Adwell Holdings Pty Ltd v Bourne - [2007] NSWSC 730

Reported Decision:
(2007) NSW Conv R 56-188

New South Wales

Supreme Court

CITATION: Adwell Holdings Pty Ltd v Bourne [2007] NSWSC 730

HEARING DATE(S): 25/06/07

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

EX TEMPORE JUDGMENT DATE: 25 June 2007

DECISION: Reasons given as to why valuer's report defective.

CATCHWORDS: LANDLORD & TENANT [51]- Rent- Rent review clauses- Reference to valuer- Valulation to be and to be set out in accordance with s 19 of Retail Leases Act 1994- Not mandatory that valuation be provided within one month of reference to valuer- Valuation flawed due to absence of detailed reasons.

LEGISLATION CITED: Civil Procedure Act 2005, s 56
Retail Leases Act 1994, ss 6(1)(b), 19, 19A, 32A
Supreme Court Act 1970, s 63

CASES CITED: Commonwealth of Australia v Wawbe Pty Ltd (1999) ANZ ConvR 597
Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd (2001) 10 BPR 18,825; affirmed (2002) 11 BPR 20,201
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286
United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904

PARTIES: Adwell Holdings Pty Ltd (P)
Robert James Thomas Bourne (D)

FILE NUMBER(S): SC 3767/06

COUNSEL: B Sharpe (P)
A Hatzis (D)

SOLICITORS: Gary Cleary & Associates (P)
Thorntons Lawyers (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Monday 25 June 2007

3767/06 – ADWELL HOLDINGS PTY LTD v BOURNE

JUDGMENT

1 HIS HONOUR: This is a dispute between landlord and tenant over the rent review provisions of leases in respect of the Henry Kendall Family Bistro and Tavern at West Gosford. There are two registered leases that I have to consider, each is in identical form, apart from amounts as to rent. One bears date 1 July 2000 and is in respect of shops 35-40 of the relevant shopping centre. The other bears date 1 April 2001, and is in respect of shops 41-42. Shops 35-42 are used as one commercial enterprise by the lessee.

2 Clause 2(a) of annexure "B" to both leases provides that rent is to be payable in accordance with the First Schedule. The relevant parts of the First Schedule - and I am looking at page 65 of PX02, that is, the lease of 1 July 2000 (the other lease is identical except as to figures) - provides, inter alia, as follows:

“The amount of rent payable by the Lessee pursuant to Clause 2 of the Lease shall be calculated and payable as follows:

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 730
Decision Date: 25 June 2007

CaseChat Overview and Summary

In the case of Adwell Holdings Pty Ltd v Bourne, the dispute arose from a disagreement over the rent payable under a retail lease. The lessor, Adwell Holdings Pty Ltd, sought to review the rent payable by the lessee, Bourne, by referring the matter to a valuer as permitted under the lease agreement. The central issue was whether the valuation had to be provided within one month of the reference to the valuer, and if the absence of detailed reasons rendered the valuation flawed.

The court was required to determine the meaning of the rent review clause in the lease and the statutory requirements under the Retail Leases Act 1994. Specifically, the court needed to ascertain whether the valuation was mandatory within a particular timeframe and whether the lack of detailed reasons in the valuation report was sufficient to render the valuation ineffective. The court examined the relevant statutory provisions and the terms of the lease agreement to resolve these issues.

The court found that the valuation did not need to be provided within one month of the reference to the valuer, as there was no express requirement to do so in the lease agreement or the statute. However, the court held that the valuation was flawed due to the absence of detailed reasons in the report. The lack of detailed reasons meant that the valuation could not be considered a proper valuation under the act, and therefore, the rent review was invalid. As a result, the court ruled in favour of the lessee, Bourne, and determined that the rent review was not valid.

The court did not make any specific orders regarding the rent amount, as the invalid rent review meant that the original rent remained in place. The court's decision clarified the obligations of lessors when conducting a rent review under a retail lease and the importance of providing detailed reasons in a valuation report.

Orders