Ugarin Pty Ltd v Coles Myer Ltd

[1993] QCA 366

IN THE COURT OF APPEAL	[1993] QCA 366
SUPREME COURT OF QUEENSLAND

Appeal No. 87 of 1993

Before The President
Mr Justice Davies
Mr Justice Lee

[Ugarin Pty. Ltd. v. Coles Myer Ltd.]

BETWEEN:

UGARIN PTY. LTD.

(Applicant) Appellant

- and -

COLES MYER LIMITED

(Respondent) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 05/10/93

This is an appeal from declarations made in the Trial Division on 16 April 1993 to the effect that (i) proposed extensions and alterations to the Beenleigh Mall Shopping Centre "reduce the area or significantly alter the location or configuration of the carparking facilities [at the shopping centre] from the area, location or configuration of the same" at 1 July 1987, the date of commencement of a lease by the appellant to the respondent of part of the premises for a Coles Supermarket and (ii) the appellant cannot proceed with the proposed extensions and alterations without first obtaining the respondent's written consent.

The Coles Supermarket is currently the major tenant in the shopping centre and the proposed extensions and alterations are to enable the appellant to erect additional premises at the shopping centre and to lease them for use as a Woolworths Supermarket. The total retail area of the existing shopping centre is 5972 square metres, of which 4208 square metres is occupied by the Coles Supermarket. The proposed Woolworths Supermarket would be 3500 square metres, if constructed.

The existing shopping centre has frontages to three roads, Main Street on the east, Bellew Street on the north and Tansey Street on the west. The appellant has acquired additional land abutting the site's southern boundary. It has also acquired an extra parcel of land with a frontage to Tansey Street, which is presently surrounded on its other three sides by the shopping centre car park. The Coles Supermarket has a large frontage to Bellew Street and part of it abuts the car park near the Main Street frontage of the shopping centre. The car parking area, which has frontages to Tansey Street and Main Street, consists of bays for 347 cars and 4 taxis, with other bays set aside for trolleys and bins, together with walkways and driveways between the bays.

It is proposed to construct the premises for the new supermarket over the southern part of the existing car park and part of the land which the appellant has acquired abutting the present site's southern boundary. The new premises would be erected on 45 circular columns, each 400mm in diameter. Twenty-seven of the existing car parking bays would be lost to the columns and additional driveways, stairways, etc.. There would also be some changes to existing walkways and some redefinition of a number of
individual parking bays, which are denoted by lines on the car park surface. However, the total area committed to car parking and the overall number of car parking bays would be substantially increased; extra bays for car parking would be constructed on both the additional areas of land which the appellant has acquired. In all, the net result would be an increase of 79 car parking bays, of which more than three quarters would be closer to the Coles Supermarket than the existing bays which would be lost if the proposal proceeded.
Clause 11.17 of the lease between the appellant and respondent provides:

"The Lessor shall have the right from time to time to improve extend add to or reduce the Centre or in any manner whatsoever alter or deal with the Centre (other than the Demised Premises) PROVIDED ALWAYS that in exercising such right the Lessor will endeavour to cause as little inconvenience to the Lessee as it practicable in the circumstances PROVIDED HOWEVER that no alterations or variations to the Centre shall reduce the area or significantly alter the location or configuration of the carparking facilities from the area, location or configuration of the same as at the date of commencement of this Lease without the Lessee's prior written consent."

Definitions in the lease include the following (unless the contrary intention appears):

"'Car Park' means that part of the Centre designated from time to time by the Lessor to be used for the parking of motor vehicles.

'Centre' means the Land the building or buildings (including the Car Park) and all other improvements erected on the Land and such of the plant, equipment, fixtures and fittings related thereto as are from time to time owned by the Lessor.

'Land' means the land described in Item 6 of the Form 8 annexed hereto and any other land owned or used for the time being by the Lessor for the extension or modification of the Centre or for carparking facilities for the Centre."

The judge below substantially confined his attention to the question whether the proposed extensions and alterations would "significantly alter the configuration" of the existing car parking area. His Honour said that "location" and "configuration" are "essentially physical ........

concepts" and, in describing his approach, he said that he had "applied the 'physical' approach to comparison of the two carparks" (the existing and the proposed car parks), and "limited the comparison ... to the area covered by the original carpark". By way of further explanation of the course which he adopted, the judge said:

"I do not think that the question is answered by a qualitative analysis of overall benefit or detriment to the lessee, or projected levels of use of the old and new customers of the respective supermarkets, or of the commercial effect of the proposed alterations. ... The question is not whether the proposed changes are reasonable having regard to the lessee's interest, but rather whether they would significantly alter the configuration of the old carparking facilities. The question whether the lessee's consent is necessary is to be answered by objective criteria."

Elsewhere, he said:

"For the purposes of the present exercise I am disregarding such factors as the overall reduction in ratio (affecting every carparking bay) between the carparking spaces and total use area and the ratio between carparking spaces and retail lettable area.

The bringing into effect of the new project would significantly reduce that ratio, that is to say it would intensify the usage ratio per carparking space. Equally, for the purposes of the present exercise I am disregarding the fact that a competitor would be introduced to share the site with the present lessee, with only a slightly enlarged carpark. I am also disregarding at this point such factors as increased traffic congestion and decreased safety for users which are established on the evidence, although these are submitted to be direct consequences of the alteration of the configuration of the carpark, and to be relevant to the question whether the configuration is significantly altered.

...

It seems to me that if alternative tests submitted for on behalf of the respondent are applied, the respondent's position is only strengthened. On those tests, the respondent's uncontradicted evidence of increased congestion, decreased safety and reduced carparking ratio to floor area, would substantially strengthen its position."

According to his Honour, "the major physical effects which might reasonably be regarded as affecting the configuration of the carpark" apart from the elimination of a number of bays would be the following:

"Alterations to the position of carparking spaces will result in the redrawing of about 70 parking lines in the area under the southern section already described and about 10 such lines in the other parts of the park. I regard the relocation, redesignation and remarking

of the previously marked bays as effecting a further change to its "configuration". That term is not in my view limited to the external boundaries of the carpark, and it includes the layout of the driveways and the place and direction by which it has been planned that users will park and by which they actually do park. In other words, the designation of the bays in association with the car driving alleys is a part of the configuration of the carpark. In many cases, an alteration to the drawing of the relevant lines might not be regarded as significant, but it is still a change in the park's configuration. In the present case it should be noted that the redrawing of the lines designating the particular car bays is fairly extensive.

The fact there will be a building above the southern part of the carpark is not in my view of itself a change to the configuration, but the provision of the posts and their consequential effect upon the placement of the respective bays is.

...

There is also a change to be effected in the existing walkway which runs through the centre part of the carpark. There will be new ramp and some change in gradients. One part will have a less gradient than presently exists whilst another will increase the steepness of its gradient from 1:25 to 1:14. This ratio is within legal limits for disabled wheelchair and trolley access, but of course it is somewhat steeper than before. In my view the alterations to the walkway (which is an integral part of the carpark) constitute an alteration to is configuration. I reject the submission of Mr Gore Q.C. (for Ugarin) to the effect that configuration is confined to changes that can be seen horizontally. In my view vertical changes can as readily effect a change of configuration as horizontal ones. One is essentially concerned with a shape and a relativity between one part and another. This pedestrian access is an integral part of the carpark.

Mr. Gore's alternative submission on this point was that the alteration was not significant. It is not however a matter that should be weighed in isolation; it should be thrown into the balance along with all the other configurations changes before one finally considers whether the new proposal will significantly alter the configuration of the old carpark.

There is also provision for new aisles and driveways along which vehicles will be able to be driven. None of the existing driveways has been removed, but they will now be a part of extended driveways which will bring and receive traffic to and from the additional carparking areas ... ."

His Honour added:

"Were I to take into account the additional areas which will be tacked on by the new proposal so that the original carpark becomes a larger and different carpark, then the argument for the respondent ... on both configuration and location becomes even stronger."

Before this Court, the appellant accepted that the judge below had adopted the correct approach but contended that he had arrived at the wrong conclusion. It was submitted that the altered configuration proposed is not "significant" because the alterations are not "important", "notable" or "of consequence". However, in its acceptance of the judge's approach, the appellants argument started from an incorrect premise.

The second proviso to clause 11.17 of the lease is concerned with the "carparking facilities", not the "car park" as defined. It is not correct to say that, since there would be no reduction in the area of the "car park", there would be no reduction in the area of the "carparking facilities". A simple example can be used to illustrate the point. If the area of the "car park" were left unchanged but within that area every second bay were blocked to prevent parking, there would be a reduction in the area available for parking and thus a reduction in the area of the "carparking facilities". Clause 11.17 is part of a commercial transaction and should be given a commercial operation to reflect the parties' intent.

Thus it is that, if the issue for resolution were confined to the existing car park area, there would be a reduction in area of the "carparking facilities", since it is common ground that 27 parking bays in that area would be lost. In those circumstances, it would be unnecessary to go further to see if there would also be a significant alteration in the "location or configuration" of the car park.
The appellant sought to counter this by reliance upon the additional car parking bays proposed to be built on the extra land which it has acquired, and it is correct that, on the meaning which should be given to "carparking facilities", there is not a reduction, but an increase, in area.

However, on this approach, both "location" and "configuration" of the "carparking facilities" would be altered, and the appellant accepted that, if the "carparking facilities" after the proposed alteration and extension of the shopping centre would include not only the existing but also the additional car park area, there would be a significant physical alteration in both "location" and "configuration" of the "carparking facilities".

It was argued for the appellant that, nonetheless, the alterations to "location" and "configuration" would not be relevantly "significant" since the altered "location" and "configuration" would not have any adverse commercial impact upon the respondent. Although the judge found that there would be "increased congestion, decreased safety and reduced car parking ratio to floor areas", these consequences would result from the use of the new premises to be erected for a Woolworths Supermarket, not from the alteration to the "location" and "configuration" of the "carparking facilities."

However, the distinction sought to be drawn on that analysis of the matter does not establish that the altered "location" and "configuration" would not involve significant commercial detriment to the respondent. It is sufficient to refer to the "carparking facilities" which it is proposed to provide on the land acquired near the southern end of the shopping centre.
A number of driveways enter the site close to the relevant area, which would also be attractive to customers because some parts, at least, would be under cover. These "carparking facilities" would be located (i) beyond the boundary of the existing car park which is most distant from the respondent's store and with relatively poor visibility of it, and (ii) beyond what customers would consider an acceptable distance to walk to the respondent's store but in close proximity to the proposed Woolworths Supermarket. The existence of "carparking facilities" in that location would operate to the respondent's significant commercial disadvantage.
In these circumstances, there is no need to consider the impact of the other new area proposed as car park.

The appellant has failed in its attempt to demonstrate that the judgment below was in error, although this Court has adopted a different approach.

The appeal is accordingly dismissed, with costs to be

taxed.
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No.87 of 1993

Brisbane

[Ugarin Pty. Ltd. v. Coles Myer Ltd.]

BETWEEN:

UGARIN PTY. LTD.

(Applicant) Appellant

- and -

COLES MYER LIMITED

(Respondent) Respondent

The President
Mr Justice Davies

Mr Justice Lee

Judgment delivered 05/10/93

Judgment of the Court

APPEAL DISMISSED WITH COSTS TO BE TAXED.

CATCHWORDS:	LANDLORD AND TENANT - LEASE - CONSTRUCTION - Appeal from declaration that alterations and extensions to shopping mall will reduce and alter carpark facilities and thus respondent's consent required - whether Judge below erred in concluding alterations "significant"
Counsel:	Mr D. Gore Q.C. with him Mr M. Hinson the appellant Mr P.D. McMurdo Q.C. with him Mr D.M. Logan for the respondent
Solicitors:	Bowdens for the appellant Minter Ellison Morris Fletcher for the respondent

Hearing Date: 05/08/93