Why I am voting No

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My four nearest neighbours in Double Decaf Latte Street, Inner Tealsville between them have six ‘Vote Yes’ signs affixed to their front fences. My neighbours are all fine people, but I reckon they’re wrong.

This might make for some awkward conversations on Saturday when they find me volunteering for the ‘No’ camp at our local Teal Central polling booth.

In preparation, I’m rehearsing my explanations. Here are just some of the reasons why I’m voting ‘No’.

  1. Never mind the referendum question’s wording about “recognising the First Peoples of Australia” – this referendum is not really about ‘recognition’ of indigenous people at all. True, the Australian constitution doesn’t currently specifically recognise indigenous people. But it doesn’t specifically recognise non-indigenous people either. It doesn’t even expressly recognise the office of Prime Minister. So what? None of us doubts the existence of Australian prime ministers, indigenous Australians or non-indigenous Australians because none of these people are specifically referred to in our constitution. Most Australians have never read our constitution and never will. It is a worthy but dull set of assembly and operating instructions for history’s only self-governing continent. As ‘Yes’ supporter Professor Greg Craven recently observed, our constitution’s success is evidenced by our historical lack of military coups, judicial corruption, and arbitrary executions. And at least since 1967, our constitution hasn’t given indigenous and non-indigenous citizens different rights from each other. Changing the constitution now so that we have constitutional “recognition” of “First Peoples” would be innocuous symbolism in a widely unread document. It wouldn’t either help or harm anyone in any practical sense.  Let’s move on to the genuine controversy in this referendum – the Voice to Parliament and the executive.
  2. The referendum proposes an institutional Voice to Parliament (and also the executive government) on “matters relating to Aboriginal and Torres Strait Islander peoples”. As of the last census, Australia has 812,000 indigenous people. But the proposal is to give them a single Voice. Indigenous Australia is not some single vast school of fish always moving silently and together in the same direction and readily capable of being adequately and fairly represented by a single Voice. Like Australians of every other demographic, Australians of indigenous heritage each have their own agency, opinions, needs, motivations, attitudes, and outlooks. Democracies should look to the opinions of their voters as separate individuals – not to the opinions of those who claim to speak for identity groups. Rather than giving indigenous Australians a single institutional Voice to Parliament, wouldn’t it be far better if we gave every indigenous Australian adult his or her own vote of equal value to their non-indigenous neighbours? Oops. We do precisely that already. And, contrary to what you keep reading elsewhere, we have been doing so since long before 1967. Every Australian adult – indigenous or otherwise – has an equal vote now. Every Australian adult is equally free to also join political lobby groups, political parties, street marches and the like now. These rights don’t currently change according to people’s ethnic identity. But when governments concern themselves with demographic groups, they necessarily overlook the individual people involved. To assume, for example, that a single indigenous Voice to Parliament can accurately and simultaneously represent, say, Jacinta Nampijinpa Price and Noel Pearson because both are Aboriginal is simply racial profiling. The essential logic underpinning the Voice can be summarised thus.  “Jacinta is black. So is Noel. They must therefore have shared experiences, needs and political outlooks, and the Voice can hence speak fairly on behalf of them both simultaneously and all other indigenous Australians as well.” Never mind the good intentions; that’s racial prejudice denying the legitimacy of two informed, articulate adults disagreeing with each other in a democracy. (It’s also wildly wrong as the competing arguments of Jacinta Nampijinpa Price and Noel Pearson on the referendum itself have so spectacularly illustrated in recent weeks.)
  3. Parliament is already getting a cacophony of advice from people claiming to speak on behalf of indigenous Australians. For evidence of that, look no further than the very fact of this week’s referendum. As a nation, we are spending $450 million this week on a proposal to give enhanced political rights to approximately 3 per cent of the population. And we are doing so because some prominent indigenous leaders backed by some of Australia’s most powerful political parties, trade unions, academics, banks, mining companies, airlines and public intellectuals persuaded the government we should. In itself, that demonstrates the existing indigenous lobby groups already have ample power and influence in Canberra even without a formal Voice to Parliament.   
  4. My four kids are now in their early twenties. In the usual course of things, I expect to become a grandparent in the fullness of time. Depending on my future children-in-law, some of my future grandkids might conceivably be able to claim indigenous heritage and some of my grandkids might not. Fine. But if the Voice succeeds, some of my future grandchildren will have political rights under the Australian constitution not available to their Australian-born cousins, also my grandkids. Not fine. (I picture myself riding a chairlift at Mt Buller with my future grandkids as one attempts to explain her indigenous disadvantage to her non-indigenous cousin and why the Voice is available to speak on behalf of one but not the other. Yuck.)
  5. I am owning up here to my middle-class privilege. There are indigenous people (such as, say, ‘Yes’ proponents professors Marcia Langton and Megan Davis) who enjoy that same middle-class privilege. I don’t need or deserve special constitutionally entrenched legal and political rights because of my ethnic composition. Neither do they.
  6. Any constitutional reform that gives a special right to people of only one group (such as the right to representation via an indigenous Voice to Parliament) necessarily denies that same right to everyone outside that group. This takes Australia backwards. A more equal Australia cannot be promoted by constitutionally entrenching unequal rights between indigenous and non-indigenous Australians.
  7. The proposed Voice “may make representations to the Parliament and the Executive Government of the Commonwealth on matters relating to Aboriginal and Torres Strait Islander Peoples”. What does this mean? Every mainstream political issue is arguably one “relating to” both indigenous and non-indigenous Australians. Nuclear-powered submarines, Commonwealth-funded cancer research, Australian Antarctic bases, foreign aid, interstate freeways. All of these things and more will affect indigenous and non-indigenous taxpayers, voters, welfare recipients and their children. Modern Australian society cannot be neatly segmented into indigenous issues (about which the Voice would be able to legitimately “make representations”) and non-indigenous issues (about which it would not). The Voice’s remit will have no logical limits. It will be litigated and relitigated in perpetuity according to the changing whims of the High Court. (Former High Court Chief Justice Robert French might disagree but – with respect – he is retired and his public musings on the subject today are likely to be of scant interest to his successors in the High Courts of tomorrow.)  
  8. As lawyers, we like testing ideas with counter-factual questions (e.g. what would have happened if the defendant had stopped at the red traffic light instead of driving through it?) I cannot get past the obvious counterfactual staring us in the face here. It is this. Is there any worthwhile policy or law assisting indigenous Australians which Australia should have in place today but has missed out on because we do not already have an indigenous Voice to Parliament? This is a basic question to which the ‘Yes’ camp appears to have no answer.
  9. Did all your ancestors migrate to this continent 65,000 years ago? Or some? Or none? Or perhaps a little more recently? Follow-up question: why is it relevant? I was born here. My parents were both born here. My grandparents were all born here. So were most of their parents. I am not an invader. I am not a tourist. Because I have no land beyond the seas to return home to, this is, was, and will always be my land too. But only the extremist fringes of the left and right would contend that my ancestry genuinely makes me more or less Australian than any of my compatriots. Entrenching gradations of Australian citizenship in the constitution by giving some of us extra rights over others depending on the accidents of our ancestry is fundamentally unfair.
  10. Don’t be seduced by the argument that this referendum is somehow akin to the same sex marriage plebiscite in 2016. This is the very opposite. The same sex marriage vote was an opportunity to promote equality between Australians and reduce prejudice against a minority. The Voice referendum is a chance to constitutionally entrench prejudice (albeit racial this time) and inequality. The two votes share a common underlying question: are we for treating all Australians as individuals with equal legal rights or do we want governments to preserve and entrench old prejudices and divisions within our society? I voted ‘Yes’ to same sex marriage and will vote ‘No’ to the Voice because you can’t vote for equality for everyone in 2016 and then vote in 2023 for an extra dollop of equality in the form of a Voice to Parliament for the minority who identify as indigenous.
  11. Australia’s traditional egalitarian aspirations often fall short, but they are worthy and should not be eroded accidentally. There’s nothing egalitarian about voting to treat indigenous people as constitutionally different to other Australians.
  12. Singer Paul Kelly has long been a supporter of indigenous people. One of his many great songs on indigenous Australia is ‘Special Treatment’. It describes the inequity of Aboriginal people being treated differently simply for their indigeneity. Kelly is a prominent supporter of the Voice but at its heart the Voice is a proposal that Australia should formally and uniformly treat Aboriginal people differently from the rest of us simply for their indigeneity. ‘Special treatment’ for Australia’s indigenous people has not been a great success for almost 240 years now. Constitutionally embedding a new form of ‘special treatment’ for them is unlikely to have a happier outcome.
  13. Democracies are meant to self-correcting. Australian history is full of happy examples. We legislated for compulsory voting in 1924. It worked. We kept it. We legislated for the Aboriginal and Torres Strait Island Commission in 1990. It quickly became a corrupt and ineffectual dog with fleas. The Liberals axed it in 2005 and no subsequent Liberal or Labour government ever tried to bring it back. If the Voice is a good idea, we can legislate for it tomorrow and then tweak any problems in the normal course of democratic government. If a legislated Voice works, its very success will politically ensure its long-term survival. If, instead, a legislated Voice turns out to be an ATSIC-style dud, we will not be burdened with it permanently. A Voice to Parliament entrenched into the constitution would very different. It would be effectively concreted into the Australian government forever – whether it worked or not.
  14. Let’s suppose for a moment that my egalitarian and anti-racist instincts are wrong. Let’s suppose that only indigenous politicians can truly understand and represent indigenous people because non-indigenous politicians exclusively represent non-indigenous people and non-indigenous views. Even in that sad and ridiculous world, indigenous Australians have ample federal parliamentary influence already. Canberra currently has 11 parliamentarians who identify as indigenous (senators Kerrynne Liddle (Lib), Jacinta Nampijinpa Price (Country Liberal), Dorinda Cox (Greens), Patrick Dodson (Labor), Malarndirri McCarthy (Labor) Jana Stewart (Labor), Jacqui Lambie (Independent) and Lidia Thorpe (Independent) and House of Representatives members Linda Burney, Gordon Reid and Marion Scrymgour (all Labor) and 215 who don’t. Statistically speaking, this suggests that indigenous people (who represent 3.8 per cent of Australia’s population) comprise 4.8 per cent of our federal parliamentarians are accordingly currently over-represented in parliament. True, these percentages will fluctuate with each election, but the point remains valid for two quite independent reasons. First, it illustrates that being indigenous is no obstacle to being elected to federal parliament in contemporary Australia. Second, if the present parliament cannot or will not listen to the 11 indigenous voices currently in its very midst, there is no sensible chance that any formalised external indigenous voice is going to get a better hearing or any better practical outcomes than are available through the current system. In which case, a Voice to Parliament would be worthless anyway.
  15. Racism is either a good thing or it is not. “Good racism” is not a third alternative. Dr Martin Luther King Jnr looked “to a day when people will not be judged by the color of their skin, but by the content of their character.” This was right when he said it. Nothing has changed since. A Voice to Parliament would be premised upon the racial character of the people it purported to represent. That is racism.
  16. Constitutionally entrenching the Voice would make it effectively permanent. This would necessarily imply that indigenous disadvantage is also permanent. Prejudging 812,000 indigenous people as being permanently incapable of sustaining themselves politically in a multi-cultural democracy without the political sheltered workshop of a Voice to Parliament is both pessimistic and patronising.
  17. We have enough politicians already. The Voice proposal we are being asked to vote on is silent on who its members will be and how they will be elected or appointed. But it seems inevitable that anyone landing a gig on the Voice will become a politician upon appointment whatever their prior vocation. It seems unlikely that indigenous Australia’s problems today are attributable to any lack of politicians and bureaucrats in Canberra. (Indeed, there is a school of thought that the abundance of Canberra politicians and bureaucrats we already have involved in indigenous policy is a cause of some of indigenous Australia’s current problems rather than a solution to them.)
  18. Is the Voice advisory only? Prime Minister Anthony Albanese is anxious to assure us that the Voice to Parliament will be only an advisory committee to the parliament and not an actual arm of the parliament. It won’t make laws. Are the Yes supporters even hearing this? Whatever else indigenous Australia lacks today, it is surely not Canberra-based committees and their bureaucracies churning out advisory reports. If committees delivering reports to politicians in Canberra was a solution to indigenous Australia’s problems, indigenous Australia would have reached political and economic Nirvana long ago.
  19. I’d vote Yes if I believed all Aboriginal people are uniformly underprivileged today while every non-indigenous Australian enjoys my privilege. But absolutely everyone’s experience of real life is more complex than that. This is a good country that can be improved a lot by attempting to help the people who need it. But we need to help people – not ethnic groupings.
  20. My main (but not only) personal involvement with Aboriginal Australia was many years ago as a temporary inhouse native title lawyer at an Aboriginal land council in Queensland. My short career there was illuminating but discouraging. Our taxpayer-funded organisation was chaired by Ray “Sugar” Robinson (whose career famously included a term as a Deputy Chairperson of the Aboriginal and Torres Strait Islander Commission and a jail term for fraud against the Commonwealth). My indigenous colleagues were lovely people but a confronting proportion of them were also Sugar’s friends and relations. Our key focus often felt like internal politicking. Anecdotally, it seems that my insider’s experience of Aboriginal bureaucracy is not unusual. Constitutionally entrenching a Voice to Parliament now – together with the brand-new indigenous bureaucracy which would inevitably be required to support it – would be a triumph of hope over national experience.

Conclusion

Believe it or not, my list of reasons goes on. But if you’ve read this far without being persuaded to vote ‘No’ at this Saturday’s referendum I’m wasting your time and mine persevering.

But let me conclude on a positive note. For all the public handwringing about this ostensibly divisive debate and reciprocal media accusations of bad faith and disinformation, my personal experience in recent weeks has been quite the opposite. I’ve vigorously disagreed with many family members and friends on this issue, but I’ve not yet heard an angry word spoken. Yes, inevitably, there are some distasteful fringe dwellers on both sides but the ‘Yes’ and ‘No’ camps both seem to me to be driven by mainstream Australia’s enormous and very sincere goodwill to indigenous Australians and the need to improve their lot.

I don’t think that popular goodwill will change. Whatever the outcome of this referendum, from next Monday the dust will settle and Australia will start looking at some very old problems with fresh eyes.  And that’s a good thing.

Prima Facie – five stars (and maybe 1.5 CPD points too?)

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Sheridan Harbridge in barrister mode in Prima Facie

Prima Facie – five stars (and maybe 1.5 CPD points too?)

Is it kosher for Victorian lawyers to claim CPD points for attending a Melbourne Theatre Company play? Probably not. But you should see MTC’s current production of Prima Facie anyway.

Prima Facie is a one-person performance starring Sheridan Harbridge as Sydney criminal defence barrister Tessa. When we first meet Tessa she has ample work, friends, invitations, and a growing profile. Life and the law are both marvellous for Tessa. She defends sexual assault prosecutions (and much else besides) with zeal and frequent success.

But then one night things go very awry and, 763 days later, Tessa finds herself under cross-examination as the complainant in her own sexual assault case.

Yes, it sounds very zeitgeist and Me Too but there is so much more to this production than, say, a clumsy Lisa Wilkinson spray about Brittany Higgins and Bruce Lehrmann.

The play is tightly written by Suzie Miller and directed by Lee Lewis.

The result is excellent. It is an hour and a half of intelligent, often funny, frequently sad, always thought-provoking words, all grippingly delivered by a single actress whose only physical stage prop is a solitary office chair.

This is a mainstream play that is not especially directed at Australian lawyers but it will captivate lawyers and non-lawyers without the usual toe-curling legal inaccuracies and Americanisms that afflict so many legal dramas.

I give it 5 stars. (So, incidentally, does The Age.)

Now for the legal blogger’s musings:

  • My subsequent ruminations about the legal policy dilemmas in Prima Facie reminded me that the law of rape is about to be modified in Victoria with the introduction from 1 July 2023 of an “affirmative consent” requirement and with it the likelihood that rape conviction rates might increase. (Here is a link to the Justice Legislation Amendment (Sexual Offences and Other Matters) Act 2022 itself and a Victorian Government press release about the changes.)
  • Most practising lawyers in Victoria are required to complete 10 CPD (Continuing Professional Development) points before 31 March of each year. (See the Victoria Legal Service Board & Commissioner’s summary of requirements here.) That means you have about 6 weeks left.
  • Prima Facie finishes a week earlier on 25 March 2023. So, on the outside chance I’m mistaken in my opening suggestion that an excellent night at the theatre won’t qualify as professional development, you can and should get Prima Facie tickets before you finalize your CPD requirements for the year. After all, Prima Facie tickets are much more likely to sell out than any conventional CPD seminar on your radar.

Commercial litigators referred to the DPP and ordered to pay their clients $11.7 m

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Banksia Securities is civil litigation’s ‘Lawyer X’ moment. It is “one of the darkest chapters in the legal history of this state,” according to the Victorian Supreme Court’s Justice John Dixon.

Dixon J. delivered this assessment in Bolitho v Banksia Securities (No 18)(remitter) [2021] VSC 666 on Monday.

He ordered two barristers, three solicitors and a litigation funder to pay their own clients damages of $11.7 million plus indemnity costs.

It is the latest crescendo in a slow-burn case spanning years. And there might be more to come because Dixon J. also ordered that the matter’s papers be provided to the Director of Public Prosecutions (plainly with view to potential fraud-related charges against some of the lawyers).

Here is the nutshell version of Banksia Securities to date. A class action for 16,000 mainly elderly investors was settled for $64 million in 2017. The plaintiffs’ lawyers then put their heads together to milk their clients of more than $19 million in legal costs and litigation funder’s commission. Between them, the lawyers’ efforts at securing this recompense included misleading the Court, reverse-engineering invoices, backdating costs agreements and destroying documents.

But two of the lawyers’ braver clients smelled a rat and spoke up.

A judicial bollocking has now resulted.

“Moral atrophy”, “disingenuous”, “intention to conceal”, “deliberately destroyed documentary evidence”, “nefarious”, “incompetent”, “extraordinarily casual”, “gross dereliction” and “knowingly false” are some of the phrases applied to particular lawyers in the decision. Dixon J. differentiates between the lawyers (for example, one solicitor is found to have been grossly derelict but not dishonest) but their collective efforts were cumulative and, in Dixon J.’s words, “The victim was the administration of justice.”

Two barristers – Norman O’Bryan SC and his junior Michael Symons – have already lost their tickets. They might yet lose their liberty depending on how things pan out with the DPP. The two surviving solicitors have been directed to show cause why they should not lose their tickets too.

I will try to blog further about this case when I have digested the 696-page judgment but in the interim the Court’s own three-page case summary will give you a taste.

My initial takeaways?

  • The Civil Procedure Act is more than a list of platitudes. Breaching it has just cost some commercial litigators millions of dollars. Complying with it (and also the Uniform Law as to costs disclosure) would have saved them that money plus their reputations, livelihoods and potentially some jail time too.
  • Pause if you ever find yourself at either end of an email between lawyers that proposes the deletion of documents. Is such a course likely to end well? And whether it is acted on or not, how is that proposal going to look if the email ever find its way into evidence?
  • Nothing about the case suggests that this was a debut performance by its ignominious ringleaders. If I had ever been represented by Norman O’Bryan SC or solicitor Mark Elliott I would now be dusting off their invoices to me with very deep suspicion.

Commercial Tenancy Relief Scheme 2.0 – a new variant for leasing lawyers

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Covid has evolved. So has Victoria’s commercial rent relief scheme to deal with the pandemic’s consequences for commercial landlords and tenants. We now have the details of the latest version.

The new CTRS (perhaps we should christen it the CTRS’s Delta variant?) effectively became law yesterday. Here is a very brief introduction:

  1. The Commercial Tenancy Relief Scheme Act 2021 ostensibly creates the scheme but its real substance is contained in the Commercial Tenancy Relief Scheme Regulations 2021 proclaimed yesterday.
  2. Its broad aim is to entitle distressed retail and commercial tenants who have suffered a decline in turnover of 30 per cent or more since 1 April 2021 to obtain at least proportionate rent relief from their landlords.
  3. Eligibility for the CTRS is no longer tied to the Jobkeeper program (which has expired) but rather to a financial comparison of three consecutive months of trade to an earlier corresponding period.
  4. Some tenants are disqualified from the outset. Publicly listed corporations, major banks and beekeepers (yes, really!) are among the unwelcome (see regs 7 and 8).
  5. The scheme is complex and littered with exceptions, carve-outs, qualifications, and deadlines. No brief summary (including this one) can be relied upon as entirely accurate.
  6. Eligibility is not automatic. Among other things, eligibility requires a written rent relief request from a tenant to a landlord (reg. 27(1)) which sets out certain details (reg. 27(2)) and is supported by certain documentary evidence within 14 days (reg. 27(3)). A tenant who stuffs up these formalities three times will not be allowed a fourth bite of the cherry (reg. 26(6)).
  7. A landlord receiving a compliant rent relief request must within 14 days offer the tenant at least rent relief proportionate to the tenant’s decline in turnover. At least half of that relief must be by way of waiver of rent (reg. 27(8)) with the balance by deferral.
  8. A tenant receiving such an offer will be deemed to have accepted it 15 days later unless they have otherwise agreed or have already referred the matter to the Small Business Commissioner (reg. 27(11)).
  9. The period for which rent relief must be granted starts on the day the rent relief request is made unless that request is made before 30 September 2021 in which case the rent relief period commences on 28 July 2021 (note the retrospectivity) (reg. 28). (This will make 30 September 2021 an important deadline for some distressed tenants.)
  10. Where a landlord and tenant cannot agree on rent relief the Small Business Commission can impose a binding order on the parties (reg. 48) without a hearing (reg. 46) which can then be further litigated in VCAT (reg. 59).
  11. Eligible lease disputes can be litigated in VCAT or the Supreme, County or Magistrates’ courts but all require a gateway certificate from the Small Business Commission (regs 64 and 65).
  12. The regulations currently contemplate a ‘rent relief period’ from only 28 July 2021 to 15 January 2022 (see definitions at reg. 4) but remember that the end date of the original CTRS scheme was extended several times so this end date might eventually prove to be elastic too.
  13. During the ‘rent relief period’ it will be impossible for most landlords to increase their rents under eligible leases for any reason (reg. 35). Particularly for long term leases without ‘review to market’ rent review clauses, this ban has potential long term implications to the capitalization rates and hence the capital value of some rental properties.
  14. Unlike the earlier CTRS schemes, some tenants will be required to provide further financial information to their landlord even after a rent relief agreement has been entered into. Their rent relief entitlement might then increase or decrease automatically depending on that information (reg. 29).

Does this all sound simple, straight forward and convenient? If so, I haven’t explained it sufficiently and you should probably do some further reading.

Some useful resources for that purpose:

How bazaar – soli’s CTRS rent relief requests mostly fail at VCAT

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A recent Covid rent relief request case at VCAT bodes ill for Victoria’s pandemic-stricken commercial tenants.

The tenant in Tzilantonis v S &C Thomas Pty Ltd [2021] VCAT 486 was a solicitor who used part of the leased premises for his legal practice and the remainder as an online variety store known as Clearance Bazaar. After Covid thumped the legal practice’s turnover, the soli made three separate written requests spanning 8 months to his landlord for rental relief under the COVID 19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“the Regulations”). The landlord was unmoved. It contended that none of the requests complied with the Regulations and accordingly the tenant was not entitled to any rent relief.

So off to VCAT the parties went.

Last month VCAT Deputy President Riegler delivered his decision.  In summary:

  • It was common ground between the parties at hearing that any entitlement to rental relief was conditional upon the tenant having made a compliant rent relief request under the Regulations.
  • Of the tenant’s three rent relief requests for the year from 1 April 2020, VCAT found only the final request was compliant and hence the tenant was entitled only to rent relief for the three months covered by that particular request.
  • The formal final order states that “The Applicant is entitled to rental relief representing 62.2% of the rent that would otherwise have been payable over the period 31 December 2020 until 28 March 2021”. But the reasons are obscure as to both how that unquantified amount was arrived at, and how much of the relief was to be by way of rent waiver and how much was to be rent deferral.

The Tzilantonis decision answers some questions about the practical operation of the Commercial Tenancy Relief Scheme (CTRS) but invites others.

Some takeaway answers include the following:

  1. It seems that a tenant’s valid CTRS rent relief request can comprise separate documents on separate dates provided they are all provided to the landlord within a reasonably short period.
  2. Supplying VCAT and the landlord at final hearing with information or documentation which should have been provided with an actual rent relief request will be too late to salvage the validity of a non-compliant rent relief request.
  3. Strict, although not entirely slavish, compliance with the Regulations is required for a rent relief request to be valid. For example, an abbreviated version of the pointless tautology required at reg. 10(2) of the Regulations that “the tenant’s lease is an eligible lease … and that the lease is not excluded from the operation of these regulations…” won’t invalidate the request.
  4. Providing a landlord with a “print activity statement” (in essence an electronic version of a BAS statement) is capable of being sufficient evidence of a tenant’s participation in the jobkeeper program for the purposes of reg. 10(2)(b)(ii).
  5. VCAT-ordered CTRS rent relief applies to rent only – there is no flow-on right to corresponding relief for outgoings (eg utility payments) payable under the lease.

What of the remaining questions about the practical operation of the CTRS?

One that occurs to me relates to the common perception that any rent relief granted under the CTRS must be directly proportionate to the tenant’s fall in turnover.  And what of the widespread understanding that whatever rent relief is given must be in the form of 50/50 forgiveness of rent and deferral of rent?

Both are myths that arose from the National Cabinet’s views on these issues last year (see my blog touching upon its Code of Conduct here) rather than from any actual requirements in the Regulations.

The Regulations were amended several times over their short life (remember that the Regulations expired on 28 March 2021) but they never included any requirement that the rent relief had to be directly proportionate to the decline in the tenant’s turnover. The closest reference to proportionality was found in reg. 10(4)(ba) which made rent relief proportionate to the tenant’s decline in turnover the minimum rent relief to which the tenant was entitled. And the tenant’s maximum rent relief entitlement? Reg. 10(4)(a) referred to “… up to 100% of the rent payable…” [My emphasis.]

The decision in in Tzilantonis sets out that the tenant’s year-on-year decline in turnover for the December quarter in 2020 was 62.2% and then — without any reference to this being the tenant’s minimum entitlement under reg.10(4)(ba) — transplants that percentage figure into the final rent relief order. Why the coincidence in percentage figures? Did the tenant even ask for more than 62.2%? The VCAT decision does not say.

Similarly, readers are left to wonder whether the 62.2% rent relief ordered for (most of) the March 2021 quarter was intended by VCAT to take the form of waiver of 31.1% of the usual rent plus deferral of payment of a further 31.1% (and if so, deferral over what period?) or if some other cocktail of rent relief was contemplated.

Reg. 10(4)(b) required a landlord offering a qualifying tenant rent relief to offer “not less than 50% of the rent relief … in the form of a waiver of rent, unless a landlord and a tenant otherwise agree in writing.” [My emphasis]. Note that — again contrary to common understanding — the requirement that 50% of the rent relief be by way of waiver (unless the tenant otherwise agrees) was the tenant’s minimum entitlement under the Regulations and was not a fixed and inflexible outcome.

So, of the 61.2% rent relief the tenant secured did VCAT decide that the tenant’s minimum waiver entitlement of 50% was appropriate here? Or was it to be a 100% rental waiver? Or was it to be waiver of something between those percentages with deferral (for however long) of payment of the balance of the rent relief? Again, readers are left to wonder.

A third big CTRS question didn’t arise in this case because of the Tribunal’s findings as to the invalidity of the tenant’s first two rent relief requests. But if, hypothetically, the tenant’s earliest rent relief request had complied with the Regulations, would the tenant’s subsequent rent relief requests then have been redundant as a consequence? (If so, a botched later request presumably would not have invalidated its valid predecessor.) Or should tenants seeking rent relief under the CTRS have submitted a fresh rent relief request each time a fresh version of the Regulations commenced (and, remember, with retrospective effect each time)? (If so, commercial tenants who failed to submit at least three valid rent relief requests will have disqualified themselves from at least some of the protections otherwise available to them under the CTRS.)

Conclusion

Two thoughts.

  • Pending some more published decisions from VCAT in this area, it will be perilous work for lawyers advising tenants and landlords as to their surviving rights and obligations under the CTRS.

As CTRS sunsets, VCAT shades VSBC’s rent relief request guidance

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Photo by Abdullah Ghatasheh on Pexels.com

The pandemic-inspired Commercial Tenancy Relief Scheme (CTRS) ends this Sunday, 28 March 2021 but two recent cases suggest that it will echo on in VCAT litigation for a good while yet.

I last blogged about the CTRS back in October (see here). For a beginners’ guide to the CTRS generally, see my original blog on the subject here. In a nutshell, it is a regime to give temporary assistance to pandemic-hit commercial and retail property tenants.

The scheme came into operation in May 2020 with retrospective effect to 29 March 2020. It was originally to end on 29 September 2020 but was extended twice. By its first lot of amendments (the September amendments) it was extended until 31 December 2020 and by a second set (the December amendments) it was extended further to 28 March 2021. (See the expiry date provision at reg. 25 and also the definition of “relevant period” at reg. 3 of the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020.)

But with no further extensions the CTRS party is about to end. Both the CTRS and the Commonwealth’s JobKeeper payment program (which was always essential to CTRS eligibility) are to end on 28 March 2021.

As discussed in my October blog, the September amendments contained some tweaks to the CTRS beyond simply prolonging it. Those other changes caused the Victorian Small Business Commission (VSBC) to suggest publicly that fresh rent relief requests to landlords were likely to be necessary for any pandemic-distressed tenants wanting rent relief for any time after the CTRS’s original 29 September 2020 expiry date. In short, the VSBC’s implication was that even an entirely compliant rent relief request made before 29 September 2020 risked being legally useless in respect of any rent due after that date and hence a fresh formal rent relief request was necessary for pandemic-affected tenants.

Really? As Talking Heads asked in Psycho Killer “Say something once, why say it again?”

As statutory interpretation, the VSBC view was arguable but as policy it did sound improbable, especially when the CTRS was directed at assisting small businesses through a societal catastrophe.

Fast forward six months and this ‘one-rent-relief-request-or-two?’ issue from the September amendments has now cropped up in two separate VCAT cases in the last fortnight.

Both cases make encouraging news for tenants.

In Yarraville Business Pty Ltd v Persico [2021] VCAT 213 Member Edquist was unmoved by the VSBC’s public pronouncements. In Yarraville, the tenant had made one (problematic) rent relief request before the September amendments and none afterwards. The landlord pointed to this as fatal to the tenant’s reliance on the CTRS in respect of short-payment of rent due after 29 September 2020. The Tribunal disagreed (at least on an interlocutory basis). It found that the tenant’s single pre-September request was sufficient for both pre- and post-29 September CTRS purposes and that the VSBC’s views were of little consequence:

….

74.    I begin with the observation that I am not assisted by the reference to the website of the Small Business Commissioner. The Victorian Small Business Commission is not a superior court, and its opinions do not bind the Tribunal. It was not contended that the website should be regarded as the opinion of an expert witness. The chain of reasoning underpinning the Small Business Commissioner’s expression of opinion does not appear to be set out on the website, and so I am not in a position to consider it.

….

88.    …. For these reasons, I find that [the Tenant’s] argument is sustained. [The Tenant] did not have to make a fresh application for review after 29 September 2020 in order to continue to enjoy protection from eviction ….

Just four days later, in Global Fashion Service Pty Ltd v ESR Investment Nominees 3 (Australia) Pty Ltd [2021] VCAT 224, VCAT’s Deputy President Riegler reached a similar conclusion in favour of another tenant who had also sought rent relief before the September amendments but had failed to make a fresh rent relief request afterwards. DP Riegler’s reasons do not refer to the VSBC nor to the Interpretation of Legislation Act (several parts of which are discussed in Yarraville) but the bottom line was the same.

In each case, a tenant who had failed to seek rent relief after the September amendments came into force succeeded in obtaining an injunction preventing a landlord from terminating a lease to which the CTRS applied.

The interlocutory nature of both the Yarraville and Global Fashion decisions is significant as no final decision of legal rights has yet been made in either case and hence they have – for the moment at least – dubious precedent value.

Nevertheless, pending the final determination of the two cases they are still likely to assist tenants in CTRS rent relief negotiations by upsetting a previously widespread perception that valid rent relief requests made before 29 September 2020 were somehow irrelevant to leasing relationships after that date.

The cases are also a useful reminder not to rely on everything you read on the VSBC website.

Tigers thump their retail landlord and Port Adelaide on the same day

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Dusty Martin’s reaction to the Court of Appeal’s judgment

Richmond Football Club had two big wins on Friday – one over Port Adelaide in the preliminary final and the other over a retail landlord in Victoria’s Court of Appeal.

One result gets the Tiges into the 2020 Grand Final; the other should win them lots of new fans among Victoria’s retail tenants.

The Court of Appeal’s decision is Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267.

In short, it allows Richmond to rely on the Retail Leases Act (‘the Act’) to save a mountain of land tax and prune back some rent increases (the precise monetary consequences are not set out).

The decision confirms that a ‘retail premises lease’ once entered or renewed will not change its legal character during its term by reason of extraneous circumstances (such as rent increases). This is important because the Act gives various protections to tenants of ‘retail premises’ including (at s. 50) voiding any requirement in a lease that the tenant effectively pay its landlord’s land tax. These protections commonly make the question of whether a particular lease relates to ‘retail premises’ within the meaning of s. 4 of the Act financially significant for tenants and landlords.

The Act’s definition of ‘retail premises’ focuses on the retail supply of goods and services but it has several carve-outs. One of the exclusions is that premises with ‘occupancy costs’ of over $1 million per year are not ‘retail premises’. But what happens if the proper categorization of premises as ‘retail premises’ changes during the life of a lease?

This was the issue that arose between Richmond and its landlord, Verraty.

Since (at least) 2004, Richmond had leased a Wantirna pokies venue from Verraty. In 2004 the venue constituted ‘retail premises’ within the meaning of the Act.The written lease included a requirement that the tenant reimburse the landlord its annual land tax but, because the lease was a ‘retail premises lease,’ that requirement was unenforceable by reason of s. 50 of the Retail Leases Act.

Over time the property’s rent and outgoings increased. By May 2016 the tenant’s annual occupancy costs ticked over the $1 million mark. Did the fact that the occupancy costs now exceeded $1 million mean that the premises ceased to be ‘retail premises’ within the meaning of the Act and that the hitherto-void land tax clause hence suddenly became enforceable against Richmond?

The landlord took that argument to VCAT and won – see Verraty v Richmond Football Club [2019] VCAT 1073.

Richmond then appealed to the Supreme Court (Croft J in his final case before retirement from the bench) and won – see Richmond Football Club v Verraty [2019] VSC 597.

Verraty then appealed to the Court of Appeal. There Justices Kyrou, Kaye and Sifris dismissed Varraty’s appeal in a joint judgment. The nub of it is in para 8:

“… if a lease is a ‘retail premises’ lease at the commencement of the lease, it remains subject to the Act even if the premises cease to be retail premises. In short, the text, context and purpose of the Act strongly support the view that it is not possible [for a lease] to jump in and out of the Act from time to time depending on whether the premises continue to fall within the definition of ‘retail premises’.

The judgment is a ringing vindication of Croft J’s final Supreme Court judgment but it is silent on the question of whether leasing relationships can ‘jump’ in or out of the Act when leases are renewed (cf during a lease term). This question did not squarely arise in the Richmond v Verraty matter but Croft J nevertheless ventured an opinion on it in his judgment. He suggested (at paras 74 – 78) that whether premises could change their ‘retail premises’ characterization upon renewal of a lease depended upon the lease provisions regarding such renewals.

The Court of Appeal does not look at this question but it certainly approved of Croft J’s analysis generally.

Conclusions? Three occur to me.

  1. It is now settled that whether a lease is or is not a ‘retail premises lease’ is established on a ‘once and for all’ basis upon its entry or renewal. Its character won’t change during its term.
  2. It is less clear whether a lease can ‘jump’ upon renewal of a lease. For example, ‘retail premises’ under the Act exclude premises whose tenants are listed on the ASX. Despite this, Verraty suggests that the retail premises lease for a ‘Mum and Dad’ business will continue to be a retail premises lease even where the tenants sell their business and assign their lease to an ASX-listed company during the life of that lease. So if that ASX-listed assignee then exercises an option to renew the lease, what is the status of the resulting further term? Croft J implies the answer depends on the terms of the lease involved. The Court of Appeal does not express a view.
  3. Richmond is going into Grand Final Week on a winning streak on and off the field. This might be a bad omen for Geelong.

Time for a second wave of rent relief applications? Meet Victoria’s amended Covid-19 commercial leasing regime

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Victoria’s commercial leasing goalposts moved again last week with new regulations tweaking the Commercial Tenancy Relief Scheme (“CTRS”). As a result, most commercial tenants should probably now be making fresh rent relief applications to their landlords.

By way of background, I blogged about the original CTRS in May (see here). But in short, the CTRS is part of a national scheme to spread the financial pain of the Covid-19 pandemic between commercial landlords and their tenants. The newly updated Covid-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (“the Amended Regulations”) extend the CTRS until 31 December 2020 (see reg. 25 and the definition of ‘relevant period’) but they also do much else.

Here are four key changes I perceive in the Amended Regulations.

1. Fresh rent relief requests might now be necessary.

As in the original version of the CTRS, a commercial tenant will qualify for rent relief only if, first, it has an ‘eligible lease’ (which involves, among other things, participation in the Commonwealth’s ‘JobKeeper’ scheme) (see reg. 10(2)(b)) and, second, it makes a written request for rent relief that complies with reg. 10. The wrinkle is that reg. 10 was changed by last week’s amendments, and the information prescribed for the tenant’s request is now greater than before. One example of the effects of the changes to reg. 10 is that a tenant’s written rent relief request to a landlord could comply with reg. 10 on 28 September 2020 without specifying the tenant’s decline in turnover as “a whole percentage”. On 29 September 2020 that same written request would not have complied with the (newly amended) reg. 10.

This is problematic for several reasons. The Amended Regulations were made on 29 September 2020 but “are taken to have come into operation on 29 March 2020” (reg. 3). Put another way, the Amended Regulations’ commencement pre-dates their very publication by precisely 6 months. So is our hypothetical tenant’s compliant rent relief request of 28 September 2020 still valid today? (Think of all the billable hours likely to be exhausted exploring this question.)

Even assuming this particular absurdity can be safely navigated in our hypothetical tenant’s favour (and I think it can be only partially), what is the status of tenants’ pre-29 September rent relief requests for post-29 September 2020 rent if their earlier rent relief requests do not comply with the 29 September 2020 version of reg. 10? (Reg. 10(4)(a) implies that a landlord is under no obligation to give its tenant rent relief for any period before the landlord receives a written request from the tenant that conforms with the reg. 10(1).)

The Small Business Commission is central to the administration of the CTRS. It has already noticed this complication and sought to deal with it by publishing this template rent relief request for tenants to send to their landlords. It is feasible that some tenants will have already accidentally provided their landlords all the information prescribed by the new reg. 10, but such serendipitous advance compliance is likely to be rare. As the tenant’s compliant written request is both important and free, most tenants will probably be best served by completing the SBC’s template document asap and firing it off to their landlords. Every day they delay is potentially costing them rent relief to which they are otherwise entitled.

Back in April, the National Cabinet published the Mandatory Code of Conduct Contrary on SME Commercial Leasing Principles during Covid 19. That document created an expectation (but no actual legal requirement) that landlords would grant rent relief which was at least proportionate to their commercial tenants’ loss of turnover. That expectation was not reflected in Victoria’s original CTRS regulations. Confusion ensued. This has now changed. The Amended Regulations do have such a proportionality requirement (see reg. 10(4)(ba)). Landlords must offer their tenants within 14 days of a compliant request, rent relief “at a minimum, proportional to the decline in the tenant’s turnover” associated with the rented premises.

2. Proportional rent relief as a minimum is now unambiguous.

Note that the proportional rent relief is a minimum rather than a fixed empirical requirement – a tenant might legitimately and candidly argue for a higher percentage of rent relief than the loss of turnover it has actually experienced.

The Amended Regulations maintain the original CTRS requirement that, unless otherwise agreed by the tenant, rent relief (whatever the amount) will be granted by landlords permanently waiving one half of the rent relief amount (see reg. 10(4)(b)) with the balance of the rent relief to be dealt with by way of deferral (see reg. 16(2)) or otherwise.

3. Even stony broke landlords are now required to donate blood to their haemorrhaging tenants.

The original CTRS regulations included (at reg. 10(4)(d)(iv)) an effective requirement that rent relief be calculated by reference to factors including “a landlord’s financial ability to offer rent relief”. Regulation 10(4)(d)(iv) has been deleted by the Amended Regulations. The potential effect is that some cash-strapped landlords might now be compelled to provide rent relief to their tenants even where that rent relief is likely to drive those landlords to insolvency.

4. A pseudo fix to jawboning as a delay tactic?

The very foundation of the original CTRS was that a qualifying tenant could not be evicted for non-payment of rent until the revised CTRS rent had been either agreed or fixed by VCAT. In my May blog I perceived a scenario where a cynical tenant might go on an effective rent strike under the pretext that it was negotiating with the landlord while knowing that the growing queue of litigants for a (largely shut-down) VCAT meant that those “negotiations” might drag on inconclusively for years. The Amended Regulations now offer tenants (but not landlords) the near-term possibility of obtaining from the Small Business Commission a binding order for rent relief (see Division 1A of the Amended Regulations). Such binding orders are likely to be relatively quick (at least compared to the VCAT route) and might be useful to some tenants requiring short term certainty (e.g. for business sales, partnership dissolutions, etc) but most tenants are likely to find them very unattractive for several reasons.

The most obvious disincentive to a tenant seeking a binding order is strategic. If a tenant has effectively suspended its landlord’s ability to evict it for non-payment of rent pending a very distant adjudication by VCAT, why would that tenant want to disrupt the status quo by seeking a binding order from the Small Business Commission? It sounds to me a bit like Roadrunner proposing a coin toss to Wyle E Coyote – essentially foolhardy.

And a landlord’s equivalent near-term options if rent relief negotiations reach an impasse? Scant indeed, on my reading of the Amended Regulations.

There are many other oddities in the Amended Regulations. These are surely not the last amendments to the CTRS that we will see.

ADDENDUM – 22 MARCH 2021 UPDATE

See this update for a contrary view from VCAT about the need for fresh rent relief requests after 29 September 2020.

For whom the Bell tolls

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Alan Bond (pre-Bell collapse, fraud conviction and bankruptcy) with a mate

There is something uplifting in properly farewelling the dead and the dying.

The Economist’s weekly obituary always floats my boat (here is its recent goodbye to Ruth Bader Ginsburg as a sample). Ditto almost anything from Nick Cave’s vast anthology of dirges (including the Sydney Opera House’s spine-tingling cover of The Ship Song). Gabrielle Faure’s Requiem is my perfect breakfast soundtrack (although it does cause my family to fling toast at me).

Maybe Master Sanderson of the Western Australian Supreme Court has similar tastes.

He has just added a nine paragraph Corporations Law judgment to the genre. It’s beautiful.

In a mere 675 words he retells the story of the Bell litigation which is now being laid to rest after 25+ exhausting years, makes some final formal orders, and even includes some wry funnies along the way.

It might well be the very first and last Corporations Act judgment you actually enjoy reading from start to finish.

Here it is: Bell Group (UK) Holdings Ltd (in liq) [2020] WASC 347.

And to give it context, here is the ABC’s take on the wider saga.

Cashing in on a sense of entitlement – another intriguing TFM tale

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From East St Kilda to Malvern via Tajikistan

Looking for an exotic read that traverses East St Kilda, L.A., London, Afghanistan and Malvern? Or researching the outer reaches of “disentitling conduct” in dysfunctional families for the purposes of Victoria’s testator family maintenance (TFM) regime?

Either way, take a look at Joss v Joss [2020] VSC 424 which was decided by Justice Elizabeth Hollingworth in the Supreme Court this month.

The deceased was an orthodox Jewish survivor of the Holocaust. He died aged 93 in 2017, leaving the entirety of his $12.4 million Australian estate to his wife of 61 years. The couple’s two children stood to inherit under Dad’s will if Mum predeceased him but as Mum survived Dad, they got nothing under Dad’s will.

One son apparently accepted this but his brother did not. That son – a 61 year-old now named “Jessica” (s/he has long been planning gender reassignment surgery) sued the estate under Part IV of the Administration and Probate Act claiming her father had a “moral obligation” to make adequate provision for her proper maintenance and support and had failed in that duty. Jessica initially claimed 100 per cent of the estate but whittled that claim back to between 30 and 45 per cent by the end of the trial.

What had the plaintiff done to deserve such munificence from her late father (and at the expense of the deceased’s widow, Jessica’a own mother)?

Here are just some of the highlights from Jessica’s resume:

  • After being expelled twice from the same school Jessica received a commerce degree from Melbourne Uni. She then worked in banking and finance in Sydney and London for a few years.
  • In 1989 Jessica briefly joined the US Marines but didn’t make it through boot camp.
  • She then moved home to East St Kilda where the deceased bought her an apartment in her own name and employed her in the family business.
  • Along the way, Jessica stole some of the deceased’s share certificates and bought herself a luxury car with the proceeds.
  • In 1998 the deceased started paying Jessica an allowance of $500 per month. That allowance never stopped (even after the deceased’s death) and by the time of the trial had grown to $1600 per week (i.e. $83,000 annually tax-free) plus miscellaneous extra payments from time to time.
  • In 1999 Jessica quit work at the family business and (on her own version) chose never to work again. She lived off her parents’ money thereafter.
  • At about the same time, she abandoned the St Kilda apartment she’d been given to stand empty while she took off to Tajikistan hoping to fight in Afghanistan.
  • She developed strong anti-Jewish, pro-Muslim views. She also attempted to get a job working with the Iranian government.
  • She boasted to friends that she was joining Al Qaeda.
  • She repeatedly demanded millions from her parents (as an “advance on her inheritance”) and threatened to kill herself if they refused.
  • She repeatedly embarrassed her parents publicly and privately.
  • She acquired a cross-bow and was arrested after threatening to kill the deceased with it at the family’s synagogue.
  • She accepted a brand-new car from the deceased in 2014 and never saw him again before he died three years later.
  • As at the date of trial (in Hollingworth J’s words): –
    • “Jessica’s life has essentially been on hold for 20 years, as she stubbornly waits for her parents to pay for the [gender reassignment] surgery that she would have been capable of saving for, and paying for, herself at various times during that period.”
    • “Jessica’s parents have furnished at least three previous homes for her over the years; she has either sold or abandoned all of the furniture.”
    • Jessica has “no superannuation, savings or substantial assets” and no dependents “except for an elderly cat”.

So did the deceased have a “moral duty” to make provision for Jessica in his will?

Too right, said Hollingworth J.

“By continuing to support Jessica for all those years, [the deceased] allowed her to become financially dependent on him, and to lose much, if not all, of her capacity for employment. This is the most important consideration in my conclusion that [the deceased] did owe a moral duty towards Jessica, notwithstanding her attitude and behaviour over the years.

….

“… I have determined that the sum of $3.225 million would constitute adequate provision for Jessica’s proper maintenance and support.”

Observations

Three thoughts occur to me.

First, like so many other TFM judgments, Joss contains some judicial platitudes about freedom of testation being “an important human right” but then illustrates that the limitations to that right can be very severe indeed.

Second, religious types might perceive in Joss an echo of the The Prodigal Son. They are wrong.

In the parable, the younger son received a large, early share of the family fortune and squandered it. He then saw the error of his ways and returned to the family fold to express regret and seek forgiveness. In Joss the younger sibling bypassed the family and went to court where expressing indignation rather than regret. And rather asking for forgiveness Jessica sought, among other things, the price of the hypothetical “impeccable” 2 or 3-bedroom house in Malvern or Armadale to which she aspired.

The only common thread between Joss v Joss and the Prodigal Son is that in both stories the older brothers must have come away dumbfounded. (The brothers might also have found themselves questioning the scriptural injunction: “The meek shall inherit the earth”.)

One final cheerful thought though. This type of case often prompts people to ask lawyers how they can be sure that a will won’t be contested after a testator dies. There is only one certain answer if you are a testator:  make sure you spend every last cent you have before you turn up your toes.