Data Base Corporate Pty Ltd v Strike Australia Pty Ltd - [2019] NSWSC 271

Supreme Court

New South Wales

Medium Neutral Citation: Data Base Corporate Pty Ltd v Strike Australia Pty Ltd [2019] NSWSC 271
Hearing dates: 11 – 12 March 2019
Date of orders: 26 March 2019
Decision date: 26 March 2019
Jurisdiction: Equity
Before: Darke J
Decision:
Declaration made that a determination of market rent is not binding upon the parties to a sub-lease.

Catchwords: LAND LAW – leases – rent – provision for review of rent – appointment of valuer to determine market rent for a sub-lease of premises located at King Street Wharf, Sydney – valuer required to have regard to certain market rents of “comparable premises in the vicinity of the Premises” – where valuer had regard to rents for premises not in the vicinity of the Premises – valuer’s determination not carried out in accordance with the terms of the sub-lease – declaration made that determination is not binding
Cases Cited: AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173
Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd (2015) 90 NSWLR 367; [2015] NSWCA 275
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Holt v Cox (1997) 23 ACSR 590
Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314
Mercury Communications Ltd v Director-General of Telecommunications [1994] CLC 1125
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305; [2011] HCA 38
WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489; [1999] WASCA 10
Category: Principal judgment
Parties: Data Base Corporate Pty Ltd (Plaintiff)
Strike Australia Pty Ltd (Defendant)
Representation:
Counsel:
Mr P T Newton (Plaintiff)
Mr D R Stack (Defendant)
Solicitors:
Mills Oakley Lawyers (Plaintiff)
HWL Ebsworth Lawyers (Defendant)

File Number(s): 2018/203488
Publication restriction: None

Judgment

Introduction

The plaintiff, Data Base Corporate Pty Ltd, is the sub-lessor of certain premises at King Street Wharf. The defendant, Strike Australia Pty Ltd, is an assignee of the sub-lessee. The defendant conducts a business at the premises in accordance with the Permitted Use under the sub-lease, which use is defined to mean “ten pin bowling, bar, ancillary facilities (including electronic and pinball machines [sic] games) in accordance with the development approval” and such other use as the plaintiff may in its absolute discretion approve.
The sub-lease was for a term of 10 years commencing on 24 August 2007 and terminating on 23 August 2017. It contains two options to renew, each for a further term of 5 years. In February 2017 the defendant exercised the first of the options to renew. Clause 11.2(a)(ii) of the sub-lease provides in effect that the rent may be reviewed at the commencement of the Further Term under paragraph…

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: [2019] NSWSC 271
Decision Date: 26 March 2019

CaseChat Overview and Summary

The dispute in Data Base Corporate Pty Ltd v Strike Australia Pty Ltd involved a disagreement between the parties regarding the market rent for a sub-lease of premises located at King Street Wharf, Sydney. The primary issue before the court was whether the valuer's determination of the market rent was in accordance with the terms of the sub-lease. Specifically, the sub-lease required the valuer to consider market rents of comparable premises in the vicinity of the leased premises. The court had to determine if the valuer adhered to this requirement and whether the valuer's determination was valid.

The court identified the key legal issues as whether the valuer's process and findings were in compliance with the sub-lease's stipulations and whether the valuer's determination was binding on the parties. The sub-lease clearly stated that the valuer must consider market rents of comparable premises in the vicinity. However, the valuer had considered rents for premises not in the vicinity, which was not in line with the sub-lease's terms. The court had to assess if this deviation from the sub-lease's requirements rendered the valuer's determination invalid.

In its reasoning, the court held that the valuer did not follow the terms of the sub-lease by considering rents for premises outside the specified vicinity. The court found that the valuer's determination was not carried out in accordance with the sub-lease. As a result, the valuer's determination was not binding on the parties. The court concluded that the valuer's failure to adhere to the specific instructions of the sub-lease rendered the determination ineffective. Consequently, the court made a declaration that the valuer's determination was not binding.

Orders