First VCAT decision about the CTRS…

November 5, 2020

Uncategorized

The first decision that I have seen from VCAT about the CTRS has been published today. The facts are very similar in substance to the Sneakerboy case.

The tenant operates a Chinese buffet restaurant and its trade was adversely affected by COVID-19 as early as January 2020. It fell into rent arrears and the landlord terminated the lease for non-payment of rent on 27 March 2020.

The tenant argued that the lease was an eligible lease under the CTRS and that it was protected from re-entry by reg 9 of the Regulations. Member Kincaid rejected that argument to the basis that the lease was terminated on 27 March 2020 and the CTRS was not in effect at that time, so could not have prohibited the re-entry.

In the alternative, the tenant sought relief from forfeiture. The tenant argued that relief from forfeiture should take into account the tenant’s entitlement to rent relief under the CTRS. However, Member Kincaid rejected that argument and required the tenant to pay all rent payable under the lease as a condition of the grant of relief from forfeiture, holding that (omitting footnotes):

72.      I accept the evidence of the applicant’s director Mr Chi to the effect that the applicant is enrolled in the JobKeeper Scheme, and that Mr Chi is an “eligible business participant” engaged in the business of the applicant and entitled to receipt of the Jobkeeper payment. I also accept for present purposes that the applicant qualifies for the JobKeeper Scheme, as “carrying on business” in Australia on 1 March 2020 notwithstanding the respondent having taken possession of the premises on 27 February 2020.

73.      However, in regard to the applicant’s obligation to pay rent and other amounts in arrears as a condition of the granting of relief against forfeiture, I find that there is no serious question as to whether the applicant is entitled to take advantage of the rent relief provisions contained in the Covid-19 legislation. I accept the respondent’s submission that the lease is not an “eligible lease” within the meaning of section 13 of the Act because, for the reasons I have found, there is no serious question as to whether it was in effect on 29 March 2020. The applicant will therefore not, in my view, be entitled to any rent relief or relief from and liabilities under the Covid-19 legislation. 

Unfortunately, it appears that Member Kincaid’s attention was not drawn to the Sneakerboy decision, discussed here, in which Robb J in the NSW Supreme Court held that the grant of relief from forfeiture revives the lease and that the tenant whose lease is terminated before the Code was published is still entitled to rent relief over the period after termination but before relief from forfeiture is granted.

A copy of VCAT’s decision is available here:

About Sam Hopper

Sam is a property and insolvency barrister.

View all posts by Sam Hopper

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