Block 27 Pty Ltd v Qursa Pty Ltd - [2023] ACTSC 139

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Block 27 Pty Ltd v Qursa Pty Ltd
Citation:	[2023] ACTSC 139
Hearing Dates:	9 May 2023 – 11 May 2023
DecisionDate:	7 June 2023
Before:	Curtin AJ
Decision:	See [160]
Catchwords:	CONTRACTS – Interpretation – whether sublease is inconsistent with terms of Crown Lease – proper construction of the sublease and Crown Lease – whether there was an obligation to give consent and allow transfer – whether there was a breach of the Crown Lease EQUITY AND TRUSTS – equity regards as done what ought to be done – application of equitable maxim to contracts – registered proprietor is a bare trustee of purchaser – whether breach of trust by consenting to transfer the sublease
Legislation Cited:	Land Titles Act1925 (ACT) s 58
Cases Cited:	AMP Financial Planning Pty Limited v CGU Insurance Limited [2004] FCA 1330; 139 FCR 223 ASSK Investments Pty Ltd v AMA Group Limited [2020] NSWSC 1756 Australian Guarantee Corp Ltd v Balding (1930) 43 CLR 140; [1930] HCA 10 Bowler v Hilda Pty Ltd (in liq) (2001) 112 FCR 59 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; 41 ALR 367 Dockrill v Cavanagh (1944) 45 SR 78 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 in Lowther v Heaver (1889) 41 Ch. D. 248 Love v Rowtor Steamship Co ltd [1916] 2 AC 527 Peter Holmes Investments Pty Ltd v S&C Nicola Pty Ltd [2021] NSWSC 1174 Re Golden Key Ltd [2009] EWCA Civ 636 Re Media Entertainment & Arts Alliance; Ex parte Hoyts Corp Pty Ltd (No 1) (1993) 178 CLR 379; [1993] HCA 40 Ryde Municipal Council v The Royal Ryde Homes (1970) 19 LGRA 321 *S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd* [2022] NSWCA 72 Sabah Flour and Feedmills Sdn. Bhd. v Comfez Ltd [1988] 2 Lloyd’s Rep 18 Slough Estates Ltd v Slough Borough Council [No. 2] [1970] 2 WLR 1187 Springrange Pty Ltd v Australian Capital Territory and ACT Planning and Land Authority [2010] ACTCA 17 Taylor v Dexta Corporation Limited and Others [2006] NSWCA 310 The Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; 157 CLR 17 Walker v Giles (1848) 6 CB 662 Walsh v Lonsdale (1882) 21 Ch D 9; [1881-5] All ER Ext 1690 Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; 233 CLR 528
Texts Cited:	Young, Croft, Smith, On Equity (LawBook Co, 2009) J D Heydon, M Leeming, P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrine & Remedies (LexisNexis Butterworths, 5^th ed, 2014) J D Heydon, Heydon on Contract (Thomson Reuters, 2019) H Beale, Chitty on Contracts (Vol 1) (Sweet & Maxwell Ltd, 29^th ed, 2004)
Parties:	Block 27 Pty Ltd (Plaintiff) Qursa Pty Ltd (First Defendant) Takeshi Pty Ltd (Second Defendant) The Registrar-General of the ACT (Third Defendant)
Representation:	Counsel

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: [2023] ACTSC 139
Decision Date

CaseChat Overview and Summary

In Block 27 Pty Ltd v Qursa Pty Ltd, the Supreme Court of the Australian Capital Territory (ACT) addressed a complex dispute concerning the interpretation and enforcement of a sublease agreement, within the broader context of a Crown Lease for a multi-level carpark. The case involved multiple parties, including Block 27 Pty Ltd (the plaintiff), Qursa Pty Ltd (the first defendant), Takeshi Pty Ltd (the second defendant), and the Registrar-General of the ACT (the third defendant). The central issue revolved around the validity of a sublease transfer, the obligations of the parties under both the sublease and the Crown Lease, and the implications of these obligations on the fiduciary duties owed by the former lessee, Garaton Pty Ltd, to the plaintiff.

The plaintiff argued that Garaton, which remained the registered lessee of the Crown Lease until the plaintiff's transfer was registered, held the land under a bare trust in favour of the plaintiff. Consequently, Garaton was alleged to have breached its fiduciary duties by consenting to the transfer of the sublease without the plaintiff's consent. Takeshi, the sublessee, contended that the plaintiff was estopped from enforcing the requirement for consent due to the sublease's terms and the Crown Lease's provisions. Qursa argued that the terms of the sublease in question were invalid and that the plaintiff had breached the Crown Lease by not enforcing them.

The court's analysis focused on the proper construction of the Crown Lease and the sublease, considering the equitable maxim that "equity regards as done that which ought to be done." The court found that the sublease should be treated as if it contained the terms required by the Crown Lease, even though it did not. This construction was based on the specific enforceable nature of the sublease's requirement that the plaintiff observe the Crown Lease's covenants. The court further determined that the clauses in the sublease requiring the procuring of consent for transfer were inconsistent with the obligation to transfer the sublease to the subsequent owner of the relevant unit. Therefore, the court construed these clauses as notice provisions, where consent could never be withheld, to avoid inconsistency with the sublease's terms.

Regarding the fiduciary duties owed by Garaton as a bare trustee, the court found that Garaton did not breach its duties by consenting to the transfer of the sublease, as the consent could not be withheld under the proper construction of the sublease. Consequently, the plaintiff's Termination Notice was invalid, and the proceedings were dismissed with costs awarded to the defendants.

This case underscores the importance of the proper construction of contractual terms, particularly in the context of registered instruments and the equitable maxim regarding specific performance. It also highlights the nuanced application of fiduciary duties in the context of a bare trust and the implications of those duties on the obligations of parties to a lease agreement.

Orders