Brown, D.A. v Forest Hill Shopping Centre P/L

[1994] FCA 471

4 99

JUDGMENT NO. ...*.-* nu.^^

IN THE FEDERAL COURT OF AUST-IA	) )
MELBOURNE DISTRICT REGISTRY	) No.VG 99 of 1994
)
GENERAL DIVISION	1
B E T W E E N :

First Applicant
Second Applicant
Third Applicant

Fourth Applicant

- and -

FOREST HILL SHOPPING CENTRE PTY LTD

ACN 005 354 325	First Respondent
L C STEVENSON ESTATES PTY LTD	Second Respondent
ACN 005 145 979
HUGH &MASTER	Third Respondent
DIANE &MASTER	Fourth Respondent
-:	Heerey J
m:	14 July 1994

m: Melbourne

REASONS FOR JUDGMENT

Clause 19 of the Applicants' Lease.
In my opinion this clause is confined, as its words clearly
indicate, to a covenant by the lessor not to lease any other

In my opinion the lease to Keatsville did not constitute a

part of the Centre by a lease which makes certain specified
provisions as to business activity. Clause 19 does not impose
any obligation on the lessor in relation to the enforcement of
obligations of other lessees concerning their business
activities. If there is any such obligation on the lessor it
is not to be found in c1.19, which is all I am considering at

the moment.

breach by the first respondent of clause 19.

The clause 19 prohibited the granting of a lease which

"... prov ides t h a t t h e main b u s m e s s a c t i v i t y t o be c a r r ~ e d on

i n such p a r t o r p a r t s o f t h e Cent re i s t o be t h a t of t h e on

s i te manufacture and re ta i l s a l e o f donuts PROVIDED FIRSTLY

t h a t t h i s covenant s h a l l no t apply t o a Lease t o a supermarket

department	s t o r e o r o t h e r major tenancy	(havlng an a r e a of	no t
less	t h a n	1000 square metres)	o r o p e r a t e s o a s t o restrict any

a c t i v i t y c a r r i e d on t h e r e i n AND SECONDLY t h a t t h i s covenant

s h a l l no t apply t o t h e s a l e of goods o r supply o f s e r v i c e s i n

any premises where such s a l e o r supply is i n c i d e n t a l t o t h e

c a r r y i n g on of some o t h e r bus ine s s AND THIRDLY t h a t t h i s c l a u s e

s h a l l no t be reproduced	i n any ex t ens ion o r renewal of	t h ~ s
Lease. "

The relevant provision in the Keatsville lease provided for the use of premises:

"Primarily the retail sale of croissants, muffins, cookies and crepes and as a subordinate and ancillary use only also the retail sale (not manufacture)"

and then the following words are added in handwriting:

"except for manufacture of cake donuts through a

robot donut machine"

and the typed form continues: 

"of donuts, hot and cold beverages, soft serve, (ie, not hard frozen), icecream dispensed from one machine only with dips and/or sweet toppings."

I think the handwritten words are a qualification of the prohibition of manufacture. The clause specifies what is the primary use, that is, the retail sale of croissants, muffins, cookies and crepes. It then specifies a subordinate and ancillary use, that is, the retail sale of donuts, hot and cold beverages, soft serve icecream etc. It excludes from that subordinate and ancillary use the manufacture of donuts, but by the handwritten insertion it provides that the manufacture of cake donuts through a robot donut machine is not to be considered the manufacture of donuts for the purposes of the exclusion. In other words, that specified form of manufacture of cake donuts will be permitted, but as a subordinate and ancillary use only.

Therefore I find that in granting thls lease with that provision to Keatsville, the first applicant did not breach c1.19.

Application for Interlocutory Injunction
I am satisfied that the application for an injunction should

be refused.

First, I do not think there is a triable issue as to the existence of an implied term such as is pleaded in para.5B of	the further third amended statement of claim. I say this for	a number of reasons. I think c1.11.15(b) of the lease
applies. That is a "whole agreement" term which amongst other things records the agreement that:

"no further or other covenants, agreements, provisions or terms whether in respect of the demised premlses or otherwise shall be deemed to be implied herein."

Counsel for the applicants referred to a later passage referring to collateral or other agreements, but that is clearly something additional to the exclusion of implied terms. The clause speaks of "demised premises or otherwise shall be deemed to be implied herein or to arise between the parties by way of collateral or other agreement by reason of any promises, representation, warranty or undertaken given,"

etcetera. [Emphasis added)

In any event, I think the suggested implied term fails to satisfy a number of the criteria expressed in BP Refinery

(Westernport) Pty Ltd v Hastlngs Shire Council (1977) 52 ALJR

20 at 26.

The implied term seems to me to be inconsistent with the express term c1.19 which is confined to the prohibition on the lessor granting a lease which requires a particular sort of business to be carried on by another lessee. It may or may not have been reasonable to impose on the lessor an obligation to prevent other shopkeepers from carrying on the same sort of

business as the applicants, but that was a matter for the	parties to stipulate if they saw fit. For the same reason I
do not think the suggested term is "so obvious that it goes without saying.
Since I have already ruled that there was no breach of c1.19 itself, I come to the conclusion that there is no arguable right to damages arising from the action of the first respondent in granting a lease of shop 154A to another tenant and in relation to any business which was carried on at that other shop.
The claim as to unconscionable conduct in breach of s.51A.A of the Trade Practices Act 1974 (Cth) rests on the contention that the sale to Mr and Mrs Ray was lost because of the first respondent insisting that any assignment of the lease had to comply with cl.E(g), that is to say, there had to be a release from any claims against the first respondent.
I am not persuaded that the reliance on such a clause, whlch was an express term of the lease would, without more, constitute unconscionable conduct in breach of the "unwritten law" of this country, whatever that expression may mean. In any event, the contract of sale of the applicants' business to
Mr and Mrs Ray was notable in that it contained no provision
for the assignment of the lease, so on the face of things the failure of the sale to the Rays was not connected with any
refusal by the first respondent to consent to an assignment or its insistence on a release by the applicants. In any case, even if there were unconscionable conduct in this
regard, the fact is that the sale to the Rays has now come to an end and not on the basis of any failure to obtain an assignment of the lease, but rather, as the Rays' solicitors made clear, because the Rays could not reach agreement as to a franchise with Keatsville. I do not see how that can be laid at the foot of the first respondent.
The most important consideration in all this, to my mind, is the fact that the applicants are seeking an order which would preserve their occupation of these premises notwithstanding that they are in very substantial arrears of rent, other charges and interest thereon amounting currently to approximately $50,000 and accruing at the rate of $4,486.44 per month.
The law has always been prepared to relieve tenants from forfeiture of their leases, that is to say to prevent landlords from retaking possession of the premises merely because there has been a failure to pay rent or a breach of other covenants. But the virtually invariable rule has been that such relief may only be granted upon the tenant paying any arrears of rent and any costs incurred by the landlord: see Platt v Ong [l9711 VR 197. The situation here is closely analogous. I do not see any reason why I should take a different approach. Indeed the position is stronger here because of the position that the second, third and fourth respondents find themselves in. As vendors of the business to the applicants, they are still liable under their covenants to
pay rent on the lease, but they have no control over the premises.
The applicants have proffered an undertaking as to damages but based on this history of the arrears of rent, that undertaking would seem to be worthless.
Conversely if the applicants do have a claim it is one that is sound in damages. There is nothing to suggest that the first respondent would not be in a position to meet any order for damages that was made.
The application will therefore be dismissed.
I will order that the applicants pay the respondents' costs of the notice of motion dated 17 May 1994, including the costs reserved by Ryan J, but I will order that the first respondent pay the applicants' costs of the notice of motion dated 25 May 1994 other than costs in relation to par.3 of that notice of motion which I will reserve.
As to the applicants' application for an injunction pending
appeal, I am concerned that the legitimate interests of the respondents have been put at serious risk by this protracted claim. If $1000 is paid into court by the close of business tomorrow afternoon, I will grant an injunction for seven days and it will be seven days, full-stop. The applicants will
have to persuade a judge on proper material that there is an
appeal on fact and a proper case for an injunction pending the hearing and determination of that appeal.
The motions of 25 May and 30 June are adjourned to 4 August. The summons for directions is also adjourned to 4 August.

I certify that this and the

preceding seven (7) pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey .

Dated: 14 July 1994

& 0 Q

muearances

Counsel for the applicant:	Mr M Goldblatt
Solicitor for the applicant:	G W P Aarons & CO
Counsel for the first respondent:	Mr T J North

Solicitor for the first respondent: Pryles & Deftros

Counsel for the second third and

sixth respondent:	Mr R Greenberger
Solicitor for the second, third
and sixth respondent:	Hardys
Date of hearing:	14 July 1994