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Alcatel Australia Ltd v Scarcella

Alcatel Australia Ltd v Scarcella

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CITATION: Alcatel Australia Limited v Scarcella & Ors [2001] NSWCA 401

FILE NUMBER(S): CA 40218/01

HEARING DATE(S): 21 September 2001

JUDGMENT DATE:
13 November 2001

PARTIES :

Alcatel Australia Limited - Appellant
Francesco Scarcella - First Respondent
Helen Scarcella - Second Respondent
Rocky Scarcella - Third Respondent

JUDGMENT OF: Beazley JA at 1; Stein JA at 2; Davies AJA at 82

LOWER COURT JURISDICTION : Supreme Court - Equity Division

LOWER COURT
FILE NUMBER(S) : EQ 3368/95

LOWER COURT
JUDICIAL OFFICER : Austin J

COUNSEL: P M Biscoe QC/S J Motbey - Appellant
V R W Gray - Respondents

SOLICITORS: Quinn & Quinn - Appellant
Henshaws Solicitors - Respondents

CATCHWORDS: CONTRACT - LEASE - rent review clause - base rent - valuer to assume a hypothetical market - whether valuer entitled to have regard to real market - whether valuer could conclude there was no market - approach to be taken in construction of rent review clause - CONTRACT - LEASE - claim before referee - whether party entitled to withdraw claim - Anshun estoppel - no final orders - CONTRACT - LEASE - repair covenant - corroded window frames - referee's report - whether reasonably minded owner would repair or replace - exclusion of replacement as an option by referee - whether trial judge correct to exclude aspects of referee's report. - EVIDENCE - credit - preference of referee - expert evidence - D

LEGISLATION CITED: Supreme Court Rules

CASES CITED:
Alcatel Australia Limited v Scarcella (1998) 44 NSWLR 349
Basingstoke and Deane Borough Council v Host Group Ltd [1988] 1 WLR 348
British Airways PLC v Heathrow Airport Ltd [1972] 1 EGLR 141
Dennis & Robinson Ltd v Kiossis Establishment (1987) 282 EG 857
F. R. Evans (Leeds) Ltd v English Electronic Co Ltd (1977) 36 P & CR 185
Graham v The Markets Hotel Pty Ltd (1943) 67 CLR 567
Jeffries v O'Neill (1987) 1 WLR 348
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589
Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549

DECISION: 1) Appeal allowed in part. 2) Order 4 of Austin J's judgment set aside. 3) Declaration that the appellant was not in breach of cl 2(c)(i) of the lease with respect to items 145 and 146 of the Notice of Default be substituted. 4) Each party to bear its own costs of the appeal. 5) Agreed Short Minutes of Order to be filed within 7 days.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40218/01
EQ 3368/95

BEAZLEY JA

STEIN JA

DAVIES AJA

Tuesday, 13 November 2001

ALCATEL AUSTRALIA LIMITED v Francesco SCARCELLA & Ors

The appellant is the lessee of a custom built commercial building at Alexandria. The respondents are the lessors of that property, and there is a lease in place between the parties, dated 15 December, 1969, with a term of 50 years. Three issues were raised on appeal. The first was the construction of a rental…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] NSWCA 401
Decision Date: 13 November 2001

CaseChat Overview and Summary

Alcatel Australia Ltd (the appellant) and Scarcella (the respondent) were parties to a commercial lease agreement. The dispute concerned the interpretation and application of a rent review clause within the lease, specifically whether a valuer appointed under the clause was entitled to consider the actual market conditions when determining the hypothetical market rent, and whether the valuer could conclude that no market existed for the premises. Additionally, the case involved a claim before a referee regarding a repair covenant concerning corroded window frames, and whether the referee had erred in excluding replacement as a repair option.

The primary legal issues before the court were: (1) the proper construction of the rent review clause, particularly the extent to which a valuer could have regard to the real market when assessing a hypothetical market rent; (2) whether the valuer was entitled to conclude that there was no market for the premises; (3) the application of *Anshun* estoppel in relation to a claim withdrawn before a referee; and (4) whether the referee's exclusion of replacement as a repair option for corroded window frames was correct, and consequently, whether the trial judge erred in upholding that exclusion.

The court considered the principles of contractual construction in relation to rent review clauses, emphasizing that the language of the clause itself was paramount. It was held that a valuer appointed to determine a hypothetical market rent was entitled to have regard to the real market to inform their assessment of that hypothetical market. The court also addressed the *Anshun* estoppel principle, noting its application to claims that could and should have been brought in earlier proceedings. Regarding the repair covenant, the court examined the meaning of "repair" in the context of the lease and the condition of the window frames, considering whether a reasonably minded owner would repair or replace them.

The appeal was allowed in part, with Order 4 of the trial judge's judgment being set aside and a declaration substituted to the effect that the appellant was not in breach of a specific clause of the lease concerning certain items in a Notice of Default. Each party was ordered to bear their own costs of the appeal.

Orders

Orders of the court

1) Appeal allowed in part. 2) Order 4 of Austin J's judgment set aside. 3) Declaration that the appellant was not in breach of cl 2(c)(i) of the lease with respect to items 145 and 146 of the Notice of Default be substituted. 4) Each party to bear its own costs of the appeal. 5) Agreed Short Minutes of Order to be filed within 7 days.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Alcatel Australia Limited v Scarcella & Ors [2001] NSWCA 401
FILE NUMBER(S):	CA 40218/01
HEARING DATE(S):	21 September 2001
JUDGMENT DATE:	13 November 2001
PARTIES :	Alcatel Australia Limited - Appellant Francesco Scarcella - First Respondent Helen Scarcella - Second Respondent Rocky Scarcella - Third Respondent
JUDGMENT OF:	Beazley JA at 1; Stein JA at 2; Davies AJA at 82

LOWER COURT JURISDICTION :	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	EQ 3368/95
LOWER COURT JUDICIAL OFFICER :	Austin J

COUNSEL:	P M Biscoe QC/S J Motbey - Appellant V R W Gray - Respondents
SOLICITORS:	Quinn & Quinn - Appellant Henshaws Solicitors - Respondents
CATCHWORDS:	CONTRACT - LEASE - rent review clause - base rent - valuer to assume a hypothetical market - whether valuer entitled to have regard to real market - whether valuer could conclude there was no market - approach to be taken in construction of rent review clause - CONTRACT - LEASE - claim before referee - whether party entitled to withdraw claim - Anshun estoppel - no final orders - CONTRACT - LEASE - repair covenant - corroded window frames - referee's report - whether reasonably minded owner would repair or replace - exclusion of replacement as an option by referee - whether trial judge correct to exclude aspects of referee's report. - EVIDENCE - credit - preference of referee - expert evidence - D
LEGISLATION CITED:	Supreme Court Rules
CASES CITED:	Alcatel Australia Limited v Scarcella (1998) 44 NSWLR 349 Basingstoke and Deane Borough Council v Host Group Ltd [1988] 1 WLR 348 British Airways PLC v Heathrow Airport Ltd [1972] 1 EGLR 141 Dennis & Robinson Ltd v Kiossis Establishment (1987) 282 EG 857 F. R. Evans (Leeds) Ltd v English Electronic Co Ltd (1977) 36 P & CR 185 Graham v The Markets Hotel Pty Ltd (1943) 67 CLR 567 Jeffries v O'Neill (1987) 1 WLR 348 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549
DECISION:	1) Appeal allowed in part. 2) Order 4 of Austin J's judgment set aside. 3) Declaration that the appellant was not in breach of cl 2(c)(i) of the lease with respect to items 145 and 146 of the Notice of Default be substituted. 4) Each party to bear its own costs of the appeal. 5) Agreed Short Minutes of Order to be filed within 7 days.