In Brief
There have been numerous decisions concerning the rent relief to be provided to tenants over the 12 months ending 28 March 2021. Two decisions stand out in particular and potentially provide relief for tenants who are alleged not to have provided a compliant rent relief request, or could not operate their business last year during the lockdowns. The two VCAT decisions are Yarraville Business v Persico (Building and Property) [2021] VCAT 213 and R&D Health Clubs Pty Ltd v Lin Wang Pty Ltd (Building and Property) [2021]VCAT 349.
What you need to know
For landlords, do not seek to terminate a lease without legal advice. If a landlord wrongfully terminates a lease for non-payment of rent last year, the landlord could be liable for damages representing the tenant's loss of profit and damage to goodwill.
For tenants, if the landlord takes any action to demand or terminate a lease, again, seek legal advice, as the protection under the Regulations may operate.
Background
The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licenses) Regulations 2020 (Vic) provided for rent relief and ended on 28 March 2021. This means that a tenant is required to pay the full rent due under their lease from 29 March 2021. So, numerous landlords have sought to terminate leases or claim rent based on the tenant failing to pay rent, during the period up to 28 March 2021, where no agreement was entered into for rent relief or the landlord claims that no compliant request for rent relief was made by the tenant.
In the VCAT decision of Persico, the tenant sought rent relief from its landlord. Under the Regulations, a claim for rent relief is required to include a statement that "the lease is not excluded from the operation of these Regulations under section 13 (3) of the Act". Whilst the tenant did not make any such statement, VCAT found that the statement had been effectively made by virtue of the tenant referring to Regulation 10 and stating that it was an eligible lease.
VCAT went on further to state that by the landlord stating that the tenant had sought rent relief (which the landlord did via its managing agent) that the landlord could not now turn around and contend that the tenant had not made a compliant application for rent relief. So, the landlord could not end the lease with the tenant, as the tenant was protected pursuant to Subregulation 9 (2) of the Regulations.
Conclusion
Pursuant to this decision in Persico, tenants have more protection. If they have provided information requested of them by the landlord, this is likely to be deemed sufficient to all comply with the Regulations. We will address the decision in R&D Health Clubs in an update shortly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
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