Global College Pty Ltd v Sooncorp Holdings Pty Ltd

[2008] NSWSC 750

CITATION:	Global College Pty Ltd v Sooncorp Holdings Pty Ltd [2008] NSWSC 750
HEARING DATE(S):	18/07/08
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
EX TEMPORE JUDGMENT DATE:	18 July 2008
DECISION:	Note that there has been a valid assignment of the lease from the first plaintiff to the second plaintiff. Make consequential orders. Reserve further consideration.
CATCHWORDS:	LANDLORD & TENANT [71]- Covenants- Restricting assignment of leases- Plaintiffs sought declarations and orders that the defendant was bound to give its consent to assignment- Held that the court does not make declarations or injunctions in such cases- Proper procedure is lessee should assign if it wants to assign- If landlord obliged to give consent, landlord cannot treat assignment as a forfeiture.
LEGISLATION CITED:	Conveyancing Act 1919, s 133B
CASES CITED:	Bragg v Alam [1981] 1 NSWLR 668
PARTIES:	Global College Pty Ltd (P1) Carrick Institute of Education Pty Ltd (P2) Sooncorp Holdings Pty Ltd (D)
FILE NUMBER(S):	SC 3805/08
COUNSEL:	R McPherson (P)
SOLICITORS:	Parry Carroll (P)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 18 July 2008

3805/08 – GLOBAL COLLEGE PTY LTD v SOONCORP HOLDINGS PTY LTD

JUDGMENT

1 HIS HONOUR: This is an application by the first plaintiff as lessee to enable it to assign its lease to the company named as the second plaintiff. The first plaintiff currently holds under a lease, clause 5.2 of which reads in part as follows:

“The lessee must not assign or transfer this lease ... without first obtaining the written consent of the lessor which will be reasonable for the lessor to withhold if ...”.

2 There are then a series of conditions and the conditions include:

“The lessee and the assignee must enter into a covenant with the lessor in the form required by the lessor that the assignee will duly perform and observe the covenants and agreements on the lessee's part contained or implied in the lease.”

3 The first plaintiff, the tenant, is in administration and will be shortly proceeding to a creditors’ voluntary winding up. It fears that unless it acts quickly, it will lose its rights to assign because one of the present conditions to assignment is that it not be in default of this lease and clause 9.4(e)(1) makes going into liquidation an event of default.

4 Up until 7 July 2008, there was no problem, however, it would seem that the proprietors of the landlord company became very ill and have been uncontactable from 8 July 2008 onwards. The state of play before then was that the landlord appeared quite happy with the proposed assignment. The plaintiffs sought as a matter of urgency a series of declarations that the landlord was bound to give its consent and for mandatory orders that it provide its consent.

5 It does not seem to me that that is a proper way of going about the matter. Assignability is an incident of every estate and it is also an incident in the chattel real known more commonly as a lease. Accordingly, if one has a right to assign, then one can assign and it matters not that the landlord has a right to object. When I say it matters not, that is perhaps a little bit of an overstatement because the landlord can treat the breach of that covenant as a forfeiture.

6 Forfeiture, of course, in the law of landlord and tenant does not mean that the lease is forfeited, but rather that the lease is liable to be forfeited by the landlord re-entering. If the consent has a condition, as this one does, reinforced by s 133B of the Conveyancing Act 1919, that the consent not be unreasonably withheld, then the assignment is valid and cannot even be attacked by the lessor as working a forfeiture. If, on the other hand, the consent is not properly obtained, then the landlord can enforce the forfeiture as against the assignee subject to the court's power to grant relief against forfeiture in equity. Thus the court does not deal with this sort of matter by declarations and injunctions, but requires the lessee if it wants to assign actually to assign.

7 In the instant case, not only does it appear on the evidence that the landlord is content with the situation, but that the plaintiffs have done all that they can to satisfy the procedural provisions of the lease. There would be an equity in the Bragg v Alam [1981] 1 NSWLR 668 sense with a landlord who makes itself uncontactable (whether deliberately or because of unexpected health problems) that the landlord would not be entitled to object to anything that it might have done had it been contactable.

8 The lease has now been assigned (see PX04 though that will have to be uplifted so that it can be stamped). The court accordingly notes that there has been a valid assignment of the lease of Level 4, Manning Building, 451 Pitt Street, Sydney from the first plaintiff to the second plaintiff. It makes orders 7, 8 and 9 in the summons and reserves further consideration. Order that the costs to date be paid by the defendant. Further questions of costs reserved. The exhibits can handed back.

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