ROBERT MC BROWN and PARTNERS PTY LTD v PERMANENT TRUSTEE CO LTD [1996] NSWCA 453

ROBERT MC BROWN and PARTNERS PTY LTD v PERMANENT TRUSTEE CO LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, HANDLEY and COLE JJA 9 May 1996, 30 May 1996

[1996] NSWCA 453

LANDLORD AND TENANT — commercial lease — rent payable — operation of rental review clause. Lease for a term of six years — option to renew for further four years — most terms of lease in standard for of Memorandum — separate Reference Schedule fills in some details of Memorandum — Schedule Two provides covenants and provisions applicable to particular circumstances of lease — CL4 of Memorandum provides that during term of lease annual rent will be sum specified in Item 4 of Reference Schedule — same CL4 also provides for rent review procedure as at successive rental review dates — CL5 of Schedule Two also relates to rent review — dispute as to effect of rental review provisions — primary question centres on interpretation of CL5 of Schedule Two — lessee seeks declaration proceedings in Equity Division as to amount of rent payable — trial judge makes declaration in favour of lessor — concludes CL5 did not come into operation.

Lessee appeals on basis CL5 of Schedule Two must be read with CL4.1 of Memorandum — lessor did not have sole option to activate rent review procedure pursuant to CL4.1.

On appeal - Held:

(1) As CL5 of Schedule Two is expressed to apply notwithstanding any other provision in the lease, it modifies part of CL4.1(a)(i) of the Memorandum, but only in respect of the first rental review, in regard to which lessor does not have an option whether it will set rent review procedure going, but is bound to give the necessary notice.

(2) CLS of Schedule Two also prevails over CL4.1 of the Memorandum in regard to which rent fixing formula applies.

(per Handley JA) CLS of Schedule Two attracts the principle in Mackay v Dick (1861) 6 App Cas 251 at 263, approved and applied in Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd (1979) 144 CLR 596 at 607.