Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Pyrmont Point Pty Ltd v Westacott [2014] NSWCATAP 106 Hearing dates: 11 November 2014 Decision date: 16 December 2014 Jurisdiction: Appeal Panel Before: M Chesterman, Principal Member C Paull, Senior Member Decision: 1. The appeal against the Tribunal's decision made on 25 March 2014 is dismissed. 2. The Tribunal's decision made on 8 April 2014 is declared to be void and of no effect. 3. Any application by the Respondent for the costs of these appeal proceedings must be filed and served within 28 days of this decision. The Appellant must file and serve its submissions in reply within a further 28 days. The matter will then be decided 'on the papers', pursuant to section 50(2) of the Civil and Administrative Tribunal Act 2013. Catchwords: Lease - whether a retail shop lease - construction of Retail Leases Act 1994, section 6(1)(b) Legislation Cited: Civil and Administrative Tribunal Act 2013 Interpretation Act 1987 Retail Leases Act 1994 Cases Cited: Pyrmont Point Pty Ltd v Albert Victor Westacott [2014] NSWCATCD 42 Pyrmont Point Pty Ltd (ACN 145199784) trading as "Red Bottle") v Albert Victor Westacott [2014] NSWCATCD 40 Wilson v Sydney Markets Limited [2009] NSWADT 256 Category: Principal judgment Parties: Pyrmont Point Pty Ltd (Appellant) Albert Victor Westacott (Respondent) Representation: D Murr SC (Appellant) D Smallbone (Respondent) JDK Legal (Appellant) RJI Legal (Respondent) File Number(s): AP 14/46344 Decision under appeal Before: Consumer and Commercial Division File Number(s): COM 14/16402; COM 14/00227 reasons for decision Introduction 1The question raised in these appeal proceedings concerns the interpretation of section 6(1)(b) of the Retail Leases Act 1994 ('the RL Act'). Specifically, it is whether this provision excluded from the operation of this Act, and from the jurisdiction of the Tribunal, a lease ('the Original Lease') that had an initial term of five years and conferred on the lessee four options of renewal, each for a term of five years. 2If all four of these options were exercised, the period during which the lessee would be entitled to remain in possession of the leased premises would be 25 years. For this reason, section 6(1)(b) might well be applicable. If that was the case, the RL Act would not apply to the Lease or any subsequent lease created by any exercise of the option to renew and the Tribunal would have no jurisdiction to hear any dispute between the parties to it. This is because section 6(1)(b) is in the following terms:- 6 Leases to which Act does not apply (1) This Act does not apply to any of the following leases of retail shops:... (b) leases for a term of 25 years or more (with the term of a lease taken to include any term for which the lease may be extended or renewed at the option of the lessee), 3In these proceedings, the Respondent lessor, Albert Westacott, argued that the Original Lease and two further leases created by exercise of the option to renew did indeed fall within the scope of section 6(1)(b) and were therefore not governed by the RL Act. The Appellant lessee, Pyrmont Point Pty Ltd (hereafter 'Pyrmont Point'), argued that, on its proper interpretation, this provision did not apply to any of these leases or, in the alternative, that it applied only to the Original Lease. 4For the reasons that follow, we have come to the conclusion that the arguments advanced on Mr Westacott's behalf should prevail. Outline of facts 5The parties to the Original Lease were Dukest Property and Investments Pty Ltd, as lessor, and Dukest Trading and Investments Pty Ltd, as lessee. The memorandum of lease, dated 19 March 2004, indicated that the commencing date was 19 March 2004 and the terminating date was 18 March 2009. 6Clause 4.3(a) of the Original Lease provided for either party to give notice to the other party, six months before the terminating date, stating what it believed to be the current market rent for the premises at the date of commencement of any renewed term. Clause 4.3(b) stated that if the party receiving such a notice disputed the suggested rent, it must give notice to this effect within 28 days. In subsequent paragraphs, the clause provided for the resolution of any such dispute by an agreed valuer or (failing agreement) by the President or other officer of the Australian Property Institute Inc (NSW Division). 7Clause 8.1 of the Original Lease stated as follows:- OPTION If the Tenant gives the Landlord not less than three months nor more than six months written notice before the expiry of the Term that it wishes to renew this Lease for the further term specified in Item 13 (Further Term) from the expiry of the Term, and if the Tenant has duly performed all its obligations under this Lease during the Term, the Landlord must grant to the Tenant a lease for the Further Term (Renewed Lease) on the same terms and conditions (including any guarantee) as this Lease but amended as follows. (a) The following amendments will be made to the Reference Schedule. (i) Item 1 - Landlord will be the then registered proprietor of the Land. (ii) Item 4 - Term of the Renewed Lease will be that specified in Item 13. (iii) Item 5 and Item 6 will be the Commencement and Termination Dates of the Renewed Lease (iv) Item 7 - Minimum Rent - will be the Minimum Rent determined under clause 4.3. (v) Clause 8 and Item 13 will be deleted and marked "Not Applicable" but only for the Lease of the Term ending 18 March 2009 otherwise clause 8 and Item 13 remain unchanged. (b) Such other consequential amendments as are appropriate. 8In clause 1, 'Term' was defined to mean 'the period specified in Item 4'. Item 4 of the Reference Schedule stated that this period was five years. 9Item 13 of this Schedule was as follows:- 4 options for renewal each for a period of 5 years with the intent that if all options for renewal are exercised the Termination Date of the final term will be 18 March 2029. 10The provision (Item 14) defining the permitted use of the Original Lease commenced as follows: 'Off Licence Retail bottle shop and delicatessen...' It was common ground that this use fell within the scope of Schedule 1 of the RL Act. 11On 20 April 2004, Dukest Property and Investments Pty Ltd assigned its interest as lessor under the Original Lease to Mr Westacott. 12On 10 May 2006, Dukest Trading and Investments Pty Ltd assigned its interest as lessee under the Original Lease to Pirrama Pty Ltd ('Pirrama'). 13At some point during the period stipulated in clause 8.1 for exercise of the first option to renew the Original Lease, Pirrama exercised this option. In consequence, Mr Westacott issued to Pirrama a lessor's disclosure statement dated 9 March 2009. Above the heading 'Lessor's Disclosure Statement' appeared the words 'Retail Leases Act 1994 Schedule 2'. 14On or about 19 March 2009, a memorandum of lease ('the Second Lease') was executed by Mr Westacott and Pirrama. It indicated that the commencing date was 19 March 2009 and the terminating date was 18 March 2014. Clause 4.3 in the Second Lease was in the same terms as in the Original Lease. Clause 8 was unchanged, except that the date specified in subparagraph (v) of paragraph (a) was 18 March 2029. Item 13 of the Reference Schedule was unchanged, except that it referred to three, not four, options for renewal. 15On 15 September 2010, Mr Westacott, Pirrama and Pyrmont Point executed a deed of consent to the assignment of Pirrama's interest under the Second Lease to Pyrmont Point. In this deed, the term 'Lease' was defined as a 'Lease for 5 years from 19 March 2009 to 18 March 2014 with 3 options for renewal each for a further period of 5 years...' 16On 22 September 2010, Pirrama assigned its interest as lessee under the Second Lease to Pyrmont Point. 17On 11 July 2013, Andrew Gibbons of Endeavour Property Advisory, acting as an agent of Pyrmont Point, sent to Patrick Woods of RJI Legal, who was Mr Westacott's solicitor, an email stating that the rent payable under the Second Lease was 'over double of the current market rental rates'. Attached to this email was a notice purporting to be a request under section 32(1)(b) of the RL Act for a determination of the current market rent that would apply if Pyrmont Point exercised the option to renew the Second Lease. 18On 18 September 2013, Mr Woods sent to Pyrmont Point an email giving notice under clause 4.3(a) of the Second Lease that Mr Westacott considered the current market rent for the premises to be $123,309 per annum plus GST. 19In a letter to Mr Woods dated 23 September 2013, Mr Gibbons advised that Pyrmont Point disagreed with Mr Westacott's opinion as to the current market rent for the premises. He suggested that a specialist retail valuer should be appointed by the parties under section 31 of the RL Act, adding that if Mr Westacott did not agree with this approach, Pyrmont Point would apply to the Administrative Decisions Tribunal ('the ADT') for appointment of an independent valuer under section 32. 20On 23 October 2013, an application for appointment of a specialist retail valuer relating to the Second Lease was filed in the ADT. It was defective because (inter alia) it was filed by Pirrama, not Pyrmont Point. 21On 14 November 2013, Mr Westacott filed an affidavit sworn by Mr Woods on the previous day, in which it was asserted that the ADT lacked jurisdiction to appoint a valuer because the leases between the parties were excluded by section 6(1)(b) from the operation of the RL Act. 22On 19 November 2013, on account of concerns that its earlier notice might have been defective, Pyrmont Point served on Mr Westacott a second notice under section 32(1)(b). 23On 21 November 2013, the ADT granted leave to Pyrmont Point to file an amended application substituting itself for Pirrama as the applicant. The Tribunal ordered that the question whether the RL Act was applicable should be decided 'on the papers' and gave directions for the filing of submissions on this matter. 24Pursuant to these orders and directions, Pyrmont Point filed an amended application on 21 November 2013. It subsequently filed affidavits sworn by its solicitor, Jon Martin of JDK Legal, on 29 November 2013 and on 5 February 2014. It also filed three sets of submissions prepared by its counsel, David Murr SC. These were dated 29 November 2013, 5 February 2014 and 27 February 2014. 25Two sets of submissions were filed by Mr Westacott's counsel, David Smallbone. These were dated 13 December 2013 and 20 February 2014. 26On 17 December 2013, Pyrmont Point sent a written notice to Mr Westacott of its intention to exercise the option of renewal contained in the Second Lease, thereby giving rise to a further five-year lease of the premises. 27In correspondence bearing the same date between Mr Woods and Mr Martin, Mr Martin maintained that the RL Act was applicable to the Second Lease (and any lease created by the exercise of the option contained it) and Mr Woods denied this proposition. 28On 1 January 2014, the ADT was abolished and its functions were taken over by the Civil and Administrative Tribunal of New South Wales (hereafter 'the Tribunal'). The proceedings in the ADT thereupon became 'unheard proceedings' as defined in clause 6(1) of Schedule 1 of the Civil and Administrative Tribunal Act 2013 ('the NCAT Act'). Clauses 7(1) and 7(3)(b) of this Schedule stipulate that such proceedings are to be heard by the Tribunal but determined as if that Act had not been enacted. 29Pursuant to leave granted on 29 January 2014 by the Consumer and Commercial Division of the Tribunal, Pyrmont Point filed an amended application. This was an application for the appointment of a specialist retail valuer under section 31(1)(b) of the RL Act to determine the current market rent for the renewed lease arising from Pyrmont Point's exercise of the option ('the Third Lease'). 30On 19 March 2014, the Third Lease commenced. 31On 25 March 2014, the Tribunal, constituted by G Mullane, Senior Member, published a decision which we will call 'the first Tribunal decision'. It was to the effect that because the leases between the parties fell within the scope of section 6(1)(b) of the RL Act, this Act did not apply to them and the Tribunal accordingly lacked jurisdiction. For present purposes, the relevant features of this decision (Pyrmont Point Pty Ltd (ACN 145199784) trading as "Red Bottle") v Albert Victor Westacott [2014] NSWCATCD 40) are as follows. 32At [8], the Tribunal stated:- 8 The applicant relies upon the Affidavit of its solicitor, Mr Martin, filed 29 November 2013. The respondent relies upon the Affidavit of its solicitor, Mr Woods of 13 November 2013 and its submission filed on 16 December 2013. No submissions have been received from the applicant. 33At [11 - 12], it gave the following reasons for its decision:- 11 It might have been argued by the applicant that once the head lease had expired the terms of current lease and remaining options became less than 25 years and that para 6(1)(b) therefore does not apply. But such an interpretation of the provision is not open because of the words used. The intention of the draftsman to not limit the application of the paragraph to the current lease term plus the terms of the remaining options for renewal is clear. It does not refer to "lease" but to "leases' and makes it clear that in deciding whether the paragraph applies one has to take the total of the terms of the original lease and the terms of any further leases under any options for extension or renewal, whether already exercised or remaining yet to be exercised. That total is 25 years. 12 It is therefore clear that paragraph 6(1)(b) applies to exclude the application of the Act to the original lease AA573542, the current lease and any other lease that may arise if the lessee further exercises the option to renew the lease. 34On 8 April 2014, without having communicated further with the parties, the Tribunal, constituted by K Rickard, Senior Member, published 'the second Tribunal decision' (Pyrmont Point Pty Ltd v Albert Victor Westacott [2014] NSWCATCD 42). As with the first decision, its conclusion was that Pyrmont Point's application must be dismissed. 35The reasons that the Tribunal gave for this conclusion were set out at paragraphs [10] to [16]:- 10 The applicant contends that the term "the lease" referred to in section 6(1)(b) refers to a current lease which in turn can be extended or renewed only once. The applicant's further submission arising from this is that if any further options are later exercised they are not extensions or renewals of the current lease but are extensions or renewals of successive future leases. It is therefore contended that a proper and literal reading of the section leads to the result that the exclusionary provision of section 6(1)(b) only applies if the term of the current lease together with the term of the next lease, being the lease which arises immediately upon exercise of an option under the current lease, combine to be 25 years or more. 11 The respondent submits that the Retail Leases Act does not apply to the Lease because it is a lease for 25 years within the meaning of section 6(1)(b) of the Retail Leases Act. An alternative proposition was also put by the respondent in the event that the Tribunal were to find that the Retail Leases Act did apply to the lease, but it is not proposed to deal with that alternative submission within this decision. 12 It can be observed that the conditions contained within the Lease have essentially not been varied since March 2004 and that the present term of the Lease is in accordance with the term of the second option period recited within the Lease agreement created in 2004. 13 There has been no contractual variation of the respective rights and obligations of the lessor and lessee since 19 March 2004 when the Lease commenced between the original lessor and lessee. After careful consideration of the submissions put forward by each party, the Tribunal respectfully disagrees with the applicant's proposition that the "current lease" falls to be considered separately from the original Lease entered into in 2004 for the purpose of deciding whether the provisions of section 6(1)(b) apply. 14 In considering this matter, the Tribunal must have regard to what it sees as the plain and literal meaning of section 6, which is that: the Retail Leases Act does not apply to any lease for a term of 25 years, and; the term of the lease is to be taken to include "any term for which the lease may be ... renewed at the option of the lessee." 15 The Tribunal in this regard concurs with the statement made by Fox JM in Wilson v Sydney Markets Limited [2009] NSWADT 256, that where a lease provides a right of occupation which could run for 25 years or more at the discretion of the lessee, a lease for a term of 25 years or more is created for the purposes of section 6 of the Retail Leases Act and the jurisdiction of this Tribunal is accordingly excluded. Whilst the submissions in reply on behalf of the applicant are correct in saying that Fox JM's comments about this issue in Wilson were not made in the course of directly resolving the principal issue in dispute, they should not simply be disregarded or assumed to be ill-considered for that reason. They are accepted as an accurate and appropriate approach toward determination of the jurisdiction issue in the present proceedings: "(15) I agree with Mr Williams - but perhaps not for the same reasons. Section 6 of the Retail Leases Act contemplates a lease for a term of 25 years or more and by way of explanation goes on to include in such term "any term for which the lease may be extended or renewed at the option of the lessee". It refers to the conventional situation where a lessor grants a term of years followed by one or more terms which the lessee (not the lessor) elects. The proper analysis is that (assuming full compliance with the other lease covenants and requirements) the lessor has given the term of years which is the sum of the initial term and the option terms. The only party who has a choice in the matter is the lessee, the lessor has no choice at all." 16 It follows that the provisions of the Retail Leases Act do not apply to the subject agreement and to the premises. No words or conduct by or on behalf of either party which could otherwise arguably constitute a waiver or an estoppel can operate to create jurisdiction in the Tribunal where there is none. If the present matters in dispute cannot be resolved, the perhaps unfortunate situation is that the parties must take their dispute to another forum. 36On 17 April 2014, Pyrmont Point filed a Notice of Appeal in which it sought orders setting aside both of the Tribunal decisions. Subsequently, Mr Westacott filed a Reply to Appeal and both parties filed submissions. 37The appeal was heard before us on 11 November 2014. Mr Murr SC appeared for the Appellant, Pyrmont Point, and Mr Smallbone for the Respondent, Mr Westacott. 38Somewhat unusually, there was agreement between the parties that both of the Tribunal decisions should be set aside. They were at one in submitting that the first decision was flawed because, as appeared from paragraph [8] of its reasons, the Tribunal had not given consideration to all the relevant material. In particular, it had not taken account of any of the submissions filed by Pyrmont Point. The parties also concurred in the view that the second decision should be held void and of no effect, on the ground that on delivery of the first decision the Tribunal was functus officio. 39As would be expected, however, the parties advanced conflicting arguments as to what orders we should make in substitution for the Tribunal's orders. They requested that we take account of the submissions that they made to the Tribunal as well as those advanced in the appeal proceedings. Before we outline their submissions, we will refer to relevant statutory provisions. Relevant legislation 40Although, as indicated above, the Consumer and Commercial Division was required by clauses 6(1), 7(1) and 7(3)(b) of Schedule 1 of the NCAT Act to determine the proceedings before it as if that Act had not been enacted, this is not the case with the present appeal proceedings. They were instituted after the commencement date of this Act and are therefore governed by it. 41We have already quoted the heading, the opening clause and the important subsection ((1)(b)) of section 6 of the RL Act. Subsection (1)(a) has been repealed. The remaining provisions of section 6(1) exclude the following categories of lease from the operation of the Act:- (c) leases entered into before the commencement of this section, (d) leases entered into under an option granted or agreement made before the commencement of this section, (e) any other lease of a class or description prescribed by the regulations as exempt from this Act. 42Section 6(2) states: 'This Act does not apply to any lease referred to in this section that is assigned to another person after the commencement of this section.' 43Parts of sections 31 and 32 and the whole of section 80 of the RL Act should also be quoted:- 31 Reviews of current market rent (1) A retail shop lease 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:... (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 Tribunal. 32 Opportunity for lessee to have current market rent determined early (1) A retail shop lease which provides an option to renew or extend the lease at current market rent is taken to include provision to the following effect: (a) The lessee is entitled to request a determination of the current market rent at any time within the period that begins 6 months before and ends 3 months before the last day on which the option may be exercised under the lease, but may not make such a request if the lessor and the lessee have already agreed as to what the actual amount of that rent is to be. (b) The lessee makes such a request by giving notice in writing of the request to the lessor. (c) If the lessee makes such a request, the amount of the current market rent is to be determined (as at the time of the request) in accordance with the provisions of section 31, and the period within which the lessee must exercise the option is varied so that the last day on which the option may be exercised is 21 days after the determination of rent is made and notified to the lessee in writing. 80 Meaning of "renewal" of lease A reference in this Act to the renewal of a retail shop lease (the current lease) is a reference to the lessor and the lessee under the current lease entering into a new retail shop lease for the retail shop to which the current lease relates (whether or not on the same terms as the current lease). Pyrmont Point's submissions 44The principal proposition underlying Mr Murr's argument was that the words 'lease' and 'leases', where each of them appear in paragraph (b) of section 6(1), should be taken to refer to the lease currently existing between the relevant parties, whether this be an initial lease or an 'option lease' (i.e., a lease arising on the exercise of an option). It was not correct, he said, to treat an initial lease and any option lease(s) that subsequently comes into being as one single lease, for the purposes of this provision. As indicated in section 80 of the RL Act (on which, however, Mr Murr placed relatively little emphasis), each of them is instead to be viewed as a separate lease between the parties. 45It followed, according to Mr Murr, that when determining whether or not section 6(1)(b) had the effect of ousting the Tribunal's jurisdiction in these proceedings, the question to be asked was whether the Second Lease - being the current lease at the time when Pyrmont Point filed its application in the Tribunal - fell within the scope of this provision. The answer to this question was clearly no, even if account was taken of the possibility that under clause 8.1 of this Lease Pyrmont Point, as lessee, could exercise three options of renewal for (in each case) a five year term. On this basis, the overall duration of Pyrmont Point's tenure would be only 20 years, not the period of 25 years stipulated in section 6(1)(b). The same approach would be applicable to any subsequent option lease and the same result would ensue. 46It was important in this context, Mr Murr maintained, that clause 8.1, where it appeared in the Second Lease, stated that the option available to Pyrmont Point was the renewal of 'this lease' and that subject to some limited exceptions the option lease was to be 'on the same terms and conditions as... this Lease'. Furthermore, in the Deed of Consent to Assignment of Lease executed on 15 September 2010 by Pirrama, Pyrmont Point and Mr Westacott, the term 'Lease' was defined as 'Lease for 5 years from 19 March 2009 to 18 March 2014 with 3 options for renewal each for a further period of 5 years...' (see [15] above). 47In support of these propositions, Mr Murr referred to the fact that the phrase in brackets in section 6(1)(b) employed the singular words 'term' and 'lease', not 'terms' or 'leases'. He acknowledged that under sections 6 and 8(b) of the Interpretation Act 1987, it is to be presumed that a reference, in an Act or instrument, to a word or expression in the singular form 'includes a reference to the word or expression in the plural form'. But this was, he said, a case where the context indicated otherwise, as envisaged in section 6. There was a clear contrast between the Act's use of the singular words 'term' and 'lease' in the bracketed phrase and its use of the plural word 'leases' in the heading to section 6, in the opening sentence of subsection (1) and at the commencement of paragraph (b). 48Mr Murr urged us to treat as obiter dicta only the ADT's observations in Wilson v Sydney Markets Limited [2009] NSWADT 256 that were quoted in the Tribunal's second decision. They were unnecessary, he claimed, for the decision to be made by the ADT and were not based on any close consideration of section 6(1)(b). 49On the basis of these propositions, Mr Murr developed two lines of argument, which he put to us as alternatives. 50His primary contention was that the phrase 'any term for which the lease may be extended or renewed at the option of the lessee' in section 6(1)(b) referred only to the period of any option lease that would come into being on the exercise of an option of renewal contained in the lease currently operating. It should not, he said, be treated as including the period(s) of any additional option lease(s). 51Mr Murr pointed out that according to this interpretation of section 6(1)(b), not merely the Second and Third Leases but also the Original Lease fell outside its scope. This was for the simple reason that the term of each of these Leases would be treated, for the purpose of section 6(1)(b), as ten years only. It would comprise the five-year period expressly stipulated as the duration of each Lease plus the further five-year period stipulated as the duration of the option lease that would come into being on exercise of the option provided for in clause 8.1. 52Two arguments based on policy considerations were included in Mr Murr's submissions relating to his primary contention. 53The first was that it was appropriate to confine the operation of section 6(1)(b) to lease transactions in which the initial term, or the sum of this term and the term of any single option lease following it, was 25 or more years. Mr Murr claimed that, generally speaking, transactions of this nature only came into being between large commercial corporations, which had no evident need for the protections conferred (notably on tenants) by the RL Act. 54Secondly, in a case (such as the present) where an overall period of 25 years was only achieved by aggregating the term of the initial lease with the terms of two or more option leases, the interpretation of section 6(1)(b) urged by Mr Westacott could be seriously detrimental to the interests of an assignee of one of the option leases. Not being aware of the duration of the preceding leases, he or she might not realise that the initial lease gave rise to the possibility of a tenure of 25 years or more and that for this reason the lease being assigned fell outside the scope of the RL Act. 55Mr Murr also mentioned, without placing undue emphasis on the point, that at the time when Pirrama exercised the first option to renew, Mr Westacott apparently believed that the Original Lease was governed by the RL Act. As indicated above at [13], he issued a lessors disclosure statement that referred to the Act in its heading. 56The alternative contention advanced by Mr Murr was that the Original Lease might have been within the purview of section 6(1)(b), but this was not the case with the Second Lease or any subsequent option leases. According to this approach, it was correct to take account of all the options of renewal envisaged by the Original Lease when determining what we may call its 'notional term' for the purposes of this provision. Because the notional term of the Original Lease would be 25 years, this Lease would fall under section 6(1)(b). But this would not be the case with the Second Lease, which was still to be treated as a separate lease, or with any of the subsequent leases. 57Mr Murr acknowledged that a consequence of this approach was that on the commencement of the Second Lease, the rights and liabilities of the parties would suffer a significant change. Their legal relations as lessor and lessee, having been previously unaffected by the RL Act, would become subject to its regulatory provisions. But he maintained that the parties, properly advised, could 'adjust' to this change. Mr Westacott's submissions 58On behalf of Mr Westacott, Mr Smallbone sought to establish the following propositions regarding section 6(1)(b) (they appear at paragraph 8 of his submissions to the Tribunal dated 20 February 2014):- An original term and successive terms on renewal are to be aggregated and regarded, together, as a lease for the entire period of the original and succeeding option or extension terms, for the purpose of calculating whether the 25 year term exclusion applies. The Applicant's constructions (sic) would deprive the exception of the real and substantial effect that it is evidently intended by the legislature to have. 59At the hearing of the appeal, he argued that the use of the plural word 'leases' in section 6 indicated that the terms of more than one option lease could be combined with that of the original lease when considering whether the total 'term' was 25 years or more. 60He argued also that the phrase 'any term' naturally embraced the plural as well as the singular and that accordingly there were no grounds for departing from the presumption stated in section 8(b) of the Interpretation Act. 61Mr Smallbone's arguments included a specific response to Mr Murr's submission that under section 6(1)(b) of the RL Act the 'term' of a lease could only include the initial term and the term of any first option lease that was envisaged. This response was as follows: (a) if, as in the present case, the first option lease contained a further option of renewal, the term of any lease arising on the exercise of this option would logically have to be taken into account also; and (b) the same process would have to be repeated if this second option lease and any subsequent option lease contained yet another option of renewal. 62 With regard to section 80 of the RL Act, Mr Smallbone maintained that it was important in indicating that a lease could be regarded as 'renewed' even though the option lease included different provisions. It was put to him by the Bench that section 80 appeared to support Mr Murr's claim that an option lease was a new lease, not just the continuation of the initial lease. In reply, Mr Smallbone submitted that this consideration did not affect the interpretation of section 6(1)(b), because this provision 'operated in its own special world'. 63With reference to Mr Murr's alternative line of argument, Mr Smallbone maintained that the legislature could not have intended that a lease containing an option to renew should fall outside the RL Act during its initial term, but should fall within its scope as soon as the option lease commenced. The original parties and any assignee, he said, would frequently fail to realise that this had occurred and could suffer significant detriment because their expectations would be at odds with the true position. 64In reply to Mr Murr's claim that it was appropriate to confine the operation of section 6(1)(b) to lease transactions that generally speaking involved large corporations only, Mr Smallbone maintained that there was no necessary correlation between large retailers and leases for long periods of time. 65Mr Smallbone invited us to treat the observations on section 6(1)(b) in Wilson v Sydney Markets Limited as correct in law, even though they were dicta only. He cited other authorities, relating primarily to section 8 of the RL Act, but acknowledged that they were unlikely to assist us to any significant degree. Discussion and conclusions 66On the principal question in this appeal, we are in broad agreement with Mr Smallbone's submissions. We find useful his observation that section 6(1)(b) operates 'in its own special world'. It requires that account be taken of the 'notional term' (to pick up a phrase that we employed earlier in these reasons) of any lease that might otherwise be governed by the Act. When deciding whether such a lease falls within the category 'leases for a term of 25 years or more', one is required by the phrase in brackets to aggregate with its initial term any subsequent term or terms for which it may be extended or renewed at the lessee's option. The total thereby produced constitutes the 'notional term' of the lease (this being a concept of relevance only to section 6(1)(b)). 67If this notional term is 25 years or more, the Act does not apply, either to the initial lease or to any option leases that may subsequently arise. We agree with Mr Smallbone that the legislature should not be taken to have intended that a lease containing an option to renew would fall outside the RL Act during its initial term, but should come within its scope as soon as the option lease commenced. This would be a thoroughly illogical outcome. 68In reaching this conclusion, we take less account than the parties did of the implications of the word 'lease' being used in both the singular and the plural forms within section 6. Although Mr Murr's contention that an option lease must be regarded as a new lease, distinct from the lease from which it originated has much to recommend it, it does not determine the issue before us because section 6(1)(b) operates, as we interpret it, by attributing a notional term to the initial lease. The provision artificially inflates the initial term of the lease under consideration - on the facts before us, from five to twenty-five years. 69In fact, the crucial question in this case as to whether the singular should be taken to include the plural does not relate to the word 'lease' but to the phrase 'any term' in section 6(1)(b). In our opinion, both in common parlance and under section 8 (b) of the Interpretation Act, this should be construed as 'any term or terms'. 70We agree with Mr Smallbone that there is no necessary correlation between large retailers and leases for long periods of time. Mr Murr's argument that such a correlation exists and provides guidance as to the interpretation of section 6(1)(b) is not persuasive. Our orders 71We agree with the parties that the two Tribunal decisions suffered from the defects identified in their submissions. We also accept their claim that the second decision must be declared void on the ground that at the time when it was delivered the Tribunal was functus officio. But since (a) the substantive order that we would make is the same as was made in the Tribunal's first decision and (b) its error was of a procedural nature only, we see little point in formally setting aside this order and substituting an order which is in the same terms. In these circumstances, it is sufficient for us, having noted the defect in the procedure adopted by the Tribunal when preparing and delivering the first decision, to record our conclusion that its order was correct in law and to dismiss Pyrmont Point's appeal against this order. 72At the end of the appeal hearing, Mr Smallbone advised us that his client, if successful, would seek costs. He expressed the opinion that any costs order that we made would have to be based on clauses 6.6 and 6.7 of the Second Lease. We are not convinced of this. We incline to the view that since the Tribunal has jurisdiction to determine whether it possesses jurisdiction to hear and determine any application made to it under the RL Act, it must also have jurisdiction, under section 60 of the NCAT Act, with regard to the costs associated with the present hearing on the matter of jurisdiction. If this is correct, any application for costs must be decided in accordance with this section, which supersedes any contractual provision as to the costs of Tribunal proceedings contained in the relevant lease. 73We add the observation that since the parties agreed that the two Tribunal decisions were both defective, any claim by the successful Respondent that the Appellant should not have instituted appeal proceedings would seem difficult to substantiate. 74We give the following direction regarding costs. Any application by the Respondent for the costs of these appeal proceedings must be filed and served within 28 days of this decision. The Appellant must file and serve its submissions in reply within a further 28 days. The matter will then be decided 'on the papers', pursuant to section 50(2) of the NCAT Act. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar ******** 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 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: 16 December 2014