DTS Retail Pty Ltd v Bingara Wilton Holdings Pty Ltd

[2022] NSWSC 1523

Supreme Court

New South Wales

Medium Neutral Citation:	DTS Retail Pty Ltd v Bingara Wilton Holdings Pty Ltd [2022] NSWSC 1523
Hearing dates:	4 November 2022
Date of orders:	4 November 2022
Decision date:	04 November 2022
Jurisdiction:	Equity - Duty List
Before:	Robb J
Decision:	Plaintiff’s claim for interlocutory relief dismissed; plaintiff ordered to pay defendant’s costs of the application.
Catchwords:	EQUITY — equitable remedies — injunctions — lease of shop premises — defendant lessor issues notice of termination to plaintiff lessee under demolition clause — whether balance of convenience supports injunctive relief — consequences of delay by plaintiff precludes injunctive relief
Category:	Procedural rulings
Parties:	DTS Retail Pty Ltd (Plaintiff) Bingara Wilton Holdings Pty Ltd (Defendant)
Representation:	Counsel: D Brezniak (Plaintiff) G Sirtes SC & D Ratnam (Defendant) Solicitors: Raihani Lawyers (Plaintiff) Madison Marcus (Defendant)
File Number(s):	2022/327907

JUDGMENT

1. The plaintiff, DTS Retail Pty Ltd (DTS), was given leave to commence these proceedings by summons filed in court in the Duty List on 2 November 2022. The defendant is Bingara Wilton Holdings Pty Ltd (Bingara).

2. DTS sought the following interlocutory relief in its summons:

2.    Until and pending further order of this Court, an order that the Lessor [Bingara] be restrained from entry into the premises located at Shop T4, 1 Greenbridge Drive Wilton in the State of New South Wales.

3. DTS's application was heard on 4 November 2022, and after hearing the parties I made an order dismissing DTS' application and an order that it pay Bingara's costs. Because of pressure of time, I provided only outline reasons on the basis that I would publish more extensive reasons in due course. These are those reasons.

4. Bingara is the registered proprietor of the shopping complex located at 1 Greenbridge Drive, Wilton NSW (Wilton Plaza). On 3 May 2018, Bingara entered into a lease (Lease) with DTS in respect of DTS's occupation of a shop premises located within the Wilton Plaza, identified as Shop T4 (Premises). The Lease commenced on 4 May 2018 and was due to terminate 3 May 2026. The Lease contained an option to renew for four periods of five years each.

5. The Lease contained the following provision:

Additional Condition 33 – Demolition

33.01   For the purposes of this Clause 33, "Demolition" of the Building of which the Premises forms part of includes any substantial repair, renovation or reconstruction of the Land that cannot be carried out practically without vacant possession of the Premises.

33.02    If the Lessor proposes to demolish the Building of which the Premises forms part, then the Lessor will be entitled to terminate this Lease, provided that:

(a)    the Lessor has provided the Lessee with details of the proposed demolition sufficient to indicate a genuine proposal to demolish the Building within a reasonably practical time after the Lease is to be terminated; and

(b)    this Lease cannot be terminated by the Lessor on that ground unless it has provided the Lessor with at least six (6) months prior written notice.

33.03    If a notice of termination on the grounds referred to in Clause 33.01 is given to the Lessee, the Lessee may terminate this Lease by giving the Lessor not less than seven (7) days written notice of termination at any time within six (6) months before the termination date, notified by the Lessor.

33.04   Any determination of this Lease under this clause:

(a)    will be without prejudice to any antecedent breach of this Lease; and

(b)    will not give rise to any claim for compensation by the Lessee.

6. On 6 May 2022, Bingara by its agent, whose business name is Revelop, provided a letter to Mr Deepak Shastri addressed to the Premises. The subject matter of the letter was "Notice of Termination – Proposed Demolition", and it provided:

We refer to your current occupation of the above-mentioned Premises under lease expiring on 3 May 2026 (Lease) and thank you for your business.

We advise that our Development Application [number stated] has been approved by Wollondilly Shire Council, which will require us to demolish the Premises as soon as practicable after receiving vacant possession. As such, we hereby invoke our rights contained in clause 33 of the Lease.

Pursuant to clause 33, please accept this letter as formal Notice of Termination of your Lease. You are hereby given six (6) months' notice from the date of this letter and as such, you are to cease trading and return the premises to the Landlord by Saturday, 5 November 2022 (Vacancy Date).

You are also required to ensure that:

a) all outstanding payments related to your lease are paid no later than one week prior to the Vacancy Date, including any rent and other moneys due under the lease up to and including the Vacancy Date; and

b) all breaches under the lease (if notified) have been remedied prior to the Vacation Date.

Once all of our requirements have been met, your Bank Guarantee will be returned to you.

Should you have any queries or wish to discuss this further please do not hesitate to contact Daniel Dinte on [mobile phone number]…

7. DTS commenced the proceedings 3 days before the Vacancy Date nominated in the notice of termination, and the hearing took place on that date.

8. The evidence in support of DTS' application was contained in an affidavit of Sonu Narendra Patel sworn 2 November 2022. Mr Patel is the sole director of DTS. The thrust of Mr Patel's evidence was to establish that he, as the director of the lessee, had not received actual notice of termination until shortly before DTS made its application to this Court. The affidavit sought to create the impression that Mr Shastri had only become aware of the notice of termination shortly before Mr Patel was informed of its existence.

9. Bingara responded to service of the summons and Mr Patel's affidavit upon it by preparing affidavit evidence to establish that Mr Shastri was the only person with whom it or Revelop had dealt with on behalf of DTS. Bingara also provided evidence of numerous communications between its representatives and Mr Shastri over the six-month period that must have brought Bingara's intention to terminate the Lease to Mr Shastri's attention. Bingara even offered Mr Shastri alternative premises from which to conduct DTS' retail operation. Bingara also produced evidence that would support an inference that anything known to Mr Sharma about the service of the notice of termination would be brought to the attention of Mr Patel.

10. It is not necessary to review this aspect of Bingara's evidence in any detail because at the hearing DTS abandoned the argument (that it appeared from Mr Patel's affidavit it intended to rely upon) that Bingara had not provided DTS proper and effective notice under additional condition 33 of the Lease.

11. DTS put one alternative argument to support its claim that the notice of termination dated 6 May 2022 was ineffective. That argument was that, on the proper construction of additional condition 33, Bingara was required to provide details of the proposed demolition sufficient to indicate a genuine proposal to demolish the Premises within a reasonably practical time after the Lease is to be terminated. DTS submitted that, whether the details were required to be provided before the service of a notice of termination, or whether it was sufficient for the required details to be contained in the notice of termination, the details given in the notice of termination did not satisfy the requirements of additional condition 33. Hence, submitted DTS, the notice of termination was invalid.

12. Bingara gave evidence that on 15 December 2021, Bingara entered into an agreement for lease with Woolworths Group Ltd (Woolworths) for the lease of premises at the Wilton Plaza. Between about September 2021 and 20 December 2021, employees of Revelop undertook various works to prepare and lodge a development application to Wollondilly Shire Council. The application was lodged on 20 December 2021 and approved on 4 May 2022. The application sought approval for alterations and additions to the Wilton Plaza including the addition of a mezzanine level and basement car park. Bingara's evidence was that the development works will take place in a part of the Wilton Plaza that requires DTS to vacate the Premises, along with another tenant in Shop T7.

13. Although it is not necessary for the Court to express a concluded view on the issue, it may well be that if DTS had commenced the proceedings soon after the service of the notice of termination, DTS could have established that there was a serious question to be tried as to whether the notice of termination was valid. The reason would be that neither in the notice of termination, nor otherwise, did Bingara provide to DTS details of the proposed demolition sufficient to indicate a genuine proposal to demolish relevant parts of the Wilton Plaza within the meaning of additional condition 33.

14. As senior counsel for Bingara submitted at the hearing, additional condition 33 is not a demolition clause that only permits a "wrecking ball" demolition, in the sense of a proposal to completely demolish the relevant premises for the purpose of constructing an entirely new building. Additional clause 33 may be engaged if Bingara forms an intention to substantially repair, renovate or reconstruct the Wilton Plaza in a manner that cannot be carried out practically without vacant possession of the Premises. As Bingara had already entered into an agreement for lease with Woolworths, there may have been grounds for suspicion that Bingara's real purpose was to replace DTS with Woolworths as its lessee. That possibility might trigger a further suspicion that the proposed reconstruction of the Wilton Plaza was influenced by a desire to terminate the Lease by engaging the demolition clause.

15. It should not be taken by referring to this possibility that I mean to suggest that there was any evidence that Bingara had sought to exercise its rights under additional clause 33 for any reason that was improper. I mean only that, in the circumstances, it probably was required that Bingara provide substantially more detail about the proposed repair, renovation or reconstruction than it in fact gave to DTS.

16. It may, in my view, have been reasonably arguable that it was not sufficient for Bingara to invite Mr Shastri to raise queries with Mr Dinte, and that it was not sufficient (contrary to a submission put by senior counsel for Bingara at the hearing) that the development application documents were available for inspection at the Council. Apart from the fact that additional condition 33 required Bingara actually to provide the details to DTS, the development consent was in evidence, and it was at least not obvious to me as a disinterested observer that the repair, renovation or reconstruction fell within the definition of "Demolition".

17. This possibility came to naught, however, because of DTS' delay in commencing the proceedings, which has had the overwhelming consequence that the balance of convenience requires the dismissal of DTS' claim for interlocutory relief. This is one of those cases where the consequences of delay alone are sufficient to preclude interlocutory relief.

18. Had DTS commenced the proceedings soon after it received the notice of termination, Bingara would have had ample opportunity to respond. Bingara may have been able to demonstrate by evidence that its decision to terminate the Lease was justified by additional condition 33. Alternatively, Bingara may have decided not to take any risk concerning the technical invalidity of the notice of termination, and may have served a further notice that more clearly complied with the technical requirements of the provision. The Court may even have been able, in a period of almost 6 months, to determine a dispute of this nature on an expedited final basis. Even if not, Bingara would have had ample opportunity to negotiate deferments in its ability to commence the reconstruction works in a way that obviated or substantially reduced the possibility that it would suffer loss.

19. As it is, Bingara has an obligation under its agreement for lease with Woolworths to achieve substantial commencement of works by 4 November 2022. The anticipated date of practical completion of the supermarket works is 9 March 2023. Substantial commencement of works cannot be achieved until, among other things, footings have been poured for the foundation of the building. Bingara has been able to negotiate a two-week extension of the commencement of works date with Woolworths, but it is not confident that Woolworths will grant any further extension.

20. Bingara has given evidence that it is at risk of wasting substantial costs if the agreement for lease is terminated by Woolworths. Further, the value of the Wilton Plaza is estimated to increase by $8 million after completion of the proposed works on the assumption that the agreement for lease with Woolworths is completed. Bingara expects to have to pay construction costs of $4 million to achieve this increase in value.

21. In the circumstances, it would be entirely unjustified for the Court to make the interlocutory orders sought by DTS, which would prevent Bingara from proceeding with the reconstruction of the Wilton Plaza and the ultimate completion of the agreement for lease with Woolworths.

22. The evidence establishes that Bingara is a company of financial substance that will be able to meet any damages that it may be ordered to pay to DTS if DTS is able to prove that Bingara's conduct has involved a breach of the Lease.

23. For these reasons I ordered that DTS' claim for interlocutory relief be dismissed and that it pay Bingara's costs of the application.

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Decision last updated: 08 November 2022