Bryant v Stack [1996] RSLT 17

______________________________________________________________________ _____ [1996] QRSLT 17 RETAIL SHOP LEASES ACT In the matter of Dispute No 61 of 1995 KEVIN ROY BRYANT - Claimants -and- HOWARD LEE STACK - Respondent DECISION Given on 19 March 1996 in Brisbane ______________________________________________________________________ ________ -- 1 of 7 -- 2 The claim is for a refund of sums alleged to be overpayments of outgoings, and the counter claim is for rectification of a lease. The land on which the demised premises is erected is described as Lot 1 on Registered Plan 134939. We refer to the demised premises as "the property." On 15 June 1979, RADCON Pty Ltd, the then registered proprietor of the land, granted a lease over the premises to JACKELSHELF (No. 14) Pty Ltd for a period of ten years, with two options of renewal, each being for a further period of ten years. The option renewal clause, being Clause 8.1 of the lease, provided:- "If the Lessee shall desire to take a renewed Lease of the Demised Premises for a further term of TEN (10) YEARS from the expiration of this Lease and shall give to the Lessor not less than three (3) months' previous notice in writing of such desire and provided the Lessee is not then in default under the provisions of this Lease whether express or implied the Lessor will at the cost and expense of the Lessee grant to the Lessee a renewal of this Lease for such further term at a rental to be agreed upon between the parties but otherwise upon the same terms and conditions as are contained in this Lease with the exception of this clause provided that if agreement as to the rental for such further term shall not be reached then such rental shall be referred for determination by an expert as provided in Clause 3.2 to determine the then current open market rental for the Demised Premises and further provided that the rental for such further term shall not in any event be less than the amount of rental being paid hereunder at the end of the original term. 8.2 If the Lessee should exercise the option contained in Clause 8.1 hereof and if the Lessee shall desire to take a renewed lease of the Demised Premises for a further term of TEN (10) YEARS from the expiration of the option period contained in Clause 8.1 hereof and shall -- 2 of 7 -- 3 give to the Lessor not less than three (3) months previous notice in writing of such a desire and provided the Lessee is not then in default under the provisions of this Lease whether expressed or implied the Lessor will at the cost and expense of the Lessee grant to the Lessee a renewal of this Lease for such further term at a rental to be agreed upon between the parties but otherwise upon the same terms and conditions as are contained in the Lease with the exception of this Clause provided that if agreement as to rental for such term shall not be reached then such rental shall be referred for determination by an expert as provided in Clause 3.2 hereof to determine the then current open market rental for the Demised Premises and further provided that the rental for such further term shall not in any event be less than the amount of rental being paid hereunder at the end of the option period contained in Clause 8.1 hereof and further provided that the exercise of any option herein contained shall not entitle the Lessee to remain in occupation of the Demised Premises except with the prior consent in writing of the Lessor for a period of greater than THIRTY-TWO (32) YEARS from the date of commencement of this Lease." After passing through an intermediate owner's hands, the respondent became the registered owner of the fee simple of the land on 26 June 1985. JACKELSHELF (No. 14) Pty Ltd assigned its interests in the lease to PUNJAB Pty Ltd on 11 June 1987, and in November 1987, PUNJAB Pty Ltd assigned its interest in the lease to Messrs M N and S Kar, and Messrs P K & J Chaterjee. By notice dated 11 July 1988, Messrs Kar and Chaterjee exercised the option under the lease for a period of ten years. A lease agreement was executed on 16 July 1990, commencing on 21 March 1989, and a new lease was entered into. By clause 4.1(a) of the 1979 lease, the following was provided:- "The Lessee shall pay to the Lessor on demand an adjustment in respect -- 3 of 7 -- 4 of any year of this Lease which shall be FORTY (40) per centum of the excess payable by the Lessor in respect of the total of the outgoings for the full year ended the 31st December or the 30th June prior to the commencement of that year (whichever be the later) over the sum payable by the Lessor in that respect for the full year ended the 31st December or the 30th June as the case may require prior to the commencement of the Lease PROVIDED THAT in the event that the outgoings were not incurred for the full period of that initial year by reason of the fact that the building in which the Demised Premises are situated had not yet been completed or occupied (in whole or in part) for the whole period of that year, the outgoings for that initial year shall for the purposes of this clause be deemed to be those that would have been payable were the building completed and so occupied for the whole of that year and were the costs thereof set at the rates applicable at the commencement of the Lease." That clause again appears in the lease dated 16 July, 1990. On 16 March, 1992, the present claimant became the assignee of the lease. The claimant alleges that the base on which the increase of outgoings is to be calculated is the year 1988/89, whereas the respondent alleges that the base year is 1978/79. This conflict of interpretation is the major issue before the Tribunal. In interpreting the 1990 lease, we rely mainly on the terms of the lease itself, although we look briefly at some surrounding circumstances. With regard to the latter, there is no indication that there was ever any discussion between the then tenant and the respondent as to what would in effect have been a substantial reduction of payments by the tenant. The respondent gave evidence and it was never suggested to him that this question was ever raised or discussed. This view of the facts is further supported by the then tenant continuing to pay outgoings on the basis of the 1978/79 year. We do not take into account in -- 4 of 7 -- 5 interpreting the contract of lease that the present claimant also paid outgoings on that basis for some time. The Chairman has directed the other Members of the Tribunal:- (a) That a lease granted as a result of the exercise of an option is a new lease and not a continuation of the old lease; (b) That in interpreting the lease, the Tribunal may look at its terms and provisions; (c) That the Tribunal may look at the surrounding circumstances at the time when the new lease was entered into. With regard to the terms of the lease, we take the view that, although it is a new lease, a very relevant surrounding circumstance is that it was granted as a result of a legal right flowing from the option under the old lease. The option clause provided that the new lease was to be "at a rental to be agreed upon between the parties but otherwise upon the same terms and conditions as contained in this lease." This would clearly imply that the operative year for outgoings was 1978/79. The provision to clause 4.1(a) of the new lease is the same as that in the old lease. It makes reference to outgoings "that would have been payable were the building completed and so occupied for the whole of that year and were the costs thereof set at the rates applicable at the commencement of the lease." This is a very relevant clause when a building is not completed or had only been completed some short time before the lease commenced. It would be irrelevant if the operative date were some ten years after the building work had been completed. We have already referred to there being no evidence of any discussion or decrease of the amount of outgoings. -- 5 of 7 -- 6 We have come to the conclusion that clause 4.1(a) of the lease is not completely unambiguous and that we are entitled to look at the points referred to above in its interpretation. On this basis we have come to the view that the operative period or base for the calculation of outgoings is 1978/79. On this basis, we decide against the claimant. In the Tribunal's opinion and in the light of its findings, there is no need for an order rectifying the lease. However, as the Chairman asked Counsel to make submissions in this regard, he expresses the following views: Section 108 of the Retail Shop Leases Act of 1994 defined the Tribunal's functions as to hear retail tenancy disputes that are within its jurisdiction. Section 109(1) defines the jurisdiction of the Tribunal as being to hear retail tenancy disputes. "Retail tenancy dispute" is defined in s.5 to mean:- "Any dispute under or about a retail shop lease , or about the use or occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into." The question arises whether a claim for rectification of a retail shop lease is under or about the shop lease. In order for it to be under the lease, it seems to the Chairman that the lease itself cannot be disputed. The Tribunal must accept the lease as executed by the parties and then interpret it. The word "about" does not necessarily apply such a restriction. It seems to determine that adding this word was intended to increase the jurisdiction of the Tribunal. This view is supported by the wide jurisdiction given by the Act overall. Examples are sections 83(1) which empowers the Tribunal to make the orders which it considers to be just to resolve the retail tenancy dispute. So, too, Section 110(1) gives the Tribunal general powers to do all things necessary or convenient to be done for, or in relation to, the performance of its functions. The Chairman takes the view that, on the proper reading of the definition of "retail tenancy dispute," the Tribunal has the power to order rectification of a -- 6 of 7 -- 7 lease. Finally, the Chairman expresses the view that this is not a case where a new party was misled by the terms of the lease. The claimant entered into the lease knowing that it would have to pay a proportion of disbursements, and did so for several years before relying on the interpretation of the lease on which he now relies. Chairman -- 7 of 7 --