The statutory construction of s 6(1)(b) of the Retail Leases Act 1994 (NSW) (Act) was the central issue for determination in a recent Court of Appeal decision (per Ward, Leeming JJA and Emmett AJA). Importantly, the court considered whether a lease with a five-year term and four options to renew for five years each, ie 25 years in total was a lease with a term of 25 years or more and therefore excluded from the operation of the Act.
The exclusion in s 6(1)(b) excludes from the Act “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)”.
The applicant (Pyrmont, Lessee) was assigned a lease for the operation of a bottleshop (Lease) on premises owned by the respondent (Westacott, Lessor). At the time of assignment, the first of four five-year options to renew the Lease had already been exercised. The original lease was for a term of five years from 19 March 2004 to 18 March 2009 and each of the original and subsequent leases made it clear that the intent was that if all options for renewal were exercised the Termination Date of the final term would be 18 March 2029 . Pyrmont sought a rent review under s 32 of the Retail Leases Act 1994 (NSW) (Act) from what is now NCAT (NSW Civil and Administrative Tribunal) for the purpose of exercising the second option to renew. The Tribunal refused the application on the basis that the term of the Lease was for 25 years and pursuant to s 6(1)(b) of the Act, it was not a “lease” for the purposes of s 3 of the Act. Accordingly it was not a retail lease over which the Tribunal had jurisdiction.
Pyrmont appealed to the Supreme Court and Wilson J upheld the decision of the Tribunal and dismissed the appeal.
Pyrmont then appealed to the NSW Court of Appeal, arguing that:
- “lease” in s 6(1)(b) directs attention only to the term (including any option term) of Pyrmont’s registered lease, that is left to run and does not include the term already utilised, with the effect that the deemed term did not exceed 20 years; or, in the alternative
- the use of the singular “any term” in s 6(1)(b), in contrast to the different statutory language in s 6A(2) and 16 of the Act, meant that only the next option to renew was relevant (to determining the length of the lease), but not a second or later option to renew.
What was the correct statutory construction of s 6(1)(b) of the Act?
Held: for the respondent – the lease fell outside the jurisdiction of the Act
1. The definition of “lease” in s 6(1)(b) did not refer to the ordinary common law meaning of a lease, rather its meaning was defined in s 3: “any agreement under which a person grants or agrees to grant to another person for value a right of occupation”. This definition was found to be inconsistent with the idea that each exercise of an option to renew brings into existence a new “lease” for the purposes of s 6(1)(b). (Per Ward JA at –, Leeming JA at  and Emmett AJA at )
2. Wilson J did not err in finding that the Act did not apply to the Lease. The relevant agreement to grant a right of occupation, for the purposes of s 6(1)(b), was that recorded in the original Lease, because that was the commencement of the agreement to grant a right of occupation. Accordingly, the term of that agreement, which consisted of the original Lease term plus any terms for which there was an option to renew provided for under that Lease, was for a term of 25 years. (Per Ward JA at , , Leeming JA at  and Emmett AJA at )
3. The ordinary meaning of “any term” within s 6(1)(b) was inclusive and referred to any option to renew. By implication, it could have a plural meaning and was not restricted just to the subsequent option. (Per Leeming JA at –, providing further reasoning for the conclusion in 2 above)
Editorial Comment: This is a useful decision because it examines the different meanings of lease under the Act and at Common Law, and provides clarification of the meaning of “lease” in s 6(1)(b). There is common sense in an approach that does not view each option to renew as a separate and new lease as that interpretation would capture many more leases than the Act was designed to regulate. Consistent with the High Court decision of Gnych v Polish Club Ltd (2015) NSW ConvR ¶56-348;  HCA 23, Leeming JA confirmed that the Act expressly overrides the private bargains of lessor and lessee (s 7). For this reason, s 6(1)(b) of the Act is important because it is seeking to exclude leases whose term is 25 years or more –.
Pyrmont Point Pty Ltd v Westacott  NSWCA 33, has been reported in the New South Wales Conveyancing Law & Practice, as (2016) NSW ConvR ¶56-360.