Australia: Market rent reviews: is time of the essence?

Focus: Supreme Court of Queensland considers a market rent review dispute
Services: Property & projects
Industry Focus: Property

In the recent case of Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200, the Supreme Court of Queensland considered a dispute between a landlord and tenant over a market rent review. The case serves as an important reminder of the need for parties to appropriately diarise and act strictly within the timeframes set out in their lease.


In accordance with its lease, the landlord had given a notice to the tenant on 16 April 2014 (Landlord's Notice), setting out the landlord's assessment of the current annual market rent for the premises. If the landlord's assessment prevailed, the rent would be increased by 22% from $1,061,347 to $1,296,295 per annum from the market review date of 7 May 2014.

The tenant had 30 days to provide its own market assessment. If it failed to do so, then from the relevant market review date, the rent would be as stated in the Landlord's Notice. The 30-day period expired on 21 May 2014. The landlord did not receive any response from the tenant until 22 May 2014, when the tenant advised it was seeking its own market rent assessment. The tenant's market rent assessment was not provided to the landlord until 16 June 2014, almost two months after the tenant had received the Landlord's Notice.

Relying on the lease, the landlord took the view that the rent stated in the Landlord's Notice should be taken to be the market rent. The tenant did not agree, and sought a declaration from the Court that the Landlord's Notice was invalid.

Was the Landlord's Notice effective?

Despite the clear terms of the lease, the tenant argued that the Landlord's Notice was ineffective as it did not specifically advise the tenant of its right to obtain its own assessment within 30 days, or contain a warning that, if it did not do so, the landlord's assessment would be deemed to be the current market rent.

The tenant also argued that because the Landlord's Notice did not state that strict compliance with the 30-day limit was insisted upon, the landlord had in effect represented that the time limit was not an essential term.

The Court noted that the Landlord's Notice specifically referred to the premises, the lease over the premises, the particular clause in the lease relating to rent, the date upon which the new rent would take effect and the amount assessed by the landlord.

In considering the validity of a notice of this type, the Court applied the test in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. The Court noted that under that test, the question asked is whether "a reasonable recipient, who is credited with knowledge of the terms of the lease, and taking into account the surrounding circumstances, would have doubt as to the meaning of the notice or have regarded it as equivocal."1

The Court also looked to the case of Finishing Services Pty Ltd v Lactose Fresh Pty Ltd [2006] FCAFC 177 in considering whether the Landlord's Notice was required to specifically refer to the particular clause in the lease or specify the timeframe in which the tenant must act under that clause. The Court found that a landlord is not obliged in a notice to advise the tenant of its rights.

It was therefore held that the Landlord's Notice was "entirely fit for purpose, and the tenant's arguments about its alleged defects or shortcomings are without merit." 2

Is time of the essence under the lease?

The tenant clearly failed to comply with the terms of the lease as it did not give its assessment to the landlord until almost two months after receiving the Landlord's Notice.

The Court considered the nature and effect of the time limit imposed under the lease and whether it was of the essence, that is, whether the time limit was critical or could simply be ignored by the parties.

The Court cited the New South Wales decision of GR Mailman & Associates Pty Ltd v Wormald (Aust) (1991) 24 NSWLR 80 which held that, when a lease contains a mechanism which dictates the consequences of failing to do something within a certain period (for instance, the tenant not submitting its own market rent assessment within a certain period), it is indicative that time is an essential consideration and is "of the essence" for that purpose.

The Court held that the relevant clause in the lease was to be construed in the same way and that the time limits imposed were essential terms, requiring strict compliance by the tenant. The Court determined that, by its conduct, the tenant breached an essential term of the lease and could not escape the repercussions of the breach.

Was the Landlord's Notice unreasonable?

The tenant argued that a 22% rent increase was not a reasonable or genuine assessment of the kind that the lease required, and that the figure adopted by the valuer appeared to have incorrectly included a land tax component.

However, the lease did not state that any assessment of market rent must be "reasonable". It also did not suggest that the tenant was entitled to require the landlord to justify the reasonableness of its conduct in assessing the rent, particularly given the mechanism in the lease for the tenant to challenge the landlord's assessment within a specified time.

In order to determine whether the landlord acted reasonably in arriving at its market review figure, the Court determined that the language of the lease needed to be considered. The relevant market rent review clause in the lease provided for a negotiating process between the parties, which could be escalated to an independent umpire if the negotiating process remained unresolved. While the initial figure put forward by the landlord was higher than the tenant expected or considered reasonable, this was not itself evidence that the landlord had been unreasonable.

It was held that the landlord's assessment did not involve any breach of the lease terms, as there was neither an express or implied requirement in the lease that the parties exercise "reasonableness" in the assessments, nor any "persuasive authority to that end". Further, there was no evidence to suggest that the landlord acted unreasonably or other than honestly and in good faith. As the Court observed, "[t]he fact that the respective assessments differ is not, itself, evidence of unreasonableness – a conclusion more readily available in this case, where that possibility is specifically envisaged in the mechanism set up for rent determination under the lease." 3

The tenant's application failed and the new rent was determined to be the amount stated in the Landlord's Notice.


It is important for landlords and tenants to ensure that timeframes associated with rent reviews are appropriately diarised, to ensure deadlines are not missed and unnecessary disputes do not arise.


1Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200 at [16]
2Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200 at [18]
3Sentinel Asset Management Pty Ltd v Primo Moraitis Fresh Pty Ltd [2014] QSC 200 at [39]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.