Yosiffidis v H E I M Nominees Pty Ltd
[2000] VSCA 250
•8 December 2000
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 7751 of 2000
| ALEXANDER YOSIFFIDIS AND DANA YOSIFFIDIS | |
| Appellants | |
| v. | |
| H.E.I.M. NOMINEES PTY. LTD. | Respondent |
APPLICATION ON SUMMONS
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JUDGES: | BUCHANAN and CHERNOV, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 8 December 2000 | |
DATE OF JUDGMENT: | 8 December 2000 | |
MEDIUM NEUTRAL CITATION: | [2000] VSCA 250 | |
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr. G. Golvan Q.C. with Mr. A. Hanak | Mingos & Co. |
For the Respondent | Mr. M. Phipps Q.C. with Mr. M. Osborne | Mason Sier Turnbull |
BUCHANAN, J.A.:
Chernov, J.A. will deliver the first judgment.
CHERNOV, J.A.:
On 3 November 2000 a Vice President of the Victorian Civil and Administrative Tribunal effectively rejected the applicants’ claim that the allegedly offending provisions of clause 2 of the Additional Provisions (“clause 2”) of the retail tenancy agreement in question which were rendered void by the legislation, were capable of severance and, therefore, the remaining provisions of clause 2 were not void. His Honour declared that clause 2 was void by reason of the operation of the Retail Tenancies Act 1986 and the Retail Tenancies Reform Act 1998 and ordered that the annual rent review under the lease was to be determined in accordance with clause 11 of the lease from October 1999, although on one reading of the decision, the new rent was to be paid from October 1996.
His Honour then ordered the applicants to pay the respondent’s rent accordingly. His Honour further held that the respondent was not required to provide the applicants with a disclosure statement when the lease was assigned to the applicants on 30 September 1985.
The applicants seek, pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998, leave to appeal against his Honour’s decision. They also seek an order that the decision of his Honour be stayed until the hearing and determination of the appeal or further order.
The test for determining whether leave should be granted in the context of a proposed appeal of this nature is whether the decision on the point of law raised by the applicant is attended by sufficient doubt and whether substantial injustice will result if the decision is allowed to stand. See Secretary to the Department of Premier
and Cabinet v. Hulls [1999] 3 V.R. 331 at 335-7 per Phillips, J.A.
A principal issue raised by this application is whether the portion of the rent review clause which is rendered void by the legislation can be properly severed from the remainder of it, so as to leave the remaining scope of the clause unchanged. The legislation seems to operate to strike down rent review provisions which permit only an upward review of rent or only a review to an amount not less than the rent payable in respect of the period immediately preceding the rent review date. Clause 2 (c), however, permits only a review which produces a higher rent or one which results in the new rent being no less than that paid for the immediately preceding period. It is clear that such a limitation is rendered void by the legislation.
The applicants propose that the offending part of clause 2(c) be blue-pencilled leaving the clause to provide that, when the lessee objects to the amount of new rent proposed by the lessor pursuant to clause 2(a), the rent will be adjusted up or down depending on what was the movement in the CPI during the relevant period. The clause so read, it was claimed, would not operate counter to the legislation.
His Honour held, correctly in my view, that the legislation does contemplate that offending provisions of the rent review clauses be severed where that is legally possible, leaving the remainder to operate, but concluded that blue-pencilling clause 2 (c) as was proposed by the applicants would amount to an impermissible, substantial re-drafting of the lease, resulting in a fundamental change to the substance of the rent review agreement between the parties.
But it should be borne in mind that the parties have agreed that the rent review be conducted not in accordance with clause 11, which contemplates review to market, but pursuant to clause 2 which is based on the movement in the CPI. It is plain that, to the extent that clause 2 fixes a floor below which the new rent cannot be fixed, it is void. It is arguable, however, that a modification of the clause as proposed by the applicants would leave the substance of the agreement between the parties intact and that it would not constitute an impermissible re-drafting of it. It is also arguable that the modified clause would be capable of sensible operation and would cater for rent review based on the movement in the CPI, which is what was contemplated by the parties when they entered the lease. The respondent would be well able to protect its position by ascertaining, prior to the giving of the notice under clause 2(a), whether the relevant movement in the CPI would produce a lower rent after the review. If that were the case, the respondent could refrain from instigating a rent review.
We have been told by Mr. Golvan who appeared for the applicants that, if the rent is reviewed in accordance with clause 11 it would rise to $79,000 per annum; currently it is in the order of under $25,000 per annum. Thus, the effect of his Honour’s decision would be to require the applicants to pay an extra rent of approximately $50,000 per annum.
Mr. Phipps, who appeared for the respondent, made it plain that the respondent does not claim any increase in rent prior to October 1999.
In all the circumstances, it is my view that both the requirements for leave to appeal have been made out and, therefore, leave should be granted.
In relation to the application for a stay of his Honour’s order pending the hearing and determination of the appeal, the respondent submitted that his Honour’s order should operate until the hearing and determination of the appeal but that any increase in the rent resulting from the review, be paid into a trust account.
Mr. Golvan contended that paying the extra rent would produce such hardship to the applicants that they might not be capable of paying it with the result that the respondent might terminate the lease and bring the applicants’ business to a premature end. It is a difficult question whether in the present circumstances a stay order should be made. It is likely, however, that the appeal material can be put together quickly; it is essentially confined to documents and an agreed state of facts. Furthermore, counsel for the applicants has indicated that he has instructions to give an undertaking to expedite the prosecution of the appeal.
In the circumstances, in my view, the justice of the situation requires an order for a stay of his Honour’s order pending the hearing and determination of the appeal.
BUCHANAN, J.A.:
I agree.
The orders the Court will make are that:
1.The applicants have leave to appeal from a decision of the Victorian Civil and Administrative Tribunal made on 3 November 2000.
2.Upon the applicants by their counsel undertaking to prosecute the appeal with all due expedition the execution of the decision of the Tribunal is stayed pending the hearing and determination of this appeal or further order.
3. The cost of the application be costs in the appeal.
MR. PHIPPS:
I was wondering about the ability to obtain some orders from the Court that can overcome the necessity of filing appeal books in the normal course where it may be possible to rely upon material.
BUCHANAN, J.A.:
It is within the Registrar’s province and he is the appropriate person to decide whether that is so. I would have thought if the parties sensibly cooperated that could be done, and it seems to me to be in the interests of both sets of parties, and we are prepared to order that the appeal proceed with such expedition as it can be given.
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