Hawker Pacific Pty Ltd v Casair Pty Ltd
[2011] WASC 152
•22 JUNE 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HAWKER PACIFIC PTY LTD -v- CASAIR PTY LTD [2011] WASC 152
CORAM: JENKINS J
HEARD: 15 OCTOBER & 25 NOVEMBER 2010, 14 FEBRUARY 2011
DELIVERED : 22 JUNE 2011
FILE NO/S: CIV 1903 of 2009
BETWEEN: HAWKER PACIFIC PTY LTD
Plaintiff
AND
CASAIR PTY LTD t/as COMPLETE AVIATION SERVICES
Defendant
Catchwords:
Landlord and tenant - Duration of term of lease - Construction of written terms of lease - Ascertainment of oral terms of lease
Landlord and tenant - Tenant holding over after lease terminated - Measure of damages
Procedure - Plaintiff's application to discontinue claim for damages - Application made after evidence concluded - Relevant principles
Legislation:
Airports (Transitional) Act 1996 (Cth)
Property Law Act 1969 (WA), s 72(1)
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 23 r 2(3)
Supreme Court Act 1935 (WA), s 24(7)
Result:
Judgment for the plaintiff
Plaintiff's application to withdraw claim for damages dismissed
Assessment of damages reserved for further submissions
Category: B
Representation:
Counsel:
Plaintiff: Mr A P Hershowitz
Defendant: Mr M J McCusker QC
Solicitors:
Plaintiff: SRB Legal
Defendant: Wilson & Atkinson
Case(s) referred to in judgment(s):
Amad v Grant [1947] HCA 9; (1947) 74 CLR 327
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Brambles Holdings Ltd v Bathurst City Council [2001] 53 NSWLR 153
Fox v Star Newspaper Co Ltd [1898] 1 QB 636
Heartlink Ltd v Jones (2007) 35 WAR 190
Rock Bottom Fashion Market Pty Ltd (in liq) v HR & CE Griffiths Pty Ltd [1998] QCA 33
Stahlschmidt v Walford (1879) 4 QBD 217
The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Turner v York Motors Pty Ltd [1951] HCA 52; (1951) 85 CLR 55
JENKINS J:
Introduction
Hawker Pacific Pty Ltd (Hawker Pacific) is the lessee of hangar 223 and the adjacent car park and customer lounge at the Perth Airport. In 2006 Hawker Pacific negotiated a sub‑lease of part of hangar 223 and associated areas (the premises) to Casair Pty Ltd trading as Complete Aviation Services (Casair). In 2009 Hawker Pacific gave Casair notice to quit the premises. Casair refused to vacate the premises and claimed that its sub‑lease was only terminable if the head lease to Hawker Pacific was terminated or the premises were required for redevelopment (the trigger events). Hawker Pacific seeks an order for possession of the premises and related orders.
Summary of the central issue
The issue for the court is whether the sub‑lease was terminable by Hawker Pacific on one month's notice, without cause, or whether, as Casair contends, it was only terminable if either of the trigger event occurred.
Pleadings
Hawker Pacific alleges that, pursuant to the sub‑lease entered into on or about 19 May 2006, it leased the premises to Casair on a month to month basis commencing on 1 June 2006. It asserts that the sub‑lease was partly oral and partly written. The oral part consists, it says, of discussions that took place in May 2006 between Ronald Frank Green, representing Hawker Pacific, and Robert Stephen Bethell, representing Casair. It says that the written part consists of a letter dated 22 May 2006 between Mr Bethell and Mr Green.
Hawker Pacific says that there were express, alternatively implied, terms of the sub‑lease that:
(1)the rent was $4,000 per month (excluding GST) payable monthly on or before the first day of the month;
(2)the sub‑lease was on a month to month basis; and
(3)the sub‑lease could be terminated by either party by giving the other party one month's notice.
Hawker Pacific pleads that on or about 23 March 2009 it served a notice on Casair terminating the sub‑lease with effect on midnight 30 April 2009 and requiring Casair to deliver up possession of the premises to it on 1 May 2009.
Hawker Pacific pleads that notwithstanding the termination of the sub‑lease, Casair has not delivered up possession of the premises.
Hawker Pacific says that as a consequence, it has sustained loss and damage. It claims judgment for possession of the premises and an order that Casair delivers up vacant possession of the premises to it.
In its defence, Casair admits that by a sub‑lease it was granted exclusive possession of the premises but it denies that the sub‑lease contained the conditions alleged by Hawker Pacific. Casair says that the express terms of the lease were:
(1)Casair would have exclusive possession of the premises;
(2)the sub‑lease commenced on 1 June 2006;
(3)rent was to be paid on the first of every month in arrears in the amount of $4,000 plus GST; and
(4)the sub‑lease was for 'a certain term' and would only be determined by the occurrence of one of the two trigger events which are pleaded as:
(a)the redevelopment of the premises by Hawker Pacific; or
(b)the termination of Hawker Pacific's head lease of the premises by either Hawker Pacific or the head lessor.
Casair says that the sub‑lease was partly oral and partly written. The oral part it says was agreed between Mr Green and Stuart Charles Naylor Burns, on the part of Casair, on 26 April 2006. The written part consists of a letter from Casair dated 22 May 2006 to Mr Green.
Casair admits that it was served with a notice dated 23 March 2009 but says that it was invalid due to the notice being contrary to the terms of the sub‑lease as neither trigger event had occurred.
Casair denies that Hawker Pacific is entitled to the relief claimed. It counterclaims for declarations that:
(1)the sub‑lease was of a certain duration;
(2)the sub‑lease would only be determined by the occurrence of one of the trigger events;
(3)that the notice to quit was of no effect; and
(4)the sub‑lease has not been determined.
The statement of claim includes a claim for damages for holding over under the sub‑lease.
In preparing for and during the course of the trial, Hawker Pacific did not pursue or present evidence, other than evidence of rent, in respect of its claim for damages. At the end of the trial Hawker Pacific sought leave to discontinue the claim for damages on the basis that it would reassert the claim in separate proceedings if it was successful in respect of its primary assertions. Casair objected to Hawker Pacific being given leave to discontinue the claim for damages. It said that Hawker Pacific should have pursued the claim in the course of this action. I ordered Hawker Pacific to file an application to discontinue the damages claim. I said that I would determine the application on the papers. I have done so and my reasons for dismissing the application are contained in this judgment.
Factual background
In 1982 the Commonwealth of Australia leased a portion of the Perth Airport being hangar 223 and associated areas to Hawker De Havilland Australia Pty Ltd for a period of 23 years and 6 months for the purposes of aircraft maintenance, car park and customer lounge. Pursuant to the Airports (Transitional) Act 1996 (Cth), Westralia Airports Corporation Pty Ltd (WAC) became the airport‑lessee company of the Perth Airport on 2 July 1997.
Pursuant to a deed of assignment and consent made in 1998 between WAC, Hawker De Havilland Ltd and Hawker Pacific the lease was assigned to Hawker Pacific.
The lease terminated on 31 December 2005. Clause 4 of the lease provided that the Commonwealth may grant extensions of the lease for up to five year periods at a time up to a maximum extension of 15 years 'subject to the availability of [hangar 223 and associated areas] consistent with airport planning constraints'. Clause 4(1)(b) provided that unless it was otherwise agreed between the parties the Commonwealth would give two years notice of an intention not to extend the term of the lease.
By an email dated 31 May 2007, a representative of WAC advised Hawker Pacific that WAC had granted a two‑year extension to the lease which was due to expire on 31 December 2007. This extension was apparently not reduced to writing and none of the Hawker Pacific witnesses had either participated in the negotiations for the two‑year extension or had been present when the, apparently, oral extension was granted.
In or about April 2007 Mr Matthew Duffy, the general manager of Hawker Pacific's maintenance, repair and overhaul division (Sydney) was advised by Mr Green that Hawker Pacific's lease with WAC was on a month to month basis. Consistent with that advice, as at 2006 Mr Green believed that Hawker Pacific was holding over under the lease on a monthly tenancy terminable on a month's notice. However, Hawker Pacific now concedes that, on the basis of the 2007 advice from WAC, there was a two‑year extension to the lease which was due to expire in December 2007.
In 2005 and 2006 Mr Green had numerous conversations with officers of WAC about whether or not WAC would consider relocating and/or redeveloping hangar 223 as it was over 40 years old and in poor condition. At this time, the future of the hangar was uncertain both in terms of whether it would be available for use by any party and/or whether there would be the possibility of any party leasing a redeveloped or substitute hangar.
Casair's sub‑lease of the premises came about in the following manner. Hawker Pacific's business is the supply of aeronautical engines and components and the supply of aircraft maintenance, repairs and overhaul services. On occasions, of which this was one, Hawker Pacific offers leasing arrangements to its customers. In or about early 2000 Hawker Pacific agreed to supply Casair, a commercial air transport company, with aeronautical engines and components and aircraft maintenance, repairs and overhaul services. In or about late 2002 Hawker Pacific agreed to sub‑lease part of the premises to Casair. This was a symbiotic relationship which, at that time, was convenient to both parties.
Apparently, the terms of the first sub‑lease were not reduced to writing and the detailed terms are not in evidence. It is sufficient to say that the agreed rental was probably less than market rental due to the relationship between the parties and the desire on behalf of Hawker Pacific to ensure that it was receiving some income from an otherwise unutilised area of hangar 223.
By 2006 office space located at Perth Airport was in high demand. In the first half of April 2006 officers of the parties discussed the terms of the sub‑lease. Hawker Pacific intended to increase the rental and Casair wished to increase the area of hangar 223 and associated space which was to be the subject of the sub‑lease.
Mr Green was the person who negotiated the terms of the sub‑lease on behalf of Hawker Pacific. Mr Burns, a director and chief pilot of Casair, and Mr Bethell, negotiated the terms on behalf of Casair. Mr Bethell was Casair's business development manager between February 2005 and February 2009. He contracted his services to Casair on an hourly basis. These three persons worked out of offices at the airport.
The three men gave evidence about the 2006 negotiations for the sub‑lease. Their evidence is not consistent. In the course of making findings of fact it is necessary for me to assess the truthfulness and reliability of the evidence of these three witnesses.
In a general sense, each of the men was a credible witness of apparent good character. However, I have been able to make findings of fact by testing the oral evidence of each man against other known facts, by assessing the consistency of each witness' evidence over time, by considering the role each witness played in relevant events and, to a lesser extent, by assessing each witness' response to questioning during their evidence.
In the following account of the facts I set out a summary of each witness' evidence, my findings on disputed facts which are crucial to my decision and the reasons I preferred one witness' version of events to another.
Mr Green said that shortly before 29 April 2006 he had a meeting with Mr Burns and Mr Bethell in his (Mr Green's) office in hangar 224 at the airport. Mr Green does not recall Mr Bethell saying anything in particular during the meeting but he testified that it was clear in his mind that Mr Bethell was there. He said that he could not understand why Mr Bethell would have followed up on that meeting unless he (Mr Bethell) was there. He said that was part of his reason for believing that Mr Bethell was present.
Mr Green said that in the course of that discussion he advised Mr Bethell and Mr Burns that as WAC leased hangar 223 to Hawker Pacific on a month by month basis, the sub‑lease to Casair and the payment of rent would be on a month by month basis. In respect of Casair's request for additional office space, aircraft parking storage space and car‑parking, Mr Green testified he said that options for relocation and/or redevelopment were being discussed between WAC and Hawker Pacific. Any redevelopment of hangar 223 would require Casair to vacate it. He told Mr Burns and Mr Bethel that if a redeveloped hangar had adequate terminal and administration space, Hawker Pacific would consider leasing it to Casair. However, no firm decision had been made as to the redevelopment and/or relocation of the hangar and Hawker Pacific would speak again to Casair after negotiations were completed with WAC regarding the future of hangar 223.
Mr Green denied that he ever said to Mr Burns or Mr Bethell that the sub‑lease between Hawker Pacific and Casair would only come to an end if one of the trigger events occurred.
Mr Green was cross‑examined in a determined fashion to try to get him to admit that he told Mr Burns and Mr Bethell that Casair could stay in the premises for as long as Hawker Pacific had a lease with WAC. Mr Green maintained his position that he had never provided that advice. His evidence was consistently to the effect that he did say that Hawker Pacific could not give Casair a more secure tenancy than Hawker Pacific had from WAC and that Hawker Pacific could only offer Casair a month to month tenancy.
Mr Bethell said that he was the person who, on behalf of Casair, had dealings with Hawker Pacific in May 2006 in relation to the leasing of the premises. His evidence was that he was not at the meeting with Mr Green in April 2006. In support of this evidence he produced a 'record of services delivered' which was, he said, a short record of work which he did for Casair in any given month, and in this case; for April 2006. It does not refer to Mr Green, Hawker Pacific, the lease or the premises. It does record that on 5 April 2006 Mr Bethell had a meeting with 'Stuart', presumably a reference to Mr Burns, concerning a number of matters including 'WAC'. It also refers to six hours work undertaken on 28 April 2006 under a heading of 'Office, Skippers, Portman' with a note that this work related to prospecting and planning.
In cross‑examination, Mr Bethell said that he had not met Mr Green in a meeting prior to May 2006. He said that it was not possible, in his mind, that he had met with Mr Green in April 2006. He said that he was not privy to any discussions about the duration of the sub‑lease leading up to the conclusion of the lease agreement. He said that part of the reason he was present at the meeting in May was because Mr Burns wanted him to negotiate with Mr Green about the amount of rent because he did not know Mr Green.
Mr Burns gave evidence that on 26 April 2006 he telephoned Mr Green and arranged a meeting with him at the Perth airport. He said that at about 3.00 pm that day they met at Casair's office within hangar 223. He said that they then toured the 'available space' within hangar 223 and had a discussion in a meeting room within the hangar. He said that only he and Mr Green were present during the tour and subsequent discussion. Mr Burns said that he recalled saying to Mr Green that Casair would like a sub‑lease agreement of at least five years and that Mr Green told him that as Hawker Pacific's head lease was month to month with WAC, it would not be able to offer such a sub‑lease.
Mr Burns testified that they then discussed the proposed new premises to be built by Hawker Pacific at the Perth airport. He said that Mr Green said to him words to the effect that when the new facility was built, Hawker Pacific would be in a position to offer an extended term sub‑lease to Casair. Mr Burns said he said to Mr Green words to the effect that a month to month tenancy was not a suitable option for Casair as it was expecting to experience continued growth for an extended period. He said that Mr Green agreed with him and said words to the effect 'while Hawker Pacific maintains their head lease with WAC, Casair would continue as a tenant'. He said that Mr Green also said to him that WAC was unlikely to cancel Hawker Pacific's head lease while a new hangar was being negotiated. However, Mr Green also said to him that if the hangar was to be redeveloped, then Casair would not be able to occupy the premises during the redevelopment.
Mr Burns testified that he (Mr Burns) said words to the effect that 'Casair would be comfortable leasing the additional space from Hawker Pacific given that Casair would continue as a tenant unless WAC cancelled the Hawker Pacific head lease, or if the facility was demolished for the purpose of redevelopment'. Mr Burns said that Mr Green then said to him that he would provide Mr Burns with details of the costs associated with the rent of the additional and existing area to be the subject of the new sub‑lease.
Mr Burns testified that he recalled that the meeting concluded at approximately 3.40 pm. The reason he said he recalled this was because of his flight schedule which showed that although he had a flight scheduled at 3.30 pm, the service did not depart until approximately 5.11 pm. He recalled that during the meeting he was advised of the delay.
Mr Burns' evidence in respect of the meeting on 26 April 2006 was in direct contradiction to a written statement which he made on 15 January 2010 for the purpose of his evidence in these proceedings (the first statement). In the first statement, Mr Burns said that he had a meeting in April 2006 with Mr Green and Mr Bethell. Mr Burns summarised the affect of the discussions at the meeting but did not profess to be able to state with any certainty the actual words used by he or Mr Green. In Mr Burns' statement dated 22 November 2010, which he adopted as his evidence‑in‑chief (the second statement), he professed to have a recollection of the words said by he and Mr Green at the meeting.
Mr Burns' evidence was also contrary to an affidavit which he swore on 20 August 2009 in support of an application by Casair for summary judgment. In that affidavit, Mr Burns said that in or around April 2006 he and Mr Bethell met with Mr Green. He said that he recalled that, at that meeting, Mr Bethell and he told Mr Green of the importance of the sub‑lease to Casair's business. He said that he recalled that Mr Green said words to the effect that the lease over the premises would only come to an end if one of the trigger events occurred (affidavit par 9).
Mr Burns gave evidence as to how he came to make the second statement. He said that prior to the first day of trial, Casair's senior counsel asked him to review relevant records because the relevant timeline was not as clear to him as it should have been. Mr Burns said that when he did that he realised that the timeline in his first statement was incorrect. He testified that his evidence had not changed, there was just more detail in the second statement (ts 14/2/11, page 146). This is not true.
It is also notable that Mr Burns' first statement and Mr Bethell's first statement are remarkably similar in some passages. In his first statement Mr Burns said that at the meeting in April 2006 the conversation which took place was to a certain effect. Although he did not depose to the actual words said, he gave quite a lot of detail as to the substance and course of the conversation. Mr Bethell's evidence contained in his first written statement is in identical terms except that he says that the conversation took place on 31 May 2006 rather than at the April 2006 meeting which Mr Bethell denies he was at.
Mr Burns claims never to have seen Mr Bethell's first statement. On the face of it, I would accept this evidence as Mr Burn's first statement is dated as having been signed on 15 January 2010 which is prior to the date on which Mr Bethell's first statement is said to have been signed, being 1 March 2010. However, the identical nature of these portions of the statements causes me to hesitate before accepting that either statement represented (in the case of Mr Burns) or represents (in the case of Mr Bethell) a true record of what either witness recalled having been said at the relevant times. It seems to me to be just as likely that this portion of one statement has been copied from the other or that both statements represent a summary of events and conversations in another person's words.
Similar problems exist with respect to Mr Burns' affidavit which includes an account of the conversation in April 2006 with Mr Green and Mr Bethell, which is identical to that in Mr Burns' first statement.
As I have stated above, Mr Burns, ultimately, did not testify in the terms of the first statement. However, I regard the inconsistency between the first statement and affidavit on the one hand and the second statement on the other, to be a matter of importance. I am not satisfied that Mr Burns has a reliable recollection of the events the subject of the inconsistency; that is the April 2006 meeting.
Another matter which also causes me to come to this conclusion is that Mr Burns now professes to have a clearer recollection of what was said in the April 2006 meeting compared to his recollection when he made his affidavit and the first statement. His affidavit and first statement were made at a time which was closer to the time the meeting took place. I do not accept that his recollection could have improved to the extent that he is now able to give considerably more detail about the meeting and what was said at it than he could when he made the first statement and the affidavit.
In contrast, Mr Green gave a consistent and credible account of the April 2006 meeting. His account is also consistent with his letter which followed it. I am satisfied that his account is likely to be accurate.
On 29 April 2006 Mr Green wrote to Mr Burns in regard to the 'rental offer'. The letter stated:
Further to our discussion we offer the following schedule of charges & conditions. Due to our current position with WAC we are currently only able to offer this proposal on a month by month arrangement. As we complete our negotiations with WAC we will advise on our intentions and may be able to offer a longer term tenancy arrangement.
You may be aware that the current arrangements have been in place since September of 2004 and we seemed to have missed passing on the 2005 price increases.
It is necessary to increase your monthly rental Charges effective May 2006 as follows.
Thereafter, Mr Green set out various charges under the headings of Aircraft parking, Office Space and Facility Charges, Special Conditions and Departure Facilities. He also set out other conditions under headings of Car Parking, Insurances, Airside Drivers Licence, Airport Security Identification Cards, Access to facility and tarmac and Indemnity.
The letter of 29 April 2006 is consistent with Mr Green's evidence about what was said at the April 2006 meeting. This consistency confirms my view that Mr Green's account of the meeting is to be preferred.
Mr Green gave evidence that after he sent that letter he had a meeting in late April or May 2006 with Mr Bethell. He said he did not recall whether Mr Burns was present at the meeting. He said that during the course of the meeting it was agreed that the future rental for the premises would be based on a fixed monthly rental of $4,000, rather than a monthly fee based on a breakdown of fixed and variable charges for the items listed in his (Mr Green's) letter of 29 April 2006. He said that he recalled that this arrangement was preferable to both parties as it was easier to administer.
In cross‑examination, Mr Green appeared to accept that Mr Burns was not present at the May meeting and that the May meeting took place on 19 May 2006. Mr Green said that the purpose of that meeting and the only matter that was discussed in that meeting was the rent for the premises and how that rent was to be determined.
Mr Bethell gave evidence that, following Casair's receipt of the letter of 29 April 2006, Mr Burns requested him to assist in negotiating the new sub‑lease terms. During discussions with Mr Burns, Mr Burns told Mr Bethell that his preference was for Casair to pay a fixed fee per month of $4,000 (exclusive of GST) for all services and facilities offered by Hawker Pacific, with power usage being additional and charged at actual usage. Mr Bethell said that it was a negotiating strategy for he (Mr Bethell) to meet with Mr Green, without Mr Burns.
Mr Bethell said that the meeting on 19 May 2006 was both friendly and successful, as far as he was concerned, in that Casair's counter‑offer was accepted by Mr Green, on behalf of Hawker Pacific.
There is no significant disagreement between Mr Green and Mr Bethell as to the effect of the 19 May 2006 meeting.
On 22 May 2006 Mr Bethell sent a letter to Mr Green outlining what Mr Bethell said had been agreed. The letter stated:
With reference to your letter dated April 29, 2006 and following our meeting on 19th May 2006, it was agreed to a fixed monthly fee of $4,000 per month all inclusive for Complete Aviation Services office space, aircraft parking and terminal movements. As discussed, the office space will consist of the existing office, the 'training room' with kitchen and the storage area adjacent to the training room.
Rental is month to month but we would very much appreciate as much advance notice as possible as your plans for the hangars (sic) progress in coming months.
We suggest that this new financial arrangement starts from June 1st 2006.
Mr Burns testified that he saw Mr Bethell's letter of 22 May 2006 in draft form and he made some changes to it prior to it being sent to Mr Green. He acknowledged that he had the opportunity to amend the letter and to add a reference to the trigger events which Casair now says are the only two circumstances in which the sub‑lease could be terminated. He says that he did not refer to them because he had a lot of respect for Mr Green and he considered that they had made an agreement to that effect (ts 14/2/11, page 170).
The parties do not dispute that the terms of the letter of 22 May 2006 were accepted by both parties.
The final relevant meeting which took place between Mr Green, Mr Burns and Mr Bethell became known during the course of the trial as the cheesecake meeting. It apparently occurred shortly before Casair took over the increased space in hangar 223. Mr Bethell said that it took place on 29 May 2006 and this is not disputed by Hawker Pacific. Mr Green did not refer to the cheesecake meeting in his witness statement which formed the basis of his evidence‑in‑chief. I am satisfied that this was not because Mr Green wished to keep any relevant meeting from the court but rather because he did not regard it as a meeting at which any thing of importance was decided or said.
In cross‑examination, it was put to Mr Green that at this meeting he told Mr Burns and Mr Bethell that as far as Hawker Pacific was concerned it was the position that it could not offer Casair anything more than its leasing arrangement with WAC, which at the time was monthly. It was further put to him that he told Mr Burns and Mr Bethell that as long as WAC did not terminate Hawker Pacific's lease, Casair could stay in the premises. Mr Green testified that he was never able to offer Casair anything more than a month by month lease and he did not recollect specifically making the latter statement. He said that there were more than those two reasons why Casair may have to vacate the premises. He said that it was never said that as long as Hawker Pacific had the premises, Casair could stay in them.
Mr Green also testified that although he ran Hawker Pacific's day‑to‑day operations in Perth, he did not have the authority within Hawker Pacific to agree to an open ended tenancy. He said that he would have had to seek approval from senior management for such an arrangement. Although at times in cross‑examination Mr Green said that he could not recall whether certain things were said to Mr Burns at the cheesecake meeting, the effect of his evidence and his express evidence in re‑examination was that he did not use any words to the effect that Casair could stay on in the premises as long as WAC gave Hawker Pacific a lease over them.
Mr Bethell gave evidence that on 31 May 2006 he and Mr Burns met with Mr Green so that Mr Burns could thank Mr Green for concluding the agreement on the additional hangar space and the new rental agreement. Mr Bethell purchased a cheesecake to take along with him. He said that at the meeting Mr Burns and he discussed a number of matters with Mr Green. Most relevantly he said that he recalls that Mr Green said to he and Mr Burns words to the effect that the sub‑lease over the premises would only come to an end if one of trigger events occurred.
In cross‑examination Mr Bethell acknowledged that the meeting was in order to say thank you to Mr Green for the sub‑lease, which had been negotiated. It was not a meeting for the purpose of negotiating that agreement (for example, ts 15/10/10, pages 102, 109).
Mr Bethell also said that during the cheesecake meeting Mr Green said that he did not want to give Casair the expectation that Hawker Pacific could deliver more than it could. Mr Green said that some things were out of his control and that if Hawker Pacific decided to redevelop hangar 223, Casair would have to vacate. Mr Bethell said that this was said in the context of Mr Green indicating that he would do everything to accommodate Casair (ts 15/10/10, page 110). Mr Green's comments about when the sub‑lease would come to an end were said in context of him wishing to dampen down Mr Burns and Mr Bethell's celebratory mood as a result of the conclusion of the negotiations for the sub‑lease. That is, Mr Green was saying that Casair may still have to vacate the premises in some circumstances (ts 15/10/10, page 112).
Mr Bethell was cross‑examined as to why relevant portions of his witness statement concerning the cheesecake meeting were identical to Mr Burns' account in his first statement of the April 2006 meeting. Mr Bethell said that his statement was prepared for him but he was in full agreement with it. He said his position was that he heard those things said at the cheesecake meeting on 31 May 2006, and not at a meeting in April 2006 (ts 15/10/10, page 114).
Mr Burns gave evidence that during the cheesecake meeting, Mr Green said words to the effect that Casair's tenancy would continue unless WAC cancelled the Hawker Pacific head lease or the hangar was redeveloped.
As with Mr Green, Mr Burns did not refer to the cheesecake meeting in his first witness statement. In his evidence, Mr Burns acknowledged that the cheesecake meeting was a thank you event after the terms of the sub‑lease had already been agreed.
I conclude that I am not prepared to rely on Mr Burns' account of what was said at the cheesecake meeting because of the inconsistency between his evidence and the first written statement and his affidavit. Neither am I prepared to rely on the evidence of Mr Bethell as to what was said at the cheesecake meeting because his evidence in chief of what was said at that meeting is identical to Mr Burns' first statement regarding what was said by Mr Green at the April 2006 meeting. I am not satisfied that it is a true and accurate recollection of what was said at the cheesecake meeting.
I think that it is possible that Mr Green, in the course of both the April 2006 and the cheesecake meetings, told Mr Bethell and Mr Burns that Casair would have to vacate the premises if WAC decided to redevelop the hangar or terminated Hawker Pacific's lease on it. I reject the notion that this meant that it was a term of the sub‑lease that these were the only circumstances in which the sub‑lease could be terminated. If, as Mr Bethell says, at the cheesecake meeting Mr Green was keen to dampen down Mr Burns' and Mr Bethell's enthusiasm over the conclusion of the negotiations, it would be logical that he would say to them, in effect, that the conclusion of the negotiations did not mean that Casair would necessarily have prolonged possession of the premises. In those circumstances, he may have given the trigger events as examples of reasons why Casair would have to vacate the premises. It does not mean that he said that these were the only circumstances in which Casair would have to vacate the premises.
In cross‑examination Mr Burns was shown a letter which he wrote to Mr Felton, the then manager of Hawker Pacific in Perth, on 29 February 2008. In part, the letter says that:
As part of the long term relationship ahead; [Casair] is extremely interested in committing to a long term agreement with Hawker Pacific for the provision of maintenance services and to share administration and terminal facilities.
Mr Burns was asked by Hawker Pacific's counsel why he had referred to committing to a long term agreement if he believed that a long term sub‑lease already existed. Mr Burns was uncomfortable in answering direct questions of that nature. It seems to me that Mr Burns was aware that his phraseology in the letter was inconsistent with Casair's case that it had a long term commitment from Hawker Pacific and he could not explain the inconsistency.
The relationship between the parties continued without difficulty for some time and Hawker Pacific continued to discuss issues relating to the premises with WAC. These discussions came to an end in early 2009 when WAC advised Hawker Pacific that WAC was no longer prepared to participate in the building of a new hangar. Throughout 2008 Casair advised Hawker Pacific that it was keen to expand its administration and terminal facilities within any area that Hawker Pacific leased at the airport.
In late 2008 and early 2009 a conflict arose between the parties over the provision of the aircraft maintenance services by Hawker Pacific to Casair and Casair's payment of invoices presented by Hawker Pacific for that work. This conflict led to the relationship between the parties breaking down.
On 10 February 2009 Hawker Pacific sent a letter to Mr Burns referring to the non payment of the invoices. The letter also advised that Hawker Pacific was terminating the sub‑lease of the premises to Casair and that Casair had to vacate the premises no later than 9 March 2009.
Casair's solicitors responded that the letter was not a valid notice of termination. Ultimately, Hawker Pacific sent a further letter to Casair on 23 March 2009 giving Casair notice to quit the premises with effect from midnight 30 April 2009.
Casair did not quit the premises and Hawker Pacific commenced these proceedings.
Legal principles
Before stating the relevant legal principles, I note that certain matters are not in dispute between the parties. For example, Casair do not deny that as at the date they received Hawker Pacific's purported notice to quit the premises, there was a sub‑lease for the premises between it and Hawker Pacific. No issues are raised by either party about the sub‑lease not being wholly in writing, not being in the form of a deed and not being registered. Neither does Hawker Pacific assert that the term of the sub‑lease propounded by Casair was not binding on it because of a lack of writing or a lack of certainty in the length of the 'certain term' asserted by Casair or alternatively, because the Property Law Act 1969 (WA) s 72(1) specifies that it only had to give one month's notice of termination. Consequently, I will not deal with these issues and the law relating to them, even though, if they had been raised, they may have been significant hurdles for Casair to overcome.
One of the principal categories of leasehold interests are periodic leases for a certain recurring period: Bradbrook AJ, Croft CE and Hay RS: Commercial Tenancy Law (3rd ed) (2009) 2.1 and 2.13. Hawker Pacific asserts that this was a periodic lease. A lease which continues from period to period, without break or renewal, and continues until it is determined at the end of any period by either party to the lease is a periodic lease: Amad v Grant [1947] HCA 9; (1947) 74 CLR 327. In Amad, Latham CJ said:
The tenant did not hold over, but continued to hold on the terms of the agreement. There was no payment of rent as an annual rent. There was a payment only of a monthly rent. The agreement created a periodic tenancy, namely a monthly tenancy expressly made determinable by a month's notice in writing. It is settled that in the case of such a tenancy there is not a new tenancy with the beginning of each month but a letting for a period determinable by notice to quit (336).
According to Rich J in Amad, tenancies are of two kinds; tenancies at will and tenancies for terms. A periodic tenancy is a form of tenancy for a term. That is, a tenancy for a specified term, but with provision for the continuation of the tenancy for successive periods until it is terminated in accordance with some provision agreed upon by the parties: Amad (340 ‑ 341).
In respect of such a periodic tenancy, when a new period begins, the tenant is entitled to continue to hold as a tenant for the complete period which has begun. That would mean, on Hawker Pacific's case, that when each new calendar month began, Casair was entitled to hold as a tenant for the complete month. A whole month's notice had to be given, expiring at the end of a periodic month from the commencement of a tenancy: Amad (338).
Casair do not dispute that Hawker Pacific only had to give one month's notice of termination. However, it says that this one month period did not equate to the duration of the lease. The duration of the sub‑lease was until one of the trigger events occurred.
The existence and duration of a tenancy is a question of fact. Exclusive possession of a property and payment of rent calculated by reference to a year, a month or a week are not matters legally conclusive of a yearly, monthly or weekly tenancy. However, they are facts which amount to evidence of such a tenancy and, 'which according to circumstances may afford such evidence that any other conclusion would be unreasonable': Turner v York Motors Pty Ltd [1951] HCA 52; (1951) 85 CLR 55, 66. On the other hand, if the express terms of a lease fix a different certain term or periodic term, such periodic payments would not be persuasive evidence of the duration of the lease.
In determining the terms of the sub‑lease, it is necessary for me to construe the 22 May 2006 letter, which is said to form the written part of it. The principles applicable to the construction of a written contract are well‑known and were set out in the judgment of Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99:
It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop (1888) 39 Ch D 387, at p 393, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case (1880) 16 Ch D 681, at p 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503, at p 514, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, at p 437). (109 ‑ 110)
In referring to the endeavour to discover the intention of the parties, the endeavour is not to determine what the parties themselves believed to be the meaning of the contract, but rather what a reasonable person would have understood the parties to mean. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, the High Court said:
This Court, in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas at [22]. [40]
Hawker Pacific also relies on what was said at the May 2006 meeting between Mr Green and Mr Bethell as forming part of the oral terms of the sub‑lease. Casair relies on what was said and agreed between Mr Green and Mr Burns at the April 2006 meeting as forming part of the oral terms of the lease. I am entitled to take into account all of the surrounding circumstances up to the 22 May 2006 letter and its acceptance by Hawker Pacific to determine the oral terms of the sub‑lease and to construe its written terms.
Additionally, Casair have asked me to take into account what was said at the cheesecake meeting. There is no dispute between the parties that what was said at the cheesecake meeting was post‑contractual conduct. That is, by the time the cheesecake meeting occurred, the terms of the sub‑lease had been negotiated and agreed between the parties. Thus, there is an issue to the extent, if at all, post‑contractual conduct can be taken into account in determining the terms of a lease.
Casair submits that where a contract is partly oral and partly written (as in this case) a court is not prevented from looking at post‑contractual conduct to assist in the construction of the contract. In this respect, Casair relies on the dicta of Owen J in TheBell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 where his Honour said:
It is important to draw a distinction between two exercises: on the one hand, deciding whether a contract exists at all (and if it does, what are its terms) and on the other hand, construing or interpreting the terms of a contract known or admitted to be in existence.
The question is relatively easy to answer in relation to the construction or interpretation of the terms of a contract. Certainly in the case of a written contract there are severe limits on the admissibility of evidence that is not contained within the four corners of the contractual instrument. This is an application of the Codelfa doctrine: parol evidence of what parties did, or how they have interpreted or applied their contract is inadmissible to subtract from, add to, vary or contradict the language of the written instrument.
While it is not easy to reconcile all of the relevant authorities, I think the better view is that post-contractual conduct is not admissible as an aid to the construction of the terms of a contract: FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, 350; Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217, (1999) 21 WAR 350, [50].
But what of the other exercise to which I have referred, namely, the task of deciding whether or not a contract with a particular term or terms came into existence at all? There is authority supporting the view that post‑contractual conduct can be taken into account in such an exercise. In Mears v Safecar Security Ltd [1983] QB 54, 77, Stephenson LJ said:
'I have already expressed my view that this agreement was oral, but even if it was partly in writing, we are concerned with the search for a term that was not written down, and there is nothing in those authorities which prevents the courts from looking at the way the parties acted for the purpose of ascertaining what that term was. Common sense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean.'
A similar question was dealt with by Young J in Peddie v Stein (unreported, SCNSW, BC8701481, 26 March 1987). Having said that evidence of subsequent acts or conversations is not admissible for the purpose of construing a contract, his Honour expressed the view that subsequent communications between the parties may legitimately be referred to and be taken into consideration to determine whether a contract has been made. Young J continued, at 20:
'However not only is it legitimate to look at subsequent conduct for the purpose of determining whether a contract is made, it is also legitimate to refer to such evidence to work out what were the terms of the contract which was partly oral and partly written.'
His Honour cited the dicta of Stephenson LJ in Mears in support of that proposition. He also referred to Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 where McLelland J collected the authorities on this question. In Film Bars, a case concerning an informal contract, McClelland J said, at 9255:
'Where a question arises whether communications between the parties have given rise to a binding contract at a particular time, subsequent communications may be legitimately referred to and taken into consideration … However … the probative value of such communications must be found in the light they throw on the proper interpretation of the earlier communications alleged to constitute the contract.'
I have found one authority that appears to take the opposite view. In Mildura Office Equipment & Supplies Pty Ltd v Canon Finance Australia Ltd [2006] VSC 42; (2006) Aust Contract R 90 ‑ 238, [185], Dodds‑Streeton J said: 'Post‑contractual conduct and communications are not admissible in order to establish the existence of a contract'. Her Honour did not cite or discuss authority for that proposition. Earlier in the reasons there was discussion of (and adoption of) the principles discussed in FAI Traders Insurance, which relate to construction of contractual terms rather than whether or not a contract has been formed. It was not a necessary part of the reasoning process because her Honour went on to say that in any event the evidence of post‑contractual conduct lacked the precision, level of detail and certainty requisite for a contract. And later in the reasons, (at [191] in the course of discussing Vroon BV), her Honour said that 'the evidence of the parties [post‑contractual] conduct and communications … does not establish that they were acting on the basis that a contract existed'.
I think I should adopt the approach taken in Mears, Peddie and Film Bars. It seems to me, therefore, that the law does permit access to extrinsic evidence of the conduct of the parties for the limited purpose of ascertaining whether a contract, with the terms contended for, existed [2665] ‑ [2672].
I note that Owen J, in his survey of relevant cases, did not refer to Heydon JA's (as he then was) dicta in Brambles Holdings Ltd v Bathurst City Council [2001] 53 NSWLR 153 where his Honour said:
The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668, 669 and 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR [97011] at 9149 and 9154‑9156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR [97023] at 9255.
The third relevant principle is that post‑contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed. As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326 ‑ 330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that the later decisions of the Victorian Full Court and Court of Appeal against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, are clearly wrong or they are overruled, they should be followed in New South Wales. No attempt was made to demonstrate that they are clearly wrong [25] ‑ [26].
In my view, it is artificial to distinguish between the inadmissibility of post‑contractual conduct to construe the terms of a contract and the admissibility of post‑contractual conduct to determine whether a contract, which contained a particular term existed. However, applying this distinction to the facts of this case, I can consider the post‑contractual conduct in deciding whether a sub‑lease containing a provision relating to its duration existed at the date Hawker Pacific purported to terminate it. But the post‑contractual conduct is inadmissible for the purpose of construing the written terms of the sub‑lease.
If I come to look at the post‑contractual conduct, I need to consider not only what was said at the cheesecake meeting, but also the conduct of the parties after the cheesecake meeting, including Mr Burns' letter of 29 February 2008 and what the parties said and did at the time that Hawker Pacific purported to terminate the sub‑lease.
Resolutions of the central issue
My analysis of the evidence leads me to conclude that the sub‑lease was a month by month periodic tenancy terminable by either party upon one month's notice to the other party. Casair had no security of tenure other than the right to receive one month's notice to quit the premises from the start of a new month. The notice to quit dated 23 March 2009 was for more than one month. It was a valid notice of termination of the sub‑lease.
Principally, I have come to this view based on the contents of the 22 May 2006 letter. The reference in the first paragraph of the letter to 'fixed monthly fee' refers only to the intervals between rent payments. However, the sentence 'rental is month to month but we would very much appreciate as much advance notice as possible as your plans for the hangars progress in coming months', can only be a reference to the duration of the lease itself. This is evident from the request at the end of the sentence. That is, the sentence only makes sense if it states, in effect, that the sub‑lease is for recurring periods of a month only but Casair requests that it be given, as opposed to Hawker Pacific having an obligation to give, more than the minimum one month's notice of Hawker Pacific's plans for hangar 223. This is the meaning that a reasonable person would understand from the language used in the letter.
The sentence does not make sense if the opening phrase of it is construed, as Casair would construe it, as referring only to the intervals between rent payments. If this meaning was preferred there would not be a logical connection between the opening phrase and the remaining portion of the sentence. A reasonable person would not have this understanding of the sentence or the letter.
In arriving at this conclusion I have also taken into account the following matters:
(1)the letter had already referred to the monthly intervals between rent payments and the amount of those payments. It was otiose for there to be a further reference to that issue;
(2)I prefer Mr Green's evidence of what was said at the April 2006 meeting to that of Mr Burns. My preferred construction of the 22 May 2006 letter is consistent with what Mr Green says was said at the April 2006 meeting;
(3)I accept that Mr Green believed that there may be reasons other than the trigger events for the termination of the lease. It is not logical that he would agree, on behalf of Hawker Pacific, to those trigger events being the only bases for Casair to have to vacate the premises;
(4)I accept that Mr Green did not believe he had authority to promise Casair that it could stay, in effect, indefinitely in the premises. Thus, it would be highly unlikely that he would negotiate such a term;
(5)the terms of the 29 April 2006 letter, comprising Hawker Pacific's initial offer, specifically states that Hawker Pacific was only able to offer 'a month by month' arrangement. Effectively, it said that a longer term tenancy would only be able to be offered once negotiations with WAC had been completed. The 22 May 2006 letter made it clear that Casair was aware that those negotiations had not been concluded. The only matter relating to the sub‑lease which was the subject of negotiations after April 2006 was the amount of the rent. The duration of the sub‑lease, being month to month, did not change between April and the conclusion of negotiations over the sub‑lease;
(6)Mr Burns had the opportunity to negotiate a different term regarding the duration of the sub‑lease after the letter of 29 April 2006 or to take issue with the wording of that letter but he did not do so; and
(7)Mr Burns had the opportunity to alter the terms of Mr Bethell's draft of the 22 May 2006 letter to include a different term about the duration of the sub‑lease or to include a reference to the trigger events but he did not do so.
It can be seen from the above that I am of the view that the 22 May 2006 letter contained a term that the sub‑lease was a month by month periodic tenancy. Consequently, on the principles that I have outlined earlier it is not open to me to admit post‑contractual conduct to construe that written term of the sub‑lease. However, in case I am wrong about that proposition, I have considered whether I would determine the issue between the parties any differently if I took into account the post‑contractual conduct of the parties. I would not do so as I accept Mr Green's account of the cheesecake meeting.
Further, Mr Burns' letter of 29 February 2008 to Mr Felton, the then manager of Hawker Pacific in Perth, is consistent with a finding that the sub‑lease was not for a long term, subject only to two possible triggers for termination.
Hawker Pacific's purported notice to quit dated 10 February 2009 and the subsequent notice to quit dated 23 March 2009 are consistent with its case that the sub‑lease was a month by month periodic tenancy. The issue between the parties about the validity of the 10 February 2009 notice to quit was that, although it gave a month to Casair to quit the premises, that month did not commence on the first day of the next month, which the parties now agree was the date on which any periodic tenancy commenced.
There was an attempt by Hawker Pacific during the trial to assert that the initial letters from Casair's solicitors in response to the notices to quit did not raise the issue that is now the nub of the defence; that is, that the sub‑lease was for a certain term, and only terminable if either of the trigger events occurred. I do not find this issue against Casair. But neither do I make a positive finding in Casair's favour that its instructions to its solicitors have always been consistent with its case at trial.
Casair's solicitor's notes of instructions which were tendered in evidence indicate that instructions in the terms of the defence were not received until early March 2009, despite Casair first instructing its solicitors in regard to the matter on or about 11 February 2009. However, I concede that when the solicitors were first instructed it was on an urgent basis following on from Casair's receipt of the notice to quit dated 10 February 2009. It is not possible for me to conclude that the solicitor noted every relevant matter that was mentioned to him or that the circumstances permitted Casair's officers to give detailed instructions to the solicitor at that time about the terms of the sub‑lease.
Putting that issue to one side but taking into account my findings in regard to the other post‑contractual conduct of the parties, I am of the view that the sub‑lease was a month by month periodic tenancy terminable by either party upon one month's notice to the other party. Hawker Pacific is entitled to judgment for possession of the premises and an order that Casair deliver up vacant possession of them to it.
Damages
By a written application dated 22 February 2011, which was foreshadowed during the course of the trial, Hawker Pacific seeks leave to discontinue its claim for damages for holding over. It has further sought an order that it pay any costs incurred by Casair in relation to the damages for holding over claim on a party and party basis. It submits that it should be at liberty to bring a future claim for damages for holding over against Casair.
In support of that application, Hawker Pacific have filed an affidavit of Paul Justin Cooper, its solicitor. The affidavit exhibits letters which disclose that in early March 2009 Hawker Pacific advised Casair that it would be holding it (Casair) liable for any damages Hawker Pacific may suffer as a result of Casair's unlawful holding over of the premises. Without prejudice to either party's position, Hawker Pacific proposed that from 10 March 2009 it would render invoices to Casair in respect of the holding over costs associated with Casair's occupation of the premises. The holding over costs would be equivalent to the sub‑lease rent which Casair was paying in respect of the premises prior to 10 March 2009. It proposed that the costs would be paid and received on the basis that Casair regarded the payments as rent for the premises and Hawker Pacific regarded the payments as compensation for Casair holding over. This offer was, in effect, accepted by Casair.
Casair opposes Hawker Pacific's application for leave to discontinue the claim for damages for holding over and says that the claim for damages ought to be dismissed or assessed at nil. In support of its opposition it has filed an affidavit by Daniel Steven Romano, its solicitor. The affidavit says that on 22 February 2011 he caused a letter to be sent to Hawker Pacific's solicitor requesting further details of the extent of the damages which Hawker Pacific believed it had suffered. The letter said that Casair had not been provided with any particulars of the extent of the damages and regarded that it had not had an opportunity to forensically assess the extent of any alleged damages suffered by Hawker Pacific.
After an exchange of correspondence, Hawker Pacific's solicitors advised that Hawker Pacific regarded the rent of $4,000 plus GST per month as reducing the amount of damages but not satisfying its claim for damages.
Hawker Pacific seeks leave to withdraw its damages claim pursuant to O 23 r 2(3) of the Rules of the Supreme Court 1971 (WA) (RSC) which states:
Save as in this Rule otherwise provided, it shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court, but the Court may before, or at, or after the hearing or trial, upon such terms as to costs, and as to any other action, and otherwise, as may be just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out.
Hawker Pacific submits that the court should be disposed to give leave to discontinue because it is not desirable that any plaintiff should be compelled to litigate against its will. It says that the court should grant leave, if it can, without injustice to the defendant, being careful to see that the defendant is not deprived of some advantage which it has already gained in the litigation, and it should be ready to grant the defendant adequate protection to ensure that any advantage it has gained is preserved: Heartlink Ltd v Jones (2007) 35 WAR 190, 198.
In Heartlink, Martin CJ reviewed the relevant principles applicable to the exercise of the court's discretion in RSC O 23 r 2(3). His Honour noted that the court has power to impose conditions, or to require an undertaking as a term of the grant of leave to discontinue. The conditions upon which leave can be granted might include an undertaking not to commence subsequent proceedings [45]. When discussing the proper construction of RSC O 23, Martin CJ quoted Chitty LJ in Fox v Star Newspaper Co Ltd [1898] 1 QB 636, referring to the equivalent provision in the English rules as follows:
It seems to me that Order XXVI, is intended to form a complete code applicable to the whole subject of discontinuing an action … The principle of the rule is plain. It is that after the proceedings have reached a certain stage the plaintiff, who has brought his adversary into court, shall not be able to escape by a side door and avoid the contest … The substance of the provision is that, after a stage of the action has been reached at which the adversaries are meeting face to face, it shall only be in the discretion of the judge whether the plaintiff shall be allowed to withdraw from the action so as to retain the right of bringing another action for the same subject-matter (639).
There is an obvious injustice to Casair if Hawker Pacific is given leave to discontinue its claim for damages for holding over without any condition being placed on its right to bring a subsequent claim. That is, after Hawker Pacific has brought Casair to trial on both liability and damages, Casair has a legitimate expectation that both issues will be tried at the one time and there will be finality at first instance as a consequence of the one trial. I note in this regard that Hawker Pacific has not explained why it did not provide particulars or evidence as to its damages claim or seek a separate trial of its damages claim so as to avoid the injustice to Casair in withdrawing the damages claim from the trial at the very last opportunity, in an effort to retain its right to bring another action for damages in the future.
Hawker Pacific's position is that a costs order would negate any injustice or prejudice to Casair if leave was granted. Whereas, if its claim is successful but it is not granted leave to discontinue the damages claim, it says it will be shut out from seeking damages for which it is entitled at law.
Casair submits that leave to discontinue the damages claim should be refused and Hawker Pacific's claim for damages ought to be dismissed with an order that Hawker Pacific pay any costs incurred by Casair in relation to Hawker Pacific's holding over claim. Alternatively, Casair submits that leave to discontinue the claim for damages should only be given on condition that Hawker Pacific proffers an undertaking that it will not commence subsequent proceedings on the question of damages for Casair's holding over of the premises.
Casair concedes that a court will normally allow a plaintiff to discontinue provided no injustice will be caused to the defendant. However, it submits that it will rarely be appropriate to grant leave to discontinue where the proceedings have proceeded to a contested hearing: Stahlschmidt v Walford (1879) 4 QBD 217.
Casair also relies on the Supreme Court Act 1935 (WA) s 24(7) which states:
The Court, in the exercise of the jurisdiction vested in it by this Act, in every cause or matter pending before it, shall have power to grant, and shall grant, either absolutely or on such reasonable terms and conditions as shall seem just, all such remedies whatsoever as any of the parties thereto may appear to be entitled to in respect of any and every legal or equitable claim properly brought forward by them in such cause or matter; so that, as far as possible, all matters so in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided. (emphasis added)
It is also relevant to consider the dicta in Aon Risk Services Australia Ltd v Australian National University[2009] HCA 27; (2009) 239 CLR 175 where the plurality of the High Court said:
Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a 'just resolution' is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.
In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. … In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh.
The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. …
In Ketteman Lord Griffiths recognised, as did the plurality in JL Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.
The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.
…
The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case [98] ‑ [103].
The reference to r 21 may be taken for the purposes of Western Australia as a reference to RSC 01 r 4A and r 4B which state:
4A.Elimination of delays
The practice, procedure and interlocutory processes of the Court shall have as their goal the elimination of any lapse of time from the date of initiation of proceedings to their final determination beyond that reasonably required for interlocutory activities essential to the fair and just determination of the issues bona fide in contention between the parties and the preparation of the case for trial.
4B.System of case flow management
(1)Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of -
(a)promoting the just determination of litigation; and
(b)disposing efficiently of the business of the Court; and
(c)maximising the efficient use of available judicial and administrative resources; and
(d)facilitating the timely disposal of business; and
(e)ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and
(f)that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.
(2)These Rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in paragraph (1).
Whilst Aon concerned an application to amend pleadings so as to raise a new issue relatively close to the trial, I am of the view that the principles stated above are also applicable to an application of this kind. Putting the principles into this context, the interests of justice is to be understood in light of the purposes and objectives stated in RSC O 4 r 4A and r 4B. Minimum delay and expense are as essential to a just resolution of this action as are the matters raised by Hawker Pacific. Hawker Pacific has had ample opportunity to prosecute its damages claim in this action and to call evidence relating to it. Despite pleading the damages claimed, Hawker Pacific has not pursued the claim and has not provided the court with a reasonable explanation as to why it has not done so. Further, Hawker Pacific has not produced any evidence in support of its application to discontinue its damages claim, beyond the evidence which is in existence as to the rent payable and paid by Casair, that justifies me in finding that the quantum of its damages is such that justice demands that it be given an opportunity to prove those damages at trial.
Leave to discontinue, together with a costs order, will not compensate Casair for the delay in finalising the issues between it and Hawker Pacific and the inconvenience of having to face another trial relating to damages.
Further, there are considerations relating to the use of the court's resources to manage and hear another claim based on the same issues that were raised in this action. There is prejudice not only to the public purse but to the cases of other litigants.
For the above reasons I am not minded to grant the application.
It follows that I should assess Hawker Pacific's claim for damages based on the evidence presented at trial.
Where a lessee remains in possession of premises, without the lessor's consent, after the valid termination of the lease, the defendant is a trespasser. Where a defendant has by trespass made use of the plaintiff's land the plaintiff is entitled to receive by way of damages such sum as should reasonably be paid for the use. These damages are called mesne profits. Whether the liability is described as damages or mesne profits, it arises as a consequence of a defendant remaining in possession beyond the period of the lease.
The practice in connection with claims for mesne profits is to allow them at the same rate as the rent that was being paid under the lease. In Rock Bottom Fashion Market Pty Ltd (in liq) v HR & CE Griffiths Pty Ltd [1998] QCA 33 Dowsett J referred to Atkin's Court Forms (2nd ed) vol 24 [22]; and Halsbury's Laws of England (4th ed) vol 27 [255] as authorities for the proposition that mesne profits are assessed on the basis of the value of the premises at the time and if they are claimed on the basis of the rent payable under the lease no proof of value need be given . That is, even if a plaintiff landlord can prove no actual damage caused to him by the defendant's trespass, the landlord may recover as mesne profits the amount of the open market value of the premises for the period of the defendant's wrongful occupation. It is said that in most cases the rent paid under any expired tenancy will be strong evidence as to open market values.
It is common between the parties (both in the pleadings and the evidence) that at the time of the termination of the sub‑lease Casair was paying rent of $4,000 plus GST per month. There is no evidence to rebut the inference that this amount was the amount of the open market value of the premises for the period of Casair's wrongful occupation.
I note that according to the agreement between the parties, Hawker Pacific have accepted payments from Casair of this amount as compensation for Casair's holding over of the premises. On the other hand, Casair has paid that sum as rent. My finding in respect to the termination of the sub‑lease means that they can not be considered as rent paid under the sub‑lease but they could be regarded as rent paid under a tenancy at will created by Casair holding over with Hawker Pacific's consent. However, my assessment on Hawker Pacific's claim for damages is reserved until I hear the parties as to whether and how those payments should be accounted for in any assessment of damages.
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