Debonair Nominees Pty Ltd v J & K Berry Nominees Pty Ltd

DEBONAIR NOMINEES PTY LTD v J & K BERRY NOMINEES PTY LTD
[2000] SASC 244

Magistrates Appeal: Civil

MULLIGHAN J This is an appeal against decisions and orders of a learned Magistrate sitting as the Magistrates Court in the Civil Jurisdiction with respect to a shop lease and ancillary matters.
The appellant is the owner of the Ingle Farm Shopping Centre. It leased to three men shop premises within the shopping centre for a term of five years commencing on 2nd February 1995 and expiring on 1st February 2000 and a memorandum of the lease was executed by the appellant and the three men on 10th May 1995. The terms and conditions of the lease included standard terms incorporated in the memorandum of lease and registered at the Lands Titles Office.
At this stage I mention only a few provisions of the lease. It provided for the rent to be paid by monthly instalments in advance on the 2nd day of each month. In the first year the annual rent was $40,299.96 per year and the monthly instalments were $3,358.33. The lease provided for increases in rent each year to the extent that in the fifth year the annual rent was $48,984.00 payable by monthly instalments of $4,082.00. The lease expressly provided that the rent and other charges must be paid by the lessee clear of all deductions and that this covenant was an essential term of the lease. The lessee was obliged to yield up and surrender to the appellant the premises at the expiration of the lease. The lease provided for two rights of renewal, each of five years commencing on the 2nd February and expiring on 1st February in the relevant years upon the same terms and conditions except for increases in rent, but with respect to each of them, the exercise of the right of renewal had to be upon the written request of the lessee made not more than 12 months and not less than three months before the expiration of the lease or the first renewal term, as the case may be.
The three men assigned their estate and interest in the lease to the respondent by deed of assignment dated 2nd February 1996.
The respondent conducted a bakery business at the subject premises and has remained in occupation since the expiration of the lease on 1st February 2000. It was substantially in arrears of rent during the latter part of 1999 which continued until the expiration of the lease. It was first in default in January 1999 when there was late payment. Thereafter all monthly payments were late until September 1999 and thereafter no rent instalments were paid. There was no payment of promotional levies from September 1999 to February 2000. No payments were made for electricity, water rates or council rates for the period from September 1999 to February 2000. The amount due for these items is $3,997.99. The total arrears exceed $30,000.00.
An application for extension of the lease was not made by the respondent until 17th January 2000 when it delivered a letter to the appellant dated 15th January 2000 advising of the wish to renew the lease. The last day for the respondent to make such an application was 1st November 1999.
Part of the shopping centre is known as a Bi-Lo supermarket which is nearby the subject premises. Renovation work to the supermarket commenced on 22nd May 1999 which, according to the respondent, caused diminution of his business. Those works were completed by 2nd December 1999.
On 17th January 2000 the appellant offered to pay the arrears of rent by instalments of $1,000 per week but the offer was rejected by the appellant. On 27th January 2000 the agent of the appellant requested the respondent to pay the arrears of rent at that time which amounted to $24,346. On 3rd February 2000, two days after the lease expired, the respondents’ solicitors wrote to the agent of the appellant advising that the respondent intended to extend the lease and enclosed an extension of leave which had been duly executed by the respondents. On 11th February 2000 the agent informed the respondents’ solicitors that the respondent had failed to exercise the right of renewal of the lease within time and further that the respondent was in breach of the lease in failing to pay outstanding rent. They asserted that the respondent occupied the premises on a “Monthly Holdover Agreement”. No doubt they were referring to clause 4.10 of the memorandum of lease which provides:
“4.10 Holding Over
If the Lessee shall remain in occupation or possession of the premises after the expiration of the term hereof or of any renewal then such continued occupation shall be a monthly tenancy at the same rental as was payable for the month preceding the commencement of such holding over and on the same terms and conditions as are herein contained so far as the same shall be applicable and without limiting the generality thereof including those contained in Clauses 1.2 and 1.5 hereof.”
On 17th February 2000 the solicitors for the respondent wrote to the agent of the appellant advising that the amount of rent was in dispute, which I assume means the unpaid rent, that the respondent claimed damages far exceeding the outstanding rent and that legal proceedings would be issued the following day. There was no earlier letter or document before the learned Magistrate regarding a claim by the respondent with respect to diminution of profits caused by the renovations except that in a letter from the agent of the appellant to the respondent on 7th June 1999, the respondent was required to produce a certified statement of the gross sales performance of its business for the previous 12 months “to verify your claim of declining customer numbers”. It seems that by that time an allegation of diminution of profits due to the renovations had been made by the respondent, but there was no evidence before the learned Magistrate of the quantum of the claim or that it had proceeded further until the letter of 17th February 2000.
The appellant issued a notice of default, executed a warrant to distrain and served notice of termination and re-entry upon the respondent. On 24th February 2000 a Notice to Quit was given on behalf of the appellant and was served on the respondent but, as has been mentioned, the respondent continues to occupy the premises.
The respondent instituted proceedings in the Magistrates Court seeking damages for diminution of business caused by works to the shopping centre, an order declaring the lease to be ongoing after the 1st February 2000, an order with an injunction retraining the appellant from distraining for unpaid rent and orders in respect of a preferential right of renewal.
The proceedings were heard by the learned Magistrate in February and March 2000 on affidavit evidence. He made various findings, decisions and orders which may be briefly summarised. He found that the rent was substantially in arrears. There was an issue as to whether the provisions of the Landlord and Tenant Act 1936 (“the LT Act”) applied to the lease and the learned Magistrate concluded that if it did apply, the Court would not have power to undo a re-entry of the premises by the appellant. Initially on 22nd February 2000 the learned Magistrate found that as from the 2nd February 2000, the day after the expiration of the term specified in the lease, the respondent was a monthly tenant. He held that the holding over created a monthly tenancy, or a periodic tenancy, and that pursuant to s81(2)(b) of the Retail and Commercial Leases Act 1995 (“the 1995 Act”), that Act applied to the relationship between the parties and not the Landlord and Tenant Act with the consequence that the respondent was in occupation of premises pursuant to a lease created, in effect, by the 1995 Act. On 24th February 2000 he concluded that the respondent should remain in possession of the premises on a monthly tenancy expiring on the first day of each month, with rent to be paid weekly.
The learned Magistrate heard further argument on subsequent days and on 31st March 2000 he held that the assignment of the lease on 7th February 1996 constituted in itself a new retail shop lease for the purposes of the 1995 Act. He made that decision despite a concession to the contrary by the respondent’s counsel. In his reasons for judgment he said:
“I say that for these reasons: A lease when it is granted is a matter of contract but it is also in conveyancing terms a demise of an estate. The original lease constituted, a demise and an original contract. The original lease in it had a prohibition on assignment unless it was consented to by the lessor. The original lease was from the lessor to its then directors. The directors assigned the lease after the Retail Shop Leases Act (as it was then called) came into place, and the landlord consented in those terms ‘The Lessor hereby consents to the assignment by the Lease hereunder and to the Assignees entering into possession of the Premises on and from the Completion Date’.”
The consequences of this decision are considered later. I mention one of them at this stage. If the assignment is a new lease, as it occurred after the coming into operation of the relevant provisions of the 1995 Act on 30th June 1995, s17 of that Act would apply. It provides that the term of a retail shop lease must be for at least five years regardless of the term prescribed in a lease. The learned Magistrate held that the respondent occupied the premises pursuant to this so-called new lease. He made an order that the respondent remain in possession of the premises until further order and that the appellant be restrained from disposing of any of the goods which had been distrained.
No orders were made that the respondent remedy existing defaults, being the outstanding rent and other expenses such as the appellant’s costs associated with the default but he did order that it pay the weekly rent which had earlier been fixed by him.
The grounds of appeal challenge findings and conclusions adverse to the appellant.
The first group of grounds of appeal challenge the conclusions that the respondent occupies the premises pursuant to a lease after 1st February 2000.
It is convenient to first consider the decision that the assignment of the lease is a new lease and that the provisions of the 1995 Act apply. The subject premises are a retail shop as defined in that Act. S5(1) provides that the Act operates despite the provisions of a lease. I have mentioned s17 which provides that the term for which a retail shop lease is entered into must be at least five years. If the view of the learned Magistrate is correct and the assignment was, per se, a retail shop lease, the term of the lease is five years from the date of the assignment.
Clause 2.9 of the memorandum of lease provides that the respondent could not, inter alia, assign, sub-let or part with possession of the shop premises without having first applied for and obtained the consent in writing of the appellant which could not be unreasonably withheld.
The assignment was made by Deed of Assignment executed under seal by the appellant, the three men who were the original lessees and the respondent. In its terms it was an assignment of “their right title and interest in and under the lease” of the three men to the respondent. Clause 3 of the Deed of Assignment is as follows:
“3 Assignee’s Covenant
The Assignees hereby covenant with the Lessor and, as a separate and independent covenant, covenants with the Assignors they will on and from the Completion Date and for the residue of the term of the Lease duly and punctually pay all rent and other moneys as and when they shall become due and payable under the Lease and will duly and punctually observe and perform each and every of the covenants conditions terms and obligations to which the Assignors are subject under the Lease as if the Assignees were the original Lessees named in the Lease.”

The Completion Date relates to the transfer of the business conducted at the shop premises from the three men to the respondent. It may be seen that the Deed of Assignment refers to the “residue of the term of the Lease”. Clause 4 provides that the appellant consented to the assignment of the lease and Clause 5 provides that the three men execute a Transfer of Lease in registrable form in favour of the respondent. There was no alteration to the terms of the lease or to any of its provisions by the Deed of Assignment.

At common law an assignment of a lease does not create a new lease: Mason, Herring and Brooks v Harris & Anor (1921) 1 KB 653 at p655. It is effectively the transfer of the lease to the assignee who becomes the lessee of the premises: CCH, Lang’s Commercial Leasing in Australia 12-030, 12-070. Absent statutory provisions to the contrary, the effect of the assignment was that the respondent became the lessee under the lease with the title to the lease vesting in the respondent. At that time the respondent obtained the benefits of the lease and became liable under the lease to fulfil the lessee’s obligations. The position is explained in Duncan, Commercial Leases in Australia (3rd ed, 1998) thus, at p65:
“Upon the creation of a valid lease, there is both privity of contract and privity of estate between lessor and lessee. The former arises from the existence of a contract between the parties and the latter arises from the tenure between the parties. Upon an assignment of the lease, that tenure is broken but the privity of contract remains. After the assignment, whilst there is privity of estate between the lessor and the assignee of the lease, the original lessee remains liable upon the express covenants.”
The continuing liability of the original lessee is for all breaches of covenants throughout the term of the lease, even after assignment because the privity of contract remains: Megary & Wade, The Law of Real Property (5th ed, 1984) at p750 and Re Teller Home Furnishers Pty Ltd (In Liquidation) Electronic Industries v Horsburgh [1967] VR 313 at pp319-320. This continuing liability is inconsistent with the creation of a new lease.
Cases decided in the context of retail lease legislation also support the proposition that an assignment does not create a new lease. It is unnecessary for present purposes to do more than merely mention these cases: A Calkos Pty Ltd v Taylor Farms (Australia) Pty Ltd & Ors (digested in Lang’s Commercial Leasing in Australia (op cit), 85-066, Dileum Pty Ltd v JK Corporation Pty Ltd (1989) 1 WAR 244, and Hamatan Pty Ltd v Narracan Nominees Pty Ltd & Anor (1993) ConR 54-471. Re Malsons Pty Ltd [1991] 2 QdR 61 is a decision to the contrary in that it was held that retail shop lease legislation in Queensland did have the effect of an assignment of a lease being a lease pursuant to the legislation. However, in that case the legislation was in existence before the original lease was granted and it was accepted that the legislation had engrafted particular rights in favour of the tenant. This is not so in the present case and is a point of distinction.
It is necessary to consider whether relevant South Australian legislation alters the common law position. The first question is what is the relevant legislation.
Relevant parts of Part 4 of the LT Act were in operation at the time the lease was entered into and was repealed by the 1995 Act which came into operation on 30th June 1995. The 1995 Act was amended by the Retail Shop Leases Amendment Act 1997 (“the 1997 Act”) and was given the short title of Retail and Commercial Leases Act 1995. The 1997 Act came into operation on 6th October 1997. Many provisions of the 1995 Act and the 1997 Act are the same and there are only a few significant differences relevant for present purposes. It is almost exclusively provisions of the 1995 Act which are said to bear upon the issues in this appeal.
The subject shop premises are clearly within the definition of a retail shop in this legislation. The definition of a “retail shop lease” remained the same in both Acts and is:
“‘retail shop lease’ or ‘lease’ means an agreement under which a person grants or agrees to grant to another person for value a right to occupy a retail shop for carrying on a business -
(a) whether or not the right is a right of exclusive occupation; and
(b) whether the agreement is express or implied; and
(c).... whether the agreement is oral or in writing, or partly oral and partly in writing.”

Both Acts applied to the subject lease and the subject provisions: see s4. In both Acts s5 provides that the Act operates despite the provisions of a lease and that a provision of a lease or a collateral agreement is void to the extent that the provision is inconsistent with the Act.

In the 1995 Act s17 provided as follows:
“Minimum 5 year term
(1)The term for which a retail shop lease is entered into must be at least five years.
The term of a retail shop lease is worked out under this section on the assumption that any right or option of renewal or extension under the lease or a collateral agreement will in fact be exercised. However, a right or option of renewal or extension will not be taken into account if it is given after the lease is entered into.
(2)If a lease is entered into in contravention of this section the lease remains valid but the term of the lease is extended to bring the term (or the aggregate term) to five years.
If (for example) a lease is entered into for a term of three years, its term is extended by two years to five years. If a lease is entered into for a term of two years with an option for a further one year after that initial two years, the term of the lease is extended to four years (with the option for a further one year after that initial four years).
(3)This section does not apply to a lease if -
(a)... the lease is a short-term lease (ie a lease entered into for a fixed term of 6 months or less); or
(b) the lease arises when the lessee holds over after the termination of an earlier lease with the consent of the lessor and the period of holding over does not exceed six months; or
(c)... the lease contains a provision excluding the operation of this section and a lawyer who is not acting for the lessor certifies in writing that the lawyer has, at the request of the prospective lessee, explained the effect of the provision and how this section would apply to the lease if the lease did not include that provision; or
(d) the lease results from the renewal of an earlier lease, so long as there was no break in the entitlement of the lessee to possession of the retail shop and the option was granted by that earlier lease or by an agreement entered into before or at the same time as that earlier lease was entered into.
A lease will not be required to be for five years if it is a renewal of an earlier lease (because the minimum five year term requirement applied to the earlier lease and the availability of the renewal will have been taken into account in determining the term of that earlier lease).
(4)This section does not apply to a lease to the extent that its application would be inconsistent with the terms of a head lease under which the lessor holds the retail shop.”

Sections 20A-D inclusive were enacted by the 1997 Act and s17 was repealed. S20A is as follows:

“Objects
20A(1).. The Parliament recognises that conflicts sometimes arise between a lessor’s expectation to be able to deal with leased premises subject only to the terms of the lease and a lessee’s expectation of reasonable security of tenure.
(2) The objects of this Part are to achieve an appropriate balance between reasonable but conflicting expectations and to ensure as far as practicable fair dealing between lessor and lessee in relation to the renewal or extension of a retail shop lease.”

Section 20B of the 1997 Act is similar to the repealed s17 and the differences are of no consequence for present purposes. Section 20C provides that Division 3, of which s20D is a part, applies to a retail shop lease of premises in a retail shopping centre entered into after the commencement of this Division. S20D provides for preference to be given to an existing lessee if it is proposed to re-let the premises and the existing lessee wants a renewal or extension of the term.

Part 4 of the LT Act 1936 relates to commercial tenancy agreements. The subject lease is such an agreement as defined in that Act and the subject premises are premises within the meaning of that Act: see s54 and s55. This Act applied when the subject lease was granted. Part 4 was repealed by s81 of the 1995 Act, however s81(2)(a) of that Act provided that the LT Act continued to apply, subject to modifications prescribed by regulation, to retail shop leases entered into before the commencement of the 1995 Act. As has been mentioned, the subject lease is a retail shop lease. There have been no modifications by regulation relevant for present purposes. Section 81(2)(b) provided that if a retail shop lease created a periodic tenancy, the 1995 Act applied to the lease as from the beginning of the first period after the first anniversary of the commencement of that Act as if there were a novation of the lease on that date.
There are no provisions of the LT Act which vary the position at common law as to the effect of the assignment of a lease. Also, there are no provisions of the 1995 Act or the 1997 Act which alter the common law position, although it is argued by the respondent that certain provisions have the effect of creating a new lease as was held by the learned Magistrate.
The first contention is that the assignment falls within the definition of a retail shop lease under s3(1) of the 1995 Act which was not amended by the 1997 Act. The respondent submits that by reason of these provisions, the assignment was a new retail shop lease which is to be taken as having been entered into on 7th February 1996, the day it was executed by the parties.
It is argued that because the assignment between the appellant as lessor and the respondent as the assignee which thereby became the lessee, under which the appellant granted to the respondent for value the right to occupy the subject premises for carrying on a business, the assignment fell within the definition of a retail shop lease in the 1995 Act and the 1997 Act. By reason of s17 of the 1995 Act or s20B of the 1997 Act, the “new” lease is for a term of five years from that date and consequently there was an existing lease at 1st February 2000 when the “original” lease expired and thereafter and there was no right of re-entry on the part of the appellant.
In my view, these contentions must be rejected. The 1995 Act did not come into operation until after the lease had been executed. The LT Act is referred to in s81(2)(a) as the former legislation. That section is:
“s81(2) However -
(a).... the former legislation continues to apply, subject to modifications prescribed by regulation, to retail shop leases entered into before the commencement of this Act (including such a lease that is renewed after the commencement of this Act under a right or option of renewal conferred before the commencement of this Act); but
(b)if the retail shop lease creates a periodic tenancy, this Act applies to the lease as from the beginning of the first period after the first anniversary of the commencement of this Act as if there were a novation of the lease on that date.”

Because the subject lease was entered into before the commencement of the 1995 Act, the provisions of Part 4 of the LT Act applied and not the 1995 Act. The legislative intention in s81(2) is clear. The 1995 Act does not apply to pre-existing leases or to such leases which are renewed after the commencement of the 1995 Act under a right of renewal conferred before the commencement of the Act. The 1995 Act does not evince any intention to alter the rights and obligations of parties to a lease which had been entered into, and it is prospective in its operation: s16, Acts Interpretation Act 1915, Maxwell v Murphy (1957) 96 CLR 261 at 267. The same approach was taken in Dileum Pty Ltd v JK Corporation Pty Ltd and Re Malsons Pty Ltd at p63.

Mr Howard, who appeared for the respondent, argued that s81 of the 1995 Act had no operation because the assignment, made after that Act came into operation, created a new lease, and consequently it was not a lease entered into before the commencement of that Act. I reject that argument. Once it is accepted that the assignment does not create a new lease, it is clear that no lease was entered into after the commencement of the 1995 Act. By virtue of s55 of the LT Act, Part 4 of that Act applied to the lease. It is to be noted that s55(1)(d) of that Act provides that Part 4 applies to a commercial tenancy agreement, if such an agreement is “entered into, extended, renewed, assigned or otherwise transferred after the commencement of this Part” (emphasis added). It is to be seen that Part 4 was enacted by Act No 19 of 1985 and was subsequently amended from time to time until repealed. Parliament intended these provisions to apply to a commercial tenancy agreement even after it had been assigned. Part 4 did make special provisions for commercial tenancies, mainly in order to ensure protection for tenants, but did not create or vary the terms of a lease or a tenancy in certain circumstances as is the case with the 1995 Act.
In my view, Part 4 of the LT Act applies to the subject lease and governs the legal relationships between the appellant and the respondent.
The learned Magistrate took a contrary view. In his reasons for judgment given on 31st March 2000, he recited s81 of the LT Act and said:
“If it was the intention of parliament to make assignment of pre-existing leases not within the ambit of the legislation it could have done so by including the words ‘assignment of a pre-existing lease’ or similar words in the inclusive clause in brackets. The only specific matter included was a right of renewal. It must be therefore that the deed of assignment, of the 7th of February leading to the subsequent occupation, was an agreement which is a Retail Shop Lease for the purpose of the retail shop leases Act 1995, as it then was.”

I disagree. As an assignment does not create a new lease or a renewal of an existing lease, there is no need to include an assignment in s81. The assignment is of an existing lease which is embraced by s81.

In his reasons for judgment on 22nd February 2000, the learned Magistrate referred to s81(2)(b) of the 1995 Act and held that it applied in the present case because the holding over provision in the lease created a periodic tenancy. I do not think the section has application to the subject lease or the arrangements between the parties. The subject lease did not create a periodic tenancy but a tenancy for a fixed term of five years. The holding over period pursuant to the lease, which has been mentioned, arose out of the lease and was not a separate lease or agreement. The intention in s81(2)(b) is to cover the situation where the lease term itself is a periodic tenancy such as a weekly, monthly or yearly tenancy.
Mr Strawbridge, for the appellant, submitted that there were other reasons why s81(2)(b) had no application. He disputed that the holding over created a new tenancy. It was a monthly tenancy and s4(2)(ab), as inserted by the 1997 Act, if it did apply, provides that that Act does not apply if the lease is for a term of one month or less. I accept the argument of Mr Howard that this holding over provision did not create a tenancy for one month or less. This provision of the lease created a periodic tenancy which was determinable by a month’s notice in writing. It is not a tenancy commencing at the beginning or end of each month: Bowen v Anderson [1894] 1 QB 164, Mellows v Low & Ors [1923] 1 KB 522 and Amad v Grant; Grosglik v Grant (1947) 74 CLR 327 per Latham CJ at p336. That is the view taken by the learned Magistrate and it is correct, in my view. However, as I have said, neither the 1995 Act nor the 1997 Act applies and consequently a new tenancy is not created by either Act.
In my view, the learned Magistrate erred in concluding that the assignment of the lease constituted a new lease and that the provision of the 1995 Act applied so as to create a term of five years from the date of the assignment.
In the alternative, the respondent contended that if the assignment did not create a new lease, the holding over provision of the lease created a periodic tenancy.
It is the respondent’s case that by reason of s81(2)(b) the 1995 Act applies to the lease because of the holding over and it applies as from the beginning of the first period, of one month, after the first anniversary of that Act coming into operation which is from 30th June 1995. Consequently, it is argued, s68(2)(f) and (j) of that Act apply to the lease resulting from the holding over and s20D of the 1997 Act also applies.
S68 provides for the jurisdiction of the Magistrates Court. Under Part 4 of the LT Act jurisdiction given by that Part was vested in the Commercial Tribunal which was established by the Commercial Tribunal Act 1982. These particular provisions are:
“68(2)......... The Magistrates Court may on application under this section, by order -
...
(f)...... reinstate rights under a retail shop lease that have been forfeited or have otherwise terminated; or
...
(j)....... do anything else necessary or desirable to resolve a dispute between the parties to the retail shop lease.”

Section 20D(1) provides that if a lessor of premises in a retail shopping centre proposes to re-let the premises, and an existing lessee wants a renewal or extension of the term, the lessor must give preference to the existing lessee over other possible lessees of the premises. However, pursuant to s20D(3)(b) the lessor is not obliged to prefer an existing lessee if the existing lessee has been guilty of a substantial breach or persistent breach of the lease.

The learned Magistrate concluded that s20D applied to the parties because a retail shop lease had been created by the assignment. I have indicated that such a conclusion is erroneous. However, it remains to consider whether this preference provision applies if a monthly tenancy is created by the holding over. I do not think it does. As I have mentioned, the 1997 Act does not apply to the subject lease and the arrangements between the parties. The lease does not create a periodic tenancy and I need not repeat my reasons for that view. Furthermore, s20D was enacted by the 1997 Act which came into operation on 6th October 1997. Sections 20C-20H inclusive, which provide protection for tenants and create various rights for them, comprise Division 3 of that Act. Section 20C provides that Division 3 applies in relation to a retail shop lease of premises in a retail shopping centre entered into after the commencement of Division 3 which, as has been mentioned, was well after both the lease being entered into and the assignment.
If I am wrong in those views, and the respondent is a lessee by reason of the holding over, s20D has no application by reason of s20D(3)(b) because the respondent has been guilty of both substantial and persistent breach of any lease arrangements by reason of the failure to pay the rent and the other financial obligations. As has been mentioned, payment of rent and other charges is an essential term of the lease. Even if the renovation to the supermarket at the shopping centre caused disruption to the respondent and diminution of profits, the obligation of the respondent to pay the rent remained. I have mentioned that the subject lease provides that the rent must be paid clear of all deductions. Liability to pay rent does not cease merely because the lessor has breached a covenant. The only deductions which can be made by the tenant are those authorised by statute or expressly permitted by the lease: Butterworths, Halsbury’s Laws of Australia, Vol.16, 245 Leases and Tenancies [245-3090], [245-3120]; Chatfield & Anor v Elmstone Resthouse Ltd & Ors [1975] 2 NZLR 269 at p275 and Tomkins and Doyle v ACME International Lithographers Ltd [1982] ANZ Conv R 400. There is no such authorisation in the LT Act and no such agreement between the parties.
The respondent made an interlocutory application to the learned Magistrate for relief under s68 of the 1995 Act as it was to be evicted from the subject premises. He held that he could act pursuant to s68. In his reasons for judgment on 22nd February 2000, he said:
“I have before me some information that this termination from the tenant’s point of view is potentially catastrophic. He has a business. He has employees. He has contracts and goodwill which is evaporating. He says that he is in his default as a result of renovations caused by the landlord. From the landlord’s perspective, he is a long defaulting tenant who failed to renew, is not paying rent and the talk of loss of trade as a result of the landlord’s renovations is simply not true.
I balance all that and it is my view that the short term damage to the tenant by the termination is so great that it leads me to conclude that I should relieve the termination and I order that the landlord is to let the tenant back in and I order that occur forthwith. My present view is that having made these orders, I should return this to me in a day or two to make the consequential orders.”

On 24th February 2000 the learned Magistrate ordered that the respondent remain in possession of the subject premises on a monthly tenancy expiring on the first day of each month. The rent fixed by the learned Magistrate is $942. He also ordered that the respondent pay certain levies and other outgoings making a total weekly payment of $1,280. It is plain that those orders were interlocutory in nature.

In my view, the learned Magistrate erred in the approach which he took and in exercising a discretion to make those orders. As I have said, neither the 1995 Act nor the 1997 Act apply. The provisions creating a minimum five year term and preferential tenancy do not apply. The lease had expired. The powers of the Tribunal under s68(2)(db) of the LT Act are not available. S68(1) provides that an action for relief under the section may be commenced by application to the Tribunal by any party (or former party) to a commercial tenancy agreement to which Part 4 of the Act applies.
S68(2) provides for the powers of the Tribunal which include:
“68(2)(db). where rights of occupation conferred by a commercial tenancy agreement have been forfeited or have otherwise terminated for a reason other than the expiration of the term of the agreement—order reinstatement of those rights on such terms as may be just.”

It may be seen that because the subject lease had expired, there was no power to order reinstatement of rights of occupation.

I allow the appeal and set aside the orders made by the learned Magistrate. I shall hear the parties as to any other or ancillary orders which should be made.

[2000] SASC 244

19 July 2000