Mayne Group Limited v Barwon Health (No 2)

[2003] VSC 235

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST

No. 2014 of 2002
F. 5523

MAYNE GROUP LIMITED	Plaintiff
v
BARWON HEALTH and MAYBURY CRAFT PTY LTD	Defendants

AND BETWEEN

BARWON HEALTH	Plaintiff by counterclaim
v
MAYNE GROUP LIMITED and MAYBURY CRAFT PTY LTD	Defendants by counterclaim

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 June 2003
DATE OF RULING:	20 June 2003
CASE MAY BE CITED AS:	Mayne Group Ltd v Barwon Health (No. 2)
MEDIUM NEUTRAL CITATION:	[2003] VSC 235

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Direction by lessee to sub-lease to pay direct to landlord – right of re-entry for failure to make directed payments.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P.E. Anastassiou SC with Ms Wendy Harris	Mallesons Stephen Jaques
For the Firstnamed Defendant	Mr P.N. Vickery QC	Harwood Andrews
For the Secondnamed Defendant	Mr J.P. Gorton	Blake Dawson Waldron

HIS HONOUR:

1. On 13 June, I published my reasons for concluding that the tenant, Maybury Craft, by consenting to an assignment by its sub-tenant Mayne Group, would not be dealing with or disposing of its estate or interest in the premises or any part of the premises, contrary to cl. 13.1 of the head lease.  The matter was stood over for final orders.

1. Barwon Health has, with leave, re-opened its case and now presents a further basis for contending that the giving of this consent would amount to such a dealing.  The argument is this:  cl. 3.5 of the Tripartite Deed contains a provision for direct payment to Barwon Health by Mayne Group of the sums payable to Barwon Health by Maybury Craft under the head lease.  This provision is expressed as a direction by Maybury Craft to Mayne Group to make these payments, and a consequent discharge of Maybury Craft's obligations to pay them.

1. By cl. 19.2.2 of the sub-lease, the failure of Mayne Group to perform its obligations under, inter alia, the Tripartite Deed, is a Review Event.  The happening of a Review Event entitles Maybury Craft to give a notice to Mayne Group to rectify and in default of rectification to re-enter and determine the sub-lease.  This contingent right to re-enter is an interest in the premises.  Under the proposed assignment, Mayne Group may be relieved of its obligation to make the direct payments, in which case Maybury Craft will have lost its right to re-enter in this event.  Alternatively, if Mayne Group were not relieved of this obligation, then, since it was no longer a tenant in possession, the right of re-entry would be affected.  In either event there is a dealing with the interest of Maybury Craft in the premises.  This in brief is the point now raised by Barwon Health.

1. I am not persuaded that this argument is correct, for the following reasons at least.  First, I do not think that the direction to pay imposes an obligation on Mayne Group to make the payment.  Second, I doubt whether the right to re-enter for default is an interest in the demised premises.  The right of reversion is such an interest.  Even so, the events which entitle Maybury Craft as sub-lessor to re-enter do not affect that entitlement as an interest in the land.

1. Accordingly, if Maybury Craft and Mayne Group agreed to modify the events which amount to a default, this will be a change to their contractual arrangements, but not to Maybury Craft's interest in the premises.

1. Third, the terms of the assignment to Healthscope are not known.  It is not known whether the contractual obligations of Mayne Group under the sub-lease are to be modified.  I must assume that they will not.

1. The case for Barwon Health is that the consenting by Maybury Craft to a simple assignment of the sub-lease is a dealing by it with its interest in the premises.  It is, to my mind, consenting to a transaction which does not affect the obligations of Mayne Group with respect to Maybury Craft's interest in the land.

1. I conclude therefore that Maybury Craft is not by cl. 13.1 of the head lease, prevented from consenting to the proposed assignment without the written consent of Barwon Health.

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