Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Weiss v Agus [2024] NSWCATAP 51 Hearing dates: 17 August 2023 Date of orders: 3 April 2024 Decision date: 03 April 2024 Jurisdiction: Appeal Panel Before: K Ransome, Principal Member G Sarginson, Senior Member Decision: (1) The name of the respondent is amended from NG Farah Pty Ltd to Jakin Agus. (2) Leave to appeal is refused. (3) The appeal is otherwise dismissed. Catchwords: LEASES AND TENANCIES---Retail lease---Rent and outgoing arrears--- Rent relief in accordance with the National Cabinet Mandatory Code of Conduct — SME Commercial Leasing Principles during COVID-19---Applicable principles Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) National Cabinet Code of Conduct-SME Commercial Leasing Principles During COVID-19 (National Code of Conduct) Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) Retail Lease Regulation 2022 (NSW) Retail Leases Act 1994 (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 Darzi Group Pty Ltd v Nolde Pty Ltd (No 2) [2022] NSWSC 643 Jamaican Coffee Kitchen Pty Ltd t/as Dushan & Shelby Trust v M20 Pty Ltd [2022] NSWCATAP 203 Layoun v Multiproperties Pty Ltd [2023] NSWCATAP 136 Pholi v Wearne [2014] NSWCATAP 78 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd [2020] NSWSC 996 Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141 Tnau Finery Pty Ltd v SuperBurrito Pty Ltd [2023] NSWCATAP 29 Wellness Bodycare Pty Ltd v Newtons Pharmacy Services Pty Ltd [2023] NSWCATAP 312 Texts Cited: Nil Category: Principal judgment Parties: Charlotte Weiss (Appellant) Jakin Agus (Respondent) Representation: Appellant (Self-represented) S Clegg, agent (Respondent) File Number(s): AP 2023/00112082 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not Applicable Date of Decision: 08 March 2023 Before: G Ellis, Senior Member File Number(s): Com 23/00501 REASONS FOR DECISION 1. This is an appeal from a decision of the Consumer and Commercial Division of the Tribunal in a dispute involving the Retail Leases Act 1994 (NSW) (RL Act). 2. The tenancy between the parties has now ended. The landlord took possession of the premises in June 2023, approximately 3 months after the decision of the Tribunal that is the subject of this appeal. 3. In this decision any reference to 'the tenant' is a reference to the former tenant, and any reference to 'the landlord' is a reference to the former landlord. Background 1. The dispute in the Tribunal involved an application by the tenant for an order of the Tribunal that she not be liable to pay money to the landlord in respect of rent arrears; and claims for damages due to the landlord's alleged breach of the terms of the lease and the provisions of the RL Act. 2. The retail premises the subject of the dispute was a beauty/tanning salon located in an eastern suburb of Sydney. There is no issue in the appeal that the premises were retail shop premises within Schedule 1 of the Retail Lease Regulation 2022 (NSW). 3. The parties entered into a written lease commencing 19 June 2013. The lease was for 3 years with a 3 year option. Jakin Agus is identified as the lessor/landlord. The lease stated that NG Farah Pty Ltd managed the property on behalf of the lessor. However, NG Farah Pty Ltd was not a party to the lease. 4. The rent identified in the written lease dated 19 January 2013 is $1,365 per month. The tenant stayed in possession after the term of the written lease ended. During the course of the lease, that amount increased to $1,706.02 per month. 5. It is not clear from the evidence as to whether the tenant stayed in possession after expiration of the terms of the original lease or whether the parties signed a second fixed term lease. For the purpose of this appeal, it is unnecessary to explore that issue further. 6. When the tenant commenced proceedings in the Tribunal she did so against NG Farah Pty Ltd. The name of the respondent was not amended during the course of the Tribunal proceedings. That is an oversight that we have corrected in our orders. 7. In the period between about 2020 and mid 2022 the retail premises were being managed on behalf of the landlord by Infinity Real Estate. 8. There was correspondence between the tenant and Infinity Real Estate about the issue of COVID 19 rent waivers and deferrals in the period between 2020 and 2022. 9. On 12 February 2021 Infinity Real Estate emailed the tenant with a summary of its position of the rent waivers that had been provided. The email stated as follows: In summary, the negotiated terms that were set back in June 2020 was not met, which on that basis the total outstanding to rental period ending 14 February 2021 less payment equal to: $24,646.44. 1. The email requested the tenant contact the agent with a proposed "payment plan." 2. Further email correspondence continued between the tenant and Infinity Real Estate about rent waivers and payment plans. Between November 2021 and January 2022 there is email correspondence regarding what amounts the landlord may be able to claim in respect of either land tax relief or commercial hardship assistance. One email from the agent refers to the landlord providing a rent waiver of 6 months. 3. On 6 January 2022, the tenant emailed Infinity Real Estate with a table asserting what rent waivers should have been granted. The tenant asserted that the tenant did not understand a previous offer of the landlord for a rent waiver was conditional. The email stated that there had been "challenges" in "negotiating" the amount of rent. 4. On 18 January 2022 Infinity Real Estate emailed the tenant stating that they were trying to find a "negotiation point" and "middle point" with the landlord, but that this had not occurred. The agent indicated that it would continue to attempt to assist. 5. On 22 February 2022, Infinity Real Estate emailed the tenant relevantly stating that the parties had not been able to reach any agreement, and that the landlord had decided to refer the matter to mediation with NSW Office of Small Business. 6. On 4 October 2022, the landlord referred the dispute to NSW Office of Small Business for mediation. 7. A mediation was to occur between the parties at NSW Office of Small Business on 14 November 2022, but that was adjourned. 8. The tenant asserts that on 16 December 2022 she was informed Ms Clegg of NG Farah Pty Ltd was now managing the property on behalf of the landlord by way of a voicemail message from Ms Clegg. 9. On 19 December 2022, Ms Clegg emailed the tenant requesting the tenant contact her to discuss rent arrears. 10. The tenant responded to this email on 19 December 2022 stating she was taking leave for personal reasons; she did not receive "any receipts or ledgers" from the previous agent; Ms Clegg would have to contact the former agent for documentation; the tenant had "done my best" to communicate with the former agent during the COVID 19 lockdowns; the tenant should not be required to provide further documentation; and "I can share everything I have during mediation". 11. On 19 December 2022, Ms Clegg responded to that email stating that she believed the tenant was "about 1 year behind" in rent and requesting the tenant inform her whether the tenant received rent relief or deferred payments during the COVID 19 lockdowns. The email also stated that mid-January 2023 was "too long to wait" for a rent payment and it was "imperative" the tenant pay rent "ASAP" to show her "commitment to catch up". 12. On 20 December 2022, Ms Clegg emailed the tenant attaching a questionnaire for the tenant to complete and "a letter from your accountant to confirm if your business turnover decreased by more than 30% during COVID. Also require information on what payments you received from the government during this time." The email stated that rent was only paid to 14 February 2021, and the information needed to be provided to the agent immediately to assist the landlord to apply for a "government rebate" which would assist the tenant. The email stated the agent would attempt to "get this backdated if I can." The email stated that if the tenant did not respond within the "next few days" the landlord would be serving a termination notice. 13. The tenant responded on 20 December 2022 that she had done her "best" to communicate with the previous agent managing the property and had not been provided with a rent and outgoings ledger) stating that she was going on leave; had previously communicated with the agent; would not be "bullied"; had provided "more than sufficient information"; and wanted to discuss the issue of rent arrears at the mediation. 14. Further emails were exchanged between the tenant and Ms Clegg on 20 December 2022. In essence, Ms Clegg stated that if the tenant did not provide the questionnaire and a letter from the tenant's accountant as soon as practicable the landlord would proceed with termination of the tenant's lease. The tenant asserted she was being "bullied." Ms Clegg responded by asserting that she was not bullying the tenant, but that she was "trying to assist" the tenant. However, the landlord was "within his rights to take back possession of the premises if you are not willing to cooperate." 15. On 23 December 2022, Ms Clegg emailed the tenant seeking rent be paid "as a matter of urgency" and the failure to do so would result in the tenant being locked out. 16. Following this email, on 23 December 2022 the landlord's agent emailed a letter to the tenant stating that the tenant was in breach of her lease obligation to pay rent; the rent was paid only to 14 February 2021; and that under cl. 33 of the lease the landlord had the right to take possession. The letter further stated: … In order to avoid being locked out of the premises, you are required to pay a substantial lump sum payment to offset some of the arrears. If we do not receive payment today then you will be locked out of your premises. Please contact me urgently to confirm your payment together with a copy of the deposit receipt to avoid escalating the action to a lock out. This is a final notice and there will be no further notice given. 1. Email correspondence between Ms Clegg and the tenant continued in early January 2023. The position of the tenant was that she had previously provided all "comms"(sic) and "information" to the previous agent. 2. On 5 January 2023, the tenant filed proceedings in the Tribunal. The order sought was that the tenant not have to pay the amount of $24,420.80. The reasons for seeking the order were identified as follows: Matter is pending with Small Business Commission, SBC00070974: Mediation-Agus v The Spraytan Salon. Amount owing is in dispute and have been locked out of my premises prematurely. 1. On 5 January 2023, the landlord took possession of the property. Possession was subsequently returned to the tenant. The tenant also alleged a second separate 'lockout' occurred on 6 January 2023. Possession was again returned to the tenant. 2. On 23 January 2023, there was a mediation at NSW Office of Small Business. The mediation was unsuccessful. Decision of the Tribunal Under Appeal 1. The Tribunal hearing occurred on 8 March 2023. A decision with written reasons was issued on 8 March 2023. There were amendments to the reasons issued under s 63 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) on 9 March 2023. At the Tribunal hearing, the tenant appeared and Ms Clegg appeared for the landlord. 2. The decision of the Tribunal sets out that, by the time the proceedings were listed for hearing, the tenant had three components to her claim as follows: 1. Not having to pay rent arrears of $24,185.80. 2. Compensation for two "lockouts" by the landlord (the tenant claiming $5,000 in damages each); and 3. Compensation for building maintenance issues (leading to excess water bills in the period from 1 July 2022 to 10 August 2022) in the total amount of $3,528. 1. It is noted in para [2] of the reasons that the tenant "suggested her rent arrears were $42,185.80." 2. When the reasons of the Tribunal are read in their totality in the context of the application made by the tenant, we understand the reference to rent arrears being $42,185.80 meant the tenant accepted that the total arrears were $42,185.90, but was arguing that $24,185.80 should be deducted from this amount due to the landlord not providing rent waivers under the applicable COVID 19 provisions. 3. The Tribunal stated in its reasons at para [11]: The decision in Jamaican Coffee Kitchen Pty Ltd t/as Dushan & Shelby Trust v M20 Pty Ltd [2022] NSWCATAP 203 at [262] suggests that the Tribunal cannot rewrite the terms of a lease by granting rent relief in accordance with the National Cabinet Mandatory Code of Conduct-SME Commercial Leasing Principles (the Code of Conduct) that was introduced by the Commonwealth Government in response to the COVID-19 pandemic. That decision is binding on the first instance hearings unless and until there is any decision to the contrary. Rent and Outgoing Arrears 1. The Tribunal dealt with this issue at paras [21]-[24] of the decision. The landlord argued the rent arrears were $44,176.43. The landlord relied on a rent ledger for the period from 1 April 2021. The Tribunal gave greater weight to the tenant's documents, which included a ledger commencing on 14 January 2019. After taking into account calculations for a month that was omitted, and GST amounts, the Tribunal found that on the tenant's calculations the rent and outgoing arrears were $44,080.52 which was "not very much different" to the landlord's ledger amount of $44,176.43. 2. The Tribunal found the rent and outgoing arrears "at the date of today's hearing" was $44,080.52. 3. At paragraphs [32]-[37] of the decision, the Tribunal noted that the landlord had not taken proceedings in the Tribunal against the tenant. However, the Tribunal stated that it was consistent with the just, quick and cheap resolution of disputes under s 36(1) of the NCAT Act for an order to be made in favour of the landlord for payment of rent and outgoing arrears, and the Tribunal had raised this issue with the parties at the commencement of the hearing. 4. The Tribunal stated that because the Tribunal had raised with the parties that it had the power in the tenant's proceedings to make an order in favour of the landlord for payment of rent and outgoing arrears, the parties would also be given the opportunity to argue that any payment in favour of the landlord should be way of instalments. The tenant sought to pay by monthly instalments over a two year period, but the first payment be deferred until July 2023. The landlord did not oppose monthly instalments over a two year period, but argued that there should be no deferment of payment of the first instalment. 5. The Tribunal found that no deferment was justified and ordered that the tenant pay the landlord the amount of $40,944.52 by monthly instalments commencing on 1 April 2023. The Tribunal also ordered that if payment of a monthly instalment was missed, the whole of the amount owing became immediately due and payable. 6. The reason for the amount of $44,080.52 being reduced to $40,944.52 was that the Tribunal set off an amount awarded in favour of the tenant of $3,136 for damages due to the landlord failing to maintain the premises. Building Maintenance Claim 1. As discussed previously, the tenant succeeded in this claim. This is dealt with at paras [28]-[30] of the decision. The Tribunal accepted that there was a water leak in the premises which had not been repaired by the landlord within a reasonable period of time, and it was the landlord's obligation under the terms of the lease to perform the repairs. The Tribunal found the tenant sustained a loss of $3,136. Lockouts 1. This is dealt with at paras [27]-[28] of the decision. The Tribunal found that the landlord was entitled to take possession on the two occasions it took possession under the terms of the lease because the tenant was in significant rent arrears. 2. The Tribunal noted the tenant's argument that the landlord could not take possession, but stated at para [25] that under the Code of Conduct the taking of possession was not prohibited as of January 2023; and further: "…there is no evidence that the applicant was an impacted lessee in that no BAS statement or letter from an accountant or other evidence having (sic) been provided." Orders of the Tribunal 1. The outcome of the decision was that the tenant was ordered to pay the landlord $40,994.52 by monthly instalments of $1,706.06 commencing 1 April 2023. The Tribunal noted the money order was separate and distinct from any other obligations of the parties under the terms of the lease. Notice of Appeal and Grounds of Appeal 1. The tenant filed a Notice of Appeal on 6 April 2023. That appeal has been filed within the applicable time period under r 25 of the Civil and Administrative Tribunal Rules 2014 (NSW). 2. The grounds of appeal were identified as follows: Error on Question of Law 1. The Tribunal failed to make a determination that the tenant was an impacted tenant under the applicable COVID-19 provisions, and the Tribunal did not consider this aspect of the tenant's claim. The tenant sought that the Appeal Panel should order that "the rent relief previously offered by the managing agent for the landlord be upheld and the rent arrears waived." 2. In essence, the tenant asserts that the Tribunal committed an error on a question of law because it did not consider or determine her claim that rent of $24,185.80 was not owed. Leave to Appeal 1. The decision was not fair and equitable and was against the weight of evidence such that leave to appeal should be granted under cl. 12 of sch. 4 of the NCAT Act. It was not asserted that there was significant new evidence available that had not been reasonably available at the date of the hearing. SCOPE AND NATURE OF APPEALS 1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80 (2) of the NCAT Act. 2. Internal appeals involve consideration of whether there has been any error of law; or any error other than an error of law sufficient to grant leave to appeal under Cl. 12 of Sch. 4 of the NCAT Act. 3. An appeal is not simply an opportunity for a dissatisfied or aggrieved party to re-argue the case they put at first instance: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. 4. 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 proper reasons. 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. 1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl. 12 (1) of sch. 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 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 (Collins v Urban), 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 requiring leave to appeal has satisfied the requirements of cl. 12(1) of sch. 4 of the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b) of the NCAT Act. 2. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; (c) 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; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) 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. Even if the appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains discretion whether to grant leave under s 80(2) of the NCAT Act. The appellant must demonstrate something more than the Tribunal was arguably wrong (Pholi v Wearne [2014] NSWCATAP 78 at [32]). 2. In respect of a self-represented non legally trained appellant, grounds of appeal should be considered generally (subject to procedural fairness considerations) to determine whether a question of law has been raised (Prendergast at [12]; Cominos v Di Rico [2016] NSWCATAP 5 at [13]). CONSIDERATION 1. The key issue in the appeal is the Tribunal not reducing the amount payable for rent and outgoing arrears by reason of the purported non-compliance by the landlord with the COVID 19 Regulations and Code of Conduct. 2. The tenant does not argue in the appeal that the Tribunal had no power under s 72 of the RL Act to make an order that the tenant pay the landlord rent and outgoing arrears, notwithstanding that the matter listed for hearing before the Tribunal was the tenant's application against the landlord, and the landlord did not take its own proceedings against the tenant for payment of rent and outgoing arrears. 3. The COVID 19 Regulations and Code of Conduct have a degree of complexity, arising from the exigent circumstances in which they were drafted. The relevant legislative provisions during the COVID-19 period are the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) and its successors (COVID Regulations). The COVID Regulations referred to the National Cabinet Code of Conduct-SME Commercial Leasing Principles During COVID-19 (National Code of Conduct). 4. Although there were successive Regulations, for ease of understanding we refer to them together as "the COVID 19 Regulations", and the National Code of Conduct as "the Code of Conduct". 5. There was an important difference in the definition of "impacted lessee" depending upon which COVID-19 Regulation applied. In the COVID-19 Regulation that commenced on 14 July 2021, the reference to eligibility to the JobKeeper grant was changed to eligibility for one or more of the Micro-business COVID-19 Support Grant; COVID-19 NSW Business Grant; or JobSaver grant. 6. The final COVID 19 Regulation lapsed on 30 June 2022. However, certain types of prohibited conduct remained extant in respect of non-payment of rent in the prescribed period. In respect of rent arrears breaches after 30 June 2022 the rights of a landlord to terminate for non-payment of rent are not affected by the COVID 19 Regulations and Code of Conduct. 7. The operation of the COVID Regulations and Code of Conduct has been considered by the both the Supreme Court and the Appeal Panel of the Tribunal in decisions including Jamaican Coffee Kitchen Pty Ltd t/as Dushan & Shelby Trust v M20 Pty Ltd [2022] NSWCATAP 203 (Jamaican Coffee); Tnau Finery Pty Ltd v SuperBurrito Pty Ltd [2023] NSWCATAP 29 (Superburrito); Layoun v Multiproperties Pty Ltd [2023] NSWCATAP 136; Wellness Bodycare Pty Ltd v Newtons Pharmacy Services Pty Ltd [2023] NSWCATAP 312 (Wellness Bodycare); Darzi Group Pty Ltd v Nolde Pty Ltd [2021] NSWSC 774 (Darzi); Darzi Group Pty Ltd v Noble Pty Ltd (No 2) [2022] NSWSC 643 ; Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd [2020] NSWSC 996; and Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141 (Sneakerboy No 2). 8. Clauses 3, 4, 7 and 9 of the COVID Regulations relevantly stated: 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. … 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. (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. … 9 Tribunal and court consideration of National Code of Conduct leasing principles The Tribunal and any court, when considering whether to make a decision or order relating to any of the following, is to have regard to the leasing principles set out in the National Code of Conduct— (a) the recovery of possession of premises or land from a lessee, (b) the termination of a commercial lease by a lessor, (c) the exercise or enforcement of another right of a lessor of premises or land. 1. The leasing principles under the Code of Conduct 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. 1. The provisions of the COVID 19 Regulations and Code of Conduct are summarised as follows: 1. The lessee must be an "impacted lessee" (cl. 4 of the COVID Regulations). An "impacted lessee" is a lessee who qualifies for either the JobKeeper grant (prior to 14 July 2021): the COVID-19 Micro-business Grant; the COVID-19 Business Grant; or the Job-Saver payment; and has a turnover of less than $50 million in the 2020/2021 financial year. One relevant consideration is the "decline in turnover test." Principles applicable to the "decline in turnover test" are set out in SuperBurrito at [128]-[170]. 2. From 3 July 2020, the lessee must provide evidence to the lessor that it falls within the definition of "impacted lessee" (Cl. 7 (3A) of the COVID Regulations). 3. If the lessee was an "impacted lessee" the lessor was precluded from taking any "prescribed action" against the lessee on the grounds of a breach of the lease due to failure to pay rent during the "prescribed period" (Cl. 6 of the COVID Regulation, but subject to Cl. 7 of the COVID Regulations). 4. If the lessee was an "impacted lessee" the parties were to renegotiate the rent payable and other terms of the lease having regard to (a) the economic impacts of the COVID 19 pandemic; and (b) the leasing principles set out in the Code of Conduct (cl 7 of the COVID Regulations). 5. If parties could not agree on renegotiated terms, they were to participate in a binding mediation, including before NSW Office of Small Business before the lessor could take a prescribed action against an impacted lessee during the prescribed period, subject to certain exceptions (cl. 9 of the COVID 19 Regulations). 6. Lessors must offer lessees proportionate reductions in rent payable in the form of waivers and deferrals of up 100% of the amount ordinarily payable, on a case by case basis, based on the reduction in the lessee's trade during the COVID 19 pandemic period and a subsequent reasonable recovery period (cl. 3 of the Code of Conduct). 7. Rental waivers must constitute no less than 50% of the total reduction in rent payable under principle 3 over the COVID 19 pandemic period and a subsequent reasonable recovery 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 given to the lessor's ability to provide such additional waivers. Lessees may waive the requirement for a 50% minimum waiver by consent (cl. 4 of the Code of Conduct). 8. Payment of rent deferrals must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is greater, unless otherwise agreed by the parties (cl.5 of the Code of Conduct). 9. Repayments should not commence until the end of the COVID 19 pandemic or the existing lease expiring (whichever is earlier) and taking into account a reasonable subsequent recovery period (cl. 9 of the Code of Conduct). 10. Lessees should be given the opportunity to extend the lease for the equivalent period of the rent waiver and/or rent deferral period (cl. 12 of the Code of Conduct). 11. Lessors are to agree to a freeze on rent increases (except for leases based on turnover rent) for the duration of the COVID 19 pandemic and a reasonable subsequent recovery period (cl. 13 of the Code of Conduct). 1. The operation of cl. 7 and cl. 9 of the COVID Regulations was considered in detail in Wellness Bodycare in the context of what, if any, powers the Tribunal had under the RL Act to order damages in favour of a tenant or order that a tenant not be liable to pay rent or outgoing arrears if the COVID Regulations and Code of Conduct was not complied with by a lessor. Many of the principles are and relevant authorities are referred to in Wellness Bodycare at [41]-[57]. 2. The applicable principles are summarised as follows: 1. The Code of Conduct could produce three potential outcomes: (1) negotiation in good faith which resulted in agreement; (2) negotiation in good faith which did not result in agreement; and (3) either no negotiation or no negotiation in good faith (Wellness Bodycare at [43]). 2. By reason of cl. 9 of the Code of Conduct, a court or tribunal is only required to have regard to the Code of Conduct in three situations, each involving a claim by a lessor against a lessee, and does not refer to a claim by a lessee against a lessor (Wellness Bodycare at [42]). 3. If there was an agreement, there would be no need for legal proceedings and the agreement would be binding as there would be a variation of the terms of the lease (Jamaican Coffee at [261]). If there was a failure by the lessor to comply with the COVID 19 Regulations and the Code of Conduct, there may be no bona fide negotiation. However, if there was a bona fide negotiation but no agreement, there is no power of the Tribunal under s 72 of the RL Act to make orders varying the terms of the lease such that the rent was waived or deferred (Jamaican Coffee at [262]-[263] applying Sneakerboy (No 2) at [84]). 4. If a lessor was taking action against a lessee for recovery of rent arrears, the lessee could raise as a defence (in whole or part) to the lessor's claim that the lessor had failed to negotiate in good faith in accordance with the provisions of the COVID 19 Regulations and Code of Conduct (Wellness Bodycare at [48] applying Darzi at [139]; Superburrito at [86]-[90]). 5. A lessor taking possession in circumstances where it was prohibited from doing so under the COVID 19 Regulations and Code of Conduct will be a repudiation of the lease that gives the lessee a contractual cause of action against the lessor for damages. However, the lessee bears the onus of establishing that the lessor had repudiated, and the loss caused by the repudiation (Superburrito at [86]-[91]). 6. A lessee can raise as a cause of action against a lessor under s 62B of the of the RL Act that the landlord had engaged in unconscionable conduct by reason of a failure to comply with the COVID 19 Regulations and Code of Conduct. The lessee would not only be obliged to establish that the conduct was unconscionable, but also the appropriate remedy (Superburrito at [263]-[269]). 1. The Tribunal was correct in applying the principles set out in Jamaican Coffee at [262]-[263] to an application by the tenant that it not have to pay a certain amount of rent and outgoings while the tenancy was still on foot. That, in substance, was an application that the Tribunal make orders to vary the terms of a lease that was still on foot. There was no cause of action raised by the tenant that the landlord had acted unconscionably; nor was the landlord bringing proceedings that the Tribunal make an order that the tenant pay rent arrears to which the tenant was raising non-compliance with the COVID 19 Regulations and Code of Conduct as a defence. 2. However, the Tribunal, during the course of the hearing, determined it appropriate to make findings as to the amount of rent and outgoing arrears, and make an order that rent and outgoing arrears be paid to the landlord. 3. We are not satisfied that the Tribunal, in doing so, committed an error on a question of law in respect of the findings and orders it made. 4. That is because the Tribunal made a factual finding at para [25] that "there is no evidence that the tenant was an impacted lessee". 5. The applicant's documents in the appeal contained an index. That index stated that the documents that were before the Tribunal at the hearing (including submissions) were the documents at pp 29-146 of the bundle. 6. When those documents are analysed, there is no evidence sufficient to establish that the tenant was an "impacted lessee," and that the tenant provided information to the landlord to establish that it was an "impacted lessee" such that the landlord had failed to provide any applicable rent waiver (or rent deferrals) that the landlord was obliged to provide under the COVID 19 Regulation or Code of Conduct. 7. Rather, what was provided was a series of emails that dealt with negotiations between the tenant and the landlord about the issue of rent arrears that did not demonstrate any concluded agreement between the parties. Evidence was not provided by the tenant to the landlord that addresses the requirements of cl. 4 of the COVID 19 Regulations. 8. Accordingly, the tenant had not complied with cl. 7(3A) of the COVID Regulations, By reason of cl. 7(3B) of the COVID 19 Regulations the landlord is taken to have complied with its obligations under cl 7(1A)-(3) of the COVID 19 Regulations. 9. The factual finding made by the Tribunal at para [25] is fatal to the tenant's defence to the amount of rent arrears. That factual finding was clearly available to the Tribunal on the evidence (and absence of evidence) before it at the hearing. New Evidence-Leave to Appeal 1. The tenant provided in the appeal documents that were not in evidence before the Tribunal at pp 147-202 of the appellant's bundle. 2. Many of those documents were clearly irrelevant to the determination of the issues in dispute in the appeal, without the necessity to consider whether they were significant new evidence that was not reasonably available at the date of the hearing. Such documents included photographs of calculations set out on a white board; documents that pertained to events after 8 March 2023; and correspondence between the tenant and the landlord's agent after 8 March 2023. 3. However, there is one key document that was not provided in evidence before the Tribunal. 4. That is a letter of the applicant's accountant dated 9 September 2021 that is headed "2021 COVID-19 JobSaver Payment". 5. That letter refers to a decline in turnover for the period between 26 June 2021 to 17 July 2021 inclusive in comparison to the period 26 June 2019 to 17 July 2019 inclusive, with there being a 100% decline in turnover. It is stated that this satisfies the minimum 30% decline in turnover test in the 2021 COVID 19 JobSaver Guidelines. 6. However, there are two issues in respect of this letter. 7. The first is that the letter says that the business name is "Spray Tans Australia Pty Ltd" and the business address identified as the "impacted address" is an address for a shop at Woollahra. The lease the subject of this dispute identified the applicant as the tenant, not the company "Spray Tans Australia Pty Ltd." The retail shop the subject of this dispute was located in a different suburb to Woollahra. 8. The second is that there is no correspondence identified to indicate this accountant's letter was sent to the landlord's then agent (Infinity Real Estate), or to the agent who took over management after Infinity Real Estate (NG Farah Pty Ltd), or to the landlord personally. 9. For leave to appeal to be granted under cl. 12 of sch. 4 of the NCAT Act, the purported new evidence must not only be "significant," but it must also be evidence that was unavailable at the date of the hearing in the sense that "no person could reasonably have obtained the evidence" (Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23]). 10. The accountant's letter is not significant new evidence that was not reasonably available to the tenant as at the date of the hearing. Conclusion 1. We are not satisfied that the tenant has established an error on a question of law; nor that leave to appeal should be granted under cl. 12 of sch. 4 of the NCAT Act. ORDERS 1. The name of the respondent is amended from NG Farah Pty Ltd to Jakin Agus. 2. Leave to appeal is refused. 3. The appeal is otherwise dismissed. ********** 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: 03 April 2024