Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd [2022] NSWCATAP 153 Hearing dates: 1 March 2022 Date of orders: 12 May 2022 Decision date: 12 May 2022 Jurisdiction: Appeal Panel Before: M Harrowell, Deputy President G Burton SC, Senior Member Decision: 1. Orders 2 and 3 made 3 November 2021 in application COM 21/08975 are set aside and in lieu thereof the following order is made: "2. For the purpose of clause 6(b) of the lease between Hanave Pty Ltd and Wine Nomad Pty Ltd dated 14 July 2012, dealing number AK318893, the amount of $252,000 plus GST is declared to be the fair market rent for the period commencing 14 July 2020." 2. Order 4 made on 3 November 2021 in application COM 21/17178 is set aside and in lieu thereof the following order is made: "3. The respondent, Hanave Pty Ltd, is to pay the applicant, Wine Nomad Pty Ltd, the sum of $7,571.17." 3. In respect of costs of the proceedings at first instance and of this appeal the following directions are made: (a) Any application for costs, including evidence and submissions in support of the application, is to be filed and served by the costs applicant within 14 days from the date of these orders; (b) Any evidence and submissions in response are to be filed and served by the costs respondent within 28 days from the date of these orders; (c) Any submissions in reply are to be filed and served by the costs applicant within 35 days from the date of these orders. (d) Submissions are to include submissions about whether a hearing of any costs application can be dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). Catchwords: LEASES AND TENANCIES — Retail leases — Rent review – whether agreement was made to fix rent – whether valuation to determine current market rent under s 31of the Retail Lease Act 1994 was valid – requirement to take into account specified matters – circumstances in which the Tribunal may intervene to declare invalid a determination of rent by appointed valuer LEASES AND TENANCIES — Retail leases — Retail shop lease – meaning of retail shop and retail shop lease – whether a licence is a retail shop lease – relevance of uses by third party where licence grants a non-exclusive right of occupation LEASES AND TENANCIES — Rent and outgoings — Abatement of rent — Damage to premises – operation of s 36 of the Retail Leases Act 1994 – whether entitlement to abatement of licence fee where premises the subject of a related lease of a restaurant are unusable because of damage Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Retail Leases Act 1994 (NSW) Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) Cases Cited: Azriel v NSW Land & Housing Corporation [2006] 67 NSWLR 256; [2006] NSWCA 372 Boland v Yates Property Corp Pty Ltd [1999] HCA 64; 167 ALR 575 Bonnington & Co Pty Ltd v Lynch [1952] HCA 46; (1952) 86 CLR 259 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Conoid Pty Ltd & Anor v International Theme Park Pty Ltd [2019 NSWSC 1138; (1999) 9 BPR 97802 Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATCD 251 Eastpoint Shopping Village v Grayson Pty Ltd [2011] NSWADT 68 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd [1988] 14 NSWLR 523 Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455; [1983] HCA 38 Hunt v Casaran Pty Ltd [2012] NSWADT 193 Minister for Immigration and Ethnic Affairs v Wu Shang Liang [1996] HCA 6; (1996) 185 CLR 259 Manly Council -v- Malouf [2003] NSWADTAP Manly Council v Malouf [2004] NSWCA 299 Moweno v Stratis [2002] NSWSC 1151 Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376 New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 Police v EMB [2021] NSWCATAP 63 Rathborne v Abel (1964) 38 ALJR 293 Redgum Developments Pty Ltd v G8 Education Limited [2020] VSC 142 Richardson v Lockevo [2010] NSWADT 305 Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205; (2019) 19 BPR 39,621 Wood & Wilson v Bergman [2003] NSWADT 82; [2003] ANZ ConvR 624 Texts Cited: Nil Category: Principal judgment Parties: In 2021/00325262 Hanave Pty Ltd (Appellant) Wine Nomad Pty Ltd (Respondent) In 2021/00340129 Wine Nomad Pty Ltd (Appellant) Hanave Pty Ltd (Respondent) Representation: In 2021/00325262 Counsel: M Sheldon (Appellant) G Sirtes SC/ A Oakes (Respondent) Solicitors: Gilbert Mane Solicitors (Appellant) Peterson Haines (Respondent) In 2021/00340129 Counsel: G Sirtes SC/ A Oakes (Appellant) M Sheldon (Respondent) Solicitors: Peterson Haines (Appellant) Gilbert Mane Solicitors (Respondent) File Number(s): 2021/00325262 2021/00340129 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 03 November 2021 Before: G Blake AM SC, Senior Member File Number(s): COM 21/08975 and COM 21/17178 REASONS FOR DECISION Introduction 1. These two appeals relate to a retail lease of premises at Surry Hills (Premises). Hanave Pty Ltd (landlord) was the landlord and Wine Nomad Pty Ltd (tenant) was the tenant. Each of the parties had brought proceedings in the Tribunal seeking various orders. 2. The parties had entered into a retail lease for the Premises, registered number AK318893, for a term of 12 years commencing on 14 July 2012 (Lease). The Lease was subject to yearly rent increases of 4% as well as a review of rent on each fourth anniversary of the Lease. 3. In addition, the parties had entered into a licence agreement dated 10 September 2013 for an area described as "the disused lift shaft and the loading dock together with part of the roof" (Licence). The Licence was "for the purposes of installing exhaust outlets from the ground floor leased premises to the roof of the building" and, in respect of the loading dock area, "for non-exclusive use solely for loading and unloading supplies and materials for the permitted use of the premises and for installing an air-conditioning coil unit". 4. Since commencement of the lease, the tenant has operated a restaurant and bar business. This operation was affected by a fire which occurred on 11 September 2019, damaging the Premises. The effects of this fire resulted in rent abating from 11 September 2019 until 16 April 2020. 5. From about March 2020, the COVID-19 pandemic has been affecting New South Wales. This led to the making of various regulations by the Government concerning rent payable by tenants in connection with retail leases and the rights and liabilities of parties in connection with such leases. 6. In consequence of the fire, works were carried out by the landlord to reinstate the Premises. Disputes arose between the parties "concerning fit out progress, the applicability of the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (Regulation) relating to COVID-19, rental arrears, breach of Licence and various minor financial and tenancy issues". On 14 July 2020, following mediation, the parties entered into a written agreement concerning these matters (July agreement). 7. In 2020, the lease was subject to rent review (rather than a 4% fixed increase of rent) due to that year being a fourth anniversary since the inception of the lease. A valuer was appointed to prepare a valuation in accordance with the Retail Leases Act 1994 (NSW) (RL Act). 8. Various disputes arose concerning the operation of the July agreement, whether the tenant was entitled to have the rent reviewed as provided by the lease, whether the valuation in respect of the rent review prepared by the valuer was valid and whether the tenant was also entitled to a refund of licence fees paid by reason of what had occurred. The original proceedings 1. The landlord commenced proceedings COM 21/08975 (landlord's application). The landlord sought various orders including that the tenant was not entitled to seek a market rent review because the amount of rent was agreed in the July agreement and, alternatively, that a valuation prepared pursuant to the review process was not a proper valuation complying with the RL Act. 2. The tenant's proceedings were COM 21/17178 (tenant's application). In these proceedings the tenant sought a refund of licence fees in an amount of $7,571.17. 3. The Tribunal made orders on 3 November 2021 and published reasons for decision (reasons). Relevant to this appeal are the following orders: 1. An order declaring that the parties did not reach an agreement as to the yearly rent as at 14 July 2020 within cl 6(b) of the lease made on or about 14 July 2012 between Hanave Pty Ltd as the lessor and Wine Nomad Pty Ltd as the lessee, which was registered with the dealing no AK318893 (lease). 2. An order declaring that the valuation dated 11 December 2020 of Michael Hermiz (Mr Hermiz) issued to the parties on 10 February 2021 is not a valid valuation and is not binding on the parties. 3. The parties are required to remit the determination of the current market rent under the lease as at 14 July 2020 to Mr Hermiz to make a redetermination according to law. 4. Proceedings COM 21/17178 are otherwise dismissed. 1. Both the landlord and the tenant appealed the decision. Notices of appeal 1. The landlord's appeal 2021/00325262 was filed on 16 November 2021 (landlord's appeal). The Notice of Appeal was filed in time. 2. The landlord seeks an order that orders 1 and 2 made 3 November 2021 be set aside and in lieu thereof an order be made "declaring that on or about 14 July 2020 the parties reached agreement that the yearly rent was $328,982.28 plus GST p.a.". Alternatively, if unsuccessful in setting aside orders 1 and 2, the landlord seeks an order that the parties be required to remit the determination of the current market rent to a different valuer, not Mr Michael Hermiz, such valuer to be agreed by the parties or appointed in accordance with clause 6(b) of the lease. 3. The Notice of Appeal contains six grounds of appeal as follows: Question of Law 1: Did the Tribunal err in construing the Heads of Agreement by concluding that the parties did not reach an agreement as to the yearly rent as at 14 July 2020 within cl 6(b) of the Lease? The consequence of a finding that the Tribunal did err is that the parties agreed rent going forward at $328,982.28 plus GST p.a. And a valuer should not have been appointed. Question of Law 2: In the alternative, did the Tribunal err in concluding that on the proper construction of the Lease, where the parties have not reached agreement as to rent 28 days prior to the applicable date for the anniversary of the Commencement Date, then the rent is required to be determined by a valuer and that the clause does not permit agreement between the parties as to the rent to be reached up to the anniversary of the Commencement Date? The consequence of a finding that the Tribunal did occur is that the parties agreed rent going forward at $328,982.28 plus GST p.a. And a valuer should not have been appointed. Question of Law 3: In the alternative, and only if the [landlord] does not succeed on Question of Law 1, did the Tribunal err in concluding that on the proper construction of the Heads of Agreement, a delay of the [tenant] appointing a valuer meant that a valuation was unavailable or that the [tenant] waived its right to a valuation? The consequence of a finding that the Tribunal did err is that the respondent was unable at law to appoint a valuer and no valuer should have been appointed. Ground 4: Did the Tribunal err in having regard to the parties' subsequent conduct and based on that conduct finding that the conduct was inconsistent with the parties reaching an agreement as to the yearly rent as at 14 July 2020 within cl 6(b) of the Lease? The consequence of a finding that the Tribunal did err is that the parties agreed rent going forward at $328,982.28 plus GST p.a. And a valuer should not have been appointed. Question of Law 5: In finding that the parties are required to remit the determination of the current market rent to Mr Hermiz (as opposed to a valuer to be agreed or otherwise appointed in accordance with clause 6(b) of the Lease) did the Tribunal deny the [landlord] procedural fairness? The consequence of a finding that the Tribunal did err is that the valuer should be agreed or otherwise appointed in accordance with clause 6(b) of the Lease. Question of Law 6: in the alternative, in finding that the parties are required to remit the determination of the current market rent to Mr Hermiz (as opposed to a valuer to be agreed or otherwise appointed in accordance with clause 6(b) of the Lease) did the Tribunal err in the exercise of its discretion in a House v King sense? The consequence of a finding that the Tribunal did err is that a valuer should be agreed or otherwise appointed in accordance with clause 6(b) of the Lease. 1. The tenant's appeal 2021/00340129 (tenant's appeal) was filed on 29 November 2021. The appeal was filed in time. An amended notice of appeal was subsequently filed on 3 December 2021. The tenant seeks orders that: 1. orders 2, 3 and 4 made on 3 November 2021 be set aside; 2. a declaration be made that "the rent payable under Registered Lease AH318893 commencing on 14 July 2012 (Lease) from 1 August 2020 is the rent determined by Mr Michael Hermiz of Anderson Group Valuers in his 10 February 2021 valuation (Hermiz Valuation), being $252,000 per annum net and exclusive of GST"; 3. an order that the landlord refund an amount equal to the overpayment of rent under the Lease from 1 August 2020 and provide a GST adjustment note in respect of that refund; and 4. an order that the landlord pay to the tenant by way of refund an amount of $7,571.17 in respect of monies paid under the Licence. 1. The tenant's grounds of appeal can be summarised as follows: 1. In determining that the Hermiz Valuation was invalid, the Tribunal erroneously applied a "merits review analysis to the question of the validity of the valuation". Such a process of analysis was inappropriate because a merits review of a determination made under s 31 of the RL Act is available only pursuant to "the mechanism in s 32A" of the RL Act. 2. The only question properly before the Tribunal was whether, in preparing the Hermiz Valuation, the valuer had regard to the matters listed in s 31(1)(a) of the RL Act. 3. The Tribunal erred in its reasons: 1. at [96] "in holding that s 31(1)(a)(i) of the Retail Leases Act requires a specialist retail valuer determining the current market rent for a lease to have regard not only to the provisions of that lease (i.e. the lease requiring the rent review), but also the provisions of leases of all properties used for the purpose of preparing the valuation; 2. at [97] in determining s 31(1)(a)(i) required the valuer to discuss whether comparable properties that did not have the same permitted use as the present property required an adjustment for that reason to determine the current market rent of the Premises; 3. at [99] in determining s 31(1)(a)(i) required the valuer to specify the presence or absence of incentives for all comparable properties considered in his determination; 4. at [101] in finding that the valuer determined the current market rent as at 11 December 2020 rather than 14 July 2020. 5. At [100] in finding that the valuation is invalid and not binding on the parties. 1. In respect of a refund of amounts payable under the licence agreement, the Tribunal was in error in failing to conclude: 1. the area the subject of the licence was used wholly or predominantly for the tenant carrying on its restaurant and bar business and that the Licence was a retail shop lease within the definition of s 3(1)(a) of the RL Act; and 2. by reason of s 36(1) of the RL Act the tenant was entitled to abatement of payments made in respect of the Licence. 1. In addition, each party seeks orders in respect of costs. Consideration 1. There is no dispute that the Tribunal has jurisdiction to determine the present disputes. 2. There are four primary issues for determination in this appeal. These are: 1. Was the Tribunal correct in construing the July agreement and its effect on the rent review clause? 2. Was the Tribunal correct in determining that the Hermiz Valuation was invalid and not in accordance with s 31(1)(a) of the RL Act? 3. Was the licence a retail lease within the meaning of the RL Act? 4. If yes, was the tenant entitled to a refund of licence fees and the amount of $7,571.17. 1. It is convenient to deal with the grounds of appeal and the parties' submissions under these four headings. Was the Tribunal correct in construing the July agreement and its effect on the rent review clause? 1. Clause 6 of the Lease regulates rent increases and rent reviews. Relevantly, in respect of the review in question, cl 6(b) provides as follows: On each 4th anniversary of the Commencement Date the rent for the [sic] shall be agreed by the parties or failing agreement at least 28 days prior to the Commencement Date the Fair Market Rent shall be determined by a valuer agreed between the parties or failing agreement appointed for such purposes by the President of the NSW Division of the Australian Property Institute or its successors. Such valuer shall be deemed to be acting as an expert and not as an arbitrator and his fee shall be borne by the [landlord and tenant] in equal shares. 1. The landlord contends that the July agreement constituted an agreement fixing the rent payable under this clause. Consequently, the appointment of the valuer was inappropriate and the valuation prepared has no effect. 2. The July agreement is found in the appeal bundle (AB) pp 307-311. Relevant provisions of the agreement were set out in the reasons of the Tribunal at [62]. It is convenient to repeat those terms here: Background A Hanave owns the Building. B Nomad has a Lease of Premises in, and a Licence of parts of, the Building. C The Premises, having been destroyed by fire on 11 September 2019 were reinstated to base building condition by Hanave and returned to Nomad on 17 April 2020 (repair period). D Rent and outgoings abated during the repair period. E The parties are in dispute about matters concerning fitout progress, the applicability of the NSW Regulation relating to COVID-19, rental arrears, breach of Licence and various minor financial and tenancy issues. F The parties sought to resolve the disputes with the help of the Mediator on 9 July 2020 in accordance with the dispute resolution provisions in the Retail Leases Act 1994 (NSW) and the NSW Regulation. G As a result of the mediation, the parties have agreed to resolve the disputes on the commercial terms set out in this document. 1 Defined terms In this document: … Lease means lease registered AH318893; Licence means the licence between the parties relating to the loading dock, lift shaft and grease trap dated 10 September 2013; … NSW Regulation means the Retail and Other Commercial Leases (COVID-19) Regulation 2020; Rent means the net monthly rent payable under the Lease. … 3 Rent relief 3.1 April to July Hanave agrees to: (a) waive all of the Rent and any accrued interest for the period 17 April 2020 to 31 May 2020: (b) reduce the Rent to $10,000 + GST for the period 1 June to 30 June 2020: and (c) reduce the Rent to $15,000 + GST for the period 1 July to 31 July 2020. 3.2 Payment Nomad will pay the reduced rent for June and July, as noted above, within 14 days after receipt of a tax invoice from Hanave for the relevant amounts. 3.3 August and onwards (a) The parties agree that from 1 August 2020 to 31 December 2020 ('the period') Nomad will pay full Rent. (b) Should the NSW Government impose further restrictions on restaurant trading due to COVID•19 during the period, Nomad will pay Rent proportionate to Nomad's real or hypothetical ability to trade during the relevant month but not less than the July 2020 rent (ie $15,000 plus GST). 3.4 NSW Regulation In consideration of the Rent concessions set out above, Nomad waives any claim it may have in relation to any rent relief under the NSW Regulation during the period from 17 April 2020 to 31 December 2020. 1. As to the other terms, Clause 4 of the July agreement dealt with the Licence, not presently relevant to this aspect of the dispute. Clause 5 and 6 dealt with "Miscellaneous niggles" and "General" matters. 2. The Tribunal concluded, on its proper construction, cl 6(b) of the Lease required the parties to reach any agreement as to rent at least 28 days prior to the relevant anniversary for a rent review. 3. At [80] the Tribunal said: I am satisfied that on the proper construction of cl 6(b) of the lease, where the parties have not reached an agreement as to the rent 28 days prior to the applicable fourth anniversary of the Commencement Date, then the rent is required to be determined by a valuation in the manner specified in that clause. The clause does not permit agreement between the parties as to the rent to be reached up to the anniversary of the Commencement Date as this would involve ignoring the words "failing agreement at least 28 days prior to the Commencement Date the Fair Market Rent shall be determined". Where agreement is not reached by this date determination of the rent by a valuation is mandatory. It follows that the HOA cannot constitute an agreement between the parties as to the rent for the purpose of cl 6(b) of the lease. 1. That is, because the July agreement was entered into on 12 July 2020, being a period less than 28 days before the relevant anniversary, it could not constitute an agreement for the purpose of cl 6(b). 2. The Tribunal then made an alternative finding, in the event its construction of cl 6(b) of the Lease was incorrect and the July agreement could operate as an agreement for future rent for the purpose of cl 6(b) of the lease. At [82] the Tribunal said: If, contrary to my finding, the lease on its proper construction permits the parties to reach a binding agreement as to the rent subsequent to 28 days prior to the applicable fourth anniversary of the Commencement Date, then I am not satisfied that the HOA contains an such agreement. Having regard to the definition of "rent" in cl 1, and the terms of cl 3.3(a) and (b) the agreement as to rent in that sub-clause was limited to the rent payable under the lease for the period from 1 August 2020 to 31 December 2020. There was no agreement as to the rent for the period from 1 January 2021. Neither the heading "August and onwards" for cl 3.3, nor the words "rental arrears" and "financial and tenancy issues" in item E of the background of the HOA, displace the specific limitation of cl 3.3(a) and (b) to the rent payable for the period from 1 August 2020 to 31 December 2020. 1. Finally, again on the assumption the Tribunal's earlier conclusions were wrong, the Tribunal rejected a claim that the landlord's conduct subsequent to the July agreement evidenced the parties reaching an agreement for the purpose of cl 6(b) of the lease. 2. At [83] the Tribunal said: It is unnecessary to have regard to Hanave's conduct subsequent to the HOA to determine whether the parties reached an agreement for the purposes of cl 6(b) of the lease. If it had been necessary to do so, then I would have been satisfied that the 29 September 2020 at 12.01pm email and the 1 October 2020 invoice are inconsistent with any resolution of the rent review mechanism by an agreement between the parties in the HOA. Contrary to the submission of Hanave, consideration of this conduct would not have been for the purpose of construing the HOA, but for determining whether such an agreement was reached. While recognising that the Tribunal is not bound by the rules of evidence in these proceedings pursuant to s 38(2) of the NCAT Act, I am satisfied that it is appropriate to apply the principles as to the use of post-contractual conduct in determining whether an agreement was reached between the parties as to the rent. Regard to this conduct of Hanave subsequent to the HOA is permitted pursuant to the principles stated in Brambles at [25]-[26]. 1. The reference to Brambles was a reference to the decision of the Court of Appeal in Brambles Holdings Ltd v Bathurst City Council [2001 NSWCA 61; (2001) 53 NSWLR 153. In that case, Heydon JA (as he then was) said at [25]-[26]: [25] The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: … [26] The third relevant principle is that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed. …" Submissions 1. The challenge to these conclusions is found in grounds 1, 2 and 4 of the landlord's appeal. 2. Ground 3 relates to the Tribunal's conclusion concerning delay of the tenant in appointing a valuer and waiver. At [81] the Tribunal said: I am satisfied that delay by Nomad in the appointment of a valuer did not mean that a valuation was unavailable or that Nomad had waived its right to a valuation. The reasoning in Gollin at 469 is directly applicable to the position of the parties in relation to the appointment of a valuer in circumstances where no agreement as to the rent had been reached by 16 June 2020, being 28 days prior to the applicable fourth anniversary of the Commencement Date. 1. The primary challenge of the landlord was based on ground 1, namely, that the Tribunal was in error in construing the July agreement. 2. The legal principles regarding construction of the agreement are not in dispute. However, the landlord submits there are two critical matters of context which ought to have been considered by the Tribunal. 3. The first was that the parties attended a mediation to discuss a range of issues in dispute under the lease. One was the "applicability of the NSW Regulation relating to COVID-19" as referenced in recital E. There was a dispute concerning whether the tenant was an "impacted lessee" within the meaning of the Regulation. 4. Secondly, the mediation, which occurred on 9 July 2020, "took place in the context of the parties being required by 14 July 2020 to agree rent for the following year pursuant to clause 6(b) of the Lease. As at the date of the mediation, agreement had [not] yet been reached". 5. The landlord says that this context is relevant to construing clause 3 because the landlord "agreed to give [the tenant] substantial deductions of rent to 31 July 2020 (despite [the tenant] not being entitled to those deductions under the NSW Regulation), in exchange for an express agreement for August and onwards (see clause 3.3) that "[the tenant] will pay Full Rent". The landlord then submits: It is in that "context", taking into account the "circumstances addressed by the contract" and the "commercial purpose or object," that the language used by the parties can only mean that there was an agreement for the purpose of clause 6(b) of the Lease that from the next month (August) onwards, rent would be $328,928.00 plus GST. Analysis 1. It is first necessary to consider the Tribunal's conclusion that cl 6(b), on its proper construction, did not permit the parties to agree rent payable in consequence of the rent review unless such agreement was reached at least 28 days prior to the relevant anniversary. 2. With respect to the Senior Member, we do not agree with his interpretation that any agreement to fix rent under cl 6(b) must be reached not less than 28 days prior to the relevant anniversary, after which valuation by an agreed or appointed valuer becomes mandatory. Rather, in our view, the time limit of 28 days is to provide a "trigger" to permit the valuation process to be activated by one party where no agreement is reached by that point in time and is to make certain the timeframe for the carrying out of any necessary valuation process. A different interpretation would prevent agreement being reached after the relevant time merely because there was a delay in reaching agreement. Such an interpretation would be an unnecessary constraint on the power to make such an agreement and is contrary to the usual position that parties to a contract are free to agree matters as they think fit. It would force the carrying out of a valuation even though the parties had agreed the rent. 3. Consequently, it becomes necessary for us to construe the July agreement and determine the question whether it operates to fix the rent and bind the parties and thereby removes the need for a valuer to be appointed to determine the relevant rent. 4. The proper construction of the July agreement is a question of law. Again, the principles of construction are not in dispute. The agreement is to be construed objectively. 5. It was not contended that the agreement was partly oral and partly in writing. Rather, the submission made was that the Tribunal failed to have regard to the context in which the agreement was entered into and the matters then in dispute. 6. We agree with the conclusion of the Tribunal at [80] that the July agreement is not an agreement whereby rent was fixed for the purpose of cl 6(b) of the lease, thereby rendering any valuation process unnecessary or ineffective. Our reasons are as follows: 1. The July agreement arose out of a mediation of various disputes. 2. The matters that were the subject of the dispute to be resolved by the July agreement are set out in the recitals. As is evident from recitals A-G inclusive, the disputes concerned rent abatement by reason of the fire on 11 September 2019 and the subsequent reinstatement work carried out by the landlord, the effects of the COVID-19 pandemic and various claimed rental arrears as well as a dispute concerning the Licence. 3. No reference is made in the recitals to any then-existing dispute concerning fixing the rent for the purpose of cl 6(b) of the lease. 4. No reference is made in clause 5 "Miscellaneous niggles" or in clause 6 "General" matters to any dispute concerning a rent review under cl 6(b) of the Lease. 5. Clause 3 deals with what was described as "Rent relief" in the heading. There was no clause in the agreement that made this heading irrelevant for the purpose of construing the July agreement. Rather, the heading is indicative of the parties negotiating rent relief by reason of the matters in the recital, not agreeing the current market rent for the purpose of cl 6(b) of the lease. 6. Clause 3.3 headed "August and onwards" provides in cl 3.3(a) that for the period "from 1 August 2020 to 30 December 2020" the tenant will pay "full Rent". It does not purport to regulate rent payable outside this period. It does not purport to regulate the whole of the period for which any determination of rent under cl 6(b) of the lease would apply, namely, 14 July 2020 until 13 July 2021. 7. The expression "Full rent" in cl 3.3(a) is not defined although "Rent" is defined to mean "the net monthly rent payable under the Lease". Rent is not defined as the then current rent or as the amount of $328,982.28 plus GST p.a. There is no reason to construe the expression "Full rent" as other than the amount of rent determined as payable under the lease. 8. The language of cl 3.3(a) does not support a construction that the parties had agreed pursuant to cl 6(b) that the rent payable for the year commencing 12 July 2020 would be $328,982.28 or that the parties had otherwise agreed that the provisions of the lease regarding rent review would not operate. Rather, the specification of a period is consistent with an agreement being reached as to what reductions for rent might be made during that period arising from the fire, the reinstatement of the Premises and the effect that those matters and the COVID-19 pandemic had or were likely to have upon the operations of the tenant in the specified period. 9. This interpretation is also consistent with cll 3.3(b) and 3.4. In relation to cl 3.3(b), when read in conjunction with cl 3.3(a), it seems clear to us that the parties were seeking to agree what rent would be payable for the period from 1 August 2020 until 31 December 2020 based on the tenant's "real or hypothetical ability to trade" because of the impact of the pandemic. Here the parties agreed to a minimum rent of not less than $15,000 per month plus GST, being the amount otherwise agreed for the period 1 July to 31 July 2020: see cl 3.1(c). Similarly, cl 3.4 deals with the waiver of rent reduction claims by the tenant in consequence of the pandemic and relevant Government regulations. 1. It follows that the July agreement was not an agreement to fix the rent for the purpose of cl 6(b) of the lease. 2. In relation to waiver and subsequent performance, the landlord says that "immediately following the mediation" the tenant paid "'full Rent', being $27,415 plus GST, plus outgoings". The landlord says that the decision of Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455; [1983] HCA 38 (Gollin) can be distinguished because the present case is not one where the parties failed to reach agreement as to rent and a valuer was then appointed. Rather, the landlord says the parties did reach agreement and the parties performed the agreement. At paras 47-48 of the landlord's written submissions (AB 88) the landlord said: 47 It is [the tenant's] conduct which distinguishes this case from Gollin. This is not a case where parties failed to reach agreement as to rent and a valuer was then appointed. To the contrary, the parties did reach agreement and the parties performed the agreement. [The tenant] does not contend otherwise in its Cross Application. In those circumstances, it is not open to [the tenant] to take the benefit of the agreement, but seek to avoid the burden of it. 48 The Tribunal erred by applying the principle in Gollin in the abstract and without considering [the tenant's] conduct. Having accepted the benefit of the agreement and having acted in accordance with the agreement by paying "full Rent", [the tenant] could not then repudiate the agreement and appoint a valuer. 1. This is also not a case where it was asserted there was an inferred agreement of the type considered by the Court of Appeal in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd [1988] 14 NSWLR 523. Rather, conduct is relied upon by the landlord to support a claim that the July agreement fixed rent for the purpose of cl 6(b) in an amount of $328,928.00 plus GST and this agreement was subsequently performed. 2. Insofar as subsequent conduct is relied upon to support a construction of the July agreement that it constituted an agreement to fix rent under cl 6(b), such an approach is not permissible: Brambles per Heydon J at [25]. As the Tribunal found at [83], such conduct was admissible only for the purpose of determining whether an agreement was reached: Brambles per Heydon J at [26]. 3. Further, the fact of payment does not prove the agreement on the terms asserted. 4. This is because there was no right of the tenant under the Lease to withhold rent pending completion of the rent review process. Any failure to pay rent on time would have constituted a breach of the Lease by the tenant. Consequently, performance of the lease by paying the rent then due could not of itself constitute conduct evidencing an agreement to fix rent for the purpose of cl 6(b) nor could it amount to a waiver of rights in connection with the appointment of a valuer to determine the rent under that clause. 5. It follows that we reject these grounds of appeal. Was the Tribunal correct in determining that the Hermiz Valuation was invalid and not in accordance with s 31(1)(a) of the RL Act? 1. There is no dispute that Mr Hermiz was appointed to prepare the relevant valuation and determine rent as provided by the Lease. There is also no dispute that, in doing so, s 31 of the RL Act applied. That section provides: 31 Determination of current market rent (1) A retail shop lease that provides for rent to be changed to current market rent or that provides an option to renew or extend the lease at current market rent is taken to include provision to the following effect— (a) The current market rent is the rent that would reasonably be expected to be paid for the shop, as between a willing lessor and a willing lessee in an arm's length transaction (where the parties are each acting knowledgeably, prudently and without compulsion), determined on an effective rent basis, having regard to the following matters— (i) the provisions of the lease, (ii) the rent that would reasonably be expected to be paid for the shop if it were unoccupied and offered for renting for the same or a substantially similar use to which the shop may be put under the lease, (iii) the gross rent, less the lessor's outgoings payable by the lessee, (iv) rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops. The current market rent is not to take into account the value of goodwill created by the lessee's occupation or the value of the lessee's fixtures and fittings on the retail shop premises. (b) If the lessor and the lessee do not agree as to what the actual amount of that rent is to be, the amount of the rent is to be determined by valuation carried out by a specialist retail valuer appointed by agreement of the parties to the lease, or failing agreement, by the Registrar. (c) The matters set out in paragraph (a) are to be taken into account by a specialist retail valuer appointed under paragraph (b) in determining the amount of the rent. (d) The lessor must, not later than 14 days after being requested to do so by a specialist retail valuer appointed under paragraph (b), supply the valuer with information (where reasonably available to the lessor) requested in a list provided by the valuer to assist the valuer to determine the current market value, including the following information about leases for comparable retail shops in the same building or retail shopping centre— (i) current rental for each lease, (ii) rent free periods or any other form of incentive, (iii) recent or proposed variations of any lease, (iv) outgoings for each lease, and including any other information prescribed by the regulations. (e) A valuation for the purposes of paragraph (b) is to be in writing and to contain detailed reasons for the specialist retail valuer's determination and to specify the matters to which the valuer had regard for the purposes of making his or her determination. (f) The parties to the lease are to pay the costs of a valuation by a specialist retail valuer appointed under paragraph (b) in equal shares. 1. Section 31(1)(c) requires the valuer to take account of the matters set out in subs 31(1)(a) in determining the amount of rent. 2. Of these requirements and the obligations of a valuer appointed under s 31 the Tribunal found: 1. Section 31(1)(a) was not a code for the reasons expressed in Eastpoint Shopping Village v Grayson Pty Ltd [2011] NSWADT 68 at [27], Hunt v Casaran Pty Ltd [2012] NSWADT 193 at [30] and Richardson v Lockevo [2010] NSWADT 305 at [10]: reasons at [88]; 2. The four factors in s 31(1)(a) are not an exhaustive list of the matters to be considered, this construction being in accordance with the principle stated by Bell P in Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205; (2019) 19 BPR 39,621, particularly at [23(viii)]: reasons at [88]; 3. Section 31(1)(a) does not prescribe or proscribe any method of assessment of the current market rent but simply requires that the chosen method of assessment is not inconsistent with these requirements and that "the enumerated matters must be considered by the appointed valuer as part of the framework for assessing the market rent for the relevant premises": reasons at [89]; 4. The reference in s 31(1)(a)(ii) to "the shop if it were unoccupied" does not mean the premises must be "treated as being an empty shell. Rather the purpose of the reference is to remove from the assessment of the market rent for the premises any premium that the sitting tenant would be prepared to pay for continuing its occupation": reasons at [89]; 5. The expression "having regard to" in s 31(1)(a) should be interpreted in the same manner as stated by Kitto J in Rathborne v Abel (1964) 38 ALJR 293 (Rathborne) at 301 and Nichols J in Redgum Developments Pty Ltd v G8 Education Limited [2020] VSC 142 (Redgum) at [43]. As such, the four factors in that subsection should be given "such weight (if any) as the valuer thinks they ought to be given": reasons at [90]. In doing so "it is not necessary for the valuer to expressly refer to this paragraph or the four enumerated factors, provided as a matter of substance the valuation determines the current market rent on an effective rent basis, addresses the four enumerated factors in subparagraph (i) to (iv), and excludes the value of goodwill created by the lessee's occupation and the value of the lessee's fixtures and fittings on the premises": reasons at [91]. 1. In relation to whether Mr Hermiz did have regard to the factors in s 31(a)(i)-(iv) of the RL Act, the Tribunal concluded the valuer had not complied with the requirements of that section. At [94]-[100] the Tribunal said: 94 Mr Hermiz in the Hermiz valuation has adverted to the factors specified in each of s 31(1)(a)(i)-(iii) of the RL Act in relation to the lease. The provisions of the lease are specified in section 6.0. The terms and relevance of the make good clause and permitted use of the leased premises is discussed in section 1.2 and 6.0. The gross rent and outgoings are specified in section 6.0. Mr Hermiz has not discussed whether "rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops" specified in s 31(1)(a)(iv) of the RL Act is relevant to a market rent review during the term of a lease. 95 In circumstances where Mr Hermiz in the Hermiz valuation used the methodology of calculating the rent per m2 of other comparable leased properties in the locality and applying adjustments to determine the current market rent of the leased premises on an effective rent basis, it is necessary that he have regard to the provisions of the lease, the permitted use, gross rent less outgoings, and provision of rent concessions and other benefits in comparable leased properties to enable a meaningful comparison to be made. 96 I am not satisfied that Mr Hermiz in the Hermiz valuation had adequate regard to the provisions of the lease in relation to all the comparable properties. The leasing details for leased property C and additional details for on the market property 2 contain no reference to the term of the lease and whether it includes an option. The leasing details for leased property D contain an assumption of the term of the lease. If these omitted details were unimportant factors in the determination of the current market rent, then Mr Hermiz has provided no explanation for this opinion. 97 I am satisfied that Mr Hermiz in the Hermiz valuation was entitled to have regard to zoning, location, and particularly proximity to shopping and services, land size, marketability, condition, size, style, layout and functionality of improvements, access, topography and current market conditions in selecting the comparable properties. It is unnecessary that the comparable properties have the same permitted use as in the lease. However, where the comparable properties do not have the same permitted use as in the lease, then it is necessary for Mr Hermiz to explain whether the different permitted use requires any adjustment in determining the current market rent of the leased premises on an effective rent basis. While Mr Hermiz in section 8.0 has not specified the permitted use of leased properties A to E, it appears from the photographs that each of them was not used as a restaurant. He has stated "similar use potential" for on the market properties 1 and 2. So far as leased properties A to E Mr Hermiz did not discuss whether the different uses requires an adjustment in determining the current market rent of the leased premises on an effective rent basis. 98 I am satisfied that Mr Hermiz in the Hermiz valuation had adequate regard to the gross rent, less the lessor's outgoings payable by the lessee in relation to the comparable properties. The leasing details for leased properties A to E include the gross rent. The additional details for on the market properties 1 and 2 include the gross asking rent, and in the case of on the market property 1 the gross rent that will be accepted. Mr Hermiz was entitled to estimate the amount of outgoings for these comparable properties based on his experience. 99 Mr Hermiz in the Hermiz valuation specifies in section 8.0 that there was no incentive for leased property A, does not refer to incentives for leased properties B and C, and specifies the incentives for leased properties D and E. He says the incentive for leased property D, being a 4.5 rent free month period, "is within the typically market range". He makes no comment about the incentive for leased property E, being "a 25% abatement (rent free) clause". In the table in section 9.2 Mr Hermiz only has regard to adjusted rents for leased properties D and E that deduct the incentives. Mr Hermiz provides no explanation for his failure to specify the presence or absence of incentives for leased properties B and C. Further, Mr Hermiz does not specify whether any incentives are available for on the market properties 1 and 2. 100 Taking into account the absence of information and explanations in [96], [97] and [99] above, I am not satisfied that Mr Hermiz in the Hermiz valuation has addressed fully the factors s 31(1)(a)(i), (ii) and (iv) of the RL Act. It follows that the Hermiz valuation in invalid and is not binding on the parties. 1. In addition, the Tribunal found at [101] that the valuer assessed the rent as at 11 December 2020 and failed to assess the current market rent as at 14 July 2020 as required by cl 6 of the lease when read with item 4 of Part II of the lease. 2. Consequently, the Tribunal determined the valuation was invalid and made orders to remit the matter to the valuer to redetermine the relevant market rent. Submissions 1. The tenant says the Tribunal was in error in reaching these conclusions. 2. In connection with the Tribunal's conclusion at [96] that the Tribunal was not satisfied the valuer "had adequate regard to the provisions of the lease in relation to all the comparable properties", the tenant submitted that the Tribunal had misapplied the RL Act in two respects: 1. Section 31(1)(a)(i) only requires a valuer to consider the provisions of the lease the subject of the determination. There is no requirement in the legislation to consider the provisions of other leases; and 2. the Tribunal erroneously implied an additional term into the legislation by requiring that the valuer was required to have "adequate" regard to the provision of the other leases. 1. The tenant says that the expression "the lease" and the use of the definite article indicates that the factors referred to in that section relate to the lease the subject of the review, the valuer not being required to assess each of those factors in connection with other leases which might be used for the purpose of determining rent. 2. Further, the tenant submits that no part of s 31 of the RL Act requires a valuer to consider other leases. The fact Mr Hermiz decided to use the comparable valuation method was a matter in the "exercise of his discretion and judgement as an expert valuer. It was not mandated by the RL Act". Reliance is placed on the reasons of Bell P in Strike at [22] (incorrectly referred to as [23]) where His Honour said: (iv) given the broad and quasi-discretionary nature of valuation, valuers may be given some guidance by contractual parties or the legislature as the case may be as to what to have regard to and what to disregard in what may be a wide ranging exercise; but (v) the ultimate exercise is a valuation (or rent determination) in respect of which the valuer is an expert and is to apply his or her expertise. 1. The tenant submits there could be no implied obligation under s 31(1)(a)(i) for a valuer to consider the factors identified in respect of other comparable properties. In this regard, the tenant submits at para 24 of its submissions in chief: Such a requirement would be impractical; it assumes that the full content of such leases (which are private contracts) would be available to each valuer. Further, s 31(4) of the RL Act specifically prohibits a specialist valuer from including (without consent) information in the report that discloses information identifying (i) other leases; (ii) parties to other leases; or (iii) information relating to the business or parties to other leases. This again speaks against a suggestion that 31(1)(a)(i) requires a valuer to consider the provisions of leases of all compared properties. 1. The tenant then points to the content of the Hermiz valuation, particularly section 6.0, as indicating that the valuer in fact had regard to the lease between the parties as was required by 31(1)(a)(i). 2. As to the Tribunal's expression "adequate regard", the tenant submitted there was no reason to imply such an obligation and that an enquiry concerning "sufficiency or quality" in connection with determining compliance with s 31(1)(a)(i) constituted an error of law. In this regard, the tenant submitted at para 28 of its written submissions in chief: While the subjective question of adequacy of consideration may be relevant for a s 32A review, the only question for consideration under s 31(1)(a) is whether regard was had to a particular matter. 1. In relation to the Tribunal's conclusion at [97] and the need for the valuer to discuss whether different uses of compared properties required an adjustment in determining the current market rent, again the tenant submits the Tribunal misapplied the law, there being no such requirement in s 31(1)(a)(ii) of the RL Act. Rather, that sub-paragraph is concerned with rent reasonably expected to be paid for the shop in question. The tenant submitted that Mr Hermiz complied with this obligation. 2. The tenant then submitted that, in holding Mr Hermiz did not explain whether different permitted uses required any adjustment, "the Tribunal engaged in an impermissible merits review by assessing whether it agreed with Mr Hermiz's methodology and reasoning (rather than simply assessing whether he had regard to the factors enumerated in s 31(1)(a))". 3. In short, the tenant submitted that, so long as a valuer complied with the requirements of s 31(1)(a), the manner in which he or she applied the comparable valuation method and made adjustments was a matter for the valuer's expert discretion and judgement. 4. In relation to the Tribunal's conclusions at [94] and [99], the tenant submitted the Tribunal fell into error in imposing an obligation under s 31(1)(a)(iv) that does not exist. That sub-paragraph requires the valuer to have regard to "rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops". 5. The tenant submitted that, by identifying comparable properties that had incentives and adjusting those incentives as found in the table at Section 9.2 of the valuation, the valuer in fact had regard to those matters and satisfied the requirement in the sub-paragraph. Otherwise, the purpose of the requirement is to ensure that the "valuer determined the market rent" and that "they do not unfairly reach a higher figure of face rent, which has failed to take into account rent concessions and other benefits". That is, the market rent is to be determined on an effective rent basis which "reflects what is in fact being paid". 6. The absence of an explanation concerning incentives in connection with all compared properties does not mean the valuer failed to have regard to rent concessions or other benefits. Indeed, for properties where incentives were identified, the tenant submitted that the valuer "made adjustments accordingly". 7. In reply to these submissions, the landlord said the tenant had not identified any question of law. Further, no leave to appeal had been sought other than in respect of grounds 1(e) and 2 (a). Consequently, the landlord said that this aspect of the appeal should be dismissed. 8. Grounds 1(e) and 2(a) of the tenant's grounds of appeal were in the following terms: 1 Validity of Hermiz valuation e. The Tribunal below erred at J[101] in finding that the Hermiz valuation determined the current market rent as at 11 December 2020 rather than 14 July 2020. … 2 Abatement of payments under the Licence Agreement a. The Tribunal below erred at J[108] in finding that the evidence before it did not establish that the licence areas are used wholly and predominantly for the carrying on of [the tenant's] restaurant and bar business. 1. As to the Tribunal's finding that the valuation was invalid by reason of its non-compliance with s 31(1) of the RL Act, the landlord relied on the reasoning of the Tribunal. The landlord submitted that the tenant must demonstrate error in all of the Tribunal's reasons for concluding the valuation was invalid. Three submissions were made to support the landlord's position that the Tribunal's decision on this aspect of the dispute was correct. 2. First, the landlord said that the reasons should not be scrutinised in an overzealous manner and should be read fairly and as a whole. As such, there should be "a degree of tolerance for looseness in language". Reference was made to the decision of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shang Liang [1996] HCA 6; (1996) 185 CLR 259 at 272 and the decision of Bell P in the Court of Appeal in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 at [77]. 3. Secondly, the landlord submitted that the expression "having regard to" in s 31(1)(a) and (e) of the RL Act required a "proper, genuine and realistic consideration" not a mere "formulaic reference". There must be an "active intellectual process". Reference was made to the decisions in Azriel v NSW Land & Housing Corporation (2006] 67 NSWLR 256; [2006] NSWCA 372 at [49} and Commissioner of Police v EMB [2021] NSWCATAP 63 at [56]. 4. In oral submissions, the landlord said there was a complete absence of reasons in the valuation on the matters to which regard was to be had and that the tenant was bound by the finding that adequate regard was not had to the matters in s 31(1)(a) of the RL Act. 5. Thirdly, the landlord submitted that the tenant sought to construe the provisions of s 31 of the RL Act "in isolation from each other and divorced from the context and obvious statutory purpose". The landlord submitted that the matters required to be considered "can only sensibly can be considered and afforded any weight in the context of the other comparable leases from which the value of the subject lease is derived". Consequently, the tenant's approach in construing the valuer's obligations under s 31 provided too narrow a focus and was a wrong approach to statutory construction. 6. As to the finding at [101] of the reasons, in oral and written submissions the landlord agreed that the Tribunal was incorrect in respect of this matter and that the valuation was prepared at the relevant date. Analysis 1. As stated above, by order 2 made 3 November 2021 the Tribunal declared that the Hermiz valuation dated 11 December 2020 was not valid and not binding on the parties. 2. It is not in dispute in this appeal that the Tribunal had power to make such a declaration. It is also not in dispute that the Tribunal was in error in its reasons at [101] in concluding the valuation was not an assessment as at 14 July 2020. 3. Rather, the dispute in this appeal concerns whether the Tribunal was correct to make the declaration having regard to the obligation imposed by s 31(1)(a) of the RL Act and the Tribunal's findings that the valuer did not comply with those obligations. The tenant contends the Hermiz valuation was valid and, in the absence of any review being initiated under s 32A of the RL Act, the rent was thereby determined at $252,000 per annum plus GST. 4. The tenant did not challenge the Tribunal's findings concerning the operation of s 31 in relation to those matters we have recorded at [55] of our reasons above. Its challenge concerns the findings at [96], [97] and [99] of the reasons and whether those findings supported a conclusion that the valuation was invalid because it was not undertaken in accordance with the mandate in s 31(1)(c) of the RL Act. Contrary to the landlord's general submission as to the tenant's grounds as framed and the appeal being incompetent, in our view this challenge raises a question of law. 5. The tenant submitted that the Tribunal fell into error at [96] in determining the valuer had not "had adequate regard to the provisions of the lease in relation to all comparable properties". 6. As the reasons disclose, the Tribunal at [96] was referring to the provisions of the lease between the parties and examined the information concerning comparable properties used by the valuer to determine whether that information concerning those comparable properties included information concerning the terms and/or options applicable. The Tribunal determined that the omission of details concerning the comparable properties, if unimportant, should have been the subject of an explanation in the opinion provided by the valuer. 7. The tenant said that the expression "the lease" found in s 31(1)(a) is a reference to the lease between the parties, not leases between other parties which might be used for the purpose of carrying out the valuation process. It is this lease to which regard is to be had, it being a matter of discretion and/or expert opinion as to how comparable property data is to be analysed. The absence of data or analysis concerning particular comparable properties may be relevant to a merits review under s 32A of the RL Act but is not a reason why the valuation is invalid because the valuer did not comply with the obligations imposed by s 31. 8. The expression "the lease" is used in sub-paras 31(1)(a)(i) and (ii) of the RL Act. In our view it is a reference to only the lease in respect of the Premises. This view is supported by the use of the expression "the shop" in sub-para 31(1)(a)(ii). Similarly, sub-para 31(1)(a)(iii) is referring to the Premises the subject of the lease and the outgoings in respect of the Premises. The purpose of the need to have regard to these matters is, in part, to ensure information used from other sources to determine rent is considered in the context of the existing lease as part of the valuation process. 9. In contrast, sub-para 31(1)(a)(iv) is a reference to rent concessions and other benefits conferred on prospective lessees in unoccupied retail shops generally. It is not a consideration limited to rent concessions and other benefits that might be conferred in respect of the Premises or under the lease. Rather, the need to have regard to this matter requires a consideration of general market conditions for "retail shops" in respect of the specified matters. 10. The tenant said that the use by the Tribunal of the expression "adequate regard" demonstrated that the Tribunal accepted the valuer in fact had regard to comparable property data in relation to the provisions of the lease between the parties, but that the regard was not adequate. This, the tenant submitted, was a matter for a merits review under s 32A and not a basis to declare the valuation invalid. 11. In Rathborne, Kitto J said at 301: Finally, to require that regard be had to a particular matter in making a discretionary judgment is not to require that that matter shall be allowed an actual influence upon the ultimate result. The matter is to be considered for such bearing as it may have upon the question to be decided, and it is to be allowed such weight (if any) as the tribunal thinks it ought to be given; but if the tribunal thinks it ought to have no weight, then no weight is required to be given to it: cf. Beresford v. Ward, [1961] V.R. 632, at p. 634. 1. In Redgum, when considering analogous Victorian legislation, Nicholls J said at [43]: G8, rightly, did not contend that Rathborne established a rule of interpretation for this case, accepting that there the Court was considering a statutory provision which directed that the decision maker "shall have regard to" particular factors; and the content of the matters to which the board was directed to have regard (including the justice and merits of the case) influenced the Court's construction of the decision maker's obligation. I accept G8's submission, however, that the language used to describe the effect of the requirement in Rathborne is also apt to describe the effect of the requirement in s 37(2) that current market rent is taken to be the rent as defined, having regard to the matters specified. 1. Of the valuation process and the role of an expert, the observations of Bell P in Strike at [9] and following are relevant: 9 The High Court has, on numerous occasions, recognised that the valuation of land (which I take to include the determination of market rent) is an art and not a science: see, eg, River Bank Pty Ltd v Commonwealth (1974) 4 ALR 651 at 653 per Stephen J; Boland v Yates Property Corp Pty Ltd [1999] HCA 64; 167 ALR 575 at [12] per Gleeson CJ and [277] per Callinan J (Boland v Yates); Vale v Sutherland (2009) 237 CLR 638; [2009] HCA 26 at [21] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ. As Callinan J stated in Boland v Yates: "It should also be firmly kept in mind that valuation practice, like legal practice, cannot be an exact science. Both require the exercise of judgments and the forming of opinions, often on matters in respect of which certitude is impossible and uncertainty highly likely." … 12 One consequence of valuation being an art and not a science is that it will involve subjective judgment and the steps in reasoning will not always be able to be articulated fully. In Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373, the Privy Council said at 391 as follows: "It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at." 13 This passage has been frequently cited with approval including in Spencer v Commonwealth (1907) 5 CLR 418; [1907] HCA 82 at 442–443 (Spencer). 14 In Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 at [24], Croft J stated that: "It is clear from the authorities that, depending on the particular circumstances, different methods of valuation may be appropriate. The courts have not adopted a prescriptive position with respect to valuation methodology and care should be taken to ensure that no single process of reasoning is elevated into a statement of principle. The valuer's task is then, within the context of the facts and circumstances relating to the relevant property, to apply the most appropriate method of valuation according to his or her expertise and experience. Valuation practice is principally an art, rather than a science and is an art that continues to evolve." (Footnote omitted; emphasis added). 1. In our view, these principles apply to the present dispute and the interpretation of s 31(1)(a) of the RL Act. 2. The task of the Tribunal in the present dispute was to decide whether the mandate in s 31(1)(c) of the RL Act was met. "Adequacy" is not a requirement of s 31(1)(a) of the RL Act. It is not a requirement of s 31(1)(c). 3. What is required of a valuer is to have regard to the factors in s 31(1)(a) required to be considered in the sense used by Kitto J in Rathborne. Consistent with what was said by Kitto J in Rathborne, it is permissible for a valuer to give "no weight" to matters to which regard must be had if appropriate in the circumstances. On the other hand, if there has been no regard to the specified factors, the Tribunal could make an appropriate declaration as to the binding effect of the valuation upon the parties. It is whether regard was in fact had, not the adequacy of what was done and said by the valuer in his valuation, which is the issue to be determined. 4. The Tribunal was not required or entitled to determine whether the manner in which the factors were considered was "adequate", nor whether the reasons given as to approach or analysis of the data relied upon for the purpose of determining the effective rent were adequate. The imposition of the concept of "adequate" is to add to the requirement "having regard to" which leads to an examination by the Tribunal of whether the valuer was correct in reaching his opinion, such an approach having the effect of substituting the Tribunal in the role of the valuer. 5. As the tenant submitted, the approach taken by the Tribunal is tantamount to a merits review. 6. In this regard: 1. As noted by Bell P in Strike, the process of valuation "is an art and not a science". 2. As stated by Callinan J in Boland v Yates Property Corp Pty Ltd [1999] HCA 64; 167 ALR 575, valuation involves "the exercise of judgments and the forming of opinions, often on matters in respect of which certitude is impossible and uncertainty highly likely"; and 3. as said by the Privy Council in Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391 "in all valuations … there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others …" and "an enquiry … relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at". 1. To construe s 31(1)(a) of the RL Act as imposing an obligation to explain or justify the valuer's opinion would render any determination liable to review as to its correctness. There is no provision in s 31 that requires such an approach or gives power to the Tribunal to conduct such a review. 2. Further, the statutory mechanism to challenge the merits of a valuation is under s 32A Review of current market rent determinations. It is only under s 32A that the Tribunal is given power to intervene in a merits review and then only "if satisfied that the valuers have manifestly made a fundamental error warranting such an order": RL Act s 32A(12)(a). 3. Indeed, s 32A is a provision inconsistent with the construction adopted by the Tribunal concerning the statutory scheme for determining rent under the RL Act. 4. As recorded in its reasons, the Tribunal did not suggest regard was not had to the factors in s 31(1)(a) of the RL Act. The use of the expression "adequate regard" is a finding that regard was had but that it was not "adequate". Neither party contended otherwise. 5. In oral submissions, the parties drew our attention to the Hermiz valuation which is found at AB 14 and following. The valuation method adopted was to look at properties which the valuer determined as comparable and appropriate to use in preparing his valuation. 6. In relation to consideration by the valuer of the factors in s 31(1)(a) it is evident from the findings of the Tribunal that regard was had by the valuer: 1. to the provisions of the Lease as required by s 31(1)(a)(i): reasons at [94]; 2. to the rent reasonably expected to be paid for the Premises as required by s 31(1)(a)(ii). At [92] the Tribunal said: While the Hermiz valuation contains no reference to "the rent that would reasonably be expected to be paid for the shop, as between a willing lessor and a willing lessee in an arms length transaction (where the parties are each knowledgeably, prudently and without compulsion" required by s 31(1)(a) of the RL Act, the wording of section 1.6 while incorrectly referring to a sale of the leased premises, indicates that Mr Hermiz was alert to these considerations; 1. to the gross rent and outgoings payable by the tenant as required by s 31(1)(a)(iii): reasons at [94]. 1. As to the factor in s 31(1)(a)(iv), the Tribunal said at [94] of the reasons: Mr Hermiz has not discussed whether "rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops" specified in s 31(1)(a)(iv) of the RL Act is relevant to a market rent review during the term of the lease. 1. However, at [99] the Tribunal reviewed the valuer's analysis in section 8.0 of the Hermiz valuation. Relevantly, the Tribunal found in relation to the comparative data recorded in the valuation that: 1. there was no incentive for lease property A; 2. the valuer does not refer to incentives for lease properties B and C; 3. the valuer "specifies the incentives for leased properties D and E" and that the valuer says the incentive for lease property D, being a 4.5 rent free month period, "is within the typically market range"; 4. the valuer "makes no comment about the incentive of lease property E, being 'a 25% abatement (rent-free) clause'". 5. The valuer in the table in section 9.2 "only has regard to adjusted rents for leased properties D and E that deduct the incentives". 1. Section 9.2 of the Hermiz valuation includes a Table of the comparative rents and calculates the net rent as $252,000 plus GST. 2. In our view, the findings of the Tribunal show that the valuer both had regard to and thought were relevant rent concessions and other benefits offered on other leases. As the findings made by the Tribunal make clear, these matters were taken into account in the valuation process. 3. As we stated above, for the purpose of determining compliance with the mandate in s 31(1)(c) of the RL Act it is not relevant whether: 1. the regard had by the valuer was "adequate"; 2. the reasons provided were adequate; 3. the valuation correctly analysed the data upon which reliance was placed. 1. Rather, the findings of the Tribunal show that regard was had by the valuer to each of the relevant factors in s 31(1)(a) of the RL Act. Consequently, there was no basis to make the declaration in the present case. 2. As the parties agreed that the finding in [101] of the reasons was incorrect (that is, contrary to the Tribunal's finding at [101], the valuation was prepared at the correct date), it follows that orders 2 and 3 made 3 November 2021 should be set aside and in lieu thereof the following declaration should be made: For the purpose of clause 6(b) of the lease between Hanave Pty Ltd and Wine Nomad Pty Ltd dated 14 July 2012, dealing number AK318893, the amount of $252,000 plus GST is declared to be the fair market rent for the period commencing 14 July 2020. Was the licence a retail lease within the meaning of the RL Act? 1. The next question is whether the Licence was a retail lease within the meaning of the RL Act. 2. At [108]-[109] of its reasons, the Tribunal found: 108 I am not satisfied on the basis of the evidence of Mr Yazbek in the Yazbek statement at [8] that the licensed areas are used wholly or predominantly for the carrying on of its restaurant and bar business. This evidence describes the use Nomad makes of the licensed areas, but does not state whether the licensed areas are used wholly or predominantly for the carrying on of its restaurant and bar business. 109 As Nomad has not established that the licensed areas are a retail shop within paragraph (a) of the definition of that expression in s 3(1)(a) of the RL Act, and so the licence is not a retail shop lease within the definition of that expression in s 3(1)(a) of the RL Act, s 36(1) of the RL Act does not apply to the licence, and Nomad is not entitled to a refund of the payment made under the licence attributable to the period from 11 September 2019 to 16 April 2020. 1. In para 8 of Mr Yazbek's statement dated 16 June 2021 (AB 49 and following), Mr Yarbek said: The Licensed Premises are adjacent and connected to the Leased Premises. They are used by the respondent for exhaust outlets, a grease trap and an air-conditioning unit for the Restaurant as well as for loading and unloading supplies for the Restaurant. (a) A floor plan of the Restaurant, which shows the Licence Premises at the bottom right, is at page 32. (b) A photograph of the inside of the Restaurant, which shows the door between the Restaurant and the Licence Premises, is at page 33. (c) a photograph of the outside of the Restaurant, which shows the roller door access to the loading dock, is at page 34. Submissions 1. The tenant submitted that two errors were made by the Tribunal in rejecting the tenant's claim for abatement of the licence fee in the amount of $7,571.17. 2. First, when considering the definition of a retail shop lease the Tribunal misapplied the law by focusing on the actual use of the premises rather than the purpose for which the Licence was granted. The tenant said that it was not the use to which the licence areas were put but, rather, that those areas were wholly or predominantly used for the carrying on of a restaurant being the purpose for which the right of occupation was granted. Reference was made to the terms of the licence agreement. In this regard, the fact the Licence does not grant a right of exclusive occupation was irrelevant. 3. Secondly, the Tribunal was in error in finding that the licensed premises were not in fact used wholly or predominantly for carrying on a restaurant, the only evidence being that the licensed premises were used for that purpose. Reference was made to the evidence of Mr Yazbek contained in his statement dated 16 June 2021 (AB 49 and following), particularly at para 8. 4. Consequently, the tenant submitted that it was entitled to an abatement of rent under s 36 of the RL Act. 5. In response, in its written submissions dated 22 February 2022, the landlord said at paras 28 and 29: 28. [The tenant] failed on this issue because the Tribunal made a finding of fact based on evidence that [the tenant] did not establish on the evidence what was required for an abatement of the Licence Fee. The tribunal should not revisit an issue based on contested matters which was resolved on the evidence by the Tribunal for a matter worth approximately $7000. 29. Further, [the tenant's] submissions ignore that under section 36 of the Retail Leases Act, [the tenant] would only be entitled to an abatement if the "shop or the building" the subject of the retail shop lease was damaged. [The tenant's] own evidence is that while the building the subject of the Lease was damaged, the licensed area was not damaged. Therefore, section 36 of the Retail Leases Act cannot assist [the tenant] in any event. 1. In oral submissions in reply, the tenant said that the issue was one of construction of the Licence and the definitions in the RL Act as to what constitutes a retail shop lease, not a question of evidence. In this regard, actual activities are not relevant. Analysis 1. At [109] of its reasons, the Tribunal determined the areas, the subject of the Licence was not a retail shop within the meaning of the RL Act. Consequently, the Act does not apply to the Licence, the licence is not a retail shop lease and the tenant is not entitled to a refund of any payment made under the Licence in the period 11 September 2019 to 16 April 2020. 2. Section 3 of the RL Act defines a retail shop and a retail shop lease as follows: retail shop means premises that— (a) are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or (b) are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre. retail shop lease or lease means any agreement under which a person grants to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop— (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing. 1. In the present case, there is no dispute that the Lease is a retail shop lease within the meaning of the RL Act. The question is whether the Licence is also a retail shop lease. 2. The Licence contained the following provisions: WHEREAS The Licensor has granted Registered Lease AH318893F ('the lease') to the licensee for premises known as Ground Floor 16-28 Foster St Surrey Hills ('the premises') AND WHEREAS The licensee has requested from the licensor that the area known as the disused lift shaft ('the shaft') adjacent to the premises be licensed to it for the purpose of installing exhaust outlets from the ground floor leased premises to the roof of the building at 16-28 Foster St Surrey Hills in which the premises are located ('the building'). AND WHEREAS The licensee has requested from the licensor that the area known as the loading dock be licensed to it for non-exclusive use solely for loading and unloading supplies and material for the permitted use of the premises and installing an air condition coil unit. GRANT OF LICENSE; DESCRIPTION OF PREMISES the licensor grants to the licensee a licence to use, subject to all of the terms and conditions of this agreement, the following described property: a. The shaft; b. The loading dock; c. That part of the roof shown on the drawing annexed and marked "D" (collectively 'the licensed areas') SECTION ONE LIMITATIONS OF DESCRIBED PURPOSE The shaft may be used by the licensee solely for the installation of exhaust extraction ducting and gas pipe to the roof, installation of a grease trap at the base of the shaft, and for incidental purposes related to such permitted use by the lease of the premises during the period 10 September 2013 and continuing until this agreement is terminated as provided in this agreement. The loading dock may be used may be used by the lessee for non-exclusive use solely for loading and unloading supplies and material and for fastening the air conditioning unit at a position to be confirmed by the license or. That part of the roof area licence by this agreement may be used by the licensee to install a platform to house air-conditioning plant and equipment. … SECTION TWO LIMITATION OF DESCIBED PURPOSE The shaft may be used by the licensee solely for the installation of exhaust extraction ducting and gas pipe to the roof, installation of a grease trap at the base of the shaft, and for incidental purposes related to such permitted use by the lease of the premises during the period beginning 10 September 2013 and continuing until this agreement is terminated as provided in this agreement. The loading dock may be used by the licensee for non-exclusive use solely for loading and unloading supplies and materials and for fastening the air conditioning unit at a position to be confirmed by the licensor. That part of the roof area licensed by this agreement may be used by the licensee to install a platform to house air-conditioning plant and equipment. … TERMINATION A. This license agreement shall remain in force only while the licence fee has been paid in accordance with this agreement and only while the licensee is not in default of any provisions of this agreement or in breach of any condition of the lease on the premises. 1. It is convenient to set out the legal principles applicable to the resolution of the issue raised. 2. In Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATCD 251, the Tribunal said on the question of jurisdiction: 35 Some of the issues arising for determination in this application have recently been considered by the Tribunal in Honings Bakery Pty. Ltd. v Cerialis Pty. Ltd [2014] NSWCATCD 87. In that case Senior Member Bluth reviewed the cases relevant to the approach to be taken in determining jurisdiction of the Tribunal and referred to Wood and Wilson v Bergman [2003] NSWADT 82 and Moweno Pty. Ltd. v Stratis Promotions Pty Ltd [2002] NSWSC 1151 approved in the Court of Appeal in [2003] NSWCA 376. The Senior Member said, in summary, that the correct approach is: 1. Firstly, one looks at the lease to see what is the permitted or agreed use of the premises, 2. If the agreement clearly defines what the use of the premises is to be, then the question as to whether or not the premises are a "retail shop" under s 3 of the Act will be determined by whether or not that use appears within Schedule 1, 3. If the permitted or agreed use is not clear or is uncertain, or the use covers a number of different types of businesses some of which are, or may be, within Schedule 1 described businesses, then an analysis is required of the actual use(s) of the premises to determine whether the predominant uses(s) fall within one or more of the businesses prescribed in Schedule 1. 1. In Moweno v Stratis [2002] NSWSC 1151 (Moweno), Barrett J (as he then was) considered how the question of what is a retail shop lease is to be resolved. At [3]-[12] his Honour said: The Retail Leases Act 3 Section 3 of the Act contains the following definition: " 'retail shop lease' or 'lease' means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop: (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing. Note. Section 6 limits the retail shop leases to which this Act applies. " 4 Several features of this definition may be noted. First, any "agreement" of the relevant description is within the "retail shop lease" concept, whether or not it is (or contemplates) a lease in the strict sense: see CAC Pty Ltd v Diamond Hill International Pty Ltd (1996) 7 BPR 14,754. Second, a "right of occupation of premises" granted (or agreed to be granted) by one party to another must be produced by the "agreement". Third, the grant of that right must be "for value". Fourth, the "right of occupation of premises" must have a "purpose" definable by reference to "the use of the premises". Fifth, that "use of the premises" must be "as a retail shop". Sixth, the factors in paragraphs (a) to (c) are to be left out of account in deciding whether a particular agreement is a "retail shop lease". 5 In the present case, no issue or difficulty arises in relation to most of these matters. The controversy centres upon the elements encapsulated in the words "a right of occupation of premises for the purpose of the use of the premises as", plus the element delineated by the words "as a retail shop". 6 The term "retail shop" is also defined by s.3: "'retail shop' means premises that: (a) are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 (whether or not in a retail shopping centre), or (b) are used for the carrying on of any business (whether or not a business specified in Schedule 1) in a retail shopping centre. Note. Section 5 limits the retail shops to which this Act applies. " 7 In the present case, para (b) of this definition (as well as the part of para (a) referring to a "retail shopping centre") may be ignored. When the relevant part of the definition of "retail shop" is inserted into the relevant part of the definition of "retail shop lease", the words become: "any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as premises that are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1". A paraphrase is: "any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1." 8 The focus is thus upon two things: the content of the right of occupation granted or agreed to be granted "under" the parties' agreement; and the question whether the occupation the subject of the right is "for the purpose of" the use of the premises in the way described. Determining the purpose 9 This raises the question of how one is to determine the purpose (as regards use) for which one person grants to another a right of occupation. The matter must, of necessity, be approached by reference to the terms of the parties' agreement. The relevant grant of a right of occupation is a grant sourced in the parties' agreement. This is the force of the words "under which". The purpose for which the right of occupation is granted must therefore be sought in the terms of the grant as embodied in the agreement. One's immediate reaction to the definition of "retail shop lease" is that expressed by Young J in passing in Kanittha Ninubon v GAG Pty Ltd [1998] NSWSC 298: "In any event, it was a lease made after 1 August 1994. It referred to premises being used as a restaurant and, accordingly, was a lease to which the Retail Leases Act 1994 applied." 10 The inquiry here, as I see it, is essentially the same as an inquiry as to the purpose (as regards use) for which premises are let, that being a concept that has long played a part in landlord and tenant legislation. It is therefore pertinent to have regard to the following principles enunciated in the joint judgment of Dixon, Williams, Webb, Fullagar and Kitto JJ in Thompson v Easterbrook (1951) 83 CLR 467: "The purposes for which premises are leased at the date of the notice to quit are the purposes which 'may reasonably be held to have been contemplated by both parties, having due regard to the terms of the lease, the character of the subject let, and other similar circumstances' (cf. Westropp v. Elligott , at p. 831). In that case Lord Watson said, in relation to provisions of an Imperial Act relating to a 'holding let to be used wholly or mainly for the purpose of pasture', that 'where the particular purpose for which the holding is to be used is not defined by contract, the legislature must have intended that the purpose should be ascertained by reference to the use or uses which the contracting parties must as intelligent and reasonable men be held to have had in their contemplation when they entered into the lease'. This proposition may be accepted as applicable to a case arising under the Act now in question, unless, after the granting of the lease, a change has occurred in the mutual rights and duties of the parties in relation to the user of the premises. It is in line with the view which the English courts have adopted in construing the words 'let as a separate dwelling' in the Increase of Rent and Mortgage Interest (Restrictions) Act , 1920 (Imp.) (10 & 11 Geo. 5 c. 17). They have held that what must be ascertained is the contemplation to be attributed to the parties at the date of the letting, according to the terms and circumstances of the letting (Wolfe v. Hogan , per Evershed L.J.). Denning L.J. said in that case, 'If the lease contains an express provision as to the purpose of the letting, it is not necessary to look further. But, if there is no express provision, it is open to the court to look at the circumstances of the letting. If the house is constructed for use as a dwelling-house, it is reasonable to infer the purpose was to let it as a dwelling. But if, on the other hand, it is constructed for the purpose of being used as a lock-up shop, the reasonable inference is that it was let for business purposes. If the position were neutral, then it would be proper to look at the actual user. It is not a question of implied terms. It is a question of the purpose for which the premises were let'." 11 The members of the High Court thus placed strong emphasis upon the parties' agreement (if any) as to user as the determinant of the purpose for which premises are let, this being the prime indicator of their intention. It must follow that where the agreement expressly defines the scope of use, that statement will be conclusive unless there is compelling evidence that the parties did not mean what they said. It is, of course, possible that the parties' original contemplation will change, in the sense that they adopt some new and different mutual intention. The members of the High Court dealt with that possibility as follows: "But, though the time of the letting is initially the time as at which the purposes must be ascertained, it is apparent that the parties may afterwards change the nature of the purposes. They may do this by a contract express or implied, or by conduct giving rise to an estoppel or a general waiver. Passages in the judgments in Wolfe v. Hogan and Court v. Robinson support the view that where premises are initially let for business purposes and the tenant converts them into a dwelling, then, even though the lease contained a prohibition against use as a dwelling, the premises should be held to be leased for the purposes of a dwelling if a contract varying the lease to permit of the new mode of user is to be inferred. But, though we think that the same conclusion should be reached if the conduct of the parties, while not justifying the inference of a contract, effects an estoppel or a waiver as to the use of the premises as a dwelling, we do not think that a change of the purposes for which the letting was originally made can be brought about by an alteration in the mode of actual user, if that alteration is unaccompanied by anything constituting a variation of the legal relations of the parties upon the subject of the purposes for which the premises are in lease. Denning L.J. in Wolfe v. Hogan expressed the view that a house originally let for business purposes does not become let for dwelling purposes unless it can be inferred from the acceptance of rent that the landlord has affirmatively consented to the change of user. We would not adopt, as applying to the Act we have to consider, the qualification contained in this proposition. In our opinion even an affirmative consent by the landlord will not suffice unless it is given by a contract between the parties, express or implied, or the circumstances lead to the conclusion that the landlord has waived any provisions of the lease inconsistent with the change of user or is estopped from objecting to the change." 12 The reservation expressed towards the end of this passage about the approach of Denning LJ in relation to the English statutory provision is also applicable to the present context. The definition of "retail shop lease" is expressed in such a way that there must be found a right of occupation for the relevant purpose that is the subject matter of a grant by agreement. Agreement must be the source of the grant, although the agreement need not be express. I regard as applicable to cases of the present kind the last sentence of the above passage. 1. This view was endorsed by the Court of Appeal in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376 (Moweno Appeal). 2. The decisions of the Appeal Panel in Manly Council -v- Malouf [2003] NSWADTAP 12 and the Court of Appeal in Manly Council v Malouf [2004] NSWCA 299 (Malouf) are also relevant to the disposition of this aspect of the appeal. Those decisions dealt with the question of whether land, the subject of a licence to occupy, separate to premises the subject of a retail lease on which a retail shop business was being conducted, could be a retail shop for the purpose of the RL Act. 3. The following principles can be derived from Malouf: 1. The definition of a retail shop is "premises that are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of [para (a) of the definition of retail shop in s 3] (whether or not in a retail shopping centre)": definition of retail shop in s 3 of the RL Act; 2. Bare land is not "premises". Therefore a licence to occupy bare land cannot be a "retail shop": Malouf per Handley JA at [24] (Mason P agreeing at [1]) and Tobias JA at [89] (Mason P agreeing at [1]); 3. The word "premises" and the definition of "retail shop" requires that there be some building or structure from which the specified business is conducted: Handley JA at [23]-[24] (Mason P agreeing at [1]) and Tobias JA (Mason P agreeing at [1]). In this regard Tobias JA at [72] referred to the decision of the High Court in Bonnington & Co Pty Ltd v Lynch [1952] HCA 46; (1952) 86 CLR 259 where, at 264, the Court said of the definition of "prescribed premises" in particular tenancy legislation "that on the land there must be some building or structure or perhaps artificial work, which colloquially might be described as "premises", and that accordingly vacant or bare land cannot constitute 'prescribed premises'". His Honour, at [77]-[79], also apparently accepted that a VW Kombi van could be premises being an enclosed space as was accepted by Simos J in Conoid Pty Ltd & Anor v International Theme Park Pty Ltd [2019 NSWSC 1138; (1999) 9 BPR 97802. 1. However, a retail shop located partly in a building and also on land associated with the building may also be a retail lease shop. In Malouf at [87]-[88] Tobias JA said (Mason P agreeing): 87 It seems to me that where a retail shop lease extends to a shop which is located partly in a building but also includes land associated with the building (such as an outdoor eating area), then the "premises" which are used wholly or predominantly for the carrying on of the relevant business will be constituted by the space used for that purpose both within and without the building. In other words, the "premises" constituting the "retail shop" will include the whole of the area devoted to the retail business. This assumes that the lease extends to both areas. The problem in the present case is that the deed extends only to vacant land. 88 With some hesitation, I have come to the view that the licensed areas are not "premises" within the meaning of the definition of "retail shop" in s 3 of the RL Act. As I have said, the position would have been different had the deed extended to the restaurant as well as the licensed areas. It was uncontested that a "shop" in ordinary parlance is referrable to the sale of goods within the whole or part of a building. There are sufficient indications in the RL Act and, in particular, in the provisions which I have identified above and in the nature of the retail businesses listed in Schedule 1, which provide a context which requires that the "premises" referred to in the definition of "retain shop" and "retail shop lease" be construed as confined to a shop being located within a building or similar structure. 1. Finally, possible or actual use of the premises by other persons at times when not used by the lessee under the relevant retail shop lease are not relevant to determining the question of whether the premises are used wholly or predominantly for the purpose of a retail shop. Rather, the examination is of the rights granted under the agreement between the parties 2. Our reasons for this view are as follows: 1. A retail shop is defined as premises used wholly or predominantly for a prescribed purpose: definition s 3 RL Act. 2. The RL Act does not require consideration of all uses which might be permitted on the premises. Rather the RL Act is concerned with the use which is permitted by the agreement in question: Moweno at [9]; 3. A retail shop lease includes an agreement where the right granted is not an exclusive right of occupation: definition s 3 RL Act; 4. The RL Act regulates the rights between the parties to a retail shop lease, not the general uses on the premises on which the prescribed retail shop use is conducted; 5. The legislation is protective of a lessee and should be construed in a beneficial manner: Malouf per Tobias JA at [74] (Mason P agreeing at 1); 6. To construe the legislation in a manner that required consideration of uses of the land when not being used by a lessee would be to require an examination of circumstances not relevant to the agreement between a lessor and lessee or the nature and extent of rights granted by a lessor. It would deny a lessee the protections afforded under the RL Act because there were uses or possible uses at times other than when a right of occupation was being exercised. 1. Our view is consistent with the view expressed Tobias JA in Malouf at [87]-[88] who appeared to accept that adjacent land, even where there was a non-exclusive right to occupy, could be a retail shop lease if it is "devoted to the retail business". In Malouf the area in question was a footpath and plaza area used by the public generally outside the time when the restaurant business was being conducted. However, in that case Tobias JA rejected the claim the particular licence was a retail shop lease because the deed by which the rights were granted was with Manly Council, only over vacant land for which there was no building and did not extend "to the restaurant as well as the licensed areas" 2. Consequently, the test to be applied is: 1. whether the rights granted to a tenant or licensee under the relevant agreement permit a use of premises which falls within the definition of a retail shop under the RL Act; and, if so, 2. whether, in circumstances where there is a grant to a tenant or licensee for multiple uses, the use as a retail shop is the predominant use for the premises in question. 1. In this regard decisions of the Administrative Decisions Tribunal, such as Wood & Wilson v Bergman [2003] NSWADT 82; [2003] ANZ ConvR 624 deal with multiple uses by one lessee and determinations about when a use is predominant. 2. The construction of the Licence and the proper interpretation of the RL Act are questions of law. 3. It is clear from the terms of the Licence that the grant is for the purpose of carrying on the restaurant business being conducted on the Premises under the Lease, the use as a restaurant being a use within Schedule 1 of the RL Act. In this regard: 1. The shaft, which is otherwise described as "unused", is to be used for exhaust ducting and for the passage of gas pipes for air-conditioning for the Premises. 2. On the roof area is permitted an air-conditioning unit for the Premises. 3. The loading dock area is for loading and unloading supplies and materials for the permitted use of the Premises, namely, a restaurant and bar. 1. The fact the areas are outside Premises, the subject of the Lease, does not affect this position. As stated by Tobias JA in Malouf, "the 'premises' constituting the 'retail shop' [includes] the whole of the area devoted to the retail business". The areas are licensed for the sole purpose of providing services to the Premises the subject of the Lease for "incidental purposes related to such permitted use by the [tenant] of the [Premises]" until the Licence is terminated. In this regard termination may occur if the tenant breaches the Lease: see recitals, sections 1 and 2 Limitation of Described Purpose and the Termination clause of the Licence. 2. Further, unlike the position in Malouf: 1. the area licensed includes parts of a building itself sufficient to constitute premises; and 2. the Licence when read in conjunction with the Lease is clearly for the purpose of extending the operation of the restaurant and bar, the subject of the Lease, to those areas the subject of the Licence. 1. The sole use permitted by the tenant of the areas the subject of the Licence was for the restaurant and bar being carried out on the Premises. 2. At [108] the Tribunal found the tenant had failed to prove that the licensed area was used wholly or predominantly for the carrying on of its restaurant and bar business. 3. Having regard to our construction of the RL Act, possible uses by others of the areas the subject of the Licence were not relevant to determining whether the area in question for use under the Licence fitted within the definition of a retail shop. The evidence of Mr Yazbek at para 8, set out above, made clear the use of these areas by the tenant was for the carrying on of the restaurant and bar business. More particularly, the Licence specified that the use of the licensed areas was only for the purpose of the restaurant and bar business the subject of the Lease. 4. It follows that the licensed areas was used wholly for carrying on the restaurant and bar business. 5. Finally, even if we are wrong on the construction of the RL Act and the use by third parties of the licensed areas is relevant to determining whether those areas are a retail shop, there was no evidence of other uses which might predominate. Rather, the only evidence was that of Mr Yazbek as to the use the tenant made of those areas. Consequently, there was no evidence to prove that there was another use which predominated the use of under the Licence. 6. Having regard to the above, the Tribunal was in error in concluding the licensed areas were not a retail shop within the meaning of the RL Act and that the Licence was not a retail shop lease. If yes, was the tenant entitled to a refund of licence fees in the amount of $7,571.17? 1. Section 36 of the RL Act provides: 36 Damaged premises (1) A retail shop lease is taken to provide for the following if the shop or the building of which the shop forms part is damaged— (a) The lessee is not liable to pay rent, or any amount payable to the lessor in respect of outgoings or other charges, that is attributable to any period during which the shop cannot be used under the lease or is inaccessible due to that damage. (b) If the shop is still useable under the lease but its useability is diminished due to the damage, the lessee's liability for rent and any amount in respect of outgoings attributable to any period during which useability is diminished is reduced in proportion to the reduction in useability caused by the damage. (c) If the lessor notifies the lessee in writing that the lessor considers that the damage is such as to make its repair impracticable or undesirable, the lessor or the lessee may terminate the lease by giving not less than 7 days notice in writing to the other and no compensation is payable in respect of that termination. (d) If the lessor fails to repair the damage within a reasonable time after the lessee requests the lessor in writing to do so, the lessee may terminate the lease by giving not less than 7 days notice in writing of termination to the lessor. (e) Paragraphs (a)–(d) do not affect any right of the lessor to recover damages from the lessee in respect of any damage or destruction to which those paragraphs apply. 1. The areas, the subject of the Licence, were part of the building in which the restaurant was located and which was damaged. The drawing at AB 88 and the Licence confirm this fact. 2. While there was a submission that the licensed areas were not affected, in our view these areas could not be "used under the lease" and/or the use was "diminished" as those expressions are used in s 36 of the RL Act. Without the ability to use the restaurant and bar, a matter not in dispute in this appeal, the areas the subject of the Licence could not relevantly be used for the permitted purposes. 3. There is no dispute about the amount of the licence fee that would be repayable if s 36 operates. This amount is $7,571.17. It follows that the Tribunal was in error in rejecting this claim and that an award should be made in favour of the tenant. Costs 1. We will permit the parties to make any application for costs. 2. In this regard the parties should address the questions of whether there are special circumstances and whether an order should be made dispensing with a hearing under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). Orders 1. The Appeal Panel makes the following orders: 1. Orders 2 and 3 made 3 November 2021 in application COM 21/08975 are set aside and in lieu thereof the following order is made: 2. For the purpose of clause 6(b) of the lease between Hanave Pty Ltd and Wine Nomad Pty Ltd dated 14 July 2012, dealing number AK318893, the amount of $252,000 plus GST is declared to be the fair market rent for the period commencing 14 July 2021. 1. Order 4 made on 3 November 2021 in application COM 21/17178 is set aside and in lieu thereof the following order is made: 3. The respondent, Hanave Pty Ltd, is to pay the applicant, Wine Nomad Pty Ltd, the sum of $7,571.17. 1. In respect of costs of the proceedings at first instance and of this appeal the following directions are made: 1. Any application for costs, including evidence and submissions in support of the application, is to be filed and served by the costs applicant within 14 days from the date of these orders; 2. Any evidence and submissions in response are to be filed and served by the costs respondent within 28 days from the date of these orders; 3. Any submissions in reply are to be filed and served by the costs applicant within 35 days from the date of these orders. 4. Submissions are to include submissions about whether a hearing of any costs application can be dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 01 August 2022 - Coversheet (order 1) date amended from '2021' to '2020' Paragraph 45 (6) amended dates Paragraph 111 amended dates DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 August 2022