Heritage Properties (No 3) Pty Ltd & Ciel Holdings Pty Ltd v Coles Supermarkets Australia Pty Ltd

[1993] QCA 192

IN THE COURT OF APPEAL

[1993] QCA 192

SUPREME COURT OF QUEENSLAND

Appeal No. 91 of 1993 Appeal No. 92 of 1993

Brisbane
[Heritage Properties v. Coles]

BETWEEN

HERITAGE PROPERTIES (NO 3) PTY LTD

- and -

CIEL HOLDINGS PTY LTD

Appellants/

Applicants

- and -

COLES SUPERMARKETS AUSTRALIA PTY LTD

Respondent/

Respondent

The President
Mr Justice Pincus

Mr Justice McPherson

Judgment delivered 24 May 1993
Reasons delivered 1 June 1993

Joint reasons of the President and Pincus J.A., separate reasons of McPherson J.A. All concurring as to the order made.

APPEALS ALLOWED, ORDERS MADE BELOW SET ASIDE, THE CAVEAT
LODGED BY THE RESPONDENT AT 11.49 A.M. ON 29 APRIL 1993 UNDER
DEALING NO. L468517G REMOVED. THE COURT TO ENTERTAIN WRITTEN

SUBMISSIONS AS TO COSTS WITHIN 7 DAYS.

CATCHWORDS:	LEASE - AGREEMENT FOR LEASE - whether final agreement reached - whether land to be leased identified - whether sufficient note or memorandum for purposes of s. 59 Property Law Act - whether term unenforceable under s. 44A Land Tax Act - whether decree of specific performance could be granted. CAVEAT - whether serious question to be tried - whether arguable case that there was a concluded agreement for lease between proprietors and Coles.
INJUNCTION - whether injunction should be granted in purported lessee's favour.
Counsel:	Mr D. Jackson Q.C., with him Mr J. Bell for the Appellants Mr P. McMurdo Q.C. for the Respondent
Solicitors:	Hopgood and Ganim for the Appellants Minter Ellison Morris Fletcher for the Respondent

Hearing Date: 24 May, 1993
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND

Appeal No. 91 of 1993 Appeal No. 92 of 1993

Brisbane

Before The President
Mr Justice Pincus
Mr Justice McPherson

[Heritage Properties v. Coles]

BETWEEN

HERITAGE PROPERTIES (NO. 3) PTY LTD

- and -

CIEL HOLDINGS PTY LTD

Appellants/

Applicants

- and -

COLES SUPERMARKETS AUSTRALIA PTY LTD

Respondent/

Respondent

JOINT REASONS FOR JUDGMENT - FITZGERALD P and PINCUS J.A.

Judgment delivered 24 May 1993
Reasons delivered 1 June 1993

These are two appeals from orders made by a single judge

of this Court, relating to a disputed agreement for a lease of
realty. Appeal No. 91 of 1993 is brought against an order
dismissing an application for removal of a caveat lodged by
the proposed lessee ("Coles"), and Appeal No. 92 of 1993
attacks an interlocutory injunction which was granted below,
restraining dealing in the land. The appeals were said to be
urgent; on the day on which they were heard, judgment was
given in each appeal in favour of the appellants, the reasons
being reserved.

The following constitute our reasons for the appeals

having been allowed.

Coles' case was that it had a binding agreement with the

blocks, at Deception Bay, under which agreement a supermarket
was to be constructed on the land, partly by the proprietors
and partly by Coles. Coles were then to take a lease of a
certain part of the supermarket at a rental. Negotiations
with a view to an agreement of that kind began at some time in
1992, but no formal lease agreement was ever executed. On 23

appellants ("the proprietors") relating to land, in two vacant party and they wished, at the date of hearing, to complete that contract, rather than to proceed with any arrangement with Coles.

The primary judge held that there was a serious question

to be tried as to whether there existed an enforceable
agreement between the proprietors and Coles for a lease along
the lines we have mentioned. Coles offering an undertaking as
to damages, his Honour held that the balance of convenience
favoured preserving Coles' position, with the result that the
orders challenged in these appeals were made.

The proprietors' principal argument was that there was no

concluded contract. In addition, it was contended for the
proprietors that there was no note or memorandum of such a
kind as to satisfy the requirements of s. 59 of the Property

serious question to be tried as to the existence of a tax contribution and that enforcement of the lease agreement alleged would involve the construction of a large shopping centre. As to that last point, it was contended that specific performance would not be granted because the agreement was one of a kind requiring continual co-operation between the parties and supervision by the Court.

We do not find it necessary to deal in detail with all

the arguments advanced.

Identity of Land to be Leased.

As a distinct point relied on in the course of their

argument concerning the existence of a concluded agreement for
lease, counsel for the proprietors said that the premises the
subject of the lease were not sufficiently identified. Coles
was to take a lease of about 2,500 sq. metres but, so counsel
for the proprietors contended, there was never any agreement
with respect to the precise location of that area on the
proprietors' land, the area of which land substantially
exceeded 2,500 sq. metres.

Consideration of this point makes desirable some

reference to the history of the litigation. In the reasons consideration by that Board. On 18 September, 1992, that letter was replied to on behalf of that proprietor, in terms dealing with each of the numbered paragraphs in the letter of 13 August, 1992. Then, to summarise, the reasons referred to subsequent dealings between the parties as to the terms of the agreement for lease, culminating in the forwarding by Coles of an agreement for lease, executed by Coles, on 10 February, 1993.

for judgment of the primary judge, reference was made to a
letter dated 13 August, 1992 written by an employee of Coles
to one of the proprietors, setting out in numbered paragraphs

It did not seem possible, however, for the agreement for

constituting the terms of the agreement between the parties,
for that document was never executed by the proprietors;
further, its terms were not only more detailed than, but in
some respects inconsistent with, the only document which could
be argued to constitute a sufficient note or memorandum for
the purposes of the Property Law Act, namely the letter of 18

terms which were to be submitted to the Board of Directors of

In the reasons, his Honour apparently did not find it necessary to identify the time at which the agreement for lease relied on by Coles might have come into existence. The executed agreement of 10 February 1993 included a plan which is of some importance, and is referred to below.

lease forwarded on 10 February, 1993 to be put forward as out terms of the then proposed agreement in some detail and is, or least purports to be, executed on behalf of one of the proprietors.

When the matter came to this Court the case was presented

on a narrower basis than that accepted below. The written
submission filed in the appeals on behalf of Coles referred to
the letter of 13 August 1992, to some further communications
between the parties, and then the letter of 18 September 1992;

the submission went on to say that "agreement was thereby

reached upon the terms including those which are `described as the essential basic terms of an agreement for lease'...". The submission did not contain any assertion, nor did anything

said by counsel for Coles before us support the view, that those mentioned in the letter of 18 September 1992.

The parties were agreed that the formal order of the

primary judge enjoining the proprietors should identify the
land the subject of the injunction by a plan marked "A",
copies of which we were supplied. The same plan was annexed
to the caveat, to show the land the subject of the agreement
for lease. It appears to be identical with the one forming
part of the draft agreement for lease referred to above as
having been sent by Coles on 10 February 1993. We proceed on
the assumption that the original plan delineates in red, as
the judge's order indicates, the land the subject of the lease
which would be granted if the agreement on which Coles relies
were enforced.

The difficulty is a simple one: there is no evidence

that on or before the date which has become critical,
18 September 1992, the land delineated in red on the plan
referred to in the order and the caveat had been the subject
of an agreement for lease. The letter of 18 September 1992
refers to item 1.2 in the letter of 13 August 1992, and notes
"Tenancy Area Agreed". The letter of 13 August 1992 under

"Tenancy Area," says:

"Approximately 2,500 sq. metres, which area is
subject to final detailed measurement as per
standard lease".

This description is not such as to suggest that the land the subject of the lease had been agreed to be that in the plan marked "A" we now have, attached to the judge's order and to the caveat. It is true that the letter of 18 September 1992, like that to which it refers, indicates that the construction of the centre is to be in accordance with plans identified as SK34 and SK35, but it was not submitted that those plans were such as to fill the gap. The Court invited counsel for Coles to place them before it if they were relevant, but that did not occur.

Retail Shop Leases Act

In order to show entitlement to an injunction and to

maintain its caveat, Coles bore the onus of showing a serious
question to be tried, and, in the circumstances of the present
case, that involved proving an arguable case that there was a
concluded agreement for lease. A component of such an
agreement must necessarily be identification of the land
intended to be leased, but there is no evidence before us to
support, even prima facie, an allegation that the land
identified by the order for an injunction made below and by
the caveat was ever agreed to be leased.

Therefore, we are of the view that there was not shown a serious question to be tried as to the land identified in the judge's orders.

Land Tax

It was argued on behalf of the appellants that specific performance of any such agreement for lease as was relied on by Coles could not be granted because of the provisions of s.

7A of the 1984, making it unlawful to arose under s. 44A of the Land Tax Act 1915 subs. 1 of which reads as follows :

include in a retail shop lease after 1 January, 1992, a
provision requiring a tenant to pay land tax or reimburse the
landlord for land tax. Mr McMurdo QC, who led for Coles,
contended that the lease in question would not be a "retail
shop lease" within the definition included in s. 4 of that

"A provision in a lease entered into after 1 January

1992 requiring a lessee to -

(a) pay land tax; or
(b) reimburse the lessor for land tax;
is unenforceable."

If there is such an agreement for lease as that for which Coles contends, it is as we have explained one containing the terms set out in the letter of 18 September 1992. Item 2.1 of that letter contemplates that Coles will :

"Contribute in each year of the lease term to all
statutory outgoings (including land tax) in the
proportion which your tenancy bears to the total
lettable area of the centre."

Such a provision, if inserted in the lease, would seem to be caught by s. 44A(1)(b) and therefore be unenforceable.

Some discussion took place as to the basis upon which a

Court might perhaps enforce the alleged agreement of
18 September 1992, deleting the requirement that Coles
contribute a proportion of the land tax. That would
undoubtedly involve a substantial sum, but there is nothing
before us to indicate the proportion it would bear to the
total consideration for the lease. Mr McMurdo disclaimed any
suggestion that a Court could award compensation, as part of a
specific performance order, for loss of the right to
reimbursement of land tax, but said that the point would be
merely a discretionary defence; that appears to us to be so.

Nevertheless, the land tax provision is in our opinion, a

substantial obstacle in Coles' path. In the absence of any
figures, it is not possible to say whether or not a Court
might grant a decree of specific performance on the basis that
the consideration for the lease would be somewhat less than
that agreed; but that would in our view be an unlikely
outcome. The conceded unenforceability of the land tax
reimbursement provision substantially weakens, in our opinion,
whatever prospects Coles would otherwise have had of obtaining
a decree based on an allegation that an agreement was made in
the terms of the letter of 18 September 1992.

Concluded Agreement - General

We have dealt above with a specific aspect of this issue,

namely the identification of the land to be leased. In view
of our conclusion on that point it may be thought unnecessary
to do so, but we will deal with some arguments directed to the
question whether there was, apart from that point, a concluded
agreement.

The core of the Coles' case, as put in this Court, was

the letter of 18 September 1992, the body of which begins:

"We refer to your letter dated 13th August, 1992 and to our subsequent telephone discussions with your Mr Philip Atkins and confirm the following

agreement..."

There followed, as we have explained above, details of the
terms of the agreement confirmed; the language used supports
the view that an agreement had been made, on the basis of the
letter of 13 August and subsequent discussions with Atkins.
However, the conclusion of the letter of 18 September is more
equivocal; it speaks of a draft agreement to be delivered to
the writer, and to a meeting to take place on 30 September
1992 "...with a view to finalising the terms and conditions of
the agreement for lease". Further, it is worthy of note that
Atkins, who made an affidavit in the matter and refers in it
to conversations with the writer of the 18 September letter
(one King), does not say that those conversations produced any
agreement, other than on a particular point which Atkins
troubles to specify, namely the identity of the proposed
lessor. Atkins says that having received the letter of
18 September and having asked that an agreement for lease be

prepared:

"At that point it was my belief that an agreement
for lease existed between Heritage and Coles."

It would have been more to the point if Atkins had sworn to the effect of the conversations which took place between the two letters; he did not do so.

There are other difficulties in the Atkins affidavit.

Paragraph 10 says in effect, that prior to the letter of 18 September, the Retail Development Committee of Coles Myer Ltd approved the deal by a memorandum, a copy of which is exhibited; it refers to:

"...the revised project as submitted to the
Corporate Development of September 2, 1992".

Atkins gives no indication whether the submission referred to in the memorandum accorded with the terms of the letter of 18 September, nor does he suggest that, having received the

letter of 18 September, Coles either orally or in writing
informed the proprietors that the terms set out in that letter

were acceptable.

On the material before the primary judge, there was a

dispute as to whether or not it was stipulated on behalf of the proposition that an agreement, binding on Coles as well as on the proprietors, existed in September 1992, one would have expected it would have written to the proprietors accordingly.

the proprietors that the parties were not to be bound until "a
final form of Agreement to Lease with Lease attached was
executed by all parties...". It is neither possible nor
necessary to resolve that point, but there is strength in the
contention that one would expect the coming into existence of
a binding agreement about this large and complicated
transaction to be accompanied by a degree of formality - if
only a letter setting out the terms of the agreement on one
side and the written acknowledgment of them by the other.

Instead, it continued to negotiate about the terms of the

proposed lease for some months after that letter was received.

General

It was pointed out, although nothing was made of it, that

the caveat is defective in form in that it refers to only one
of the two proprietors; in that respect and perhaps in others
it would have had to be amended if it were to stand. No
contention was advanced that, if the Coles' case were
sufficient in substance, appropriate amendments should not be
made.

As we have explained, the questions before the Court were

injunction should be granted in its favour. It has come to be
accepted that in cases of this sort, the issue with respect to
the caveat is akin to that relating to the interlocutory
injunction. See re Jorss' Caveat [1982] Qd. R. 458, re

whether the Coles' caveat should be removed and whether an Caveat Ryan J., unreported, 14 July 1992. There is authority that in exercising the discretion to grant or refuse an interlocutory injunction, the apparent strength or weakness of the plaintiff's case can in some instances be taken into account: Brayson Motors Pty Ltd v. Federal Commissioner of Taxation (1983) 57 A.L.J.R. 288 at 292, Kolback Securities Ltd v. Epoch Mining NL (1987) 8 N.S.W.L.R. 533 at 536. The evidence presently before the Court shows, as we have explained, no concluded agreement with respect to the land to be leased. If there were room for exercise of a discretion, we would think it proper to take into account against Coles' claim to preserve the status quo, the difficulties its case for specific performance appears to face, discussed above, with respect to land tax reimbursement and the existence of a concluded agreement generally. It is unnecessary to say anything about the proprietors' contention that specific performance would not be granted requiring the erection of a large and complex structure, the details of which have not yet been agreed; we would merely remark that such an order would be one of a most unusual character.

For these reasons we have, as mentioned above, allowed

the appeals, set aside the orders made below, and ordered that the caveat lodged by the respondent at 11.49 a.m. on 29 April, 1993 under dealing no. L468517G be removed. The Court will

entertain submissions on the question of costs.
THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND

Appeal No. 91 of 1993 Appeal No. 92 of 1993

Brisbane

Before The President
Mr Justice McPherson
Mr Justice Pincus

[Heritage & Ciel Holdings v. Coles Supermarkets]

BETWEEN

HERITAGE PROPERTIES (NO. 3) PTY LTD

(ACN No. 010 244 149)

- and -

CIEL HOLDINGS PTY LTD

(ACN No. 010 164 075) Applicants

AND

COLES SUPERMARKETS AUSTRALIA PTY LTD

(ACN No. 004 189 708) Respondent

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered 02/06/1993

I have had the advantage of reading the joint reasons prepared by the President and Pincus J.A. Where those reasons relate to the question of identity of the land to be leased and the matter of land tax, I agree with them. Without the benefit of evidence of the kind and extent of that ordinarily given at a full hearing, I am not prepared at this stage of the proceedings to express a firm opinion as to whether final agreement was reached between the parties.