Rent Relief for Commercial Tenancies if compliant application lodged: Yarraville Business v Persico (Building and Property) [2021] VCAT 213

By Alicia Hill, Principal and Jacob Cripps, Law Clerk

In Yarraville Business v Persico (Building and Property) [2021] VCAT 213, the Victorian Civil and Administrative Tribunal (VCAT) held that a tenant in a commercial premises did not need to resubmit an application for rental relief after the Victorian Government amended it’s COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020, S.R.No 107/2020 (the ‘Regulations’) on 29 September 2020. This case provides guidance on whether applications made under the Regulations prior to amendments are still eligible for rental relief.

Background

In March 2020, the Covid-19 Pandemic took the world by storm. As a response to the decrease in business, the Victorian Government introduced the original Regulations on 1 May 2020.

On 29 September 2020, the Victorian Government amended the Regulations.

Yarraville Business Pty Ltd (‘Yarraville’) ran a Pawn Shop and Payday Loans business on Summerville Road, Yarraville, which was subject to a lease made between Yarraville as the tenant and Maria Persico (‘Mrs Persico’) as the landlord.

Due to the Covid-19 Pandemic, Yarraville had closed its doors between 24 March – 20 May 2020 and between 6 August – 26 October 2020, totalling 137 days. Mrs Persico claimed that Yarraville had failed to pay rent due $15,253.32 (incl GST). This rent has accrued after 29 September 2020 after the amended Regulations had passed.

After Mrs Persico changed the locks and fixed a notice of re-entry to the premises, Yarraville applied to VCAT seeking an order to enable it to re-enter.

Yarraville’s Legal Argument

Regulation 10 of the Regulations stipulates that a tenant may request rent relief from the landlord, if the request is:

  • in writing;
  • accompanied by a statement that the tenant’s lease is an eligible lease under the Regulations; and
  • information that the tenant is an SME entity and qualifies for, and is a participant in, the jobkeeper scheme.

Regulation 9(2) of the Regulations forbids a landlord from evicting or attempting to evict a tenant because of non-payment if they have complied with regulation 10.

Yarraville argued that it had satisfied regulation 10 in the original Regulations and therefore became protected against eviction under regulation 9(2) of the current Regulations.

Mrs Persico’s Legal Argument

Mrs Persico opposed Yarraville’s arguments on two grounds:

  1. No valid application for rent relief was made prior to 29 September 2020, and therefore they are not eligible to the protections afforded in regulation 9; and
  2. That even if Yarraville validly made an application for rent relief under the original Regulations, the benefit of protection created by the original Regulations expired on 29 September 2020, and that in order to gain protection from eviction under the amended Regulations, a new application had to be made.

Judgement and Orders

In terms of Mrs Persico’s first argument, VCAT held that Yarraville’s owner had complied with regulation 10 even though he did not use the precise wording of the Regulations. This is because the owner is not a lawyer, was acting in his capacity as a Director, and was sending an email (not a formal legal submission).

In terms of Mrs Persico’s second argument, his Honour held that Yarraville did not have to make a new application after the 29 September 2020 amendments as Yarraville is entitled to the continued protection of regulation 9(2).

This is because s 28 of the Interpretation of Legislation Act 1984 (Vic) provides that when the Regulations were amended, the amendment will not affect the previous operation of those Regulations, nor affect any right or privilege acquired under those Regulations.

Conclusion

This case shows the importance of complying with all the requirements of applications for relief in this case under temporary COVID-19 Relief Regulations and the dangers of non-compliance.

In this case VCAT gave effect to the substantive purpose of the Regulations although allegedly technical compliance had not been met. VCAT however noted the basis upon which it did so highlighting that not all non-compliant applications may be treated in the same manner.

The argument between the parties may possibly have been avoided if strict compliance on the face of the communications between the parties had been demonstrated. If in doubt on measures necessary to obtain relief, exercise an option, notify of termination or other measures in the property sphere seek assistance as getting it wrong could result in a messy and costly dispute.

If you have any queries, please contact Alicia Hill on (03) 8540 0292 or alicia.hill@mst.com.au