Longjing Pty Ltd v Perpetual Nominees Limited

Case •

[2019] NSWSC 1098

•

27 August 2019

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Longjing Pty Ltd v Perpetual Nominees Limited [2019] NSWSC 1098
Hearing dates: 13-15 May 2019; 30 May 2019
Date of orders: 27 August 2019
Decision date: 27 August 2019
Jurisdiction:Equity
Before: Hallen J
Decision:

The Court:

1. Orders that the Plaintiff’s Statement of Claim be dismissed.

 

2. Orders that there be judgment for the Cross-Claimant against each of the Cross-Defendants in the sum of $252,936.

 

3. Orders that the Plaintiff pay the Defendant’s costs of the Statement of Claim.

 

4. Orders that the Cross-Defendants pay the Cross-Claimant’s costs of the Cross-Claim.

 

5. Orders that the Court Books be returned.

6. Orders that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10) and Practice Note No SC Gen 18.
Catchwords:

CONTRACTS – Construction – Principles – Determining when Lease commenced pursuant to clauses within “Agreement to Lease” and “Lease” – Several potential dates for commencement of lease were submitted by Defendant – Plaintiffs argued lease did not commence and no Lease Commencing Date – Commercially unrealistic to conclude that no lease had commenced in the light of the parties’ conduct

 

CONTRACTS – Unconscionable conduct – Misleading or deceptive conduct – Whether Defendant’s conduct in terminating lease is unconscionable pursuant to meaning within s 46A of the Retail Shop Leases Act 1974 (Qld) or pursuant to s 20 or s 21 of the Australian Consumer Law, or misleading or deceptive conduct

 

CONTRACTS – Breach of contract – Parties entered into a contract consisting of an Agreement for Lease and Lease of certain premises – Whether Plaintiff in breach of contract – Whether Defendant entitled to terminate lease

  CONTRACTS – Breach of contract – Consequences of breach – Right to damages – Quantum of damages agreed to by the parties during course of hearing
Legislation Cited: Australian Consumer Law
Competition and Consumer Act 2010 (Cth)
Retail Shop Leases Act 1994 (Qld)
Retail Shop Leases Amendment Act 2016 (Qld)
Property Law Act 1974 (Qld)
Cases Cited: Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136
Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185
G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251
H20 Learning Pty Ltd v Swim Loops Pty Ltd t/as Jump Swim Schools [2019] NSWDC 165
Highmist Pty Ltd v Tricare Ltd [2005] QCA 357
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61
Leda Commercial Properties Pty Ltd v DHK Retailers Pty Ltd (1992) 111 FLR 81
Macquarie Developments Pty Ltd & Anor v Forrester & Anor [2005] NSWSC 674
Nadilo v Souris [2019] NSWSC 108
Progressive Mailing House Pty Ltd v Tabali (1985) 157 CLR 17
Selever v Klaskova (Supreme Court of New South Wales, Powell J, 15 March 1988, unrep)
Walsh Investments Pty Ltd v SCK Properties Pty Ltd [2016] QCA 258
Watson v Foxman (2000) 49 NSWLR 315
Whitlock v Brew (1968) 118 CLR 445
Willmott Growers Inc v Willmott Forests Ltd (Receivers and Managers appointed) (In liq) (2013) 251 CLR 592; [2013] HCA 5
Category:Principal judgment
Parties: Longjing Pty Ltd (Plaintiff)
Merry Ng (Cross-Defendant)
Perpetual Nominees Limited (Defendant/Cross-Claimant)
Representation:

Counsel:
Mr J A Raftery (Plaintiff/Cross-Defendant)
Mr C N Bova and Ms B A Ng (Defendant/Cross-Claimant)

  Solicitors:
Somerset Ryckmans (Plaintiff/Cross-Defendant)
Dentons Australia (Defendant/Cross-Claimant)
File Number(s): 2016/269217

Judgment

Introduction

  1. HIS HONOUR: This case concerns, principally, a commercial lease of shops 203, 204, 205 and 206 (“the Premises”), in a retail shopping centre known as “Orion Springfield Central” (“the Centre”), situated at Springfield Lakes, in Queensland; whether the lease was validly terminated by the Defendant; and the consequences that follow upon termination of the lease.

  2. The Premises comprised seven individual stalls in the Centre. They were to be used by the Plaintiff, and/or its licensees, for operating an Asian store selling groceries and vegetables and an Asian Hawker-Style Market selling pre-prepared, and prepared to order, Asian cuisine and beverages. The Centre consisted of over 110 specialty stores.

  3. At the commencement of the hearing, each of the parties contended that the Defendant had granted, and the Plaintiff had taken, the Lease on alternative dates, the Defendant submitting dates earlier than 24 November 2015, and the Plaintiff indicating there was a binding lease on 24 November 2015: Tcpt, 13 May 2019, p 22(11-36). However, ultimately, there was no real dispute that the Defendant granted, and the Plaintiff took, a lease of the Premises, by no later than 24 November 2015, being the date on which the Defendant executed the Lease, and that on that date, the Lease became binding on the parties: Tcpt, 15 May 2019, p 189(13-25).

  4. During the course of the hearing, the Defendant seemed to suggest that the Lease became binding when the Plaintiff entered into possession: Tcpt, 15 May 2019, p 190(8-50), but it is clear from the correspondence, to which reference will be made, that the Defendant asserted, during the course of negotiations, that it was not to be legally bound until it had executed the Lease.

  5. More specifically, the issues for determination relate to whether the Lease had “commenced” at the time a Notice to Remedy Breach of Covenant (“the Breach Notice”) was issued on 22 January 2016; whether the Plaintiff was in breach of the Lease as a result of its failure to open the Premises during Core Trading Hours; whether the Defendant was entitled to terminate the Lease on 1 March 2016; and whether the Defendant’s conduct, in terminating the Lease, was unconscionable pursuant to s 46A of the Retail Shop Leases Act 1994 (Qld) (“the RSL Act”) or pursuant to s 20 and/or s 21 of the Australian Consumer Law (“the AC Law”), being Schedule 2 to the Competition and Consumer Act 2010 (Cth), or “misleading and deceptive” conduct.

  6. (Initially, in the discussions that took place between the parties, and in some of the documents, there was a reference to the lease of another shop (“Shop MM5”), which was to be used by the Plaintiff, or its licensee, for a Yum Cha restaurant, but, at the hearing, this did not form part of either party’s case, other than in respect of one head of damage for a limited amount, that the Plaintiff advanced.)

  7. Depending upon how the issues stated above are determined, the further issue for determination will be which party is to pay the losses sustained, and the quantum of the losses, said to have been sustained, by one party, or the other, in relation thereto.

  8. Whilst the Plaintiff accepted that the Lease came to an end in March 2016, it claimed damages for the Defendant’s repudiation of the Lease, which repudiation it accepted. The Defendant denied that it is liable to the Plaintiff for such damages and disputes the Plaintiff’s calculation of damages. The Defendant made its own claim for damages said to have been suffered as a result of the breaches of the Lease, against both the Plaintiff and against Ms Merry Ng, the Cross-Defendant, as the guarantor of the Plaintiff’s obligations under the Lease.

  9. Very little attention was given, during the first three days of the hearing, to the issue of damages. There had been a suggestion by leading counsel for the Defendant that “the damages, with respect, should be either able to be agreed or able to be succinctly argued by the time your Honour rises on Wednesday. My learned friend was going to propose a schedule of damages, which I haven't seen yet, but we'll look at that. The damages I claim are reasonably small in the bigger scheme of things …”: Tcpt, 13 May 2019, p 13(26-41).

  10. At various times, during the course of the hearing, the Court reminded the legal representatives of the issue of damages, and that very little time had been devoted to that issue: Tcpt, 14 May 2019, p 92(13-38), p 178(50) – p 179(36).

  11. Shortly prior to the adjourned date, each party provided a schedule of damages that it claimed. I shall refer to the various claims later in these reasons.

  12. In the events that occurred, it was necessary to leave the issue of damages, as well as the Defendant’s submissions, until a fourth day of hearing time, which had to be arranged, being 30 May 2019. On the fourth day of the hearing, the parties confirmed they had agreed upon an amount for damages claimed by the Defendant, discussed later in these reasons. Then, counsel for the Plaintiff referred to an e-mail that had been sent, by my Associate at my request, to the parties, in respect of damages, and he “confirm[ed] that the damages claimed by the defendant are agreed” and that the agreed amount for damages claimed by the Defendant was $252,936: Tcpt, 30 May 2019, p 251(21-48).

  13. On the fourth day, the issue of the Plaintiff’s damages was otherwise dealt with, as were the Plaintiff’s submissions on the topic. The case concluded on the fourth day of hearing.

  14. I should mention that despite submissions made as to the readiness of the Plaintiff at the time the Defendant served the Notice of Termination, no steps were taken by the Plaintiff to seek relief from forfeiture or any interlocutory relief to enable it to remain in possession.

The pleadings and the documentary evidence

  1. The pleadings relied upon, in their final iteration, were an amended Statement of Claim, filed on 14 May 2019; a Defence to the amended Statement of Claim, filed on 30 April 2018; a first Cross-Claim and Statement of Cross-Claim, filed on 30 April 2018; and a Defence to the first Cross-Claim, filed on 5 June 2018.

  2. (It was necessary to give leave to the Plaintiff to file the amended Statement of Claim. Although it appeared that it had been filed on 18 April 2018, the filing was described in JusticeLink as having been “Void” (for reasons not entirely clear). There being no dispute that it should be filed, the Court granted leave to file the amended Statement of Claim, which was done in accordance with the leave granted. The Court noted that, in the amended Statement of Claim to be filed, the Plaintiff would omit paragraphs 23 and 24 and the particulars (l) and (n) of paragraph 33: Tcpt, 13 May 2019, p 46(5) – p 47(16). The amended Statement of Claim, as filed, now forms part of the Court file.)

  3. In the Defence to the amended Statement of Claim and in the Defence to the first Cross-Claim, some admissions were made in relation to the facts alleged and, where appropriate, I have included a number of the admitted facts as uncontested facts.

  4. Prior to the commencement of the hearing, the Plaintiff’s legal representatives provided the Court with three folders of documents, in date order, and consecutively paginated, comprising the relevant documents, upon which one, or both, parties relied. At the hearing, these folders were together marked as Ex. A. Subsequently, each party, without objection, added some documents to that Exhibit. Five folders of additional documents were also tendered, each being the Exhibit accompanying its corresponding affidavit. I have used the contents of the Exhibit, where appropriate, as the basis of some of the facts not in issue, and to which I shall refer.

  5. Counsel also provided a statement of agreed facts which has been used as an aide memoire. Each also provided written submissions, both opening, and closing, which I have found very helpful.

  6. I am grateful to all of the legal representatives of the parties for the efforts made in order to provide the Court with the documents, and also for the submissions. Co-operatively, they have made a commendable attempt to limit the real issues in dispute and to assist the Court in determining those issues.

  7. Ultimately, the parties agreed that the issues to be determined were:

  1. When did the Lease commence?

  2. Was the Defendant entitled to terminate the Lease on account of the Plaintiff’s breach of cl 10.4 of the Lease?

  3. Did the Defendant engage in misleading or deceptive conduct or unconscionable conduct in terminating the Lease on 1 March 2016?

  4. What is the quantum of damages suffered by the Defendant or by the Plaintiff (depending upon the Court’s determination of the first three issues set out above)?

The Dramatis Personae

  1. I shall limit the identity of the persons referred to in this section to the parties and to the principal witnesses. I shall name other persons who played a part in the events, and who are referred to, in passing, in the evidence.

  2. In circumstances to which I shall come, the Plaintiff, Longjing Pty Limited, at all material times, was said to be the lessee of the Premises. Ms Ng was its sole director and the secretary, and the guarantor of the Plaintiff’s obligations under the Lease. As earlier noted, she is named as the first Cross-Defendant in the first Cross-Claim and Statement of Cross-Claim.

  3. Ms Ng swore one affidavit that was read in the proceedings and she was cross-examined. At all relevant times, she seems to have been the controlling mind of the Plaintiff, although it is clear that her husband, Eddie Fong Chung Ng, also participated in some of the events that occurred. He did not give evidence in the proceedings.

  4. Hilton Edward Hedley was a leasing agent employed by Allied Property Group, a business that he had established, and which specialised “in retail project planning and leasing, site acquisitions and disposals, and retailer representation”. He has had 20 years’ experience in the commercial property industry and had negotiated both on behalf of tenants and on behalf of landlords: Tcpt, 13 May 2019, p 27(49) – p 28(16).

  5. Mr Hedley had known Ms Ng and Mr Ng for a number of years prior to 2015. He had previously acted for them in connection with various lease transactions in New South Wales. Ms Ng and Mr Ng had owned, and operated, a number of Chinese restaurants in the Sydney Metropolitan Area.

  6. It seems clear from Mr Hedley’s affidavit evidence that Ms Ng was not an ingénue in relation to the leasing of retail premises.

  7. The Plaintiff engaged Mr Hedley, as its duly authorised agent, for the purpose of dealing with, amongst others, the Defendant. In the subject transaction, he was to be remunerated, by way of commission, and was to be paid by the Plaintiff. “Because the deal was pulled”, he had not received any commission, which was to have been paid to him “once the tenancies opened”: Tcpt, 13 May 2019, p 30(4-13).

  8. Mr Hedley could not state, precisely, the quantum of the commission he would seek, but thought that it could be either $25,000 or $50,000. He would only receive remuneration for the work that he undertook on behalf of the Plaintiff if it was successful in these proceedings.

  9. It was not Mr Hedley’s usual practice to read or understand the formal legal documents such as an agreement for lease or a lease, although he would understand the commercial terms: Tcpt, 13 May 2019, p 31(1-6).

  10. Mr Hedley swore three affidavits that were read and he was cross-examined.

  11. In about May 2015, the Plaintiff retained Space Cubed Pty Limited (“Space Cubed”), an architect and interior graphic designer, to perform certain work relating to the Premises. Mr Arran Woollams, of Space Cubed, was the relevant representative with whom the Plaintiff dealt. He did not give evidence in the proceedings but copy emails to, and from, him, are included in Ex. A.

  12. Kevin Brennan was the engineering and project manager for the Plaintiff in respect of the Premises. He did not give evidence in the proceedings.

  13. In or about mid-November 2015, the Plaintiff retained Alex Su, a commercial real estate agent based in Sunnybank Hills, Queensland, to assist with the marketing, and the obtaining of prospective sub-tenants/licensees of the Premises: Tcpt, 13 May 2019, p 57(16-27). Mr Su was not a witness in the proceedings, but copy emails to, and from, him, are included in Ex. A.

  14. The Defendant/Cross-Claimant, Perpetual Nominees Limited, at all material times, as custodian and agent for Mirvac Funds Management Limited (“Mirvac”) as trustee for the Springfield Regional Shopping Centre Trust, was, and remains, the owner of the Centre. Mirvac is a subsidiary of Mirvac Limited. (In the evidence, it was Mirvac, rather than the Defendant, to which counsel referred: Tcpt, 13 May 2019, p 29(14) p 30(2). (On occasions, during the hearing, the witnesses and the parties also referred to the Defendant as “Mirvac”.)

  15. Mirvac Projects Pty Limited (“Mirvac Projects”) is, and was, at all material times, a wholly owned subsidiary of Mirvac Limited.

  16. Glenn Dumbrell is the project leasing manager of Mirvac Property Group. Mr Dumbrell and Mr Hedley had known each other, professionally, for a number of years, and had worked together during the period 2003 to 2006. Mr Dumbrell was the first person to have discussions with Mr Hedley about the Centre and the lease of the Premises. He was not a witness in the proceedings.

  17. From about May 2012, Mirvac Projects engaged Theo van Veenendaal as a development consultant. From about June 2012, he was engaged by Mirvac Projects to consult with its management and to work on the development of the Centre. His principal role in the development was to negotiate leases with key tenants. From about August 2015, he was involved in negotiating an Agreement to Lease and the Lease with the Plaintiff. His discussions with Mr Hedley commenced in about August 2015 and completed in late February or early March 2016. He affirmed two affidavits, read in the Defendant’s case, and he was cross-examined.

  18. From about 2013, Benjamin Conlon was the Portfolio Manager at Mirvac Projects in respect of the Centre. In that role, he had responsibility for “managing day-to-day activities for the Centre, including liaising with the centre management team, managing operational expenses, capital expenditure, leasing, marketing, administrative matters, managing tenant relationship[s] and asset strategy and forecasting”. He also had “responsibility for Mirvac’s dealings with the [P]laintiff …including instructing the solicitors for the [D]efendant in its dealings with the [Plaintiff], both in relation to negotiations and the subsequent dispute”: Affidavit, Benjamin Conlon, 2 August 2018 at par 4. Mr Conlon swore two affidavits that were read in the Defendant’s case and he was cross-examined.

  19. It was to Mr Conlon that Mr van Veenendaal reported.

  20. James Mutch was the Tenancy Co-ordinator Manager for Mirvac. According to Mr van Veenendaal, he was responsible for co-ordinating the works that the Defendant was required to perform within the tenancy area: Tcpt, 14 May 2019, p 121(41-47). He was not a witness in the proceedings.

  21. Ms Manuella Di Rossi was the National Leasing Manager at Mirvac Property Group. She was not a witness in the proceedings.

  22. The firm of solicitors acting for the Plaintiff and Ms Ng, until about 25 November 2015, was Raymond Lee & Co. Then, between 25 November 2015 and 2 March 2016, the Plaintiff retained Thomas Kung Lawyers, or Thomas Kung, to act on its behalf in respect of the lease of the Premises and to assist in drafting sub-leases/licence agreements for prospective sub-tenants/licensees of the Premises.

  23. At all relevant times, the firm of solicitors acting for the Defendant, in the Lease transaction, was Gadens.

  24. None of the lawyers, on behalf of any party involved in the transactions, was a witness, although many emails passing between them formed part of Ex. A.

Background Facts

  1. The following facts, which trace the history of the events leading to this dispute, are not controversial. To the extent that any facts are disputed, what is stated under this heading should be regarded as findings of the Court. (It is not necessary, or practicable, to set out all of the events that occurred prior to the signing of the relevant lease documents. I have used the parties’ statement of agreed facts and the admissions made in the oral evidence as a guide to identifying the relevant events.)

  1. The discussions for the lease of the Premises commenced in late January 2015, when Mr Dumbrell approached Mr Hedley, to find a tenant to lease the Premises. Mr Dumbrell told Mr Hedley that he had been in discussions with Golden Vision Retail Pty Limited (“Golden Vision”) in respect of the Premises but that those negotiations had reached a standstill. Mr Dumbrell enquired whether Mr Ng would be interested in leasing the Premises.

  2. On about 4 February 2015, Mr Hedley attended a meeting at the Centre with Mr Dumbrell and Mr Ng.

  3. At about this time, Mr Dumbrell also advised Mr Hedley that Shop MM5 was available, and that he thought it would be suitable for use as a large format Yum Cha restaurant. Mr Dumbrell then enquired whether Ms Ng and Mr Ng would be interested in the lease of that shop also.

  4. On 5 February 2015, the Defendant provided a document headed “Orion Springfield Central … Retail Lease Proposal” which was said to be “subject to Lessor approval, availability and contract” for the Premises. In this document, it was made clear that “[t]hese premises do not exist and will need to be constructed”: Ex A/1-30. A draft Floor Plan for the Premises was attached to the Proposal.

  5. The “permitted use” identified in the Retail Lease Proposal was:

“The operation of a retail store selling Asian groceries and vegetables and an Asian Hawker-Style Market selling pre-prepared and prepared to order Asian cuisine and beverages…”

  1. On 18 February 2015, Mr Dumbrell, through Mr Hedley, provided a further proposal to the Plaintiff, in respect of the Premises: Ex. A/31-48. (It appears that the principal change related to the name of the area of the Premises.)

  2. Also, on 18 February 2015, the Defendant provided a document headed “Orion Springfield Central … Retail Lease Proposal” which was said to be “subject to Lessor approval, availability and contract” for Shop MM5. In this document, it was also made clear that “[t]hese premises do not exist, and will need to be constructed”. A draft Floor Plan, delineating MM5, was attached: Ex. A/49-62 to this Proposal.

  3. In about mid-March 2015, the Plaintiff executed each Retail Lease Proposal.

  4. On 23 March 2015, Mr Dumbrell sent an email to Mr Hilton confirming that there had been “Approval internally” and “Will now processes [sic] formally and instruct I would say by the end of the week”: Ex. A/63.

  5. On 26 March 2015, the Plaintiff paid to the Defendant a deposit of $64,166.70, which was apportioned as to $27,500 for the Shops and as to $36,666.70 for Shop MM5. (The parties’ Statement of Agreed Facts, which was provided as an aide memoire states that the deposit was paid to “Mirvac”. The affidavit of Mr Hedley made 5 October 2016, to which the Statement of Agreed Facts refers, and identifies as the source of that fact (at par 18)), “Mirvac” is defined to mean Mirvac Property Group (at par 6). In any case, there is no dispute that the Plaintiffs paid those sums, on that date. This document was treated as an aide memoir: Tcpt 15 May 2019, p, 187(44) – p 188(6)).

  6. Under cover of a letter dated 24 April 2015, Gadens sent to Raymond Lee & Co a proposed Agreement for Lease, Lease and other documents for Shop MM5, for review by the Plaintiff, all of which documents were said to be subject to the Defendant’s approval. The request was made that if the documents were in order, they should be executed and returned “as soon as possible”. A cheque for $202.10, payable to Gadens, was also sought: Ex. A/66-67.

  7. On 6 May 2015, Mr Hedley attended a design meeting with representatives of the Defendant.

  8. On 7 May 2015, Mr Mutch sent an email to Mr Hedley noting the following timetable:

“Initial Concept Design issue to Mirvac   15th may [sic] 2015

Handover of Tenancy to Commence Fitout   13th August 2015

Fit Out works to be completed by      8th October 2015”

  1. On 19 May 2015, Mr Dumbrell provided Mr Hedley with plans, scale drawings and colour schematics from Mirvac, of the plans that had previously been submitted by Golden Vision, the previous proposed tenant, for the Premises.

  2. On 20 May 2015, Mr Hedley attended an on-site meeting with Mr Mutch, other Mirvac representatives, Ms Ng and Mr Ng.

  3. On 22 May 2015, Mr Woollams, of Space Cubed, sent Mr Hedley an email attaching a layout for the Premises.

  4. In the weeks leading up to 21 July 2015, Mr Hedley had a conversation with Mr Dumbrell regarding the delay in the handover dates.

  5. On 21 July 2015, Mr Angus White, the Development Manager, Mirvac, and Mr Hedley had an email exchange in which, amongst other things, Mr White confirmed “following our conversation today, your commitment to take handover of the store at Orion on 12th August 2015 and open on 7th October 2015 as per our agreed program”: Ex. A/76-77.

  6. Also, on 21 July 2015, Gadens sent an email, addressed to “Anson”, with a copy to Raymond Lee & Co, regarding the Premises, in the following terms (Ex. A/79):

“We refer to the above matter and are instructed by our client that the terms of the documents are now agreed… We have re-engrossed the documents to include the agreed amendments.”

  1. (At the hearing, the parties agreed that “Anson” was Anson Cheang, a solicitor at Raymond Lee & Co: Tcpt, 15 May 2019, p 185(25-37).

  2. The email attached a copy of the Agreement for Lease of the Premises in marked-up form, the Agreement for Lease, in final form, of the Premises, Lease in marked-up form, and the Agreement for Lease, in final form, for Shop MM5. It was noted that the Defendant “had not had the opportunity to review the documents prior to them being issued and that the Defendant reserved its rights to make further amendments”.

  3. On 29 July 2015, Mirvac emailed a “Handover Notice” (Ex. A/84-85) to Mr Hedley which provided:

“The Lessor hereby notifies the Lessee that as of the Handover Date set out below the above premises will become the sole responsibility of the Lessee for the commencement of the Lessee’s works.

Applicable dates are confirmed as follows:

•   Handover Date:             12th August 2015

•   Date of completion of Lessee's works:   7th October 2015

•   Trade Commencement Date:      7th October 2015

•   Lease & Rent Commencement date      The earlier of:

(i) The day after the end of the Fitout Period; or   

(ii) Trade commencement date

Before the Handover Date, the Lessee and/or its shopfitter is to contact James Mutch on 04XX XXX XXX to organise an inspection of the Premises.

During the inspection, the Lessee or its shopfitter will be provided with a notice called ‘Site Condition at Handover’ which outlines the condition of the Premises as at the Handover Date.

There will be a deemed handover of the Premises on the ‘Handover Date’ regardless of whether the Lessee or its shopfitter attend the inspection or access the Premises unless the Lessor provides a further Handover Notice in which case the Handover Date will be the date in the further Handover Notice.

Please note however that access to the Premises to commence the Lessee’s works will only be granted to the Lessee upon satisfaction of the following items marked with X:

Lease Documentation Checklist

X LEASE EXECUTED

X PUBLIC LIABILITY INSURANCE, CERTIFICATE OF CURRENCY RECEIVED

X BANK GUARANTEE RECEIVED

Design and fitout checklist

X FINAL DESIGN APPROVAL

XTENANT TO PAY FEES AND SERVICES ADJUSTMENT COSTS

TENANT APPOINTED SHOPFITTER

X SHOPFITTER PAPERWORK RECEIVED”

  1. At the time the “Handover Notice” was issued, Mr Mutch and Mr Angus White, the Development Manager, Mirvac, informed Mr Hedley that the lease documentation had been finalised. Despite that having been said, it is clear that at that time, negotiations as to the Agreement for Lease and Lease were ongoing between the solicitors. There is no dispute that Mr White, at the relevant time, was employed by the group known as “Mirvac”.)

  2. On 30 July 2015, Gadens sent an email to Raymond Lee & Co, requesting those solicitors to “advise when we can expect to receive the executed lease documents for Shops 203-206 and Shop MM5 [sic]”: Ex. A/73.

  3. On 4 August 2015, Mr Hedley sent an email to Mr White regarding the contribution payable by the Defendant and suggested amendments to the Lease.

  4. On 6 August 2015, at 9:07 a.m., Mr Hedley wrote to Mr Dumbrell noting “We are all meeting on site next Wednesday to finalise everything prior to taking handover…”: Ex. A/89.

  5. On 6 August 2015, at 5:15 p.m., by letter sent via email to Mr Lee at Raymond Lee & Co from Gadens, the Defendant elected to withdraw from offering the Plaintiff the leases due to the failure to return executed documents: Ex. A/93-94.

  6. Another letter, also of the same date, in almost identical terms as that sent to Mr Lee, from Gadens to Mr Cheang at Raymond Lee & Co, noted (Ex. A/95):

“You will appreciate that there is no binding agreement in place until the documents are signed by both parties. To date, the documents have not been signed by both parties.”

  1. Despite the withdrawal from the negotiations, Ms Di Rossi requested a meeting with Mr Hedley to discuss the Lease.

  2. On about 7 August 2015, Mr Hedley had a meeting with Ms Di Rossi, and Sepideh Vahdat, a retail leasing executive for the Defendant, at which Mr Ng also attended. When Ms Vahdat and Ms Di Rossi raised concerns about the guarantors under the lease and whether the Plaintiff would be able to commence its tenancy fitout following handover, Mr Hedley responded (Affidavit, Hilton Hedley, 5 October 2016 at par 37):

“I really can't understand why you have only decided to raise issues about the guarantors in August when the deals were approved back in March. I also don't understand why we are being pressured about a handover when the leases aren't even signed and in fact the deals have been terminated. This just seems to be another example of no-one within Mirvac speaking to the other side…”

  1. Following the discussion referred to, Ms Di Rossi said that the Defendant had “terminated the lease as a precaution” and that she was happy to proceed with the negotiations for the Lease.

  2. On 7 August 2015, Mr Hedley sent an email to Ms Vahdat regarding the shop design, guarantor and Lease: Ex. A/97

  3. Between 7 August 2015 and 24 August 2019, Mr Hedley continued to liaise with the Plaintiff’s designer and shopfitter to ensure that all requirements of Mirvac were being attended to and completed. He also continued to liaise with Mirvac's delivery team in relation to the tenancy design and handover.

  4. On 11 August 2015, Mr Hedley informed Ms Ng and Mr Lee that Ms Di Rossi “is resubmitting these details to the CEO tomorrow”: Ex. A/99.

  5. On 24 August 2015, Mr Brennan sent Mr Hedley an email, which stated (Ex. A/106):

“We confirm that we have been waiting on the owner’s consent form to be filled out for the plumbing application which we requested on 4th August.”

  1. Following a meeting on 31 August 2015 between Mr Hedley, Mr van Veenendaal and Ms Justine Hughes, the Head of Retail Management, Mirvac provided the Plaintiff with Heads of Agreement for the Yum Cha restaurant, which was to be located at Shop 116A, rather than Shop MM5, as had previously been agreed. (For the same reason that has been outlined earlier in these reasons, it is unclear from the evidence whether Mr Hughes was employed by Mirvac, Mirvac Property Group, or another subsidiary. I do not think anything turns on this.)

  2. On the same date, Gadens sent an email to Raymond Lee & Co stating that she had received instructions that the “parties have now reached agreement regarding the guarantor for Shops 203-206…”. She also enclosed the “lease documents with the proposed changes shown tracked as well as the final from [sic] for signing by the parties”: Ex. A/112.

  3. On 18 September 2015, Raymond Lee & Co sent a letter to Gadens in respect of the Agreement of Lease and Lease: Ex. A/146-147. That letter stated:

"We refer to the above and note that we are still waiting for copies of draft lease documents relation [sic] to the yum cha restaurant. We had expected to receive such documents by now however understand that lease of the yum cha restaurant and we have been advised to expect to receive draft lease documents shortly.

In the meantime, we have also been advised as follows in relation to the lease by Kowloon City of Shop 203-206:

1. The Lessor will complete, at the Vendor's expense, the previously agreed scope of Lessor's works for Shops 203-206 including but not limited to all category one items.

2. The dates for the provision of plans, such as services layout plans do not need to be strictly comply with. We understand from our client that some plans have been previously provided including an initial concept drawing and layout plan.

3. We understand from our client that on a meeting with your client's representative, your client advised that it would require copies of lease documents executed by the Lessee to allow our client to commence fitout works on and from 28 September 2015.

4. We are instructed to confirm that the lease by Longjing Pty Ltd of Shops 203-206 Orion Springfield Central is to proceed only on the basis that an agreement for lease and lease satisfactory to our client with respect to the yum cha/Chinese restaurant is entered into with respect to premises satisfactory to our client within the Orion Springfield Central Shopping Centre.

On the above basis, we attach hereto the following:

1. Copy of signed agreement for lease.

2. Copy of lease.

3. Copy of Lessor's disclosure statement. We note that such was the one initially issued by the Lessor. We note that some of the terms as contained in the original Lessor disclosure statement have been superseded by subsequent negotiations.

4. Signed Lessee's disclosure statement.

We would be grateful if you would acknowledge receipt.

We also note that the lease documents attached hereto are to be held in escrow.”

  1. In the “Disclosure Statement by the lessor” (Ex. A/162ZCL-162ZDB), the copy of which bears, on the final page, what appears to be Ms Ng’s signature and the date 4 September 2015, in the box headed “Estimated commencement date of the lease”, the date “10/09/2015” was inserted and described as “Actual”. Similarly, in the box headed “Estimated handover date of the premises” “10/09/2015” was inserted and described as “Actual”: Ex. A/162ZCL.

  2. In the Disclosure Statement referred to, important is Part 3 “Works Fit Out and Refurbishment” and in the box headed “Date of handover (if different to the date the lease commences indicated at Item 5),” the date “10/09/15” was inserted and described as “Actual”: Ex. A/162ZCO.

  3. On about 18 September 2015, Ms Ng, on behalf of the Plaintiff, and in her capacity as a guarantor, executed the Agreement for Lease, and the Net Retail Lease, for the Premises. (Each of the Agreement for Lease and Net Retail Lease that was signed by Ms Ng, copies of which were sent by Raymond Lee & Co to Gadens on 18 September 2015, appear to be undated.)

  4. On 21 September 2015, the Plaintiff provided the Defendant with a bank guarantee in the sum of $165,000.

  5. On 24 September 2015, Mr Mutch sent an email to Mr Hedley and others (Ex. A/163) confirming the following dates :

“3rd October - Handover (8 week fitout)

5th November - Entire shopfront completed with the Mall/Town Walk tenancies fully open and trading

28th November - Full completion of any outstanding works with all tenancies open and trading.”

  1. On 1 October 2015, Mr Hedley sent an email to Mr van Veenendaal asking for the contribution that the Defendant was to make. He noted “they are supposed to be taking handover on Saturday and won’t be doing so until they have some money”: Ex. A/167. (The reference to “taking handover this Saturday” is consistent with the email of 24 September 2015 from Mr Mutch.)

  2. On 2 October 2015, the Plaintiff delivered to the Defendant the hard originals of the Agreement for Lease and the Lease.

  3. On 8 October 2015, Gadens sent a letter to Raymond Lee & Co, in response to the letter dated 18 September 2015, which included:

“1.   We refer to your letter of 18 September 2015 and the original signed documents for the above Premises which were returned to our client directly on 2 October 2015. We are instructed that the matters raised in your letter of 18 September 2015 are not agreed by the Lessor.

2.   We are further instructed that your client has requested that the Lessor release the first instalment of the Fitout Contribution to the Lessee.

3.   Our client instructs us that the Premises will not be handed over to the Lessee or its fitout contractor and the first instalment of the Fitout Contribution will not be released to the Lessee (despite any contrary position in the Agreement for Lease) until your client acknowledges, accept and agrees that:

(a) the final agreed terms between the parties for the Premises are as set out in the documents returned to the Lessor signed by the Lessee on 2 October 2015 (Agreed Documents);

(b) the Lessee will not seek any further amendments to the Agreed Documents, subject to any amendments being required to correct any errors, to give effect to the Agreed Documents or to enable registration of the Lease. In this regard, we particularly refer you to paragraph 4 below;

…

4.   Our client advises that the original signed documents returned by your client include certain hand writing on page 26 of the Agreement of Lease which cannot be deciphered. Can you please confirm by return that this hand writing is not intended to vary the signed documents and, if so, please authorise us to replace this page in the signed documents held with a new clean page 26 (a copy of which is attached for your reference).

5.    Please have your client confirm its agreement to the above by signing and returning the duplicate of this letter before close of business on Thursday 8 October 2015.”

  1. On 9 October 2015, Mr Hedley sent an email to Ms Ng, Mr van Veenendaal and Raymond Lee & Co (Ex. A/187A), stating:

“Merry,

Theo and I have just spoken and the reality of finalising the outstanding legal terms by today - are slim.

The payment for the fitout contribution should hit your account today, but maybe not be until Monday. Theo and I have agreed that the opening date will be pushed back (so no longer the 5th of November), and that realistically we all work together in starting on site as soon as possible, and opening as soon as possible, rather than committing to new dates that will just be missed again.

I will explain to Leigh the builder that he will not be starting on site this weekend.

Theo suggested a meeting on Monday with all of us to go through where we are at and to provide you both with a degree of comfort as to where we are heading.

I'll come back to you once a time has been set. If any progress is made today on any of the above I will let you know, otherwise have a nice weekend and I'll see you Monday.”

  1. On 13 October 2015, in a letter from Raymond Lee & Co to Gadens, it was confirmed that the Plaintiff had not accepted the terms put forward in the letter dated 8 October 2015 from Gadens, but that there had been certain without prejudice discussions between the parties and that some amendments to the Lease would be made (particularly referring to Shop MM5 no longer being available): Ex. A/187ABA-187ABB.

  2. On about 14 October 2015, Mr van Veenendaal attended a meeting with Mr Hedley, during which meeting, a conversation to the following effect took place (Affidavit, Theodorus van Veenendaal, 24 July 2018 at par 20):

“[Mr Hedley]: There is additional work that needs to be done, such as the mechanical exhaust and fire services. Mirvac should pay for this work.

[Mr van Veenendaal]: This work was never part of the Lessor's Works but we will do the additional work as Lessor's Works, if Longjing agrees to pay an extra $10,000 in rent, and reduce the incentive payment for the Yum Cha Restaurant. We will handover the Premises on 19 October 2015, and Longjing can commence the fitout works then. This will mean the Opening Date will be 14 December 2015.”

  1. On 14 October 2015, Raymond Lee & Co sent a letter dated 13 October 2015 to Gadens. That letter stated:

“I refer to your letter of the 8th of October 2015 received by e-mail at 3pm on that date requiring our client's instructions and confirmation to the matters contained herein by 5pm on Thursday the 8th of October 2015.

Our client was unable to and cannot accept and agree to the terms set out in your letter of the 8th of October 2015. In this regard, we are instructed that matters, particularly Point 3 (d) is incorrect.

It had always been the case that our client was to lease Shop 203 to 206 and Shop MM5 and our client had made plans and arrangements and made commercial decisions on this basis.

Subsequent to our client making arrangements with respect to the leasing of both of the premises, we are instructed that your leased Shop MM 5 to a retail tenant for your client’s own commercial gain, not having regard to our client's position.

We have been advised that your client has been unable to commit to other possible premises within the Centre to allow our client to open a yum cha restaurant.

Without prejudice to our client's rights, we are instructed that our respective clients have recently undertaken discussions. We are instructed that the Lease with respect to Kowloon City and the yum cha restaurant are to remain as "hand-in-hand" however, in the event that your client is unable to confirm the terms of a deal with respect to the lease of the yum cha restaurant premises by the 1st of July 2016, at premises satisfactory to our client and on terms satisfactory to our client then our client requires an amount of $350,000.00 plus GST by way of compensation. This would be in addition to the amount of compensation of $50,000.00 plus GST which, we understand, your client has agreed to reimburse or pay to our client due to the premises at MM 5 now not being available to our client.

We look forward to hearing from you in relation to the above.”

  1. On about 14 October 2015, Mr Hedley and Mr van Veenendaal agreed to make certain amendments to the Agreed Documents (“the Amendments”). The Amendments included, amongst other things (Ex. A/188, 190-91):

  1. A variation to the Agreement for Lease to reflect that “the Lessee’s contraction [sic] will take physical possession” of the Premises on 19 October 2015, and the “rent commencement date” was to be 14 December 2015;

  2. A variation to the Agreement for Lease to alter the scope of the Lessor’s Works; and

  3. A variation to the Lease to increase rent by $10,000 per annum for the term of the Lease.

  1. On 15 October 2015, Mr Hedley sent an email to “Merry and Raymond” confirming that “Mirvac will pay Leigh directly for the work he is doing and pay their contractor for the work they are doing…Please confirm you accept this and if so we can have it sorted out asap so that your fitout can start today”: Ex. A/187B.

  2. On 15 October 2015, the Defendant paid the Plaintiff $313,500, being 33 per cent of the total "Fitout Contribution" (as defined in the Agreement for Lease).

  3. In an email from Mr van Veenendaal to Mr Hedley sent 16 October 2015 (Ex. A/188), the following appears:

“Hi Hilton

Further to recent conversations, I confirm the following in response to your request for further contribution to the Lessee’s fitout and in relation to Raymond Lee & Co’s email below:

The additional works for Kowloon that you have requested the Lessor to undertake is as follows:

Item

Cost

Notes

Under slab drainage works

$35,000

Work undertaken by Lessee’s Contractor

Gas and potable water

$26,565

Work undertaken by Mirvac

Wet & Dry Fire

$59,141

Work undertaken by Mirvac

Addition support for Exhaust Hoods

$20,000

Work undertaken by Lessee’s Contractor

A/C changes

$104,000

Work undertaken by Mirvac

Electrical

$11,213

Work undertaken by Mirvac

Additional Mech Ventilation

$20,000

Work undertaken by Mirvac

Total

$275,919

It is proposed that the following variations be made to the Agreements for Kowloon and Hong Kong Yum Cha to cover these additional tenancy fit out costs:

Mirvac will pay for the costs of the works outlined above;

The incentive for Hong Kong Yum Cha to be reduced by $100,000 and the rent increased by $5,000 p.a. for the ten year term of the lease;

The rent for Kowloon be increased by $10,000 p.a. for the ten year term of the lease;

If Mirvac is unable to confirm an alternate premises for the Hong Kong Yum Cha restaurant premises by the 1st July 2016 satisfactory to your client (acting reasonably) Mirvac will pay your client an amount of $300,000.00 plus GST by way of compensation which include the $50,000 plus GST which Mirvac has agreed to pay to your client due to the premises at MM5 now not being available to our client and the costs incurred in relation to that tenancy;

and

The Lessee’s Contraction [sic] will take physical possession of the Kowloon Premise [sic] (Shop 203-206) on Monday 19th October 2015 and the rent commencement date will be 14th December 2015.”

  1. (The parties agreed that the word “Contraction” should be read as “Contractor”: Tcpt, 13 May 2019, p 35(23-25).)

  2. On 16 October 2015, Mr Hedley forwarded to Ms Ng and Raymond Lee & Co, a copy of Mr van Veenendaal’s email. Ms Ng responded as follows:

“Hilton and Raymond,

We agreed to the proposed response below and please proceeding accordingly.”

  1. Mr Hedley forwarded to Mr van Veenendaal Ms Merry Ng’s email, writing:

“Theo

Please see below and instruct Gadens accordingly.

Can you please ensure the second instalment of the contribution is paid asap as the builder will be on site Monday.”

  1. On 16 October 2015, Ms Ng, on behalf of the Plaintiff, and on her own behalf, agreed to the amendments. Her agreement was noted in an email from her to Mr Hedley and to Raymond Lee & Co, sent on 16 October 2015, a copy of which was provided to Mr van Veenendaal on the same date.

  2. On 19 October 2015, Gadens sent an email to Raymond Lee & Co, with attachments that:

  1. included replacement pages for the Agreement for Lease and Lease to reflect the Amendments; and

  2. sought the written confirmation by Ms Ng on behalf of herself and the Plaintiff that she, and it, acknowledged, accepted and agreed that the final terms between the parties for the Lease of the Premises were as set out in the Agreed Documents.

  1. The letter, stated, amongst other things:

“1. We refer to your email of 14 October 2015 in response to our letter of 8 October 2015.

2. We are instructed that the parties have had further discussions regarding the Premises and the proposed lease for a Yum Cha Restaurant at the Centre. We are instructed that the parties have agreed the following:

(a) …

(b) The rent for the first year of the Term for the Premises is to be increased to $242,858.10 per annum which will be payable on and from 14 December 2015. Again, to document this we propose to amend the signed Agreement for Lease (page 2) and the Lease (page 5) by inserting the attached replacement pages. Please provide us with your client’s authority to insert the proposed replacement pages by return.

…”

  1. There was attached a document (Ex. A/218) that stated:

“Item 11   Opening Date

5 November 14 December 2015

Item 12   Opening Contribution

$1,500.00

Item 13   Design Approval Fee

$800.00

  1. On 19 October 2015, Mr van Veenendaal sent Mr Hedley an email and, with an attachment entitled "Handover Notice" (Ex. A/221). The email stated:

“Please see attached signed Handover Notice acceptance form for S203/206, Kowloon City. Handover has been accepted by the tenant as of the 19th October 2015.”

  1. To the email was attached a document headed “Site Inspection Handover”. The date of the Site inspection was said to be 16 October 2015 and appears to have been accepted on behalf of the Plaintiff: Ex. A/222.

  2. Ms Ng admitted (in paragraphs 3 and 5 of her affidavit of 10 April 2019), that on about 19 October 2015, the Defendant “formally handed over the [Premises] to the Plaintiff in order to enable the Plaintiff to begin “the lessee’s fitout works”.

  3. On 23 October 2015, Raymond Lee & Co sent to Gadens (with a copy to Ms Ng and Mr Hedley) an email on the following terms:

“Thank you for your email and your letter of 19 October. In relation to Point 2 of your said letter, we are instructed that the parties had agreed that in the event that a Lease is entered into with respect to Premises for use a Yum Cha Restaurant, your client will reimburse our client for expenses thrown away relating to the proposed Lease of Shop MM5 by way of a payment to our client of $50,000.00 plus GST. We note that we had raised this in an email to you on 13 October but had not been addressed by you. After receipt of your letter of 19 October, we had raised this with our client's agent who had confirmed that this had been agreed to and expected an amended letter from you reflecting such arrangement. Would you urgently confirm by return email that such an arrangement is correct and is agreed to by your client.

We advise that subject to your confirmation of the above, our client is making arrangements with respect to the Advice Certificates required, the execution of the amended pages of the Lease and the Agreement for Lease and the Registration Fees for delivery to your client.”

  1. On 26 October 2015, Gadens sent another email to Raymond Lee & Co attaching an amended copy of the letter referred to above, which was said to reflect a further agreement between the parties. The email referred to a chain of emails, all sent on 23 October 2015, being an email from Mr Hedley to Mr van Veenendaal; an email from Mr van Veenendaal to Mr Hedley; and an email from Raymond Lee & Co to Gadens. Also included was an amended copy of the letter dated 19 October 2015 to reflect further agreement between the Plaintiff, the Defendant and Ms Ng. (Relevantly, paragraph 2(b) of the letter dated 26 October was the same as paragraph 2(b) of the 19 October letter.) The letter required Ms Ng, as the sole director and secretary of the Plaintiff, to acknowledge, accept, and agree to, the terms of the letter dated 26 October 2015 by signing and dating a copy of the letter: Ex. A/195-197.

  2. The letter dated 26 October 2015 specifically stated that “The rent for first year of the Term …which will be payable on and from 14 December 2015”.

  3. On 26 October 2015, the Defendant paid the Plaintiff $313,500, being the second instalment of 33 per cent of the total "Fitout Contribution" (as defined in the Agreement for Lease).

  4. On 30 October 2015, Raymond Lee & Co sent to Gadens, by email (and, apparently, by courier), the copy letter dated 26 October 2015, and the further amended pages of the Lease and Agreement for Lease for the Premises, both signed by Ms Ng (which were said to have been provided to replace the pages in the previous document). The letter was also said to enclose the signed Legal advice report, Financial report and a cheque to the Department of Natural Resources and Mines. In relation to the amended pages to the Lease and Agreement to Lease, whilst the “Commencing Date” (Item 7) and the “Terminating Date” (Item 8) remained incomplete, the “Opening Date” (Item 11) was stated to be 14 December 2015. However, in the definitions, “Lease commencing date” was said to mean “the Fitout Access Date”: Ex. A/231A-231M.

  5. In the “Legal advice report”, which is a document required to be completed by a legal practitioner, in this case Raymond Lee, and which was signed by Mr Lee on 23 October 2015 and by another person, perhaps, Jenny Zhuang (the signature is indecipherable) on 30 October 2015, the legal practitioner confirmed that he had provided, and the “lessee/assignee” certified that “I have received the explanations referred to… and have understood them”, and advice on, among other things, the “term of the lease”, and “consequences of the prospective lessee/assignee … breaching lease conditions”: Ex. A/231J – 231K.

  6. It appears that on 30 October 2015, Ms Ng as “sole director [and] secretary of Longjing” did acknowledge, accept and agree to the terms of the letter dated 26 October 2015 from Gadens: Ex. A/197.

  7. By email dated 16 November 2015 sent to Mr van Veenendaal, Mr Hedley forwarded an email from Leigh Weber, who was carrying out the fitout works on behalf of the Plaintiff, in which he explained the reasons for the delays and proposed that “due to delays out of our control … the works will not be completed on the 14/12/15. I suggest a time extension from Mirvac” (earlier in the email, the extension proposed was “until 23/12”.): Ex. A/236-238.

  8. In an email sent on 17 November 2015, from Raymond Lee to Gadens, a request was made to “urgently provide to our office a copy of the Agreement for Lease and the Lease executed by your client…”. Shortly thereafter, Gadens responded that “[T]he documents have not yet been signed by the Lessor and are still being processed…” Ex. A/241A-241B.

  9. On 18 November 2015, Mr van Veenendaal sent an email to Mr Hedley under the heading “Request for time extension for works to Kowloon City” and stated “I have asked Mirvac to look into the claim … We need to ensure that the tenant opens as close to the 14 December as possible”: Ex. A/246.

  10. On 19 November 2015, a new shop location for the yum cha restaurant was agreed.

  11. On 20 November 2015, an error in relation to the Marketing Levy in the signed lease documents was detected and a request was made for an amendment to Item 12 of the Reference Schedule.

  12. On 23 November 2015, Mr Hedley sent an email to TKA Lawyers stating that the Plaintiff “requires the services of a solicitor in Brisbane to act on its behalf to prepare sales contracts and licence agreement for a number of food court tenancies…There are 7 businesses in total, so that will be 7 sales contracts and 7 licence agreements…”: Ex. A/259A.

  13. Also on 23 November 2015, Mr Hedley sent an email to Mr van Veenendaal stating the following (Ex. A/260):

“As mentioned to you last week and the week prior, we urgently require copies of the executed agreements for Kowloon City.

It is preventing LongJing [sic] entering into licence agreements with proposed operators and it's reaching the point where one of these tenants is losing interest.

…”

  1. (There was no evidence given by the Plaintiff of any “proposed operators” or of any tenant losing interest.)

  2. On 24 November 2015, the Defendant executed the counterpart of the Agreement for Lease and the Lease for the Premises and provided it to the Plaintiff.

  3. It was agreed, at the hearing, that amendments to the Lease that had been signed on 18 September 2015 by the Plaintiff and Ms Ng were inserted into the Lease that was signed by each of them as agreed amendments were made: Tcpt, 15 May 2019, p 216(8-46).

  4. As has been stated earlier in these reasons, between 25 November 2015 and 2 March 2016, the Plaintiff engaged Thomas Kung or Thomas Kung Lawyers to act as its solicitors in respect of the Premises and to assist in drafting sub-leases/licence agreements for prospective tenants of the Premises. The Plaintiff also engaged in the same period Mr Su, to assist with marketing and obtaining prospective tenants for the Premises.

  5. On 18 December 2015, the Plaintiff had not opened any part of the Premises for trading.

  6. On 21 December 2015, Daryl Gabagas, a Development Manager at Mirvac, sent an email to Hala Nagy, an accounts payable manager at Mirvac, Fizzah Salahuddin, a development assistant (finance) at Mirvac, and Rod Moynahan, the National Director, Retail Delivery, at Mirvac, stating:

“Further to our discussion on Friday, Mirvac Retail have requested that… Longjing Pty Ltd be paid urgently

If payment is not made before Christmas closure this would result in Mirvac been [sic] in breach of agreement with both Tenants

…”

  1. On 21 December 2015, Mr Gabagas sent an email to Fizzah Salahuddin and Rod Moynahan stating:

“A bit of Good [sic] and bad news.

Only Diamond Properties will be paid this week and Longjing on the 6th”

  1. Also on 21 December 2015, Mr Moynahan sent an email to Mr van Veenendaal, Andrew Paterson and Mr Mutch stating:

“We have been begging to corporate and Treasury and no luck for Longjing.”

  1. The final fitout works were completed on 23 December 2015.

  2. On 11 January 2016, Melanie Hodge, the Centre Manager, sent an email to Mr van Veenendaal, in which she stated (EX. A/663):

“Just spoke with Merry [Ng], they haven't opened as the licence with the sub-tenant has not been finalised and is going back and forth. She will be at the centre on Wednesday and will meet with me to go through it further and hopefully have more news. She is hoping they will open on Friday or Next [sic] week.”

  1. On 11 January 2016, the Defendant paid the Plaintiff $220,000, being the third instalment of 23 per cent of the total "Fitout Contribution" (as defined in the Agreement for Lease).

  2. On 12 January 2016, Mr van Veenendaal forwarded Ms Hodge's email to Mr Hedley with: "Hi Hilton, What's the status of this". Mr Hedley responded later that same day with: "People are only now coming back from their break and shops will tentatively be opening in stages likely from this Friday or Monday of next week": Ex. A./663.

  3. On 13 January 2016, Ms Hodge sent an email to Mr Conlon and Mr van Veenendaal, which stated (Ex. A/665A):

“…

Just spoke with Merry from Kowloon.

She has been advised by Hilton that rent is not payable until she opens and was unaware of the current invoice and outstanding amount of $19k.

She advised they have not finalised the details with the sub-tenants and are not expected to open for another week or two.

She has not made payment for the furniture although believes it is in the country and at the store.”

  1. On 14 January 2016 at 7.05 p.m., Ms Hodge sent an email and an attachment being a tax invoice for outstanding rent to Ms Ng. Ms Hodge’s email stated (Ex. A/667A-667B):

“…

Further to our discussion yesterday please see attached a copy of the tax invoice for outstanding rent. Please advise when payment of $19,170.42 is to be expected.”

  1. On 14 January 2016 at 7.37 p.m., Ms Ng forwarded Ms Hodge's email to Mr Hedley. Mr Hedley forwarded on the email to Mr van Veenendaal at 7.41 p.m. stating (Ex. A/667A):

“…

Can we discuss this please.

Thanks

…”

  1. On 22 January 2016, the Defendant served a Notice to Remedy Breach of Covenant (“the Breach Notice”) (Ex. A/692) on the Plaintiff, that relevantly stated:

“Breach Notice. On behalf of the Lessor we enclose a Notice to Remedy Breach of Covenant (Notice) relating to the breaches that have occurred under the Lessee's lease of the above premises, namely:

1. The Lessee's failure to open the Premises for business during the core trading hours of the Centre in accordance with clause 10.4(a)(1) and clause 45.1 of the Lease, for the period 18 December 2015 up to and including 22 January 2016; and

2. The Lessee's failure to make payment of Rent and other occupancy charges totalling $15,553.98 (Arrears)…

Opening the Premises for trade. We are instructed that the Lessor considers 7 days from the date of service of this letter to be a reasonable timeframe within which the Lessee is to commence trading at the Premises. If the breach is not remedied within this period, the Lessor reserves its rights to terminate the Lease without further notice to the Lessee.

Time for Payment of Arrears. On behalf of the Lessor we demand payment of the Arrears by the date which is 14 days from the date of this letter. Payment must be made to the office of the Centre Manager.

Consequences if Arrears are not paid. Please note that if full payment of the Arrears is not made on or before the date which is 14 days after the date of this letter, the Lessor reserves its legal rights in relation to the recovery of the Arrears and the breach by the Lessee of its obligations under the Lease. Those rights may include institution of court proceedings for recovery of the arrears together with interest, without further notice to the Lessee.

…”

  1. The Breach Notice provided:

“With reference to the lease of the Premises between Perpetual Nominees Limited… and the Lessee… and the covenants by the Lessee:

  1. Section 11 of the RSL Act relevantly provides:

“A retail shop lease is entered into on whichever is the earlier of the following dates -

(a)   the date the lease becomes binding on the lessor and lessee;

(b)   the date the lessee enters into possession of the leased shop.”

  1. In this case, Ms Ng accepted that the Plaintiff entered into possession of the Premises on about 19 October 2015: by her affidavit made 10 April 2019, at [3], Ms Ng stated “[o]n or about 19 October 2015, the Defendant formally handed over the Property to the Plaintiff” and at [5], “[o]n or around 19 October 2015, Mirvac proceeded with the handover to Longjing for Shops 203-206 to begin the lessee’s fitout works”. By her counsel, it was accepted at Tcpt, 15 May 2019, p 186(6-12) that “on 19 October the defendant formally handed over the premises to the plaintiff to begin the lessee's fit out works”. Mr Hedley also agreed that from the middle to end of October 2015, the Plaintiff was allowed into occupation of the Premises to “do their [sic] works”: Tcpt, 13 May 2019, p 32(49) – p 33(1-2). In an email dated 16 October 2015 from Mr van Veenendaal to Mr Hedley, it was stated that “[t]he lessee’s [contractor] will take physical possession of the… Premises on Monday 19th October 2015…”: Ex. A/188. He later agreed, under cross-examination, that it was on 19 October 2015 that the Plaintiff took physical possession of the Premises: Tcpt, 13 May 2019, p 43(38-41).

Determination

  1. I shall deal with the four issues that were identified by the parties. Naturally, what follows should be read in the context of the findings of fact identified earlier in these reasons.

(a)    When did the Lease commence?

  1. Looking at the two relevant documents being the Agreement for Lease and the Lease, I am satisfied that the “Lease Commencing Date” meant the “Fitout Access Date” and that the “Fitout Access Date” meant the date on which the Plaintiff obtained access to the Premises.

  2. In the present case, there can be no doubt that the Fitout Access Date was 19 October 2015. Ms Ng admitted so much in her affidavit and there is other evidence to which reference has been made that confirms that it was on that date the Plaintiff entered into possession of the Premises to commence the fitout works.

  3. In addition, that date accords with the RSL Act which provides that one of the dates that a retail shop lease is entered into is the date the lessee enters into possession of the leased premises.

  4. It is impossible to accept the submission of the Plaintiff that the Lease Commencing Date cannot be a date prior to the Lease becoming binding on the parties. That the RSL Act refers to “the earlier of the following dates” makes clear that a lessee may enter into possession before the date the lease becomes binding on the lessor and the lessee.

  5. In addition, I have earlier referred to Ex. A/162ZCO being part of the Disclosure Statement which in Part 3 “Works Fit Out and Refurbishment” stated in the box headed “Date of handover (if different to the date the lease commences indicated at Item 5), which suggests that the parties contemplated the same possibility.

  6. If those matters were not enough, in Whitlock v Brew (1968) 118 CLR 445, a case in which a purchaser of land agreed to lease the land to a third party upon entering into possession of the land, Kitto J wrote at 456:

“As regards the term of the lease, it sufficiently appears, I think, that the commencing date is to be the date when the purchaser obtains possession.”

  1. In Selever v Klaskova (Supreme Court of New South Wales, Powell J, 15 March 1988, unrep) Powell J wrote, at [7]:

“… It is true to say that an agreement for lease, to be valid and enforceable, must mention the term, and from what day it is to commence, otherwise there is no complete agreement … However, it is not impossible to limit the commencement of the contemplated term upon a contingency; it is sufficient if the date of commencement should be capable of being definitely ascertained at the time the proposed lease takes effect in interest or possession.”

  1. Recently, in Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185, at [154]-[168], Basten JA held that an objective approach to contractual interpretation frees the courts from the constraining influence of reflecting upon the actual intention of the parties; and that such an approach controls factual disputes relating to pre-contractual negotiations and post-contractual conduct.

  2. I reject the Plaintiff’s submissions that because notice in writing was not given in accordance with clause 4.2 of the Lease, that there was no “Lease Commencing Date”. The parties themselves agreed that the Plaintiff would take possession on 19 October 2015, and it did so. They also agreed that the last day of the Fitout period was 13 December 2015, which was subsequently extended. Both these matters are unarguable on the evidence. In addition, in October 2015, the Plaintiff had received $627,000 from the Defendant. It received another $220,000 in January 2016. To suggest that the Lease had not commenced does not accord with the actions of the parties themselves. It would be commercially unrealistic to conclude that no Lease had commenced in the light of the parties’ conduct.

  3. To the extent that it is relevant, I am satisfied that the reasonable bystander would conclude, from the parties’ words and conduct, that the Lease commenced when the Plaintiff went into possession.

  4. It does not matter that the Plaintiff was not given exclusive possession of the Premises. The purpose of it being given possession was so that it could carry out the fitout works.

  5. One also asks, in the circumstances of this case, following agreement having been reached on 16 October 2015, what would have been achieved by the service of a notice. Clause 4.2 required the notice to specify only two things, namely, the Fitout Access Date, and the last day of the Fitout Period, both of which dates had already been agreed by the parties and were known to the Plaintiff.

  6. In the event that I am wrong in reaching the conclusion set out above, I am satisfied that the email sent by Mr van Veenendaal to Mr Hedley on 16 October 2015, contained that information. Although that notice was not given “at least fourteen (14) [days] before the Fitout Access Date specified in it”, the parties had been negotiating terms for several months. Strict compliance with clause 4.2, therefore, was not necessary.

  7. The submissions made by the Defendant, which I shall not repeat, and which are set out above, are far more persuasive than those of the Plaintiff on this first issue.

(b)   Was the Defendant entitled to terminate the Lease on account of the Plaintiff’s breach of cl 10.4 of the Lease?

  1. As stated, the Plaintiff’s arguments on this issue depend on the finding of inconsistency between Clause 10.4 and Clause 18.2(d). I am not satisfied that there is any such inconsistency. The two clauses simply deal with different aspects of a breach and operate concurrently. Clause 10.4(d) provided the method by which damages could be calculated – it was an agreed damages clause. As was submitted by the Defendant, it “is a contractual term which quantifies the amount of damages payable by a promisor for designated breaches of contract: see Carter’s Breach of Contract at [12-27]”. Clause 18.2(d) provided the Defendant with the right to terminate the Lease for breach of an essential term, one of which was Clause 10.1(a) of the Lease (upon the giving of a notice to remedy required by law and the failure of the Plaintiff to comply with that notice). The Defendant gave such a notice.

  2. Again, the facts of the case, as set out, lead to me being unpersuaded that the Defendant was not entitled to terminate the Lease. The Plaintiff did not pay rent. It did not assert that the Defendant should call on the Bank to satisfy outstanding rent. To the extent that the Defendant stated that it would do so and require the Plaintiff to replace the Bank Guarantee, or the proportion of the Bank Guarantee recovered by the Defendant, the statement was made in the context of the Plaintiff not complying with the Breach Notice, which required the Plaintiff to pay to the Defendant the amount outstanding. The statement did not relieve the Plaintiff of the obligation to pay rent.

  3. Furthermore, the failure to open the Premises during “Core Trading Hours” had continued from 24 December 2015 until 22 January 2016. It continued then until 1 March 2016. Even then, there was no specific indication when trading would commence. All that the Plaintiff seemed to be doing was making suggestions about when licenses might be signed, not when the Premises would be open for business during core trading hours. It follows that the answer to the question is Yes.

(c)   Did the Defendant engage in misleading or deceptive conduct or unconscionable conduct in terminating the Lease on 1 March 2016?

  1. I have earlier referred to the evidence of the representations and explained the reasons why I do not accept the evidence regarding the January representations or the February representations. It was these representations that formed the cornerstone of the Plaintiff’s claim of unconscionable conduct and misleading or deceptive conduct.

  2. In my view, there was no such conduct otherwise. The Defendant’s representatives asked the Plaintiff’s representative to advise the period of time the Plaintiff required to remedy the breaches. The Plaintiff indicated 14 days, initially from 3 February 2016. The agreement reached on 16 February 2016 provided for 12 more days from that date, until 28 February 2016. Even then, an additional day elapsed before, on 1 March 2016, the notice of termination was given.

  3. I am simply not satisfied that any conduct by the Defendant, as alleged by the Plaintiff, was misleading or deceptive conduct or was unconscionable conduct.

(d)   What is the quantum of damages suffered by the Defendant or by the Plaintiff (depending upon the Court’s determination of the first three issues set out above)?

  1. The quantum of the Defendant’s damages, in the circumstances, was agreed in the sum of $252,936.03. There should be judgment for the Defendant against the Plaintiff for that amount on the Cross-Claim.

  2. There was no suggestion that Ms Ng, as guarantor of the Plaintiff’s obligations, would not be liable.

  3. In light of the conclusions, it is unnecessary to deal with the Plaintiff’s claim for damages as the Statement of Claim will be dismissed.

  4. Although there were no submissions made on costs, there is no reason why the usual costs order should not be made. Also, an order should be made dealing with the exhibits.

  5. In the circumstances, the Court:

  1. Orders that the Plaintiff’s Statement of Claim be dismissed.

  2. Orders that there be judgment for the Cross-Claimant against each of the Cross-Defendants in the sum of $252,936.

  3. Orders that the Plaintiff pay the Defendant’s costs of the Statement of Claim.

  4. Orders that the Cross-Defendants pay the Cross-Claimant’s costs of the Cross-Claim.

  5. Orders that the Court Books be returned.

  6. Orders that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10) and Practice Note No SC Gen 18.

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Decision last updated: 30 August 2019

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Cases Cited

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Statutory Material Cited

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Whitlock v Brew [1968] HCA 71
Whitlock v Brew [1968] HCA 71
Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185