Applicant v Respondent

LEASES AND TENANCIES - Retail leases - Rent review - Whether maximum cap on rent review contravenes s 35(2) of the Retail Leases Act 2003 - Legislative approaches - Remedial or ameliorating legislation - Ratchet clauses - Balance of rights and interests for landlords and tenants - Interpretation of Legislation Act 1984, s 35 - Krajcar v Eastern Central Real Estate Pty Ltd [2022] VSC 173 - Q St Kilda Tenancy Pty Ltd v Kane [2023] VCAT 75 - Roberts Family Enterprises Pty Ltd v Bekirofski [2023] VCAT 121 - Cote Noire Pty Ltd v Roberts Family Enterprises Pty Ltd [2024] VCAT 810 - Ross‑Hunt Pty Ltd v Cianjan Pty Ltd [2009] VCAT 829.

1 This proceeding is brought pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 ('the VCAT Act'). The applicant, Aldi Foods Pty Ltd (ACN 086 210 139) ('the Applicant'), seeks leave to appeal the orders of Acting Senior Member H Nash made on 10 July 2024 in the Victorian Civil and Administrative Tribunal ('VCAT' or 'the Tribunal') made in VCAT proceeding number BP1866/2022 ('the Orders'). The Tribunal published reasons for the making of these Orders ('Tribunal Reasons').[1] This proceeding was heard on 11 December 2023.

2 The Applicant is the tenant of a shop situated on part of the land at Northcote Shopping Centre, 5 Separation Street, Northcote ('the Premises'). The Applicant is the tenant of the Premises under a lease for a term of 15 years which commenced on 3 May 2007 with options for two further terms of 5 years each ('the Lease'). The Lease was granted by the then registered proprietor, Sporran Quentin Pty Ltd, on 2 June 2008. Northcote Shopping Centre Pty Ltd (ACN 624 599 748) ('the Respondent') became the registered proprietor of the Premises and entitled to the reversion under the Lease on 9 July 2018.

3 The dispute the subject of these proceedings is whether the rent review provisions of the Lease comply with the provisions of s 35 of the Retail Leases Act 2023 ('the RLA').[2] It is helpful to place the rent review issue in a broader factual context and so it is convenient to refer to the background facts as set out in the Tribunal Reasons:[3]

1. The parties submitted an agreed statement of facts,[4] the substance of which is set out here as the relevant background.
2. On 2 June 2008, Sporran Quentin Pty Ltd, the registered proprietor of the Premises entered into a lease of the Premises ('Lease') with the respondent ('Tenant').
3. The Lease was for a term of 15 years commencing 3 May 2007 with options for 2 further terms of 5 years.
4. On 9 July 2018, the applicant ('Landlord') became the registered proprietor of the Premises and entitled to the reversion under the Lease.
5. By a deed dated 10 November 2021 ('Deed for Works and Variation of Lease') the Landlord and the Tenant varied the terms of the Lease.
6. On 18 November 2021, the Tenant gave notice of its exercise of the option for a further term of 5 years commencing 3 May 2022 in accordance with the Lease (as varied by the Deed for Works and Variation of Lease) ('Renewed Lease').
7. The Landlord sent an email dated 8 February 2022 setting out its proposed rent for the first year of the Renewed Lease. Further, the Landlord sent a letter dated 21 February 2022 to the Tenant,[5] which also set out the Landlord's proposed rent for the first year of the Renewed Lease.
8. By an email dated 28 March 2022, the Landlord proposed that if the parties could not agree on the rent for the first year of the further term, a market rent review be conducted.
9. The relevant clauses of the Lease and the Schedule set out two rent review processes depending on the stage of the term of the Lease; during the term of the Lease, each year there is a review pursuant to CPI, and at the commencement of each new term, a market review in accordance with Clause 11 of the Lease.
10. Each of the rent review processes imposes a cap or limit on the increase expressed by reference to a fixed percentage.
11. It is the terms of each of the rent review processes and the rent review clause in the Lease, that is the subject of this dispute, and more particularly, whether the clause in the Lease which imposes a cap on any rent increase complies with s 35 of the RLA.

A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding -

(a) if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or

(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.

5 It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law and, secondly, that the Court gives leave to appeal. The legislative policy underlying these provisions is that 'VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal'.[6] It follows that '[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal'.[7]

6 The leave requirement under s 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[8]

The requirement for leave under s 148(1) of the [VCAT Act] "is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the court do found the subject matter of the appeal".[9] It also confers a discretion about whether to grant leave[10] which an applicant must persuade the court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[11] It will ordinarily be necessary (in addition to a clearly articulated question of law)[12] for an applicant to make out a prima facie case[13] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[14]

7 An additional safeguard has since been imposed. Effective from 1 May 2018, the VCAT Act was amended to include s 148(2A).[15] The section provides:

The Trial Division of the Supreme Court may grant an application for leave to appeal under this section only if it is satisfied that the appeal has a real prospect of success.

8 This amendment sees the replacement of the requirement that an applicant seeking leave to appeal from VCAT to the Trial Division of the Supreme Court must show that there is a real or significant argument to be put that an error below exists,[16] sometimes referred to as the Hulls test.[17] Instead, all applicants under s 148 are now subject to the same and more burdensome requirement: they must demonstrate that the appeal has a real prospect of success.[18] With respect to applications subject to the same test,[19] the Court of Appeal has said:[20]

The test under s 63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a "real" as opposed to a "fanciful" chance of success; that the "real chance of success" test is to some degree a more liberal test than the "hopeless" or "bound to fail" test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent's case is not "hopeless" or "bound to fail", it does not have a real prospect of succeeding.

9 The new requirement of s 148(2A) makes express the restraint this Court ought exercise when reviewing decisions of VCAT, a restraint long and more generally recognised in case authority. In considering applications of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission said:[21]

Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.[22] The focus of attention is on the substance of the decision and whether it has addressed the "real issue" presented by the contest between the parties.

10 Similarly, in Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc, Ashley J said:[23]

This Court has said more than once that it should not examine briefly stated reasons by an expert Tribunal in an over‑legalistic manner or by the over‑zealous drawing of inferences in order to disclose some supposed error; although where unambiguous language is used, the user should be taken to mean what the words say. I should add that the Court is not entitled to interfere with the Tribunal's decision unless it is satisfied that there was in fact a vitiating error of law. It is not enough for the appellant to show that the Tribunal's reasons for its decision are so expressed as to suggest the possibility that it proceeded upon a wrong view of the law. In support of the several propositions that I have just stated I refer to Portland Properties Pty Ltd v Melbourne & Metropolitan Board of Works,[24] Michaelis Bayley (Vic) Pty Ltd v Melbourne & Metropolitan Board of Works[25] and Teston Investments Pty Ltd v Melbourne & Metropolitan Board of Works.[26]

11 Additionally, '[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons.'[27]

12 It is clear from the authorities to which reference has been made that the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court and that a decision of such a tribunal is not to be interfered with, absent a vitiating error of law.[28]

13 Moreover, the authorities also indicate and emphasise that it is not the function of the Court on an application under s 148 of the VCAT Act to substitute its own views on the evidence which is before the Tribunal, its relevance, significance and inferences which might be drawn from it. Thus, the Court of Appeal in Hoskin v Greater Bendigo City Council[29] said, with respect to an appeal pursuant to s 148 of the VCAT Act:[30]

1. Such an appeal is limited to an appeal on questions of law.[31]
2. It is not open to this Court to entertain further debate as to the merits of the Tribunal's decision on the facts. It is only if a conclusion on the facts was not open to it that an error with respect to factual matters will involve a question of law.[32]
3. This Court's function is limited to the exercise of a supervisory jurisdiction intended to ensure that the merits review which the Tribunal carried out was undertaken in accordance with its statutory obligations.

14 The operation of s 35 of the RLA with respect to the present dispute has already been the subject of at least two previous decisions of the Tribunal and has been an unresolved issue with respect to the rent review provisions of the RLA, and also the preceding retail leases legislation. This proceeding raises important and difficult issues with respect to the interpretation of the present retail leases legislation.[33] Accordingly, as appears from the reasons which follow, I am satisfied that the Applicant has established a proper basis upon which leave to appeal should be granted and I have, having heard the appeal, found that it should be upheld.

15 Leave to appeal is sought with respect to the following question of law by the Applicant in the proposed Notice of Appeal:

Does a 'maximum' cap on rent increases contained in a rent review provision in a retail premises lease contravene s 35(2) of the Retail Leases Act 2003 (the 'RLA')?

(1) The Tribunal erred in applying an incorrect construction of s 35(2) of the RLA to the facts, namely, in finding that a 'maximum' cap on rent increases in a rent review provision in a retail premises lease did not comply with s 35(2) of the RLA.

(2) The Tribunal should have found that a 'maximum' cap on rent increases in a rent review provision in a retail premises lease complied with s 35(2) of the RLA.

17 The orders sought by the Applicant are, as set out in the proposed Notice of Appeal, as follows:

(1) Pursuant to s 148(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the applicant is granted leave to appeal against paragraphs 1 and 2 of the order.

(2) Pursuant to s 148(7)(a) of the VCAT Act, the appeal is allowed, and paragraphs 1 and 2 of the order are set aside.

(3) Pursuant to s 148(7)(b) of the VCAT Act, the Court declares that:

(3.1) items 7, 11, and 12 of the lease between the parties dated 2 June 2008 (as varied by the works and variation deed dated 10 November 2021 and as renewed by deed of renewal dated 18 November 2021) (the 'lease') comply with s 35(2) of the Retail Leases Act 2003 (Vic); and

(3.2) annual rent increases and commencing rent on each renewal of the term of the lease must be determined in accordance with the lease.

(4) The respondent pay the applicant's costs of and incidental to this proceeding.

(5) The proceeding is otherwise dismissed.

18 The rent review clauses contained in the Lease are set out in the Tribunal Reasons as follows:[34]

[15] Clause 11 of the Lease outlines the market rent review process. It states as follows:

RENT REVIEWS TO MARKET

11.1 In this clause "review period" means the period following each Market Review Date until the next review date or until the end of this lease. The review procedure on each Market Review Date is ‑

(a) Each review of Rent may be initiated by either party but, if the Act applies, the review is compulsory.

(b) A party may initiate a review by giving the other party, not more than 9 months nor less than 6 months before the relevant Market Review Date a written notice stating the current market Rent which it proposes as the Rent for the review period. Unless the Act applies, if the party receiving the notice does not object in writing to the proposed Rent within 15 Business Days, it becomes the Rent for the review period.

(c) If:

(i) the Act does not apply and the party receiving the notice serves an objection to the proposed Rent within 15 Business Days and the parties do not agree on the Rent within 15 Business Days after the objection is served; or

(ii) the Act applies and the parties do not agree on what the Rent is to be for the review period

the parties must appoint a Valuer (if the Act applies, a specialist retail Valuer) to determine the current market Rent.

the first day of each further Term of this lease and the first day of any year of the Term identified in Item 7 as a market review pursuant to clause 11.

[17] In the context of this dispute, the parties agree that the market review date is 3 May 2022.

[18] Item 7 of the schedule to the Lease states:

Rent

Year 1: $283,500.00 per annum

Year 2: the Rent in year 1 varied by CPI

Year 3: the Rent in year 2 varied by CPI

Year 4: the Rent in year 3 varied by CPI

Year 5: the Rent in year 4 varied by CPI

Year 6: the Rent in year 5 varied by CPI

Year 7: the Rent in year 6 varied by CPI

Year 8: the Rent in year 7 varied by CPI

Year 9: the Rent in year 8 varied by CPI

Year 10: the Rent in year 9 varied by CPI

Year 11: the Rent in year 10 varied by CPI

Year 12: the Rent in year 11 varied by CPI

Year 13: the Rent in year 12 varied by CPI

Year 14: the Rent in year 13 varied by CPI

Year 15: the Rent in year 14 varied by CPI

From the

Effective Date $479,057.16 per annum.

"varied by CPI" means the adjustment of Rent by reference to the Consumer Price Index pursuant to clause 15

In no case is Rent varied CPI to be more than the previous year's Rent increased by 6%.

[19] Item 11 of the schedule to the Lease states:

Rent review dates

The Rent is to be reviewed on each anniversary of the Commencement Date. On each Market Review Date the Rent is reviewed pursuant to clause 11. On all other review dates the Rent is reviewed by reference to the Consumer Price Index pursuant to clause 15.

[20] Item 12 of the schedule to the Lease states:

Further term

2 further Terms each of 5 years.

Rent in each further Term is to be determined as follows:

Year 1: Market review pursuant to clause 11.

Year 2: The Rent in year 1 varied by CPI.

Year 3: The Rent in year 2 varied by CPI.

Year 4: The Rent in year 3 varied by CPI.

Year 5: The Rent in year 4 varied by CPI.

"varied by CPI" means an adjustment of Rent by reference to the Consumer Price Index pursuant to clause 15.

In no case is Rent varied by CPI to be more than the previous year's Rent increased by 6%.

In no case is Rent varied by market review to be more than the previous year's Rent increased by 10%.

19 The relevant provisions of the RLA with respect to rent review are, for present purposes, as follows:

The main purpose of this Act is to replace the scheme in the Retail Tenancies Reform Act 1998 with a new scheme to enhance -

(a) the certainty and fairness of retail leasing arrangements between landlords and tenants; and

(b) the mechanisms available to resolve disputes concerning leases of retail premises.

(1) If a retail premises lease provides for a review of the rent payable under the lease or under a renewal of the lease, the lease must state -

(a) when the reviews are to take place; and

(b) the basis or formula on which the reviews are to be made.

(2) The basis or formula on which a rent review is to be made must be one of the following -

(a) a fixed percentage;

(b) an independently published index of prices or wages;

(c) a fixed annual amount;

(d) the current market rent of the retail premises;

(e) a basis or formula prescribed by the regulations.

Note

For reviews based on the current market rent of the retail premises, see section 37.

(3) A provision in a retail premises lease is void to the extent that it purports to preclude, or prevents or enables a person to prevent, the reduction of the rent or to limit the extent to which the rent may be reduced.

(4) However, subsection (3) does not apply to a provision that uses -

(a) a basis or formula referred to in subsection (2)(a), (b) or (c); or

(b) a prescribed basis or formula referred to in subsection (2)(e) that is also prescribed as a basis or formula to which subsection (3) does not apply.

20 The Retail Tenancies Act 1986 ('the 1986 Act') contained the following provisions with respect to, or relevant to, rent review:

The purpose of this Act is to reform the law relating to retail tenancy agreements.

(1) A provision in a retail premises lease for a review of the rent (other than a provision) -

(a) specifying a fixed increase in the rent; or

(b) providing for an alteration of the rent to be determined by the application of -

(i) a fixed percentage; or

(ii) in the case of a retail premises lease entered into on or after the date on which the Retail Tenancies (Rent Review) Act 1991 receives the Royal Assent, a specified index, for example an index of prices, costs or wages) -

is void to the extent that it provides that the rent payable after the review must exceed or be not less than the rent payable immediately before the review.

(3) A provision in a retail premises lease for a review of the rent is void unless the lease specifies how the review is to be made.

(4) If a provision in a retail premises lease that provides for a review of the rent does not comply with sub‑section (1), the rent is to be -

(a) as agreed between the landlord and tenant; or

(b) if there is no agreement within 30 days after the landlord gives the tenant, or the tenant gives the landlord, a written notice specifying an amount of rent for the purposes of the review, the amount determined by a specified retail valuer appointed by the Small Business Commissioner as the current market rent of the retail premises (as described in section 11(2)).

(5) The landlord and tenant are to pay the costs of a valuation referred to in sub‑section (4)(b) in equal shares.

21 The Retail Tenancies Reform Act 1998 ('the 1998 Act') contained the following provisions with respect, or relevant, to rent review:

The purpose of this Act is to reform the law relating to retail tenancies.

(1) If under a retail premises lease the rent payable under the lease or a renewal of the lease is to be reviewed during the term of the lease or under an option to renew the lease, the lease must state the time when the reviews are to take place and the basis or formula on which the reviews are to be made.

(2) The basis or formula on which a rent review referred to in sub‑section (1) is to be made must be one only of the following -

(a) a fixed percentage;

(b) an independently published index of prices, costs or wages;

(c) a fixed actual amount;

(d) the current market rent of the retail premises;

(e) another basis or formula prescribed by the regulations.

(3) A provision in a retail premises lease or an option to renew the lease other than a provision -

(a) using a basis or formula referred to in subsection (2)(a), (b) or (c); or

(b) using a basis or formula prescribed for the purposes of sub‑section (2)(e) that is also prescribed to be a basis or formula to which this sub‑section does not apply -

is void to the extent that it -

(c) purports to preclude the reduction of the rent or to limit the extent to which the rent may be reduced; or

(d) prevents, or enables the landlord or any other person to prevent, any decrease in the rent that may result from the review.

(4) A provision in a retail premises lease for a review of the rent is void unless the lease specifies how the review is to be made.

...

(8) The amendments made to this section by section 102 of the Retail Leases Act 2003 only have effect from 1 November 2003.

22 It is the case, as observed by Acting Senior Member Nash, that the RLA is not merely a re‑enactment of earlier legislation, namely the 1998 Act. This is made clear by s 1 of the RLA which clearly states that the purpose of that act is to replace the scheme in the 1998 Act with a new scheme.[35] This means that previous decisions on the interpretation of the provisions of the 1998 Act and also the 1996 Act, and subsequent amendments to these acts, cannot necessarily be applied to the interpretation of the provisions of the RLA. It follows that the RLA provisions must be interpreted according to the application of the usual principles of statutory interpretation applied to the new scheme of regulating retail leases which this legislation establishes.

23 It does not follow, however, that the evolution of retail tenancies regulation under the previous legislation is not instructive on the approach of the legislature in this respect over time. Of particular relevance in the present context is the changing structural approach in the provisions which have regulated permissible rent review arrangements. While the overall structural approach of the 1986 Act and the 1998 Act were not significantly different - though their content changed - the structural approach in s 35 of the RLA is different. For the first time, these RLA provisions separated the provisions with respect to rent review formulae from the provisions with respect to permissible outcomes. This is, in my view, a significant legislative change and one which the RLA itself indicates must be treated as potentially significant - as part of the 'new scheme'. For the reasons which follow, I am of the view that the structural change in the rent review provision indicates a substantive change in the legislative approach to the regulation of rent review arrangements.

24 Issues arose with respect to the operation of the rent review provisions of the 1986 Act which led to amendments in 1991 by the Retail Tenancies (Rent Review) Act 1991. The purpose of these amendments and their context in the provisions of operation of the 1986 Act is set out in Retail Leases Victoria, particularly in the following commentary:[36]

There was brief debate in Parliament in relation to the 1991 amendments, ... In the second reading speech and the Legislative Council (where the Bill was first introduced) on 14 November 1991, the Minister said (Hansard pp 1285-6):

The Retail Tenancies Act 1986 was introduced to protect the rights of small retailers who in the past did not receive full protection from the law when entering into lease and rental arrangements. Sub‑section 10(1) of the Retail Tenancies Act 1986 provides that a clause in a lease of retail premises which provides only for the same or an increased rental following a rental review - that is, does not permit a reduction in rental - is void. It has been a commonly accepted practice in leases of retail premises to have a rent review clause providing for periodic adjustments of rental based upon a percentage increase in the belief that such a provision is not in breach of s 10(1) of the Act. The Supreme Court has in two cases recently considered whether such a clause is in breach of s 10(1), and the two judges differed in their interpretation of the section. In the first case it was held that a clause providing for an annual increase of rental by a fixed percentage did not infringe s 10(1). Approximately one month later another judge concluded that a similar provision did infringe s 10(1) and to that extent was void. The judge considered that the expression "review" as used in s 10(1) meant "alteration". The former decision is in line with commonly accepted commercial practice, the latter is not. The second decision has caused doubt over the legality of the rent review provision in a considerable number of existing leases of retail premises. Representatives of the industry groups concerned have indicated that the associated uncertainty is affecting the negotiation of new leases. Although s 10 goes on to provide a mechanism for fixing rental in circumstances where the rent review provision in the lease is declared void, it has been estimated that the cost in valuation fees involved would be of the order of $15 million, which amount would be borne equally between landlords and tenants. There is no certainty as to the outcome of such valuations. An immediate amendment of subs 10(1) is therefore essential to restore certainty and confidence in the industry and is supported by both landlord and tenant representatives.

On the basis of the minister's second reading speech on the 1991 provisions it seems that the intention of parliament was to eliminate or reduce substantially the possibility of rent review provisions being rendered void - certainly in the circumstances of the then recent Supreme Court decisions which were referred to: Pasen v Buy‑Rite Discounts Pty Ltd (1991) V ConvR 54‑409 (and subsequently on appeal at Pasen v Buy‑Rite Discounts Pty Ltd (1992) V ConvR 54‑431) and GLG Nominees Pty Ltd v Prowse (1991) V ConvR 54‑410: see [200,010]. In other words, the Parliamentary intention was to avoid as far as possible the expense of the application of the provisions of subs 10(4) to determine the reviewed rent. The Hon R A Best (North‑Western Province) made a similar comment on 21 November 1991 (Hansard p 1522) that the cost of a valuation should be avoided in the current economic climate. In the debate on the second reading of the Bill in the Legislative Assembly on 26 November 1991 (see Hansard pp 2020-23), similar views were expressed.

An example of a combined rent review provision is provided by Retail Tenancies Award No 2 (1991) V ConvR 58‑551. The rent review provision considered was a combination of a rent review to market or a percentage rent review - increasing by 8% on the rent for the previous period. The means of selecting between the alternative mechanisms was at the option of the landlord. It was noted that although the selection between alternatives was not "automatic" in the sense that the higher was to be applied, the landlord was unlikely to exercise the option to select the rent review mechanism that produced the lesser increase. It was decided in that award that a rent review provision of this nature did not offend the prohibition in subs 10(1) of the Act. The general principle of statutory interpretation with respect to private rights, as set out in Halsbury (referred to above), was applied and account was taken of the fact that neither of the rent review mechanisms taken separately would offend the provisions of the Act. It seems, in this respect, that nothing changed as a result of the 1991 amendments to the Act, save that parliament expressed the view that it was undesirable that the rent review by valuation provisions of subs 10(4) apply unnecessarily. In general terms it does not seem that any perceived evil that s 10 may have been intended to remedy is perpetrated by combined provisions of this nature where each of the components of the combined provisions would themselves be permitted under the provisions of s 10. The validity of optional rent review provisions generally were upheld in R & H Australia Pty Ltd v Salta Constructions Pty Ltd [1994] ANZ ConvR 83; (1993) V ConvR 54‑462 and Sheralex Nominees Pty Ltd v Johnson Taylor & Co Pty Ltd (1994) V ConvR 54‑489. For a contrary view as to the validity of mixed or optional rent review clauses under the 1986 Act, see Redfern, "Rent Reviews and Rent Review Clauses", Leases and Mortgages (Leo Cussen Institute, 1997), 95 at 117-123.

25 The provisions of the 1998 Act built upon the 1986 Act provisions and the amendments in 1991. The general effect of the 1998 Act rent review provisions was that the following types of rent review, which may or may not have been permissible under s 10 of the 1986 Act, are no longer permissible:

• The greater of a combination of various rent review formulae (e.g. a combination of a fixed percentage increase and the consumer price index);
• The application of a rent review formula chosen by the landlord from a specific series of formulae from which a choice is or may be made (e.g. a fixed percentage increase, to CPI or the current market rent);
• Not less than $x less provisions; and
• Rent review at the option of the landlord only, where the rent review basis of formula could produce a decrease in rent.

A provision that the rent payable after a rent review must exceed or be not less than the rent payable before a review remained prohibited as it had been under the 1986 Act.

26 Mixed rent review provisions or 'rachet clauses' were not permitted under the provisions of s 12 of the 1986 Act. Rachet clauses, which have commonly been referred to as provision which automatically fix the rent review in terms of the greater of two or more rent review mechanisms (such as a fixed percentage or CPI or market etc.) were impermissible because s 12(2) clearly indicated that only one basis of formula was allowed at each review date. Moreover, a combination of rent review provisions applying the consumer price index, a fixed increase or a percentage increase and a market review, whichever is the greater, would also fail under s 12(3). Again, this is because a provision of this nature would not fall within the excepting provisions of s 12(3)(a) and would, therefore, fall within the prohibitions of s 12(3)(b) or (d). In relation to these provisions, the comment is made in Retail Leases Victoria, with respect to the possibility of an upper limit or 'cap' on these provisions:[37]

It is not clear from the provisions of s 12 whether an upper limit on rent fixing on review would be permitted; whether it is an upper limit on the basis of a consumer price index provision or on a market review provision. It was suggested by Mr Maurice Phipps QC in "Rent Review", Retail Tenancies Reform (Leo Cussen Institute, 1999) 55 that an upper limit in both circumstances would be permitted; and see Dagles Trading Pty Ltd v Skamper Pty Ltd [2006] VCAT 1220 where the issue arose but was not decided; and see also [50,030]. Approaching the 1998 Act as ameliorating or remedial legislation (see [10,025] and [170,015]) there is a strong argument that upper limit provisions in these circumstances would be permitted. As consumer price index rent review provisions or market rent review provisions are the only types of reviews in which an upper limit would be relevant it seems that, as Mr Phipps says, placing an upper limit on a review on either basis or formula is not "an independent means of fixing rent but rather, part of the basis or formula which meets the description of published index of prices or current market rent" (see pp 54 and 55).

27 What ever may have been the position under the 1986 Act, it is clear from the words of s 12(2) of the 1998 Act and now s 3(2) of the RLA that the specified bases or formulae relied upon a rent review cannot be 'mixed'. This is clear from the use of the words 'one only'; and having regard to interpretation of this expression in s 12(2) of the 1998 Act, as discussed in Fazzolari v Couchouron.[38]

28 The effect of the rent review provisions of the RLA with respect to rachet clauses and the like is also discussed in Retail Leases Victoria:[39]

Subsection 35(3) would also prevent another common device that has been used to prevent a fall in the rent namely a provision for a market review (whether in combination with any other rent review mechanism or "basis or formula" or not) at the option of the landlord. These type of provisions have been used effectively by landlords to prevent a fall in the rent because, naturally, if the landlord wished to gain an increase in rent or, at least, no decrease it would not trigger the market review mechanism in the absence of fairly clear rental valuation advice and assessments that the market rent would rise. The validity of optional rent review provisions of this nature under the 1986 Act were upheld in R & H Australia Pty Ltd v Salta Constructions Pty Ltd [1994] ANZ ConvR 83; (1993) V ConvR 54‑462 and Sheralex Nominees Pty Ltd v Johnson Taylor & Co Pty Ltd (1994) V ConvR 54‑489.

The question of whether s 35(2) allows for the fixing of an upper limit on rent on review has been considered in two recent decisions of the Tribunal.

In Q St Kilda Tenancy Pty Ltd v Kane [2023] VCAT 75; BC202304729, the rent review clause in the lease permitted upon review the rent to be increased in accordance with CPI, but only up to a maximum of 4%. The landlord argued that the prohibition on increasing the rent in accordance with CPI beyond the maximum of 4% was merely a ceiling or cap on the amount the rent can be increased, rather than a second formula, and so did not offend s 35(2). Moreover, the landlord suggested that such an interpretation accords with the underlying consumer protection nature of the RLA.

In rejecting the argument that the rent review provision did not contravene s 35(2) of the 2003 Act, the Tribunal held that the rent review clause contained in the lease required both an assessment of rent after the application of the CPI, and then a further assessment of that rent to ensure that it is not greater than the increase of 4%. This second assessment was found not to be the application of the CPI formula, but rather the application of a fixed percentage, and hence was a mixed rent review provision.

In the second recent decision of Roberts Family Enterprises Pty Ltd v Meddles Bekirofski and Reshat Bekirofski [2023] VCAT 121; BC202304166, the rent review clause in that lease contained a concluding sentence which provided that "Any rental increase pursuant to this clause shall be a minimum increase of 1.1% and a maximum increase of 5%". In finding that the rent review provision contravened s 35(2) of the 2003 Act, the Tribunal again held that the second limb (being the upper limit of 5%) was not simply the application of the CPI formula, but rather was the application of a fixed percentage. Accordingly, the Tribunal found that the rent review provision in the lease sought to utilise more than one method of rent review contrary to s 35(2).

...

That ameliorating nature in the context of the rent review provisions in the 2003 Act was highlighted by Justice Croft in Krajcar v Eastern Central Real Estate Pty Ltd [2022] VSC 173; BC202203443, in an appeal brought by a landlord from a decision of the Tribunal upholding a rent review clause contained in 23 leases. Under each of the 23 leases, a single tenant conducted an aged care facility from a building which contained 23 separate units. Each of the leases contained identical clauses, the effect of which provided that each individual landlord was bound by a simple majority on a wide range of matters, including the appointment of a managing agent to conduct affairs on behalf of the landlords in what was described as being in the nature of a joint venture between each of the lot owners to further the permitted use of the property in a commercially beneficial and practical way. The relevant clause in the leases provided that, upon renewal of the leases, a market valuer was to be appointed to determine the market rent of the whole of the building in which the 23 units were located, and that each lot owner was then entitled to a share of the market rent in accordance with lot entitlements as set out in the relevant plan of subdivision. One of the landlords of the 23 units challenged this provision, on the basis that the market review clause in the leases did not provide for a current market review of "the retail premises", but rather required a valuer to amalgamate 23 separate retail premises leases and treat them as one for the purpose of the market review.

In upholding the Tribunal's earlier finding that the rent review clause in the 23 leases was a "basis or formula" within the meaning of s 35(2) of the 2003 Act, Croft J noted that there was a reasonable inference from the lease terms that each individual unit was very much part of a whole, and that a market rental valuation of each individual unit would be a highly artificial process which would not reflect reality. His Honour highlighted the ameliorating and remediating nature of the legislation (together with s 35 of the Interpretation of Legislation Act 1999) which his Honour found would not be served by adopting an approach which struck down commercial arrangements involving retail leases on the basis of a strict and literal approach of the 2003 Act's provisions.

29 The gravamen of the Applicant's submissions is that rental caps are valid in the context of rent review under the provisions of the RLA.[40] Four points are made in support of this proposition.

30 First, the Applicant relies upon the express words of s 35(2) of the RLA on the basis that nowhere in that subsection are maximum caps on rent increases prohibited.[41] Conversely, it is said, the Tribunal read a restriction into s 35(2), namely, that maximum caps on rent increases are prohibited because the inclusion of the cap means that there are two formulae on which a rent review is to be made which are, consequently, applied. In this context, reference is made to the Tribunal findings:[42]

[44] To find that a rent review clause with a cap is permissible removes the purpose of the legislature using the phrase "one of the following" instead of "any of the following". It is clear that the imposition of the cap involves the application of two formulae to the previous rent.

[45] There are two different rent review clauses to consider.

[46] With respect to the yearly rent during the terms of the lease, it is in effect the calculation of rent by reference to a formula which uses the lesser of the two amounts - CPI or 6% (or 10% for the renewed lease's commencing rent).

[47] With respect to the commencing rent on renewal of the lease it involves a comparison of the market rent to a fixed percentage increase and the lease provides that it is the lesser of those two amounts that is the commencing rent. That clause requires the application of two different methods of calculating rent: market rent and fixed percentage. It is not until the market rent assessment has been undertaken can it be determined if the proposed rent is more than 10% higher than the previous rent.

[48] I do not consider that there is any ambiguity in s 35 nor is there any necessity to seek to contort the words of the section. The section is clear when it states that only one of the listed means of determining rent review is to be used.

[49] For each type of rent review, it involves the calculation of rent using two different formulae to determine the annual or commencing rent. Section 35(2) requires that the basis or formula on which a rent review is to be made is one of the formulae listed.

[50] I find that to apply two different formulae to ascertain which rent is the lesser is contrary to s 35(2). Therefore s 35(7) applies and the annual rent and the commencing rent on the renewed lease is to be determined pursuant to s 35(7) of the RLA.

31 With reference to these findings, the Applicant contends that the Tribunal was incorrect because placing a maximum cap on a method of rent review does not involve the application of two formulae or two bases but, rather, the only formula or basis for the rent review is the current market rent.[43] Moreover, it is said that s 37(2) of the RLA contemplates that the parties may reach an agreement about the rent and, in this case, the parties did not agree on the rent but did agree on the application of the formula subject to a cap.

32 The second point made is that the landlord and tenant under the Lease, and presumably now the current reversioner and the Applicant, are sophisticated parties who were at all times legally represented when they expressly agreed to a formula for rent review subject to a maximum cap to protect the position of the Applicant, the tenant. Thus it is said that, as a matter of policy, the Court should give primacy to the bargain struck between the parties where there is no direct conflict with the RLA.[44] Freedom of contract should not be ignored, it is said, and so it follows that the presumption against interfering with vested contractual or proprietary rights militates against the position reached by the Tribunal in the context of the machinery of rent reviews under s 35(7). Reference is made to Retail Leases Victoria where it is said:[45]

Presumption against interfering with vested contractual or proprietary rights

If there is any doubt that subs 35(2) should be construed to permit the mixture or combination of a specified "basis or formula" and a provision for agreement, it may be resolved by the application of the principle of statutory interpretation that unless a provision clearly and unambiguously indicates an intention to do so it should be construed so as not to interfere with or prejudice established private rights under contracts or the title to property: see Halsbury's Laws of England (4th ed) Vol 44: Statutes: 906; see also Retail Tenancies Award No 4 (1991) V ConvR 58‑513 and Peppercorn Nominees Pty Ltd v Loizou; see also Retail Tenancies Award No 2 (1991) V ConvR 58‑511 ...

On this basis, the Applicant submits that it would be absurd if s 35(2) were construed to make the tenant worse off than it otherwise would have been had the parties not had commercial negotiations.[46] The Applicant submits that Parliament could not have intended a result like that, which does not accommodate the parties negotiating.[47] Section 35(7) contemplates, it is said, that the parties may reach an agreement about the rent, though in this case the parties did not agree on the rent but did agree on the application of the formula subject to a cap.[48]

33 The third point made is that s 35(3) of the RLA renders void any provision in a lease that seeks to prevent the reduction or limitation of rent.[49] This provision prohibits a landlord from placing a 'minimum cap' or 'collar' on rent so that it never falls below a certain level even in a declining rental market. Hence it is said that the existence of this section, without a comparable provision excluding maximum caps, indicates that the legislature intended that 'maximum caps' are permissible as it gives greater bargaining power to a tenant in a falling rental market.[50] Further on this point, reference is made to a paper by Mr Maurice Phipps QC where he considered whether 'maximum caps' would be permissible under the provisions of s 12(2) and (3) of the 1998 Act in his article Rent Review[51] where he said:

An uncertain question is whether an upper limit could be placed on increase on rent review. For instance, consumer price index but no greater than 5% or current market rent but no greater than 5%. On one view this is to use one only method of rent review with an upper limit not prohibited by the Act. The opposite view is that it is a mixture of two methods of review and so not permitted. The better view would seem to be that an upper limit is permitted. Again the argument is that this is remedial legislation and a beneficial interpretation would permit tenants to negotiate an upper limit to any individual rent review.

...

A limit on reduction of rent is prohibited and so its seems logical that a limit on increase in rent should not be prohibited.[52] [Emphasis added]

Mr Phipps was, when writing, an arbitrator as part of the exclusively arbitration‑based dispute resolution provisions contained in the 1986 Act and the 1998 Act.

34 The opinion of Mr Phipps on 'maximum caps' was referred to with approval in Retail Leases Victoria:[53]

It is not clear from the provisions of s 35 whether an upper limit on rent fixing on review would be permitted; whether it is an upper limit on the basis of a consumer price index provision or on a market review provision. It was suggested by Mr Maurice Phipps QC in "Rent Review", Retail Tenancies Reform (Leo Cussen Institute, 1999) 55 that an upper limit in both circumstances would be permitted by the provisions of the 1998 Act. Approaching that legislation as ameliorating or remedial legislation (see [10,025] and [170,015]) there is a strong argument that upper limit provisions in these circumstances would be permitted under that Act: and see Dagles Trading Pty Ltd v Skamper Pty Ltd [2006] VCAT 1220 where the issue arose but was not decided; and see also [140,030]. As consumer price index rent review provisions or market rent review provisions are the only types of reviews in which an upper limit would be relevant it seems that, as Mr Phipps says, placing an upper limit on a review on either basis or formula is not "an independent means of fixing rent but rather, part of the basis or formula which meets the description of published index of prices or current market rent": see pp 54 and 55. The same arguments apply to subs 35(3) and (4) of the 2003 Act and, possibly, with greater force because the general prohibition in subs 35(3) is clearly directed to avoiding provisions which prevent the reduction of rent on a rent review (and the 2003 Act is, similarly, ameliorating or "consumer protection" type legislation; see [10,020]). [Emphasis added]

As this passage indicates, the validity of 'maximum caps' was a question which had not been resolved at the time Mr Phipps was writing and, in more recent times, had only been referred to tangentially in the Dagles Trading decision in VCAT. Indeed, it was not until more recent times in 2023 when VCAT found that 'maximum caps' infringed s 35 of the RLA.

35 The last point made, which really picks up the final observations in the passage from Retail Leases Victoria to which reference has been made, is that it is well established that the RLA is ameliorating or remedial legislation.[54] Moreover, it is said that s 35 of the Interpretation of Legislation Act 1984 also requires a purposive approach to the interpretation of legislation.[55] In this particular context, the Applicant accepts that neither the common law nor principles governing statutory interpretation enables a court or tribunal to transcend clear express words in an act or to disregard the fundamental structure and approach of the particular legislation. Nevertheless, it is said that s 35(2) of the RLA does not contain clear express words precluding the parties agreeing to a 'cap' on rent increases as a result of a rent review process.

36 In terms of purpose, reliance is placed on s 1 of the RLA where reference is made to the purpose of the Act in terms of enhancing 'certainty and fairness in retail leasing arrangements between landlords and tenants'.[56] I should observe at this stage that, for the reasons which follow, this general purposive statement does not indicate that the balance of interests as between landlords and tenants is sought to be tilted in one direction or the other but, rather, as the express words of s 1 indicate, 'certainty and fairness' is to be enhanced on both sides of the landlord and tenant equation.

37 In terms of authority, reference is made to Krajcar v Eastern Central Real Estate Pty Ltd,[57] in which Croft J considered the purpose of the RLA in the context of s 35 and a rent review mechanism in the subject lease. It was held:

However, neither the common law nor the statutory approach to statutory interpretation enables the Court to transcend clear express words of an act or to disregard the fundamental structure and approach of legislation. In the case of the RLA the consistent approach is to focus on the provisions of individual leases - each individual demise. On this basis it follows that "retail premises" the subject matter of the operation of provisions such as s 35 and s 37 is that of each individual lease. ...

...

Moreover, the purpose of the RLA, generally expressed in s 1 in terms of enhancing "certainty and fairness in retail leasing arrangements between landlords and tenants" is not served by disregarding the ameliorating and remedial nature of the legislation and striking down commercial arrangements involving retail leases on the basis of a strict and literal approach to the interpretation of its provisions. Quite apart from these considerations the legislature has sought to avoid this position in mandating a purposive approach in s 35 of the Interpretation of Legislation Act 1984. As indicated previously, this approach cannot be carried so far that a court is, effectively, giving pre‑eminence to contractual or lease provisions over clear legislative provisions, a point made in 756 Glenferrie Road Pty Ltd v Mountfords Shoes Pty Ltd. [Emphasis added]

38 Concluding, the Applicant submits that, based on a strict and literal approach to the construction of s 35(2), the Tribunal erred in striking down a commercial arrangement made between the parties. The Applicant submits that, effectively, the Tribunal is setting up a code which does not allow the parties to negotiate anything at all.[58] Moreover, it is submitted that if the Tribunal were correct in its decision based on a strict and literal approach to the construction of s 35(2), the Tribunal erred by disregarding the ameliorating and remedial nature of the RLA by striking down a commercial arrangement when the words used in the subsection did not require it to do so.

39 In summary, the submissions of the Respondent, the landlord, are that:

(a) Section 35(2) of the RLA on its plain wording permits the parties only the prescribed methods of rent review;[59]

(b) Mixed methods of rent review are prohibited; and

(c) Both CPI capped at 6% and current market rent capped at 10% are mixed reviews that are not permissible under that section.

The key words are, it is said, the words 'must be one of the following' in s 35(2); emphasising that the plain meaning of those words are that the parties may not employ more than one method when reviewing the rent.[60] Reference is then made to three other decisions of the Tribunal to the same effect; namely, Q St Kilda Tenancy Pty Ltd v Kane[61] and Roberts Family Enterprises Pty Ltd v Meddles Bekirofski and Reshat Bekirofski[62] (both decisions of VCAT Member Nash); and VCAT Deputy President Riegler in Cote Noire Pty Ltd v Roberts Family Enterprises Pty Ltd[63] who referred with approval to the reasons of Member Nash in Roberts Family Enterprises.[64] Additionally, of course, there is the decision of Acting Senior Member Nash now the subject of this appeal.

40 The Respondent relies on the reasoning in Q St Kilda Tenancy and also in Roberts Family Enterprises which are against the validity of a 'maximum cap' in rent reviews. In the context of the history of the development of the retail leases legislative provisions in relation to rent review, it is helpful to make reference to part of the reasons of VCAT Member Nash in Q St Kilda Tenancy where consideration was given to rent review provisions in a retail premises lease that imposed a cap on CPI increases:

[18] Clause 14.1.1 has two limbs to the determination of the new commencing rent for the renewed lease. Firstly, the rent is to be increased by CPI (cost of living) and secondly, such an increase is capped at 4%.

[19] The tenant argues that each limb is a basis or formula within the scope of s 35(2). The first limb falls within s 35(2)(b) and the second limb falls within s 35(2)(a). Section 35(2) requires that the manner in which the rent is to be determined "must be one of the following" and therefore as there is more than one basis or formula for determining the rent the clause is contrary to s 35(2).

[20] The landlord argues that the second limb is a ceiling or cap on the amount the rent can be increased rather than a second formula for determining the rent. The rent is to be determined by reference to the CPI. He argues that this is a cap imposed for the benefit of the tenant which aligns with the underlying consumer protection nature of the RLA.

[21] The landlord's submissions also rely on s 35(4)(a) of the RLA. It is argued that

Section 35(4)(a) of the Retail Leases Act expressly provides that s 35(3) does not apply to a provision that uses a basis or formula in subsections (2)(a), (b) or (c). Section 35(3) therefore does not apply to clause 14.1.1.[65]

[22] Further, the landlord relies on the statement of Deputy President Macnamara (as his Honour then was) in Barbcraft Pty Ltd v Geobel Pty Ltd & Anor,[66] at paragraph 36:

1. I reject the contention that the provision for indexation of the rent is avoided in so far as it provides only for rental increases and no decreases. Section 10(1)(b)(ii) exempts indexation by reference to the Consumer Price Index and the general prohibition upon review techniques which do not provide for rental to decrease as well as increase. For the reasons already given I believe that this clause meets the requirements of the section. Section 12(3)(a) of the Retail Tenancies Reform Act 1998 to the extent that that statute is relevant is to the same effect.

[23] However, it must be noted that this case involved a consideration of a rent review clause and its interpretation and applicability under s 10(2) of the Retail Tenancies Act 1986 (Vic) which did not exclude the use of a "mixed" rent review clause combining different methods of calculating rent. Rather, s 10(2) was directed to prohibiting a rent review being determined by reference to any index of prices, costs or wages. Therefore, this statement by DP Macnamara does not support the landlord's proposition.

[24] Further, DP Macnamara stated in Fazzolari v Couchouron (Fazzolari)[67]

1. With some hesitation I believe the approach adopted by Dr Croft is the preferable one. Neither version of Section 10(1) intended to invalidate a provision automatically escalating rent during the term of a lease. So much appears from the decision of the Full Court in Pasen's case and the express terms of the revised Section 10(1). Section 10(2) prohibited the indexation of retail premises lease rental by reference to indexes such as the Consumer Price Index. That prohibition was repealed in 1991 and it is clear that Parliament intended such a review procedure to be available to landlords and tenants for retail premises leases entered into after the commencement of the 1991 amendment. There is nothing in the Minister's Second Reading Speech which indicated that his Bill sought to prohibit "mixed" rental review clauses. To adapt the words of Beach J. in the Hume's case, the sub‑section by the use of two paragraphs and two "ors" seeks to indicate the types of underpinning clauses which may legally be entered into not to prohibit their combination.

2. Accordingly, I would reject the tenants' contentions as to the validity of Item 7 of the Schedule.

3. I should add that my views on the proper construction of Section 10(1) of the 1986 Act are fortified by the absence from them of the phrase "one only" which appears in the corresponding sub‑section of the 1998 Act, viz. Section 12(2).

4. Needless to say I accept that Item 7 constitutes a "rent review" for the purposes of Section 10 of the 1986 Act. Moreover, the decision of the Full Court in Pasen is clearly distinguishable for the reasons which Mr Arthur gave in his supplementary submissions. The interstate statutes which Mr Arthur says clearly invalidate a rent review clause such as the present, merely indicates that those Parliaments, like the Victorian Parliament in enacting Section 12(2) of the Retail Tenancies Reform Act 1998 well know how to use clear words to prohibit a mixture of rent review techniques when that is their objective. No clear words to that effect could be found in Section 10(1) nor is there anything in the Minister's Second Reading Speech which would indicate that such a prohibition was in contemplation.

[25] The above comments from Fazzolari indicate that DP Macnamara considered that s 12(2) of the Retail Tenancies Reform Act 1998 (Vic) by using the term "one only" when describing the alternative methods of rent review did seek to prohibit "mixed rent review clauses".

[26] Similarly, the RLA while having changed the language from "one only" to "must be one of the following" has adopted the same requirement that the method of rent review must be one method only, not a mixture of rent review methods.

[27] While the second limb does have the effect of being a cap on the amount the rent can increase, this is not the test. The "cap" or limitation is itself an alteration of the method to be used for calculating the rent or a mixture of rent review methods.

41 The Respondent also makes reference to a number of commentaries which it contends support its position:[68]

1. The leading text on the RLA 2003, Croft J, et al, Retail Leases Victoria (looseleaf service) gives the following commentary about s 10 of the Retail Tenancies Act 1986 (Vic) which is the statutory predecessor the current s 35 (at [200,015], emphasis added):

... the operation of subs 10(3) remains uncertain: see [200,030]. For example it is arguable (but see [200,025]) that its provisions would be offended by a combined provision in a lease, say, for "8 per cent annual rent increases or rent increases to the current market rental at the option of the landlord": but see [200,025]. Similarly, a provision that provides for "a fixed percentage annual rent increase or an increase in accordance with the consumer price index, whichever is the greater (or lesser)", may offend subs 10(3): but see [200,025].

1. The learned authors then continue (at [50,025], emphasis added):

Whatever may have been the position under the 1986 Act it is clear from the words of subs 12(2) of the 1998 Act and now subs 35(2) of the Retail Leases Act 2003 that the specific bases or formulae cannot be "mixed", provided what is being mixed is more than one "basis or formula": see [200,025] with respect to the 1986 Act and see [50,040]. This is clear from the use of the words "one only" (as to this expression in subs 12(2) of the 1998 Act, see Fazzolari v Couchouron (2003) V ConvR 58‑572; [2003] VCAT 503 at 36; and see [200,015]).

1. This commentary entirely supports the Landlord's case. Although expressed differently, the form of rent review clause 'a fixed percentage annual rent increase or an increase in accordance with the consumer price index, whichever is the ... lesser' suggested in the extract above is the same in substance as CPI with a cap.

2. The Tenant relies in its submission at [42] on paragraph [50,030] of Retail Leases Victoria. It is, with respect to the learned authors, unclear how that paragraph can be reconciled, both with paragraph [50,025] and [200,015] recited above.

3. The reasoning in the Decision is also supported by text from the late Michael Redfern, in his paper "Rent Reviews and the Retail Tenancies Legislation" (at 4.9), contained in Rent Review Issues, Leo Cussen Institute, June 2002, again commenting on s 12(2) of the 1998 Act, in which the author stated that:

It has been put that a rent clause providing for a cap on a CPI adjustment or on a market review clause should not be regarded as contravening the Act because it will be in the interests of the tenant but, again, because it is not within the precise wording of the methods provided for by s 12(2) the safer view appears to be that it is not authorised by the Act.

1. In the most recent edition of Commercial Tenancy Law,[69] at [23.41], p 799‑800, the decisions in Q St Kilda Tenancy Pty Ltd v Kane and Roberts Family Enterprises Pty Ltd v Bekirofski are cited to with apparent approval.

42 The Respondent also made reference to the history of the legislation, particularly with reference to the rent review provisions.[70] It also made reference to a series of recommendations to Government contained in a document titled Review of Victorian Retail Tenancies Legislation: Discussion Paper (October 2001).[71] The Discussion Paper contained discussion of drafting improvements and the need for clarification with respect to the rent review regime, relevant part of which are as follows:[72]

Drafting improvements

...

A number of drafting improvements have been identified in the course of the Review. In particular those identified by the Law Institute and other peak organisations require legislative action. These are dealt with in turn below.

...

Rent review matters

Clarification will need to be made of:

...

• The capacity of a rent review clause to lawfully contain a provision for a maximum rental such as the capping of a CPI or market review provision.

...

Draft recommendation 14:

...

...

(ii) a rent review clause can lawfully contain a provision for a maximum rental such as the capping of a CPI or market review provision; ...

On this basis, the Respondent contends that had legislature intended to allow mixed reviews in circumstances where that benefits the tenant, it could easily have adopted that recommendation and said so.[73]

43 The Respondent also addressed the four points made by the Applicant in support of its appeal. As to the first point, it is submitted that it should be rejected because s 35(2) of the RLA states that the method of rent review 'must be one' of the prescribed methods of review as specifically set out in that subsection.[74] Thus it is said that it is necessarily follows that the imposition of a cap to either a CPI review or a current market rent review combines two of those methods, which is impermissible.[75] In short, 'CPI up to 6%' is not 'CPI' and 'Current market rent up to 10%' is not 'current market rent'. To suggest otherwise, it is said, is just wrong.

44 Moreover, it is said that the text of s 35(1) reinforces this construction in that it states (with emphasis added):[76]

(1) If a retail premises lease provides for a review of the rent payable under the lease or under a renewal of the lease, the lease must state -

(a) when the reviews are to take place; and

(b) the basis or formula on which the reviews are to be made.

Hence it is said that paragraph (b) contemplates, with the use of the definite article, one basis or formula for each review, while also implicitly acknowledging that multiple reviews take place or may take place over the term of the lease.[77]

45 As to the second point, it is submitted that the presumption against interfering with vested contractual or proprietary rights cannot survive the clear words of a statute,[78] so those presumptions have no role to play here.[79] Moreover, it was observed that the RLA is intended to and frequently does interfere with vested contractual and proprietary rights. In this respect, it is said that the Court need only refer to ss 37, 50, 52, 54, 56, 57, 58 and, most importantly, s 94 which highlights that one of the main effects of the RLA is to interfere with contractual freedoms and vested property rights. In the same vein, it is contended that there is no absurdity in construing the provisions of s 35 to allow for a benefit for a landlord.[80] Nor does such a section stand at odds with the policy of the Act. To the contrary, it is said, the RLA has a number of sections that overtly benefit landlords or have concessions to protect landlords' interests.[81] The following are identified by way of example:

(a) section 78 creates a cause of action for landlords against tenants for unconscionable conduct;

(b) section 57(1)(c) gives landlords an ability to terminate a lease in certain circumstances;

(c) sections 57(1)(e) and (2) preserves a landlord's ability to sue a tenant for damage to a retail premises;

(d) section 52(2) was a put in repair covenants in the original version of the RLA, but was amended in the 2005 amendments to the benefit of landlords to be a keep in repair covenant;

(e) section 52 was amended to allow landlords to recover the cost of essential safety measures from tenants; and

(f) section 17 was amended in 2005 to allow landlords to recover rent in the absence of a disclosure statement.

46 As to the third point, the Respondent submits that the express prohibition on ratchet clauses in s 35(3) of the RLA does not assist the tenant for the following reasons:

(a) an express prohibition on ratchet clauses does not mean caps are permitted. The second proposition does not follow from the first;

(b) the consequences for including a ratchet clause in a retail premises lease are different to the consequences for a rent review clause that otherwise does not comply with s 35(2). This difference reflects a difference in the underlying policy of the Act. In particular:

(i) by rendering a ratchet clause void under s 35(3) of the RLA, Parliament singled out ratchet clauses as a separate and specific mischief requiring special treatment. If, for example, the tenant extracted some form of concession from the landlord during lease negotiations in exchange for the ratchet clause, the RLA renders the ratchet clause void without further adjustments to the bargain on account of that concession. This allows for a potential windfall gain to tenants and, to that extent, is similar in operation to the prohibition on the recovery of land tax under s 50 of the RLA. Consequently, the prohibition on ratchet clauses under s 35(3) is an example of pure tenant protection in the statute; and

(ii) on the other hand, if a clause otherwise fails to comply with s 35(2), s 35(7) prescribes a current market rent review as the consequence. This prevents windfall gains to either party as the market review process will take account of any concessions extracted in exchange for the non‑compliant rent review. This suggests that the underlying policy of s 35(2) is to create a code for the conduct of rent reviews in retail premises leases.[82] In particular, by limiting the bases on which rent can be reviewed, s 35(2) of the RLA creates a level playing field that is capable of being understood and applied by all parties to the retail premises lease. That policy is consistent with the purpose of the legislation expressed in s 1(a) of the RLA - to enhance certainty and fairness of retail leasing arrangements between landlords and tenants (as found by the learned Acting Senior Member Nash in her reasons).

47 As to the last point, the fourth point raised by the Respondent, it is submitted that the argument that the RLA is ameliorating legislation that should be construed in favour of tenants should not be taken too far.[83] In this respect, reference is made to the decision of Deputy President Macnamara (as His Honour then was) in Ross‑Hunt Pty Ltd v Cianjan Pty Ltd[84] in relation to s 52 of the RLA (emphasis added):

1. Mr Strang sought to avoid this conclusion by arguing that the Retail Leases Act in general and Section 52 in particular should be regarded as 'beneficial' legislation and therefore given the benevolent construction in favour of the tenant. He referred to the well known authorities on 'beneficial' legislation. In my view this is not the appropriate approach to construing a provision such as Section 52. The Retail Leases Act and cognate legislation regulates the rights and liabilities between one another of landlords and tenants; it is a zero sum game. A right given to a tenant is an obligation imposed on the landlord. An immunity given to a landlord is a right removed from the tenant. The policy of a statute such as the Retail Leases Act is to draw what Parliament regards as a proper balance between the rights and liabilities of landlords and tenants in the particular area regulated by the Retail Leases Act. There is no broad outer area from which 'beneficial' principles can be drawn. The only way in which it can be determined exactly how the balance between the rights and liabilities of landlords and tenants has been struck by Parliament is to analyse in accordance with normal statutory maxims the words which Parliament has used. Carrying out that process leads me to the view that Mr Williams' construction of Section 52 should be adopted. Hence it is only if it can be demonstrated on the balance of probabilities that there has been a deterioration of the state of these air‑conditioning appliance since 1 August that the applicant Ross‑Hunt will be entitled to any relief under Section 52. [Respondent's emphasis]

Similarly, it is observed that it has been held that superficially ameliorative legislation may be limited in its operation because it in fact represents a compromise between competing interests.[85] Indeed, this is the point which was being emphasised by Deputy President Macnamara in the passage in Ross‑Hunt set out above.

48 These considerations, it is said, apply equally to s 35(2) of the RLA which represents a compromise of the interests of both tenant and landlord on the central question of rent in a retail premises lease.

49 Reference is also made to the Second Reading Speech for the Retail Leases Bill 2003 where it was said:[86]

This legislation is intended to encourage an environment of fairness, so that landlords and tenants mutually benefit. The government has legislated to ensure that a party does not unfairly take advantage of its superior information and negotiating power to the detriment of the other party.

That sentiment is said to be reflected in s 1(a) of the RLA, and in the unconscionable conduct provisions of both ss 77 and 78 of that Act, which apply in equal measure to landlords and tenants; and to the other provisions of the RLA that benefit landlords, which have been referred to previously.

50 The Respondent also emphasises that, as the authorities indicate, first and foremost attention must be directed to the words used in the statute.[87] Particular reference was made to Commissioner of Taxation (Cth) v Consolidated Media Holdings Ltd where French CJ, Hayne, Crennan, Bell and Gageler JJ said:[88]

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

In this case, it is said that the words of the statute are clear. Section 35(2) clearly states that (emphasis added):

The basis or formula on which a rent review is to be made must be one of the following: ...

Moreover, it is said that the legislative purpose of 'certainty and fairness of retail leasing arrangements between landlords and tenants' is expressed at a high level of generality[89] and cannot itself determine the present question.

51 In my opinion, the submissions of the Applicant provide the correct approach to the interpretation of the critical provisions of s 35 of the RLA in the context of this dispute on the bases advanced. In analysing the parties' submissions, it is convenient to refer, particularly, to the four points in support of the appeal relied upon by the Applicant, matters upon which the Respondent also focused on in its submissions.

52 As to the first point, it is quite correct that the express words of s 35(2) of the RLA do not, at least expressly, prohibit maximum caps on rent increases as a result of rent review. The Respondent does not cavil with this proposition in terms of an express prohibition but, rather, contends that it is, in effect, implicit in the words of s 35(2) which states that the method of rent review 'must be one' of the prescribed methods of review. Were the provisions of s 35(2) the only relevant provisions, there would be much force in this argument. However, these provisions must, as a matter of statutory interpretation according to usual principles, be considered in the context of both the remaining provisions of s 35 and also in the context of other provisions and the structure of the RLA as a whole. As observed previously in the course of reviewing the legislative approach in the retail leases legislation, through the 1986 Act, the 1998 Act to the present provisions,[90] the current provisions of s 35 for the first time clearly separated provisions with respect to the permissible rent review formula which may be utilised from the provisions with respect to permissible outcomes. Both the 1998 Act and the RLA provisions are consistent in the sense that they both clearly prohibit 'mixed' formulae being used in rent review provisions in retail premises leases. However, the structure of s 35 now separates the permissible rent review formula provisions, which are contained in s 35(2), from the provisions with respect to rent review outcomes, now addressed in s 35(3). In my view, this is not merely a drafting change but, rather, reflects in this legislation 'a new scheme'[91] with respect to the permissible rent review regime. It is also an approach, as the review of legislative approaches the earlier acts makes clear in the preceding discussion in these reasons, indicating that the legislature was concerned, and has maintained that concern, to prevent rent review formulae being combined for the purpose of providing for or enabling landlords to opt for ever increasing rents as a result of review processes. Section 35(3) is consistent with the rent review provisions of the legislation since the 1986 Act in that it renders void a provision which enables prevention of the reduction of rent, or reduction of rent to a limited extent, on a rent review. This addresses clearly the 'evil' to which the legislature has been directing itself since the 1986 Act. However, consistently with the legislative approaches in that act and subsequently, there is no prohibition in s 35(2) on maximum caps on rent increases. Having regard to this legislative history and the express words of s 35 this cannot, in my view, be viewed as anything but significant. It cannot be viewed as a mere legislative 'accident' or 'omission'.

53 The second point addressed is the presumption relied upon by the Applicant against interfering with vested contractual or proprietary rights. Clearly, as the Respondent observes, the presumption cannot survive the clear words of a statute, referring to Mayberry v Mornington Peninsula Shire Council.[92] On this basis, it is contended that this presumption has no role to play here and reference is made to a variety of provisions of the RLA which cut both ways, so to speak, in the landlord and tenant balance of rights and interests equation. This balance was, as highlighted by the Respondent, discussed previously by Deputy President Macnamara (as His Honour then was) in Ross‑Hunt Pty Ltd v Cianjan Pty Ltd.[93] I do, with respect, strongly endorse Deputy President Macnamara's observation in this respect in the Ross‑Hunt decision. This does not, however, detract from the points made by the Applicant in the context of this second point. Were the Respondent's contention in this respect accepted, it would, in my view, produce the absurdity highlighted by the Applicant, namely that if s 35(2) were construed to make the tenant worse off than otherwise would have been had the parties not had commercial negotiations. Section 35(7) contemplates that the parties may reach an agreement about the rent, pointing to the position that, in this case, the parties did not agree on the rent but did agree on the application of the formula subject to a cap. I should add that I do not accept the Respondent's contention that the possible operation of s 35(7) is indicative of a legislative scheme which indicates that the legislature intended to accommodate agreements effectively capping rent reviews under these provisions only. Were the position that s 35(7) would otherwise have no work to do if the preceding provisions of s 35 permitted rental 'caps', there may be some force in the argument. However, this is clearly not the case given the possibilities of breach of the preceding provisions for a variety of other reasons.

54 The third point made goes to the prohibition on rachet clauses where the Applicant emphasises the provisions of s 35(3) render void only a 'collar' on rent after review so that it never falls below a certain level in a declining rental market. Thus, in common leasehold parlance, these provisions apply only to a 'collar' but not a 'cap'.

55 The Respondent submits, however, that an express prohibition on rachet clauses does not mean that caps are permitted, adding that the second proposition does not follow from the first. For the reasons indicated, I do not accept that proposition in the present context and neither do I accept that the interpretation of s 35(2) and (3) provisions proffered by the Applicant would allow a potential windfall gain to tenants. As indicated, I am of the view that the prohibition of a 'collar' but not a 'cap' on an outcome of a rent review process is entirely consistent with the language of s 35 and, indeed, the ongoing legislative approach to the regulation of rent reviews and retail tenancy leases. Moreover, the provisions of s 35(7) do not, in my view, impinge upon the operation of s 35(2) in terms of the rent review process and s 35(3) with respect to the outcome of that rent review process. Rather, the s 35(7) provisions are intended to provide an outcome where, in the particular circumstances, the rent review process and outcome has not delivered a compliant result under the preceding provisions of s 35.

56 The final point made goes to the argument that the provisions of s 35 of the RLA should be construed in favour of tenants. This does not mean, as appears to be implicit in the Respondent's submissions, that the provisions of the RLA should, on this basis, be construed in favour of tenants. The balancing of interests under this legislation, as emphasised by Deputy President Macnamara, has already been referred to, and is consistent with the point made by the Respondent that superficially ameliorating legislation may be limited in its operation because it does represent a compromise between competing interests. Moreover, balance is reflected in the Second Reading Speech for the Retail Leases Bill 2003 and the other provisions of the legislation, which go both ways in terms of the balance, to which reference has been made. In my view, the Applicant's points in this respect are well made and reflect the balance and approach as indicated in and consistent with the authorities and VCAT decisions.

57 The Respondent also made points in support of its position in relation to the history of the legislation, particularly the RLA. In my view, these matters have been fully addressed, save that it may have been helpful if draft recommendation 14 of the Review of Victorian Retail Tenancies Legislation: Discussion Paper (October 2001) had been acted upon.[94] Nevertheless, the fact that this recommendation was not adopted in the drafting of the RLA does not detract from its interpretation now as an enacted statute, as indicated in the preceding reasons.

58 Having regard to extensive reference to commentaries, it is desirable to make reference to a statement by Megarry J in Cordell v Second Clanfield Properties Ltd:[95]

I would add one comment, in amplification of certain observations that I made when during the argument counsel cited a passage from the 3rd edition of Megarry & Wade's Real Property. It seems to me that words in a book written or subscribed to by an author who is or becomes a judge have the same value as words written by any other reputable author, neither more nor less. The process of authorship is entirely different from that of judicial decision. The author, no doubt, has the benefit of a broad and comprehensive survey of his chosen subject as a whole, together with a lengthy period of gestation, and intermittent opportunities for reconsideration. But he is exposed to the peril of yielding to preconceptions, and he lacks the advantage of that impact and sharpening of focus which the detailed facts of a particular case bring to the judge. Above all, he has to form his ideas without the aid of the purifying ordeal of skilled argument on the specific facts of a contested case. Argued law is tough law. This is as true today as it was in 1409 when Hankford J. said: "Home ne scaveroit de quel metal un campane fuit, si ceo ne fuit bien batu, quasi diceret, le ley per bon disputacion serra bien conus" (Y.B. 11 Hen. 4, Mich., fo. 37); and these words are none the less apt for a judge who sits, as I do, within earshot of the bells of St. Clements. I would, therefore, give credit to the words of any reputable author in book or article as expressing tenable and arguable ideas, as fertilisers of thought, and as conveniently expressing the fruits of research in print, often in apt and persuasive language. But I would do no more than that; and in particular I would expose those views to the testing and refining process of argument. Today, as of old, by good disputing shall the law be well known.

As with many other issues that have arisen over the years, the decades, with respect to the retail leases legislation, commencing with the 1986 Act, difficult issues have arisen, including issues the subject of this appeal. As now, 'the testing and refining process of argument' has been employed in their resolution, as emphasised by Megarry J.[96]

59 For the preceding reasons, leave to appeal is granted and the appeal is upheld. Orders will be made accordingly.

60 The question of costs is reserved and I will hear the parties as necessary in this respect.

[1] Northcote Shopping Centre Pty Ltd v Aldi Foods Pty Ltd [2024] VCAT 641 ('Tribunal Reasons').

[4] Agreed Statement of Facts and Documents dated 5 February 2024.

[5] This was sent to the Tenant's address for notices specified in the Lease.

[6] Commissioner of State Revenue v Frost (2011) 83 ATR 832, 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335-6 and Myers v Medical Practitioners' Board (Vic) [2007] VSCA 163; (2007) 18 VR 48, 55-6 [28].

[7] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400; (2005) 145 LGERA 21, 26 [15] citing Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198; (2005) 13 VR 275.

[8] (2011) 83 ATR 832, 833-4 [3].

[9] Commissioner of State Revenue (Vic) v STIC Australia Pty Ltd [2010] VSC 608; (2010) 81 ATR 682, 687 [10] per Davies J.

[10] Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Al‑Hakim v Monash University (unreported, Court of Appeal, Vic, No 3707 of 2003, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48.

[11] See Morris v The Queen [1987] HCA 50; (1987) 163 CLR 454, 475; [1987] HCA 50; 61 ALJR 588, 597; [1987] HCA 50; 28 A Crim R 48, 63-64; [1987] HCA 50; 74 ALR 161, 176-177 per Dawson J.

[12] Osland v Secretary to the Department of Justice [No 2] [2010] HCA 24; (2010) 241 CLR 320, 333 [21]; [2010] HCA 24; 84 ALJR 528, 536 [21]; [2010] HCA 24; 267 ALR 231, 240 [21] per French CJ, Gummow and Bell JJ.

[13] Morris v The Queen [1987] HCA 50; (1987) 163 CLR 454, 475; [1987] HCA 50; 61 ALJR 588, 597; [1987] HCA 50; 28 A Crim R 48, 63-64; [1987] HCA 50; 74 ALR 161, 176-‍177 per Dawson J; Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335 [10]; [1999] VSCA 117; 15 VAR 360, 366 [10].

[14] Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335-336 [11]; [1999] VSCA 117; 15 VAR 360, 366 [11] per Phillips JA; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203; (2006) 63 ATR 65, 69 [20], 77 [65] per Hollingworth J.

[15] Justice Legislation Amendment (Court Security, Juries and Other Matters) Act 2017, s 31(3).

[16] Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48, 55 [28], citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335.

[17] See Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 7th ed, 2022), 965-7.

[18] The same requirement is imposed upon applicants for leave to appeal a VCAT decision before the Court of Appeal under s 148(1)(a) of the VCAT Act with the additional requirement to such an application set out at s 14C of the Supreme Court Act 1986; see Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 7th ed, 2022), 965-70.

[19] Section 63(1) of the Civil Procedure Act 2010 empowers a court to give summary judgment in a civil proceeding if the defence, inter alia, has 'no real prospect of success'.

[20] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27, 39 [29]. See also Kennedy v Shire of Campaspe [2005] VSCA 47, [3]-[14].

[21] [2005] HCA 40; (2005) 222 CLR 115, 136 [64].

[22] Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559, 575, 597; cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, 348 [74].

[23] (Supreme Court of Victoria, Ashley J, 21 December 1994), 13.

[24] (1971) 38 LGRA 6, 18.

[25] (1980) 44 LGRA 65, 67-8.

[26] (1985) 62 LGRA 346, 349-50.

[27] The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442, [59].

[28] And see Rysze International Pty Ltd v Yong [2021] VSC 786, [12]; Club Fogolar Furlan Melbourne v Paramount Investments Group Pty Ltd [2024] VSC 208, [12].

[29] [2015] VSCA 350; (2015) 48 VR 715.

[30] [2015] VSCA 350; (2015) 48 VR 715, 720 at [9]-[11]; and see Karakatsanis v Racing Victoria Ltd [2013] VSCA 305; (2013) 42 VR 176, 186 [22] (CA); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771, 782 [41], 805 [162] and [165] (CA); and Maund v Racing Victoria Ltd [2016] VSCA 132, [67].

[31] Transport Accident Commission v Hoffman [1989] VicRp 18; [1989] VR 197, 199; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48, 59 [44].

[32] S v Crimes Compensation Tribunal [1998] 1 VR 83, 88-93; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48, 59 [44].

[36] Croft, Hay & Virgona, Retail Leases Victoria, (LexisNexis, looseleaf), [200,025].

[37] Croft, Hay & Virgona, Retail Leases Victoria, (LexisNexis, looseleaf), [140,030].

[38] (2003) V ConvR 58-572; [2003] VCAT 503, [36].

[39] Croft, Hay & Virgona, Retail Leases Victoria, (LexisNexis, looseleaf), [50,030].

[45] Croft, Hay & Virgona, Retail Leases Victoria, (LexisNexis, looseleaf), [50,035.15].

[51] Mr Maurice Phipps QC, 'Rent Review', Retail Tenancies Reform - A guide to contemporary issues in Property Law (No 2), Leo Cussen Institute, May 1999.

[53] Croft, Hay & Virgona, Retail Leases Victoria, (LexisNexis, looseleaf), [50,030].

[54] T10.11-16; Wellington v Norwich Union Life Insurance Society Ltd [1991] VicRp 27; [1991] 1 VR 333, 334 (Nathan J); Peppercorn Nominees Pty Ltd v Loizou (1997) V ConvR 54-560, 66,734 (Smith J); Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd [2013] VSC 344, [42] (Croft J); CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017] VSC 23, [20] (Croft J); Krajcar v Eastern Central Real Estate Pty Ltd [2022] VSC 173, [39] (Croft J); T8.18-21.

[55] Pearce and Geddes, Pearce and Geddes Statutory Interpretation in Australia (LexisNexis, 9th ed, 2019) [9.2].

[57] [2022] VSC 173, [41], [43].

[61] [2023] VCAT 75.

[62] [2023] VCAT 121.

[63] [2024] VCAT 810.

[64] [2024] VCAT 810, [8].

[65] Landlord's submissions dated 8 April 2022.

[66] [2003] VCAT 1700.

[67] [2003] VCAT 503.

[68] Respondent's Outline of Submissions (31 October 2024), [16]-[21].

[69] Croft, et al, Commercial Tenancy Law, LexisNexis, 5th ed, 2024.

[71] The discussion paper is referred to in the Second Reading Speech for the Retail Leases Bill 2003: see Parliament of Victoria, Second Reading Speech, Hansard, Thursday, 27 February 2003 (Mr Brumby) p 230.

[78] See Mayberry v Mornington Peninsula Shire Council [2019] VSC 623, [87]-[94]; especially [92].

[84] [2009] VCAT 829.

[85] T23.7-13; See Kennedy v Australian Fisheries Management Authority [2009] FCA 1485 and Minister for Immigration and Ethnic Affairs v Teo (1995) 57 FCR 194, 206.

[86] Parliament of Victoria, Second Reading Speech, Hansard, Thursday, 27 February 2003 (Mr Brumby), p 230.

[87] See the observations referred to and applied by the Court of Appeal in Centurion Australia Investments Pty Ltd v APM Group (Aust) Pty Ltd [2023] VSCA 324, [53]-[57].

[88] [2012] HCA 55; (2012) 250 CLR 503, 519 [39].

[89] Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797, 1804 [33] (Heydon J with McHugh ACJ, Gummow, Kirby and Hayne JJ agreeing).

[92] [2019] VSC 623, [87]-[94], especially [92].

[93] [2009] VCAT 829, [33].

[95] [1969] 2 Ch. 9, 16-17.