated 1 September 2020 from the Lessor's solicitors to the Lessee, the Lessor declined to provide access, even to allow the Lessee to obtain documents which might satisfy the Lessor's request. Also, the Lessee was concerned with perishable food items in the Premises which it could not access. 66 By email dated 7 September 2020, the Lessee's solicitors sought mediation. 67 By email dated 12 October 2020 from the Lessee's solicitors to the Lessor's solicitors the Lessee noted that the Lessor had attempted to withdraw the bank guarantee provided by the Lessee to the Lessor as security for the Lease. The Lessee's solicitors again protested stating that that was a prescribed action which was prohibited under clause 3(h) of the Regulation. 68 By letter dated 14 October 2020, the Lessor's solicitors wrote to the Lessee's solicitors stating that it held two bank guarantees of the Lessee, in the following sums: (1) NAB guarantee dated 31 July 2019 in favour of the Lessor no. 704924842 in the sum of $26,125.00; and (2) NAB guarantee dated 6 August 2019 in favour of the Lessor no. 859891766 in the sum of $55,000.00. 69 The sum of these bank guarantees totalled $81,125.00. In the same letter, the Lessor's solicitors acknowledge outstanding accumulated rent in the sum of $55,734.31 (inclusive of GST) plus outgoings in the sum of $7,977.48, a total of $63,711.79. 70 The letter acknowledged that as the bank guarantee in the sum of $55,000.00 for the fit-out had been released to the Lessee in 2019, the Lessor had taken steps to claim the other bank guarantee in the sum of $26,125.00 pursuant to clauses 16.3 of Annexure B of the Lease and clause 69(f) of Annexure A of the Lease. 71 On 16 October 2020 the Registrar of Retail Tenancy Disputes certified that … mediation has failed to resolve the dispute between the Lessor and Lessee.
14. The lessee remained locked out of the premises, and on 1 February 2021 the lessor re-let the premises to a third party for a rent approximately equivalent to that payable under the lease between the parties.

Impacted lessee

1. The lessor asserted that the lessee was not or had not established that it was an "impacted lessee". The lessee asserted that it was an impacted lessee.
2. The question whether the lessee was an impacted lessee at any relevant time was dependent upon the definition of that term in clause 4 of the COVID Regulation. That definition was not amended by the 2020 Amendment Regulation.
3. The critical question in determining whether the lessee was at relevant times an impacted lessee was whether the lessee "qualifies for the jobkeeper scheme under sections 7 and 8 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 of the Commonwealth"
4. Because the lessee did not commence business until December 2019, it was entitled to utilise an alternative test pursuant to the Alternative Test Rules.
5. The parties were agreed that the first alternative test was the applicable test for determining whether the lessee qualified for the jobkeeper scheme.
6. Relevantly the first alternative test required the lessee to calculate its current GST turnover for January and February 2020 (each whole month after the lessee commenced business and before 1 March 2020), divide that figure by two to give its "average monthly current GST turnover", and use either that figure or three times that figure instead of its current GST turnover in applying clause 8 of the Jobkeeper Rules.
7. Clause 8 then required a comparison between the figure so calculated and the projected GST turnover for a "turnover test period" of one month, or three months, after 1 March 2020. If the shortfall between the projected GST turnover and the current GST turnover was 30% or greater, the lessee qualified for the jobkeeper scheme.

The Decision

1. The Tribunal found that the lessee "was, and should have been considered by the Lessor, an 'impacted lessee' prior to 3 July 2020" and that the re-entry by the lessor and subsequent exclusion of the lessee from the premises were "prescribed actions which were prohibited by clause 7 of the Regulation".
2. The Tribunal found that the re-entry by the lessor was a repudiation of the lease, which was accepted by the lessee, and awarded compensation. The Tribunal calculated that compensation on the "reliance basis", that is, as outlined in the High Court decision in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 (Amann Aviation), that: "in a case where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed … the law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant's promise … the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed." (Per Mason CJ and Dawson J at 86, see also Brennan J at 106-108, Deane J at 126-127, Toohey J at 142-143 and Gaudron J at 156)
3. Presumably because the lessee conceded that its claim of unconscionable conduct would not found any different measure of compensation, the Tribunal did not address the claim of unconscionable conduct.
4. The Tribunal did not accept that the lessee had established all the expenditures it claimed to have incurred. The Tribunal calculated the lessee's expenditure on the basis that the lessee had established that it had incurred an item of expenditure if it had produced an invoice and the "recital on, and timing of, the invoice" were correct. The Tribunal noted that the lessee was incorporated as a single purpose vehicle to conduct the restaurant business at the premises and did not appear to run other businesses or conduct its restaurant business at other addresses.
5. The Tribunal discounted the value of kitchen equipment which the lessee had not collected from the premises on the basis that, if the equipment had been collected and sold by the lessee, it might have recouped 30% of its costs. After allowing for that discount, the Tribunal calculated the lessee's costs of setting up the restaurant at $399,922.61. The Tribunal discounted this sum "as a result of the realistic, commercial prospects the lessee had of its business surviving the five year term of the lease." The Tribunal stated: "156 In Australia, industry statistics disclose that approximately 60% of new restaurants fail within the first year and nearly 80% fail within five years. The Tribunal takes judicial notice of this industry data."
6. The Tribunal discounted the set-up cost, which it found had been established, by 35%: "to reflect the realistic prospect that either the lessee's business would not have survived the full five years in the grim, pandemic circumstances which existed in Sydney throughout 2020 to 2022 inclusive, or that it would have operated at such a level that it may not have been able to recover the full amount of the setup costs either in the five year term or that part in which the lessee gainfully traded."
7. The Tribunal accordingly awarded the lessee $259,949.70.

The scope and nature of internal appeals

1. By virtue of s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), internal appeals from decisions of the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel.
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide adequate reasons where they are required; 2. Whether the Tribunal identified the wrong issue or asked the wrong question. 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited by the terms of cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must first be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
5. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
6. In Collins v Urban, the Appeal Panel stated at [84(2)] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

Lessor's Appeal

1. The lessor's Notice of Appeal set out 18 grounds of appeal over nine pages. The grounds of appeal incorporated substantial argument and repetition. We do not consider that it is necessary for the purposes of the appeal to repeat the grounds of appeal in full. We have attached a copy of the attachment to the Notice of Appeal, which set out the lessor's grounds of appeal, as an appendix to these reasons. The attachment, and the lessor's written submissions on the appeal, grouped the grounds of appeal under headings which generally provide a more succinct identification of the issues. We consider that, for the purposes of the appeal, the lessor's grounds can be summarised as follows: 1. That the Covid Regulation did not prohibit the lessor's re-entry for the non-payment of the rent for April 2020 which rent had fallen due and was more than 14 days in arrears before the commencement of the "prescribed period" on 24 April 2020. 2. That the Tribunal should have found that the "force majeure letter" (and other conduct of the lessee) was a repudiation of the lease which entitled the lessor to terminate. 3. That the Tribunal erred in finding that the lessee was an impacted lessee either at the time of re-entry or at all. 4. That the Tribunal erred in failing to find that the lessor had satisfied the requirements of clause 7(3) of the Covid Regulation by negotiating in good faith with the lessee. 5. That the Tribunal should not have awarded damages for breach of the lease when the lessee could not establish that it was ready willing and able to perform its obligations. 6. That the Tribunal had no power to order the return of the bank guarantee. 7. That the Tribunal erred by failing to make a finding concerning the date when the lessee terminated the lease and failing to uphold the lessor's claim for rent and outgoings to the date of termination. 8. That the Tribunal erred in concluding that the lessee would have recouped its expenditure if the lease had not been terminated. 9. That the Tribunal erred in awarding compensation in respect of expenditure which it had not been established had been either incurred or reasonably incurred. 10. That the correct basis for the assessment of the lessee's loss was "the value of the fitout rendered useless as at the date of the lessee's termination of the lease less the value of salvage". 11. That the Tribunal erred in awarding damages in respect of kitchen equipment which the lessee had failed to retrieve from the premises.
2. The lessor maintained in respect of the above grounds that the Tribunal had applied a wrong principle, failed to provide adequate reasons, and, in respect of the grounds we have identified as 3 and 4, that the Tribunal took into account irrelevant considerations.
3. The lessor also sought leave to appeal on the bases that the decision was not fair and equitable and that the decision was against the weight of evidence. In submitting that the decision was not fair and equitable and was against the weight of evidence, the lessor relied upon the grounds we have identified as 4, 8 and 9.

Lessee's Appeal

1. The lessee's Amended Notice of Appeal raised three grounds of appeal: 1. That the Tribunal had denied the lessee procedural fairness by relying upon the "industry statistics" referred to in paragraph [156] of the decision, without disclosing to the parties its intention to do so and permitting the parties to make submissions. 2. That the Tribunal applied a wrong principle and took into account an irrelevant matter by discounting the lessee's expenditure by reference to the industry statistics. 3. That the Tribunal erred by failing to grant the lessee an opportunity to be heard in relation to the question of costs, in particular in relation to the effect of a settlement offer made by the lessee.
2. The lessee withdrew the third ground of appeal in the course of the hearing of the appeal.
3. The lessee did not seek leave to appeal.
4. It is convenient to consider the grounds, as we have identified them above, in turn.

Lessor's first ground - Failure to pay April rent

1. The lessor submitted that the Covid Regulation did not prohibit action by a lessor on the ground of a breach of lease which had occurred prior to the commencement of the Covid Regulation, that is before the commencement of the prescribed period.
2. Clause 12.2.2 of the lease provided that the lessor was entitled to re-enter and take possession of the property if rent or any other money due under the lease was 14 days overdue for payment.
3. As the rent was due on the first day of each month, the April rent was 14 days overdue by 15 April 2020. The prescribed period commenced on 24 April 2020.
4. The lessee's response was: firstly, that this submission had not been raised in the proceedings at first instance; secondly, that the lessee had in fact paid the April rent before the lessor re-entered the premises on 3 July 2020; and, thirdly, that the Covid Regulation, properly construed, prohibited prescribed action on the ground of a failure to pay rent, regardless that the rent had fallen due prior to the commencement of the prescribed period.
5. It is a well-established principle that a party will not be permitted to raise on appeal a ground which was not taken at first instance, if there is any possibility that, had it been raised at first instance, it might have been met with evidence which had not been led.
6. In Suttor v Gundowda Proprietary Limited [1950] HCA 35; (1950) 81 CLR 418 the High Court said at 438: … The circumstances in which an appellate court will entertain a point not raised in the court below are well established. Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards. In Connecticut Fire Insurance Co. v. Kavanagh (1892) AC 473, Lord Watson, delivering the judgment of the Privy Council, said, "When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice, to entertain the plea. The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact, in considering which the court of ultimate review is placed in a much less advantageous position than the courts below." (1892) AC, at p 480.
7. Those principles are applicable in the Appeal Panel. As the Court of Appeal held in Fasako v TianyD Beauty & Hairdressing Australia Pty Ltd [2022] NSWCA 112 at [20] and [24] 20 The Appeal Panel set out the relevant principles identified in Suttor v Gundowda Pty Ltd. At least in this Court, the applicant submitted that reliance on a new ground had to be affirmatively justified, because a consequence of permitting that course was to deprive the applicant of one level of appeal. Why that rendered the application of Suttor an error of law was not explained. … 24 Although in this Court, the applicant resisted any suggestion that it had to demonstrate prejudice or practical unfairness on the part of the Appeal Panel in permitting the respondents to rely on a breach of cl 9.3, that position disregarded the statutory obligation on the Appeal Panel to determine the dispute according to "the substantial merits of the case without regard to technicalities or legal forms". … If the failure to refer to cl 9.3 caused prejudice to the applicant, it should have raised that issue before the Appeal Panel and explained why that was so. …
8. When the Appeal Panel asked Mr Chan, who appeared with Mr Flick for the lessee, what evidence the lessee might have led if this issue had been raised at first instance, Mr Chan was not able to identify any such evidence. Accordingly, we do not consider that the lessor is precluded from relying on this ground on the appeal.
9. In support of the proposition that it had in fact paid the April rent, the lessee relied upon the three payments which it had made after 1 April 2020, that is the two payments of $2,612 made on 1 June 2020 and the payment of $3,988.74 made on 20 May 2020. These three payments together exceeded the rent payment of $8,708.33 which fell due on 1 April 2020.
10. The difficulty for the lessee with this submission is that the lessee clearly indicated when making the payments that only one of the payments made on 1 June 2020 was intended to constitute part payment of the April rent, the other was identified as part payment of the rent due for May 2020, and the amount paid on 20 May 2020 was identified as "5/301 outgoing", that is payment of the outgoings which had been invoiced by the lessor on 18 May 2020 . In our view the lessee clearly appropriated two of the three payments to debts other than the April rent and therefore cannot now assert that those payments should be appropriated to the April rent.
11. As Slattery J held in APX Projects Pty Ltd v The Owners - Strata Plan No 64025 [2015] NSWSC 1250, at [30] - [33]: 30 The principles for ascertaining to which debt a payment will be appropriated work in the following stages. Firstly, a debtor has the right, in the first instance, to declare in respect of which debt he pays money: Mills v Fowkes (1839) 5 Bing (NC) 455; 132 ER 1174. However as noted by the authors in E Tyler, P Young and C Croft, Fisher & Lightwood's Law of Mortgage (3rd ed 2013, LexisNexis) at 32.52, the debtor's direction must be in clear terms: Colonial Bank of Australasia v Kerr (1889) 15 VLR 314; Healey v Commonwealth Bank of Australia (Court of Appeal, (NSW), 8 December 1998, unrep). For example, entries made by the debtor in his or her own books are not sufficient evidence of a particular appropriation of money paid on a general account: Wrout v Dawes (1858) 25 Beav 369; 53 ER 678. 31 Equally, it is possible that in circumstances where a debtor fails expressly to communicate to the creditor the appropriation of a debt, the circumstances of payment may be such that the proper appropriation of the debt is implied. This may be the case, for example, where two debts of different amounts are owing and the amount paid equates to one of them. 32 Secondly, where the debtor does not appropriate his or her payment to a particular debt, the creditor enjoys the right of choosing the debt to which the payment is appropriated. As Lord McNaughten in Cory Brothers & Company v Owners of Turkish Steamship 'Mecca' [1897] AC 286 at 293: "When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of application devolves on the creditor." 33 Thirdly, where neither the debtor nor the creditor acts upon their successive entitlements to choose how the debt will be appropriated, the default position is that the payment will be applied to the oldest debts first: Devaynes v Noble ('Clayton's Case') (1816) 1 Mer 572; Sibbles v Highfern Pty Ltd (1987) 164 CLR 214 at [11]. In Re Walsh; Ex parte DCT (1982) 13 ATR 40, Lockhart J explained the application of these three rules governing the appropriation of payments in the following way: "A debtor who owes two debts to a creditor is entitled to appropriate a payment which he makes to his creditor to one debt rather than to the other. If he omits to do so, the creditor may make the appropriation. If neither makes any appropriation, the law appropriates the payment to the earlier debt. If there is specific appropriation by the debtor cadit quaestio. In the absence of a specific appropriation it is a question of fact whether there was any appropriation by the debtor. To constitute an appropriation there must be more than an intention to appropriate by the debtor. I respectfully adopt the following passage from the judgment of Greene LJ in I [1936] 2 KB 156 at 162-163: 'When, however, he does not notify the creditor of his intention, and when the circumstances are such that the creditor receives the payment merely in satisfaction of the debts and the payment is not more appropriate to the payment of the one debt than to that of the other the creditor is entitled to make the appropriation. When it is said that there need not be an express appropriation of a payment, but that the appropriation can be inferred, that does not mean that appropriation of a payment can be inferred from some undisclosed intention in the mind of the debtor. It is to be inferred from the circumstances of the case as known to both parties. Any other view might lead to injustice, as the creditor's right to appropriate a payment would be defeated. When the matter is examined upon principle it will be found that an undisclosed intention in the mind of the debtor is not sufficient to support an appropriation. If authority is needed for that proposition it can be found in the judgment of Lush J in Parker v Guinness (1910) 27 TLR 129 at 130 where he said: 'What is to be considered is this. Is the true inference to be drawn from all the circumstances of the case that the debtor paid the moneys generally on account, leaving the creditor to apply them as he thought fit, or is the true inference that he paid them on account of special portions of the debt for the purpose and with a view to wipe these out of the account? His undisclosed intention so to do would, of course, not benefit him. It is what he did in fact, and not what he meant to do that is to be regarded.' A debtor's undisclosed intention to appropriate a payment to one of two debts owed by him to a creditor cannot benefit him.'"
12. The lessee's third response was that clauses 6 and 7 of the Covid Regulation prohibited any prescribed action by a lessee during the prescribed period on the ground of any failure to pay rent.
13. In our view, that submission is not consistent with the wording of the relevant prohibitions.
14. Clause 6 prohibited prescribed action against a lessee "on the grounds of a breach of the commercial lease during the prescribed period consisting of - (a) a failure to pay rent, or (b) a failure to pay outgoings". The clause does not prohibit prescribed action during the prescribed period on the grounds of a prior breach of lease consisting of a failure to pay rent. The prohibition on prescribed action is against action on the grounds of a breach during the prescribed period.
15. The COVID Regulation was repealed and replaced on 24 October 2020 by the Retail and other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW) (the No 2 Regulation). We note that clause 6 of the No 2 Regulation differed from clause 6 of the COVID Regulation. Clause 6 of the No 2 Regulation relevantly provided: (1) This clause applies if, during the prescribed period, a lessee is an impacted lessee. (2) During the prescribed period, a lessor must not take prescribed action against the impacted lessee on the grounds of a breach of the impacted lease occurring during the prescribed period consisting of - (a) a failure to pay rent …
16. Thus, in the No 2 Regulation, any ambiguity concerning whether the words "during the prescribed period" qualify the phrase "must not take any prescribed action" rather than the phrase "a breach of the commercial lease" was resolved by the repetition of those words so that both phrases were so qualified.
17. We further note the comment of Robb J In Darzi group Pty Ltd v Nolde Pty Ltd [2021] NSWSC 774 (Darzi Group), at [123]: 123 It must be noted that, while clause 6 operated as a prohibition against a lessor taking any prescribed action against the lessee "during the prescribed period", there is nothing in clause 7 which limits the duration of the prohibition on the lessor's conduct under clause 7(1).
18. Whilst Robb J was referring in that statement to the Covid Regulation rather than the No 2 Regulation (or subsequent regulations), it would appear that his Honour had regard to the later versions of the Regulations in determining the operation of clause 6 of the Covid Regulation.
19. Clause 7 also prohibits prescribed action "on grounds of a breach of the commercial lease consisting of a failure to pay rent during the prescribed period".
20. We also note the terms of clause 5 of the Covid Regulation which provided: 5 This Regulation applies to the exercise or enforcement of rights under a commercial lease in relation to circumstances occurring during the prescribed period.
21. In Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141 (Sneakerboy (No 2)), at [65], Robb J held: 65 In respect of actions that are prescribed actions under the COVID-19 Regulation, clause 5 does not have the effect that the prescribed actions are prohibited during the six-month period, but all such actions can be taken after that period. Rather, the regulation has the effect that, in relation to "circumstances occurring during the prescribed period" (emphasis added), the COVID-19 Regulation prohibits the prescribed actions whenever the rights are sought to be exercised or enforced. Put another way, the wording of clause 5 suggests an intention that the factor that is operative is when the circumstances occur. If they occur during the prescribed period, then the described actions cannot be taken during or after the period. …
22. We do not consider that the lessee's submissions can be reconciled with that statement.
23. Nor do we consider that the lessee's submission can be reconciled with the decision of Robb J in Darzi Group Pty Ltd v Nolde Pty Ltd (No 2) [2022] NSWSC 643 (Darzi Group No 2). In that case, Robb J held that the consequence of a failure to negotiate in breach of clause 7 was that the lessor was permanently prohibited from taking action to recover unpaid rent which fell due during the prescribed period. If the prohibition was on taking prescribed action only during the prescribed period but in respect of a failure to pay rent whenever it occurred, then the prohibition would not have been found to have been permanent.
24. We note that, in Sneakerboy (No 2) Robb J found, at [105], that, under the terms of the Code of Conduct: "… the instalment of rent and outgoings due under the Lease on 1 April 2020, which was payable in advance, should not be treated as being a vested entitlement of the Lessors before the commencement of operation of the COVID-19 regime. Even though the COVID-19 Regulation came into effect at a later date, its terms, insofar as they required the application of the leasing principles, had retrospective effect to 1 April 2020 in relation to rent and outgoings for the period from that date."
25. That would suggest that, to the extent that the lessee had paid the proportion of the April rent which was consistent with its reduction in turnover in April, the lessor could not maintain that the lessee had failed to pay the April rent so as to permit the lessor to re-enter the premises and terminate the lease. However, the evidence before the Tribunal did not suggest that it could be argued that the lessee had paid the appropriate proportion of the rent due on 1 April 2020. It had paid a significantly lesser proportion (30% when the lessee's evidence at its highest suggested a reduction in turnover of around 30%, warranting, under the Code of Conduct, waivers and deferrals of that magnitude).
26. Accordingly, the conclusion of the Tribunal that the lessor had infringed clause 7 of the Covid Regulation by taking action to re-enter the premises was incorrect. It follows that the lessor did not repudiate the lease, and, if the lessee's claim were limited to breach of contract, the lessee's claim would be dismissed and the lessor's claim to unpaid rent and outgoings would succeed.
27. However, the lessee's claim was not limited to breach of contract. The lessee also maintained a claim for unconscionable conduct in breach of s 62B of the Retail Leases Act. The Tribunal did not determine that claim because it upheld the lessee's claim for breach of contract and it was not suggested that the damages for unconscionable conduct would be any different.
28. For that reason, it is necessary that we consider and determine the lessor's remaining grounds of appeal and the lessee's appeal. We will then consider the appropriate resolution of the appeal.

Lessor's second ground - Other allegedly repudiatory conduct

1. In the attachment to its Notice of Appeal, the lessor identified four matters which it asserted constituted a repudiation of the lease by the lessee. Those matters were: 1. The failure to pay the April rent 2. The notice headed "notice of force majeure" (the force majeure letter) sent to the lessor on 7 February 2020 3. "A serious and persistent failure and refusal or inability to pay a proportion of the rent that accrued during the prescribed period" 4. "A serious and persistent failure to engage in negotiation under the Covid regulation on an open and transparent basis"
2. We have already determined that the lessee's failure to pay the April rent entitled the lessor to terminate the lease and to re-enter the premises. It is not necessary to further address the first of the matters identified by the lessor.
3. The lessor's submissions noted that the lessor had relied upon the force majeure letter as an event of default, but did not otherwise seek to maintain that the delivery of that letter constituted a repudiation. We would not in any event have concluded that the delivery of the force majeure letter did constitute a repudiation of the lease.
4. As is stated in Halsbury's Laws of Australia at [110 - 9325]: An express declaration by a promisor of the promisor's inability to perform all (or substantially all) contractual obligations is a repudiation by reason of the promisor's words. Such a declaration may alternatively be inferred from conduct, and even a promisor who does not expressly state an inability to perform, may repudiate by words or conduct from which the only reasonable inference is an inability to perform the contract.
5. We have set out the terms of the force majeure letter above (at [26] - [27]). Although that letter expresses the propositions that the lessee had no income and that it was difficult for the lessee to "bear the payment obligations in accordance with the provisions of the lease", the letter stated that the lessee would "continue to perform payment obligations according to the lease" when normal business resumed, and did not explicitly state that the lessee would not, or could not, meet its obligations under the lease. Particularly in the circumstances as they stood at the commencement of the COVID-19 pandemic, it would not be appropriate to construe an expression of concern about the capacity to maintain rental payments in the circumstances of the pandemic as a declaration of intention no longer to be bound by the lease.
6. It is also apparent that the lessor effectively affirmed the contract after February 2020, and expressly pleaded that it had done so in paragraph 7 of the "Particulars of Claim" attached to its application filed on 17 February 2021.
7. The lessor's submissions in reply asserted that "The affirmation pleaded at paragraph 7 was confined to a specific time." It is not clear what the lessor intended by that submission, the affirmation of a contract after an act of repudiation, operates as an election not to rely upon the act of repudiation. A party cannot affirm a contract yet hold an act of repudiation in reserve to be relied upon if it should subsequently become convenient to do so: see Halsbury's Laws of Australia [110-9350].
8. The lessors' submission concerning the third and fourth matters identified in the notice of appeal was as follows: 87. Having regard to the figures disclosed by the tenant and the requirements of Reg. 7(4)(b) (if Reg. 7 applied at all) and the Code's Leasing Principles 2 and 3, the landlord's repeated offers of a 20% waiver and 20% deferral were far more generous than the proportionate reduction suggested by Leasing Principle 3, even if one accepted the tenant's unsupported projection of a 30% reduction in turnover for May. The tenant did not attempt to negotiate having regard to the principles stated in the Code. Its only proposals were quite at variance with the principle of proportionate reduction and, contrary to Leasing Principle 2, which expressly states, "2. Tenants must remain committed to the terms of their lease, subject to any amendments to their rental agreement negotiated under this Code. Material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under this Code." (emphasis added) 88. The sum of this conduct is that the tenant was unwilling and unable to comply with the terms of the lease, even to the standard of a lower threshold of performance from 24 April, 2020 conforming with the Code.
9. Those submissions do not explain how a failure to negotiate "having regard to the principles stated in the Code" might constitute a breach of the lease or conduct indicating a refusal or inability to comply with the terms of the lease.
10. To the extent the submissions suggest that characterising the failure to pay rent (whether in full or in a specific proportion) as a repudiation avoids the prohibition on termination for failure to pay rent, we consider the submission is clearly inconsistent with the Covid Regulation.
11. To the extent that the lessor submits that the Tribunal failed to address, or give adequate reasons in relation to, the issues raised by the lessor, we note: 1. It is not clear that these issues were raised by the lessor at first instance, there is no reference to them in the lessor's written submissions to the Tribunal and we have not identified any submission about them in the transcript. The Tribunal cannot be said to have made an error by failing to deal with a submission that was not made to it; 2. In any event, for the reasons we have set out above, we do not consider that what we have identified as the lessor's second ground has any merit.

Lessor's third ground - Impacted lessee

1. The lessor challenged the conclusion of the Tribunal that the lessee was an impacted lessee on three bases, which related to: 1. The time at which the lessee was required to qualify as an impacted lessee; 2. The method of assessment whether the lessee met the decline in turnover test; 3. The evidence required to establish that the lessee was an impacted lessee, in particular that the lessee had met the decline in turnover test.

Time of qualification

1. The lessor's submissions concerning the question whether the lessee was at relevant times an "impacted lessee" proceeded upon the basis of a proposition set out in the heading preceding paragraph 92 of its submissions as follows: "The lessee must qualify at the time of the relevant event or within the preceding portion of the same job keeper fortnight"
2. The lessee relied in support of that proposition upon the terms of rules 6(1) and 7(1) of the Jobkeeper Rules.
3. Rule 6(1) provided relevantly: (1) An entity (the employer) is entitled to a job keeper payment for an individual for a fortnight if: (a) the fortnight is a job keeper fortnight (see subsection (5)); and (b) the employer qualifies for the jobkeeper scheme at or before the end of the fortnight (see section 7); …
4. Rule 6(5) provided that: (5) Each of the following is a jobkeeper fortnight: (a) the fortnight beginning on 30 March 2020; (b) each subsequent fortnight, ending with the fortnight ending on 27 September 2020.
5. Rule 7 (1) (b), which we have set out above, provided, relevantly, that "an entity qualifies for the job keeper scheme at a time if: … The entity has satisfied the decline in turnover test at or before the time":
6. The lessor submitted: "These provisions establish that the entity should be qualified at or before the relevant time, but within the "job keeper fortnight" in which the relevant event happened."
7. We do not accept that submission. In our view the provisions of rule 7(1)(b) of the Jobkeeper Rules clearly had the effect that, once an entity had qualified through satisfying the "decline in turnover test" at a time, it continued to qualify subsequently. There was no requirement either in rule 6 or in rule 7 that an entity meet the decline in turnover test during each "jobkeeper fortnight" during the operation of the jobkeeper scheme between 30 March 2020 and 27 September 2020.
8. As the lessee submitted, the terms of clause 4 of the Covid regulation define the term "impacted lessee" only by reference to rules 7 and 8 of the Jobkeeper Rules. The requirement of clause 4 is that an entity "qualify" for the jobkeeper scheme, not that it be "entitled to a jobkeeper payment for an individual for a fortnight".
9. We see no reason to read down the terms of rule 7(1)(b) of the Jobkeeper Rules. The clear and literal meaning of rule 7 is that an entity qualifies once and for all. If an entity has satisfied the decline in turnover test "at or before [a] time" (and meets the requirements of rule 7(1)(a)), then the entity qualifies for the jobkeeper scheme at that time regardless of when, however many weeks or months previously, the entity met the decline in turnover test.
10. The lessee referred to the judgment of Robb J in Darzi Group at [95] where his Honour said: " … the issue of whether a lessee is an impacted lessee is not an inherently complicated one. The test will be satisfied, in a case such as the present, where the lessee has qualified for the JobKeeper scheme and had a turnover of less than $50 million in the 2018 to 2019 financial year. More complicated financial information may be required to enable the terms of the rent reduction, waiver and deferral to be negotiated."
11. In our view, this statement supports our interpretation of the Jobkeeper Rules. It is also in our view the explanation for a comment by his Honour in that case at [60] where he stated that the lessee's turnover had improved after June 2020 to the extent that it had "ceased to qualify as an impacted lessee". It appears that his Honour was not referring to the statutory definition but rather to the circumstance that the improvement in the lessee's turnover had had the result that it no longer required any rent reduction.
12. The lessee also relied upon clause 14 of the No 2 Regulation which provided: 14 Savings provision - impacted lessees (1) A reference in this Regulation to an impacted lessee extends to a person who was an impacted lessee under the repealed Regulation in relation to a breach of the impacted lease that occurred at any time during the first prescribed period. (2) To avoid doubt, a person who was an impacted lessee within the meaning of the repealed Regulation at any time during the first prescribed period is taken to be an impacted lessee for the whole of the first prescribed period. (3) In this clause - first prescribed period means the period from 24 April to 23 October 2020. repealed Regulation means the Retail and Other Commercial Leases (COVID-19) Regulation 2020.
13. The lessee referred to paragraph [114] of the judgment of Robb J in Darzi Group where his honour stated: "114 Clause 14 had the effect that, if Darzi was an impacted lessee at any time during the period of operation of the COVID-19 Regulation (No 1), it was taken to be an impacted lessee for the whole of that period. That provision makes it clear that a lessee may be an impacted lessee if the definition of impacted lessee was only satisfied for a closed period."
14. As the lessor submitted in reply, the No 2 Regulation was not enacted until 23 October 2020 and therefore could not affect the operation of the Covid Regulation on 3 July 2020, when the lessor re-entered the premises.
15. In Darzi Group Robb J was considering a factual situation which extended beyond the enactment of the No 2 Regulation. It is therefore necessary to exercise caution in applying statements made in that decision in considering the operation of the Covid Regulation as at 3 July 2020.
16. The lessee submitted that the "subsequent express saving" in the later regulation can be used to interpret the earlier regulation. The lessee referred to Grain Elevators Board (Vic) v Dunmunkle Shire (1946) 73 CLR 70 at 85 - 86 and Masson v Parsons [2019] HCA 21; (2019) 266 CLR 554 at 573 to 574 [28].
17. In Masson v Parsons the High Court held, at [28]: … an Act of Parliament does not alter the law by merely betraying an erroneous opinion of it. It may be that, where the interpretation of a statute is obscure or ambiguous or readily capable of more than one interpretation, the meaning ascribed to it in a subsequent statute may provide some insight.
18. The applicable principles were set out at greater length by the Court of Appeal in Trustees of Sydney Grammar School v Winch [2013] NSWCA 37; (2013) 83 NSWLR 80 at [157] as follows: It might be accepted that an amending Act may be taken into account in the interpretation of the prior legislation, at least to avoid a result that would render the amending legislation unnecessary or futile: Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70 (at 86) per Dixon J. However a cautious approach should be adopted to ensure the words in the later statute have not been inserted to remove possible doubts: Allina Pty Ltd v Commissioner of Taxation (1991) 28 FCR 203 (at 212) per Lockhart, Burchett and Gummow JJ. ... As Gummow J said in Interlego AG and Lego Australia Pty Ltd v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348 (at 382), taking an amendment into account in determining the scope of the prior legislation is a curious way of revealing parliamentary intention at the time of passing the earlier provision.
19. See also Pearce, Statutory Interpretation in Australia, Ninth edition 2019, at [3.38] - [3.41].
20. The lessor submitted that the lessee's reliance upon clause 14 of the No 2 Regulation attributed to the No 2 Regulation the retrospective alteration of accrued rights.
21. We do not consider that it is necessary to determine whether reference to clause 14 of the No 2 Regulation is permissible in construing the meaning of the Covid Regulation. The question whether qualification for jobkeeper, and therefore qualification as an impacted lessee, is to be determined once and for all or from time to time is not answered by the interpretation of the Covid Regulation. The question to be answered for the purposes of section 4 of the Covid Regulation is whether, at a relevant time, the lessee "qualifies" for the jobkeeper scheme under the Jobkeeper Rules. It is the interpretation of the Jobkeeper Rules which governs that question.
22. The lessor maintained that the question whether the lessee was an impacted lessee was to be determined at the date the lessor sought to take prescribed action. That date was 3 July 2020. We accept that the lessor is correct that the relevant date for determination whether the lessee was an impacted lessee was 3 July 2020. Nevertheless, the question whether the lessee "qualifies for the jobkeeper scheme" under the Jobkeeper Rules as at 3 July 2020 is to be determined by reference to the question whether the lessee had satisfied the decline in turnover test "at or before" 3 July 2020.

Operation of the decline in turnover test

1. The critical components for the purposes of the decline in turnover test, as set out in the Jobkeeper Rules at relevant times were "current GST turnover for a relevant comparison period" and "projected GST turnover for a turnover test period".
2. The meaning of "current GST turnover" and "projected GST turnover" for these purposes was as we have set out at [17] above.
3. In calculating the "current GST turnover for a relevant comparison period" in the usual case, a comparison period consisting of the same month or quarter in 2019 would be utilised. But because that was not applicable to the lessee, which only commenced business in December 2019, the alternative turnover test was applicable.
4. As we have noted, at [44] above, the alternative test required the lessee to take the value of taxable supplies made during the months of January and February 2020 and divide that figure by two, to obtain its "current GST turnover for a relevant comparison period". The turnover test then required the lessee to compare that figure to its "projected GST turnover for a turnover test period".
5. For the purposes of the decline in turnover test under the Jobkeeper Rules, the "turnover test period" was required to be a calendar month ending after 30 March 2020 but before 1 October 2020 (ie a calendar month from March to September 2020 inclusive) or the April to June or July to September quarters in 2020.
6. The lessor submitted that it was necessary to identify a "test time" for the purposes of undertaking the turnover test and that: 112. This time is a function of the issue between the parties and the operation of Rules 6 and 7 of the [Jobkeeper Rules] …. One must return to the causes of action and legal defences that are relied on and examine the elements, and in particular the elements required by the NSW Covid Regulation to ascertain the relevant time for which the lessee has to establish qualification for the jobkeeper scheme as required by Reg. 4(1)(a).
7. The lessor submitted that that time was 3 July 2020 for the purposes of clause 6 of the Covid Regulation, and 15 May 2020 and 15 June 2020, for the purposes of clause 7 of the Covid Regulation.
8. This submission is affected by the error which we have identified above in the lessor's approach to the application of the Jobkeeper Rules. The test time is not the time at which an entity is required to demonstrate qualification for job keeper for a specific purpose, but rather the time from and after which (until 30 September 2020 for the purposes of the Jobkeeper Rules as in force in June and July 2020) an entity was qualified for jobkeeper.
9. The test time would therefore be the earliest date at which the entity identified that it satisfied the decline in turnover test. That could be even before the imposition of restrictions on movement and attendance at dining venues introduced incrementally from March 2020 [2] . It might be April, or even March, 2020.
10. The evidence before the Tribunal, being the affidavit of Mr Qin dated 2 March 2021, was: "35 After I realised that the alternative test was applicable, I had a meeting with Ms Lan the bookkeeper and Mr Yun Lan, another shareholder, at the end of April 2020. The purpose of this meeting was to see whether SuperBurrito was eligible for JobSeeker under the alternative test. 36 At this meeting we worked out the monthly average GST turnover figure for January and February 2020 to be $5,310 per month from the Xero data. In projecting our May 2020 turnover we considered the following factors: a. about 2 weeks of April 2020 sales data from the POS, hand written ledger and bank statement showing a significant downturn from March 2020 (that data has since been entered into the Xero system); b. foot traffic was close to nil with the lockdowns in place; c. the longer the lockdown took place the worse the business was going to be impacted; d. very few customers wanted to buy in store in any event because of a fear of catching Covid-19; e. the promotions from food platforms such as Food Panda, Easi, Deliveroo and Uber Eats had increased sales for March but those promotions had come to an end in April 2020; and f. the lack of foreign international students who were our primary target market. Located at Tab 9 is a copy of the weekly Xero profit and loss figures for April 2020 containing the POS, hand written ledger and bank statement data. 37 By the end of the meeting concluded that for May 2020 and onwards SuperBurrito was likely to suffer a sales downturn of at least 30%. We also concluded that if the trend continued SuperBurrito was likely to go out of business in the near future. At the meeting we did not calculate a precise figure as a likely outcome because that was impossible to do with any accuracy but we were sure that the downturn would be greater than 30%. 38 As a result I concluded that SuperBurrito's May 2020 income was going to be at least 30% less than the GST turnover average for January and February 2020 and therefore eligible for JobKeeper under the alternative test."
11. There was also evidence before the Tribunal that the lessee had received jobkeeper payments.
12. The lessor referred to the comment of Ward CJ in Eq, as she then was, in NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd [2020] NSWSC 1378 at [310]: "On this evidence, … I see force to NTT's submission that it is somewhat difficult for me to be satisfied that CGS, as a matter of fact and law, qualifies for the JobKeeper payment. Indeed, while perhaps formalistic, the receipt of a payment is not the same as an entitlement to it."
13. The Tribunal recognised (at [95]) that: "Receipt of Jobkeeper payments is not and was not the same as entitlement to them."
14. However, the acceptance of that proposition does not alter the nature of the test that the lessee was required to satisfy.
15. The lessor also maintained that the lessee was not entitled to rely upon "projected" figures once the actual figures became available.
16. We do not accept that submission.
17. Once it is recognised, as we have determined above, that an entity, once qualified for job keeper during the prescribed period, continued to be qualified regardless of its subsequent trading, there is no basis upon which it could be said that the question whether the lessee was qualified for job keeper required consideration of the lessee's actual subsequent trading figures rather than the projected figures utilised in determining its qualification.
18. In considering whether the lessee had established that it was an impacted lessee, the Tribunal referred to Mr Qin's evidence and noted: 113 According to the Lessee, [the average monthly GST turnover] was $5,310.00: see Qin affidavit sworn 2 March 2020 [paragraph 36] … In the same Qin affidavit at paragraphs 36-38, the Lessee considered the business environment and projected that their May 2020 income would fall by at least 30%. The Lessee contends that this, and the receipt of JobKeeper Scheme payments by the Federal Government in May 2020 confirmed the Lessee was an "impacted lessee" as it qualified for JobKeeper payments under the Alternative Test. This evidence was in the Qin affidavit at [42], [43] and [47] that it did receive JobKeeper payments from the Commonwealth from 30 May 2020 on. 114 The Tribunal has some difficulty accepting the submission by the Lessor that the Lessee did not "qualify" for JobKeeper payments. There was no doubt it had a reduction in turnover, that the reduction was significant and that it was receiving JobKeeper payments as evidenced in the communications sent to the Lessor. There was no process by which formal qualification or certification of acceptance into the JobKeeper Scheme was made by the Federal Government.
19. The Tribunal referred to communications between the parties regarding the question whether the lessee was an impacted lessee, noting (at [120]) that: "… the Lessor insisted it had a right to audit the turnover figures submitted by the Lessee to the ATO and make up its own mind about whether the Lessee satisfied the Alternative Test. Nowhere in the Regulation, the Rules or the Alternative Test is a lessor afforded such authority. The Lessor itself retreats from the word "audit" in its written submissions but the Tribunal considers that that is precisely what the Lessor did and considered itself entitled to do."
20. The Tribunal set out the comments of Robb J in Darzi Group at [78]: "… In my view, it was not reasonable for Nolde's solicitors to acknowledge in par 4 of their letter that Darzi had "provided confirmation that it has enrolled in the Jobkeeper scheme but not confirmation that it has qualified for the scheme". A reasonable lessor acting in good faith would have accepted that, if the ATO was satisfied that Darzi qualified for the scheme to the extent that the ATO would acknowledge that fact, then the ATO's acknowledgement was adequate proof. Nolde's solicitors sought "all necessary supporting information to show that it has qualified for the scheme and continues to qualify for the scheme" without explaining what additional information was required, if the ATO's acknowledgement was insufficient."
21. The Tribunal continued: 127 What the Darzi case clarifies is that a lessor is not entitled to undertake an independent or parallel audit of whether a lessee has qualified for the JobKeeper Scheme if the ATO is so satisfied, although more complete financial information may be required from a lessee to enable the precise terms of the rent reduction, waiver and deferral to be negotiated. 128 Darzi also stands for the proposition that receipt of JobKeeper payments by a lessee is prima facie evidence that the lessee has qualified for the JobKeeper Scheme and that a lessor acting in good faith should accept this as such. 129 Further, in Darzi at [112]-[114], Justice Robb had regard to the subsequent COVID-19 Regulation (No. 2) which came into effect on 24 October 2020. Although the wording of this regulation was in substantially the same terms as the Regulation dealt with here, there were subtle differences. Clauses 12-14 of the COVID-19 Regulation (No. 2) relevantly contained saving and transitional provisions. Clause 14 stated: "14. Saving provisions - impacted lessees (1) The reference in this regulation to an impacted lessee extends to a person who was an impacted lessee under the Repeal Regulation in relation to a breach of the impacted lease that occurred at any time during the first prescribed period. (2) To avoid doubt, a person who was an impacted lessee within the meaning of the repealed Regulation at any time during the first prescribed period is taken to be an impacted lessee for the whole of the first prescribed period." 130 The first prescribed period meant the period from 24 April 2020 to 23 October 2020. 131 As Justice Robb stated at [114]: "Clause 14 had the effect that, if a lessee was an impacted lessee at any time during the period of operation of the Regulation, it was taken to be an impacted lessee for the whole of that period. That provision makes it clear that a lessee may be an impacted lessee if the definition of impacted lessee was only satisfied for a closed period". 132 This raises further concerns about the Lessor's conduct. By acting in the manner it did and re-entering the Premises and terminating the Lease on or about 3 June 2020 it potentially deprived the Lessee of any further or reasonable opportunity to meet the Alternative Test during the first prescribed period which would have then applied to that whole period.
22. The Tribunal concluded (at [133]): 133 Justice Robb's comments were confirmed by Justice Darke in Todarello Property Investments Pty Ltd v GJA Kalra Pty Ltd [2021] NSWSC 1678 at [56]-[58]. For the above reasons, and in particular Justice Robb's comments in [78] of Darzi, the Tribunal considers that the Lessee was, and should have been considered by the Lessor, an 'impacted lessee' prior to 3 July 2020.
23. It is apparent that the Tribunal accepted Mr Qin's evidence that he had undertaken a projection of turnover for May 2020 and that the projected turnover was more than 30% less than the average turnover for January and February 2020.
24. The lessor submitted that the question whether Mr Qin had undertaken the projection to which he had attested was a contested issue which the Tribunal failed to address. Mr Qin was cross-examined on his evidence (at pages 60-61 of the transcript). Although counsel for the lessor (who was not counsel who appeared at the hearing of the appeal) at one point commenced to put the proposition to Mr Qin that the meeting referred to in paragraphs [35] - [37] of his affidavit had not taken place (P 60.30), he withdrew the question and ultimately only put to Mr Qin that "if you, in fact, had such a meeting it was for April, not May. You were making a projection for April, not May. Do you agree?" (P 61.19-21). Mr Qin's response was "May" (P 61.23).
25. The lessor submitted in closing written submissions to the Tribunal that Mr Qin's evidence in paragraphs 35 and 36 of his affidavit should not be believed. The lessor made this submission on three bases: 1. That the "May projection" was asserted for the first time in Mr Qin's affidavit. 2. That Mr Qin should not be believed. 3. That Mr Qin's evidence that the projection undertaken at the meeting referred to in paragraph 35 of his affidavit was for May 2020 was inconsistent with the application for enrolment in the jobkeeper scheme lodged by the lessee which identified April 2020 as the month in which the lessee had experienced or was likely to experience a reduction in turnover in excess of 30%.
26. Whilst, given the limited extent of the cross-examination of Mr Qin on the topic, which we have set out above, very little explanation of the Tribunal's reasons for accepting Mr Qin's evidence might have been necessary, the lessor is correct in submitting that Mr Qin's evidence concerning the making of the projection for May 2020 was challenged and that the Tribunal erred in failing to resolve that question.
27. We will defer consideration of the significance of that conclusion.
28. We otherwise reject the lessor's challenge to the conclusion that the lessee was, as at 3 July 2020, an impacted lessee.
29. A conclusion that the lessee had undertaken a projection of turnover for April or May 2020 and concluded that it would be likely to be reduced by 30% compared to the average turnover for January and February 2020 would be sufficient to enable the Tribunal to conclude that the lessee was an impacted lessee as at 3 July 2020 (and we note is a ground of distinction between this case and NTT Australia v Cover Genius Services where the only evidence before the Court was evidence of enrolment in the jobkeeper scheme and receipt of jobkeeper payments: see [309]).
30. The lessor submitted that the Tribunal had erred: in accepting that Darzi Group stands for the proposition that receipt of jobkeeper payments is prima facie evidence that the lessee has qualified for the jobkeeper scheme; in referring to the savings provision in clause 14 of the No 2 Regulation; in the proposition stated by the Tribunal at [132]; and in stating that Robb J's comments in Darzi Group were confirmed by Darke J in Todarello Property Investments Pty Ltd v GJA Kalra Pty Ltd [2021] NSWSC 1678.
31. However, whether or not that criticism is correct, we do not consider it relevant to the ultimate conclusion, which hinged upon the acceptance of Mr Qin's evidence, that the lessee had qualified for the jobkeeper scheme by the end of April 2020 at the latest, and was therefore an impacted lessee at all times in May and June 2020 and up to and including 3 July 2020.
32. The lessor submitted that the actual turnover recorded in the lessee's accounts discloses that the lessee was not an impacted lessee. However, as we have outlined above, whether or not the actual turnover figures, when assessed in retrospect, were greater than the projected figures assessed in advance was irrelevant to the lessee's qualification for the jobkeeper scheme.
33. The lessor submitted: "121. Where the event was no longer hypothetical and exact calculation was possible, it was for the lessee to prove the matter not as conjecture (such as by an historical projection) but rather as a matter of historical fact, on the balance of probabilities, "and with as much precision as the subject matter reasonably permitted", with the cogency and sufficiency of its evidence to be weighed having regard to its power as the proprietor of the business to adduce evidence as to its own trading figures. … 124. The historical projection for May said to have been made by Mr Qin in April, without documentary record, was naturally a disputable opinion. In a Court to which the rules of evidence applied it would not usually be even admissible, because of the opinion rule. 125. The requirement for proof of the fact directs attention to the actual figures where or to the extent that the trading period has actually occurred, and, where it has yet to occur, or is hypothetical, then to such actual facts as bear reasonably upon the estimation by the tribunal of fact of what the trading figures will be or would have been. It is not a question for Mr Qin or his company, and still less a question upon which he or it could be allowed to conclude the question in a manner preclusive of proof of the actual facts."
34. It will be clear from what we have said above that we do not accept those submissions. They proceed upon the erroneous premise that eligibility for the jobkeeper scheme was required to be established repeatedly, rather than once at the time an entity first applied for jobkeeper payments. They also ignore the fact that the projection of expected turnover for the purposes of the turnover test was an act with consequences, not a mere expression of opinion.
35. We make the same comment in relation to paragraphs [132] to [133] of the lessor's submissions.
36. At [131] of its submissions, the lessor noted the lessee's submission that "projected GST turnover" meant future estimates. At [132] the lessor suggested that that was "a curious proposition of law" and submitted: "What if no contemporaneous projection had been made? Would a lessee in that situation be forever precluded from proving actual figures to establish qualification?
37. The lessor's submissions continued: 133. It could not seriously be disputed that if a lessee makes no projection, it would be open to either party to prove the actual trading figures for the turnover test period. Why then, just because the lessee has made a projection in advance of the event, are the actual facts to be disregarded when they are proved at trial?
38. The lessor's submissions at [133] failed to acknowledge the context in which an entity would be assessing "projected GST turnover" for the purposes of the Jobkeeper Rules. Qualification required a projection. The GST Act recognises that the projection may in part (or even wholly) reflect actual figures, but it also refers to the value of supplies which an entity is "likely to make".
39. If an entity qualified on the basis of a projection, it continued to qualify under the Jobkeeper Rules in force in June and July 2020, at least until October 2020.
40. As the Tribunal noted in the decision at [122], it was notorious in 2020 that some enterprises, which had qualified for the jobkeeper scheme on the basis of projections made in March or April 2020, subsequently continued to receive jobkeeper payments, notwithstanding that their turnover did not fall or actually increased during the latter half of 2020.
41. We do not rely upon that fact as a matter to be taken into account in reaching a conclusion regarding the proper interpretation of the Jobkeeper Rules, but it does indicate that what the lessor's submissions suggest is a curious or irrational outcome in fact reflected the way in which the Jobkeeper Rules did and were generally understood to operate.

Evidence to satisfy the decline in turnover test

1. It will be apparent from what we have said above that, in our view, the evidence before the Tribunal, if accepted, was sufficient to establish that the lessee had satisfied the decline in turnover test. That evidence consisted of the affidavit of Mr Qin, but was corroborated by the evidence that the lessee had received jobkeeper payments. We have found that the Tribunal fell into error with respect to a question of law by failing to make findings concerning the disputed evidence of Mr Qin. We otherwise find no error in the Tribunal's conclusion that the lessee had qualified for the jobkeeper scheme and was an impacted lessee as at 3 July 2020.
2. Much of the lessor's submissions were directed to the proposition that the lessee had not provided sufficient evidence to the lessor to satisfy the lessor that the lessee was an impacted lessee. That is a different question which arises in relation to the lessor's fourth ground of appeal rather than its third ground.

Lessor's fourth ground - Good faith negotiations

1. As we have noted above the Covid Regulation was amended on 3 July 2020. Until that date there was nothing in the Covid Regulation which required a lessee to provide any evidence to a lessor that it was an impacted lessee.
2. The "overarching principles" set out in the Code of Conduct required landlords and tenants to "act in an open, honest and transparent manner" and to "each provide sufficient and accurate information within the context of negotiations to achieve outcomes consistent with this Code."
3. However, those principles were not incorporated into the Covid Regulation, although, clearly, they may (or must) be taken into account in considering the content of the requirement in clause 7 of the Covid Regulation that the parties negotiate in good faith.
4. It was only with the amendment of the Covid Regulation on 3 July 2020 that a specific obligation was imposed upon lessees, by clause 7(3A), to provide "evidence that the lessee is an impacted lessee": See Jamaican Coffee Kitchen Pty Ltd trading as Dushan & Shelby Trust v M20 Pty Ltd [2022] NSWCATAP 203 at [280].
5. It is in this context that the comments of Robb J in Darcy Group at [78] that "a reasonable lessor acting in good faith would have accepted that, if the ATO was satisfied that Darzi qualified for the scheme to the extent that the ATO would acknowledge that fact, then the ATO's acknowledgement was adequate proof" must be understood. His Honour noted, at [80], that: "It was not unreasonable, in my view, for Nolde's solicitors to have requested the 2019 financial year statement, as that information may have provided relevant background to the judgments that Nolde was entitled to make during the process of negotiation."
6. In this case the lessee provided some financial information on 23 April 2020 and, on 18 May 2020, provided a screenshot "showing the eligibility of job keeper from business portal for super burrito Pty Ltd." That document confirmed: that the lessee had been enrolled for jobkeeper wage subsidies; that the lessee had identified employees eligible for jobkeeper wage subsidies; and that the lessee had completed a monthly declaration confirming eligible employees and turnover for April 2020, as required by the Jobkeeper Rules.
7. The lessee forwarded the same document to the lessor's solicitor on 23 June 2020.
8. The lessor submitted that the screenshot was not evidence that the lessee had qualified for the jobkeeper scheme. However, it is clear from the first two sentences of paragraph [78] of Robb J's judgment in Darzi Group that the document provided by the lessee on 18 May and 23 June 2020 was the same form of document as that which Darzi Group's solicitors had provided to Nolde's solicitors and which Robb J considered was sufficient to impose upon Nolde the obligation to negotiate with Darcy group.
9. The lessor submitted that it was only on 3 July 2020, after the lessor had taken possession of the premises, that the lessee had provided evidence of receipt of jobkeeper payments.
10. The lessor further submitted that even evidence of the receipt of jobkeeper payments was not evidence that the lessee qualified for the jobkeeper scheme pursuant to the Jobkeeper Rules and was therefore an impacted lessee. In circumstances where the obligation to provide evidence that the lessee was an impacted lessee had been imposed upon the lessee only on 3 July 2020, we do not consider that at 9 am on 3 July 2020, when the lessor took possession, the lessor could reasonably suggest that the lessee had failed to comply with an obligation to provide evidence to which it had been subject for nine hours, none of which were normal business hours.
11. It is not clear from the lessor's submissions whether the lessor relies upon sub-clauses 3A and 3B of clause 7 of the Covid Regulation to establish compliance with clause 7. For the above reasons we do not consider that the lessor can rely upon those subclauses to justify its conduct in entering into possession of the premises on 3 July 2020.
12. The lessee had informed the lessor that it was an impacted tenant. The Tribunal found that the lessee was an impacted tenant. If that finding were to stand, then arguably, independently of the operation of clause 7 of the Covid Regulation, clause 6 of the Covid Regulation prohibited the lessor from taking prescribed action on the ground of a failure to pay rent during the prescribed period, whether or not the lessor had entered into good faith negotiations in accordance with clause 7 (noting that this is no answer to our finding at [79] above).
13. The lessee's submissions on the appeal suggested that clause 7 operated as a defence to an allegation of breach of clause 6. Why that should be so was not explained. The wording of the two clauses does not suggest that they are intended to operate in that way.
14. However, the Tribunal found that the lessor had entered into possession in breach of clause 7. That is the proposition which it is necessary to address in determining the appeal. Pursuant to clause 7, if the lessee was an impacted lessee, the lessor was entitled to take prescribed action on the ground of a failure to pay rent during the prescribed period only if it had "renegotiate[d] in good faith the rent payable under, and other terms of, the commercial lease" (as required by sub-clause (3)) and done so "having regard to (a) the economic impacts of the COVID-19 pandemic, and (b) the leasing principles set out in the National Code of Conduct" (as required by sub-clause (4)).
15. The lessor submits that the Tribunal should have found that the lessor had complied with the requirements of clause 7 and was therefore not precluded from taking prescribed action on the ground of the lessee's failure to pay rent during the prescribed period.
16. In paragraph [115] of the Decision the Tribunal held: 115 The Tribunal also has some concerns about the Lessor's approach in its communications to establishing whether the Lessee was an impacted lessee.
17. In paragraphs [116] to [133] the Tribunal set out eight concerns and at [134] - [135] concluded: 134 As a result, the Lessor failed to act with sufficient prudence, caution and consideration of the Regulation in re-entering the Premises on 3 June 2020 [sic] and locking out the Lessee thereafter. This is particularly so once the Lessor had written evidence from the Lessee that it was in receipt of JobKeeper payments. By so doing, the Lessor carried out prescribed actions which were prohibited by clause 7 of the Regulation. 135 The Tribunal considers that the Lessor's failure to accept written confirmation of JobKeeper payments as being at least prima facie evidence of the Lessee's qualification for the scheme for the purpose of good faith negotiations with the Lessee was unlawful.
18. The Tribunal then stated, at [136]: 136 From the above decision the following findings flow: (1) The Lessor unlawfully re-entered the Premises and locked out the Lessee on 3 July 2022.
19. The lessor submitted, in relation to these findings: 236. It was wrong to comment on the conduct of the lessor or Ms Nguyen [a director of the lessor who gave evidence at the hearing] because the lessee was either an impacted lessee or it was not and, if it was, there had either been negotiations or there had not. Clearly there had been negotiations. The offers were in evidence. Their existence was not in dispute. There was no cross examination about their genuineness. It was not alleged or pressed that the lessor's offers did not conform with the Leasing principles set out in the Code. 237. What was the issue as to her bona fides? There was no basis for the findings at [134]-[135] imputing to the lessor an unlawful obstruction of good faith negotiations required by the Regulation.
20. The lessee's response was: 71. This ground complains that the Reasons do not disclose how it is that TNAU is said to have failed to negotiate in good faith. However this submission fails to consider R[49] and R[135]. 72. In the Senior Member's view the failure to accept Superburrito's contention that it was an impacted lessee at all infected any and all subsequent negotiations. TNAU's position was such that those subsequent negotiations cannot be said to have taken place in good faith at all. That this was the Senior Member's thought process is clear from R[126] citing Darzi Group and Robb J's view that once informed of the ATO's acknowledgment a reasonable landlord should accept it as evidence of the lessee being an "impacted lessee". 73. The complaint that the Senior Member did not expressly deal with how TNAU failed to comply with cl 7 of the Regulation is baseless. Superburrito pleaded protection by virtue of cl 6 of the Regulation; it bore the burden in that respect. It was then for TNAU to plead that if Superburrito was an impacted lessee that negotiations had been entered into in good faith before the prescribed act. That burden lay on TNAU by virtue of cl 7(1) and (3) of the Regulation. In paragraphs 10-13 of the Points of Defence (HB17-20) TNAU recognised it bore the burden and pleaded the defence. 74. At R[135] the Senior Member made a finding of fact that it had failed to raise the defence. It is not procedurally unfair for the Senior Member to state that TNAU on the facts, after it had pleaded its case, and run its defence on that case, to say that it had failed. In fact the Senior Member was required to say so as a matter of procedural fairness. 75. TNAU chose to put good faith in issue by raising the defence under cl 7 of the Regulation. The risk that it might lose and suffer reputational harm was something which (having the benefit of counsel) it decided to take. It does not sit well now to complain simply because it lost.
21. The lessee also relied upon the submission, raised by "notice of contention" in its Reply to the lessor's Notice of Appeal, that the lessor had failed to comply with the obligation to negotiate in good faith imposed by clause 7 because it had not participated in a mediation before taking prescribed action on the ground of the lessee's failure to pay rent.
22. The lessor objected to the lessee relying upon this submission, submitting that the issue had not been raised at first instance and that, had it been raised, it could have been the subject of evidence. The lessor further submitted that there was no requirement in clause 7 to engage in mediation as part of any good faith negotiation and that, although the Code did provide for "binding mediation" "where landlords and tenants cannot reach agreement on leasing arrangements", that was not part of the "Leasing Principles" to which clause 7(4) of the Covid Regulation required the parties to have regard.
23. In our view the Tribunal failed to make any finding that the lessor had failed to engage in good faith negotiations, or at the least, failed to provide adequate reasons for so concluding. We do not accept the lessee's submission that the Tribunal, at [135] "made a finding of fact that [the lessor] had failed to raise the defence."
24. If the lessor had engaged in good faith in a renegotiation of the rent and other terms of the lease, clause 7 did not prohibit it from re-entering the premises and terminating the lease on the ground of the lessee's failure to pay rent during the prescribed period.
25. To find that the lessor's re-entry was "unlawful", that is a breach of the lease, by reason of the provisions of clause 7, it was necessary for the Tribunal to find that the lessor had failed to negotiate in good faith. This was not a simple question of onus of proof. There was evidence before the Tribunal of offers made by the lessor and counter-offers from the lessee. The Tribunal was required to consider whether those exchanges between the parties satisfied the requirements of sub-clauses 7(3) and 7(4) of the Covid Regulation.
26. In our view, by failing to consider and determine the question whether the lessor had complied with the requirements of sub-clauses 7(3) and 7(4), or alternatively by failing to provide adequate reasons for finding that it had not complied with those requirements, the Tribunal made an error with respect to a question of law.
27. We will defer consideration of the consequences of this finding. However, we note that there were at least two bases upon which it might be said that the lessor did not comply with the requirements of clause 7 before entering into possession on 3 July 2020: 1. First, the offers put to the lessee by the lessor on 28 April 2020 and 9 May 2020 limited the period for which rent relief was offered to the three months, April to June 2020, and required repayments of deferred rent to commence on 1 July 2020 or 30 June 2021 respectively. Those offers may not reflect the requirements of Leasing Principles 3, 5 and 9, which required the abatement of rent "during the COVID-19 pandemic period and a subsequent reasonable recovery period" (principle 3) and the amortisation of repayments of deferred rent over a period of "the balance of the lease term and … no less than 24 months, whichever is the greater" (principle 5). Repayments were not to commence until "the earlier of the COVID-19 pandemic ending (as defined by the Australian Government) or the existing lease expiring, and taking into account a reasonable subsequent recovery period" (principle 9). The "COVID-19 pandemic period" was defined in the fifth paragraph of the statement of purpose as being "defined by the period during which the JobKeeper programme is operational". 2. Secondly, although the provisions of the Code of Conduct relating to "binding mediation" were not, strictly, leasing principles, it is arguable that a good faith renegotiation of the terms of a retail lease, including the rent, should include resort to mediation as it could not otherwise be said that the prospects of a successful renegotiation had been exhausted. We note that clause 8 of the Covid Regulation provided that Part 8 of the Retail Leases Act applied to an impacted commercial lease dispute (which the dispute in this case clearly was if the lessee was an impacted lessee). Part 8 of the Retail Leases Act provided for the mediation of retail lease disputes and s 68 required any dispute to be submitted to mediation before proceedings could be commenced in a court (which is defined in s 63 and includes the Tribunal).
28. We recognise, as the lessor submitted, that "bad faith is a serious charge" and that the absence of good faith is not lightly to be found. Nevertheless, we do not consider that the conclusion that the lessor failed to comply with clause 7 of the Covid Regulation was not available on the evidence, if the Tribunal had undertaken a consideration of the issue.

Lessor's fifth ground - Lessee not ready willing and able to perform the lease

1. The lessor referred to Foran v Wight (1989) 168 CLR 385 and submitted that the lessee had: 1. Given and never withdrawn the "force majeure" notice; 2. Itself repudiated the lease as alleged above; 3. Never paid the April rent which was not subject of Covid regulation; 4. Estimated for itself (if its own evidence be accepted) that it had or would have a 30% turnover reduction, but not paid 70% of the rent for May to July, as contemplated by the Leasing Principles in the Code, thereby according to Leasing Principle 2, putting itself outside the protection of the Code, and 5. Not paid outgoings from as early as the Council and Water rates for December 2019 to February, 2020.
2. The lessee submitted that the question whether the lessee was ready willing and able to perform its obligations was a question of fact and that the Tribunal "implicitly found that Superburrito was ready and willing as a fact." The lessee submitted that, accordingly the lessor required leave to appeal on this ground, which the lessor had not sought.
3. The lessee also submitted that this ground had not been raised at the hearing at first instance and "was not put in issue in the Joint Statement of Facts and Issues, nor was Mr Qin cross-examined on it."
4. The lessor submitted in reply that readiness and willingness was in issue at first instance "because it was an element of the lessee's own claim." The lessor further submitted that a finding that the lessee was willing and able would not be imputed "in the absence of some specific indication in the Reasons that it was in the mind of the Tribunal". The lessor submitted that the Tribunal's comments in relation to the possibility that the lessee might not survive the pandemic, relied upon by the Tribunal in discounting the damages awarded to the lessee, "do not readily reconcile with this view".
5. We consider that, unless the lessor had specifically raised the issue before the Tribunal, it was not incumbent upon the Tribunal to address or make a determination concerning this issue. Although the parties had exchanged points of claim and points of defence, the Tribunal is not a court of strict pleading. That the lessee was ready willing and able to comply with its obligations at the time it purported to terminate the contract may strictly have been a matter which the lessee was required to allege and prove. However, the Tribunal is required by s 38(4) of the NCAT Act "to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms". If the lessor intended to rely upon a submission that the lessee was not ready willing and able to comply with its obligations it ought, in our view, have raised that issue, in its points of defence or otherwise, at a time when the lessee could respond to it: See Maygood Australia Pty Ltd v The Owners - Strata Plan No 85338 [2020] NSWCATAP 237 at [76]-[77].
6. We also note that, in the context of the pandemic and in circumstances where the lessor had been excluded from the premises, it may have been difficult to identify what the lessee was required to prove in order to establish that it was ready willing and able to perform its contractual obligations (which were, notionally at least, subject to modification in light of the provisions of the Covid Regulation or subsequent regulations) at the time that it claimed to have accepted the lessor's repudiation and terminated the lease.

Lessor's sixth ground - Return of the bank guarantee

1. The lessor submitted that the Tribunal had not identified what power it was exercising to order the return of the bank guarantee.
2. The lessee pointed to s 72 of the Retail Leases Act which provides that the Tribunal has power to make orders that a party to proceedings pay money to a specified person and orders that a specified amount of money is not due or owing by a party to the proceedings to a specified person, and sub-section (2) of which provides: "(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under this section to have full effect."
3. In reply, the lessor submitted that: 95. It is not to the point for the respondents to suggest a head of power for the Tribunal to have made the order for return of the bank guarantee. It is fundamental to the correct exercise of power for the Tribunal to direct itself as to the powers that it has, and the principles upon which they are exercisable, and to identify on what basis it is acting, and for what reasons. 96. None of this was done, and the relief given in respect of the bank guarantee had not even been claimed by the lessee.
4. We do not regard this as sufficient basis to uphold an appeal against the order for return of the bank guarantee. We note that s 72 (1) (c)(iv) also permits the Tribunal to order a party to proceedings "do or perform, or refrain from doing or performing, any specified act, matter or thing". We consider it beyond doubt that the Tribunal had the power, if appropriate, to order the return of the bank guarantee.
5. We also note that the lessee had sought: "A declaration that TNAU is not entitled to receive the whole or any part of the security bond."
6. The lessor's real objection to the order for return of the bank guarantee would appear to be that the Tribunal failed to acknowledge that the lessor had a claim for unpaid rent to the date of termination which claim was secured by the bank guarantee. That issue is the subject of what we have identified as the lessor's seventh ground.

Lessor's seventh ground - Date of termination and rent to date of termination

1. Although the grounds of appeal attached to the Notice of Appeal included, in paragraph 12, the assertion that "the Tribunal erred in dismissing the lessor's claim for rent and outgoings to the date of termination by the lessee and in failing to make any finding as to when that termination was effected", the lessor's written submissions for the appeal did not address the latter issue and, in respect of the former issue, merely stated that "the Tribunal's approach was contrary to the Lessee's own position in opening written submissions that the lessee was liable for rent and outgoings up to 2 July 2020".
2. In its written submissions for the appeal, the lessee conceded that it was liable to the lessor for outstanding rent and outgoings up to 3 July 2020, when the lessee lost the benefit of the lease. At the hearing of the appeal the lessee sought to withdraw that concession. The lessee submitted that, as the lessor had failed to negotiate in good faith as required by cl 7 of the Covid Regulation, the lessor was permanently barred from bringing action to recover rent unpaid by the lessee in respect of any part of the prescribed period. The lessee relied upon the decision of Robb J in Darzi Group No 2.
3. We note that the decision in Darzi Group No 2 would not assist the lessee in respect of the unpaid rent for April 2020 or the lessee's liability for outgoings.
4. Nevertheless, we do not consider it necessary to resolve this issue for the purposes of the appeal. It is not in dispute that, if the lessee was entitled to terminate the lease for repudiation by the lessor, that occurred either on 24 November 2020, when the lessee commenced proceedings in the Tribunal seeking damages and not an order that it be restored to possession, or on 19 January 2021, when the lessee asserted that it had communicated its acceptance of the lessor's repudiation at a directions hearing in the Tribunal.
5. The Tribunal's assessment of the compensation payable to the lessee did not depend upon a finding as to when the lease was terminated (save in respect of one submission made by the lessor in relation to what we have characterised as the lessor's eighth ground).

Lessor's eighth ground and Lessee's grounds 1 and 2 - The assessment of damages on the reliance basis

1. It is convenient to address what we have identified as the lessor's eighth ground and the lessee's grounds 1 and 2 together as each relates to the application of the principles governing the award of reliance damages for breach of contract.
2. We have set out above (at [47]) the expression of the principle governing the award of reliance damages by Mason CJ and Dawson J in Amann Aviation. The principle was stated in similar, but not identical terms by other judges of the High Court.
3. The principle was restated and applied by Macfarlan JA, with whom Bell P and Meagher JA agreed, in Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 (Meetfresh Franchising). His Honour stated, at [28] - [36]: 28 Ivanman claimed, and the primary judge awarded, damages of $113,171 representing Ivanman's costs of refitting the premises in response to the appellant's threat not to extend Ivanman's franchise agreements if the refit was not done. The claim was therefore not for a loss of profits, which would amount to a claim for expectation damages, but rather for what has been described as damages for wasted expenditure or reliance damages (see Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54). 29 The decision in Amann Aviation established that, in respect of such a claim, "the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed", with the consequence that the onus of proof rests on the party breaching the contract to establish "that the reliance expenditure would have been wasted even if the contract had been performed" (at 86-90 per Mason CJ and Dawson J). 30 In support of these grounds of appeal, the appellant submitted that damages for wasted expenditure are only awarded where it is impossible to quantify expectation damages. It then contended that this was not such a case because it was possible to quantify Ivanman's loss of profits, that being zero because its business had been performing poorly. 31 This approach is not supported by Amann Aviation or other authority. The effect of Amann Aviation is that the Court may award reliance damages where the evidence does not establish any loss of profits. Where, as here, a claimant does not seek to prove that the revenue it would have been likely to earn would have exceeded expenditure, such that profits would have been earned, it remains open to that party to claim that the prospective revenue would at least have been sufficient to recoup identified expenses. 32 The appellant submitted in the alternative that it had discharged its onus to establish that the wasted refit cost would not have been recouped by Ivanman. The primary judge did not deal with this argument, although it was not made clear to this Court whether the argument was put to his Honour. The appellant nevertheless relied on appeal on statements made by the primary judge elsewhere in his judgment that "the business, frankly, did not do very well. The financial accounts which are before the Court clearly reveal that" (Judgment at 20), that "the business was making a loss every year since it was purchased by Ivanman Pty Ltd" (at 58), and that there was a question about the solvency of Ivanman "and it was losing money" (at 59; see also at 40). 33 The accounts in evidence for Ivanman for the year ended 30 June 2016 covered most of its first year operating the Meetfresh business. They showed that Ivanman's trading income for that year exceeded its costs of sales by $273,368.23 which thus represented a gross profit from trading. Its net position after deduction of other expenses was a loss of $15,837.30. The expenses included substantial depreciation charges, directors' fees and wages. 34 For the following financial year, Ivanman's gross profit from trading was $241,685.73, with a net loss after other expenses of $76,334.49. Again, the expenses included substantial depreciation charges, directors' fees and wages. 35 Proof of these results for a period somewhat less than the first two years of Ivanman's operation of the business was not in my view sufficient to discharge the appellant's onus of proving that it was unlikely that Ivanman would, over the term of its agreements with the appellant (to 31 October 2017 under the first franchise agreement and then to 31 October 2022 under the second franchise agreement), have earned sufficient revenue to cover its costs including the costs of the refit. 36 Ivanman's decision to seek a second franchise agreement extending its right to carry on the business for five years from 31 October 2017 was made after it had been conducting the business for some time. It can therefore be assumed to have been in a position to make an informed decision as to the business' prospects for the future. It is hardly likely that it would have sought that extension if it had not reasonably anticipated that it would make profits from the business in the future, or at the very least cover its costs. Moreover, the existence of a significant prospect of profits being made was supported by an expert report in evidence that assumed that the business had a substantial positive value and projected that it would earn substantial profits from 1 November 2017.
4. In our view, the decision in Meetfresh Franchising is clear authority that even substantial losses incurred prior to termination are not inconsistent with full recoupment of reliance expenditure.
5. The lessor submitted that it had met its onus of establishing that the lessee would not have recouped its expenditure if the lease had been permitted to run its course.
6. The lessor founded that submission on the proposition that the evidence as to the success or otherwise of the lessee's business was sufficient to discharge any onus lying upon the lessor.
7. The lessor submitted: 263. Here was a tenant operating in "grim pandemic circumstances". The Reasons are devoid of any analysis of the lessee's Profit and Loss statement or actual trading figures. The Profit and Loss statement shows that the tenant at no time was able to cover its costs of sales and operating costs, let alone recoup overheads. 264. Here was a tenant openly alleging "force majeure" and inability to perform. The lessee at different times asserted it could pay only 20% the rent, and at other times 30%. On 31 May it proposed to pay 30% as a sign of good faith, but when the rent fell due the next day, paid nothing at all. Furthermore, the tenant was not paying even modest outgoings. 265. The term was to expire on 30 June, 2024 and so at the time of re-entry the lessee had just under 4 years remaining, and it is clear, from the exchanges in August, that the lessee was not willing or able to trade immediately, probably because it was not able to trade profitably. 266. Moreover, in a repudiation claim, the date for the assessment of loss of the bargain is when the contract is brought to an end by acceptance of the repudiation and termination on the part of the innocent party. That would require a determination of the date of the lessee's termination, which was not the subject of any finding by the Tribunal. If, as the lessee, alleged, that date was 21 January, 2021, then the lease had less than 3 ½ years to run at the time of termination. 267. On 4 August, 2020 the lessee was offered the opportunity to return upon a 70% rental, its reply on 11 August, 2020 was to reject that proposal and to make no proposal for re-entry and payment of any rental at all, pending conclusion of negotiations. No further proposal was received. There seems no reason to think that the tenant would ever have paid a rental conforming with Leasing Principle 3, and therefore it would have been exposed, as Leasing Principle 2 says, to loss of the protections that the Code supplied.
8. The lessee referred to the judgment of Brennan J in Amann Aviation at 106-107: "What justifies the reversal of the onus is the defendant's repudiation or breach which denies, prevents or precludes the existence of circumstances which would have determined the value of the plaintiff's contractual benefits."
9. The lessee submitted that, in assessing the lessee's damages in terms of "possibilities of failure" (at [156] and [157] of the decision), the Tribunal had found that "it was impossible to show that Superburrito would not have recovered." The lessee submitted that it was implicit in that finding that the Tribunal had concluded that the lessor could not meet its burden of proof.
10. In our view the Tribunal did not apply correctly the principles governing the award of reliance damages.
11. On a correct application of those principles, as outlined by Macfarlan J in Meetfresh Franchising, if the Tribunal was of the view that the lessor had failed to establish that the lessee would not have recouped its expenditure, it was appropriate to award compensation equivalent to the whole of the expenditure reasonably incurred in fitting out the premises and preparing to commence business, in reliance upon the lessor's promises contained in the lease.
12. The decisions in Amann Aviation and Meetfresh Franchising do not support the approach adopted by the Tribunal, of applying a discount factor to allow for the contingency that the lessee's business might not succeed. In our view, that approach is not consistent with those authorities.
13. We also consider that the Tribunal failed to accord the parties procedural fairness when it referred to "industry statistics" to justify the reduction in the compensation awarded to the lessee. The Tribunal did not identify the source of those statistics and failed to draw to the attention of the parties its intention to rely upon them so that they might have the opportunity to make submissions concerning them.
14. Section 38(2) of the NCAT Act provides that: "The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice."
15. That provision does not permit the Tribunal to make findings without evidence and, even to the extent that the Tribunal may take notice of matters within its own specialist knowledge, for example, procedural fairness would require that those matters be disclosed to the parties.
16. As the Appeal Panel held in Minifie v Maxwell [2020] NSWCATAP 30, at [67]: "… it may be a denial of procedural fairness where a finding is made based upon the decision maker's own purported knowledge or understanding of matters that do not form part of the evidence. If a judicial officer intends to rely upon their specialist knowledge, this issue should be raised with the parties during the hearing so they have an opportunity to make submissions."
17. See also the decision of the Full Court of the Supreme Court of Victoria in R v Metropolitan Fair Rents Board; ex parte Canestra [1961] VR 89 at 91: "In our opinion, there is no room to doubt that a tribunal which is bound to act in a judicial manner and therefore to observe the principles of natural justice is bound to disclose to the parties any specific information or evidence received in the course of an inquiry relevant thereto, unless the legislation governing its duties negatives it."
18. The lessor did not submit that the Tribunal had not failed to accord the parties procedural fairness in relying upon the "industry statistics".
19. It follows that the lessee has established both grounds of appeal which it pressed at the hearing.
20. We also accept that the Tribunal did not adequately address the question whether the lessor had established on the balance of probabilities that the lessee would not have recouped its expenditure.
21. The lessor correctly points out that the Tribunal was conscious that the lessee's prospects of recouping its expenditure were adversely affected by the pandemic. However, the Tribunal did not directly consider whether the lessor had established that the lessee would not have done so.
22. It is not apparent to us that the matters raised by the lessor in paragraphs [263] - [267] of its submissions, which we have set out above, were raised before the Tribunal at first instance. The lessor's written submissions merely stated: "Any liability to [the lessee] must be reduced by any value flowing to [the lessee] from the use of items of expenditure it now claims" and "any liability to [the lessee] must be reduced by rent owed to [the lessor]."
23. It is neither necessary nor appropriate that we seek to determine the question whether the lessor did meet its burden of proof, but we note a number of propositions about the matters raised by the lessor in paragraphs [263] - [267] of its written submissions on the appeal: 1. The lessor's submissions proceed as if the lessee's trading during the pandemic period was an indication of its prospective trade after the pandemic was over. 2. Moreover, the lessor's submissions do not acknowledge that the lessee had only commenced trading in December 2019, and hence its pre-pandemic trade could not be said to be indicative of the likely results of trading over the longer term. 3. We also note that the lessor's submissions do not acknowledge either the existence of an option for a further five-year term or the provisions of Leasing Principle 12 which indicated that lessees should be given the opportunity to extend their leases for a period equivalent to "the rent waiver and deferral period". Hence it may not have been appropriate to assess the lessee's prospects of recouping its expenditure on the basis that, at the time the lessee was excluded from possession, the lease only had four years to run. 4. We further note that paragraph [267] of the lessor's submissions omits to record that the lessor's offer of 4 August 2020 required the lessee to pay by 10 August 2020 what the lessor calculated was rent due up to the end of September (that is including rent for July and August, when the lessee had been denied access to the premises, and rent for September, which would not fall due until 1 September 2020). It does not seem appropriate to draw any inferences regarding the lessee's future conduct on the basis of its failure to respond to that offer.
24. We will consider in due course the consequences of our findings regarding the lessor's eighth ground and the lessee's grounds 1 and 2.

Lessor's ninth ground - Evidence of expenditure

1. In paragraphs [144] and [145] of the decision the Tribunal stated: 144 Also, the Lessee's evidence in respect of loss was deficient in some material respects: (1) First, many of the items disclosed a tax invoice only with no evidence of payment; (2) Some of the online advertising related to point of sale and not start-up costs; and (3) Some documents were in Chinese and were not translated. 145 In respect of items in 144(1) above, the Tribunal accepts that the Lessee's tax invoices relating to the fit-out of the Premises were incurred and paid if the recital on, and timing of, the invoice are correct. It's apparent to the Tribunal that the Lessee was post-incorporation a single purpose vehicle to conduct the business at the Premises under the Lease. It did not appear to run other businesses or conduct that business at other addresses.
2. The lessor submitted that the approach of the Tribunal in [145]: "… amounted to dispensing with proof of payment and was wrong. The first condition for a reliance loss claim is proof that the expenditure is proved. The expense might have remained unpaid, or might have been paid by a third party, or written off by the supplier, or discounted. It is for the plaintiff to prove payment."
3. The lessor also submitted that the evidence of Mr Qin, that the lessee had expended the money, was not sufficient.
4. We do not agree. The lessor's submissions appear to overlook paragraph 85 of Mr Qin's affidavit which stated that: "Located at Tab 25 is a copy of the invoices from each of the suppliers rendered and paid by SuperBurrito." [Emphasis added.]
5. The question whether the lessee had incurred the expenditures which it claimed was a question of fact. The Tribunal found that the lessee had incurred expenses amounting to $399,922.61. It cannot be said that there was no evidence that the lessee had incurred those expenses.
6. The lessor requires leave to challenge that finding. We do not consider that the conclusion of the Tribunal was not fair and equitable or against the weight of evidence. The lessee provided copies of invoices and Mr Qin gave evidence that they were incurred so that the lessee could run its burrito business from the premises and that they had been paid. There is no basis for the grant of leave to appeal against the finding that the lessee incurred expenditures of $399,922.61 in setting up its business and fitting out the premises.
7. The lessor also submits that the lessee failed to establish that, and the Tribunal failed to consider whether, the expenditures were reasonably incurred.
8. We consider that the fact that the expenses were incurred in respect of kitchen equipment, design costs, fit-out costs and advertising for the purposes of setting up and running a restaurant, was sufficient to establish that the costs prima facie were reasonably incurred. We do not consider that the references in Amann Aviation to expenses "reasonably incurred" were intended to impose an obligation upon the party seeking damages to establish in respect of each item of expenditure that it was reasonable. Rather, the qualifier "reasonably" was intended to exclude from recovery as reliance damages expenditures which, either on their face or by reference to other evidence, were found to be unduly extravagant or unnecessary for the purposes of the relevant project or enterprise. In the absence of challenge by the lessor to the reasonableness of any expense claimed by the lessee, we do not consider that the Tribunal was required to give specific consideration to the question whether the expenses were reasonably incurred.

Lessor's tenth ground - Basis of assessment of loss

1. In its written submissions, the lessor referred to the decision of Higgins J in Commonwealth of Australia v Silverton Ltd (1997) 130 ACTR 1 and cited his Honour's statement, at [23], that: "The correct measure of loss is the value of the fitout rendered useless as at the date of the breach less the value of salvage."
2. The lessor submitted that that statement represented the correct approach to the assessment of the lessee's damages flowing from the lessor's repudiation of the lease.
3. We do not accept that submission.
4. Silverton was a case arising from the early termination of a sub-lease to the Commonwealth for the purposes of the Australian National Audit Office and two other Government Departments. The sub-lease had been terminated abruptly, nearly six years into a ten-year term, when the building had been assessed as being structurally unsound.
5. Neither the Commonwealth nor the Audit Office were using the premises for the purposes of a profit-making enterprise. Accordingly, as Higgins J noted, at 21, it was "not a case in which 'loss of profits' [was] relevant."
6. His Honour concluded: "… it is not, in my view, correct to allow the cost of a new fitout less the value remaining after depreciation of the existing fitout. The correct measure of loss is the value of the fitout rendered useless as at the date of the breach less the value of salvage."
7. It is clear from his Honour's judgment that the "value of the fitout rendered useless" was the depreciated value referred to in the previous sentence.
8. The factual situation in Silverton was clearly distinguishable and the judgment is not in any way inconsistent with the conclusion reached by the Tribunal in these proceedings.

Lessor's eleventh ground - Kitchen equipment not retrieved from the premises

1. The lessor submitted in respect of the Tribunal's award of a proportion of the value of the kitchen equipment, discounted both by reason of the lessee's failure to collect the goods and by reason of the prospects of the lessee remaining in business if it had not been evicted: "283. The chattels were distinct from the subject premises and it could not be presumed that they were a wasted expense because they were not lost as a result of loss of the premises. They were not a head of loss that flowed from the alleged breach without further specific proof, which was not offered. Their value was not the subject of evidence. This head of claim should not have been allowed."
2. The lessee submitted that the Tribunal had awarded compensation in respect of the kitchen equipment based upon the contingency that, if the lessee had taken possession of the equipment, it might have been able to realise some value for them and so mitigated its loss. The lessee submitted that the Tribunal was entitled to take a broad-brush approach to the assessment of the extent to which the lessee had failed to mitigate its loss and did not err by doing so. The lessee also submitted that the lessor was seeking to challenge a finding of fact and required leave to rely on this ground.
3. The lessor submitted in reply that the discount allowed by the Tribunal was not a finding as to the lessee's loss but rather "speculation without evidence."
4. We agree with the lessee that the Tribunal's findings in respect of the kitchen equipment were findings of fact in respect of which the lessor would require leave to appeal.
5. The assessment of damages is not a precise science and the Tribunal, and the courts, may be required to do the best they can to assess damages on the basis of limited evidence: Amann Aviation at 83; Baak v Concrete Services Group Pty Ltd [2016] NSWCATAP 42, at [87]; Tuck v White [2016] NSWCATAP 132, at [43]-[44].
6. The lessee had established that it had incurred expenditure acquiring the kitchen equipment for the purposes of the business it conducted on the premises. As the Tribunal noted, the lessee did not have other businesses where the equipment might have been put to use. The lessee might have mitigated its loss in respect of that equipment by collecting it from the premises and seeking to sell it. The lessor bore the burden of proof in respect of the alleged failure to mitigate. The Tribunal, in calculating the lessee's damages, applied a 30% discount to the cost of the equipment, to account for the possibility that the lessee might, if it had attempted to do so, have been able to realise that much by selling the kitchen equipment.
7. We find no error of law or fact in the Tribunal's decision in this respect.

Conclusion - The resolution of the appeal

1. We have upheld a number of grounds of appeal. Most significantly, we have upheld the lessor's first ground and found that the lessor was not prohibited by the Covid Regulation from re-taking possession of the premises on 3 July 2020 on the basis of the lessee's failure to pay the rent which fell due on 1 April 2020.
2. That means that it is necessary to determine the lessee's unconscionable conduct claim which the Tribunal did not find it necessary to consider.
3. We do not consider it appropriate that we seek to determine the unconscionable conduct claim, the parties have not addressed the elements of that claim in submissions to the Appeal Panel.
4. It will be more likely to promote the prompt resolution of the remaining issues for the proceedings to be remitted to the Consumer and Commercial Division of the Tribunal for determination of the lessee's unconscionable conduct claim and, if found to be appropriate, assessment of the lessor's claim (which, if the lessee is found to have been an impacted lessee, may need to be discounted to take account of the impact of the Code of Conduct).
5. In considering the unconscionable conduct claim, the Tribunal may need to make findings concerning whether the lessee was an impacted lessee, whether the lessor participated in good faith negotiations and, if the lessee succeeds in establishing unconscionable conduct, how damages are to be assessed, including whether the appropriate measure of damages is reliance damages and whether the lessor has established that the lessee would not have recouped its investment if the lease had not been terminated.
6. To the extent that it is determined that reliance damages are the appropriate measure of damages, the Tribunal should consider that measure to have been determined at the figure calculated by the Tribunal (before the application of the 35% discount which we have found was applied in error), that is $399,922.61.
7. We note that the Tribunal made a number of findings critical of the way in which the lessor had conducted negotiations and otherwise conducted itself during the pandemic period up until the lessee commenced proceedings in the Tribunal. The lessor's submissions were critical of the Tribunal for making those findings but they were potentially relevant to the question whether the lessor had participated in a good faith renegotiation of the lease. They are also potentially relevant to the question whether the lessor engaged in unconscionable conduct. Nevertheless, the fact that the Tribunal made those findings is a reason why the proceedings should not be remitted to the Senior Member who constituted the Tribunal at the original hearing.

Costs

1. Both parties have succeeded in establishing one or more grounds of appeal. The Tribunal's orders will be set aside, and the proceedings remitted. The amount in issue both at first instance and on appeal exceeded $30,000. Accordingly, pursuant to rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW), special circumstances are not necessary before the Appeal Panel may make an order for costs.
2. The usual rule where rules 38 and 38A are applicable is that the successful party is entitled to an order for costs in its favour, but that is not an absolute rule: Thompson v Chapman [2016] NSWCATAP 6 at [69] - [72].
3. Relevant to consideration of whether the usual rule should apply are the facts that: 1. The lessor maintained numerous grounds of appeal on which it did not succeed; 2. The substantial point upon which its appeal has succeeded was one which was not raised before the Tribunal at first instance; 3. The grounds on which the lessor has succeeded could be stated in short compass and did not warrant the filing of nine pages of grounds of appeal or 51 pages of written submissions; and 4. The lessor has failed on its grounds of appeal relating to the application of the Covid Regulation and Jobkeeper Rules in determining whether the lessee was an "impacted lessee", which grounds occupied about 25% of the lessor's written submissions and probably a greater proportion of the time at the hearing.
4. The parties sought to be heard on the question of costs. We will make orders providing for the filing of submissions on costs. If the parties do not file submissions on costs, there will be no order for costs in relation to either appeal.

ORDERS

1. Our orders are: 1. Appeals 2022/68195 and 2022/69427 are allowed 2. Orders (1) to (3) made on 10 February 2022 in proceedings COM 20/49367 and orders (1) and (2) made on 10 February 2022 in proceedings COM 20/52695 are set aside. 3. Both proceedings COM 20/49367 and proceedings COM 20/52695 are remitted to the Consumer and Commercial Division of the Tribunal, differently constituted, for determination in accordance with this decision. 4. Leave to the Consumer and Commercial Division the question whether the parties should be permitted to file further evidence. 5. Either party may, within 14 days of the date of publication of these reasons, file and serve submissions, not exceeding five pages, and any evidence relied upon in support, seeking an order in relation to the costs of either or both appeals. 6. If either party files submissions pursuant to order (5), the other party may file and serve submissions not exceeding five pages in response to any such submissions, and any evidence relied upon in support, within a further 14 days. 7. Any submissions filed in accordance with orders (5) and (6) should address the issue whether the question of costs can be determined on the basis of the written submissions and without a further hearing. 8. If neither party files submissions in accordance with order (5) there will be no order in relation to the costs of either appeal.

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

APPENDIX - THE ATTACHMENT TO THE LESSOR'S NOTICE OF APPEAL (attach to Notice of Appeal) In the NSW Civil & Administrative Tribunal Appeal Panel No. 2022/ TNAU Finery Pty Ltd, Appellant Superburrito Pty Ltd, First Respondent Zhongyuan QIN, Second Respondent Schedule A to Notice of Appeal - Orders Challenged on Appeal Orders made in proceedings no. COM 20/49367 on 10 February, 2022

1. The Order that the Lessor pay to the Lessee the sum of $259,949.70.
2. The Order that the Lessor pay to the Lessee its costs of the application as agreed or assessed and on a party/party basis; and
3. The Order that NAB Bank Guarantee No. 704924842 dated 31 July, 2019 of the Lessee and in favour of the Lessor in the sum of $26,125.00 be returned to the Lessee forthwith. Orders made in proceedings no. COM 20/52695 on 10 February, 2022
4. The Order that the Application (in proceedings no. COM 20/52695) be dismissed.
5. Any other adverse Orders of which the Appellant has not been notified. Schedule B to Notice of Appeal- Grounds of Appeal Breaches before the prescribed period
6. The learned Senior Member erred in finding (at Reasons par. [134] and 136 and (2)) that the Lessor unlawfully re-entered the subject Premises on 3 July, 2022, and repudiated the lease, by reason that by so re-entering it contravened Reg. 7 of the Rental and Other Commercial Leases (COVID-19) Regulation, 2020 (NSW), whereas that Regulation did not prohibit recovery of the Premises in the circumstance that the Lessor was entitled to rely pursuant to clause 12.2.2 of the lease upon a breach of the lease consisting of a failure to pay rent before the prescribed period, being rent for the month of April, 2020, which fell due for payment on I April, 2020 and was more than 14 days in arrears from 15 April, 2020, being a breach that occurred before the commencement of the prescribed period under the Regulation, which commenced on 24 April, 2020.
7. The learned Senior Member erred in finding (at Reasons par. [134) and [136)(1) and (2)) that the Lessor unlawfully re-entered the subject Premises on 3 July, 2022, and repudiated the lease, by reason that by so re-entering it contravened Reg. 7 of the Rental and Other Commercial Leases (COVID-19) Regulation, 2020 (NSW), whereas that Regulation did not prohibit recovery of the Premises in the circumstance that the Lessor was entitled to rely pursuant to clause 12.2.1 of the lease upon repudiation of the lease by the tenant consisting of (a) a serious and persistent failure and refusal or inability to pay rent that accrued before the prescribed period, being rent for the month of April, 2020, which fell due for payment on I April, 2020 and was more than 14 days in arrears from 15 April, 2020, being a breach that occurred before the commencement of the prescribed period under the Regulation, which commenced on 24 April, 2020, and in which the Lessee persisted in the face of notices to remedy the same; and/or (b) a notice entitled Notice of Force Majeure delivered by the Lessee to the Lessor on 7 February, 2020 by email; and/or (c) a serious and persistent failure and refusal or inability to pay a proportion of the rent that accrued during the prescribed period, in that the amount of$2,6l2 paid on 1 May, 2020 bore no relationship to any reduction in the lessee's turnover, and the lessee paid nothing at all in respect of June or July; and/or (d) at the same time as the conduct alleged in (a) and (c), a serious and persistent failure to engage in negotiation under the Covid Regulation on an open and transparent basis in circumstances where it did not frankly and fairly disclose its turnover figures, whilst requesting waivers and deferrals far in excess of any actual reduction in turnover.
8. Further, or in the alternative, the learned Senior Member erred in failing to deal with and make findings concerning the issues that were the subject of Grounds I and/or 2, and in failing to give any reasons disposing of those issues. The Finding that the Lessee was an "impacted lessee" as defined
9. The learned Senior Member erred in finding that the Lessee was an "impacted lessee" as defined, in that: (a) He misdirected himself or made assumptions of Jaw to the effect that: (i) consideration by the Tribunal of the issue of whether the lessee was an "impacted lessee" was confined to material that the lessor was entitled to require; and (ii) that a lessor is not entitled to undertake an independent or parallel audit of whether a lessee has qualified for the JobKeeper Scheme if the ATO is so satisfied, and (iii) that the right or opportunity of a lessee to the require or seek the provision of more complete financial information from a lessee, was confined to the purpose of enabling a negotiation of the terms of a rent reduction, waiver or deferral to occur; and (iv) that the receipt of JobKeeper payments by a lessee is, for the purpose of proceedings in the Tribunal or a Court prima facie evidence that a lessee has qualified for the JobKeeper scheme; and (v) That a lessor acting in good faith was bound to accept such evidence, for the purpose of proceedings in the Tribunal or a Court; and (iv) that these propositions were established by Darzi Group Ply Ltd v. Nolde Ply Ltd [2021] NSWSC 774, whereas that decision does not establish or support any of those propositions as propositions of law. (b) In substance he misdirected himself to the effect: (i) that the lessor was bound to accept at trial the Lessee's receipt of JobKeeper payments as sufficient evidence that the Lessee satisfied par. 4(1)(a) of the definition of "impacted Lessee"; and (ii) that he need not (or erred in failing to direct himself that he ought to) determine the qualification of the Lessee as an "impacted lessee" objectively on the evidence in accordance with the relevant statutory provisions as at the relevant time; (c) Further or in the alternative, he took into account irrelevant considerations, being: (i) the suggested legal limits (if they were otherwise correctly found, which is denied), at the time and in the course of the dealings between the parties before action, on the lessor requesting or requiring information from the lessee or on the lessor contesting the lessee's claim to be an "impacted Lessee"; and (ii) in relation to those suggested legal limits, the conduct of the lessor; and (iii) the lessor's prudence and caution in re-entering and locking out the lessee; and (iv) the lessor's consideration of the Regulation in re-entering and locking out the lessee; and (v) the suggested conduct of the lessor in depriving the lessee of a reasonable opportunity to meet the Alternative Test under a subsequent regulation by re-entering and terminating the lease on 3 June, 2020 (in fact 3 July, 2020); and (vi) the breach of Regulation 7 that he found. (d) in consequence of making one or more of those misdirections or assumptions, or failures to direct himself correctly, the learned Senior Member: (i) failed to consider and take into account relevant evidence, and to make findings, on that question that was before him, namely, whether upon the objective evidence the lessee was at the time of re-entry actually qualified as an "impacted lessee"; and (ii) accepted without actually evaluating its reliability and reasonableness, the lessee's assertion that at the end of April it made a projected turnover for May, 2020.
10. The learned Senior Member misdirected himself by accepting that the lessee was entitled to have the question of its qualification for the JobKeeper Scheme determined upon a projection asserted to have been made by the lessee, rather than objectively in accordance with the applicable statutory provisions, whereas the relevant legislation imposes an objective standard.
11. The learned Senior Member misdirected himself (Reasons [111]-[113]) by accepting a projected turnover for May, 2020 and failing to address the Lessee's satisfaction of the test as at the relevant time, which was 3 July, 2020.
12. The learned Senior Member erred in finding that it was sufficient to establish a breach of Regulation 7 that at the time that it re-entered, the lessor had written evidence from the lessee that the lessee was in receipt of JobKeeper payments. The finding that the lessor's conduct was unlawful
13. By reason of the foregoing errors, the learned Senior Member erred in finding that the Lessor carried out prescribed actions which were prohibited by clause 7 of the Regulation (Reasons [134]) and that its failure to accept written confirmation of JobKeeper payments as being at least prima facie evidence of the Lessee's qualification for the scheme for the purpose of good faith negotiations was unlawful (Reasons [135]).
14. The learned Senior Member erred in finding that the Lessor carried out prescribed actions which were prohibited by clause 7 of the Regulation (Reasons (134)) and that its failure to accept written confirmation of JobKeeper payments as being at least prima facie evidence of the Lessee's qualification for the scheme for the purpose of good faith negotiations was unlawful (Reasons [135]), in the circumstances where: (a) the written communication referred to was not made until after the Lessor re-entered; (b) the Lessor subsequently on 4 August, 2020 offered the lessee a 15% waiver plus 15% deferral of rental, including for the month of April, 2020, in circumstances where the lessee had not disclosed at that point in time accurate trading figures; and (c) The Lessee on 11 August, 2020 rejected that offer and insisted on being let into possession, without making any counter offer, or any proposal to pay arrears, and at the same time as refusing to pay any rent at all for the months from July onwards until completion of negotiation.
15. Those findings (Reasons (134-135))14(c): (a) were made without putting to the Lessor, and without identifying in the Reasons any specific breach of Regulation 7(3), and in particular whether the breach was failure to renegotiate at all, or a breach of good faith, and, in either case, how it arose; (b) cannot be supported on the mere basis of an unwillingness of the Lessor to accept specific evidence that, or to admit that, the Lessee was an impacted Lessee, in circumstances where the Lessor did none the less take part in negotiations; (c) were contrary to law in that there is no legal obligation to make the suggested admission; and (d) ought not to have been the subject of consideration at all in circumstances where an adverse finding on a matter involving good faith has reputational consequences and was not necessary for or relevant to determination of the issue whether the Lessee was an impacted lessee as defined. The lessor's claim
16. By reason of the foregoing errors, the learned Senior Member consequently erred in dismissing the lessor's claim for arrears of rent, outgoings and damages for loss of the balance of the term.
17. In the alternative, the learned Senior Member erred in dismissing the lessor's claim for rent and outgoings to the date of termination by the lessee and in failing to make any finding as to when that termination was effected. Lessee's damages In the alternative to the grounds challenging the finding of liability, the lessor relies on the following grounds concerning quantum:
18. The learned Senior Member erred in allowing a claim by the lessee for substantial damages for loss of the bargain in circumstances where the lessee was not at the time of terminating ready, willing and able to perform the contract comprised in the lease.
19. The learned Senior Member erred in: (a) applying a presumption that the plaintiff would have recouped expenditure in respect of items of expenditure for which no evidence of payment was adduced, and (b) in finding that items of expenditure were paid, (i) without any evidence that they were paid, and/or (ii) without the Tribunal directing itself that it was open to it to draw against the lessee an inference that such evidence would not have assisted it; or (c) alternatively, in finding that items of expenditure were paid without sufficient evidence that they were paid.
20. The learned Senior Member erred in applying a presumption that the plaintiff would have recouped expenditure without evidence that the expenditure was reasonably incurred, and without making such a finding.
21. The learned Senior Member erred in allowing any or any substantial damages for wasted expenditure: (a) without making a finding as to whether o r not that expenditure would have been recouped and in failing to take into account the expenses including rental and outgoings that the tenant would have been liable to pay; and (b) by discounting the amount of wasted expenditure by a percentage chance that the Applicant's business would not have survived rather than making a finding on the balance of probabilities as to whether the expenditure would have been recouped if the contract had been fully performed; (c) in the alternative to (b), by failing to give reasons for the selection of a 35% discount; and (d) in circumstances where he found that 60% of new restaurants fail within the first year; and (e) in circumstances where he found that 80%ofnew restaurants fail within 5 years; and (f) in circumstances where the he found that there was a realistic prospect that either the Lessee's business would not have survived or that it would not have operated at such a level that it may not have been able to recover the full amount of set up costs; and (g) in circumstances where the evidence, including the lessee's own evidence, was that its sales turnover both before and after the inception of the pandemic was insufficient to pay the rental and other expenses of the business.
22. The learned Senior Member erred in allowing substantial damages for wasted expenditure in circumstances where th e correct basis for assessment of loss was the value of the fi tout rendered useless as at the date of the lessee's termination of its lease, less the value of salvage, and there was no evidence of this value.
23. The learned Senior Member erred in allowing any amount of damages for loss of the furniture, plants and pots, and kitchen equipment that he found the Lessee refused to retrieve from the subject premises. Schedule C to Notice of Appeal - Orders the NCAT Appeal Panel Should Make
24. An Order that leave to appeal be granted in respect of Grounds 9, l 4(c) and I 6(d) to (g) of the Grounds of Appeal.
25. An Order that the Appeal be allowed.
26. An Order that the orders of the Tribunal made on 10 February, 2022 in matter no. COM 20/49367 and in matter no. COM 20/52695 be set aside.
27. An Order that the Application in matter no. COM 20/49367 be dismissed.
28. An Order that in matter no. COM 20/52695 there be judgment for the Applicant TNAU Finery Pty Ltd ACN 629 469 558 against the Respondents SuperBurrito Pty Ltd CAN 634 026 850 and Zongyuan QIN in the sum of $158,23 1, plus interest at the contract rate of 12%, or such other amount as the Appeal Panel finds the Appellant is entitled to recover.
29. In the alternative to prayer 5, an Order that in proceedings no. COM 20/49367 be remitted for a new trial limited to quantum.
30. In the alternative to prayer 4, an Order that matter no. COM 20/49367 and matter no. COM 20/52695 be remitted for a new trial.
31. An Order that SuperBurrito Pty Ltd ACN 634 026 850 and Zongyuan QIN pay the costs of this appeal and of the proceedings in matters no. no. COM 20/49367 and in matter no. COM 20/52695, and that those costs be assessed on the indemnity basis.
32. Such further or other Order as to the Appeal Panel seem fit.

Endnotes

1. Clause 4(2) of the Jobkeeper Rules provides that any term defined in the Income Tax Assessment Act 1997 (Cth) has the same meaning in the Jobkeeper Rules. "GST Act" is defined in s 995-1 of the Income Tax Assessment Act 1997.
2. See in particular the Public Health (COVID-19 Places of Social Gathering) Order 2020 (NSW), which commenced on 23 March 2020 and prohibited the sale of food and beverages for consumption on premises. 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 06 February 2023 - Added text version of Appendix 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: 06 February 2023