Cafarm Pty Ltd v David Mark Newbold and Helen Newbold [1998] RSLT 9

[1998] RSLT 9 RETAIL SHOP LEASES ACT 1994 In the matter of Decision 55 of 1998 CAFARM PTY LIMITED - Claimant - and - DAVID MARK NEWBOLD and HELEN NEWBOLD - Respondents DECISION Given on 20 November, 1998, in Brisbane -- 1 of 4 -- Cafarm-v-Newbold Decision - Page 2 THE CHAIRMAN: The dispute in this matter has been partially resolved by discussion between the parties and concessions made, and what is left is a fairly narrow issue. This decision is delivered by me sitting alone, as the issues involved are entirely matters of law. I have therefore excused or discharged the other Members of the Tribunal. The decision which I now make relates to the rent review provisions of the lease between the parties, and is contained in the Items Schedule Second Part, a copy of which I attach to this decision. Section 27 and Section 36 of the Retail Shop Leases Act are the sections which must be interpreted or used in the interpretation of the rent review provisions of the lease. Section 27.2 provides that: "The reviews must be using only one basis for each rent review". And s.27.5 provides that: "If, under a retail shop lease, the rent is to be reviewed during the term of the lease or any renewal or extension of the lease using more than one basis for a rent review, the rent payable for the rental period after the timing of the review is the same as the rent payable before the timing of the review." The Items Schedule, Second Part, provides for rent review, and in clause 2 provides: "That the yearly rental for the third and fifth year of the original term and for the second and fourth rental years of the extended period shall be the current market rent for the demised premises as agreed between the parties, and in the event of non-agreement, that determined by a valuer appointed in accordance with the provisions of the Retail Shop Leases Act, as amended, with this proviso: PROVIDED ALWAYS that the yearly rental determined as aforesaid shall in no case be less than the yearly rental payable for the preceding rental period." It is contended that this provides for two bases for review, and therefore the rent applicable after review is the same as that applicable before review. The Retail Shop Leases Act must be considered as a whole under the normal laws or rules relating to the interpretation of an Act. Section 36(e) of the Act provides that a provision of a retail shop lease is void to the extent that it: -- 2 of 4 -- Cafarm-v-Newbold Decision - Page 3 "(e) provides for the rent of the leased shop to change on a particular review of the rent in accordance with whichever of two or more methods of calculating the change would result in the higher or highest rent." I have previously been called upon to interpret very similar provisions in a dispute between parties. I delivered my ruling in January of this year. I previously came to the conclusion in that ruling that the provision which I have referred to specifically, providing that the rent shall in no case be less than the yearly rental payable for the preceding rental review, is not a basis for review. I came to this conclusion on two grounds. The first was that the ordinary meaning of the words "basis for review" do not apply to a provision which in effect means that rent is not reviewed, but that a provision is made that a previous rental applies. I ruled then, and I was large influenced by s.36(e), that this is a provision for enforcement of a determination made under a review provision. I adopted the reasoning relating to s.36(e) more or less in these terms. That section is a so-called ratchet clause, providing for movement in one direction only. Such a clause is made void. If voided, it could not be used when considering the provisions of s.27.5. Upholding the claimant's argument would result in a situation in other cases of a practical result which would be against the intention of the Act, that is, if a review resulted in a decreased rental, then the previous rental would still apply. This would be contrary to the intent of the Act generally, as I read into s.36(e) and s.27.5. I therefore abide by my previous ruling, that is, that the review provisions do not provide for more than one basis of rental review. Mr Power has submitted that this is against the ordinary meaning of the word "change" as it appears in s.36.3. Prima facie this argument has some validity. Looking at the Act more carefully, it is perhaps unfortunate that this word has been used, but I still reject Mr P's argument in context. I take the view that "change" covers the position of no change, as well as a positive change. By consent I make orders in terms of the draft orders handed up to me, which I have marked "A" and signed: 1. That the lessee is not required to pay to the lessor an amount representing interest pursuant to clause 12.2 of the lease. 2. That the lessee is not required to pay to the lessor legal costs amounting to $463.50. 3. A declaration that the lessee is not required to pay to the lessor the sum representing contributions to the Sinking Fund as part of the outgoings payable under the lease from the date hereof. -- 3 of 4 -- Cafarm-v-Newbold Decision - Page 4 I further declare that the rent which applies for the third year of the lease is that as determined by the valuer Mr Byrne. (Sgd), Chairman. -- 4 of 4 --