Construction Technologies Australia Pty Ltd v Doueihi (No 4) - [2017] NSWSC 684

Supreme Court

New South Wales

Case Name:	Construction Technologies Australia Pty Ltd v Doueihi (No 4)
Medium Neutral Citation:	[2017] NSWSC 684
Hearing Date(s):	16 December 2016
Date of Orders:	31 May 2017
Decision Date:	31 May 2017
Jurisdiction:	Equity
Before:	Kunc J
Decision:	Notice of Motion dismissed
Catchwords:	PRACTICE AND PROCEDURE – Construction of orders for specific performance to give effect to equitable estoppel – No issue of principle
Legislation Cited:	Environmental Planning and Assessment Act 1979 (NSW)
Cases Cited:	Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104 Construction Technologies Australia Pty Ltd v Doueihi (2014) 17 BPR 33,457; [2014] NSWSC 1717 Construction Technologies Australia Pty Ltd v Doueihi (No 3) [2015] NSWSC 1850 Despot v Registrar General of New South Wales [2016] NSWCA 5 Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 JAG Investments Pty Ltd v Strati [1981] 2 NSWLR 600 Nadinic v Drinkwater [2017] NSWCA 114
Texts Cited:	Perry Herzfeld, Thomas Prince and Stephen Tully, Interpretation and Use of Legal Sources — The Laws of Australia (2013, Thomson Reuters)
Category:	Principal judgment
Parties:	Construction Technologies Australia Pty Ltd (ACN 126 262 842) (Plaintiff) Edward Doueihi (First Defendant) Katrina Scott (Second Defendant) Maria Vatselias (Third Defendant) Nicole Hogan (Fourth Defendant)
Representation:	Counsel: K Rees SC, R A Jedrzejczyk (Plaintiff) J Lockhart SC (Defendants) Solicitors: SD Commercial Lawyers Pty Limited (Plaintiff) Clayton Utz (Defendants)
File Number(s):	2012/367996
Publication Restriction:	No

JUDGMENT

Summary

The plaintiff, Construction Technologies Australia Pty Ltd (“CTA”), leases an industrial property (the “Property”) in Seven Hills, New South Wales from the defendants. CTA wishes to make a development application (the “Second s 96 Application”) to Blacktown City Council (the “Council”) in relation to the Property.
Faced with the defendants’ refusal to consent to the Second s 96 Application being made, CTA filed a notice of motion on 27 July 2016 (the “Motion”) for an order that the Court sign the Second s 96 Application on behalf of the defendants. CTA says it is entitled to that relief pursuant to final orders made in these proceedings by White J (as his Honour then was). The defendants deny that those orders compel them to give their consent.
CTA operates an adhesive manufacturing facility on the Property. CTA admits that it is operating its facility for hours which exceed those permitted by the current planning approval for the Property. The Second s 96 Application seeks Council approval of the extended operating hours for the Property to cure this irregularity.
CTA’s lease of the Property (the “Lease”) is the outcome of the decision of White J in Construction Technologies Australia Pty Ltd v Doueihi (2014) 17 BPR 33,457; [2014] NSWSC 1717 (the “Decision”). The Decision was upheld by the Court of Appeal in Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105.
In the Decision, his Honour held that CTA had the benefit of an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 684
Decision Date: 31 May 2017

CaseChat Overview and Summary

The matter before the court was an appeal against a decision to grant specific performance to enforce an equitable estoppel. The appellant, Construction Technologies Australia Pty Ltd (CTA), sought to enforce an equity arising by estoppel against the respondents, the Doueihi family. The primary judge had found that CTA was entitled to specific performance of the lease terms as negotiated between the parties. The central legal issue was whether specific performance of the lease should be granted, considering the absence of a mistaken belief as to legal rights, the incompleteness of the agreed terms, and CTA's perceived carelessness in protecting its own interests. The court had to determine whether these factors should preclude the grant of specific performance.

The court held that none of the factors mentioned militated against granting specific performance. The court found that CTA had a legitimate expectation that it would be granted a lease on the terms negotiated. The absence of a mistaken belief as to legal rights did not preclude the grant of specific performance, as the court considered the parties' conduct and negotiations. The incompleteness of the agreed terms did not prevent specific performance, as the court was able to fill in the gaps based on the parties' negotiations and the surrounding circumstances. The perceived carelessness of CTA did not preclude specific performance, as the court found that the respondents had taken advantage of CTA's reliance on the negotiations. The court concluded that the appropriate equitable relief was specific performance to make good the assumption that CTA was induced to adopt.

The court ordered that CTA and the respondents execute a lease on the terms negotiated between the parties. The lease was to be for a term of five years from 18 May 2010 with an option for renewal for a further five-year term. The rent for the first five-year term was to be $12,000 per month inclusive of outgoings, with CTA paying for electricity and consumables and services in the same way as it had to date. If the option for renewal was exercised, the rent for the renewed lease was to be the then market rent as agreed or determined by valuation and be subject to annual increases in accordance with the Consumer Price Index. The court also ordered that the lease contain usual lease covenants for factory premises that in default of agreement be determined by an expert to be appointed for that purpose. The court further ordered that CTA undertake promptly to do all things necessary on its part to obtain all necessary regulatory approvals to its occupation of the site and its manufacturing facility, with the costs of obtaining such approvals to be borne by CTA.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Finally, it is necessary to set out his Honour’s conclusion (emphasis added):“Conclusion249. For the reasons at [141] I consider that CTA is entitled to enforce an equity arising by estoppel. For the further reasons above, neither the absence of a mistaken belief as to legal rights, nor the incompleteness of agreed terms, nor what might be regarded as carelessness in protecting its own interest, militates against that conclusion.250. The appropriate equitable relief is relief to make good the assumption that CTA was induced to adopt. That relief is not disproportionate. Nor is it precluded by intervening interests of third parties. Nor could a monetary award satisfactorily value the expectation. There is no evidence of available alternative premises (Giumelli v Giumelli at [48]–[50], 125; Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 at [82]–[85], 529-530). That may require the court to settle the terms of a lease for a term of five plus five years if the parties are unable to agree on the terms. But for the reasons given that is not an objection to the grant of relief.251. It will be a condition of the relief that CTA undertake promptly to do all things necessary on its part to obtain all necessary regulatory approvals to its occupation of the site and its manufacturing facility. The costs of obtaining necessary approvals are to be borne by CTA. The first to fourth defendants will be ordered to do all that is necessary on their part for the obtaining of such approvals.252. As indicated at [245] above, in its modified terms sheet CTA proposed adjustments of rent according to movements in the Consumer Price Index as well as a review to market if the option for renewal was exercised. The evidence is that the rent paid to date is a market rent notwithstanding the absence of CPI increases. However, the lease should provide for a review to market if the option is exercised. I also think that if the option is exercised there should be provisions for the rent for the renewed term to be increased in accordance with the CPI.253. There was a dispute as to whether CTA has enjoyed exclusive possession of some of the shared facilities, such as the boardroom and an area of an amenities room. It has not claimed and is not entitled to a right of exclusive use of those areas.254. The orders should provide that the first to fourth defendants execute a lease on terms that:a. CTA have the right of exclusive possession of the area shown as Area B on the plans, being the areas totalling approximately 1,159 square metres as depicted on the survey plan of Mr Bromhead, with a non-exclusive right to use the current shared facilities;b. the lease to be for a term of five years from 18 May 2010 with an option for renewal for a further five-year term, the option to be exercised by 18 May 2015;c. the rent for the first five-year term to be $12,000 per month inclusive of outgoings, but that CTA pay for electricity and consumables and services in the same way as it has to date;d. if the option for renewal is exercised, the rent for the renewed lease be the then market rent as agreed or determined by valuation and be subject to annual increases in accordance with the Consumer Price Index;e. CTA have the right to remove its tenant fixtures at the determination of the lease and be obliged to make good;f. that the lease otherwise contain usual lease covenants for factory premises that in default of agreement be determined by an expert to be appointed for that purpose.”

Ratio Decidendi

Legal Principle Established

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