Pyrmont Point Pty Ltd v Westacott

Brief history of the relevant facts

1. The lease at the centre of the dispute between the parties concerns retail premises that were originally leased for a term of 5 years, from 19 March 2004 to 18 March 2009, with 4 options of 5 years each ("Original Lease"). The lease with all options exercised was for a term of 25 years. An issue arose between the lessee and lessor as to the manner of determining the rent payable for the premises, and the lessee made an application to the Tribunal for a resolution of the issue. The question of the interpretation of s.6(1)(b) of the Act and the jurisdiction of the Tribunal arose in that context.
2. The facts surrounding the tenancy of the premises, a liquor outlet, are not in dispute. The outline of the facts set out below is extracted from the decision of the Appeal Panel (at [5] - [24], [26]-[27],[29]). "5. The parties to the Original Lease were Dukest Property and Investments Pty Ltd, as lessor, and Dukest Trading and Investments Pty Ltd, as lessee. The memorandum of lease, dated 19 March 2004, indicated that the commencing date was 19 March 2004 and the terminating date was 18 March 2009. 6. Clause 4.3(a) of the Original Lease provided for either party to give notice to the other party, six months before the terminating date, stating what it believed to be the current market rent for the premises at the date of commencement of any renewed term. Clause 4.3(b) stated that if the party receiving such a notice disputed the suggested rent, it must give notice to this effect within 28 days. In subsequent paragraphs, the clause provided for the resolution of any such dispute by an agreed valuer or (failing agreement) by the President or other officer of the Australian Property Institute Inc (NSW Division). 7. Clause 8.1 of the Original Lease stated as follows:- OPTION If the Tenant gives the Landlord not less than three months nor more than six months written notice before the expiry of the Term that it wishes to renew this Lease for the further term specified in Item 13 (Further Term) from the expiry of the Term, and if the Tenant has duly performed all its obligations under this Lease during the Term, the Landlord must grant to the Tenant a lease for the Further Term (Renewed Lease) on the same terms and conditions (including any guarantee) as this Lease but amended as follows: (a) The following amendments will be made to the Reference Schedule. (i) Item 1 - Landlord will be the then registered proprietor of the Land. (ii) Item 4 - Term of the Renewed Lease will be that specified in Item 13. (iii) Item 5 and Item 6 will be the Commencement and Termination Dates of the Renewed Lease (iv) Item 7 - Minimum Rent - will be the Minimum Rent determined under clause 4.3 (v) Clause 8 and Item 13 will be deleted and marked "Not Applicable" but only for the Lease of the Term ending 18 March 2009 otherwise clause 8 and Item 13 remain unchanged. (b) Such other consequential amendments as are appropriate. 8. In clause 1, 'Term' was defined to mean 'the period specified in Item 4'. Item 4 of the Reference Schedule stated that this period was five years. 9. Item 13 of this Schedule was as follows:- 4 options for renewal each for a period of 5 years with the intent that if all options for renewal are exercised the Termination Date of the final term will be 18 March 2029. 10 The provision (Item 14) defining the permitted use of the Original Lease commenced as follows: 'Off Licence Retail bottle shop and delicatessen...' It was common ground that this use fell within the scope of Schedule 1 of the RL Act. 11. On 20 April 2004, Dukest Property and Investments Pty Ltd assigned its interest as lessor under the Original Lease to Mr Westacott. 12. On 10 May 2006, Dukest Trading and Investments Pty Ltd assigned its interest as lessee under the Original Lease to Pirrama Pty Ltd ('Pirrama'). 13. At some point during the period stipulated in clause 8.1 for exercise of the first option to renew the Original Lease, Pirrama exercised this option. In consequence, Mr Westacott issued to Pirrama a lessor's disclosure statement dated 9 March 2009. Above the heading 'Lessor's Disclosure Statement' appeared the words 'Retail Leases Act 1994 Schedule 2'. 14. On or about 19 March 2009, a memorandum of lease ('the Second Lease') was executed by Mr Westacott and Pirrama. It indicated that the commencing date was 19 March 2009 and the terminating date was 18 March 2014. Clause 4.3 in the Second Lease was in the same terms as in the Original Lease. Clause 8 was unchanged, except that the date specified in subparagraph (v) of paragraph (a) was 18 March 2029. Item 13 of the Reference Schedule was unchanged, except that it referred to three, not four, options for renewal. 15. On 15 September 2010, Mr Westacott, Pirrama and Pyrmont Point executed a deed of consent to the assignment of Pirrama's interest under the Second Lease to Pyrmont Point. In this deed, the term 'Lease' was defined as a 'Lease for 5 years from 19 March 2009 to 18 March 2014 with 3 options for renewal each for a further period of 5 years...' 16. On 22 September 2010, Pirrama assigned its interest as lessee under the Second Lease to Pyrmont Point. 17. On 11 July 2013, Andrew Gibbons of Endeavour Property Advisory, acting as an agent of Pyrmont Point, sent to Patrick Woods of RJI Legal, who was Mr Westacott's solicitor, an email stating that the rent payable under the Second Lease was 'over double of the current market rental rates'. Attached to this email was a notice purporting to be a request under section 32(1 )(b) of the RL Act for a determination of the current market rent that would apply if Pyrmont Point exercised the option to renew the Second Lease. 18. On 18 September 2013, Mr Woods sent to Pyrmont Point an email giving notice under clause 4.3(a) of the Second Lease that Mr Westacott considered the current market rent for the premises to be $123,309 per annum plus GST. 19. In a letter to Mr Woods dated 23 September 2013, Mr Gibbons advised that Pyrmont Point disagreed with Mr Westacott's opinion as to the current market rent for the premises. He suggested that a specialist retail valuer should be appointed by the parties under section 31 of the RL Act, adding that if Mr Westacott did not agree with this approach, Pyrmont Point would apply to the Administrative Decisions Tribunal ('the ADT') for appointment of an independent valuer under section 32. 20. On 23 October 2013, an application for appointment of a specialist retail valuer relating to the Second Lease was filed in the ADT. It was defective because (inter alia) it was filed by Pirrama, not Pyrmont Point. 21. On 14 November 2013, Mr Westacott filed an affidavit sworn by Mr Woods on the previous day, in which it was asserted that the ADT lacked jurisdiction to appoint a valuer because the leases between the parties were excluded by section 6(1)(b) from the operation of the RL Act. 22. On 19 November 2013, on account of concerns that its earlier notice might have been defective, Pyrmont Point served on Mr Westacott a second notice under section 32(1)(b). 23. On 21 November 2013, the ADT granted leave to Pyrmont Point to file an amended application substituting itself for Pirrama as the applicant. The Tribunal ordered that the question whether the RL Act was applicable should be decided 'on the papers' and gave directions for the filing of submissions on this matter. 24. Pursuant to these orders and directions, Pyrmont Point filed an amended application on 21 November 2013. It subsequently filed affidavits sworn by its solicitor, Jon Martin of JDK Legal, on 29 November 2013 and on 5 February 2014. It also filed three sets of submissions prepared by its counsel, David Murr SC. These were dated 29 November 2013, 5 February 2014 and 27 February 2014. [.…] 26. On 17 December 2013, Pyrmont Point sent a written notice to Mr Westacott of its intention to exercise the option of renewal contained in the Second Lease, thereby giving rise to a further five-year lease of the premises. 27. In correspondence bearing the same date between Mr Woods and Mr Martin, Mr Martin maintained that the RL Act was applicable to the Second Lease (and any lease created by the exercise of the option contained it) and Mr Woods denied this proposition. [As at 1 January 2014 the ADT was abolished and its functions, including the determination of applications before the ADT, were taken over by NCAT.] [.…] 29. Pursuant to leave granted on 29 January 2014 by the Consumer and Commercial Division of the Tribunal, Pyrmont Point filed an amended application. This was an application for the appointment of a specialist retail valuer under section 31(1)(b) of the RL Act to determine the current market rent for the renewed lease arising from Pyrmont Point's exercise of the option ('the Third Lease')." 30. On 19 March 2014 the third lease commenced."

NCAT Proceedings

1. On 25 March 2014 in an application dealt with on the papers, the Tribunal (constituted by Senior Member Mullane) determined that, because the lease between the parties fell within the scope of s 6(1)(b), the Act did not apply to the issue between the parties, and the Tribunal lacked jurisdiction to determine the dispute over rent (Pyrmont Point Pty Ltd (ACN 145199784) trading as "Red Bottle" v Westacott [2014] NSWCATCD 40.)
2. Although the reasons for it are unclear, the Tribunal, constituted by Senior Member Rickard, determined the matter again on 8 April 2014, reaching the same decision. This second decision of the Tribunal was later declared null and void, as the Tribunal was functus officio at the relevant time.
3. On 17 April 2014 Pyrmont Point filed a Notice of Appeal, seeking orders setting aside both decisions of the Tribunal. That appeal was heard by an NCAT Appeal Panel on 11 November 2014, with judgment given on 16 December 2014, dismissing the appeal.
4. The Appeal Panel agreed with the interpretation of s.6(1)(b) of the Act given by the Tribunal at first instance,

Supreme Court Proceedings

1. The plaintiff filed a summons seeking leave to appeal in the Supreme Court on 12 January 2015. Primarily the plaintiff seeks to appeal order 1 in the proceedings below which dismissed the appeal against the Tribunal's decision of 25 March 2014.
2. The grounds advanced by the plaintiff are akin to arguments in support of the appeal, rather than grounds of appeal proper. They are lengthy, and I do not propose to set them out in full here.
3. Suffice it to say that, at the hearing of the application for leave to appeal in this Court, the plaintiff accepted that at the heart of the appeal was the complaint that the Appeal Panel had erred in its interpretation of s.6(1)(b) of the Act. The parties agreed that this was the issue to be determined in deciding the question of leave and, should leave be granted, the appeal itself.

The Arguments of the Parties

1. Consistent with that approach, the parties focused in submissions upon the meaning of s.6(1)(b) and how the provision should be understood.
2. In the context of a lease with options for renewal or extension, the plaintiff contends that the provision is intended by its wording to refer only to the period of renewal or extension which is current at the material time.
3. Applied to the lease that was current at the time the matter was referred to the Tribunal for resolution of the rental dispute, the term "lease" or "leases" in s.6(1)(b) could only mean, in the plaintiff's submission, the five year lease renewal option then current or, at most, that five year option with one further option, making a ten year lease in total.
4. It argues that, once a lease renewal or extension option is exercised, only that new lease exists, with all that had gone before or which may come after irrelevant. On that basis, the plaintiff contends that the Tribunal and the Appeal Panel were both in error in having regard to the whole of the lease, from its origins as a lease for five years with four further five year options available by which to extend the lease.
5. The defendant argues that ordinary principles of statutory construction apply to the interpretation of s.6(1)(b), and the words used in the provision are to be given their natural and ordinary meaning. Applying that approach, it is clear that the section provides its own definition of the leases to which it applies, where the "term" of a lease is taken to include any options for renewal or extension. The defendant's submission is that the term of the lease between he and the plaintiff must be taken to be 25 years, since that includes the lease term of five years and each of the four options for renewal of five years each.
6. The parties agree that there is no direct guidance in any authority decided by a superior court in which the meaning of s.6(1)(b) has been considered.

Consideration

1. The Retail Leases Act 1994 is, according to the statute itself, "An Act to make provision with respect to the leasing of certain retail shops and the rights and obligations of lessors and lessees of those shops, and for other purposes."
2. The adoption of the word "certain" clearly indicates that not all retail leases and retail shops are intended to be covered by the operation of the Act.
3. Sections 5, 6, and 6A are exclusionary provisions, which operate to remove some retail premises and some retail leases from the governance of the statute.
4. Section 6(1)(b) provides: "Leases to which Act does not apply (1) This Act does not apply to any of the following leases of retail shops: (b) Leases for a term of 25 years or more (with the term of a lease taken to include any term for which the lease may be extended or renewed at the option of the lessee."
5. It is clear from the heading to and wording of s.6 that it is an exclusionary provision, intended to exclude certain leases from the operation of the Act. That is further confirmed by the explanatory note to the definition of "retail shop lease" or "lease" contained in s.3, the definitions section. The note is to the effect that s6, amongst other provisions, limits the retail shop leases to which the Act applies.
6. Accepting that the provision is exclusionary, how wide is its scope?
7. In construing the meaning and effect of a statute or statutory provision, the task of the courts is to ascertain the objective intention of the legislature and give effect to that intention. That purposive task is undertaken by determining the meaning of the language used, in accordance with principles of construction fixed by common law or statute: Wilson v Anderson [2002] HCA 29; (2002) 213 CLR 401 at [8]. Determining the meaning of the words used in the context in which they appear is fundamental to the exercise.
8. An underlying principle of statutory construction is that ambiguity or uncertainty should not be read into a statutory provision by the courts; where the language employed by the legislature is clear it should be given its ordinary meaning: Maunsell v Olins [1975] AC 373 at p.394. Although individual words in the English language can often be used to convey many shades of meaning, statutes are not drafted as a demonstration of the beauty and richness of the language, and so it is the natural and ordinary meaning of the words used which is to be given primacy.
9. Although the plaintiff contends that the Court must have regard to the Parliament's assumed intention to protect lessees, rather than to benefit lessors, in passing the Act, "[…] there is nothing more dangerous and fallacious in interpreting a statute than first of all to assume that the legislature had a particular intention, and then, having made up one's mind what that intention was, to conclude that that intention must necessarily be expressed in a statute, and then proceed to find it": Richardson v Austin (1911) 12 CLR 463 at 470, per Griffith CJ.
10. On that basis I discount the "anecdote" the plaintiff referred to, to the effect that the Parliament intended by the passage of the Act to protect small businesses, which typically obtain short term retail leases, from their more powerful landlords.
11. In any event, it has been held to be erroneous to have regard to extrinsic material before exhausting the ordinary rules of statutory construction: Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 per French CJ, Gummow, Hayne, Crennan and Kiefel JJ, at [33]. Fidelity to the text is important and, where the meaning of the text is clear, it is not necessary to go beyond them.
12. Setting aside for the moment such extrinsic material as may be available, and starting with the words of the section, the question is whether the section catches a lease which, cumulatively by reference to the available options for extension or renewal, has a term of 25 years or more.
13. By reference to the ordinary meaning of the words of the section, it must, in my view, apply to such leases.
14. The language used in the section is unambiguous, and can be read in a straightforward way. The sub-section contains an internal definition of what the phrase "lease for a term of 25 years or more" means in the context of the section, that being a lease for such a term, or a lease which may be extended or renewed at the option of the lessee.
15. That is, where a lease includes options for renewal or extension that may be exercised by the lessee to a total of 25 years or more, it is relevantly categorised as a lease for 25 years or more.
16. That is the plain meaning of the language used and, in accordance with the principles that ordinarily apply to statutory construction, those words should be given their usual meaning.
17. The plaintiff contends that this cannot have been the intention of the Parliament, since such an interpretation would be contrary to logic.
18. I do not consider that submission to be capable of being made good as I see no inherent flaw of logic in that interpretation.
19. As a matter of logic, the provision - by including in the definition of a 25 year lease, those leases which contain an option for renewal or extension by the lessee only, and not by the lessor - clearly aims to achieve a balanced outcome. Without that exclusionary provision, lessors who provide a lease with options exercisable by the lessee capable of amounting to a lengthy tenancy would be bound by statutory provisions intended to regulate shorter term tenancies. Since the lessor has no control over the exercise of the option by the lessee under relevant leases, this could result in a situation of prejudice to lessors.
20. The Parliament may be taken not to have intended that a whole class of persons or entities be prejudiced. "All statutes are construed against a background of common law notions of fairness and justice:" Kioa v West (1985) 159 CLR 550 at 609 per Brennan J.
21. Although the plaintiff relies upon the use of the of the singular in the reference to "term" to suggest that regard should not be had to more than one option to extend or renew, that approach is not consistent with the ordinary application of the Interpretation Act 1987 (NSW) which provides, at s.8, "8 Gender and number In any Act or instrument: (a) a word or expression that indicates one or more particular genders shall be taken to indicate every other gender, (b) a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form."
22. Accordingly, I do not regard that argument as persuasive of an interpretation which is contrary to the words used in s.6(1)(b) to define a lease of 25 years or more.
23. On this analyses, the plaintiff cannot make good its appeal against the orders of the Appeal Panel of NCAT. Since the appeal to this Court could not succeed, I refused leave to appeal. The summons was dismissed.

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