Fibrework Industries Pty Ltd v Furnari
[2005] VSC 489
•15 December 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
No. 9174 of 2005
| FIBREWORK INDUSTRIES PTY LTD | |
| Plaintiff | |
| v. | |
| RICHARD FRANK FURNARI & ORS | Defendant |
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JUDGES: | Maxwell, P. | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 December 2005 | |
DATE OF JUDGMENT: | 15 December 2005 | |
CASE MAY BE CITED AS: | Fibrework Industries v Furnari and Ors | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 489 | |
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PROPERTY – Plaintiff lessee of part of property – Defendant entered heads of agreement with lessor to purchase whole property – Term of agreement that defendant have immediate access to non-leased area - Access involved using roadway within leased part of property – Lessee has the right to exclusive possession of the leased area – Lessor has revisionary interest – Lessor incapable of conferring on Defendant a right inconsistent with the leasehold title of Plaintiff – No justification for implying reservation into lease – No implied right of way.
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| APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr G.K. Moore | Richard Harrison |
For the 1st, 2nd and 4th Defendants | Mr D.A. Klempfner | Bazzani Brand Lawyers |
| For the 3rd Defendant | No appearance |
MAXWELL, P.:
Before the Court are cross-applications for injunctions. The plaintiff (“Fibrework”) seeks to prevent the defendants from having access to the subject land. For their part, the defendants want orders giving them clear access to the subject land, by requiring Fibrework to remove existing obstructions to access, and to refrain from erecting any further obstruction.
The relevant facts may be shortly stated. Bubbletech Pty Ltd (“Bubbletech”) is the owner of a large industrial property (“the property”), consisting of buildings and vacant land, at 1 The Esplanade, North Shore, Geelong. By lease dated 11 November 2003 (“the lease”), Bubbletech leased to Fibrework part of that property (“the leased area”). It is not in dispute that the lease has been validly extended to 30 November 2006. The most recent extension was by agreement dated 10 October 2005.
On 7 March 2005, heads of agreement were signed between Bubbletech and the first defendant, Richard Furnari, who is the managing director of the defendant companies. By these terms, Bubbletech agreed to sell the whole of the property (including the land leased to Fibrework) to Mr Furnari or his nominee for $2.5m. It was agreed that an amount of $20,000 would be payable that same day –
“which will be applied against deposit to enable access to property immediately.”
It was a further term of the heads of agreement as follows:
“The purchaser’s operating company, Main Roads (Vic) Pty Ltd to have immediate access to administration building and “lawn area” and utilise the area as they see fit including landscaping et cetera.”
It is the latter term which has led to the current dispute. Mr Furnari assumed – quite reasonably – that this term gave his operating company a contractual right of immediate access to a grassed area, which is not part of the leased area. Vehicular access to the grassed area, however, is by way of a concrete roadway, and it is this roadway which is at the heart of the dispute.
The defendants conduct a transport business. In connection with that business, Mr Furnari wished to be able to park trucks and equipment on the grassed area. He commenced doing so in March 2005, soon after the heads of agreement was signed. Vehicles belonging to the defendant company began to use the concrete roadway in order to gain access to the grassed area. The defendants wished to be able to park up to 50 large trucks and machines on the grassed area at any one time.
From about 15 March 2005, Mr Furnari informed Mr Klopper, the managing director of Fibrework, of his plan to park trucks and equipment on the grassed area. Although Mr Klopper realised that Mr Furnari could only gain access to the grassed area by using the concrete driveway – which Mr Klopper believed he had leased – he did not at that point seek to restrain Mr Furnari from doing so.
According to Mr Klopper, however, it became apparent by April 2005 that frequent movements by the defendants’ trucks and equipment along the concrete driveway and over the grassed land –
“were placing significant burdens on Fibrework and its operations on and from Fibrework’s leased property.
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It was also apparent by April 2005 that the movement of Mr Furnari’s vehicles to and from the grassed area was a risk to the safety of Fibrework’s employees. Such employees frequently passed on foot and by forklift truck [over the concrete driveway]. In this regard, I soon came to regard the movement of Mr Furnari’s vehicles as a significant occupational health and safety hazard for Fibrework.”
In late June and early July 2005, there were discussions between Mr Klopper and Mr Furnari, in which Mr Klopper expressed his concerns about the adverse effect of the truck access. It is unnecessary to go into the detail of these conversations. Suffice it to say that they were not productive of agreement. According to Mr Klopper, on about 12 July 2005 Mr Furnari informed him that he did not recognise Fibrework’s rights to its leased area and was therefore not answerable to Mr Klopper. Mr Klopper advised Mr Martin Travers, the sole director of Bubbletech, of this by email on 12 July 2005.
Mr Klopper subsequently instructed his solicitor to send a letter of demand to Mr Furnari. The letter is dated 20 July 2005. The relevant part of the letter states as follows:
“I am instructed that you occupy approximately 50% of the leased premises with your trucks, equipment and rubbish.
My client requires:
1.The immediate removal of all the trucks, equipment and rubbish from the leased premises.
2.Compensation in the sum of $1250.00 per month from the 1st of June 2005.
3.An undertaking that until the end of the term of my client’s lease you will not nor will you allow any other party to occupy or use the leased premises contrary to my clients tenancy.
Please confirm within that you will attend to the above prior to the 27.7.05.
In the event that you do not remove your trucks, equipment and rubbish as required, my client gives notice that it will seek the necessary orders to effect the same, damages for all losses and trespass together with costs.”
There were subsequent exchanges between Mr Klopper and Mr Furnari. According to Mr Klopper, Mr Furnari spoke and behaved aggressively in informing Mr Klopper that his companies intended to continue to have access over the concrete driveway. It is unnecessary for present purposes to investigate those allegations further. There is in evidence a version of the solicitor’s letter of 20 July 2005 which, according to Mr Klopper, was sent to him by facsimile by Mr Furnari. The faxed copy has the words “Get fucked” in large letters written across it. In his affidavit sworn 21 November 2005, Mr Furnari took issue with a number of aspects of the evidence of Mr Klopper, but he did not deny that this fax had been sent by him.
In mid-October 2005, Mr Klopper had arranged for shipping containers to be arranged in a half circle around the northern front of one of the leased buildings. This had the effect of closing the concrete driveway beyond the common area. According to Mr Klopper:
“The purpose of this movement of the shipping containers was to use them to provide protection for Fibrework from trucks, wind and dust, and to create a safe working space for Fibrework employees to begin fabrication works for the construction of the new warehouse.”
It was common ground that this arrangement of containers did leave a gap through which smaller vehicles could be driven to the grassed area. I was informed by counsel for the defendants, however, that this was of little assistance to the defendants because most of the vehicles which they needed to park on the grassed area could not fit through this gap.
The leased area
Attached to the November 2003 lease is a plan, which shows the leased area. It is perfectly clear that, with the exception of a small section immediately adjacent to the public road, the concrete roadway is within the leased area. I am satisfied, further, that the diagram faithfully reflects the intention of the parties to the lease.
In related proceedings which are now on foot in this Court between Mr Furnari and Bubbletech, concerning the heads of agreement, Mr Travers has sworn affidavits, to which reference has been made by both plaintiff and defendants in these applications. Having read that material, and in particular the most recent affidavit of Mr Travers sworn 7 November 2005 in proceeding No. 7807 of 2005, I am left in no doubt that the concrete roadway was part of the property leased to Fibrework in November 2003.
The defendants sought to impugn the authenticity of the map attached to the copy of the lease which is in evidence. Marked on the map is what was described as a “sliver” of land to the north-western edge of the leased land. I was told that this portion of land was compulsorily acquired by VicRoads but not until 2004. It was contended on behalf of the defendants – first in paragraphs 12 and 13 of Mr Furnari’s affidavit and then in submissions –that because the acquisition did not occur until 2004, the lessor and lessee could not have known about it when the lease was entered into in November 2003 and, hence, that this map must have been prepared subsequently to the making of the lease. The clear imputation was that the map had been prepared disingenuously.
I reject that allegation. It should never have been made. The lease itself – to which there was no challenge – makes the position quite clear. It concludes with the following paragraph:
“The parties agree Fibrework Industries or its associated Companies may take an option to purchase the property after 30 March 2004. The agreed price is $1,800,000.00 less the amount received from proceeds obtained in the land acquisition to the western boundary by VicRoads.” (emphasis added)
In short, the prospect of compulsory acquisition of the western “sliver” was well known to the parties to the lease at the time the lease was entered into. There was never any reason to doubt the authenticity of the plan attached to the lease.
It follows that Fibrework as lessee has the right to exclusive possession of the entire leased area, including all of the concrete roadway apart from the small section next to the gate. The right to exclusive possession is one of the defining characteristics of leasehold title.[1] Conversely, for so long as the lease subsists, Bubbletech as lessor has only the reversionary interest in the leased land, including the concrete roadway.
[1]See P Butt, Land Law (4th ed, 2001) [1509].
It follows that the attempt by Bubbletech – no doubt in good faith – to give to Mr Furnari in the heads of agreement a contractual right of access over the leased area to the grassed area (being part of the non-leased land) was ineffective. Having leased the concrete roadway to Fibrework, Bubbletech was incapable at law of conferring on any other person a right inconsistent with the leasehold title of Fibrework.
Implied right of way?
Mr Klempfner for the defendants submitted, first, that Fibrework had taken its lease in full knowledge of the fact that there were likely to be occupiers of the non-leased land, who would inevitably need to use the concrete driveway in order to gain access to the non-leased land. This knowledge, so it was argued, had the effect that Fibrework took its lease subject to an implied reservation by the lessor of a right of way over the concrete road in favour of any present or future occupier of the non-leased land.
Alternatively, it was submitted by Mr Klempfner, the defendants had a right of way over the concrete road implied by law. Mr Klempfner called in aid the concept of an easement of necessity, and relied on the following passage from Mr Peter Butt’s Land Law[2]:
“On the conveyance (or lease) of land described by words or diagram as abutting or adjoining a road or lane owned by the vendor (lessor), there is implied in favour of the land conveyed (leased) a right of way over that road or lane. More accurately, the vendor (lessor) and the vendor’s (lessor’s) successors in title are estopped from denying the grant of a right of way. Where the road or lane is linked to other roads or lanes owned by the vendor, to provide access to a public road, the right of way extends to those other roads or lanes.”
[2]ibid [1638].
I reject these submissions. As to the first, it may be accepted that the leasing to Fibrework of only part of the Bubbletech property had as its corollary the prospect that there would be other occupiers of the non-leased portions. But it was for the lessor, not the lessee, to take account of the access requirements of any such future occupier. No reservation was made in the lease itself. Nor, in my view, is there anything in the circumstances which could justify implying such a reservation into the lease. To do so would contradict the clear and unambiguous intention of both lessor and lessee that Fibrework should have all the rights of lessee over the entirety of the leased land, including the (relevant part of) the concrete roadway.[3]
[3]cf. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 354-5.
As to the second argument, there is no parallel between the present case and the circumstances referred to by Mr Butt as giving rise to an implied right of way. Had Bubbletech been in possession of the leased area, including the concrete roadway, and then leased the grassed area to the defendants, it would be obvious enough why a right of way over the concrete roadway would have had to be implied in favour of the defendants, in order for them to occupy the grassed area which they had leased. Where the land in question has, however, passed out of the control of the grantor, as in the present case, the doctrine has no application.[4] By granting the lease to Fibrework, Bubbletech disabled itself from giving Furnari any right of way over the concrete roadway and, for the same reason, no such right of way can be implied by law.
[4]Butt op.cit. [1641].
It follows, in my view, that the contention advanced on behalf of the defendants – that they have a right of access over the concrete roadway – does not raise a serious question to be tried. Accordingly, the defendants’ application for interlocutory relief fails. Conversely, for the reasons I have given, the position of Fibrework appears to me to be correct in law. As lessee, Fibrework is entitled to assert its right to exclusive possession of the leased land, as by its summons it seeks to do.
It is apparent from the affidavit material that, in a spirit of compromise, Mr Klopper of Fibrework endeavoured in the period immediately after March 2005 to accommodate the defendants’ need for access to the grassed area. But, as explained earlier, this arrangement has proved to be unsustainable. There is particular work which is required to be done by Fibrework on the leased land, in connection with a contract which a related company of Fibrework has entered into for the construction of a warehouse. Mr Klopper’s evidence is that access for the trucks and equipment which the defendants wish to store on the grassed land is incompatible with the safe and efficient carrying out of that work. I accept that evidence.
As I do not regard the defendants’ claim of a right of access as reasonably arguable, it is hardly necessary to consider the balance of convenience. Since it was fully argued, however, I should say that I regard the balance of convenience as clearly favouring Fibrework. Moreover, as I pointed out to Mr Klempfner, any loss caused to the defendants by their having to park their trucks and equipment elsewhere pending trial should be readily quantifiable and, in due course, compensable by an award of damages should the defendants’ counterclaim succeed at trial.
For these reasons, I will make the orders sought in the plaintiff’s summons. The defendants’ summons will be dismissed with costs.
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