Amberdown Pty Ltd v Goldana Investments P/l

[1999] NSWSC 743

Reported Decision: [1999] 9 BPR 17,125
[1999] NSW ConvR 55-913

New South Wales

Supreme Court

CITATION:	Amberdown Pty Ltd v Goldana Investments P/l & Anor [1999] NSWSC 743
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	2640/99
HEARING DATE(S):	8/7/99, 9/7/99
JUDGMENT DATE:	27 July 1999
PARTIES :	Amberdown Pty Limited (Plaintiff) Goldana Investments Pty Limited (First Defendant) Trung Hung Luong (Second Defendant)
JUDGMENT OF:	Bergin J

COUNSEL :	J Armfield (Plaintiff) D Officer QC/J McKenzie (First Defendant) T Kolomyjec (Second Defendant)
SOLICITORS:	CP White & Sons (Burwood) (Plaintiff) James Lee (First and Second Defendants)
CATCHWORDS:	Construction of a lease in which the permitted use clause contains the word "including"; Whether the permitted use clause is for a single conglomerate business or for separate businesses; Whether lessor in breach of covenant not to lease premises in same Shopping Centre for permitted use.
CASES CITED:	Marsal Pty Limited v Comptroller of Stamps (1982) ATC 4536; Dilworth v Commissioner of Stamps (1899) AC 99 at 105; Hemens v Whitsbury Stud Limited (1988) 1 AC 601 at 613; Burghard v Holroyd Municipal Council (1984) 2 NSWLR 164 at 169; YZ Finance Co Pty Limited v Cummins (1964) 109 CLR 395 at 401; Buckle v Josephs (1983) 47 ALR 787 at 792 & 196; Reynolds v Commissioner for Income Tax [1967] 1 AC 1 at 10; Hyde & Skin Trading Pty Limited v Oceanic Traders (1990) 20 NSWLR 310 at 313; Australian Broadcasting Commission v Australasian Performing Rights Association Limited (1973) 129 CLR 99 at 109 - 110; L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 at 261; Saheebolay v Woolfson (1925) A.D. 38; Kemp v Bird (1877) Vol V Ch 974; Stuart v Diplock (1889) 43 Ch 343; Fitz v Iles [1893] 1 Ch 77; Ashby v Wilson [1900] 1 Ch 66; Holloway Bros Ltd v Hill [1902] Ch 612; Brigg v Thornton [1904] 1 Ch 386; Openshaw v Kelly & Anor [1954] NZLR 1058; Lopes v Tesoriero (1982) VConvR 54-073; Rocci v Newman Nominees Pty Limited [1985] ANZConvR 147; Tarooba Nominees Pty Ltd v Stanurban Pty Ltd (Re Retail Tenancies Act 1986 (Victoria) Arb. Phipps unreported 30 April 1997);
DECISION:	Permitted use for separate businesses. pars 79-80

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J

TUESDAY 27 JULY 1999

2640/1999 - AMBERDOWN PTY LIMITED v GOLDANA INVESTMENTS PTY LIMITED & TRUNG HUNG LUONG

JUDGMENT

Background

1    The plaintiff has leased shop 9 at the Greystanes Shopping Centre (the Shopping Centre) since July 1988 when the then lessee, Clinical Chemicals Pty Limited, transferred its lease to the plaintiff (the initial lease). The permitted use of shop 9 in the initial lease was a pharmacy including a Post Office agency and photographics store and film processing.

2    The initial lease expired on 30 June 1989 and the plaintiff entered into a lease with Andhed Holdings Limited as lessor for the period 1 July 1989 to 30 June 1994 (the second lease). The permitted use in the second lease was a pharmacy including a post office agency and photographics store and processing agency.

3    At the expiration of the second lease the plaintiff entered into a further lease with Andhed Holdings Limited for the period 1 July 1994 to 30 June 1995 with an option to renew for a further period of five years. The permitted use in the third lease is a pharmacy including a post office agency and photographic store and processing agency. (the third lease) On 30 March 1999 the plaintiff exercised its option under the third lease by serving a Notice of Exercise of Option on the defendant on that day.

4    The defendant purchased the Shopping Centre on 23 May 1997.

5    From July 1988 when it became the lessee of shop 9 the plaintiff has operated as follows:

5.1 it has dispensed prescriptions and medicines, sold cough and cold medicines, general medicines, health care equipment, hair shampoo and other hair products, perfumes and make-ups, gifts and promotional items, vitamins and associated products, dental care products, sun glasses and sun care products, eye preparations, contact lens preparations, baby foods, nappies, surgical aids and supports, first aid treatments and wound care products;

5.2 it has operated as a Soul Pattinson agency selling products advertised by Soul Pattinson;

5.3 the post office has been conducted from a separate counter from which site services include the sale of stamps, posting of letters and payment of accounts; and

5.4 the photographic store and film processing has operated from a separate counter. The photographic store has stocked and sold cameras, films, batteries, photo albums, photo frames, passport photos and the processing of films.

6    The manner in which films have been processed has changed over the years. During the period 1988 to 1995 the plaintiff only offered an overnight service whereby the customer would leave the film with the plaintiff and it would be sent off-site for developing by a third party. The developed film would then be returned to the plaintiff for delivery to the customer on return the following day.

7    Since October 1995 the plaintiff has offered an additional service whereby films are developed on site with the use of a minilab which was purchased by the plaintiff in late 1995. The minilab was described in evidence as being just over a metre long by half a metre wide by about 1.2 metres high. There is also a photograph of the minilab in evidence.

8    The Shopping Centre consists of two supermarkets, Franklins and Flemings and a number of smaller shops including the plaintiff’s shop no 9, a video store, a Mitre 10 Hardware, a newsagent, two butchers, a takeaway food store, a bakery, a barber, a drycleaning store, an hairdresser, a seafood store, a St George Bank and a Commonwealth Bank, a Liquorland outlet, a healthfood store, a coffee shop and a delicatessen.

9    On 31 May 1999 Trung Hung Luong executed a lease over shop no 22 which is diagonally opposite the plaintiff’s store with a coffee shop between it and the shop directly opposite the plaintiff’s shop. The plaintiff was unaware of the execution of that lease.

10    However on 3 June 1999 the directors of the plaintiff observed a person in shop 22 which at that stage was vacant and undergoing renovation. A conversation occurred with that person who Ms Therese Cooper, a director of the plaintiff, has identified as Mr Luong although he denies ever speaking with her. From that conversation it became apparent to the plaintiff that Mr Luong intended to commence trading in the near future. The photograph in exhibit A shows the sign on the window of Shop 22 which read “Greystanes Instant Photo. Shop 22 Greystanes Shopping Centre. We will do all photographic services. Opening Soon”

11    The plaintiff filed a summons on 8 June 1999 seeking relief against the first defendant and by reason of various undertakings that were given to the Court by the parties the matter was fixed for final hearing on 23 June 1999. The matter came before me in the duty list on that day and the defendant was not ready to proceed to final hearing but an interlocutory hearing took place.

12 Mr Luong’s lease with the first defendant is a Retail Shop Lease within that meaning in the Retail Leases Act 1994. As the lease is for a term of 5 years it is required to be in the approved form and to be registered. (ss41 and 53 Real Property Act 1900)

13    I granted an injunction restraining the defendant from registering the lease executed by Mr Luong. Mr Luong was not a party to the proceedings at that time but gave evidence for the defendant in the interlocutory hearing . I then set the matter down for final hearing on 8 and 9 July 1999.

14    On 8 July 1999 on the application of Mr Luong, supported by the first defendant but opposed by the plaintiff, I joined Mr Luong as the second defendant in these proceedings. The second defendant indicated that he was ready to proceed and wished to be joined to ensure finality of this litigation.

Main Issue

15    The main issue involved in these proceedings is the interpretation of the third lease between the plaintiff and the first defendant and in particular whether the granting of the lease to Mr Luong is in breach of the first defendant’s covenant in the third lease.

16    The relevant covenants in the third lease are as follows:

Clause 6:
The lessee will not without the consent in writing of the lessor first had and obtained do or permit or suffer to be done any of the following:
(a) use the premises of any part thereof otherwise than for a pharmacy including a post office agency and photographic store and processing agency;
(b) sell or permit the sale of any intoxicating liquor on the premises.
Clause 55:
The lessor shall not during the term hereby granted or during the term granted pursuant to the option contained herein lease any other premises within the Greystanes Shopping Centre for the use permitted hereunder.

17    Clause 13.1 of the lease executed by the second defendant provides:

The Lessee will use the Premises only for the permitted use and will at all times required by this Lease conduct its business for the permitted use in accordance with best practice and in a reputable manner.

18    The permitted use as contained in item 12 is:

Retail sale of cameras and camera accessories (including duty and tax free), frames, albums, batteries, photo processing, laser printing, colour copying, instant passport photos, laminating and fax bureau.
Plaintiff’s approach

19    The plaintiff submits that on its true construction cl 55 prohibits the first defendant from granting a lease of a pharmacy, a post office agency, a photographic store or a processing agency within the Shopping Centre. It is submitted that the words “is permitted hereunder” should be construed as including all of the uses contemplated by cl 6.

20    It is submitted that cl 6 expressly provides for more than one use. In support of the submission that “use” should be read as “uses” in the light of the context in which it appears, reliance was placed on cl 1 of the lease which provides:

Words importing the singular number shall include the plural number and vice versa.

21 Additionally it is submitted that cl 6 is not drafted so as to permit the operation of a pharmacy as the principal business being carried on with the other uses being part of it. The plaintiff submits that the word “including” should be construed as “in addition to” and the restriction in cl 55 equally applies to a lease permitting any one of those uses. (Marsal Pty Limited v Comptroller of Stamps (1982) ATC 4536)

22    The plaintiff submits that a contrary construction would permit the lessor to derogate from its grant by permitting the establishment of businesses in competition with the businesses of the plaintiff. It is submitted that such a result is contrary to the intention of the parties.

First Defendant’s approach

23    The first defendant submits that the only permitted use to be found in cl 6(a) is a conglomerate pharmacy. It submits that the word “including” is a word intended to expand the ordinary meaning of pharmacy and to include within it concepts not embraced by the ordinary meaning of the word.

24 The first defendant placed reliance on the following passage in Dilworth v Commissioner of Stamps (1899) AC 99 at 105:

The word “include” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include.

25 The defendant also referred me to those cases in which Dilworth v Commissioner of Stamps had been referred to with approval. Hemens v Whitsbury Stud Limited (1988) 1 AC 601 at 613; Burgchard v Holroyd Municipal Council (1984) 2 NSWLR 164 at 169; YZ Finance Co Pty Limited v Cummins (1964) 109 CLR 395 at 401; Buckle v Josephs (1983) 47 ALR 787 at 792 & 796; and Reynolds v Commissioner for Income Tax (1967) 1 AC 1 at 10.

26    In reliance upon these authorities the first defendant submitted that the use is that of a pharmacy albeit that the pharmacy is not restricted to the sale of drugs, medicines and the like but can include the other elements of the photographic store, the post office agency and the processing agency. However it is submitted that it must still answer the description of a pharmacy.

27    In testing this submission the first defendant points to the converse of the situation and submits that the plaintiff would not be permitted to use the premises only as a photographic store because it could not in any sense be described as a pharmacy.

28    It is submitted that the term photographic store within cl 6(a) should be interpreted as being part of the pharmacy which sells photographic equipment and accessories. Additionally it is submitted that according to its ordinary meaning the clause does not permit processing of film on the premises and that the contrary construction is militated against by the presence of the word “agency”.

29    On the one hand the plaintiff submitted that each of the businesses of pharmacy, post office agency, photographic store and processing agency are permitted uses within the lease and the first defendant is prohibited from granting a lease for any of these uses in the Shopping Centre during the term of the third lease as extended by the exercise of the option. On the other hand the first defendant submitted that the only permitted use is the conglomerate pharmacy and that it is not prohibited from granting a lease for a permitted use of post office agency, photographic store or processing agency.

Rules of Construction in Construing the Terms of the Lease

30 In construing the terms of this lease the fundamental rule of construction requires the Court to give the words within it the natural meaning that they bear. (Hyde & Skin Trading Pty Limited v Oceanic Traders (1990) 20 NSWLR 310 per Kirby P (as His Honour then was) at 313.)

31 An authoritative enunciation of the general principle to be applied is contained in the following portion of the judgment of Gibbs J (as His Honour then was) in Australian Broadcasting Commission v Australasian Performing Rights Association Limited (1973) 129 CLR 99 at 109 - 110:

It is trite law that the primary duty of the Court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts and the words of every clause must if possible be construed so as to render them all harmonious one with another.

32    The plaintiff submits that if there is ambiguity in the wording of the lease then the clause should be construed against the lessor. Gibbs J in Australian Broadcasting Commission v Australian Performing Rights Association also said at p 109:

…if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust.

33 Lord Wilberforce in L Schuler AG v Wickman Machine Tool Sales Ltd (1974) AC 235 said at 261:

…ambiguity is not to be equated with difficulty of construction, even difficulty to a point where judicial opinion as to meaning has differed.

34 I have been referred to numerous cases in which lessees have sought to prevent lessors from either leasing and/or permitting the use of premises similar to the permitted use of the lessee’s premisesThe business of an eating house in Kemp v Bird (1877) Vol V Ch 974; a ladies outfitter as against hosiers and drapers in Stuart v Diplock (1889) 43 Ch 343; a coffee house keeper and a tea and coffee dealer intending to sell light refreshments in Fitz v Iles [1893] 1 Ch 77; a fruiterer/greengrocer/corn-chandler against an oil, colour and Italian warehouse selling oranges, lemons, apples etc in Ashby v Wilson [1900] 1 Ch 66; a tailor against another tailoring business in Holloway Bros Ltd v Hill [1902] Ch 612; an artistic and heraldic stationer against a bookseller and stationer in Brigg v Thornton [1904] 1 Ch 386; tea and refreshment rooms against tea rooms only in Saheebolay v Woolfson (1925) A.D. 38; a grocery against a dairy and home cookery business in Openshaw v Kelly & Anor [1954] NZLR 1058; a grocery and delicatessen shop selling kitchenware, hardware, crockery, china and glassware in Lopes v Tesoriero (1982) VConvR 54-073; and a butcher against a supermarket selling meat in Rocci v Newman Nominees Pty Limited [1985] ANZ ConvR 147.. Only one of the cases to which I have been referred involves a clause in a lease using the word “including” in the permitted use clause Rocci v Newman Nominees Pty Limited [1985] ANZ ConvR 147..

35    The plaintiff relies upon the South African decision in Saheebolay & Woolfson (1925) A.D. 38 as being on all fours with the present case. The plaintiff’s lease contained a covenant that the lessor would not sub-let any portion of the premises in the immediate neighbourhood for use as a grocery store, or “tea and refreshment rooms”.

36    The proposed lease under challenge prevented the use of the premises as “tea and refreshment rooms” but permitted the use of “retail dealer and tea room”. The question that arose for decision was whether the restrictive provisions in the earlier lease prevented the letting of the neighbouring premises as a tea room only, or whether it prevented the letting of the dual purpose of tea and refreshment rooms.

37    However that case turned on an interpretation of some relevant local by-laws, in particular as to whether separate licences could be obtained for tea rooms or refreshment rooms. Innes CJ said:

This is not an ordinary case of overlapping businesses, and the meaning of the prohibitive clause.. seems quite clear. It was manifestly drawn with an eye on the local by-laws…. A tea room business was regarded as distinct and separate from a refreshment room business. There was and is no such licensed business as that of carrying on a tea and refreshment room . There could have been no object therefore in the insertion of the words “tea and” in the restrictive clause, except to indicate that a tea room business alone was to be prohibited as well as a refreshment room business which included the sale of tea.

38 The first defendant relied upon Stuart v Diplock (1889) 43 Ch 343 as authority for the proposition that shop 22, the subject of the executed lease between the first and second defendant, is clearly not a pharmacy and that merely because the business sells some articles which may also be sold by the plaintiff does not make it the same business as that of the plaintiff so as to breach any covenant.

39    Stuart v Diplock was a case in which the plaintiff’s lease permitted the premises to be used for “ladies’ outfitting, juvenile outfitting, or sale of baby linen”. The business of the defendant was that of hosiers and drapers. Lord Justice Bowen said at 352:

The business of a ladies’ outfitter is one business - the business of a hosiery is a distinct business. The two businesses overlap each other by having four classes of articles the sale of which is common to them both. But a covenant not to carry on the business of a ladies’ outfitting is not broken by carrying on the business of a hosier, and the hosier commits no breach by selling some articles which are usually sold by a ladies’ outfitter, if he does it in the ordinary course of the business of a hosier.

40    Cotton LJ, after observing that the nature of the business of a ladies’ outfitter consisted of selling all articles of underclothing for ladies, and other articles which were not underclothing, said at p350-351;

If it could be made out that the sale of these articles made up the business of a ladies’ outfitter it would be quite another question, but it does not follow, because it is necessary for a ladies’ outfitter to sell certain articles, that everyone who sells these articles is carrying on the business of a ladies outfitter.

41    Drawing upon these comparisons the first defendant compares the pharmacy - albeit a conglomerate pharmacy - in this case with the retail sale of cameras etc as contained in the lease executed by the second defendant. The first defendant submits that the second defendant would be merely selling some of the items that the photographic store component of the conglomerate pharmacy would be selling; that the processing of film would be merely providing some services that the conglomerate pharmacy is providing and that this overlap would not be in breach of the covenant in cl 55 of the plaintiff’s lease.

42    I am of the view that this submission is good only if I accept the interpretation of clause 6 for which the first defendant contends.

Settling an ambiguity

43    I am of the view that this case does not involve a mere difficulty in construction of clause 6. The clause is open to more than one meaning. It is thus ambiguous. In aid of settling the ambiguity and endeavouring to discover the intention of the parties cl 54 of the plaintiff’s lease may assist. It provides:

The lessor acknowledges that for the purposes of the lease the pharmacy, photographic store and film processing agency shall be conducted by Therese Marie Cooper, Anne Maree McCabe and Robyn Anne Whitehead or their nominee or assignee being a registered Pharmacist and the post office agency shall be conducted by Anne Maree McCabe or her nominee or assignee being a person approved by Australia Post provided however that nothing in this clause shall effect the liability, duties or obligation on the part of the lessee under this lease.

44    None of the parties referred me to this clause during the hearing of the matter. After I reserved my judgment I wrote to counsel for each of the parties referring them to the clause and inviting any submissions they wished to make as to the affect , if any, of cl 54 on the interpretation of cl 6. The second defendant did not respond to that invitation. The final submissions of the plaintiff and the first defendant were received on 19 July 1999.

45    The plaintiff submitted that this clause supports the interpretation of cl 6 for which it contends. It submitted that cl 54 envisages that the lessee will carry on the separate uses in the premises which, it claims, is borne out by the acknowledgment in cl 54 that particular persons conduct the particular businesses permitted under the lease.

46 The first defendant submitted that cl 54 does not really assist in the construction of cl 6. It submitted that the evident purpose of cl 54 is to be found in cl 10 of the third lease and the Pharmacy Act 1964.

47 Clause 10 of the third lease is a clause dealing with assignment and prohibits the lessee from assigning, sub-letting or transferring any portion of the premises except in certain circumstances with the prior written approval of the lessor. It is submitted that the plaintiff could not carry on the business of a pharmacy because such had to be carried on by a registered pharmacist within the meaning of the Pharmacy Act 1964. Therefore as the permitted use under the third lease must be conducted by licensed natural persons, clause 54 was merely acknowledging such a requirement.

48    There is no such requirement in relation to the conduct of the photographic store or the processing agency. The first defendant submitted that cl 54 may be explained by a perceived need flowing from the Licence Agreement with Soul Pattinson for the registered pharmacist to conduct the “pharmacy, photographic store and film processing agency”. The particular licence relied upon for this inference did not come into force until well after the execution of the third lease. I am asked to infer that there were similar provisions in place because the plaintiff has always operated as a Soul Pattinson agency.

49    This raises a matter which the plaintiff raised originally as an alternative submission. It submitted that if I was against it in relation to separate uses then I should find that the concept of a pharmacy had always included film processing. In support of this submission I was referred to an interim award of Arbitrator Phipps in Victoria in an Arbitration under the Retail Tenancies Act 1986 (Victoria) in Tarooba Nominees Pty Ltd v Stanurban Pty Ltd.(unreported 30 April 1997)

50    In that case a dispute had arisen as to whether the tenant who had a lease with a permitted use of a pharmacy was in breach of that clause by reason of the installation of a minilab for the development of photographic film. The Arbitrator found that the traditional meaning of pharmacy included a service for the processing of film.

51    I am not convinced that the process by which the Arbitrator reached his conclusion is one that is so sound that I could rely upon it for the purpose of interpretation of a clause in the present case. The Arbitrator refused to allow any evidence as to industry usage but seemed to reach the conclusion that it was simply his “view” that a pharmacy was commonly understood to include photo processing.

52    If I were to accept the submission that a pharmacy business always includes a service for film processing then it may be that the words “processing agency” in cl 6 are mere surplusage. However if I were to find that to be the case then the defendant’s submission in reliance upon Stuart v Diplock (supra) would be successful.

53    The plaintiff and the first defendant each relied upon the history of cl 6 to support their respective positions. In the first lease there is a typewritten part of the clause that says “Pharmacy including a Post Office agency.” and after the full stop there appears in handwriting the words “AND photographics store and film processing.” There is then apparently the word “agency” which appears to have a line through it. There is some debate whether the copy is just difficult to read and the word is not crossed out. The second lease is the same as the third except that the word “photographics” in the second lease is “photographic” in the third lease.

54    I am not particularly assisted by this history although on its own without the benefit of cl 54 it may tend to suggest to me that if anything was to be included in the pharmacy and not have a separate existence it would have been the post office agency. However I am of the view that cl 54 does assist with the interpretation of cl 6 and I need not dwell on this history.

55    In my view clause 54 supports the plaintiff’s interpretation of cl 6(a). The three businesses, that of pharmacy, photographic store and film processing agency are to be conducted by the people named and the other business, that of the post office agency, is to be conducted by another person or her nominee. This clause does not refer to the photographic store and the processing agency being “included” in the pharmacy. Neither does the clause refer to the post office agency as being “included” in the pharmacy.

56    I am of the view that the intention of the parties was that each of these businesses was permitted to be conducted in the premises. I find therefore that a lease permitting any of those uses within the Shopping Centre during the term of the third lease as extended by the exercise of the option would be in breach of cl 55 of the lease.

Photographic store and processing agency

57    The question then arises as to whether the permitted use in the lease executed by the second defendant is a use of “photographic store” or “processing agency”.

58    The first defendant raises what it claims to be an important point of distinction between the plaintiff’s lease which it claims only permits the processing of film off-site and the second defendant’s lease which permits the processing of film on-site.

59    The defendant submits that a “photographic store” cannot according to its ordinary meaning involve processing of film on the premises. It also submits that the use of the word “agency” when coupled with the word “processing” means that the plaintiff cannot process films on-site.

60    The plaintiff has been processing film on-site since November 1995 when the minilab was installed. The defendant claims that it was not aware of the existence of the minilab. Mr Hua, the managing agent, although inspecting the Shopping Centre approximately twice per week for about two years, gave evidence that he did not notice the minilab in the premises. He also gave evidence that he did not notice the advertisements on the window of shop 9 for a one (1) hour service for photo development. Nor did he see the sandwich board in the common area outside shop 9 advertising the one (1) film development service. Although it may seem incredible that a diligent managing agent would not see such things I believe that Mr Hua did not notice these matters.

61    The first defendant served a s129 Notice upon the plaintiff on 8 June 1999 citing the presence and use of the minilab as a breach of the plaintiff’s lease. It claims that its written consent was required before film processing on site could become a permitted use under the lease. There is no issue between the parties that the first defendant’s written consent was not obtained. The validity of the Notice will depend upon whether I find that the development of film on-site was outside the permitted use.

62    What then is a “photographic store”? The word “photographic” is a derivative of the word “photograph” which itself is defined as a “picture made using a camera, in which an image is focused on to film or other light-sensitive material and then made visible and permanent by chemical treatment”.(The New Oxford Dictionary of English)

63    There is nothing in the evidence to convince me that a photographic store should be given a limited meaning of selling only the implements to take a photograph (cameras and films) or the items in which to display photographs (albums and frames) as opposed to the provision of the service which completes the production of the photograph - its development.

64    I am of the view that the use of “photographic store” in the plaintiff’s lease permits the development of film on-site by the plaintiff. The other service of sending film away for processing by Soul Pattinson is permitted by the use “processing agency”. However I am also of the view that the plaintiff would be entitled to develop such films on-site as agent for Soul Pattinson. The use of the term “agency” does not require the service to be off-site.

65    The definition of “agency” in the Macquarie Concise Dictionary is “a commercial or other organisation furnishing some form of service for the public”; “the place of business of an agent”; “the business of an agent entrusted with the business of another”. The New Oxford Dictionary of English defines “agency” as “business or organisation established to provide a particular service, typically one that organises transactions between two other parties”.

66    There is the further interpretation available to the plaintiff that by reason of the terms of cl 54 the persons named as conducting the business of “film processing agency” are doing so as agent for the lessee - the plaintiff. This interpretation would also accommodate the processing of films on-site.

67    I am of the view that the permitted use in the lease executed by the second defendant as contained in Item 12 is, but for the reference to fax bureau, the use of the premises for the same businesses as those of the plaintiff of photographic store and processing agency. I am satisfied that they are not merely overlapping as referred to in Stuart v Diplock.

68    In all the circumstances I am of the view that the first defendant would be in breach of cl 55 of the third lease if it leased other premises for the use as permitted in the lease executed by the second defendant.

69    In these circumstances I am also of the view that the s129 Notice is not valid as the presence of the minilab is part of the equipment for the permitted use in the lease.

The second defendant

70    The second defendant gave evidence that he did not have a conversation with the director of the plaintiff and that he was not aware of the dispute between the plaintiff and the first defendant before he completed the fit-out of shop 22.

71    The main thrust of the second defendant’s submission, if I understand it correctly, was that if the plaintiff was successful there should be no injunction granted and that damages is an appropriate remedy.

72    I am satisfied that Mr Luong’s recollection is not accurate as to when he became aware of the dispute between the plaintiff and the first defendant. In particular I accept that he continued to renovate and fit out shop 22 after he was aware of the dispute. I accept the evidence of the plaintiff and in particular I accept that the photograph in Exhibit A correctly depicts the state of repair and fit-out of shop 22 as at 17 June 1999.

73    I am satisfied on the evidence that the second defendant was aware of the dispute that had arisen between the plaintiff and the first defendant before he completed the fit-out of shop 22 and that he did so in the knowledge that the first defendant may be restrained from registering the lease executed on 31 May 1999.

Remedies

74 The first defendant relied upon Brigg v Thornton (1904) 1 Ch 386 to suggest that the plaintiff is not entitled to injunctive relief because it has not brought any action against the second defendant.

75    In that case the Court found that the second tenant (Mr Grant) had been carrying on the business of a stationer in breach of the covenant between the defendant and the plaintiff. Lord Justice Vaughan Williams said at p 392:

Now I think that, if information had come to the plaintiff while this letting to Grant was threatened or in negotiation, probably the plaintiff could have applied to the Court for an injunction, not only to restrain Messrs Thorton from letting to Grant, but to restrain Grant from taking these premises from Messrs Thorton in breach of this covenant; and after the letter to Grant by Messrs Thorton had become an accomplished fact, the plaintiff could, in my judgment, have asked the Court for a declaration that the letting was a bad letting and that declaration would have bound both Messrs Thornton and Grant; but that is not what happened in this case.. The truth of the matter is, that the plaintiff has been content to treat the letting to Grant as an existing fact and not to impeach it.

76 It is true that the plaintiff only seeks injunctive relief against the first defendant registering the lease between it and the second defendant or any other lease for the permitted uses under the plaintiff’s lease. However the plaintiff did not treat the lease as an existing fact which was not to be impeached. The plaintiff claims that the second defendant does not obtain an enforceable lease under the Retail Leases Act 1994 until it is registered. It does impeach it as it seeks the injunction preventing its registration.

77 The plaintiff was candidly conscious of the fact that it did not have a lease in which the defendant had covenanted not to “permit or suffer” other premises in the Shopping Centre conducting the businesses permitted in the plaintiff’s lease. (Holloway Bros. Limited v Hill (1902) 2 Ch 612).

78    The plaintiff submits it is entitled to an injunction to restrain the breach of the express negative stipulation within cl 55 (see Meagher Gummow & Lehane.Equity Doctrine & Remedies 3rd Ed. Par 2138-2139). I agree.

79    In the circumstances of my findings I will make the declarations and orders as contained in the plaintiff’s Amended Summons in paragraphs 1, 2(a), 2(b); 3, 4, 5, 6(a), 6(b),6 (c) and 6 (e). I will also make an order for an inquiry to be held as to damages and refer such inquiry to a Master of the Equity Division of this Court. The question of the plaintiff’s entitlement to interest and quantification thereof should await the outcome of that inquiry.

80    The first defendant’s cross claim is dismissed and I order the first defendant to pay the plaintiff’s costs of the proceedings. The parties should bring in short minutes reflecting these orders.

81    The second defendant made application to be joined in the proceedings so that there would be finality to the litigation. The first defendant in support of the second defendant’s application submitted such joinder was necessary to “control” the second defendant and have “orders made against him personally”.

82    In the light of the basis of the joinder of the second defendant, failing agreement between the parties, I will re-list the matter to hear argument in relation to the appropriate orders, if any, to be made against the second defendant.

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