DHK Retailers P/L v Leda Commercial Properties P/L

[1993] FCA 221

Re: DHK RETAILERS PTY LIMITED
And: LEDA COMMERCIAL PROPERTIES PTY LTD
No. AG76 of 1992
FED No. 221
Number of pages - 23
Landlord and Tenant

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Neaves(1), Wilcox(1) and Miles(1) JJ

CATCHWORDS

Landlord and Tenant - sub-lease of shop in shopping centre - breach - Whether lessor entitled to re-enter and recover damages for breach - Interpretation of lease.

Forfeiture of Leases Act 1901 (NSW), in its application in the Australian Capital Territory, s.l

DTR Nominees Pty Ltd v. Mona Homes Pty Ltd (1978) 138 CLR 423

Shevill v. Builders Licensing Board (1982) 149 CLR 620

AMEV-UDC Finance Ltd v. Austin (1986) 162 CLR 170

AMEV Finance Ltd v. Artes Studios Thoroughbreds Pty Ltd (1989) 15 NSWLR 564

Progressive Mailing House Pty Ltd v. Tabali Pty Ltd (1985) 157 CLR 17

Ex parte Whelan (1986) 1 QdR 500

HEARING

CANBERRA, 29 March 1993

#DATE 21:4:1993

Counsel for the appellant: Mr B.A. Meagher

Solicitors for the appellant: Ken Johnston Bedford and Co

Counsel for the respondent: Mr R. Sackville QC and Mr F.J. Purnell

Solicitors for the respondent: Mallesons Stephen Jaques

ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay to the respondent its costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

NEAVES, WILCOX and MILES JJ This is an appeal, brought by leave of this Court, from a decision of the Supreme Court of the Australian Capital Territory (Higgins J). His Honour acceded to an application for the entry of summary judgment in a proceeding pending in that Court. The applicant for judgment was Leda Commercial Properties Pty Limited ("Leda"), the plaintiff in the Supreme Court and the respondent to this appeal. The defendant in the Supreme Court was the present appellant, DHK Retailers Pty Limited ("DHK").

The facts
2. Leda is the registered proprietor of the Crown Lease of land at Tuggeranong upon which is erected a shopping centre known as the "Tuggeranong Hyperdome". By a Deed of Agreement for Lease dated 22 April 1987 Leda agreed to sub-lease a shop in the centre to DHK. The form of the sub-lease was annexed to the Deed of Agreement for Lease. The term of the sub-lease was six years, commencing upon the earliest of three stipulated events. The evidence before Higgins J was that the first of these events occurred on 9 November 1987, so the sub-lease ran until 8 November 1993. The lessee desired to use the demised premises as a clothing shop and this use was approved by the lessor. It seems that DHK moved into the shop in about November 1987. The company thereafter used the shop for the sale of clothing, until 15 June 1992.

1. Incorporated by reference into the sub-lease were the provisions contained in a document referred to as a "Memorandum of Lease Provisions", a document registered under the Real Property Act 1925 (ACT) and numbered 558229. The Memorandum is a lengthy document. Having regard to the submissions put to us, it is necessary to refer to several provisions.

2. Part 5 of the Memorandum dealt with the use of the demised premises. It included cl. 5.04, whereby the lessee covenanted to cause any business permitted to be carried on in the premises to be "conducted in a proper, orderly and business-like manner", and cl. 5.05, whereby the lessee covenanted to cause the business to remain open during usual business hours.

3. Part 15 of the Memorandum dealt with default by the lessee. Clause 15.04 read:
   

"15.04 DEFINITION OF DEFAULT - It is a fundamental and essential term of this Lease that the Lessee shall be in default in any of the following circumstances:

15.04.1 Rent in arrears - if the rent hereby reserved or contributions to Outgoings or Air Conditioning Costs or any part of any such moneys shall be unpaid for the space of seven (7) days after the same shall have become due whether any formal or other demand therefor shall have been made or not; or

15.04.2 Failure to pay moneys - if any moneys payable by the Lessee to the Lessor hereunder on demand shall not have been paid within seven (7) days of the making of demand therefor or if any other moneys payable by the Lessee to the Lessor shall not have been paid by the due date therefor; or

15.04.3 Failure to effect repairs - if the Lessee shall not commence effecting the rectification or repairs required by any notice given in terms of Clauses 5.17 or 6.08 respectively hereof within a reasonable time after the giving of such notice or having commenced to effect the same does not complete such rectification or repairs within a reasonable time having regard to the nature and extent of such rectification or repairs; or 15.04.4 Breach of covenants - if the Lessee shall fail to observe, perform or fulfil any of other terms, covenants, conditions and restrictions herein contained on the part of the Lessee (whether positive or negative) contained or implied in this Lease; or

15.04.5 Liquidation of company - if the Lessee being a company enters into liquidation (otherwise than for the purpose of reconstruction or amalgamation with the prior consent in writing to the Lessor which consent shall not be unreasonably refused) or if a receiver or official manager or provisional liquidator be appointed; or 15.04.6 Execution against lease - if the interest of the Lessee under this Lease is attached or taken in execution under legal process;

15.04.7 Assign, part with possession - if the Lessee attempts to assign, transfer, part with possession, grant a licence or fail to comply with any provision of Part 14 hereof; 15.04.8 Use of premises - if the Lessee uses the Demised Premises other than as permitted under this Lease; 15.04.9 Lessee abandons premises - if the Lessee vacates or abandons the Demised Premises; or

15.04.10 Failure to achieve level of trading - if in the Lessor's bona fide and reasonable opinion and having regard to the nature of the Lessee's business and the size and location of the Demised Premises, the Lessee fails to achieve a level of trading in the Demised Premises which a business of the type carried on by the Lessee should achieve when conducted with diligence, efficiency and in a proper, reputable and businesslike manner and such failure has continued for a period of not less than two (2) calendar months after the Lessor has given written notice to the Lessee of his intention to take action pursuant to this clause."

1. It will be noted that the opening words of the clause do not make sense; a drafting or typing error has occurred. We were presented with conflicting submissions as to the effect of this error.

2. Clause 15.05 dealt with waiver, cl. 15.06 with forfeiture. The latter clause read:
   

"15.06 FORFEITURE OF LEASE - If the Lessee shall be in default as aforesaid the Lessor may at its option -

15.06.1 Determination by re-entry - without any prior demand or notice (by force if necessary) re-enter into and take possession of the Demised Premises or any part thereof in the name of the whole and eject the Lessee and all other persons therefrom and repossess and enjoy the same as of its first and former estate therein and thereupon this Lease shall be absolutely determined; or 15.06.2 Determination by notice - by notice in writing to the Lessee determine this Lease; or

15.06.3 Conversion to monthly tenancy - by notice in writing to the Lessee elect to convert the unexpired portion of the term of this Lease into a tenancy from month to month in which event this Lease shall be determined as from the giving of such notice and thereafter the Lessee shall hold the Demised Premises from the Lessor as Lessee from month to month at a monthly rent equal to the aggregate of the monthly instalments on account of the rent the Outgoings and the Air Conditioning Costs payable hereunder at the date of giving such notice (such rent being payable monthly in advance) but otherwise on the terms and conditions of this Lease so far as they can be applied to a monthly tenancy;

PROVIDED ALWAYS that if the Lessor is not required by law to give prior notice in writing to the Lessee of its intention to re-enter, determine or convert as aforesaid the Lessor shall not (in the case of a default which is capable of rectification) exercise its rights of re-entry, determination or conversion until the default has continued for a period of fourteen (14) days after the Lessor has given notice in writing to the Lessee requiring the Lessee to rectify such default".

1. Clause 15.07 related to tender after determination of the lease. It is not presently relevant. Clause 15.08 provided that, in the event of the lessor determining the term by reason of the default of the lessee -
   

"the Lessee shall pay to the Lessor from time to time upon demand by the Lessor by way of damages for loss of its bargain the amount (if any) by which the rent hereby reserved between the date of determination and the date of expiry of this Lease by effluxion of time exceeds the rent received or likely to be received from any other Lessee to whom the Demised Premises are relet or may be relet during such period."

1. By cl. 15.09, the Memorandum provided for recovery of damages for repudiation.

2. After the commencement of the term, a dispute arose between the parties concerning the circumstances under which DHK had agreed to enter into the Deed of Agreement for Lease. DHK apparently contended that Leda had infringed s.52 of the Trade Practices Act 1974. This dispute was settled by the parties entering into a deed dated 12 June 1992. The terms of this deed do not matter, except that it is relevant to note that the deed of settlement confirmed the continuation of the lease.

3. On 15 June 1992, the Monday following the execution of the deed of settlement, Ian Hardy, the manager of the centre, noticed that DHK's shop was closed and that the trading stock had been removed. There was a conflict in the affidavit evidence read to Higgins J regarding the time on that day when the stock was removed. There was evidence that Anita Calvin, a buyer for DHK who visited Tuggeranong on 15 June, told Frederick Warren, a security guard at the centre, that she and others were taking out the stock and "changing it for new" or "giving the shop a whole new look"; depending on whose version is accepted. Whatever the time of the stock removal and the precise terms of the conversation between Ms Calvin and Mr Warren, it is clear that, by the end of the day, all stock had been removed from the shop. The moveable furnishings were also removed. The fixtures and window dressing remained, but otherwise the shop was empty and locked. It is common ground that, apart from what was said by Ms Calvin to Mr Warren, nobody representing DHK conveyed to Leda any information about DHK's intentions.

4. On the following Monday, 22 June, Malcolm Brennan, the solicitor for Leda, had a conversation with Paul Conway, a solicitor acting for DHK. Mr Brennan asked Mr Conway what were his instructions. According to Mr Brennan, Mr Conway replied: "My instructions are not to say anything to anybody". Mr Conway's version is that he answered: "I do not have instructions to say anything". The difference is immaterial. The significant point about the conversation is that, one week after the closure of the shop and after DHK had the benefit of legal representation, DHK expressly declined to enlighten Leda as to its intentions.

5. On the same day - the evidence does not reveal whether before or after the conversation between Mr Brennan and Mr Conway - Leda's solicitors prepared a notice pursuant to the Forfeiture of Leases Act 1901 (NSW) in its application in the Australian Capital Territory (see the New South Wales Acts Application Act 1984 (ACT)). The notice was served on that day by affixing a copy to the door of the shop (as permitted by cl. 17.04 of the Memorandum of Lease Provisions). A further copy was served on DHK at its registered office on 26 June. The notice read:
   

"TO: D.H.K. Retailers Pty Limited ACN 002 094 457

of: 4th Level, 770 George Street, Sydney in the State of New South Wales

The Sublessee of Shop No. GA6 in Subleasing Plan No. 2353 BEING PART of the building erected on all that piece of land being Block 2 Section 1 Division of Greenway in the Australian Capital Territory and the whole of the land in Crown Lease registered Volume 1229 Folio 58. Having reference to the deed of agreement for lease of the abovementioned premises dated the 22nd day of April 1987 between Leda Commercial Properties Pty Limited and D.H.K. Retailers Pty Limited AND the covenant by the Sublessee therein contained that the Sublessee shall cause any trade or business conducted in the premises to remain open for business for not less than the regular customary days and hours for businesses of the like nature in the trading area in which the Centre is located

AND the breach by you of that covenant Leda Commercial Properties Pty Limited hereby gives you notice and requires you to remedy that breach by opening the premises for business in accordance with the terms of the Sublease on or before 6 July 1992."

1. Mr Conway responded to the notice by a letter dated 29 June in which he stated, without elaboration: "Our instructions are that our client does not regard itself as being in breach".

2. On 7 July Mr Brennan issued a Notice of Re-entry. Mr Hardy fixed this notice to the shop. On the same day, he changed the locks; thereby effectively preventing re-entry by DHK. A copy of the notice of 7 July, also, was served on DHK at its registered office. This notice read:
   

"TO: DHK RETAILERS PTY LIMITED ACN 002 094 457

OF: 4th Level

770 George Street

SYDNEY NSW 2000

NOTICE RELATING TO:

SUBLEASE: Annexed to Deed of Agreement for Lease dated 22 April 1987 ("Sublease")

SUBLESSOR: LEDA COMMERCIAL PROPERTIES PTY LIMITED SUBLESSEE: DHK RETAILERS PTY LIMITED ACN 002 094 457 PREMISES: Relating to shop numbered GA6 in subleasing plan number 2353 ("Premises") BEING PART of the building erected on all that piece of land being Block 2 Section 1 Division of Greenway in the Australian Capital Territory and the whole of the land in Crown Lease registered Volume 1229 Folio 58.

TAKE NOTICE THAT the Sublessor intends to exercise its right to re-enter the Premises on the 7th day of July 1992 on the grounds that the Sublessee has failed to comply with the provisions of the Sublease. Particulars of the ground on which the re-entry is based are as follows: Default by Sublease

1.1 Clause 15.04 of the Memorandum of Lease Provisions registered No.558229 provides that it is a fundamental and essential term of the Sublease that the Sublessee shall be in default in any of the following circumstances:

(ii) The Sublessee Abandons Premises - If the Sublessee vacates or abandons the demised premises. 1.2 Clause 15.06 of the Memorandum of Lease Provisions registered No. 558229 provides that if the Sublessee shall be in default the Sublessor may at its option without any prior demand or notice (by force if necessary) re-enter into and take possession of the premises or any part thereof in the name of the whole and eject the Sublessee and all other persons therefrom and repossess and enjoy the same as of its first and former estate therein and thereupon the Sublease shall be absolutely determined. PROVIDED ALWAYS THAT if the Sublessor is not required by law to give prior notice in writing to the Sublessee of its intention to re-enter the Sublessor shall not (in the case of a default which is capable of rectification) exercise its right of re-entry until the default is continued for a period of 14 days after the Sublessor has given notice in writing to the Sublessee requiring the Sublessee to rectify such default.

2.1 The Sublessee vacated the Premises and failed to open the Premises for business in accordance with the terms of the Sublease. 2.2 By notice pursuant to the Forfeiture of Leases Act 1901 (NSW) as it applies in the Australian Capital Territory dated 22 June 1992 the Sublessor required the Sublessee to open the Premises for business in accordance with the terms of the Sublease on or before 6 July 1992. The Sublessee has failed to rectify that breach of the Sublease.

AND the Sublessor hereby demands immediate possession of the premises."

1. Seven days later, on 14 July, a Writ of Summons was issued out of the Supreme Court. Annexed to the writ was a Statement of Claim in which Leda referred to the covenant of the lessee to cause the business to remain open during usual business hours. The plaintiff pleaded that it was:
   

"a fundamental and essential term of the sublease that the defendant shall be in default if the defendant vacates or abandons the premises".

By para 8 of the Statement of Claim, Leda alleged that, in breach of the terms of the sub-lease, "the defendant closed the business and vacated the premises on 15 June 1992". Leda sought damages in the sum of $132,703.64. Particulars were supplied. They indicated that this sum comprised rent, outgoings and promotional levy from 1 August 1992 to 8 November 1993. We assume from the starting date of this claim that these items had been paid up until 31 July 1992.

1. On 16 July Mr Conway wrote a letter to Mr Brennan's firm responding to the lessor's re-entry:
   

"We are instructed by our client that your client has entered the premises occupied by our client, removed our client's locks, moved our client's fittings and fixtures, affixed a new padlock and precluded access to the shop premises to our client and to persons authorised by our client.

We are instructed that in so doing your client has repudiated the provisions of the lease. We are instructed that our client previously informed the security guard of the premises that our client would be renovating and refurbishing the premises. Plans for this purpose have been prepared by our client.

We are instructed that the improper action taken by your client in precluding access and occupation to our client is inconsistent with the continued occupation of the premises by our client. We are instructed that our client does not wish to be involved in lengthy and costly litigation with your client with a view to securing the tenancy and that your client's action has already left a stigma on the premises which would have an adverse reaction upon customers of our client. In those circumstances our instructions are that our client accepts the repudiation of the tenancy by your client.

Our client will not pay further rental as the lease is at an end, and requires reimbursement of the advance payments already made. Our client expressly reserves its right to claim damages from your client by virtue of the repudiation by your client of the terms of the lease. Please have your client return to our client direct its fixtures, fittings, plant and equipment."

1. Mr Brennan responded with a letter advising Mr Conway of the institution of legal action.

The application for summary judgment
19. Leda's application for summary judgment was filed on 11 August 1992. It was argued before Higgins J on 28 August 1992. His Honour reserved his decision. On 10 November 1992 he made an order giving Leda leave to amend its Statement of Claim and, subject to that amendment being made within seven days, leave "to enter interlocutory judgment against the defendant for damages to be assessed". It will be noted that his Honour did not accede to Leda's original application that it have leave to enter judgment in its favour for $132,703.64. In this he was clearly correct. Leda would have been entitled to recover that sum only if it demonstrated that it would not, or would not be likely to, receive any rent or outgoings from any new lessee before 8 November 1993. There was no material before Higgins J to support that conclusion.

1. Higgins J gave comprehensive reasons for the orders he made. As they are lengthy, it will suffice for us to summarise their principal elements.

2. After referring to the facts of the matter, his Honour set out a number of the lease provisions, including some not relied upon before us. He found that the conduct of the defendant, even on the defendant's account of the matter, "justified the plaintiff in concluding, as it did, that the defendant had chosen to close its business and not trade during the hours and on the days it covenanted to trade". He thought that persistence in that closure "would, in the absence of explanation, warrant a conclusion that the defendant had vacated or abandoned the demised premises". Higgins J went on to consider "whether the subjective intention of the defendant to refurbish and then re-occupy the premises, if so found as a fact, would alter the situation". He commented:
   

"I do not believe cl. 15.04.4 was intended to allow any breach of covenant, however trivial, to found a right of re-entry. The process of notice clearly focusses on terms of the agreement which, if the lessee persists in breach thereof, would evidence an intention not to be bound by the leasing agreement. Of course, cl. 15.04. also focusses on specific obligations the breach of which are (sic) expressly agreed to confer a right of re-entry if that breach remains unremedied or if the forfeiture is not made the subject of equitable relief."

1. Higgins J referred to the decision of the High Court of Australia in Shevill v Builders Licensing Board (1982) 149 CLR 620 and commented that "ordinarily, the final step of determination of a lease is reserved for breach of an essential term". He went on:
   

"It seems to me, that, in context, cl. 15.04.4 refers to a breach of the agreement of sufficient gravity as to evince an intention to repudiate it. That would, of course, sit well with the view that such a breach could be rationally viewed as a 'fundamental' breach or the breach of an 'essential' term.

I would, therefore, conclude that conduct which breached the terms relating to opening for trading would not, by itself, suffice to activate the power in cl. 15.06.1."

1. Higgins J proceeded to discuss the notice of re-entry, concluding that it was ineffective because it failed to complain of a fundamental breach of the lease or the breach of a fundamental term. As a result, he said, it was -
   

"at least, seriously arguable that the re-entry effected on 7 July 1992 was not authorised or permitted by the provisions of the Lease or any of them".

1. However, this conclusion did not avail DHK. Higgins J went on to consider whether DHK had repudiated the lease. After referring to several authorities, his Honour said that -
   

"(i)f a tenant gives notice of intention to vacate, a landlord is entitled to assume that the tenant is repudiating the lease".

He expressed the view that, in the present case, "the lessee had acted so as to lead the lessor reasonably to conclude it had abandoned the premises". He asked whether the terms of the lease prevented the lessor relying on that repudiation. In considering this matter, Higgins J adverted to the opening words of cl. 15.04:

"It seems to me that words have been omitted from the preamble to it. It should read to the effect, 'It is a breach of a fundamental and essential term of this Lease if the Lessee shall be in default ...'. However, nothing turns on this. The intended meaning is plain enough. A similar omission had occurred in Ex parte Whelan (1986) 1 Qd R 500. As Thomas J noted in that case, at p 502, Fitzgerald v Masters (1965) 95 CLR 420, 426-7 is authority for the view that words may be supplied or omitted where that action is required to avoid absurdity or inconsistency." (Original emphasis)

1. Higgins J thought cl. 15.08 inapplicable, because there was no "default of the lessee". But he thought the lessor entitled to recover damages under cl. 15.09 on the basis that the lessee's conduct "was such as reasonably to induce the plaintiff to believe that the defendant had abandoned the premises and so repudiated the lease agreement".

2. Higgins J then considered the matter of estoppel, concluding that -
   

"it would be inequitable to permit the defendant now to resile from the consequences of the false impression it deliberately created";

and in reliance upon which the plaintiff had acted in re-entering. Consequently, it was appropriate to enter interlocutory judgment for damages to be assessed.

The appeal
27. The argument in this Court departed significantly from the matters apparently put to Higgins J. Many of the matters discussed by his Honour were not raised before us. We will not deal with those matters.

1. It is particularly important to note that, in their argument in this Court, counsel for the respondent did not rely upon the doctrine of estoppel. They founded themselves directly upon the terms of the sub-lease, contending that, upon their proper interpretation, they entitled their client to re-enter on 7 July 1992 and to recover damages for breach. They submitted that Higgins J erred in holding that it was not a fundamental breach of the sub-lease for the lessee to have failed to carry on business after 15 June. Counsel submitted that it is open to the parties to a lease to agree between themselves that a term which would not otherwise be fundamental shall be regarded as an essential provision of the agreement. They said that, if a question arises whether the parties have so agreed in any particular case, it is to be resolved by construing the relevant lease. In support of these submissions counsel referred to four authorities: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 431; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 627-629 and 635-637; AMEV-UDC Finance Limited v Austin (1986) 162 CLR 170 at 186, 216-217; AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1989) 15 NSWLR 564 at 584. They said that, where a lease is terminated by the lessor by reason of the lessee's repudiation or breach of an essential term, the lessor is entitled to recover damages from the lessee for loss of its bargain. Counsel contended that the same position applies where termination occurs in consequence of the exercise of a contractual right to terminate for breach, whether or not the breach giving rise to the termination would otherwise be regarded as a fundamental term. They referred to Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 at 31.

2. In order to relate these submissions to the present case, counsel for the respondent had to demonstrate an intention by the parties to regard as a fundamental term the ground specified in the notice of 22 June 1992: failure by the lessee to remain open for business during usual trading hours. This task immediately involved them in the difficulty caused by the opening words of cl. 15.04. It will be recalled that, after the heading "Definition of Lease" the clause stated: "It is a fundamental and essential term of this Lease that the Lessee shall be in default in any of the following circumstances". Counsel contended that those words ought to be read as suggested by Higgins J: "It is a breach of a fundamental and essential term of this lease if the Lessee shall be in default" etc. They said that, without the insertion of some such words as those emphasised, the opening words of the clause are nonsensical; the parties could not have intended them to take that form. They pointed out that no other meaning had been suggested at any stage of the case. They argued that this is a case where the Court ought to take the course adopted by the Full Supreme Court of Queensland in Ex parte Whelan (1986) 1 Qd R 500. In that case Thomas J, with whom Kneipp and Shepherdson JJ agreed, said at 502:
   

"Some words have obviously been left out and it is true that a strictly literal construction makes nonsense of the clause. However I do not think that any lawyer, commercial lessor or commercial lessee would have any difficulty in discerning what was intended. There is express reference to something which a more recent Consumer Price Index 'bears' to the 1982 Index, and this plainly demonstrates a ratio or proportion. What is lacking is an express linkage of this ratio to the base of $400. It was obviously intended to be linked to something, and the only possible candidate for linkage is the prescribed initial rental of $400. The question then is whether the clause should be interpreted as if some such words as 'adjusted in the proportion' appeared before the words 'which the Consumer Price Index (All Groups)'. Mr. Davies QC for the lessor submitted that insofar as the clause purports to provide a rental for the second and subsequent years it is unintelligible, uncertain and meaningless. He went on to submit that in the absence of rectification the lease as a whole was void for uncertainty, citing Hall v. Busst

(1960) 104 CLR 206 and Whitlock v. Brew (1968) 118 CLR 445. He rightly urged the Court against any re-writing of the parties' agreement. In the present case a meaning can be given to the clause and I do not believe that anything additional is thereby foisted upon the parties to which they did not agree. The parties could not have meant anything other than the meaning I have mentioned. It is significant that no other or alternative meanings were suggested by counsel and there is none apparent even after wide speculation. It is not a case of ambiguity. If the clause fails, it does so because it is illusory. But there is little difficulty in determining that the parties did agree upon a rental or in discerning what that rental was."

1. The argument of counsel for the appellant, on this aspect of the case, was that cl. 15.04 was concerned with the identification of fundamental and essential terms, not with breaches. He also said that, even on Higgin J's reading, the provision did not operate to elevate the provisions of the clause into fundamental or essential terms; it was implausible that the parties intended that a breach of any of the multifarious terms listed in cl. 15.04 would give rise to a right of termination.

2. The first argument runs into the difficulty that other words in the document suggest that the function of cl. 15.04 was to identify the particular breaches that would enable termination. The clause is headed: "Definition of Default"; and it is in truth a definition clause fulfilling no purpose other than to define the circumstances under which the lease may be determined. The operative provision is cl. 15.06 which provides that, if the lessee "shall be in default as aforesaid" (the words "as aforesaid" clearly referring back to 15.04), the lessor may determine the lease or take other action. Having regard to the function of cl. 15.04 it is impossible to regard it otherwise than as a clause defining the breaches that will enable forfeiture. That function may be fulfilled only if the clause is read in the manner suggested by Higgins J.

3. In relation to the appellant's second submission, it is relevant to note that some of the events specified in cl. 15.04 are events that may not necessarily constitute a breach of the covenants of the lease; for example, liquidation of a lessee company (cl. 15.04.5) and execution against the lease (cl. 15.04.6). Nonetheless, these are matters that might legitimately concern a lessor; as also are the events listed in cl. 15.04. 7 - 15.04.10. It is understandable that a lessor running a shopping centre, where the success of one business is important to others, would wish to be entitled to terminate the lease of premises used for an unauthorised purpose (cl. 15.04.8), abandoned (cl. 15.04.9) or which fail to achieve a satisfactory level of trading (cl. 15.04.10). We see nothing in the nature of the events listed in cl. 15.04.5 to cl. 15.04.10 to cause us to doubt that it was the wish of the lessor, accepted by the lessee, that it be able to terminate the sub-lease if any of those events occurred.

4. Each of the events specified in cl. 15.04.1 - cl. 15.04.4 would constitute a breach of the sub-lease. The apparent purpose of the first three paragraphs was to provide time to the lessee to rectify any one of the stipulated defaults before it enabled termination of the lease. These paragraphs all dealt with matters inherently capable of rectification (payment of money or commencement of repairs). Clause 15.04.4 then provided a general right to terminate the lease in relation to the lessee's failure to perform any of its other sub-lease obligations. Although Higgins J thought otherwise, we see no reason to read down this provision so as to exclude what his Honour called a "trivial" breach of covenant. There is no warrant in the language of the clause to read down its application. To impose a test of what is "trivial", is to involve a court in the very task that the drafter of the lease sought to avoid by inserting cl. 15.04: identifying the circumstances which give the lessor a right of termination. It must be remembered that the parties did not envisage automatic and immediate termination. The proviso to cl. 15.06 extended the statutory obligation to give prior notice of termination to all defaults. If the parties turned their minds to the subject, no doubt they would have assumed that a trivial breach would be rectified within the required 14 day period.

5. Even on the lessee's version of the facts before the primary judge, the lessee was clearly in default of its obligation under cl. 5.05 to remain open for business during normal trading hours. Accordingly, the lessee was entitled to terminate the lease under cl. 15.06.1, read with cl. 15.04.4; but only if the default continued for 14 days after the service of a notice specifying the default relied upon. The lessor gave notice on 22 June. That notice complained that the lessee had breached its obligation to remain open during normal hours, a clear reference to cl. 5.05. The default continued after the expiration of the breach. The lessor was then entitled to re-enter, as it did. It was strictly not necessary for the lessor to serve a notice of re-entry. As Brennan J pointed out in Tabali at 49, where a lease is liable to forfeiture "enforcing the forfeiture both determines the lessee's interest in the land and constitutes the lessor's election to accept the repudiation". Thereafter, in the present case, cl. 15.08 provided for recovery of damages for breach.

6. Counsel for the appellant submitted that the notice of re-entry depended on a different ground of default from what was specified in the notice of breach. It is true that the notice of re-entry highlighted the fact that the lessee had allegedly vacated or abandoned the demised premises, a different matter. But the notice did also rely on the fact that the lessee had failed to open the shop for business in accordance with its obligation under the sub-lease. This was the ground taken in the notice of breach. Anyway this is irrelevant. If the lessor was not obliged to give notice of re-entry, any inadequacies in the notice actually given cannot matter.

7. Counsel for the respondent put an additional argument, by reference to which they sought to support the order of Higgins J, even if the lessor was not entitled to terminate the sub-lease for breach of cl. 5.05.

8. It is not necessary for us to consider that argument. We must, of course, consider this appeal on the basis of the version of the facts most favourable to the appellant (the party against whom summary judgment was sought). Even so, we are satisfied that the sub-lease was properly terminated and that the lessor, Leda, became entitled under cl.15.08 to recover damages for breach. Being so satisfied, we are of the view that no purpose would be served by allowing the appellant to defend the claim generally in order to re-agitate the issues raised on the appeal. Although we have reached our conclusion by a route different from that travelled by Higgins J, we are of the opinion that his order was correct. The appeal is dismissed with costs.