Head and Zimmermann Investments Pty Ltd

In Head and Zimmermann Investments Pty Ltd, the tenant, Head, sought to challenge the validity of a rent review clause in their lease with the landlord, Zimmermann. The dispute was heard and determined by the Supreme Court of Western Australia. The central issue before the court was whether the rent review clause in the lease was void due to its failure to specify a "single basis" as required by section 11(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). Additionally, the court had to consider whether the clause was saved by a reference to a procedure under section 11(3) of the same Act. The tenant argued that the clause was void, while the landlord contended that the clause remained valid and enforceable.

The court examined the statutory requirement under section 11(1) that a rent review clause must specify a single basis for determining the rent. The court found that the clause in question did not meet this requirement, as it did not provide a single basis for calculating the rent review. However, the court also considered whether the clause was saved by the reference to a procedure under section 11(3). Section 11(3) provides that if a rent review clause does not specify a single basis, the clause will not be void if it provides for a procedure to determine the rent. The court concluded that the clause did not provide for a valid procedure to determine the rent and therefore remained void. The court also considered the effect of the void rent review clause on the renewal of the lease, finding that the failure to validly exercise an option to renew was not prevented by the invalidity of the rent review clause.

The court answered the referred question in the affirmative, finding that the rent review clause was void. This determination invalidated the rent review clause but did not prevent the renewal of the lease. The court's decision clarified the requirements for valid rent review clauses under the Act and provided guidance for landlords and tenants in drafting and interpreting such clauses.