Abletone Pty Ltd v Bonview (Tas) Pty Ltd
[2008] TASSC 59
•20 October 2008
[2008] TASSC 59
CITATION: Abletone Pty Ltd v Bonview (Tas) Pty Ltd [2008] TASSC 59
PARTIES: ABLETONE PTY LTD (ACN 009 549 786)
v
BONVIEW (TAS) PTY LTD (ACN 076 766 295)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 4/2007
DELIVERED ON: 20 October 2008
DELIVERED AT: Launceston
HEARING DATE: 16 June 2008
JUDGMENT OF: Tennent J
CATCHWORDS:
Landlord and Tenant – Retail and commercial tenancies legislation – Other matters – Tasmania – Application of Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 – Lease entered into as consequence of exercise of option in lease entered into prior to commencement of Code.
Fair Trading (Code of Practice for Retail Tenancies)Regulations 1998 (Tas), cl2.
Aust dig Landlord and Tenant [239]
Statutes – By-laws and regulations – Construction – Particular words - "or" and "and".
Acts Interpretation Act 1931 (Tas), s8A.
R v Oakes [1959] 2 QB 350; Re Peat Resources of Australia Pty Ltd; Ex Parte Pollock [2004] WASCA 122;
Maxwell v Murphy (1957) 96 CLR 261; Fisher v Hebburn Ltd (1960) 105 CLR 188; Robertson v City of Nunawading (1973) VR 819; referred to.
Aust dig Statutes [129]
REPRESENTATION:
Counsel:
Plaintiff: S B McElwaine
Defendant: M E O'Farrell
Solicitors:
Plaintiff: Shaun McElwaine
Defendant: Douglas & Collins
Judgment Number: [2008] TASSC 59
Number of paragraphs: 46
Serial No 59/2008
File No 4/2007
ABLETONE PTY LTD v BONVIEW (TAS) PTY LTD
REASONS FOR JUDGMENT TENNENT J
20 October 2008
On 23 February 1997, Abletone Pty Ltd entered into a deed with Bonview (Tas) Pty Ltd by which it agreed to lease to Bonview a portion of a property comprising an indoor retail area. The leased area formed part only of an existing building. The lease included the right for Bonview, in common with Abletone, to use the driveway to the property, the car park and an entrance area. The lease was for a period of five years commencing 20 December 1996. Rental for the first two and a half years was $65,000 per annum. There were options for renewal and provision for calculating the rental after the first two and half years.
Clause 5(p) provided for renewal of the lease in the following terms:
"(p) To the intent that the Lessee may have the opportunity of renewing this lease on two occasions for a period of five (5) years on each occasion then on the written request of the Lessee to the Lessor made not more than three months nor less than one month before the expiration of the term hereby created and if there shall not be then any existing breach or non-observance by the Lessee of any of the terms stipulations and provisos herein contained or implied on his part to be observed and performed the Lessor will at the cost and expense of the Lessee grant to the Lessee a lease of the leased premises for a further term of five (5) years from the expiration of the said term and upon the like covenants and provisos as are herein contained (save and except that the lease for the first further term of five years shall contain an option for one further term and the lease for the second further term of five years shall not contain an option for a further term) and save and except the rental for the first two and one half year period of the further term shall be such sum as may be mutually agreed between the parties and in default of agreement shall be determined in the same manner provided by Clause 5(q)(a) for review of rental."
Clause 5(q) provided for rental adjustments in the following terms:
(q) Notwithstanding anything hereinbefore contained the rental payable under this lease or any extension hereof shall be reviewed at the expiration of each two and one half year period after the commencing date of the lease and the rental for the following two and one half year period shall be the greater of such annual sums determined as follows:-
(a)An annual sum payable monthly in advance as shall be a fair market rental to be determined by two valuers one to be appointed by each of the parties hereto which said two valuers shall appoint an umpire whose decision shall be final and in the event that either party hereto shall refuse or neglect to appoint a valuer within fourteen days of being requested so to do then the valuer appointed by the other party shall determine the rental and his decision shall be final PROVIDED ALWAYS that the rental payable on such review shall in no case be less than the rental payable immediately before such review OR
(b)(i) An annual sum calculated by multiplying the annual rent payable during the immediately preceding period to the date of the review by a fraction obtained by dividing the Index Number as determined immediately prior to such date of review by the Index Number as determined two and one half years prior to the date of such review.
(ii)In this sub-paragraph of this Lease the words 'Index Number' shall mean the Consumer Price Index (all groups) for Hobart in Tasmania published from time to time by the Australian Bureau of Statistics or its successor. In the event that there is any suspension or discontinuance of the Consumer Price Index or its method of calculation is substantially altered then 'Index Number' shall mean the weighted average for Australia of weekly wage rates; Adult males; All groups as published by the Australian Bureau of Statistics or its successor. If such weekly wage rates shall not be calculated at any relevant date by the Australian Bureau of Statistics or it [sic] successor then 'Index Number' shall mean an index published at the date hereof and at the review dates as defined in this Lease which reflects fluctuations of the cost of living in Hobart aforesaid and which the parties may mutually agree upon and if they are unable to agree then such index as shall be determined by the President for the time being of the Tasmanian Law Society or his nominee whose decision shall be binding and conclusive."
Prior to 20 December 2001, Bonview made a written request to Abletone pursuant to cl 5(p). As a consequence, the parties entered into a second deed dated 30 January 2002. It provided for a lease for a further term of five years commencing 20 December 2001 on the same terms and conditions as the 1997 deed. However this second deed also provided as follows:
"5That the parties agree to amend the provisions of clause (5) (p) of the lease such that if the further option to extend is exercised the Lessee will give not more than 6 months nor less than 3 months written notice in lieu of the times presently set out in the lease.
6The parties agree that there is allocated to the Lessee eight car parking spaces being these immediately adjacent to the outside tennis courts.
7If any GST (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 as amended from time to time, 'GST') is payable by the Lessor in respect of the supply of the said premises to the Lessee then the rent specified in this Agreement (Original Rent) is to be increased so that the Lessee receives an amount (Increased Rent) which, after subtracting the GST liability of the Lessor on that Increased Rent, results in the Lessor retaining the Original Rent after payment of that GST liability."
By letter dated 4 September 2006 from the solicitors for Bonview to Abletone's accountants, Bonview contended the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 ("the Code") enacted pursuant to the Fair Trading Act 1990 ("the Act") applied to the lease between the parties created by the deed of January 2002.
By a document dated 14 September 2006, Bonview gave notice to Abletone as follows:
"As lessee under the Lease dated 23rd day of January 1997, as varied by Deed dated 30th day of January 2002, we give notice of the exercise of the option for the further term of 5 years commencing on the 20th December 2006."
To date, no fresh deed has been entered into to acknowledge the successful exercise of the option. However there is no dispute that Bonview is entitled to a new lease for five years from December 2006.
The issue
The issue in this matter is whether the Code, which came into effect 1 September 1998, applies to the lease brought into existence as a consequence of the January 2002 deed and hence any new lease to which Bonview is entitled. Bonview says it does. Abletone says it does not. If it does, there will be an impact on the ability of Abletone to adjust the rental to be paid.
The Code
The Code, as it stood at the time the 2002 lease was entered into, provided in cl 2 for the circumstances in which it did, and did not, apply. Clause 2 was in the following terms:
"2 Application
(1) This Code applies to the following, in relation to retail premises with a lettable area of not more than 1000 square metres:
(a) a lease of, or an agreement to lease, such premises entered into on or after the commencement of this Code, regardless of where the lease or agreement to lease was entered into and despite the fact that the lease or agreement to lease purports to be governed by the law of a jurisdiction other than Tasmania;
(b) a lease of, or an agreement to lease, such premises that was entered into before the commencement of this Code, if –
(i) the lease or agreement to lease is varied after that commencement; and
(ii) the variation was not provided for by the original lease or agreement to lease;
(c) a new lease of such premises resulting from the exercise of an option contained in a lease that was entered into before the commencement of this Code, if –
(i) the number of times remaining for the option to be exercised is not specified in the lease or does not decrease when the option is exercised; or
(ii) the new lease contains a variation that was not provided for by the original lease;
(d) a sublease of such premises entered into on or after the commencement of this Code.
(2) The provisions of Part 3 of this Code apply only to a lease of, or an agreement to lease, retail premises within a shopping centre.
(3) This Code does not apply to the following:
(a) a lease of, or an agreement to lease, any retail premises entered into before the commencement of this Code;
(b) a lease of retail premises with a lettable area of more than 1 000 square metres;
(c) a lease entered into on or after the commencement of this Code in accordance with an agreement to lease, if the agreement to lease is entered into before the commencement of this Code;
(d) a new lease resulting from the exercise of an option contained in a lease entered into before the commencement of this Code, if –
(i) the number of times remaining for the option to be exercised is specified in the lease or decreases when the option is exercised; or
(ii) the new lease contains no variation other than a variation that was provided for by the original lease.
(4) This Code does not apply to a lease for retail premises –
(a) used wholly or predominantly for a business by a tenant on behalf of a property owner; or
(b) within premises in which the principal business carried on is the operation of a business including, but not limited to –
(i) a cinema; or
(ii) a bowling alley; or
(iii) a skating rink; or
(iv) an indoor cricket centre; or
(v) a basketball stadium; or
(vi) a netball centre –
if the business in the retail premises is carried on by the person who operates the principal business.
(5) A written lease is to contain a provision to the effect that this Code and the disclosure required in clause 6(1) form a part of that lease.
(6) Except as otherwise provided in this Code, if there is an inconsistency between the provisions of this Code and a lease or an agreement to lease, the provisions of the Code prevail."
"Retail premises" were defined in cl 1 of the Code to be:
"… any premises that are used-
(a) wholly or predominantly for one or more of the businesses listed in Appendix C; or
(b) for any business in a shopping centre;"
There is no dispute that the business being operated by Bonview is one of those listed in Appendix C and that it is not a business in a shopping centre.
For the purpose of this case, a "lease" was defined to mean:
"(a) any agreement providing for the occupation of retail premises, whether for a term, periodically or at will;
…".
The parties' contentions
Abletone contends the provisions of the Code do not apply to any lease between the parties. Its counsel contends that:
(a)by reference to cl 2(3)(d) of the Code, sub-cls (i) and (ii) should be read disjunctively and therefore, on the facts of this case, because the number of times remaining for the option to be exercised was specified in the original lease, one of the conditions has been satisfied and hence the Code does not apply;
(b)it is not necessary to even consider cl 2(1)(c) because the application of cl 2(3)(d) interpreted as above resolves the question of whether the Code applies to the 2002 deed;
(c)if, however, cl 2(1)(c)(i) and (ii) are to be considered, they should also be read disjunctively and because
(i)the new conditions in the 2002 deed do not constitute a variation to a lease of retail premises, and
(ii)the number of times remaining for the option to be exercised was specified in the original lease, and
(iii)therefore neither of the conditions in cl 2(1)(c) is satisfied,
the Code does not apply;
(d)if however it is determined that the Code does apply, the Court would be accepting that it is operating retrospectively and there is no authority by reference to either the Code or the Act for it to do so.
Bonview contends that the Code does apply to the 2002 lease and that a consequence of the application of the Code to the lease is that cl 5(q)(a) is invalid, or alternatively does not operate to determine the rental payable between the parties. Its counsel contends:
-that cl 2(1)(c)(i) and (ii) should be read disjunctively as a consequence of the word "or" appearing after cl 2(1)(c)(i);
-that the new lease constituted by the 2002 deed contains a variation not provided for in the original lease within the meaning of the Code;
-that, therefore, as one of the conditions in cl 2(1)(c) is satisfied, the Code applies to the new lease;
-that cl 2(3)(d)(i) and (ii) should be read conjunctively so that to escape the operation of the Code, both conditions must be satisfied and not just one; and
-as a consequence, cl 2(3)(d) cannot operate to allow the new lease to escape the application of the Code, because, on the facts of this case, only one condition has been satisfied, namely that relating to the specification of the number of times remaining for an option to be exercised.
Counsel contends that to interpret cl 2(3)(d) otherwise, that is, read "or" as being disjunctive, would result in an emasculation of cl 2(1)(c) which cannot have been intended by Parliament.
The convoluted arguments that counsel mounted in this matter became necessary because a plain reading of cls 2(1)(c) and 2(3)(d) applied to the facts of this case could produce conflicting answers to the question of whether or not the Code applied to the 2002 deed. To resolve that conflict, counsel relied on different interpretations of the clauses.
There is no dispute the premises, the subject of this dispute, are "retail premises" as defined in the Code, that they comprise a lettable area of not more than 1,000 square metres, that the 2002 deed is a new lease resulting from the exercise of an option contained in a lease entered into before the commencement of the Code, and that the number of times remaining for the exercise of an option was specified in the original lease under which the option was exercised. There is a dispute as to whether the additional provisions in the 2002 deed amount to a variation of a lease of retail premises.
Interpretation of clauses 2(1)(c)(i) and (ii) and 2(3)(d)(i) and (ii)
The dispute about the interpretation of these clauses centres upon the word "or" which appears after cls 2(1)(c)(i) and 2(3)(d)(i). Ordinarily the word "or" appearing between two phrases is used disjunctively, and the word "and", if it appeared, would be used conjunctively. Counsel for Abletone contends that the word "or" in both clauses should have its ordinary meaning and be read disjunctively. Counsel for Bonview, on the other hand, contends that the word "or" should be read disjunctively in cl 2(1)(c) and conjunctively in cl 2(3)(d). The question is whether there is any reason to depart from the ordinary meaning.
The Acts Interpretation Act 1931, s8A, provides that in interpreting a provision of an Act, an interpretation that promotes the purpose or object of the Act is to be preferred to one which does not. The Code itself has no preamble to indicate a specific object. That in the Act does not directly assist. However, having regard to it and the provisions of the Code, it would be fair to say that the purpose of the Code was to make provision in relation to unfair or undesirable practices in relation to leases of retail premises. The Code was also structured to progressively bring leases within its ambit. However, clearly, it was not intended that every new lease, granted after the commencement of the Code as a consequence of the exercise of an option where the original lease predated the Code, should automatically be made subject to the Code. It was only to apply to such new leases where certain conditions were met.
The history of the Code may provide some assistance to its interpretation. The conditions as they appeared in the Code, cls 2(1)(c) and 2(3)(d), at the time of the 2002 deed were not there when the Code was first introduced. A Code was enacted in 1997 under the Act which was to come into effect on 29 April 1998. Clause 2 in that document provided that Code should apply to all agreements to lease and all leases entered into on or after the commencement of the Code and any variation made on or after the commencement of the Code to an existing lease. It clearly provided that leases entered into prior to the Code were not to be subject to it. It contained no distinction between lettable areas of not more than 1,000 square metres and those over that. It did not include the concept now appearing in cls 2(1)(c)(i) or 2(3)(d)(i). It did provide for the capacity of parties to apply to be exempted from the Code if the lease arose from the exercise of an option in a lease entered into before the commencement of the Code. However that Code never took effect. The regulations which gave effect to it were rescinded on 29 April 1998.
A new Code took effect 1 September 1998. Clause 2 was significantly different from that in the earlier proposed Code. It also drew no distinction between tenancies having regard to area. Relevantly, cls 2(1)(c ) and (d) and 2(3)(c) in that version of the Code provided as follows:
"2 (1) This Code applies to-
(a) ...
(b) …
(c) any variation, including a sub-lease, made on or after the commencement of the Code to an existing agreement to lease or lease; and
(d) a new lease resulting from the exercise of an option contained in a lease that was entered into before the commencement of this Code, if the period of the new lease is not specified in the original lease.
(2) …
(3) This Code does not apply to-
(a) ...
(b) ...
(c) a new lease resulting from the exercise of an option contained in a lease that was entered into before the commencement of the Code, if the period of the new lease is specified in the original lease."
It can be seen that under this version of the Code, the conditions were simple. The Code applied if there was a variation to an existing lease. It also applied where an original lease did not specify the period of any new lease as a result of the exercise of an option. Where the term of any lease was so specified, however, the Code did not apply.
On 28 April 1999, the Code was amended. Clause 2(1), (2) and (3) were omitted and replaced with the present clauses. The difficulty we now have has arisen as a result of those 1999 changes. Clause 2(1), both before and after the 1999 amendments, provided for what was to be covered by the Code, and cl 2(3) provided for what was not to be covered by the Code. The first significant relevant change post-1999 was that cl 2(1) was expressed to apply only to retail premises with a lettable area of not more than 1,000 square metres. The second relevant change to both cls 2(1)(c) and 2(3)(d) was to the provision relating to new leases as a result of the exercise of an option. Instead of there being only one condition, which related to the term of any new lease, there were two conditions. One related, not to the period of the new lease as had been the case, but to the number of times remaining for an option to be exercised, and whether or not the number of times was specified in the original lease pursuant to which the option had been exercised. The other was a new concept altogether and related to whether or not a new lease contained a variation not provided for in the original lease.
There was no obvious connection between the two conditions and they were expressed as alternatives. However, there was a common theme. In the cl 2(1)(c) conditions, or the inclusionary ones, they refer to a new lease with an indefinite future and with new conditions. In the cl 2(3)(d) conditions, or the exclusionary ones, they refer to a new lease of defined length in the same terms as the original. If regard is had to an intention to progressively bring leases within the ambit of the Code, there is a certain logic in including the former category and excluding the latter, which will end soon in any event. However, this does not lead necessarily to any conclusion that Parliament intended the inclusionary conditions to be read disjunctively and the exclusionary ones to be read conjunctively.
The purposive approach to the interpretation of cl 2 may allow for the word "or" to be read as "and" if the purpose of the legislation suggests such an interpretation. There have been cases where "or" has been read as "and", and vice versa. These have been identified as falling within two categories. The first is where the court determines that Parliament simply made a mistake in its use of the word. In R v Oakes [1959] 2 QB 350, Parker LCJ at 356 concluded that whichever way the provision there under consideration was read, on its face "an absurd" result was obtained. The justification for a particular interpretation was "that no intelligible meaning could otherwise be given to the phrase".
In Re Peat Resources of Australia Pty Ltd; Ex Parte Pollock [2004] WASCA 122, a second category was recognised from an analysis of the authorities. This was that the context in which the words appeared was also relevant to the question of their interpretation. At 47 - 63, the learned authors of Statutory Interpretation in Australia, 6th edn, discussed the various approaches adopted by the courts in dealing with the interpretation of various pieces of legislation. The courts have clearly been willing to stretch the boundaries where it has been thought necessary to give effect to what was concluded to be Parliament's intention.
Not unsurprisingly, the interpretation for which each party contends in this matter suits their client. If it is accepted that the extra provisions in the 2002 deed do not constitute a variation to a lease of retail premises within the meaning of the Code, and both cls 2(1)(c)(i) and (ii) and 2(3)(d)(i) and (ii) are given their ordinary meaning and read disjunctively (Abletone's contention), the Code would not apply to the 2002 deed because:
- neither of the conditions in cl 2(1)(c) would be satisfied, and
- one of the conditions in cl 2(3)(d) would be satisfied.
Bonview's contention that there was a variation, and that cl 2(1)(c)(i) and (ii) should be read disjunctively and cl 2(3)(d)(i) and (ii) conjunctively, would, on the other hand, produce a conclusion that the Code does apply to the deed.
Which, however, can be said to give effect to Parliament's intention? The intent of Parliament when the Code was introduced in 1998 was to bring new leases, resulting from the exercise of an option under a lease entered into before the Code commenced where the period of the new lease was not specified in the original lease, under the Code and to exclude new leases where the term was specified. However, Parliament has now included a further condition about a variation and there is no indication it intended that to be simply ignored if the condition about the length of the term determined the issue. A consequence of Abletone's contention, if, for example, there is a finding that the extra provisions in the 2002 deed do constitute a variation of a lease of retail premises, is that the application of cls 2(1)(c) and 2(3)(d) will produce conflicting answers to the question of whether the Code applies. That cannot have been intended.
If, on the other hand, the clauses are interpreted as contended for by Bonview, a sensible result would follow, which is that any new lease with a finite term and no variations would not be caught by the Code. In the circumstances I conclude that a proper construction of cl 2 is that cl 2(1)(c)(i) and (ii) should be read disjunctively and cl 2(3)(d)(i) and (ii) should be read conjunctively.
Do the extra provisions in the 2002 deed constitute a variation to a lease of retail premises?
A lease may become subject to the Code only if it is a lease of "retail premises", and not otherwise. There is no question that the shop area within the sports arena falls within the definition of "retail premises". The original lease defined the leased area as that retail area. It was not a lease of that retail area and an area in the car park. The right to use part of the car park was simply a licence to use that part in common with others.
A new lease of the retail shop area was created by virtue of the 2002 deed. That deed, however, did not simply provide for the creation of a new lease in identical terms to the original lease. It provided for the lease of the same retail area as was covered by the original lease, and again for the right of Bonview to use the driveway car park entrance area and changing rooms in common with Abletone and its employees and invitees. It then went on to provide in para5 for an amendment to a clause in the original lease pursuant to which options were to be exercised. Further, it provided in para6 for the allocation of some defined car parking spaces for the use of Bonview. There was no suggestion in the 2002 deed that the leased premises were by this provision to be expanded to include these defined car spaces. The deed then provided in para7 for an obligation to be placed upon Bonview to pay any GST which might become payable in respect of the supply of the premises to it. Clearly none of these provisions appeared in the original deed.
Bonview contends these provisions constitute a variation within the meaning of cl 2 in the Code which was not provided for in the original lease, while Abletone contends they do not. A "variation" for the purposes of cl 2 in the Code is not defined. The Macquarie Dictionary defines variation as "the act or process of varying; change in condition, character, degree, etc". It also describes it as "a different form of something; a variant."
The argument mounted by Abletone varied by reference to the three matters dealt with by paras5, 6 and 7 of the 2002 deed. Dealing firstly with the paragraph relating to the car parks, counsel for Abletone submitted that the Code had no application beyond what was within the definition of "retail premises". Any variation for the purpose of the Code had to relate directly to the retail premises, in this case the retail area within the sports arena. If a variation dealt with something other than what fell within the definition of retail premises, the variation was not one which could result in cl 2(1)(c)(ii) having any application.
A lease for the purpose of the Code means "any agreement providing for the occupation of retail premises". There is nothing in the Code to suggest such an agreement cannot deal with other matters as long as it provides for the occupation of retail premises. The issue to be considered is whether a variation, for it to be relevant under cl 2(1)(c), must relate directly to the occupation of the retail premises as defined or may, as long as it is in an agreement "providing for the occupation of retail premises", relate to a matter other than the occupation of the actual retail premises. The link between retail premises and the application of the Code is clear. In those circumstances it is a logical interpretation of the Code that a variation for the purpose of ascertaining the application of the Code or otherwise should be a variation relating directly to the occupation of any relevant retail premises.
In this regard, therefore, I would conclude that the provision in para6 of the 2002 deed does not constitute a variation for the purpose of determining whether the Code applies to that deed or not.
The next matter I will deal with is that covered by cl 5 in the 2002 deed, that is, the provision relating to the change of the period of notice in relation to the exercise of the option. There can be no argument that this issue does relate directly to the occupation of the relevant retail premises. Counsel for Abletone submits, however, that the word "variation" cannot have its literal meaning because to allow that would mean any variation at all, however minor, would trigger the operation of the Code. He gave, as an example, a change of address. He submitted that this interpretation cannot have been intended because the Code creates offences, and Abletone may have committed a number of offences and be saddled with a number of void provisions if the Code applies because of a minor variation. This, he argued, was a strong indicator that a literal meaning could not have been intended. He argued that for a variation to trigger the operation of the Code, it must be a material variation relevant to a matter regulated by the Code. To interpret the Code otherwise would be to visit on Abletone significant consequences as a result of a minor change to the arrangements between the parties.
With respect, counsel's submissions are dependent upon this Court accepting that the word "variation" should be interpreted to mean any change in the parties' arrangements, no matter how minor. An acceptance of the definition of the word as it appears in the Macquarie Dictionary, would not see a change, such as a change of address, trigger the application of the Code. It would also not necessitate an interpretation which involves the Court in adding words to the Code to produce the interpretation sought by Abletone. As to the potential for consequences to Abeltone such as void provisions and offences having been committed, with respect, what counsel for Abeltone ignored by this submission was that there can be no question of the original lease being subject to the Code. Further, when the option was exercised in 2001 which resulted in a new lease, the Code already existed. At that point, Abletone had the opportunity to give consideration to the impact of the Code.
Counsel for Abeltone made submissions to the effect that, if the Code were intended to regulate prospective conduct, it was hard to see how a "variation" could arise by reference to an old agreement. He submitted that you could not make unlawful what had previously been lawful. With respect, that is not what the Code sought to do. The Code did not in any way render conduct lawfully provided for in the original lease retrospectively unlawful. The Code did not impact upon anything done pursuant to that agreement. What it did was use the old agreement as a benchmark for determining whether there had been a variation of its terms in a new lease. For example, had the new lease not contained the provisions relating to the payment of GST and the alteration to the period of notice for the exercise of an option, the Code would not have applied to the 2002 deed and there would be no question now arising as to the potential for Abletone to have committed offences and to be left facing possibly void provisions in the 2002 deed.
I conclude in the circumstances that the provision in the 2002 deed relating to the alteration to the period of notice to be given in relation to an exercise of an option is a variation within the meaning of cl 2(1)(c)(ii) of the Code. There is no need in those circumstances to consider the GST issue.
Retrospectivity
Counsel for Abletone contended that, if it were found that there was a variation in the new lease such as to trigger the operation of cl 2(1)(c)(ii), the Code was beyond power.
The starting point generally for questions about retrospectivity is usually Maxwell v Murphy (1957) 96 CLR 261 and the statement by Dixon CJ at 267:
"The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events."
Another passage often referred to is that from the judgment of Fullager J in Fisher v Hebburn Ltd (1960) 105 CLR 188 where, at 194, he said:
"There can be no doubt that the general rule is that an amending enactment - or, for that matter, any enactment - is prima facie to be construed as having a prospective operation only. That is to say, it is prima facie to be construed as not attaching new legal consequences to facts or events which occurred before its commencement.
That common law position has been given some statutory effect by the Acts Interpretation Act, s47, which deals with regulations. Regulation 3(d) provides that regulations are to take effect from a date that is specified or able to be ascertained either prospectively or retrospectively as the case may be. However, it also provides that regulations are not to be expressed to take effect as on a date preceding the date of publication or notification in the Gazette where the "rights or privileges of a person ... existing at the date of that notification or publication would be prejudiced" or "liabilities or obligations would be imposed on any person … in respect of anything done or omitted to be done on or before that date of notification or publication."
In the present case, cl 2 of the Code is not, in my view, expressed to operate retrospectively. In Robertson v City of Nunawading [1973] VR 819, Winneke, Gowans and Starke JJ said at 824, having referred to the passage stated in para37:
"It is to be observed that this principle is not concerned with the case where the enactment under consideration merely takes account of antecedent facts and circumstances as a basis for what it prescribes for the future, and it does no more than that: Maxwell on Interpretation of Statutes,12th ed, pp 216-7.The principle is concerned with the case where the enactment would apply to these antecedent facts and circumstances in such a way 'as to impair an existing right or obligation' or 'as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events'."
What cl 2 does is express the Code to apply to new agreements entered into after the commencement of the Code, but defines the new agreements to be covered by reference to provisions in an agreement entered into before the commencement of the Code. The Code does not, by cl 2, render anything in the original agreement unlawful. For example, the Code does not render the rent review clause in the original deed unlawful. It may, however, affect the same clause in the 2002 deed if the Code applies. With respect, again, the Code was in force at the time the 2002 deed was entered into. Abletone had it within its power at that point in time to ensure that the Code did not apply to that deed.
I conclude, therefore, that cl 2 of the Code did not operate retrospectively such as to render it beyond the power of the legislature to enact in the form in which it appears.
Conclusions
I have concluded that:
- cl 2 of the Code is not beyond power;
-cl 2(1)(c)(i) and (ii) should be read disjunctively and cl 2(3)(d)(i) and (ii) should be read conjunctively; and
- cl 6 in the 2002 deed constitutes a variation not provided for in the 1997 deed.
Does the Code therefore apply to the lease created by the 2002 deed?
The application of the above conclusions to the facts of this case lead to the result that the Code applies to the lease created as a consequence of the 2002 deed and hence any new lease created as a consequence of the exercise of an option in that deed.
Orders
The orders which I would propose as a consequence of the conclusions I have reached are as follows:-
1 That the plaintiff's claim be dismissed.
2 That upon the counterclaim of the defendant, the Court declares that:
(a)the defendant is entitled in equity to the grant of a new lease by the plaintiff for a further term of five years from 20 December 2006 upon the like covenants and provisos contained in the lease granted by deed dated 30 January 2002, and
(b)the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 applies to:
(i)the agreement for lease made between the plaintiff and the defendant as a result of the exercise of the option by the defendant on about 14 September 2006 under the lease granted by deed 30 January 2002; or alternatively
(ii)the lease to which the defendant is entitled in equity as a result of the exercise of the option by the defendant on or about 14 September 2006.
I will, however, hear counsel as to the precise terms of the orders and as to any issue as to costs.
2
1