Coles Myer Ltd v Volley Investments Pty Ltd
[2003] WASC 254
COLES MYER LTD -v- VOLLEY INVESTMENTS PTY LTD [2003] WASC 254
| Link to Appeal : | [2005] WASCA 52 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 254 | |
| Case No: | CIV:2029/2003 | 9 DECEMBER 2003 | |
| Coram: | MASTER SANDERSON | 16/12/03 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Landlord liable for breach of covenant for quiet enjoyment | ||
| A | |||
| PDF Version |
| Parties: | COLES MYER LTD (ACN 004 089 936) VOLLEY INVESTMENTS PTY LTD (ACN 055 797 085) |
Catchwords: | Landlord and tenant Collapse of ceiling in shopping centre Tenant claiming breach of covenant for quiet enjoyment Relevance of landlord engaging competent independent contractor |
Legislation: | Nil |
Case References: | JC Berndt Pty Ltd v Walsh [1969] SASR 34 Matania v The National Provincial Bank Ltd (1936) 2 All ER 633 Sanderson v Mayor of Berwick-upon-Tweed (1884) 13 QBD 547 Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 Blake v Woolf (1898) 2 QB 426 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 Byrnes v Jokona Pty Ltd (2002) FCA 41 Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18 Dey v Victoria Railways Commissioners (1947) 78 CLR 62 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 Jones v Bartlett (2000) 75 ALJR 1 Manchester, Sheffield and Lincolnshire Railway Co v Anderson (1898) 2 Ch 394 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd (1976) 2 NSWLR 15 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 75 ALJR 164 Pacific Parking Pty Ltd v Ryssal Three Pty Ltd (1995) ATPR) 46-142 Returned Sailors' Soldiers' and Airmens' Imperial League of Australia (Henley & Grange Sub-Branch) Inc v Grace Abbott v Joseph Ernest Abbott (1946) SASR 270 Stoneman v Lyons (1975) 133 CLR 550 Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 V K & M R Leong Nominees Pty Ltd v Batur [2003] VSC 17 Vasile & Anor v Perpetual Trustees WA Ltd (1987) ANZ Conv Rep 352 Wilkinson v Joyceman (1985) 1 QdR 567 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
VOLLEY INVESTMENTS PTY LTD (ACN 055 797 085)
Defendant
Catchwords:
Landlord and tenant - Collapse of ceiling in shopping centre - Tenant claiming breach of covenant for quiet enjoyment - Relevance of landlord engaging competent independent contractor
Legislation:
Nil
Result:
Landlord liable for breach of covenant for quiet enjoyment
(Page 2)
Category: A
Representation:
Counsel:
Plaintiff : Mr I R Freeman
Defendant : Mr R J L McCormack
Solicitors:
Plaintiff : Phillips Fox
Defendant : Srdarov Richards Burton
Case(s) referred to in judgment(s):
JC Berndt Pty Ltd v Walsh [1969] SASR 34
Matania v The National Provincial Bank Ltd (1936) 2 All ER 633
Sanderson v Mayor of Berwick-upon-Tweed (1884) 13 QBD 547
Case(s) also cited:
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Blake v Woolf (1898) 2 QB 426
Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520
Byrnes v Jokona Pty Ltd (2002) FCA 41
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Dey v Victoria Railways Commissioners (1947) 78 CLR 62
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185
Jones v Bartlett (2000) 75 ALJR 1
Manchester, Sheffield and Lincolnshire Railway Co v Anderson (1898) 2 Ch 394
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Martins Camera Corner Pty Ltd v Hotel Mayfair Ltd (1976) 2 NSWLR 15
Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 75 ALJR 164
Pacific Parking Pty Ltd v Ryssal Three Pty Ltd (1995) ATPR) 46-142
(Page 3)
Returned Sailors' Soldiers' and Airmens' Imperial League of Australia (Henley & Grange Sub-Branch) Inc v Grace Abbott v Joseph Ernest Abbott (1946) SASR 270
Stoneman v Lyons (1975) 133 CLR 550
Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156
V K & M R Leong Nominees Pty Ltd v Batur [2003] VSC 17
Vasile & Anor v Perpetual Trustees WA Ltd (1987) ANZ Conv Rep 352
Wilkinson v Joyceman (1985) 1 QdR 567
(Page 4)
1 MASTER SANDERSON: This is the plaintiff's application for summary judgment. The application is supported by an affidavit of Eric Peter Cicanese ("Mr Cicanese") sworn 21 August 2003. The affidavit verifies the facts upon which the claim is based and states that in Mr Cicanese's opinion there is no defence to the claim. The affidavit satisfies the requirements of O 14 r 2(1).
2 The facts of the case are straightforward and were not seriously in dispute between the parties. The position can be summarised in this way. The plaintiff is a well-known national retailer. The defendant is the owner of the Phoenix Shopping Centre in Spearwood. The plaintiff is the lessee of a significant area within the Phoenix Shopping Centre and has occupied the premises for a number of years. It does so under the terms of a lease first entered into in 1977. The relevant circumstances that give rise to this claim can be effectively summarised by quoting par 8 through to 13 of the statement of claim. They read as follows:
"8 At all material times, the plaintiff's normal trading hours at the Shopping Centre have been Mondays, Tuesdays, Wednesdays and Fridays from 8:00 am to 6:00 pm, Thursdays from 8:00 am to 9:00 pm and on Saturdays from 8:00 am to 5:00 pm.
9 Pursuant to clause 11.04 of the Lease, the plaintiff is entitled to quiet enjoyment of the Premises.
10 On 20 and 21 April 2002, as part of a redevelopment of the Shopping Centre, the defendant and/or their agents had arranged for work to be carried out for the installation of skylights in the roof of the food court area at the Shopping Centre.
11 Late on the evening of 21 April 2002 or in the early hours of the 22 April 2002, a section of the Shopping Centre roof over the food court collapsed.
12 As a result of the collapse of the portion of the roof as pleaded in paragraph 11:
12.1 the entire Shopping Centre was closed for retail trade on 22 April 2002;
(Page 5)
- 12.2 the plaintiff was unable to resume retail trade from the Premises at the Shopping Centre until 26 April 2002;
12.3 access to the Premises was restricted to access via a temporary entry which was external to the Shopping Centre, instead of via the usual access from the Shopping Centre malls until 29 July 2002, when some of the access doors reopened;
12.4 public access to the Shopping Centre malls in the vicinity of the usual entry to the plaintiff's premises was restricted until late October 2002, when all access doors had reopened and all obstructions had been removed from the vicinity of the entrance;
12.5 customer traffic to the Premises was reduced while repairs to the Shopping Centre were undertaken; and
12.6 there was water ingress to the Premises and damage to the Premises and the plaintiff's fixtures and fittings as a result of that water ingress.
- 13 By reason of the matters pleaded in paragraphs 10, 11 and 12 above, the plaintiff is in breach of clause 11.04 of the Lease in that the plaintiff's quiet enjoyment of the Premises has been affected."
3 It is not in dispute between the parties that the section of roof of the shopping centre collapsed as alleged in par 11 of the statement of claim. Nor is it disputed that the collapse of the portion of the roof resulted in some business interruption. The defendant does not necessarily accept that the interruption was as pleaded in par 12 of the statement of claim. This application is not concerned with any loss and damage that the plaintiff suffered as a consequence of the alleged breach of the entitlement to quiet enjoyment. The plaintiff seeks judgment on its claim, with damages to be assessed. The issue between the parties is whether, given the pleaded facts, there has been a breach by the defendant of the plaintiff's right to quiet enjoyment of the premises. If the plaintiff is successful on this application then damages are to be assessed at a later date.
(Page 6)
4 The defendant's answer to the plaintiff's claim can be summarised in this way. The defendant accepts that it undertook a refurbishment of the shopping centre. It says that it engaged competent independent contractors to undertake the work. These independent contractors included architects, engineers and a builder. They took all reasonable precautions to ensure that the refurbishment did not interfere with the plaintiff's operation of their retail premises. For reasons not yet ascertained the roof collapsed. That may have been the consequence of negligence on the part of the defendant's independent contractors. But whatever the reason for the collapse, it did not result directly from the actions of the defendant. The defendant itself did nothing to cause the collapse of the roof - other than undertake the refurbishment. In the circumstances, the defendant says, it is not liable for a breach of the lease. Such a finding, it says, is tantamount to the defendant being held strictly liable for any breach of the covenant of quiet enjoyment. That, it is said, is not and never has been the law in Australia.
5 As I have indicated above, there is no real dispute on the facts relevant to this application. But it is worth bearing in mind precisely what those facts are. First, the plaintiff is entitled pursuant to cl 11.04 of the lease, to quiet enjoyment of the premises. There can be no suggestion that the plaintiff in some way waived such a right or acquiesced in the refurbishment of the premises so as to diminish its rights under the quiet enjoyment covenant. I mention this only because both in his written submissions (par 5(a)) and in oral submissions, counsel mentioned that the plaintiff was aware of the nature and extent of the refurbishment works. In my view, that knowledge is irrelevant to the matters in issue. I did not understand counsel to argue that there was some variation to the lease to be implied by conduct of the parties, nor was it suggested that somehow, by acquiescence, to the refurbishment the plaintiff was prevented from claiming damages for breach of the covenant of quiet enjoyment. Quite what counsel intended to make of the plaintiff's admitted knowledge of the refurbishment did not emerge from any of the submissions made at the hearing of the application.
6 Second, there was no evidence at all as to what caused the collapse of the ceiling. While it did not emerge from the evidence, counsel for the defendant said during his submissions, without objection from counsel for the plaintiff, that it had not yet been ascertained what caused the collapse of the ceiling. Having said that, there is no suggestion of the intervention of a third party. For instance, it is not suggested that thieves in attempting to enter the shopping centre premises precipitated the collapse of the ceiling. All that can be said is that refurbishments were being undertaken
(Page 7)
- on the shopping centre premises and during the course of those refurbishments, the ceiling collapsed.
7 Thirdly, this is a contract case. The plaintiff alleges that the defendant has breached the covenant of quiet enjoyment found in the lease. It is not pleaded that the defendant was in some way negligent. In other words, there is no claim in tort. I mention this point because counsel for the defendant referred on a number of occasions to various authorities where the plaintiff's claim was based in tort. With respect, these authorities seem to me to have little or no relevance to the present matter at issue. The simple question is - on the facts as pleaded, is the defendant in breach of the covenant for quiet enjoyment found in the lease between the plaintiff and the defendant?
8 The classic statement of what is involved in a breach of a covenant of quiet enjoyment is found in the dictum of Fry LJ in Sanderson v Mayor of Berwick-upon-Tweed (1884) 13 QBD 547, where the learned Lord Justice said (at 551):
"… it appears to us to be in every case a question of fact whether the quiet enjoyment of the land has or has not been interrupted; and where the ordinary and lawful enjoyment of the demised land is substantially interfered with by the acts of the lessor, or those lawfully claiming under him, the covenant appears to us to be broken, although neither the title to the land, nor the possession of the land may be otherwise affected."
9 Many of the cases deal with the question of whether or not there has in fact been a breach of the covenant of quiet enjoyment. That is not the issue in this case. The issue here concerns whether or not the covenant has been breached when a third party engaged by the landlord has been responsible for the interference with the tenant's right of quiet enjoyment. This was the issue in the South Australian case of JC Berndt Pty Ltd v Walsh [1969] SASR 34. Walters J put the position as follows (at 38):
"By its covenant, the defendant in effect guaranteed the plaintiff against any acts, or the consequences of any acts, done by it or with its authority which could disturb the plaintiff's enjoyment of the premises. And it is none the less a breach of covenant for quiet enjoyment that the interferences of which the plaintiff complains were caused by an independent contractor, however competent that contractor may have been, and however little may have been the defendant's control over the building works.
(Page 8)
- The defendant cannot escape liability because it entrusted the execution of the works to a competent contractor over which it exercised no control."
10 That statement of principle, which reflects the authorities, can be put in context by reference to the facts of the case. A convenient summary of the facts is to be found in the headnote:
"The owner of a city building leased a lock-up shop in the building to a lessee for a term of years, the lease containing a covenant by the landlord for quiet enjoyment. During the term of the lease the landlord carried out an extensive reconstruction of the building, which necessitated the erection in the street, in front of the shop, of a hoarding, and the use of a hoist and chute to facilitate the removal of materials. The hoarding remained in front of the shop for a period of about four months. The lessee of the shop alleged that the hoarding obscured the shop windows and interfered with the access of customers to the shop; and that there had in consequence been a falling-off in his business. He sued for damages for breach of covenant for quiet enjoyment."
11 His Honour found that the refurbishment of the building had been carried out in a proper and competent manner. He was satisfied that no other system was available which would have allowed for the removal of the materials and not have interfered with the plaintiff's business. Furthermore, the defendant obtained a licence from the local authority allowing for the erection of the hoarding to allow the building work to be carried out. But nonetheless his Honour found that the actions of the defendant amounted to a breach of the covenant of quiet enjoyment.
12 The difference between the facts in Walsh and this case is that in Walsh there was no identifiable sudden act which resulted in the plaintiff's quiet enjoyment being interrupted. It is that difference which was fixed upon by counsel for the defendant. Counsel pointed out that all of the actions undertaken by the independent contractor in the Walsh case were authorised by the landlord. There was no question in this case of the landlord having authorised any action which resulted in the collapse of the ceiling.
13 In my view there is nothing in that suggested point of distinction. As Walters J said, the defendant cannot escape liability because it entrusted the execution of the works to a competent contractor over which it
(Page 9)
- exercises no control. Rather, the defendant is liable for any act of interruption caused by a person whom it expressly authorised to do and act. The act here is the act of refurbishment. The interruption to the plaintiff's business has resulted from the process of refurbishment. For that reason, the defendant is liable to the plaintiff.
14 In reaching that conclusion I am not interpreting the covenant of quiet enjoyment in a way that might be equated with strict liability. For instance, if during the course of construction thieves had attempted to enter the shopping centre premises and precipitated the collapse of the ceiling, then it is at least arguable that the defendant would not be liable to the plaintiff, at least under the quiet enjoyment provision of the lease. That is because the business interruption was not caused by the defendant or parties claiming through him, but was a consequence of the actions of a third party over whom the defendant had no control.
15 There are a number of authorities which confirm this position. In Matania v The National Provincial Bank Ltd (1936) 2 All ER 633, Slesser LJ quotes with approval Williams' Notes to Saunders' Reports, Vol 2 at page 525 (641 - 642):
"the law will never adjudge that a lessor covenants against the wrongful acts of strangers, except his covenant is expressed to that purpose; for the law itself does defend every man against wrong, and therefore though one warrants land to another expressly, yet he does not defend against tortious entries."
16 Here no tortious act by a third party is invoked. No more need be said. The defendant is clearly liable to the plaintiff and there should be judgment for the plaintiff against the defendant with damages to be assessed.
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