GABSTONE PTY LTD & ANOR -v- CAMISA NOMINEES PTY LTD & ORS [2002] WASC 134

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2002] WASC 134
Case No:	CIV:2346/1999	Heard:	23-25 JANUARY 2002 18-22 MARCH 2002
Coram:	SCOTT J	Delivered:	31/05/02
No of pages:	41	Judgment Part:	1 of 1
Result:	Lease forfeited - no relief against forfeiture
Category:	B
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Parties:	GABSTONE PTY LTD (ACN 005 647 969) OLD PAPA'S FRANCHISE SYSTEMS PTY LTD CAMISA NOMINEES PTY LTD (ACN 008 811 452) FIELDGATE ENTERPRISES PTY LTD (ACN 006 145 551) CORADO PIZZALE MARIA PIZZALE
Catchwords:	Landlord and tenant Assignment of lease dispute Forfeiture of lease Relief against forfeiture Deed of assignment Plaintiff claims defendant unreasonably withheld consent to assignment of lease from first to second plaintiffs Lessee sold business to purchaser with a deed of bare trust Misunderstanding with respect to interpretation of terms of settlement of action Whether defendants were advised of specific work necessary for first plaintiff to obtain liquor licence Documents deliberately withheld from defendant by plaintiffs Breaches of lease both wilful and substantial Business and equitable interest sold by first plaintiff without advice or consent of defendants
Legislation:	Commercial Tenancy (Retail Shops) Agreement Act 1985 Trade Practices Act 1974 (Cth)
Case References:	Australian Competition and Consumer Commission v Leelee [1999] FCR 1121 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Daw-Win Pty Ltd v Tagliferri [1986] ANZ ConvR 876; SCt of WA Franklyn J; 29 July 1986 Gentle v Faulkner [1900] 2 QB 267 Lam Kee Ying v Lam Shes Tong [1975] AC 247 MacDonald v Robins (1954) 90 CLR 515 Massart v Blight (1951) 82 CLR 423 Richardson v Somas [1967] WAR 109 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 Shiloh Spinners Ltd v Harding [1973] AC 691 Acorn Consolidated Pty Ltd v Hawkeslade Investments Pty Ltd (1999) 21 WAR 425 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 96 FCR 491 Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCA 253 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Alliance Acceptance Co Ltd v Oakley (1988) 48 SASR 337 Amalgamated Investment & Property Co (in liq) v Texas Commerce International Bank [1982] QB 84 Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59; [2001] 1 WLR 2180 Australian Mutual Provident Society v 400 St Kilda Road Pty Ltd [1990] VR 646 Australian Securities Commission v Bank Leumi LeIsrael (1995) 18 ACSR 639 B Seppelt & Sons Ltd v Commission for Main Roads (1975) 1 BPR 9147 Bates v Donaldson [1896] 2 QB 241 Bentley v Nelson [1963] WAR 89 Frederick Berry Ltd v Royal Bank of Scotland [1949] 1 KB 619 Bickel v Duke of Westminster [1976] 3 All ER 801 Blomley v Ryan (1956) 99 CLR 362 Brown & Root Technology Ltd v Sun Alliance & London Assurance Co Ltd [2000] 2 WLR 566 Burger King Corp v Hungry Jacks Ltd [2001] NSWCA 187 Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 All ER 965 Cameron v Qantas Airways Ltd (1995) 55 FCR 147 Caratti v The Queen (2000) 22 WAR 527 Central Exchange Ltd v Anaconda Ltd [2001] WASC 128 Christie v Ovington (1875) 1 Ch D 279 Clay v Clay (1999) 20 WAR 427 Coal Cliff Colleries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Commissioner of Main Roads v Hough (1997) 18 SR (WA) 111 Commonwealth v Verwayen (1990) 64 ALJR 540 Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370 Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771 Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd (1986) 1 Qd R 406 Davies & Davies v Nyland & O'Neil (1975) 10 SASR 76 Dileum Pty Ltd v J K Corp Pty Ltd (1988) 1 WAR 244 Esanda Ltd v Burgess [1984] 2 NSWLR 139 Esther Investments Pty Ltd v Cherrywood Park Pty Ltd [1986] WAR 279 Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320 Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310 Field v Barkworth (1986) 277 EG 193 Field v Commissioner of Railways (NSW) (1957) 99 CLR 285 Foran v Wight (1989) 168 CLR 385 Fry v Lane (1888) 40 Ch D 312 Fuller's Theatre & Vaudeville Co Ltd v Rofe [1923] AC 435 Gabstone Pty Ltd v Camisa Nominees Pty Ltd [2001] WASC 224 Giumelli v Giumelli (1999) 196 CLR 101 Goldstein v Sanders [1915] 1 Ch 549 Governors of Bridewell Hospital v Fawkner (1892) 8 TLR 637 Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49 Haberecht v Chapman [1993] ANZ ConvR 277 Hartley v Palermo Nominees Pty Ltd (1998) 21 SR (WA) 204 Harvey v Walker (1945) 46 SR (NSW) 180 Hayes v Gunbola Pty Ltd, unreported; SCt of NSW (Young J); 17 June 1986 Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 Hurley v McDonald Australia Ltd (2000) ATPR 41 - 741 Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513 Legione v Hateley (1983) 152 CLR 406 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 Louth v Diprose (1992) 175 CLR 621 Love v Gemma Nominees Pty Ltd [1983] ANZ ConvR 68 Magill v National Australia Bank Ltd [2001] NSWCA 221 McFadden v Snow (1952) 69 WN (NSW) 8 Morgan v Swansea Urban Sanitary Authority (1878) 9 Ch D 582 Norwest Beef Industries Ltd v Peninsular & Oriental Steam Navigation Co (1987) 8 NSWLR 568 Parker v Jones [1910] 2 KB 32 Pentagold Investments Pty Ltd v Romanos [2001] NSWSC 269 Petkov v Lucerne Nominees Pty Ltd (1992) 7 WAR 163 Pimms Ltd v Tallow Chandlers in the City of London [1964] 2 All ER 145 Pitts v Adney (1961) 78 WN (NSW) 886 Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350 Powell v McFarlane (1979) 38 P & Cr 452 Pym v Campbell (1856) 6 E1 & B1 370; 119 ER 903 Qantas Airways Ltd v Cameron (1996) 66 FCR 246 Re Commercial Registrar, Commercial Tribunal of Western Australia; The Commissioner of Main Roads v Scarff, unreported; Sct of WA; Library No 970522; 14 October 1997 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Scala House and District Property Co Ltd v Forbes [1974] QB 575 Secured Income Real Estate (Australia) Pty Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Sharp v O'Driscoll, unreported; SCt of WA; 21 March 1997 South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 Stening v Abrahams [1931] 1 Ch 470 Stern v McArthur (1987) 165 CLR 489 Stoyles v Job (1954) 73 WN (NSW) 41 Temwood Holdings Pty Ltd v Paterson Group Architects Pty Ltd, unreported; SCt of WA; Library No 980553; 22 September 1998 Thompson v Palmer (1933) 49 CLR 507 Tomlin v Standard Telephone Cables [1969] 3 All ER 201; 1 WLR 1378 Unilever plc v Proctor & Gamble Ltd [2001] 1 WLR 2436 VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716 Verschures Creameries Ltd v Hull & Netherlands Steamship Co Ltd [1921] 2 KB 608 Walker v Wilsher (1889) 23 QBD 335 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Watson Holdings Pty Ltd v Hodinott (1957) 75 WN (NSW) 168 Welch v Birrane (1974) 29 P & Cr 102 West Layton Ltd v Ford [1979] 2 All ER 657 Yared v Spier [1979] 2 NSWLR 291

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : GABSTONE PTY LTD & ANOR -v- CAMISA NOMINEES PTY LTD & ORS [2002] WASC 134 CORAM : SCOTT J HEARD : 23-25 JANUARY 2002

18-22 MARCH 2002

DELIVERED : 31 MAY 2002 FILE NO/S : CIV 2346 of 1999

CIV 1617 of 2001

Consolidated pursuant to the Order of Templeman J on 9 May 2001

BETWEEN : GABSTONE PTY LTD (ACN 005 647 969)

First Plaintiff

OLD PAPA'S FRANCHISE SYSTEMS PTY LTD

Second Plaintiff

AND

CAMISA NOMINEES PTY LTD (ACN 008 811 452)

First Defendant

FIELDGATE ENTERPRISES PTY LTD (ACN 006 145 551)

Second Defendant

CORADO PIZZALE

MARIA PIZZALE

Third Defendants

(Page 2)

Catchwords:

Landlord and tenant - Assignment of lease dispute - Forfeiture of lease - Relief against forfeiture - Deed of assignment - Plaintiff claims defendant unreasonably withheld consent to assignment of lease from first to second plaintiffs - Lessee sold business to purchaser with a deed of bare trust - Misunderstanding with respect to interpretation of terms of settlement of action - Whether defendants were advised of specific work necessary for first plaintiff to obtain liquor licence - Documents deliberately withheld from defendant by plaintiffs - Breaches of lease both wilful and substantial - Business and equitable interest sold by first plaintiff without advice or consent of defendants

Legislation:

Commercial Tenancy (Retail Shops) Agreement Act 1985

Trade Practices Act 1974 (Cth)

Result:

Lease forfeited - no relief against forfeiture

Category: B

Representation:

Counsel:

First Plaintiff : No appearance

Second Plaintiff : Mr D H Solomon

First Defendant : Mr S Owen-Conway QC & Mr P A Monaco

Second Defendant : Mr S Owen-Conway QC & Mr P A Monaco

Third Defendants : Mr S Owen-Conway QC & Mr P A Monaco

Solicitors:

First Plaintiff : Solomon Brothers

Second Plaintiff : Solomon Brothers

First Defendant : Godfrey Virtue & Co

Second Defendant : Godfrey Virtue & Co

Third Defendants : Godfrey Virtue & Co

(Page 3)

Case(s) referred to in judgment(s):

Australian Competition and Consumer Commission v Leelee [1999] FCR 1121
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Daw-Win Pty Ltd v Tagliferri [1986] ANZ ConvR 876; SCt of WA Franklyn J; 29 July 1986
Gentle v Faulkner [1900] 2 QB 267
Lam Kee Ying v Lam Shes Tong [1975] AC 247
MacDonald v Robins (1954) 90 CLR 515
Massart v Blight (1951) 82 CLR 423
Richardson v Somas [1967] WAR 109
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289
Shiloh Spinners Ltd v Harding [1973] AC 691

Case(s) also cited:

Acorn Consolidated Pty Ltd v Hawkeslade Investments Pty Ltd (1999) 21 WAR 425
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 96 FCR 491
Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCA 253
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Alliance Acceptance Co Ltd v Oakley (1988) 48 SASR 337
Amalgamated Investment & Property Co (in liq) v Texas Commerce International Bank [1982] QB 84
Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59; [2001] 1 WLR 2180
Australian Mutual Provident Society v 400 St Kilda Road Pty Ltd [1990] VR 646
Australian Securities Commission v Bank Leumi LeIsrael (1995) 18 ACSR 639
B Seppelt & Sons Ltd v Commission for Main Roads (1975) 1 BPR 9147
Bates v Donaldson [1896] 2 QB 241
Bentley v Nelson [1963] WAR 89
Frederick Berry Ltd v Royal Bank of Scotland [1949] 1 KB 619
Bickel v Duke of Westminster [1976] 3 All ER 801
Blomley v Ryan (1956) 99 CLR 362

(Page 4)

Brown & Root Technology Ltd v Sun Alliance & London Assurance Co Ltd [2000] 2 WLR 566
Burger King Corp v Hungry Jacks Ltd [2001] NSWCA 187
Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 All ER 965
Cameron v Qantas Airways Ltd (1995) 55 FCR 147
Caratti v The Queen (2000) 22 WAR 527
Central Exchange Ltd v Anaconda Ltd [2001] WASC 128
Christie v Ovington (1875) 1 Ch D 279
Clay v Clay (1999) 20 WAR 427
Coal Cliff Colleries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Commissioner of Main Roads v Hough (1997) 18 SR (WA) 111
Commonwealth v Verwayen (1990) 64 ALJR 540
Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370
Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771
Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd (1986) 1 Qd R 406
Davies & Davies v Nyland & O'Neil (1975) 10 SASR 76
Dileum Pty Ltd v J K Corp Pty Ltd (1988) 1 WAR 244
Esanda Ltd v Burgess [1984] 2 NSWLR 139
Esther Investments Pty Ltd v Cherrywood Park Pty Ltd [1986] WAR 279
Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320
Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310
Field v Barkworth (1986) 277 EG 193
Field v Commissioner of Railways (NSW) (1957) 99 CLR 285
Foran v Wight (1989) 168 CLR 385
Fry v Lane (1888) 40 Ch D 312
Fuller's Theatre & Vaudeville Co Ltd v Rofe [1923] AC 435
Gabstone Pty Ltd v Camisa Nominees Pty Ltd [2001] WASC 224
Giumelli v Giumelli (1999) 196 CLR 101
Goldstein v Sanders [1915] 1 Ch 549
Governors of Bridewell Hospital v Fawkner (1892) 8 TLR 637
Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49
Haberecht v Chapman [1993] ANZ ConvR 277
Hartley v Palermo Nominees Pty Ltd (1998) 21 SR (WA) 204
Harvey v Walker (1945) 46 SR (NSW) 180
Hayes v Gunbola Pty Ltd, unreported; SCt of NSW (Young J); 17 June 1986
Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68
Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1
Hurley v McDonald Australia Ltd (2000) ATPR 41 - 741
Hyde v Wrench (1840) 3 Beav 334; 49 ER 132

(Page 5)

International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513
Legione v Hateley (1983) 152 CLR 406
Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177
Louth v Diprose (1992) 175 CLR 621
Love v Gemma Nominees Pty Ltd [1983] ANZ ConvR 68
Magill v National Australia Bank Ltd [2001] NSWCA 221
McFadden v Snow (1952) 69 WN (NSW) 8
Morgan v Swansea Urban Sanitary Authority (1878) 9 Ch D 582
Norwest Beef Industries Ltd v Peninsular & Oriental Steam Navigation Co (1987) 8 NSWLR 568
Parker v Jones [1910] 2 KB 32
Pentagold Investments Pty Ltd v Romanos [2001] NSWSC 269
Petkov v Lucerne Nominees Pty Ltd (1992) 7 WAR 163
Pimms Ltd v Tallow Chandlers in the City of London [1964] 2 All ER 145
Pitts v Adney (1961) 78 WN (NSW) 886
Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350
Powell v McFarlane (1979) 38 P & Cr 452
Pym v Campbell (1856) 6 E1 & B1 370; 119 ER 903
Qantas Airways Ltd v Cameron (1996) 66 FCR 246
Re Commercial Registrar, Commercial Tribunal of Western Australia; The Commissioner of Main Roads v Scarff, unreported; Sct of WA; Library No 970522; 14 October 1997
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Scala House and District Property Co Ltd v Forbes [1974] QB 575
Secured Income Real Estate (Australia) Pty Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Sharp v O'Driscoll, unreported; SCt of WA; 21 March 1997
South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611
Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103
Stening v Abrahams [1931] 1 Ch 470
Stern v McArthur (1987) 165 CLR 489
Stoyles v Job (1954) 73 WN (NSW) 41
Temwood Holdings Pty Ltd v Paterson Group Architects Pty Ltd, unreported; SCt of WA; Library No 980553; 22 September 1998
Thompson v Palmer (1933) 49 CLR 507
Tomlin v Standard Telephone Cables [1969] 3 All ER 201; 1 WLR 1378
Unilever plc v Proctor & Gamble Ltd [2001] 1 WLR 2436
VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716

(Page 6)

Verschures Creameries Ltd v Hull & Netherlands Steamship Co Ltd [1921] 2 KB 608
Walker v Wilsher (1889) 23 QBD 335
Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Watson Holdings Pty Ltd v Hodinott (1957) 75 WN (NSW) 168
Welch v Birrane (1974) 29 P & Cr 102
West Layton Ltd v Ford [1979] 2 All ER 657
Yared v Spier [1979] 2 NSWLR 291

(Page 7)

1 SCOTT J: By a lease dated 30 January 1996 the first, second and third defendants leased to the first plaintiff, Gabstone Pty Ltd ("Gabstone"), and Gumina Investments Pty Ltd ("Gumina") part of the land and a building located at, 17 South Terrace, Fremantle. The premises leased were used for a café and restaurant under the name of "Old Papa's" and will hereinafter be referred to by that name.

2 The term of the lease was for a period of 10 years from 1 October 1995 with two options for renewal, each for a further term of five years, the first concluding on 1 October 2005 and the second on 1 October 2010.

3 The lease was guaranteed by a director of Gabstone, Bruce John Monteath, and a director of Gumina, Nunzio Anthony Joseph Gumina.

4 The terms of the lease of importance in this action are as follows:

Clause 6.01 - No alterations or additions

Not make or permit to be made any alterations or additions of a structural nature without obtaining the prior written consent of the Lessor which consent may in the absolute discretion of the Lessor be withheld without giving any reason and if granted may be granted subject to such conditions or amendments or variations to the proposed alterations or additions as the Lessor shall require and not without the like consent cut maim or injure any of the walls partitions timber doors or floors thereof."

5 Other provisions of cl 6.01 are not relevant for the purposes of these reasons:

Clause 6.02 - Comply with legislation and regulations

Punctually comply with and observe at the expense of the Lessee all present and future Acts (State or Federal) regulations and by-laws and all orders and requirements of any statutory public or other competent authority including (but without limiting the generality of the foregoing) the Western Australian Fire Brigades Board and the Insurance Council of Australia which relate to the Leased Premises or any part thereof or the use or occupancy thereof or the number or sex of the persons working in or from or at any time occupying or visiting the Leased Premises and with all notices received either by the Lessor or the Lessee from any such authority including (but without limiting the generality of the foregoing) notices

(Page 8)

requiring the carrying out of any repairs alterations or works to or the provision of Fire Equipment for the Leased Premises

PROVIDED ALWAYS THAT

insofar as the same may require structural alterations or additions to the Leased Premises or to the Building this covenant shall only apply to such regulations by-laws orders requirements and notices as relate to the Lessee's business or the use to which the Leased Premises are put by the Lessee or the number or sex of persons working in or from or occupying at any time or visiting the Leased Premises or the provision of separate lavatories in the Leased Premises.

All works which the Lessee is required to carry out shall be carried out by workmen approved of by the Lessor (such approval not to be unreasonably withheld) and pursuant to plans and specifications so approved but no such works shall be commenced before all such approvals have been obtained. The lessee shall pay to the Lessor on demand the cost to the Lessor and its employees agents and independent contractors of granting such approvals and ensuring that the works are properly carried out.

…

Clause 8.01 - Lessee not to assign etc.

The Lessee shall not without the prior written consent of the Lessor assign sub-let or part with possession or occupation (including the granting of a licence) of the Leased Premises or any part thereof or this Lease or any estate or interest therein but in the event of the Lessee wishing to assign or sub-let the whole of the Leased Premises the Lessor shall not unreasonably withhold its consent to such assignment of sub-letting if:

(a) Prior to entering into any agreement for sub-letting the Lessee shall have submitted to the Lessor particulars of the proposed sub-lease including the name, address and occupation of the sub-tenant, the proposed term and any options of renewal available under the sub-tenancy, the proportion if any of outgoings payable under the sub-tenancy, the proposed covenants and conditions of the sub-tenancy and such other information as may be

(Page 9)

reasonably required by the Lessor or which would be relevant to the Lessor granting or withholding its consent.

Notwithstanding the foregoing provisions the Lessee shall not in any event offer and the Lessor shall not be required to consent to a sub-tenancy at the rental or on terms and conditions more favourable to the proposed sub-tenant than those payable and applicable hereunder;

(b) The proposed assignee or sub-lessee is a respectable and financially sound person the onus of proving which fact to the satisfaction of the Lessor shall be upon the Lessee;

(c) The lessee has procured the execution by the proposed assignee or sub-lessee and such guarantors as are referred to in Clause 8.01(d) of an assignment of this Lease or a sub-lease (as the case may be) to which the Lessor is a party and which is in a form prepared or approved of by the Lessor and its solicitors and has delivered such assignment or sub-lease to the Lessor;

(d) Where the proposed assignee or sub-lessee is a corporation the performance of the covenants by the assignee or sub-lessee with the Lessor contained in the assignment or sub-lease shall be guaranteed by such of the directors and principal shareholders of such corporation and by such third parties as the Lessor may require;

(e) All rentals and other amounts then owing shall have been paid and there shall not then be any existing unremedied breach of the covenants conditions and stipulations herein contained (PROVIDED THAT breaches which have been waived by the Lessor shall not be deemed to be unremedied breaches for the purpose of this Clause 8.01(e));

(f) The Lessee has paid to the Lessor all costs charges and expenses incurred by the Lessor of or incidental to any enquiries which may be made by or on behalf of the Lessor as to the respectability solvency and suitability of any proposed assignee or sub-lessee and of and incidental to either or both the preparation and approval of the form

(Page 10)

of assignment or sub-lease by the Lessor and its solicitors;

(g) Any assignment fee payable to the Managing Agents has been paid;

(h) The Lessee has withdrawn any caveat lodged by the Lessee over the Land the Leased Premises or any part hereof;

(i) The Lessee has paid to the Lessor such sum as the Lessor considers necessary to cover any possible under-recovery of the Rates and Taxes Outgoings and any similar charges provided that the Lessor will determine the amount required (if any) at the expiration of the relevant Lease Year pursuant to the provisions of Clause 3.04;

(j) The Lessee has furnished to the Lessor the proposed assignee's written acknowledgment that it has received a copy of the Disclosure Statement (if any).

…

Clause 8.02 - Lessee to remain liable

The covenants and agreements on the part of any assignee or sub-lessee with the Lessor contained in any assignment or sub-lease shall be deemed to be supplementary to those contained in this Lease and subject to the express provisions of the Retail Shops Act to the contrary shall not in any way relieve or be deemed to relieve the Lessee and the Guarantor (if any) from liability hereunder.

Clause 8.03 - Change in shareholding of Lessee corporation

For the purpose of Clause 8.01 any change in effective control of the Lessee (being a company) or its holding company (within the meaning of the Corporations Law shall be deemed to be an assignment by the Lessee of its interest in the Leased Premises. For this purpose "effective control" means control of the composition of the board of directors (as defined in the Corporations Law or control of more than one half of the voting power PROVIDED THAT the issue transfer or transmission of shares to (or to a trustee for) any relative by blood or marriage

(Page 11)

of the shareholders at the Date of Commencement (or the beneficiaries under any trust in the case of shares held by a trustee) or to (or to a trustee for) any employees of the Lessee employed at the date of this Lease shall not be regarded as effecting any change in effective control.

Clause 8.04 - No statutory right to assign

Sections 80 and 82 of the Property Law Act 1969 are hereby expressly excluded and shall not apply.

…

Clause 9.03 - Copy notices to Lessor

Forthwith give to the Lessor a complete copy of any notice received by the Lessee from any statutory public or other authority or otherwise relating to the Leased Premises or any part thereof.

…

Clause 11.01 - Default provisions

If:

…

(b) in the case of breach or non-observance of any of the other covenants conditions or stipulations on the Lessee's part hereinbefore or hereinafter contained or implied and such breach or non-performance continuing after the expiry of 21 days written notice to the Lessee to remedy the same; or

(c) the Lessee being a Company shall go into compulsory or voluntary liquidation (except for the purpose of amalgamation or reconstruction) or shall have appointed under any Act or instrument or by order of any Court a manager or an administrator or a trustee or a receiver or a receiver and manager or provisional liquidator or liquidator or agent in possession in relation to any part of the Lessee's undertakings or assets or property; or

(Page 12)

(d) the Lessee shall enter into any composition arrangement with or assignment for the benefit of the lessee's creditors; or

…

then in any such case the Lessor may at its option at any time thereafter and without notice or demand enter and repossess the Leased Premises and thereby the Term and the estate and interest of the Lessee in the Leased Premises will immediate determine but without affecting any right of the Lessor under this Lease and without releasing the Lessee from liability in respect of the covenants conditions and stipulations on the Lessee's part herein contained or implied.

…

Clause 11.04 - Damage for breach of essential term of repudiation

It is expressly agreed and declared that the covenants by the Lessee specified in

(a) Clauses 2.02, 3.01, 3.03 and 14.01 to pay the Annual Rental the Rates and Taxes and the Strata Contribution at the time and in the manner therein provided or referred to respectively

(b) Clause 5.01 to keep the Leased Premises in good and substantial repair and condition

(d) Clauses 6.10 and 6.11 not to create any nuisance or do or suffer to be done any act which may be an annoyance or nuisance to the Lessor or the owners of [sic] occupiers of adjoining premises

(e) Clause 6.14 to use the Leased Premises for the purpose or purposes therein provided or referred to

(f) Clause 8.01 not without the prior written consent of the Lessor to assign sublet or part with possession or occupation of the Leased Premises or any part thereof

(Page 13)

(g) Section XVI to comply with each and every of the Licence provisions.

are (subject to the proviso hereinafter contained) essential terms of this Lease the breach non-observance or non-performance of any one or more of such covenants terms and conditions shall be deemed to be a fundamental breach of the provisions of this Lease on the part of the Lessee to be observed and performed PROVIDED THAT the presence of this Clause in this Lease shall not mean or be construed as to meaning that there are no other essential terms in this Lease. Should the Lessor terminate the Term following any such fundamental breach pursuant to Clause 11.01 without prejudice to any other right or remedy of the Lessor herein contained or implied the Lessee covenants with the Lessor (and agrees with the Lessor that this covenant will survive the determination of the Term) that the Lessor shall be entitled to recover from the Lessee as by way of liquidated damages for such breach the difference between:

(h) the aggregate of the Annual Rental, the Strata Contribution, Rates and Taxes, cleaning charges and other moneys which would have been payable by the Lessee if the Term had expired by effluxion of time calculated at the rate payable at the date of determination (less a rebate in respect of instalments of Annual Rental, the Strata Contribution Rates and Taxes, cleaning charges and other moneys not then accrued or due to be ascertained by applying a rate of 10% per annum to each instalment over the period by which the date for payment is brought forward by this clause) together with any costs and expenses incurred by the Lessor or which the Lessor reasonably estimates are likely to be incurred by the Lessor as a result of such breach including the cost to the Lessor of reletting or attempting to relet the Leased Premises; and

(i) the aggregate of the Annual Rental, the Strata Contribution Rates and Taxes, cleaning charges and of the moneys which the Lessor by taking proper steps to re-let the Leased Premises shall obtain or could reasonably be expected to obtain by reletting the Leased Premises after such determination to the date the Term would have expired by effluxion of time PROVIDED

(Page 14)

THAT in so doing the Lessor shall not be required or obliged to offer or accept in respect of such reletting terms covenants conditions or stipulations which are the same or similar to the terms covenants conditions or stipulations herein contained or implied.

SECTION XVI - LICENSING PROVISIONS

The Lessor and the Lessee acknowledges and agrees that if any Licence shall be issued or granted in respect to the Leased Premises or the business conducted thereon the following provisions shall apply.

Clause 16.01 - Entitlement to Licence

The Lessor hereby acknowledges and agrees that at all times the beneficial ownership of or entitlement to the Licence shall be with the Lessee.

Clause 16.02 - Compliance with Liquor Licensing Act

The Lessee shall during the Term hereof keep the Licence current and in good stead and duly and punctually comply with and ensure compliance by other relevant persons with all the provisions of the Liquor Licensing Act 1988 and the regulations thereunder and all amendments thereto as may be applicable to the licensee of the Leased Premises."

6 In addition, there is provision in the lease for reviewal of the rental in relation to the premises in item 7 of the schedule to the lease which contains a formula for rent review.

7 The evidence indicates that the relationship between the first plaintiff and the defendants was in some respects unsatisfactory in that there were a number of disputes that arose between the parties in the course of the tenancy. The solicitors for the defendants gave a notice of termination of the lease due to unpaid rental and other outstanding money by notice dated 9 September 1996. However, those defaults were ultimately remedied.

8 In early May 1997 the second plaintiff sought to extend the premises by constructing external verandas. The proposal was to enable a greater number of patrons to be accommodated on the premises. That application was consented to by the defendants in a letter signed by Mr Paul Bafile

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("Mr Bafile") of 5 May 1997. Mr Bafile also signed the application for planning and building approval which related to the veranda reconstruction, painting, façade and modification of what was described as stage 1.

9 The second plaintiff, however, wished to carry out further extensions and to obtain a liquor licence for the premises and so in addition to the works required for stage 1 wished to carry out further and more extensive alterations to the premises. Those proposed extensions will be referred to in more detail later in these reasons.

10 In the schedule to the lease in item 1 the second plaintiff is identified as the lessee in the following way:

"Gabstone Pty Ltd ACN 005647969 of Level 2, 1 Altona Street, West Perth, both in the State of Western Australia in its own right and as trustee for The Gabstone Trust."

11 No evidence has been placed before the Court identifying The Gabstone Trust or the beneficiaries of it. As part of the document book, the final two pages of a deed of trust dated 8 May 1980 were provided. That trust is described as B and D Family Trust. The trustee is shown as Gabstone and the beneficiaries are identified as the issue of Bruce John Monteath and Donna Joy Monteath. Nothing further, however, is provided in relation to the details of the B and D Family Trust. It is to be noted that there is no reference in the schedule to the lease of the B and D Family Trust. The sole reference is to The Gabstone Trust. The only other reference to The Gabstone Trust is to be found at page 375 - 376 of the document book which reveals a balance sheet for the trust showing the financial statements of the trust for the year ending 30 June 1999 with corresponding provisions relating to 1998. There are no details, however, as to the composition of the trust or its terms.

12 As indicated earlier in these reasons, the lessees under the original lease were Gumina and Gabstone.

13 By a deed of assignment of 29 July 1999 Gabstone acquired the interests of Gumina under the lease. The assignment was properly documented and executed by all of the parties, including the defendants as lessors. Following the execution of that document, Gabstone became the sole lessee of the premises and Nunzio Anthony Joseph Gumina retired as a covenantor. Bruce John Monteath and Donna Joy Monteath continued as guarantors.

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14 By a written contract dated 4 May 2000, Gabstone sold the business of Old Papa's to Old Papa's Holdings Ltd and Fieldmont Holdings Pty Ltd.

15 By that written contract, it is recited that the vendor (Gabstone) carried on the business from the premises known as Old Papa's and agreed to sell the business to the purchaser, Old Papa's Holdings Ltd (hereinafter referred to as OPHL) for $1,150,000. Contained within the document is a complex formula as to how that purchase price was to be paid, but the purchase price was tied to subscription to shares in the purchaser. Some of the consideration was to be paid in cash and, in certain circumstances, the balance by way of the issue of shares.

16 As part of the contract it was agreed that Gabstone, as vendor, was to hold the business on bare trust for the purchaser on the terms and conditions of a deed of trust.

17 The agreement was also conditional upon approval by the Director of Liquor Licensing to the agreement and to the arrangement. As will become apparent later in these reasons, that approval was never obtained.

18 The effect of that document, in my view, was to transfer the business from Gabstone to OPHL, with Gabstone remaining as the bare trustee of the lease.

19 By a deed of bare trust of the same date, Gabstone acknowledged that it was holding its entire estate, right, title and interest in the business (including, but not limited to, the trustee's right, title and interest in the lease, the liquor licence, the licences, and the business name) as bare trustee for and on behalf of the beneficiary, OPHL. A provision of the deed of bare trust required the trustee to transfer to the beneficiary, upon receipt of a written direction, the entire estate, right, title and interest held by the trustee in the business. Clause 3.3 of the deed of bare trust also provided:

"3.3 Any transfer by the trustee to the beneficiary pursuant to clause 3.2 shall be subject to and conditional upon:

3.3.1 the trustee obtaining the consent of the relevant lessor (and of any other person whose consent is required) to the assignment of the lease to the beneficiary; and

3.3.2 the beneficiary obtaining the transfer."

(Page 17)

20 There were also obligations imposed upon the trustee to transfer the liquor licence to the beneficiary.

21 At that stage of this transaction, in my view, Gabstone had sold the business in its entirety to OPHL and retained only the legal entitlement to the lease as bare trustee. The chain of documentation makes it clear that, upon completion of those two agreements, OPHL owned and operated the business.

22 It is common ground that the defendants were not notified of those transactions, nor was their consent requested or obtained. In the end result OPHL became the occupier of the premises and the entity in law which operated the business. Gabstone, however, remained the bare trustee and in that capacity remained the Lessee.

23 Although no point was made of it in the course of these proceedings, the agreement for sale of the business between Gabstone and OPHL was to become effective seven days after approval by the Director of Liquor Licensing to the agreement and the arrangements contained in the agreement. It is common ground that no such approval was ever given. However, one of the agreed facts is that the agreement for sale became unconditional.

24 On 12 April 2001 Mr K S Wallman of Wallman and Co, Chartered Accountants, was appointed the administrator of OPHL. By letter of 8 May 2001, Mr Wallman made application to the manager of the office of Racing, Gaming and Liquor for a protection order for the liquor licence which Gabstone held as bare trustee for OPHL.

25 The application was refused by the Director of Liquor Licensing by decision of 15 May 2001. In that decision the Director said:

"Section 86 of the Act (being the Liquor Licensing Act 1988) provides that where a licensee that is a body corporate becomes an externally administered body corporate (within the meaning of the Corporations Law), the person who has lawful financial control of the licensed premises may carry on the business of the licensee as though that person was the licensee, until 28 days from the date of going into possession of the licensed premises. Section 87(1)(c) subsequently provides that a protection order may then be granted to such a person, where they wish to carry on that business for a period in excess of 28 days. Yet the circumstances of this particular application, in relation to who has the right to the liquor licence, is unclear and

(Page 18)

convoluted. Mr Wallman has advised that he has a right to occupy the premises pursuant to an interim injunction granted by the Supreme Court to Old Papa's Franchise Systems Pty Ltd, who holds the lease on assignment from Gabstone Pty Ltd. Following further inquiries, Mr Wallman provided a copy of an executed deed between Gabstone Pty Ltd, Old Papa's Holdings Ltd and Old Papa's Franchise Pty Ltd dated 24 April 2001. I note that clause E of that deed identifies that by an earlier undated deed (stamped on 3 April 2001), Gabstone Pty Ltd assigned its interest in the leased premises and its role as trustee of the Deed of Bare Trust, to Old Papa's Franchise Pty Ltd (effective from 20 February 2001).

Pursuant to section 37(5) of the Act, therefore, Gabstone Pty Ltd lost its interest in the licence from that date (ie; the date on which it ceased to occupy the licensed premises to the exclusion of others). The licence has not subsequently been vested lawfully in any other person. As such, any person who has sold and supplied liquor at the premises since that date has done so without the authority of a liquor licence. This is a most serious offence under section 109(1) of the Act.

The fact is that the parties to the agreements have assigned the right to carry on the business under the licence without the approval of the Director of Liquor Licensing (section 84(1) of the Act refers). This has resulted in the licence being placed in suspension without, it appears, any body having a right to the licence (at least, in the terms contemplated by the Liquor Licensing Act 1988).

Notwithstanding the fact that Mr Wallman will suffer loss if a protection order is not granted, I do not believe that it is appropriate or legally possible to grant him such an order. While I accept that Mr Wallman is the appointed administrator of Old Papa's Holdings Ltd and while that company is a beneficiary of the trust for whom the licence is held, that company does not directly carry on the business as licensee."

26 As a result, the Director of Liquor Licensing refused the application on the basis that it was contrary to the public interest.'
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27 Following that decision, Mr Wallman made application for approval to allow alcohol brought onto the premises by patrons to be consumed on the premise. That application was also refused.

28 On 23 May 2001 the senior co-ordinator (Licensing) from the office of Racing, Gaming and Liquor wrote to the owners of Old Papa's indicating that he was considering cancelling the liquor licence that applied to the premises.

29 In dealing with the general background to this action, it should be mentioned that in civil action 1034 of 1999 Gabstone brought action against the present defendants arising from and following the defendants' notice of default for non-payment of rent dated 23 August 1996. The statement of claim referred to the actions of the defendants' solicitors in giving notice of termination of the lease and subsequent correspondence which referred to the reinstatement of the lease but without the options. In that action the plaintiffs referred to the defendants having agreed to the plaintiffs carrying out the works necessary to obtain a liquor licence for the leased premises and the detriment which would follow to the plaintiffs by reason of the termination of the lease. In those proceedings the plaintiffs sought declarations that the lease had not been terminated or alternative remedies which sought the reinstatement of the full lease.

30 Correspondence followed between solicitors in an attempt to settle that action and ultimately agreement was reached, as evidenced by a letter from the defendants' solicitors, Godfrey Virtue and Co, to the plaintiffs' solicitors, Solomon Bros, of 27 April 1999. That letter is central to one aspect of this action and so is set out in full hereunder:

"Solomon Brothers

PO Box Z5360

St George's Terrace

PERTH WA 6031

By fax: 92215955

Dear Sirs

GABSTONE PTY LTD v CAMISA NOMINEES PTY LTD & ORS SUPREME COURT OF WESTERN AUSTRALIA ACTION CIV 1034 OF 1099

We refer to your correspondence of 21 April 1999.

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In Supreme Court proceedings numbered CIV 1034 of 1999 your client claimed:

(a) a declaration that the lease has not been terminated

(b) alternatively to (a), a declaration that any attempt to invalidate or terminate the lease was void

(d) alternatively to (b) or (c), a declaration to cancel the options in the lease are ineffective

(e) alternatively to (a) - (d) relief against forfeiture

(f) a declaration that the lessors unreasonably withheld consent of the assignment.

(g) an injunction requiring the lessors to consent to the Application being a grant of a liquor licence for the Leased Premises and the work necessary to obtain a liquor licence

(h) an injunction requiring the lessors to remedy the defects being matters in your correspondence of 6 November 1998.

Our clients maintain that all the matters the subject of the writ have been resolved, namely

1. items (a) to (f), above have been resolved and an assignment of lease has been prepared and presented to your client for execution. We await from your client the executed assignment;

2. item (g) above has been resolved as our clients have indicated their consent and await from your client:

(i) comment as to the terminology of the written consent to be supplied by our clients (see our facsimile of 30 March 1999).

(ii) details of the works required to support the liquor licence application.

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3. item (h) above has been resolved and our clients are awaiting firm quotes before instructing the completion of the works by subcontractors.

There has been resolution with respect to all matters in the writ. Accordingly, our clients require that your client discontinue the writ with each party paying their own costs as agreed.

Your clients now seek to obtain from our clients permission on extensive works beyond what was original [sic] suggested and beyond what is required to support the application for a liquor licence. This is a new matter.

The works now proposed by your clients carry significant consequences for the lessors and impact on the lease including but not limited to, the building fabric, the rights of the other tenants and occupants, the requirements of the local authority, the requirements of statutory authorities, insurance, leased area, maintenance and common property. Each of these issues raise many more concerns and your clients' response to the issues will no doubt raise further concerns.

Your clients want a prompt decision. Our clients will accommodate your client's request on receiving:

(a) a discontinuance of the writ;

(b) an executed assignment:

(c) a detailed written proposal for the proposed extra works addressing not only the structural issues but all relevant issues arising from the construction of such extensive works as are contemplated by your clients.

Until your client attends to the matters raised at 2(i) and (ii), and (a), (b) and (c) above our clients do not see any value in meeting with your client or continuing with correspondence in relation to these matters.

Yours faithfully

(Signed)

GODFREY VIRTUE & CO

PER: Pino Monaco"

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31 The problem that arises from the letter of 27 April 1999 is that the second plaintiff and the second plaintiff's solicitors understood that the consent by the defendants' solicitors was a consent to do those structural works that were necessary to obtain the grant of a liquor licence for the leased premises. On their construction of the letter, they were entitled to carry out structural alterations to the premises as may have been necessary to obtain that liquor licence, notwithstanding any of the provisions of the lease. The defendants, on the other hand, maintain that their consent was always made subject to the lease and their specific approval for structural alterations (if any) that may have been required to the premises for the liquor licence to issue.

32 In the course of hearing this action a dispute arose as to the admissibility of the correspondence between the solicitors for the plaintiffs and the solicitors for the defendants. Counsel for the plaintiffs maintain that the correspondence was not admissible without evidence being given by the defendants' solicitor to prove the authorship and sending of the correspondence. In the course of the proceedings I indicated that, in my view, the course of correspondence was admissible, if relevant, to explain any ambiguities, if any, in the letter of 27 April 1999: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at [301]. Having considered the position and the course of correspondence, in my opinion, the course of correspondence is both relevant and admissible. In the first place, the letter of 27 April 1999 expressly refers to the correspondence of 21 April 1999 from the plaintiffs' solicitors. In addition, under par (h) reference is made to the plaintiffs' correspondence of 6 November 1998 and par 2(i) refers to a facsimile of 30 March 1999. The letter from the defendants' solicitors to the plaintiffs' solicitors of 27 April 1999 was the culmination of a course of correspondence between the solicitors that ultimately resolved the litigation in CIV 1034 of 1999.

33 As I indicated earlier in the course of these proceedings, it is common ground that the course of correspondence was discovered both by the plaintiffs and the defendants. It is clear from the course of correspondence that letters passed between the plaintiffs' solicitors and the defendants' solicitors and each in turn acknowledged the other's correspondence. The receipt of that correspondence by the parties to whom it was sent is confirmed by the affidavit of discovery. As to the authenticity of the correspondence, in my view, O 30 r 4 of the Rules of

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the Supreme Court

assists the defendants' argument in that the authenticity of the documents referred to extensively in the pleadings has not been denied. Indeed, many of the letters were relied upon by counsel for the plaintiffs to prove particular points in the course of the evidence. I would add that the chronology prepared by the defendants' witness, Mr Bafile, and extensively cross-examined upon, makes reference to the chain of correspondence (page 420 - 421, trial bundle vol 2).

34 For reasons that I will come to, in my view, it is not necessary to resolve the issue as to whether or not the building work carried out on the leased premises was without the consent of the lessors and in breach of the lease because, in my view, other matters, to which I have already referred and to which I will later refer and which constituted breaches of the lease, were sufficient to justify forfeiture of the lease.

35 It should be noted in passing that the majority of the evidence called in this case was directed to the issue of whether the work carried out on the premises was in breach of the lease or whether the defendants' consent permitted that work to be carried out so that it was not in breach of the lease. As I have said, in my view, it is not necessary to resolve that issue, but it will be referred to later in these reasons, as the issue was extensively canvassed.

36 I turn then to the pleadings. On 15 May 2001 Murray J made an order that the question of assessment of damages for breach of contract should be tried separately and after the trial of all other issues between the parties. As a consequence, the only matter falling for determination in these proceedings is the issue as to the status of the lease; whether the plaintiffs' conduct entitles the defendants to forfeit the lease and whether, if that is so, the plaintiffs are entitled to equitable relief against forfeiture.

37 The plaintiffs plead that pursuant to what they understood to be the consent of the defendants to carrying out such steps as were necessary to enable a liquor licence to be granted, they have either expended or incurred debts in the sum of $58,507 for the upgrading and structural improvement to the premises. It is not in dispute that some of that work involved structural alterations to the premises in that an additional door had to be constructed to enable access to the toilets other than through food preparation areas and disabled toilets had to be constructed.

38 As I have said, the question of the improvements will be discussed later in these reasons.

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39 The plaintiffs also plead that the defendants unreasonably withheld their consent to an assignment of the lease from the first to the second plaintiff. The plaintiffs raise the provisions of the Commercial Tenancy (Retail Shops) Agreement Act 1985 and contend that the provisions of that Act apply to the lease between the plaintiffs and the defendants. Again, that claim will be discussed later in these reasons.

40 The plaintiffs also plead that the defendants, pursuant to the lease, conducted a rent review of the premises and increased the rental from $79,008 per annum to a $115,000 per annum, plus GST and, as a consequence, it is pleaded that the defendants are estopped from pleading the termination of the lease. The plaintiffs plead that the assignment of the lease from the first plaintiff to the second plaintiff was a valid assignment and that the defendants are not entitled to terminate the lease on the grounds of the non-consent of the defendants. In addition, the plaintiffs plead the provisions of the Trade Practices Act and allege that the defendants have engaged in unconscionable conduct and a failure to act in good faith.

41 The plaintiffs also plead that certain provisions of the lease are void by reason of provisions of the Commercial Tenancy (Retail Shops) Agreement Act 1985.

42 The plaintiffs also plead that the effect of the sale of the business from the first plaintiff to OPHL was to change the beneficiary of a trust which did not amount to a change in effective control of the premises within the meaning of that term in the lease.

43 The second plaintiff claims declaratory relief and the first and second plaintiffs claim damages.

44 The defendants plead that their refusal to consent to an assignment of lease from the first to the second plaintiff was reasonable and particulars are provided. The defendants plead that they were entitled to refuse consent until the plaintiffs removed the improvements and made good the structural alterations to the premises.

45 The defendants plead that the rent review conducted by them was in accordance with the terms of the lease.

46 The defendants refer to the chain of correspondence between the plaintiffs' solicitors and the defendants' solicitors leading up to the compromise agreement of 27 April 1999 referred to earlier in these reasons.

(Page 25)

47 The defendants plead that they were never advised of the works required to be carried out in order for the first plaintiff to obtain a restaurant liquor licence and that they never consented to such work. The defendants plead breaches of the lease by the first plaintiff and plead that they were entitled to terminate the lease and that the first plaintiff is not entitled to the relief sought in the statement of claim.

48 The defendants also counterclaim for specific breaches by the first plaintiff in relation to its obligations under the lease, in particular, failing to give the defendants copies of notices received from statutory public or other authorities in relation to the leased premises.

49 The defendants also plead the default notices which were served upon the first plaintiff and which the defendants say were not complied with. The defendants say that they became entitled to re-enter the premises or forfeiture of the lease and they plead that they have suffered loss and damage by reason of the first plaintiff's conduct.

50 The defendants also plead that the first plaintiff assigned the lease without approval of the defendants and they plead the various contracts referred to earlier in these reasons as being a breach of cl 8.01 of the lease. That clause is set out earlier in these reasons.

51 The defendants also plead that on 10 May 2001 a liquidator was appointed to the first plaintiff and that on 12 April 2001 an administrator was appointed to OPHL. The defendants plead the provisions of the lease which entitle the defendants to terminate the lease in such circumstances.

52 The defendants counterclaim for recovery of the possession of the leased premises and for mean profits and damages. The defendants also seek declarations that:

(a) the first plaintiff has, without prior knowledge and approval of the defendants, assigned the equitable estate or interest and/or the legal estate or interest in the lease and/or has parted with possession or occupation of the leased premises;

(b) the defendants are entitled to terminate the lease at common law and/or pursuant to the provisions of cl 11.01(b) and/or cl 11.04 of the lease.

53 The defendants seek other ancillary orders and costs.
(Page 26)

54 In their reply, the plaintiffs say that the improvements which they undertook have increased the value of the leased premises.

55 In their reply, the plaintiffs admit that on 12 April 2001 a voluntary administrator was appointed to OPHL and that on 10 May 2001 the first plaintiff was placed into liquidation.

56 The plaintiffs also say in their reply that the first plaintiff was not placed into liquidation whilst lessee of the premises and that none of the provisions of cl 11.01(c) have occurred with respect to the second plaintiff.

57 Having dealt with the background of this dispute between the plaintiffs and the defendants and the pleadings, it is then necessary to turn to the evidence called by the parties in relation to these issues.

58 The first thing that should be said about the evidence is that, in my opinion, the evidence of the defendants' witness, Paul Bafile ("Mr Bafile"), is to be preferred to the evidence called on behalf of the plaintiffs. Mr Bafile, as will be discussed, is an experienced property manager aware and conscious of the defendants' obligations under the lease and of the obligations of a landlord generally. His evidence was, in my view, compelling.

59 The plaintiffs' witnesses, on the other hand, were less satisfactory. Mr Dichiera repeatedly suggested that various matters were the responsibility of project management rather than himself. In addition, Richard Kilbane, a witness who worked in the project management side of the plaintiffs' business, said that the responsibility for many matters that were put to him was that of Mr Dichiera who, he said, was responsible for the day-to-day management of Old Papa's. In the end result, the plaintiffs' witnesses seemed to pass responsibility between one another with neither witness accepting responsibility. Whether that was because of inadequate delineation of the areas of responsibility, or whether it was a convenient way of avoiding difficult cross-examination was not clear, but whichever way, in my opinion, the evidence called for the plaintiffs was less acceptable than the evidence of Mr Bafile.

60 With that general comment, it is then necessary to turn to the evidence and cross-examination called by the parties.

61 In relation to the issue as to whether the defendants were advised of the specific work necessary for the first plaintiff to obtain a liquor licence, I am satisfied that no such information was ever provided by the plaintiffs

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to the defendants. Whilst there was evidence of a number of sets of drawings being provided by Antonio Dichiera ("Mr Dichiera"), I am of the view that no plans ever identified with particularity the work that was necessary to obtain a liquor licence for the premises.

62 Mr Dichiera did show to Mr Bafile the plans necessary for stage 1 of the proposed development and Mr Bafile agrees that on behalf of all of the owners he consented to the works to be done for that stage to be completed, but beyond that plans for the other works necessary for obtaining the liquor licence were never shown to him.

63 In cross-examination Mr Dichiera agreed that he had never shown to Mr Bafile, or any of the defendants, the planning consents or building licences for the work proposed to be done. He said, "It wasn't my responsibility to do so."

64 Mr Dichiera made it clear that, in his view, it was for project management to advise the defendants through Mr Bafile of any approvals. Mr Dichiera did not see it as part of his responsibility and accepted that he had never advised Mr Bafile, or anybody from the defendants, of the planning consents and approvals that were obtained.

65 Mr Dichiera, however, in evidence made it clear that the works that were completed at the premises were those works which were required for the liquor licence. Included in those works were the disabled toilet facilities.

66 Mr Dichiera testified that he had on several occasions supplied plans including the works required for a liquor licence. In my view, however, there were no plans provided to Mr Bafile which expressly designated that work.

67 I would add that Mr Bafile kept a working diary which he used to refresh his memory about certain meetings and events. Mr Dichiera kept no such diary, nor any record. In my view, that fact added to Mr Bafile's credibility as a witness.

68 Mr Dichiera, at the end of the day, could not point to any plans which designated precisely what work was required for the liquor licence, although he said in his evidence he had advised Mr Bafile of the work verbally. His evidence was that it was for project management to provide that information to Mr Bafile. As I have said, Mr Kilbane from project management thought that it was Mr Dichiera's responsibility, which almost inevitably leads to the conclusion that Mr Bafile was correct in

(Page 28)

saying that the precise information was never provided to him. In addition, Mr Dichiera made it clear in cross-examination that he never advised Mr Bafile of the issue of planning consents or building licences because it was not his responsibility to do so. It should, however, be mentioned that the relationship between Mr Dichiera and Mr Bafile had become strained, particularly in 1999 and thereafter both the plaintiffs and the defendants had put matters in the hands of their solicitors so that communication between Mr Dichiera and Mr Bafile was limited. Nonetheless, in my view, it is clear that the first plaintiff did not advise the defendants of the statutory and other approvals obtained from the local authority for the building works.

69 In my view, the chain of correspondence passing between the plaintiffs' solicitors and the defendants' solicitors makes it clear that the defendants', through their solicitors, never consented to any structural works being done and that no such consent would be forthcoming until such time as the defendants knew precisely the structural works to be undertaken. The plaintiffs, on the other hand, realising that there was at least a misunderstanding as to the defendants' knowledge of work to be done, nonetheless proceeded with it. The first that Mr Bafile knew of the work was when he realised that a door opening had been constructed and the work for the disabled toilets was going ahead. At that stage the defendants sought to restrain the first plaintiff from carrying out the work and sought to have them evicted. Ultimately an injunction was granted by this Court so that the status quo could remain until these issues were resolved.

70 In addition, it is important to note that after Mr Monteath, on behalf of the plaintiffs, sought to suspend the liquor licence for the premises, as outlined earlier in these reasons, the defendants were not notified of that suspension. That was admitted by Mr Dichiera in his cross-examination. Mr Dichiera, however, took the view that after Mr Wallman became involved as liquidator of Gabstone and administrator of OPHL, it was his responsibility to advise the defendants of the position. Mr Dichiera, in his evidence, made it clear that he did not tell Mr Bafile of the suspension.

71 In the course of evidence an issue was raised as to whether the construction of the disabled toilet and access to the toilets other than through the kitchen area was part of the requirements for a liquor licence or whether it was part of the requirements for an outdoor eating licence. In my view, the evidence establishes that these items were required for both purposes. The significance of that matter will become apparent later in these reasons.

(Page 29)

72 The plaintiffs also called Richard Kilbane ("Mr Kilbane") who was, from June or July 1999 to October 1999, a project assistant employed by Monteath Properties Pty Ltd. Mr Kilbane was part of the property management team dealing with the improvements to Old Papa's Café. Mr Kilbane's evidence was that the City of Fremantle, the relevant local authority in relation to Old Papa's Restaurant, required disabled toilets and other works described in par 8 of his statement of evidence before the local authority would approve the application for a restaurant liquor licence to enable the application to proceed in the Liquor Licensing Court. Mr Kilbane referred to the correspondence which indicated the requirements of the office of Racing, Gaming and Liquor for the licence to issue.

73 Mr Kilbane testified that Hollis Constructions (1987) Pty Ltd ("Hollis") was contracted to carry out the work which, as I have said, cost in excess of $50,000. Mr Kilbane, in cross-examination, said that he saw his role as getting the work done rather than communicating with the defendants. He agreed that he had never in fact met Mr Bafile, nor communicated with him in any way. Mr Kilbane said that he did not see it as any part of his job to advise the defendants or Mr Bafile as to the progress of the work and as to the steps that were being taken.

74 As can be seen from these reasons, there appears to have been a hiatus between Mr Kilbane and Mr Dichiera. Mr Dichiera understood that project management, that is, Mr Kilbane, would be advising Mr Bafile of the progress of the development and Mr Kilbane thought Mr Dichiera would fill that role. In fact, in my view, neither did, and I accept Mr Bafile's evidence that he had no knowledge of the state of the works or as to how far the first plaintiff's application had progressed.

75 The evidence relating to the requirement for the disabled toilet, and a different access way to the toilets other than via the kitchen, was supported by Glen Garry Lange ("Mr Lange"), an environmental health officer from the City of Fremantle who handled the application for the liquor licence from the point of view of the City of Fremantle. Mr Lange was responsible for issuing a certificate under s 39 of the Health Act indicating that the City of Fremantle's health requirements had been complied with before a liquor licence for the premises could be obtained by the first plaintiff.

76 The significance of that evidence will become apparent when I deal with the letter set out earlier in these reasons in which the plaintiffs

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maintain that the defendants gave unqualified consent to the plaintiffs carrying out the work necessary for obtaining of the liquor licence.

77 The defendants called as a witness Mr Paul Bafile (Mr Bafile), a director of Camisa Nominees Pty Ltd and Fieldgate Enterprises Pty Ltd, the first and second defendants in this action. Mr Bafile testified that there were a number of businesses conducted on the property known as 17 to 25 South Terrace, Fremantle, including the business of Old Papa's.

78 Mr Bafile's evidence, which I accept, was that he understood that before any building permit could be obtained by the plaintiffs he would have been advised, and his consent sought. He understood that to have been a requirement of the lease. Mr Bafile's evidence was that no structural alterations were to be done to the premises of Old Papa's because, in his view, the building was of heritage value and onerous requirements would be imposed by the local council. Mr Bafile was concerned that if structural alterations were made to the premises, they may adversely affect other businesses that were operating on the defendants' land. Mr Bafile was also concerned that if the plaintiffs' plans to construct verandas right around the building was carried out, there would be ramifications for the other businesses in that the veranda deck may become part of the common property of the tenancies.

79 Mr Bafile accepted that he had consented to the stage 1 development which was limited to Old Papa's and he accepted that he had signed, as an owner, where appropriate, on the application form to the local authority.

80 I accept Mr Bafile's evidence that when he was advised in July 1998 that the first plaintiff was seeking to obtain a liquor licence, he indicated that he required written documentation detailing the works required and an application for the owners to approve. Mr Bafile made it plain that there were a number of owners involved, including the third defendants, Corado and Maria Pizzale (Mr and Mrs Pizzale), who had to be consulted before any decisions were made.

81 Mr Bafile accepted that the defendants agreed to support the plaintiffs' application for a restaurant liquor licence for Old Papa's. At that time Mr Bafile was of the understanding that the tenant was the first plaintiff, Gabstone, and he understood that Gabstone was, and remained, the tenant of the defendants throughout. Mr Bafile testified as to the defaults under the lease which he alleged were committed by the plaintiffs leading up to the civil proceedings issued in the Supreme Court in Civil 1034 of 1999. Mr Bafile accepted that the defendants agreed and

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supported the plaintiffs' application for a liquor licence, but he said that the support was always subject to the terms of the lease so that the defendants would have the right to approve, or otherwise, structural alterations to the premises before those structural works were carried out. The reason for that, as I have already said, was because of the nature of the premises and the need to obtain the approval of all the owners before such works were undertaken.

82 Mr Bafile said, and I accept, that he was never provided with plans that specifically designated the work that was required solely for the purpose of the liquor licence application and so his unqualified approval for that work on behalf of the owners was never obtained or given. Mr Bafile accepted that a number of plans and specifications were provided to him but that none of them met with this requirement. Mr Bafile was an experienced property manager who had dealt with other premises where liquor licences had been granted and he understood that no structural works were necessary for the restaurant licence for Old Papa's. As I have said, in that view, in my opinion, he was mistaken. Nonetheless, he expected to be advised of any structural alterations necessary before any works were carried out. That, indeed, was a requirement of the lease and, in my view, nothing in the letter from the defendants' solicitors to the plaintiffs' of 27 April 1999 set out earlier in these reasons derogates from that view. Mr Bafile's evidence was that he understood that any consent to the first plaintiff obtaining a liquor licence was always subject to the lease so that structural alterations had to be approved before they could be undertaken.

83 In my opinion, it is clear that there was a misunderstanding between the solicitors for the plaintiff and the solicitors for the defendants as to what was required for a liquor licence and as to the agreement contained in the letter of 27 April 1999. From Mr Bafile's point of view, and as indicated in the letter of 27 April 1999, he understood that any approval for the works necessary to be carried out to obtain the liquor licence was subject to the terms and conditions of the lease which required specific approval for structural alterations. The solicitors for the plaintiffs, on the other hand, were of the view that the consent contained in the letter of 27 April 1999 was an unqualified consent and that they were entitled to proceed with the work based upon that consent.

84 The misunderstanding in this case caused the plaintiffs to go ahead with the work, notwithstanding the lack of unqualified approval, in order to comply with the requirements of the local authority so as to obtain the liquor licence. In my view, the work was carried out in breach of the

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terms of the lease. I will return to that matter later in these reasons. I also accept Mr Bafile's evidence that he was never advised of the approval by the local authority for the work to be done, nor of the issue of a building licence. Under the terms of the lease the first plaintiff had the obligation to advise the defendants of each of those steps.

85 Mr Bafile's evidence was that it was on about 25 October 1999 when he realized that there were works being undertaken at Old Papa's Restaurant. He said that he contacted the managing agents concerning the work and that they faxed Mr Dichiera concerning that matter. A chain of correspondence followed, including a course of correspondence between the plaintiffs and the defendants' solicitors.

86 Mr Bafile testified that on 6 December 1999 he attended at the City of Fremantle and obtained a copy of the application for the building licence. That document, he said, referred to the attached owners' consent. He said that there was no consent attached to the application and that the application was not signed by the owners. The consequence of that finding is that the first plaintiff went ahead with the works, including the structural works, without either notice to, or the consent of, the defendants other than to the extent that such consent was contained in the defendants' solicitors' letter of 27 April 1999 set out earlier in these reasons.

87 Mr Bafile also said that on or about 27 December 2000 he received a notice of assignment requesting the approval of the defendants to an assignment of the lease from the first plaintiff to the second plaintiff. The proposal was that the guarantors would be Bruce John Monteath and Old Papa's Holdings Ltd. Mr Bafile said that the offer and the terms of it were unacceptable to him. Mr Bafile's evidence was that because of the injunction granted by Templeman J of 9 May 2001, the defendants from that date were injuncted from terminating the lease between themselves and the first and/or second plaintiffs. The terms of the injunction granted by Templeman J were:

"Until 5 pm on 17 May 2001 or further order, the defendants and each of them, whether by themselves, their servants, their agents or otherwise be restrained, and an injunction is hereby granted restraining them, from terminating the lease (the "lease") between them as lessors and the second plaintiff, further or alternatively the first plaintiff, as lessee of the premises known as Old Papa's and located at 17 South Terrace, Fremantle dated 30 January 1996."

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88 It is understandable that Mr Bafile would have believed that he could not consent to the proposed assignment after the injunction was granted because to do so may have been in breach of that injunction.

89 The injunction granted by Templeman J was extended by Murray J on 15 May 2001 until 31 May 2001. On 31 May 2001 Murray J further extended the injunction until the trial of the action or until further order.

90 It is understandable that Mr Bafile, in those circumstances, would have understood that to consent to an assignment of the lease from the first plaintiff to any other party may have been a breach of the injunction. Whether the defendants would in fact have been in breach of the injunction by consenting to the assignment sought by the first plaintiff does not fall for consideration in this action, in any event, in my view, because, for other reasons to which I will come, I am of the opinion that the defendants were entitled to withhold their consent, in any event.

91 The application by the plaintiffs for consent to the assignment from the first plaintiff to the second plaintiff was in the form of a notice of assignment which recited the original assignment from Gabstone and Gumina to Gabstone, but made no other reference to the intervening steps that had been taken, as set out earlier in these reasons. There was no reference to the sale by Gabstone of the business to Old Papa's Holdings Ltd and no reference to the deed of bare trust. Both of those documents had been deliberately withheld from the defendants. In addition, the request for consent to the assignment proposed that the guarantors should be OPHL and Bruce John Monteath. Information was provided to the defendants as to the financial position of the second plaintiff and OPHL, but even a cursory perusal of that information is sufficient to conclude that the proposal was unsatisfactory. The second plaintiff was shown as having liabilities of $668,000, with a deficit in net assets of $172,000. OPHL was shown as having an equity of $1,249,000, but that equity was comprised of goodwill of $1,142,000, with current liabilities of $696,000. Mr Bafile concluded that the financial position of the second plaintiff and of the proposed guarantor, OPHL, was, to say the least, precarious. In reaching that conclusion, in my view, Mr Bafile was entirely justified.

92 In addition, the transfer from Gabstone to the second plaintiff by the deed made on 24 April 2001 (document book 534 - 535) and the earlier undated deed (document book 509 - 511) demonstrates that Gabstone had totally divested itself of any interest in the leased premises. Even if it can be contended that Gabstone retained possession of the premises under the sale agreement and the original deed of bare trust, once the trusteeship

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was transferred to the second plaintiff by the first plaintiff, the first plaintiff had no interest remaining in the premises: see

Lam Kee Ying v Lam Shes Tong

[1975] AC 247 at 256. Section 10(7) of the

Trustees Act 1962

upon which counsel for the plaintiff relies has no application to these facts. That section provides:

10. Trust property, vesting of in new or continuing trustees

…

(7) For the purposes of a covenant against assignments, or against assignment without licence or consent, contained in any lease, underlease or agreement for a lease or underlease, a vesting under this section shall be deemed not to be an assignment."

93 Gabstone leased the premises from the defendants in its own right and as trustee for the Gabstone Trust. There was no vesting of this trust in a new trustee within the meaning of that section.

94 Counsel for the plaintiffs maintains that the plaintiffs have requested the defendants to consent to an assignment of the lease from the first plaintiff to the second plaintiff as trustee for OPHL. That request is to be found at page 561 of document book 2. It is contended by counsel for the plaintiffs that the effect of the defendants consenting to such an assignment would be that the second plaintiff would replace Gabstone as the bare trustee of the lease, the beneficiary being OPHL. As a matter of law, I accept that proposition as being correct. It would, nonetheless, remain the case that, if assigned, the defendants would have had as tenant the second plaintiff, a company about which the defendants knew very little apart from the limited material provided. It is contended by counsel for the plaintiffs that the second plaintiff would be a lessee in the capacity of a trustee only, the beneficial interest remaining with OPHL. Nonetheless, the fact remains that OPHL, as a company with an appointed administrator, would operate the business. In those circumstances, it is not difficult to understand why the consent of the defendants was withheld. The defendants were never advised of the sale from Gabstone to OPHL, nor were they advised of the appointment of the liquidator to the first plaintiff or the appointment of an administrator to OPHL other than through the advice from Mr Wallman, the administrator of OPHL and the liquidator of Gabstone.

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95 In my opinion, the breaches of the lease by the plaintiffs were wilful and substantial and of such a nature as to entitle the defendants to forfeit the lease: Shiloh Spinners Ltd v Harding [1973] AC 691 at 725

96 The next matter is the second plaintiff's claim for relief against forfeiture.

97 The difficulty with the second plaintiff's claim for relief against forfeiture is that the defendants maintain that they have no legal relationship with the second plaintiff. That being the case, there is no lease in existence between those parties or in relation to which relief against forfeiture could be given. Relief against forfeiture would only be available to the first plaintiff and, if that relief was given, the question would arise as to whether the refusal by the defendants to consent to the assignment of the lease from the first plaintiff to the second plaintiff, albeit in the capacity in each case as trustee for OPHL, was unreasonable. It is to those issues to which I now turn.

98 The first matter of law which arises is whether the defendants in all the circumstances are entitled to forfeit the lease presently held by the second plaintiff as a bare trustee for OPHL. In Gentle v Faulkner [1900] 2 QB 267 A L Smith LJ said at 273:

"The first ground of forfeiture alleged is that the tenant has broken the covenant in the lease not to assign the demised premises. The covenant by the lessee is not to assign or underlet the premises or any part thereof without the consent in writing of the lessor first had and obtained, such consent not to be unreasonably withheld in the case of a respectable and responsible tenant. The covenant does not relate to the parting with the possession of the demised premises, but simply to the assigning or underletting of them. It is not said that the defendant has underlet the premises; it is said that he has assigned them. What, then, is the meaning of a covenant not to assign the demised premises? In my judgment the meaning is not to execute a legal assignment. An equitable assignment is not sufficient to operate as a breach of the covenant. There must be an assignment at law."

99 Counsel for the plaintiff contends that in this case the sale of the business from the first plaintiff to OPHL and the declaration of bare trust that then came into existence was the sale of the business, plus a transfer of the equitable interest in the lease and not the legal interest. As such, it

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is contended that

Gentle v Faulkner

is authority that such an assignment is not a breach of the covenant set out earlier in these reasons. In my view, the distinction between

Gentle v Faulkner

and the present case is that the covenant here expressly includes the parting with possession. As can be seen from the terms of the agreement for sale referred to earlier in these reasons, the first plaintiff sold to OPHL the whole of its interest in the business and the premises, save and except that it retained the position of a bare trustee pursuant to the documentation to which I have earlier referred.

100 It is clear, in my view, that in taking those steps, the first plaintiff parted with possession of the premises and the business. That being the case, in my view, Gentle v Faulkner has nothing to say about the present circumstances.

101 Counsel for the plaintiffs maintains that the sale of the business to OPHL under the sale agreement and the assignment of the equitable interest in the lease was effective in law, notwithstanding the fact that the defendants did not consent to the transaction. In advancing that proposition, counsel relied upon the decision of the High Court in Massart v Blight (1951) 82 CLR 423 where Dixon J, McTiernan, Williams, Webb and Fullagher JJ said at 440:

"The breach of a condition does not make the assignment nugatory. It merely exposes the lease to forfeiture, a forfeiture which of course would at common law considered independently of the Landlord and Tenant (Amendment) Act 1948 to 1949, deprive the assignee of his estate or interest."

102 It follows, in this case, that if forfeiture is ordered, then the forfeiture will operate against the second plaintiff which presently holds the leasehold estate as bare trustee for OPHL. The forfeiture, nonetheless, which the defendants maintain is appropriate would, of course, be the forfeiture of the lease by the first plaintiff. If that is ordered, then the second plaintiff's interests as assignee of the lease would fall with it.

103 I should also add that a further distinction between the present case and Gentle v Faulkner is that cl 8.01 of the lease in this case also refers to "any estate or interest therein". That provision was not included in the lease under consideration in Gentle v Faulkner and, in my view, is wide enough to include the assignment of an equitable interest.

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104 In any event, in my view, the first plaintiff breached the lease when OPHL took an equitable interest in or possession of the premises by purchasing the business from Gabstone.

105 Counsel for the plaintiffs also sought to rely upon the High Court's decision in MacDonald v Robins (1954) 90 CLR 515 where the High Court had occasion to deal with a case where one co-tenant devised his equitable interest in a lease to his co-tenant, the lease having a clause prohibiting the transfer, assigning, subletting or parting with possession of the land. Dixon CJ said at 520:

"If the lease was operative to create a term of years, the clause amounts at most to an equitable assignment of the brother's interest in the term. An assignment by one co-tenant of a share in the demised premises operating at law, as distinguished from equity, to vest his share in his co-tenant would constitute a breach of such a covenant as the present against transfer or assignment of the land. In all events it has been so held … An equitable assignment, however, is an entirely different matter. The privity of estate and the liability on the covenants of the lease all remain. Even when the entirety as distinguished from an undivided share in the term is equitably assigned there is no breach of such a covenant against assignment;

Gentle v Faulkner

[1900] 2 QB 267 at pp 274, 277;

Martin v Coultas

(1911) SALR 1. It is also settled that for one co-tenant to retire from the possession of the demised premises and leave his co-tenant in sole possession does not amount to a breach of the covenant not to part with the possession of the land;

Corporation of Bristol v Westcott

(1879) 12 Ch D 461."

106 Again the clause in that case is to be distinguished from the clause with which we are dealing here. In addition, the factual circumstances in MacDonald v Robbins are clearly distinguishable from those presently under consideration. The transaction impugned here was not the transfer of an interest by one co-tenant to another, but the transfer by the first plaintiff of its entire interest in the business, save and except preserving to itself the capacity to remain as bare trustee of the lease.

107 In Richardson v Somas [1967] WAR 109 the Full Court had occasion to deal with a case which is, in many respects, similar to the present. Wolff CJ, with whom Jackson and D'Arcy JJ agreed, said at 114:

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"But a covenant not to part with possession of the demised premises is broken by an agreement to assign or sublet coupled with placing the proposed assignee or sublessee in possession, the lessee going out of possession:

Abrahams v McFisheries

Ltd [1925] 2 KB 18; [1925] All ER Rep 194. There is no doubt, as the Magistrate found, that this is what happened here. It is, however, contended, on the authority of

Moat v Martin

[1951] KB 175; [1949] 2 All ER 646, that if (which may be taken as shown by the evidence) the proposed assignees were respectable and responsible persons, then under the first proviso to cl 1(o) of the lease the lessor could not refuse her consent, and hence no breach was committed by letting the purchaser into possession without consent. That may well be the position if the lessor wrongly refuses or unnecessarily delays consent. But the authorities are clear that consent must be sought;

Eastern Telegraph Co v Dent

[1899] 1 QB 835;

Barrow v Isaacs

[1891] 1 QB 417; and it has also been said, and with good sense, that the lessor must be given a reasonable time to consider the matter;

Lewis and Allenby Ltd v Pegge

[1914] 1 Ch 782;

Wilson v Fynn

[1948 2 All ER 40, at p 42. Neither of these requirements was met in this case. Mr Reid's letter of 27 January can reasonably be construed as seeking the plaintiff's consent to an assignment or sublease, but not to the parting with possession of the premises prior thereto. The time allowed

between receipt of the letter and the giving and taking of possession was only two days, which was patently inadequate.

For these reasons, I consider the Magistrate was right in his opinion that the covenant had been broken and the lease forfeited under the proviso for re-entry."

108 In this case the conduct of the plaintiffs was even more blatant. The first plaintiff sold the business and parted with its equitable interest to OPHL without asking the defendants for their consent, or even advising them of the transaction. In addition, the first plaintiff did not inform the defendants that its position was that of bare trustee only. Counsel for the second plaintiff says that these decisions were deliberately made. That being the case, in my opinion, these were deliberate and blatant breaches of the lease.

109 Counsel for the second plaintiff maintains that equitable relief against forfeiture is available to the second plaintiff because the assignment of the lease from the first plaintiff to the second plaintiff is not

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nugatory but effective in law. In that respect, counsel relied upon the passage from

Massart v Blight

set out earlier in these reasons. In my view, that passage is of no assistance to the second plaintiff. It is only the first plaintiff who could seek relief against forfeiture because it is only the first plaintiff that had the legal rights pursuant to the lease. Once an order for forfeiture is made against the first plaintiff, then the second plaintiff's leasehold title which derives from the first plaintiff falls with it.

110 The principles upon which a Court will grant relief against forfeiture are well established in Shiloh Spinners Ltd v Harding (Supra) at 723 - 724.

111 It is to be noted that the first plaintiff does not seek relief against forfeiture and, as I have said earlier in these reasons, took no part in these proceedings. Had it done so, it would have been required to do so through the liquidator. It follows, in my view, that the second plaintiff is unable obtain relief against forfeiture: see Daw-Win Pty Ltd v Tagliferri [1986] ANZ ConvR 876; SCt of WA Franklyn J; 29 July 1986.

112 Having reached these conclusions, it is then necessary to consider the second plaintiff's claim for unconscionable conduct by the defendants. Those pleas are set out in pars 35 to 41 of the re-amended consolidated statement of claim. It is not necessary to deal with those claims in detail because, in my view, they are directed towards the claim for damages to be made by either the first and/or second plaintiff in due course. Those issues do not reflect upon the status of the lease which falls for consideration in these proceedings.

113 The next aspect of the plaintiffs' claim that falls for consideration arises from the plaintiffs' pleading that the lease between the defendants and the first plaintiff was a retail shop lease within the meaning of that term in s 3 of the Commercial Tenancy (Retail Shops) Agreement Act 1985 ("The Retail Shops Act"). The effect of that Act is to strike down provisions of leases which contravene the Act and generally to deal with undesirable practices in relation to the leasing of retail premises. Again, in my view, this matter can be dealt with shortly. Having considered the provisions of the Retail Shops Act and the provisions of the lease, I am unable to conclude that the provisions of this lease are formulated in terms that would be in breach of the Retail Shops Act so as to render them void under the provisions of s 15(2) of that Act.

114 The final matter that falls for consideration is whether the defendants have engaged in unconscionable conduct within the meaning of that term

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under the

Trade Practices Act

1974 (Cth)

("the

Trade Practices Act

"). In

particular, the plaintiffs plead that the defendants have breached s 51AA of that Act and, in addition, they plead s 51AC of that Act. I accept that s 51AA and s 51AC of the

Trade Practices Act

apply to leases and to a lessor's behaviour in relation to a lessee (

Australian Competition and Consumer Commission v Leelee

[1999] FCR 1121) where unconscionable conduct is made out.

115 The plaintiffs plead that the defendants have unreasonably withheld their consent to the assignment of the lease from the first plaintiff to the second plaintiff and, in addition, have instituted a rent review pursuant to the lease and accepted an increased rental resulting from that review.

116 The plaintiffs plead that the defendants have forced the plaintiffs to apply for injunctions to protect the lease and in negotiations have sought to terminate the first plaintiff's options of renewal. In addition, the plaintiffs plead that the defendants have refused consent to the plaintiffs building veranda decking around the premises, in addition to which it is said that the plaintiffs have instituted and accepted a rental increase.

117 The circumstances surrounding the plaintiffs' proposal to install decking around the premises have been discussed earlier in these reasons. The plaintiffs maintain that without the increased patronage that the constructed decking would accommodate, the liquor licence for the restaurant is commercially unviable. The defendants, on the other hand, maintain that the building is of heritage value and they have not consented to any structural alterations. In my view, accepting, as I do, Mr Bafile's evidence, it seems to me that the defendants' attitude in this respect is entirely reasonable.

118 As to the rent increase, it is conceded that the rent review was conducted under the terms of, and in accordance with, the lease. Valuers were appointed and a market rental determined, with both parties participating in the process. In addition, it is not in dispute that the rental has been paid in accordance with the arbitrated increase since the date of its determination.

119 Having considered the evidence and the plaintiffs' claims, I am quite unable to conclude that the plaintiffs' claims in relation to unconscionable conduct have been made out for the purposes of these proceedings.

120 In all the circumstances, therefore, I have come to the conclusion that the defendants should be granted an order for recovery of the leased premises and a declaration that the first plaintiff has without prior

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knowledge and consent of the defendants assigned the equitable estate or interest and the legal estate in the lease. In addition, I would make a declaration that the defendants are entitled to terminate the lease at common law because the first plaintiff is in breach of cl 11.01(c) of the lease.

121 I will hear from the parties as to the further action that is now required in order for the remaining issues in these proceedings to be resolved.