Kingsley's Chicken Pty Ltd v Queensland Investment Corporation & Canberra Centre Investments Pty Ltd [2006] ACTCA 9

Kingsley's Chicken Pty Ltd v Queensland Investment Corporation & Canberra Centre Investments Pty Ltd [2006] ACTCA 9 - ACTCA 2006 case summary — Zoe

[38]

1. This matter comes before the Court of Appeal by way of a stated case on appeal from a decision of a single judge of this Court. Both matters involve the application of the Leases (Commercial and Retail) Act 2001 (the Leases Act) to a commercial lease over premises used as a food outlet in a major Canberra shopping centre. The real question for determination in this Court, both by way of resolving the questions in the stated case and the appeal, involves the interpretation of those provisions of the Leases Act that operate to modify what would be the ordinary common law rights of a landlord and tenant in respect of commercial premises.

2. The appeal and stated case essentially fall to be determined on the question of the proper interpretation to be placed on certain terms used in the Leases Act. Essentially, the question is whether the terms "offer" and "accepts" should be taken to have a technical legal meaning derived from contract law or whether a broader meaning should be given to these terms consistent with what is said to be the legislative intent.

3. The appellant has been a tenant of the respondents since October 1992 when it first occupied premises in the food court of the Canberra Centre, a major retail facility in the heart of Canberra. On 13 October 1998 a new lease was entered into by the parties, which by its terms was to expire on 12 October 2003.

4. The Legislative Assembly enacted the Leases Act in 2001, which by its terms seeks to regulate commercial and retail leases. Among its provisions is a regime whereby a tenant can, during the latter stages of a lease, seek an indication from a landlord as to whether the lease will be renewed, and the regime provides that, should the lease be renewed, the rental may not exceed market rent and there are specific provisions to resolve disputes within the Magistrates Court as to whether the proposed rent complies with this requirement.

5. These latter provisions become operative when a lessor makes an "offer" to the tenant to renew the lease and the tenant "accepts" that offer, subject to the determination of market rent. In the proceedings below both the learned Magistrate and the learned Judge have taken the use of the term "offer" in the operative provision of the Leases Act to have the ordinary common law meaning of a contractual offer as laid down by the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360. Both the learned Magistrate and the learned Judge took the view that, as the correspondence between the lessee and lessor concerning a renewal of the lease was, in the lessor's case, always marked as "subject to lessor approval", there had never been an "offer" to renew the lease, and accordingly the dispute resolution provisions of the Leases Act did not have effect. The principal issue in this appeal and stated case is whether the term "offer" in the Leases Act should be given its conventional common law contractual meaning or whether it should be given a broader meaning to encompass commercial negotiations leading towards a possible renewal of a commercial lease.

[110]

53. We are far from satisfied that, in their ordinary usage, the terms "offer" and "accepts" as used in the Leases Act necessarily imply the technical contractual meaning of the terms. Even if it were to be accepted that, of the two possible interpretations, the technical legal approach would be favoured, the effect of s 139 of the Legislation Act, in our view, requires this Court to prefer an interpretation that best achieves the purpose of the legislation. It seems clear to us that this would favour the view that the terms in question are to be given their ordinary meaning rather than restricted to their technical contractual meaning. It follows that the learned Magistrate, and the learned primary appeal Judge, were in error in holding that the jurisdiction of the Magistrates Court was not enlivened because the parties had not yet reached a firm contractual agreement.

54. Counsel were of one mind that, should this be our view, the preferable order would be to remit the matter to the Magistrates Court to exercise the function conferred on that Court pursuant to s 58 of the Leases Act, as there was not sufficient evidence before us to enable us to determine this question. When the matter came before the Magistrates Court, the appellant and the respondents both submitted that the Court did have jurisdiction, and the argument was, in effect, as to whether sufficient grounds for disqualification of the valuer were capable of being made out. This may become relevant to the question of costs.

55. Once the Magistrates Court had ordered that it had no jurisdiction to determine the issues between the parties, contrary to the submissions of both parties, the conduct of the respondents in seeking to order the appellant to quit the premises is entirely understandable, and again this may be relevant to the eventual order as to costs.

56. The stated case sought a range of answers to questions that would arise depending on the answer to the primary question as to whether or not the jurisdiction of the Magistrates Court was enlivened to appoint a valuer to determine market rent and to entertain an application pursuant to s 58 to appoint a new valuer. It seems to us that there is a danger in proceeding beyond this primary question in these proceedings. Until the application is dealt with according to law, it is a somewhat hypothetical set of questions and gives rise to the long recognised danger of appellate courts proffering what are in effect advisory opinions. It seems to us that the proper course is not to answer the stated case questions beyond the point that is necessary to determine the appeal, and to remit the matter to the Magistrates Court for further determinaton. Should the application be successful, a new valuer will be appointed, and a new market rent set. This must, it seems to us, be a determination of market rent at the date of the conclusion of the former lease. Should the application be unsuccessful, then the extant determination of the valuer will have effect. As it is common ground between the parties that there is no "interim agreement" here, the parties will be free to decide whether or not to enter into a new five year lease from 13 October 2003.

57. It is appropriate to observe that s 55 of the Leases Act clearly provides that once the market rent is "worked out" then that is the rent to apply from the date of the end of the former lease. This is clearly a sensible provision, as otherwise a tenant could, by long process of appeal and negotiation, effectively freeze a rental that had long been overtaken by events. Section 55 provides -

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Judgment (123 paragraphs)

Kingsley's Chicken Pty Ltd v Queensland Investment Corporation & Canberra Centre Investments Pty Ltd [2006] ACTCA 9 (2 June 2006)

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Legislation Cited (4)

Cases Cited (3)