Moweno v Stratis [2002] NSWSC 1151

Reported Decision : (2003) NSW ConvR 56-050

New South Wales Supreme Court

CITATION : Moweno v Stratis [2002] NSWSC 1151 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4685/01 HEARING DATE(S) : 21/11/02 JUDGMENT DATE : 2 December 2002

PARTIES : Moweno Pty Limited - Plaintiff Stratis Promotions Pty Limited - Defendant JUDGMENT OF : Barrett J

COUNSEL : Mr A M Colefax - Plaintiff Mr C M Harris - Defendant SOLICITORS : Colin Biggers & Paisley - Plaintiff Clinch Neville Long - Defendant CATCHWORDS : LANDLORD AND TENANT - retail tenancies legislation - whether variation of existing lease may itself be "retail shop lease" - determining purpose of right of occupation - whether actual use as distinct from agreed use relevant - construction of user covenant LEGISLATION CITED : Retail Leases Act 1994 CAC Pty Ltd v Diamond Hill International Pty Ltd (1996) 7 BPR 14,754 CASES CITED : Kanittha Ninubon v GAG Pty Ltd [1998] NSWSC 298 Randi Wixs Pty Ltd v Pokana Pty Ltd [2002] NSWADT 205 Thompson v Easterbrook (1951) 83 CLR 467 DECISION : See paragraph 33

- 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

MONDAY, 2 DECEMBER 2002

4685/01 – MOWENO PTY LIMITED v STRATIS PROMOTIONS PTY LTD JUDGMENT

Background 1 The plaintiff is the owner of premises at 588-590 Princes Highway, Rockdale. On or about 24 August 1998, the plaintiff granted to the defendant a lease of the first floor of those premises for a term of ten years commencing on 1 February 1999. In January 1999, the lease was varied. By its amended summons filed on 31 January 2002, the plaintiff claims a declaration that, upon its proper construction, the lease "is not a retail shop lease within the meaning of the Retail Leases Act 1994". At this stage of the proceedings, that is the only issue the court is called upon to determine. 2 Both the plaintiff and the defendant led evidence. I shall turn to it in due course. First, it is appropriate to examine the Retail Leases Act 1994 to discover the processes that must be engaged in to determine whether a particular agreement is a "retail shop lease" within the meaning of that Act. 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: