Conifer Developments Pty Ltd v C and E Riha Pty Ltd

[2003] QDC 239

[2003] QDC 239

DISTRICT COURT
CIVIL JURISDICTION

JUDGE DODDS

No 471 of 2001

CONIFER DEVELOPMENTS PTY LTD	Plaintiff
and
C & E RIHA PTY LTD	First Defendant
and
CHRISTOPHER RIHA and FRANCES RIHA	Second Defendants
and
DAVID RONALD ISON and JONATHON VICTOR	Third Defendants
BAILEY
MAROOCHYDORE ..DATE 16/04/2003
JUDGMENT

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16042003 T8/MT M/T MCY 1/2003 (Dodds DCJ)

HIS HONOUR: This was an application for summary judgment by	1
$23,076.55. In Bernstrom v. National Australia Bank Ltd 2002,
the plaintiff against the first and second defendants, for dealing with rule 292 of the Uniform Civil Procedure Rules

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endorsed the approach of the Court of Appeal in the United In effect, the power to grant summary judgment in the plaintiff's or defendant's favour is to be exercised where the claim or defence has, "no reasonable prospect of being

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successful, the word, 'real', distinguishes fanciful prospects
of success or -- they direct the Court in the need to see
whether there is a 'realistic', as opposed to a 'fanciful'
prospect of success". If there are factual matters in dispute

which could be resolved in favour of a respondent to an

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application for summary judgment, and if so found, could raise
a realistic prospect of success, summary judgment is not

appropriate.

The plaintiff was the lessor of shop premises in the Nambour

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Plaza shopping centre (the shop). The first defendant was the original lessee of those shop premises, pursuant to a 10-year lease commencing on 1 October 1992. The second defendants,
who were directors of the first defendant, in consideration of

the granting of the lease, executed a guarantee guaranteeing

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the "due and punctual payment of rent, and all other moneys
payable by the tenant under the lease", and, "the due
performance and observance by the tenant of the terms and

conditions of the tenants' covenants.

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It also provided:  1

"(b) (ii) This guarantee shall not be discharged by any

assignment of the lease by the tenant or it's

successors -

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(iii) Where there is more than one guarantor the
covenants herein contained on the part of the
guarantors shall be deemed to have been made jointly

and severally."

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The plaintiff's claim was for $50,429.79, comprising
$23,076.55, for rent, electricity, outgoings, promotional

levies and GST, outstanding when the then tenant of the shop vacated it without notice on or about 30 September 2001, and $27,353.16 for damages arising from the balance of the term of	30
the lease to 30 September 2002.
The tenant of the shop, who, it was said, vacated it on or
about 30 September 2001, was an assignee of the lessee's
interest under the lease. That came about as follows:	40
(a)	On or about 7 October 1998 the first defendant's interest

under the lease was assigned (the first assignment) by

deed made between the plaintiff as lessor, the first

defendant as assignor and the second defendant as 50

existing guarantors, and Jonathon Victor Bailey and David Ronald Ison (the third defendants) as assignees. The deed contained terms as follows:

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"(3)	It is hereby expressly agreed and declared by	1
and between the lessor and assignor that the assignment shall not release or relieve the assignor from its obligations to observe and perform each and every covenant agreement and

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condition contained or implied in the lease.

---

"(9) The existing guarantor consents to the within

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assignment and variation and acknowledges that
the assignment and variation will not vary or
abrogate his respective obligations pursuant to
the guarantee and indemnity contained in and

annexed to the lease. The existing guarantor

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confirms that his obligation under the
guarantee and indemnity remain in full force
and effect notwithstanding that within

assignment and variation."

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(b) On or about 28 October 1999 by deed entered into between the plaintiff as lessor, the third defendant as assignors and David Ronald Ison (one of the assignors) as assignee, the third defendants assigned their interest under the least to David

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Ronald Ison (the second assignment).

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The second defendants have said they were not aware of the	1
second assignment. It will be observed that the first and second defendants were not a party to this deed.
In their defence to the plaintiff's claim the first and second

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defendants did not dispute the existence of the lease or the
terms contained in the lease document. It was admitted that in
consideration of the plaintiff's agreeing to lease the
premises to the first defendant, the second defendants

executed the guarantee. It was admitted the first defendant

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had not paid amounts claimed for rent, electricity, outgoings,
promotional levies, and goods and service tax claimed in the
sum of $23,076.55. The two assignments of the lease were
admitted. The first and second defendants asserted they did

not agree to the second assignment, that the plaintiff had

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since a time prior to 25 September 2001, proposed to redevelop
the site of the premises the subject of the lease, that the
development would not be completed prior to 1 October 2002,
and that as part of that proposed redevelopment the plaintiff

had resolved that the premises the subject of the lease not be

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re-opened or used until redevelopment of the site was
completed. They denied that the first defendant had abandoned
the premises as the plaintiff had pleaded, and said they were
unaware whether the plaintiff in accordance with the terms of

the lease re-entered the premises.

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In an affidavit of Eleanor Robertson in support of the plaintiff's application, Ms Robertson deposed that the assignee of the second assignment did not pay the totality of

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the rent, electricity charges, outgoings, promotional levies	1
and goods and services tax due and payable in accordance with the lease terms. That on or about 30 September 2001 the said assignee vacated the premises without notice to the plaintiff,
and that at that date, $23,076.55 was due and owing according

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to the terms of the lease.

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Reference to Exhibit E to the affidavit of Ms Roberston, tax	1
invoices/statements of account from 1 July 2000 to 30 particularly from January 2001.

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In an affidavit of the male second defendant, Christopher Riha, Mr Riha deposed that neither the first or second defendants received any notice of the second deed of assignment, nor prior to 11 October 2001 did they have any notice that the third defendants, or the assignee from them,

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were in breach of the terms of the lease. On 11 October 2001 immediately. Ms Robertson was to speak to the owners but
he phoned Ms Robertson and was told by her the shop had been
closed for several months and that the tenants had walked out.

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never reverted to him. On 13 October 2001 he and his wife,
the other second defendant, attended at the shopping centre,
spoke to other retailers and obtained the latest centre
newsletter which contained what was apparently said to other

retailers at the centre at a retailers' meeting on 25

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September 2001. Therein was printed:

"The chicken shop (the shop) will not be reopening and
remain as a planned closure until the redevelopment takes

place."

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The liability of the first and second defendants for unpaid
rent and other charges due according to the terms of the lease

up until 30 September 2001 will depend upon the continuing

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extent of their contractual obligations pursuant to the lease	1
and guarantee in light of the assignments which occurred.
The defendants referred to the reference to a planned closure referred to in the centre newsletter, lack of precision when

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the tenancy was abandoned by the assignee and apparent
disinterest in the offer by the male second defendant to
reopen the shop. It was submitted that these matters raised
questions of fact to be explored and resolved and pointed to a

suspicion something inequitable had occurred.

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It seems to me that some of these matters may be relevant to the other part of the plaintiff's claim relating to the period 30 September 2001. However I do not think they raise issues pointing to a realistic prospect of success by the first and

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second defendants to the part of the plaintiff's claim, the
subject of this application.

It is well established that assignment of a lease does not discharge a lessee assignor from the covenants in the lease.

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See for instance, Minister of State v. Dalziel, (1944) 68 CLR
261; Richardson v. Landecker (1950) 50 SR (NSW) 250 at 255;
Ahern v. L A Wilkinson (Northern) Ltd (1929) STRQ 66. In
Molina and Another v. Leask and Another, Unreported, NSWSC, 6

February 1998, Santow J; the facts were somewhat similar to

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this case. A lease had been assigned by the lessee and
further assigned by the assignee without knowledge of the
lessee. The lessor consented. The assignees defaulted on

rent payments. The lessor did not inform the lessee of any

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default in rent payment while either assignee was in	1
possession. The deed of assignment between the lessor, the lessee assignor, and the first assignee, contained a term as follows:

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"The assignor shall continue to be liable with the
assignee for the payment of the rent and the performance
of all the terms, covenants and conditions contained in
the lease and on the part of the lessee to be performed
and observed notwithstanding the assignment hereby

effected."

It was submitted on behalf of the lessee that the liability of

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the lessee only continued while it and the original assignee
alone remained jointly liable and upon the further assignment
by the assignee the liability would end. This was rejected by

Santow J. He said:

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"it would seek to displace the position at general law
where the original lessee's liability continues. This is
purported to be done by drawing an implication to the
contrary from a clause (the clause set out above) which
expressly reflects the general legal position simply
because the clause refers only to the assignment then in

contemplation."

It was also submitted that an estoppel arose from the lessor's	40
failure to inform the lessee of the assignees' default in payment of rent until after the ultimate assignee had vacated. This also was rejected.
Here the parties to the second assignment were the lessor, the	50
third defendants as assignor, and the assignee. There was no
requirement of law or in the lease for the lessee to be a
party to this assignment.

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The terms, covenants and conditions and restrictions in the	1
lease were, unless the context otherwise required, to be construed as continuing throughout the lease. See clause 2.24 of the lease. Part 14 thereof dealt with inter alia assignment of the lease by the tenant.

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The first deed of assignment contained a term (set out earlier) similar in effect to that in Molina. Additionally, it contained a term whereby the second defendant guarantors consented to the assignment, notwithstanding that the

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guarantee itself contained a term acknowledging it would not
be discharged by any assignment of the lease by the tenant,

the first defendant or its successors.

The second deed of assignment in its unexecuted form

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apparently included reference to the second defendants as
existing guarantors as parties to the deed. It recited that
the existing guarantor guarantee the obligations of the lessee
under the lease and recited that the existing guarantor

consented to the assignment. These references were deleted

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before or upon execution by the executing parties. However I
cannot see that this can lead to a conclusion that the
position at law has been altered. There was simply no need
for the first or second defendants to be parties to this deed

of assignment.

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The guarantee guarantees the due performance and observance by
the tenant of the terms and conditions of the tenant's

covenants, agreements and obligations in the lease. In the

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event of the tenants default thereof the guarantor covenanted	1
to inter alia perform or observe such term, condition, covenant agreement or obligation and to pay to the landlord and indemnify the landlord, et cetera.

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I give judgment for the plaintiff against the first and second defendants for $23,076.55 and for costs including the costs of this application.

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