Conoid Pty Ltd v International Theme Park Pty Ltd

[1999] NSWSC 1138

CITATION:	CONOID PTY. LIMITED & ANOR. v INTERNATIONAL THEME PARK PTY. LIMITED [1999] NSWSC 1138
CURRENT JURISDICTION:	EQUITY
FILE NUMBER(S):	2247/99
HEARING DATE(S):	1 and 2 July 1999
JUDGMENT DATE:	26 November 1999
PARTIES :	CONOID PTY. LIMITED & PLANGLOSS PTY. LIMITED. (Plaintiffs) INTERNATIONAL THEME PARK PTY. LIMITED (Defendant)
JUDGMENT OF:	Simos J

COUNSEL :	BAJ Coles, QC, and MA Ashhurst (Plaintiffs) DP Robinson (Defendant)
SOLICITORS:	Landerer & Company (Plaintiffs) Baker & McKenzie (Defendant)
CATCHWORDS:	Retail Leases Act 1994 - Concession agreements within theme park authorising plaintiffs (concessionaires) to take photos of visitors to theme park during rides and elsewhere in theme park and to sell photos and other items (certificates as to meanings of christian or first names, copies of personalised front page of fictitious newspaper and temporary tattoos) from premises within theme park - "Retail Shop" - Premises used by plaintiffs for the carrying on of the business of "Souvenir Shops" but not for the carrying on of the business of "Gift Shops", "Nick-Nack Shops", "Prints and Posters Shops" or "Wall Decorations Shops" within the meaning of Schedule 1 of the Act - Premises were accordingly "Retail Shops" -" Retail Shop Lease" - Plaintiffs had been granted non-exclusive right of occupation of premises for purpose of use as retail shops - Concession agreements were retail shop leases - Term of each retail shop lease prima facie extended to five years (section 16) - "Head Lease" - Head lease of retail shops terminable on one month's notice without breach - Termination of head lease effective to terminate sub-lease without breach - Prima facie extension of terms of retail shop leases to five years inconsistent with terms of head lease of retail shops - Section 16 not applicable to retail shop leases (section 16(5)) - Terms of retail shop leases not extended to five years
CASES CITED:	Lee v Ferno Holdings Pty. Ltd. (1993) 33 NSWLR 404 Masters v Cameron (1954) 91 CLR 353 Metropolitan Trade Finance Co. Pty. Ltd. v Coumbis (1973) 131 CLR 396 Oxley v James 153 ER 87 Wilson v Jolly (1948) 48 SR (NSW) 460
DECISION:	Proceedings dismissed with costs.

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SIMOS J

FRIDAY, 26 NOVEMBER 1999

(NO. 2247/99): CONOID PTY. LIMITED & ANOR. v INTERNATIONAL THEME PARK PTY. LIMITED

JUDGMENT

HIS HONOUR:

The Proceedings

Statement of Claim

1   By their statement of claim dated 28 May 1999 the plaintiffs allege that on or about 23 March 1998 Conoid Pty. Limited, the first plaintiff, entered into an agreement (“Agreement A”) with International Theme Park Pty. Limited, the defendant, (which operates the theme park known as Australia’s Wonderland) whereby the defendant granted to the first plaintiff a non-exclusive licence to occupy the premises described in Appendix 1 to Agreement A (“Premises A”).

2   The statement of claim further alleges that on or about the same day, namely, 23 March 1998 Plangloss Pty. Limited, the second plaintiff, entered into an agreement (“Agreement B”) with the defendant whereby the defendant granted to the second plaintiff a non-exclusive licence to occupy the premises described in Appendix A1 to Agreement B (“Premises B”).

3 It is further alleged that each of Premises A and B was a “retail shop” within the meaning of section 3 of the Retail Leases Act 1994 (“the Act”), and that each of Agreements A and B was a “retail shop lease” within the meaning of section 3 of the Act, with the term for each of these agreements being “purported to be” until 30 June 1999. The plaintiffs further allege that the “purported term of Agreements A and B is in breach of section 16(1) of the Act.”

4 The plaintiffs claim a declaration that Agreements A and B are “retail shop leases” within the meaning of section 3 of the Act, and a further declaration that, pursuant to section 16(2) of the Act, the term of each of Agreements A and B expires on 22 March 2003, that is, that the term of each of the agreements is extended to a term of five years. The plaintiffs also claim specific performance of Agreements A and B and, in the alternative, damages.

Defence

5   By their defence the first and second plaintiffs admit the entering into of Agreements A and B on or about 23 March 1998, but the second plaintiff, in relation to Agreement B, alleges that in or about July 1998 the second plaintiff, by virtue of certain conduct, repudiated Agreement B and/or intimated that it would not comply with the Agreement and/or an essential term of that Agreement and that the defendant accepted the repudiation and/or breach of the essential term and terminated the Agreement and tendered to the second plaintiff a form of instrument described as “Agreement C”. The defendant further alleges that Agreement C was not executed by the second plaintiff, and further alleges that the second plaintiff’s continued operation of the “Celebrity Photos, Old Time Photos and Tattoos/Face Painting” concessions is not pursuant to Agreement B.

6   The defendant also alleges that it was the lessee of certain land (being the land upon which the subject premises are erected and upon which Australia’s Wonderland is conducted), and that it held the said land under the terms of a head lease from Hartford Lane Pty. Limited, the registered proprietor of the land, holding over on a monthly tenancy.

7 The defendant further alleges that section 16 of the Act does not apply to any of Agreements A, B or C (because section 16 does not apply to a lease to the extent that its application would be inconsistent with the terms of any head lease under which the defendant (lessor) holds the retail shop: see section 16(5).

8   The defendant also denies, or does not admit, all other material allegations made by the plaintiffs.

9   It does not appear that a reply was filed on behalf of the plaintiffs but it was plain from the course of the proceedings that all material allegations made by the defendant in its defence are denied by the plaintiffs.

The Facts
Conoid Pty. Limited - the First Plaintiff

10   Agreement A as referred to in the Statement of Claim is dated 23 March 1998 and is expressed to be between the defendant (therein referred to as “ITP”) and the first plaintiff (therein referred to as “Concessionaire”). This agreement recites that the defendant is “the operator of Australia’s Wonderland, a themed entertainment park (‘the Park’) located at Eastern Creek, New South Wales”. The agreement also recites that the first plaintiff (Concessionaire) has agreed to operate certain concessional activity within the Park and that the Agreement provided the terms upon which the concessional activity is to operate.

11   The body of Agreement A provides, inter alia, so far as material, is as follows:-

“1(a). ITP grants to the Concessionaire a concession to operate ride photos for Beastie Coaster, Bush Beast Coaster, Demon Coaster and Space Probe 7 Coaster, and for What’s In A Name and Rave Review Newspaper (the ‘Concessions’). The grant is a non-exclusive licence to the Concessionaire to occupy the premises (‘the Premises’) to be set aside by ITP for use by the Concessionaire to operate the Concessions …

1(b). The premises are currently located at the positions shown on the schedule attached as Appendix 1 …

9. Licence Fees
9(a). In consideration of the grant of the Concessions, the Concessionaire shall pay to ITP a percentage of its gross daily receipts (‘the Percentage’) as set out on the schedule attached as Appendix II to this Agreement …
10. Merchandise
10(a) The Concessionaire shall only sell, unless otherwise authorised in writing, certain agreed products (‘the Agreed Products’), which have been described in the schedule attached as Appendix III to this Agreement, and shall not charge, in respect of the Agreed Products, an amount that is more than the retail price recommended by ITP from time to time. Before adding merchandise lines additional to those described in Appendix III the Concessionaire will consult with ITP to obtain approval and upon approval in writing being given, which approval shall not be unreasonably withheld, such additional merchandise will become part of the Agreed Products and will be subject to the provisions hereof.
11. Term
11(a) The term of this Agreement shall be the period between the date of signing of this the Agreement and 30 June, 1999 (‘the Term’)”.

12   Appendix III to Agreement A is in the following terms:- “SCHEDULE OF AGREED PRODUCTS

1. Photographs of guests posing with cut-outs.
2. To supply photographs of guests dressed in period costume.
3. Face Painting.
4. Temporary Tattoos product for resale.”

13   Relevantly, it will be noted that Agreement A is stated to be “the grant of a non-exclusive licence to the Concessionaire to occupy the premises (‘the Premises’) to be set aside by ITP for use by the Concessionaire to operate the Concessions”, and that the term of the agreement “shall be the period between the date of signing this the Agreement and 30 June, 1999 (‘the term’)”.

The Concessions Operated by the First Plaintiff

14   As stated in the affidavit of Michael Mitton of 5 May 1999, the first plaintiff operates various “ride photo concessions” which “offer visitors photos of themselves taken on the following roller coasters, namely, Space Probe 7, Beastie, Bush Beast and The Demon.” Examples of the photos for each of these rides together with their “Wonderland sleeve (that is provided with each photo purchase)” were tendered in evidence. As stated in the affidavit of Mr. Mitton these photos are generated from an in-built video camera and sensor placed in the specific ride (at Conoid’s cost) which then generates, in the case of the Space Probe 7 ride, a colour and a black and white computerised image that can be converted into a photo, and in the case of the other rides, a black and white photo. Each of the photos are available for visitors to purchase immediately after they finish the ride. The cost of the Space Probe 7 photos are $9.95 for a colour image, and the cost of the photos for each of the other rides is $5.95.

The Premises Used by the First Plaintiff to Operate the Concessions

15   Each of the premises used to operate the ride photo concessions were built on behalf of the first plaintiff, and are themed to suit the area of the theme park in which they are located. Each of the premises, except the Space Probe ride photo concession which is made out of corrugated iron, and the Beastie Ride photo concession, are made out of wood. Each of the premises other than that used for the Beastie Ride photo concession is approximately ten feet by twelve feet in size.

16   The premises used to operate the Beastie Ride photo concession is a converted V.W.Kombi van called The Scooby Doo Mystery Machine. The Scooby Doo Mystery Machine Kombi van is connected to the mains electricity supply servicing the theme park. It has no motor and rests on wheels and on four metal stands next to each wheel. After it was positioned, a canvas awning was placed over it which rests on steel poles concreted into the ground. It covers an area of approximately twenty feet by twenty feet and is surrounded by a garden bed planted by the defendant. The Scooby Doo Mystery Machine could only be moved from its position by crane. It is fixed in its current position and has been there for the last three years. It has been designed on behalf of and at the cost of the first plaintiff to look like the Scooby Doo van associated with the Scooby Doo cartoon character by Hanna Barbera.

Additional Concessions Operated by the First Plaintiff

17   The first plaintiff also operates concessions known as “What’s In A Name?” and “Rave Review Newspaper”. At “What’s In A Name?” visitors can purchase certificates stating the meaning of Christian or first names which can be laminated or mounted on a frame, and at “Rave Review Headlines” visitors can purchase an A3 front page of the fictitious “Rave Review” newspaper containing a personalised headline and story, which page can be laminated or mounted on a frame at a cost of from $6.95.

The Premises Used by the First Plaintiff to Operate the Additional Concessions

18   The Rave Review Headlines and What’s In A Name concessions operate from separate premises built by the second plaintiff approximately five to six years ago. They cost the second plaintiff approximately $19,000 to build and are made of wood and are approximately thirty feet by fifteen feet by twelve feet.

Submissions of the First Plaintiff

19 As stated in the statement of claim, the plaintiffs claim that Agreement A, the agreement of 23 March 1998 between the defendant and the first plaintiff, is in respect of premises which fall within the definition of “retail shop” as defined in section 3 of the Act, and that the agreement falls within the definition of “retail shop lease” as also defined in section 3 of the Act, with the consequence that the term of the agreement is extended to five years by virtue of the operation of subsections 16(1) and (2) of the Act.

20 The relevant provisions of section 16 are in the following terms:-

16 Minimum 5 year term
(1) The term for which a retail shop lease is entered into, together with any further term or terms provided for by any agreement or option for the acquisition by the lessee of a further term as an extension or renewal of the lease, must not be less than 5 years. An agreement or option is not taken into account if it was entered into or conferred after the lease was entered into.
(2) If a lease is entered into in contravention of this section, the validity of the lease is not thereby affected but the term of the lease is extended by such period as may be necessary to prevent the lease contravening this section.”

21 The term “retail shop” is defined in section 3 of the Act as follows:-

“ retail shop means premises that:
(a) are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 (whether or not in a retail shopping centre), or
(b) are used for the carrying on of any business (whether or not a business specified in Schedule 1) in a retail shopping centre.”

Schedule 1 of the Act contains a long alphabetical list of “Retail shop businesses”.

22 The primary submission made on behalf of the plaintiffs was that the businesses of the plaintiffs fall within the description of “Souvenir shops”, being one of the “Retail shop businesses” included in Schedule 1. Alternatively the plaintiffs submit that their businesses could also be categorised as “Gift shops”, “Nick-nack shops”, “Prints and posters shops” and “Wall decorations shops” within the meaning of Schedule 1.

23 “Retail shop lease” is defined in section 3 of the Act as follows:-

“ retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop:
(a) whether or not the right is a right of exclusive occupation, and
(b) whether the agreement is express or implied, and
(c) whether the agreement is oral or in writing, or partly oral and partly in writing.”

24   The plaintiffs submitted that Agreement A was an agreement which fell within the definition of “retail shop lease” because it was an agreement under which the defendant granted to the first plaintiff for value a right of occupation of premises for the purpose of the use of the premises as a retail shop, and that the fact that the right of occupation so granted was not a right of exclusive occupation, did not exclude the agreements from that definition, by reason of sub-paragraph (a) of that definition.

25 The plaintiffs further submitted that, accordingly, and pursuant to subsections 16(1) and (2) of the Act, the term of that agreement was extended to a term of five years.

Plangloss Pty. Limited - the Second Plaintiff

26   The agreement referred to as Agreement B in the statement of claim is the agreement dated 23 March 1998 between the defendant (therein referred to as “ITP”) and the second plaintiff (therein referred to as “Concessionaire”).

27   Agreement B recites that ITP is “the operator of Australia’s Wonderland, a themed entertainment park (“the Park”) located at Eastern Creek, New South Wales”, that the Concessionaire has agreed to operate certain concessional activity within the Park, and that the agreement provided the terms upon which the concessional activity is to operate.

28   The body of the agreement provides, inter alia, so far as material, as follows:-

“ 1. Location
1(a). ITP grants to the Concessionaire a concession to operate Celebrity Photos, Old Time Photos and Tattoos/Face Painting (the ‘Concessions’). The grant is a non-exclusive licence to the Concessionaire to occupy the premises (‘the Premises’) to be set aside by ITP for use by the Concessionaire to operate the Concessions …
1(b). The Premises are currently located at the positions shown on the schedule attached as Appendix 1 …
9. Licence Fees
9(a). In consideration of the grant of the Concessions, the Concessionaire shall pay to ITP a percentage of its gross daily receipts (‘the Percentage’) as set out in the schedule attached as Appendix 11 to this Agreement …
10. Merchandise
10(a). The Concessionaire shall only sell, unless otherwise authorised in writing, certain agreed products (‘the Agreed Products’), which have been described in the schedule attached as Appendix III to this Agreement, and shall not charge, in respect of the Agreed Products, an amount that is more than the retail price recommended by ITP from time to time. Before adding merchandise lines additional to those described in Appendix III the Concessionaire will consult with ITP to obtain approval and upon approval in writing being given, which approval shall not be unreasonably withheld, such additional merchandise will become part of the Agreed Products and will be subject to the provisions hereof.

11. Term

11(a). The term of this Agreement shall be the period between the date of signing of this the Agreement and 30 June, 1999 (‘the Term’) …”

29   Appendix III to the Agreement B is in the following terms:-

“ SCHEDULE OF AGREED PRODUCTS
1. Photographs of guests posing with cut-outs.
2. To supply photographs of guests dressed in period costume.
3. Face Painting.
4. Temporary Tattoos product for resale.”
The Concessions Operated by the Second Plaintiff

30   The affidavit of Mr. Mitton referred to above states that in relation to the Celebrity Photos concession, visitors can have their photos taken with cut-outs of various celebrities including the Spice Girls, Claude Van Damme and Hanson, the cost of the Polaroid photo being $7.50.

31   The Old Time Photos concession operated by the second plaintiff involves the taking of a photo of the visitor which can be taken with two backgrounds, a Western background or a Victorian background. The visitors are photographed in sepia photography, being dressed in period costumes of the late 1800s and the early 1900s. The photos are mounted and framed and are priced from $19.95.

32   The Tattoos/Face Painting concession operated by the second plaintiff consists of various temporary tattoos in respect of which visitors have a choice of over 250 designs ranging from $4.00 to $20.00 per temporary tattoo. The outline of the tattoo is put on with a transfer and the design is then coloured in with oil based paints. The tattoos can last up to 2 weeks.

The Premises Used by the Second Plaintiff to Operate the Concessions

33   As is the case with Agreement A, the first plaintiff’s agreement, Appendix 1 to Agreement B, the agreement with the second plaintiff, is a schedule indicating the location of the premises utilised by the first and second defendants pursuant to the agreements. However, Appendix 1 to Agreement B, the second defendant’s agreement, does not record the premises used by the second defendant to operate the Demon Photo Ride and the Paint On Tattoos concessions. These are, however, recorded on Appendix I to Agreement A, the first plaintiff’s agreement.

34   Photographs of the premises, the subject of the concession agreements, were tendered in evidence and were described as follows in the affidavit of Mr. Mitton.

35   The plaintiffs and their predecessors have at all times occupied the various premises from which they have operated on an exclusive basis. The premises in which Celebrity Photos is located was formerly the Old Time Photos premises which was built by Mr. Mitton in approximately 1987/1988. The premises are constructed from wood and are approximately twelve feet by fourteen feet.

36   The premises used now by Old Time Photos was an existing building but remodelled by the second plaintiff when it moved there in 1997. The building was re-modelled at the cost of the second defendant of $16,000 and houses three separate concessions under the one roof. The largest and middle area under the roof is occupied by Old Time Photos. The premises are made from wood and are approximately thirty feet by twenty feet.

37   The tattoos concession is operated at premises attached to a games building and has operated from these premises for the last eight years. The premises were constructed by the owners of the theme park but have been renovated and fitted out by the second plaintiff to operate the concession. The size of the premises is approximately twelve feet by twelve feet.

Submissions of the Second Plaintiff

38 Subject to one further matter in the case of Agreement B, the agreement of the second plaintiff, it was submitted on behalf of the plaintiffs that, Agreement B, the second plaintiff’s agreement, was, as was submitted to be the case in respect of Agreement A, in respect of premises which fell within the definition of “retail shop” as contained in section 3 of the Act, that the agreement also fell within the definition of “retail shop lease” as defined in section 3 of the Act and that, accordingly, by virtue of the operation of section 16(1) and (2) of the Act, the term of Agreement B, the second plaintiff’s agreement, was extended to a term of five years.

Alleged Repudiation by Second Plaintiff of Agreement B

39   The further matter referred to above in relation to Agreement B, the second plaintiff’s agreement, is the allegation made by the defendant in the defence that in or about July 1998 the second plaintiff, by its conduct referred to in paragraph 5 of the affidavit of Michael Mitton, sworn 5 May 1999, repudiated that agreement, and/or intimated that it would not comply with that agreement and/or an essential term of that agreement, and that the defendant accepted the repudiation and/or breach of the essential term, and terminated the agreement and tendered to the second plaintiff another form of agreement (“Agreement C”), which was not executed by the second plaintiff.

40   Paragraph 5 of Mr Mitton’s affidavit states that after the signing of Agreement B, the second defendant’s agreement dated 23 March 1998, Mr. Mitton, a director and shareholder of both of the plaintiff companies, said to a representative of the defendant words to the following effect:-

“Plangloss does not wish to operate the Celebrity Photos concession full time. The number of customers does not warrant it remaining open all the time, especially during the week and in non-holiday periods. Will you consent to Plangloss not operating this concession during these periods.”

41   According to Mr. Mitton the representative of the defendant replied with words to the effect:-

“If you want to do that, I will have an alternative agreement prepared.”

42   Also according to Mr. Mitton, a short time later he was given a copy of a document entitled “Temporary Agreement” dated 1 August 1998 (“Agreement C”) between the defendant and the second plaintiff and signed by the General Manager of the defendant. The second defendant has not signed this “Temporary Agreement”, but since that time has operated the Celebrity Photos concession only on weekdays and during holiday periods, but has paid the licence fees in respect of Celebrity Photos as required in Agreement B, the original agreement dated 23 March 1998.

43   The relevant provision in Agreement B, the agreement of 23 March 1998 between the defendant and the second plaintiff, is clause 2 which is in the following terms:-

“ 2. Operating Times
2(a). ITP shall from time to time determine the days and hours when the Park shall be opened or closed and the Concessionaire agrees to be bound by any such determination. The Concessionaire acknowledges that ITP may shorten the Park’s operating season.
2(b). The Concessionaire will operate the concession for all Park operating hours. Any exemption from this is to be specifically approved by ITP, in writing.”

44   The “Temporary Agreement” given by the defendant to the second plaintiff is limited to the granting of a concession in relation to “Celebrity Photos”, and has a different provision in relation to the operating times of that concession. The relevant paragraphs in the “Temporary Agreement” are as follows:-

“ 1. Location
1(a). ITP grants to the Concessionaire a concession to operate Celebrity Photos (the ‘Concession’). The grant is a non-exclusive licence to the Concessionaire.
2. Operating Times
2(a). The Concessionaire will operate the concession for all Park operating hours, of a minimum for weekends, school holidays and public holidays.”

45   In my opinion, what Mr. Mitton said to the representative of the defendant did not constitute a repudiation by Mr. Mitton on behalf of the second plaintiff of Agreement B, the agreement of 23 March 1998, nor was it an intimation by Mr. Mitton, on behalf of the second plaintiff, that the second plaintiff was refusing to comply with the concession agreement as a whole, or with an essential term of the concession agreement, being the term, in effect, requiring the second plaintiff to operate the Celebrity Photos concession at all times during which the Amusement Park was open, as provided for in Agreement B, the agreement of 23 March 1998.

46   Rather, in my opinion, what Mr. Mitton, on behalf of the second plaintiff, conveyed to the representative of the defendant was, in effect, a request that the defendant agree to an amendment of Agreement B, the second plaintiff’s agreement of 23 March 1998, so as to provide that in respect of the Celebrity Photos concession, the second plaintiff was required to operate it only at weekends and during holiday periods.

47   That this was the effect of what Mr. Mitton said on behalf of the second plaintiff, and that it was so understood by the representative of the defendant, is made plain by the terms of the “temporary agreement” which was subsequently handed to Mr. Mitton by the representative of the defendant.

48   I therefore find that the second plaintiff did not repudiate Agreement B, the second plaintiff’s agreement of 23 March 1998, as alleged, nor did it, through Mr. Mitton, convey an intention that it would not comply with that agreement or any essential term thereof, as alleged.

49   I note, however, that there is uncontradicted evidence from Mr. Mitton to the effect that not later than receipt of the “Temporary Agreement”, the second plaintiff has operated the Celebrity Photos concession only on weekends and during holiday periods but has continued to pay licence fees in respect of the Celebrity Photos concession as required in Agreement B the agreement of 23 March 1998 - although it appears that, in effect, the provision in the temporary agreement for payment of fees is no different in substance.

50   In these circumstances it is my opinion that Agreement B, the original agreement of 23 March 1998 between the defendant and the second plaintiff, in effect, remained on foot, either on the basis that the defendant had agreed that it should be varied to accommodate the wishes of the second plaintiff in relation to the times of operation of the Celebrity Photos concession or, alternatively, in effect, on the basis that the defendant would be estopped by its conduct accepting the position, from denying the existence of that agreement. On these findings the “Temporary Agreement” had no operation as such.

51 In any event, however, even if the “Temporary Agreement” became, on some basis or another, binding according to its terms, it would be affected by the relevant provisions of the Act no differently from the way those provisions affect Agreement B, the second plaintiff’s agreement of 23 March 1987, and would produce no different result in substance in the present litigation.

The Concession Agreements Between the Parties Are “Retail Shop Leases” Within the Meaning of the Act

Decision

52 In my opinion, the relevant concession agreements between the parties are “retail shop leases” within the meaning of the Act.

“ Shop ”

53 In my opinion, with the possible exception of the V.W. Kombi van, the premises in which the plaintiffs carry on their businesses are “shops” within the ordinary, natural meaning of that word, and there is nothing in the Act or in the legislative purpose underlying the Act, requiring the exclusion of that ordinary meaning. The word “shop” is defined in the Macquarie Dictionary (3 ed. - 1997), relevantly, as “a building where goods are sold retail” and, in the Concise Oxford Dictionary (8 ed. - 1990) relevantly, as “a building, room, etc. for the retail sale of goods or services (chemist’s shop; betting-shop).” In my opinion, each of the concessions carried on by the plaintiffs involves the sale of goods and/or services by retail in premises which, in my opinion, with the possible exception referred to above, may properly be described as “buildings” albeit not substantial buildings, or “rooms” having regard to the consideration that the Macquarie Dictionary defines the word “building” as “a permanent fixed structure forming an enclosure and providing protection from the elements, etc. (e.g. a house, school, factory, or stable).” The Concise Oxford Dictionary defines the word “building” as “a substantial structure with a roof and walls, as a shed, house, department store, etc.” In my opinion, again with the possible exception mentioned, all of the relevant premises are, relevantly, permanent, fixed structures forming enclosures with a roof and walls providing protection from the elements and are thus “buildings”, and are also “rooms”.

“ Goods and/or Services ”

54   So also, in my opinion, are the items sold by the plaintiffs as “goods and/or services”. The “goods” sold by the plaintiffs in respect of the various “ride photo concessions”, being Space Probe 7, Beastie, Bush Beast and The Demon, are photographs of visitors or patrons of the theme park taken on one or other of those rides. The “goods” sold by the plaintiff in respect of the “What’s In A Name” concession are certificates stating the meaning of christian or first names. The “goods” sold by the plaintiffs in respect of the “Rave Review Newspaper” concession are A3 size front pages of the fictitious “Rave Review Newspaper” containing a personalised headline and story which can be laminated or mounted on a frame. The “goods” sold by the plaintiffs in respect of the Old Time Photos concession are photos of visitors or patrons to the theme park with either a Western background or a Victorian background, with the visitors being dressed in period costumes of the late 1800s and early 1900s, which photos are mounted and framed. The “goods” sold by the plaintiffs in respect of the Celebrity Photos concession operated by the second plaintiff are photos of visitors or patrons of the theme park taken with cut-outs of various celebrities. The “goods” and/or “services” sold by the second plaintiff in respect of the Tattoos/Face Painting concession are temporary tattoos which are put on with a transfer after which the design is then coloured in with oil based paints, with the tattoos being able to last up to two weeks.

55   I note in this connection that in clause 10 of each of Agreements A and B the “goods” and/or “services” sold are described as “Merchandise” and as “Agreed Products”.

56   I also note that the “SCHEDULE OF AGREED PRODUCTS” contained in Appendix III to each of those Agreements lists “Photographs”, “Face Painting” and “Temporary Tattoos product for resale”.

57 I note further that the operation of the Tattoos/Face Painting concession does involve the sale of “goods” being the temporary tattoo transfers and the paints, but that even if the operation of that concession is described as involving the supply of services, the supply of such services by retail would not, in my opinion, prevent the premises in which those services are supplied from being described as shops, just as, for example, the premises in which hair-dressing services are supplied are, in my opinion, properly described as a shop, “hairdressers” being one of the “retail shop businesses” listed in Schedule 1. It follows, in my opinion, that the premises in which the plaintiffs operate their concessions, and in which they carry on their businesses, may properly be described as “shops” within the ordinary, natural and dictionary meaning of the word “shop”.

The VW Kombi Van

58   The possible exception to which I have referred above in relation to whether those premises may properly be described as “buildings” are the “premises” from which the Beastie Ride photo concession is operated, being the converted V.W. Kombi van called The Scooby Doo Mystery Machine, which has been described above. In my opinion, that van, which is, to all intents and purposes, permanently located in its present position resting on four metal stands next to each wheel and surrounded by a garden bed, and having the other features described above, may properly be described as a “building” for the purposes of the definition of “shop” contained in the Macquarie Dictionary and the Concise Oxford Dictionary.

59   The van is plainly used as a permanent fixed structure or room with roof and walls providing protection from the elements in which photographs are sold by retail. In those circumstances, in my opinion, it is appropriate for present purposes, that is, for the purposes of the Act, to regard the van as a “shop”. In my opinion the legislative purpose underlying the Act is, relevantly, in this context, that the Act should cover all enclosed places (cf. stalls) in which goods and/or services are sold by retail, and which are the subject of leases or licences, regardless of whether those places may be strictly called “buildings” or not. This underlying legislative purpose is, in my opinion, manifested, inter alia, in the definition of “retail shop” in section 3 of the Act which incorporates Schedule 1 to the Act from which definition and Schedule it is plain that the legislature’s principal relevant focus of attention in this connection was the (retail) business being carried on, and not the particular nature of the premises in which it was being carried on. Accordingly, I find that the V.W. Kombi van used to operate the Beastie Ride Photo concession is a “shop” within the meaning of the definition of “retail shop” contained in section 3 of the Act.

60 I reject the submissions made on behalf of the defendants to the effect that the premises occupied by the plaintiffs are not “shops”, “as one commonly understands that concept”, because they are part of the activity of a theme park which has park gates which are open to the public only at the discretion of the owners of the theme park, and then only for a fee, unlike “ordinary” retail shops which do not charge any fee to enter. In my opinion, none of these matters produces the result that the premises in which the plaintiffs carry on their activities or businesses are not “retail shops” within the meaning of the Act. A retail shop is no less a retail shop simply because its trading hours are limited, for whatever reason.

“ Retail ”

61 Further, it is plain, in my opinion, that the operation by the first and second plaintiffs of the various concessions, involving, as it does the sale of goods and/or services as described above, involves the sale of those goods and/or services by retail, because it may be inferred that they are sold usually in small quantities to the persons who may properly be described as “the ultimate consumers” of those goods or as “the public”. The Macquarie Dictionary defines the word “retail”, relevantly, as “The sale of commodities to household or ultimate consumers, usually in small quantities (opposed to wholesale)”. The word is also defined in the Concise Oxford Dictionary, relevantly, as “The sale of goods in relatively small quantities to the public, and usu. not for resale (cf. wholesale).”. Nor, in my opinion, is there anything in the Act or in the legislative purpose underlying the Act to suggest that the word “retail” should be construed in any different way.

62 I reject the submissions on behalf of the defendant to the effect that the operation by the plaintiffs of the concessions is no more than an incident to the operation and activity of a theme park, that there is no material distinction between the businesses operated by the plaintiffs and sideshows of the type found at the Royal Easter Show which plainly are not conducted in retail shop premises, and accordingly, the conduct of the businesses of the plaintiffs does not involve any “retail” element within the meaning of the Act. Reference was also made to the definition of “outgoings” as set out in section 3 of the Act and to the provisions of section 11 of the Act relating to disclosure statements which it was said were really irrelevant to the circumstances of the present case and thus were an indication that the Act was not intended to apply in such circumstances.

63 It is plain, in my opinion, however, that the operation of those concessions by the plaintiffs does involve the sale of goods and/or services by retail, notwithstanding that those concessions are operated within the boundaries of the theme park, and notwithstanding that certain provisions of the Act are directed towards retail shop leases of a somewhat different kind, I can find nothing in the terms of the Act or in its underlying legislative purpose which would support the view that those concessions, including the associated right of occupation of certain premises, should be excluded from the operation of the Act. In any event, as I have held, in my opinion, the relevant aspects of the concessions do fall within the clear terms and ambit of the relevant provisions of the Act.

64 It was also submitted on behalf of the defendant that the concession agreements were not retail shop leases within the meaning of that term as defined in section 3 of the Act because those concessions were not within the meaning of the Act granted “for value”, there being said to be no consideration for the grant of “the use of the premises as a retail shop” so that it could not be said that the grant of the right of occupation was a grant “for value” as required in the definition of “retail shop lease” contained in section 3 of the Act. In my opinion, it is plain that there was such consideration (value) expressly provided for in each of the agreements, notwithstanding that the consideration (value) took the form of an entitlement by the defendant to collect the gross takings of the plaintiffs and retain an agreed percentage thereof before accounting to the plaintiffs for the balance.

“ Souvenir Shop ”

65 I am also of the opinion that the relevant premises are used by the plaintiffs wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 of the Act (see definition in section 3 of the Act of “retail shop”), namely, the business of a “souvenir shop”.

66 As appears from the definition of “retail shop” contained in section 3 of the Act, as set out above, in order for a retail shop to fall within the terms of the Act it must constitute premises that “are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 of the Act”.

67 It was submitted on behalf of the plaintiffs that the businesses conducted by the plaintiffs pursuant to the concession agreements consisted of the sale of “souvenir” photographs (taken of the patrons of the Park on the amusement rides or posing in theme costumes in background) or the sale of copies of the front page of fictional newspapers, certificates and temporary tattoos. Specifically, the plaintiffs submitted that the “Schedule 1 business” conducted by them pursuant to the terms of the agreements could be described as “souvenir shops”. It was submitted, as stated above, alternatively, that the businesses conducted by the plaintiffs could be described as “Gift Shops”, “Nick-Nack Shops”, “Prints and Poster Shops”, and “Wall Decorations Shops” within the meaning of Schedule 1 of the Act.

68   It was submitted on behalf of the plaintiffs that the photos and other items (the goods) sold by them were souvenirs within the ordinary, natural and dictionary meaning of that word, being items and mementos to remind visitors or patrons of their visit to the theme park. The Macquarie Dictionary defines the word “souvenir” as “something given or kept for remembrance; a memento”, and defines “memento” as “something that serves as a reminder of what is past or gone”. The Concise Oxford Dictionary defines “souvenir” as “a memento of an occasion, place, etc.” and defines “memento” as “an object kept as a reminder or souvenir of a person or event”.

69   Reference was also made to the fact that each of the photos comes with a sleeve designed to suit each ride and with the name “Australia’s Wonderland” printed on it. It was also submitted that the certificate sold in relation to the operation of the What’s In A Name concession, and the copy of the front page of the fictitious newspaper sold in the course of operation of the Rave Review Newspaper concession, and the temporary tattoos and face paintings sold in the course of the operation of the Tattoos/Face Painting concession, were all mementos or reminders of the visitor’s (purchaser’s) visit to “Australia’s Wonderland”.

70 It was submitted, on the other hand, on behalf of the defendant, that the relevant premises were not being used by the plaintiffs “wholly or predominantly” for the carrying on of any of the businesses specified in Schedule 1 of the Act, and, in particular, were not being used wholly or predominantly for the carrying on of any of the businesses as submitted on behalf of the plaintiffs. In particular, it was submitted on behalf of the defendant that none of the premises occupied by the plaintiffs could be described as a souvenir shop, which description should be limited, for example, to a hypothetical shop at Circular Quay which sells souvenirs such as spoons, postcards, (souvenir) tea towels, miniature koalas, yellow wombat signs and the like.

71 In my opinion, the premises occupied by the plaintiffs are used wholly or predominantly for the carrying on of the business of a souvenir shop within the meaning of Schedule 1 to the Act because, in my opinion, all the photos and other items (goods) and/or services sold by the plaintiffs to visitors or patrons may properly be described as souvenirs within the ordinary, natural and dictionary meaning of those words, namely, as something given or kept as a remembrance or reminder, or as a memento, of the occasion of the visitor’s (purchaser’s) visit to the theme park, there being nothing in the Act, or in the legislative purpose underlying the Act, to suggest that the word “souvenir” was used in Schedule 1 of the Act in any different sense.

The Premises Used by the Plaintiffs Are Retail Shops and Are Held by the Plaintiffs Pursuant to Retail Shop Leases

72 It follows, in my opinion, that the premises occupied by the plaintiffs under licence from the defendant are, relevantly, used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1, namely, for the purpose of carrying on the business of a souvenir shop and as such, those premises are, having regard to their other characteristics as discussed above, “retail shops” within the meaning of the definition of “retail shop” contained in section 3 of the Act. It also follows, in my opinion, that the agreements granting the plaintiffs the non-exclusive right of occupation of those premises for the agreed purposes are “retail shop leases” within the meaning of that therm as defined in section 3 of the Act.

The term of Each of the Retail Shop Leases Is Prima Facie Extended to a Term of Five Years

73 It also follows, in my opinion, that pursuant to the provisions of subsection 16(1) and (2) of the Act the term of each of those agreements is, prima facie, extended to a term of five years, subject to the provisions of subsection 16(5) which is in the following terms:-

“16(5) This section does not apply to a lease to the extent that its application would be inconsistent with the terms of any head lease under which the lessor holds the retail shop.”

74   As stated above, it was also submitted on behalf of the plaintiffs, in the alternative, that the businesses conducted by them pursuant to the concession agreements could be characterised as the carrying on of the business of a gift shop, a nick-nack shop, a prints and poster shop and/or a wall decorations shop. In my opinion, these submissions should be rejected.

“ Gift Shop ”

75   So far as concerns gift shops, in my opinion, according to the ordinary meaning of the word “gift”, the business carried on in a gift shop is the business of selling “gifts”, being things purchased for the purpose of giving them to another. As defined in the Macquarie Dictionary a gift is “something given; a present”. The Concise Oxford Dictionary defines a gift as: “a thing given; a present”. Although there is, naturally enough, no specific evidence as to whether any of the photos or other items sold by the plaintiffs to visitors or patrons of the theme park are purchased for the purpose of making a gift of them to some relative or friend or acquaintance of the visitor or patron, it is, in my opinion, reasonable to infer that most of those photos and other items would be purchased by visitors or patrons of the theme park for their own use, as a souvenir or memento of the occasion of their visit to the theme park, rather than as a gift to be given to another, although, of course, that may have been intended in respect of some purchases, by some of such visitors or patrons. On that basis it could not, in my opinion, be said that the premises occupied by the plaintiffs under licence from the defendant were being used wholly, or evenly predominantly, for the carrying of the business of a gift shop. It is also the case, in my opinion, that most shops that could properly be described as gift shops, do not sell photographs of their customers, nor certificates as to the meaning of christian or first names, copies of the front page of fictitious newspapers or temporary tattoos.

“ Nick-Nack Shop ”

76 So far as concerns the submission made on behalf of the plaintiffs to the effect that premises occupied by them are being used wholly or predominantly for the carrying on of the business of a nick-nack shop I am also of the opinion that the submission should be rejected. The term “nick-nack” as used in Schedule 1 is defined in the Macquarie Concise Dictionary, as “knick-knack”, meaning “a pleasing trifle; a trinket or gimcrack”; and also as “a bit of bric-a-brac”. “Gimcrack” is defined as “a showy, useless trifle” and “bric-a-brac” as “miscellaneous ornamental articles of antiquarian, decorative, or other interest”. The Concise Oxford Dictionary defines “knick-knack” as meaning “a useless and usu. worthless ornament; a trinket” and defines “trinket” as “a trifling ornament, jewel, etc. esp. one worn on the person”. Having regard to these definitions I am of the opinion that it would not be in accordance with ordinary usage as reflected in the dictionary meanings of the term “knick-knack” to describe the photos and other items sold by the plaintiffs as “nick-nacks”, and that accordingly, the premises occupied by the plaintiffs are not premises which are used wholly or predominantly for the purpose of carrying on the business of selling nick-nacks within the meaning of Schedule 1 of the Act.

“ Prints and Posters Shop ”

77   So far as concerns the submission made on behalf of the plaintiffs to the effect that the premises occupied by the plaintiffs are used wholly or predominantly for the carrying on of the business of a prints and posters shop, I am of the opinion that the photos and other items sold by the plaintiffs could not properly be described as prints or posters (notwithstanding that the photos may be described as (photographic) “prints”), with the possible exception of the certificates stating the meaning of christian or first names sold in the course of operating the “What’s In A Name” concession, and the front pages of the fictitious “Rave Review” newspaper containing a personalised headline and story sold in the course of operating the “Rave Review” newspaper concession.

78   In my opinion, however, notwithstanding that each of these items may be laminated or mounted on a frame, neither could, in my opinion, be described, consistently with ordinary usage, as a print or a poster. In my opinion, in the context of a shop described as a “prints and posters” shop, the word “print” according to ordinary usage connotes something other than either of the two items mentioned above, namely, something of the nature of but not limited to an original print or a non-original print of a painting or of a photograph or of some other picture. The Macquarie Dictionary defines “print”, relevantly, as “a picture, design, or the like, printed from an engraved, or otherwise prepared block, plate, etc.”. The Concise Oxford Dictionary defines “print”, relevantly, as “a picture or design printed from a block or plate”.

79   I am also of the opinion that in the context of a shop described as a “prints and posters” shop, that the word “poster”, according to its ordinary usage, does not connote either of the two items referred to above but rather, connotes something in the nature of a poster as defined in the Macquarie Dictionary, namely, “a large placard or bill, often incorporating photographs or illustrations, and posted for advertisement or publicity or for decorative purposes.” In particular, the two items referred to above could not, in my opinion, be said to be copies of items which could have been “posted” for advertisement or publicity or for decorative purposes within the meaning of this dictionary definition. The Concise Oxford Dictionary defines “poster” as “1. A placard in a public place. 2. A large printed picture. 3. A billposter.” The Concise Oxford Dictionary defines “decorate”, relevantly, as “provide with adornments; serve as an adornment to”. “Decoration” is defined as “a thing that decorates or serves as an ornament” and “adorn” is defined as “add beauty or lustre to: furnish with ornaments, decorate.” Nor, in my opinion, could it be said that the photos taken by the plaintiffs were, according to ordinary usage, as reflected in the dictionary definitions, either prints or posters.

“ Wall Decorations Shop ”

80   So far as concerns the submission made on behalf of the plaintiffs that any part of the premises occupied by the plaintiffs are being used wholly or predominantly for the carrying on of the business of a wall decorations shop, I am of the opinion that the submissions should be rejected for the reason that photos, even if hung on a wall, would not, according to ordinary usage, be described as wall “decorations” and because even the two items referred to above, namely, the certificate as to the meaning of christian or first names, and the front pages of the fictitious Rave Review newspaper, even if hung on a wall after having been laminated or mounted on a frame could also not, according to ordinary usage, be said to be “wall decorations”, having regard, in particular, to the relevant meaning of the word “decorate” in the Macquarie Dictionary as quoted above. In my opinion, whatever other purpose might be served by hanging items such as these on the wall, either laminated or in a frame, the purpose in so doing, could not, in my opinion, according to ordinary usage be said to be for the purpose of “decorating” the walls.

81 Notwithstanding these rejected submissions, however, the position remains that, in my opinion, the premises in which the plaintiffs operate their concessions are retail shops within the meaning of the definition of “retail shop” contained in section 3 of the Act because they are used wholly or predominantly for the carrying on of the business of a souvenir shop within the meaning of the Act, and further, that the agreements between the defendant and the plaintiffs are retail shop leases within the meaning of the definition of that term as defined in section 3 of the Act, since they constitute the grant for value of the non-exclusive right of occupation of those premises for the purpose of the use of those premises as a retail shop.

Business Not Carried On On Behalf of Lessor

82 I also reject the submissions made on behalf of the plaintiffs to the effect that the Act does not apply to the retail shops conducted by the plaintiffs, having regard to the provisions of section 5(b) of the Act which provides as follows:-

“This Act does not apply to any of the following retail shops: …
(b) Shops that are used wholly or predominantly for the carrying on of a business by the lessee on behalf of the lessor …”

83   It is true, as submitted on behalf of the defendant that, pursuant to the relevant agreements between the plaintiffs and the defendants, the plaintiffs may sell only “agreed products” as described in the agreements, and that the plaintiffs may not in respect of the “agreed products” charge more than the retail price recommended by the defendant from time to time, and further that additional products may be sold only with the approval in writing of the defendant, although that approval must not be unreasonably withheld. It is also true, that pursuant to those agreements the defendant is entitled to collect daily from the plaintiffs their gross daily receipts, and that the defendant is entitled by way of licence fee to an agreed percentage of those gross daily receipts. It is also true that pursuant to the said agreements the defendants are required to operate their concessions in accordance with certain requirements by the defendant, for example, as to the conduct of the staff employed by the plaintiffs.

84   It is, nevertheless, the plaintiffs who employ, direct and pay the staff, and it is also the plaintiffs who operate the concessions in the course of which they bring the “agreed products” into existence, and make the sales of the “agreed products”, without interference from the defendant.

85 In all the circumstances, it is, in my opinion, impossible to maintain the submission that the “retail shops” conducted by the plaintiffs are used “wholly or predominantly for the carrying on of a business by the lessee on behalf of the lessor” within the meaning of section 5(b) of the Act.

Section 16 of the Act Does Not Apply to the Retail Shop Leases Between the Parties Because the (Prima Facie) Extended Terms of Those Retail Leases Would Be Inconsistent With the Terms of the Head Lease Under Which the Defendant Holds the Retail Shops

86 It was submitted on behalf of the defendant that, by reason of the operation of section 16(5) of the Act, section 16 did not apply to the retail shop leases in the present case because its application would be inconsistent with the terms of the head lease under which the defendant holds those retail shops.

87 As stated above section 16(5) is in the following terms:-

“(5) This section does not apply to a lease to the extent that its application would be inconsistent with the terms of any head lease under which the lessor holds the retail shop.”
The Nature of the Defendant’s Occupation of the Theme Park

88   It was submitted on behalf of the defendant that, although at the time the agreements were entered into, the defendant occupied the theme park as a tenant pursuant to an unsigned and unregistered lease, that lease had now expired by effluxion of time, with the result that the defendant was now occupying the theme park as a monthly tenant pursuant to the holding over clauses of that lease which were in the following terms:-

“ 5.2 Monthly Tenancy - Holding Over
If the Lessor permits the Lessee to occupy the Property after the Date of Termination the Lessee must do so:
(a) as a monthly tenant; and
(b) on the same terms and conditions as the Lease as far as they apply to a monthly tenancy and expressly including clause 3.2.
5.3 Termination of Holding Over
Either the Lessor or the Lessee may terminate the monthly tenancy under this Part by giving the other 1 month’s written notice expiring on any day.”

89   It was submitted on behalf of the defendant that the unsigned and unregistered lease between Hartford Lane Pty. Limited, the owner of the theme park, which company became registered as proprietor of the land upon which the theme park is conducted pursuant to a transfer dated 26 March 1987, and the defendant, which was tendered in evidence, was operative between Hartford Lane Pty. Limited and the defendant according to its terms by reason of the evidence to the effect that the parties to that lease had conducted themselves on the basis that it was binding according to its terms, as manifested by the following facts:-

(a) Administratively the parties have operated the theme park consistently with the terms of the lease from 26 March 1997.

(b) The defendant took exclusive possession of the theme park.

(c) Hartford Lane Pty. Limited is the registered proprietor of the theme park.

(d) The defendant has paid money and done things pursuant to the lease, namely, paid land tax and rates and made payments in respect of the lease of equipment and for insurance and other things.

(e) There is no other competing or probable inference.

90 The plaintiffs submitted, on the other hand, that the unsigned and unregistered lease was not operative in the way contended for on behalf of the defendant and that, in any event, the purported head lease was not a lease of a retail shop within the meaning of the definition in section 3 of the Act (see later).

91   In my opinion, the defendant has not established, on the evidence, that the unsigned and unregistered lease is operative in the manner contended for by it. In my opinion, it is plain, on the evidence, that that lease was one which was not intended to be binding by the parties unless and until it had been executed by both parties within the meaning of the second class of contracts referred to in Masters v Cameron (1954) 91 CLR 353 at 360:-

“Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain … but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document.”

92   This, in my opinion, is made plain from the correspondence and other surrounding circumstances concerning the proposed execution of the lease, including the letter of 12 June 1997 from the solicitors for the owner of the theme park to the defendant forwarding a copy of a draft lease.

93   That letter drew attention, inter alia, to the fact that the term was for one year commencing 26 March 1997 and terminating 25 March 1998, and that the lease provided that if the lessee occupied the property after the date of termination then the lessee did so as a monthly tenant in accordance with clauses 5.2 and 5.3 thereof.

94   On 29 March 1999, the defendant finally wrote a letter to the company secretary of the owner of the theme park enclosing “a revised copy of the lease document” and, in effect, a request that a “circular” resolution, relating to the execution of the lease by the owner, be signed by the Malaysian directors of the owner. That letter was in the following terms:-

“Dear Kim Aun,
I enclose a revised copy of the lease document between International Theme Park Pty. Limited and Hartford Lane Pty. Limited. This is the lease that is the subject of a directors’ resolution that you have for signature by the Malayasian Directors.

There is a new clause - 13.3 - which allows the Lessor, Hartford Lane Pty. Limited, to deal with any part of the property as it sees fit. This clause addresses the problem highlighted by your legal advisor in regard to any proposed development of the property at Wonderland.

I trust that you can now proceed to have the circular resolution signed and returned to me.”

95   That copy of the proposed lease provided in clause 5.1 that the term of the lease was to commence on the “Date of Commencement” and was to expire on the “Date of Termination”. On the first page of the lease it was stated that the term of the lease was one year with a commencing date on (blank) March 1997 and a terminating date on (blank) March 1998, and this notwithstanding that the letter to which I have referred was dated 29 March 1999.

96   In these circumstances it is plain, in my opinion, that as at the date of the relevant concession agreements, namely, 23 March 1998, and even as at the date of the unsigned temporary agreement, namely, 1 August 1998, the defendant was not bound by any lease in terms of the draft which had been forwarded to Malaysia under cover of the letter of 29 March 1999. It follows, in my opinion, that the defendant is not in occupation of the theme park as a periodic tenant pursuant to the holding over clause of the draft lease. Notwithstanding that the defendant may have made certain payments of land tax and/or council and/or water rates and/or insurance premiums which would have been consistent with some of the obligations to which it would have been subject under the draft lease if it had been executed, or if it had otherwise been adopted by the parties as the measure of the agreement between them, the evidence is insufficient in my opinion, to lead to a conclusion that the parties had agreed that they would be bound by the terms of that draft lease even prior to its execution.

97   I would only add that, even if it were the position that the defendant was in occupation of the theme park as a monthly tenant pursuant to the holding-over clauses of the draft lease, that fact would produce no different result in the present proceedings (see later).

98 Against the eventuality that the Court would find that the defendant was not a monthly tenant of the theme park pursuant to the holding-over clauses of the draft lease, it was submitted on behalf of the defendant that the defendant, as at the date of entry into the relevant concession agreements, was a tenant of the theme park in respect of which there was no agreement as to its duration, with the result that, pursuant to section 127(1) of the Conveyancing Act 1919, the tenancy was a tenancy determinable at the will of either party by one month’s notice in writing expiring at any time.

99 Section 127(1) of that Act provides as follows:-

“127(1) No tenancy from year to year shall, after the commencement of this Act, be implied by payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall be deemed to be a tenancy determinable at the will of either of the parties by one month’s notice in writing expiring at any time.”

100   It was submitted on behalf of the defendant that its tenancy (with no agreement as to its duration) came into existence by reason of the fact that it had in fact granted by Hartford Lane Pty. Limited exclusive possession of the theme park and had paid the full annual liability for land tax for the 1999 land tax year as well as the council rates by way of quarterly instalments. There was also evidence to suggest that the defendant had paid an insurance premium in respect of the theme park covering the period from 30 June 1997 to 30 June 1998. These payments were said to be in consideration of the grant to the defendant of exclusive possession of the theme park which, it was envisaged by the draft lease would be payable by the defendant, and that, accordingly, these payments were in the nature of rent. In this context attention was also drawn on behalf of the defendant to the fact that in the proposed lease the rental provided for was 97% of the gross operating profit of the defendant and to the fact that no rent would have been payable on this basis if the lease had been executed by reason of the fact that the theme park had not, at any relevant time, been operating at a profit.

101 In my opinion, these facts, in the context of all the surrounding circumstances, did produce the result that the defendant was a tenant of Hartford Lane Pty. Limited at the relevant times with no agreement as to the duration of the tenancy. It follows in my opinion, that pursuant to section 127 of the Conveyancing Act 1919, the defendant was at the relevant times a tenant of the theme park under a tenancy determinable at the will of either of the parties by one month’s notice in writing expiring at any time.

The Defendant Holds the Retail Shops Under a Head Lease

102 It was submitted on behalf of the defendant, as stated above, that section 16 of the Act did not apply to the retail shop leases between the parties because its application would be inconsistent with the terms of the “head lease” under which the defendant held the relevant “retail shops” within the meaning of section 16(5) of the Act, the terms of which have been quoted above.

103 In response to these submissions on behalf of the defendant, it was submitted, firstly, on behalf of the plaintiffs that, contrary to the above heading, the tenancy of the defendant of the retail shops could not be described as a “head lease” under which lessor holds the relevant “retail shops”, within the meaning of section 16(5) of the Act, because the defendant is the tenant of the whole theme park, and not the tenant of the relevant retail shops within the meaning of section 16(5).

104 In my opinion, this submission on behalf of the plaintiffs must be rejected. Whilst it is, of course, true, that the defendant is the tenant of the whole of the theme park, it is, in my opinion, also the tenant in that sense of all the relevant retail shops contained within the theme park. As such tenant the defendant is plainly entitled to grant separate leases of the retail shops within the theme park and, that being so, I can see no basis in principle or logic, nor in any underlying legislative purpose, for holding that the Act should be construed in those circumstances so as to produce the result that the sub-lessor of a retail shop was not itself the head tenant of the retail shop, simply because its head lease of the retail shop, was not limited to that retail shop but extended to a larger area of land within which the retail shop was erected.

The Application of Section 16 to the Retail Shop Leases Between the Parties With Their Terms Extended (Prima Facie) to Five Years Would Be Inconsistent With the Terms of the Head Lease Under Which the Defendant Holds the Retail Shops (see Section 16(5)) .

105 It remains to consider whether or not section 16 of the Act applies to the relevant concession agreements (retail shop leases) of the plaintiffs because its application, resulting in the extension of the term of each of those agreements (retail shop leases) to a term of five years, would be relevantly “inconsistent” with the terms of the defendant’s tenancy (head lease) under which the defendant holds the retail shops.

106 It was submitted on behalf of the plaintiffs, contrary to the above heading, that section 16 of the Act did so apply because the relevant concession agreements (retail shop leases) were not inconsistent with any of the terms of the defendant’s tenancy (head lease) under which the defendant holds the theme park (including the relevant retail shops). It was submitted on behalf of the plaintiff that this was so because it was the position under the general law that a periodic tenant of land could grant a sub-lease of that land for a term longer than the period of the (head) tenant’s periodic tenancy, without the grant of such a sub-lease resulting in an assignment of the head periodic tenancy to the sub-lessee.

107   It was submitted, on the other hand, on behalf of the defendant, that, by reason of the fact that in such circumstances, under the general law, the sub-lease could be terminated, simply by termination by notice and without any breach of the head periodic tenancy, the concession agreements (retail shop leases) of the plaintiffs were clearly inconsistent with the terms of the head periodic tenancy under which the defendant held the relevant “retail shops”, because the potential for the bringing to an end of a sub-lease for a term of years without any breach, by the bringing to an end of a head lease, being a periodic tenancy, without any breach, was necessarily inconsistent with a sub-lease for a term which was enforceable as such according to its terms.

108 In my opinion, the submission made on behalf of the plaintiffs is correct, so far as it goes, but the correctness of that submission, so far as it goes, does not, in my opinion, produce the result that the relevant concession agreements (retail shop leases) between the parties, with their terms extended to five years, are not inconsistent with the terms of the head periodic tenancy (head lease) under which the defendant holds the retail shops, within the meaning of section 16(5) of the Act.

109   The correctness of the plaintiffs submission is reflected, so far as it goes, in the following passages, inter alia, from certain of the cases upon which the plaintiffs relied:-

“… within a few weeks at the most the sublessor would have been either a weekly or monthly tenant, or a tenant at will under s.127 of the Conveyancing Act 1919. Such a tenancy will support a sublease for a term of years because it may outlast that sublease: see Oxley v James (1844) 13 M & W 209; 153 ER 87, Wilson v Jolly (1948) 48 SR (NSW) 460 at 465, 469 and William Skelton & Son Ltd. v Harrison & Pinder Ltd. (1975) QB 361”: per Handley JA in Lee v Ferno Holdings Pty. Ltd. (1993) 33 NSWLR 404 at 410.
“… It is clear, according to the cases of Pike v Eyre and Curtis v Wheeler , that, if a tenant from year to year demises for a term of years, and the original tenancy from year to year lasts beyond that term, such a demise is not an assignment, but there is a reversion, on which covenant may be maintained”: per Pollock , C.B. in Oxley v James 153 ER 87 at 89 .

110   It is also the fact however that, consistently with these principles, a sub-lease for a term of years granted by a sub-lessor in his capacity as a tenant under a periodic tenancy of the land may be brought to an end (is defeasible) by the bringing to an end of the periodic head tenancy, which may be brought to an end, without breach, by appropriate notice of either party to that head tenancy. That this is so is made clear, inter alia, in the following passages from various authorities:-

“The respondent, by indenture made on 30th June 1967, had leased to the appellant the premises described in the default summons at an annual rental of $8,320 for a term of three years from 3rd July 1967. At that time the respondent held a larger area of which the subject premises form part as tenant of the Fremarle Acceptance Corporation Pty. Ltd. (Fremarle) under a tenancy as provided by s.127(1) of the Conveyancing Act 1919, as amended ( NSW). Such a tenancy is expressed in that section to be a tenancy terminable at the will of either of the parties by one month’s notice in writing expiring at any time. It is not a tenancy at will as at common law, but is a periodic tenancy from month to month terminable by a month’s notice in writing expiring at any time. Such a tenancy was capable of supporting the grant of the term of three years by the respondent to the appellant of the subject premises though a determination of the respondent’s interest in the land before the expiry of the term of three years would terminate the appellant’s interest in the land under the sub-tenancy”: per Barwick C.J. in Metropolitan Trade Finance Co. Pty. Ltd. v Coumbis (1973) 131 CLR 396 at 398.
“… Suppose that a tenant under a lease from week to week entered a sub-lease from week to week, from month to month, or for a term of years, and then surrendered his weekly tenancy, what was the position at common law as between the head lessor and the sub-lessee? It was held that such a sub-lease was valid as a sub-lease but determined upon the determination of the lease: Oxley v James ; Peirse v Sharr ” per Jordan C.J . in Wilson v Jolley (1948) 48 SR(NSW) 460 at 465.
“… the holder of any such tenancies is deemed to have a lease of longer duration than for practically any fixed time. For example, he might underlet from week to week, year to year or even for 21 years or more which is regarded as a lesser period than the periodical term … But the inherent nature of such under-leases means that they are operative only during the continuance in legal effect of the term out of which they were granted and no longer: Pike v Eyre; Oxley v James: per Davidson J in Wilson v Jolly, supra, at 469.

111   In my opinion, the submission on behalf of the defendant should be upheld. In my opinion, a head periodic tenancy (head lease) which can be terminated without breach, for example, on one month’s notice, which termination then results in the termination on one month’s notice (as it were) without breach, of a sub-lease for a term of years, is necessarily inconsistent with the sub-lease for a term of years, because the head periodic tenancy (head lease) has the potential within its terms to prematurely bring to an end the sub-lease for a term of years without any breach of either the head lease or the sub-lease.

112 It would, in my opinion, be extraordinary in the context of the Act, that a head periodic tenant (head lessee) of a retail shop under a periodic tenancy terminable on, for example, one month’s notice could, by granting a sub-lease of a retail shop for a term of, say, five years, produce the result under section 16 of the Act that the sub-lessee of the retail shop had a lease for a term of five years which would bind not only the periodic head tenant (sub-lessor), but also the head lessor who had granted no more than a periodic tenancy to his tenant. In my opinion, the Act could not have been intended to produce such a result and indeed, it is plain, in my opinion, that the legislative purpose of section 16(5) of the Act was to protect the position of a head lessor from what would otherwise have been an unintended consequence of section 16.

Order

113   Accordingly, the order of the Court is that the proceedings be dismissed and that the plaintiffs pay the costs of the defendant of the proceedings.

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Last Modified: 06/26/2000