Alex Constructions Pty Ltd v Gabriella Fedeli and Domenico Santapadre [2014] NSWCATCD 217

Alex Constructions Pty Ltd v Gabriella Fedeli and Domenico Santapadre [2014] NSWCATCD 217

The words in item 15 providing for Method 1 and Method 2 and annual increases by the greater of 3% and movements in the CPI involved a prohibited choice between rent review methods and were void under s 18(3)(c) and s 7 of the Retail Leases Act 1994. After those words were excised, no other rent review method was stated, so the default wording in item 15 applied and Method 2, Consumer Price Index rent review, governed the annual rent increases. Section 18(4) did not apply because there was no ratchet provision and CPI could increase or decrease.

Jurisdiction
Australia
Judgment Date
28 October 2014
Procedural Posture
Retail Lease Dispute Concerning Rent Review Provisions / Hearing on the Papers; Principal Judgment
Outcome
Application resolved by determining that annual CPI rent review applies.
Legal Topics
['renewal of Lease' 'rent Review' 'void Rent Review Provision' 'consumer Price Index Rent Adjustment' 'retail Leases Act']
['retail Leases' 'property Law' 'consumer and Commercial Law'] ['renewal of Lease' 'rent Review' 'void Rent Review Provision' 'consumer Price Index Rent Adjustment' 'retail Leases Act']

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Procedural Posture

Retail Lease Dispute Concerning Rent Review Provisions / Hearing on the Papers; Principal Judgment

Legal Issues

  1. 1 ['Whether the rent review provision in item 15 of the lease was void under s 18(3)(c) of the Retail Leases Act 1994 because it provided for annual increases by the greater of 3% and movements in the CPI.' 'Whether the whole of item 15 failed, invalidating all rent increases, or only the offending words should be excised.' 'Whether s 18(4) of the Retail Leases Act 1994 applied on the basis that the rent review clause prevented the base rent decreasing.' 'What rent review method applied after any void words were excised from item 15.']

Ratio Decidendi

The words in item 15 providing for Method 1 and Method 2 and annual increases by the greater of 3% and movements in the CPI involved a prohibited choice between rent review methods and were void under s 18(3)(c) and s 7 of the Retail Leases Act 1994. After those words were excised, no other rent review method was stated, so the default wording in item 15 applied and Method 2, Consumer Price Index rent review, governed the annual rent increases. Section 18(4) did not apply because there was no ratchet provision and CPI could increase or decrease.

Court Disposition

Application resolved by determining that annual CPI rent review applies.

Orders

  • ['The rent is increased annually by Method 2, being by increase in accordance with the Consumer Price Index (CPI).']