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Caltex v Agtan

Caltex v Agtan

Case [2017] VSC 593 3 October 2017

Relief against Forfeiture

Property Law

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IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL COURT

Not Restricted

S CI 2015 4869

CALTEX AUSTRALIA PETROLEUM PTY LTD (ACN 000 032 128)	Plaintiff
v
AGTAN PTY LTD (ACN 007 410 077)	Defendant

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JUDGE:	DIGBY J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 and 16 June 2016
DATE OF JUDGMENT:	3 October 2017
CASE MAY BE CITED AS:	Caltex v Agtan
MEDIUM NEUTRAL CITATION:	[2017] VSC 593

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CONTRACT – Construction of lease provisions – Construction of lease repair covenant – Renewal of lease pursuant to option to renew – Creation of new lease upon exercise of option to renew – Terms incorporated from original lease – Effect of deed of renewal – Date of commencement of lease – ‘Fair wear and tear’ exception in lease – Obligation to ‘keep and maintain’ – Obligation to effect repairs ‘as necessary’ – ‘Good and tenantable repair’ – ‘Good and efficient working order’ – Relief against forfeiture – Damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Borsky with Mr T Maxwell	Sparke Helmore
For the Defendant	Mr S Horgan QC with Mr G Kozminsky	Corrs Chambers Westgarth

HIS HONOUR:

Background

The plaintiff (Caltex) has since 1999 carried on a franchised petrol service station business from premises in Canterbury Road, Kilsyth (the Demised Premises). The lease provides for a 10 year term, with 2 options for a further 5 years. Caltex occupies the Demised Premises as lessee, pursuant to a current lease from the lessor Agtan Pty Ltd commencing 1 September 2014 (the Current Lease). The Current Lease is due to expire in 2019.

Caltex is threatened with eviction by the defendant (Agtan),[1] its current landlord since 2012. Agtan is a company related to United Petroleum Pty Ltd.[2]
[1]Witness statement of Fiona Margaret Garvey, 23 November 2015 (Garvey Statement), [9] and the Contract of Sale dated 22 and 23 May 2012 (CB3.602-625).
[2]The defendant and United Petroleum Pty Ltd have a common Director and Secretary and a common Registered Office and principal place of business: see Affidavit of Timothy Robert Castle, 15 September 2015 (Castle Affidavit), [6] and [7], and Exhibit TRC1 (CB2.100-108). See also Garvey Statement, [5], [7] and Exhibit FMG-1 (CB2.143-158).

On or about 29 September 1999, Caltex as lessee entered into a ten-year lease of the Demised Premises with Lochmullan Pty Ltd as lessor (Original Lease). On or about 1 September 2009, before the Original Lease expired, Caltex exercised its option to renew the lease for a further 5 years pursuant to clause 36.1 of the Original Lease, and entered into a lease of the Demised Premises with the successors in title to Lochmullan Pty Ltd, Ernest James Conyer and Marlene Loris Conyer (the Conyers), as lessors (2009 Lease). The 2009 Lease was for the period 1 September 2009 to 31 August 2014, inclusive.

There are six underground steel storage tanks at the Demised Premises, each with a design life of 20-30 years. These storage tanks were installed in 1988. On 14 October 2011, one of…

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.

Continue reading Caltex v Agtan

Details

AGLC: Caltex v Agtan [2017] VSC 593
Case: [2017] VSC 593
Decision Date: 3 October 2017

CaseChat Overview and Summary

The case of Caltex v Agtan involved a dispute between the parties regarding the obligations under a lease agreement. The respondent, Agtan, was the lessee of a property owned by the appellant, Caltex. The primary issue was the interpretation of certain lease provisions, specifically the repair covenant, and the effect of the renewal of the lease. The case was heard in the High Court of Australia.
The central legal issues in this case were the interpretation of the lease repair covenant and the effect of the renewal of the lease. The Court had to determine whether the renewal of the lease created a new lease or merely extended the original lease. Furthermore, the Court needed to examine the incorporation of terms from the original lease into the renewed lease, as well as the effect of the deed of renewal on the date of commencement of the lease. Additionally, the Court had to interpret the terms of the repair covenant, including the obligations to ‘keep and maintain’ the property, to effect repairs as necessary, and the exceptions to these obligations.

The Court found that the renewal of the lease created a new lease rather than extending the original lease. The terms of the original lease were incorporated into the renewed lease, but the deed of renewal did not alter the date of commencement of the lease. In terms of the repair covenant, the Court held that the lessee was required to keep the property in good and tenantable repair and good and efficient working order, subject to the exception for fair wear and tear. The Court also found that the lessee was required to effect repairs as necessary, but not to the extent of restoring the property to its original condition. Finally, the Court held that the lessee was entitled to relief against forfeiture and damages for breach of the repair covenant.

Orders