Murram Pty Ltd v RCR Tomlinson Ltd - [2001] WASC 240

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MURRAM PTY LTD -v- RCR TOMLINSON LTD [2001] WASC 240

CORAM: MASTER SANDERSON

HEARD: 21 AUGUST 2001

DELIVERED : 7 SEPTEMBER 2001

FILE NO/S: CIV 2667 of 2000

BETWEEN: MURRAM PTY LTD (ACN 009 255 350)
Plaintiff
AND
RCR TOMLINSON LTD (ACN 008 898 486)
Defendant

Catchwords:

Practice and procedure - Application to strike out parts of defence - Application for summary judgment on counterclaim - Turns on own facts

Legislation:

Nil

Result:

Strike out application successful in part - Summary judgment refused

Category: B

Representation:

Counsel:

Plaintiff: Mr M H Zilko
Defendant: Mr P K Walton

Solicitors:

Plaintiff: Peter Bogue
Defendant: Jackson McDonald

Case(s) referred to in judgment(s):

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

Case(s) also cited:

1915 Crown Street Pty Ltd v Hoare [1969] 1 NSWR 193
Alcatel Australia Pty Ltd v Scarcella [1998] NSWSC 483
Anstruther Gough-Calthorpe v McOscar [1942] 1 KB 716
Associated Beauty Aids Pty Ltd v Commissioner of Taxation (1965) 113 CLR 662
Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76
Chapple v Electrical Trades Union [1961] 3 All ER 612
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Combara Nominees Pty Ltd v McIlwraith-Davey Pty Ltd (1991) 6 WAR 408
Dey v Victorian Railway Commissioner (1949) 78 CLR 62
Ex parte Turnbull; Re Storey [1967] 1 NSWR 667
Fancourt v Mercantile Credits Pty Ltd (1983) 154 CLR 87
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Gerraty v McGavin (1914) 18 CLR 152
Jeffray v Buckland (1873) 4 AJR 163
Misiaris v AFC Holdings Pty Ltd (1988) 15 NSWLR 231
Pinson v Lloyd's & National Provincial Foreign Bank Ltd [1941] 2 KB 72
Re Comptoir Commercial Anversois and Power Son & Co [1920] 1 KB 868
Rider v Ford [1923] 1 Ch 541
Turner v Bulletin Newspaper Co Pty Ltd (1974) 3 ALR 491

MASTER SANDERSON: This is the plaintiff's application to strike out certain parts of the defence and for summary judgment on the counterclaim.
For the purposes of the application it is unnecessary to canvass the facts in any detail. The plaintiff's claim can be summarised in this way. On 30 April 1990 certain parties described in the statement of claim (par 3) as "the Original Lessors" leased certain premises in Belmont to a party described as "the Original Lessee". The terms and conditions of the lease are pleaded. It is also pleaded that in December 1992 the Original Lessor's transferred their interest in the leased property to the plaintiff. It is pleaded a Deed of Extension of the Lease was executed on 19 June 1995 between the plaintiff and the Original Lessee. It is further pleaded that on 19 December 1997 the lease was assigned from the Original Lessee to the defendant. It is said that the term of the lease expired on 30 April 2000 and the premises were delivered up by the defendant to the plaintiff on or about that day. The plaintiff says that the defendant failed to deliver the premises in a condition as required by the lease and as a consequence the plaintiff has suffered loss and damage. By its amended defence the defendant admits the lease but does not admit all the terms as pleaded by the plaintiff. The defendant admits the extension of the lease but denies any assignment of the lease or that it operated its business from the premises. By par 12 of the amended defence, par 12 of the statement of claim is denied. Paragraph 12 of the statement of claim pleads two allegations of breach of the lease by the defendant.
Paragraph 12(ii) of the statement of claim refers to cl 2.1 and cl 4.5 of the lease. These two clauses are in turn pleaded as express terms of the lease in par 4(i) and par 4(iii). The plaintiff says that the bare denial by the defendant at par 12 of the statement of claim leaves it uncertain as to precisely what is denied. The plaintiff is unsure whether it is a breach of cl 2.1 or a breach of cl 4.5 that is denied.
Clause 2.1 of the lease, as pleaded in par 4(i) required the lessee to keep the buildings and the lessor's fixtures and fittings "in good and substantial repair, order and condition". Clause 4.5, as pleaded in par 4(iii) required the lessee at the end of the lease to deliver up the premises and the lessor's fixtures and fittings "in such good and substantial repair, order and condition as shall be consistent with the covenants contained in the lease." It is the plaintiff's case that the premises were not delivered up in a state which complied with cl 4.5. By implication, that means the premises and the fixtures and fittings were not maintained as was required by cl 2.1. But the essential fact pleaded is that the premises were not delivered up in a satisfactory condition. By its plea in par 12 of the amended defence the defendant takes issue with this allegation. In my view the issue is joined on the pleadings and no greater specificity is required.
I should make the point that by its bare denial the defendant is putting the plaintiff to proof of the allegations made in par 12 of the statement of claim. The defendant does not put a positive case in its amended defence and would not be permitted to put a positive case on this issue at trial. I mention this to highlight that the plea must be viewed in its proper context.
Complaint is made by the plaintiff of par 15(a)(iii), par 15(b)(ii), par 15(c) and par 15(d) of the amended defence. Because of the way these paragraphs inter‑relate, both with each other and other parts of par 15, I will quote par 15 of the amended defence in full. (I have omitted the marking up of the paragraph and the deletions made by amendment. These are not relevant for present purposes.):
"15.Further, or in the alternative if, which is denied, Centurion assigned its interest as lessee under the Lease to RCR, RCR says that:
(a)(i)Upon a true construction of clauses 2.1 and 4.5 and as a matter of law, at the expiration of the Lease the lessee was required to deliver up the premises and the lessors' fixtures, fittings and chattels in good and substantial repair, order and condition, reasonable wear and tear excepted;
(ii)Alternatively, such term is implied by section 92 of the Transfer of Land Act (WA) 1893;
(iii)Further or alternatively, such term is implied in order to give the Lease business efficacy.
Particulars
This implication arises from the following considered as a whole:
A.The Lease was for a term of 5 years with an option of renewal of a further 5 years.
B.At the commencement of the Lease the buildings, improvements and lessors' fixtures, fittings and chattels were in various stages of repair and disrepair.
C.At the commencement of the Lease the buildings, improvements and lessors' fixtures, fittings and chattels had been used as a machine and fabricating shop for in excess of 20 years.
D.At the commencement of the Lease the buildings, improvements and lessors' fixtures, fittings and chattels in the premises were in excess of 20 years old and their useful life substantially exhausted.
E.At the commencement of the Lease, Bruce Cameron, Franco Fusco and Victor Matteo Fusco were executives and officers of Centurion.
F.Bruce Cameron, Franco Fusco and Victor Matteo Fusco, either through their interests as shareholders and directors in Oxbridge Pty Ltd or in their personal right, were original lessors under the Lease.
G.Bruce Cameron, Franco Fusco and Victor Matteo Fusco are directors and shareholders or interests associated with them are shareholders of Murram.
H.At the commencement of the Lease, the solicitors Durack and Zilko, who prepared the Lease, acted for the lessee and the lessors;
I.At all material times prior to the commencement of the Lease it was contemplated by Oxbridge Pty Ltd, Franco Fusco and Victor Matteo Fusco as lessors and Centurion as lessee that during the term of the Lease, the lessee would use the premises as a machine and fabrication shop.
J.During the term of the Lease, the lessee used the premises as a machine and fabrication shop.
K.Following the expiration of the Lease, the premises continue to be used as a machine and fabrication shop.
(b)(i)Upon a true construction of clause 4.1 of the Lease, the lessee was obliged to reinstate any portion of the premises added to or altered by the lessee having regard to the age of the improvements and the use to which the premises were being put to and to make good to the reasonable satisfaction of the lessor any damage occasioned by any addition to or alteration to the premises by the lessee;
(ii)Further or alternatively, such was an implied term in order to give business efficacy to the Lease.
Particulars
The implication arises from the following considered as a whole:
ARCR repeats the particulars to paragraph 15(a)(iii) above;
BAt the material time that the alleged alterations pleaded in paragraph 10 of the Statement of Claim took place, Bruce Cameron was chief executive officer and a director of Centurion and Franco Fusco and Victor Fusco were senior executives of Centurion.
CBruce Cameron, Frank Fusco and Victor Fusco made the decision to carry out the alleged alteration pleaded in paragraph 10 of the Statement of Claim.
DAt the time such decision was made, Bruce Cameron, Frank Fusco and Victor Fusco effectively through their respective interests in Oxbridge Pty Ltd and subsequently Murram owned the premises the subject of the Lease.
EThe cost of the alleged reinstatement of the premises pleaded in paragraph 10 of the Statement of Claim and particularised in Schedule A thereto bear no relation to or wholly ignore the age of the improvements, their value and the use to which it was contemplated prior to the commencement of the Lease the premises would be put during the term of the Lease, and the use the premises were put during the term of the lease and continue to be put namely machinery and fabrication.
(c)Taking account of the age of the buildings and improvements on the premises and the use to which it was contemplated prior to the commencement of the lease the premises would be put during the term of the lease, and the use the premises were put during the term of the lease and continue to be put, in respect of the alleged alterations pleaded in paragraph 10 of the statement of claim the lessee will discharge any obligations under clause 4.1 (which are denied) of the Lease as pleaded in paragraph 15(e) by filling and compacting with sand the 2 open pits described in schedule A to Murram's statement of claim and covering the same with a concrete float finish flush to the existing floor.
Particulars
RCR repeats the particulars to paragraph 15(b) herein.
(d)Alternatively to paragraphs 15(b) and (c) above:
(i)The term of the lease in which the alleged alterations pleaded in paragraph 10 of the statement of claim were made expired on 28 April 1995.
(ii)Upon exercise of its right to renew the Lease for a further term of 5 years commencing on 1 May 1995, the lessee continued to occupy the premises and the alleged alterations remained intact in the full knowledge and with the acquiescence of Murram.
(iii)At all material times following the expiration of the first term and during the occupation of the premises by the lessee during the second term, Murram acquiesced and permitted the lessee to use the premises with the alleged alterations intact and did not at any time require the lessee to reinstate the premises and the lessee so used them.
(iv)As a result of the matters pleaded in paragraphs 15(d)(i) to (iii) above Murram is estopped from relying on any rights it may have under clause 4.1 of the Lease in respect of the alleged alterations referred to in clause 10 of the statement of claim.
(v)Alternatively to paragraph 15(d)(iv) above Murram has waived any rights it may have under clause 4.1 of the Lease in respect of the alleged alterations referred to in clause 10 of the statement of claim."
It is said that par 15(a)(iii) should be struck out because the particulars provided of that paragraph do not support the plea. In fact, complaint is made of particulars A, E, F, G and H. It is said that these particulars are irrelevant. It was conceded that the remaining particulars could support the plea to be found in par 15(a)(iii). Once that concession was made, and in my view it was correctly made, there could be no question of striking out the paragraph itself. The remaining question was whether the particulars ought be struck out. On behalf of the defendant it was said that all of the particulars, A through to D, were of importance and should be read together as particularising the plea that the term was to be implied into the lease to give it business efficacy. I must say I have some doubts about this submission. For instance it is difficult to see how the fact that Durack and Zilko who prepared the lease and acted for both parties could in any way assist in implying a term into the lease itself. However, none of the paragraphs complained of is of such moment as to offer a real distraction from the issues between the parties. In the circumstances I would not be prepared to strike out the particulars complained of.
The same comments apply to par 15(b)(ii). Once again I have doubts as to the relevance of the particulars but once again I would not be prepared to strike them out. Paragraph 15(b)(ii) should stand, as should all the particulars.
Understanding par 15(c) and par 15(d) would have been assisted if they were pleaded as separate paragraphs. As I understand what is said in par 15(c), if it is found that the defendant is in breach of the lease and liable to the plaintiff then the defendant says its liability is limited as specified. In other words, the defendant takes issue with the damages claimed by the plaintiff. Apart from being inelegantly expressed, the clause is not properly particularised. Particulars of par 15(b) have nothing to do with the extent of the defendant's liability to repair or reinstate the premises. Paragraph 15(c) ought to be struck out with leave to replead.
Paragraph 15(d) should also have been a separate paragraph. It raises a separate matter and it deserves a paragraph of its own. Reading par 15(d), I am not at all sure that what has been pleaded can be properly characterised as either estoppel or acquiescence. As I understand the plea, it is said that the original lease expired on 28 April 1995. The right of renewal was exercised, meaning there was a further five year term commencing on 1 May 1995. It is said that the renewal amounted to a new lease. That being so, the obligation was to maintain and deliver up the premises relative to their condition on 1 May 1995. By implication it is said that this was done. The fact that the premises may not have been delivered up in a proper condition relative to the date upon which the lease commenced is of no moment.
If I have correctly understood par 15(d), then what the defendant is raising is a point of construction. I doubt that the principles relevant to estoppel and acquiescence have any relevance. I would urge counsel to consider again the terms of par 15(d) and consider amending the paragraph in the interests of clarity. However, even in its present form I am satisfied that it makes clear the defendant's position. As some amendment to the amended defence will be necessary to take account of par 15(c) being struck out, the draftsman should take the opportunity to renumber par 15(d) so it appears as a separate paragraph.
That leaves the plaintiff's application for summary judgment on the counterclaim. The counterclaim concerns cl 6.20 of the lease. That clause is in the following terms (see annexure "BJC1" of the affidavit of Bruce John Cameron sworn 25 June 2001):
"In consideration of the Lessor agreeing to Lease the premises to the Lessee, the Lessee grants the Lessor an option to purchase the Lessee's cranes and gantries installed in the premises upon termination of this Lease for whatever reason at the depreciated value thereof at the date of termination calculated on a deemed capital cost of $60,000 as at the commencement date of this Lease which cost shall be depreciated at the rate of 10% per annum on a prime cost method, or for the sum of $1.00 whichever is the greater. The Lessor shall be entitled to exercise the Lessor's option to purchase the Lessee's cranes and gantries at any time prior to the expiration of fourteen (14) days from the date of termination of the Lease and in the event of the Lessor exercising its option to purchase the cranes and gantries the Lessor shall pay the purchase price therefor within fourteen (14) days of the date of exercise of the Lessor's option herein."
Both parties agree that the lease terminated on 28 April 2000. The defendant says that on a proper interpretation of the clause the plaintiff had to exercise its option on or before 14 April 2000. The plaintiff purported to exercise the option on 1 May 2000. The defendant then says it is entitled to delivery up of the cranes and gantries and as these have not been delivered up it has suffered loss and damage. For the plaintiff it is said that this interpretation of cl 6.20 is clearly untenable. What the clause anticipates is exercise of the option 14 days after termination of the lease. The option was therefore exercised within time and the counterclaim cannot succeed.
Given that I have concluded I ought not enter judgment on the counterclaim, it is not appropriate that I offer a view one way or the other of the proper interpretation of cl 6.20. It is enough if I say that given the nature of the dispute between the parties, evidence will be led about negotiations which led to the lease and its subsequent renewal. This evidence may say something about the way in which cl 6.20 is to be interpreted. I appreciate that the defendant has not sought, on this application, to adduce any evidence which would support its position. If such evidence exists then it should have been produced in answer to this application: see Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109. However, even taking that into account, in the circumstances of this case I think the better course is to allow the counterclaim to be determined in the context of the action as a whole. Were it the case that determination of the counterclaim may effectively resolve the issue between the parties or if the issues on the counterclaim were so separate and distinct from the issues of the action as a whole as to save everyone time and expense by removing them, I would have been inclined to deal with the counterclaim in isolation. But in my view little purpose would be served by dealing with the counterclaim separately from the action as a whole. In my view it is appropriate to deal with the counterclaim in the light of all the evidence.
I will hear the parties as to the precise form of the orders.