Pyrmont Point Pty Ltd v Albert Victor Westacott

[2014] NSWCATCD 42

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Pyrmont Point Pty Ltd v Albert Victor Westacott [2014] NSWCATCD 42
Decision date:	08 April 2014
Before:	K Rickards, Senior Member
Decision:	The application is dismissed
Catchwords:	Retail leases; jurisdiction
Legislation Cited:	Retail Leases Act 1994
Cases Cited:	Wilson v Sydney Markets Limited [2009] NSWADT 256
Category:	Principal judgment
Parties:	Pyrmont Point Pty Ltd (applicant) Albert Victor Westacott (respondent)
Representation:	DH Murr SC (applicant) DA Smallbone (respondent) JDK Legal (applicant) RJI Legal (respondent)
File Number(s):	COM 14/00227
Publication restriction:	Nil

REASONS FOR DECISION

1. The dispute between the parties in these proceedings relates to determination of the rent payable following the exercise of an option to renew a lease agreement between the parties in respect of shop premises at Shop 5, 42-44 Harris Street Pyrmont NSW ("the premises").

1. Following consideration of this dispute during a directions hearing on 29 January 2014, orders were made listing the preliminary issue of jurisdiction for determination "upon the papers" and providing for filing and service of additional submissions to those which had been previously filed in the proceedings. The respective submissions filed by the parties have now been considered in order to reach this decision.

1. It is common ground that the premises are used as a delicatessen and off licence bottle shop, and hence would be considered a "retail shop" for the purposes of the Retail Leases Act 1994.

1. A lease agreement in respect of the premises was originally entered into between two apparently related corporate entities in March 2004 ("the Lease").

1. The term of Lease was expressed to commence on 19 March 2004 and to terminate on 18 March 2009, with the lessee having four consecutive options to renew the term of the Lease each for a period of five years.

1. The original lessor transferred ownership of the premises to the respondent at some time during the initial 5 year term; by 19 March 2009 the Lease had been renewed for a further 5 year term with the respondent noted as lessor. Also by that time, the Lease had been assigned to a company named Pirrama Pty Ltd as lessee.

1. Pursuant to the terms of a Deed of Consent to Assignment of Lease dated 15 September 2010, the respondent consented to Pirrama Pty Ltd assigning its rights under the Lease to the applicant.

1. The applicant seeks an order for appointment of a retail valuer pursuant to the provisions of the Retail Leases Act, because the parties cannot agree on the amount of rent properly payable for the term of the renewed lease. The respondent argues that the subject lease is a lease for a total term of 25 years at the option of the lessee which commenced on 19 March 2004 which means that the Tribunal has no jurisdiction pursuant to the provisions of section 6(1)(b) of the Retail Leases Act.

1. Section 6 of the Retail Leases Act is as follows:

6 Leases to which Act does not apply

(1) This Act does not apply to any of the following leases of retail shops:

(a) (repealed)

(b) leases for a term of 25 years or more (with the term of a lease taken to include any term for which the lease may be extended or renewed at the option of the lessee),

(c) leases entered into before the commencement of this section,

(d) leases entered into under an option granted or agreement made before the commencement of this section,

(e) any other lease of a class or description prescribed by the regulations as exempt from this Act.

(2) This Act does not apply to any lease referred to in this section that assigned to another person after the commencement of this section.

Note: Part 9A provides for certain exemptions regarding Sydney (Kingsford-Smith) Airport

1. The applicant contends that the term "the lease" referred to in section 6(1)(b) refers to a current lease which in turn can be extended or renewed only once. The applicant's further submission arising from this is that if any further options are later exercised they are not extensions or renewals of the current lease but are extensions or renewals of successive future leases. It is therefore contended that a proper and literal reading of the section leads to the result that the exclusionary provision of section 6(1)(b) only applies if the term of the current lease together with the term of the next lease, being the lease which arises immediately upon exercise of an option under the current lease, combine to be 25 years or more.

1. The respondent submits that the Retail Leases Act does not apply to the Lease because it is a lease for 25 years within the meaning of section 6(1)(b) of the Retail Leases Act. An alternative proposition was also put by the respondent in the event that the Tribunal were to find that the RetailLeases Act did apply to the lease, but it is not proposed to deal with that alternative submission within this decision.

1. It can be observed that the conditions contained within the Lease have essentially not been varied since March 2004 and that the present term of the Lease is in accordance with the term of the second option period recited within the Lease agreement created in 2004.

1. There has been no contractual variation of the respective rights and obligations of the lessor and lessee since 19 March 2004 when the Lease commenced between the original lessor and lessee. After careful consideration of the submissions put forward by each party, the Tribunal respectfully disagrees with the applicant's proposition that the "current lease" falls to be considered separately from the original Lease entered into in 2004 for the purpose of deciding whether the provisions of section 6(1)(b) apply.

1. In considering this matter, the Tribunal must have regard to what it sees as the plain and literal meaning of section 6, which is that: the Retail Leases Act does not apply to any lease for a term of 25 years, and; the term of the lease is to be taken to include "any term for which the lease may be ... renewed at the option of the lessee."

1. The Tribunal in this regard concurs with the statement made by Fox JM in Wilson v Sydney Markets Limited [2009] NSWADT 256, that where a lease provides a right of occupation which could run for 25 years or more at the discretion of the lessee, a lease for a term of 25 years or more is created for the purposes of section 6 of the Retail Leases Act and the jurisdiction of this Tribunal is accordingly excluded. Whilst the submissions in reply on behalf of the applicant are correct in saying that Fox JM's comments about this issue in Wilson were not made in the course of directly resolving the principal issue in dispute, they should not simply be disregarded or assumed to be ill-considered for that reason. They are accepted as an accurate and appropriate approach toward determination of the jurisdiction issue in the present proceedings:

"(15) I agree with Mr Williams - but perhaps not for the same reasons. Section 6 of the Retail Leases Act contemplates a lease for a term of 25 years or more and by way of explanation goes on to include in such term "any term for which the lease may be extended or renewed at the option of the lessee". It refers to the conventional situation where a lessor grants a term of years followed by one or more terms which the lessee (not the lessor) elects. The proper analysis is that (assuming full compliance with the other lease covenants and requirements) the lessor has given the term of years which is the sum of the initial term and the option terms. The only party who has a choice in the matter is the lessee, the lessor has no choice at all."

1. It follows that the provisions of the Retail Leases Act do not apply to the subject agreement and to the premises. No words or conduct by or on behalf of either party which could otherwise arguably constitute a waiver or an estoppel can operate to create jurisdiction in the Tribunal where there is none. If the present matters in dispute cannot be resolved, the perhaps unfortunate situation is that the parties must take their dispute to another forum.

1. Accordingly, the application is dismissed. No order is made as to costs.

(signed)

K Rickards

Senior Member

Civil and Administrative Tribunal of New South Wales

8 April 2014

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 24 July 2014