Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Layoun v Multiproperties Pty Ltd [2023] NSWCATAP 136 Hearing dates: 17 January 2023 Date of orders: 19 May 2023 Decision date: 19 May 2023 Jurisdiction: Appeal Panel Before: S Thode, Principal Member D Robertson, Senior Member Decision: (1) Grant leave to appeal. (2) Allow the appeal in part. (3) Set aside orders 1 and 2 made by the Tribunal on 13 October 2022 in proceedings COM 21/05854. (4) In lieu thereof, declare pursuant to s 72(f)(iv) of the Retail Leases Act 1994 (NSW) that Multiproperties Pty Ltd is entitled to payment of the sum of $7,816.16 from the bond lodged with the NSW Small Business Commissioner on 22 November 2015 and that that George Layoun is entitled to the balance of the bond. (5) In the event that the respondent has received from the bond an amount exceeding $7,816.16 or the appellant has paid to the respondent any part of the amount ordered to be paid by the Tribunal, the parties are to file consent orders for repayment of those amounts by 23 May 2023 and the Appeal Panel will make an order without requiring the further appearance of the parties. (6) Set aside the Tribunal's orders relating to the costs of proceedings COM 21/05854 and COM 21/23405. (7) Remit to the Consumer and Commercial Division of the Tribunal for determination only of the question of costs arising in proceedings COM 21/05854 and COM 21/23405. (8) No order in relation to the costs of the appeal. Catchwords: LEASES AND TENANCIES — Retail Leases Act 1994 (NSW) — Retail and Other Commercial Leases (COVID-19) Regulation 2020 — Landlord entered into possession on ground of unpaid rent — Whether tenant "impacted lessee" for purposes of Regulation — Whether tenant had qualified for the jobkeeper scheme established by the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) — Whether landlord had entered into negotiations "in good faith" Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) Retail and Other Commercial Leases (COVID-19) Regulation (No 3) 2020 (NSW) Cases Cited: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 Collins v Urban [2014] NSWCATAP 17 Cominos v Di Rico [2016] NSWCATAP 5 Darzi Group Pty Ltd v Nolde Pty Ltd [2021] NSWSC 774 Lstar Holdings Pty Ltd v Ta [2021] NSWCATCD 62 Martin v Big Country Developments Pty Ltd; Big Country Developments Pty Ltd v Martin [2022] NSWCATAP 312 NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd [2020] NSWSC 1378 Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 TNAU Finery Pty Ltd v SuperBurrito Pty Ltd [2023] NSWCATAP 29 Texts Cited: None Cited Category: Principal judgment Parties: George Layoun (Appellant) Multiproperties Pty Ltd (Respondent) Representation: Counsel: S Andrews (Respondent) Solicitors: Centurion Lawyers (Respondent) File Number(s): 2022/00314737 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: None Date of Decision: 13 October 2022 Before: D Goldstein, Senior Member File Number(s): COM 21/05854; COM 21/23405 REASONS FOR DECISION Introduction 1. The appellant was, until September 2020, the tenant of retail premises in Parramatta from which he conducted a coffee shop. The respondent was the landlord. The appellant occupied the premises under a lease which commenced on 1 February 2015. The term of the lease was five years with an option for a further five years 2. The appellant did not exercise the option during the exercise period and from 1 February 2020 held over in the premises on a month-to-month tenancy. 3. Commencing in March 2020, government health orders, introduced in consequence of the COVID–19 pandemic, imposed substantial restrictions upon the trading of cafés and restaurants, including the appellant's business. 4. The appellant last paid rent on 9 March 2020 for the period 1 March 2020 to 31 March 2020. It is not in issue that rent for the month of April 2020 in the amount of $3,753.30 (including GST) fell due on 1 April 2020 and was not paid. The respondent's rent ledger recorded the amount due at that date, including the April rent, as $6,866.16. 5. The Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (Covid Regulation) came into force on 24 April 2020. The Covid Regulation was amended on 3 July 2020 and from that date provided, relevantly to this appeal: 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. … 7 Obligation to renegotiate rent and other terms of commercial leases before prescribed action (1A) This clause applies to a commercial lease to which an impacted lessee is a party (an impacted lease). (1) A lessor under an impacted lease must not take or continue any prescribed action against the impacted lessee concerned on grounds of a breach of the impacted 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 an impacted 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) Any party to an impacted lease may request the other parties to renegotiate the rent payable under, and other terms of, the impacted lease. (3) A party to an impacted lease must, if requested, renegotiate in good faith the rent payable under, and other terms of, the 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 parties are to renegotiate the rent payable under, and other terms of, the impacted 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. 1. Sections 7 and 8 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) 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. (2) The specified percentage for an entity is: … (c) otherwise - 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"; 1. During August and September 2020, the appellant and the respondent's agent engaged in correspondence concerning rental arrears and the impact of the pandemic. 2. On 8 September 2020 the respondent's agent forwarded a letter of demand for non-payment of rent. That letter stated that the arrears as at 8 September 2020 were $27,612.36. The letter required payment of all arrears by 18 September 2020 and stated: "If arrears are not cleared by the above-mentioned date, the lessor reserves the right to take further actions including potential eviction." 1. On 11 September 2020 the appellant sent to the respondent's agent, Ms Alyson Morland, a number of documents supplied by his accountant, including: financial statements for the year ended 30 June 2019; the appellant's tax return for the year ended 30 June 2019; and the appellant's business activity statements for each quarter from July 2018 to June 2020. 2. On 18 September 2020 the appellant forwarded to Ms Morland bank statements for his Business Transaction account with the Commonwealth Bank, covering the period from 1 July 2018 to 30 June 2020. 3. The appellant met with the respondent's director, Mr Raymond Draybi, and Ms Morland on 23 September 2020. What was said at that meeting was the subject of evidence from Mr Draybi and Ms Morland and also from the appellant's wife, Grace Layoun. The evidence of both Mr Draybi and Ms Morland was to similar effect. Mr Draybi gave evidence that the appellant said: "I am not getting JobKeeper yet, I'm still waiting for my accountant to lodge the paperwork for it." 1. Ms Morland's evidence was that the appellant said: "I am not getting JobKeeper yet, I'm still waiting to lodge the papers to get it." 1. Grace Layoun gave evidence that she had been "present and listening" at the meeting. She did not directly contradict the evidence of Mr Draybi and Ms Morland but only stated: "George clearly has asked parties for rental reduction and a percentage discount of the outstanding rent due to Covid 19. Raymond [Draybi] refused to give any discount and asked for full payment and keep pointing on JobKeeper's eligibility." 1. On 24 September 2020 Ms Morland emailed the appellant at 10:59 AM: "As per our conversation yesterday we require a response from you by 3pm tomorrow (Friday 25th September) To reiterate, in order for any rent relief to be considered you must be eligible for Job Keeper – we will need proof that you are in fact receiving job keeper payments. There are further details and what requirements you need to understand in the below links https://www.ato.gov.au/general/jobkeeper-payment/ https://www.ato.gov.au/general/jobkeeper-payment/employers/ If this does not help you will need to seek legal advise on the best way to assist your business Secondly, you confirmed that you have received government cash flow boosts. As per the bank statement - this was transferred into a personal account. We must reiterate that the cash flow boosts and any payments from the Government for businesses are to assist to pay bill relating to the business i.e. rent, utilities etc and not for personal use. https://treasury.gov.au/coronavirus/businesses In conclusion, we require payment from you towards your rent as per our letter of demand and our discussions yesterday. You are under obligation to pay your rent on the 1 day of every month. No rent has been paid since March. If we still have no cooperation with this matter we will be required to take further action and subsequently termination the lease." 1. The appellant responded at 11:09 AM: "My JobKeeper was release yesterday it takes about five working days I will pay 25% by the first of this month and same next month. I will send you a copy of statements ASAP." 1. At 3:58 pm on 24 September 2020 the respondent's solicitors forwarded to the appellant a "Notice of Re-Entry". Paragraph 2 of that notice stated: "2. You have not provided any evidence that you are impacted by the Covid-19 Pandemic. Namely you have not provided any evidence that you have qualified for the Jobkeeper scheme. As such, you are not an impacted lessee pursuant to the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Covid Regulation). In any event, the Covid Regulation commenced on 24 April 2020. You have not paid rent and outgoings at all since February 2020." 1. The notice stated that the respondent would "re-enter and take possession of the premises on Monday 28 September 2020". 2. On 28 September 2020 Ms Morland and Mr Draybi attended the premises and observed that the appellant had vacated, leaving the keys on the premises. 3. The respondent commenced proceedings in the Tribunal on 5 February 2021 seeking payment of an amount variously stated as $47,052.25 and $49,030.25, being: $27,272.25 for "retail rent, parking rent and GST due to 30 November 2020" and $21,758 in respect of "make good works". The respondent's application also sought an order for the payment of the whole of the security bond, which was in the amount of $9,625. 4. The appellant filed a cross-application on 28 May 2021 seeking: "damages for unlawful re-entry" and "the cost of the cross-claimant's improvements to the premises". 5. Both applications were heard on 12 and 13 May 2022. By decision delivered on 13 October 2022, the Tribunal ordered the appellant to pay the respondent the sum of $18,937.36, declared that the respondent was entitled to payment of the whole of the bond, and dismissed the appellant's claims. The Tribunal also made directions for the filing of submissions with respect to costs. The Appeal Panel was informed at the hearing of the appeal that the Tribunal had ordered the appellant to pay the respondent's costs. 6. The appellant filed a Notice of Appeal on 31 October 2022. The scope and nature of internal appeals 1. An internal appeal to the Appeal Panel does not provide a losing party in the Tribunal at first instance with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. 2. 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. 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). 1. 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. 1. 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). 2. 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. 1. Section 81 of the NCAT Act provides: 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following— (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance. Grounds of appeal 1. The Notice of Appeal did not identify the orders which the appellant challenged nor did it identify any grounds of appeal with any clarity. On 2 November 2022 the appellant was directed to file an Amended Notice of Appeal, "which clearly articulates the grounds of appeal (ie the questions of law raised on the appeal)". 2. The appellant filed a document, which was apparently intended to be an Amended Notice of Appeal, on 14 December 2022. The document was treated at the hearing of the appeal as the appellant's statement of his grounds of appeal and it is convenient to refer to it as the Amended Notice of Appeal. 3. The Amended Notice of Appeal did not significantly improve the articulation of the basis upon which the appellant sought to appeal. However, the appellant is self-represented. As the Appeal Panel stated in Cominos v Di Rico [2016] NSWCATAP 5 at [12] – [13]: 12 The Appeal Panel must give effect to the guiding principle when exercising functions under the CAT Act, which is to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" (s 36(1)). This is reinforced by s 38(4) which provides that the Tribunal is required 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." 13 It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316]). Relevantly, s 38(2) provides that that Tribunal "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice." 1. As the respondent's submissions point out, it is difficult to identify any question of law raised by the Amended Notice of Appeal. 2. The appellant's written submissions included the following: "The lessee was an impacted lessee: a) The lessee was qualified for job keeper scheme. b) The following turnover in 2018-2019 less than $50m c) The lessee or business is registered for GST and turnover is more than $70000 d) The lessee declined turnover for 30% or more in 2019 compared to 2020. The lessee is an impact tenant and eligible for job keepers and rent assistant. (see attached) A full bank cash income statement with business activity statement and proof of registration for job keepers was provided as proof of eligibility which was denied by landlord and the landlord refuse to attend mediation with NSW BUSINESS COMMISSION to avoid eligibility and witness of the commissioner." 1. The appellant confirmed in oral submissions to the Appeal Panel that that statement set out the basis of his appeal. 2. We understand the basis of the appeal to be that the Tribunal erred in finding that the appellant was not an "impacted lessee" within the meaning of the Covid Regulation and in failing to find that the respondent was precluded from exercising any right of re-entry for non-payment of rent. 3. So stated, those grounds of appeal do not identify any question of law, however, as we will outline below, the Tribunal's approach to these issues did involve in one respect the application of an incorrect legal principle. 4. The Amended Notice of Appeal also included reference to the appellant's claim to compensation for early termination and to the proposition that "The arrears amount of $6,866 outstanding is not part of the lease." 5. The appellant's original Notice of Appeal also sought leave to appeal on the bases that the decision was not fair and equitable and was against the weight of evidence. 6. In that regard, we understand the appellant's case to be that he has suffered a substantial miscarriage of justice because the Tribunal's findings: that the appellant was not an impacted lessee; and that the appellant did not provide the respondent with a statement and evidence that he was an impacted lessee, were not fair and equitable and were against the weight of evidence. Further evidence 1. The appellant further sought leave to appeal on the basis that "significant new evidence is now available that was not reasonably available at the time of the hearing." The appellant attached to his original Notice of Appeal the additional documents which he asserted had not been reasonably available at the time of the hearing. Those documents consisted of: 1. A letter from the Australian Taxation Office dated 30 June 2021 confirming that the appellant had received JobKeeper payments since 1 July 2020 and reminding him that those payments needed to be included in his 2020-2021 income tax return; and 2. A transaction record produced by the Australian Taxation Office which records that the appellant did receive JobKeeper payments in respect of the period from 1 April 2020 to 28 February 2021. 1. The latter document may be interpreted as disclosing that the effective application for JobKeeper was lodged on 23 September 2020. The document does however also appear to indicate that relevant forms were lodged in May, June and July 2020. 2. We note immediately that these documents, to the extent that they are potentially relevant to the issues raised by the proceedings, were clearly available to the appellant at the time of the original hearing. 3. The appellant's submission appeared to be that he did not know how to obtain them before the original hearing. Even if we accept that explanation, it is not sufficient to establish that the documents were not reasonably available at the time of the original hearing: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23] – [25]. Accordingly, the documents will not be received in evidence on the appeal, and we have not had regard to them in considering the appeal. The Decision 1. It is convenient to address the matters raised by the appellant before considering whether a question of law is raised and whether leave to appeal should be granted. 2. The Tribunal dealt with the question whether the appellant was an "impacted lessee" and whether he had complied with regulation 7(3A) at paragraphs [18] – [25] of the decision as follows: 18 The lessee claims that he was an impacted lessee in [23] of his Points of Defence. In its Outline of Submissions, the lessor does not concede that the lessee was an impacted lessee. 19 To establish that he is an impacted lessee the lessee must establish that at the relevant time, he qualified for the jobkeeper scheme under sections 7 and 8 of the Commonwealth Coronavirus Economic Response Package (Payments and Benefits) Rules 2020. 20 The lessee's evidence in these proceedings does not establish that he was an impacted lessee. In the absence of evidence from the lessee regarding whether or not he is an impacted lessee, I have had regard to the evidence filed on behalf of the lessor. Mr Draybi's evidence in his 6 August 2021 affidavit is to the effect that at 23 September 2020 the lessee said that he was not qualified for jobkeeper. Ms Morland also gave evidence for the lessor in an affidavit affirmed on 11 August 2021. She referred to an email that she sent to the lessee on 18 August 2020 asking for him to fill out forms so that they as the lessor's agent could ascertain whether he was eligible for rental assistance. A Commonwealth Fact sheet was attached in connection with 'Cash flow assistance for business'. On 15 September 2020 the lessee sent to Ms Morland a document which indicated that he had enrolled his business for JobKeeper wage subsidies. This is conceded by Ms Morland at [32] of her affidavit. Also on 15 September 2020 Ms Morland sent an email to the lessee stating that she was waiting on additional documents to ascertain whether the lessee was an impacted tenant. On 9 September the lessee's accountant sent the lessee and the lessor's agent, Ms Morland 2 years of business activity statements. At [35] of her statement Ms Morling gives an account of a meeting on 23 September 2020 in which she states that the lessee said that he was not getting job keeper. Mrs Layoun gave evidence concerning the meeting on 23 September in her statement which is exhibit B. She states that Mr Draybi 'kept pointing on Job keeper eligibility' and after the meeting ended asked the lessee for payment and detail for job keepers' to be provided by 3pm on Friday. The lessee also gave evidence about this meeting. He does not say that he said that he was not eligible for jobkeeper. Nor does he say that he told the lessor and its agent that he had qualified for jobkeeper. I find that Mrs Layoun's evidence although using different words confirms Mr Draybi and Ms Morland's accounts of the meeting in which they both state that the lessee's eligibility for jobkeeper was questioned. 21 On 24 September 2020, the day after the meeting referred to above, at 10.59 Ms Morland wrote to the lessee stating among other things 'To reiterate, in order for any rent relief to be considered you must be eligible for Job Keeper - we will need proof that you are in fact receiving job keeper payments." 22 At 11:09 am the lessee wrote replied: 'My job keeper was release yesterday it takes about 5 working days I will pay 25% by the first of this month and same next month. I will send you copy of statements ASAP' 23 There is no evidence that I have seen or been referred to which provides confirmation that the lessee was formally approved for job keeper. In that regard section 18 of the Commonwealth Coronavirus Economic Response Package (Payments and Benefits) Rules provides for the Commissioner to give written notice for eligibility for jobkeeper. In addition clause 7(3A) of the First Regulation stated in connection with Renegotiating of rent that an 'impacted lessee' was required to give a lessor a statement and evidence that it was an impacted lessee. 24 I find that the lessee has not provided such notice from the Commissioner which would establish his eligibility for job keeper. I also find that the lessee did not provide the lessor with a statement and evidence that he was an impacted lessee. 25 To be an impacted lessee under the First Regulation the lessee was required to qualify for the jobkeeper scheme under sections 7 and 8 of the Commonwealth Coronavirus Economic Response Package (Payments and Benefits) Rules 2020. Those sections required the lessee to satisfy a decline in turnover test which was set out in section 8. I find that the lessee has not established by evidence filed in these proceedings that he qualified or eligible for the jobkeeper scheme. As a result I find that for all practical purposes the lessee was unable to avail himself of the protective elements of the First Regulation because he did not establish at the relevant time that he qualified for the jobkeeper scheme. 1. It is necessary to note immediately that section 18 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (JobKeeper Rules) did not have the effect stated by the Tribunal at [23]. That provision was only applicable if: (a) an entity has notified the Commissioner in the approved form that the entity elects to participate in the jobkeeper scheme (as referred to in paragraph 6(1)(e), 11(1)(e) or 12A(1)(f)); and (b) the entity has given the Commissioner, in the approved form, details of one or more individuals for fortnights ending in a calendar month (as referred to in paragraph 6(1)(f), 11(1)(f) or 12A(1)(g)); and (c) the sum of the amounts paid by the Commissioner (including nil) is not consistent with the Commissioner being satisfied that the entity is entitled to a jobkeeper payment for each individual covered by paragraph (b) of this subsection for each of the fortnights referred to in that paragraph. 1. Section 17 of the JobKeeper Rules provided that, if the amount paid by the Commissioner to an entity which had claimed JobKeeper was consistent with the Commissioner being satisfied that the entity was entitled to the amount claimed, the Commissioner was taken to have given notice that the Commissioner was satisfied that the entity was entitled to the amount claimed. In other words, it was only when the Commissioner did not accept a claim for JobKeeper payments, or the amount of a claim for JobKeeper payments, that the Commissioner was required by section 18 to give notice in writing. 2. We have set out above clause 7(3A) of the Covid Regulation as in force in September 2020. 3. The Tribunal correctly recorded that clause 7(3A) of the regulation imposed an obligation upon the appellant to give the respondent a statement that he was an impacted lessee and also evidence that he was an impacted lessee. 4. If the Tribunal's finding at [24] stands, that is sufficient, by virtue of regulation 7(3B) to permit the respondent to take "prescribed action" in respect of the tenancy, including taking possession of the premises and bringing proceedings to recover unpaid rent. 5. We have reached the conclusion that the findings of the Tribunal at [24] and [25] are against the weight of evidence and are not fair and equitable. In reaching that conclusion we take into account the fact that, as we have noted above, the Tribunal applied a wrong principle of law in suggesting that the appellant should have received a notice from the Commissioner of Taxation confirming his eligibility for JobKeeper. We consider that the Tribunal's incorrect reading of s 18 of the JobKeeper Rules is likely to have influenced the Tribunal's approach to the determination whether the appellant had provided evidence to the respondent that he was eligible for JobKeeper and therefore an impacted lessee and also the question whether the evidence before the Tribunal established that the appellant was an impacted lessee. 6. We also consider that the Tribunal did not clearly distinguish between eligibility for JobKeeper and receipt of JobKeeper. As we will explain below, they are not the same thing. 7. In this context we note that, in order to succeed in establishing that the respondent was prohibited by regulation 7 from taking prescribed action in respect of the lease, the appellant was required to establish: 1. That he was, at the relevant time (28 September 2020), an impacted lessee; and 2. That he had complied with the requirements of regulation 7(3A). 1. These are not the same question: see Martin v Big Country Developments Pty Ltd; Big Country Developments Pty Ltd v Martin [2022] NSWCATAP 312 at [116] – [117]. Impacted lessee 1. The evidence provided to the respondent's agent by the appellant, which was tendered at the hearing by the respondent, included: 1. A Business Activity Statement (BAS) for 1 April 2019 to 30 June 2019 disclosing revenue for that quarter of $25,787; 2. BAS's for the following three quarters, September and December 2019 and March 2020, which disclosed comparable levels of revenue; 3. A BAS for 1 April 2020 to 30 June 2020 disclosing revenue for that quarter of $1,036. 4. Bank statements for the period 1 July 2018 to June 2020. 1. There was no suggestion that the appellant's revenue exceeded $50 million. It was not in dispute that the appellant was carrying on business in Australia on 1 March 2020, nor is it disputed that, if the appellant's revenue had fallen by 30% between the June quarter of 2019 and the June quarter of 2020, the appellant qualified for the JobKeeper scheme. 2. The respondent submitted that the June 2020 BAS was not sufficient to establish that the appellant had suffered a decline in turnover in excess of 30%. The respondent pointed to the bank statements provided by the appellant which disclosed receipts of $9,534.50 during that period and submitted that the June 2020 BAS was clearly incorrect and therefore not evidence of the appellant's actual turnover. 3. The appellant suggested that the figure of $1,036 recorded as the appellant's turnover in the BAS for the June quarter of 2020 was a typographical error and that the correct figure was $10,036. He pointed out that the BAS recorded the GST payable to the Australian Taxation Office as $700, which suggests revenue in excess of $7,000 (noting that not all sales made in a café are subject to GST). The ratio between GST payable and turnover recorded in BAS's during 2019 varied from 6.4% to 8.2%. That is consistent with the appellant's suggestion that the correct turnover figure for the June quarter BAS was $10,036. 4. If the appellant's revenue was $9,534.50 or $10,036, the appellant had nevertheless sustained a drop in revenue of greater than 30% and consequently was eligible for JobKeeper. For the appellant not to have been eligible for JobKeeper (on the basis of a comparison of his turnover for the June quarters of 2019 and 2020) his turnover for the June quarter of 2020 needed to be in excess of $18,050. The was no material before the Tribunal to suggest that that was the case. 5. The respondent submitted that the appellant had admitted to receiving payments in cash and not including cash payments in his BAS. 6. Ms Andrews, of counsel, who appeared for the respondent both at first instance and on the appeal, confirmed that the appellant had been cross-examined on this issue and had not conceded that he had understated his revenue in 2020. 7. The Tribunal did not explain why it did not regard the BAS's and the bank statements as sufficient evidence to establish that the appellant was an impacted lessee. In our view, the evidence before the Tribunal was overwhelmingly to the effect that the appellant was an impacted lessee. 8. We note that, contrary to the third sentence of paragraph [20] of the decision, Mr Draybi's evidence was not to the effect that the appellant said he was not qualified for JobKeeper. 9. Mr Draybi's evidence was that the appellant said "I am not getting JobKeeper yet, I'm still waiting for my accountant to lodge the paperwork for it." That evidence is to quite the opposite effect of that stated by the Tribunal. 10. Being in receipt of JobKeeper may be some evidence of being qualified for JobKeeper (Darzi Group Pty Ltd v Nolde Pty Ltd [2021] NSWSC 774 (Darzi Group) at [78]; cf NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd [2020] NSWSC 1378 at [310]) but not being in receipt of JobKeeper is not evidence of not being qualified. The appellant's statement that he was waiting for an accountant to lodge the paperwork suggests that he understood that he was eligible for JobKeeper, and should also have communicated that proposition to Mr Draybi. Compliance with Regulation 7(3A) 1. We are also satisfied that the evidence clearly disclosed that the appellant had informed the respondent that he was an impacted lessee and provided evidence of that fact. 2. As to the latter, the June quarter BAS's for 2019 and 2020 were "evidence that the lessee was an impacted lessee", as were the bank statements. We note the comments of Robb J in Darzi Group at [134] – [135]: 134 The overarching principles in the Code required the parties to leases 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". Given the urgency of the situation, that meant that lessees would not necessarily be required to provide extensive financial information to lessors, particularly if that information was not readily available and had to be prepared on a bespoke basis to satisfy the requests of lessors. To a considerable extent, it may be necessary for lessors in the renegotiation process to rely upon the honesty of lessees and apparently authentic financial information distilled from the accounting records of lessees. 135 In making that observation, I do not mean to generalise, and depending upon the circumstances, and in particular the amount of the reductions in rent involved, over the course of a good faith renegotiation, lessors may well be entitled to require more financial information than is initially offered by lessees, but that process would need to be tailored to the financial information that was germane to the implementation of the Code, having regard to the reasonableness of causing delay and imposing costs on lessees as a result of the need to prepare additional financial information. 1. As to the former, although there was not before the Tribunal evidence that the appellant had explicitly said "I am an impacted lessee", there was evidence: 1. That the appellant sent to the respondent's agent a document, apparently a pro forma document prepared by Knight Frank (the respondent's managing agency), titled "rental assistance request" in which the appellant had requested rental assistance for six months in the amount of $30,000 because "turnover down more 50% coronavirus crisis" 2. The exchange of correspondence between the appellant and Ms Morland on 8 September 2020 in which Ms Morland indicated that rental assistance could not be provided until "the requirements set out under the Code of Conduct are met to determine whether or not you are an impacted tenant" and the appellant responded that his accountant would provide the necessary documents. 3. The exchange of emails on 24 September 2020, in particular the statement by the appellant that "my JobKeeper was released yesterday" which was sent in response to an email from the agent stating "in order for any rent relief to be considered you must be eligible for JobKeeper." 4. The evidence of Mr Draybi that the appellant had stated at the meeting on 23 September 2020 that he was waiting for his accountant to lodge the documents so he could get JobKeeper. 1. Unless the requirement of regulation 7(3A)(a) is only satisfied by a statement using the words "impacted tenant" or "impacted lessee", it is clear in our view that the appellant had made a number of statements to the respondent to the effect that he was an impacted lessee. 2. We do not consider that there is any reason why the requirements of regulation 7(3A)(a) should only be satisfied by a statement which uses the words "impacted tenant" or "impacted lessee". (See, in respect of the same wording in s 7(5) of the Retail and Other Commercial Leases (COVID-19) Regulation (No 3) 2020 (NSW), Lstar Holdings Pty Ltd v Ta [2021] NSWCATCD 62 at [60].) In our view the requirement that the lessee "give the lessor … a statement to the effect that the lessee is an impacted lessee" could be satisfied by a statement that the lessee had applied for or been in receipt of JobKeeper, or a statement that the lessee had yet to receive JobKeeper because he was waiting for his accountant to submit the necessary documents. 3. Accordingly, in our view, as at 3:58 pm on 24 September 2020, the respondent was not entitled to take prescribed action on the ground of non-payment of rent during the prescribed period, unless it had complied with the requirements of regulation 7(3) and (4), by renegotiating in good faith the rent payable and other terms of the lease having regard to the economic impacts of the COVID-19 pandemic and the leasing principles set out in the National Code of Conduct. Did the respondent negotiate in good faith? 1. The respondent submitted that the respondent had negotiated in good faith and that the appellant had failed to do so by submitting the "Rental assistance request" form, which the respondent submitted contained false statements. 2. The alleged false statements were said to be the appellant's response to the question: "Are you aware of any State or Commonwealth assistance, being provided in response to COVID-19, that is currently available to you?" 1. The appellant responded "No" but then, next to the following line, "If yes – please provide details", the appellant wrote "rental assistance required". 2. The respondent alleges that that statement was false, because the appellant had received payments from the State and Commonwealth governments. 3. The respondent also submitted that the appellant failed to negotiate in good faith because he had sought rental assistance in the amount of $30,000, which was said to be for six months, when that sum was greater than the total rental payable by the appellant under the lease over six months. 4. We do not accept either submission. 5. In our view, the "Rental assistance request" form is not so clear that the response to the question whether the appellant was aware of any State or Commonwealth assistance currently available to him could be said to be false. The fact that the appellant had received some assistance previously did not necessarily mean that assistance was currently available to him. The fact that the appellant was eligible for JobKeeper but was not at the time he submitted the form (August 2020) in receipt of JobKeeper is not necessarily inconsistent with the appellant not being aware of assistance being currently available to him. 6. The appellant was, before the commencement of the pandemic, paying the landlord $4,400 per month (which equates to $26,400 for six months). The respondent has not clearly articulated how the figure of $30,000 could be said to have been submitted not in good faith. It may have been an inflated demand, but that does not equate to a lack of good faith. 7. In any event, the relevant question is not whether the appellant negotiated in good faith but rather whether the respondent negotiated in good faith. It is clear that the appellant had requested that the respondent renegotiate the rent payable under the lease. To comply with clause 7 of the Covid Regulation the respondent was required to negotiate the rent payable in good faith. 8. In our view it cannot be said that the landlord negotiated at all, let alone in good faith. The respondent's own evidence was that the meeting on 23 September 2020 concluded with the Mr Draybi saying: "You haven't even established that you are eligible for JobKeeper so you aren't impacted. Let us know how you want to pay back the arrears by 3 pm Friday, otherwise I'll have to instruct a lawyer." 1. There is no evidence that the respondent made any proposal to the appellant for a rent reduction. The communications from the respondent's agent and Mr Draybi merely involved repeated demands for more documents and for an explanation of where the government assistance which the appellant had received had been spent. What follows from the conclusion that the respondent did not negotiate in good faith? 1. The consequence of the foregoing conclusion is that the respondent was not entitled to take "prescribed action" in respect of the failure to pay rent during the "prescribed period". That is, as defined in clause 3 of the Covid Regulation, the period commencing on the day on which the Covid Regulation commenced (24 April 2020) and concluding six months later. 2. However, the Covid Regulation did not prohibit the respondent from taking action, including terminating the tenancy, on the basis of a failure to pay rent falling due prior to the prescribed period: TNAU Finery Pty Ltd v SuperBurrito Pty Ltd [2023] NSWCATAP 29 at [77] – [91]. 3. The appellant disputed that the sum of $6,866.16, recorded in the respondent's ledger as the amount owing by the appellant at the commencement of the prescribed period, represented unpaid rent. 4. The background to that submission is that a dispute had arisen between the appellant and the respondent in relation to the appellant's use of a parking space in the building, which was not included in the tenancy. The documents included in the respondent's evidence tendered at the hearing in the Tribunal include an exchange of emails in March 2018 by which the dispute was resolved on the basis that the appellant would make payments of $4,400 per month, of which $3,753.30 represented monthly rent inclusive of GST, $380.72 reflected a monthly parking fee inclusive of GST, and the balance was credited against the landlord's pre-existing claims in respect of parking fees. The amount shown in the respondent's ledgers as outstanding as at 31 March 2020 was $2,716.92. 5. The rent for April 2020 fell due on 1 April 2020. The appellant does not suggest that he made any payment in respect of that rent. Accordingly, although it would appear to be the case that the amount outstanding at 31 March 2020 did not reflect unpaid rent, and it may not have been permissible for the respondent to rely upon the non-payment of that amount in terminating the tenancy, there was indisputably outstanding rent of $3,753.30 inclusive of GST unpaid at the commencement of the prescribed period on 24 April 2020. That amount remained unpaid on 24 September 2020 when the respondent gave notice of its intention to terminate the lease by re-entering the premises on 28 September 2020. It follows that the issue of the notice to vacate and the termination of the tenancy on the ground of non-payment of the rent due on 1 April 2020 was not a prescribed action prohibited by the Covid Regulation. 6. Although the appellant's Notice of Appeal and Amended Notice of Appeal did not explicitly challenge the dismissal of his application, his submissions did nevertheless refer to his claim for damages for wrongful termination. Even if that issue was fairly raised by the Notice of Appeal or Amended Notice of Appeal, it cannot succeed for the reasons we have outlined, in summary, because the termination of the lease was not unlawful. 7. For the same reasons the appellant's challenge to the respondent's recovery of arrears of rent owing at the commencement of the prescribed period cannot succeed. The respondent was entitled to recover the rent due for April 2020. Although the appellant in his submissions and evidence sought to contest his liability for parking charges, the exchange of correspondence between the appellant and the respondent's agent is in our view an unequivocal agreement on the part of the appellant to pay the amount recorded in the respondent's ledger at the date of the agreement and to do so by paying $4,400 per month for rent, parking charges and clearance of the arrears. In those circumstances, the landlord was entitled to recover the full amount outstanding at the commencement of the prescribed period ($6,866.16) from the appellant. 8. In any event, as the Tribunal noted at [28], liability for the sum of $6,866.16 was admitted by the appellant in Points of Defence filed on his behalf by his then solicitor on 26 May 2021. 9. However, having failed to negotiate in good faith as required by clause 7 of the Covid Regulation, the landlord was precluded from bringing proceedings to recover the rent falling due during the prescribed period, which the landlord calculated as $20,386.09. As Robb J held in Darzi Group at [142]: "… a failure by the lessor to comply with the requirements of clause 7 of any version of the COVID-19 Regulation will lead to a permanent prohibition on the lessor taking any prescribed action against the lessee for non-payment of rent while the lessee was an impacted lessee." 1. The Tribunal also awarded the respondent the sum of $950 for making good the premises after the appellant had vacated. The appellant did not take issue with that award in either his Notice of Appeal, his Amended Notice of Appeal, or his submissions. 2. On our calculation the respondent was entitled to recover the sum of $7,816.16 from the appellant, being the amount the appellant owed the respondent at the commencement of the prescribed period ($6,866.16) and the cost of making good ($950). 3. We are satisfied that the appellant would suffer a substantial miscarriage of justice if the decision of the Tribunal finding him liable to the respondent in the sum of $28,562.36 were allowed to stand. We are satisfied, for the reasons outlined above, that the decision was against the weight of evidence and was not fair and equitable. Accordingly we will grant leave to appeal and allow the appeal. We will set aside the orders of the Tribunal made on 13 October 2022 and instead order that the respondent is entitled to payment of the sum of $7,816.16 from the bond lodged with the New South Wales Small Business Commissioner on 22 November 2015, and that the appellant is entitled to the balance of the bond. 4. As that amount is less than the amount of the bond lodged with the NSW Small Business Commissioner on 22 November 2015, and, as the judgment was not stayed, the amount of the bond has presumably been paid to the respondent. It is appropriate to order to order that the respondent reimburse to the appellant $1,808.84 of the amount received from the bond and any monies paid by the appellant in satisfaction of the judgment of the Tribunal. 5. We note that there are some mathematical discrepancies within the Tribunal's decision but, by reason of our conclusions, it is not necessary to seek to resolve those issues. Costs 1. In the decision published on 13 October 2022 the Tribunal made orders permitting the parties to exchange submissions concerning costs. We were informed at the hearing of the appeal that the Tribunal had made an order for the appellant to pay the respondent's costs of the application. 2. Although the appeal has not resulted in complete relief of the appellant from liability to the respondent or affected the Tribunal's orders dismissing the appellant's cross-claim, we consider that the substantial change in the outcome of the proceedings means that the question of costs of the first instance proceedings should be reconsidered by the Senior Member in light of this decision. We will set aside the orders made by the Tribunal in relation to costs and remit the issue of costs of the first instance hearing to the Consumer and Commercial Division, preferably constituted as previously. Costs of the Appeal 1. The amount in issue on the appeal was less than $30,000. Accordingly rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) do not operate to exclude the requirement imposed by s 60 of the NCAT Act that there be special circumstances before the Appeal Panel can make an order in respect of the costs of the appeal. 2. The appellant was substantially successful in his appeal. However, he was not represented and did not, either in his Notice of Appeal, his Amended Notice of Appeal or in his submissions, seek an order for costs and we make no order as to costs. orders 1. Our orders are: 1. Grant leave to appeal. 2. Allow the appeal in part. 3. Set aside orders 1 and 2 made by the Tribunal on 13 October 2022 in proceedings COM 21/05854. 4. In lieu thereof, declare pursuant to s 72(f)(iv) of the Retail Leases Act 1994 (NSW) that Multiproperties Pty Ltd is entitled to payment of the sum of $7,816.16 from the bond lodged with the NSW Small Business Commissioner on 22 November 2015 and that that George Layoun is entitled to the balance of the bond. 5. In the event that the respondent has received from the bond an amount exceeding $7,816.16 or the appellant has paid to the respondent any part of the amount ordered to be paid by the Tribunal, the parties are to file consent orders for repayment of those amounts by 23 May 2023 and the Appeal Panel will make an order without requiring the further appearance of the parties. 6. Set aside the Tribunal's orders relating to the costs of proceedings COM 21/05854 and COM 21/23405. 7. Remit to the Consumer and Commercial Division of the Tribunal for determination only of the questions of costs arising in proceedings COM 21/05854 and COM 21/23405. 8. No order in relation to the costs of the appeal. ********** 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 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: 19 May 2023