Re Woolworths (Qld) Pty Ltd

[1998] QSC 246

IN THE SUPREME COURT

OF QUEENSLAND  No. 9507 of 1998

Brisbane

[Re Woolworths (Qld) Pty Ltd]

IN THE MATTER of Order 64 rule 1A and Order 64 rule 1BB of the Rules of the Supreme Court

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IN THE MATTER of a Lease between PERMANENT TRUSTEE AUSTRALIA LIMITED (ACN 008 412 913) and WOOLWORTHS (Q’LAND) PTY LIMITED (ACN 000 034 819)

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IN THE MATTER of an application by WOOLWORTHS (Q’LAND) PTY LIMITED (ACN 000 034 819)

REASONS FOR JUDGMENT - MOYNIHAN J.

Judgment delivered 6 November 1998

1. This is an application pursuant to O.64 for the determination of the construction of a clause in a lease and for a declaration that specified notices are not in accordance with the clause.

2. The respondent owns two parcels of land at Toowong.  The parcels are not adjacent.  It is convenient to refer to them collectively as the Toowong land.  The respondent is desirous of accepting an offer to purchase its Toowong land.  One of the parcels (the subject premises) is subject to a registered lease to the applicant who conducts a supermarket and associated carpark on the land leased to it.  Clause 3 of the lease - which extends to a lease as well as a sale in circumstances it is presently unnecessary to consider -  relevantly provides:-

“(a)If at any time during the term of this lease the Lessor shall be desirous of selling the demised premises or any part thereof . . . the Lessee . . . shall have the right to purchase . . . the demised premises or such part thereof upon the following conditions:

(i)The Lessor shall first give notice in writing to the Lessee specifying the part of the demised premises which the Lessor desires to sell . . . (hereinafter called “the subject premises”) and with such notice there shall be delivered to the Lessee the form of contract for sale . . . containing the terms and conditions upon which the subject premises are offered to the Lessee for sale . . .

(ii)The Lessee if it desires to purchase . . . the subject premises upon the terms and conditions so offered shall within one month after the receipt of such notice cause to be delivered to the Lessor the said form of contract . . . duly executed by the Lessee . . .”.

The clause goes on to provide to the effect that if the lessee does not accept the offer in the prescribed manner or irrevocably rejects it within the period of one month, the lessor is at liberty to sell “the subject premises” on terms and conditions no more favourable to the proposed purchaser than those offered to the lessee.

1. The respondent, having received the offer for the Toowong land which it was desirous of accepting, purported, by a notice of 19 October 1998, to give the applicant notice pursuant to cl.3(a)(i) of its intention to sell the Toowong land on terms and conditions contained in a form of contract of sale which accompanied the notice.  This provided for the sale of the Toowong land.  A second notice dated 21 October referred only to the subject premises but the accompanying form of contract referred to the Toowong land.

1. It well may be that, as the respondent submits, cl.3 is a contractual right of preemption creating no equitable interest in the land as would be the case if it were an option; Mackay v. Wilson[1] and Woodroffe v. Box and Anor[2] were cited in support of this.   I am not however persuaded the difference is of consequence in the construction of the clauses.

   [1](1947) 47 SR NSW 315.

   [2](1954) 92 CLR 245.

2. The respondent relies on the reference in cl.3(a)(i) to the form of contract for sale accompanying the notice “containing the terms and conditions upon which the subject premises are offered” as justifying the inclusion of the whole of the Toowong land in the form of contract proffered in the discharge of its obligations under cl.3.

3. I am unable to construe the clause, which I do not regard as ambiguous, as having the effect contended for by the respondent.  Clause 3 by its terms is referrable to the sale of the subject premises.  I can see no basis for construing reference to the form of a contract of sale containing terms and conditions as referring other than to the terms and conditions necessary to effect the sale of the subject premises.  In general conveyancing parlance the proper function of conditions of sale for land is to set out the terms on which the land is sold[3].   In other words, the terms and conditions referred to in cl.3(2)  are ancillary to, but necessary to give effect to a contract for sale of the subject premises.   The provision does not authorise the respondents including the sale of land other than the subject premises as a condition of sale of that land.

[3]Wikrama-Nayake P.N.  Voumard; The Sale of Land 5th ed, Law Book Company, Sydney, 1995, at 9050.

1. The respondent submits that it is not bound by cl.3 of the lease because the preemptive right does not touch and concern the land and registration does not confer indefeasibility on a covenant which does not effect a state or interest in land; Mercantile Credit Ltd v. The Shell Company of Australia Ltd[4]; Woodall v. Clifton[5].  The obligation under cl. 3 is however contractual and enforceable on the basis it would be unconscionable for the respondent to repudiate it; Bahr and Anor v. Nicolay and Ors (No.2)[6]; Valbirn Pty Ltd v. Powprop Pty Ltd[7].  8             The clause does not have the consequences of the clauses considered to be void in cases such as In re Rusher; Rusher v. Rusher[8] and Hall v. Busst[9].  Those clauses required a sale at a fixed price irrespective of market value.  By the same token it is difficult to see that the clause imposes a restraint on the alienation of the Toowong land.  Clause 3 relates only to the “subject premises” and its effect is no more than I have said.  It does not bear on a sale of land other than the subject premises. 

   [4](1976-77) 136 CLR 326 at 346.

   [5](1905) 2 Ch. 257 at 279.

   [6](1988) 164 CLR 604.

   [7](1991) 1 Qd. 295 at 300.

   [8](1884) 26 Ch.D. 801.

   [9](1960) 104 CLR 206 per Fullager J. at 224.

2. It is in any event desirable that the issue of the construction of the clause be determined as it may lead to “a resolution resulting in savings in time and costs”; State of Queensland v. Multiplex Constructions Pty Ltd[10]. 

   [10](1998) 14 BCL 329 at 330 per Davies J.A. and Lee J.

3. I therefore declare that:-

   ·The expression in cl.3(a)(i) “the terms and conditions upon which the subject premises are offered to the lessee for sale” does not permit the respondent to include, in a notice under the clause or a contract of sale delivered with it, the purchase of land not part of the demised premises contained in the lease.

·The notices given by the respondent of 19 October and 21 October 1998 are not notices pursuant to cl.3(a)(i) of the lease.