Jelin Pty Ltd v Murdoch Pty Ltd
[1984] FCA 144
•31 MAY 1984
Re: JELIN PTY. LTD
And: MURDOCH PTY. LTD.
No. WA G26 of 1983
(1984) ATPR para 40-457
Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.
CATCHWORDS
Trade Practices - lease of shop in centre - allegations of misleading and deceptive conduct - preliminary issue - accord and satisfaction - agreement by applicant to "withdraw" proceedings - meaning of "withdraw" - whether accord and satisfaction by exchange of promise or performance - failure to establish accord and satisfaction.
HEARING
PERTH
#DATE 31:5:1984
ORDER
Declares that the respondent has failed to establish the matters pleaded in paragraph 9 of its defence.
Orders that paragraph 9 of the respondent's defence be struck out.
Orders that the costs of the trial of the preliminary issue arising from paragraph 9 of the respondent's defence be reserved.
JUDGE1
The respondent is the owner of a big shopping centre, known as Mount Hawthorn Plaza, in Scarborough Beach Road, Mt. Hawthorn.
By an agreement in writing dated 3 December 1981 the respondent leased to the applicant Shop 6 in the shopping centre for a term of 5 years as from 10 November 1981. The annual rent was $15,527.52 payable by monthly instalments of $1,293.96. In addition the applicant was obliged to pay a percentage of the "aggregate variable outgoings", a term exhaustively defined in the First Schedule to the lease but meaning in effect all monies expended by the respondent in the maintenance and operation of the shopping centre.
Shop 6 was leased to the applicant as a delicatessen.
From the outset there were disputes between the parties and the applicant paid no rent after the first month. The disputes focused on allegations by the applicant that the shopping centre had been misrepresented to it, with particular reference to the number of persons who were likely to use the centre and the nature of the business to be conducted by Target Supermarkets Pty. Ltd., the principal lessee. For the purposes of the issue now before the Court it is unnecessary to refer to these allegations in any detail. It is enough to say that the applicant claimed that the respondent had represented that Target intended to operate a variety store in the shopping centre. The significance of this, from the applicant's point of view, was that a variety store was likely to attract persons to the shopping centre and furthermore that such a store would not be in competition with the applicant's business. The applicant complained that in fact Target operated as a food store with a loss of attraction to the centre and competition destructive of the applicant's business.The applicant placed the matter in the hands of solicitors at the end of 1981 or early 1982. The respondent issued two Local Court summonses for arrears of rent, one on 22 April 1982 and another on 14 May 1982. On 4 March 1983 the respondent issued proceedings out of the District Court against the applicant and James Lowe, one of its directors and a guarantor under the lease, claiming rent and variable outgoings and also forfeiture of the lease by reason of their non-payment.
For its part the applicant sued the respondent in the Supreme Court by writ issued 8 July 1982. In that action the applicant claimed damages for fraudulent misrepresentations and negligent misstatements. That action was discontinued on 8 April 1983 and on 6 July 1983 the applicant brought the present application in the Federal Court. In this action the applicant makes allegations similar to those raised in the Supreme Court proceedings but relies upon s.52 of the Trade Practices Act 1974 as well as the causes of action pleaded in the Supreme Court.
In its defence to the Federal Court application the respondent pleads to the various allegations made by the applicant and in addition pleads accord and satisfaction. It does so in the following terms.
"9.In any event the respondent pleads as follows:-
(a)On the 22nd April 1982 the respondent commenced proceedings against the applicant in the Local Court at Perth claiming rent and variable outgoings due under the said Lease.
(b)On the 8th July 1982 the applicant commenced proceedings in the Supreme Court of Western Australia against the respondent. The action was based on the same or similar grounds and similar relief to that claimed in this action was sought.
(c)Between May and August 1982 negotiations took place between representatives of the applicant and the respondent which culminated in an agreement which was reduced to writing in and on a letter dated the 6th August 1982 from the respondent to the applicant, signed by or on behalf of both parties.
The respondent will refer to the said letter at trial for its full terms and effect.
(d)In terms of the said agreement, inter alia -
(i) the respondent granted the applicant a rent-free period for the following 6 months;
(ii) the respondent forgave the applicant all arrears of rent then outstanding;
(iii)each party was to withdraw its said action and pay its own costs.
(e)The respondent has performed its obligations under the said agreement and the applicant has enjoyed the benefits provided for in the said agreement.
(f)The aforesaid agreement and the performance thereof constituted an accord and satisfaction in relation to the applicant's present claims and complaints.
(g)By its conduct since 6th August 1982 the applicant has repeatedly endorsed its acceptance of the terms of the agreement reached, and it has retained and retains the benefits aforesaid."
The applicant filed a detailed reply to the plea of accord and satisfaction. It is unnecessary to set out the plea verbatim; I shall deal with its contents in the course of these reasons. At one stage, by consent, the issue of liability in the application was to be heard first. Problems then arose over some of the interlocutory steps that had been taken and in the end a decision was made to deal first with the plea of accord and satisfaction, on the basis that if the plea were successful a long and inevitably expensive hearing would be avoided. These reasons are therefore confined to that plea.
The principal actors in the negotiations and discussions that took place were, on the part of the applicant, Mr. and Mrs. Lowe who were directors and shareholders. For its part the respondent acted through Mr. Johnston, who was a director of the company and also employed as development manager. At a later stage he was joined by Mr. Thomas who, in July 1982, became the co-ordinator of the Mt. Hawthorn shopping centre and other shopping centres owned by the respondent.
There was a sharp divergence in the evidence of the witnesses called by the applicant, on the one hand, and the respondent, on the other, as to the times and places at which certain meetings were held and also as to who was present at those meetings. It was a divergence which ought to have been capable of resolution by reference to contemporaneous records. But, with the exception of a letter to which I shall now refer, no such records were forthcoming.
An appropriate starting point, though it took place late in the sequence of events, is a letter written by the respondent to the applicant on 6 August 1982. That letter refers to "our agreement reached yesterday". There was no suggestion that this reference was a concoction and it may be assumed that there was a meeting on or about 5 August 1982. I say "on or about" to accommodate a submission by counsel for the applicant that the letter may have taken a day or so to be typed and that the meeting might have been a little earlier than 5 August. The significance of this was that Mr. and Mrs. Lowe spoke of a meeting they attended late in July or early in August 1982.
The divergence comes about in this way. Mr. Johnston and Mr. Thomas gave evidence that the letter of 6 August 1982 was preceded by a meeting between them and Mr. Lowe in the applicant's delicatessen in the shopping centre. At that meeting, they said, various matters were discussed which are referred to in the letter of 6 August. Mr. Lowe denied there had been any such meeting. His evidence was that the matters referred to in the letter were discussed at a meeting in the respondent's office in Mt. Pleasant, a meeting at which he, his wife and Mr. Johnston were present. Mr. Rishani, an employee of the Murdoch group of companies, was present for part of that meeting. Mrs. Lowe corroborated her husband's evidence of that meeting but was unable to say whether or not there had been a meeting at the delicatessen as alleged by the respondent. It should be said that Mr. Johnston acknowledged that there had been a meeting at the respondent's office but he placed that meeting much earlier than 5 August 1982 and was adamant that it was not the meeting referred to in his letter.
There was one area of common ground. It was that on 2 September 1982 Mr. Johnston and Mr. Thomas met Mr. Lowe at the delicatessen, that there was a discussion concerning the letter of 6 August and that, Mr. Thomas having by way of postscript noted some additional matters relating to the leased premises, Mr. Lowe signed that letter. Mr. Lowe said that Mr. Johnston and Mr. Thomas called at his shop unexpectedly; they said it was by appointment. The parties differed as to what was said at that meeting.
On one view it may be unnecessary to attempt to resolve the divergent evidence regarding events preceding the letter of 6 August. In its plea of accord and satisfaction, the respondent relies upon an agreement reduced to writing in the letter with the handwritten additions as signed by the parties. Even on that basis some reference must be made to other events as the respondent points to the circumstances in which the letter was written and added to on 2 September to resolve any ambiguity there may be in it, in particular a provision:
"That each party is to withdraw its legal action and be responsible to pay its own fees."
But the applicant asserts that, although there was an agreement, it was partly oral and partly in writing. The oral agreement is that said to have been made at the meeting in the respondent's office.
It is possible to test the differing accounts by reference to some objective facts. However I should first say that, speaking generally, I prefer the evidence of Mr. and Mrs. Lowe to that of Mr. Johnston and Mr. Thomas. The Lowes gave a very clear account of events, including matters of detail, and their evidence was not shaken on cross-examination. No doubt the clarity of their recollection is in part due to the importance the lease of the delicatessen has featured in their lives since the end of 1981 and the substantial financial loss they have sustained in the business for which, rightly or wrongly, they blame the respondent. On the other hand the evidence of Mr. Johnston and of Mr. Thomas regarding the meeting on 2 September 1982 and the earlier meeting which they said took place on 5 August was very general and, in some respects, quite vague. Mr. Lowe was an irritation to the respondent, not only because of his complaints but also because of his role in the airing of grievances by other tenants. In his anxiety that the respondent should be quit of the applicant once and for all, I am satisfied that Mr. Johnston tended to gloss over events that took place and, in particular, discussions that were held. His oft repeated advice to Mr. Lowe that the parties should eschew solicitors and sort things out themselves had the almost inevitable result that the parties are now before this Court.
In attempting to pinpoint when and where meetings were held, there is one matter of considerable significance. I accept the evidence of Mr. and Mrs. Lowe that, at the meeting in the respondent's office, Mr. Johnston suggested that the parties should "withdraw their writs" and that Mr. Lowe said that he would not withdraw his writ. It is known that the applicant did not commence proceedings against the respondent until it issued its writ in the Supreme Court on 8 July 1982. It may be taken therefore that this meeting was not held earlier than 8 July. Mr. Johnston first placed that meeting "some six months prior to the meeting I had with David Thomas and Mr. Lowe in August" but later said the meeting "must have taken place around about June of 1982". I am satisfied that the meeting took place after 8 July and, as the respondent was aware of the writ, it must have been some time after that date.
Mr. Thomas was quite vague regarding the meeting which he said took place on 5 August. It is clear that he had no independent recollection of the date, taking it from the reference in the letter of 6 August. He had virtually no memory of what was said and, to the extent that he did refer to any matters of detail, he might well have been talking about the meeting on 2 September.
There is a question whether Mr. Thomas is likely to have been present at a meeting on 5 August 1982 in any event. By letter dated 14 July 1982, the Murdoch group of companies appointed him as project co-ordinator of its shopping centres, "to commence work on July 19, 1982". In his evidence, Mr. Thomas confirmed that he began work on 19 July but thought he first met Mr. Lowe towards the end of July or early August. He pointed out:
"I was also involved with two other
shopping centres."
On 20 July 1983 Mr. Johnston swore an affidavit, filed in these proceedings, in which he referred to a meeting on 5 August 1982, attended by Mr. Thomas and Mr. Lowe. He also referred to the meeting on 2 September. On 6 September 1983 Mr. Thomas swore an affidavit in which he referred to the affidavit of Mr. Johnston, saying that "in so far as the matters contained therein are within my knowledge they are true and correct". Rather curiously, although Mr. Thomas dealt in that affidavit at some length with the meeting on 2 September, he made no direct reference to a meeting on 5 August.
Apart from the evidence of Mr. Johnston and Mr. Thomas, there is only one matter which might suggest that the meeting in the respondent's office was earlier than 5 August. Mrs. Lowe said that at that meeting Mr. Johnston mentioned a new manager to be appointed for the centre, someone who had been with Woolworths. This was undoubtedly a reference to Mr. Thomas who, as I have pointed out, was not appointed until July 1982. On the other hand Mr. Lowe's evidence was that Mr. Johnston said:
"... we're getting a new manager, he's already started at one of the other centres, and he'll be coming down to Mt. Hawthorn."
This would place the meeting on a date later than 19 July when Mr. Thomas began work.
There is one other matter I should mention before making findings about the sequence of events. Reference has already been made to Mr. Rishani who made a brief appearance at the meeting in the respondent's office. At the end of the hearing, after Mr. Templeman had addressed on behalf of the applicant and Mr. White had begun to address on behalf of the respondent, Mr. White asked leave to call Mr. Rishani. He said that the materiality of Mr. Rishani as a witness only became evident during the cross- examination of Mr. Johnston on the preceding day, that immediate steps had been taken to locate Mr. Rishani, but that he had only just been found and brought to Court. The application should have been made before counsel for the respondent began his final address and indeed before counsel for the applicant began his address. It was then known that Mr. Rishani might be available. However I allowed Mr. Rishani to be called on one matter, the date on which he ceased to be employed by the Murdoch group of companies. Mr. Rishani was quite vague about that matter; the best he could do was to say that it was about June 1982. But in any event his evidence did not advance the respondent's case in this respect because he said that after he left that employment he still carried out negotiations for the Murdoch group of companies and that he could not recall whether the meeting with Mr. and Mrs. Lowe and Mr. Johnston was before or after his employment came to an end.
I find that the meeting referred to in the respondent's letter of 6 August took place on or about 5 August, that it took place in the respondent's office in Mt. Pleasant and that it was attended by Mr. and Mrs. Lowe and Mr. Johnston, with a fleeting appearance by Mr. Rishani. I make that finding by reason of my general preference for the evidence of Mr. and Mrs. Lowe; the vagueness of the evidence of Mr. Johnston and Mr. Thomas regarding the meetings that took place; the fact that, in the light of the date of the issue of the writ in the Supreme Court by the applicant, the meeting in the respondent's office must have been after 8 July 1982 and certainly much later than Mr. Johnston placed it; and having regard to Mr. Lowe's evidence that at the meeting Mr. Johnston referred to a new manager who had already started at another centre. It is significant too that although Mr. Johnston was said to have taken notes at the meeting in the respondent's office and Mr. Thomas to have done likewise at the first meeting at the delicatessen, no notes were produced and no records by way of diaries, appointment books or other records that might have placed officers of the respondent at particular places on particular dates.
In the light of my finding regarding the meetings, I turn now to what was there agreed and the implications of any agreement.
It is important not to lose sight of the fact that the matter presently before the Court is the respondent's plea of accord and satisfaction. The need to trace events earlier than the letter of 6 August 1982 and to make findings as to what was agreed by the parties arises because of the defence that the applicant agreed to withdraw its action against the respondent. While, at that time, the only action on foot by the applicant against the respondent was in the Supreme Court, the respondent argues that, in the intention of the parties, there was an agreement in satisfaction of all claims the applicant had against the respondent. The action in the Federal Court, the respondent submits, was brought in breach of that agreement and the respondent is entitled to judgment accordingly.
Notwithstanding the reference in the letter of 6 August to "our agreement reached yesterday", I am not persuaded that at the meeting held on or about 5 August, the parties did resolve their disputes, at any rate not in the manner for which the respondent contends. I think that Mr. and Mrs. Lowe and Mr. Johnston discussed the various matters in issue between the applicant and the respondent, probably by reference to a letter written on 20 May 1982 by the applicant's then solicitors to the respondent's solicitors in which various matters were itemised. I think too that Mr. Johnston, on behalf of the respondent, undertook to attend to a number of Mr. Lowe's complaints, in particular those relating to the operation of the car park lights time clock, the airconditioning in the shop and the matter of shop front signs. Mr. Johnston agreed that arrears of rent would be waived and that the applicant could have a further 6 months, rent free, for the delicatessen to get on its feet. He did not agree to a suggested waiver of variable outgoings because these were monies actually expended by the respondent. There was agreement that at the end of 6 months the parties would look again at the matter of rent payable under the lease.
But I accept the evidence of Mr. Lowe, supported as it is by that of Mrs. Lowe, that he was adamant that the applicant would not discontinue the action in the Supreme Court. Mr. Lowe said he would be willing to leave the writ in abeyance for 6 months, being the additional rent free period, and see how matters stood at that time. Mr. Johnston was optimistic that by then the business of the shopping centre would have increased and the applicant's business improved correspondingly.
It is now necessary to look at what happened at the meeting on 2 September 1982, the location of which and the participants in which are not in issue.
The letter of 6 August was before the parties at the meeting. I accept Mr. Johnston's evidence that Mr. Lowe complained that certain matters agreed to at the previous meeting had not been mentioned in the letter. They related to the car park lights time clock, airconditioning and a neon sign. These matters were added by Mr. Thomas in his own hand and below them Mr. Lowe signed his name which was witnessed by Mr. Thomas. As already mentioned, the letter identifies, as part of the agreement reached at the meeting on or about 5 August, that each party would withdraw "its legal action" and be responsible for its own costs.
I accept the evidence of Mr. Lowe that he said "I am not withdrawing the writ" and that Mr. Johnston said "The letter means nothing. You can put the writ on again after 6 months but you won't want to".
There is one other evidentiary matter to which reference must be made. The applicant called as a witness Mr. Carton who had been employed by the respondent in a menswear store in the Mt. Hawthorn shopping centre. Some time thereafter Mr. Carton bought the business himself but in August-September 1982 he was assisting Mr. Thomas in some duties concerned with the running of the centre. There was in fact an office at the back of the menswear shop which Mr. Thomas used. Mr. Carton gave evidence that early in September 1982 Mr. Thomas came to his shop and, referring to a letter he had, said "I've got to get this letter signed by Jim". "Jim" was a reference to Mr. Lowe. Mr. Johnston then came on the scene and both men went into the delicatessen. Some time later Mr. Thomas came to the office in Mr. Carton's premises and said: "He's signed now; we've got him now. He thought he could take us to court but I think we've got him now". This conversation was put to Mr. Thomas in cross-examination. He said that he had no recollection of making any such remark and denied having made it.
It is true that Mr. Carton is not well disposed towards the respondent. His business has been unsuccessful and the respondent has taken possession of property under its bill of sale. But, having seen Mr. Carton in the witness box and heard his evidence-in-chief and evidence under cross-examination, I accept that some such remark was made by Mr. Thomas. It is consistent with the attitude of the parties at the time and since, the applicant maintaining that it would not abandon its claim for damages against the respondent and the respondent asserting that this was the effect of Mr. Lowe signing the letter of 6 August. It is also of some interest that as soon as the letter was signed, Mr. Thomas had it photocopied. He said he did so at the newsagents in the shopping centre. Mr. Carton said there was no photocopying machine in the newsagents but there was one in the office at the rear of the menswear shop. It is logical that Mr. Thomas should go to that shop to photocopy the letter.
The respondent submits that, whatever might have been said at the meeting on 2 September or indeed at any other meeting, the fact is that Mr. Lowe signed the letter of 6 August and, his authority to bind the applicant not being in question, the applicant is bound by the terms of the letter.
Even if this submission be accepted, the respondent does not succeed in its plea of accord and satisfaction. It may be that in a particular case a promise not to sue or to withdraw an action already initiated amounts to a release of any cause of action the promisor may have against the promisee. McDermott v. Black (1938) 63 CLR 161 is an instance of this. A purchaser was induced by fraudulent misrepresentations made by the vendor to buy shares. Before the date of completion, the purchaser complained of the misrepresentations but in a later letter he withdrew all allegations imputing anything improper to the vendor, conditionally upon the vendor granting him an extension of time to complete the contract. The extension of time was granted but the purchaser refused to complete on the extended date. The vendor having rescinded the contract, the purchaser sued for damages for deceit, relying on the misrepresentations which he had withdrawn. The court held that the withdrawal of the allegations amounted to a promise not to sue in respect of the misrepresentations or to a release of any cause of action in respect of them. Accordingly there was a defence, either as an accord and satisfaction at law or a release of the cause of action by an agreement, enforceable in equity.
Starke J. commented at pp.175-176:
"A business arrangement was proposed, and an interpretation should be given to it that best effects the intention of the parties and makes it efficacious. A withdrawal of allegations of false representations on the part of the appellant would be useless from a business point of view if it had only an evidentiary value or was but an affirmation of the agreement, still leaving the appellant open to an action for damages for deceit. Consequently, the respondent's proposal that he withdraw all allegations imputing anything improper to the appellant means, I think, that he would not bring any action against the appellant in respect of those allegations if an extension of time were granted to him ...".
Again, Dixon J. at p.186 said:
"In these circumstances, it would be natural for the appellant McDermott to suppose that the proposal was that the contract should be completed on the footing that Black waived all claims based on the alleged misrepresentation. It would be futile for Black to withdraw allegations which he was to be at liberty to revive. The purpose of the withdrawal was not that of social amenity but to complete and close a business transaction".
Ordinarily, one might readily conclude that provision for withdrawal of actions was part of an arrangement intended to resolve all matters in dispute between the parties. But, in the circumstances of the present case, circumstances that I am satisfied were not intended to resolve the issues between the parties once and for all but to achieve a cooling off period for 6 months, it is not appropriate to reach that conclusion. In saying that, I am construing the letter of 6 August in the light of the surrounding circumstances, but treating it as an agreement in its own right. See Prenn v. Simmonds (1971) 3 All ER 237. The expression "withdraw" should be given its ordinary meaning of discontinuance, without affecting the promisor's right to bring future proceedings if he chooses. It must be remembered that although, on the face of the document, the respondent was conceding the applicant a rent free period of about 14 months, the respondent had offered other tenants what was referred to as a "rent holiday", something which is by no means unknown with the letting of new commercial premises. The applicant believed, on the advice of counsel, that it had a good cause of action against the respondent for damages in the sum of $50,000 or thereabouts and it is unlikely to have forgone that claim for the concession offered by the respondent.
In any event, I am not persuaded that the letter of 6 August 1982, with the handwritten additions as signed by Mr. Lowe, constitutes the entirety of the agreement made between the parties. In my view, there was an oral agreement of which the letter was evidence or alternatively an agreement that was partly oral and partly in writing. I accept the evidence of Mr. Lowe that Mr. Johnston said to him on 2 September "The letter means nothing. You can put the writ on again after 6 months but you won't want to".
Thus, on any view of the agreement made the parties on 2 September 1982, there was no intention that the applicant should abandon for all time any cause of action it had against the respondent. What I have said is enough to dispose of the particular defence now before the Court but I should say something about the aspect of satisfaction. An accord and satisfaction may result from the exchange of promises or by performance. McDermott v. Black at p 184. It is a matter of construction of the agreement. British Russian Trade Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd. (1933) 2 KB 616 at pp 654-655.
In the present case, if there were an accord in the sense that the applicant undertook to abandon its claim for damages against the respondent, it was in exchange partly for promises given by the respondent and partly for the performance of certain acts by the respondent. There was an issue as to whether the respondent had attended to the matters noted by Mr. Thomas on the letter of 6 August. I am satisfied that in substance it did so, bearing in mind that in the case of the neon sign the initiative was to come from the applicant. The Local Court actions were not discontinued by the respondent until the second day of the hearing in this Court and there was no evidence that the action in the District Court had been discontinued.
On what was a matter quite vital to the parties, the respondent failed to review the rental at the end of 6 months. By letter dated 7 June 1983, the respondent's solicitors wrote to the applicant to say that the rent for the 18 month period commencing on 10 May 1983 would be the minimum annual rent, as defined in the lease. This was in effect a 10% increase on the rent provided for the period up to 10 May 1983. This was not the arrangement mentioned in the letter of 6 August 1982 which contemplated that a rent would be fixed having regard to the "trading pattern of the Centre and also taking into account all of the known factors". Of its very nature this was an undertaking the performance of which was essential to any accord. The respondent did not meet its obligation.
I am therefore of the view that the respondent has failed to establish either accord or satisfaction as pleaded and that it cannot succeed in respect of the matters raised in paragraph 9 of its defence. It seems to me that the proper way to dispose of this part of the application is to declare that the respondent has failed to establish the matters pleaded in paragraph 9 of its defence, to strike out that paragraph and to order that the costs of the issue now before the Court be reserved. Attached to these reasons is a copy of the order I propose but I shall hear from counsel on the matter.
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