Homebase Management Pty Ltd v City of Subiaco
[2000] WASC 212
•24 AUGUST 2000
HOMEBASE MANAGEMENT PTY LTD -v- CITY OF SUBIACO [2000] WASC 212
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 212 | |
| 24/08/2000 | |||
| Case No: | CIV:2072/2000 | 22 AUGUST 2000 | |
| Coram: | MASTER SANDERSON | 22/08/00 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Leave granted | ||
| PDF Version |
| Parties: | HOMEBASE MANAGEMENT PTY LTD CITY OF SUBIACO |
Catchwords: | Practice and procedure Application for leave to proceed against Local Authority Turns on its own facts |
Legislation: | Limitation Act 1935, s 47A (1) and (3) |
Case References: | Heytesbury Properties Pty Ltd v City of Subiaco [2000] WASC 8 Lucas and Tait (Investments) Pty Ltd v Victoria Securities Ltd [1975] 1 NSWLR 170 Rivers v Bondi Junction-Waverley RSL Sub Branch Ltd (1986) 5 NSWLR 362 The Minister for Community Welfare v Bennett, unreported; FCt SCt of WA; Library No 5060; 2 September 1983 Victorian Railways Commissioner v Casaccio [1961] VR 157 Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth of Australia & Ors (1977) 139 CLR 54 Bingham v England (1996) 12 WAR 226 Howe v City of Nedlands & Ors, unreported; SCt of WA (Master Sanderson); Library No 980128; 23 March 1998 Murray v Baxter & Ors (1914) 18 CLR 622 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
CITY OF SUBIACO
Defendant
Catchwords:
Practice and procedure - Application for leave to proceed against Local Authority - Turns on its own facts
Legislation:
Limitation Act 1935, s 47A (1) and (3)
Result:
Leave granted
(Page 2)
Representation:
Counsel:
Plaintiff : Mr A J N Aristei
Defendant : Mr A J McLean
Solicitors:
Plaintiff : Willers & Co
Defendant : Corrs Chambers Westgarth
Case(s) referred to in judgment(s):
Heytesbury Properties Pty Ltd v City of Subiaco [2000] WASC 8
Lucas and Tait (Investments) Pty Ltd v Victoria Securities Ltd [1975] 1 NSWLR 170
Rivers v Bondi Junction-Waverley RSL Sub Branch Ltd (1986) 5 NSWLR 362
The Minister for Community Welfare v Bennett, unreported; FCt SCt of WA; Library No 5060; 2 September 1983
Victorian Railways Commissioner v Casaccio [1961] VR 157
Case(s) also cited:
Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth of Australia & Ors (1977) 139 CLR 54
Bingham v England (1996) 12 WAR 226
Howe v City of Nedlands & Ors, unreported; SCt of WA (Master Sanderson); Library No 980128; 23 March 1998
Murray v Baxter & Ors (1914) 18 CLR 622
(Page 3)
1 MASTER SANDERSON: This is an application by the plaintiff for leave to commence proceedings. The application is brought under s 47A(3) of the Limitation Act 1935. The defendant is a local authority and is constituted under the provisions of the Local Government Act. After hearing argument I reserved my decision for a short period then advised the parties I would make the orders sought by the plaintiff and publish my reasons at a later date. These are those reasons.
2 The facts giving rise to this application are not in dispute to any material extent. On 20 May 1987 the plaintiff (using its former name, Subiaco Homebase Management Pty Ltd) executed a Lease with the defendant. A copy of this Lease appears as Annexure "JW1" to the affidavit of Johan Maritz Willers, sworn 7 August 2000. At all material times the defendant was the registered proprietor of a parcel of land within the boundaries of the city over which it granted the lease to the plaintiff (the "Land"). Prior to the execution of the lease, the plaintiff had applied to the defendant for approval to commence development of the Land. The development was for commercial purposes comprising, inter alia, an exhibition centre, offices, showrooms and a hardware store. On 2 December 1995 the defendant approved the development and on 10 February 1987 the defendant issued the appropriate building licence to facilitate the development. Construction of the development was completed on 22 April 1988 at a cost of in excess of $11,000,000. The development is now known as the "Wembley Homebase Centre".
3 The rental to be paid by the plaintiff to the defendant is covered by cl 2 of the Lease. For present purposes, cl 2.2, cl 2.3 and cl 2.4 of the Lease are relevant. They read as follows:
"2.2 During the period from 1st October, 1996 to the expiration of the term of the Lease the annual rent payable under the Lease and the manner in which such rent is to be reviewed and paid shall be as is mutually agreed between the parties but failing agreement the rent shall be calculated as set out in Clauses 2.3 and 2.4.
2.3 From the 1st October 1996 to the 30th September 2010 the rent payable hereunder shall be calculated in accordance with the following -
(a) on the 1st October 1996; and
(Page 4)
- (b) at the expiration of each succeeding period of three (3) years thereafter until the 30th September 2010; and
(c) if during the period from the 1st October 1996 to the 30th September 2010 the Leased Premises or any part thereof are transferred or assigned on the date of the transfer or the date of the assignment as the case may be
the rent payable hereunder shall be reviewed and shall for the next succeeding period of three (3) years or the remainder of that period in the case of a transfer or assignment during the currency of such period of three (3) years (as the case may be) be an annual amount equal to seven and one half per centum (7.5%) of the Unimproved Capital Value of the Leased Premises as at the date upon which rent is to be reviewed to be mutually agreed between the Lessor and the Lessee and failing agreement to be determined by a Valuer.
- 2.4 From the 1st October 2010 to the expiration of the term of this Lease the rent payable hereunder shall be calculated in accordance with the following -
(a) on the 1st October 2010; and
(b) at the expiration of each succeeding period of three (3) years thereafter during the balance of the term of this Lease; and
(c) if during the balance of the term the Leased Premises or any part thereof are transferred or assigned, on the date of the transfer or the date of the assignment as the case may be
the rent payable hereunder shall be reviewed and shall for the next succeeding period of three (3) years or the remainder of that period in the case of a transfer or assignment during the currency of such a period be an amount to be agreed between the parties or in default of agreement to be determined by a Valuer as a fair commercial rental for the Leased Premises as at the date
(Page 5)
- upon which rent is to be reviewed assuming the actual improvements thereon had not been made."
4 Negotiations in relation to a revised rental for the Land first commenced on or about 13 August 1998. It is unnecessary for me to detail the progress of those negotiations. It is sufficient if I say that it was common ground between the parties that, as yet, no agreement has been reached. The parties are still negotiating. It was not suggested by either party that negotiations have broken down and each is still optimistic of a successful negotiated outcome. But it is the case that no agreement has been reached.
5 Given that this is the position, it would appear that the parties are still negotiating within the provisions of cl 2.2 of the Lease. Clauses 2.3 and 2.4 of the Lease only come into operation "failing agreement". Precisely when the parties can be said to have failed to reach agreement is an interesting question, but it is not one which it is necessary for me to decide in the context of this application. It is enough if I say that both parties agree that it could not yet be said that they have failed to reach agreement.
6 When the parties executed the Lease the Land was zoned for "garden industrial estate". The land use within that zoning was restricted to such uses as light industry, service industry, showroom, warehouse, office use and the like. This was the zoning pursuant to the defendant's Town Planning Scheme No 2 Jolimont Special Area Scheme as gazetted in the Government Gazette No 102 of 25 October 1985. In late 1990 the defendant adopted what was known as the "Subiaco 2000 Concept Proposal". This proposal anticipated substantial redevelopment of the City of Subiaco, including the Jolimont Special Area. To facilitate implementation of the proposal certain amendments were made to the various town planning schemes the defendant had in place. One of the schemes amended was Town Planning Scheme No 2. This amendment was approved by the Hon Minister for Planning on 27 January 1993 and published in the Government Gazette on 5 February 1993. This amendment affected the Jolimont area and the Land. As a result of the amendment to the Scheme, the defendant was no longer intended to achieve a garden industrial estate in the area around the development, but was preparing a new Town Planning Scheme to facilitate a comprehensive redevelopment of the area in accordance with the Subiaco 2000 concept. To facilitate the redevelopment, the State Government introduced the Subiaco Redevelopment Act 1994. This Act established the Subiaco Redevelopment Authority. The Act was proclaimed on 24 August 1994
(Page 6)
- and the authority was, on the plaintiff's argument, established on that date. Without going into the detail of the Act and the powers of the Authority, it is sufficient if I say that it is the plaintiff's argument that from the date of the establishment of the Authority the zoning of the land, or at least the area around the land, was changed. The plaintiff says, therefore, that the date of 24 August 1994 is significant for reasons which I will outline below.
7 During the period the parties were negotiating in relation to the rental, the defendant obtained a valuation of the Land. This valuation report prepared by Chesterton International appears as Annexure "JW8" to the affidavit of Willers. This report values the property at $9,250,000. The valuation is based on a zoning of "Precinct 2", as specified by the Redevelopment Authority. If the rental of the property was calculated in line with this valuation report and pursuant to cl 2.4, the rental would be $693,750 per annum which, according to Willers, would be an increase of some 520 per cent over the present rental: see par 11. The defendant has not sought to increase the rental based upon the Chesterton International valuation. No doubt it has obtained this valuation to background its negotiations with the plaintiff. As I have mentioned above, negotiations continue and while that is the case the provisions of cl 2.4 do not operate. No doubt, if negotiations break down, the plaintiff will obtain its own valuation of the property and there may be an argument as to the Unimproved Capital Value of the Leased Premises (as that expression is used in cl 2.3 of the Lease and as Unimproved Capital Value is defined in cl 1.1(g) of the Lease).
8 Section 47A(1) of the Limitation Act is in the following terms:
"47A. Protection of persons acting in execution of statutory or other public duty
(1) Notwithstanding the foregoing provisions of this Act but subject to the provisions of subsection (2) and (3) of this section, no action shall be brought against any person (excluding the Crown) for any act done in pursuance or execution or intended execution of any Act, or of any public duty or authority, or in respect of any neglect or default in the execution of the Act, duty or authority, unless ¾
(a) the prospective plaintiff gives to the prospective defendant, as soon as practicable after the cause of action accrues, notice in writing giving reasonable information
(Page 7)
- of the circumstances upon which the proposed action will be based and his name and address and that of his solicitor or agent, if any; and
- (b) the action is commenced before the expiration of one year from the date on which the cause of action accrued,
and for the purposes of this section, where the act, neglect, or default is a continuing one, no cause of action in respect of the act, neglect, or default accrues until the act, neglect or default ceases but the notice required by paragraph (a) of this subsection may be given and an action may thereafter be brought while the act, neglect or default continues."
(2) ...
(3)(a) Notwithstanding the foregoing provisions of this section application may be made to the Court which would but for the provisions of this section have jurisdiction to hear the action, for leave to bring an action at any time before the expiration of six years from the date on which the cause of action accrued, whether or not notice as required by subsection (1) of this section has been given to the prospective defendant.
(b) Where the Court considers that the failure to give the required notice or the delay in bringing the action as the case may be, was occasioned by mistake or by any other reasonable cause or that the prospective defendant is not materially prejudiced in his defence or otherwise by the failure or delay, the Court may if it thinks it is just to do so, grant leave to bring the action, subject to such conditions as it thinks it is just to impose.
(c) Before an application is made under the provisions of paragraph (a) of this subsection, the party intending to make the application shall give notice in writing of the proposed application and the grounds on which it is to be made to the prospective defendant, at least fourteen days before the application is made.
... "
9 Both parties raised in their submissions the question of whether or not the signing of a lease or the negotiation of a rent review pursuant to a
(Page 8)
- lease is an "act done in pursuance or execution or intended execution of ... any public duty or authority". What is involved in this case is the negotiation by the defendant of a commercial transaction with the plaintiff. There is no doubt the defendant is empowered to enter into the Lease: see s 267(1) of the Local Government Act 1960 (as amended); s 3.59 of the Local Government Act 1995. The plaintiff took the view that the defendant's actions did not fall within s 47A but it nonetheless sought leave to proceed out of an abundance of caution. At the hearing counsel for the defendant submitted that leave was required. In the circumstances, without finally deciding this issue, I will proceed on the basis that leave is required.
10 The nature of the proposed action by the plaintiff against the defendant can be summarised in the following way. The plaintiff says that it is clear that the defendant proposes that any rent calculated in accordance with cl 2.4 of the Lease will be based upon the zoning of the Land as "Precinct 2" as determined by the Subiaco Redevelopment Authority. The plaintiff says that it was an implied term of the Lease that the zoning of the Land would not be altered during the currency of the lease so as to adversely affect the plaintiff. Consequently, the plaintiff says that by rezoning the land the defendant breached this implied term of the lease and the defendant is not able to reap rewards from its default. This argument draws heavily on the decision of Heytesbury Properties Pty Ltd v City of Subiaco [2000] WASC 8. The plaintiff says that, consequent upon the breach of contract by the defendant, it should be entitled to seek declaratory relief from the court. Furthermore, the plaintiff says that its cause of action arose on or before 24 August 1994 when the Subiaco Redevelopment Authority was constituted and that therefore if action was not taken by that date any cause of action it had might have been statute barred.
11 For its part, the defendant maintained that at present no cause of action had arisen. The parties were still negotiating pursuant to cl 2.2 of the Lease. Agreement might well be reached and any action commenced prior to the termination of negotiations was speculative. It was submitted that s 47A(1) anticipated that a cause of action was on foot prior to any leave being granted. At present, as no cause of action was on foot no grant of leave should be made.
12 The second and allied submission made by the defendant was that this action was a "try on", as that expression is used in Victorian Railways Commissioner v Casaccio [1961] VR 157 at 160 and in The Minister for Community Welfare v Bennett, unreported; FCt SCt of WA; Library
(Page 9)
- No 5060; 2 September 1983. In support of this submission, it was said that the actions of the plaintiff were opportunistic - based upon the court's findings in the Heytesbury decision, the plaintiff saw an opportunity to avoid the clear intention of the lease agreement and to lock the defendant into an uneconomical rent.
13 I was satisfied that this is a proper case for the grant of leave. I reached that conclusion for a number of reasons. First, there is the limitation question. I am by no means satisfied that the plaintiff's right to seek a declaration as to any implied term in the Lease is subject to the limitation found in s 38(1)(c)(v) of the Limitation Act. Nonetheless, the plaintiff obviously regards this as a matter of concern. In the light of the plaintiff's concern and to ensure that any right of action which might have been extinguished on 24 August 2000, I thought it appropriate that leave be granted. No point would be served by refusing leave and introducing a further element of doubt into any action which might subsequently be commenced.
14 Secondly, I am satisfied that it is at least arguable that the plaintiff could seek declaratory relief, even though negotiations taking place pursuant to cl 2.2 are not yet complete. It is possible, as matters stand at present, that declaratory relief might be refused on the grounds that no good purpose would be served by granting it, or because making declarations would not resolve all issues between the parties: see Rivers v Bondi Junction-Waverley RSL Sub Branch Ltd (1986) 5 NSWLR 362 and Lucas and Tait (Investments) Pty Ltd v Victoria Securities Ltd [1975] 1 NSWLR 170. However, the position is by no means clear and it is not possible to determine in these proceedings whether or not discretionary considerations would preclude the grant of relief. Doubts about the remedies which might be available to the plaintiff are not such as to preclude leave being granted.
15 Thirdly, I am not satisfied that this expression is a "try on", to adopt that curious vernacular expression. It could not be said that the action is either speculative or absurd. There may be difficulties with the plaintiff's argument, but it is not wholly out of the question that there may be implied into this Lease a term as the plaintiff submits. That is a matter which could only be determined after trial.
16 Under s 47A(3)(b) leave to bring proceedings may be granted where the defendant is not materially prejudiced in its defence. Neither in the evidence, nor in its submissions, did the defendant suggest that it would be materially prejudiced in its defence if leave was given to bring these
(Page 10)
- proceedings. Of course, the defendant will suffer the prejudice of having to defend this action and, potentially, receiving a much reduced rent if a term is implied in the contract as the plaintiff argues. But that is not the proper test. There is no suggestion in this case that witnesses have disappeared, that documents have been lost or that, in some way, the delay in bringing the action for a declaration has acted to the specific prejudice of the defendant.
17 In the circumstances, then, I granted the plaintiff leave to bring an action. I made orders in terms of par 1 of the chamber summons and I reserved the costs.
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