Players Pty Ltd & Ors v Clone Pty Ltd - [2006] SASC 118

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
PLAYERS PTY LTD & ORS v CLONE PTY LTD
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Sulan and The Honourable Justice Layton)
24 April 2006
LANDLORD AND TENANT - ASSIGNMENT, SEVERANCE AND SUBLEASE - SUBLEASE
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION - SURROUNDING CIRCUMSTANCES
LANDLORD AND TENANT - AGREEMENTS FOR LEASE - BREACH
Appeal from a single Judge of the Supreme Court – whether Clone Pty Ltd consented to Players Pty Ltd subletting premises leased between the parties – whether Clone Pty Ltd consented to Players Pty Ltd removing a gaming machine licence from premises leased between the parties – whether Clone Pty Ltd consented to Players Pty Ltd applying for a gaming machine licence for premises leased between the parties – consent alleged to have been communicated by letters – letters also contained an alleged agreement that Players Pty Ltd would conduct maintenance on premises and set out a schedule for improvements to the premises - the trial Judge held no consent to be evidenced by conduct – the trial Judge held that notwithstanding the absence of consent to sublet and alter gaming licences on the part of Clone Pty Ltd the agreement to improve the premises on the part of Players Pty Ltd was made out – a single Judge held that Players Pty Ltd had breached covenants of the lease by failing to maintain the property - the question is whether a reasonable person in the position of Players Pty Ltd would have viewed the conduct between the parties as consent to subletting and to changes to gaming licences – no error made out on appeal – the question is whether the state of repair of the property evidences a breach of the agreement or the lease – no error made out on appeal – the question is whether the trial Judge erred in finding that additional conditions proposed by correspondence were on foot between the parties – error made out on appeal – no further conditions set out in correspondence on foot between the parties – the trial Judge found that a guarantee was a condition precedent to the lease – error made out on appeal – conduct of the parties shows that no precondition can be made out – whether a gaming licence could be transferred for nil consideration – construction of terms of an agreement – no error made out on appeal – licence was to be transferred for nil consideration - whether the dealing in the licence by Clone Pty Ltd was a breach of the lease – trial Judge held a breach made out – error made out on appeal – licence had not reached a point where it was liable to be surrendered or revoked – appeal allowed in part – remitted to trial Judge for consideration of relief against forfeiture.
Liquor Licensing Act 1997 (SA); Gaming Machines Act 1992 (SA), referred…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] SASC 118
Decision Date: 24 April 2006

CaseChat Overview and Summary

In the case of Players Pty Ltd & Ors v Clone Pty Ltd, the dispute centred around whether Clone Pty Ltd had consented to Players Pty Ltd subletting and altering the gaming machine licence for premises leased between the parties. This appeal was heard in the Supreme Court and involved several legal issues, including the interpretation of the lease agreement, the consent of Clone Pty Ltd to the subletting and licence changes, and whether Players Pty Ltd had breached the lease by failing to maintain the property. The trial Judge had ruled against Players Pty Ltd on all counts, finding no consent to the subletting or licence changes, a breach of the lease by Players Pty Ltd, and that additional conditions proposed in correspondence were on foot between the parties.

The Court of Appeal examined whether a reasonable person in the position of Players Pty Ltd would have viewed the conduct between the parties as consent to subletting and changes to gaming licences. The Court found no error in the trial Judge's conclusion that there was no such consent. It also determined that there was no error in the trial Judge's findings regarding the state of repair of the property and whether it evidenced a breach of the agreement or the lease. However, the Court did find errors in the trial Judge's conclusions regarding additional conditions proposed in correspondence and the existence of a condition precedent to the lease. The Court found that the conduct of the parties did not support the existence of further conditions or a precondition to the lease. Additionally, the Court ruled that the gaming licence could be transferred for nil consideration, and that Clone Pty Ltd's dealing in the licence was not a breach of the lease as the licence had not reached a point where it was liable to be surrendered or revoked.

The appeal was allowed in part, and the matter was remitted to the trial Judge for further consideration of the claim for relief against forfeiture. The Court set aside certain declarations and orders made by the trial Judge and ordered that the matter be remitted for the limited purpose of considering Players’ Counterclaim for relief against forfeiture in respect of the breaches of the Lease found by the trial Judge. The appeal was otherwise dismissed. The Chief Justice's reasons and proposed orders were agreed upon by the other judges.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

My conclusion is that there was no breach proven in relation to the first notice. Accordingly, it is appropriate to consider the claim for relief against forfeiture in respect of the breaches made out under the second and third notices. It is appropriate to allow the appeal for the purpose of remitting to her Honour, for further consideration, the claim for relief against forfeiture as that claim has not been considered.Conclusion For those reasons I would allow the appeal in part. I would order that para 1 of the declaration made by order of 29 July 2005 be set aside. That is a declaration that the Lease “became the sole and exclusive embodiment of the Agreement between the plaintiff and the first defendant”. In my view such a declaration was inappropriate in any event. As it is inconsistent with what I consider to be the correct approach to the Agreement, it should be set aside to avoid any possible confusion about the status of the Lease. Para 4.3 of the order should be set aside, that order being a declaration that Players is liable to pay damages for breach of the Lease by its dealings with the hotel licence. Para 7 of the order, dismissing Players’ Counterclaim, should be set aside, and the matter should be remitted to the Judge for the limited purpose of considering Players’ Counterclaim for relief against forfeiture in respect of the breaches of the Lease found by her Honour. Otherwise the appeal should be dismissed. SULAN J: I agree with the reasons of the Chief Justice. I agree with the orders he proposes. LAYTON J: In this matter I have the benefit of the detailed draft reasons for decision of the Chief Justice. With respect I agree with the conclusions of the Chief Justice that the appeal should be allowed in part as he expresses, but that otherwise the appeal should be dismissed. I also agree with his reasons for so concluding. There were two particularly concerning issues in this case and they are whether or not the word “NIL” was deleted from the Agreement at the time when it was executed by Players and where the onus of proof lay on that issue. On the latter issue, I was initially concerned about the reference to the case of Briginshaw v Briginshaw (1938) 60 CLR 336 by the trial Judge in [43] followed by the immediate reference to the onus of proof. Further I was uncertain about what issue the trial Judge was referring to by the phrase “this particular issue” and whether the trial Judge was correct in finding that the onus lay on the defendants. I have assumed in the context that the Judge was referring to “this particular issue” as being the positive proposition that the word “NIL” was deleted in the Agreement at the time of its execution by Players, and not for example the negative assertion of this proposition. I have concluded, as indeed does the Chief Justice, that in deciding where the onus lay, the starting point must be with the pleadings and the case being made by each of the parties. For the reasons already set out in the Chief Justice, by its pleading and the nature of its case and relief sought, the onus was cast on Players to prove that the Agreement entitled it to a payment of consideration by way of rectification of the Lease to accord with the Agreement. Players did not challenge Clone’s entitlement to the licences. I therefore have reached the same conclusion as the Chief Justice that the Judge was correct in stating that the onus was on Players to prove that the word “NIL” was deleted at the time of the execution the Agreement in order to lay the foundation for its argument as to the relief sought. This was required to be satisfied on the balance of probabilities. This was not a matter to which the standard of proof in Briginshaw applied.

Ratio Decidendi

Legal Principle Established

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