Progolf Pty Ltd (Administrator Appointed) v Town of Claremont

[2000] WASC 229

PROGOLF PTY LTD (Administrator Appointed) -v- TOWN OF CLAREMONT [2000] WASC 229

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASC 229
Case No:	CIV:1978/1997	Heard:	2 AUGUST 2000
Coram:	ANDERSON J	Delivered:	20/09/00
No of pages:	8	Judgment Part:	1 of 1
Result:	Question answered in favour of plaintiff
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Parties:	PROGOLF PTY LTD (Administrator Appointed) (ACN 009 223 698) TOWN OF CLAREMONT
Catchwords:	Contract Lease Golf course Covenant to repair Covenant to carry out "Works" Breach of covenant Interpretation of lease Trial of preliminary issue Whether alleged breaches constitute breaches of covenant to repair or of covenant to carry out Works
Legislation:	Nil
Case References:	Nil Alcatel Australia Ltd v Scarcella & Ors (1998) 44 NSWLR 349 Alcatel Australia Ltd v Scarcella & Ors (1998) ANZ Conv R 182 B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 Clowes v Bentley Proprietary Limited [1970] WAR 24 Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 Commonwealth of Australia v Oldfield (1976) 10 ALR 243 Lindsay v Federal Commissioner of Taxation [1962] ALR 427 Lurcott v Wakely & Wheeler [1911] 1 KB 905 Morcom & Ors v Campbell-Johnson & Ors [1955] 3 All ER 264 Prenn v Simmonds [1971] 1 WLR 1381 The Life Insurance Company of Australia Limited v Phillips (1925) 36 CLR 60 The Thames and Mersey Marine Insurance Company Limited v Hamilton, Fraser & Co (1887) 12 AC 484 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd Trading As "Uncle Bens of Australia" (1992) 27 NSWLR 326

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : PROGOLF PTY LTD (Administrator Appointed) -v- TOWN OF CLAREMONT [2000] WASC 229 CORAM : ANDERSON J HEARD : 2 AUGUST 2000 DELIVERED : 20 SEPTEMBER 2000 FILE NO/S : CIV 1978 of 1997 BETWEEN : PROGOLF PTY LTD (Administrator Appointed) (ACN 009 223 698)

Plaintiff

AND

TOWN OF CLAREMONT
Defendant

(BY ORIGINAL ACTION)

THE TOWN OF CLAREMONT
Plaintiff

AND

PROGOLF PTY LTD (Administrator Appointed) (ACN 009 223 698)
First Defendant

WILLIAM ELLIS SURBER
BILLYE JO SURBER
Second Defendants

(BY COUNTERCLAIM)

(Page 2)

Catchwords:

Contract - Lease - Golf course - Covenant to repair - Covenant to carry out "Works" - Breach of covenant - Interpretation of lease - Trial of preliminary issue - Whether alleged breaches constitute breaches of covenant to repair or of covenant to carry out Works

Legislation:

Nil

Result:

Question answered in favour of plaintiff

Representation:

Original Action

Counsel:

Plaintiff : Mr R H B Pringle QC
Defendant : Mr M J Buss QC & Mr C S Gough

Solicitors:

Plaintiff : Pye & Quartermaine
Defendant : Minter Ellison

Counterclaim

Counsel:

Plaintiff : Mr R H B Pringle QC
First Defendant : Mr M J Buss QC & Mr C S Gough
Second Defendants : Mr M J Buss QC & Mr C S Gough

Solicitors:

Plaintiff : Pye & Quartermaine
First Defendant : Minter Ellison
Second Defendants : Minter Ellison

(Page 3)

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

Nil

Case(s) also cited:

Alcatel Australia Ltd v Scarcella & Ors (1998) 44 NSWLR 349
Alcatel Australia Ltd v Scarcella & Ors (1998) ANZ Conv R 182
B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227
Clowes v Bentley Proprietary Limited [1970] WAR 24
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Commonwealth of Australia v Oldfield (1976) 10 ALR 243
Lindsay v Federal Commissioner of Taxation [1962] ALR 427
Lurcott v Wakely & Wheeler [1911] 1 KB 905
Morcom & Ors v Campbell-Johnson & Ors [1955] 3 All ER 264
Prenn v Simmonds [1971] 1 WLR 1381
The Life Insurance Company of Australia Limited v Phillips (1925) 36 CLR 60
The Thames and Mersey Marine Insurance Company Limited v Hamilton, Fraser & Co (1887) 12 AC 484
Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd Trading As "Uncle Bens of Australia" (1992) 27 NSWLR 326

(Page 4)

1 ANDERSON J: This action was commenced by a writ of summons issued on 9 September 1997. According to the statement of claim, the defendant municipality built a golf course in its municipal district, known as the Lake Claremont Golf Course, on the site of an old municipal rubbish tip. From about August 1988, problems began to occur with respect to the infrastructure. The bores supplying water for the reticulation system failed, the reticulation system was proving to be generally inadequate, some parts of the golf course were subsiding and rubbish, including glass, deposited on the old tip site began coming to the surface. Extensive capital works were required. The parties entered into a lease commencing in January 1995 for a term of 10 years with a 5 year option of renewal, and it is pleaded that there were express terms of the lease with respect to the refurbishment and upgrading of the golf course. It is pleaded that the defendant covenanted to engage a company called Hydro-Plan Pty Ltd to provide a plan of the irrigation system to the plaintiff and recommendations as to its upgrading, and covenanted to provide remedial earthworks to the fairways and to carry out other works such as the construction of temporary fairways, fencing and the like. It is pleaded that, for its part, the plaintiff covenanted to spend up to $400,000 on the irrigation system in accordance with the recommendations of Hydro-Plan Pty Ltd. In the statement of claim, the plaintiff alleges certain breaches of the defendant's covenants. The plaintiff also alleges that the defendant failed to perform certain implied terms of the lease relating to the enforcement of municipal by-laws designed to keep the public off the golf course so that it could be used as a golf course. By par 20 of the statement of claim, it is pleaded that the defendant repudiated its obligations under the lease and, by par 21, it is pleaded that by notice dated 31 August 1997 the plaintiff accepted the defendant's repudiation of the lease. The plaintiff's claim is for damages arising from the repudiation.

2 By its defence, the defendant admits that it received a notice of acceptance of repudiation but denies the efficacy of the notice on the ground that the plaintiff was not entitled to rescind the lease, inter alia, because at the time it purported to do so, on 31 August 1997, the plaintiff was itself in substantial breach of the lease in a number of respects. The following are the relevant parts of the defence:

"15A. As to paragraph 21 of the statement of claim, the Town admits that by a letter dated 31 August 1997 Progolf purported to accept the Town's alleged repudiation of the Lease but:

(Page5)

…

(d) says that at the time Progolf sent the letter dated 31 August 1997 Progolf was in substantial breach of the Lease as pleaded in paragraphs 16 ... "

3 Numerous breaches are pleaded in par 16 of the defence, including many breaches of cl 2.1 of the lease. Clause 2.1 is in the following terms:

2.0 THE WORKS

2.1 Lease and Works


(a) In consideration of the Lessor agreeing to lease the Premises to the Lessee for the Term, the Lessee agrees to carry out the Works in accordance with the Projected Time Table subject only to any delays due to Force Majeure and any amendment or variation to the Projected Time Table as agreed by the Lessor and the Lessee pursuant to this Lease.

(b) The Works include:


(i) the refurbishment of and where necessary the replacement of parts of the Irrigation System;

(ii) the programmed replacement of greens and tee boxes over a period; and

(iii) the improvement and refurbishment of the Golf Course generally;"

4 The breaches which are alleged are said to be breaches of cl 2.1(b)(iii), namely, the obligation to carry out works comprising "the improvement and refurbishment of the Golf Course generally".

5 It is apparent from the various subparagraphs of par 16 of the defence that it is the defendant's case that cl 2.1(b)(iii) imposes upon the lessee an obligation to keep and maintain the golf course in good and substantial repair. That this is the defendant's case appears from the nature of the breaches pleaded in par 16 of the defence. I do not set them all out. Paragraph 16 occupies 11 pages of pleading. It is sufficient to refer to par 16(b) and par 16(c), which plead:

(Page 6)

"16. Further, the Town says that if Progolf has suffered any loss or damage (which is denied) any such loss or damage was caused solely, alternatively substantially, by Progolf's … breaches of the Lease, in the following respects:

…

(b) Progolf did not maintain the greens adequately in that it failed to:


(i) cut the greens adequately;

(ii) water the green sufficiently; and

(iii) ensure the greens were free of weed infestation;

in breach of clause 2.1 of the Lease as pleaded in paragraph 8(b)(iii) herein.

(c) Progolf did not ensure the bunkers were properly maintained, clearly defined and free of weeds in breach of clause 2.1 of the Lease as pleaded in paragraph 8(b)(iii) herein.

etc … "

6 The plea in par 8(b)(iii) of the defence is the plea of cl 2.1(b)(iii) of the lease. So what is being pleaded by the defendant is that the plaintiff was in breach of its covenant to "carry out the Works" comprising "the improvement and refurbishment of the Golf Course generally" by failing to cut the greens, do the watering, keep the weeds down, maintain the bunkers and so on.

7 In essence, the plaintiff claims that this pleading raises false issues inasmuch as it pleads as breaches of cl 2.1 a litany of failures and omissions which, on the proper construction of the lease, cannot constitute breaches of that clause.

8 Hence, the trial of preliminary issues. The questions posed for consideration by the order for trial of preliminary issues are:

"On a proper construction of the lease between the parties dated 19 June 1995 -

(Page 7)

(a) would failure on the part of the plaintiff to keep and maintain in good and substantial repair, order and condition parts of the golf course as alleged in subparagraphs (b), (c) and (h) to (r) inclusive of paragraph 16 of the Amended Defence have constituted breaches of clause 2.1 of the lease?

(b) could the plaintiff be held liable for acts or omissions of the kind pleaded in subparagraphs (b), (c) and (h) to (r) inclusive of paragraph 16 of the Amended Defence under both clause 2.1 and clause 3.2(a) of the lease or under clause 3.2(a) only?

(c) if the plaintiff could be so liable under both clause 2.1 and clause 3.2(a), in judging whether the plaintiff has breached clause 2.1 of the lease, should the trial Judge have regard to the repair, order and condition of the golf course at the commencement of the lease?"

9 Clause 3.2 is a long clause and I do not set it out in full, but the relevant parts of it are:

"3.2 Maintenance and Repairs

(a) To keep and maintain every part of the Premises … in good and substantial repair, order and condition and to a standard acceptable to the Lessor with regard to the repair order and condition of the Premises at the commencement of the Term and the requirement of the Lessee to carry out the Works PROVIDED THAT the Lessee's obligations do not extend to replacement of a capital nature (except when included in the Works and except where replacement is required as a result of any act neglect default or omission by the Lessee …."

10 It is quite clear from the terms of the lease that the parties had entered an arrangement whereby the lessee was not only entitled to occupy and operate the golf course as a going concern but was also obliged to co-operate with the lessor in carrying out major changes to the layout of the course and improvements to the playing surfaces. "Works" is defined in the definitions cl 1.1 to mean "the developments, projects, improvements and renovations to be carried out by the Lessee as set out in

(Page 8)

the Projected Time Table". The "Projected Time Table" is defined in the same clause to mean "the projection for the carrying out by the Lessee of the Works which will be provided by the Lessee in stages as shown in the Second Schedule". The second schedule gives content to the term "Works" by broadly describing the activities which are to comprise the "Works" and by referring to documents in which the works are further detailed. The word "Stage" is defined in the definition clause to mean "each of the 7 stages as shown in the Projected Time Table in which the Works are to be carried out".

11 In my opinion, cl 2.1 is exclusively concerned with the lessee's obligation with regard to the "Works", that is, the major project of renovating and improving the golf course in the stages set down in the second schedule to the lease. Failures to carry out the kind of work referred to in par 16(b), par 16(c) and par 16(h) to par 16(r) inclusive of the amended defence did not constitute breaches of cl 2.1 of the lease.

12 This is not a question which admits of much elaboration. The work which is described in cl 2.1(b) of the lease is work referred to in the second schedule which the lessee has agreed to carry out "in accordance with the Projected Time Table", which in turn provides that the "Works" are projected in certain "Stages". It is not sensible to regard the obligations pleaded in the subparagraphs of par 16 of the defence which are in question as involving work appropriate to be carried out in "stages" or in accordance with a projected time table. I do not see how an obligation for example to keep greens watered and free of weed infestation, to keep bunkers clearly defined and free of weeds and so on, can be carried out in stages in accordance with a projected time table.

13 In my opinion, cl 2.1 is not the source of such obligations as the lessee may have to do the things pleaded in the subparagraphs of par 16 of the statement of claim which are in question. On this trial of preliminary issues, I would answer the questions as follows:

(a) No.

(b) Not necessary to answer.

(c) Not necessary to answer.