Clone Pty Ltd v Players Pty Ltd & Ors (N0 2)

[2006] SASC 290

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

CLONE PTY LTD v PLAYERS PTY LTD & ORS (N0 2)

[2006] SASC 290

Judgment of The Honourable Justice Vanstone

22 September 2006

LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION

LANDLORD AND TENANT - TERMINATION OF THE TENANCY - FORFEITURE - NOTICE AND DEMAND BEFORE RE-ENTRY

LANDLORD AND TENANT - COVENANTS - AS TO REPAIR

Plea for relief against forfeiture - no relief given.

CLONE PTY LTD v PLAYERS PTY LTD & ORS (N0 2)
[2006] SASC 290

Civil

1. VANSTONE J:     On 4 July 2006 the Full Court made orders consequent upon its judgment in Players Pty Ltd & Ors v Clone Pty Ltd [2006] SASC 118. That was an appeal against a judgment of mine delivered on 22 July 2005: [2005] SASC 281.

2. Among the orders made by the Full Court was an order remitting to me for determination the claim of the first defendant (by way of counter-claim) for relief against forfeiture on account of breaches of lease. 

3. The claim for relief against forfeiture related to two Notices to the Tenant to Remedy a Breach, each served in June 2004. (There were two further such Notices which are not relevant for my purposes.) These purported to comply with s 10 Landlord and Tenant Act 1936.  They were referred to as the second and third Notices.  In addressing these issues I rely on the more detailed factual background set out in my original judgment and I shall use the abbreviations employed there.

4. I earlier found that it was unnecessary to definitively consider the claim for relief against forfeiture because I concluded that breach of the Lease as alleged by the first Notice was made out and because, in any event, Clone succeeded on the main issues in the action.  However, because the Full court found that no breach as alleged in the first Notice was made out, the claim for relief becomes more relevant.

5. The second Notice principally alleged breaches of clause 2.6 of the Lease, which imposed the obligation to maintain the premises in good repair.  In that Notice were alleged numerous instances of breach of that obligation which I found proved.  I found these were not such as to be covered by the wear and tear exception in the Lease and that they were not remedied by Players.  The main breach related to the state of the roof, but there were extensive failures identified by the plaintiff’s witness, Mr Jankovic, quite apart from the roof. 

6. The third Notice relied on certain failures to meet the provisions of the Building Code (“BCA”) and failure to maintain the air conditioning plant.  I set out at [145] of my reasons the five matters ultimately relied on, as supported by the evidence of Mr Dodd.  At [146] I referred to the fact that reliance was placed on the BCA as it stood in 2005, whereas there was no evidence of what the BCA required in 1995 when the redevelopment of the premises was done.  I said:

   In my view it was too late ten years on, as the end of the Lease term approached, to raise issues of compliance with the BCA under the guise of the maintenance provisions of the Lease, or at all.  That the plaintiff did so tends to reinforce that the Notices were principally a tactic.

   I should have more clearly set out my view that, for the reasons given, all but one of these alleged breaches remained unproved.  Whilst the fifth was a matter of general maintenance rather than a BCA matter, and was proved, it was of little significance.

7. As to the air conditioning plant, I found proved that a number of the units had not been kept in good running order and required servicing or repair.  However, I accepted the defendant’s submission that the issue was de minimus.

8. In my reasons for judgment at [153] I said in respect of this aspect of the counterclaim:

   Had the matters raised by the third Notice stood alone, I might have been sympathetic to the plea for relief against forfeiture.

9. What I meant to convey there was that I considered that even though I found that the state of the air conditioning plant constituted a breach of the Lease, I found merit in the first defendant’s claim for relief against forfeiture.  I had in mind too my earlier observations that the Notices appeared to have been served in the context of the developing dispute for “essentially tactical reasons”.  I further had regard to the fact that the necessary repairs appeared to be able to be done readily and relatively cheaply.  I remain of the view that had the third Notice breaches stood alone I might have been inclined to give relief against forfeiture.  But they did not.

10. That comment did not extend to the second Notice.  The breaches I there found proved were of much greater significance and included, as I have said, the roof cladding.  The remedial work done on that was superficial and inadequate.  Dispute about that had been ongoing over several years.

11. Section 11 Landlord and Tenant Act provides for the right to give relief against forfeiture, but it seems to have always been a right this Court had.  The Court has considerable discretion in whether to ameliorate the harshness of the provisions in a lease and the lessee’s conduct throughout is relevant:  Dinian WD, Commercial Leases (2^nd ed, Law Book Company, 1993);  Smith PF, The Law of Landlord & Tenant (4^th ed, Butterworths, 1993) pp 209-210.  Logically, a denial of breach is not a promising prelude to a claim for relief, particularly where the nub of the dispute is of significance and the dispute itself, protracted.  At least so far as the roof was concerned, that was the case here.  I think the issue of the roof, the state of the air conditioning plant and the various matters alluded to by Mr Jankovic (insofar as I accepted that they amounted to breaches) are properly to be accumulated when the question of relief is considered.  To those could be added instances of late payment of outgoings and failure to comply precisely with the requirements of the Lease with respect to insurance and outgoings.  Viewed in a global way, these add up to an ongoing lack of concern for the Lessor’s rights under the Lease.  In the face of the entirety of Players’ conduct as a lessee, I would consider it unfair to Clone to grant to Players relief against forfeiture.

12. Accordingly, I find that the plaintiff was entitled to forfeiture of the Lease on the basis of the second and third Notices.  I decline to give relief against forfeiture.

13. I dismiss paragraphs 52 and 53 of the first defendant’s counterclaim.