Griffiths v Williams[2021] QDC 338

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   This is a civil appeal from part of the order of the Magistrates Court at Southport made on 11 December 2020. 
2. [2]
   The learned Magistrate on that date gave judgment dismissing the appellant’s claim and entering judgment for the respondents on their counterclaim.  The only aspect which is appealed is the dismissal of the claim for rent said to be payable on the basis of a market review completed a little less than three years after the expiration of the term of a 3 year lease between the appellant as lessor and the respondents as lessees commencing 1 January 2013 and expiring 31 December 2015.

Nature of the appeal

3. [3]
   The appeal is pursuant to s 45 of the Magistrates Courts Act 1921 (Qld) which provides for the right of appeal for parties dissatisfied with the judgment or order of a Magistrates Court to appeal to the District Court. The right of appeal is not limited where the amount involved in the action (or proceeding as is the more up-to-date language used in the Uniform Civil Procedure Rules) is more than the civil dispute limit.  Pursuant to the Queensland Civil and Administrative Tribunal Act 2009 (Qld), the limit is currently $25,000. ^[1]  The amount claimed for rental arrears in this case was $22,704.33 but that was after subtracting a $5,000 deposit which had been paid.  Recovery of the $5,000 was sought by the respondents by counterclaim and her Honour ordered that be paid.   It seems to me then that the amount involved exceeds $25,000.
4. [4]
   Section 47 of the Magistrates Courts Act 1921 (Qld) provides for the jurisdiction of the District Court as follows:

“47  Jurisdiction of the District Court

On the hearing of an appeal or special case, the District Court may do any of the following—

1. (a)
   draw inferences of fact from facts found by the Magistrates Court, or from admitted facts or facts not disputed;

2. (b)
   order a new trial on such terms as it thinks just;

3. (c)
   order judgment to be entered for any party;

4. (d)
   make any other order, on such terms as it thinks proper, to ensure the determination on the merits of the real questions in controversy between the parties;

5. (e)
   as regards any special case, remit the matter to the Magistrates Court with the opinion of the District Court thereon;

6. (f)
   make such order with respect to the costs of the appeal or special case as it thinks proper.”

5. [5]
   Section 113 of the District Court of Queensland Act 1967 (Qld) provides:

“113  Power of District Court on appeal from Magistrates Court

The District Court has, for an appeal from a Magistrates Court, the same powers as the Court of Appeal has to hear an appeal.”

6. [6]
   This appeal is by way of rehearing.^[2] In such an appeal the Court must make up its own mind on the evidence that was before the Magistrates Court giving “due deference and weight” to the learned Magistrate’s view.  To succeed on the appeal the appellant must show that the decision appealed from was wrong.^[3]  As to this, in Teelow v Commissioner of Police [2009] 2 Qd R 489 Muir JA held at [4]:

“It is a normal attribute of an appeal by way of rehearing that the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all of the evidence now before the appellate court, the order that is the subject of the appeal is a result of some legal, factual or discretionary error …”

Grounds of appeal

7. [7]
   As I have mentioned, the appellant was the lessor and the respondents the lessees under a lease of premises described as Unit 1, 6 Ereton Drive, Labrador pursuant to a three year lease commencing on 1 January 2013 and expiring 31 December 2015.  The relief sought at first instance by the appellant in the proceeding comprised rental arrears of $22,704.33, operating expenses of $42,928.15, legal fees and repairs.  The respondents counterclaimed for the security deposit they had paid in the sum of $5,000 and for net overpaid operating expenses in the sum of $528.78.  They were successful on that counterclaim.
8. [8]
   The grounds of appeal and the orders sought are as follows:

“1. As to the arrears of rental claim:

1. (a)
   the learned Magistrate wrongly concluded that time was of the essence as to the ‘Current Market Review’ as provided for in the lease between the parties.

2. (b)
   the learned Magistrate wrongly concluded that the plaintiff/appellant had not initiated a ‘Current Market Review’ in November 2014.

3. (c)
   the learned Magistrate was wrong to conclude that the 2018 valuation by Mr Collins could not be applied for the purpose of paragraph (a) of the ‘Current Market Review’ clause in the lease.

4. (d)
   the learned Magistrate ought to have held that the rent review to current market rent had been properly implemented by the plaintiff/appellant and that the defendants/respondents were liable to pay such rent.

2. As to costs, costs ought to follow the event of a successful appeal and be allowed on a higher basis as set out below.

The appellant seeks the following orders from the District Court:

1. Appeal allowed.
2. Decision of the Magistrates Court of Queensland at Southport dated 11 December 2020 be set aside.
3. That there be judgment for the plaintiff/appellant against the defendants/respondents for the sum of $27,703.23.
4. That the defendants/respondents pay the costs of the plaintiff/appellant on an indemnity basis or on a solicitor own client basis both in the Magistrates Court and in this honourable court.”

Submissions on appeal

The appellant

9. [9]
   The appellant contends that:

   1. (a)
      by an exchange of emails between 17 November 2014 and 28 November 2014 the parties, in effect, commenced the Current Market Review under the lease and, in particular, they commenced negotiations contemplated as a precursor to the agreement referred to in subclause 4.1.  “[B]y this exchange of correspondence the rent review procedure had been engaged;^[4]
   2. (b)
      while the Current Market Review was not finalised while the lease was on foot, it is submitted that it was completed by a valuation dated 28 April 2018, which I pause to note was almost two and a half years after the lease came to an end;
   3. (c)
      the learned Magistrate erred in finding that time was of the essence in respect of the reasonable time implied during which the Current Market Review was to be undertaken;
   4. (d)
      the appellant was entitled notwithstanding the expiration of the lease to take the step of nominating and appointing a Valuer to determine the current market rent, the contention being that an accrued right arose prior to the expiration of the lease relying upon McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 and Clambake Pty Limited v Tipperary Projects Pty Ltd [2009] WASC 52 in particular at [94]-[106].
10. [10]
    Finally, the appellant submits:

“It is important also to observe that the respondents agreed by Cl. 4.1 of the lease, to pay an increased rent commencing on the second year of the term.  All that was required was for the rent to be fixed.  That there was a default mechanism for the determination of the increased rent, is not the point.  The question was whether the appellant successfully initiated the review to market.”

11. [11]
    Of course, what was agreed was that the lessor could choose to obtain a valuation of market rental in respect of the second year if he so wished.  If he did so and if that market rent turned out to be higher than the other alternative increased rent then, there would have been a higher rent payable in this way.  However, some care needs to be taken so as not to express a version of the perceived agreement of the parties in a way that forecloses consideration of the proper construction of the lease. 

The respondents’ submissions

12. [12]
    The respondents submit that the learned Magistrate made no appealable error.
13. [13]
    Primarily this is submitted to be so because:

    1. (a)
       the learned Magistrate correctly identified the rebuttable presumption as to time not being of the essence in respect of rent review clauses referred to in United Scientific Holdings Limited v Burnley Borough Council [1978] AC 904 and GR Mailman & Associates v Wormald (Australia) Pty Ltd (1991) 24 NSWLR 80;
    2. (b)
       having done so the learned Magistrate correctly identified that there were sufficient contra indications in the Current Market Review Clause such as to rebut the presumption in United Scientific and Mailman so that time was of the essence;
    3. (c)
       the learned Magistrate correctly concluded that the valuation report obtained on 21 May 2018 could not be applied for the purposes of clause 4.1(a) of the lease and thus the respondents were not liable to pay the claimed increased rent;
    4. (d)
       the learned Magistrate correctly rejected the appellants contention that the process for obtaining a valuation for the purposes of subclause 4.1(a) of the lease had been initiated but not completed such that the appellant enjoyed an accrued right which survived expiration of the lease.
14. [14]
    Further it was said that there were two additional matters which were relevant to the appeal and which supported her Honour’s decision namely:

    1. (a)
       what is said to be another contra indication because there was a CPI review to follow for the year commencing 1 January 2015;
    2. (b)
       whether or not time was of the essence the Current Market Review had to be completed by no later than 31 December 2014 to enable the CPI Review to be calculated and applied “automatically” in respect of the third year commencing 1 January 2015.

Appellant’s supplementary submissions

15. [15]
    The appellant relied on supplementary submissions in respect of the notice of contention on behalf of the respondents.  The appellant submitted that those further matters could not be accepted because:

    1. (a)
       clause 4.1 makes provision for both the CPI review and the Current Market Review;
    2. (b)
       the clause simply states the dates upon which the rent will be reviewed or, in effect, provides that as from those dates, or effective those dates that new rent will be payable;
    3. (c)
       contrary to what is submitted for the respondents the clause does not attempt to define the process by which that review is to take place and nor does it set out any time limit for either review. 

In effect what is said is that the respondents by stating that the CPI review must occur on 31 December 2014 or 1 January 2015 ignore the fact that their own argument as to when the Current Market Review must occur is not on the date stated but within a reasonable time of that date.  The appellants submit that it is difficult to see why the position would be different in respect of the two reviews dealt with by the same clause.

The learned Magistrates reasons

16. [16]
    Her Honour commenced by observing that there were little in the way of factual disputes in the matter and mostly it concerned the proper construction of the lease and the effect of various communications between the parties.  That is especially so now where the appeal is limited to the question of the Current Market Review and, in effect, whether the appellant had lost the right to conduct such a review prior to delivery of the valuation some years after the expiration of the lease.
17. [17]
    Her Honour set out the relevant provisions of the lease and they are as follows:

‘“Base Rent’ means the amount per annum specified in Schedule 1 as varied from time to time under the Provisions.

…

Clause 4.1 – Payment of Base Rent

Base Rent

The Tenant shall pay to the Landlord without any demand the Base Rent as determined under the Provisions by equal monthly instalments in advance on or before the first day of each month.  The first instalment shall be paid on or before the Commencement Date.”

Rent Reviews

The Base Rent will be subject to CPI Review at the commencement of each year of the lease term or increased by 3% whichever is the greater except in the second year of the lease term when the Base Rent will be subject to Current Market Review.

In this Part, ‘CPI Review’ has the meaning described below:

1. ‘Current Market Review’ has the meaning described below:

On each review date on which a Current Market Review is specified the Base Rent will be varied to the greater of:

1. (a)
   the current market rent as agreed between the parties.  If the parties fail to agree, the current market rent shall be that determined by a Valuer nominated by the Landlord in his absolute discretion.  In making such a determination, the Valuer shall act as an expert, not an arbitrator.  The Valuer’s determination shall be binding on the parties.

2. (b)
   the Base Rent in the immediately preceding year increased and determined according to a CPI Review; or

3. (c)
   the Base Rental in the immediately preceding year increased by 3%.

…”

18. [18]
    Her Honour set out the terms and effect of the correspondence and other events said to touch upon the topic of the Current Market Review as follows:

    1. (a)
       On 17 November 2014 (see paragraph 35 of the Reasons):

The plaintiff sent an email to the defendant stating, ‘please find attached rental advice for the current year’.  That attachment was a letter dated 28 October 2014 which said ‘please find the following rental advice reviewed in accordance with the lease for the year commencing 1 January 2014 to 31 December 2014 for the above noted building.  Please continue to make automatic monthly payments in the amount of $4,647.50 for rental and assessed outgoings …’  It was accompanied by a document … which contained calculations of how this amount had been arrived at … There was no indication as to how the ‘nominated rental figure of $44,200’ had been arrived at and no valuation by a valuer.’”

2. (b)
   (At paragraph 36 of the Reasons) the emails between 18 and 28 November 2014 were dealt with and her Honour records that the respondents clearly indicated that they did not accept the increased rental nominated.  She referred in this respect to an email from the respondents which stated in part that “it would seem that your opportunity to act in accordance with the lease and seek a Current Market Review has long expired”.  The second respondent went on to say that the respondents would pay 3 per cent extra on the original base rent to 31 December 2014;
3. (c)
   the appellant responded that there was no provision in the lease limiting the time by which he was entitled to exercise a right to conduct a market review and that he intended to engage one Mark Carew of Ray White Real Estate as a valuer (although he was not a valuer).  It was asserted in that correspondence that his determination would bind the parties;
4. (d)
   Her Honour observed that the appellant points to Mr Williams’ email of 28 November 2014 and his statement that ‘we don’t have a problem with you waiting 11 months to do a review provided that the increase was not retrospective but let’s see what your man and ours come up with’;
5. (e)
   on 2 December 2014 correspondence from the appellant to the respondents including a tax invoice claiming rent said to be owing for 2014 with a covering letter providing that the per square metre rate was “as valued by Mark Carew, Ray White as at 1 January 2014 in accordance with the lease”.

19. [19]
    Her Honour rejected the appellant’s submission based upon United Scientific, GR Mailman and Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 finding that the presumption referred to in those cases did not apply to the current facts because of the matters set out in paragraphs [50] to [57] of the reasons which it is as well to reproduce here:

“[50] Firstly, the current market review clause is not limited to an agreed current market rent, or current market rent determined by a valuer.  It is expressed as the greater of three possibilities – (a) the current market rent as agreed or in accordance with the landlord’s valuation, (b) the Base Rental increased according to a CPI review, or (c) the Base Rental of the preceding year plus 3%.

[51] The terms of the lease should be construed from the perspective of the need of the parties for certainty.  The purpose of a rent review condition is to fix the rent with certainty, so that both the landlord and tenant can arrange their affairs accordingly.

[52] If the current market review clause in the lease between the plaintiff and defendants provided only for an increase determined by an agreed current market rent or a valuation (where there was no agreement as to the current market rent), then a valuation by a valuer would be necessary to give certainty to the amount of rent payable under the lease agreement.

[53] However, the current market review clause provides alternatives to give certainty where there is no agreed or market value set by the landlord’s valuation, namely to the greater of an increase in accordance with a CPI review or an increase of 3% on the Base Rental.

[54] The clause considered in Gollin (and the other authorities relied upon by the plaintiff)^[5]was the only means of the rent for a particular year being calculated.  If the clause was not given effect, then there was no other way of ascertaining what the rent for that period was.  It was a clause which benefitted both parties, because it was the only way to determine the rent payable.  This was, in turn, relevant to any argument that the lessor had, by its delay waived the right to rely on the rent review clause.  As the rent review clause in Gollin (and the other authorities relied upon by the plaintiff), benefitted both parties by determining what the rent was, it could not be waived by any one party.^[6]

[55] The situation here is different.  The current market review clause provided if there was no agreement for the purposes of (a), the landlord plaintiff could obtain a valuation.  However, if there was no agreement and no valuation obtained, paragraph (b) and paragraph (c) still applied.  The rent was greater of those alternatives in (b) and (c).

[56] As the valuation could be invoked by only one party (the plaintiff lessor) and was solely for his benefit, it was capable of being unilaterally waived by him.

[57] To adopt the plaintiff’s submission would mean that there would be uncertainty as to the rent payable not only during the currency of that particular rental period, but also indefinitely after the lease had concluded.  That does not make commercial sense.”

20. [20]
    As can be seen, her Honour was satisfied that time was of the essence and, in any case, the right to obtain a valuation was a right solely for the benefit of the appellant and plainly it was because it would only fix the rent if it was a higher amount than the other two alternatives and was thus capable of being unilaterally waived by him contrary to the position in Gollin.  He could choose to see whether the rent might be increased or not as he wished.
21. [21]
    Her Honour was satisfied that the rent payable was the base rent for the previous year plus 3 per cent as there was no dispute between the parties that such amount exceeded the base rental increased by CPI.  As will soon become apparent, in my view, her Honour was correct in this analysis.
22. [22]
    Her Honour considered that the presumption ought to be rebutted on the basis that the review clause only applied to the second year of a relatively short three year lease and because it was “expressed to be varied on the review date which must logically have been the commencement of the second year of the lease”.  Also, as I have indicated, the fact that there were two other choices as to the rent payable for that year beyond this one which required steps to be taken by the lessor was considered significant to construing the parties’ agreement.  
23. [23]
    Her Honour found that a valuation obtained over four years later was not obtained within a reasonable time and nor was the proposal of the current market rent in November 2014 within a reasonable time.  Because her Honour had found that time was of the essence, despite there being no specified timeframe, it followed that the right to appoint a valuer was lost.
24. [24]
    Her Honour also concluded that the right to obtain a valuation was capable of waiver by the lessor.  This is dealt with in paragraphs 54 and 55 of the reasons.  Her Honour did not go on to make a finding as to whether there had been any waiver.  This would have been unnecessary given that her Honour had concluded that time was of the essence and that a reasonable time had expired by, at least, November 2014. 
25. [25]
    Her Honour took the view that there was no need to have recourse to the Current Market Review after the expiration of the lease (or ask whether any right to appoint a valuer had been waived) because of the alternatives in subclauses 4.1(b) or (c), which indicated that time was of the essence.  Her Honour expressed the view that, as there was no agreed or valued Current Market Rent the rent was varied to the greater of the amounts provided for in subclauses 4.1(b) and (c).  Her Honour expressed the view that while there might be an accrued right if the only means of establishing the rent for the second year was by valuation, that was not so because of the alternatives in 4.1(b) and (c).  Those statements were made in response to the appellant’s submission relying on Clambake which I will deal with shortly for the proposition that “in the absence of agreement to the contrary, the rent review power may be exercised notwithstanding that the lease has concluded”.

I pause to mention at this point that when speaking of accrued rights and obligations it is important to identify with some precision the right or obligation which is said to have accrued.  The appellant submits that the right which had accrued was the right to proceed with the valuation process after the lease came to an end. Consideration

Time of the essence?

26. [26]
    Her Honour concluded that time was of the essence on the basis that the presumption in United Scientific was rebutted in circumstances where there were the contra indications I have referred to above.
27. [27]
    In United Scientific Lord Salmon (at [1978] AC 904 at page 950) said:

“The time provision in a rent revision clause of the present kind, even in a lease concerning a commercial transaction is however different in character and I regard it as not being of the essence of the contract unless it is made so expressly or by necessary implication.”

28. [28]
    At page 951 his Honour went on to say:

“I do not regard the leases in either of the present appeals, nor in Samuel Properties (Developments) Ltd v. Hayek [1972] 1 W.L.R. 1296 (to which I shall return), as vesting any option in the landlord to have the rent revised. In my opinion each lease constitutes, amongst other things, an agreement between the parties that, at stated intervals, the rents shall be revised so as to bring them into line with the then open market rent.  The rent revision clauses specified the machinery or guidelines for ascertaining the open market rent.  These provisions as to time are not, in my opinion, mandatory or inflexible; they are only directory.”

29. [29]
    The effect of the decision in United Scientific was summarised by Slade LJ in Trustees of Henry Smith’s Charity v AWADA Trading & Promotion Services Ltd (1983) 47 P & CR 607 at 619 as cited by Gleeson CJ in Mailman at [88] in the following terms:

“(1) Where a rent review clause confers on a landlord or tenant a right for his benefit or protection, as part of the procedure for ascertaining the new rent, and that right is expressed to be exercisable within a specified time, there is a rebuttable presumption of construction that time is not intended to be of the essence in relation to any exercise of that right.

3. (2)
   In a case where the presumption applies, the other party concerned may, if he wishes to bring matters to a head after the stipulated time for the exercise of the right has expired, give to the owner of the right a notice specifying a period within which he requires the right to be exercised, if at all; the period thus specified will if it is reasonable then become the essence of the contract.

3. (3)
   The presumption is rebuttable by sufficient ‘contra indications in the express words of the lease or in the interrelation of the rent review clause itself and other clauses or in the surrounding circumstances.’ …

3. (4)
   Though the best way of rebutting the presumption is to state expressly that stipulations as to the time by which steps provided for by the rent review clause are to be taken is to be treated as being of the essence (as to which see United Scientific Holdings Ltd v Burnley Borough Council v Lord Diplock [[1978] AC] at 936, and per Lord Salmon [[ 1978] AC] at 947), this is not the only way.  Any form of expression which clearly evinces the concept of finality attached to the end of the period or periods prescribed will suffice to rebut the presumption.  The parties are quite free to contract on the basis that time is to be of the essence if they so wish.”

30. [30]
    In Mailman Gleeson CJ (as well as Samuels JA and Meagher JA) referred to the oddity which arises in respect of the second matter appearing in the quoted passage above.  That is that such a notice procedure is to indicate a position on something that one is not contractually obliged to take any action.  That is, unlike the position dealt with in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537.  Notwithstanding that issue, their Honours in Mailman were satisfied (following Gollin) to accept that the notice procedure was applicable.
31. [31]
    Ultimately of course, what one seeks to do, of course, is to give effect to the parties’ bargain.
32. [32]
    I am satisfied that the existence of the alternative bases of calculation of the rent (such that this is not the only basis upon which a rental might be fixed), the fact that the particular rental review applies only to the second year in a relatively short lease (such that it would be not be commercially sensible to think that the purportedly revised rent might only be fixed years after the expiration of the lease) together with the fact that the appointment of a valuer is in my view a condition precedent to the lessor having a right to impose a rent revised to market provide sufficient contra indication so as to rebut the presumption. 
33. [33]
    While I accept the respondents’ submission that Gollin is not authority for the proposition that time can never be of the essence if timeframes are not explicitly agreed, I also accept that the occasions upon which it might be would be rare.  There is support for that view in Gollin itself (at 468) and I have also had regard to Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271 at [34], [75] and [83] in this respect.  That is what I find to have been the parties’ intention here.  I am confident, as was her Honour, that the time to appoint a valuer expired well before the end of the lease or November 2014.  If it were necessary for me to express any more precise view as to this, I would consider that the right was to be exercised if the lessor so chose sometime before the date from which the rent fixed by reference to one of the 3 alternatives was to take effect.  That seems to me a sensible commercial construction of the implied time in which this matter is to be dealt with having regard to the fact that there are 3 alternatives and it is a matter which the lessor may choose to do or not at his whim.

Accrued right?

34. [34]
    As I have set out above, her Honour rejected the existence of an accrued right to an increased rent.  In my view, she was correct to do so.  The argument for the appellant is that when the lease came to an end the Current Market Review was unresolved in that, as the appellant describes it, its validity was challenged by the respondents.  It was further submitted before her Honour that a right to conduct a rent review may be activated after a surrender (as to which see page 10 of the appellant’s written submissions at trial).
35. [35]
    The appellant relies heavily on the decision of Clambake in this respect.  In turn, it is indicated in the appellant’s submissions that that decision deals with the retrospective exercise of the power to review rent, to some extent, by reference to McDonald v Dennys Lascelles (1933) 48 CLR 457.  However, it is necessary to recall that what that decision provides is that in respect of termination for breach (at 476-477) both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired.
36. [36]
    In Clambake a fire had resulted in Tipperary abandoning possession of the destroyed property.  
37. [37]
    Clambake claimed that it was entitled to invoke the rent review mechanism retrospectively after the expiration of the lease and specifically relied upon clause 2.03 of the lease in that case.  That clause provided in part that the annual rental as reviewed would be payable irrespective of when such Annual Rent is calculated agreed or determined and the lessor’s right to have the Annual Rent reviewed and the lessee’s obligation to pay it:

“Shall not be waived varied or prejudiced by reason of the Lessor’s failure to enforce these provisions, or by the Lessor’s continuing to accept after the relevant Rent Review Date payment of Annual Rent at the rate applicable prior to the relevant Rent Review Date or by any other laches delay or forbearance on the part of the Lessor.”

38. [38]
    In Clambake, Heenan J considered that the issue was not answered by reference to McDonald v Denny Lascelles where there was no termination for breach by either party.  In that case it was accepted by both sides that the tenancy was bought to an end without fault on either side by reference to termination after the fire.  The position is analogous in respect of the lease coming to an end in the present case.  Heenan J also considered Item 4 of the second schedule to the lease which expressly provided for the ability to exercise the rent review powers during any holding over period.  The relevant question then was whether the power could still be exercised after the end of that monthly tenancy during the holding over period. 
39. [39]
    Heenan J said the following at para [106]:

“106  Clause 2.03 contemplates that the reviewed rent shall be payable irrespective of when it was calculated, agreed or determined. There would not appear to be any reason why this power could not have been exercised immediately upon the termination of the monthly tenancy, say on 23 December 2002 and, because cl 2.03 expressly provides that the lessor's right to conduct such a review 'shall not be waived, varied or prejudiced by reason of the lessor's failure to enforce those powers … or by any other laches, delay or forbearance' the implication is that the power is exercisable even after the termination of the monthly tenancy during the holding over period.”

40. [40]
    At para [108] of Clambake two other cases were referred to in the context of rent review powers being exercised after a lease has come to an end.  First, Maritime Services Board of New South Wales v Australian Shipping Commission (1991) 27 NSWLR 258 which is stated to be authority for the proposition that in the absence of agreement to the contrary a rent review power may be exercised notwithstanding that the lease has been concluded.  In that case, unlike this one, the rent review power was not dependent upon the receipt of a valuation.  All that was called for was an exercise of discretion by the lessor to charge an additional amount up to 25 percent.   
41. [41]
    In the second case, Tormister Properties v Green [1983] 1 WLR 676, the English Court of Appeal was concerned with a case where the rent review provided for the appointment of a surveyor to determine the rent.  That occurred on 22 January 1979, while the lease remained on foot.  On 4 April 1979, that is about two and a half months after the relevant valuer was appointed, the lessee surrendered the lease.  The lessor demanded the payment of the additional rent determined by the surveyor on 8 May 1979.  That was held to be permissible.
42. [42]
    The distinction in those cases is that any steps that were necessary to be taken by the lessor to establish the market rent had been taken prior to determination of the lease.  That has not occurred in the present case, which in my view, is a relevant and critical point of distinction between the situation in those cases and that in the present.
43. [43]
    At no time prior to the end of this lease, which was more than 12 months after market review was first raised, was the lessor prevented in any way from obtaining the requisite valuation.  Unlike Tormister the relevant step was not taken by the appellant.  That was frankly extraordinary given that the first respondent gave notice to the appellant on 5 January 2015 that he required the appointment of a registered valuer to conduct the valuation for the purposes of a market review and did not accept that Mr Carew was qualified to do that.  The appellant did nothing in this respect for more than three years.
44. [44]
    In all the circumstances, I do not consider that there was an accrued right to receive the higher rental.  The right was relevantly accrued in Tormister because the action of appointing the surveyor had occurred prior to surrender.  In Maritime Services it was accrued because the Board could effect the market review simply by its own determination. The right referred to in Clambake, to determine the market rental subsequent to the lease coming to an end, was expressly referred to in the words of the lease.

Conclusion

45. [45]
    In summary, for the following reasons, the appeal must be dismissed.

    1. (a)
       properly construed, the appellant’s right to require the respondents to pay a revised market rent pursuant to cl 4.1(a) was subject to a condition precedent being that, should the parties not agree to a revised rent and should the appellant wish to levy a perceived higher market rent, the appellant was obliged to nominate a valuer;
    2. (b)
       that condition precedent was not fulfilled at any time prior to the expiration of the lease;
    3. (c)
       alternatively, to the extent to which the question is one of whether time was of the essence in respect of the appellant’s “obligation” in this respect, then in my view, time was of the essence despite the obligation being one to perform that “obligation” within a reasonable time as:

       1. the matter was expressed as being in the nature of a condition precedent to the appellant’s right to charge a reviewed rent fixed by a valuer;
       2. there were two other mechanisms by which the rent could also be increased;
       3. the lease was a lease for a short period of time and the market review and in particular this aspect of it applied only in the second year of the lease;
       4. the existence of the other mechanisms for altering the rent suggested that it could not have been the parties’ intention that no choice as to which provision was applicable in increasing the rent would be made during the currency of the lease.  There is no sensible reason why the amount payable between those three alternatives would be left to be calculated at some time later than the effective date and certainly not years after the lease expired;
       5. the relevant right was solely for the benefit of the appellant in circumstances where a market rent arrived at in this way would only apply if the amount was greater than the other two methods for ascertaining a revised rent and the lessor was the only person who could invoke this aspect of the clause;
    4. (d)
       in any case, in my view, it cannot have been the parties’ intention that the appellant would be permitted, even after being called upon by the respondents to nominate a valuer (in January 2015), to wait until after the expiration of the lease and retain the right nonetheless to appoint a valuer and conduct a market review thereafter;
    5. (e)
       the right being solely for the benefit of the appellant had the consequence that the right could be waived and, in my view, that occurred, at the very latest, in circumstances where the appellant had been called upon to appoint a valuer and had not done so at any time before the expiration of the lease;
    6. (f)
       in any case, even if time was not of the essence, the effect of the respondents’ calling upon the appellant to appoint a valuer in January 2015 could be construed as giving rise to an obligation upon the appellant to then do so within a reasonable time. Whatever that time might have been, it at least expired with the expiration of the lease.
46. [46]
    In all of those circumstances the appeal is dismissed.
47. [47]
    The appellant should pay the respondents costs of and incidental to the appeal