Belperio & Ors v Linehaul Holdings & Anor No. DCCIV-01-53

ROSARIO, ASSUNTA, DONATO & ROSA MARIA BELPERIO
v
LINEHAUL HOLDINGS PTY LTD
and
RICHARD ANDREWS
[2003] SADC 118
Judge Lunn
Civil

In this action the plaintiffs have sued the 1^st defendant for $74,207 plus GST for alleged repudiation and breach of an agreement to lease premises. The plaintiffs have sued the 2^nd defendant on his alleged guarantee of this liability of the 1^st defendant.
During the course of the trial I made it plain to the parties that the issues were to be confined to those raised by the pleadings. However, the evidence ranged far and wide over many topics, much of which was only justified as relating to credit. In the following paragraphs I make my findings on the relevant facts on the balance of probabilities based on my conclusions about the evidence. There were a number of issues raised in the trial to which I need not refer as they are not related to any relevant findings.
In 1998 the plaintiffs bought a commercial property at Lot 11, Hawker Road, Burton (“the Hawker Road property”). It was about 2,000² metres in area and had three sheds and some offices on it. They retained Lin Andrews Real Estate Northern as their agent to lease out this property. (This agent is not related to the 2^nd defendant who coincidentally has the same surname.) The manager of that real estate company was Kevin Hodges who conducted all of the relevant dealings.
The 1^st defendant operates a large trucking business. The 2^nd defendant is a director of it and its apparent controller. Over the past few years the 1^st defendant has substantially increased its business by taking over various other trucking companies.
On 18 March 1999 the parties entered into a written agreement to lease (“the Agreement”) which was prepared by Hodges by which the plaintiffs agreed to lease the Hawker Road property to the 1^st defendant for two years as from 1 April 1999 at a monthly rental of $5,461 which was subject to increase for the second year. The Agreement provided that the 1^st defendant was to execute a formal lease prepared by the plaintiffs’ solicitors within seven days of its submission to the 1^st defendant, but any failure to execute it was not to prejudice the binding nature of the Agreement. No such formal lease was ever executed. Thus the legal relations between the parties were governed solely by the Agreement and the general law. The lease remained only an equitable lease, but that is of no significance in the context of the matters in dispute.
Clause 17 of the Agreement provided:

“17. GUARANTEE
The persons (if any) mentioned as guarantors hereunder HEREBY GUARANTEE for no consideration whatsoever the payment by the Lessee of the rent and any other monies herein referred to and the performance and observance by the Lessee of the covenants terms and conditions stated in and implied by this Agreement and the performance and observance by the Lessee of the covenants terms and conditions which are to be embodied in the formal lease agreement to be prepared by the Lessor’s solicitors.”

The 2^nd defendant was named as the only guarantor. The execution clauses of the Agreement were as follows:
“SIGNED by the said LESSOR’S  )       (R & A BELPERIO)
(Per: R Belperio)….
Authorised AGENT in the presence of:         )       (D & M BELPERIO)
(Per D Belperio)…..
………..(Kevin Hodges)…………..
SIGNED SEALED AND DELIVERED by               )(LINEHAUL AUST PTY LTD)
The said Lessee in the presence of:  ) ……(Richard Andrews)……..
………..(Kevin Hodges)……………
SIGNED SEALED AND DELIVERED by               )
The said Guarantors in the presence of:                  )        (Richard Andrews)……….
………..(Kevin Hodges)…………….”
(The passages shown in ( ) are in handwriting and the rest was typed.)
The plaintiffs claim that the Agreement operated as a deed binding the 2^nd defendant but he disputes that. In the light of my other findings, I need not adjudicate on this point.
On 23 March 1999 conveyancers acting for the plaintiffs sent a lengthy formal Memorandum of Lease and Guarantee to the defendants for their execution. Because of the disputes to be mentioned in the next paragraph the defendants did not execute this document and the plaintiffs took no action in respect of their failure to do so.
On 1 April 1999 the 1^st defendant occupied, and commenced running its business activities from, the Hawker Road property. Thereafter there were a number of difficulties and disputes concerning water damage, plumbing problems and the like. In particular B-double transports operated by the 1^st defendant were unable legally to access the Hawker Road property which apparently led to problems with the police and the Department of Transport. Although considerable evidence was given about these disputes, they do not have any direct bearing on what I have to decide. They substantially contributed to antagonism between the plaintiffs and the 2^nd defendant. They led to the 2^nd defendant deciding by at least early 2000 that the Hawker Road property was not suitable for the future conduct of the 1^st defendant’s business.
Under the Agreement the monthly rental payments were due on the first day of each month. The 1^st defendant was always late in making these payments and generally they were not paid until shortly after the middle of each month. In most months Hodges had to chase up the payment of the rent. These delays in payment were principally due to the defendants not wanting to affect their cash flow adversely by paying out rent until they had to do so. On 8 March 2000 Hodges advised the 1^st defendant that under the provisions of the Agreement the monthly rent for the second year of the term would be $5,663.
On 1 April 2000 the defendant sent a letter to Hodges as follows:
“Following to our telephone conversations concerning 111 Hawker Road Burton, as you are aware the property has no access for B Doubles as we were first told, it only has the approval from Salisbury Council, This approval needs to come from Transport SA and they will not give this permission.
As you can appreciate we are a growing Business and the access for B Doubles is imperative for the Transport Business. Due to these circumstances we will be moving premises. All premises will be cleaned and cleared of any rubbish by the end of the month.”
Hodges had no positive recollection of receiving it but it is likely he did so. However, the intimation in the last paragraph was superseded by subsequent negotiations on 14 April between Hodges and the 2^nd defendant.
WRB Transport Pty Ltd was a large interstate transport company which was controlled by Wayne and Phillip Bunker. It was in serious financial difficulties. It operated out of premises at 20 George Street, Greenfields (“the George Street property”) and/or an adjoining property. These properties were both owned by Wintide Pty Ltd (“Wintide”) which was another company controlled by the Bunker family. After some negotiations, on 10 April 2000 the defendants entered into agreements with Wintide to rent the George Street property and the adjoining property from that date on monthly tenancies and to have options to purchase both properties. Although it was not part of the written documents, the 1^st defendant also took over at the same time much of the business and assets of WRB Transport Pty Ltd. That company went into voluntary administration on 11 April 2000. These transactions had the effect of substantially increasing the size of the business of the 1^st defendant.
On the George Street property was a shed of 1500² metres of which 1000² metres was a truck workshop and the balance was sublet to another business, Northern Tropic Freight Management. There was not sufficient room at the George Street property for the 1^st defendant to carry on all of its enlarged operations.
Shortly after 10 April the 1^st defendant moved all its office staff and most of its other operations from the Hawker Road property to the George Street property. The defendants did not tell Hodges or the plaintiffs about this. The 1^st defendant had a large contract for the regular transport of vermiculite from a mine in the Northern Territory to Adelaide. Under that contract it was apparently responsible for storing the vermiculite once it reached Adelaide until it was shipped on elsewhere. It needed to be stored under cover. There was no facility available at the George Street property for the storage for such vermiculite. The defendants had a general intention to continue to store vermiculite at the Hawker Road property while it remained available to them. While much of the 1^st defendant’s plant and equipment was moved out of the Hawker Road property to the George Street property some of it was left at the Hawker Road property. While its operations there were substantially scaled down the 1^st defendant did continue in April and May 2000 to use it for limited purposes of storage and some repairs to vehicles.
On 14 April 2000 there was a telephone discussion between Hodges and the 2^nd defendant. The best evidence of what was said in this conversation was what Hodges put into letters which he wrote soon afterwards as a result of it. On 27 April he wrote to the defendants as follows:
“SUBJECT: VACATING OF 11 HAWKER ROAD BURTON
This letter is to acknowledge your telephone call of 14^th April advising us that you were vacating the above premises prior to the expiry of your Lease.
I have communicated with the owners and they have instructed our Company to seek a new tenant for the property.
Accordingly, next week, we will be erecting ‘for lease’ signage at the property and putting it on the market.
I also wish to advise that you are under obligation to continue paying rent on the premises until we obtain a new tenant or until the end of your current lease (31/03/01), and to reimburse the owners for re-leasing costs.
Could you please advise me when the premises will be vacant and arrange for return of keys.”
Also relevant is what he wrote on 20 April 2000 to the plaintiffs:
“SUBJECT: TENANT VACATING 11 HAWKER RD BURTON
This letter is to confirm my discussion with Don last Friday 14^th April.
On that date, the tenant of your property at Burton, Linehaul Australia Pty Ltd informed me that they had vacated the property.
The reason for doing so was due to a continuous Police presence in the area resulting in every truck being fined for being on a road not gazetted for ‘B-Double’ vehicles. Mr Andrews informed me that he had been fined $1650 in the previous week.
He further informed me that they would leave the premises in a spotless condition. ………”
There is a crucial difference in these two letters insofar as they reflect what was said on 14 April. The letter of 27 April states “that you were vacating” whereas the letter of 20 April says “they had vacated the property”. I find that what was said was that the defendants were vacating, and not that they had vacated. It is consistent with the other evidence that they were in the process of vacating the Hawker Road property and it is not correct that they had vacated it at that date. This interpretation is consistent with the last sentence of the letter of 27 April referring to “when the premises will be vacant and arrange for return of keys.”
On this point the plaintiff’s counsel relied on a passage in a letter of 20 June 2000 from Hodges to the 1^st defendant, which is set out in full later, where Hodges wrote:
“You advised by telephone on 14 April that you no longer wished to remain the tenant of the subject premises.”
In evidence the 2^nd defendant agreed that he had said this. However, in its context I am satisfied it meant no more than the 1^st defendant would not remain a tenant if another tenant could be found. It is not an admission that the 1^st defendant was unconditionally abandoning the premises.
From 14 April until 19 May the defendants’ position was that if another tenant could be found for the Hawker Road property they would vacate it and thereby extinguish the liability for continuing rent, but, if not, they would continue to use the property for limited purposes and pay the rent, albeit at the latest possible moment. There is no evidence that any “For Lease” sign was erected or any other attempts were made by Hodges to find an alternative tenant prior to 19 May. The defendants did not return the keys which would have confirmed their vacation of the property. Prior to 19 May Hodges drove past the Hawker Road property and remembers seeing a lot less vehicles there but still one semitrailer being there. He did not make any other investigations or inquiries about whether the defendants’ vacation of that property had been completed. Up until 19 May the plaintiffs personally had no knowledge of whether the defendants had vacated or not.
In a letter of 18 July 2000, which will also be mentioned later, the previous solicitors for the defendants stated as follows:-
“My client notified you by letter dated 1 April 2000 that Linehaul Australia Pty Ltd would vacate Lot 11, Hawker Road, Burton (“the property”) by the end of the month. My client vacated the property on or about 18 April 2000. I am instructed that you have been aware sine that time that the property has been vacant.
My client vacated the property because the property has no access for B double vehicles. Transport SA therefore did not approve of the operation of my client’s business on the property and fined my client. ……….”
The 2^nd defendant denied that this passage was in accordance with his instructions to his then solicitors. I have already dealt with the letter of 1 April 2000, and its effect, above. The assertion that the plaintiffs had been aware since 18 April that the property had been vacant was incorrect, if by vacant is meant that the defendants had wholly ceased to use it. The plaintiffs had no definite knowledge prior to 19 May about exactly what the defendants were doing at the Hawker Road property. If this admission had been made by the defendants before 19 May, it may well have misled the plaintiffs into believing that the defendants had abandoned the property, but it was only sent well after the relevant events. In part it reflects the 2^nd defendant’s lack of understanding of the legal situation at the time and in part it was an attempt to raise a spurious answer to the plaintiffs’ claim based on alleged misrepresentations which have not been pursued. In the light of the other evidence to the contrary I do not find that what the defendants instructed their solicitors, as reflected in this letter, overrides the other evidence that they had not completely vacated the Hawker Road property before 19 May.
The monthly rental payment due on 1 May 2000 was not paid by the 1^st defendant. On 8 May Hodges sent the following letter to the 1^st plaintiff:
“SUBJECT: OVERDUE RENT LOT 11 HAWKER RD BURTON
We note with concern that rental and outgoings arrears for the above premises and advise that you are in breach of your obligations as tenants by reason of your failure to pay the renal (sic) and outgoings when they fall due.
On behalf of the Landlord, we hereby require you to remedy the aforementioned breach and hereby demand for payment the amounts specified on the attached statement, being a total of $6416.46 which is to be received in the form of cash or a Bank Cheque in our office no later than 5.00 pm on 15^th May 2000.
If payment is not received in full by the date specified herein, the Landlord intends to pursue its rights against you, pursuant to the Landlord and Tenant Act 1936 and otherwise for the recovery of the rental and outgoings and the premises without further notice to you or the guarantors of the lease.”
This letter referred not only to recovery of the outstanding rent but also to recovery of the premises. It did not refer to accepting a repudiation from any abandonment of the premises by the defendants. They made no response to this letter.
On Friday, 19 May 2000 a few employees of the 2^nd defendant worked at the Hawker Road property. They left at about 4pm and padlocked the front gate. On the property was then stored a 21 foot aluminium boat with an outboard motor which belonged to Brett McBeath, an employee of the 1^st defendant.

On the afternoon of 19 May the solicitors for the plaintiffs instructed Benjamin Shingles, a licensed bailiff, to distrain for the outstanding rent on the goods of the 1^st defendant situated at the Hawker Road property. Shingles, with three assistants, entered the property at about 5pm using a key which they had obtained from Hodges’ office. They proceeded to make an inventory of various goods and chattels which were at the property and to distrain up them for the outstanding rent. There has been no suggestion that this distrain was unlawful. Shingles summoned a locksmith who changed all of the locks on the buildings and provided a new padlock for the front gate. Shortly afterwards the two male plaintiffs, and the son of one of them, also entered the property and remained there for some hours.
At about 6pm on that day McBeath and another employee of the 1^st defendant, Driscoll, came to the Hawker Road property to collect the boat so that they could use it on a fishing trip that weekend. Shingles refused them entry to the property and told them they could not take the boat. The 2^nd defendant arrived shortly afterwards. Initially Shingles refused him entry to the property, but he then allowed him to come in to speak with the 3^rd plaintiff about what was occurring. The 2^nd defendant was upset and angry. He spoke for a few minutes with the 3^rd plaintiff in the yard of the property endeavouring to sort out a solution to the problem. However, nothing was agreed between them. To avoid the situation getting out of hand Shingles then intervened and told the 2^nd defendant that he had to leave the property. The 2^nd defendant thereupon left. He said something to the effect that he would take up his discussion with the 3^rd plaintiff at his home later than evening but he did not do so.
At some stage while the 2^nd defendant was at the property on this evening he was served with a document prepared and signed by the plaintiffs’ solicitors which was entitled “Notice to Quit”. The relevant parts read:
“NOTICE TO QUIT
TO:  LINEHAUL AUSTRALIA PTY LTD (ACN 077 750 451)
BURTON SA 5110
WHEREAS
A.You the said LINEHAUL AUSTRALIA PTY LTD (CAN 077 750 451) are a tenant of those premises situate at Allotment 11 Hawker Road, Burton ………… as a tenant of ROSARIO BELPERIO and ASSUNTA BELPERIO ……….. and DONATO BELPERIO and ROSA MARIA BELPERIO …………. (hereinafter called “the Landlord”).
B.TAKE NOTICE that you are in breach of the terms and conditions of your agreement to lease of the demised premises insofar as you have failed:
1.     To pay rent in the sum of $5,663.60 due as at the l^st day of May 2000.
2.     To pay outgoings in the sum of $752.86 due as at the 1^st day of May 2000 being
2.1Monthly contribution to council, water, insurance and auditing rates $560.55
2.2Management fees $192.31.
NOW the Landlord hereby requires you to forthwith pay the said sum of $6,416.46 to Thomson Playford, ……….. and to forthwith quit and deliver up possession of the demised premises to the Landlord or its duly authorised agent AND TAKE NOTICE that failure to comply with this notice will result in legal proceedings being taken for your eviction.
DATED this 19 day of May 2000.
THOMSON PLAYFORD
………………”
More will be said later of this document and its effect.
Shingles did not leave the Hawker Road property that night until about 10pm. He then locked the front gates with the new padlock. Sometime later that night McBeath removed his boat from the property. He said that when he went there the front gates were open. There was no evidence about how this might have occurred and I do not need to speculate about it. The 1^st plaintiff and his son also found the gates open on the following Saturday morning and some unknown person then removed other goods from the property, although apparently not anything which had been made subject to the distraint. It would seem that the front gates were relocked with the new padlock shortly thereafter but I do not know who did it.

On Monday 22 May the 2^nd defendant negotiated with the plaintiffs’ solicitors for payment of the moneys outstanding so that he could retrieve the goods which were the subject of the distraint. It took a couple of days to sort out the precise costs payable. On about 25 May the defendants paid $7,393 for the outstanding rent and charges and the costs of the distraint. Thereafter they collected the new keys to the premises from Hodges’ office. They then removed all of the defendants’ belongings from the Hawker Road property and cleaned it. They finally vacated it somewhere between 27 and 29 May and subsequently had no further dealings with the property.
On 20 June 2000 Hodges wrote to the 1^st defendant in the following terms:
“Linehaul Australia Pty Ltd
……..
SUBJECT: LOT 11 HAWKER ROAD BURTON
We refer to previous action regarding the above property, and draw your attention to the following details:
-       you advised by telephone on 14^th April that you no longer wish to remain the tenant of the subject premises
-       the property appears to be vacant
-       your transport business now operates from another address
-       we have not received any written reply to our correspondence of 27^th April 2000
Could you please confirm these details by signing the bottom of this letter where indicated and fax or mail back to us as soon as possible.
It is our duty to mitigate any losses for all parties and wish to re-lease the premises as soon as possible.
We also take this opportunity to point out that you are responsible for the on-going rent and outgoings until we lease to a new tenant, together with re-leasing costs. You are currently outstanding an amount of $7,169.32.
Yours truly,
Kevin Hodges
Kevin Hodges CREI MREI
Director
ACKNOWLEDGEMENT:
We, Linehaul Australia Pty Ltd acknowledge that we have vacated the property known a 111 Hawker Road, Burton and no longer require the premises to run our business.
SIGNED: ………………………………….. DATE: …………………………”
The 1^st defendant did not immediately reply to this letter and did not sign the acknowledgement. There is no evidence that prior to this letter Hodges had taken any steps towards re-letting the property. However, it appears at about the time of writing it he was negotiating with Southern Pacific EPS Group, a Queensland company, about it leasing the Hawker Road property. On 23 June Hodges signed an agreement to lease on behalf of the plaintiffs and sent it to this Queensland company in the expectation that it would become the tenant of the property as from 1 July 2000. It appears the defendants knew of these negotiations. However, the Queensland company changed its mind and did not take the property.
On 18 July 2000 solicitors acting for the defendants (who are not their present solicitors) wrote to Hodges in reply to his letter of 20 June denying liability but making assertions which were not pursued in the trial. (More is said of this letter elsewhere.) The 2^nd defendant was not aware that the property had not been re-let to the Queensland company until he received demands for payment from the plaintiffs’ solicitors in September 2000.
Although Hodges made reasonable efforts to find another tenant for the Hawker Road property, he was unsuccessful and the property remained untenanted until after the expiration of the term of the Agreement on 31 March 2001. In about March 2001 the plaintiffs spent $2,090 in repairing the rear fence of the Hawker Road property which had been damaged by vehicles during the occupancy of the premises by the 1^st defendant.
The witnesses
The 3^rd plaintiff, who was the principal witness of the plaintiffs, was unimpressive and unreliable. Although he spoke with a slight accent and was apparently of Italian birth, he was moderately fluent in English and appeared quite astute. His initial claims in his evidence that before 19 May 2000 he had not previously met the 2^nd defendant or talked with him were false and were quickly dispelled in cross examination. His claim that he had not had a conversation with the 2^nd defendant on the property on 19 May was patently false. His brother and his brother’s son also falsely asserted that he had not had a conversation with the 2^nd defendant inside the property on 19 May which strongly suggests that they had all colluded to tell a false story about it. Little weight can be placed on their evidence.
Regrettably, the credibility of the 2^nd defendant was little better. His assertions in correspondence that he wished to vacate the Hawker Road property because of problems with access for B-Doubles was at the best only a half truth. His attempts to claim that his previous solicitors had misinterpreted his instructions about matters which they had asserted in correspondence were unconvincing. He made reference to a person who was a member of a bikie gang. Initially he said he could not remember the person’s name but that was false. He then refused to name him because he said he was scared of him. I reject his evidence that he had spoken to Hodges on 19 May. It was never put to Hodges that any such conversation had occurred. There was little contemporaneous documentation to support many of his assertions. Overall he was an unimpressive and unconvincing witness, but I accept that there was a general substratum of truth underlying much of what he claimed.
I generally accept the evidence of Hodges although he was somewhat vague on details. Shingles was the best of the witnesses about what occurred on 19 May and I accept his evidence on those matters in preference to that of any other witness.
I accept the evidence of Wayne Bunker as to the business dealings in which he was involved, but I do not accept his evidence about the activities of the defendants where it was in conflict with the evidence of the 2^nd defendant.
The defendants called McBeath, Driscoll, Mercer and Graham Andrews who were all employees of the 1^st defendant. They were not impressive or reliable witnesses. I reject their evidence where it is contrary to other evidence. I do not accept their evidence about what happened at the Hawker Road property in the week of 22 May where it is contrary to that of the 2^nd defendant.
In respect of the evidence as a whole it needs to be understood that the defendants did not manage their business in a particularly business-like or efficient manner. The 2^nd defendant had an aggressive and “gung-ho” approach to his business affairs. It also needs to be said that the plaintiffs and their agents did not have a proper understanding of the legalities of the procedures which they carried out on 19 May 2000. It is likely that a good deal of emotion and antagonism clouded the judgments of the parties in what they did.
The 1^st defendant’s alleged wrongful repudiation of the lease
The primary case advanced by the plaintiffs at trial was that the 1^st defendant by its conduct prior to 19 May 2000 had evinced an intention not to be bound by the Agreement and therefore had wrongfully repudiated the lease. It was common ground that the law is that the ordinary principles of contract law about repudiation apply to an equitable lease: Progressive Mailing House Ltd v Tabali Pty Ltd (1985) 157 CLR 17. The question of repudiation is to be judged objectively, and the subjective intention of the alleged repudiator is not relevant: Murray-Oates v Jjadd Pty Ltd (1999) 76 SASR 38 at 46-7. Neither is it relevant whether the alleged repudiator has communicated its intention to repudiate to the other party. The plaintiffs’ counsel conceded that repudiation is not to be lightly found: Progressive Mailing House Pty Ltd v Tabali Pty Ltd (above) at 32.
On the findings made above the 1^st defendant had only partially vacated the Hawker Road property prior to 19 May. It is relevant that it was under no positive obligation from the terms of the Agreement to carry on any business on the premises during the term of the Agreement. I do not find it proved that the partial vacation of the Hawker Road property by the 1^st defendant prior to 19 May, either in itself, or in combination with the other matters I have found proved, amounted objectively in law to an intention of the 1^st defendant no longer to be bound by the Agreement. Rather the intention of the 1^st defendant was conditional that it would only completely vacate the property if and when another tenant was found so that it was then relieved from its acknowledged obligation to pay future rent.
Likewise I find that the failure of the 1^st defendant to pay the rent which became due on 1 May did not in itself, or in combination with the other matters I have found, evince an intention that it would not be further bound by the Agreement. While the 1^st defendant paid a substantial amount of rent to Wintide in May it was not shown that by such payments it either precluded itself from paying the rent due to the plaintiffs or that it paid that rent in purported substitution for the fulfilment of its obligations to the plaintiffs to pay the rent for May on the Hawker Road property.
Even if the 1^st defendant had repudiated the Agreement by any vacation of the property, and/or its failure to pay the rent due on 1 May, it was not shown that the plaintiffs expressly or impliedly terminated the Agreement by an acceptance of any such repudiation. As will be stated later the plaintiffs’ termination of the Agreement proceeded on other grounds. Accordingly, I find that the actions of the 1^st defendant did not wrongfully terminate the Agreement so as to give the plaintiffs any right to damages for its repudiation and breach.
I reject the plaintiffs’ alternative submission that they were entitled to terminate the lease for the 1^st defendant’s failure to pay the rent due on 1 May 2003 by virtue of the notice given in the letter of 8 May 2000 which is set out above. The plaintiffs’ counsel relied upon dicta of Mason CJ in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 638-9 to the effect the period of proper notice is to be assessed in the light of the relevant surrounding circumstances. In Sindel v Georgiou (1984) 154 CLR 661 at 670, which was cited by Mason CJ, it was said that strong circumstances must be shown to justify giving a notice which allowed less than fourteen days for completion. Clause 4.1.1 of the proposed lease, which was never executed, required the period of any such notice to be fourteen days. While this never became contractually binding it is some indication of what the plaintiffs prospectively considered would generally be reasonable notice.
The letter of 8 May 2000 was apparently sent to the 1^st defendant by fax. There was no direct evidence as to when it was either sent or received. The 2^nd defendant did not know. While I am prepared to infer that it was sent on 8 May I am not prepared to find that it was received by the defendant before 9 May. The letter required payment of $6,416 “to be received in the form of cash or a Bank Cheque in our office no later than 5pm on 15 May 2000”. Monday, 15 May was a public holiday for the Adelaide Cup. There was no evidence that the office of Hodges was open on that day. I take judicial notice of the fact that it would have been impossible for the 1^st defendant to have obtained a bank cheque after 5pm on Friday, 12 May. Accordingly, the effective time which the 1^st defendant had to comply with the demand in the letter was less than four days. I find that the 1^st defendant did have the capacity to pay in that period. However, in view of the serious consequences of non-compliance, and the right of the plaintiffs to claim interest on the outstanding rent, I do not find that four business days was reasonable notice in the circumstances.
Plaintiffs’ repudiation of the lease
The 1^st defendant pleaded that by their actions on 19 May the plaintiffs had wrongfully re-entered the Hawker Road property and repudiated the Agreement. If so, the lease would have been terminated and the 1^st defendant would have been under no obligation to pay any further rent. The defendants’ counsel conceded that unless I found a wrongful repudiation by the plaintiffs which was accepted by the defendants they would still be entitled to recover the rent for the balance of the term even though they had not expressly pleaded their case on this basis.
The plaintiffs’ case at trial was that all that had occurred on 19 May was a lawful distraint for rent. I do not accept this. A landlord distraining for rent has only a right to secure the goods over which the distraint is taken on the property, but not otherwise to exclude the tenant from the property except insofar as it is necessary to effect the distraint: “Woodfall Landlord and Tenant”, 28^th edition, para 1-0925; s32(1) Landlord and Tenant Act 1936; “Foa on Landlord and Tenant”, 6^th edition, (1924) 603; “Hill & Redman Law of Landlord and Tenant”, 16^th edition, 406. Insofar as “Halsbury’s Laws of England”, 3^rd edition, volume 12, para 239 suggests anything different I prefer the other authorities cited. The cases cited by the various text writers on the point are all very old and unsatisfactorily reported. The locking up of the whole of the premises in order to effect a distraint is only an incidental power of last resort: Smith v Ashforth (1860) 29 (NS) LJ Exchequer 259. On the evidence here it is not shown that it was necessary for protecting the security of the goods distrained upon that the tenant should have been locked out of the whole of the property. It was not shown that the distraint could not have been properly effected by confining goods distrained to part of the property which could be locked up and/or by removing them to some other safe location. In any event there was no justification in effecting the distraint for Shingles to have required the 2^nd defendant to leave the premises on 19 May as there was no suggestion that he was seeking to retake any goods which had been the subject of the distraint. For these reasons the actions of the plaintiffs’ agents on 19 May in changing the locks on the gates and each of the buildings and in excluding the 1^st defendant’s employees and the 2^nd defendant from the property went well beyond anything which was justified for effecting their distraint on the goods. They were the classical actions of a landlord physically re-entering leased premises.
The intention of the plaintiffs to re-enter and dispossess the 1^st defendant of the Hawker Road property was made explicit in their Notice to Quit which is set out above. In particular that notice required the 1^st defendant “to forthwith quit and deliver up possession of the demised premises to the landlord or its duly authorised agent”. This requirement was in addition to, and not in the alternative, to the earlier requirement to pay the outstanding rent. The Notice went on to say that failure to comply “will result in legal proceedings being taken for your eviction”. That was incorrect as the service of the Notice was part of a “self-help” remedy of physical re-entry which the plaintiffs were already implementing when they served the Notice to Quit. While they could have used the safer option of obtaining an order for possession from a Court rather than effecting a physical re-entry, they cannot be in any better position through having misstated the consequence of non-compliance. It was a still a re-entry.
I do not accept the submission of the plaintiffs’ counsel that the Notice to Quit was of no legal effect. Such a document, particularly where it has been prepared by solicitors, should not be treated as pointless and irrelevant unless that is clearly the case. The authority cited by the plaintiffs’ counsel that the document was of no effect was in a section of a text book which dealt with notices to quit in the context of periodic tenancies, which is not the situation here: “Halsburys Laws of Australia”, volume 16, para [245-4085]. However, a document entitled “Notice to Quit”, and in the general form of this notice, can in the context of leases for a fixed term, which is the case here, be used as a form of re-entry by a lessor making an unequivocal demand for immediate possession: Halsburys, op cit, para [245-4035] and the cases in footnote 6; eg Price v Mayman [1948] SASR 241 at 246. I am satisfied that this Notice to Quit was served by the plaintiffs as an alternate means of effecting a re-entry and terminating the lease.
It should also be noted that in paragraph 4 of the Statement of Claim the plaintiffs pleaded:
“On or about 19 May 2000, the Plaintiffs terminated the Agreement ……… for non-payment of rent and outgoings pursuant to its right to do so under the terms of the Agreement ………. and/or in the alternative at common law.”
This is a classical plea of termination by re-entry. There was no clause in the Agreement which gave it any such right. There was no legal right to do so in the circumstances at common law or otherwise. Thus I find the plaintiffs’ re-entry and termination of the lease created by the Agreement to have been wrongful. The 1^st defendant has not pleaded that it suffered any loss as a result of this wrongful act, but it had the effect in law of terminating the lease as at 19 May 2000 and depriving the plaintiffs of any rights to recover rent or damages for loss of rent thereafter.
I reject the submission of the plaintiffs’ counsel that the effect of the plaintiffs’ actions on 19 May was only to dispossess the 1^st defendant of the property for a few hours and that thereafter the lease revived. How McBeath and Driscoll gained entry to the property on the night of 19 May to retrieve the boat is unknown, but it is not shown that they entered in their capacities as employees of the 1^st defendant. As the defendants had to get the keys to the new locks on the property from Hodges after the distraint had been released, I infer that the property had been re-secured on behalf of the plaintiffs on or shortly after 20 May. There was no evidence that anything was said or done in the dealings between the parties which discharged the distraint which suggested that the distinct act of re-entry had been waived or the lease otherwise revived. Nothing was pleaded about any revival of the lease after re-entry.
I do not accept the plaintiffs’ submission that the defendants continued to occupy the Hawker Road property until 27 May. The evidence about what the defendants did in relation to the property after 19 May is very sketchy. I accept the evidence of the 2^nd defendant about it in preference to any contrary evidence. Insofar as he said that he had told Hodges that the 1^st defendant was intending to continue as a tenant of the property that was said, if at all, before the re-entry. All the defendants did after the rent was paid to release the distraint was to remove their goods and chattels from the property and to clean it. The 1^st defendant did not again carry on business there.
In his written submissions the plaintiffs’ counsel asserted that the defendants had pleaded that they continued to occupy the property until 25 May 2000. Paragraph 16 of the defence pleaded:
“16.Linehaul continued to occupy the Premises on the 14^th April 20000 (sic) and thereafter until on or about the 25^th May 2000 and use the Premises in accordance with the permitted use pursuant to the Agreement to Lease.”
In the context of the defence as a whole, and in the light of what had occurred, this plea is not to be construed as meaning that between 19 and 25 May 2000 the 1^st defendant carried on business at the Hawker Road property as distinct from merely vacating it in that period.
I find that there was a wrongful repudiation of the Agreement by the plaintiffs on 19 May in that they deprived the 1^st defendant of its lawful occupation of the premises and by the terms of the Notice to Quit and by changing the locks they showed that they intended to exclude the 1^st defendant from the property for the balance of the term subject to its rights to regain the distrained goods after payment of the outstanding rent. I find that the 1^st defendant accepted this repudiation of the lease in that it did not resume its business activities at the property and merely went back for the limited purposes of retrieving its goods and complying with its obligations to clean it up.

In the alternative as a matter of law it may well be that a wrongful re-entry by a landlord, such as occurred here, was sufficient to put an end to the lease, and the tenant’s obligation to pay future rent, irrespective of any acceptance by the tenant of any repudiation inherent in the landlord’s re-entry.
I reject the defendants’ contention that there was a surrender of the lease by consent.
Accordingly, the claim by the plaintiffs for loss of rent and outgoings and the expenses of seeking to relet the Hawker Road property fails. However, there was also a claim by the plaintiffs which was baldly pleaded as, “Supply and Installation of New Fence, damaged by the First Defendant” of $1,820 plus GST of $182”. Paragraph 30.3 of the Defence was pleaded in answer to this claim as follows:
“30.3 the plaintiffs are not entitled to the claim of $1,820.00 as Linehaul:
30.3.1denies that it is liable to repair any damage to any part of the Premises pursuant to the Agreement to Lease;
30.3.2offered to repair damage caused to a cyclone fence by one of its trucks at its own costs which offer the plaintiff declined; and
30.3.3says that in any event the damage caused to the cyclone fencing could have been repaired by it at a cost of $180.00;
………..”
Very little was said on this topic in the evidence or addresses. I find that the back fence of the Hawker Road property was damaged by trucks of the 1^st defendant colliding with it. I find that the cost of the repairs to it, including GST, was $2,090. Paragraph 30.3.1 is established from the face of the Agreement, but paragraphs 30.3.2 and 30.3.3 were not established. The 1^st defendant is liable under the ordinary principles of negligence to pay this amount to the plaintiffs as there is an implied admission of liability in paragraph 30.3.3 and such damage would not ordinarily have occurred if there had been no negligence.
I do not find that the 1^st defendant is liable to the plaintiffs for this $2,090 for any breach of any express or implied term of the Agreement. There was no basis necessarily to imply such a term because such liability was already covered by the ordinary law of negligence. Accordingly, there is no liability of the 2^nd defendant for this amount under the Guarantee in clause 17 of the Agreement.
Pre-judgment interest under s39 of the District Court Act is to be added to this sum from March 2001 until judgment at a commercial rate of interest, which I fix at a lump sum of $260.
On the claim there will be judgment for the plaintiffs against the 1^st defendant for $2,350 and there will be judgment against the plaintiffs in favour of the 2^nd defendant. I will hear the parties on the costs of the action.
Costs of the adjournment of the trial on 14 April 2003
The action came on for trial before me on Monday, 14 April 2003. I adjourned it because of medical problems of the 2^nd defendant. The plaintiffs applied for the costs of the adjournment. I referred the issue to be dealt with in conjunction with the trial of the action. In his final address counsel for the plaintiffs limited his application to costs in the plaintiffs’ favour based on the 2^nd defendant not having taken out an application in the previous week to adjourn the trial which thereby caused the plaintiffs to incur additional costs until the adjournment was granted on 14 April.
The defendants sought to tender a medical certificate dated 11 April 2003 from Dr Gillis. I received it de bene esse. I now reject its tender. Counsel for the defendants sought to justify its tender under s34C(2) of the Evidence Act 1929 which provides:
“In any civil proceedings, the Court may at any stage of the proceedings, if having regard to all the circumstances of the case it is satisfied that undue delay or expense would otherwise be caused, order that such a statement …….. shall be admissible as evidence ……… notwithstanding that the maker of the statement is available but is not called as a witness ………..”
No arrangements had been made prior to the trial for Dr Gillis to be called at the trial by the defendants. I accept that it would have been likely to involve undue delay for the purposes of subsection (2) if arrangements were first made on the third day of the trial for him to give evidence. I do not accept that his certificate having been put before me in relation to the adjournment of the trial meant that it was admitted by the plaintiffs as evidence which could be adduced on a trial of the issue of costs. If the defendants wished the certificate to be tendered at the trial, they should either have obtained a formal admission of the document from the plaintiffs’ solicitors or made arrangements well before the trial commenced for Dr Gillis to be available to give evidence. Section 34C(2) does not extend to undue delay where that delay is caused by a party not taking the necessary steps to have the evidence available at the proper time. If the tender was sought under ss45A or 45B of Evidence Act 1929, I would have required the defendants to have called Dr Gillis as a condition of its admission into evidence.
On Monday, 7 April the 2^nd defendant was admitted to the Modbury Hospital with a perianal abscess. He underwent surgery on it on Tuesday, 8 April. He was discharged from hospital on that date and was referred for home nursing. On 7 April a surgical registrar at the hospital gave the 2^nd defendant a certificate indicating he would be unfit for work until 21 April. (The actual certificate exhibited to the affidavit of Shahn Corry is dated 14 April 2003, but the report of the surgeon Mr Williams says that he was given a certificate dated 7 April until 21 April indicating that he would be unfit for work during this time. I infer from this that either a certificate or some intimation was given to the 2^nd defendant on 7 or 8 April that he would be unfit for work until 21 April.)
On Wednesday, 9 April the 2^nd defendant spoke to his solicitor, told him of his medical treatment and said that he believed he would be fit to attend at the trial. Although I have a number of reservations about the 2^nd defendant’s credibility, I am not prepared to find that he falsely asserted that he expected to be available for the trial. If he was then seeking to postpone the trial, it would have been easy for him to have alleged at that stage that his medical condition would not allow him to participate in a trial, but he did not do so. There was no reason why his solicitor should not have accepted that intimation and he was not at fault in not then either having the 2^nd defendant’s medical condition further investigated or in not applying immediately for an adjournment of the trial. The mere fact that the 2^nd defendant was not fit for work did not necessarily mean that he was unfit to participate in a trial.
On Thursday, 10 April the 2^nd defendant’s condition deteriorated. He went to the Modbury Hospital that afternoon instead of keeping an appointment with his solicitor. He waited at the hospital for three hours but was unable to see a doctor. On the morning of Friday, 11 April he telephone his solicitor and advised that he was too ill to attend at a further appointment which had been organised with his solicitors for that afternoon. His solicitor rang the Modbury Hospital that afternoon but was unable to speak to the treating surgeon. He then rang the 2^nd defendant and asked him to get a report from his general practitioner about his fitness to attend Court. The 2^nd defendant saw his general practitioner at 5pm that night. His general practitioner, Dr Gillis, prescribed him Panadeine Forte painkillers and referred him back to the Modbury Hospital for further surgery. That surgery was apparently tentatively scheduled for Wednesday, 16 April but the abscesses abated and it was never carried out.
In these circumstances the solicitor for the defendants cannot be criticised for not having made an application to the Court on the afternoon of Friday, 11 April to adjourn the trial. No adjournment was likely to have been granted unless there was medical evidence that the 2^nd defendant would not be fit for a trial commencing on 14 April and despite reasonable efforts being made there was not enough time to obtain that evidence on that afternoon. The plaintiffs’ solicitors were not informed about the potential problem with the 2^nd defendant’s medical condition until late on the afternoon of Friday, 11 April. Again I do not consider the defendants’ solicitor can be criticised for not having alerted them to the problem earlier when he still did not have any medical evidence on the point.
In addition on Friday, 11 April counsel for the defendants had been informed by a clerk in the Court Registry that the action would not be coming on for trial on 14 April because of a shortage of Judges. This intimation should not have been given, but as it was given the defendants’ solicitor was entitled to act on it in deciding that no application needed be made to the Court on the afternoon of 11 April for the trial to be adjourned.

Accordingly, I am against the submissions of the plaintiffs’ counsel on these costs issues. As the adjournment of the trial was necessitated by the 2^nd defendant’s medical problems the appropriate order is that the costs of the adjournment should be costs in the cause.

[2003] SADC 118

8 September 2003