Hilton Hotels (Australia) Pty Ltd v Sunrise Resources (Australia) Pty Ltd

[2000] NSWSC 46

Reported Decision: [2000] 9 BPR 17,495
[2000] NSW ConvR 55-932

New South Wales

Supreme Court

CITATION:	Hilton Hotels (Australia) Pty. Ltd. v. Sunrise Resources (Australia) Pty. Ltd. [2000] NSWSC 46
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2848/99
HEARING DATE(S):	6, 7 and 8 December 1999
JUDGMENT DATE:	18 February 2000
PARTIES :	Hilton hotels (Australia) Pty. Limited - Plaintiff Sunrise Resources (Australia) Pty. Limited - Defendant
JUDGMENT OF:	Hodgson CJinEq at 1

COUNSEL :	Mr. J. Campbell QC with Mr. G. Jacobs for plaintiff Mr. T. Jucovic QC with Mr. D. Hammerschlag & Mr. C. Moore for defendant
SOLICITORS:	Minter Ellison, Sydney for plaintiff Gilbert & Tobin, Sydney for defendant
CATCHWORDS:	ESTOPPEL - Estoppel by convention - Consent by lessor to placement of signs by lessee - Incorrect assumption that signs within terms of lease - Lessor estopped from departing therefrom. LANDLORD & TENANT - Interpretation of term of lease allowing placement of signs with consent of lessor - Whether confined to signs on the demised premises - Whether consent revocable.
DECISION:	See par.77 of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Friday 18th February 2000

NO. 2848 OF 1999
HILTON HOTELS OF AUSTRALIA PTY. LIMITED V. SUNRISE RESOURCES (AUSTRALIA) PTY. LIMITED

JUDGMENT

1   The plaintiff Hilton is the lessee and the defendant Sunrise is the lessor of premises in Sydney under a lease for a term of 40 years from 3rd March 1975. The leased premises are part of the building 255-269 Pitt Street, Sydney, and the plaintiff conducts a hotel business on them. 2   In late 1989 and early 1990, Hilton affixed to the outside of Levels 44 and 45 at the top of the building, called the parapet level, and not within the demised premises, four large signs each containing the word "Hilton", one sign being attached to each of the northern, southern, eastern and western faces of the building. 3   In December 1998, Sunrise requested the removal of these signs. In these proceedings, Hilton seeks a declaration that it is entitled to have these signs kept in their present locations, and also consequential relief. In its cross-claim, Sunrise seeks an order that the signs be removed, and damages.

OUTLINE OF FACTS

4   In 1973, when the building was under construction, Claude Neon Limited applied to the Sydney City Council for development permission to erect two illuminated signs, 70 feet by 16 feet, on the northern and southern walls of Levels 44 and 45 of the building, consisting of lettering displaying the word "Hilton"; and also two illuminated signs, 60 feet by 3 feet, to the facades facing the Pitt Street and George Street frontages, about 30 feet above the footway level, consisting of lettering displaying the words "Sydney Hilton". These applications were made with the consent of Lanloar Investments Pty. Limited, the then owner of the property; and consent was granted on 17th December 1973. 5   These four signs were erected on the building in about 1974. The signs at Levels 44 and 45 were maintained in position without objection from the lessor until about 1989; and the signs on the street frontages have been maintained up to the present time without objection from the lessor. 6   On 6th March 1975, Hilton entered into the subject lease with the then owner Abbey Orchard Property Investments Pty. Limited (Abbey Orchard) for the term of 40 years, with two options of 10 years each. The lease was expressed to be of premises known as the Sydney Hilton Hotel described in the first schedule to the lease, forming part of the building known as the Lanray Centre, together with the right to use in common with the lessor and certain other persons certain "common areas" described in the second schedule. The lease included the following clauses:

The Lessee COVENANTS with the Lessor as follows:
5(a) the lessee will not use or permit to be used the Demised Premises or any part thereof for any purposes other than those associated with the operation of a first-class hotel of International standard together with restaurants bars ballrooms shops and facilities ancillary thereto and will not permit or suffer the use of the same or any part thereof for any purpose or activity unharmonious with the permitted uses or which is illegal or immoral.
(b) ...
(c) The Lessee will not (except with the previous consent in writing of the Lessor) do or permit or suffer to be attached or exhibited in or to the Demised Premises or the windows thereof so as to be seen from the exterior any figure letter signboard advertisement inscription bill placard or sign whatsoever PROVIDED that the Lessor shall not unreasonably withhold consent to the display of signs bearing the name of the Hotel nor to flags on poles provided the Lessee obtains all necessary consents from the local planning and other authorities.

The Lessee FURTHER COVENANTS with the Lessor as follows:
6(a) The Lessee will during the whole of the said term and otherwise so long as the Lessee may remain in possession or occupation when where and so often as need shall be maintain renew replace repaid and keep the whole of the interior and exterior of the areas of roof covering any part of the Demised Premises in good and substantial repair working order and condition and particularly all machinery plant equipment fixtures and things thereto belonging or appurtenant or which at any time during the term or possession or occupation as aforesaid shall be erected therein or be appurtenant thereto or be part thereof.
...
(d) The Lessee will without affecting the generality of the preceding sub-clauses of this clause at the Lessee's expense:-
...
(v) upon vacating the Demised Premises or otherwise at the request of the Lessor remove any signs names advertisements or notices erected painted displayed affixed or exhibited upon to or within the Demised Premises or the Building and make good any damage or disfigurement caused by reason of such erection displaying affixing exhibiting or removal thereof.

...
14. The Lessee will name the Hotel "Sydney Hilton" and not change the name of the Hotel without the consent in writing of the Lessor (which shall not be unreasonably withheld).
..

The Lessor HEREBY COVENANTS with the Lessee that the Lessee paying the rent hereby reserved and duly and punctually observing and performing the covenants obligations and provisions in this Lease on the part of the Lessee to be observed and performed:-
...
19(d) Not after the determination of the term hereby granted or any extension or renewal thereof to use or permit to be used the name "Hilton" as or part of the name of any hotel or other business carried on at the Demised Premises.
(e) Not to permit the existence of any signs on the elevations of the Building which by reason of size or placement will cause confusion or interference with regard to the name of the hotel.
(f) The Lessor recognises that the name "Hilton" when used alone or in conjunction with some other word or words is the exclusive property of the Lessee and the Surety. Accordingly the Lessor agrees that no right or remedy of the Lessor for any default of the Lessee nor delivery of possession of the Demised Premises to the Lessor upon expiration or sooner termination of this Lease shall confer nor shall any provision of this Lease confer upon the Lessor or any person firm or corporation claiming by or through the Lessor the right to use the name "Hilton" either alone or in conjunction with some other word or words in the use and operation of any hotel or other business whatsoever and whether at the Demised Premises or not.

7   The demised premises did not include any part of Level 45. They did include part of Level 44, but not beyond the internal faces of external walls. The demised premises did not include the walls on which the 60 feet by 3 feet signs were erected on the Pitt and George Street frontages. 8   In September 1987, Abbey Orchard transferred its ownership of the building to Sunrise (then called Iwak Pty. Limited). 9   In about 1989, Hilton and associated companies changed their corporate brand logo worldwide; and Hilton wished to replace its existing signs at Levels 44 and 45 to signs displaying the word "Hilton" in a manner which conformed with the new corporate logo. 10   At about this time, there were discussions between Oded Lifschitz, then the General Manager and Vice President of Hilton, and Tony Staveley, the Project Manager of The Bond Corporation (which was managing the building on behalf of Iwak) concerning Iwak's plans to have a strata plan registered in respect of the building. In the course of these discussions, Mr. Lifschitz expressed concern about Iwak's proposals in relation to the car park in the building and a pedestrian link which was proposed between the building and an associated development contemplated by The Bond Corporation. 11   In about mid-1989, there was a conversation between Mr. Lifschitz and Mr. Staveley, in which Mr. Lifschitz said words to the effect that Hilton wished to change its signs at the top of the building to conform with its new logo; and Mr. Staveley said words to the effect that that would be fine, so long as Hilton repaired the facade behind the old signs and painted the whole of the parapet level. Mr. Staveley asked to be provided with a development application to be signed on behalf of Iwak. 12   A development application to Sydney City Council was prepared in the name of Adams Signs, dated 21st September 1989, for two signs 10 metres by 7 metres to replace the existing signs, at an estimated cost of $90,000.00. Mr. Fox, a director of Iwak, signed this application to indicate Iwak's consent to it. 13   About this time, there was a further conversation between Mr. Lifschitz and Mr. Staveley, in which Mr. Lifschitz said words to the effect that, because the new signs were smaller, could Hilton put up two further signs on the east and west faces of the building. Mr. Staveley said words to the effect that that would be fine. 14   A further development application to Sydney City Council was prepared in the name of Adams Signs, this being dated 10th November 1989, and being for signs 10.3 metres by 9 metres to be placed on the east and west faces, at an estimated cost of $21,000.00. This application was signed by Mr. Creely, a director of Iwak, to indicate the consent of Iwak to the application. 15   The signs were erected in late 1989 and early 1990, and Hilton arranged and paid for the painting of the whole parapet level of the building. The signs have remained in position and been maintained by Hilton from then until about November 1998, without any objection from the lessor. 16   Sunrise is now required to renovate the facade of the building at the parapet level. There is evidence that this will be hindered by the four signs at that level, and that the work will be less safe if done with the signs in place.

ISSUES

17   The following issues have been debated. 18   First, there are questions concerning the construction of the lease, especially cl.5(c) and 6(b)(v). 19   Next, assuming the erection of the relevant signs was permitted with the consent of the lessor, there was an issue as to whether that consent could be revoked. 20   Thirdly, there was the question whether the conversation between Mr. Lifschitz and Mr. Staveley amounted to a contract, and/or the grant of an equitable easement. In connection with this question, there was a defence relying on the lack of writing containing the terms of the contract and/or easement. 21   Fourthly, Hilton claimed to have the benefit of an estoppel arising from its removal of the previous signs and expenditure of a substantial amount of money with the consent of Sunrise. This estoppel was put in various ways, and various discretionary matters were raised in relation to it.

CONSTRUCTION OF LEASE
Submissions

22   Mr. Campbell QC for Hilton has provided written submissions which I will leave with the papers. 23   Mr. Campbell submitted that the proviso to cl.5(c) obliged the lessor to grant consent to the erection of signs when Hilton asked for it. The proviso was not restricted to the erection of signs on the demised premises: there was in fact no place upon the demised premises appropriate for the erection of large illuminated advertising signs, or for the erection of flags on poles. That the proviso was not so limited is confirmed by the terms of cl.6(a), with its reference to things "appurtenant" to the demised premises; and also by cl.6(d)(v), with its reference to signs exhibited upon the building. 24   Mr. Campbell also submitted that cl.6(d)(v) did not permit the lessor to require the removal of the sign. Unless read down, that provision was unreasonable and draconian. Construed in the context of the lease as a whole, cl.6(d)(v) must be limited to signs etc. erected without the consent of the lessor; or alternatively, "or otherwise at the request of the Lessor" should be read ejusdem generis with "upon vacating". Alternatively, in this case there is an estoppel preventing the lessor relying on this clause to require these signs to be removed. 25   If it were submitted that the right under cl.5(c) is limited to signs bearing the name of the hotel, and that the name of the hotel is "Sydney Hilton" (cl.14), this was over-technical. In any event, the name can be changed, and the lessor has consented in writing to the change by signing the development application in relation to each sign. The signing of the development applications was also consent in writing within the terms of the proviso to cl.5(c). 26   Mr. Campbell submitted that the interpretation for which he contended of cl.6(d)(v) did not make it superfluous: it would give the lessor a contractual right where otherwise it would only have a right to damages or self-help. 27   If the court did not accept the construction of cl.6(d)(v) contended for, nevertheless the power it gave had to be exercised reasonably and not capriciously: Pierce Bell Sales Pty. Limited v. Frazer (1973) 130 CLR 575 at 587; Alcatel Australia Limited v. Scarcella (1998) 44 NSWLR 349 at 368-9. In the present case, the purported exercise of the power is unreasonable, being motivated by desire to start charging for having the signs in place, after around 25 years of not doing so. 28 Mr. Jucovic QC for Sunrise submitted that cl.5(c) did not amount to a grant of any right to the plaintiff: rather, it was a restriction on what otherwise might enure to the benefit of Hilton; and the proviso did no more than cut down the restriction imposed by cl.5(c). The lease was one for 40 years, where there were likely to be successors in title to the lessor and perhaps also the lessee, so that one should not lightly draw inferences concerning valuable commercial rights, which could have been expressly documented but were not. 29 It was a fallacy to start with the existence of signs, and use that as a basis for the construction of cl.5(c). It was not impossible to place signs on the demised premises themselves, so that there was just no basis for interpreting the proviso to cl.5(c) as extending to parts of the building outside the demised premises. The initial placing of signs at the parapet level occurred prior to the entry into the lease, and the evidence did not establish what was the arrangement pursuant to which this happened. In any event, the proviso only applied to the name of the hotel, and the name of the hotel was "Sydney Hilton", not "Hilton". 30 Mr. Jucovic further submitted that cl.6(d)(v) plainly applied to things that had been placed on the demised premises or the building initially with the consent of the lessor: its plain words were not limited to things there with consent, and there was no need for such a provision in relation to things there without consent. The existence of cl.6(d)(v) was itself a factor relevant to whether the withholding of consent to signs was reasonable, and also to the terms on which any consent could be given.

Decision

31   The evidence in this case shows that hotels, even hotels situated in high-rise buildings, do not always have a large sign identifying the hotel at the top of the building. However, I accept evidence led on behalf of Hilton that it is advantageous to have such a sign placed on a high-rise building; that it is also advantageous to have a prominent sign identifying the hotel visible from the street near to street-level; and also that there was no place on this building within the demised premise suitable for either kind of sign. 32   There is force in Mr. Jucovic's submission that one would not expect to have a positive right granted to a lessee by a proviso to one of the lessee's covenants. However, in my opinion the proviso to cl.5(c) does give the lessee a positive right, a right which is not limited to the demised premises. 33   In the first place, the provision that the lessor shall not unreasonably withhold consent is plainly directed to giving the lessee the right to erect signs with the consent of the lessor, and to impose an obligation on the lessor not unreasonably to withhold that consent. This is plainly a positive right given to the lessee. 34   A number of factors also indicate, in my opinion, that the right is not limited to the demised premises. First, there is the circumstance, adverted to above, that it is advantageous to a hotel to have signs which identify it, at the top of the building in which the hotel is situated and also in a prominent position near street level; and the circumstance that there was no place suitable for such signs, or indeed for the erection of poles on which to display flags as contemplated by cl.5(c), within the demised premises. Coupled with this is the circumstance that the lessor did in fact consent, prior to execution of the lease, to two large signs displaying the name "Hilton" at parapet level, and two large signs displaying the name "Sydney Hilton" outside the demised premises near street-level. Furthermore, cl.6(d)(v) contemplates that there may be signs erected on the building outside the demised premises, in respect of which the lessor may need the assistance of such a clause, tending to confirm that such signs may be there otherwise than wrongfully. Finally, cl.19(e) contemplates that signs identifying the hotel are likely to be erected on elevations of the building, although as noted above the elevations within the demised premises are unsuitable for the erection of such signs. 35   Plainly, consent may be granted upon reasonable conditions; but in my opinion, those conditions cannot include the payment of a commercial fee for the displaying of the signs. In substance, the right to display signs is part of what is paid for by the rental under the lease; and its value may be taken into account in the rent reviews provided by the lease. 36   The question then arises, how is cl.5(c) reconciled with cl.6(d)(v). As already indicated, my opinion is that cl.6(d)(v) is certainly not limited to signs etc. erected without the consent of the lessor. Nor in my opinion is it limited to the vacation of the demised premises or circumstances which are somehow ejusdem generis with this. In my opinion, what the two clauses read together mean is that the lessor cannot unreasonably withhold consent to the display of signs referred to in cl.5(c), and a requirement to remove such signs which have already been erected would amount to a withholding of consent to that display. Accordingly, if that withholding of consent would be unreasonable, it is precluded by cl.5(c), so that the power in cl.6(d)(v) cannot be exercised. Otherwise, that power can be exercised. 37   However, as pointed out by Mr. Jucovic, the right in cl.5(c) is limited to signs bearing "the name of the hotel". Under cl.14, the name of the hotel is "Sydney Hilton". That is the name shown by the large signs near street-level. There is some force in Mr. Campbell's submission that this is an over-technical point; but the lessor might legitimately want the particular hotel situated in the lessor's building to be advertised by the sign placed on the building, rather than the chain of which that particular hotel is merely one hotel. 38   In my opinion, the consent given to the development application for the signs at parapet level did not amount to a consent to a change of name of the hotel, particularly when the large signs displaying the signs "Sydney Hilton" were placed and have subsequently been maintained near street-level up to the present time. 39   Accordingly, in my opinion, signs displaying the word "Hilton" are not within cl.5(c). The consent to their erection may of course give rise to some estoppel; but that is a matter which I will consider separately.

EFFECT OF CONSENT

40   I have held that signs displaying the word "Hilton" are not within cl.5(c), so the contractual effect of consent does not arise. If I am wrong on that point, however, I should note that in my opinion the consent which was signified in writing to the development applications would amount to a consent in writing to the display of the signs in question. I also note that my decision on the construction of the lease would suggest that consent is revocable if, at the time of revocation, it is not unreasonable then to withhold consent to the display of the signs. However, submissions have been advanced on this point, and I should note them and indicate my response to them.

Submissions

41   Mr. Campbell referred to the case of William Hill (Southern) Limited v. Cabras Limited (1986) 54 P&CR 42, in which the English Court of Appeal considered a lease which contained a clause prohibiting signs, but saying that the landlord's consent would not be unreasonably withheld in respect of a sign stating the lessee's name, business or profession. The landlord had consented to such a sign, which was affixed to part of the building beyond the demised premises. The trial judge, Goulding, J., stated that "a landlord's consent under such a clause as that now in question, once acted upon by a tenant, cannot be withdrawn during the term unless given with the express reservation for that purpose". Kerr, LJ said that, if it had been necessary to decide the appeal on that basis, he would have done so; but that his primary reason for dismissing the appeal was that stated by Nourse, LJ, based upon the circumstance that the lease expressly demised "appurtenances". Stocker, LJ inclined to the same view, but did not need to decide it. 42 Mr. Campbell also referred to Armstrong v. Shephard & Short Limited (1959) 2 QB 384, and Bendall v. McQuirter (1952) 2 QB 466 at 479-480 (overruled on a different point by National Provincial Bank Limited v. Ainsworth (1965) AC 1175). 43 Mr. Campbell also submitted that the consent was irrevocable, because it was given for consideration: see Young, The Law of Consent, p.49. Mr. Campbell also referred to Plimmer v. City of Wellington (1884) 9 App.Cas. 699 at 714. 44 Mr. Jucovic submitted that it would be extraordinary that an informally given consent like this could entitle Hilton to have the signs in place throughout the whole 40 year term plus two 10 year options, and that there could be no revocation of that consent.

Decision

45   In my opinion, the views expressed obiter in William Hill would not apply to this lease, because of the terms of cl.6(d)(v). As indicated earlier, in my opinion that clause does give the right to the lessor to revoke consent given to signs, if at the time of that revocation it would not be unreasonable for the lessor to withhold consent to the display of those signs. 46   In my opinion also, the other cases and principles referred to by Mr. Campbell really give rise to questions as to the existence of a contract or of estoppel, which are matters I will consider separately.

CONTRACT
Submissions

47   Mr. Campbell submitted that the evidence of Messrs. Lifschitz and Staveley showed that there was an agreement that Hilton could place the signs on the building in consideration of painting the parapet level of the building. This evidence was not cross-examined on, even for the purpose of testing the recollection of the witnesses. The agreement was made in the commercial context of Iwak wanting Hilton's consent to the strata plan; but this was part of the motivation for the agreement, not a term of it. 48   Mr. Lifschitz was cross-examined on a written communication of 3rd December 1998, in which he referred to an explanation from a lawyer that "unless we can come up with some sort of agreement regarding the signs, we will be in a position where we will either have to enter into negotiations with the owner regarding repayment of the sign, or face the possibility that the owners might ask us to take the signs off"; and went on to write "to the best of my knowledge in October 1989, no agreement was entered into as at the time it was understood that it was our right to erect signs on the building". Mr. Campbell submitted that that document was responding to an enquiry directed to documentation; and he also relied on Mr. Lifschitz's evidence that, although that expressed his understanding in 1998, he now believed that his understanding in 1989 was that Hilton did have an agreement to erect the signs. 49   Mr. Campbell submitted that, on the proper construction of the agreement, the signs could remain on the building for as long as Hilton chose, up to the end of its lease of the demised premises. Any other construction would not be commercially sensible, because of the expense of the signs, the fact they were likely to last for many years, and the fact that the previous signs had been there, without payment of rent or complaint from the landlord, since about 1973; and because it would be impractical for Hilton to move its existing signs and replace them with others, only to be told shortly afterwards that it must remove the new signs. 50   The existence of such agreement was confirmed by the signing of the development applications; Hilton's painting the parapet level; and the fact that during a detailed review of Hilton's rights in 1990, no mention was made of the signs. 51   Mr. Campbell also submitted that Hilton's right to have the signs in place amounted to an equitable easement: there was a dominant tenement and a servient tenement; the easement was capable of being the subject of a grant (see Re Ellenborough Park (1956) Ch. 131); and the advertising related to the business conducted on the dominant tenement (see Clapham v. Edwards (1938) 2 AllER 507 at 512; and see Moody v. Steggles (1879) 12 Ch.D. 261 at 266; Copeland v. Greenhearth (1952) Ch. 488; Hoare v. The Metropolitan Board of Works (1874) LR 9 QB 296; Francis v. Hayward (1882) 22 Ch.D. 177 at 182; William Hill; Lane v. Dixon (1847) 3 CB 776). That the rights are in the nature of an easement is made clearer by the nature and means of affixation, which are suitable for the signs to remain in situ for a very long time, and such that it would take twenty days to remove them. 52   Further, part performance and estoppel were sufficient to overcome the lack of writing setting out all the terms of the easement. The acts of part performance in making application to the Sydney City Council for consent to the erection of signs, purchasing and causing the signs to be erected, painting the parapet, periodically causing maintenance to be performed on the signs and paying for that maintenance, and removing the old signs, were permitted by the alleged contract, were referable to some such agreement as alleged, and done in the faith of the agreement; and also involved such a change in position of Hilton that Hilton would be unfairly prejudiced if the lessor were to take advantage of the lack of written evidence. 53   Mr. Jucovic submitted that I could not be satisfied as to the precise terms of the conversations between Mr. Lifschitz and Mr. Staveley; especially in relation to Mr. Staveley, because he had no recollection concerning the lodgment of the strata plan. As regards Mr. Lifschitz, he had verified a Statement of Claim alleging a contract a term of which was that Hilton would not object to the strata plan, whereas Hilton now alleges a contract without that term; and Mr. Lifschitz in 1998 noted that they would have to "come up with" an agreement, in circumstances where he wrote that no agreement was entered into in 1989. It could be accepted that something was said between them along the lines given in evidence; but the Court could not be satisfied exactly what was said, and could not be satisfied that whatever was said manifested a contractual intention to give irrevocable rights for 40 years. This was confirmed because of the lack of any record of any agreement. It was part of the obligation of Mr. Lifschitz and Mr. Langton to record agreements reached, and none was recorded on this matter. 54   Mr. Jucovic submitted that it was apparent that the parties disclosed no intention to vary the terms of the lease, including cl.6(d)(v). Exhibits D7 and D9 showed that, in cases of variations of the lease or variations of rights, there would be long and careful negotiations and ultimately appropriate writing so as to bind the parties, the land, and successors in title. In circumstances where the lessor was hoping to achieve strata title, one would not infer an intention to bind itself in a way which could interfere with this process. What occurred is best regarded as a matter of give and take in the operation of a long-term lease. 55   Mr. Jucovic also submitted that any such contract would not in any event be enforceable, because of the lack of writing. Any alleged part performance was not sufficient, in that it would not be "unequivocally referable" to such an agreement: see Regent v. Millet (1976) 133 CLR 679 at 683. The need for an interest in land, and thus for writing, is confirmed by Cowell v. Rosehill Racecourse Co. Limited (1937) 56 CLR 605 and National Provincial Bank Limited v. Hastings Car Mart Limited (1965) AC 1175 at 1237, 1251. 56 In reply, Mr. Campbell submitted that it was not extraordinary that such an agreement should be made in this way without writing. It dealt with practical problems in a practical way. The agreement was such as to vary the lease, whether the participants actually turned their mind to that question or not. The agreement to repair and repaint the parapet level, and for the placing of the sign, was different from what was required by the lease, and in that sense was effective to vary the lease. The terms were not extraordinary. The hotel had been there for 16 years, and the lease had 25 years to run. There was no express limitation on the time during which the signs could be displayed, and the implication suggested by Hilton was not unreasonable, given that it was spending $180,000.00 on erecting the signs. The arrangement was not a new one, just one for the replacement of existing signs. Iwak wanted to progress its strata proposal, so it is not implausible that it would seek good relations with Hilton by making such an agreement. It was not burdensome on the lessor, because the current value of signage can be included in rent reviews. 57 Mr. Campbell submitted that the 1990 correspondence concerning the strata plan did not point against the existence of the agreement. It commenced five months after the time of the agreement, and it was unsurprising that once lawyers became involved, there would be detailed negotiations. Even so, the s.88B instrument prepared in relation to the strata proposal contained a note using the letters "dd" on the page relating to level 46 which plainly indicated contemplation that Hilton had signage rights at the parapet level. The evidence did not in fact indicate that the strata plan was lodged at the Land Titles Office for registration: it was only submitted in draft. 58 Mr. Campbell submitted that Mr. Lifschitz's verification of the Statement of Claim occurred after he had already sworn his affidavit in which he set out his recollection of the conversations. The Statement of Claim did no more than verify the legal effect of facts to which Mr. Lifschitz was already committed. He relied on lawyers as to their legal effect. Finally, Mr. Campbell submitted that it was not Mr. Langton's responsibility, or Mr. Lifschitz's responsibility, to ensure that there was a record of all agreements.

Decision

59   In my opinion, the evidence does establish that Hilton paid about $180,000.00 for the erection of these signs, and also that Hilton painted the parapet level at about this time. I accept that there were conversations along the lines given in evidence by Mr. Lifschitz and Mr. Staveley, but I cannot be satisfied as to their precise terms. It is clear that there is no writing recording any agreement as alleged by Hilton, apart from the consents to the development applications. I accept that Iwak was at the relevant time wishing to have a strata plan for the building registered, and that correspondence entered into some months after the alleged agreement involved detailed negotiations concerning the terms on which this might occur. I accept also that the notation "dd" on a proposed s.88B instrument was referable to the Hilton signs, but the absence of any other material concerning that notation means that it carries virtually no weight. 60   Mr. Lifschitz's 1998 comment that "in October 1989 no agreement was entered into" does not lead me to reject his evidence about the conversations with Mr. Staveley. However, in my opinion this does tend to confirm that the intention manifested in the conversations concerned the lessor's consent to the placing of signs as contemplated by the lease, rather than the grant of a new right or the variation of the lease. I accept that there was consideration given by Hilton in agreeing to paint the parapet level and actually doing so; but there is no evidence as to what expense was involved in this; and I would not infer from this that an intention was manifested to give a right entirely outside the lease, which Hilton could maintain for the whole term of the lease plus any options. 61   It follows from my decision on the construction of the lease that what was consented to was in fact not something actually provided for by the lease, but there is no suggestion that the parties directed their minds to that question at the time; and it does not affect my conclusion that the intention manifested at the time concerned only consent to something contemplated by the lease. 62   In my opinion, my lack of satisfaction as to an intention to make a contract which gave a right outside the lease, or varied the lease, is also an answer to Hilton's claim based on equitable easement.

ESTOPPEL
Submissions

63   Mr. Campbell submitted that the defendant represented to Hilton that its signs could be erected and maintained at the parapet level, and on the faith of that representation and to the knowledge of the defendant, Hilton removed the existing signs and paid for the purchase and installation of the new signs, at a cost of over $180,000.00. Hilton has paid for the maintenance of the signs since then. Removal of the signs would deprive it of the benefit of the expenditure. As a result, what might otherwise be a revocable licence has become irrevocable. Mr. Campbell submitted that this could be regarded as estoppel by representation, or estoppel by acquiescence, or conventional estoppel. Mr. Campbell referred to Ward v. Kirkland (1967) 1 Ch. 194; E.R. Ives Investments Limited v. High (1967) 2 QB 379; Morris v. Morris (1982) 1 NSWLR 61; Plimmer; Chalmers v. Pardoe (1963) 3 AllER 552; Hill v. A.J.W. Moore & Co. Pty. Limited (1990) 5 BPR 11,359; Klianis v. Chatham Pty. Limited, Young, J., unreported, 22/8/94. 64   Mr. Campbell also relied on evidence that not having the signs would be detrimental to Hilton's operation of its business, and that absence of the signs would affect the goodwill of the hotel, in ways not readily calculable in money terms. There would be a market perception that Hilton no longer operated the hotel. The process of removal would require twenty working days plus extensions caused by bad weather, and would cause annoyance and inconvenience to guests. 65   Mr. Campbell submitted that there was no justification for the requirement for removal. Although facade remediation works were required, they could be performed with the signs in place. Hilton had offered and continued to offer to pay any cost reasonably involved in effecting remediation to levels 44 and 45 with the signs in situ. From the commercial point of view, there had been no suggestion from Sunrise that it had any other person ready, willing and able to occupy the site with another sign; and it would not be open to Sunrise to put alternative signage on the building, without risking breach of cl.19. 66   Mr. Jucovic submitted that, for an estoppel such as that claimed by Hilton, there would need to be a clear and unequivocal representation that it could have the sign in place indefinitely, that is in effect for the remainder of lease and option: see Legione v. Hately (1983) 152 CLR 406 at 435-7. Mr. Jucovic also referred to Giumelli v. Giumelli (1999) 73 ALJR 547. 67 In any event, he submitted, as Mr. Lifschitz's 1998 memo showed, Hilton did not believe that it had an agreement to keep the signs in place. Furthermore, the onus was on the plaintiff to show that it would now be unconscionable for consent to be withdrawn. The evidence showed that the use of the external face of such a building for the display of such a sign was worth a substantial amount of money, and the plaintiff had not shown that it had not in fact received a fair return for its expenditure of $180,000.00. In addition, the defendant's requirement could not be unconscionable, where the defendant was required to undertake a substantial program of facade renovation, and the evidence of the defendant's expert Mr. Koch showed that it would be safer to perform this work with the signs removed.

Decision

68   As noted earlier, I accept that Hilton spent about $180,000.00 in erecting the signs. It is plain that the use of the external facade of such a building for the purpose of displaying signs is very valuable commercially, and although it has been agreed by the parties that I should not at this hearing quantify that value, it is plain that Hilton has not shown that the value of its use of the space over the last ten years falls short of the amount of about $180,000.00 expended it, plus whatever the cost of maintenance has been. 69   I accept that the defendant is required to undertake facade renovation, and in my opinion it is reasonable for the defendant to accept the advice of its expert that it would be safer to conduct that renovation with the signs removed. However, I also accept the evidence of Hilton's expert that the renovation could be performed, to acceptable safety standards, with the signs in place, albeit at somewhat greater expense. 70   In those circumstances, have the elements for an estoppel been made out? In my opinion, Hilton has not established a clear and unequivocal promise or representation that the signs could be kept in place indefinitely or for the term of the lease or for the term of the lease plus the two options. This is essentially for the same reason as I was not satisfied that a contract or equitable easement had been established, namely that, in my opinion, the intention manifested by the conversations between Mr. Lifschitz and Mr. Staveley was an intention that the lessor consent to something that Hilton was entitled to do under the lease with the consent of the lessor. Realistically, what has happened is that neither party previously adverted to the possibility that the right under cl.5(c) is limited to signs displaying the hotel name; but now the lessor does advert to that point and wishes to rely on it. 71   In my opinion, the conversations and other conduct by the lessor in 1989 and 1990 did not amount to a representation by the lessor that the signs were within cl.5(c) of the lease; but my findings concerning the effect of the conversations and conduct of both parties at this time indicate that they did disclose and were based on a common assumption that this was the case. Such a common assumption can ground an estoppel by convention: see Grundt v. Great Boulder Pty. Gold Mines Ltd. (1937) 59 CLR 641. There is a statement in Con-Stan Industries v. Norwich Winterthur Insurance (Aust) Ltd. (1986) 160 CLR 226 that, "just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact". However, this statement was obiter, and in any event should not in my opinion be taken as applying to assumptions as to private rights or the legal effect of particular agreements, as distinct from assumptions as to the general law: see Eslea Holdings Ltd. v. Butts (1986) 6 NSWLR 175 at 185-9 per Samuels, JA, with whom Kirby, P agreed; cf. Walton Stores (Interstate) v. Maher (1988) 164 CLR 387, at 415-6, 435, 452, 457; Commonwealth of Australia v. Verwayen (1990) 170 CLR 394 at 500; and Lee v. Ferno Holdings Pty. Ltd. (1993) 33 NSWLR 404. 72 In reliance on this common assumption, and the lessor's consent based upon it, Hilton spent $180,000.00, and further sums in painting the parapet level and maintaining the signs; and having regard to the circumstance that, upon the construction of the lease I have adopted, Hilton was entitled to have the hotel name displayed on such signs, it is not in my opinion appropriate to consider that that expenditure has been reimbursed by the commercial value of having the signs in place. Hilton was entitled to have similar signs in that position, but had these particular signs there because of the common assumption. In those circumstances, in my opinion, so long as these signs are in place, it would be unconscionable for the lessor to rely on the point that this sign does not display the hotel name, and the lessor is estopped from doing so. 73 I note that Mr. Jucovic did make the submission that various ways in which Mr. Campbell sought to put the estoppel argument had not been pleaded; and it is fair to say that the way I have proceeded is not explicitly pleaded. However, in my opinion the basis on which I have proceeded is sufficiently within the Statement of Claim and within the manner in which the case has been conducted. 74 It remains to consider the effect of the lease, and in particular cl.6(d)(v) of the lease, on the basis that the signs are assumed to be within cl.5(c). In my opinion, apart from the lessor's need to renovate the facade, it would amount to an unreasonable withholding of consent for the lessor to require removal of the signs in reliance on cl.6(d)(v). The lessor does not put forward any case that it is disadvantaged by the display of the word "Hilton" rather than the words "Sydney Hilton". Removal of the signs would deprive Hilton of the benefit of at least some of its expenditure of over $180,000.00. 75 There is material in the evidence suggesting that Hilton wishes in the near future to replace the existing signs with signs displaying a new form of the word "Hilton" in conformity to a new worldwide corporate logo. The estoppel to which I have referred would not, in my opinion, support that course: once Hilton undertook the removal of these particular signs, the lessor would in my opinion be entitled to require that any substitute signs display the name of the hotel so as to be in accordance with cl.5(c). However, the circumstance that Hilton wishes to make that substitution does not alter the situation that, if Hilton is required to remove the signs in circumstances where the substitution is not permitted, Hilton would lose the benefit of substantial expenditure. 76 Turning to the question of rehabilitation of the facade, I have indicated acceptance of Hilton's evidence that this can be achieved with acceptable safety with the signs in place. However, I have also accepted the lessor's evidence that safety would be enhanced if the signs are removed, and that the lessor's advice is that this is the preferable way to proceed. In those circumstances, and in circumstances where Hilton offers to pay any additional cost associated with facade remediation with the signs in place, I think the preferable view is that it would be an unreasonable withholding of consent for the lessor to require removal of the signs for that purpose, at least unless it is on the basis that those signs (and no others) can be reinstated when that purpose is fulfilled. Since the lessor has not required removal on that basis, in my opinion Hilton is for the present entitled to have the signs left in place, on condition that it pay any additional costs of facade remediation. 77 I will stand the matter over so that the plaintiff can bring in short minutes of orders giving effect to these reasons.

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Last Modified: 09/25/2000