Khayat Investments Pty Ltd v Winston Holdings Pty Ltd [No 2]

[2010] WASC 374

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   KHAYAT INVESTMENTS PTY LTD -v- WINSTON HOLDINGS PTY LTD  [No 2] [2010] WASC 374

CORAM:   ALLANSON J

HEARD:   4 NOVEMBER 2010

DELIVERED          :   13 DECEMBER 2010

FILE NO/S:   GDA 19 of 2010

BETWEEN:   KHAYAT INVESTMENTS PTY LTD

Applicant

AND

WINSTON HOLDINGS PTY LTD
First Respondent

AYOMAN PTY LTD
Second Respondent

ON APPEAL FROM:

Jurisdiction              :  STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA

Coram  :MR C RAYMOND (SENIOR MEMBER)

File No  :CC 1374 of 2009

Catchwords:

Appeal from State Administrative Tribunal - Commercial tenancy - Rent review - Jurisdiction of tribunal

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
State Administrative Tribunal Act 2004) WA

Result:

Leave to appeal granted
Appeal dismissed

Category:    B

Representation:

Counsel:

Applicant:     Mr J R Birman

First Respondent           :     Mr M W Fatharly

Second Respondent       :     Mr M W Fatharly

Solicitors:

Applicant:     Birman & Ride

First Respondent           :     Kott Gunning

Second Respondent       :     Kott Gunning

Case(s) referred to in judgment(s):

Chin v Legal Practice Board of Western Australia [2009] WASCA 117

Commissioner of Stamp Duties v Permanent Trustee Co Ltd (1987) 9 NSWLR 719

Elmslie v Federal Commissioner of Taxation (1993) 46 FCR 576

Griffiths University v Tang [2005] HCA 7; (2005) 221 CLR 99

Mustac v Medical Board of Western Australia [2007] WASCA 128

Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361

Real Estate and Business Agents Supervisory Board v Carey [2010] WASCA 109

Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1

Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331

Town of Cottlesloe v Multiplex (Marine Parade) Pty Ltd [2007] WASCA 113

Trajkoski v Director of Public Prosecutions [2010] WASCA 119

Victorian Public Service Board v Wright [1986] HCA 16; (1986) 160 CLR 145

1. ALLANSON J:  The appellant and the respondents are parties to a retail shop lease governed by the Commercial Tenancy (Retail Shops) Agreements Act 1985.

2. In September 2009, the respondents applied for leave of the State Administrative Tribunal to refer to the tribunal the question of the rent payable under the lease.  The tribunal did not immediately decide whether to grant leave, but proceeded to mediation.  In October 2009 the tribunal made orders, by agreement of the parties, that a specified valuer 'shall resolve the rent payable.'  Following those orders, the valuer made a determination of rent payable.

3. The question for the tribunal was whether it still had jurisdiction to determine the question of rent now that the valuer had made a determination.  The tribunal held that it did have jurisdiction.  The appellant seeks leave to appeal that decision.

The jurisdiction of the State Administrative Tribunal

1. The State Administrative Tribunal (SAT) has jurisdiction to deal with a matter where another Act enables an application to be made to the tribunal. 

2. Under s 16 of the Commercial Tenancy (Retail Shops) Agreements Act, a party to a retail shop lease may refer to SAT any question which he believes to be a question arising under the lease. SAT shall determine whether the question referred is a question arising under the lease, and if it is, shall hear and determine it. Section 16 is expressed to be subject to s 11(5).

3. Section 11(3) and (5) provide:

   (3)A retail shop lease that provides for review of the amount of rent payable during the currency of the lease shall be taken to provide that where the parties do not agree on the rent payable as a result of the review, the question shall be resolved, subject to subsection (5), by either -

   (a)a person licensed under the Land Valuers Licensing Act 1978 agreed to by each of the parties; or

   (b)2 persons licensed under that Act, one of whom is appointed by the landlord and one of whom is appointed by the tenant.

   …

   (5)Notwithstanding subsection (3), a party to a retail shop lease may refer to the Tribunal for determination a question as to the rent payable as a result of the review by the parties where  -

   (a)the persons acting under subsection (3)(b) fail to reach an agreement on the rent to be paid; or

   (b)a person has not acted under subsection (3)(a) or (b) and the leave of the Tribunal has been obtained,

   but otherwise such a question shall not be referred to the Tribunal.

4. By s 15, the Act prevails over any provision in a lease which is contrary to or inconsistent with the Act.

Background facts

1. The appellant, Khayat Investments Pty Ltd (Khayat Investments), is the lessee of a shop in Hay Street, Perth.  The respondents, Winston Holdings Pty Ltd and Ayoman Pty Ltd (Winston Holdings), are the lessor.  The parties have been in negotiation for some years as to the appropriate rent for the premises for a term of five years commencing 7 April 2008.

2. In February 2009, the parties agreed to appoint a valuer, Mr John Del Dosso, to determine the gross rent for the premises for the period from 7 April 2008.  They were, however, unable to agree on the conditions for his appointment.  On 9 September 2009, Winston Holdings brought an application in SAT seeking leave to refer the question of rent to the tribunal for determination.

3. On 17 September 2009, SAT referred the application for mediation.  On 9 October 2009, the following orders were made:

   On the application heard before Member Peter McNab and Sessional Member Alexander McNaughton on 9 October 2009, it is ordered that:

   1.Following mediation in the Tribunal on 9 October 2009, the parties have agreed, subject to these orders, that Mr John Del Dosso of Colliers International shall resolve the 'rent payable' (that is, the gross rental) as at 7 April 2008, in accordance with and for the purposes of s 11(3)(a) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).

   2.Without limiting the exercise of Mr Del Dosso's expert professional judgment, the determination shall take place upon the written information already supplied by the parties to date, with the intent that the parties shall not and shall not be required to supply any such further information.

   3.Without prejudice to either party's position, the parties also agree to defer all jurisdictional and procedural matters or issues that arise out of, or may arise out of, the applicant's application (including any cross-action that might be proposed), until the date fixed for further mediation, or such other date as may be agreed upon between the parties.

   4.The mediation is adjourned until 4 December 2009 at 10 am.

   5.The Tribunal shall send a copy of these orders together with appropriate correspondence to Mr Del Dosso.

   6.The question of costs (if any) is reserved.

4. On 13 October 2009, the tribunal wrote to Mr Del Dosso enclosing a copy of the orders and including the following paragraphs:

   It is hoped that on 4 December 2009 further mediation can take place concerning the consequences of your resolution of the rent payable.

   We should be grateful if you would also send a copy to the Tribunal of your resolution, as sent to the parties.

5. On 26 November 2009, Mr Del Dosso wrote to the parties confirming his nomination by the parties 'to determine the rent for the premises payable from the Market Review Date of 7 April 2008.'  Both parties signed a memorandum agreeing that 'the valuer will determine the rent payable from the Market Review Date in respect of the premises in accordance with the terms and conditions set out in this letter with which the Landlord and the Tenant agree to be bound and to comply with.'  Mr Del Dosso made a rental determination, dated 27 January 2010.

6. The parties did not accept that Mr Del Dosso had resolved the dispute, and continued with the application in SAT.  On 11 June 2010, Khayat Investments filed a reply and cross‑claim, which included an application to vary the lease, and a claim for compensation for unconscionable conduct.

7. On 19 August 2010, a tribunal member made orders programming the matter for a hearing, including orders relating to the adducing of expert evidence, the production of any new or supplementary documents or information, and the filing of outlines of contentions. 

8. On 14 September 2010, the matter came before Senior Member Raymond in the tribunal. Until this point, Khayat Investments had consented to Winston Holdings having leave under s 11(5) of the Commercial Tenancy (Retail Shops) Agreements Act to refer the question of rent to SAT. Khayat Investments now withdrew its consent, and asked the tribunal to dismiss the application by Winston Holdings because Mr Del Dosso had now acted under s 11(3)(a) to resolve the disagreement between the parties, and the question could no longer be referred to the tribunal. Khayat Investments still wished to proceed with its cross-claim.

9. Senior Member Raymond refused the application to dismiss Winston Holdings' application.  In brief ex tempore reasons the learned Senior Member held that the order of 9 October 2010, referring the matter to Mr Del Dosso, was made in the course of, or as a result of the mediation, and was aimed at achieving a resolution within SAT's mediation powers.  The parties having failed to reach agreement following Mr Del Dosso's report, the matter remained properly before the tribunal and the parties and the tribunal had proceeded on that basis. 

10. It is unclear whether, even at this stage, the tribunal has given leave to Winston Holdings under s 11(5) of the Commercial Tenancy (Retail Shops) Agreements Act.  In his reasons the Senior Member states:

    I am satisfied that this is an appropriate matter in which to grant leave.  No doubt that was a question which was being left over as a matter of formality to be dealt with at the hearing in the view of the indications until effectively today that the parties consented to leave being granted.

11. The orders made on 14 September 2010 do not, however, include an order granting leave.

12. It is these, perhaps unusual, circumstances that give rise to the questions of law in this appeal.

13. On 29 September 2010 Khayat Investments applied for leave to appeal, and for a stay of proceedings in SAT pending resolution of the appeal.  Corboy J granted the stay on 6 October 2010.

Leave to appeal

1. Khayat Investments seeks leave to appeal on 3 grounds:

   1.The Tribunal erred in law in finding that when he made his Rental Determination dated 27 January 2010 Mr John Del Dosso was not acting under subsection 11(3)(a) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (Act) given the terms of:

   1.1clause 7.2 of the undated lease (but said to commence on 7 April 2003) (Lease) binding the Parties to the appeal;

   1.2the Parties to the appeal's agreement recorded by the Tribunal in its Order dated 9 October 2009 (October Order);

   1.3the Tribunal's letter to Mr Del Dosso dated 13 October 2009; and

   1.4the Parties to the appeal's lawyers' letters to Mr Del Dosso dated 10 December 2009.

   2.The Tribunal erred in law in finding that it had jurisdiction to:

   2.1grant leave to the respondent under subsection 11(5)(b) of the Act to refer to the Tribunal for determination the question as to the rent payable under the Lease; and

   2.2determine the rent payable.

   3.The Tribunal erred in law in finding that the correct construction of the October Order was that Mr Del Dosso was to arrive at what he considered to be the appropriate rental as a basis for further negotiations by the Parties to the appeal during the course of mediation, given:

   3.1the wording of paragraphs 1 and 2 of the October Order;

   3.2that Mr Del Dosso was not a party to the proceedings and the Tribunal had no jurisdiction to compel him to do anything; and

   3.3that the Tribunal's mediation processes do not override the effect of section 11 of the Act.

2. A party may only appeal from a decision of SAT by leave: State Administrative Tribunal Act 2004 (WA), s 105 (1). The appeal can only be brought on a question of law: s 105(2). That is, the subject matter of the appeal is the question or questions of law: Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 [53] (Buss JA); Real Estate and Business Agents Supervisory Board v Carey [2010] WASCA 109 [49] ‑ [53] (Owen JA).

3. The appeal turns on a number of questions. The primary issue is whether, as a matter of law, in making the rental determination Mr Del Dosso acted 'under s 11(3)(a).' Second, on the proper construction of s 11(5)(b) of the Commercial Tenancy (Retail Shops) Agreements Act, had proceedings commenced in SAT even though leave had not yet been obtained.  Finally, if the question of rent was referred to SAT, did that tribunal cease to have jurisdiction when, before it had granted leave, the parties appointed a valuer who determined the rent payable.

4. Leave to appeal should be granted if, in all the circumstances, it is in the interests of justice to grant leave:  Chin v Legal Practice Board of Western Australia [2009] WASCA 117 [12]; Paridis v Settlement Agents Supervisory Board [16] ‑ [18]; Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331, 337 [16]. The same principles apply where the decision of SAT is an interlocutory decision, as in this case: Town of Cottlesloe v Multiplex (Marine Parade) Pty Ltd [2007] WASCA 113 [10] ‑ [15]. See also Mustac v Medical Board of Western Australia [2007] WASCA 128 [63] (Martin CJ).

5. If the applicant is correct in its contentions, the tribunal has no jurisdiction to determine the rent. The parties will be put to the expense of continuing proceedings when they would not result in any valid determination of rent.  Further, the applicant's contentions are arguable.  Leave should be granted.

Ground 1: whether the valuer was acting under s 11(3)(a)

1. The parties agreed in mediation that Mr Del Dosso 'shall resolve the rent payable' (that is, the gross rental) as at 7 April 2008, 'in accordance with and for the purposes of s 11(3)(a) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).' When he made a determination, did he act 'under s 11(3)(a)'?

2. The word 'under' in relation to a written law or a provision of a written law includes 'by', 'in accordance with', 'pursuant to' and 'by virtue of': Interpretation Act 1984, s 6. More generally, the word 'under' usually imports a direct connection between the relevant act and the instrument it is said to be under: Elmslie v Federal Commissioner of Taxation (1993) 46 FCR 576. The question, however, is one of the interpretation of s 11 in the context of the Commercial Tenancy (Retail Shops) Agreements Act, and in the light of its subject, scope and purpose: compare Griffiths University v Tang [2005] HCA 7; (2005) 221 CLR 99 [68] ‑ [69].

3. The apparent purpose of s 11 is to provide a mechanism by which the parties to a lease may, wherever possible, resolve rent review questions without resort to a tribunal. Section 11(3) does this by providing that a retail shop lease 'shall be taken to provide' that the question of rent payable shall be resolved by a licensed valuer agreed to by the parties, or by two valuers, one appointed by each. Valuers so agreed or appointed have authority to resolve the question (rather than simply give their opinion of the rent payable). That authority comes from a term of the lease implied by law.

4. Further, the section limits the jurisdiction of SAT to determine questions of rent. Such a question may be referred to SAT only in the circumstances set out in s 11(5)(a) and (b). By s 15, the parties cannot exclude the operation of s 11.

5. In my opinion, before it can be said the valuer has acted under s 11(3), the valuer's authority to resolve the question of rent must be found in that section and the term implied in the lease.

6. The orders of SAT, following mediation, recorded that the parties had agreed that Mr Del Dosso shall resolve the rent payable 'in accordance with and for the purposes of s 11(3)(a).' Even though the order refers to Mr Del Dosso acting 'in accordance with s 11(3)(a)', his appointment and authority to resolve the question did not derive from the term implied into the lease by s 11, but from the agreement of the parties in mediation and from the orders of SAT. He did not act under s 11(3)(a).

7. The terms of the letter from SAT to Mr Del Dosso do not affect the legal source of his authority to resolve the question.

8. For these reasons, ground 1 fails.

Ground 2: the jurisdiction of SAT

1. This ground requires consideration of when the jurisdiction of SAT is enlivened. In particular, did it have jurisdiction when it made the orders following mediation, but before it had granted leave to Winston Holdings. Read literally, s 11(5)(b) may require a party to a lease to obtain leave of SAT before that party may refer a question of rent to the tribunal. In my opinion, however, having regard to the history and context of the legislation, leave is not required before the jurisdiction of SAT arises.

2. The starting point must be the words of s 11(3) and (5), read in the context of the Commercial Tenancy (Retail Shops) Agreements Act, in particular s 16, and the State Administrative Tribunal Act.

   The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.  The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'.  In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'.  Thus, the process of construction must always begin by examining the context of the provision that is being construed:  Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, [69] (citations omitted).

3. The context of a provision includes its history:  Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1.

4. Schemes of legislation consisting of more than one statute should be interpreted in a way which makes the overall scheme workable.  '[It] is proper for courts to endeavour to so construe interrelated statutes as to produce a sensible, efficient and just operation of them in preference to an inefficient, conflicting or unjust operation':  Commissioner of Stamp Duties v Permanent Trustee Co Ltd (1987) 9 NSWLR 719, 722; Trajkoski v Director of Public Prosecutions [2010] WASCA 119 [50] ‑ [53].

5. Until the establishment of SAT, disputes arising under the Commercial Tenancy (Retail Shops) Agreements Act were within the jurisdiction of the Commercial Tribunal of Western Australia, established under the Commercial Tribunal Act 1984. The particular question of rent determination was dealt with by the registrar of the tribunal.

6. When first enacted, the Commercial Tenancy (Retail Shops) Agreement Act 1985 s 11(3) required a question as to the rent payable following a rent review, to be resolved

   by a person who is licensed under the Land Valuers Licensing Act 1978 by whom each of the parties agrees to be bound or, where the parties do not agree to be bound by one such person, by agreement between two persons each of whom is so licensed and one of whom is nominated by each of the parties, and such a question shall not be referred under this Act to the registrar unless two persons so nominated fail to reach agreement or the leave of the registrar has first been obtained.

7. In 1990, s 11(3) and (5) were enacted in a form closely resembling their current form, save that the question as to rent payable as a result of a rent review was to be referred to the registrar for 'resolution'. Leave of the registrar was still required, but Parliament removed the requirement that leave has been 'first' obtained. Other questions arising under the lease could be referred to the registrar under s 16 for 'determination.'

1. In 1998, s 11(5) was amended to provide that the question of rent may be referred to the registrar for determination, rather than for resolution.

2. In 2004, jurisdiction under the Commercial Tenancy (Retail Shops) Agreements Act was given to the newly created SAT.  In giving the jurisdiction to SAT, the legislature must have intended that, except to the extent that the Commercial Tenancy (Retail Shops) Agreements Act expressly sets out or modifies how applications are to be dealt with, SAT should deal with these matters in accordance with the procedures set out in its governing legislation. There is an analogous presumption that where an established court is invested with jurisdiction, the legislature intends to take the court as it finds it, including its established procedures:  Victorian Public Service Board v Wright [1986] HCA 16; (1986) 160 CLR 145, 154.

3. Section 13 of the State Administrative Tribunal Act provides:

   (1)A provision of an enabling Act that enables an application to be made to the Tribunal gives the Tribunal jurisdiction to deal with the matter concerned.

   (2)In addition to the jurisdiction that an enabling Act gives to deal with a matter, the Tribunal has any jurisdiction that this Act gives in relation to that matter.

4. Part 4 sets out the tribunal's procedures. Part 4, Div 2 contains preliminary procedures, including how proceedings are commenced. By s 42(1):

   (1)A person applying to the Tribunal for review, or otherwise bringing a matter before the Tribunal by referral or other means, has to do so in accordance with this Act except to the extent that the enabling Act states otherwise.

   …

   (3)A proceeding before the Tribunal commences when the application is accepted by the executive officer.

5. Under s 44 the executive officer of SAT may reject an application on the ground that it is made by a person not entitled to make it, it is made outside the time limited by the enabling Act, or it does not otherwise comply with the State Administrative Tribunal Act or the enabling Act.  The State Administrative Tribunal Act does not provide for a decision at this stage on whether a person has leave to refer a matter; nor does it provide for an application to be rejected for want of leave. 

6. Section 16 of the Commercial Tenancy (Retail Shops) Agreements Act provides generally that a party to a retail shop lease may refer any question he believes to be a question arising under the lease to SAT. The tribunal first determines whether it is such a question, and if it is, shall hear and determine it. Section 11(5) modifies this in two ways. First, it provides positively that a party may refer a question as to the rent payable to the tribunal where the requirements of paragraphs (a) or (b) are met. Second, it provides that otherwise such a question shall not be referred. That is, the question of rent cannot be referred to the tribunal under the general provision in s 16 as a question arising under the lease.

7. The requirement in s 11(5)(b) is that 'the leave of the tribunal has been obtained.' To require a party to obtain leave before it may refer a matter, however, is not consistent with the procedures set out in Part 4 of the State Administrative Tribunal Act.  And neither that Act nor the Commercial Tenancy (Retail Shops) Agreements Act provides for referral confined to the question of leave.  Further, the purpose of the leave requirement does not require that leave be first obtained. 

8. In my opinion, on the proper construction of s 11(5)(b), a party to a lease may refer the question of the rent to SAT, without having first obtained leave of the tribunal. Leave is required before the tribunal determines the matter. This construction achieves a sensible, efficient, and just operation for the scheme comprising the Commercial Tenancy (Retail Shops) Agreements Act and the State Administrative Tribunal Act. Further it is consistent with the history of the legislation - until 1990, there was a requirement that leave has first been obtained, but that requirement was removed when s 11(5) was first enacted.

9. Once SAT has jurisdiction, it may rely on its normal range of procedures, including mediation: Commercial Tenancy (Retail Shops) Agreements Act, s 25. Under s 54(1) of the State Administrative Tribunal Act:

   At an initial directions hearing or at any other stage of a proceeding, the Tribunal may refer the matter, or any aspect of it, for mediation by a person specified as a mediator by the Tribunal.

10. Accordingly, for the purposes of the State Administrative Tribunal Act, a proceeding on the question of the rent payable had commenced in SAT at the time the matter was referred to mediation.  The matter was within the jurisdiction of SAT when it was referred to mediation, and when orders were made to give effect to the agreement in mediation

11. In any event, Mr Del Dosso had not acted, under s 11(3) or otherwise, at the time the question was referred to SAT. Section 11(5) limits the circumstances in which a party may refer a matter to SAT, thereby enlivening its jurisdiction. It does not purport to limit the powers of SAT once a matter has been referred to it, or to otherwise affect the jurisdiction of the tribunal.

12. I would dismiss ground 2.

Ground 3: the construction of the order of 9 October 2009

1. There was nothing in the order of 9 October 2009 which purported to override the effect of s 11 of the Commercial Tenancy (Retail Shops) Agreements Act. The matter was before SAT because the rent question had not been resolved under s 11(3). Once it was before SAT, the full range of the tribunal's procedures and powers was available: Commercial Tenancy (Retail Shops) Agreements Act, s 25. It was in the exercise of those powers that the matter was referred to Mr Del Dosso. The learned senior member was correct as to the effect of the order.

2. Accordingly, in my opinion, the applicant has not demonstrated any error of law in the decision of the learned senior.  SAT has jurisdiction to determine the question of rent payable as a result of the rent review.

Conclusion

1. For these reasons, I would grant the appellant leave to appeal, but the appeal is dismissed.