Motor Group Australia Pty Ltd v Owners Corporation Strata Plan 64622 - [2004] NSWSC 633

No judgment structure available for this case.

CITATION: Motor Group Australia Pty Ltd v Owners Corporation Strata Plan 64622 [2004] NSWSC 633

HEARING DATE(S): 7, 8, 9, 10 June 2004

JUDGMENT DATE:
19 August 2004

JURISDICTION:
Equity Division
Commercial List

JUDGMENT OF: Bergin J

DECISION: See para [104]

CATCHWORDS: [CONTRACT] - Whether the parties agreed that the plaintiff's use of the common property in a high rise apartment block was to be without fee - Whether the signing of and support for the plaintiff's development application constituted a contract between the parties that no fee would be charged for the use of common property. - [MISLEADING & DECEPTIVE CONDUCT] - Whether a letter from the Executive Committee of the defendant contained a representation that no fee would be charged to the plaintiff for the use of the common property - Whether the plaintiff relied upon the alleged representation when it entered into a lease over Retail Space, undertook renovations and opened a retail showroom - Whether the defendant's silence in relation to fees for the use of common property constituted a representation that there would be no fees. - [UNCONSCIONABLE CONDUCT / EQUITABLE ESTOPPEL] - Whether the defendant, in seeking to impose a fee upon the plaintiff for the use of common property, engaged in unconscionable conduct within the meaning of section 51AA of the Trade Practices Act 1974 (Cth) - Whether there was consent to the use of common property and the extent of any consent - Whether there was an expectation in the plaintiff that it would be able to use common property without fee - Whether the defendant is estopped from denying agreement to use the common property without fee. - [TORT - TRESPASS] - Whether the plaintiff's signage on the common property and use of the concrete walls on common property amount to trespass - Whether loss of a commercial fee for use of the common property was the natural and probable consequence of the trespass - Whether injunction should be granted.

LEGISLATION CITED: Fair Trading Act 1987 (NSW)
Strata Scheme Management Act 1996 (NSW)
Trade Practices Act 1974 (Cth)

CASES CITED: Austotel Pty Ltd & Anor v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Australian Competition and Consumer Commission v
CG Berbatis Holdings Pty Ltd & Ors (2003) 214 CLR 51
Bowyer v Cook (1847) 4 CB 236
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Commonwealth v Verwayen (1990) 170 CLR 394
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Holmes v Wilson & Ors (1839) 10 Ad & E 503
Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334
Letang v Cooper [1965] 1 QB 232
Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388
Re Caughey, ex parte Ford (1876) 1 Ch D 521
Taplin v Florence (1851) 138 ER 294
TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333
The Owners - Strata Plan No. 43551 v Walter Construction Group Ltd [2003] NSWSC 1177
Waltons Stores (Interstate) Ltd v Maher & Anor (1988) 164 CLR 387
Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1948] AC 173
Yovich v Collyer [1972] WAR 143

PARTIES :
Motor Group Australia Pty Ltd (Plaintiff)
The Owners Strata Plan 64622 (First Defendant)

FILE NUMBER(S): SC 50036 of 2003

COUNSEL: B Coles QC, GA Sirtes (Plaintiff)
DJ Hammerschlag SC, J Miller (Defendant)

SOLICITORS: Landerer & Company (Plaintiff)
Dibbs Barker Gosling (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

19 AUGUST 2004

50036/2003 MOTOR GROUP AUSTRALIA PTY LTD v THE OWNERS STRATA PLAN NO 64622

JUDGMENT

1 The plaintiff, Motor Group Australia Pty Ltd, is the lessee of lots 140 and 141 in Strata Plan 64622 (the Retail Space) comprising premises at ground level on the eastern side of the building known as “Altair” at 1-3 Kings Cross Road, Darlinghurst, in Sydney. The defendant is the corporation constituted upon the registration of the Strata Plan 64622, and under the relevant legislation the common property of the Plan vested in the defendant as agent for the lot owners of Altair as tenants in common. The proceedings relate to the signage on the roof of the Retail Space, a pylon sign in the garden adjacent to the Retail Space, and concrete walls in the common property through which the plaintiff created access to the Retail Space.

2 Altair is a high-rise building consisting of 138 apartments and includes the Retail Space. Altair was built by Australand and designed by the architects, Engelen Moore, of which Tina Engelen is a director, although not an architect. Altair won a World Architecture Award for the Best Housing Scheme in the World in 2002 “despite being let down by the unsightly appearance of the untenanted eastern pavilion on the eastern forecourt of the building” as Ms Engelen put it. The untenanted area to which Ms Engelen referred is the Retail Space that had remained untenanted for approximately 2 years.

3 The Retail Space consists of the plaintiff’s “flagship” showroom for selling motor vehicles, particularly Rovers and MGs, and a café. The signage on the roof has a Rover badge and an MG badge and in large white letters the words “MG Rover”. The pylon in the garden bed to the south of the showroom is a vertical standard displaying the MG and Rover badges. The Retail Space is on the eastern side of the Altair building which is located above the road tunnel that carries a large volume of traffic from the eastern suburbs of Sydney into the central business district of the City of Sydney. Further to the east there are a number of car dealerships on the southern side of the roadway leading up to the tunnel, in particular near McLachlan Street, Rushcutters Bay.

4 The director of the plaintiff, Bradley Garlick, has been involved in the motor industry selling cars for approximately 30 years. The plaintiff purchased the MG Rover distributorship in August 2002 when it was operating out of premises in Crown Street, Surry Hills, selling cars and operating the apparently successful restaurant known as MG Garage. For various reasons that showroom had to be relocated and Mr Garlick looked for alternative premises. He gave evidence that “with prominent signage” the Retail Space would become a “billboard” for MG Rover in the eastern suburbs.

5 The business of the defendant is conducted through the Executive Committee (the EC). The members of the EC included Elizabeth George (Chairperson), Karl Steinberg (Vice Chairperson) who is the second defendant, Sue Williams (the Secretary), Kerry Ford, Joe Catanzariti, Christopher Ong (the Treasurer), Michael Drummond, Todd McKenny, Eric Francis and David Stanger (the Building Manager). All of these members of the EC gave evidence in the proceedings. Ms Engelen was also a member of the EC and gave evidence for the plaintiff.

6 The dispute between the parties has arisen because the plaintiff alleges that the defendant gave its consent to the lodgement of the plaintiff’s Development Application (the DA) in respect of the Retail Space, including proposals for signage and an opening through concrete walls, part of the common property, to gain access to the Retail Space, without advising the plaintiff that it intended to charge a fee for the use of the common property. The defendant did not make a request for that fee until three months after it had provided its consent to the DA, by which time it is claimed that the plaintiff had committed itself to a 5x5 year lease and erected the signs on the building. The plaintiff claims that in those circumstances it is entitled to use the common property for the period of the lease free of charge.

Agreement to Lease/Lease

7 Mr Garlick negotiated the rent with the then owner of the Retail Space, XL Holdings Pty Limited (XL). On 11 September 2002 Chesterton International, Property Consultants, on behalf of XL, advised the “commercial terms of the leasing proposal” to the plaintiff for 5 years with a 5 year option with the lease commencing on 1 December 2002. The net rental referred to was $210,000 for the first year, $220,000 for the second year and $230,000 for the third year. The proposal contained a clause entitled “signage” which provided: “the Lessee will be allowed to erect signage as required subject to Lessor, council and any other relevant statutory body approval”.

8 On 10 October 2002 the plaintiff and XL executed an Agreement to Lease whereby the plaintiff agreed to immediately apply for the DA. The DA was defined as a “development approval for use of the Premises as an automotive showroom and the sale of food and drink to be consumed on the Premises”. XL was entitled to terminate the agreement if the DA was refused (3.6). Completion of the Agreement for Lease was subject to the grant of the DA before the Sunset Date, being 6 months from the date of the Agreement for Lease (1.1 & 3.8). If the DA was not granted prior to the Sunset Date, the Agreement to Lease terminated on that date without prejudice to the parties’ rights in respect of any breach of the Agreement to Lease.

9 The Agreement to Lease provided that XL would grant, or procure the grant of the Lease and the plaintiff would accept the Lease within 7 days from and including the date on which XL provided the plaintiff access to the Retail Space. The Lease was annexed to the Agreement to Lease and included clause 10.7 whereby the By-Laws applicable to the Strata Plan were deemed to be part of the Lease with a requirement that the plaintiff obey them.

10 The By-Laws included relevantly provision for the owners of lots 32 and 119 to have exclusive use of a Signage Area along the eastern side of the building immediately above but set back from the Retail Space roof (By-Law 38). They also provided for the defendant to grant licences to owners and occupiers to use part of the common property and included the power to set the term of the licence, any payment under the licence and the permitted use under the licence (By-law 30).

11 The Lease annexed to the Agreement to Lease also contained clause 13.7 that provided:

13.7 Signs
(a) The Tenant must get the Landlord’s and (if required) any relevant Authority’s consent before the Tenant:

(i) puts any signs, lights, advertisements or similar items on the outside or inside of the shopfront of the Premises; or

(ii) uses any picture or likeness of the Building or the Premises for an advertisement (except as the Tenant’s address or place of business).

(b) The Landlord will not unreasonably withhold consent to signs stating the Tenant’s name and business if the Landlord believes they are of a standard in keeping with the Building and are in accordance with the requirements of and consents required under the By-Laws. The Landlord will not consent to handwritten signs or notices or to signs that the Landlord considers are obscure, improper, defamatory or likely to offend the public.

(c) The Landlord may remove any sign or other thing which the Tenant erects in contravention of this clause.

The EC Meeting – 10 October 2002

12 Ms Engelen had been co-opted onto the EC after the completion of the Altair building to assist it with the defendant’s dealings, inter alia, with the builder, Australand, and, it seems, to attempt to find a suitable tenant for the Retail Space. In the first week of October 2002 Engelen Moore was retained by the plaintiff to assist it with the DA for the Retail Space. Notwithstanding this retainer, Ms Engelen remained as a member of the EC.

13 A meeting of the EC took place on 10 October 2002, the Minutes of which included:

Tina said she had been negotiating with a prospective tenant for the empty restaurant space at the bottom of the building. She had been helping them draw up their plans to make sure they were sympathetic to the building. The EC agreed to support a DA going before council, subject to certain provisions about the common property surrounding the lot. Carl, David and Kerry will check the situation.

14 Ms Engelen gave affidavit evidence that she attended the meeting and presented to and left with the EC a spiral bound set of documents including drawings, the Statement of Environmental Effect and signage specifications by Coates Signage. Ms Engelen’s affidavit included a claim that after the presentation, the following conversation occurred:

Engelen: Do you have any issues?

Steinberg: I believe that the wall between the retail premises and the carpark is common property so we will need to negotiate some conditions to terminate the right of use should MG Rover vacate the premises or sublet the space. We will also require to be compensated financially for such usage rights.

Engelen: Please outline your conditions in writing and forward to my client for agreement .

Ford: We were all under the impression that the space was going to be a restaurant. MG Garage is such a great restaurant. Could Altair’s MG Café be enlarged so that the ratio of cars to people becomes a little more equitable?

Engelen: According to advice from our BCA consultant, this would require extra toilets to be installed internally to service extra patrons. If there are under 20 patrons then no toilet facilities are required, whilst 20-50 patrons would require one male WC, one female WC and one disabled WC. I too would like to see the café a larger size as I feel that the current outdoor proposal favoured by my client is a bit of a token café and being outdoor is subject to weather conditions. My client is naturally racing against the clock and wishes to lodge the DA application upon obtaining your approval. If you wish to propose a financial agreement with MG Rover to grant rights of use for 2 roller doors to the carpark area, and if you wish to request a large café area, could I ask you to please put this in writing immediately for my client’s consideration. If the modifications are agreed to, Engelenmoore will have to amend the drawings prior to council lodgement .

Stanger: Is the forecourt area where the proposed steel pergola structure is going to be fixed common property?

Engelen: I’m not sure but I believe it is on title. I will have to check.

Steinberg: How high are the letters of the sign you are proposing?

Engelen: The letters need to be gutsy and strong so we are proposing that they are 1.5M high (indicating the height relative to her own height). The letters will also be illuminated white letters that will stand out against the dark grey of the podium behind.

Williams: I suggest we issue a notice to all residents on the Altair notice board situated in the entry lobby stating that MG Rover wishes to lease the retail premises pending development application approval and that a submission made by Engelenmoore has been approved in principle pending some required modifications and that the documents will be lodged at the concierge for a period of 2 weeks for inspection should anyone wish to raise any issues or make any objection.

Engelen: I agree and I would be happy to include my office contact number in order to invite any resident to discuss their concerns directly with me. In particular, I wish to avoid any problems with Ron Pront and Maggie Sten who own the apartment situated directly over the forecourt. I feel they certainly will have an issue with the signage, the operating hours and potential noise from patrons.

George: If we are all in agreement that there are no other issues on this matter, I motion that we vote to approve the application pending the modifications raised. Karl (Steinberg), could you please follow these up? Sue (Williams), if you could implement the notice board as suggested. Tina (Engelen), I would like to thank you for your presentation and particularly for your help in finding a suitable prestige tenant for Altair.

15 There was some dispute in the affidavit evidence about what was said at this meeting. In her evidence in-chief Ms Engelen “corrected” her affidavit by seeking to remove the first statement in italics on the basis that since reading the defendant’s affidavits she had recalled that the request for the letter had been made in a telephone call with Mr Steinberg the following morning. Ms Engelen also sought to “correct” her affidavit in cross-examination by removing the second italicized portion of the conversation.

16 The defendant’s witnesses gave evidence that Ms Engelen did not use the words “my client” at the EC meeting. Ms Engelen denied this and persisted in her evidence that she did refer to “my client”. Ms Williams gave evidence that she took notes of the meeting and although her notes are different from the Minutes, she gave the explanation that MG Rover was not mentioned in the Minutes because Ms Engelen had “made it clear to us that we shouldn’t actually mention” the plaintiff’s name in the Minutes because there was a “commercial consideration going on” and there was a feature to the transaction involving confidentiality. A transcript of Ms Williams’ shorthand notes are in evidence and include the following entry:

Restaurant-MG Rover. We’ve got cars and water there for coffee. No strong food smells and no late hours. Tina: I’m happy to make anything work. They want signage. I told them it has to be designed. Karl and Eric: allow them to use the common access but contract that if the lease expires, we make a condition of our approval that, at expiry, they have to reinstate it if the EC requests. Or change of operator.

If it’s common property we can charge rent. DA approval in principle, then apply for DA but certain strings. (Common property) David can find out. Karl ascertain about area. Approval subject to negotiating a suitable lease for any common property involved. Karl David and Kerry (to manage). Vote to support DA on suitable resolution of lease of common property in accordance with bylaws. And negotiate Australian application received.

Letter of 11 October 2002

17 Ms Engelen gave evidence that she telephoned Mr Steinberg at approximately 9:30am on 11 October 2002 and suggested the matters in italics referred to above that she had previously claimed she had suggested at the EC meeting on 10 October 2002. On 11 October 2002 Mr Steinberg and Ms Engelen drafted a letter from the EC to be signed by Mr Steinberg directed to XL and the plaintiff. Mr Steinberg produced a draft of the letter and forwarded it to Ms Engelen for her to settle. The draft as corrected or settled was then sent back to Mr Steinberg and he signed it. The final form of the letter dated 11 October 2002 was in the following terms:

Proposed DA application for café/Retail Space at Altair forecourt

In principal (sic) we are delighted to welcome MG Rover as the tenant of this lot. However we must first address two concerns prior to granting our permission to the lodgement of the DA.

The concrete block walls between the café/retail space and the Altair carpark are common property. We will grant renegotiable rights of access through these walls on the condition that the terms of access can be removed or renegotiated at any future change of operator or operation of the commercial lot. We would also require you to agree to reinstate and make good these wall openings should the Altair EC withdraw their rights of access at any change of operator or operation. You would be required to fit the doors with a security camera linked into Altair’s monitored security system.

Altair owners bought their apartments on the understanding that the commercial lots were zoned as a restaurant and we welcome the proposal to provide the café amenity. We are concerned that the proposed ratio of showroom to café is currently unbalanced and would ask you to double the seating area and provide WC’s in line with the BCA. Altair will support the café as patrons and will promote it to the occupants of our 138 apartments.

18 On 11 October 2002 Ms Engelen met with Mr Steinberg and asked him to view the amended drawings and sign the DA. Ms Engelen informed Mr Steinberg that Mr Garlick had agreed to the terms of the letter from the EC dated 11 October 2002 and that the principal of XL, Mr Ash Samadi, had agreed with the terms concerning the common wall.

The Development Application (DA)

19 The Development Application (DA) dated 11 October 2002 included detailed plans and a Statement of Environmental Effect. The DA included the following description of the development:

Development Application for Use of Café/Retail Space at Altair Forecourt. Signage details for Retail Use. New sunshade structure over forecourt. Planting changes. New opening in podium façade & new opening into café/Retail Space from Altair carpark.

20 It also included the following in the space provided for any details of any proposed signs:

21 The Statement of Environmental Effect included the following:

22 Part 8 of the DA entitled “Applicant and Owner Declarations” included the following:

Every owner of the land must sign this form. If the owner is a company, the form must be signed by an authorised director or directors and the common seal must be stamped on this form (if required by the company’s Articles of Association). If the property is within a strata plan and the proposal affects the common property then the Body Corporate’s authority is required. If you are signing on the owner’s behalf as the owner’s legal representative, you must state the nature of your legal authority and attach written evidence (e.g. power of attorney, executor, trustee, etc.).

23 Part 8 was signed by the director of XL as the owner of the Retail Space and by Mr Steinberg next to the words “Altair Executive Committee Vice Chair” and “in accordance EC motion”. The DA was signed by Ms Engelen on behalf of the plaintiff.

Post DA

24 On 23 October 2002 Ms Engelen reported to the plaintiff on the progress of the DA which by that time had been lodged with the South Sydney Council. Ms Engelen stated: “of course there is always the possibility the approval could be denied, however we do not expect such an outcome”. She also advised that arrangements had been made for a note to be placed on the Altair notice board that the plaintiff “of MG Garage fame” was seeking approval to trade from the forecourt showroom and that the Altair EC had signed the approval based on some agreed modifications. The letter also advised that residents had been advised to view the proposed drawings at the concierge’s desk and to contact Ms Engelen if they had any questions or concerns. The letter continued “this is in the hope that we can prevent objectors from within Altair”.

25 Ms Engelen also reported that Engelen Moore were requesting further details from Nathan Coates for approval in respect of the signage “in order to firm quotation for your approval”. The proposed timeframe for the works and opening of the showroom indicated on the “best scenario”, an opening in December 2002 and on the “normal scenario”, an opening in mid January 2003.

26 On 21 November 2002 Ms Engelen wrote to the EC on behalf of her “client” in the following terms:

In order to provide quality air-conditioning to the retail spaces on the forecourt of Altair, on behalf of our client MG Rover Australia P/L, the mechanical consultant has proposed erecting a platform structure at high level on the wall in the space between the garbage room and the car park near the Craigend Street exits, on top of which he proposes mounting two large a/c condenser units with ducting to the retail space.

The consultant has informed me that the two condenser units will actually help to ventilate and dispel the odours of the garbage room/bins. Would it be possible to meet together on-site in order to discuss his proposal and seek urgent Altair EC approval to proceed.

The Development Application approval is imminent and we wish to commence the fit out in order to complete Stage 1 works by December 2002. This will allow the client to commence pre Christmas trading with a café proponent of their business scheduled as Stage 2 works, commencing works straight after the Christmas and New Year break. The new openings proposed from the carpark into the retail space have been approved by Council and do not require a fire engineered solution.

I await your confirmation to attend an on-site meeting on Monday 25 November between 11:30 am and 12:00 pm in the car park at the Craigend Street exit in order for Ron Long (R & J Air-conditioning) to outline his proposal to you both, allowing you to ask any questions or outline any issues.

27 On 22 November 2002 the DA was consented to by the South Sydney Council on conditions that included requirements: (a) that the café hours were restricted from 7:00am to 7:00pm seven days a week; (b) that the roof mounted sign and logo pylon in the garden bed were to be illuminated only at the front and that the sides and the backs of the signs were to be blacked out; and (c) that the illuminated signage was to be turned off at 9:00pm each day.

28 It is apparent that the meeting proposed by Ms Engelen for 25 November 2002 took place. Immediately after the meeting Mr Stanger wrote by e-mail to the EC members, including Ms Engelen, in which he set out the proposal in relation to air conditioning and fit-out and advised that he did not consider that the requirements would have any detrimental visual impact. The e-mail continued: “there may be an opportunity to obtain some revenue from the tenant for the use of common property, but this may be offset by the improved air flow etc resulting from the modifications”. That same afternoon Mr Steinberg responded advising that the “MG Rover people would like to start quickly on this” and suggested that it would be good if they could commence before the Cross City Tunnel construction commenced. He advised that he and Mr Stanger thought it was “probably an ok proposal” and that they could “raise some money from the use of the common property”. He warned that Ms Engelen probably should not vote on the matter, but that all other recipients of the e-mail should give “a quick vote” on the matter. Ms Engelen did not object to the reference to the raising of some money from the use of the common property in this email. Indeed, no suggestion was made by Ms Engelen that she was not aware of this email or the EC’s requirement for compensation for the plaintiff’s use of the common property. The only qualification to that position was that Ms Engelen said that the discussion about the fee was in the context of the concrete walls.

29 Mr Steinberg wrote a further e-mail on 26 November 2002 to the members of the EC, including Ms Engelen, that included the following:

We have made it clear to them through Tina that they will have to pay us for the use of common property. How much do you think we should ask for?

30 The immediate response to Mr Steinberg’s e-mail is not in evidence, however in a Minute recording an EC meeting by e-mail (between 12-16 December 2002) the following is recorded:

MG GARAGE: There was some discussion about negotiations with the new tenants of the café area at the foot of the building over payment for using our building access, and installing air-conditioning equipment over the garbage area on one wall. David said that we’re benefiting by having air circulating in the garbage room. It was resolved that Karl continue negotiations and report back to the January meeting.

Claim for fee for use of common property

31 It is apparent that the plaintiff commenced building works to convert the Retail Space into the showroom and café. The signage was erected on the roof and the pylon was placed into the garden. The building manager, Mr Stanger, observed the progress of the works and assisted when access was needed to the building. He said most of his dealings in this regard were with Ms Engelen.

32 Mr Steinberg was overseas from the beginning of December 2002 until early January 2003. He gave evidence that when he first saw the signage in place it “became obvious” that the sign on the roof was “most likely” on common property. On 12 January 2003 he wrote an e-mail to Mr Ian Cook of Linders, the defendant’s managing agent, on the subject “lease of common property at Altair” in the following terms:

MG Rover and the owner of the commercial lot at the base of Altair asked the EC to approve some Engelen Moore designs to turn the lot into a car showroom and café. The plans involved the use of some common property in the garden beds and the cutting of two new doors through the wall into the carpark so MG Rover could get their cars in and out of the showroom.

We approved the plans for a DA on the written condition that there would be a lease for a commercial fee for the use of common property and that we could withdraw or renegotiate any rights to use the common property if the usage or operators change. (This is because we believe MG Rover don’t want to run the café and will probably try to shut it down after a few months and also to protect the building in case MG Rover move out and a less desirable car company moves in).

Council approved the DA and MG Rover started work and have cut the new doors, they also sought our permission to situate an air conditioner in our garbage room and run pipes through the carpark to air condition the showrooms. We agreed verbally to this use of common property.

We now realise that the DA involved erecting a large sign on the roof of the lot (it’s a kind of pavilion on the forecourt) and we hadn’t realised this was also common property and they didn’t specifically ask us if they could do this or mention that it was CP.

So, we have no problems with them using the common property as we are keen to have the lot occupied by such a stylish outfit but we do need to create a lease which we can put to the AGM.

We believe the right to put such a big sign in such a prominent site is probably worth a lot of money, maybe $200,000 a year. We also understand that allowing the new doors has added substantially to the value of the site and it could not be used as a car showroom without these doors so we think they are probably pretty valuable too.

33 Mr Steinberg accepted in his evidence that the reference in this letter to the “written condition” that there would be a lease for a commercial fee for the use of the common property was “a mistake”. He explained this mistake on the basis of having been overseas for six weeks, his lack of contact “with this whole thing”, his imminent departure for a further period overseas and the fact that he had written the letter to Linders in “some haste”.

34 On 17 January 2003 Linders wrote to the plaintiff in the following terms:

Re MG Rover Lease of Altair Common Property

Further to a presentation by Tina Engelen, Engelen Moore to the Altair Executive Committee in late 2002, the Altair Executive Committee approved the plans for a DA. This agreement was on the condition that there would be an agreed commercial fee for the use of common property and that Altair could withdraw or renegotiate any rights for the use of common property if the usage or operators changed.

Following Council approval, there has been verbal agreement to facilitate construction work with Karl Steinberg, Altair Executive Committee and David Stanger, Altair Building Manager.

Construction has been underway including the modification to Altair common property including:

· Construction of new doorways for vehicle access;

· Installation of air conditioning;

· Garden bed modification; and

· Signage installation.

Upon receipt of this information, the Owners Corporation would like to meet with you at the earliest opportunity to discuss and agree the annual lease value and terms. A representative from the Executive Committee will contact you shortly to arrange a meeting.

Best wishes for the establishment of your business. We look forward to a continuing positive relationship.

35 On 24 February 2003 the EC wrote to the plaintiff referring to Linders’ letter of 17 January 2003 and enclosing a copy of a valuation from Higgins Valuers Pty Ltd valuing the access through the common walls at $41,500 per annum and use of the common property for signage at $150,000 per annum.

36 The plaintiff responded to Linders’ letter of 17 January 2003 by letter dated 4 March 2003 that included the following:

For the record allow me to note our complete surprise at the suggestion of any fee for the use of the common property.

At no stage did the owners corporation make as a condition of its approval to our development application that a commercial fee be paid by us or indeed any fee at all. Many aspects of the development application and the work carried out benefit the owners corporation. The owners corporation has acknowledged those benefits in writing and confirmed from the outset its encouragement and support for our development application and the work carried out.

Its approval to such development application and work has been confirmed in writing at several stages and again no fee is indicated or raised at any stage.

We deny any liability for any such fee and reserve our rights against the owners corporation and its representatives as to the representations made to us in relation to the expensive work carried out by us and in relation to our entering into the lease for the premises.

We relied on those representations in carrying out the work and in entering into the lease. It is entirely inappropriate for the owners corporation to seek to impose any liability upon us now that the work has been completed and now that that we are committed to our lease.

We are happy to continue to discuss any matters arising from our business or our occupation of the premises and will attend the meeting on Thursday.

37 The reference to the meeting on Thursday was a meeting at which Mr Garlick met with Mr Steinberg and Mr Catanzariti. Mr Catanzariti’s unchallenged evidence of that meeting was as follows:

Mr Garlick: There’s no financial solution to this. You guys never mentioned you wanted payment. We’ve gone ahead and committed ourselves and paid Engelen Moore a fortune because you wanted them. Now you want to charge us for the signs. If we’d known about it we could have factored it into our figures and renegotiated the lease. You could have been stuck with some crappy restaurant like Stressa. But we’ve done what you wanted, given you Engelen Moore and increased the size of a very upmarket café. That should be enough.

Steinberg: I don’t understand why you didn’t include some money for the sign and the new entrance in your budget. You knew it was common property. Its obviously a valuable sign. Half the eastern suburbs, your target market, drives past it twice a day. You’d know these signage rights are very valuable.

Catanzariti: We just want to be reasonable about this and find a commercial solution.

Steinberg: We need to get a motion passed at the AGM to organise a licence for you to use the common property. So it would be great if we could agree a commercial solution. We have to have the motion in place 10 days before this meeting.

Garlick: There is no financial solution. We’re prepared to walk away from the site if you persist with this. We’ve already put a hold on the Volvo site in Rushcutters Bay. I’m happy to move down there if you want us to.

38 On 13 March 2003 the defendant’s then solicitors wrote to the plaintiff in terms that included the following:

The Owners Corporation’s consent to the lodgement of the Development Application did not and does not constitute its consent to the construction of the signs and the doorway. An examination of the document signed by the Owners Corporation will make it clear that it consented only to the lodgement of the Development Application. The by-laws of the strata scheme, by which your company is bound as a lessee or occupier of a lot, provides that a licence to use common property may not be granted to an occupier except pursuant to a resolution of the Owners Corporation in general meeting. In any case, the executive committee’s resolution in its terms concerned a Development Application not the undertaking of works.

After your company undertook these works without authority, my client advised you in a letter by its Strata Manager of 17 January 2003, that it proposed to have the rights that your company had assumed valued, and thereafter to negotiate an appropriate lease or other arrangement with your company. Many telephone calls to your company followed, but it was not until last Thursday that you discussed the matter with representatives of my client. In that meeting and in a letter faxed to the Strata Manager that morning you asserted that there had been a representation that the common property could be used by your company without consideration, and that you understood that the Owners’ Corporation consent to a Development Application constituted its consent to the works. Both assertions are denied.

I am advised that you have advised my client that your company refuses to pay any consideration for the use of the common property. The owners of lot 141 have advised the Owners Corporation that they refuse to pay any consideration pursuant to a by-law that had been prepared for consideration by the Owners Corporation and which, if made, would have conferred relevant rights upon the owners.
In these circumstances, your company is required to remove the signs and the doorway, and to restore the common property to its original condition, within 7 days of the date of this letter. I am instructed that if your company fails to do so, I am to institute legal proceedings to seek appropriate orders, including orders for costs.

Proceedings commenced

39 The plaintiff commenced these proceedings on 7 April 2003. The proceedings were heard on 7-10 June 2004 when Mr B Coles QC leading Mr G Sirtes appeared for the plaintiff and Mr DJ Hammerschlag SC leading Mr J Miller appeared for the defendant. I had a view of the position of the signage from various vantage points on 10 June 2004. On that day I reserved my judgment, but suggested that the parties attempt to reach a commercial settlement of their differences. On 16 June 2004 the parties advised that they had been unable to reach a settlement.

Changed circumstances

40 On 10 February 2004 the ownership of the Retail Space was transferred to Barbrina Pty Ltd and Birchly Cross Pty Ltd in equal shares. Barbrina Pty Ltd, of which Mr Garlick is a director, is a trustee for Mr Garlick’s family trust. Birchly Cross Pty Ltd is the trustee of the family trust of Robert Zagame, a colleague of Mr Garlick.

41 On 5 April 2004 the plaintiff sublet the Retail Space to Sterling Motor Sport Pty Ltd by lease for the term until 29 November 2007 with an option for a further five years. The plaintiff appointed Sterling Motor Sport Pty Ltd as its dealer and it carries on the business formerly carried on by the plaintiff from the Retail Space.

The Contract Claim

42 The Further Amended Summons includes the following claim:

23. In or about October 2002, the Plaintiff entered an agreement with the First Defendant whereby it was agreed that in exchange for the Plaintiff establishing a larger café in the Retail Space, complying with the design criteria imposed by the First Defendant’s project architects and satisfying the requirements of the First Defendant’s letter of 11 October 2002, the First Defendant would consent to the Plaintiff’s Development Application concerning, inter alia, the erection of the Signage on the common property and allow the Plaintiff to erect and maintain the Signage thereupon without charge.

24. The agreement contained the following implied terms:

24.1 the First Defendant would take all steps to facilitate the Plaintiff’s use and occupation of the common property, including the passing of any necessary by-law to record the agreement;

24.2 an obligation upon the First Defendant to act in good faith;

24.3 an obligation upon the First Defendant to co-operate with the Plaintiff so as to allow the agreement to be properly performed.

25. In breach of the terms, both express an implied, the First Defendant has:

25.1 sought to impose a levy upon the Plaintiff of $150,000 per annum for the usage of the common property;

25.2 threatened to disconnect the electrical current illuminating the Signage in the absence of such payment being made.

43 The defendant sought particulars of the contract claim and the plaintiff’s response makes it difficult to ascertain with any precision what it was really alleging. However there was reference to the letter of 11 October 2002 and the minutes of the meeting of the EC on 10 October 2002. There was also a claim that there was an absence of any reference whatsoever to a fee in respect of the signage.

44 Mr Coles QC submitted that the contract between the plaintiff and the defendant was a contract wholly in writing consisting of: (1) the letter from the defendant to the plaintiff dated 11 October 2002; (2) the amended plans proffered to Mr Steinberg on 11 October 2002; and (3) the DA submitted to and signed by Mr Steinberg on 11 October 2002. Mr Coles QC submitted that the term of the contract upon which the plaintiff relies is that it “may carry out the work on the terms and conditions of the letter of 11 October 2002”.

45 It was submitted that a contract was formed, characterised by an exchange of promises, and contained an implied term that the parties would act in good faith in performing the agreement. It was submitted that this term was breached in January 2003 when the defendant sought to impose a fee upon the plaintiff’s usage of the common property after the signage was erected. It was also submitted that the defendant ought to be prevented from departing from the terms of the agreement and should be prohibited from imposing any licence fee upon the plaintiff for the duration of the term of the lease and any further term consequent upon the exercise of the option.

46 The applicable principles identified in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, per Heydon JA at [24]-[27], relevant to the question of whether there was such an agreement are: (1) that pre-contractual conduct may be considered on questions of construction if the contract is ambiguous and the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term; (2) that post-contractual conduct may be considered on the question of whether a contract was formed; (3) that post-contractual conduct may not be considered on the question of what a contract means as distinct from the question of whether it was formed; and (4) that the construction of a contract is an objective question for the court and the subjective beliefs of the parties may be considered in the estoppel claim but not on the question of construction.

47 It was submitted that the content of the letter of 11 October indicates that there was no intention to charge a signage fee. The plaintiff alleges that the circumstances of the creation of the letter of 11 October 2002 are important. Ms Engelen gave the following evidence in cross-examination:

48 The plaintiff submitted that Mr Steinberg’s e-mail of 12 January 2003 demonstrates that at all times he was aware that the proposal put forward by the plaintiff involved, at the very least, “the use of common property in the garden beds”. It was also submitted that the email demonstrates that at all material times the EC was aware that the pylon sign was being placed on common property. I am not satisfied that the e-mail supports the plaintiff’s contentions. Mr Steinberg’s evidence was that he was not sure whether the proposed signage was in a garden bed that was on title or part of the common property. He was unsure whether the garden bed was part of the courtyard or common property and understood that Ms Engelen was to check out the areas of common property. The only area that he was to check was the pergola. He agreed that he thought that if the plans were approved “some elements” would probably be on common property. He made the point in his evidence that at the time the plans were produced on 10 October and 11 October, the final details of the signage were still to be decided and that the EC did not even know what dealerships would be involved. This is consistent with the words on the plans “proposed new signage logo type indicative only, pending on dealership arrangement”.

49 Mr Steinberg also gave the following evidence:

I wasn’t sure what was common property and the reason I didn’t investigate it past the instructions given to me by the executive committee to look at the pergola and the entrance was because we had clearly told Tina Engelen, the architects of MG Rover, that if any aspects of the design or the development involved common property we needed to be paid for them, we’d be seeking charges for them.

So, as far as we understood, they understood that and they would get back to us as they did when they met with us about the air-conditioning. So I fully expected that to happen for any common property in the development.

50 Mr Garlick gave evidence that the first time that he was aware that the defendant had any intention of charging him for the installation of signage on common property was when the plaintiff received the letter of 17 January 2003. During cross-examination Mr Garlick gave the following evidence:

…

Q: It didn’t enter your mind that you were erecting signs on common property until the builders asked you to pay for it?

…

51 The evidence establishes that Mr Garlick did not turn his mind to any fee for the use of common property for the signage at the time he agreed to the conditions in the letter from the defendant of 11 October nor at the time he submitted the DA to the Council. Ms Engelen also gave evidence about this matter. She said “nobody realized” that the signs were to be on common property. Ms Engelen agreed that some time after the events the subject of this litigation she had a conversation with the Secretary of the EC, Ms Williams, in which she said to Ms Williams, “we just naively didn’t realize that the roof was common property”.

52 The plans that were given to the EC at the meeting on 10 October 2002 referred to the signage on the drawings as “proposed new signage, logo type indicative only, pending on dealership arrangement”. The Statement of Environmental Effect specifically referred to the signage and stated that “by extending the pavilion roof line to form the light weight pergola structure over the outdoor café area we are able to utilize its front edge to carry the proposed new signage above and below it in one line”. Ms Engelen’s affidavit evidence was that at the meeting on 10 October 2002 she was asked a question by Mr Stanger about whether the proposed steel pergola area was common property. Her answer to that question was she was not sure and that she would “have to check”. There is no evidence that Ms Engelen made any relevant “checks” in relation to common property. Indeed the overwhelming evidence is that the question of whether the signage was on common property was just not appreciated or on anyone’s mind.

53 Mr Stanger gave affidavit evidence that at the meeting on 10 October 2002 he and Mr Steinberg were deputised to check whether the pergola was encroaching on common property. His evidence was that on 11 October 2002 they met in the courtyard and took some measurements that satisfied them that the pergola would not extend onto common property. The question of whether the signage was to be on common property was not addressed.

54 Ms Engelen also gave the following evidence in cross examination:

…

55 The letter of 11 October 2002 was expressed in terms of the defendant granting “permission” to the plaintiff for the “lodgement of the DA” on the two conditions contained within the letter relating to the concrete block walls and the size of the café. The DA signed by Mr Steinberg on the EC’s behalf required the authority of the Body Corporate “if the property is within a strata plan and the proposal affects the common property”. There had already been discussion about the common property in relation to the area of the concrete walls and the fact that Mr Steinberg signed the DA does not in my view establish that the EC was aware that the proposed signage also involved common property.

56 The evidence establishes that the search for the common property, as poor as it was, was not for the purpose of agreeing to any particular fee but for the purpose of deciding whether to support the DA. It is clear from the discussions at the EC meeting on 10 October 2002 that the intention of the EC was that if common property was to be used then the defendant was to be compensated. That intention was made clear to Ms Engelen in the context of the use of the walls and was understood by her to be the EC’s intention. Notwithstanding that intention and Ms Engelen’s understanding of it, there was no mention of that matter in the letter of 11 October 2002. In this regard Mr Coles QC submitted “that does not mean that the letter is incomplete or lacking in contractual force” and suggested “it simply did not materialise as an expression of the relevant concern”. It seems to me that the letter did not refer to that requirement because it was a requirement separate from the question of whether there would be permission for the lodgement of the DA, not whether there would be a particular fee struck for the use of the common property.

57 The plaintiff would have it that because of the “naivety” (as Ms Engelen put it) of the parties: (1) failing to recognize between late on 10 October 2002 at the meeting and on 11 October 2002 up to the time when the letter and the DA were signed, that the proposed signs were to be on common property; and (2) failing to include the requirement for a fee for the use of the common property in the letter of 11 October 2002, they thereby contracted that the plaintiff was entitled to use the common property for no fee for a period of at least five years and possibly ten years.

58 It is clear beyond doubt that in October 2002, in particular at the time the letter of 11 October 2002 was written and at the time the DA was signed by Mr Steinberg, the parties did not turn their minds to the signs being on common property. There was simply no intention ever formed at this time that there would be no fee for the use of the common property for the signage. There was an intention that there would be a fee for the common property in the context of the concrete walls and I am not satisfied that its absence from the letter of 11 October 2002 evidences an intention or agreement between the parties that the plaintiff was entitled to use the common property for no fee. There is also no evidence that the EC was aware as at 10 or 11 October that there was an Agreement to Lease for a period of 5 years with an option for a further five years. MG Rover forwarded a copy of part of the Lease to Mr Stanger on 21 November 2004 in relation to the subject of car parking.

59 The plans provided to the EC did no more than state that the signage was “indicative only, pending on dealership arrangement”. Ms Engelen’s evidence was that the location of the common property was “not obvious … even then”, meaning at the time of the meeting. The letter of 11 October 2002 was an indication of conditions upon which the defendant would grant “permission” to the lodgement of the DA and give its “support” to the DA and its “immediate lodgement”. I am not satisfied that the parties intended this letter to be the exhaustive terms upon which their relationship would be governed.

60 The evidence establishes that Ms Engelen, as the plaintiff’s agent, was well aware that the EC required compensation to be paid to the defendant for the use of common property, albeit in the context of the concrete walls. That matter was obviously to be the subject of contractual arrangement between the parties including the amount of such compensation. The parties did not agree by this letter that the plaintiff could use the common property without fee. The parties agreed that the defendant approved of and supported the immediate lodgement of the DA. They simply did not turn their minds to the question of whether the signage was on common property.

61 I reject the plaintiff’s claim that there was a contract between the parties that the use of the common property would be without fee for a period of at least five years and possibly ten years.

Misleading and Deceptive Conduct Claims

62 The defendant is also sued under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) for misleading and deceptive conduct. The second defendant, Karl Steinberg, was sued in his role as Vice Chairperson of the EC for misleading and deceptive conduct and allegedly aiding and abetting the defendant in its alleged misleading and deceptive conduct. I expressed my concerns in relation to the appropriateness of the claims against Mr Steinberg and the plaintiff subsequently sought and was granted leave to discontinue the proceedings against Mr Steinberg.

63 The plaintiff’s misleading and deceptive conduct claims rely in the main upon the terms of the 11 October 2002 letter and the signed DA. It is alleged that the defendant represented in the letter that it would support the plaintiff’s development of the Retail Space “replete with signage”, without imposing any licence fee for the occupation of the common property. It is also alleged that in reliance upon these representations the plaintiff: (1) entered into a 5x5 year lease over the Retail Space; (2) undertook extensive renovations of the Retail Space, including the installation of vehicle access and a café; (3) procured and installed signage; (4) opened a retail car showroom; (5) lost the opportunity of negotiating a lesser rental with the landlord so as to make allowance for the imposition of any fee for the common property; and (6) committed itself to occupy the Retail Space which it claims was of little use to it in the absence of prominent signage.

64 It is also claimed that the defendants misled and deceived the plaintiff by silence, in failing to advise it that By-Law 38 bestowed exclusive signage rights on the builder, Australand, in respect of the signage area behind that utilised by the plaintiff, rendering the usefulness of the plaintiff’s signage vulnerable. It was also submitted that the defendant, by its silence in respect of the By-Law, impliedly represented that there existed no lawful impediment (as regards the by-laws) restricting the plaintiff’s usage of the common property and erection of the signage.

65 I will deal with the latter claim first in respect of the alleged misleading and deceptive conduct constituted by silence in respect of By-Law 38. This claim is simply unsustainable in the light of the following evidence given by Mr Garlick:

…

66 I now turn to the other claims in respect of the alleged misleading and deceptive conduct. It is claimed that by its conduct the defendant expressly represented that it would approve MG Rover’s tenancy subject to two conditions, neither of which related to the signage, and that it immediately signed and supported the DA after agreement was given to the conditions of consent. This express representation is claimed to arise from the terms of the 11 October 2002 letter. It is also claimed that the defendant impliedly represented, by the absence from the letter of any reference to a fee in respect of the use of the common property, that no fee would be imposed by the defendant in relation to the plaintiff’s usage of the common property during the term of the lease or any further term.

67 It is clear that in October 2002 the members of the EC, Ms Engelen and Mr Garlick did not appreciate that the signage was to be erected on common property. Mr Garlick described this lack of appreciation on a number of occasions in his evidence as having been “not top of mind”. Indeed Mr Garlick’s evidence was that it was only after the signage had been erected and when he received the letter of 17 January 2003 suggesting the fee for the use of the common property, that it came to mind that it was on common property.

68 The plaintiff did not rely upon the alleged representation to enter into the lease. The plaintiff signed the Agreement to Lease on 10 October 2002 by which it was bound to sign the Lease on the conditions as referred to earlier in this judgment. The plaintiff had already negotiated and settled upon the rental for the Retail Space before it received the letter of 11 October 2002 from which it claims the representations arise.

69 To suggest that there was a representation that there would be no fee for the use of common property for the signage is rather difficult in the circumstances, but to suggest that there was reliance upon such a representation is impossible. Neither Mr Garlick nor the plaintiff relied upon any representation in relation to the use of common property for signage because it was simply not even thought about. It is not possible to rely upon something that was not on one’s mind at the time that it is alleged reliance occurred. This conclusion is applicable to the entering into the lease and the contracts for the signage construction and installation, as well as the carrying out of the renovations to and occupation of the Retail Space. The claim is in any event flawed because the plaintiff, through its agent Ms Engelen, knew that the defendant required compensation for the use of the common property in respect of the access through the common walls.

70 The claims in respect of misleading and deceptive conduct are dismissed.

Unconscionable Conduct/Equitable Estoppel

71 The plaintiff seeks a declaration that the defendant, in seeking to impose any levy, charge, fee or other impost upon the plaintiff, has engaged in conduct that is unconscionable within the meaning of section 51AA of the Trade Practices Act 1974 (Cth) as that term has been recently considered by the High Court in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Limited & Ors (2003) 214 CLR 51. In that case Gummow & Hayne JJ said (endnotes excluded):

Snell

GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd

“[T]he concept of unconscionable conduct ‘within the meaning of the unwritten law’ is presently confined in its operations by reference to specific doctrines. Nevertheless the cases indicate that its use is a matter of taxonomy which may be subject to substantial change. As Hardingham has suggested:

‘…the boundaries between traditional heads of intervention against unconscionable behaviour – specifically between common law duress and actual undue influence or pressure, between presumed undue influence and unconscionable dealing as such – are shifting. Lines of demarcation are not now as clearly defined as they may have been in the past. As a consequence, the traditional heads themselves may be ready for some redefinition or [rationalisation].’

In considering the contention that ‘unconscionable conduct within the meaning of the unwritten law’ in s 51AA refers to some kind of legal dictionary, it is important to observe that it has no settled technical meaning. It is, as Mahoney JA said, ‘better described than defined’. It offers a standard determined by judicial decision-making rather than a rule, albeit it may for the present be subject to limitation in its factual field of operation by the existence of specific doctrines.”

Crescendo Management Pty Ltd v Westpac Banking Corporation

Muschinski v Dodds

46. It is unnecessary to resolve these questions concerning the reach of s 51AA because, as remarked earlier in these reasons, and consistently with what had been said in the Explanatory Memorandum, the litigation was conducted on the footing that the facts fell within that well-established area of equitable principle concerned with the setting aside of transactions where unconscientious advantage has been taken by one party of the disabling condition or circumstances of the other. In such situations, and as will be further discussed below, equity intervenes not necessarily because the complainant has been deprived of an independent judgment and voluntary will, but because that party has been unable to make a worthwhile judgement as to what was in the best interests of that party.

72 The plaintiff claims the defendant knew the development included the installation of a large sign prominently displayed on the roof of the retail space, gave approval for this development to be undertaken and made no suggestion until mid January 2003 that a licence fee was proposed to be charged for the use of the common property. It is alleged that the defendant allowed the plaintiff to enter into binding contracts with the lessor, a builder and signage manufacturer and awaited the installation of the signage and the plaintiff’s imminent occupation before presaging the imposition of a large fee that would have the effect of almost doubling the plaintiff’s cost of occupying the Retail Space. It is alleged the defendant then threatened to remove the signage if such fee was not immediately paid in circumstances where the utility of the plaintiff’s occupation of the premises would be significantly compromised in the absence of prominent signage. It is submitted that this conduct was unconscionable.

73 The unconscionability is said to be the vulnerable position in which the plaintiff was placed by the defendant’s conduct, in that the plaintiff committed itself to retail space and was thereafter threatened with the removal of the most vital aspect of its occupation. It was submitted that the demand made in January 2003 for a licence fee was calculated to exploit the vulnerability of a retail business reliant upon the public’s knowledge of the plaintiff’s business location that would have been occluded or overlooked in the absence of not merely signage but prominent signage. Mr Coles QC suggested that the signage was really in the nature of a location sign rather than a display sign or a stand alone display advertisement. This suggestion was not supported by the plaintiff’s evidence. Mr Garlick gave evidence that he regarded it as a ‘billboard”. It seems to me that the signage served the dual purposes of identifying the plaintiff’s business location and advertising the business in a very prominent position above the road tunnel which carries a large volume of traffic into the CBD.

74 It was also submitted that the defendant’s conduct could be characterised as “economic duress”. The value of the sign to the retail space was made plain by the large sums of money sought to be extracted from the plaintiff, as a reflection of how valuable the defendant perceived the signage to be to the operation of the plaintiff’s allegedly fledgling business. It was submitted that the defendant ought to be restrained from imposing any licence fee until the expiry of the initial term of the lease and any extended term. Alternatively it was submitted that the defendant should be ordered to pay to the plaintiff damages for such conduct equivalent to the amount of any fee imposed for the duration of the term of the lease.

75 The plaintiff also relied upon the same conduct as a basis for a claim that the defendant ought to be estopped for the duration of the initial term of the lease and any additional term, from resiling from the express and implied representations. It was submitted that the detriment suffered by the plaintiff need not be a pecuniary loss but it must be material or real (Yovich v Collyer [1972] WAR 143 at 147) and that in this case the deconstruction and removal of the sign is a material detriment to the operation of the plaintiff’s business.

76 It was also submitted that the equity is said “not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon”: Waltons Stores (Interstate) Ltd v Maher& Anor (1988) 164 CLR 387 at 423 per Brennan J; Commonwealth v Verwayen (1990) 170 CLR 394 at 412 per Mason J, at 429 per Brennan J, at 454 per Dawson J, at 475 per Toohey J and at 501 per McHugh J. It was submitted that the avoidance of detriment in this case would require an order restraining the defendant from interfering with the signage.

77 The plaintiff proceeded to enter into the Agreement to Lease with XL before it even knew of the defendant’s attitude to its proposed DA. It agreed to the rental before it knew whether there was to be any fee for the use of any common property. It agreed to that rental prior to any relevant meeting with the EC and certainly prior to the letter of 11 October 2002. To suggest it lost the opportunity to adjust the rental by the claim for the fee in January 2003 is without merit. The plaintiff placed itself in the position of losing the opportunity to negotiate the rental because it agreed to that before any plans were provided to the EC.

78 I have found that the letter of 11 October 2002 did not amount to a representation that there would be no fee for the use of common property. In those circumstances this aspect of the plaintiff’s claim is left with only the defendant’s conduct in allegedly standing by and allowing the installation of the signage on common property to support its claim that it would be unconscionable to impose a fee for the period of the lease. This claim has been characterised as consent to a licence for that period.

79 The defendant submitted that there is no evidence of any active, or indeed passive consent by the defendant or by the EC to the use of the common property for no fee. Mr Stanger as the building manager co-operated with Ms Engelen, whom he understood had made the arrangements to give the plaintiff access to do the building works. The defendant submitted that observation by any particular owner or member of the EC of the installation of the signs could not amount to consent to a licence for five years with an option for five years. It was also submitted that at most it could only be consent to entry to carry out the building works. It was further submitted that consent implies knowledge and one cannot consent to a thing unless one has knowledge of it: Re Caughey, ex parte Ford (1876) 1 Ch D 521 at 528 per Jessel MR. The plaintiff has not established that anyone’s mind was turned to the question of a licence, let alone one for five or ten years. Any consent by the defendant had to be by ordinary resolution and this did not occur. The defendant submitted that it is plain from the evidence that there was some confusion, or lack of precise understanding in the minds of all parties as to the actual impact of the plaintiff’s development on common property. In those circumstances it was suggested it is entirely unsurprising that no steps were taken to negotiate an actual price for use of common property until there was realisation that the signs were on common property.

80 The defendant submitted that the plaintiff’s assertion of an unconditional licence, proprietary in nature, to occupy the defendant’s premises is untenable. For any such licence to be proprietary, it would have to be coupled with a grant of interest in some ascertainable property, distinct from the licence itself. It was submitted that if a licence arose from the letter of 11 October 2002, it was coupled with no grant of interest in any ascertainable property. It follows that any such licence could be no more than a licence by way of bare permission to do that which otherwise would be a trespass: Taplin v Florence (1851) 138 ER 294.

81 The defendant conceded that Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173 is authority for the proposition that a negative stipulation in a bare licence that the defendant not treat the plaintiff as a trespasser until the plaintiff’s licence is lawfully revoked, may be protected by injunction. However it was submitted that if the plaintiff’s licence to use common property had been properly terminated prior to the commencement of the current proceedings there is no negative stipulation on foot capable of protection by injunction.

82 Ms Engelen was on notice of the defendant’s requirement for compensation for use of the common property by reason of the conversations on 10 and 11 October 2002, and certainly no later than 26 November 2002 on receipt of the email from Mr Steinberg. This was before the signs were installed. The letter of 11 October 2002 was an agreement in principle to the “tenancy” and to the support for and submission of the DA. The plaintiff was aware that all matters between it and the defendant were not recorded in the letter of 11 October 2002 by reason of the knowledge Ms Engelen (and thus the plaintiff) gained at the meeting of 10 October 2002 and in the subsequent discussions and emails.

83 The plaintiff was not in a position in which it was unable to make a worthwhile judgment as to what was in its best interests. The so-called disabling event of having already committed itself to the Retail Space was caused by the plaintiff in full knowledge that the arrangement with the defendant was only “in principle” and that other matters had to be finalised. I am not satisfied that the “disabling event” occurred in reliance upon or as a result of an agreement that the plaintiff could use the common property for no fee for the period of the lease. Equity will not intervene in such circumstances. The defendant had absolutely no knowledge of the terms of the lease between XL and the plaintiff. The plaintiff could have waited to enter into the Agreement to Lease until it had obtained the defendant’s specific requirement for the plaintiff’s use of any common property. It can hardly be said that the plaintiff understood that it was not going to have to pay for the common property when no one comprehended that the signage was on common property and in circumstances where the conversations on 10 October and the e-mail of 26 November made clear that the defendant required compensation for the use of common property.

84 The urgency with which the plaintiff approached the building works was no doubt related to the fact that it had agreed to pay rental to XL from 1 December 2002, a fact unknown to the defendant. It had failed to identify its encroachment upon the common property as its agent, Ms Engelen, informed the EC it would. This failure may well have been because other things intervened in the fast pace of building works. I am not satisfied that the defendant’s conduct was unconscionable.

85 In Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334 the plaintiff, a retail tobacconist, sought a mandatory injunction that the defendant remove an advertising sign in the plaintiff’s leased airspace. The plaintiff had originally agreed to the sign being placed in the airspace and had, from time to time, allowed the defendant’s employees access through his premises for maintenance of the sign. After some years the plaintiff, for commercial reasons, requested the defendant to remove the sign but subsequently allowed it to remain in situ. After certain differences arose between the parties the plaintiff gave the defendant formal notice to withdraw the sign and in the absence of its removal moved the Court for an injunction for its removal. A similar estoppel claim was made in that case and McNair J said at 342-343:

Jorden v Money

86 The commercial parties in the present case continued to negotiate matters as the building works occurred. The example of the positioning of the air conditioning and its presence on common property is a good example and one that was emphasised, correctly in my view, by Mr Steinberg in his evidence. In Austotel Pty Ltd & Anor v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Priestly JA, with whom Kirby P agreed, said at 610:

For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.

87 On the evidence to which reference has been made in relation to the contract claim and the misleading and deceptive conduct claim there was no encouragement by the defendant in the plaintiff of an assumption that no fee would be charged for the use of the common property. There was no basis upon which the plaintiff could have reasonably understood or expected that the use of the common property for the signs was to be without a fee. The permission to the lodgement of the DA even if taken to have been an implied permission to put the “indicative” signs on the property did not entitle the plaintiff to assume that it would be for no fee for a period of the lease.

88 I am of the view that any licence that may have existed was limited to access being granted to do the building works and did not extend to the use the common property for no fee for the period of the lease. To suggest that the defendant’s claim for a fee for the use of the common property amounted to economic duress as that term was described in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 is in my view a suggestion without merit. In my view there was no illegitimate pressure brought to bear upon the plaintiff. There is no basis for making the declaration sought and no proper basis for estopping the defendant from denying the existence of such an agreement and acting accordingly.

89 The plaintiff’s claims for declarations of unconscionable conduct and injunctive relief against the defendant are dismissed.

Cross Claim

90 In reliance on Master Macready’s decision in The Owners – Strata Plan No 43551 v Walter Construction Group Limited [2003] NSWSC 1177 (Walter) the plaintiff submitted that the defendant does not have standing to bring the cross claim because it has not established that the owners of the lots in the strata scheme are jointly entitled to take proceedings against it. In that case Master Macready was deciding a preliminary question in proceedings that involved allegations of building defects in construction work carried out by the defendant in circumstances where the ownership of a number of the lots had changed and where subsequent owners may not have had a cause of action against the defendant.

91 The defendant in this case submitted that although Master Macready’s interpretation of s 227 of the Strata Scheme Management Act 1996 (NSW) was narrow it does not impact upon this case because the facts of this case are distinguishable from those in Walter. The defendant submitted that the conduct complained of in the present proceedings is of a continuing wrong and that change of ownership of the lots is irrelevant. Thus the claim falls within the terms of s 227, even narrowly construed. I agree. I am not satisfied that the defendant lacks standing to bring the cross claim.

92 The defendant, as cross claimant, claims that the plaintiff’s use of the common property both as to the use of the concrete walls for roller doors for access and the roof and garden bed for the signage, from at least 7 days after the defendant’s solicitors letter of 13 March 2003 constituted a trespass and, it is claimed, continues to constitute a trespass. It was also submitted on this aspect of the claim as it was submitted in response to the claim of unconscionable conduct, that any licence to access and use the common property to construct the access way and install the roller doors and erect the signs was a licence in which a term would be implied that the plaintiff would negotiate with the defendant a fee for the use of the common property. This was not a claim pleaded in the cross claim. After the plaintiff refused to negotiate a fee, the defendant’s solicitor’s letter of 13 March 2003 gave 7 days notice after which, it was submitted, any licence was revoked and the plaintiff’s continued presence on the common property amounted to a trespass.

93 In Kelsen v Imperial Tobacco Co the court dealt with what was referred to as the “most interesting point” of the case, being “whether an invasion of an airspace by a sign of this nature does give rise to an action in trespass or whether the rights, if any, of the owner of the airspace are not limited to complaining of nuisance”. If it had been only nuisance then it was clear that the presence of the sign caused no inconvenience and no interference with the plaintiff’s use of his airspace. After referring to the authorities on this question of “considerable controversy” McNair J concluded that a trespass and not a mere nuisance was created by the invasion of the plaintiff’s airspace (at 345).

94 In this case the common property of the defendant includes the roof and the airspace in which the MG Rover sign is situated. There is now no issue about that. Indeed the plaintiff/cross defendant did not suggest that trespass did not lie but rather submitted that the facts did not support such a finding. Any licence that the plaintiff had was subject to termination by the defendant and was not a licence for the term of the lease, as claimed by the plaintiff. The plaintiff’s continued refusal to remove the sign constitutes a trespass to the common property and a continuing trespass.

95 McNair J considered the alternatives of damages and an injunction for the removal of the sign in Kelsen v Imperial Tobacco and said at 346:

I am further impressed by this fact, that if I refuse to grant an injunction in this case there is nothing to prevent the defendant company from continuing to display this sign and leave it to the plaintiff again to put forward a subsequent claim for damages in a further action. If I were to decide that an appropriate remedy would be a small money payment of nominal damages, I would be, in effect, saying that although such implied license, if any, as the defendants have has been determined, nevertheless the defendants are entitled to continue to display their sign.

96 The defendant submitted that the evidence of “valuation” that was the basis for the suggested commercial fee is the measure of the damages suffered by the defendant for the trespass. Each party called expert evidence on this matter. The plaintiff’s expert, Michael Paris, valued the pylon sign at nil and the roof sign at $5,000 per annum. Alan Aizley Hyam, the defendant’s expert, valued the vehicular access at $41,500 per annum and the signage at $110,000 per annum. It is not necessary for me to decide the question of such valuation for the reasons given below.

97 The plaintiff submitted that the defendant must establish that it suffered actual damage before being entitled to recover damages. For this proposition reliance was placed upon what Lord Diplock said in Letang v Cooper [1965] 1 QB 232 at 245. That does not seem to me to be apt to the trespass in this case, which is a trespass to land rather than a trespass to the person about which Diplock LJ was speaking.

98 In Palmer Bruyn & Parker Pty Limited v Parsons (2001) 208 CLR 388 a case relating to the loss of a consultancy alleged to have been caused by an injurious falsehood contained in a letter, Gleeson CJ said:

As a matter of principle, this being an intentional tort, if relevant harm was intended, or was the natural and probable consequence of the respondent’s act, then it is difficult to see why foreseeability should operate as an independent factor limiting the respondent’s liability for damage.

99 In TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333, Spigelman CJ, at [100], referred to the reasoning of the High Court in Palmer Bruyn & Parker as of general application to intentional torts and authority for the proposition that damages can be recovered for harm that is intended or that is the natural and probable consequence of the tortious act. His Honour said at [104]:

Wormald v Cole,

Hogan v A G Wright

Svingos v Deacon Avenue Cartage & Storage Pty Ltd

100 Spigelman CJ also expressed the view that it is undesirable to limit the scope of recoverable damage to a list of categories intended to exhaustively state the kinds of damage that may be recoverable.

101 In this case the plaintiff submitted that the defendant is not entitled to an award of damages equivalent to the alleged commercial fee because it has not established that it would otherwise have earned such a fee from any other party. Indeed it was submitted that in the light of the plaintiff’s occupation of the Retail Space, it is highly unlikely that any third party would have had any desire to obtain a licence for the common property for the purposes for which the plaintiff has used the common property.

102 If I were to award damages for the trespass, without any injunctive relief and the plaintiff did not agree to a commercial fee for the future and did not remove the signs and make good the access walls, the defendant would have a right to return to Court for further relief. The continuing trespass would in the circumstances be treated as a fresh trespass: Holmes v Wilson & Ors (1839) 10 Ad & E 503; Bowyer v Cook (1847) 4 CB 236. I am not satisfied that is a sound or just result for commercial parties in a continuing relationship.

103 The plaintiff submitted that if I am satisfied it has committed a trespass the appropriate relief is an injunction. That seems to be the only matter on which these parties are ad idem, except that the defendant also seeks damages. I am not satisfied that the loss of the commercial fee was the natural and probable consequence arising from the trespass. It may have been the natural and probable consequence of a breach of an implied term in a licence but that was not pleaded on the cross-claim. I am not satisfied that this is an appropriate case in which to award damages in the amount of the commercial fee. An injunction in this case will have serious consequences for the business of the plaintiff but the plaintiff has had the benefit of the use of the common property for over a year without fee. It may be that if in the future the plaintiff wishes to obtain the defendant’s agreement in relation to the use of the common property, the striking of a commercial fee may take into account the time during which the plaintiff has already had access to that property, however I am of the view that the appropriate remedy in this case is an injunction for the removal of the signage on the roof and in the garden bed and the removal of the roller doors and the making good of the concrete walls where access was gained.

104 The plaintiff’s claims are dismissed. The defendant/cross claimant is entitled to an injunction requiring the plaintiff, within 28 days, to remove the signs from the common property on the roof and in the garden bed and to remove the roller doors and make good the concrete walls though which access was gained to the showroom. A short minute of order should be filed giving effect to these findings, together with an agreed costs order, when the matter is listed for that purpose at 9.30 on 25 August 2004. If the parties are unable to agree on a costs order I will hear argument on that date.

****************

Last Modified: 08/19/2004

Actions

Download as PDF Download as Word Document

Citations

Motor Group Australia Pty Ltd v Owners Corporation Strata Plan 64622 [2004] NSWSC 633

Most Recent Citation

Quin, in the matter of Harman Properties Pty Ltd (in liq) v Harman (No 2) [2021] FCA 121

Cases Citing This Decision

2

The Owners Strata Plan No 6534 v El Khouri [2015] NSWCATCD 145

Quin, in the matter of Harman Properties Pty Ltd (in liq) v Harman (No 2) [2021] FCA 121

Cases Cited

10

Statutory Material Cited

3

Rankin Investments (Qld) Pty Ltd v CMC Property Pty Ltd [2021] QCA 156

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18

CITATION:	Motor Group Australia Pty Ltd v Owners Corporation Strata Plan 64622 [2004] NSWSC 633
HEARING DATE(S):	7, 8, 9, 10 June 2004
JUDGMENT DATE:	19 August 2004
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Bergin J
DECISION:	See para [104]
CATCHWORDS:	[CONTRACT] - Whether the parties agreed that the plaintiff's use of the common property in a high rise apartment block was to be without fee - Whether the signing of and support for the plaintiff's development application constituted a contract between the parties that no fee would be charged for the use of common property. - [MISLEADING & DECEPTIVE CONDUCT] - Whether a letter from the Executive Committee of the defendant contained a representation that no fee would be charged to the plaintiff for the use of the common property - Whether the plaintiff relied upon the alleged representation when it entered into a lease over Retail Space, undertook renovations and opened a retail showroom - Whether the defendant's silence in relation to fees for the use of common property constituted a representation that there would be no fees. - [UNCONSCIONABLE CONDUCT / EQUITABLE ESTOPPEL] - Whether the defendant, in seeking to impose a fee upon the plaintiff for the use of common property, engaged in unconscionable conduct within the meaning of section 51AA of the Trade Practices Act 1974 (Cth) - Whether there was consent to the use of common property and the extent of any consent - Whether there was an expectation in the plaintiff that it would be able to use common property without fee - Whether the defendant is estopped from denying agreement to use the common property without fee. - [TORT - TRESPASS] - Whether the plaintiff's signage on the common property and use of the concrete walls on common property amount to trespass - Whether loss of a commercial fee for use of the common property was the natural and probable consequence of the trespass - Whether injunction should be granted.
LEGISLATION CITED:	Fair Trading Act 1987 (NSW) Strata Scheme Management Act 1996 (NSW) Trade Practices Act 1974 (Cth)
CASES CITED:	Austotel Pty Ltd & Anor v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd & Ors (2003) 214 CLR 51 Bowyer v Cook (1847) 4 CB 236 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Commonwealth v Verwayen (1990) 170 CLR 394 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Holmes v Wilson & Ors (1839) 10 Ad & E 503 Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334 Letang v Cooper [1965] 1 QB 232 Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 Re Caughey, ex parte Ford (1876) 1 Ch D 521 Taplin v Florence (1851) 138 ER 294 TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 The Owners - Strata Plan No. 43551 v Walter Construction Group Ltd [2003] NSWSC 1177 Waltons Stores (Interstate) Ltd v Maher & Anor (1988) 164 CLR 387 Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1948] AC 173 Yovich v Collyer [1972] WAR 143
PARTIES :	Motor Group Australia Pty Ltd (Plaintiff) The Owners Strata Plan 64622 (First Defendant)
FILE NUMBER(S):	SC 50036 of 2003
COUNSEL:	B Coles QC, GA Sirtes (Plaintiff) DJ Hammerschlag SC, J Miller (Defendant)
SOLICITORS:	Landerer & Company (Plaintiff) Dibbs Barker Gosling (Defendant)