2 This proceeding is referred to an administrative mention on 29 January 2007; whereby, each party will inform the Tribunal in writing if there is any disagreement over the terms and contents of the retail premises lease for five years commencing 8 September 2003 and their grounds for their position in relation to any disagreement and full particulars of fact and law that they submit establishes such grounds.

1 This is an application by the tenant of Sandors Motel, Daco Enterprises Pty Ltd seeking declarations under the Retail Leases Act 2003 ('the Act') that it is entitled to a lease of the demised premises for five years commencing on 9 September 2003. The motel is situated at 179-181 Deakin Avenue, Mildura ('the demised premises').

2 The respondent landlord, the Golden Sultana Pty Ltd ('the landlord') resists the application on the basis that the Act does not apply to the lease under which the tenant holds possession of the demised property. Alternatively, if the tenant is entitled to a five year lease under the Act that lease commenced on the date the landlord originally leased the demised premises to the assignor of the current tenant, Malatex Pty Ltd, which lease commenced on 9 September 2000 and the five year term has now expired.

3 The hearing proceeded on the basis of agreed facts between the parties, a summary of the relevant facts are:-

(a) the landlord let the demised premises to Malatex Pty Ltd on a three year lease commencing 9 September 2000, with an option for renewal for a further six years ('the original retail lease');

(b) the tenant purchased the business and took an assignment of the lease from Malatex Pty Ltd and there was a deed of assignment of the lease to the tenant dated 29 April 2002;

(c) the term of the lease expired on 8 September 2003 and the tenant did not renew the lease.

(d) the tenant remained in possession of the demised premises on an overholding, subject to Clause 10.1 of the original retail lease and this periodic tenancy continues to this day, the applicant remaining in possession of the demised premises as a monthly tenant ('the periodic tenancy').

4 There are no other applications on foot other than the tenant's application and there are no submissions that either party is in any way in breach of the original retail lease or the periodic tenancy. Both parties agree that the premises is a retail premises within the description of such premises under sub-section 4(2)(a) of the Act.

5 The salient points of the tenant's position is that;-

(a) Section 11 of the Act provides:

'This Act applies to a retail premises lease that is:

(a) entered into after the commencement of this section; or

(b) renewed after the commencement of this section, whether the lease was entered into before or after that commencement.'

(b) when the original retail lease ended on 8 September 2003, a periodic monthly tenancy was commenced, and the tenant submits on the authority of Hamilton v Porta [1958] VicRp 39; [1958] VR 247 at 250 that this was a new retail premises lease;

(c) under sub-section 12(1) of the Act, the Act does not apply to a retail premises lease if its term is less than one year; the effect of this sub-section is ameliorated by sub-section 12(2) which provides as follows:-

'However, if the term of a retail premises lease is less than one year and as a result of either or both of the following -

the tenant is continuously in possession of the retail premises for one year or more under the lease after the commencement of this section, this Act applies to the lease on and from the day on which the tenant has continuously been in possession of the retail premises for one year after that commencement.';

(d) the tenant was in possession of the premises continuously from the expiration of the original retail lease on 8 September 2003 until 9 September 2004; therefore, the Act applies to this lease;

(e) under sub-section 21(1) of the Act a tenant is entitled to a minimum term of five years, the sub-section is in the following terms:

'The term of a retail premises lease, including any further term or terms provided for by an option for the tenant to renew the lease, must be at least five years; or, if the term remaining under any head lease under which the landlord holds the retail premises is five years or less, the length of that remaining term less one day.'

(f) the calculation of the five year term is subject to sub-section 21(2A) of the Act, which was inserted by the Retail Leases (Amendment) Act 2005, No. 82/2005 assented to on 22 November 2005. This amendment also gave retrospective operation to this sub-section as from the commencement of the Act ie. 1 May 2003. Sub-section 21(2A) is in the following terms:

'In applying sub-section (1) to a retail premises lease to which this Act applies because of section 12(2), account must be taken of any period during which the tenant was continuously entitled to possession of the retail premises before the day on which this Act first applied to the lease.

Note: Section 8 provides that an assignment of a retail premises lease is to be taken as a continuation of that lease.'

(g) the tenant acknowledges that sub-section 21(2A) applies to the tenant's situation and the period of occupation under the lease from the commencement of the periodic tenancy on 9 September 2003 must be taken into account and that the date of the commencement of the five year term must be the date of the commencement of the periodic tenancy;

(h) lastly, the tenant submits that under sub-section 21(7), it is entitled to a statutory rent review in accordance with that sub-section.

6 The landlord submits that the tenant is not entitled to its declarations because;-

(a) Subclause 10.1 of Clause 10 of the original retail lease, titled Overholding and Abandonment of Premises, is in the following terms:-

'If the tenant remains in possession of the premises without objection by the landlord after the end of the term:

10.1.1 A tenant, without any need for written notice of any kind is a monthly tenant on the conditions in this lease, modified so as to apply to a monthly tenancy;

10.1.2 Either party may end the tenancy by giving one month's notice to the other at any time;

10.1.3 The monthly rent starts at one-twelfth of the annual rental which the tenant was paying immediately before the term ended unless a different rent has been agreed; and

10.1.4 The landlord may increase the monthly rent giving the tenant one month's written notice.'

(b) The landlord submitted that the periodic tenancy, due to the overholding, was part of the original retail lease, citing as authority the decision of Brereton J. in Gill v Wright (1964) 82 WN (Pty.1) (NSW) 347, where His Honour held that where a lease contains provision for overholding via a monthly tenancy, if there is no objection by the landlord to the tenant remaining in possession then the lease contains a contract for a possible holding over which is part of the original grant of the lease and becomes effective on the contingency of the overholding occurring. Thus, landlord submits the periodic tenancy is only part of the original retail lease of 2000 or at least since the assignment of 2002. Both of these dates are prior to the 1st of May 2003 and therefore the landlord submits the Act does not apply.

(c) Alternatively, if the Tribunal considers that a new lease does exist from 9 September 2003, then Section 21 of the Act as amended does not create a statutory term as contended for by the tenant. Under sub-section 21(2A) account must be taken of any period during which the tenant was continuously entitled to possession of the retail premises before the day on which the Act first applied to the lease. The tenant has been in actual continuous possession since the date of the assignment of 21 April 2002 and by the operation of Section 8 of the Act the lease period began at the start of the original retail lease being 9 September 2000 and the lease period continued over the overholding period continuing up until the present time. Therefore, any five year minimum term would have expired by this date.

(c) Further, the landlord submits the original retail lease in this case granted a term of three years and a option for a further six years, which was not exercised by the tenant. Such a lease is not deficient in time in relation to the Act and does not require a statutory extension. The purpose of Section 21 of the Act is not to save a tenant who has not exercised an option to renew the lease that was available.

7 I will deal firstly with the question as to whether the Act applies; and submissions of both parties show that the decision as to this centres around whether a new retail premises tenancy was created when the overholding started at the end of the original retail lease on 9 September 2003. In relation to the authorities relied upon, I consider that I am bound by the decision of Chief Justice Herring in Hamilton v Porter (supra) which held that the overholding did create a new retail tenancy, being a periodic tenancy, but I also do so on the basis that I consider decision in Hamilton correct at law.

8 I consider that the finding in Gill v Wright, cited by the landlord, for the proposition that where provision has been made in the original lease in regard to overholding then overholding is part of the original grant and cannot be regarded as a new lease, is in direct conflict with the decision of the Chief Justice in Hamilton v Porter. In Hamilton v Porter at page 250 the Chief Justice said:-

Where property is leased for a term, the tenants interest under the lease comes to an end at the expiration of the term. To give him a continuing interest in the premises, apart that is to say from any right he may be given by statute, a new contract and a new tenancy is required. There must be a consensus ad idem between the parties. Such a consensus ad idem could be inferred, before the operation of the rent restriction acts, from the tenant remaining in occupation after the term had expired and the landlord allowing him to remain and accepting rent from him. Before such acts came into force the landlord was free to eject the tenant at the end of the term, if he so desired. An inference could therefore be legitimately drawn from his not doing so but on the other hand allowing the tenant to remain in possession, that he for his part was agreeing to the tenant continuing on as such. A clause in the original lease prescribing the terms, that will attach in the event of an overholding, presupposes that from the circumstances of the overholding a new tenancy can properly be inferred, for unless and until there is a new tenancy, the prescribed terms are left as it were in the air with no tenancy to which they can attach. Without such a new tenancy such a clause therefore will not operate at all.

9 Both of the leases in question in Hamilton and Gill contained a clause in relation to overholding that, although expressed in more arcane terms than the term as to overholding in Gill, and both contained similar provisions as to overholding as did the original retail lease now under consideration. The two decisions appear to me opposed in their basic reasoning. In Gill, Brereton J held that an overholding term in a lease created a contract at the time of the creation of the lease and therefore it was part of the original grant of possession ie. it could not be regarded as separate to it, there was continuity in the grant and the right to possession. Whereas, Herring CJ in Hamilton reasoned that if an overholding came to pass a new contract and a new tenancy must have been created, reasoning without such a new tenancy such a clause (ie the overholding clause) therefore will not operate at all.

10 With the greatest respect I consider that the reasoning of Herring CJ is more logical than that of Brereton J, in that, for the overholding to take place the tenant must not leave the demised premises at the end of the term, as it is entitled to do; and, secondly, the landlord does not object, which it is entitled to do. Therefore, I do not see the inclusion of a term as to how overholding can take place sets up a new contract, it is put there by the parties as a description of how they will regulate that overholding and how it will be regarded in the event that it takes place. However, it is not a settled contract that this would happen, it does not create a right to possession or obligation in either party, it is subject to their behaviour at the end of the original tenancy. It still needs the consensus and agreement of both parties for the tenant to continue in occupation after the end of the original retail lease and I consider it is at this time that a new contract for the tenant to have possession of the demised premises is created between the tenant and the landlord.

11 Therefore, I consider a new tenancy was created on 9 September 2003. Further, I accept that it was a periodic tenancy that lasted for more than a year and therefore in accordance with the provisions of Sections 11 and 12 of the Act I consider that the Act does apply to this retail premises lease. In relation to the tenant's entitlement to a minimum five year term under Section 21 there appeared to me to be a number of competing contentions depending on the meanings given to the words in sub-section 21(2A) and in the face of any ambiguity in the meaning of the words, what to make of the evidence that can be brought in to support of such competing constructions.

12 Taking into account sub-section 21(2A), the tenant submits it is entitled to a five year term commencing at the start of the periodic tenancy of 9 September 2003. Allowing that the Act applies, the landlord contends that, taking into account the note to sub-section 21(2A) and that an assignment of a lease is taken to be a continuation of the lease, the tenant has been continually entitled to possession back to the start of the original retail lease.

13 Which of these contentions is correct? If the landlord's contention is to be correct it appears to me that it is submitting that the words in sub-section 12(2A) 'the tenant was continuously entitled to possession of the retail premises' equate with the words 'the tenant was continuously in possession of the retail premises'. The first objection to the landlord's contention is that it does not give any work to the word 'entitled', and, secondly, the landlord's contention relies on actual possession whereas the subsection is framed in terms of 'entitlement' not 'actual possession'.

14 We should also remember that we are dealing with a retail premises lease, the retail premises lease in this case being the lease under sub-section 12(2) of the Act which I have already found to be a new retail premises lease arising as a result of the overholding. Keeping this in mind, I consider the solution is again to be found in the reasoning of Chief Justice Herring in Hamilton at page 250, set out above. In the passage cited the Chief Justice held a new lease is required if an overholding is to commence and, absent the rent restriction acts, a consensus between the parties to the new tenancy could be inferred from the landlord allowing the tenant to remain and accepting rent from him where the landlord was in the position, as here, to eject the tenant at the end of the term (providing always of course that the landlord had complied with the requirements of the lease and this Act). Thus, I consider the tenant at the end of the original term on 8 September 2003 is not entitled to possession but must wait and see if the landlord objects and the tenant's possession is brought to an end or if the landlord does not object, the tenant stays in possession and the parties have thereby agreed, by inference, to the tenant having a further entitlement to possession, and a new tenancy is created.

15 I consider this interpretation accords with commonsense. If the landlord has objected and a new tenancy for the demised premises was negotiated with either this tenant or another person, under Section 21(1) the term for any retail premises lease would need to be for a minimum of five years. Likewise, I consider that whenever a new tenancy is created, in this case via overholding, it must comply with Section 21.

16 The landlord submitted that any tenant on an overholding which called into question the operation of sub-section 12(2) could always force a landlord into giving a lease for the minimum statutory period of five years. I agree, that is what Section 21 of the Act requires, where there is a new retail tenancy, ie. a new retail premises lease, under Section 21 it has to have a minimum five year term subject always to the commencement of that term being influenced by sub-section 21(2A). I accept that the operation of sub-section 21(2A) means that the tenant was entitled to possession from the date of commencement of the period tenancy of 9 September 2003. I do not consider that the note to sub-section 2A regarding the assignment of a lease has any relevance to my analysis as my reasoning is based on the premise that the commencement of an overholding creates a new tenancy.

17 It became apparent to me whilst writing this determination that my decision may be significantly influenced by the provisions of sub-section 21(3) of the Act which is in the following terms:

"This section does not apply to a renewal of a lease if there is no break in the tenant's entitlement to possession of the retail premises."

18 I did not consider it appropriate to decide the effect of this sub-section on my determination without first giving the parties an opportunity to present their submissions as to its affect. The parties attended a further hearing on the 12 July 2006 at which they provided me with written submissions and addressed those submissions. I appreciate and thank them for their efforts.

19 The tenant submitted that the decision previously cited by it Hamilton (supra) was relevant. He submitted that renewal is defined in section 9(1)(b) of the Act as:

"In this Act, the "renewal" of a retail premises lease means the renewal of the lease -

(a) under an option granted under the lease for a further term; or

(b) under an agreement to renew the lease on substantially the same terms and conditions, except as to rent, for a further term entered into by all of the parties to the lease."

20 The tenant submitted that Section 10 was also relevant, this section states:

"If, in accordance with a retail premises lease, the tenant continues to be in possession of the retail premises for a period after the lease has expired, the lease is taken to continue for the purposes of this Act while the tenant is in possession of the premises."

21 The tenant submitted that the original lease was a lease for a fixed and definite term which was a wholly different creature from the periodic tenancy created by the overholding. The tenant submitted that the periodic tenancy was not an agreement to renew the lease for a further term; and, therefore it was not a "renewal" under the Act. The tenant further submitted that the legislature's perceived need to insert Section 10 in the Act implies that a periodic tenancy arising on an overholding is not to be treated as a renewal.

22 The landlord submitted that a periodic tenancy is a lease of one continuous duration: "The duration of a periodic lease does not determine and recommence on each notice period but rather it is of continuous duration which is determinable upon certain notice having been given: per Latham J in Amad v Grant [1947] HCA 9; (1947) 74 CLR 327 at 337.

23 The landlord submitted that the tenant took its assignment of the retail premises effective from 21 April 2002 and had been continuously entitled to possession since that date.

24 In deciding the effect of sub-section 21(3) attention should directed to the fact that clause speaks of "entitlement to possession" and not actual of possession; once this is realised it is apparent that the reasoning of Herring C J in Hamilton (supra) is pertinent which shows that the tenant did not have an entitlement to possession at the time that the original retail lease came to an end. The tenant had to wait, the length of time being irrelevant, to establish if the landlord would agree to it overholding after the end of the original retail lease. Therefore, I find that there was a break in the tenant's entitlement to possession over the period from the end of the retail lease until the overholding began.

25 I am reinforced in this view by the observations of Dr Croft in his book "Retail Leases", Volume 2 at page 185, where in discussing the purpose and effect of sub-section 21(3) he observes that:

"Sub-section 21(3) has been included to overcome the difficulties that would arise if the renewal of a lease under an option to renew which was conferred when the lease was entered into (in contradistinction to the situation in sub-section 21(2)) was exercised during the minimum five year term period. Without this provision a renewal of lease (which at general law is a fresh lease) would attract the minimum five year provision of section 21 afresh, which would entirely disrupt the initial calculation of the minimum five year term. The same potential difficulty, of course, exists if the lease is renewed after the expiration of the minimum five year term. Without a provision such as sub-section 21(3) the five year minimum term provisions would be attracted on every lease renewal. This is apparently not the intention of the legislature as long as there is no break in the tenant's entitlement to possession of the retail premises (see sub-section 21(3)). The implication of this exception to these provisions is that where there is a break in the tenant's entitlement to possession, every lease "renewal" will be treated as a fresh lease for the application of the minimum five year term provisions of section 21."

26 Thus, according to Dr Croft sub-section 21(3) was included to overcome difficulties arising from options to renew and not to overcome periodic tenancies arising on overholding, although he does note that they can be affected. Thus, I consider that the tenant is entitled to a five year term from the day after the expiration of the original retail lease.

27 Therefore, I consider that the tenant is entitled to the declarations that it sought in the following terms:-

(b) The tenant is entitled to a retail premises lease for a minimum period of five years from 9 September 2003.

(c) The initial rent payable under the lease should be assessed in accordance with sub-section 21(7) of the Act.

28 The tenant sought a final declaration that the lease be on the same terms as the original lease with any necessary changes made. I am loath to make such a general declaration that may give rise to further disagreement between the parties. I would need to know the precise changes to be made before I would make such a declaration. For this reason I will not make such a declaration at this time. I will make an order that this proceeding be referred to an administrative mention in approximately one month whereby the parties can inform the Tribunal in writing if they have satisfactorily resolved all issues or if there are any matters outstanding we can set the proceeding down for a further short hearing to resolve any such disagreements. I shall structure the order for the administrative mention so that if there are any disagreements the parties have to inform each other and the Tribunal of the parameters and particulars of their disagreements and their responses; upon being notified of any such disagreements I will set the matter down for a further half day hearing. If the parties inform the Tribunal there are no disagreements, I will make no further orders.

29 As costs cannot be awarded in this jurisdiction I have not made any orders as to costs, and as presently advised I do not intend or see how I can do so.