Elders Ltd v EJ Knight & Co Pty Ltd - [2009] NSWSC 1462

CITATION: Elders Ltd v E J Knight & Co Pty Ltd [2009] NSWSC 1462

HEARING DATE(S): 19 October 2009

JUDGMENT DATE :
23 December 2009

JURISDICTION: Equity

JUDGMENT OF: White J

DECISION: Direct counsel for Elders and Caversham to bring in short minutes of order in accordance with these reasons.

CATCHWORDS: LANDLORD AND TENANT - agreements for lease – lease signed and held in escrow - breach - whether sale of shares in lessee was a breach of lease or agreement for lease – no rights or obligations of lessee were assigned by the sale of shares – lease was not operative when shares were transferred - no breach of lease or agreement for lease – no written notice served requiring rectification of alleged breach – alleged breach not a material breach – lessor not entitled to call on bank guarantee - LANDLORD AND TENANT - lease – termination – construction of contract – meaning of “date of execution” - notice of termination of lease by lessee was effective

LEGISLATION CITED: Real Property Act 1900 (NSW)
Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)

CATEGORY: Principal judgment

CASES CITED: Alan Estates Ltd v W G Stores Ltd [1982] Ch 511
Security Trust Co v Royal Bank of Canada [1976] AC 503
Fisher v Westpac Banking Corporation (1993) 43 FCR 385
Beesly v Hallwood Estates Ltd [1961] Ch 105
Meredith Projects Pty Ltd v Fletcher Construction Australia Ltd [2000] NSWSC 493
Forklift Engineering Australia Pty Ltd v Powerlift (Nissan) Pty Ltd [2000] VSC 443
Celtech International Ltd v Dalkia Utility Services plc [2004] EWHC 193 (Ch)
Mobileciti Pty Ltd v Vodafone Pty Ltd [2009] NSWSC 899
In the Estate of Williams (dec’d) (1984) 36 SASR 423
MYT Engineering Pty Ltd v Mulcon Pty Ltd [1999] HCA 24; (1999) 195 CLR 636
Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109
Xenos v Wickham (1866) LR 2 HL 296
Beesly v Hallwood Estates Ltd [1960] All ER 314
Staple of England v Bank of England (1887) 21 QBD 160
Windsor Refrigerator Co Ltd v Branch Nominees Ltd [1961] Ch 88

PARTIES: Plaintiff: Elders Limited
Defendant: EJ Knight & Co Pty Limited

FILE NUMBER(S): SC 1322/09

COUNSEL: Plaintiff: I M Jackman SC with C Withers
Defendant: R J Webb SC with N Manousaridis

SOLICITORS: Plaintiff: Hardings Lawyers agents for Lipman Karas
Defendant: UBK Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 23 December 2009

1322/09 Elders Limited v E J Knight & Co Pty Limited

JUDGMENT

1 HIS HONOUR: This dispute is about a lease. The defendant (“EJ Knight”) is the registered proprietor of land at Karalta Road, Erina. On 22 July 2005 EJ Knight entered into an agreement with the second cross-defendant (“Caversham”) to lease the land to Caversham if development approval were granted for the establishment of a retirement village on the land. The Lease was to be for 99 years commencing on 15 October 2003.…

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: [2009] NSWSC 1462
Decision Date: 23 December 2009

CaseChat Overview and Summary

In the case of Elders Ltd v EJ Knight & Co Pty Ltd, the dispute arose between Elders, the lessor, and EJ Knight, the lessee. Elders claimed that EJ Knight breached the lease agreement by selling shares in the company. Elders argued that the sale of shares resulted in a change in the lessee’s identity, which breached the lease. The matter was heard in the Supreme Court of New South Wales.

The court was required to determine whether the sale of shares in the lessee constituted a breach of the lease or the agreement for lease. It was also necessary to establish whether Elders had the right to call on the bank guarantee provided by EJ Knight. Furthermore, the court had to interpret the meaning of “date of execution” in the context of the lease agreement.

The court found that the sale of shares in EJ Knight did not constitute a breach of the lease or the agreement for lease, as no rights or obligations of the lessee were assigned by the sale of shares. The lease was not operative at the time of the transfer of shares, and thus, there was no breach of the lease or agreement for lease. The court also noted that Elders had not served a written notice requiring rectification of the alleged breach, and that the alleged breach was not a material breach. Consequently, Elders was not entitled to call on the bank guarantee. The court further held that the notice of termination of the lease by EJ Knight was effective, and the lease was terminated on the date of execution of the notice.

As a result, Elders was not entitled to any relief, and the court dismissed the proceedings with costs.

Orders