Dogrow Pty Ltd v Teakdale Pty Ltd - [2013] NSWSC 1380

Supreme Court

New South Wales

Medium Neutral Citation: Dogrow Pty Ltd v Teakdale Pty Ltd [2013] NSWSC 1380
Hearing dates: Thursday, 22 August 2013
Decision date: 22 August 2013
Jurisdiction: Equity Division
Before: White J
Decision:
Amended cross-claim dismissed; defendant pay the plaintiff's costs of the proceedings, including the cross-claim.

Catchwords: LANDLORD AND TENANT - leases and tenancy agreements - construction and interpretation - lessee operated hotel on leased premises - whether lessor obliged to consent to lessee's application to Council for extended trading hours - appropriate material to which regard can be had in construing terms of lease - meaning of expression "proper business hours" - implied terms of co-operation and non-derogation from grant - whether implied terms ousted by clause excluding implication of terms in respect of pre-contractual promises and representations - declaration - whether application for declaration concerns purely hypothetical dispute
Legislation Cited: Liquor Act 1982
Cases Cited: University of New South Wales v Moorhouse (1975) 133 CLR 1
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Wickstead v Browne (1992) 30 NSWLR 1
CF & SP Pty Ltd v FAI General Insurance Co Limited (Bryson J, Supreme Court of New South Wales, 17 December 1998, unreported BC 9806746)
Burns Philp Hardware Limited v Howard Chia Pty Ltd (1987) 8 NSWLR 642
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Ltd (1979) 144 CLR 596
Category: Principal judgment
Parties: Dogrow Pty Ltd (Plaintiff)
Teakdale Pty Ltd (Defendant)
Representation: Counsel:
J Taylor (Plaintiff)
D L Warren (Defendant)
Solicitors:
JDK Legal (Plaintiff)

File Number(s): 2013/117017

Judgment

HIS HONOUR: These proceedings were commenced by summons filed in circumstances of some urgency on 16 April 2013.

The plaintiff sought an order that the defendant sign and return to it an application to modify a development consent that the plaintiff sought to lodge with the Sydney City Council. The defendant's consent to the lodgement of that application was required. The application sought the continuation for a further five years of 24-hour trading at premises known as Three Wise Monkeys in George Street, Sydney.

The plaintiff is the lessee and the defendant is the lessor of a licensed hotel under that name. The lease was initially entered into on 14 September 2000 for a period of ten years with an option for renewal of a further period of ten years and with a further option for another period of five years. The first option for renewal has been exercised and the current lease extends to 13 September 2020 with a further five-year option available after that. The issue raised by the plaintiff's summons was whether the defendant lessor was required to give its consent to the making of a development application that allows the plaintiff lessee to trade for 24 hours a day, seven days a week.

The relevant provisions of the lease that bear on that question are the clauses 6.01, 6.13, 13.05 and…

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: [2013] NSWSC 1380
Decision Date: 22 August 2013

CaseChat Overview and Summary

Dogrow Pty Ltd, the lessee, operated a hotel on premises leased from Teakdale Pty Ltd, the lessor, under a lease agreement. The dispute centred on whether the lessor was required to consent to the lessee's application to the local council for extended trading hours. This involved the interpretation of the lease terms, particularly the phrase "proper business hours" and the effect of a clause excluding the implication of terms regarding pre-contractual promises and representations.

The court had to determine the meaning of "proper business hours" in the context of the lease, the effect of the clause excluding the implication of pre-contractual terms, and whether the lessor was obliged to consent to the lessee's application for extended trading hours. Additionally, the court needed to decide if the application for a declaration was purely hypothetical, as it concerned a future event dependent on the lessee's actions and council approval.

The court held that the term "proper business hours" was ambiguous and required interpretation in light of the entire lease and the surrounding circumstances. The clause excluding the implication of pre-contractual terms did not prevent the court from implying terms of co-operation and non-derogation from grant. These implied terms required the lessor to act reasonably and not undermine the lessee's ability to operate the hotel effectively. The court concluded that the lessor was not obliged to consent to the lessee's application for extended trading hours without considering the potential impact on neighbouring properties and the council's requirements. The application for a declaration was considered hypothetical as it depended on future events, but the court made a declaration to clarify the parties' rights and obligations.

The court declared that the lessor was not required to consent to the lessee's application for extended trading hours without considering the relevant factors. The court also emphasised the importance of the implied terms of co-operation and non-derogation from grant in the context of the lease.

Orders