Lfracm Inc v Halski Pty Ltd
[2025] VCC 1506
•16 October 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-24-04309
| LAKE FYANS RECREATIONAL AREA COMMITTEE OF MANAGEMENT INC (ABN 49 022 428 129) | Plaintiff |
| v | |
| HALSKI PTY LTD (ACN 075 003 057) and DARRIN JOHN PALENSKY | First Defendant Second Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 September 2025 | |
DATE OF JUDGMENT: | 16 October 2025 | |
CASE MAY BE CITED AS: | LFRACM INC v Halski Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 1506 | |
REASONS FOR JUDGMENT
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Subject:Tenancy Dispute
Catchwords: Lease of holiday park for a term of 21 years – whether Retail Leases Act 2003 governs lease – Ministerial Determination made pursuant to s5(1)(c) of the Retail Leases Act 2003 on 20 August 2004 – whether lease obliges tenant “to carry out any substantial work on the Premises …” – covenant to carry out “substantial works” without identifying any particular obligation to carry out construction or civil engineering works – obligation lacking specificity and substance therefore not substantial – Retail Leases Act 2003 governs lease – whether a rental determination made by valuer binding on parties – “comparable” lease arrangements relied on by valuer alleged to be conducted other than in accordance with s37(2) of the Retail Leases Act 2003 and therefore including tenant’s fixtures – six of seven “comparable” leases governed by Retail Leases Act 2003 – seventh “comparable” lease excluding tenant’s fixtures from assessment – alleged error not made out – alleged error as to treatment of the cost of repairs as “outgoings” – cost of repairs not within the concept of “outgoings” – no error established – doubtful if such an error existed that it would invalidate the rental fixation.
Legislation Cited: Associations Incorporation Act 1981; Water Act 1989; Retail Leases Act 2003; Residential Tenancies Act1997; Retail Tenancies Reform Act 1998; Evidence (Miscellaneous Provisions) Act 1958; Building Act 1993; Petroleum Retail Marketing Franchise Act 1980 (Cth); Interpretation of Legislation Act 1984; Freedom of Information Act1982
Cases Cited:Lopes v Taranto [2018] VSCA 288; Greer v Kettle [1938] SC 156; In the Matter of the Referral of Matters to VCAT from Advisory Opinion Pursuant to s125 of theVictorian Civil and Administrative Tribunal Act 1998 by the Small Business Commissioner [2015] VCAT 478; Mola v Free Wesley and United Church of Tonga in Australia (Vic) Inc [2019] VSC 205; Caltex Oil (Aust) v Best (1990) 170 CLR 516; Luchio Nominees Pty Ltd v Epping Fresh Food Market Pty Ltd [2016] VCAT 937; McKechnie v Victorian Civil and Administrative Tribunal (2020) 62 VR 54; Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1; Australia and New Zealand Banking Group Limited v Commissioner of Taxation (1994) 48 FCR 268; Adelaide Brighton Cement Ltd v Long [2008] FCA 496; Ellerman Lines v Murray [1931] AC 126; Legal and General Life of Australia Limited v A Hudson Pty Ltd (1985) NSWLR 314; AGL Victoria v SPI Networks [2006] VSCA 173; Commonwealth of Australia v Wawbe Pty Ltd [1998] VSC 82; Bevendale Pty Ltd v Lucky Eights Pty Ltd [2020] VSCA 312; Serene Hotels Pty Ltd v Epping Hotels Pty Ltd [2015] VSCA 228; Higgins Nine Group Pty Ltd v Ladro Greville St Pty Ltd [2016] VSC 244; Red Gum Developments Pty Ltd v G8 Education Limited [2020] VSC 142; Valuer-General v AWF Prop Co 2 Pty Ltd [2021] 65 VR 327
Judgment: (1) Within 14 days the parties must bring in short Minutes to give effect to these reasons
(2)Costs reserved
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. Peters | Bowman & Knox |
| For the Defendants | Mr. Hopper SC with Mr. Kelly | Mann Legal |
HIS HONOUR:
1The plaintiff, to whom I will refer as “Lake Fyans”, was incorporated under the Associations Incorporation Act 1981. According to a Statement of Agreed Facts, it is also “an incorporated association pursuant to the Water Act 1958”. This “agreed fact” appears to be incorrect. There is, and was, no “Water Act 1958”. The Water Act, which is now in force, was enacted in 1989 and makes no reference to incorporated associations.
2The first defendant, Halski Pty Ltd (“Halski”), is an incorporated company.
3This proceeding concerns a property at 650 Mokepilly Road, Lake Fyans, which is said to be “about 10 kms east of Halls Gap, 15 kms south west of Stawell and on the shore of Lake Fyans”. It might be described as a holiday camp, with 327 sites, including 42 “Tenant Owned” sites, with 36 “Cabins” and 6 “Ensuite” sites, 67 “Powered” sites, 68 “Annual” sites and 150 “Unpowered” sites. The “Tenant Owned cabins” are said to be “demountable dwellings that are owned by the Tenant”.
4The complex also includes an office and manager’s house, function centre known as Roscoe’s Bistro, a games room and a camp kitchen, three amenity blocks, a playground, an inground swimming pool, four barbecue areas, a pump station, power sheds, tennis courts, two boat ramps, entry boom gates, a work shed and various storage areas. (Statement of Agreed Facts, [1]-[7])
5Neither the Statement of Agreed Facts nor a valuation report for rental determination purposes, which features prominently in the present dispute between the parties, discloses the area of the camp complex. According to the “site” section of the valuation, “The plan attached to the Lease outlines the area of the demised premises however a site/land area is not specified”. (Court Book “CB” 419)
6By lease dated 23 December 2010, Lake Fyans leased the camp complex to Vision Accommodation Pty Ltd for a term of 21 years, commencing on that day and expiring 22 December 2031. (Statement of Agreed Facts, [11])
7The lease which was a Law Institute standard form provided at Clause 1.9, “This lease, including all guarantees and indemnities, is delivered and operates as a deed”. Sub-clause 1.14 stated:
“The parties consider that the application of the Act to this lease is as specified in item 15 and, if item 15 states that the Act does not apply, that the reason is as specified in item 15.” (CB 45)
8The lease defined the “Act” as being the Retail Leases Act 2003. (CB 43)
9Item 15 in the Schedule, which sets out the permitted use, reads “Caravan and camping park and incidental uses”. (CB 59)
10Clause 2.2 provides:
“The tenant must not, and must not let anyone else -
2.2.1use the premises except for the permitted use, but the tenant agrees that the landlord has not represented that the premises may be used for that use according to law or that the premises are suitable for that use.” (CB 46)
11The standard printed condition as to repairs and maintenance provides that the tenant must:
“3.1.1keep the premises In the same condition as at the start of the lease, except for fair wear and tear; and
3.1.2comply with all notices and orders affecting the premises which are issued during the term.” (CB 47)
12This obligation is subject to a proviso in Clause 3.3, stating:
“The tenant is not obliged -
3.3.1to repair damage against which the landlord must insure under clause 6.2 unless the landlord loses the benefit of the insurance because of acts or omissions by the tenant or the tenant’s agents.
3.3.2to carry out structural or capital repairs or alterations or make payments of a capital nature unless the need for them results from –
(a)negligence by the tenant or the tenant’s agents,
(b)failure by the tenant to perform Its obligations under this lease,
(c)the tenant’s use of the premises, other than reasonable use for the permitted use, or
(d)the nature, location or use of the tenant’s installations,
in which case the repairs, alterations or payments are the responsibility of the tenant.” (CB 48)
13The printed term included an obligation on the part of the tenant to:
“5.1.2remove the tenant’s Installations and other tenant’s property from the premises and make good any damage caused in installing or removing them.” (CB 49)
14Clause 11 of the printed standard form provided for rental reviews “to market” to occur on each market review date. The market review dates were set out in item 16 of the Schedule, being the 5th, 10th and 15th anniversaries of the commencement date.
15Clause 11.1.4 provided that whether or not the Retail Leases Act applied, the valuer was required to make his or her determination “in accordance with the criteria set out in s37(2) of [that] Act”. (CB 52-3, 59)
16Item 16 of the Schedule also provided:
“The rent is to be adjusted annually on each anniversary of the Commencement Date in accordance with CPI save for the Market review dates.” (CB 59)
17Clause 18 provided the formula for the “CPI (Consumer Price Index)” adjustments. (CB 55-6, 59)
18Clause 20 of the printed form provided for additional provisions to be added to the list and included, at item 22 of the Schedule, which provisions were said to:
“20.1bind the parties, and
20.2if inconsistent with any other provisions of this lease, override them.” (CB 56)
19Two of these “additional provisions” are central to the present dispute and state:
“1. NON-RETAIL LEASE
The parties acknowledge that, pursuant to the determination by the Minister on 24 August 2004 under section 5(1 )(c) of the Retail Leases Act ("Act"), the Premises does not constitute a "retail premises" and will not be subject to the operation of the Act.
2. REPAIRS AND MAINTENANCE
Despite any other condition contained in this Lease, and without limiting the Tenant's repair obligations under general condition 3, the Tenant shall be responsible for all substantial work on the Premises which involves the building, installation, repair, replacement or maintenance of:-
(a) the structure of, or fixtures in, the Premises; or
(b) the plant or equipment at the Premises; or
(c)the appliances, fittings or fixtures relating to the gas, electricity, water, drainage or other services.” (CB 60)
20Additional provision 18 stated:
“18. IMPROVEMENTS TO REMAIN PROPERTY OF LANDLORD
Any permanent improvements to the Premises (during the term of the further renewed term) will become the property of the landlord at the expiration or earlier determination of the lease. For the avoidance of any doubt, the term "permanent improvements" does not include any un-registerable moveable dwelling within the meaning of the Residential Tenancies (Caravan Parks and Moveable Dwellings Registration and Standards) Regulations 2010 (the "Regulations") and any relevant provisions of the Residential Tenancies Act 1997.” (CB 65)
21By a document styled “Transfer of Lease”, once again in a Law Institute standard form, and dated 5 April 2012, Vision Accommodation Pty Ltd described as the “old tenant” transferred the lease to Halski, the first defendant in this proceeding, described as the “new tenant”.
22The lease contained no options to renew.
23The second defendant, Mr Darrin Palensky, was also a party to this document and described as “the new tenant’s guarantor”. By Clause 8 of the document, he guaranteed performance of the covenants under the lease by Halski. (CB 89-93)
24Lake Fyans commenced proceeding number CI-22-03885 in this Court against Halski and Mr Palensky, which was settled by Terms of Settlement dated 9 May 2023, whereby the defendants agreed to pay to Lake Fyans the sum of $140,000.
25Clause 4 of the terms provided:
“The Parties agree to initiate a Market Rent Review at a “Relevant Market Review Date" of 1 June 2023 to determine the “Current Market Rent” for the period from 1 June 2023 to 23 December 2025 by adopting the mechanism in Clause 11 of the Lease and Item 22 (6) of the Schedule of the Lease.” (CB 105)
26The terms provided for the proceeding to be “dismissed with a right of reinstatement” and no order as to costs. (CB 104-108)
27On 9 May 2024, Mr Ryan Danaher, described as “primary valuer” of Opteon Property Group Pty Ltd, issued a valuation “for rent determination purposes” valuing the rental for the camp complex as at 1 June 2023 at $300,000 per annum. (CB 403-407)
28Mr Danaher recorded having received submissions on behalf of a tenant and landlord. (CB 409-412) Mr Danaher referred to additional provision 1 and item 22 of the lease, being acknowledgment by landlord and tenant that the premises were not retail premises, and that Lake Fyans had submitted to him that the Retail Leases Act did not apply to the tenancy. In addition, the tenant, Helski, had agreed. (CB 412)
29Part 20.0 of the valuation dealt with “Market Evidence & Analysis”. (CB 446-455)
30He noted that the tenant had some eight items of rental evidence which he tabulated as:
*Includes 10-year capital works programs equal to around $110,000 (excluding GST) (CB 446)
31Mr Danaher commented:
“The evidence, excluding Murray River, shows a range of rents between $112,500 and $286,000, percentage of revenue rates between 17.88% and 20.98%, percentage of EBITDAR (net profit) between 30.41% and 38.89%, and site rates between $1,125 and $3,446 per powered site and between $903 and $3,250 per total sites.” (Ibid)
32Significantly, Mr Danaher observed:
“The Tenants representative Valuer has not disclosed details, such as business names, addresses, and lease terms. The Determining Valuer has requested such additional information (in confidence if required) however, and despite our Terms and Conditions requiring full and frank disclosure of relevant information, further details have been declined for confidentiality reasons. Whilst I confirm having regard to the evidence tabled in the Tenants submission, the failure to disclose full details ultimately means I am not privy to such details surrounding those leasing transactions and accordingly can only place limited weight on the information. As such, I have had to make a determination without such detail.” (Ibid)
33He tabulated the landlords’ rental evidence as follows:
*Includes 10-year capital works programs equal to around $175,000 (excluding GST) (Ibid)
34Mr Danaher selected some seven premises which he said exhibited the “most comparable rental evidence”. (CB 447-490)
35Mr Danaher observed:
“Given the short remaining term with nil further options, the 'Park Owned' cabins and ensuite sites would be required to be relocated to another park prior to the expiration of the Lease to comply with Additional Provisions 17 (Termination of Term) and 18 (Improvements to Remain the Property of the Landlord) of the Lease.
To this end, my determination must have regard to the length of tenure and make necessary adjustments to reflect any differences between the evidence herein and the subject Lease. However, in any sense, the Determining Valuer must have primary regard to open market letting transactions, rather than market rent reviews and renewals. As such, I must first have regard to transactions where a hypothetical Tenant undertakes the same, or substantially similar, use as permitted under the Lease, being "caravan and camping park and incidental uses" noting the likely reduced depth of leasing market because of the remaining lease term certain.” (CB 455)
36Mr Danaher referred to “sub-section … 37(2) [of the Retail Leases Act] stated:
“3.3 I also confirm I have:
-not considered the value of the goodwill created by the Tenant's occupation or the value of the tenant's fixtures and fittings, in determining the Current Market Rent for the Premises,
-considered Landlord and Tenant submissions,
-had regard to a range of accommodation rental evidence,
-assumed the tenant and landlord meet their obligations under the lease, and
-acted as an expert and not as an arbitrator” (CB 457)
37On the subject of park owned sites and tenant improvements, Mr Danaher said:
“6.1Additional Provision 18 of the lease states any permanent improvements to the premises will become the property of the landlord at the expiration or earlier determination of the lease. For the avoidance of doubt, the term 'permanent improvements' does not include any un-registerable moveable dwelling within the meaning of the Residential Tenancies (Caravan Parks and Moveable Dwellings Registration and Standards) Regulations 2010 and any relevant provisions of the Residential Tenancies Act 1997. For clarity, un-registerable moveable dwellings include the 'Parked Owned' cabins and ensuite sites.
6.2It is common practice in the caravan park sector for incoming tenants to make capital improvements to the premises with the intention of maintaining/increasing guest numbers, sustaining a level of service in line with competing premises, and increasing trade and profitability. On that basis such tenant improvements are usual for incoming tenants and consistent with market behaviour and the evidence herein and does not have a material impact on rents (with such capital costs ordinarily incurred by tenants). Accordingly, whilst the 'Parked Owned' improvements have been disregarded, market behaviours dictate an adjustment or reduction in rent is not justified.” (CB 458)
38As to the rental evidence, Mr Danaher said:
“12.1Evidence tabled by both parties has been considered within this determination and it is noted that both parties agree that based on industry expectations, rentals for caravan parks are generally between 17.0% and 25.0% of total revenue and 30.0% to 40.0% of EBITDAR. Furthermore, the tabled evidence shows a net rental range between $65,000 and $286,000 pa, and a market rate range between $1,125 and $3,446 per powered site.” (CB 459)
39As to his method of valuation, Mr Danaher said:
“13.2Having regard to the submissions of the respective parties and the terms and conditions of the Lease, the rental evidence detailed herein, permitted use, the specialised nature of the improvements, and in particular, the principles of 'Guidelines to the Retail Leases Act 2003' and Serene Hotels v Epping Hotels, I have adopted the Comparable Transactions Method as the primary method of valuation in the calculation of the Current Market Rent, supported by the Revenue and Profits Methods.
Note: The Direct Comparison Method is now referred to as the Comparable Transactions Method under the International Valuation Standards (IVS). Accordingly, I use the superseded and IVS compliant terminology 'Comparable Transactions Method' as a method under the IVS 'Market Approach'.” (CB 460)
40He concluded that the subject site was “marginally superior” to the property at Heinz Street, White Hills, which had an annual rental of $286,000 net per annum or $3,446 per powered site, but marginally inferior to the site at Deakin Avenue, Mildura, which had a $313,000 net per annum rental or $3,962 per powered site.
41Therefore, said Mr Danaher:
“my conclusions are that the current market rent for the subject premises is higher than $286,000 net pa but less than $313,000 net pa. Accordingly, I would expect my rental determination (using the Comparable Transaction Method) to fall within this range.” (CB 461)
42He used the Comparable Transaction Method as his primary method with his unit of comparison being the number of powered sites in the complex which is set at 177. The range was as between the Heinz Street property on the low side and the Deakin Avenue, Mildura site at the higher level. He chose a median figure of $300,900 rounded to $300,000 even. This method, based on the unit of comparison, was compared with a revenue and profit method which would have shown a range between 17 per cent and 18 per cent, with a median turnover of $1,944,707 per annum and a median annual rental of $340,924. He said the Comparable Transaction Method, without resort to a unit of comparison, would show a median of $300,000 per annum, being his adopted valuation. (CB 463)
This proceeding
43Solicitors acting for Lake Fyans filed a Writ and Statement of Claim dated 25 July 2024 commencing the present proceeding, having alleged the existence of the lease, the assignment to Halski and the guarantee by Mr Palensky. It referred to the earlier proceeding in the court and its settlement.
44The Statement of Claim alleged short payment of rental by the first defendant company, which were the subject of two breach notices. At paragraphs 31-32, Lake Fyans sought termination of the lease. The Prayer for Relief saw the following:
“A.An Order from Court that the Lease is terminated, and the Plaintiff is entitled to re-enter the premises as at the date of the Court Order.
B.Damages of $181,125.53.
C.Interest pursuant to the Lease.
D.Alternatively, interest pursuant to Statute.
E.Costs.
F.Such further relief as this Honourable Court deems fit.” (CB 11)
45The solicitors for the defendants filed a Defence and Counterclaim dated 15 October 2024, based upon the contention that the lease was governed by the Retail Leases Act.
46By way of counterclaim, they sought a perpetual stay of the proceeding “for want of jurisdiction” and a declaration that Mr Danaher’s rental determination was “vitiated by error and [did] not comply with the terms of the Lease, and [did] not bind the parties”, together with consequential relief. (CB 23)
Issues for determination
47The parties brought the matter on for hearing before me on the basis of a Statement of Agreed Facts and without oral evidence. The issues for determination were as follows:
“1.Is The Lease excluded from the operation of the RLA by virtue of the Ministerial Determination under s.4(2)(f) and s.5(1)(c) of the RLA?
2. If the answer to question 1 is ‘yes’, then is the Opteon Determination vitiated by error on any of the following grounds:
…
(b)Danaher failed to disregard the value of cabins installed at the Premises and ensuite sites that are owned by Halski and are the tenant’s fittings and fixtures (Defence and Counterclaim, [37](b));
(c)Danaher failed to provide reasons as required by cl. 11.1.5 of the Lease to explain how he ignored or excluded the value of the cabins and ensuites (Defence and Counterclaim, [37](c)); or
(d)Danaher failed to have regard to the Committee’s [viz Lake Fyans] outgoings to the extent that Halski is required to contribute to those outgoings (Defence and Counterclaim, [37](d)).” (Signed Statement of Issues)
The Retail Leases Act
48The Retail Leases Act governs the leasing of what it defines as retail premises. Section 1 of the Act states it’s “purpose” as follows:
“The main purpose of this Act is to replace the scheme in the Retail Tenancies Reform Act 1998 with a new scheme to enhance—
(a)the certainty and fairness of retail leasing arrangements between landlords and tenants; and
(b)the mechanisms available to resolve disputes concerning leases of retail premises.”
49Section 4 of the Act defines “retail premises” as relevantly providing:
“(1)In this Act, retail premises means premises, not including any area intended for use as a residence, that under the terms of the lease relating to the premises are used, or are to be used, wholly or predominantly for—
(a)the sale or hire of goods by retail or the retail provision of services;
…
(2) However, retail premises does not include the following premises—
…
(f)premises of a kind that the Minister determines under section 5 are premises to which this paragraph applies;
…”
50Section 5 provides inter alia:
“(1)The Minister may, by notice published in the Government Gazette—
…
(c)determine that a kind of premises are premises to which section 4(2)(f) applies; or
…”
51Section 37(2) of the Act provides:
“The current market rent is taken to be the rent obtainable at the time of the review in a free and open market between a willing landlord and willing tenant in an arm's length transaction having regard to these matters—
(a) the provisions of the lease;
(b)the rent that would reasonably be expected to be paid for the premises if they were unoccupied and offered for lease for the same, or a substantially similar, use to which the premises may be put under the lease;
(c)the landlord's outgoings to the extent to which the tenant is liable to contribute to those outgoings;
(d)rent concessions and other benefits offered to prospective tenants of unoccupied retail premises—
but the current market rent is not to take into account the value of goodwill created by the tenant's occupation or the value of the tenant's fixtures and fittings.”
52Section 81 of the Act provides:
“(1)In this Part, retail tenancy dispute means a dispute between a landlord and tenant—
(a)arising under or in relation to a retail premises lease to which—
(i)this Act applies or applied because of Part 3; or
(ii)the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 applies or applied; or
(b)arising under a provision of the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 in relation to a lease to which that Act applies or applied; or
(c)arising under a lease that provides for the occupation of retail premises in Victoria to which none of those Acts apply or applied—
despite anything to the contrary in this Act (apart from subsection (2) and section 119(2)).
Note
If proceedings were in progress under the Retail Tenancies Reform Act 1998 when this Act commenced, see section 119(2) (general transitional and savings).
(1A)In addition, a retail tenancy dispute includes—
(a)a dispute between a landlord and a guarantor of a tenant's obligations under a lease arising in circumstances referred to in subsection (1)(a), (b) or (c); and
(b)a dispute between a landlord and a person who has given an indemnity to the landlord for loss or damage arising as a result of a breach by a tenant of a lease in circumstances referred to in subsection (1)(a), (b) or (c).
(2)However, retail tenancy dispute does not include a dispute solely relating to the payment of rent or a dispute that is capable of being determined by a specialist retail valuer under section 34, 35 or 37 of this Act or under section 12A or 13A of the Retail Tenancies Reform Act 1998 or section 10 or 11A of the Retail Tenancies Act 1986.”
53Section 83 of the Act states that for the purposes of this definition “landlord” includes a former landlord, “lease” includes a former lease and “tenant” includes a former tenant.
54Subject to an obligation to refer matters for alternative dispute resolution (ss85-88), jurisdiction to determine retail tenancy disputes is bestowed exclusively on the Victorian Civil and Administrative Tribunal by s89, and such disputes are “not justiciable” before any other tribunal or a court or a person acting judicially within the meaning of the Evidence (Miscellaneous Provisions) Act 1958.
55One key provision of the Act which will require particular attention in the resolution of the present dispute is s94, which provides:
“(1)A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).
(2)A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it purports—
(a)to exclude the application of a provision of this Act; or
(b)to limit the right of a party to the lease to seek resolution of a retail tenancy dispute under Part 10 or otherwise to limit the application of that Part.
(3)A provision contained in any other agreement or arrangement (whether or not between parties to a retail premises lease) is void if that provision would be void under this Act if it were contained in a retail premises lease.”
Issue 1 – is the lease governed by the Retail Leases Act?
56The premise upon which this case has been argued is that, absent a ministerial direction under 5(1)(c) of the Act, the lease for this complex would be governed by the Retail Leases Act.
57In Government Gazette No S 184, Monday, 23 August 2004, the Minister for Information and Communication Technology and Small Business, Marsha Thomson, made a determination pursuant to s5(1)(c) of the Retail Leases Act as to “premises not constituting retail premises”, which stated inter alia:
“A.Acting under section 5(1 )(c) of the Retail Leases Act 2003,1 determine that the following kind of premises are premises to which section 4(2)(f) applies:
Premises which are leased under a lease:
(a)the term of which (excluding any options for renewal) is 15 years or longer; or
(b)the term of which (excluding any options for renewal) is less than 15 years which was granted by way of renewal (as provided in section 9 of the Retail Leases Act 2003) of a lease to which paragraph (a) applies or applied or a lease to which paragraph (a) would have applied had the lease been entered into after the date upon which this determination comes into effect; or
(c)the term of which (excluding any options for renewal) is less than 15 years which was granted expressly or by operation of law by way of or as a result of the variation of a lease to which paragraph (a) applies or applied or a lease to which paragraph (a) would have applied had the lease been entered into after the date upon which this determination comes into effect provided that the terms of lease so granted are substantially the same as the terms of the lease which was varied –
and which contains any provisions that –
(d)impose an obligation on the tenant or any other person to carry out any substantial work on the Premises which involves the building, installation, repair or maintenance of:-
(i)the structure of, or fixtures in, the Premises; or
(ii)the plant or equipment at the Premises; or
(iii)the appliances, fittings or fixtures relating to the gas, electricity, water, drainage or other services; or
(e)impose an obligation on the tenant or any other person to pay any substantial amount in respect of the cost of any of the matters set out in sub-paragraphs (d)(i), (ii) or (iii); or
(f)in any significant respect disentitles the tenant or any other person to remove any of the things specified in paragraph (d) at or at any time after the end of any of the leases to which paragraphs (a), (b) or (c) apply.
…
This determination comes into effect on 24 August 2004.
Dated 20 August 2004”
58As appears from the foregoing narrative, Lake Fyans and Vision Accommodation Pty Ltd entered into the lease upon the footing that the Ministerial Determination “excluded this lease from the operation of the Retail Leases Act”.
59A similar assumption seems to have been made by Lake Fyans and Halski when submissions were made to the valuer. It seems that Halski and Mr Palensky have thought better of this concession since the valuation process was completed. If the valuation were carried out on what turns out to be a false premise, that the Retail Leases Act does not govern this lease, the rental determination will have to be revisited.
60Lake Fyans’ counsel, Mr Peters, said that since his client had received and accepted rental payments after the default notices referred to in its Statement of Claim and the issue and service of the Writ, it could not now be contended, whatever the outcome on the issue as to the application of the Retail Leases Act, that Lake Fyans was entitled to re-enter and terminate the lease.
Estoppel
61An initial question arises as to whether, in the events narrated, the provisions of the lease and the dealings between the parties have created an estoppel such that whether, upon its terms the Retail Leases Act applies to this leave, the tenant, Halski, and its guarantor, Mr Palensky, ought to be regarded as estopped from maintaining that position.
62Mr Peters contended that additional provision 1 of the lease entailed an acknowledgement by Halski that the Act did not apply, which acknowledgement amounted to an admission that this proposition was true. He referred to a definition in the Macquarie Concise Dictionary. (Contention, [23])
63He referred to a Judgment of the Court of Appeal in Lopes v Taranto [2018] VSCA 288, where the court Kyrou, McLeish and Hargrave JJA adopted and approved a statement by Lord Maugham in Greer v Kettle [1938] AC 156 to the following effect:
“Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies and therefore as not admitting any contradictory proof. It is important to observe that this is a rule of common law, though it may be noted that an exception arises when the deed is fraudulent or illegal. The position in equity is and was always different in this respect, that where there are proper grounds for rectifying a deed, e.g., because it is based upon a common mistake of fact, then to the extent of the rectification there can plainly be no estoppel based on the original form of the instrument. It is at least equally clear that in equity a party to a deed could not set up an estoppel in reliance on a deed in relation to which there is an equitable right to rescission or in reliance on an untrue statement or an untrue recital induced by his own representation, whether innocent or otherwise, to the other party.” [1938] AC 156, 171
64According to Mr Peters, there was no fraud involved in the parties joining in that acknowledgement nor any illegality. (Outline of Opening Submissions, [29]-[30]) He said (Ibid [32]) since s94 of the Act did not prohibit a party from agreeing that a Ministerial Determination applied to a lease, the acknowledgment could not be regarded as contrary to the Retails Leases Act.
65He said the validity of the acknowledgment depended on “whether it is ‘inconsistent with’ the RLA or one of the implied terms”. (Ibid, [33])
66He said that the question of inconsistency was governed by a decision of Garde J, sitting as the President of VCAT, in Small Business Commissioner reference for advisory opinion (Building and Property) [2015] VCAT 478.
67According to Mr Peters, since the purpose of the Retail Leases Act, including enhancement of certainty and fairness of leasing arrangements, it could not be said that the acknowledgment defeated or circumvented the policy or purpose of the Act. Rather, the acknowledgment enhanced certainty.
68It is not clear to me how fully the “estoppel” argument was pressed beyond the quoted passage from Lord Maugham, Mr Peters did not elaborate upon the alleged operation of the estoppel here beyond what I have already sought to summarise.
69Mr Hopper SC and Mr Kelly, on behalf of the defendants, did not deal in their outline with the issue of estoppel at all.
70It is well-established that an estoppel, including an estoppel by deed, cannot prevail against the mandatory provisions of a statute. This issue was considered by Ginnane J in the relatively recent past in his decision in Mola v Free Wesley and United Church of Tonga in Australia (Vic) Inc [2019] VSC 205 [427]-[436], in which his Honour regarded the rule as being established inter alia by a decision of the Judicial Committee of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993, 1016-7 (Viscount Radcliffe, Lord Morris of Borth-y-Gest and Lord Guest).
71Upon their Lordships’ analysis, the question was whether a statute in question was intended to create a right merely in favour of an individual (which could be disclaimed by contract or otherwise) or created a rule for the benefit of the public in general.
72In my view, s94 of the Retail Leases Act is indicative of a policy that the application of the regime under the statute is a matter of public interest rather than a matter that can be determined simply by agreement between the parties. If it were the latter, s94 would not have been included. If an argument based on estoppel is relied upon by the plaintiff, I would reject it.
Inconsistency
73If additional provision 1 is regarded as being “inconsistent” with anything in the Retail Leases Act, then it would seem to be void by virtue of s94(1) of that Act.
74In his decision “In the Matter of the Referral of Matters to VCAT from Advisory Opinion Pursuant to s125 of theVictorian Civil and Administrative Tribunal Act 1998 by the Small Business Commissioner [2015] VCAT 478”, Garde J considered what constituted an inconsistency for the purposes of s94 of the Retail Leases Act and s251 of the Building Act 1993. Having considered a number of suggested tests, his Honour adopted as the proper and preferred one the test postulated by the High Court in Caltex Oil (Aust) v Best (1990) 170 CLR 516, 522-3 per Mason CJ, Gaudron and McHugh JJ [26] of his Honour’s determination.
75In that case, their Honours were considering a contention that a clause in a franchise agreement was inconsistent with s16(1) of the Petroleum Retail Marketing Franchise Act 1980 (Cth). In a joint judgment, Mason CJ, Gaudron and McHugh JJ said:
“6. An express statutory prohibition against contracting out renders void or inoperative contractual provisions which are inconsistent with the statute. Inconsistency between contract and statute is not confined to literal conflicts or collisions between the contractual provisions and the statutory provisions. Inconsistency in this context arises whenever there is a conflict between a contractual provision or the operation of such a provision and the purpose or policy of the statute. So, if the operation of a contractual provision defeats or circumvents the statutory purpose or policy, then the provision is inconsistent in the relevant sense and falls within the injunction against contracting out.
7. The principle that it is not permissible to do indirectly what is prohibited directly, which is expressed in the maxim quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud, is a more traditional general statement of the same proposition. It has been acknowledged that, in conformity with this principle, the adoption of a circuitous device with a view to avoiding the need to comply with a constitutional requirement will be of no avail.” (1990) 170 CLR 516, 522-3
76Mr Peters on behalf of the plaintiff contended, it will be recalled, that the operation of an additional provision did not “defeat or circumvent the policy or purpose of the RLA”.
77Section 1 of the Act stated “a main purpose” for the enactment of the statute by definition. This cannot be regarded as the “sole purpose” for the enactment. Other purposes may be inferred from the structure and provisions of the Act. The most obvious purpose which may be so derived is a policy that a particular class of contractual and real property relationships viz retail tenancy leases, should be subject to the statutory regime propounded in the Act.
78If, upon its true construction, the Ministerial Determination takes the present lease outside the class of relationships to be regulated by the Act, that consequence will flow from the combined effect of the determination and the provisions in ss4 and 5 of the Act itself.
79If the determination does not have that effect, to conclude that any sort of inter partes arrangement could move what would otherwise be regulated by the Act outside its scope would plainly constitute circumventing the operation of the statute, and an inconsistency with the operation of the statute in the sense in which this is explained by the joint judgment of the High Court Justices in Best’s case.
80It follows that the question whether this lease is regulated by the Retail Leases Act depends crucially and solely upon the true construction of the Ministerial Determination.
The Determination
81The present lease clearly engages the first criterion stated in the Ministerial Determination viz that its term exclusive of any options is “15 years or longer”. The engagement of the balance of the criteria is somewhat problematic. Paragraphs (b) and (c) are alternatives to paragraph (a) and may be put aside. Paragraphs (d), (e) and (f) are alternatives one with another, but must be engaged in combination with paragraph (a) for the determination to apply to the lease.
82By way of general observation, this is not an instance in which the lease includes an obligation to construct anything in particular. Rather, the obligation is only to maintain.
83The printed portion of the lease includes the standard provision, as recited above, imposing an obligation to repair upon the tenant subject to an exclusion of any obligation to carry out capital works. (Paragraphs 3.1 and 3.3, CB 47-48)
84Additional provision 2 effectively negates the proviso as to capital works created by printed covenant 3.3 and specifically renders the tenant liable “for all substantial work”.
85Mr Hopper and Mr Kelly attacked this wording as a transparent artifice to escape the leases being regulated by the Act. The matter was not further elaborated. It was not suggested, however, that the additional provision should be treated as a “sham” in accordance with the principle which guides courts in dealing with transactions plainly structured so as to avoid or minimise tax liability. The additional covenant should be given the legal effect created by its proper construction.
86The gravamen of the argument by Mr Hopper and Mr Kelly at this point would seem to be that, on its true construction, the Ministerial Determination requires for its engagement a provision in a lease requiring the carrying out of some specific piece of substantial work rather than some identified and indefinite substantial work, as does the present additional provision.
87The reference in the additional provision to structure, plant or equipment and appliances as separate sub-paragraphs tracks the language in paragraph (d) of paragraph A in the Ministerial Determination.
88In Luchio Nominees Pty Ltd v Epping Fresh Food Market Pty Ltd [2016] VCAT 937, Member Edquist considered the operation of the Ministerial Determination. The lease there under consideration had a term of 20 years. ([2016] VCAT 937 [11])
89The obligation to carry out substantial work, which it was contended engaged paragraph (d) of the determination, that special condition stated:
“The Tenant agrees and undertakes that it will construct a stall for the exclusive use of the Landlord within the buildings (‘the Buildings’) to be constructed by the Tenant on the demised land, to be approximately 42.9 square metres in size and generally in accordance with the location of stall 14 (marked as ‘Delis’) on the ground floor of the Buildings as indicated on the plan attached hereto. The Landlord shall have the exclusive use and occupation of the stall, free of rental for the duration of the term of the Lease and any option. The Landlord shall pay all outgoings in proportion to the area that the Stall bears towards the total buildings constructed by the Tenant on the demised land.” ([2016] VCAT 937 [86])
90The tenant argued that by reference to the consideration of the lease as a whole and various other provisions, in particular as to permitted use, the construction of the stall would only be mandatory if the tenant elected to construct a retail market, and therefore there was no “outright” obligation to construct. ([2016] VCAT 937 [95])
91Mr Edquist analysed the evidence and concluded:
“ I find that on its true construction, special condition 2 obligated Epping to construct a building containing a fresh food market. On any view of the meaning of the word ‘substantial’, such an undertaking would be substantial.” ([2016] VCAT 937 [109])
92He also said at [112], that in context an obligation to construct a stall entailed “the construction of a substantial building”. Therefore, Mr Edquist concluded that the premises were not retail premises and he made a declaration accordingly. [117]
93It will be seen that this determination does not offer guidance on the particular point now under consideration.
94Mr Edquist concluded, after a lengthy analysis of the principles and authorities, that the word “or” between paragraphs (d) and (e) should be read as “or” and not as “and”. This latter contention, he said, was “not sustainable”. [2016] VCAT 937 [47]
95Once again, this analysis does not touch upon the contention which I am now considering.
96Mr Hopper and Mr Kelly relied on documents styled “Guidelines to the Retail Leases Act 2003 – What are retail premises?” published by the Victorian Small Business Commission respectively in March and October 2019. These guidelines sought to explain and elaborate upon some seven Ministerial Determinations issued pursuant to s5 of the statute. The present determination is dealt with at paragraph 7.1.3 of both documents.
97The Guidelines having already dealt with Ministerial Determinations relative to retail premises located in a multistorey building and the premises of Barristers’ Chambers Limited, and continued “This [the determination relative to 15-year leases] is a more complex Determination and should be considered carefully taking into account the following”. The Guidelines then stated what the Commission regarded as “The Policy Background”, which was described as follows:
“The Policy Background
The intention of the Act was to draw what Parliament regards as a proper balance between the rights and liabilities of landlords and tenants, and in so doing promote more certainty and fairness in the relationship between landlords and tenants, in the area of retail leases.
The Act made significant changes especially to the scheme of responsibility for repairs and maintenance. These changes resulted in undesirable outcomes for certain leases in particular Crown land leases.
Such leases typically stipulated that the tenant was responsible for the construction, installation, repair and maintenance of buildings and structures. These leases also commonly required the tenant to leave any structures built or improvements made by the tenant to the premises on the land at the end of the lease.
By way of compensation and in recognition of these obligations imposed on tenants, the terms of such leases were long and the rent required to be paid was very low or even peppercorn rent. Leases of this type included Alpine Resorts, Amusement Parks, Sports and Recreational Grounds, Raceways, Theatres, Caravan Parks, Marinas, and Youth Camps.
The operation of the Act changed the role of the landlord of these leases from a lease administrator to a property investor/manager. Such a change in role was perceived as being of little or no benefit to either the landlord or the tenant. The substantial increase in costs to the landlord, arising particularly from the repair and maintenance obligations of the landlord under the Act, would have resulted in a substantial increase in the rent and may have resulted in many of these leases not being commercially viable for tenants.
Many of these facilities considered to be community facilities and of considerable benefit to the community would not have been undertaken or would have failed if undertaken, if the Act applied. The Act was therefore viewed as impractical with regard to these leases.”
98Under the heading “The Purpose of the Determination”, the Guidelines state:
“The Determination is not restricted to Crown land leases, but may apply to any retail lease as long as that lease satisfies all of the criteria of the Determination. However, it is not the purpose or intent of the Determination to exclude genuine small and medium retail tenants from the protections provided by the Act, where doing so would not be in the best interests of the tenant.”
99The Guidelines continue, stating that the Retail Leases Act was “remedial legislation” and therefore “the Determination should be read narrowly, so as not to take away those rights [viz the rights given to tenants by the Act] except to the extent expressly and clearly provided”.
100Mr Peters denied that it was proper or appropriate to have regard to these Guidelines for the purposes of interpreting the Ministerial Determination. Whilst he conceded that the Ministerial Determination was a legislative instrument, he said the Commission’s Guidelines were not within the scope of the extrinsic materials which the Interpretation of Legislation Act 1984 authorised a court to resort to, to assist in construing legislation.
101He relied upon a decision of Cavanough J in McKechnie v Victorian Civil and Administrative Tribunal (2020) 62 VR 54, in which Mr McKechnie sought declaratory relief against the Tribunal’s summary dismissal of his review application under the Freedom of Information Act 1982. Mr McKechnie relied upon the relevant department’s “FOI protocol” relative to fee waivers, which he said had not been observed in his case.
102Cavanough J rejected this reliance, stating:
“Post-enactment ministerial or departmental understandings of statutes do not bear on their proper interpretation. Nor, generally speaking, is the executive bound by anything in the nature of estoppel in relation to the exercise of statutory discretions.”(2020) 62 VR 54, 89 [85]
103Mr Peters noted that the Guidelines relied on by Messrs Hopper and Kelly post-dated the Ministerial Determination by more than a decade. Mr Peters contended that I was bound by his Honour’s decision. (Transcript (“T”) 116, Lines (“L”) 9-10)
104He then referred to a decision of the High Court of Australia in Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1, 16, where the court stated:
“In South Australia the use of extrinsic materials in the construction of South Australian statutes is governed by the common law, there being no equivalent in the Acts Interpretation Act 1915 (SA) to s 15AB of the Acts Interpretation Act 1901 (Cth). There is no basis at common law or otherwise for resorting to a ministerial statement, about the effect of a law in force at the time of the statement, as an aid to the interpretation of that law.” (2012) 248 CLR 1, [33]
105According to Mr Peters, therefore, any contentions to the contrary must therefore be regarded as overruled.
106Mr Hopper and Mr Kelly referred to, and relied upon a decision of the Full Court of the Federal Court in Australia and New Zealand Banking Group Limited v Commissioner of Taxation (1994) 48 FCR 268, 201, in which Hill J (as a member of the Full Court) said:
“Counsel for the Bank referred us to the notes to s 82(2) contained in the explanatory handbook, showing the differences between the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1922 (Cth), issued by authority of the Commonwealth Treasurer on 31 August 1936. That handbook does not stand in the same position as Explanatory Memoranda to legislation to which regard may be had in interpreting that legislation, at least in the case of ambiguity under s 15AB(2)(e) of the Acts Interpretation Act 1901 (Cth). Publication of the handbook postdated the date of assent to the Income Tax Assessment Act 1936 on 2 June 1936. Nevertheless, regard might be had to that publication as indicating the mischief to which s 82(2) was directed, that subsection having no counterpart in the prior legislation.” (1994) 48 FCR 268, 201 [37]
107Mr Hopper also referred to a decision of Besanko J, as a single judge of the Federal Court of Australia, in Adelaide Brighton Cement Ltd v Long [2008] FCA 496, [48] where his Honour said:
“In certain circumstances, it may be that a statement of the mischief Parliament was intending to remedy made after the enactment of the provision to be constructed can be used for the purposes of interpreting the provision. It seems to me, however, that a person seeking to rely upon such a statement would need to establish, at the very least, that the statement was clearly one relating to the mischief the relevant provision was designed to remedy and that the statement was made by a person or body in a position to identify that mischief in a reliable way.” ([2008] FCA 496, [48])
108The High Court in the Australian Education Union case did not specifically overrule these two Federal Court decisions.
109Accepting Mr Peters’ contention to the full, the Small Business Commission’s Guidelines must have at least the authority of an academic commentary. Given that they emanate from the public sector, the author or authors of the Guidelines would have had access to information within the public sector not available to an ordinary academic commentator.
110In the end, however, the Guidelines cannot I think provide an absolute outer limit for the application of the Ministerial Determination. The “Policy Background” which, according to the Small Business Commission, led the Minister to act, arose out of concerns relative to leases granted by public sector entities. Yet, the determination in its terms, as the Small Business Commission’s Guidelines observed, is not confined to Crown or other public sector leases but potentially applies to all leases longer than 15 years subject to satisfaction of the other criteria.
111The legislative step, therefore, goes beyond the “mischief” which led to its being taken. Where the words are clear, there is no occasion to read them down by reference to the initial mischief which led the Minister to act – Ellerman Lines v Murray [1931] AC 126.
112We are therefore remitted once again to the text of the determination. Given that the present lease is of more than 15 years’ duration, the primary question is whether additional provision 2 of the lease imposes an obligation on the tenant “to carry out any substantial work on the Premises”, involving building installation, repair or maintenance.
113As previously noted, the boilerplate provisions of the printed lease form impose a covenant to repair upon the tenant subject to a proviso exempting the tenant from responsibility for works of a capital nature. Additional provision 2 does not oblige the tenant to carry out any work in particular. It merely renders the tenant responsible for “all substantial work on the premises”. Then, tracking the words of the determination relative to structures, plant and equipment, appliances, fittings and so forth, the combined effect of the printed boilerplate and the additional and overriding special covenant is, one might think, to delete the proviso as to capital works in boilerplate clause 3.
114What then does the adjective “substantial” mean and import?
115The most obvious synonym for the word “substantial” is “major”. An obligation to carry out some minor piece of work would not merit the description “substantial”. This accords with the meaning “of ample or considerable amount or size; sizeable” (Oxford English Dictionary Online Edition). The word “substantial” bears many other meanings and nuances, amongst which, according to Oxford English Dictionary, are “firmly or solidly establish; of solid worth or value; of real significance, weighty; reliable; important, worthwhile”. One of the other strains of meaning, according to the Oxford English Dictionary, is “that is, or exists as, a substance; having a real existence; subsisting by itself”.
116In the present instance, where no particular piece of “substantial” work is identified, all that one can say is, were there to be a deterioration in fixtures, structures, appliances, et cetera which require work of a major type or dimension to be carried out, the tenant would be obliged to carry out that work. The particular piece of work is entirely uncertain and the need to carry it out is also entirely uncertain. Can it be said that the tenant under this lease is obliged to carry out work “having a real existence”? On the contrary, the obligation is nebulous.
117Another of the meanings of “substantial” in the Oxford English Dictionary is “having substance in reality; not imaginary, unreal, or only apparent; true, actual, real”. Again, it is difficult to regard additional Clause 1 as imposing a real and actual obligation, as distinct from having been included for the sole purpose of engaging, or purporting to engage, the Ministerial Determination.
118In my view, the requirements of paragraph (a) of the determination, as to an obligation to carry out substantial work, are not met. Therefore, this lease is subject to regulation by the Retails Leases Act.
Issue 2 – validity of the Danaher rental valuation
119As a “fallback” position on behalf of the defendants, Mr Hopper and Mr Kelly contended (Outline, [30]):
“If the Court is against the Tenant and Guarantor on the first question, they say that the Rental Determination is vitiated by error in any event. The principles for challenging rental determinations are well-established.”
120I have determined the issue as to the application of the Retail Leases Act favourably to the defendants – assignee tenant and guarantor. Lest the matter go further, however, I should also deal with the second or “fallback” argument on behalf of the tenant and guarantor.
121As to the principles governing review of rental determinations, Messrs Hopper and Kelly referred to the seminal judgment of McHugh JA (as he then was) as a member of the New South Wales Court of Appeal in Legal and General Life of Australia Limited v A Hudson Pty Ltd (1985) NSWLR 314, 335-6. They referred also to the judgment of Nettle JA (as he then was) in AGL Victoria v SPI Networks [2006] VSCA 173, [51] and [53] and the judgment of Gillard J in Commonwealth of Australia v Wawbe Pty Ltd [1998] VSC 82.
122They said this approach had been adopted and endorsed both by the Court of Appeal and the Trial Division of the Supreme Court of Victoria, referring to Bevendale Pty Ltd v Lucky Eights Pty Ltd [2020] VSCA 312; Serene Hotels Pty Ltd v Epping Hotels Pty Ltd [2015] VSCA 228; Higgins Nine Group Pty Ltd v Ladro Greville St Pty Ltd [2016] VSC 244; Red Gum Developments Pty Ltd v G8 Education Limited [2020] VSC 142.
123They said that “the Valuer’s Charter” was to be found at Clauses 11.1.4 and 11.1.5 of the lease, specifically requiring the valuer to make his or her valuation “in accordance with the criteria set out in s37(2) of the [Retail Leases] Act”. Section 37(2) is quoted above [51]. They said that the valuer had not been guided, as s37(2) of the Act, as incorporated into the lease, required him to be by reference to the rent obtainable at the time of the review in a free and open market between a willing landlord and willing tenant in an arm’s length transaction, because three of the seven lease arrangements which he treated as comparable was an arm’s length transaction. (Outline, [39]-[44])
124This contention, however, was not pressed at trial and may be therefore put to one side.
Ground 2 – failure to disregard tenant’s cabins
125Messrs Hopper and Kelly said:
“The Determining Valuer had regard to seven transactions as comparable rental evidence. The Determining Valuer noted, in relation to one of those transactions, ‘the 38 tenant owned tourist sites were excluded in the calculation of rent’. The Determining Valuer did not note that an of the other six transactions involved tenant owned cabins. The strong inference is that the cabins were not tenant-owned in the other six transactions.” (Outline, [46])
126Therefore, they said, that in treating six transactions:
“as comparable to the lease without adjustment, the Determining Valuer implicitly took into account the value of the cabins in those transactions and, in so doing, failed to disregard the value of tenant’s fixtures and fittings. The Determining Valuer’s bare assertion to the contrary should not be accepted. (Outline, [47])
127Mr Hopper and Mr Kelly said that photographic evidence showed that the cabins at Lake Fyans were “self-evidently fixtures”. They said “that the comparable transactions to which the valuer had regard had built in them through the inherent synthesis of the rent process, the value of landlord owned cabins”. (T99, L3-6)
128They agreed that the method used by Mr Danaher reached a valuation by reference to “the number of powered sites on the premises”. (Ibid, L23)
129They said that, according to the valuation, there were 327 sites; 42 park owned sites, being 36 cabins and 6 ensuites; 6 powered sites; 68 annual sites and 150 unpowered sites. The 177 figure adopted by the valuer represented 327 minus 150. (T100, L29 – T101, L4) These 150 are the unpowered sites. (T101, L9)
130Therefore, said Messrs Hopper and Kelly, Mr Danaher “bundles together the 26 cabins, the six en suites [sic], the 67 powered sites and the 68 annual sites”. (Ibid, L11 and 13) This would entail treating as homogenous a group which were in fact heterogenous. (Ibid, L14-16) They said “importantly built into that are the tenant owned cabins”. (Ibid, L19-20) The valuer’s statement that he had disregarded the value of tenant’s fixtures therefore was “mere lip service”. (T105, L27-28)
131They said (T106-7), the same criticisms would be made of Mr Danaher’s secondary and tertiary methods of assessment which he used as “checks” on his primary determination.
132Mr Peters said that whether a chattel becomes a fixture depends upon the answer to the questions of fact identified by the Court of Appeal in Valuer-General v AWF Prop Co 2 Pty Ltd [2021] 65 VR 327 [86]-[91]. He said the defendants bore the burden of proving that the cabins were fixtures and “on the evidence, has not discharged that burden”. (Outline, [96]-[97])
133According to Mr Peters, logically, if Mr Danaher had regard to tenant’s fixtures in analysis of “comparables”, how could that mean that he “had regard to the value of the Cabins at the Premises?”. (Ibid, [101]) In any event, he said that, consistently with the ruling authorities, if there were such a mistake it would not be reviewable.
134Mr Danaher, in his treatment of the seventh and last of the lease arrangements which he regarded as “comparable” and which guided him in fixing his valuation, commented with respect to the property at Main Road, Clare stated “Of note, the 38 tenant owned tourist sites were excluded in the calculation of rent”. (CB 453)
135Consideration of this “comparable” therefore would not exhibit the vice alleged by Messrs Hopper and Kelly. Unlike the Clare property, which was the subject of a 21-year lease, all of the other “comparables” had five-year leases and mostly with a multiplicity of five-year options to remove. On the face of it, those rental valuations, if properly made, would have been guided inter alia by s37(2) of the Retail Leases Act and, again, would not exhibit the vice alleged by Messrs Hopper and Kelly.
136If I were wrong in this, the method adopted by Mr Danaher in being guided by the number of powered sites would be calculated to “strip out” the value of the cabin. A powered site with a cabin is ascribed the same value in the calculation as a powered site without a tenant owned cabin.
137I should add that the photographic material and the nature of cabins is supportive of there being fixtures rather than mere chattel. If, as Mr Peters contended, the cabins were chattels, it would seem to be even more contrary to principle to value than for rental purposes.
Tenant’s outgoings
138Mr Hopper and Mr Kelly noted that the valuer was required to have regard to the terms of the lease and “the landlord’s outgoings to the extent that the tenant is required to contribute to those outgoings”. They referred to Clause 11.1.4 of the lease and s37(2)(a) and (c) of the Retail Leases Act. The question as to the validity of the valuation is posed upon the premise that the Retail Leases Act applies (contrary to the conclusion that I have reached based on the issue presented relative to the Ministerial Determination).
139They said, in that event, despite the provisions of the lease the notion of ss52 and 94 of the Retail Leases Act would render the landlord responsible for repair and maintenance. They continued:
“… the rent n [sic] those comparable transactions must reflect the fact the tenants in those transactions did not need to pay for repair and maintenance under s.52 of the RLA 2003 and would, as a result, have been willing to pay more in rent.” (Outline, [57] and [58])
140Mr Peters said, how could a consideration of leases that might:
“require the landlord … to bear the maintenance expense … mean that [Mr] Danaher did not have regard to the Committee’s outgoings for the Premises to the extent that Halski [was] liable to contribute to them? (Outline, [111])
141If there was a mistake, as alleged, it was not reviewable.
142In his reply, Mr Peters said:
“How, without a full set of ledgers, knowing what money had been spent on outgoings, such as maintenance, from some third party caravan park, could the valuer possibly make an adjustment? This is exactly why it’s left to the experience.” [viz the experience of the valuer] (T112, L20-24)
143The valuation task committed by the parties to Mr Danaher assumed that the Retail Leases Act did not apply to the subject lease. Therefore, on a very material point based on this assumption, the valuer was comparing apples with oranges as regards the costs of repair and maintenance, if they are to be regarded as “outgoings”.
144Both counsel, I thought, were prepared to make the assumption that a landlord’s costs of repair, in discharge of its duty to repair under s52 of the Retail Leases Act, could be characterised as an “outgoing”. On reflection, I am sceptical that that is correct.
145Part 5 of the Retail Leases Act is headed “Rent and Outgoings”. Divisions 1-3 deal with the issue of rent and Division 4 deals with outgoings. Paragraph 39 relieves the tenant from paying outgoings:
“… except in accordance with provisions of the lease that specify—
(a)the outgoings that are to be regarded as recoverable; and
(b)in a manner consistent with the regulations, how the amount of those outgoings will be determined and how they will be apportioned to the tenant; and
(c)how those outgoings or any part of them may be recovered by the landlord from the tenant.”
146The landlord’s obligation to repair is to be found in Division 4 (s52). Despite its being located there, there is nothing which would bring the landlord’s cost of repairs under the s39 regime. Indeed, the existence of s52 would preclude that being done.
147In my view, a tenant’s covenant to repair, whether framed in accordance with Clause 3 of the boilerplate provisions of this lease, or additional provision 2, is not apt to render the cost of performance of the repair obligation an outgoing – as that word is used in the Retail Leases Act. It would follow, therefore, that whether the Retail Leases Act applies or does not apply, the cost of repairs, whether done by landlord or tenant, would simply be outside the outgoings equation. On that view, the valuer has made no error.
148If I were wrong in that, I am inclined to think that Mr Peters is correct in saying that, consistently with the seminal judgment of McHugh JA (as he then was) in the Legal and General case, an error such as alleged would not lead to the assessments being set aside.
Disposition
149I will direct the parties to bring in short Minutes to give effect to these reasons.
Costs
150
I have not heard submissions on the question of costs and so I will reserve them.
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Certificate
I certify that these 32 pages are a true copy of the judgment of his Honour Judge Macnamara delivered on 16 October 2025.
Dated: 16 October 2025
Jodie Daniel
Associate to His Honour Judge Macnamara
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