SAS TRUSTEE CORPORATION v THE STATE OF NEW SOUTH WALES [1998] NSWCA 201

SAS TRUSTEE CORPORATION vy THE STATE OF NEW SOUTH WALES

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

Mason P, PRIESTLEY JA and HODGSON CJ in Eq 24 April 1998

[1998] NSWCA 201

Mason P It is practical to give judgment forthwith. This case has been expedited and the Court is in a position to adopt the reasoning of Bryson J which effectively addresses most of the arguments which have been advanced for the appellant. Indeed I do not think that the trial judge's reasoning could be better expressed were we to take time in an endeavour to do so.

The proceedings relate to a dispute as to the criteria to be adopted by the parties and nominated valuers in relation to the rent review of a lease. The lease commenced in 1994 and created a term of twelve years commencing on 1 January 1995 (with three successive options for renewal for further terms of five years). It covers twenty five floors and a secure area in the Governor Macquarie Tower, Sydney. The rent reserved, referred to in the lease as the minimum rent, was $13,224,7891 per annum and in the original term there were to be five rent review dates occurring two-yearly, the first being 1 January 1997. At or about the commencement of the lease the lessor made an incentive payment to the lessee of $68 million.

The procedure for rent review involves notices, negotiation in good faith and the appointment of valuers. At this stage the two nominated valuers are endeavouring to determine jointly the rent applicable to the first review.

Detailed provisions in Pt2 of the Lease state the meaning of "current annual market rental value" and control the manner in which the determination is to be made. The determination is to be final and binding on the parties (cl2.7(b)) and the valuers must comply with cl2.11 (cl2.7(c)). This is subject to a qualification imposed by cl2.14 as regards the Review Date for the tenth anniversary of the commencement date of the Lease.