Re Guinsberg, H. v Ex parte OFP Pty Ltd

[1991] FCA 433

IN THE FEDERAL COURT	1
)
OF AUSTRALIA	1
1
QUEENSLAND DISTRICT REGISTRY)	No. QP 533 of 1991

1

BANKRUPTCY DIVISION	)
BETWEEN:

HAROLD GUINSBERG

Ex Parte: OFP PTP LTD

I - 2 -

Heerey J.

01 AUG 1991

Brisbane FEDERAL CGURT OF

AUSTRALIA PRINCIPAL

15 July 1991	REGISTRY
-

EX TEMPORE REASONS FOR JUXMENT

The act of bankruptcy relied on is non compliance with a bankruptcy notice which is founded on a judgment of the District Court of Queensland dated 7 December 1990 for $136,118.06 plus interest at 17 per cent. The judgment was obtained on a guarantee of the obligations of a company called Mimi Proprietary Limited, which was the tenant under a lease of premises in the central business district of Brisbane.

Honour Judge Skoien in the District Court. His Honour	judgment on substantially the same grounds was made to his
dismissed the application. In the meantime the petitioning creditor's petition had been adjourned and now has come on for hearing before me today. No issue arises as to compliance
with the formal requirements of the Bankru~tcv Act.
Miss Phillippedes, who appeared for the petitioning creditor, polnted out that under s.40(l)(g) of the Bankru~tcv Act a counter-claim set off or cross demand would only be of use to the debtor if he could not have set it up in the District Court proceeding in which the judgment was obtained. Although, as will hereafter appear, there are, I think, conklusive answers on the merits to the arguments which the debtor advanced, I think it is right at the outset to say that In any case the requirements of s.40(1) (g) have been met, because everything that was put by way of a suggested counter-
claim could have been put to the District Court, and in most
respects was in fact put.
However, I shall comment briefly on the matters which were raised as a suggested counter-claim. In essence, the debtor, who was not represented by counsel, put a case that there had been a breach by the petitioning creditor of an obligation to grant a new lease on 1 October 1990 when the last of a series of leases granted by it, or its predecessors in title, had
expired. Those leases extended as far back as 1957 and they
usually contained an option in each case for a further three
year term.
However, in 1987 the lease then granted was expressed to be for a period terminating on 30 September 1990 and the lease contained no provision for an option for renewal.
It is to be noted that the immediately preceding lease - that is, one granted in 1984 for a three year term from 1 October 1984 - did contain a provision for an option for renewal which said no more than, after the compliance with certain provisions as to the giving of notice and the payment of rent

The debtor sought a stay of the judgment in the District Court pending the determination of a counter-claim against the petitioning creditor. For this purpose the debtor had to satisfy the District Court that he had an arguable case for such a counter-clam. On 28 November 1990 his Honour Judge Robln dismissed that application and judgment was entered on 7 December.

On 14 May 1991 an application for a stay of execution of that

..... the Lessee shall have the right to be granted a further lease of the demiaed premises for the term of three (3) years commencing on the day after the expiration of the term hereof.

It was suggested in the course of argument that perhaps the
1984 lease, since it did not specify the terms of any new

lease to be granted, therefore meant that the new lease would be on the same terms as the 1984 lease itself, including the option for renewal. On that basis, the 1987 lease should have contalned a provision for an option. However, there are a number of answers to this contention.

First, it seems well established as a principle of construction that a right to a further renewal will not be implied in a lease which itself was granted pursuant to an optlon unless there is express provision to that effect; see Caerphillv Concrete Products Limited v Owen [l9721 1 WLR 372 at p.376. Therefore, simply as a matter of construction, there was no right to have included in the 1987 lease an optlon for renewal. But, in any case, even if the 1987 lease should have contained an option for renewal, that could only have been on the same terms as the option in the 1984 lease. That rs to say, upon terms that the tenant

shall at all tunes during the term have duly and punctually paid

the rent and other moneys payable hereunder.

Although notice purporting to exercise the option was given on	20 April 1990 and there was no relevant default at that stage,
by the time the term had concluded there was default because the rent due on 1 August and 1 September had not been paid. It may be that, as the debtor says, the commercial reason for this was that, because no new lease was forthcoming, the debtor had not been able to obtain rent from his sub-tenants or finance from his bank, but I do not think this can affect the conclusion that if the option to renew did exist, it was an offer which, on its terms, could only be accepted by giving the appropriate notice and by complying with the terms of the
lease. As this was not done, the offer constituted by the option was simply not accepted: see Gilbert J. McCall Ptv Ltd v The Pitt Club (1959) 59 SR(NSW) 122.
The debtor further says in his affidavit that he did not sign the guarantee

Until I had had further discussrons wrth the manager of the (landlord) and was then led to believe that if I executed the deed of guarantee and indemnity (the tenant) would be granted an option to renew when the current lease had exprred.

He further says that for this reason:.

Although the deed was grven to me in 1987 I did not sign the same untrl 1988 - rt was always subject to the condrtron that an optron to renew would be granted.

In a later affidavit the debtor gives some more detail as to this. He says that:

On 4 March 1988 (the tenant) srgned a lease for a perrod of three years, commencing 1 October 1987 and terminating 30 September 1990. This lease contarns no option as we were grven to understand that (the landlord) wanted all leases withrn the burldrng to expire at the same time before making any new lease arrangements.. . . .l5. At or about thrs trme I executed a deed of guarantee, but before doing so spoke on two occasrons to my solicrtors advrsrng that I was not prepared to sign the guarantee as it was altered in context so much and drd not reflect the understandrng of why I was givrng the guarantee. After some

diecussion I was informed that the guarantee was the same format	as I had signed prevrously and not to do so at thrs stage could
antagonise (the landlord) jeopardrsing any chance of obtaining a fresh lease on the expiry of the present lease. Before signing the guarantee I spoke to Hr John Serb or ME Julre nuter to confrrm and obtain an assurance that there drd not appear to be any reason why I should not obtain a new lease and that (the landlord) had no immediate plans to develop the site.

I think that, objectively considered, this falls well short of

an arguable case that the parties reached an agreement binding on the landlord that there would be a further term. The lease itself, in contrast to the earlier leases, on its face contained no option. At best there was an indication on behalf of the landlord that there were no immediate plans to develop the site.

There is nothing in the evidence before me to suggest that this statement was untrue when made. The very fact that the landlord declined to include an option for renewal in the lease, as it had in earlier leases, points to the landlord wishing to preserve its freedom of action at the end of the term in the light of the circumstances then existing.

There being in my opinion no arguable case made out that the debtor has a counter-claim and, as I have said, in any case such argument not being for a counter-claim which could not have been raised in the District Court proceedings, still less

I might add a counter-claim sounding in damages in a sum that

would equal or exceed the amount of the judgment debt, I think there is no answer to the petition. So I propose to make the sequestration order.

I order that a sequestration order be made against the estate

of the debtor.

I appoint Desmond Livingstone Nicholl to be trustee of the estate of the bankrupt.

I order that the petitioning creditor's costs of and

incidental to the petition in this matter, including reserved

costs, be taxed and paid in accordance with the Bankru~tcv	Act
1966.

The date of commission of the act of bankruptcy is 4 February

I certify that this and the

preceding four (4) pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Heerey

Appearances

Counsel for the Creditor:	Miss A Phillippedes
Solicitors for the Creditor:	Henderson Trout
Counsel for the Debtor:	Mr H Guinsberg appeared on
his own behalf