Chan & Anor v Cresdon Pty Limited

[1988] HCATrans 299

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B46 of 1988

B e t w e e n -

ROBERT WING FONG CHAN and

GRACE SAU HA CHAN

Applicants

and

CRESDON PTY LIMITED

Respondent

Application for special

leave to appeal

WILSON J

DEANE J

DAWSON J

Chan

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 25 NOVEMBER 1988, AT 12.30 PM

Copyright in the High Court of Australia

C2T42/l/SH 1 25/11/88

MR P.D. ROBINf QC:  May it please the Court, I appear with

my earned friend, MR J. SULLIVAN, for the applicant.

(instructed by Zaghini and Associates)

MR J.D.M. MUIR, QC:  May it please the Court, I appear with

my learned friend, MR A.E. LYONS, for the respondent.

(instructed by Flower & Hart).

MR ROBIN:  The case went to trial before the primary judge

who, contrary to what is recorded in the Full Court

judgment, did enter judgment for a landlord against

a tenant for moneys claimed but His Honour refused judgment against a number of guarantors, including

Mr and Mrs Chan, the present applicants, the reason for His Honour's decision being that the lease in question was not registered in the Titles Office,

that being a requirement for a lease valid at law,

having a term in excess of three years.

The Full Court allowed an appeal on the basis that the doctrine in WALSH V LONSDALE resulted in

the lease being good in equity and the court
wrongly,in our submission, had no difficulty in
extending the application of WALSH V LONSDALE from
the narrow relations between landlord and tenant
which represent the full extent to which it has been
applied in the past,to the wider situation

incorporating third parties, namely, guarantors.

(Continued on page 3)

C2T42/2/SH	25/11/88
Chan

MR ROBIN (continuing):  The case is one of great commercial

importance, we respectfully submit. It does appear

to be the first occasion in which this Court is to be
asked to consider what the status of guarantors is

when the lease, in respect of which they have given

the guarantee, is void at law, although it may be

good in equity. It is section 52 of the REAL PROPERTY

ACT 1861 of Queensland, which requires registration

of this lease because of its term and every State and

Territory in the Cornmonwealth has similar legislation.

In this day and age leases to proprietary companies

are exceedingly cornmon, as is their being accompanied

by guarantors, by the directors of the companies or

perhaps other people.

A possible opportunity for this Court to consider

the question was offered in a case in which an appeal

was heard on 4 October this year. Your Honours

Justices Deane and Dawson formed part of the Court.

That case involved an appeal by both lessee and

guarantors but, in the event, no special attention was paid to the role of the guarantors, the issues being whether the landlord's failure to register

the lease in question constituted a repudiation and,

if so, whether the tenant had effectively relied

on that repudiation to rescind the arrangements.

(Continued on page 4)

C2T43/l/VH	3	25/11/88
Chan

MR ROBIN (continuing): It is a rather curious case because

it involved no claim by the landlord, but rather a

claim by the.other parties for a declaration from

the court that their relations were at an end

because of the landlord's behaviour. There .are

two aspects of the application of the doctrine of

WALSH V LONSDALE which come into question in this

matter, and both of them are hinted at by the

judgment of four Judges of this Court in PROGRESSIVE

MAILING HOUSE PTY LTD V TABALI PTY LTD, 157 CLR 17.

I refer in particular to pages 26 and 27 in the

judgment of the present Chief Justice, which received

support from three others of Your Honours.

The first question about the application of

WALSH V LONSDALE is whether it is capable of applying

to third parties and at page 27, about point 7,
the judgment has, in the crucial phrase "as between
them" reference, we would say, to this proposition:

It follows that the rights of the parties in the present case -

they being the landlord and tenant -

are to be determined on the footing that

as between them, notwithstanding the

failure to register the memorandum of

lease, it brought into existence an

equitable term of the duration which it

which it contained. specified and subject to the conditions

(Continued on page 5)

C2T44/l/HS	25/11/88
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MR ROBIN (continuing):	The second question, and an important

question, about the doctrine in WALSH V LONSDALE is

whether its application is limited to those cases
where it is shown to the Court that specific performance

is available. We refer to page 26 in the reasons and at about point 6, the two sentences at the end of the

long paragraph on the page:

It was otherwise where the agreement had been

terminated. Then equity would not allow one

party to allege that any tenancy, even a

tenancy at cormnon law, existed.

The law as it stood before WALSH V LONSDALE is indeed

clear. The cases which Sir Anthony Mason referred to

at pages 26 and 27, in PROGRESSIVE MAILING HOUSE,

come from a number of jurisdictions in Australia,

South Australia, New South Wales and Victoria. There are

cases in Queensland which appear in our outline in

paragraph 1, which establish that a lease for a term

of more than three years, which is unregistered, is

indeed void at law, although landlord and tenant are

bound to an equitable lease. The old Full Court decision

in New South Wales, SULLIVAN V WILSON, in 1864 held

that a guarantor was not liable to the landlord on the
basis that the parties had contracted that there ought

to be a lease under seal and that had not come about.

(Continued on page 6)

C2T45/l/SR	5	25/11/88
Chan

MR ROBIN (continuing): Similarly, Sir Alexander Cockburn,

with whom Mr Justice Lush agreed, in

TOLER V SLATER, held to the same effect.

DAWSON J:  But here is there not some difficulty in that

the guarantee is part of the agreement for the

lease?

MR ROBIN:  That is certainly the fact of the matter,

Your Honour.

DAWSON J:  And what is guaranteed are the obligations under

that agreement.

MR ROBIN:  That is so, Your Honour. But the consideration

for that guarantee is, in our submission, apparent
fro~ firstly, page 1 of the record which records
in recital C that:

The Grantor has agreed at the request of the Grantee and the Guarantors (if any) to grant or procure the grant ..... of ..... a lease of

part of the Centre (the "demised premises").

That, in our submission, is a clear indication of the consideration which the guarantors were entitled to have provided as a condition of their

being held liable under this agreement for lease.

Turning to the bottom of page 2, Your Honours,

in the paragraph headed "Agreement for Lease",

it is stipulated that:

On and from the first to occur of:

(a) the day that the Grantee commences to

trade ..... or

(b) the date specified in Item 7,

the Grantor will grant or procure the grant

to and the Grantee will accept a lease of

the demised premises.

May I interpolate to say that page 15 shows

that the date specified in item 7, namely,

20 March 1984 became the relevant date.	So there
was a lease for five years from that time.

Interestingly, that five-year period has not yet expired and although there was little evidence

given in this case -

(Continued on page 7)

C2T46/l/AC	6	25/11/88
Chan

DAWSON J: Just correct.me, if I am wrong? There is

no question, Mr Robin, of any repudiation

of this agreement for the lease in this
case?

MR ROBIN:  That is not the way it has been argued by

my clients, Your Honour.

DAWSON J: Yes.

MR ROBIN:  It depends purely and simply on the question

of whether the consideration for the guarantee

and the condition on which the guarantee

should become enforceable was - - -

DAWSON J:  So that the agreement for the lease remains

binding on the parties?

MR ROBIN:  Yes, and it appears to us that the agreement

for lease probably still regulates the

party's rights because although there is an

instrument in registrable form signed, it

has never been registered, so it is really

little better than the agreement for lease.

DAWSON J:  The obligations of the tenant under that

agreement are guaranteed by the guarantors?

MR ROBIN:  Yes, Your Honour. If I might come back to

page 3 and read to the Court those words

following letter (b):

the Granter will grant or procure the

grant to and the Grantee will accept

a lease of the demised premises -

that is - - -

WILSON J:  Mr Robin, I am having difficulty hearing

you. Would you speak up perhaps?

MR ROBIN:  I am sorry, Your Honour. We say that those

words in paragraph 2.1 following (b) speak

only of a legal term, which means a registered

one. Going to 2.2, in the second sentence

it is stipulated that:

The Grantor is authorised to complete the

Lease and arrange for its execution stamping

and (where appropriate) registration -

The Full Court agreed that this was a case

where registration was appropriate, given

the term of the intended lease. Over the page,

clause 2.3 indeed arms the proposed lessor

with powers as an attorney to complete and execute

documents and have them registered in the Titles Office.

C2T47/l/JM	7	25/11/88
Chan

MR ROBIN (continuing): The guarantee in the lease itself is

in clause 23 which appears at page 43 of the
record. There, the guarantee expresses consideration

in terms of the landlords entering into this lease -

that is the lease effected by a document

commencing at page 18. The operative words are

"do hereby lease" at about point 4. Again, we say

that that is an indication that what is required

is a lease and one which is good at law.

The proposition that WALSH V LONSDALE has

no effect in respect of third parties is widely

accepted in the texts. They are listed at the

bottom of page 3 of our outline of submission and it has been accepted by Mr Justice Farwell in the

MANCHESTER BREWERY case, in a famous dictum which

cited in those texts. It was als0 ~oplied by

Chief Justice Blair in AHERN V w'ILKINSON, a Queensland case, and

although reference was not made to MANCH:t:::iTER

BREWERY, Mr Justice Fox, in CHRONOPOULOS V

CALTEX also held that the doctrine of WALSH V

LONSDALE does not apply to third parties.

To return to a matter raised by Your Honour

Justice Dawson, we would submit that, for purposes

of legal analysis, it is irrelevant that the page

on which the guarantee appears has been stapled

together with pages dealing with the covenants as

between the landlord and the tenant.

(Continued on page 9)

C2T48/l/SH	8	25/11/88
Chan

DAWSON J:	I am not sure I follow that last submission.
MR ROBIN:	Our argument is that the guarantor should be taken

as having expected, as a condition of his liability,

that there would be a legal lease. The reasons

for that are questions of security of the tenant's

tenure and those impact on the guarantor's

ability to require the tenont to do what is required of him; they also impact on the

guarantor's ability to enforce the terms of

that lease if he ever is in a position to do

that:through workings of subrogation.

DAWSON J:  Yes. When the lease was prepared there would

be another guarantee executed,	would there
not?

MR ROBIN:  There was another guarantee executed and that

is clause 23.

DAWSON J: Correct me if I am wrong, that is not the guarantee

which is relied upon. The guarantee that is

relied upon is the guarantee which is part of

the agreement of the lease?

MR ROBIN:  I think the guarantee relied on was the one

in clause 23, Your Honour, because there was
some debate whether the agreement for lease

ought to have been admitted in evidence. It

was executed on the same date as the other document,

at least on the part of the tenant; the execution

can be found in respect of the document in

re~istrable· form at page 49. Your Honours

will see that the guarantors and the lessee

signed on 13 March 1984 although the landlord

did not sign in the top place for execution

until November 1984.

(Continued on page 10)

C2T49/l/SDL	9	25/11/88
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WILSON J: That is November, is it?

MR ROBIN:	I believe so, yes.
DEANE J:	Was there any independent promise to pay rent under

the agreement for lease?

MR ROBIN:	By the guarantors, Your Honour?
DEANE J:	By the tenant.
MR ROBIN:	I do not think there was anything beyond the
obligation mentioned in 2.1 that the grantee would
accept the lease.
DEANE J:	And the claim was essentially for rent.
MR ROBIN:	Yes, Your Honour.
DEANE J:	Which means?

MR ROBIN: Well, it may have been for other matters such as

contributions to outgoings, but largely rent.

DEANE J:  So the claim was only under the equitable lease, not

under the agreement.for lease. I put that wrongly:

the claim was under the effect of the agreement

for lease but not under a term of it.

MR ROBIN:  Yes, Your Honour, and I think it right to say that

the landlord took the view that the agreement for

lease was the document in registrable form.	I was
about to refer Your Honours to page 16 where

Your Honours will see that the execution date appears

as 13 March on page 16. In only the third of them

does the year appear but it is indeed March 1984.

In relation to the facts attending this matter,

very few of them appeared in evidence but an

important one which did appear is that, although this

lease was never registered, there was registered an
intervening mortgage in favour of Citibank.	I hope

arrangements which we attempted to supply Your Honours

with copies of the certificate of title have borne

fruit.

•· WILSON J: Yes, we have a certificate of title.

(Continued on page 11)

C2T50/l/VH	10	25/11/88
Chan

MR ROBIN:	The last endorsement shows _a mortgage to E:itibank Limited registeEed on 12 March 1987 after production
on 12 December 1986. So that from the point of view
of the guarantor and the tenant the worst has happened.
There is now registered a mortgagee which is not
bound to respect the lease in any way or to consent to
its registration.  The position of the guarantor is
one of greater risk than that of the lessee, who has
available to him the possibility of lodging a caveat to protect his interest pending registration of the
lease.  A guarantor, as the applicants are, has no
interest in the loan and is denied that means of
protection.

I might refer Your Honours to Maitland's work.

One finds there, perhaps, the strongest statement of the point that we are attempting to make. I am reading

from page 161, where the learned author says:

I have heard remarks upon WALSH V LONSDALE which seem to imply that since the JUDICATURE

ACT an agreement for lease is in all respects

as good as a lease. Now Jessel certainly did

not say this, and to say it would certainly be

untrue.	An agreement for a lease is not equal to
a lease.	An equitable right is not equivalent

to a legal right ..... But introduce the third

party and then you will see the difference.

That has actually happened in this case. Taking up the

approach to guarantees which has been recently indicated

by this Court in ANKAR PTY LTD V NATIONAL WESTMINSTER

FINANCE PTY LTD, (1987) 162 CLR 549, our respectful

submission is that the proper interpretation of these

facts is that the guarantors contracted for no more

and should be held responsible for no more than to be

guarantors in the event of a legal term being made

available to the principal debtor, namely the intended

lessee. Those are our submissions, Your Honour.

(Continued on page 12)

C2T51/l/SR	11	25/11/88
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WILSON J:	Thank you, Mr Robin.	Yes, Mr Muir?

MR MUIR: If it please Your Honours, the application is

resisted on two grounds. The first is that

the application is not a suitable one for special
leave because in the end result the outcome
of any appeal must depend on facts peculiar

to this case and, particularly, upon the wording

of the guarantee contained in clause 23.01 of

the lease and, secondly, on the grounds that

the decision of the Full Court is clearly correct.

Your Honours, if I could go to the construction

question first of all. Our submission is that

the reference to WALSH V LONSDALE and the bearing
that it has on the rights of third parties

is something of a red herring. The matter,

in the end result, is always one of contractual

construction. That is how the Full Court regarded

it and when regard is had to the terms of the

guarantee in clause 23.01, in our respectful

submission, it will be seen that the Full Court

was clearly correct.

Your Honours, could I go to clause 23.01

which is at page 43 of the record. The guarantee

there, looking at the introductory wordings,

was granted in consideration of the landlord

entering into this lease at the guarantor's

request. Your Honours, that cannot be construed

as if it provided, in effect, in consideration

of the grantor's agreeing to grant and having

actually granted a term of years or perfecting

this demise. It means no more, with respect,
than it actually says, namely , that the "consideration"

is the "entering into". In other words, the

execution or otherwise becoming a party to this

lease, that i~ the instrument which Your Honours

have before you.	·
Your Honours, to conclude to the contrary, apart from doing some violence, we suggest,

to the language used, would also be to ignore recent decisions such as PROGRESSIVE MAILING

HOUSE PTY LTD V TABALI PTY LTD, 157 CLR 17.

(Continued on page 13)

C2T52/1 /SDL	12	23/11/88
Chan

MR MUIR (continuing):  My learned friend, Mr Robin, has

already referred to that and I go to it to show

that it is a decision which makes it clear that

normal principles of contract law and contractual

construction apply to leases. That was made plain

by His Honour the Chief Justice at page 29 where

His Honour said at about point 5:

The decisions in Australia and Canada

and the speeches in PANALPINA, reflect the

point made by William 0. Douglas and Jerome

Frank in "Landlords' Claims in Reorganizations",

Yale Law Journal, vol 42 (1933) -

omitting some words -

that, as the law of landlord and tenant had

outgrown its origins in feudal tenure, it

was more appropriate in the light of the

essential elements of the bargain, the modern

money economy and the modern development of

contract law that leases should be regulated

by the principles of the law of contract.

Accordingly, the balance of authority

here as well as overseas, and the reasons

on which it is based, support the proposition

that the ordinary principles of contract law,

including that of termination for repudiation

or fundamental breach, apply to leases.

Your Honour Mr Justice Wilson agreed in substance

with Mr Justice Mason's reasons. Your Honour

Mr Justice Deane also looked at this point in some

detail and concluded in the middle of page 53, after

considering how leases should be regarded, by saying:

That trend should be followed in this Court

and it should be accepted that, as a general

matter and subject to one qualification, the

ordinary principles of contract law are

applicable to contractual leases.

And the qualification does not seem to be relevant

for present purposes.

(Continued on page 14)

C2T53/l/SH	13	25/11/88
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MR MUIR (continuing):  Your Honours, the language of the

instrument of lease itself reinforces the view that when the parties to it were talking about

this lease, and obligations under this lease, they

were, as one might expect, not addressing themselves

to questions such as the lease giving rise to a

term of years and to the doctrine in

WALSH V LONSDALE, they were talking as ordinary

commercial people do and making reference to the

instrument containing the terms and conditions

of their bargain. The expression "this lease"

is studded throughout the instrument. If I could

just refer Your Honours to one or two places in

which it is used: on page 36 of the record, just

above clause 13.07 in the last paragraph .of 13.06

fter setting out rules and regulations, or the

types of rules and regulations, which the landlord

might prescribe, it says, looking at that last

paragraph:

Any such rules and regulations -

and then omitting unnecessary words and coming

down to the second-last line:

binding upon the Tenant as if the same were

set forth in this lease as covenants on the

part of the Tenant.

Clearly, we would submit that '~his leas? means

no more and no less than the document entered into

by the parties. The same applies, we submit, in

14.04 on the next page, page 37:

Notwithstanding anything contained in this lease or any implication or rule of law to the contrary -

another reference to what is in the ins~rument

of lease. And, finally, on page 39 at 17.01

where quiet enjoyment is dealt with: (Continued on page 15)

C2T54/l/AC	14	25/11/88
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MR MUIR (continuing):

The Landlord warrants that the Tenant

observing and performing the covenants
conditions and stipulations on its part

contained in or implied in this lease -

the "contained in", we would submit, is simply

a reference to what is in the document and

there is no reason why clause 23.01 should be

approached in any different fashion.

Your Honours, even if there was substance

WILSON J:  Mr Muir, that might be a convenient time

for us to adjourn.

MR MUIR:	Thank you, Your Honour.
WILSON J:	The Court will resume at 2 o'clock Canberra time.

AT 1.01 PM LUNCHEON ADJOURNMENT

C2T55/l/JM	15	25/11/88
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UPON RESUMING AT 2.01 PM:
WILSON J:	Yes,	Mr Muir.
MR MUIR:	Thank you, Your Honour.	Your Honours, I was

making the point before lunch that the case is

simply one of construction and that, as a matter

of construction, the grant of a legal estate was

not a consideration for the giving of the guarantee

by the guarantors~ Even if there is some substance

in the applicant's point that the consideration for

the granting of the guarantee was the granting of

a legal term of years and there was thus an obligation

to register, the grant of a term of years was not

a precondition to the assumption of any liability

on the part of the guarantors.

Registration is an obligation which can only

be fulfilled after execution of the lease, after

stamping, after obtaining the mortgagee's consent

and of course we have heard here that there was a

mortgagee. The instrument of lease contains no

stipulations relating to the time for registration

and accordingly the law will imply an obligation that

registration be effected within a reasonable time

assuming the existence, of course, against us of

such an obligation. The breach by the respondent

of any such obligation could only be a breach of a

non-essential time stipulation and mere delay in

effecting registration could not be relied on to

ground termination of the lease or termination

of the guarantee until such time as notice had been

given - ma~<in~ tir1e of. the essence. In that respect

we rely on authorities such as LOUINDER V LEIS

which is on our list at 149 CLR 509.	I do not
propose to go to that decision.

Your Honours, the Full Court held at page 66 - I am sorry, Your Honours, I seem to have lost the

reference I was looking for. (Continued on page 17)

C2T56/l/HS	16	25/11/88
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WILSON J: Is it about line 8 on page 66?

MR MUIR:  Yes, Your Honour, starting a little further up, about

the fifth line:

This is so but, although a failure to register is alleged against the appellant, nhere is no

suggestion that it was required to do so within

a particular time or that it had refused or

was unwilling to register. The only evidence on

the point is to the contrary; and there is no

evidence to suggest that the first defendant at

any stage sought registration or attempted

otherwise to safeguard. its position. His Honour

the trial judge did not find and could not have

found that the appellant was in default and,

in equity, validity of the lease in no way

depended upon registration of it.

The applicant's case involves acceptance of the notion

that the guarantors had no obligation under clause 23.01

until after registration because it is only then, of

course, that a term of years, a legal term, can come

into existence. Your Honours, with respect, that

conclusion is odd. It is odd because there would seem

to be no legal or practical reason why the obligations

of the lessee and guarantor should.be tfiggered by

registration, the date of which cannot be predicted,

rather than being triggered by the execution of the

instrument of lease which, of course, embodies the
contract between them or, perhaps, even by the
commencement of the term or the entering into of

possession.

The date of registration will be affected by

matters such as stamping, mortgagees' consents,

titles office requisitions and other matters to which

I have referred and, of course, there is nothing in the lease itself to support the conclusion that the guarantors' obligations are in any way postponed.

My learned friend mentioned registration of a mortgage.

Of course, that was not a point relied on below and
not a point pleaded.	The sole points which were

relied on are referred to in the reasons for judgment
at the very foot of page 62 going over to 63 and
the points are really twofold. Firstly, the contention
which found favour with the learned trial judge, that
failure to register a lease for a term in excess

of three years resulted in the instrument being void

and of no effect. The second point, that the

obligations of the guarantors were entirely dependent

on the registration of the lease.

Of course, although perhaps it is not strictly

relevant, Your Honours, the guarantors and the lessees

were not in a particularly difficult position because,

even though the lease was unregistered, the lessee

could have protected itself quite simply by registering

C2T57/l/VH	17	25/11/88
Chan

a caveat at any time. In our submission, the

Full Court approached the problem in the correct way by examining the wording of the guarantee in order to ascertain the obligations of the parties

and the aourt's approach is shown at page 63, right

down towards the bottom of the page in the very

last line:

In other words, His Honour used the provisions of

exhibit 2 to restrict the plain words of

clause 23.01 of the lease -

exhibit 2 being the agreement for lease -

and, in the course of doing so decided that the

first defendant was but a tenant at will.

The proposition lastmentioned overlooks

entirely the first defendant's position in

equity but adds little, in my view, to the relevant

argument. To me it seems quite clear that

when the appellant executed and so entered

into the lease (exhibit 1) the respondents

guaranteed performance by the first defendant

of its obligations under the lease and that

performance was to be the same whether the

lease was unregistered or awaiting registration

or registered.

And over at page 65 at about point 9 it is made plain

again that Their Honours approached the matter as one

of construction. In the fourth last line:

For the respndents it is submitted that

although equity would look to the conscience of
both the appellant and the first defendant,
it could not do so in respect of the respondents

but the short answer to that is that if the

first defendant was bound to perform its

covenants the respondents had guaranteed such

performance.

DEANE J:  As a matter of construction, did the obligations arise

under this lease or under the agreement for lease?

(Continued on page 19)

C2T57/2/VH	18	25/11/88
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MR MUIR (continuing):. Your Honour, our submission is that

the lease superseded the agreement for lease. The

obligation in the agreement for lease was to execute

the instrument of lease.

DEANE J:	But what gave rise to the equitable obligations was
the agreement for lease.
MR MUIR:	Yes, Your Honour but, with respect, once the
instrument of lease was executed by the parties it then became the agreement for lease until
registration.

DAWSON J: Is that right? I mean, the lease is void. Equity

may treat it asa.i. agreement for a lease but it is

unnecessary to do so where there is an actual

agreement for a lease and that may be of significance.

MR MUIR:	Yes, Your Honour but, with respect, we would submit
that where, in pursuance of obligations under an agreement for lease, a further document is executed
by the parties which is intended to embody the terms
and conditions of their bargain then, until
registration, it becomes the agreement for lease.

DAWSON J: You may be right.

MR MUIR: Perhaps it, in the end result does not particularly

matter here because - - -

DAWSON J: Well, it might.

MR MUIR:	Except that, Your Honour, the wording of clause 23.01 has virtually identical provisions in the agreement
for lease. Those provisions are to be found at
clause 4.10.
WILSON J:	But the obligations of the lessee are different,

are they not? I thought that Mr Robin indicated

that there was no obligation to pay rent in the

agreement for a lease.

MR MUIR: Well, Your Honour, what happened in this case was

that the lease that was entered into was in a form

annexed to and part of the agreement for lease so

that precisely the same terms and conditions apply.

DAWSON J :	And there is no obligation to pay rent in that form,
is there?-

MR MUIR: Well, we would submit so, Your Honour, because

looking at the agreement for lease, clause 2.1 on

page 2 going over to page 3 just above - well, all

of 2.1, there is the obligation to grant and an

obligation to aceept a lease on the terms and

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conditions in the annexed lease and that is in

identical terms to the document which contains

clause 23.01.

DEANE J:	But if there were no guarantee in the annexed lease,
you could not get a guarantee of the obligation to
pay rent under 4.10?
MR MUIR:	No, Your Honour.  Your Honours, the submissions
that I have just made and the approach of the
Full Court, with respect, show that the principle
in WALSH V LONSDALE really does not have any
application to the circumstances before the Court
in so far as it is attempted to be said by the other
side that a difficulty rests in applying WALSH V
LONSDALE so as to affect the rights and obligations
of third parties because here, we say it is simply
a matter of construing clause 23.01 and, if one looks at clause 23.01, one sees that the obligations that are guaranteed are simply the obligations which arise under the instrument and the matter is, really,
quite a simple one.

Our learned friend has relied heavily on two

cases, looking at paragraph 2 of their outline:

SULLIVAN V WILLSON and TOLER V SLATER.

(Continued on page 21)·

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MR MUIR (continuing):  Your Honours, SULLIVAN V WILLSON was

a demurrer case and, consequently, had to be

decided on the facts pleaded and when one looks

at it, it is quickly seen that it sheds no light

upon any problem which might exist here. It is

reported at, (1864) SCR (NSW) 180. There is a

very short judgment of Chief Justice Stephen at

page 184 and a quick perusal of it shows that the

conclusion in the case was inevitable. Starting

at about four lines into the judgment at page 184,

His Honour said:

What effect the existing written contract

had, either as between the plaintiff and his

tenant, Souter, or as between the plaintiff

and this defendant, it is not material to

enquire. It is sufficient to say that the

defendant signed it alone on the faith and

and consideration that there should be a

deed executid by the two under seal, and that

he should be liable only for the covenants

in that deed. If this be so, it is nothing

to the purpose that it would have been

perfectly immaterial whether the suretyship

was for one or the other, the result being

the same. The defendant is entitled to insist

that whatever might be the effect of the signed

paper, there was to be another more formal character for the covenants to be inserted in which, and no other, he was to be responsible.

In other words, it was pleaded, in effect,

that his obligation was dependent upon the execution

of the formal deed. That did not happen and,

consequently, it had to follow that the guarantor

was not liable. And TOLER V SLATER, (186.7) 3 QB 42,

is, similarly, of no assistance to the applicant.

Your Honours, it was a pre WALSH V LON~DALE case

and if one looks at the judgment of

Chief Justice Cockburn at page 45, it will be seen

that all that the case decide~ prior to

WALSH V LONSDALE, is that if the lessor fails to

execute a lease the tenant is not bound by the

covenants in the lease and in consequence the

guarantor is not bound either. And it is authority

for no other proposition.

Your Honours, the next point that I come to

is that it is asserted by the applicant that this

case may conveniently be dealt with in association

with LAURINDA PTY LTD V CAPALABA PARK SHOPPING

CENTRE PTY LTD, a matter which has been heard but

the decision on which is pending. Your Honours,

the issues in that case were quite different to

the issues here - - -

WILSON J:  I do not think you need trouble about that

submission.

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MR MUIR:	Thank you, Your Honour.	Your Honours, our final

point is that, putting aside everything that has

been said thus far, the applicants are still faced

with a simple argument on the construction of

clause 23.01 which they are unable to meet.

If I could go to the clause - - -

WILSON J:  I thought you had taken us to the clause at the

beginning, Mr Muir.

MR MUIR:  I had, Your Honour, but I wish to ~ake a further

point on its construction and on the width of the

clause, which I have not so far raised.

Your Honours, the point I am making is that if

one looks at 23.01, particularly paragraph (b),
the clause is so broad that irrespective of whether

or not there may have been an obligation on the

part of the lessor to register the lease, failure

to do so cannot have the result that the guarantor

is discharged from its obligations.

(Continued on page 23)

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MR MUIR (continuing):  The words we rely on in particular

are the words towards the foot of paragraph (b).

Perhaps I should start in the first line and

then pick up the relevant part at the foot:

the guarantee and indemnity shall not be

considered as wholly or partially discharged

by the payment at an¥ time of any moneys -

et cetera and then,going down to the third last

line:

or by any other dealing matter or thing

whatsoever.

Our submission is that failure to register comes

within the scope of those broad words.

Your Honours, there is no reason why the

breadth of those words should be confined in

any way, particularly when one looks at what

has preceded those words in 23.0l(b) because

even if the lease itself has been altered, it

provides that the obligations of the guarantors

still stand and there is no restriction on

the nature or extent of alteration .. The demised

premises could be increased, or decreased,

the rent could be increased, all without

reference to the guarantors. Those are our

submissions.

WILSON J:  Thank you, Mr Muir. The Court need not

trouble you to reply, Mr Robin. Special leave

will be granted in this case.

AT 2.22 PM THE MATTER WAS ADJOURNED SINE DIE

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