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LANDLORD REFUSES TO GRANT RENT RELIEF ALLEGING THAT THE TENANT’S FURTHER REQUEST FOR RENT RELIEF SHOULD HAVE BEEN MADE IN ACCORDANCE WITH THE AMENDED REGULATIONS
This case involves a determination on whether a complaint request for rent relief made under reg 10(2) of the Regulations as they existed prior to 29 September 2020 entitles the tenant to claim rent relief after 29 September 2020.
Facts:
The Applicant (‘the Tenant’) is the tenant of retail premises located in Burwood, which operate as a 24-hour gymnasium known as Snap Fitness Burwood (‘the Premises’). The Respondent (‘the Landlord’) is the registered owner and landlord of the Premises.
The Tenant was forced to close the Premises to the public because of restrictions imposed by the State Government due to the COVID-19 pandemic. Those restrictions were substantially lifted on or about 20 June 2020, allowing the Tenant to reopen its business on 21 June 2020. However, the re-opening of the Premises was short-lived as restrictions were reimposed on 6 July 2020, again forcing the Tenant to close its business to the public until 8 November 2020.
On or about 19 May 2020, the Tenant, through its accountant, wrote to the Landlord’s leasing agent requesting a waiver of all rental expenses and associated outgoings from March 2020 until such time as the gym is allowed to reopen (‘the Rent Relief Request’). In late May or early June 2020, the Landlord rejected the Tenant’s Rent Relief Request. Despite further negotiation between the parties, the parties were unable to reach an agreement as to what rent relief, if any, should be given.
The Tenant filed this proceeding in late August 2020. It seeks the order for a waiver of all rental over the period 1 April 2020 until 1 November 2020. The Landlord, submitted that the Rent Relief Request only related to the first relevant period, which ended on 29 September 2020. She argued that a fresh request for rent relief should have been made following the introduction of the Amended Regulations. Mr Li submitted that given the above factors, there was no entitlement to rent relief for the period after 29 September 2020.
Mr Burgers, a director of the Tenant, appeared on its behalf. He conceded that no further request for rent relief was made following the introduction of the Amended Regulations.
Issue: Is the Tenant entitled to claim rent relief for the period after 29 September 2020, in circumstances where no request for rent relief was given to the Landlord relating to the second relevant period?
Held:
Amending provisions, which require that additional documents or information accompany requests for rent relief, only relate to requests for rent relief made after 29 September 2020, and in circumstances where no compliant request was made prior to that date. In other words, they are intended to allow fresh entry into the rent relief scheme. They are not, however, intended to affect an existing eligible lease dispute arising under the Principal Regulations, other than to extend the period under which rent relief may be sought and protection against eviction is given.
This decision in part concerned whether a T who had made a request for rent relief under the 1st tranche of the CTRS regs which spanned a period after those regs ended was required to make a further request for rent relief under the 2nd or 3rd tranche (as relevant). A few quotes from the case will suffice to show the Member’s decision:
1. I find that the Amended Regulations (and Further Amended Regulations) do not require that a fresh request for rent relief must be made for a tenant to be entitled to claim rent relief after 29 September 2020 until 28 March 2021, provided a compliant request was made under the Principal Regulations and no agreement had been reached between the parties. In other words, a right to claim rent relief which lawfully accrued under the Principal Regulations survives into the second and third relevant periods (Para 50).
2. In my view, the amending provisions, which require that additional documents or information accompany requests for rent relief, only relate to requests for rent relief made after 29 September 2020, and in circumstances where no compliant request was made prior to that date. In other words, they are intended to allow fresh entry into the rent relief scheme (para 47).
3. I do not accept that the intent of the Amended Regulations or the Further Amended Regulations was to mandate that once a tenant had validly entered the rent relief scheme, it had to re-apply to continue to obtain the benefits under that scheme (para 48).
4. Nevertheless, having regard to the definition of annual turnover in s 5(2)(a) to (g) Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Rules 2020 (Cth), I find that jobkeeper payments, cash flow boost payments and State government grants do not fall within that definition. In my view, the categories of revenue set out in the above subsections have some connection with the Tenant’s supply. On the other hand, receiving government grants, jobkeeper payments or cash flow boost payments are not linked to supply. They are gratuitous and non[1]assessable payments. In my view, they do not fall within the definition of annual turnover. Consequently, I find that those payments are to be ignored in assessing any decline in turnover (para 59).
The primary objective of Amended Regulations was to extend the scheme, albeit that it also tightened entry for new participants and introduced other provisions dealing with how eligible lease disputes could be resolved or determined.
The Amended Regulations (and Further Amended Regulations) do not require that a fresh request for rent relief must be made for a tenant to be entitled to claim rent relief after 29 September 2020 until 28 March 2021, provided a compliant request was made under the Principal Regulations and no agreement had been reached between the parties. In other words, a right to claim rent relief which lawfully accrued under the Principal Regulations survives into the second and third relevant periods.
Conclusion: The Applicant is entitled to a waiver of rent that would have been otherwise payable for the months of April, May, June, July, August, September, October, November and December 2020.
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