Paul George Pty Ltd v Peros - [2003] NSWADT 87

No judgment structure available for this case.

CITATION: Paul George Pty Ltd v Peros [2003] NSWADT 87

DIVISION: Retail Leases Division

PARTIES: APPLICANT
Paul George Pty Ltd
RESPONDENT
Garry Peros and Irene Peros

FILE NUMBER: 025051

HEARING DATES: 15/10/2002

SUBMISSIONS CLOSED: 10/15/2002

DATE OF DECISION:
04/28/2003

BEFORE: Montgomery S - Judicial Member

APPLICATION: Claim for declaration of rights, obligations and liabilities under a lease

MATTER FOR DECISION: Principal matter

LEGISLATION CITED: Retail Leases Act 1994

CASES CITED: Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500

REPRESENTATION: APPLICANT
G Underwood, barrister
RESPONDENTS
D Flaherty, barrister

ORDERS: 1.The Respondents are to refrain from doing any of the following on the Premises; (a) selling coffee in china mugs in circumstances where the sale cannot be classified as takeaway coffee because of the obligation on the purchaser to return the mug to the Respondents; (b) serving food on stainless-steel or other non-disposable platters; (c) providing ‘table service’; (d) placing tables within the Shop and ; (e) placing more than one table on the upper terrace area.

1 These proceedings relate to a retail shop lease ("the Lease") in relation to Shop 1, 85 Avoca Drive, Avoca Beach ("the Premises"). The Lease was entered between Paul George Pty Ltd as lessor (“the Applicant”) and Garry Peros and Irene Peros as lessees (“the Respondents”) and is for a term of three years, commencing on 1 April 2000. The lease provides for two options of three years each.

2 Pursuant to clause 6.1 of the Lease, the permitted use for the Shop is as a "seafood takeaway". Clause 18 located in the annexure to the Lease headed "Amendments and Additions to Annexure B" provides:

“The tenant hereby covenants with the landlord that he will not use the premises for any purpose other than a seafood takeaway and will not do or permit to be done anything on the premises which may be a nuisance or annoyance to the Landlord, its members, guests or staff”.

3 Clause 23 to the Lease, also located in the "Amendments and Additions to Annexure B" provides:

“The tenant acknowledges that it will only be able to place outdoor tables on the lower terrace area and one table on the outside verandah area. In addition the tenant shall not be permitted to provide any table service to the outdoor tables.”

4 Prior to the parties entering the Lease, the parties entered a deed which foreshadowed completion of the Premises and that the parties would enter the Lease. Lessor and lessee disclosure statements were also exchanged. The lessor’s disclosure statement provides for the tenancy details. This document contains a handwritten notation with respect to the permitted use of the shop in the following terms:

“All take away. Fresh & cooked seafood. Hot foods. Drinks. Ice-cream”

5 The Respondents operate a food business (“Shop”) from the Premises and have done so since 7 April 2000. It is common ground that the Lease is governed by the Retail Leases Act 1994 (“the Act”).

6 The Applicant alleges that, contrary to the provisions of the Lease, the Respondents have and continue to:-

7 The Applicant seeks orders declaring that the Lease restrains the Respondents from:-

8 The Applicant also seeks orders restraining the Respondents from:-

9 It is common ground that Mr. Paul George (“Paul”), the sole director of the Applicant, or related entities had conducted a take-away/general store business on the Premises from about 1962. In 1970 he sold the business but retained ownership of the property. He re-entered into possession of the business in 1983. In 1981, the property was extended to include a café next to the take-away shop. The property was redeveloped after May 1999 and the redevelopment was finalised prior to commencement of the Lease. It comprises a two-storey building with a café and take-away shops on the ground floor and an a la carte restaurant upstairs.

10 Mr. Peter George (“Peter”), the son of the director of the Applicant, leases the café adjacent to the Premises. This café offers table service and sells coffee in china cups. It does not provide take-away coffee.

11 The Respondents’ menu is in evidence. It is not in dispute that the Respondents serve coffee both in disposable cups and in mugs. The Respondents have china coffee mugs hanging from a wall of their Shop. The mugs have labels on them to identify their ownership.

12 The Respondents serve a range of hot foods. These include a range of fish, shellfish and crustaceans but also includes other hot foods such as bacon and eggs, pancakes and muffins. The Respondents serve meals on plastic plates with plastic knives and forks.

Jurisdiction

13 As noted above, this matter is governed by the Act. The provisions of the Act which are most relevant to these proceedings are as follows:

“63 Interpretation

retail tenancy dispute

Division 3 - Determination of claims by Administrative Decisions Tribunal

70 Definitions

retail tenancy claim

72 Powers of Tribunal relating to retail tenancy claims

14 The Applicant relied on affidavits provided by Paul, Peter, Mr. David George, Paul’s son and registered attorney, Ms Maureen Hipwell who works for Peter on a casual basis as a kitchenhand, and Mr. Karl Hogg, a customer who had patronised the Respondents’ Shop. Paul and Peter also appeared and gave oral evidence and were subjected to cross-examination.

15 Paul’s evidence is that he lives next door to the Premises. His front sunroom is on the same level as the Premises and café and about 10 yards away from the Respondents' front door. He said that he has observed waffles and cream or ice cream, bacon and eggs and other meals being served on plastic plates and coffee served in china mugs. He said that he has observed the Respondents' tables and chairs inside their Shop and more chairs than they are allowed on the upper terrace. He said that the Respondents used to place more than one table on the upper terrace but after mediation this practice ceased.

16 Paul’s evidence is that he had several discussions with Mr. Peros but that there was never any permission sought or given for the Respondents to install an espresso machine or to sell coffee in china mugs or cups.

17 Paul recounted his experience as the operator of a take-away business and stated that, in his understanding and experience, the definition of seafood take-away includes hamburgers and other 'greasy' foods generally associated with takeaway. He said that, in his experience, meals on plates, with knives and forks, and espresso coffee served in china mugs is not generally associated with take-away service.

18 In his oral evidence before the Tribunal, Paul stated that he had seen the Respondents take food to the tables. He had seen silver platters carried overhead to the tables. However, he conceded that he had never observed orders being taken from the tables. He also observed that the Respondents’ tables are often placed on areas outside the Premises. He stated that he considered table service to involve setting the table, serving the table, delivery of orders to the table, the clearing of the table and wiping the table. In some cases it would include taking orders from the table.

19 Paul agreed that he had spoken to his solicitor prior to the signing of the Lease to ensure the inclusion of clause 23. He asked his solicitor to have this clause included to ensure that the Respondents would only be able to place one table on the upper terrace. He had originally contemplated that no tables would be placed on the upper terrace because these would be confused with the restaurant’s tables. The parties had reached a compromise of one table in that area. He now considers that he should not have agreed to the single table.

20 He agreed that the Lease imposed no restriction on the use of the lower terrace. However, he considered that this did not give the Respondents a blank cheque for the use of that area. It permitted the Respondents to have a few tables.

21 Paul did not concede that clause 23 contemplated that the Respondents could place tables and chairs on the lower terrace. He said that the matter was never discussed. Nevertheless, he conceded that the reference to “outside tables” in clause 23 contemplated more than one table. He also conceded that it was contemplated that the Respondents’ customers would consume food while seated, however he considered that it was a mistake that no restriction had been placed on the number of tables and chairs that could be placed on the lower terrace. He agreed that the tables and chairs in the Premises are completely different to those in the café and that there is no difficulty in working at which belong to the Respondents’ Shop and which belong to the café.

22 Paul stated that his solicitor prepared the disclosure statement and the reference to the permitted use of the Premises. He was aware at the time of signing the Lease that the permitted use included all takeaway hot food, drinks and ice cream. He was also aware that customers might consume these items at the tables. He agreed that customers could consume coffee while taking in the view, providing it was not done within the Shop. He also agreed that the lower terrace area is designed to allow the consumption of food from the Shop.

23 Paul said that his primary objection is the plate service rather than the Respondents’ menu. However, he objects to some of the items being sold by the Respondents. For example, He considers that a pancake with syrup and ice cream is not takeaway food. Similarly a fisherman’s basket on a plate with a knife and fork is not take away food. Nor is raisin toast.

24 Peter’s evidence is that he met Mr. Peros in May 1999 and introduced him to Paul. He said that before the Respondents' opened their Shop he had spoken with Mr. Peros about the Respondents' espresso coffee machine and the Respondents' intention to sell espresso coffee. He said that Mr. Peros had assured him that the Respondents' would not be selling espresso coffee. Peter said that after the Respondents opened their Shop he noticed that they started to sell espresso coffee in styrene cups. He approached Mr. Peros and said that he was under the impression that the Respondents would only be selling instant coffee. Mr. Peros assured him that they were only selling the espresso coffee in styrene cups.

25 Peter’s evidence is that the Respondents sold espresso coffee in styrene cups for approximately 6 months and only sold only take-away food during that period. After that time, Peter said that he noticed the Respondents using china coffee cups. He also observed Mr. Peros carrying boxes of food to the tables for the Respondents’ customers. He approached Ms. Peros about the china coffee cups and she assured him that the Respondents only served them to family, friends and staff. He approached Mr. Peros about the table service but Mr. Peros denied that he was offering table service.

26 Peter said that since October 1999 the Respondents have openly served espresso coffee in china mugs. In early 2002 the Respondents acquired a new espresso coffee machine, a triple group, that makes six cups of coffee at once. The Respondents have coffee china mugs hanging from a wall of their Shop. The mugs have name labels on them and Peter estimated that the Respondents now have 120 of those mugs in their Shop. He also stated that more recently the Respondents started to provide table service and meals on plastic plates with plastic forks and knives. Their menu now includes bacon and eggs and waffles and ice cream, served on plastic plates. He asserted that this is generally considered to be café food, not take-away food from a seafood take-away shop.

27 He said that the fact that the Respondents provide table service causes confusion to some customers who think that the café and Shop area is one big restaurant and expect that they can sit anywhere. He said that the Respondents have tables and chairs inside their Shop and two tables and numerous chairs on the upper terrace. This, he said, gives the general impression that the Respondents’ Shop is a café too.

28 Peter asserted that his purchases of coffee have decreased significantly since his café opened. His overheads are higher than the Respondents’ because of the nature of his café, and his prices for coffee and sit-down meals are naturally higher than for meals served on plastic plates and styrene cups.

29 In his evidence before the Tribunal, Peter stated that he has had long experience in the food industry. He has operated various businesses including fish and chips, groceries and general stores and takeaway businesses. He said that in his understanding, takeaway food is food that it is to be served in disposable containers and not consumed on the premises where it is purchased. In contrast, table service involves ordering from the table or service to the table or both. Peter conceded however, that in the present circumstances the expression “takeaway” includes food consumed on the Premises.

30 Peter said that he had never observed orders being taken at tables on the Premises, but he had regularly observed food being delivered to tables. He said that the Respondents commenced serving seafood platters, using stainless steel trays, about five months after they commenced business and had continued that practice ever since. Peter said that he had seen platters, using stainless-steel trays, delivered to tables on more than 100 occasions.

31 Peter stated that in his opinion food delivered on stainless steel trays could never be called takeaway because the trays are not disposable. He said that if stainless steel trays were used it would make no difference whether the platter was delivered to the table or whether customers collected the platter themselves.

32 Peter agreed that he signed his lease and commenced operation in the café about three months after the Respondents commenced business on the Premises. He conceded that he had had the opportunity to observe the Respondents before he signed his lease. He agreed that he had observed the Respondents’ tables and chairs on the lower terrace and that those tables and chairs were totally different to his own. He had also observed that the Respondents’ customers used those tables and chairs to consume food from the Respondents’ Shop. Peter further conceded that he entered his lease on 1 July 2000 even though he was aware of the positioning and use of the tables and chairs and that the Respondents’ tables and chairs are totally different to his own.

33 Peter said that from about September 2000 he had complained to the Applicant about the Respondents’ conduct, and that Paul had approached the Respondents and tried to resolve the issue. He agreed that the first written correspondence about his concerns did not occur until October 2001, but he said that there had been many discussions prior to that time. He had suffered financial loss for over a year and he had proposed to take action against the Respondents if the Applicant had not done so.

34 Ms. Hipwell’s evidence is that she works for Peter in his café as a kitchenhand on a casual basis, usually 4 to 5 days per week. She stated that on Thursday 19 September 2002, at about 9.30 am, she went to the Premises and ordered a cup of tea. She was served from behind the counter and was asked if she would like a take-away cup or mug. The woman who served her then took one of the mugs hanging from the hooks on the wall and made her a cup of tea. Another female customer who was there at the time requested coffee in a mug.

35 Ms Hipwell stated that she noticed that the mugs were of varying sizes. She walked out of the Shop with the mug and went to work next door. Later, she left the same mug at one of the tables belonging to the Respondents.

36 Mr. Karl Hogg’s evidence is that on Monday, 7 October 2002, he and a friend went to the Premises. Mr. Hogg’s friend sat down at one of the outside tables while he went into the Shop to place their food order. When he went to collect the order he was offered a knife and fork, salt and pepper and serviettes. He said that he observed that other customers were carrying coffee or tea. Some were carrying mugs, while others had take-away styrofoam cups.

The Applicant’s submissions

37 Mr. Underwood submitted that the Lease regulates the use of the Premises. It is not in dispute that the permitted use of the Premises provided for by the Lease is as a seafood takeaway. It is clear from clause 18 that no other purpose is intended. Clause 23 imposes restrictions on the location of tables and stipulates that there is to be no table service. He submitted that the ordinary and proper meaning should be given to those clauses and to any expressions which are the subject of dispute. He referred to dictionary definitions of the words "seafood", "takeaway", "coffee shop" and "service".

38 He submitted that for the purposes of this matter, the meaning of the word "seafood" should be restricted to food obtained from the water. He argued that hamburgers, waffles, bacon and eggs are clearly not seafood. He observed however, that the Applicant's complaint is not so much about the food served by the Respondents but about their method of service.

39 Mr. Underwood further submitted that for the purposes of this matter, the meaning of the word "takeaway" should be limited to foods that are intended to be consumed away from the Shop. He argued that while in the main the Respondents served food in plastic containers, there is evidence that the Respondents also served food on stainless-steel platters. The provision of food on an article that is to be returned to the proprietor is a breach of the intention of the Lease and the intention was that the food be consumed elsewhere. There is no objection to service in takeaway disposable containers.

40 The Applicant’s main complaint relates to the sale of coffee in mugs. Mr. Underwood argued that there is no mention of coffee in the Lease or in the disclosure statement. There is evidence to show that the coffee mugs are returned to the Respondents and cleaned. Paul gave evidence of his observations regarding table service provided by the Respondents. Mr. Underwood argued that for the purposes of this matter, the term "table service" should be defined as: ‘any sale directly to tables or service to tables by the Respondents or their employees’. He argued that the Respondents have created a coffee shop environment that was not within the contemplation of the Lease or within the definition of seafood takeaway. The Applicant seeks clarification of the permissible use of the Premises. Once that is done, the declarations sought can be made.

The Respondents’ case

41 Mr. Peros provided an affidavit and he also appeared and gave oral evidence and was subjected to cross-examination.

42 Mr. Peros’s evidence is that he first met Peter in 1997 when he sold tomatoes to Mr. Peros’s previous business in Terrigal. In early May 1999, he received a telephone call from Peter in which Peter asked him to meet Paul to discuss leasing a shop in Paul's proposed building. On about 11 May 1999, Mr. Peros met with Peter and Paul at Paul's home. He was shown a set of building plans and Paul encouraged him to take up the Lease of the Premises. Peter told Mr. Peros that he proposed to operate the adjacent café.

43 Mr. Peros stated that at this meeting they agreed to describe the Shop as a seafood take-away but that it would be a general store serving a variety of hot foods, seafood, hamburgers ice-cream etc. Also at this meeting Mr. Peros told Paul and Peter that he would need to serve hot coffee and neither Paul nor Peter objected to this. However, Peter added the proviso that the Respondents could not provide table service. The parties then discussed the rent, and all three confirmed their deal with a handshake.

44 Two days later, Peter telephoned Mr. Peros and requested a further meeting with Paul to revisit the matter of the rent. They subsequently met and a new agreement was reached.

45 Mr. Peros stated that he met with Paul on several occasions and that he showed Paul his menu. The menu for the Shop has remained essentially the same. He said that the Respondents do not serve waffles but they do serve pancakes. The menu that Paul was shown includes Cappuccino as one of the items to be offered. Mr. Peros said that Paul had seen the menu and that he never raised any objection to it. Mr. Peros said that he has never shown the menu to Peter; he only showed it to Paul.

46 Mr. Peros said that both Paul and Peter were aware of his intention to sell coffee. During the construction of the Applicant’s building he approached Peter, who was on site supervising construction for Paul, about having a 32 amps power point installed for a 3-group espresso coffee machine that Mr. Peros had located. As a consequence of advice that Peter gave him, Mr. Peros changed his order from the supplier for a 2-group machine rather than the 3-group machine.

47 Mr. Peros also asserts that he showed Paul and Peter a drawing depicting the layout of the Respondents' Shop. The drawing clearly identifies an allocation of space for "coffee machine" and "coffee drawer".

48 Mr. Peros stated that Shortly after Peter opened his café, he assisted the Respondents by using his coffee grinder to grind some coffee beans for them. On several occasions the Respondents served Paul cappuccinos in china cups and Paul would sit at the tables set for the Respondents' customers. He said that occasionally he and Paul would share a coffee in mugs served to Paul's home next door.

49 When the Respondents first started the Shop they served coffee in disposable cups. About 3-4 months later, after repeated requests by locals to fill their own mugs with coffee, the Respondents started to offer that service. Some customers would take their coffee away and others would drink their coffee taking in the view of the beach. They would then leave their cup with the Respondents to keep for them for their next visit.

50 Mr. Peros stated that this service was very successful with the locals. The Respondents have identified the mugs by numbering them and customers usually request the mugs by number. Where a customer does not bring their own mug or has forgotten their mug the Respondents charge $1.00 extra for coffee in a china mug.

51 Mr. Peros said that the Respondents keep the mugs on the Premises strictly as a convenience to the customers. The Respondents do not own the china mugs and they will always remain the property of the customer. Customers are free to collect their mugs without ordering coffee. A customer is free to take away their china mug at any time.

52 Mr. Peros asserts that the Lease allows the Respondents to provide tables and chairs for their customers’ use. The key restriction imposed by the Lease is that the Respondents cannot provide table service. Mr. Peros said that the Respondents have not strayed from the spirit of this agreement, but occasionally they have asked elderly or invalid persons to wait by the table for their food and as a gesture of good will the food is taken to them at the table. The food is always in a paper bag. He said that the Respondents have never taken an order from a table and delivered that order in an open plate to a customer. The Respondents’ business is not structured for such service nor do they purport to offer such service. When providing food to customers the Respondents serve it in disposable containers with disposable cutlery. Mr. Peros also asserts that the Lease places no restriction on the type of containers that the Respondents are able to use.

53 Mr. Peros said that customers often move the tables and chair themselves and at times he is occupied in the Shop and does not have the opportunity to reposition the items as soon as they are moved. He said that the number of tables and chairs and their location has not significantly deviated from that prescribed in the Lease.

54 Mr. Peros conceded that occasionally the Respondents’ customers sit on Peter's chairs but he said that such incidents are very rare and that occasionally Peter's customers sit on the Respondents’ chairs. He said that this is a consequence of having two premises so close to each other. Mr. Peros also agreed that that on rainy days he has moved a table and chairs inside the Shop so that customers do not get wet while waiting for their order.

55 With respect to Peter's assertion that he has suffered loss of business, Mr. Peros stated that he has observed that Peter does not run his business consistently. He said that he has observed Peter's business closed to the public without notice. He has also had many enquiries as to why the café was closed and there is little support for Peter's business amongst the locals.

The Respondents’ submissions

56 Mr. Flaherty submitted that it is a mistake to focus on a few words as the Applicant suggests. The correct approach is to construe the entire Lease. The words in issue take their meanings from the context in which they are used. The Lease is a document prepared by the Applicant's solicitors. Any ambiguity is to be construed against the Applicant.

57 He argued that the whole Lease should be read in the light of clause 23. It can not be said that the term “takeaway” was intended to refer to food that was to be consumed away from the Premises. The intention of clause 23 is that the Respondents could place tables on the terraces and they could also place chairs there. Both parties contemplated that the Respondents’ food would be consumed at those tables. The term “takeaway” must be read in light of that contemplation. Only an absurd construction of the Lease could lead to the conclusion that the tables were not for consumption of food sold by the Respondents. The stipulation in clause 23 that there is to be no table service at the outside tables suggests that customers could use the tables themselves. Mr. Flaherty submitted that this stipulation reinforces the Respondents’ argument.

58 Evidence before the Tribunal shows customers consuming food on the lower terrace and admiring the view. Mr. Flaherty submitted that the rent for the Premises was in fact calculated on the basis that customers could use the lower terrace for that purpose. There was no intention by either party that customers would have to consume food off the Premises.

59 Mr. Flaherty submitted that the Applicant's disclosure statement is ambiguous with respect to hot foods. It should be read disjunctively. Paul's evidence and the disclosure statement could not be ignored. The evidence shows that Paul intended that the Respondents would sell other hot foods beside seafood. The Lease does not prohibit the sale of hot food and the disclosure statement provides for it. If the content of the menu is considered, it is clear that the Respondents sell hot food. In Mr. Flaherty’s submission it is absurd to suggest that the Respondents could not sell raisin toast in a bag. Paul had few complaints about the items in the Respondents’ menus. His main complaint is their method of service rather than the items sold.

60 Mr. Flaherty submitted that the provision of plastic knives and forks does not mean that the Respondents are not providing takeaway food. The customers are not prevented from removing them, so the provision of plastic knives and forks makes no difference to the issue.

61 Mr. Flaherty submitted that the Lease should be construed as not excluding the sale of coffee. There is nothing in the Lease that prohibits that sale and Paul gave evidence that he had previously sold instant coffee from an urn. The Applicant provided a disclosure statement to the effect that the sale of drinks is included in the permitted use of the Premises. Mr. Flaherty argued that any liquid that is not poisonous is a drink and that coffee is a drink.

62 There is nothing in the Lease to prohibit the service of coffee in mugs. Mr. Flaherty argued that if the Respondents sold coffee in gold plated mugs and gave those mugs to the customers, it could not be suggested that the coffee was not takeaway coffee. He submitted that the same principle applies to china mugs. If the Respondents do not attempt to limit where the customer consumes the coffee, it is takeaway coffee. It makes no difference if the Respondents provided the coffee in china mugs or in styrofoam cups.

63 The Respondents deny that they provide table service. The distance between the food preparation area and where it is consumed is between 20 and 30 metres. Mr. Flaherty urged the Tribunal to accept that the number of times on which the Respondents would have run an order down to a customer is very small.

64 Mr. Flaherty further submitted that the Lease does not prohibit the Respondents placing chairs on the Premises. In any event, he argued that if the Respondents are in breach of the Lease with respect to the placement of chairs, it is not clear what flows from that breach. Similarly, if the Respondents are in breach of the Lease with respect to the provision of table service, it is not clear what flows from the breach. The Applicant has not brought a claim for damages nor is there any request to rectify the Lease. Mr. Flaherty submitted that an injunction restraining the Respondents from having too many chairs is absurd.

65 Mr. Flaherty submitted that the Tribunal should not accept Peter's evidence because he clearly has an axe to grind. The Tribunal should find that there is no evidence to substantiate Peter's assertions that he has been affected by the Respondents’ actions. Peter watched the Respondents for three months before he commenced business in his café and he must have been aware of how the Respondents operated their Shop. While Peter says that he complained about the Respondents’ actions from September 2000, he took no action against the landlord and he did not seek a rent reduction.

66 Mr. Flaherty also urged the Tribunal to note that Paul was not full and frank in answering questions. Mr. Flaherty said that it is absurd to suggest that the Respondents were to be limited to the sale of instant coffee from an urn. If that was the Applicant’s intention, a prohibition on the sale of espresso coffee would have been included in the Lease. Mr. Flaherty argued that the Applicant should be seen as merely trying to rewrite the Lease.

Findings

67 As noted, the Applicant seeks various declarations and orders regarding conduct said to be restrained by the Lease. For convenience, I propose to address the Applicant’s claims in the order set out above. In order to do so, it is necessary to first consider the issue of the permitted use of the Premises.

The permitted use of the Premises

68 Pursuant to clauses 6.1 and 18 of the Lease, the permitted use for the Shop is as a "seafood takeaway". The Lease does not define the words " seafood takeaway ". The meaning of those words is primarily a question of the proper construction of the Lease. In the absence of any indication within the document as to the meaning of the words, the words should be construed in the light of the Lease as a whole, thereby giving due weight to the context in which the words appears including the nature and object of the Lease. In case of ambiguity, the words are to be construed contra proferentum: Underwriters at Lloyds v Ellis (unreported, Court of Appeal, 25 February 1998, per Meagher, Handley and Powell JJA at paragraph 29

69 In my view, the permitted use of the Premises as set out in clause 6.1 of the Lease is in conflict with the permitted use as stated in the disclosure statement. The Applicant’s disclosure statement is a clear representation made by the Applicant with the intention that it would be relied on by the Respondents. Support for this view is found in section 10(2) of the Act which states in the context of pre-lease misrepresentations:

“(2) The giving of a lessor’s disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.”

70 It is clear from the evidence that the intentions of the parties is more closely represented by the information contained in the disclosure statement than in the permitted use referred to in clauses 6.1 and 18 of the Lease. In my view, the meaning of the expression “seafood takeaway” as contemplated by the parties may be quite different to the meaning attributed to that expression in other circumstances. The correct construction is to be ascertained by considering the Lease as a whole and by reference to the disclosure statement.

71 In my view, the parties intended that the Respondents would conduct a takeaway business serving a variety of hot takeaway foods, including seafood, hamburgers and the like. The Respondents would also sell ice cream and drinks and the drinks sold would include hot takeaway coffee. The primary restriction on the Respondents’ business was that they could not provide table service. The purpose of this restriction is to ensure that the Respondents’ provided a takeaway rather than an eat-in service, and it could therefore be distinguished from the service offered by Peter’s café.

72 For the purposes of the Lease, the expression “seafood takeaway” is to be construed as including a variety of hot takeaway foods, including seafood, hamburgers and the like, ice cream and drinks including hot takeaway coffee.

Serving coffee in china mugs

73 I am satisfied that the evidence establishes that the Respondents have served coffee in china mugs/cups on a regular basis in lieu of take-away disposable containers. The Applicant seeks a declaration that the Lease restrains this practice.

74 The Respondents have served coffee in styrofoam containers and this is clearly within the contemplation of the expression takeaway coffee. In my view, coffee served in china mugs may be classified as a takeaway coffee if there is no restriction of where the customer consumes the coffee and if there is no restriction placed on how the customer is to deal with the container. The classification is therefore not dependent on the form of the container or the place where the food is consumed but on the restriction placed on the consumer.

75 In the circumstances of this matter, there is evidence that for the most part there is no restriction placed on the customers with respect to how they deal with the china mugs. If these mugs were the property of the customer rather than the Respondents, then the customer would be free to take the mug of coffee and walk along the beach and never return. In that circumstance the customer has purchased takeaway coffee. If however the same customer chose to consumes the coffee on the terrace and then requested the Respondents to hold the mug for them until the customer’s next visit, that choice does not cause the coffee to cease to be takeaway coffee. The overriding principle is that the customer, and not the Respondents, decides how they will deal with the mug.

76 There is some evidence that the Respondents sold coffee in mugs that were not the property of the purchaser. I find as a fact that the Respondents made such sales. In my view, that type of sale cannot be considered to be takeaway coffee and therefore the Lease restrains that conduct.

77 The Applicant is entitled to an order restraining the Respondents from selling coffee in china mugs in circumstances where the sale cannot be classified as takeaway coffee because of the obligation on the purchaser to return the mug to the Respondents.

Serving meals that cannot be described as 'seafood takeaway'.

78 As I have indicated above, it is my view that the expression 'seafood takeaway' is to be given a broad interpretation. I am not satisfied on the evidence that any of the items included on the Respondents’ menu are incapable of being classified as takeaway food. They are items which fall within the meaning of 'seafood takeaway' as contemplated by the parties.

79 There is evidence of the Respondents serving seafood on stainless-steel platters. I find as a fact that the Respondents provided such service. In my view, it is probable that stainless-steel or other non-disposable platters were intended to be returned to the Respondents. In those circumstances, the product cannot be classified as 'seafood takeaway' and therefore the Lease restrains the Respondents from providing that service.

80 It follows in my view that the Applicant is entitled to an order restraining the Respondents from serving food on stainless-steel or other non-disposable platters.

Serving meals on plastic plates and providing plastic knives and forks

81 In my view, the same restriction would not apply to serving seafood on disposable platters or plastic plates. The Lease places no restraint on that sale. Similarly, the provision of plastic knives and forks does not cause 'seafood takeaway' to cease to be 'seafood takeaway'.

82 It follows in my view that the Applicant is not entitled to an order restraining the Respondents from serving food on disposable plates or with disposable knives and forks.

Providing table service.

83 As noted above, Paul indicated that that he considered ‘table service’ to involve setting the table, serving the table, delivery of orders to the table, the clearing of the table and wiping the table. In some cases it would include taking orders from the table. I agree that Paul’s description provides a reasonable definition of ‘table service’. I do not accept that ‘table service’ necessarily involves taking orders from the table. It is a common industry practice for eat-in establishments to require orders to be placed at the counter but to otherwise exhibit the remainder of the indicia of table service.

84 I find that it is probable that the Respondents have at times provided table service. I also find that it is probable that the number of occasions on which they have done so is very small. Nevertheless, the Lease restrains the Respondents from providing that service.

85 It follows in my view that the Applicant is entitled to an order restraining the Respondents from providing ‘table service’.

Having too many chairs placed on the upper terrace and tables and chairs inside the shop.

86 It is clear from the evidence that the Respondents have placed both tables and chairs on the lower terrace area and on occasions they have placed tables and chairs inside the shop. There is also evidence to suggest that the Respondents have placed at least two tables on the upper terrace area and that they have placed varying numbers of chairs in that area.

87 Clause 23 to the Lease imposes a limitation on the placement of tables. Clause 23 provides that the Respondents are only able to place outdoor tables on the lower terrace area and one table on the upper terrace area. In my view, the wording of clause 23 is ambiguous.

88 In the High Court decision of Darlington Futures Ltd. v. Delco Australia Pty. Ltd. (1986) 161 CLR 500 Mason, Wilson, Brennan, Deane and Dawson JJ stated that, in case of ambiguity, limitation clauses are to be construed contra proferentem. Their honours observed at paragraph 16 that:

contra proferentem

89 Under the contra proferentem rule of interpretation, in the event of an ambiguity a document is construed against the author. In this case the author is the Applicant. The Lease was prepared by the Applicant’s solicitors and Paul gave evidence that clause 23 of the Lease was included on his instructions.

90 In construing clause 23 of the Lease the words should not be given an unduly or artificially expansive meaning. However, where the words are capable of more than one construction, the construction which least favours the interests of the Applicant should be preferred.

91 In my view, clause 23 should be construed as limiting the placement of tables as indicated. It should not be seen as limiting the placement of chairs. For the purposes of this matter the words “only able to place outdoor tables on the lower terrace area and one table on the upper terrace area” restrict the Respondents in placing tables for the use of their customers to the lower terrace area and the upper terrace area. In other words, the Respondents are restrained from placing tables for the use of their customers inside the Shop. Additionally, the Respondents are restrained from placing more than one table on the upper terrace area. No such limitation applies to the lower terrace area and no limitation is imposed with respect to the placing of chairs on either the lower terrace area or the upper terrace area. The Respondents would obviously be restrained by the commercial realities of the Premises and safety factors. Had the parties intended that restrictions be placed on the placement or number of chairs on the terraces, a clause could have been included in the Lease. The absence of any such clause suggests that there was no intention to place limitations on the use of chairs.

92 The Respondents have conceded that they have placed tables within the Shop during wet weather. I am satisfied that it is probable that the Respondents have at various times placed more than one table on the upper terrace area. In my view, the Lease restrains those practices.

93 The Applicant is entitled to an order restraining the Respondents from placing tables within the Shop and an order restraining the Respondents from placing more than one table on the upper terrace area.

Summary of findings

94 I have indicated above that in my view the Applicant is entitled to several orders restraining the Respondents’ conduct. The Applicant is entitled to an order restraining the Respondents from:

95 I note that the Applicant has sought orders restraining the Respondents from conduct that it alleged is in breach of the Lease. I accede to that application to the extent to which I have found that the Lease restrains the Respondents.

Orders

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Citations

Paul George Pty Ltd v Peros [2003] NSWADT 87

Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82

CITATION:	Paul George Pty Ltd v Peros [2003] NSWADT 87
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Paul George Pty Ltd RESPONDENT Garry Peros and Irene Peros
FILE NUMBER:	025051
HEARING DATES:	15/10/2002
SUBMISSIONS CLOSED:	10/15/2002
DATE OF DECISION:	04/28/2003
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Claim for declaration of rights, obligations and liabilities under a lease
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
REPRESENTATION:	APPLICANT G Underwood, barrister RESPONDENTS D Flaherty, barrister
ORDERS:	1.The Respondents are to refrain from doing any of the following on the Premises; (a) selling coffee in china mugs in circumstances where the sale cannot be classified as takeaway coffee because of the obligation on the purchaser to return the mug to the Respondents; (b) serving food on stainless-steel or other non-disposable platters; (c) providing ‘table service’; (d) placing tables within the Shop and ; (e) placing more than one table on the upper terrace area.