1. I declare that clause 35 of the lease dated 19 November 1998 of a motel in Echuca known as the Paddlewheel Motel located at 385 High Street, Echuca (the Lease) was not varied by the Disclosure Statement dated 28 March 2003.
2. I declare that clause 35 of the Lease contravenes s 35(2) of the Retail Leases Act 2003 (Vic).
3. I declare that the commencing rent for the further term of the Lease commencing on 23 November 2019 is to be determined in accordance with s 35(7) of the Retail Leases Act 2003 (Vic).
4. Any application for costs must be made by 28 February 2023 and further directions will then be made. The parties are reminded of the terms of s 92 of the Retail Leases Act 2003 (Vic).

1. This dispute arises from a retail lease of motel premises located in Echuca. The applicant seeks a declaration that clause 35 of the lease, which is the rent review clause is void under s 35 of the Retail Leases Act 2003 (Vic) (RLA) and that the rent review ought to be conducted in accordance with s 35(7) of the RLA.

1. The respondents (landlord) are the landlord of motel premises located in Echuca. Since 2009 the applicant (tenant) has been the tenant of a motel in Echuca known as the Paddlewheel Motel located at 385 High Street, Echuca (Premises).
2. By a lease dated 19 November 1998, the landlord granted to JF & TE Beck Pty Ltd (Beck) a lease of the Premises for a term of three years commencing 23 November 1998, with the option of nine (9) additional terms of three years each (Lease).
3. By a transfer of lease made on 3 March 2003, between Beck and Loroco Pty Ltd (Loroco), Beck transferred its rights as tenant under the Lease to Loroco (2003 Transfer).
4. By transfer of lease made in approximately November 2006, between the landlord, Loroco and PM & JM Seabrook Pty Ltd (Seabrook), Loroco transferred its rights as tenant under the Lease to Seabrook.
5. On 18 November 2009, Seabrook transferred its rights under the Lease to the tenant by deed titled "Transfer of Lease". At that time, the Lease was for a term of 3 years commencing on 24 November 2007 with the option of six further terms of three years each.
6. The tenant exercised further options for further terms on or about 23 November 2010, 23 November 2013 and 23 November 2016.
7. In or around November 2019, the tenant exercised a further option for a three- year further term, commencing on 23 November 2019 (New Lease).
8. The Lease and the New Lease are a lease of retail premises and therefore subject to the provisions of the RLA.
9. The parties are in dispute about the method to calculate the commencing rent for the New Lease.

35. C.P.I

AT the expiration of twelve (12) months from the commencing date hereof and thereafter in each twelve months during the continuance of this lease or any renewal or extension thereof the rental payable hereunder shall be increased for the next ensuing twelve (12) months by such amount as shall be equivalent to any increase in the cost of living from the commencing date to the first adjustment date and thereafter to allow for any cost of living increase each twelve (12) months from the previous adjustment date. Any increase between the two dates shall be determined by multiplying the rental payable at the time of the review by a fraction whereof the denominator shall be the Consumer Price Index Weighted Average Eight Capital Cities issued by the Commonwealth Statistician current at the date of commencement of this lease or the immediately preceding rental review date (whichever is the later) and the numerator shall be -the same index current on the date of review.

Where the Commonwealth Government:

(1) ceases to establish the Consumer Price Index, or

(2) the basis of calculating that index is substantially changed, either party may give to the other one month's notice in writing specifying the facts which they allege satisfies paragraphs (1) or (2) of this Clause and where notice is so given the parties agree that the amount of increased rent shall be determined by a single Sworn Valuer appointed by the President for the time being of the Real Estate and Stock Institute of Victoria or its successor who inter alia shall have regard to what would have been the increase had it been determined on the basis of the Consumer Price Index had that operated.

Any rental increase pursuant to this clause shall be a minimum increase of 1.5 % and a maximum increase of 5%.

(Clause 35)

1. The final sentence in Clause 35 of the Lease has caused the controversy. Clause 35 requires the commencing rent for the New Lease to be determined by reference to the CPI but then seeks to impose a minimum increase and maximum increase in the last sentence by reference to a fixed percentage.

1. The landlord argues that Clause 35 was varied in 2003 by its Disclosure Statement and therefore does not reflect the relevant rent review clause to determine the commencing rent for the New Lease.
2. The tenant argues that the Lease was not varied and Clause 35 remains the relevant rent review clause.
3. There are two questions for determination:
   1. Was the Lease varied by the disclosure statement provided by the landlord in 2003?
   2. If it was not varied, is the rent for the first year of the New Lease to be determined by reference to clause 35 of the Lease or s 35(7) of the RLA?
4. It is necessary to determine whether the rent review clause was varied, before determining the validity of Clause 35. If the Lease was varied, it is the varied rent review clause that must be considered in the light of the terms of s 35 of the RLA.

1. The landlord argues that the rent review clause in the Lease was varied at the time of the transfer of lease in 2003. It puts its position as follows:[1]
   1. The 2003 Transfer and the Disclosure Statement together constituted a variation to the terms of the Lease (relevantly) as follows:
      1. the rent for the period 24 November 2001 to 23 November 2002 is fixed at $145,000.00 per annum plus applicable GST;
      2. the rent for the period 24 November 2002 to 23 November 2003 is fixed at $150,000.00 per annum plus applicable GST;
      3. the rent for the period 24 November 2003 to 23 November 2004 would be reviewed on 24 November 2003 using CPI as the rent adjustment method;
      4. where any rent adjustment method under the Lease is specified as CPI then the rent for the applicable period shall be the rent applying for the previous year adjusted by any change in the cost of living in the previous year, such adjustment (if any) being determined by multiplying the rental for the previous year by the percentage by which the Consumer Price Index figure (all groups) as published by the Australian Bureau of Census and Statistics (hereinafter call "the CPI") applicable to the City of Melbourne has adjusted during the previous year PROVIDED THAT if the same C.P.I. is not current on both dates or is calculated from different base years or if any dispute arises between the parties as to the calculation of the adjustment the percentage to be applied shall be such percentage representing the adjustment to the average cost of living in Australia between the two dates as the Commonwealth Statistician shall declare to be appropriate; and
      5. the rent for any further term of the Lease would be determined by agreement.
   2. The terms are contained in paragraphs 4.01, 4.02 and 4.03 of the Disclosure Statement.
   3. By reason of the variation to the Lease made by paragraph 4.02 of the Disclosure Statement, the provision within clause 35 of the Lease which originally required any rental increase based on CPI to be a minimum increase of 1.5% and a maximum increase of 5% was no longer applicable.
   4. The effect of paragraph 4.02 of the Disclosure Statement is to be implied to the extent that the original requirement of clause 35 of the Lease for any rental increase based on CPI to be a minimum increase of 1.5% and a maximum increase of 5% is not consistent with the express term contained within paragraph 4.02 of the Disclosure Statement.
   5. The rent review mechanisms described in paragraphs 4.01, 4.02 and 4.03 of the Disclosure Statement complied with the requirements of section 35 of RLA 2003.
2. Loroco exercised the further option for the term commencing 24 November 2004 for a further 3 years which was documented in a deed of renewal of lease dated 2006 between the landlord and Loroco (and others) (2006 Renewal). The landlord says the 2006 renewal constituted a further variation of the Lease as follows:[2]

1. the rent for the first year of the term of the second option term is fixed at $147,500.00 per annum exclusive of GST ($13,125.00 per calendar month exclusive of GST);
2. the rent for the second year of the term of the second option term is fixed at $162,270.00 per annum exclusive of GST ($13,522.50 per calendar month exclusive of GST); and
3. the rent for the third year of the term of the second option term is fixed at $168,661.20 per annum exclusive of GST ($14,055.10 per calendar month exclusive of GST).

1. The 2006 Renewal contained a term that, subject to the fixed rental amounts referred to in sub-paragraph (h) above, all other covenants, terms and conditions of the Lease (as varied by the 2003 Transfer and Disclosure Statement) remained the same.

1. In contrast, the tenant argues that a Disclosure Statement cannot vary a lease as it is not a contractual document. A disclosure statement is a statutory requirement under the RLA and it does not form part of the lease documentation. In addressing this point, the tenant puts its argument as follows:[3]
   1. First, the suggestion that clause 35 of the Lease was varied by operation of the 2003 Disclosure Statement should be wholly rejected for the following reasons:

(a) a disclosure statement is not a contractual document. Remedies associated with it are prescribed by statute (at that time, the Retail Tenancies Reform Act 1998 (Vic), s 23 and s 8(5)); > > (b) the 2003 Disclosure Statement does not purport on its face to be a contractual document. This is amplified by the following statement that appears on the first page of the 2003 Disclosure Statement:

The tenant has remedies and may claim compensation under the Retail Tenancies Reform Act 1998 if information in this statement is misleading or false

(c) even if the 2003 Disclosure Statement does purport to be a contractual document, it does not purport to vary clause 35 of the Lease. To the contrary, it merely purports to summarise the Lease (see TB 69, para 4.02);

(d) the 2003 Disclosure Statement is dated 28 February 2003 (see TB 75) and is signed by the respondents and Loroco Pty Ltd. However, the Lease was assigned to Loroco Pty Ltd by deed of assignment with a transfer date of 3 March 2003 (see TB 76, 2003 Assignment)). It is unclear how Loroco Pty Ltd and the respondents could agree to vary the Lease before it was assigned to Loroco Pty Ltd;

(e) the respondents have not produced any evidence of negotiations, or a quid pro quo, between them and Loroco Pty Ltd giving rise to the alleged variation;

(f) the 2003 Assignment refers to the Lease (TB 76) and both the assignor and the respondent's warrant in that document that no changes have been made to the Lease (TB 78, clauses 2 and 7.2);

1. The tenant further relies on the ongoing lease documents which do not record the Lease having been varied. In 2006 the Lease was renewed and the Deed of renewal refers to the Lease, its renewal and the assignment to Loroco in 2003 but does not refer to any variation to the Lease. Further the 2006 Deed of renewal records that other than rent and the term of the Lease, the covenants, terms and conditions of the Lease remain the same.
2. Subsequently, the Lease was assigned from Loroco to Seabrook by an undated deed of assignment. The tenant argues this deed of assignment also confirms that no changes have been made to the Lease.[4]
3. In addition, the tenant says on 17 August 2009 Seabrook having exercised its option to renew the Lease, entered into a deed of renewal which expressly refers to the Lease and records that there are no variations or additional provisions[5] and contains express promises by both parties to comply with the terms of the Lease save for the term and commencing rent which are recorded in the deed.[6]
4. And then, Seabrook assigned its interest in the Lease to the tenant on 18 November 2009. The tenant again relies on the assignment documentation which also contains express covenants confirming that no changes have been made to the Lease.[7]

1. The provision of a Disclosure Statement is a statutory requirement whereby a landlord or assignor (of an interest in land under a retail lease) is required to summarise the key terms and obligations under a lease in order to provide the incoming tenant with sufficient information to understand its obligations. Key to the matters which must be disclosed are the terms of the lease regarding the tenant's financial obligations including rent, outgoings, and repair liabilities. The remedies for failing to provide a Disclosure Statement or to inaccurately describe the terms of the lease in the Disclosure Statement are set out in legislation. These remedies are similar to the common law remedies for misrepresentation. That is, a misrepresentation results in a party being entitled to elect to set aside the contract they have entered into if they have done so by reason of a misrepresentation. A tenant under a retail lease may terminate the lease.[8] It does not result in the misrepresentation varying the terms of the contract. A failure to provide a Disclosure Statement for a retail lease entitles the tenant to rescind the lease.[9]
2. In addition, the documentation entered into at each renewal of lease and assignment of lease all confirm that the terms of the Lease have not been varied. If the 2003 Disclosure Statement had been intended to vary the terms of the Lease by the relevant landlord and tenant at the time, then the subsequent documentation would have recorded that amendment or at least the parties would have conducted themselves in a manner which reflected the alleged variation. No evidence of any conduct in accordance with the alleged variation was put before the Tribunal.
3. For these reasons, I do not accept that a Disclosure Statement provided in accordance with the relevant legislation will vary the terms of the Lease. It is not provided as part of the terms of the Lease, rather it is a summary of the terms.
4. I therefore find that the 2003 Disclosure Statement did not vary the terms of the Lease.

IS THE RENT FOR THE FIRST YEAR OF THE NEW LEASE TO BE DETERMINED BY REFERENCE TO CLAUSE 35 OF THE LEASE OR SECTION 35(7) OF THE RLA?

Does Clause 35 comply with s 35(2) of the RLA?

1. The tenant's complaint regarding Clause 35 is that is contravenes s 35 of the RLA because it requires the use of more than one formula or method for calculating the commencing rent contrary to s 35(2) of the RLA. That is, it requires the use of the CPI but then for a fixed percentage to be used to ensure a minimum increase and cap it at a maximum increase.
2. Section 35 of the RLA states

35 Rent reviews generally

(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.

(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.

(5) A rent review is to be conducted as early as practicable within the time provided by the lease. If the landlord has not initiated the review within 90 days after the end of that time, the tenant may initiate the review.

(6) A rent review provision in a retail premises lease is void if the lease does not specify how the review is to be made.

(7) If a provision in a retail premises lease that provides for a review of the rent payable under the lease does not comply with subsection (2) or is void under subsection (6), 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 specialist retail valuer appointed by the Small Business Commission as the current market rent of the retail premises.

(8) The landlord and tenant are to pay the costs of a valuation referred to in subsection (7)(b) in equal shares.

1. The tenant says that Clause 35 does not comply with sub-s 35(2) of the RLA and that the rent for the New Lease must be as agreed between the parties or a current market rent for the Premises be determined under s 35(7) of the RLA.
2. The tenant argues that Clause 35 is void as it contravenes s 35 of the RLA in that the final sentence in Clause 35 "Any rental increase pursuant to this clause shall be a minimum increase of 1.5 % and a maximum increase of 5%" imposes both a minimum and maximum limit on the rent review which the tenant argues renders Clause 35 outside the operation of s 35(2).
3. The tenant argues that the imposition of a maximum and a minimum amount of increase of the rent determination involves the use of more than one bases or formula for determining the commencing rent for the New Lease.
4. Section 35(2) of the RLA requires that only one of the methods enumerated is used as a bases or formula for calculating the commencing rent. One of those methods is "an independently published index of prices or wages" (CPI), another is a fixed percentage.

1. The landlord argues that Clause 35 is not void as it does not contravene s 35(2) of the RLA. It argues that there is nothing in s 35(2) that prevents parties from limiting the extent of any increase in rent.

1. If the formula to be used is CPI then the CPI figure for the relevant period must be applied, irrespective of what percentage rate it is. The use of a minimum percentage increase and maximum percentage increase imposes an additional bases for determining the commencing rent.
2. Deputy President Macnamara (as his Honour then was) stated in Fazzolari v Couchouron (Fazzolari)[10]
   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.
3. The above comments from Fazzolari show 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".
4. 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.
5. While the second limb does have the effect of being a limit and 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.
6. Section 35(2) requires the use of only one method for calculating the rent review. In this case, the use of "an independently published index of prices or wages". The imposition of a cap means that the method of calculating the rent review is outside the scope of this method. It is a mixed method of calculating the rent review as more than one method is required to be used which is outside the scope of s 35(2).
7. The wording of Clause 35 refers to more than one method or formula for calculating the rent as it requires more than mathematical formula to be applied to determine the commencing rent. It requires:
   1. Firstly, the application of CPI to the previous rent; and then if the rent is increased
   2. Secondly, to calculate 1.5% and 5% of the previous rent to ensure that the proposed rent is greater than 1.5% and less than 5%.
8. The second limb is not the application of the CPI formula but the application of fixed percentage. Any rent review which involves having regard to more than one method of rent review calculation must fall foul of the terms of s 35(2).
9. I find that clause 35 seeks to utilise more than one method of rent review, that is a "mixed rent review" method which is contrary to s 35(2) of the RLA.

Does s 35(3) and s 94 of the RLA apply to Clause 35 or does s 35(7) apply?

1. The landlord also contends that Clause 35 did not fall foul of s 35(3) because the constraints imposed by the clause on the amount of any increase in rent, do not prevent any reduction in rent if CPI is negative thus reducing the commencing rent.
2. Section 35(3) renders a rent review clause "void to the extent that it purports to preclude, or prevents" a reduction or limits a reduction in rent. The landlord argues that s 35(3) does not apply because s 35(4) provides that s 35(3) does not apply to a provision of a lease that uses a basis or formula referred to in s 35(2).
3. The landlord argues that if Clause 35 is void as contrary to s 35(2), then s 35(3) provides that it is only those words that contravene s 35(2) that are to be severed from the clause rather than the entire clause being rendered void. The landlord also relies on s 94 of the RLA in support of this position.
4. Section 94 of the RLA states

94 The Act prevails over retail premises leases, agreements etc.

(1) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).

(2) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it purports -

(a) to exclude the application of a provision of this Act; or

(b) to limit the right of a party to the lease to seek resolution of a retail tenancy dispute under Part 10 or otherwise to limit the application of that Part.

(3) A provision contained in any other agreement or arrangement (whether or not between parties to a retail premises lease) is void if that provision would be void under this Act if it were contained in a retail premises lease.

1. The landlord argues that the use of the phrase "void to the extent" results in the severance of that part of the clause which is contrary to s 35(2).
2. In support of this argument, the landlord relies on the decision of Riordan J in Darebin City Council & Anor. v Municipal Association of Victoria[11] wherein his Honour summarised the principles of statutory construction, inter alia, as follows:
   1. The primary object of statutory construction is to construe the relevant provisions so that its legal meaning is consistent with the language and purpose of all of the relevant provisions of the statute. The legal meaning is the meaning that the legislature is taken to have intended [the provision] to have.
   2. The Court of Appeal recently considered the principles of statutory construction in Colonial Range Pty Ltd v CES Queen (Vic) Pty Ltd. I summarise the approach adopted by the Court of Appeal as follows:

(a) First the Court considers the text of the relevant provision in its context, which includes the whole of the instrument, the existing state of the law and the legislative history. > > (b) To identify the legislative purpose consideration may be given to extrinsic material such as parliamentary debates, only after exhausting the application of the ordinary rules of statutory construction. However extrinsic material cannot replace the clear meaning of the text. > > (c) If the literal or grammatical meaning ('the literal') meaning is consistent with the legislative purpose, the literal meaning will be accepted as the legal meaning. > > (d) A construction that promotes the purpose of the Act is to be preferred to a construction that does not."

3. The landlord's submissions explain the position as follows[12]
   1. In this case, the text of s. 35(3) of the Retail Leases Act 2003 is clear. The section uses the words 'to the extent' in providing that a provision of a lease is void. These words are clear and provide a limit to the extent to which a provision of a lease is void. The text of the provision is clear and should be given its ordinary meaning.
   2. The construction of the provision advanced by the tenant does not give any effect to the words 'to the extent' and effectively ignores their existence. These words cannot be ignored and must be given their literal meaning. As a matter of construction, the words of a statute cannot simply be ignored.
   3. Further, the meaning advanced by the respondents is consistent with the text of the Retail Leases Act 2003 as a whole. In this respect it is relevant that s. 94 of the Retail Leases Act 2003 provides as follows:
      • (1) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).
      • (2) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it purports -

(a) to exclude the application of a provision of this Act; or > > (b) to limit the right of a party to the lease to seek resolution of a retail tenancy dispute under Part 10 or otherwise to limit the application of that Part.

(3) A provision contained in any other agreement or arrangement (whether or not between parties to a retail premises lease) is void if that provision would be void under this Act if it were contained in a retail premises lease.

1. The landlord submits that its construction of s 35(3) is consistent with s 94 and the legislative purpose of the RLA as follows[13]
   1. The construction of s. 35(3) of the Retail Leases Act 2003 advanced by the respondents is consistent with this legislative purpose. In particular, the construction that s. 35(3) of the Retail Leases Act 2003 only operates to render part of clause 35 void, is consistent with promoting fairness and consistency as that part of the clause 35 which does not breach the provisions of Retail Leases Act 2003 is retained. It is fair to retain the clause of the lease to the extent that it is possible to do so, as that is the term that was agreed between the parties. Retention of so much of clause 35 as is possible also provides certainty, as the lease is retained in the form that the parties agreed, to the extent that it is possible to do so.

1. The tenant argues that terms of s 35(3) and s 94 are different from those of s 35(7) and should be interpreted to reflect that difference.
2. For example, s 35(3) renders a clause in a lease 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.

1. The tenant argues that s 35(3) may void the minimum increase of 1.5% in Clause 35 but is insufficient to resolve the remaining complaint regarding Clause 35 - that it still requires the use of more than one method or formula for calculating the commencing rent for the New Lease as the cap on the increase would remain.
2. Moreover, the tenant contends that s 35(7) of the RLA does not adopt the same drafting formula as the provisions in the RLA that may operate to render a clause in a lease void.
3. Both s 35(3) and s 94 use the phrase "is void to the extent" whereas s 35(7) states that if a provision "does not comply with subsection (2) or is void under subsection (6)". The tenant says that this difference is significant.
4. The tenant explains[14]
   1. The difference is significant, particularly as it is contrasting a phrase that is found within the section 35.
   2. Moreover, the difference reflects a different policy behind the contrasting provisions.
   3. Section 94 and sub-s 35(3) of the RLA 2003 are severing provisions. The repeated use of the phase 'to the extent that' in those sections is consistent with Parliament intending to interfere with the parties' bargains as little as possible and to sever only a limited part of the lease.
   4. By contrast, sub-s 35(7):

(a) does not use those words of limitation;

(b) uses words of general application to any rent review clause that does not comply with sub-s 35(2);

(c) operates as a code to replace non-compliant rent review clauses with a market rent review; and

(d) for the reasons set out above, is consistent with a statutory policy to replace non-compliant rent review covenants with a fair and reasonable market rent review that takes into account any concessions made elsewhere in the bargain between landlord and tenant.

1. The landlord's argument fails to address s 35(7) which provides that where a rent review provision in a lease does not comply with s 35(2) the rent is to be either agreed between the landlord and tenant or in the absence of an agreement, determined by a specialist retail valuer as current market rent.
2. The drafting of s 35(3) and s 94 compared with s 35(7) are different and must be interpreted differently. If the legislator had intended s 35(3) and s 35(7) to operate in the same way, the draftsman would have used the same words as was done in s 94. The draftsman did not. The words are different and therefore the section must operate differently.
3. This is not contrary to the purpose of the RLA. The legislative purpose of the RLA is set out in s 1 as

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 lease of retail premises.

1. Giving each section its literal and grammatical interpretation is consistent with s 1. It provides certainty and fairness between parties to leasing arrangements and provides a clear mechanism for resolving a dispute which may arise if a rent review provision is contrary to s 35(2).
2. Section 35(4) specifically states that s 35(3) does not apply to a rent review clause that uses a basis or formula referred to in s 35(2)(a), (b) or (c), namely a fixed percentage, CPI or a fixed annual amount.
3. I find that s 35(3) would not apply to Clause 35 by reason of s 35(4).
4. Section 35(7) does not limit the clause being rendered void to "the extent that it contravenes". Rather, it provides that if the clause in the lease does not comply with s 35(2) then rent is to be determined in accordance with s 35(7). It does not state that the non-compliant part of the clause is to be severed, in fact it does not even state that the clause is void, it simply requires a clause to be non-compliant with s 35(2). Thus s 35(7) operates to ensure that any clause that does not comply with s 35(2) for any reason, still has a means for rent to be determined.
5. Having found that Clause 35 does not comply with s 35(2), I find that the commencing rent of the New Lease is to be determined in accordance with s 35(7).
6. I will make orders accordingly.

[1] Respondents' opening submissions dated 25 August 2022 (Respondents' Opening Submissions) at [27] to [32].

[2] Respondents' Opening Submissions at [34] to[36].

[3] Applicant's opening submissions dated 31 August 2022 (Applicant's Opening Submissions) at [19] to [23] (although the paragraph numbering restarts after 19).

[9] Section 17 of the RLA; s 8(5) of the Retail Tenancies Reform Act 1998 (Vic) entitled a proposed tenant to terminate the lease within 28 days of commencement if the disclosure statement hasn't been provided; s 23(4) entitled a proposed assignee tenant to withhold rent until such time as the disclosure statements provided.

[10] [2003] VCAT 503.

[11] [2017] VSC 51.

[14] Applicant's Opening Submissions at page 11.