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TENANT FILES FOR INJUNCTION TO PREVENT LANDLORD FROM ENTERING PREMISES, LANDLORD SEEKS TO HAVE THE INJUNCTION DISSOLVED CONTENDING THAT THE TENANT FAILED TO COMPLY WITH THE RENT RELIEF AGREEMENT

Zeini v Inner Metropolis Holdings Pty Ltd (Building and Property) [2021] VCAT 243 (19 March 2021)

This case involves the determination of whether the landlord is entitled to re-enter the demised premises after a request for rent relief was made. The landlord contends that the terms of a rent relief agreement have not been complied with.

Facts:

The Applicants (‘the Tenants’) are the tenants of premises located at 273 Elizabeth Street and 354 Lonsdale Street, Melbourne (‘the Premises’), which are owned by the Respondent (‘the Landlord’).

By notice dated 4 February 2021, the Landlord required the Tenants to pay the amount of $260,606 plus costs within 14 days, failing which the Landlord intended to re-enter the Premises. On or about 12 February 2021, the Tenants issued this proceeding seeking interim or interlocutory orders restraining the Landlord from re-entering the Premises. On 17 February 2021, the Tribunal granted an interim injunction restraining the Landlord from re-entering the Premises, pending further hearing.

The Tenants contend that reg 9 of the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020  (‘the Regulations’) prohibits the Landlord from re-entering the Premises. That regulation provides that a landlord is not entitled to evict or attempt to evict a tenant under [an] eligible lease because of non-payment of rent or outgoings. The prohibition against re-entry afforded by that regulation is subject to a tenant having first made a request for rent relief in accordance with sub-regulation 10(2) of the Regulations.

Mr Peters, counsel for the Landlord, submitted that there is no serious issue to be tried because the Tenants’ arguments are premised on it having protection under the Regulations. He argued that the Tenants are unable to avail themselves of the protection under reg 9 of the Regulations because the request for rent relief, constituted by the letter dated 7 December 2020 and its enclosures, did not comply with reg 10 and is of no effect, insofar as it purports to give protection under reg 9 of the Regulations.

Issue: Should the interlocutory injunction be dissolved due to the tenant’s non-compliance with the rent relief agreement?

Law:

Analysis:

A compliant request made under reg 10 requires a landlord to offer rent relief to the tenant within 14 days after receiving the request or a different time as agreed between the parties.

Importantly, a compliant request for rent relief triggers protection against eviction under reg 9 of the Regulations, thereby depriving a landlord of exercising rights that might otherwise crystallise under the relevant lease.

These factors indicate that the Regulations contemplated some immediacy to the provision of financial documents accompanying a request for rent relief. Whether that temporal connection requires documents to be submitted contemporaneously or whether some slippage is permissible remains uncertain and is ultimately a matter for trial. However, whatever the case, the court does not consider that a delay exceeding two months after the initial request was made is contemplated by the Regulations. Moreover, the documentation supplied on 12 February 2021 did not include any financials concerning the rent received under the two subleases. It was impossible to properly assess the Tenants’ request for rent relief, even with the benefit of the additional BAS served on 12 February 2021.

The purported request for rent relief, constituted by the letter dated 7 December 2020, did not comply with reg 10(2)(c) of the Regulations. It failed to disclose information that evidenced the Tenants’ stated decline in turnover – by not disclosing all revenue received by the Tenants associated with the Premises. Had that information been provided, it would have been clear that there was no decline in turnover over the nominated period of April to September, with the result that the request for rent relief could have never satisfied reg 10(2)(a)(iii) of the Regulations.

Conclusion: The interim injunction granted by order of this Tribunal dated 17 February 2021 is dissolved.

 

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