Stefo Nominees Pty Ltd v Summer Moon Enterprises Pty Ltd - [2004] WADC 221

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: STEFO NOMINEES PTY LTD -v- SUMMER MOON ENTERPRISES PTY LTD & ANOR [2004] WADC 221

CORAM: CHANEY DCJ

HEARD: 1 & 2 NOVEMBER 2004

DELIVERED : 11 NOVEMBER 2004

FILE NO/S: CIV 2616 of 2002

BETWEEN: STEFO NOMINEES PTY LTD
Plaintiff
AND
SUMMER MOON ENTERPRISES PTY LTD
First Defendant
RICHARD JAMES TRAINER
Second Defendant
(BY ORIGINAL ACTION)
SUMMER MOON ENTERPRISES PTY LTD
First Plaintiff (by Counterclaim)
RICHARD JAMES TRAINER
Second Plaintiff (by Counterclaim)
STEFO NOMINEES PTY LTD
First Defendant (by Counterclaim)
KAY CHRISTINE BLACKBURNE
Second Defendant (by Counterclaim)
(BY COUNTERCLAIM)

Catchwords:

Lease - Claim for rent - Alleged failure to mitigate

Misleading and deceptive conduct - False representations - Claim to avoid lease - Turns on own facts

Legislation:

Nil

Result:

Judgment for plaintiff
Counterclaim dismissed

Representation:

Original Action

Counsel:

Plaintiff:        Mr I R Gillon
First Defendant  :        No appearance
Second Defendant  :        In person

Solicitors:

Plaintiff:        Lawton Gillon
First Defendant  :        Not applicable
Second Defendant  :        In person

Counterclaim

Counsel:

First Plaintiff (by Counterclaim)               :        No appearance
Second Plaintiff (by Counterclaim)         :        In person
First Defendant (by Counterclaim)         :        Mr I R Gillon
Second Defendant (by Counterclaim)       :        Mr I R Gillon

Solicitors:

First Plaintiff (by Counterclaim)         :        Not applicable
Second Plaintiff (by Counterclaim)         :        In person
First Defendant (by Counterclaim)         :        Lawton Gillon
Second Defendant (by Counterclaim)       :        Lawton Gillon

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

Jones v Dunkel (1959) 101 CLR 298

Case(s) also cited:

Nil

CHANEY DCJ: Stefo Nominees Pty Ltd ("Stefo Nominees") is the owner of office premises situated at 71‑73 South Perth Esplanade, South Perth. By a lease dated 25 May 2000, Stefo Nominees leased the premises to Summer Moon Enterprises Pty Ltd ("Summer Moon"). The lease was for a term of three years commencing 19 June 2000.
Summer Moon went into possession of the premises and remained there until it abandoned them in June 2002. By then it was in arrears in its rental payments. The premises remained un‑let for the balance of the term of the lease which expired in June 2003. The plaintiff sues for the unpaid rental, and outgoings through to the completion of the term of the lease.
Summer Moon admits the lease agreement, and admits that it did not pay the rent claimed, nor the outgoings which it accepts were payable under the lease. It contends, however, that it was entitled to, and did, avoid the lease by reason of misleading conduct by the plaintiff which caused Summer Moon to enter the lease in the first place. The misleading conduct is alleged to comprise misleading representations as to the car parking entitlements of the tenant and a representation that the plaintiff would sell the premises to Summer Moon within six months of the execution of the lease.
In the alternative, the defendants contend that the plaintiff had an obligation, pursuant to the terms of the lease, to mitigate any loss by attempting to re‑let the premises following vacation of them by the first defendant. The defendants assert that the plaintiff breached that obligation by refusing to accept an assignment of the lease to a company called Integrated Accounting Group Pty Ltd, or alternatively, to grant a new lease to any third party.
Given that the terms of the lease, and the amounts due but not paid under it, are not in issue, the matters for determination in this case are:
(i)whether the defendants are entitled to relief by reason of misleading representations concerning car parking;
(ii)whether the defendants are entitled to relief by reason of a misleading representation concerning the sale of the property;
(iii)whether the plaintiff failed to mitigate its losses by refusing to assign the lease, or grant a new lease, to Integrated Accounting Group Pty Ltd;
(iv)whether the plaintiff failed to mitigate its losses by failing to grant a new lease to any other party.

The plaintiff's claim

It is pleaded that the first defendant breached its obligations under the lease by failing to pay instalments of $6,454.25 per month, inclusive of GST, from April 2002 until June 2003 together with the balance of the February 2002 instalment in the sum of $2,292.79. The total rent due under the lease but not paid amounts therefore to $99,106.54. In addition, the plaintiff claims outgoings totalling $5,785.32 which were payable by the lessee under the terms of the lease.
Although a further sum of $198.55 was claimed in relation to replacement of electric globes and fluorescent tubes, that aspect of the claim was abandoned at trial. The total amount of the plaintiff's claim amounts, therefore, to $104,891.86.
The defendant admits that that amount would have been payable under the lease, and was not paid. The basis of the defendants' defence is that its liability under the lease is discharged by its election to avoid the lease by reason of the plaintiff's misleading and deceptive conduct.

The course of the trial

Because all of the material facts constituting the plaintiff's cause of action were admitted, the contentious issues at trial were the defences of misleading and deceptive conduct and failure to mitigate damage which were raised by the defence and counterclaim. In that light, I accepted the plaintiff's submission that the defendants, and plaintiffs by counterclaim, should open the case.
Mr Trainer appeared in person. A declaration had been made on 22 October 2004 that solicitors previously acting for both Mr Trainer and Summer Moon have ceased to act. By reason of O4 r 3 of the Rules of the Supreme Court, Summer Moon could not carry on the proceedings otherwise than by a solicitor. No point was taken at the hearing concerning Mr Trainer's appearance, but he was obviously entitled to do so in his personal capacity as second defendant. Being a guarantor under the lease upon which the plaintiff sues, Mr Trainer is entitled to any defences which may be available to the principal debtor Summer Moon. Thus, whilst strictly speaking there was no appearance by Summer Moon at trial, that did not prevent any impediment to the full airing of the pleaded issues.
Despite my invitation to give evidence himself, Mr Trainer elected to call only Kaye Christine Blackburne, the second defendant by counterclaim and a director of the plaintiff, and a Mr Marinko Pecotic to give evidence. Although it was Mr Trainer's right to elect not to give evidence, the consequence of that decision was that his case rested substantially on documents he produced through Ms Blackburne and Ms Blackburne's oral evidence, which not surprisingly, rarely favoured the defendants' case. In closing submissions, Mr Trainer made a number of submissions based on inferences that might be drawn from the correspondence produced in evidence. For the most part, those inferences were matter of speculation and could not properly be drawn. Despite several invitations during the course of the trial to give evidence himself, Mr Trainer declined to do so, with the consequence that I infer that Mr Trainer's evidence would not have assisted his case (Jones v Dunkel (1959) 101 CLR 298).

The parking representation

The defence pleads that the first and second defendants were induced to enter into the lease by a representation made by Kaye Christine Blackburne on behalf of Stefo Nominees that Summer Moon "would pursuant to the lease have exclusive lease of three car parking and non‑exclusive use of two car parking bays in the common areas of the land". The representation is said to have been made orally by Ms Blackburne. The pleading does not identify when or where the representation is said to have been made.
It is pleaded that the parking bay representations were false and untrue "in that under the lease ultimately executed by the parties, the plaintiff did not grant the first defendant exclusive use of three car parking bays or non‑exclusive use of two car parking bays in the common areas of the land". The defendants rely on s 51A of the Trade Practices Act to contend, at least by implication, that the representation was as to a future matter, and that the plaintiff did not have reasonable grounds for making the representation. It is pleaded that the plaintiff had no intention of fulfilling its promise to grant the first defendant the use of the parking bays as represented. As a consequence of the contention that the representation constituted misleading and deceptive conduct, the plaintiff pleads that the lease was void or voidable, and that "the first defendant elected to avoid the lease and the first defendant did so and vacated the premises on or about 7 June 2002".
Neither Mr Trainer, nor anyone else on his behalf or on behalf of Summer Moon gave evidence at the trial. The only evidence on this issue consisted, therefore, of the evidence of Ms Blackburne and the documents tendered by Mr Trainer.
Ms Blackburne said that she was not personally involved in the negotiations for the lease to Summer Moon. She accepted that she believed that the lease gave the lessee an entitlement to the exclusive use of three car parking bays, and the right to use common property including visitors' parking bays, but said that she had never made any representation to that effect prior to the execution of the lease. There is thus no evidence of any oral representation in terms pleaded in par 7 of the defence.
The lease itself, which was executed on 25 May 2000, attached a sketch showing three parking bays for the exclusive use of Lot 5. The premises demised comprised:
"An area of approximately 320² being Suite 5, 'Beaumere' Building, 71‑73 South Perth Esplanade, South Perth, Western Australia and being more particularly shown (for identification purposes only) shaded yellow on the plan attached together with:
(a)the right, subject always to the rules of the Strata Company from time to time, to use the three carparks identified on the plan; and
(b)a non‑exclusive right, subject always to the rules of the Strata Company from time to time, to use the common areas."
The plan attached to the lease, as well as showing the three exclusive use parking bays, shows three bays which apparently form part of the common property. It is apparent, therefore, that, if a representation were made of the nature pleaded, it proved to be correct. That is, the lease did provide for exclusive use of three car parking bays and non‑exclusive use of the bays in the common areas.
Mr Trainer tendered a facsimile from Blackburne Real Estate to Summer Moon dated 28 March 2000. That letter provided information in relation to Lot 5. The letter referred to "Parking: 3 open bays allocated exclusively plus visitors' and street parking". Blackburne Real Estate acted as strata manager for the building. Amongst its directors was a Mr J R Blackburne, whom Ms Blackburne said was her brother‑in‑law. She said, however, that Blackburne Real Estate was not her agent for the purpose of leasing Lot 5. Rather she suggested that Mr Trainer had approached Blackburne Real Estate with a view to leasing the premises, and that in relation to lease negotiations, that firm was acting on Mr Trainer and Summer Moon's behalf.
In a letter dated 6 July 2000, after the lease had commenced, Blackburne Real Estate wrote to Mr Trainer and said:
"I have had several complaints from the residents at the property and (sic) the parking arrangements that have been adopted by your company. At times there are up to six cars parked out the back and it seems to be happening on a daily basis. Your lease allows for three vehicles to be parked and you have been given permission to actually park four."
In the absence of any evidence from Mr Trainer, the circumstances of the assertion that permission to park four cars had been given is not apparent on the evidence. The letter from Blackburne Real Estate attached a sketch which showed two exclusive use bays where three were shown on the lease, and two additional bays in an area which, on the plan attached to the facsimile of 28 March 2000, had been shown as visitors' parking.
It is quite apparent from the letter from Blackburne Real Estate, in its capacity as strata manager, that parking became a problem for the defendants quite early in the lease.
By letter dated 14 June 2001, Ms Blackburne, on behalf of Stefo Nominees wrote to Mr Trainer. The letter advised that a special meeting of the Council of Owners of the strata units had been held on 6 June 2001, and that owners had informed Ms Blackburne that Summer Moon is "currently occupying 5 bays and using the common parking area for your clients" and that the unit owners were therefore left with no parking as Summer Moon was "often using the 7 bays". The letter requested that Summer Moon confine its parking arrangement to the three bays allocated to it. It is apparent that, by this time, the body corporate had erected signs adjacent to the common parking bays reading "Strictly Residential Visitors Only". Mr Trainer had written to Blackburne Real Estate demanding that those signs be replaced with signs reading "Visitor Parking Only".
On 27 June 2001, Mr Trainer wrote to Ms Blackburne. He denied that his companies were using bays in the manner complained of at the meeting of owners. In that letter he said that he was aware of the parking requirements and that although entitled to park in the common bays, he had "always asked … staff to park elsewhere. From time to time we do have visitors that may park in a bay but this is on a very rare occasion. We have very few visitors to our office."
On 31 July 2001, Ms Blackburne wrote to Mr Trainer. She advised that, having taken legal advice, she accepted that Summer Moon was entitled to have visitors parking on the property and that Blackburne Real Estate had advised her that they would arrange to have the signs removed. In August 2001, Mr Trainer wrote to Blackburne Real Estate complaining that the "Residential Visitors Parking" sign had not yet been removed. That letter was copied to Ms Blackburne on 27 August 2001.
On 12 September 2001, a meeting of the owners amended the by‑laws of the strata company to insert two new by‑laws which read as follows:
"BY-LAW 20
The Strata Company confers on the proprietors of Lots 1, 2, 3, 4 the exclusive use of the Visitor's Parking Bays as per attached sketch coloured Yellow. The Strata Company and not the proprietors of each of the lots shall be responsible for the repair and maintenance of all the carparking bays on the land comprised in the Strata Plan forming part of the Common property.
BY-LAW 21
All proprietors, occupiers or other residents will close the vehicle gate at Harper Street entrance at all times."
That resolution was passed without dissent, and Ms Blackburne acknowledged in evidence that she supported the resolution. The new by‑laws were said to "become unconditional on 10 October 2001". Mr Trainer was advised of the resolution by letter dated 10 January 2002 from Stefo Nominees. It is apparent that matters did not improve, and on 16 April 2002, Blackburne Real Estate wrote to Stefo Nominees complaining that its tenant was using the visitors' bays on a daily basis "often parking first in these bays with staff vehicles before even filling their designated bays". The letter added:
"There are up to seven staff vehicles regularly parking on the premises and as the security gates are open during office hours, customers and supplier and service vehicles park where they can on the premises further adding to the problem."
It was complained that that situation left no parking available for visitors to the residential apartments, and it was threatened that if the situation continued the vehicle access gate would be closed immediately to avoid the problems. By letter dated 22 April 2002, Ms Blackburne forwarded that letter of complaint to Mr Trainer.
Mr Trainer's complaint at trial was, in essence, that the threat to close the gates, and thus prevent access to the premises by customers of his business, breached the terms of his lease. That was not, of course, the case pleaded in the defence. The complaints concerning parking made in the correspondence to which I have referred were, in broad terms, supported by Ms Blackburne's evidence. She indicated that the problems with parking arose because of the excessive use of parking by the tenant. There was, of course, no evidence from the defendants to suggest that the complaints as to Summer Moon's use of the parking were not justified. The right to use common property was, under the lease, expressly made subject to the rules of the strata company from time to time. It is unlikely that what occurred amounted to a breach of the lease on the part of Stefo Nominees, but it is not necessary for me to pursue that issue, since it was not pleaded.
In my view nothing in the sequence of events can lead to the conclusion that, even if some representation to the effect pleaded was made, it was misleading and deceptive. In fact the substance of the pleaded representation is reflected in the terms of the lease which was granted.
There is no basis upon which the defendants should be relieved of their obligations under the lease by reason of any representation relating to parking.

The sale representation

The defendants counterclaimed for relief by way of a declaration pursuant to s 87 of the Trade Practices Act that the lease was properly avoided by Summer Moon, and for damages pursuant to s 82 of the Act. The damages were not particularised in the pleading, nor was there any evidence whatsoever at trial as to any damage. That issue falls away.
The basis for the declaration that the lease had been avoided was misleading conduct by Stefo Nominees, in which Ms Blackburne was said to be knowingly concerned. The conduct was said to consist of a representation that Stefo Nominees would accept an offer of $700,000 to sell the premises to Summer Moon within a reasonable time being not less than six months after the execution of the lease. That representation is said to have induced Summer Moon to enter into the lease. It is pleaded that the representation was false in that Stefo Nominees failed or refused to accept an offer in the sum of $850,000 made by Summer Moon in writing in or about March 2002. Again s 51A of the Trade Practices Act is relied upon and it is pleaded that Stefo Nominees had no intention of fulfilling its promise to sell the property for $700,000 or alternatively "had no reasonable grounds for believing that it could fulfil its promise".
The counterclaim on this basis can be briefly dealt with.
In the course of examination‑in‑chief, Ms Blackburne was shown a document dated 20 February 2000 from Summer Moon and addressed to Serge Desveaux, Stefo Nominees Pty Ltd. Mr Desveaux was the accountant for Stefo Nominees. The letter read:
"Please forward my offer of $700,000-00 including plant and equipment for the property situated 5/71 South Perth Esplanade, South Perth.
My offer will settle in 30 days from acceptance of this offer."
Presumably, that letter was put forward of evidence of the offer of $700,000 which, in the counterclaim, is pleaded to have been made in April 2000. Curiously, the letter shows the address of Summer Moon as "Suite 5, 71 South Perth Esplanade, South Perth". As observed above, the lease by Summer Moon of those premises was dated 25 May 2000, and the term of the lease commenced on 19 June 2000. On the face of the letter, the date of 20 February 2000 could not be correct. Attached to the letter is a confirmation of facsimile transmission. That bears the transmission date of 20 February 2002, and the only reasonable conclusion to draw is that it was on that date that this letter was transmitted to Mr Desveaux.

Following her initial evidence that she had never seen the letter (at which point it was marked for identification), Ms Blackburne, when pressed in cross‑examination by her own counsel, said that she had seen it but not until sometime after she received the offer to lease in April 2000. How long after did not emerge from the evidence. On the basis that she had subsequently seen the document, it was eventually tendered. In the end, therefore, Ms Blackburne's evidence was broadly consistent with the proposition that the letter bearing the date 20 February 2000 was not sent until much later, and I find that it was not in fact sent until 2002.
In the absence of that letter, there is simply no evidence of any offer in April 2000 which was capable of supporting the pleaded representation concerning the sale of the premises. Even if I had found that the letter had been sent prior to the offer to lease (which was not itself in evidence) being made, there was no evidence of any agreement to accept the offer whether within six months after the execution of the lease or otherwise. Furthermore, there was absolutely no evidence concerning any offer of $850,000 said to have been made in March 2002, a transaction said by the defendants to constitute demonstration of the falsity of the initial representation.
The defence based upon a representation concerning the sale of the premises has no support and cannot be upheld.
Mr Trainer sought to derive some support for this aspect of the claim from the fact that the lease, by cl 60, contained a right of first refusal to purchase. That clause simply requires that, if the landlord proposed to sell the lot, it would first offer it to the lessee (provided no subsisting event of default existed). That provision gives no support to the proposition that the lease was entered into on the basis of the pleaded representation as to sale. Indeed, if an expectation existed on the part of the lessee that the property would be sold to it for $700,000 within six months, cl 60 would have had no function to fulfil. Its presence is in fact inconsistent with the existence of the alleged representation, and the lessee's alleged reliance upon it.

Failure to assign the lease

Clause 39.1 of the lease provided that the lessee must not assign the lease or part with possession of the premises without the consent of the lessor. Clause 39.5 provided that the lessor may not unreasonably wit+hhold its consent to an assignment if:
"(a)the proposed assignee is a respectable and responsible person of good financial standing, the onus of satisfying the Lessor in respect of those criteria being on the Lessee;
(b)all Money Payable then due or payable has been paid and there is no existing unremedied breach of the Lessee's Covenants;
and certain other conditions were fulfilled.
The defence pleads that Summer Moon and Mr Trainer proposed to assign the lease to Integrated Accounting Group Pty Ltd from 1 July 2002. It is pleaded that on or about 7 June 2002, the first defendant and the second defendant gave notice to Stefo Nominees of the proposed assignment. It is then contended that, in breach of the lease, the plaintiff withheld its consent to the assignment despite it being unreasonable to do so.
Mr Marinko Pecotic, a principal of Integrated Accounting Group Pty Ltd, was called by Mr Trainer to give evidence. His evidence was that he was not interested, at any time, in an assignment of the lease to Integrated Accounting Group Pty Ltd, but he did make an offer to lease the premises in June 2002. The offer was for a lower rental, and less than full payment of outgoings.
There was no evidence whatsoever of any proposal to assign the lease, nor of any notice of any proposed assignment on 7 June 2002 or otherwise. This aspect of the pleaded defence is simply not supported by the evidence.

Failure to mitigate by granting a new lease to Integrated Accounting Group

Clause 33.8 of the lease deals with damages for breach of essential terms of the lease. That clause provides for the amount payable by the lessee to the lessor in the event of a determination of the lease. It includes the right of the lessor to recover the rent payable for the unexpired balance of the term less rent or other money which the lessor reasonably expects to obtain by re‑letting the premises between the date of termination and the date of the expiration of the term. The clause provides a positive obligation for the lessor to "take reasonable steps to mitigate its losses and endeavour to re‑let the premises at a reasonable rent and on reasonable terms".
The defence pleads that the plaintiff failed to mitigate its loss by executing a fresh lease of the premises with a third party. The offer by Mr Pecotic on behalf of Integrated Accounting Group Pty Ltd assumes relevance in the context of this plea.
The full terms of Mr Pecotic's offer were not clearly established in evidence. Ms Blackburne said that Mr Pecotic made an offer which involved paying less rent, and a contribution of only $5,000 to outgoings. She said that he refused to provide financial statements, was not prepared to give a personal guarantee, and he wanted to sub‑lease part of the premises to some mining company with which Ms Blackburne was not familiar. She said that she met with her accountant in relation to the offer, and that he was not "happy with the deal".
By facsimile dated 17 June 2002, Ms Blackburne wrote to Mr Pecotic referring to a meeting on 14 June 2002 in West Perth. She said that she was seeking a tenant on the same terms as the current lease, and that Mr Pecotic's offer did not qualify him as a suitable lessee for the following reasons:
"1.You want to pay a combined rent of $60,000 (GST inclusive).
2.You want to pay a total of $5,000 (GST inclusive) for outgoings.
3.You want to sub lease the premises.
4.You would have difficulties to pay the rent if the sub tenant vacated. As you mentioned you could not pay the full rent yourself."
Mr Pecotic wrote back by a facsimile which was transmitted the next day. He expressed surprise at the decision and in particular in relation to the comments in relation to the sub‑lease. He indicated that his proposal was for the lease to be in the joint names of Integrated Accounting Group Pty Ltd and Mansfield Mining NL as joint lessees, but it was, he said, Ms Blackburne who wanted the lease to be in Integrated Accounting Group's name only with the sub‑lease to Mansfield Mining NL. The facsimile sought a response by 12 pm on 18 June, that is the same day that it was transmitted.
Mr Pecotic's evidence was that Mansfield Mining NL subsequently went into voluntary administration, and is now in liquidation.
It is apparent from Mr Pecotic's facsimile that negotiations were carried over a brief period between 14 June and 18 June. Mr Pecotic set a very short deadline for a response to his facsimile. His evidence is that he subsequently took a lease of different premises. Mr Pecotic's evidence was that he was never asked for a personal guarantee, nor did discussions get as far as his being asked for financial details. To that extent his evidence was inconsistent with Ms Blackburne's which was to the effect that Mr Pecotic refused to provide either of those things.
In view of the deadline set by Mr Pecotic, the uncertainties in relation to his proposal as to either a joint lease or sub‑leasing arrangement, his apparent admission recorded in Ms Blackburne's fax of 17 June 2002 that Integrated Accounting Group Pty Ltd could not pay the full rent itself, and the reduced rent and outgoings proposed from the previous rental figures, all lead me to the conclusion that the failure by Stefo Nominees to let the premises to Integrated Accounting Group Pty Ltd was not, in all the circumstances, unreasonable.

Failure to mitigate by granting a new lease to a third party

Ms Blackburne engaged Elders Real Estate to endeavour to lease the premises at the end of August 2002. Her evidence was that, thereafter, it was regularly advertised in the West Australian, and signs were erected on the premises, albeit it not on the South Perth Esplanade frontage. Eventually the premises were re‑leased, although not until after the expiration of the term of the Summer Moon lease. The agent handling the matter at Elders subsequently commenced his own business as a real estate agent in Ardross, known as Premier One. The authority to obtain a tenant for the premises moved to Premier One with the agent concerned.
Mr Trainer argued in submissions that the agent handling the matter from August 2002 onwards, a Mr Raphael, was not a commercial agent, but was only known to Ms Blackburne by reason of his having previously sold a residential unit on her behalf. It was suggested that reasonable steps to mitigate the losses would have involved the appointment of commercial real estate agents. The evidence simply does not enable me to adequately explore that contention. There is no evidence as to the nature of the business of either Elders or Premier One and no basis upon which it could be said that the use of those agencies was unreasonable. Ms Blackburne's evidence as to the efforts to obtain a tenant was uncontradicted, although Mr Trainer invited me to reject it, essentially on the basis that it was inherently unlikely that all of the advertising claimed to have been undertaken had been undertaken, given that Ms Blackburne had not been billed for it. In the absence of any evidence to the contrary, I accept Ms Blackburne's evidence as to what attempts were made to re‑let the premises, and I conclude that Stefo Nominees was not in breach of its obligation to take reasonable steps to mitigate losses following the vacating of the premises by the defendants.

Problems with the City of South Perth

Against objection, Mr Trainer adduced some evidence as to problems which occurred because the premises the subject of the lease did not, apparently, comply with the originally approved building plans. It is apparent that, in late 2002, the City of South Perth gave Stefo Nominees a notice requiring it to bring the premises into compliance with the building approval. I allowed some evidence in relation to this issue to be adduced, notwithstanding that it was not specifically mentioned in the pleadings, because it was suggested that the difficulties in relation to planning approval provided some explanation for the refusal to sell the property as agreed, the failure to re‑let the property to Mr Pecotic or anyone else, and the inadequacy of parking on site. In my view, however, having now heard all the evidence, the difficulties with the council do not assist with resolution of any of the issues. The difficulties were ultimately overcome, the premises remain in the same state as they were during the term of the lease, and there is no reason to think that, had the first defendant remained in possession of the premises, that possession would have been interfered with in any way by the actions of the City of South Perth. While it may be that those difficulties may have affected the capacity of the plaintiff to re‑lease the premises, that fact does not relieve the first defendant of its obligations under the lease.

Conclusion

It follows that the plaintiff is entitled to judgment in the amount claimed, namely $104,891.86. The counterclaim should be dismissed.