A recent NSW Court of Appeal case confirmed a failure of the
Market Review clause resulted in an Option Lease not coming into
existence – and hence, the tenant did not repudiate it. The
case is interesting in how the Retail Leases Act moderates market
review clauses, and also is a good reminder about the need for
clear agreement between the parties on all the essential terms
– an agreement to agree is not enforceable.
In the case, Pozetu Pty Ltd v Alexander James Pty Ltd [2016] NSW
205, the lease of a retail premises in Queen Street Woollahra
contained an option to renew with a market review. The lessee
(Alexander James Pty Ltd) exercised that option and the initial
lease expired. The parties didn't come to an agreement about
the rent, and the lessee continued paying the same rent it was
paying in the final year of the initial term. About 6 months into
the option term, the lessee gave notice to the lessor that it would
leave the premises and terminate the lease.
