[2004] VCAT 1450

1 The Tribunal declares that the respondent has the responsibilities prescribed by Section 25 of the Retail Tenancies Reform Act 1998 as inserted by Section 107 of the Retail Leases Act 2003 in respect of the lease between the parties dated 27 September 2001.

2 The respondent must replace the missing toilet cubicle door and missing wash basin in Shop 32 Centreway Arcade, Preston and fill the hole in the wall between the two toilet cubicles.

1 Through a number of companies, the Mazzei Group owns about 10 shops at the Preston Market clustered around the Centreway Arcade. This proceeding concerns Shops 32, 32A and 32B in the Centreway Arcade which are operated as a delicatessen by Aegean Food Import Export Pty Ltd, a company controlled by Mr Isaak Isaakidis. Aegean has operated from this location since 1986. On 4 November 1994 the owner of the reversion, R. & C. Mazzei Nominees Pty Ltd, executed a lease of the three premises in favour of Aegean, granting it a term of five years commencing from 1 October 1994. Mr and Mrs Isaakidis signed as guarantors. The lease was in the 1989 Law Institute of Victoria form of Lease of Real Estate for Commercial Property. It provided for a rent of $37,960 per annum payable by instalments of $3,163.33 monthly commencing on 1 October 1994 (and therefore inferentially in advance). The last day for the exercise of the first five year option of renewal was 1 July 1999. Special Condition 1 provided for the indexation of the rental by an increase of 3% for the second year and in subsequent years by reference to the movements in the Consumer Price Index (All Groups) for Melbourne in accordance with a fairly elaborate formula. Special Condition 2 provided for indexation by reference to the Consumer Price Index in the second and subsequent years of any new term. The special condition, says that this indexation is to be `in accordance with Special Condition 11 hereof''. There is no special condition 11, so the reference presumably should be to Special Condition 1. Special Condition 3 provided that despite the general provisions obliging the tenant to indemnify the landlord for a variety of insurances:

The tenant should be responsible only for insurance for glass and public risks and the landlord will insure the premises.

2 Special Condition 4 provided for a rental abatement with respect to Shops 32A and 32B `should the landlord obtain a permit for the proposed addition'.

3 Shop 32 constituted the main portion of the tenancy. Shop 32A was a small area in the left hand rear corner with a separate entrance on the left hand side of the building. Shop 32B is a small area at the front right hand corner which was earmarked as a stairwell in the event that a second storey was added to the building in which Shop 32 is located. In 1994 and thereafter it was used by Aegean for storage purposes related to its delicatessen business. Shop 32A was occupied by Mr Paino who operated a shoe repair business. He was a sub-tenant of Aegean.

4 In April 2000 Mr Paino ceased business and vacated Shop 32A. According to Mr Ross Mazzei (the father in the Mazzei family), Mr Paino suffered a serious heart attack and had to retire. According to Mr Isaakidis, Mr Paino left because of persistent dampness in Shop 32A.

5 In 1997 a car crashed into the right side of the rear of the shop. This area, at least when the shop was initially built in the 1970s, contained two lavatory cubicles each with a wash basin. R. & C. Mazzei Nominees Pty Ltd made a claim on its insurer and Ascot Constructions Pty Ltd, one of whose directors was Mr Peter Mazzei (the son of Mr Ross Mazzei) and now the manager of R. & C. Mazzei Nominees Pty Ltd, was the successful tenderer to repair the damage. Mr Peter Mazzei says that the damage was repaired `by mid to late February 1998'. Mr Isaakidis says that whilst the external work was done at that time, internal repairs were not completed so that one of the lavatories (the male) was wholly out of action and one of the wash basins was gone. The door to the female lavatory was said to `bind'. Mr Peter Mazzei said that he was not personally involved in carrying out the repair works but attended to inspect immediately after the collision. The male lavatory set was, he said, missing even at that stage.

Approximately six months before the end of the 1994 lease I spoke to Mr Mazzei [presumably Mr Ross Mazzei] about renewing it beyond 1999. I did not give him anything in writing but Mr Mazzei said it was okay.

7 As it was, no new lease was executed until the 27th of September 2001. This new lease differed in some respects from the 1994 lease. This lease provided for a term of five years commencing 1 October 2001 and included two further five year options. This entails granting an additional five year option to Aegean because otherwise the number of options provided for would have been reduced by one when the 2001 lease was entered into. The 2001 lease was in the form of a document styled `This Deed of Renewal of Lease' which annexed a copy of the 1994 lease with the deed itself apart from its front cover consisting of some three pages. The third page consisted entirely of execution clauses, the first page mainly of the parties, namely R. & C. Mazzei Nominees Pty Ltd, Aegean and the Isaakidises, together with recitals. The operative provisions were contained in some three clauses. Clause 1 provided for the lessor [R. & C. Mazzei Nominees] to grant and the lessee [Aegean] to accept `a new lease of the premises for the term of five years commencing the first day of October 2001'. The lease was to be on the same terms as the 1994 lease which was attached. Clause 2 set out amendments being the term rental of $3,439.49. Clause 2.3 headed `Rent Review' was in the following terms:

(b) The rent shall be reviewed annually in accordance with the increase in the Consumer Price Index ("CPI").

8 Clause 2.4 granted Aegean an option for two further terms of five years. Clause 2.5 headed `Special Conditions' provided

These words were struck out and replaced with manuscript

in full force and effect except to the extent ... expressly amended by this Deed. The Lease as amended by this Deed must be read as a single integrated document incorporating the amendments effected by this Deed.

10 Aegean had not been paid the full rent provided for in the 1994 lease. According to Mr Ross Mazzei, Mr Isaakidis on behalf of Aegean had failed to adjust his rent upwards on a number of occasions when it was increased by Consumer Price Indexation. In addition once Shop 32A was vacated by Mr Paino, Aegean reduced the rent it was paying by the amount of sub-rental previously paid by Mr Paino. Mazzei Nominees wanted to iron out this difficulty. Mr Ross Mazzei said that since Aegean was a long-standing tenant he had agreed to requests by Mr Isaakidis that these adjustments be dealt with in due course. Mazzei Nominees had its accountant, Frank DeMarco and Associates prepare a document in the form of a tax invoice dated 6 September 2001 and headed `Summary of Arrears'. This document stated an `amount outstanding as at 1/10/01 of $26,094.28'. This document proved the basis for negotiation. Mazzei Nominees modified the amount claimed.

11 According to Mr Ross Mazzei and his son, Mr Peter Mazzei, Mr Isaakidis on behalf of Aegean agreed to pay the arrears, or at least the arrears which could be proven to exist from the 1994 lease, once the new 2001 lease was signed. Aegean's position was that it was agreed between it and Mazzei Nominees that:

(a) Aegean would make no claim for damages for the term of the 1994 lease for a number of structural and repair problems with the premises in consideration of which

(b) Mazzei Nominees Pty Ltd would drop the claim for rental arrears but

(c) Following the execution of the new lease, Mazzei Nominees would rectify these structural and other problems.

12 The Mazzeis deny that their company agreed either absolutely or conditionally to forego its claim for rental arrears for the term of the 1994 lease.

13 Prior to the execution of the Deed of Renewal in 2001 Mr Isaakidis says that a number of documents were submitted to his company by Mazzei Nominees to extend its leasehold interest. Mr Isaakidis said:

These documents given to me did not include the terms as we had agreed and they were not signed.

The documents in question were prepared by Mr Frank Zita, Solicitor, who was then acting for Mazzei Nominees. The precise objections taken by Mr Isaakidis were not gone into in any detail in evidence. It is noteworthy that Mr Zita's documents employed a later addition of the Law Institute of Victoria standard form lease including for instance a GST `pass through' clause which unsurprisingly was not to be found in the 1989 edition which had been used for the 1994 lease. Aegean had also sought to be relieved of the tenancy of Shops 32A and 32B with a consequent reduction in rental. These issues amongst others were taken up in a letter dated 27 September 2000 from Aegean's solicitors to Mr Zita. The negotiations were desultory. GSM (Aegean's solicitors) sent a letter to Mr Zita dated 14 November suggesting that lease documents forwarded by Mr Zita to GSM under cover of a letter dated 12 September should be amended so as to reflect the points raised by GSM in its letter to Mr Zita dated 27 September and then `signed by our client and returned to you without delay'. This letter received no response. Accordingly, GSM sent a follow up letter dated 23 May 2001 which again seems to have elicited no response. About this time Mazzei Nominees ceased to retain Mr Zita with regard to this transaction. Mr Isaakidis after lengthy discussion with Mr Ross Mazzei and latterly with his son, Mr Peter Mazzei, suggested that Aegean's Solicitors, GSM, should document the renewal for extension of the tenancy. It was by this means that the Deed of Renewal of 27 September was drawn by GSM.

14 No disclosure statement in accordance with the schedule to the Retail Tenancies Reform Act 1998 was furnished by Mazzei Nominees at or prior to the execution of the 27 September deed.

15 One of the effects of deleting the special conditions which had previously existed in the old lease was on the face of the document to render Aegean liable to indemnify Mazzei Nominees for the cost of fire insurance on the premises, a liability from which it had been free under the 1994 lease.

16 Meanwhile, no resolution was reached on the rental arrears claimed by Mazzei Nominees for the term of the 1994 lease. As a result it commenced proceedings in the Magistrates' Court.

17 There was also dispute as to the issue of Goods and Services Tax. Since the 1994 lease had been entered into before the enactment of the statutes which imposed Goods and Services Tax none was payable. The tax was however payable upon the 2001 lease. Through its solicitors, GSM, Aegean complained by letter dated 23 December 2002 that Mazzei Nominees had not quoted an Australian Business Number. GSM said:

We have advised our client that pursuant to Section 12-190 of the Taxation Administration Act, our client must withhold 48.5% of any payment of rent to the landlord.

18 The same letter addressed by GSM to Comlaw, a law firm which by then was acting for Mazzei Nominees, asserted that the rental payable under the 2001 lease was `GST inclusive' and therefore Aegean `requires a tax invoice in order to claim the GST input tax credit'. Finally GSM complained on behalf of Aegean that no disclosure statement had been given to Aegean `prior to the signing of the agreement dated 27 September 2001'. Under cover of a letter dated 6 December 2002, Comlaw sent a notice on behalf of Mazzei Nominees demanded payment of alleged arrears of rent of $939.04, $500 costs, $48.23 interest accruing from day to day. The notice threatened that failure to remedy the alleged default would lead the landlord

TO RE-ENTER THE PREMISES in accordance with Clause 7 of the lease and Clause 1 of the Deed of Renewal and END THE LEASE.

19 The Magistrates' Court proceeding was commenced by complaint filed in the Magistrates' Court at Melbourne on 11 December 2002. It sought $22,683.56 against Aegean as tenant under the 1994 lease and Mr & Mrs Isaakidis as guarantors. Aegean and the Isaakidises took a number of defences. They said that part of the claim was more than six years old and was barred by the Limitation of Actions Act 1958. Secondly, they relied upon the alleged agreement reached on or about 27 September 2001 to the effect that Mazzei Nominees agreed to forego claims for arrears of rent under the 1994 lease in consideration of Aegean foregoing its claim for damages by reason of the unfitness of the premises after the car collision in 1997. Finally, Aegean and the Isaakidises said that part of the rent should have been suspended by reason of the damage to the premises in 1997 and that amount should be set off against the claim. The complaint eventually came on for hearing before Mr Lauritsen on 3, 4 and 5 December 2003 and 16 January 2004. Mr Lauritsen delivered written reasons on 29 April 2004, awarding $12,348.42, interest of $6,233.01 and costs of $8,389.90 against each respondent. Meanwhile, on 25 March 2003 Aegean commenced the present proceeding against Mazzei Nominees. In its original application and points of claim it sought the following relief:

A. A declaration that the applicant [that is Aegean]:

(b) is not liable to pay rent to the respondent [that is Mazzei Nominees]

B. An order that the respondent repay to the applicant all payments of rent made under protest.

F. Such further and other relief as the Tribunal sees fit.

20 The reference to payment of money under protest arises thus: following the service of the Notice of Default, Aegean took the view on the advice of Mr Mangopoulos of GSM that it was entitled to withhold payment of all rent because it had not been given a disclosure statement. Nevertheless, Mr Isaakidis says that he was advised by Mr Mangopoulos that failure to pay the rent may lead to Mazzei Nominees changing the locks in the premises. Mr Isaakidis says he thought the more prudent course was to make payment of the rent. He sent a cheque in the sum of $5,628.25 under cover of a letter dated 17 February 2003. It was in the following terms:

When we signed the first contract I 1986, I asked you which way I would be paying the rent.

You told me then, that you personally would come by the shop and collect the rent, otherwise you would call and give directions for payment.

This method of payment has been followed until January 3, 2003.

That is: for 17 whole years you came by our property at 32 Centreway, Preston, where my business is housed, and collected cash and a cheque, always in person.

At the beginning of February 2003, you did not come by to collect the rent. I, however, as always, had the payment ready. I waited for an extra week but you still did not appear. I then called my lawyer for directions and he informed me that he had received an epistle by you, in which you complained about not receiving payment for the month of February.

Hence, I wonder, since you did not come by the shop to receive the payment, and since you did not telephone to give directions, how could I pay you and in what manner?

I have decided, therefore, with this epistle (following relevant advice by my lawyer) to forward to your lawyer the cheque that you did not come to collect!!

Please, inform me promptly, in which manner you do want me to effect payments in the future.

21 Following that letter Comlaw wrote to GSM on behalf of Mazzei Nominees stating that an amount of $548.23 remained outstanding, hence the Notice of Default had not been complied with. The letter gave Aegean seven days to rectify the breach `otherwise we shall seek our client's instructions to take steps and take possession of our client's premises'. By letter dated 27 February 2003, GSM stated that `the rent being paid by our client is paid under protest.'

22 Aegean filed Amended Points of Claim on 3 May 2004. These amended Points of Claim sought the same relief as the original points with the following added as paragraph BA, namely:

An order that [Mazzei Nominees] do all things necessary to rectify the defects described in the attached report.

23 The `attached report' is presumably an expert report dated 9 March 2004 from Mr Gary Sayers of BSS Design Group. The items which the report identified for rectification were as follows:

The toilets are damaged due to a vehicle accident and although the exterior masonry wall was repaired, the toilet repairs have not been completed.

The sewer pipe regularly blocks and requires replacement.

Rising damp exists to the masonry walls in the northwest store room and a leaking pipe, require repair.

The roof has leaked and the shop wall and ceiling require repair.

24 At some time in May 2004 workmen engaged by Mazzei Nominees carried out some work at the premises. Aegean's expert, Mr Gary Sayers summarised that work as follows:

1. Female WC - the basin waste pipe has been reconnected and is operational.

2. Male WC - the WC pan and cistern have been installed and are operational.

25 He remarked however that the male WC cubicle still lacks a door and

As a result of installing a new waste pipe through the dividing wall of the toilets, a large gap exists around the pipe. Prior to painting of the wall, this requires filling.

26 In its Amended Points of Claim Aegean contends that Mazzei Nominees was obliged to furnish a disclosure statement prior to execution of the lease of 27 September 2001. Since it did not, by virtue of Section 8 of the Retail Tenancies Reform Act 1998, Aegean was not liable for the rent and was entitled to withhold the rent. The rent that was paid, it said, was paid under protest. Further, it said that to induce Aegean to sign the 2001 lease, Mazzei Nominees `represented and warranted that it would repair damage to Shop 32A and toilets at the premises'. It says those repairs were not carried out and in the circumstances Mazzei Nominees was guilty of breach of warranty and misleading and deceptive conduct contrary to Section 9 of the Fair Trading Act 1999. Aegean says it suffered loss as a result of the breach of warranty and misleading and deceptive conduct being loss of the amount that could have been earned by sub-letting Shop 32A. Finally, Aegean says that as from 1 November 2003 Section 25 of the Retail Tenancies Reform Act 1998 as substituted by Section 107 of the Retail Leases Act 2003 obliged Mazzei Nominees to maintain the premises in good repair. It relied upon the report of Mr Sayers as indicative of the breach of that obligation and claimed to have suffered loss and damage as a result of the breach of the repair obligation. The amount of money sought to be recovered as money paid under protest is calculated in separate documentation provided in the sum of $67,473.79.

27 Mazzei Nominees denied that it was obliged to give a disclosure statement with respect to the 27 September 2001 lease. In any event it contended that even if it were so obliged, in the circumstances it said that Aegean was estopped from contending that the 27 September 2001 lease was:

(a) A retail premises lease within the meaning of the Retail Tenancies Reform Act 1998; and

(b) A lease within the terms of Section 8(1) of the Retail Tenancies Reform Act 1998.

28 Moreover it said Aegean had waived any requirement for a disclosure statement. It said that Mr Isaakidis had represented that the lease of 27 September 2001 was a renewal of the lease dated 4 November 1994 and that Aegean knew or ought to have known that Mazzei Nominees was acting in reliance on the representation that the Deed of Renewal of Lease was a renewal of the lease dated 4 November 1994. Mazzei Nominees said it relied upon this representation by accepting a rent of $3,439.49 per month charging a lesser rental for part of the premises being Shop 32A, granting an additional option to renew for a period of five years and not providing Aegean with a disclosure statement. Therefore, said Mazzei Nominees, since it had relied upon Aegean's representation it was inequitable to allow Aegean to rely on the provisions of the Retail Tenancies Reform Act to deny liability for rent and seek to recover the rent as moneys paid in protest. With regard to the repair issues, Mazzei Nominees referred to Aegean's obligation under the terms of the lease to clean and maintain the property. It said that any problems with the sewer drain arose out of misuse of the premises by Aegean. It denied that Aegean had suffered any loss as a result of failure to repair the premises, concluding:

In the circumstances Section 25 of the Retail Leases Act 2003 has no application and does not entitle the applicant to loss and damage.

29 It seems to be common ground that these premises are retail premises within the meaning of the various statutes which have governed retail premises leases in Victoria in the last 20 years, viz. the Retail Tenancies Act 1986, the Retail Tenancies Reform Act 1998 and the Retail Leases Act 2003. To determine which of those statues governs the 2001 lease is important because of the three statutes, it is only the Retail Tenancies Act 1998 which imposes the swingeing penalty of forfeiting the landlord's rent for an indefinite period of time if the landlord is obliged to furnish a disclosure statement and does not do so.

30 Mr Hancock on behalf of Mazzei Nominees submits that the 2001 lease is governed by the Retail Tenancies Act 1986 and not by the Retail Tenancies Reform Act 1998. He observed that the 1994 lease was governed by the Retail Tenancies Act 1986 and that the 2001 lease should be regarded as a `renewal' of the 1994 lease, hence governed by the 1986 Act and not by the 1998 Act. Whether it is proper to regard the 2001 lease as a mere `renewal' is the subject of dispute. For the moment I am prepared to accept that view of things for the purpose of analysing which statute applies. The Retail Tenancies Reform Act, Sections 1 to 7 came into force on 28 April 1998 and the rest of the Act on 1 July 1998 according to Section 2(1) of that statute and the Victorian Government Gazette, 18 June 1998, page 1511. Section 4(1) of the 1998 Act states:

(1) This Act applies to a retail premises lease that is entered into after the commencement of this Section including one entered into under an option provided under a retail premises lease that was entered into before that commencement.

31 The 1994 lease was entered into prior to the commencement of the 1998 Act and therefore was not governed by it. It is common ground that it was governed by the 1986 Act. Accepting Mr Hancock's submission that the 2001 lease was to be regarded as a lease `entered into under an option provided under a retail premises lease' that was entered into before the commencement of the 1998 Act, viz. the 1994 lease, Section 4(1) clearly provides that such lease is governed by the 1998 Act and not the 1986 Act.

32 I am fortified in my view that this lease is governed by the 1998 Act and not the 1986 Act by the following: the Retail Leases Act 2003 includes a raft of amendments to the 1998 Act and some transitional provisions. The 1998 Act is repealed by Section 118 with effect from 1 May 2003. Section 119(4) of the Retail Leases Act 2003 however provides:

For the avoidance of doubt it is declared that the effect of section 4(1) of the Retail Tenancies Reform Act 1998 is, and always has been, to apply that Act to a retail premises lease within the meaning of that Act that was entered into on or after 1 July 1998 including one entered into under an option provided under such a lease that was entered into before that date.

Section 119(1) of the 2003 Act provides that the 1998 Act despite its repeal, subject to the amendments made to it by the 2003 Act continues to apply `to a retail premises lease to which it applied immediately before its repeal'.

33 The 1998 Act requires disclosure statements to be given in three circumstances:

(1) Entry into a retail premises lease by a prospective tenant (Section 8)

34 Section 23 is obviously irrelevant. There has been no assignment. Of the other two sections, the more obviously applicable is Section 17 which provides:

(a) A tenant has an option under a lease for a further term; or

(b) A landlord proposes to renew a retail premises lease -

the landlord must give to the tenant, at least seven days before the end of the current term of the retail premises lease, a disclosure statement ...

35 In Antonino Giuseppina Ensabella and Sons Pty Ltd v Players on Down Under Pty Ltd (2000) V ConvR 54-626 a landlord let premises for five years commencing 16 January 1994. The assignee tenant purported to exercise an option for renewal of the lease. The original lease was governed by the 1986 Act and for the reasons given with respect to the 2001 lease in the present case, the renewed lease was governed by the 1998 Act. The Court of Appeal held that Section 17 of the 1998 Act had no application. It dealt only with the situation where the lease being renewed, that is the expiring lease, was governed by the 1998 Act. It had no application, according to the Court, where the expiring lease was governed by the Retail Tenancies Act 1986.

36 It is in light of this Court of Appeal decision no doubt that Aegean has placed no reliance on Section 17 of the 1998 Act.

37 This leaves Section 8 which provides, inter alia:

8(1) At least seven days before a prospective tenant of retail premises enters into a retail premises lease, the landlord must give to the prospective tenant -

(a) A disclosure statement in the form of a schedule providing information about the matters set out in the schedule; and

(b) If the retail premises lease is, or any of the terms of the retail premises lease are, in writing, a copy of the proposed lease or a copy of the written terms of the proposed lease; and

(c) A copy of the retail tenancies information booklet published by the Minister under Section 7.

(2) If a tenant has not been given a disclosure statement in accordance with sub-section (1) before entering into a retail premises lease -

(a) The tenant may withhold payment of rent until the end of seven days after the landlord gives the tenant a copy of the disclosure statement; and

(b) The tenant is not liable to pay the rent attributable to the period before the landlord gave the tenant a copy of the disclosure statement; and

(c) The tenant may give the landlord a written notice of termination at any time before the end of seven days after the landlord gave the tenant a copy of the disclosure statement.

38 For reasons which are not obvious the tenant in Ensabella placed no reliance on Section 8. The applicability of Section 8 to a situation where a retail premises lease governed by the 1986 Act was renewed after the commencement of the 1998 Act was considered by Judge Davey, then a Vice-President of this Tribunal in Khodr v Foo Qan Eng Holdings Pty Ltd (No. 2) (2001) V ConvR 58-558. The lease in question was entered on 3 October 1994 and was governed by the 1986 Act. It had a term of five years. The tenant purported to exercise an option to renew the lease for a further term of years on 8 September 1999, that is, after the commencement of the 1998 Act. The tenant received no disclosure statement until 24 May 2000. It claimed a refund of the rent paid to the landlord between 30 September 1999 when the lease was renewed and 24 May 2000. Judge Davey dismissed this claim. After quoting the relevant parts of Section 8 he continued:

82. The form of a disclosure statement is contained in the schedule to the Act. The type of detail required by the form relates to information which is already in the Tenant's possession. The significant matter that may change is the amount of the rent. However that information is often unknown by the parties until after a rental review.

83. The use of the language "a prospective tenant of a retail premises lease" makes it clear that the person or entity referred to is not an existing tenant in the premises but a new tenant. I am reinforced in this view having regard to the potential consequences which may result in the event that a disclosure statement is not given to a person in the position of a person in the position of a prospective tenant.

84. On any view an existing tenant wishing the renewal of a lease is not a prospective tenant and it would be straining the language in what I consider would be an unjustifiable way to extend the requirement of a disclosure statement to existing tenants.

39 If His Honour's reasoning is applicable here it would appear to provide a complete answer to Aegean's claim to recover rental paid under protest. Whatever view one takes of the protest, if no disclosure statement were required, there would be no basis to contend that the rent was not in truth payable. Mr Northrop on behalf of Aegean submitted that I should be concerned only with the ratio decidendi of Khodr's case and not any additional and strictly unnecessary dicta. He referred to Woolcock Street Investment Pty Ltd v C.D.G. Pty Ltd [2004] HCA 16; (2004) 78 ALJR 628, 640-651 [58] - [62] per McHugh J. Mr Northrop submitted that the ratio of His Honour's determination was to be found at paragraph 84. He submitted that His Honour's remarks at paragraph 83 of his determination were merely dicta. According to Mr Northrop:

There are a variety of situations where a tenant seeking a lease is not in the same position as that described in Khodr, for example:

(a) A tenant who is a tenant will, such as one who enters into possession of premises during negotiations for lease;

(b) A tenant who enters into a lease on different terms than the existing lease during the period of the existing lease;

(c) A tenant who has no contractual or statutory right of renewal.

The present lease is not within the ratio of Khodr's case:

(a) The deed of renewal was executed only after protracted negotiations which canvassed matters such as whether Shops 32A and 32B should be included as well as the state of repair of the premises and rent.

(b) There is no suggestion that the respondent considered itself bound to grant the new lease.

(c) As a matter of law, the respondent was not bound to renew the lease unless the applicant paid arrears of rental: see Clause 12.2.1 of Section 14(5)(a) of the 1986 Act.

(d) The 2001 lease did not commence from the expiry of the 1994 lease (contrast Khodr v Foo Qan Eng Holdings Pty Ltd (No .3) 2001 V ConvR 58-559 at [10]).

(e) Under the 2001 lease the applicant assumed additional obligation to reimburse the respondent's insurance payment (although the respondent now seems to concede this was a mistake, contrast the notice of default dated 21 May 2004 ...)

(f) The applicant did not have in its possession any information about additional insurance premiums.

(g) The 2001 lease was entered into on the basis of representations and agreement made during 2001.

41 According to Mr Northrop there are a number of reasons why in the present case the disclosure statement would have been useful in the way that it would not have been in Khodr's. It would have clarified:

(c) What if any, representations were made by the landlord to the tenant during the leasing negotiations.

(d) An acknowledgement by the tenant that it was satisfied `all agreements made with the landlord are fully reflected in' the statement.

(e) An acknowledgement by the landlord that he was satisfied `all agreements are fully reflected in' the statement.

42 Uninstructed by Judge Davey's analysis in Khodr I would have concluded that in circumstances such as the present Section 8 of the 1998 Act did apply and there was an obligation upon the landlord to provide a disclosure statement. Nevertheless in the interests of consistency and comity I thought it appropriate to apply His Honour's reasoning in Rogowski v Bedelis (2001) V ConvR 58-562 and in Temptress Nominees Pty Ltd v Constantinou (2001) V ConvR 58-563. Neither Counsel suggested that I should adopt any different view here. The question is do any of the matters relied upon by Mr Northrop take this matter outside the principle of Khodr's case? Obviously the application of a statutory provision cannot depend upon a flexible approach as to the utility of that provision's operation in a particular case. Either Aegean was immediately prior to entering the 2001 lease a prospective tenant within the meaning of Section 8 or it was not. Whether a disclosure statement in this case would in the events that have occurred prove more useful than a disclosure statement would have proved in Khodr's case cannot be the criterion for the section's operation in a particular case. The consequence of the section's operation is drastic, the forfeiture of rent for an indefinite period. It may also provide the ground for a restitutionary claim to recover rent which has been paid perhaps for a period of years therefore in my view there is every reason to strive for a construction which will give clear criteria as to whether a disclosure statement is required or not. To put it another way, a construction which provides a `bright line' should be preferred if one is available.

43 To entertain the relatively fine distinctions relied upon by Mr Northrop is to blur rather than clarify this very important question. In any event when analysed the points of distinction raised by Mr Northrop are less impressive than his initial formulation would suggest. He stressed the lengthy period of negotiation from September 1999 to September 2001 taking me in detail to various items of correspondence. I have referred to some but by no means all of them in my narrative above. Nevertheless, the upshot of those negotiations was to agree upon a rental - one would have thought an essential one way or another in the taking of a new term and always the preferred course rather than a reference to the expense and uncertainty of a rental determination by a valuer and some inconsequential amendments to the term of the lease itself. The operative provisions of the lease were furnished by a copy of the old one. The only significant effect of the re-jigging of the special conditions was to impose an apparently additional insurance liability on the tenant. As it was the tenant never accepted that liability and never paid. The landlord eventually in the course of the hearing before me conceded that the change in insurance obligations was a mistake. Though no one sought an order of rectification of the lease upon the evidence before me, one could clearly have been made if asked for. I cannot regard this mistake therefore as significant. A re-jigging of the clause for the indexation of rent by reference to the Consumer Price Index is scarcely significant anyway. It was not suggested that this change would result in any actual difference in the way that rent was indexed. The balance of the special conditions would seem to be simply overtaken by time and irrelevant. The parties may have argued at length but ultimately with the exception of adding a further option, they went back to a simple repetition of the terms of the old lease.

44 An amendment to an existing lease which adds an additional term or perhaps an additional option might be regarded as surrender and re-grant rather than a mere amendment to the existing term. But where an option is renewed, clearly the additional term is a new lease. The fact that had the 1994 lease during its term been amended so as to add an additional option would have worked a surrender and re-grant seems to me to be beside the point.

45 The precise position of Aegean before the 2001 lease came into effect is problematic. Section 14 of the Retail Tenancies Act 1986 made special provision for options to renew retail tenancies leases. Sub-section (3) provided that if such a lease contained an option exercisable by the tenant to renew the lease for a further term `the landlord must notify the tenant in writing of the date after which the option is no longer exercisable at least three months before that date'. If the notice is not given, the time for exercise of the option is extended to `the day that is three months after the landlord gives the tenant the notice' (see sub-section (4)) and according to the same sub-section `the lease continues ... until that date'. While Mr Isaakidis said that he exercised his option to renew at some unstated date by word of mouth notice with Mr Ross Mazzei there is no detail as to when that exercise of option took place (assuming within the circumstances it could be regarded as a proper exercise of the option). The deed of renewal executed on 27 September 2001 recites that the renewal option was exercised but gives no detail of when and how. As the tenant would have it, this indicates that there was in truth no exercise of the option. Mr Northrop referred to and relied upon Judge Davey's determination in a later stage of Khodr's case. Khodr v Foo Qan Eng Holdings Pty Ltd (No. 3) (2001) V ConvR 58-559 at [10] where His Honour concluded that if an option to renew was exercised during a statutory extension of the term of the expiring lease, the term of the new lease retrospectively commences immediately following the end of the contractual term of the original lease not its extended term. The effect of His Honour's analysis is shown in the following hypothetical example: `L' lets Blackacre to `T' for a term of three years, including an option to renew `T's' lease for a further three year term. `L' fails to comply with Section 14(3) of the Retail Tenancies Act 1986 with regard to the retail tenancies lease, finally giving notice to `T' one month after the expiry of the contractual term of the lease. `T' gives notice of exercise of the option a further one month later. According to Judge Davey's analysis these facts result in `T' having a total tenure of six years, not six years and two months, the two months being the additional one month following the end of the first contractual term until the date when the Section 14(3) notice is given and a further one month pending the exercise of the option. Mr Northrop says that since the 2001 Deed of Renewal unequivocally commenced the new term from 1 October 2001, a date two years distant from the expiry of the first contractual term, this demonstrated that the 2001 lease was a totally new lease and not a renewal.

46 In Seacrest Pty Ltd v Apriaden Pty Ltd [2000] VSCA 75; (2000) 1 VR 567, 578 at [31] Phillips JA as a Member of the Court of Appeal, considered the same problem. He said:

If during the period of that extension (the statutory extension of the old term) the tenant were to exercise the option and to do so purely as to both form and substance, an agreement for lease would be brought about, but from what date would the new lease commence? Would it commence from the date of the exercise of the option (the statutory extension of the old term, then necessarily given way to the commencement of the new) or would the renewal take effect only at the end of the old term extended by subs (4) - that is, on the day which is three months after the landlord's giving of the notice required by subs(3)?

47 His Honour said there was no easy answer to the question. In the same case Brooking JA said that the extended period of the old lease would be brought to an end once a new lease came into effect [2000] VSCA 75; (2000) 1 VR 567, 574 at [17]. These of course are dicta. It is noteworthy however that neither of their Honours appears to have entertained the solution which Judge Davey applied to the problem. In the circumstances despite the desirability of uniformity in decision making in the Tribunal and the particular weight that should be given to decisions of judicial members, I cannot regard Judge Davey's solution to this problem in Khodr's case as authoritative since it is at odds with dicta in the Court of Appeal. The court of Appeal once again left open the issue in Pirea Building Suppliers Pty Ltd v Graphics 103 Pty Ltd (2002) V ConvR 54-6007, 62,461 column 2 at [24] where Phillips JA considered the same issue. Again His Honour did not contemplate the answer given to this problem by Judge Davey.

48 I return then to the central question whether Section 8 of the Retail Tenancies Reform Act 1998 applied to the creation of the 2001 lease. Mr Northrop's submission was that the ratio of Khodr's case is to be found in paragraph 84 of His Honour's reasons. Accepting that submission it seemed that Judge Davey concluded that a sitting tenant exercising an option to renew referred to in his reasons as `an existing tenant' is not to be regarded as a prospective tenant and is therefore outside the protection of Section 8 of the Retail Tenancies Reform Act 1998. Whilst the argument in cross-examination in this case focussed upon whether the 2001 lease was to be regarded as a `new lease' as one of the operative provisions would suggest or `a deed of renewal' as its title with emphasis being laid upon the degree to which the terms of the 2001 lease reproduced or did not reproduce those of the 1999 lease, it is obvious that this is not the central question. The central question is was Aegean a `prospective tenant' immediately prior to its execution of the 2001 lease? I express no view as to the particular instances raised by Mr Northrop as to when a `sitting' tenant could still be regarded as a prospective tenant where the sitting tenant was immediately before the lease `a tenant at will' or a tenant on different terms or a tenant with no contractual or statutory right of renewal. In my view in the circumstances of this case, Aegean could not conformably with Judge Davey's analysis in Khodr's case be regarded as a `prospective tenant'. Aegean was a sitting tenant which took a renewed five year lease term on premises that it had been in possession of since 1986. The terms of the new tenancy were almost identical with this last tenancy for a term of years as created by the 1994 lease which by force of section 14 of the Retail Tenancies Reform Act received a statutory extension. Mr Northrop observed that by virtue of Section 14(5) of the 1986 Act and Aegean's unremedied defaults under the 1994 lease of which notice had been given to it re the arrears of rent, Aegean had no right to a new term. So much may be accepted but Mazzei Nominees did not press the point and rely upon Section 14(5).

49 Since no disclosure statement was required a claim for the repayment of rental paid must fail.

50 I should note one matter which does not appear to have attracted any submissions from either side. A definition of prospective tenant was inserted into the Retail Tenancies Reform Act 1998 by the Retail Leases Act 2003. That definition was as follows:

"Prospective tenant", in relation to a lease entered into under option provided under a retail premises lease to which the Retail Tenancies Act 1986 applied (the 1986 lease), includes a tenant under the 1986 lease;

51 The purpose of that amendment seems to be to reverse Judge Davey's determination in Khodr's case as to the application of Section 8 of the 1998 Act. This new definition was inserted by Section 100 of the 2003 Act which also inserted a new sub-section (8) to Section 3 of the 1998 Act to the effect that the definition of prospective tenant `only has effect from 1 November 2003'. This is perplexing indeed. The Retail Leases Act 2003 commenced on 1 May 2003. By virtue of Section 11(1) it applies to a retail premises lease that is entered into after the date the 1998 Act is repealed. See Section 118. There are extensive amendments to the repealed 1998 and 1986 Acts in Parts 12 and 13 of the 2003 Act. Amendments to repealed statutes seem somewhat bizarre, nevertheless the explanation would appear to be that even after their repeal by virtue of saving provisions in the 2003 Act and the 1998 Act, the two repealed statutes continue to apply to leases entered into before 1 May 2003 depending upon their date. The 1998 Act has a new Section 25 inserted by Section 107 of the 2003 Act imposing extensive repair and maintenance obligations upon landlords which had no previous statutory existence. This provision is said to have effect only as from 1 November 2003. Logically this must mean that retail leases entered into before 1 May 2003 and governed by the Retail Tenancies Reform Act 1998 are taken to provide as from 1 November 2003 that the landlord is obliged to maintain the premises in accordance with the new Section 25. In so far as the terms of the lease are amended by statutory implication perhaps years after the lease was entered into this is in effect retrospective legislation; but to give the provision any other meaning would deprive it of any effective operation. The definition of `prospective tenant' is more difficult to deal with still. Section 8 is relevant only to the creation or formation of a new lease. No lease entered into after 1 May 2003 (or for that matter, 1 November 2003) of retail premises can be governed by the 1998 Act which `sunsetted' on the last instant of 30 April 2003; but what effect then is the new definition of prospective tenant? Does it mean that where a tenant renewed a five year lease granted for the first time on 1 July 1997 on 30 June 2002 without any disclosure statement (the landlord relying upon Khodr's case) as from 1 November 2003 the tenant is relieved of the obligation to pay any rent until a disclosure statement relative to the renewal in 2002 is served? If not, what does the insertion of the definition achieve? The expression `prospective tenant' is used in the 1998 Act additionally with regard to business plans (Section 9) and the requirement for special disclosure statements with regard to franchising (Section 44). Neither of those usages would appear to provide the answer to the paradox which I have described since they both refer to the creation of new leases which as at 1 November 2003 must be governed by the 2003 Act and not the 1998 one. The only other reference to prospective tenants is in Section 12A(2)(d) which is another amendment to the 1998 Act inserted by Section 103 of the Retail Leases Act 2003. This section lays down rules as to the fixation of `current market rent' under rent reviews to market and requires regard to be had to `rent concessions and other benefits offered to prospective tenants of unoccupied retail premises'. Whilst the definition appears capable of some sensible application to this provision, it is not obvious why it would be thought important to ensure that the `prospective tenants' referred to in this section would include those holding under the 1986 Act.

52 I am unable to perceive the purpose of the insertion of this definition. Applying it literally however, I asked myself was Aegean a `prospective tenant' within the meaning of that definition as at 1 November 2003? The answer is no. First, Aegean was a sitting tenant but in any event Aegean was a tenant under a lease governed by the 1998 Act, not the 1986 Act as at 1 November 2003 and all days thereafter down to the date of these reasons.

53 Next I turn to the claim for repairs and rectification. I have already described the terms of the expert report of Mr Gary Sayers. Mazzei Nominees says that all relevant items have been rectified now. The evidence before me was that the deletion of a hot water line to Shop 32A has rectified the dampness problem complained of there. I also had evidence from Mr Mercica, a specialist drain blocking plumber who described the extensive operations he carried out in November 2003 to unblock the drains at the premises. I was shown a video recording of the interior of the sewer drain serving the premises taken by a probe inserted by Mr Mercica after he had concluded his unblocking operation. I am satisfied that the drain was properly unblocked in November 2003. There is no evidence on the video recording that the sewer drain required replacement. There is no evidence for instance of the intrusion of tree roots. Mr Isaakidis conceded that there had been no recurrence of water leaking through the slab floor of the shop as he had complained of earlier. Mr Mercica said that he observed some water leaking though the slab floor of the shop but only in circumstances where due to his unblocked operations the sewer drain was under the pressure of 300 to 400 lbs/in2, a quite abnormal situation. The inference I draw is that once the sewer drain was unblocked and not subjected to unusual pressures there was no leaking problem and that the sewer drain remains serviceable. Work was carried out in May last year rectifying most of the problems with the toilets at the rear of the shop but the male toilet cubicle lacks a door and one of the original washbasins is missing. Mazzei Nominees says that no further work needs to be done and the missing basin was misappropriated by Aegean. It also alleges that the male toilet which was missing until last year was misappropriated by Aegean.

54 I reject the contention that Aegean somehow did away with the male toilet suite and the hand basin. Mr Peter Mazzei conceded that whilst his company was involved in rectifying the damage to the building after the motor impact in 1997, he was not involved in the supervision. He said that the toilet suite was missing shortly after the impact. In my view the likely explanation for these missing fittings is that they were removed by the trades that were involved in re-instating the brick wall for one reason or another and simply were not replaced. The same goes for the door to the male toilet cubicle. A hole remains to be filled following the replacement of the male toilet cubicle.

55 According to Mr Isaakidis Mazzei Nominees agreed unconditionally to rectify all these matters both those remaining undone and those attended to in May 2003 which included the replacement of the male toilet suite, the reconnection of a previously unconnected hand basin and so on, so soon as the 2001 lease was executed. Mr Peter Mazzei says that the agreement between the parties was that these matters would be rectified so soon as Aegean cleared the rental arrears from the 1999 lease, therefore it was following payment on the order made in the Magistrates' Court in April that the work was carried out in May 2003. Mr Peter Mazzei's account of events seems to me to be more plausible. As the law stood in 2001 Mazzei Nominees was under no obligation to rectify these matters. On the other hand it had a substantial rental arrears bill which it was seeking to collect upon. It is as plausible that Mazzei Nominees would agree to carry out these repairs and maintenance subject to the arrears of rent being paid as it is implausible to suggest that Mazzei Nominees would have undertaken an unconditional obligation to do these repairs which it was not obliged to do under the lease without any quid pro quo from Aegean in settling the rental arrears claim. In so far as Mazzei Nominees delayed doing these works until May 2003 it was justified in so doing. It follows that Aegean's claim for breach of warranty and misleading and deceptive conduct must fail, at least in so far as it relates to all of the matters which were ultimately rectified in May 2003.

56 Should those outstanding matters, viz. the missing cubicle door and the missing hand basin and the hole in the wall be rectified?

57 With effect from 1 November 2003 the Retail Tenancies Reform Act was amended to impose an obligation of repair on landlords of retail premises. The new Section 25 is in the following terms:

(1) A retail premises lease is taken to provide as set out in this section.

(2) The landlord is responsible for maintaining in good repair--

(a) the structure of, or fixtures in, the retail premises; and

(c) the appliances, fittings or fixtures provided under the lease by the landlord relating to the gas, electricity, water, drainage or other services.

(3) However, the landlord is not responsible for maintaining those things in good repair if--

(a) the need for the repair arises out of misuse by the tenant; or

(b) the tenant is entitled or required to remove the thing at the end of the lease.

(4) The tenant may arrange for urgent repairs (for which the landlord is responsible) to be carried out to those things if--

(a) the repairs are necessary to fix or remedy a fault or damage that has or causes a substantial effect on or to the tenant's business at the premises; and

(b) the tenant is unable to get the landlord or the landlord's agent to carry out the repairs despite having taken reasonable steps to arrange for the landlord or agent to do so.

(a) the tenant must give the landlord written notice of the repairs and the cost within 14 days after the repairs are carried out; and

(b) the landlord is liable to reimburse the tenant for the reasonable cost of the repairs.

(6) This section only has effect from 1 November 2003.

58 In my view, the missing basin is a fixture in the retail premises, or rather was and the missing cubicle door was part of the structure. As such it is the landlord's responsibility to replace them under Section 25. The wall between the toilets is clearly part of the structure. There was some debate with regard to the cubicle door as to whether it was necessary to replace it. Mr Sayers referred to the Building Code of Australia. Mr Hancock on behalf of Mazzei Nominees submitted it was not demonstrated given that this building dated from the 1970s that the Building Code of Australia applied or that the requirement referred to by Mr Sayers relative to airlocks applied having regard to the lack of precise evidence of the area of the various spaces in the toilet area. In my view the door of the toilet cubicle is an inherent part of its structure and Section 25 requires the replacement of the cubicle door independently of any operation of the Building Code of Australia. The same goes for the missing hand basin and the hole in the wall.

59 With regard to these outstanding items no evidence has been placed before me indicating that any monetary loss and damage has been suffered as a result of these matters remaining unrectified from 1 November 2003 until now or if it matters from the date of payment of the arrears under the 1994 lease until now. Hence there should be no award of damages, nor in my view would there be any justification for any abatement of rent because these matters did not significantly affect the enjoyment of the premises, they continued trading. Nevertheless, Mr Northrop submitted that there should be a declaration that Mazzei Nominees has the obligations under Section 25 of the Retail Tenancies Reform Act 1998 as amended and I believe in the circumstances it is proper for the avoidance of doubt and to clarify the continuing obligations of the parties for such an order to be made.

60 I have heard no argument on costs and so that question should be reserved.

61 Had I found that Section 8 of the Retail Tenancies Reform Act obliged Mazzei Nominees to furnish a disclosure statement prior to entering into the 2001 lease Mr Hancock put elaborate submissions to me relying upon well known authorities as to estoppel by representation that in the circumstances Aegean was estopped from relying upon the section. Given that I have ruled the primary point in Mr Hancock's favour it is strictly unnecessary for me to say anything as to these estoppel arguments. Nevertheless, I believe I should make the following observations. Mazzei Nominees could not have relieved itself of an obligation to give a disclosure statement if such obligation existed by inserting a provision in the Deed of Renewal of Lease stating:

The tenant dispenses with any disclosure statement and the landlord is relieved from any obligation to provide one.

62 If dispensation with a disclosure statement could not be achieved by this clear and straight forward device, how can it be that the arcane doctrines of the law of estoppel by representation can achieve indirectly what could not be achieved directly by contract? There is a general principle that estoppel cannot avail against mandatory provisions of a statute. The cases supporting this proposition are to be found at Part [35] of the section on Estoppel in Title 32 (Volume 24) of the Australian Digest. The point is made most clearly with respect to statutes protecting consumers and others such as land purchasers and business franchisees deemed in need of special statutory protection as the retail tenancies legislation in Victoria clearly treats retail tenants. See Beckford Nominees Pty Ltd v Shell Co of Australia Limited (1986) 73 ALR 373; (Petroleum Retailing Marketing Franchise Act 1978); Considine v Citicorp Australia Limited [1981] 1 NSWLR 657 (New South Wales Hire Purchase Act 1960); Gibson v Francis (1989) 5 BPR 11101 (New South Wales Conveyancing (Vendor Disclosure and Warranty Regulations) 1986; Conveyancing Act 1919).