L a Wear P/L v Melbourne Central P/

[1994] FCA 154

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JUDGMENT NO. ...... -m . . . . . . -

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VICTORIA DISTRICT REGISTRY	1	No. VG 57 of 1994
1
B N B R A L	DIVISION	1

B E T W E E N :

L A WEAR PTY LTD

(A.C.N.051 216 052) and

Applicants

MELBOURNE CENTRAL PTY LTD

(A.C.N. 006 470 560)

Respondent

JUDGE :  Heerey J

RECEIVED

DATE :	17 March 1994
PLACE :	Melbourne  FPIRULOOURfOF

MlsTRIUA . I

EX TEMPORE REASONS FOR JUDGMENT

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The first applicant L A Wear Pty Limited ("the company") is the tenant of shop 278 at Melbourne Central Shopping Centre

( "the Centre") . It has brought this claim under S. 52 of the

Trade Practices Act 1974 (Cth) ("the Act") and seeks an

interlocutory injunction restraining the respondent landlord

and the erection of a traffic bridge between the centre and

from taking possession of the shop.

The company went into possession of the shop under a lease which commenced on 11 September 1991. Its complaint, as emerges from a statement of claim which was filed in this court on 3 March 1994, is that it was induced to enter into the lease by a number of representations about the centre

relating to such matters as estimated pedestrian traffic flow

Myers .

At the beginning there must have been some recognition on both sides that the venture was attended with some uncertainty. I say that because the parties at the outset agreed to a seven month rent holiday under the lease, and also because in the initial letter dated 1 February 1991 from accountants acting on behalf of the applicants there is reference to "these harsh economic conditions".

Anyway, it is plain that the business did not prosper. The evidence shows that there were a number of very substantial reductions agreed to by the respondent in the rent due under the lease. After the rent holiday the rent payable would have been $6,608.33 per month, but as a result of a request by the company in April 1992 that was reduced to $1,652.08 per month, a reduction of some 75 per cent. There was a further reduction agreed to in March 1993. Nevertheless, the arrears that have accumulated amount to $70,388.27. That is to say,

arrears in respect of the rental as varied.

There are some criticisms which can be validly made of the merits of the applicants' case even at this initial stage. In particular, the statement of claim to which I have already referred is quite unequivocal on its face in seeking a termination of the lease. Paragraph 14 pleads that:

"The tenant is entitled to and seeks an o;der
terminating the lease and releasing it from any

liability pursuant to the lease and pursuant to
section 87 of the Act."

Similar relief is sought by the guarantor, and the prayer for relief sought includes a declaration terminating the lease between the company and the respondent and releasing the company from any obligations pursuant to the lease, and orders under 8.87 of the Act declaring the agreement void from such date as the court may specify.

Some explanation was proffered as to that by the second applicant. In an aff idavit sworn in support of the present application, he says that he discussed the matter with his solicitor and told him he had been negotiating for approximately 12 months for a new rental.

He says also that during his negotiations with the landlord's

solicitors :

"I have always made it clear to them that I intended

to remain in the premises."

His solicitor Mr Burstyner deposes that the instructions from	the second applicant were that he wished to remain as tenant,
but at a value which reflected the true market value of the
premises. M r Burstyner says that he

"obtained specific instructions to issue proceedings in the Federal Court seeking damages and seeking 'rectification' of the lease."

On its face that suggests that the second applicant 'used the word "rectification" in the course of giving his instructions to Mr Burstyner, something perhaps a little unlikely. Mr Burstyner also deposes that his client

"wished to obtain an order from the court that the lease be 'varied' so that it remains on foot but at a rental appropriate to the turnover being achieved by the business rather than on the facts as misrepresented to the tenant."

The whole aspect of the matter is quite unsatisfactory in the light of the unequivocal claim for termination of the lease made in the statement of claim which, I might add, is much more consistent with the history of the business and the remorseless decline to which I have already referred.

But as I made it fairly clear in argument, the thing that really exercises my mind most and influences me against granting the relief sought is the lack of any evidence that the proffered undertaking as to damages would be of any worth.

In the course of these negotiations with the respondent, the

company was asked to provide evidence of its assets. The	second applicant supplied a statutory declaration sworn on 8
August 1993 which disclosed his assets and liabilities as
follows :

Share in L A wear pty Ltd
Monies owing
Total assets
Lees liabilities
Creditors and loans
Net assets

The evidence on behalf of the respondent shows that there is at least a possibility of other tenants being obtained for the shop. In the light of the whole history of the matter I think it would be unfair to the respondent to require it to continue with the company in possession of the shop with every likelihood of increasing further losses which are likely to be irrecoverable.

On the other hand, if the company is successful ultimately it can recoup its loss by way of damages. It is argued that it will suffer hardship because, if it goes out of possession now, what is said to be a recent upturn in the business will not accrue to it and will not be able to show the loss of profits and perhaps goodwill which it could otherwise establish by staying in the business. I think that is all really in the realms of speculation at the moment and does not seem to outweigh the irremediable loss which is likely to be suffered to the respondent. So for those reasons the

application for an interlocutory injunction is dismissed.

I certify that this and the

preceding five (5) pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey.

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Associ te

&pearancee

Counsel for the applicant:	MS C Sparke
Solicitor for the applicant:	Glennen Burstyner & CO
Counsel for the respondent:	M r J Davis
Solicitor for the respondent:	Corrs Chambers Westgarth
Date of hearing:	17 March 1994

JUDGES' CHAMBERS

FEDERAL CIOURT OF AUSTRALIA
450 LITTLE BOURKE STREET

MELBOURNE. 3000

30 March 1994

Sonia Cornale
Federal Court of Australia

Principal Registry

Law Courts Building
Queens Square

SYDNEY NSW 2000

Dear Sonia,

A Wear Ptv Ltd v Melbourne Central Ptv Ltd

No. VG 57 of 1994

I enclose a copy of the judgment delivered by his Honour M r
Justice Heerey in the above matter on 17 March 1994.
A diskette record of the judgment is also enclosed.
This judgment is not for general distribution.

Regards,

&/K	David Brennan
Associate to Heerey J
enc. PRINCIPAL

REGISTCIV