WIN Television Qld Pty Ltd v Tripplea Pty Ltd
[2018] QDC 58
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- Unreported Judgment
- Appeal Determined (QCA)
- WIN Television Qld Pty Ltd v Tripplea Pty Ltd[2018] QDC 58
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WIN Television Qld Pty Ltd v Tripplea Pty Ltd[2018] QDC 58
WIN Television Qld Pty Ltd v Tripplea Pty Ltd[2018] QDC 58
DISTRICT COURT OF QUEENSLAND
CITATION: | WIN Television Qld Pty Ltd v Tripplea Pty Ltd [2018] QDC 58 |
PARTIES: | WIN Television Qld Pty Ltd ACN 009 697 198 (Applicant) v Tripplea Pty Ltd ACN 609 514 418 (Respondent) |
FILE NO/S: | 632/18 |
DIVISION: | Civil |
PROCEEDING: | Originating Application |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 11 April 2018 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4 April 2018 |
JUDGE: | Jarro DCJ |
ORDER: |
|
CATCHWORDS: | LANDLORD AND TENANT – RENT – PROVISIONS AS TO RENT IN AGREEMENT FOR LEASE OR LEASE – RENT REVIEW CLAUSES – DETERMINATION BY REFERENCE TO MARKET RENTAL VALUE – whether valid notice given by landlord Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55, cited Ex parte Whelan [1986] 1 Qd R 500, cited Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCFCA 177, followed GHD Pty Ltd v Wayne [2001] QSC 73, cited Inness v Waterson A/T for Cobok Family Trust [2006] QCA 155, cited Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, followed Sargent v ASL Developments Ltd (1974) 131 CLR 634, cited Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200, followed |
COUNSEL: | C Wilson for the Applicant PD Hay for the Respondent |
SOLICITORS: | Andrew Morris Legal for the Applicant Rees R & Sydney Jones Solicitors for the Respondent |
- [1]The applicant, Win Television Pty Ltd, leases commercial premises in Rockhampton from the respondent. The lease was a registered five year lease, subject to two five year options. Inter alia the lease contains a mechanism for market rent review.
- [2]By originating application filed 21 February 2018, the applicant seeks declarations that:
- (a)The respondent has not given the applicant a valid notice setting out reviewed rent pursuant to clause 8.1 of the written lease between the applicant lessee and the respondent lessor made on 23 November 2012;
- (b)A letter from the respondent’s agent Knight Frank to the applicant dated 28 August 2017 is not a valid notice.
- [3]The respondent, Tripplea Pty Ltd, cross applies for a declaration that there is a valid agreement for lease dated 29 August 2017 and for specific performance of that lease.
The Lease
- [4]The original lease provided a commencement date from 1 November 2012. It expired on 31 October 2017.[1]Rent reviews are dealt with under clauses 7, 8 and 9 of the lease and reference schedule Item 10.
- [5]More particularly, market rent reviews are dealt with under clause 8. It states:
8 Market Rent Reviews
8.1 We [the lessor] shall review the rent, based on the current market rent, at each market review date in Item 10. In the period from ninety (90) days before to ninety (90) days after each market review date, we must endeavour to give you a notice setting out the reviewed rent. However, even if we are late in giving you our notice, we will not lose the right to review the rent.
8.2 You must pay us the reviewed rent from the market review date. Until we give you a notice under clause 8.1, you must pay us the old rent, and any adjustment is calculated from the market review date.
8.3 If you dispute the reviewed rent, and the dispute cannot be resolved by negotiation between you and us, the procedure in clause 9 must be followed.
8.4 If you do not give us a notice under clause 9.1 within the time referred to in that clause, you are deemed to agree to the reviewed rent.
- [6]Item 10 of the lease nominates the market review date as being on the commencement of any new term entered into as a consequence of the exercise of any option.
- [7]Clause 42 of the lease provides for options to renew it. It states:
42 If Option To Renew Applies
42.1 If Item 13 provides for an option to renew, then you may give us a notice asking us to give you a new lease for the option period specified in Item 13. Your notice will not be effective unless it is given to us at least three (3) months before the expiry but no more than six (6) months before the expiry date.
42.2 If you give us a notice under clause 42.1, we must give you a further lease for the option period as long as there is no unremedied breach of this lease as at the time of your notice and as at the expiry date.
42.3 The further lease shall contain identical terms as this lease, but it shall not contain this clause unless Item 13 provides for a further option period or unless we agree. The further lease may contain any other terms that you and we agree to. You and the guarantor must execute the further lease and return it to us within fourteen (14) days after we provide to you the further lease.
42.4 The rent to be paid by you during the further lease will be determined by treating the option period as a continuation of the terms of this lease, and applying clauses 5, 6, 7 and 8.
42.5 The grant of a further lease is conditional upon on the guarantor entering into a guarantee in the form contained in clause 44 of this lease in respect of the option period. If the guarantor does not provide a guarantee in respect of this lease for the option period, you are not entitled to a further lease for the option term (or any future option term).
Factual Matters
- [8]Ms Rachael Dimitrievski is the applicant’s property manager. The respondent’s agent is Kris McClymont, Commercial Asset Manager, Knight Frank Rockhampton. It was common ground that both individuals were agents for the respective parties.
- [9]On 8 August 2017, the respondent sent an email with an attached letter “regarding the forthcoming option term for WIN at the above premises”. The letter stated:
“As you would be aware your 5 year option is due on the 1st November 2017.
We would appreciate your response ASAP if you intend to exercise this option term.”
- [10]Two days later, the applicant advised the respondent:
“Thanks for contacting me regarding this, yes we would like to stay in the premises for an additional 5 years. Please let me know the new lease terms so that I can have them agreed with Executive Management.”
- [11]On 28 August 2017, the respondent emailed the applicant with an “attached letter of offer for WIN option term”. The letter stated:
“Thank you for advising that WIN would like to exercise their 5 year option due 1st November 2017.
The Owner is offering the new 5 year term at the current rate with no increase.
As a further gesture of good will he will forego the next review in 2018.
Rent would increase as per lease on the 01 November 2019.
Please advise when the executive management have approved and we shall have the necessary paperwork prepared.”
- [12]The following day on 29 August 2017, the applicant advised the respondent:
“Thankyou for your letter, WIN Executives accept if you would please provide the appropriate documentation for signature.”
- [13]On 20 September 2017, Fox Law, who were the property lawyers for the respondent, emailed the applicant:
“I act for the landlord, Tripple A Pty Ltd.
I have been requested to prepare an Amendment to the Lease in order to renew the Lease.
Please find attached the Form 13 Amendment for your consideration and, if all is in order, signing.”
- [14]The respondent submitted the last communication was in the form of an amendment, the effect of which was to renew the lease on the same material terms and continuing the rental as agreed and that given the lease has expired, execution of a new lease on appropriate terms is now necessary. The respondent contended the option to renew was not exercised because the applicant had not given notice between three months and six months before the expiry date of 31 October 2017 (between 30 April 2017 and 31 July 2017) in accordance with clause 42.1. As no such notice was given, the option was not exercised.
Was the Landlord’s Notice Sufficient?
- [15]A Wilson J in Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200 at [16] – [17] stated (footnotes omitted):
[16] “The test to be applied to determine the validity of a notice of this kind involves asking whether a reasonable recipient, with knowledge of the terms of the lease, would have any doubts as to the meaning of it: Finishing Services Pty Ltd v Lactose Fresh Pty Ltd [2006] FCAFC 177 at [18], [25]-[26]; [2007] ANZ ConvR 93 at 98, 100-101. That case is also authority for the proposition that the landlord is under no obligation, in a notice of this kind, to advise the tenant of its rights. All three members of the Full Court of the Federal Court in Finishing Services adopted and applied a test laid down in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 – i.e., whether a reasonable recipient, who is credited with knowledge of the terms of the lease, and taking into account the surrounding circumstances, would have doubt as to the meaning of the notice or have regarded it as equivocal.
[17] In Finishing Services the Court also accepted a finding of the judge at first instance that, to be valid, the notice was not required to refer specifically to the relevant lease clause or inform the recipient of the period in which it must act under that clause – again, in reliance upon the decision of the House of Lords in Mannai, and what Lord Steyn said in that case at 768:
… inquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and terms of [the relevant clause] the question is simply how the reasonable recipient would have understood such a notice.”
- [16]In applying the test, I consider the respondent has not given a valid notice for rent review.
- [17]The communications between the parties as identified above were done prior to the cessation of the original lease. I accept the applicant’s submission that by virtue of the 8 August 2017 correspondence as to whether the applicant intended to exercise the “option”, the respondent apparently waived the time limit which required notice of the exercise of option under clause 42.1 to be at least three months before the expiry date i.e., prior to 1 August 2017. In response the applicant advised that it wished to “stay in the premises for an additional five years”.[2]
- [18]In any event, by letter dated 28 August 2017, the respondent confirmed the exercise of the option and stated that it was “offering the new five year term at the current rate with no increase”. There was no reference in the letter to the market rent review clause, nor any indication that the letter was “a notice setting out the reviewed rent” in accordance with clause 8.1 of the lease. That notice could be given by the respondent at any time between 1 August 2017 and 1 February 2018, and even if late, the respondent did not lose the right to review the rent.
- [19]When the letter dated 28 August 2017 was received, the applicant did not understand the letter to be a notice of market rent review. Ms Dimitrievski only realised that it was such a document after receiving the proposed amendment documents on 20 September 2017.[3]
- [20]It appears then that on 11 October 2017, the applicant requested the landlord reconsider the proposed rental. On 17 October 2017, the respondent maintained that the applicant had “one month from our advice” to dispute the notice rent review and that the applicant’s failure to “dispute the rent” within one month of receipt of the “notice” put it out of time to do so.[4]
- [21]I am not satisfied the respondent has given the applicant a valid notice setting out reviewed rent pursuant to clause 8.1 of the lease in accordance with the test enunciated in Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCFCA 177.
- [22]I do not accept the respondent’s submission that the application should fail as it is inutile in view of the parties express agreement as to the rent payable in their new term. I am not persuaded on the material before me as to an express agreement as to the rent payable in the new term. Further all of the documents seem to have been done in anticipation of exercising an option.
- [23]In the alternative the respondent contends that the letter of 28 August 2017 satisfied the requirements of the original lease for a clause 8.1 notice because:
- (a)The lease specified that such notice be in writing (per clause 45);
- (b)The notice was based on the respondent’s review of market rent, as carried out on its behalf by its agent, Knight Frank;
- (c)There was no obligation to “serve” any such notice on WIN which would attract the application of clause 46.1 of the original lease.
- [24]Whilst I accept the notice was to be in writing and there was no obligation to “serve” the notice, I consider the respondent’s letter of 28 August 2017 as equivocal.
- [25]Further the matter is one of impression. Informing the conclusion reached, the overall impression created to a reader by the letter is a significant factor.[5]Indeed, and not unsurprisingly, the impression the applicant’s Ms Dimitrievski reached was that when she received the letter of 28 August 2017, she did not understand that the letter was a notice of market rent review under clause 8.1 of the lease. I too have doubts as to the meaning of the respondent’s “notice” of 28 August 2017. Additionally the letter of 28 August 2017 refers to the landlord agreeing to forego the next review in 2018 (presumably in accordance with a CPI review pursuant to clause 7 of the lease given the reference to the words: “a further gesture of goodwill [the respondent] will forego the next review in 2018”). Accordingly had Ms Dimitrievski understood that the letter of 28 August 2017 was a notice of market review, she would have immediately requested the landlord’s reconsideration of the proposed reviewed rent which became clear by 20 September 2017.[6]
- [26]Consequently, I find the respondent has not given the applicant a valid notice setting out reviewed rent pursuant to clause 8.1 of the lease.
Conclusion and Orders
- [27]In the circumstances, I make the declarations in terms of the originating application. Given such views and noting the applicant has never disputed that an enforceable agreement to lease was entered into, the cross application should be dismissed.
- [28]For those reasons:
- (a)The Court declares that the respondent has not given the applicant a valid notice setting out reviewed market rent pursuant to clause 8.1 of the written lease between the applicant lessee and the respondent lessor made on 23 November 2012, of premises described as lot 1 of RP618121 County Livingstone, Parish, Rockhampton, title reference 30597249, situated at level 6, 34 East Street, Rockhampton.
- (b)The respondent’s application be dismissed.
- (c)The respondent is to pay the applicant’s costs of both the applicant’s originating application and the respondent’s application.
Footnotes
[1] The lease appears in the affidavit of Ms Rachael Dimitrievski, sworn 13 February 2018, at Exhibit A.
[2]See generally Ex parte Whelan [1986] 1 Qd R 500 at 504 per Thomas J. See also Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 at [147], [151], [155] and [156] per Keane JA; Sargent v ASL Developments Ltd (1974) 131 CLR 634, 643 – 647 and 654 – 656 and Inness v Waterson A/T for Cobok Family Trust [2006] QCA 155 at [46] – [47] per Keane JA.
[3] See Affidavit of Ms Rachael Dimitrievski, sworn 13 February 2018, [8] and [10].
[4] See Affidavit of Ms Rachael Dimitrievski, sworn 13 February 2018, [10] - [12].
[5] See GHD Pty Ltd v Wayne [2001] QSC 73 at [12].
[6] See Affidavit of Ms Rachael Dimitrievski, sworn 13 February 2018, [13].