Baycloud v Dowling Investments [2005] NSWSC 237

Baycloud v Dowling Investments [2005] NSWSC 237

Clause 21.03(a) properly construed imposed an obligation on the lessor to notify the lessee of the amount claimed as market rent within the specified third-year review periods. Clause 21.02 prevented the clause 21.01(a) 6% or CPI increases in years when a market review was required, whether or not the lessor actually performed that obligation. Because the lease assumed regular market reviews to keep rent at market levels and the lessor did not initiate the required review, no applicable lease provision altered the rent after the second year of holding over; accordingly the rent remained at the second-year rate until a clause 21.03 review was initiated and completed.

Jurisdiction
Australia
Judgment Date
17 March 2005
Procedural Posture
Landlord and Tenant Dispute Concerning Construction of a Rent Review Clause in a Lease of Hotel Premises / Judgment on Amended Summons; Ex Tempore Judgment Revised 17 March 2005
Outcome
Declaration made for the plaintiff; defendant ordered to pay the plaintiff's costs.
Legal Topics
['rent Review Clause' 'market Rental Review' 'holding Over Tenancy' 'hotel Premises Lease']
['landlord and Tenant' 'equity' 'contract Interpretation'] ['rent Review Clause' 'market Rental Review' 'holding Over Tenancy' 'hotel Premises Lease']

Case Brief

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Procedural Posture

Landlord and Tenant Dispute Concerning Construction of a Rent Review Clause in a Lease of Hotel Premises / Judgment on Amended Summons; Ex Tempore Judgment Revised 17 March 2005

Legal Issues

  1. 1 ['Whether clause 21.03(a) obliged the lessor to initiate a market rental review in the third year of the holding over period and each third year thereafter.' 'Whether, if the lessor did not initiate the required market rental review in the third year, the fixed 6% or CPI increase mechanism in clause 21.01(a) applied in the third and subsequent years.' 'What rent was payable during the third and subsequent years of the holding over period until a market rent review was initiated and completed.']

Ratio Decidendi

Clause 21.03(a) properly construed imposed an obligation on the lessor to notify the lessee of the amount claimed as market rent within the specified third-year review periods. Clause 21.02 prevented the clause 21.01(a) 6% or CPI increases in years when a market review was required, whether or not the lessor actually performed that obligation. Because the lease assumed regular market reviews to keep rent at market levels and the lessor did not initiate the required review, no applicable lease provision altered the rent after the second year of holding over; accordingly the rent remained at the second-year rate until a clause 21.03 review was initiated and completed.

Court Disposition

Declaration made for the plaintiff; defendant ordered to pay the plaintiff's costs.

Orders

  • ['Declared that upon the proper construction of the lease dated 25 July 1990, in the third and subsequent years of the holding over period and until such time as the lessor initiates a rent review under clause 21.03 and that rent review is completed, the plaintiff has been and will be obliged to pay rental to the...