The meaning of "having regard to" and the problem of being prescriptive

The phrases "have regard to" and "having regard to", are often used in construction and project documents, including as limitations on discretions such as decisions to grant or withhold consent or as inputs into the valuation of extensions of times or variations. The NSW Court of Appeal recently had cause to consider these phrases in the context of an expert determination about the operation of a rent review clause. The decision serves as a reminder that where a principal does not intend criteria in a contract to be exhaustive, this should be plainly set out.

The decision in Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205 involved Strike Australia Pty Ltd who sub-leases from Data Base Corporate Pty Ltd premises at the King St Wharf in Sydney. Strike gave notice to Data Base that it was exercising the first option to renew their rent agreement. The key contentious provision in the sub-lease stated "the valuer must have regard to market rents for comparable premises in the vicinity of the Premises". The valuer in determining the rent had regard to four comparable properties, two in the Sydney CBD, one in Macquarie Park and one in Bondi Beach.

The primary judge held that valuer had not carried out his determination in accordance with the sub-lease. Strike appealed on three grounds. Strike submitted that the determination of market rent is an inherently discretionary exercise and that the sub-lease did not explicitly state what comparable premises the valuer can consider.

There was a split between the Court of Appeal over an interpretation issue whether the valuer ought to have taken into account comparable properties. Justices Basten and Ward said that the identification in the clause of specified properties for the expert to consider operated as an implied exclusion of other properties and they heavily favoured the premise that commercial contracts should be construed by reference to the language used by the parties to the contract. President Bell considered whether the expression "have regard to" means on proper construction "only have regard to" and found that it did not. President Bell took the natural meaning of "have regard to" in its context (including the nature of valuation and the role of experts) to mean that the list of properties was not exhaustive.

However, the Court was unanimous in finding that the other premises taken into account by the valuer were objectively outside "the vicinity" of the premises and the appeal was dismissed.