Wilson Parking Australia 1992 Pty Ltd v Leda Holdings Pty Ltd
[1996] FCA 982
•13 Nov 1996
CATCHWORDS
TRADE PRACTICES - application for damages arising from alleged misrepresentations and conduct in relation to the lease of a Sydney car park - misrepresentation and conduct relate to non-disclosure of a curfew condition of the development approval - reasonable for respondents to act on basis that applicant knew of the curfew condition - applicant has not made out a case of misleading or deceptive conduct, nor of misrepresentation or non-disclosure.
CONTRACTS - unilateral mistake - common mistake - not applicable as both parties aware of condition - no frustration since no new or supervening conditions or circumstances arose - termination of lease ineffective because without notice - applicant not entitled to terminate lease.
EVIDENCE - failure to call witnesses instrumental to decision-making in the present matter - lack of evidence in relation to knowledge, reliance and inducement - Jones v Dunkel (1959) 101 CLR 298 discussed - inferences which may be drawn.
Trade Practices Act 1974 (Cth)
Jones V Dunkel (1959) 101 CLR 298, considered
Payne v Parker [1976] 1 NSWLR 191, applied
Taylor v Johnson (1983) 151 CLR 423, considered
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, considered.
Thors v Weekes (1990) 92 ALR 131, cited
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985)
157 CLR 17, cited
National Carriers Ltd v Panalpina (Northern) Ltd [1981]
AC 675, cited
Treitel, GH, Frustration and Force Majeure, (1994)
WILSON PARKING AUSTRALIA 1992 PTY LIMITED - v-
LEDA HOLDINGS PTY LIMITED and NATIONAL MUTUAL TRUSTEES LIMITED
No G939 of 1993
Tamberlin J
Sydney
13 November 1996
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. G939 of 1993
GENERAL DIVISION )
BETWEEN: WILSON PARKING AUSTRALIA
1992 PTY LIMITED
(ACN 052 475 911)
Applicant/Cross Respondent
AND: LEDA HOLDINGS PTY LIMITED
(ACN OO1 404 557)
First Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED
(ACN 004 029 841)
Second Respondent/
Cross Claimant
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 13 NOVEMBER 1996
MINUTE OF ORDERS
THE COURT:
Orders that the application be dismissed.
Orders that the applicant pay the respondents' costs with respect to the application.
Directs that the parties bring in Short Minutes of Order to give effect to the finding with respect to the cross-claim.
Reserves liberty to restore the matter on 48 hours notice in relation to the Short Minutes of Order.
Orders that the applicant pay the respondents' costs with respect to the cross-claim.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. G939 of 1993
GENERAL DIVISION )
BETWEEN: WILSON PARKING AUSTRALIA
1992 PTY LIMITED
(ACN 052 475 911)
Applicant/Cross Respondent
AND: LEDA HOLDINGS PTY LIMITED
(ACN OO1 404 557)
First Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED
(ACN 004 029 841)
Second Respondent/
Cross Claimant
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 13 NOVEMBER 1996
REASONS FOR JUDGMENT
TAMBERLIN J:
Introduction
The applicant at relevant times since September 1991 operated a number of car parking stations throughout Australia.
In this proceeding the applicant seeks damages said to arise from misrepresentations and from conduct of the first respondent in relation to the operation of a car parking station located in a twenty-four level office building at 2 Market Street, Sydney ("the car park"). The period during which the relevant events occurred was between 1988 and 1993.
In addition to misrepresentation and breaches of the Trade Practices Act 1974 (Cth) ("the Act"), the applicant alleges unilateral and common mistake, unjust enrichment, frustration and termination of the lease negotiated with the second respondent ("National Mutual").
The misrepresentation or misleading conduct raised is said to arise from non-disclosure of a condition of development approval in respect of the car park.
In substance the applicant, says that the first respondent, Leda Holdings Pty Limited ("Leda") failed to disclose that it was a condition of operation of the car park imposed by the original and amended development consent granted by the Sydney City Council in 1987 and 1988 that access to the public car park was prohibited between the hours of 6.30 am and 9.30 am on Mondays to Fridays ("the curfew condition"). The car park comprised two sections. One was for the exclusive use of building tenants with reserved spaces (levels 5 and 6). This was effectively a private car park. The other section was one in which tenants were guaranteed a parking space but not a specific reserved space. This latter section was open to casual parkers and members of the public generally (levels 1 to 4).
The applicant's case is that in the event that tenants of the office building were not able to access and use the public section of the car park during the morning peak-hour period, then the operation was not commercially viable and that it was as a result of an understanding that there was no curfew that Wilson entered into the lease.
The lease was executed by the applicant as lessee and National Mutual as lessor. The lease related to levels 1 to 6 inclusive. It was executed on 10 September 1992 for a term of five years from 1 September 1991 with an option to renew for a further five years.
Wilson Parking Australia Limited ("Wilson"), now in liquidation and the predecessor of the applicant, commenced operation of the car park on 11 April 1990 pursuant to an Agreement for Lease executed on 5 September 1990 with National Mutual. The relevant terms of that Agreement had been substantially agreed upon by the parties when the car park was first made available for occupation in April 1990.
The applicant's case is that it did not learn of the curfew condition until about 27 July 1993 when it received the 1993 Council Licence for the car park. It asserts that it would not have entered into the lease if it had been aware of the Council restriction. Further it contends that Leda was aware of the condition and its importance at all material times and should have disclosed the condition during the period of negotiations for the lease which took place between 1988 and 1992. Its failure to do so was misleading and deceptive conduct amounted to a breach of the Act.
The case for the respondent in broad outline is that there was no requirement to disclose the condition because Wilson and the applicant were experienced and fully informed car park operators, aware at all relevant times of the restrictions imposed by the curfew condition and that the respondents reasonably believed Wilson and the applicant had this knowledge. The applicant contends that, since at least 1983, Wilson had been aware of the property and of curfew conditions applying to the premises, and probably knew of such restrictions in relation to other car parks in the vicinity of 2 Market Street prior to the redevelopment of that site during 1987 to 1990.
Leda relies on discussions and documents to support its submission that Wilson and the applicant were aware of and fully understood the curfew condition at all material times.
It is on the broad question as to the awareness of the applicant and its predecessor Wilson of the curfew condition that the main factual dispute turns.
Change in Ownership
The applicant, purchased the major parking assets and interests of Wilson effective from 10 September 1991, as a result of serious financial difficulties experienced by Wilson prior to and during 1991.
Until that time Wilson was a large scale operator of car parking stations.
Following the purchase of assets from Wilson the applicant continued to negotiate with the owner of the car park and subsequently assumed operation of the car park. The applicant had no legal or other relationship with Wilson but operated on the site using the Wilson name.
Negotiations continued between the applicant, Leda and National Mutual and these culminated in an Agreement to enter into a Lease on 15 November 1991. The formal lease was entered into between the applicant and with National Mutual on 10 September 1992.
After the change of operators occurred, Mr Graham Watson, the then New South Wales State Manager of Wilson, joined the applicant as State Manager for a short period. Mr Craig Smith, who had been the Development Manager for Wilson also joined the applicant. Mr Paul Hansen of Wilson also served as Managing Director of the applicant. He was the ultimate decision-maker of Wilson and the applicant at all material times and was involved in negotiations with Leda as to the terms of the proposed new lease. Mr Hansen was located in Perth.
Mr Hansen was assisted in the course of the negotiations for the terms of the lease by Mr Tony Vis, a solicitor also located in Perth.
Leda was a member of a development group which had long and extensive experience particularly with respect to large commercial and industrial development. The principal of Leda at all material times was Mr Ell.
The second respondent National Mutual was the owner of the premises at material times and it executed the formal lease with the applicant on 10 September 1992.
Mr Ell, Mr Hansen and Mr Vis did not give evidence.
Background
Mr Paul Hansen's association with the site was that he was the General Manager of Wilson for some years prior to 1988. In 1988 he became the Managing Director when Mr Laurie Wilson, the founder of Wilson Parking stepped down. As Managing Director, his responsibilities included the consideration of development proposals of the business. There was evidence that he was the principal decision-maker of Wilson, in relation to the expansion of that company's operations. Mr Hansen decided on the proposals with respect to the subject premises, 2 Market Street, Sydney and during the period 1988 through 1990 he was the person with the authority to decide whether Wilson entered into the proposed lease. The documentary evidence indicates that Mr Hansen was closely involved at various times in relation to the proposed operations at 2 Market Street.
1983-1987
In order to make good its submission that Wilson and the applicant were aware of the curfew condition, Leda directs attention to what must be taken to have been the knowledge which should be attributed to senior officers of Wilson in the period prior to commencement of negotiations for lease of the car park. The evidence relied on by Leda is mainly documentary.
During the period 1983 to 1991, Mr Laurie Wilson was the Chairman and Managing Director of Wilson. He was based in Perth. Wilson traded as "Wilson Car Parking" up to September 1991.
In August 1983 Mr Wilson was informed of a proposed re-development on the site which later became 2 Market Street. That development proposal included a large public car park.
On 11 October 1983 Mr Wilson wrote to the Sydney City Council objecting to the development of the proposed public parking station on the site on the ground it would not be feasible and would affect the viability of the $10 million proposed investment by Wilson in its then approved development at Kent, Market and Sussex Streets, Sydney which was opposite the site. The letter disclosed a strong interest by Mr Wilson in the site. A handwritten note of Mr Wilson, dated 30 October 1983 instructed a consultant to endeavour to lease the site of the proposed development.
A memorandum from the consultant, dated 4 November 1983, pointed out that control of all three car parks in the area would give Wilson "a very strong strategic hold in the area". The note concludes:
"With regard to the 9.30 am curfew, Agnew stated that his car park is subject to this and that he is in a quandary as to how to approach the matter."
Mr Agnew was the intending developer and this paragraph is a reference to a restriction on what later became part of the site, 2 Market Street.
A further note by the consultant, Mr Peter Burrows, of 9 November 1983 records a conversation with Mr Ken Kanagarajan, of Sydney City Council's Planning Department. It referred to the site at 397 King Street and referred to:
"9.30 am opening"
On 5 December 1983 the consultant for Wilson, wrote to the developer of the premises confirming Wilson's interest in the lease and operation of the proposed parking station on that site.
On 13 February 1984, the Council issued a Development Consent for the premises containing a condition which read:
"(5) That access to the public parking station shall not be permitted between the hours of 6.30 am and 9.30 am Mondays to Fridays, inclusive;"
A copy of this consent was obtained by Wilson Parking and was discovered in its file (Exhibit A). The condition as to the morning curfew was one of several which are highlighted but it is not clear by whom or when this highlighting was done.
On 1 March 1984, Jones Lang Wootton wrote a letter to Mr Wilson. A handwritten note on that letter by Mr Wilson directed to Mr John Pearce, the then Development Manager of Wilson, stated that:
"It could be in our interest to obtain option to purchase and sell on with lease to us of car park. Plse do feasibil. & let me know your thinking."
On 9 April 1984 Mr Burrows reported to Mr Wilson and Mr Pearce on a preliminary feasibility study.
On 10 September 1984 Mr Johnston, the Development Manager for Wilson, wrote to Sabemo Pty Limited enclosing a proposal to lease the car park in the development of 397 Kent Street. The offer stated that there would need to be a redesign of the current development approval in order among other things, "... to meet the Council requirements for public parking, ...". These requirements were not specified. That proposal was based on 421 bays.
The keen interest of Wilson in the site persisted through 1984, 1985 and the first half of 1986.
On 15 August 1985 Mr Johnston expressed the opinion that because the site was located near the "gateway to Darling Harbour" there was a "likelihood that it may serve as an excellent overflow" parking site "during weekends if the demand was what the [Darling Harbour] Authority expect". He made alternative recommendations to lease or buy the premises and pointed out that Wilson should consider the opportunity of getting there first because he anticipated an enormous amount of competition.
On 30 April 1986 Mr Johnston wrote to the Property Manager of Immer Pty Ltd, a subsidiary of Leda, noting "with interest" the development of the site and drawing attention to the parking services which Wilsons could offer. He pointed out that Wilson operated in excess of 200 car parks in 5 countries which had been established over 20 years experience in the parking industry.
Period 1987-1993
There were three relevant consents granted in this period in relation to the redevelopment of the sites which became known as 2 Market Street. These sites comprised 397-413 Kent Street, 182-194 Sussex Street, and 2-22 Market Street. The original (first) development consent dated 9 July 1987 approved:
"... the application submitted by Donald Crone & Associates Pty Limited with the authority of Leda Holdings Pty Limited for permission, after demolition of the remaining building on the ... site, to erect ... a retail and commercial building of 23 levels comprising ...:-
Levels 1-3 (basement) -
Public car parking station
Level 4 (Sussex Street level) -
Public car parking station, loading vehicle facilities
Level 5 (Market Street level) -
Entry foyer, tenant car parking facilities,
Level 6 -
Tenant car parking facilities, retail
Level 7(Kent Street level) -
Forecourt retail
......
... subject to the following conditions, namely: ..." (Emphasis added)
This case is concerned with use of the public car park on levels 1 through 4.
Condition 37 of the development consent prohibited access to the parking station (meaning the public car park) between the hours of 6.30 and 9.30 am on Mondays to Fridays inclusive. The parking proposal was for a large number of unreserved tenant parking spaces to be located in the public car park area.
On 14 April 1988 Sydney City Council ("the Council") issued a consent to an amended development application which provided for an additional high rise office floor. This did not materially affect the car parking facilities and Condition 37 remained as set out above.
On 20 April 1989 the Council again wrote to Crone and Associates, architects for the project, informing them that the Central Sydney Planning Committee on 13 April 1989 had resolved to consent to a further amendment to the development application, which is not material for present purposes.
The issue as to Wilson's knowledge of the application of the curfew condition to the redevelopment involves a consideration of several matters to which I now turn.
The meeting of July 1989.
Mr Paul McDermott, was employed with Leda in January 1989 and resigned from the company in November 1991. He was the Commercial Manager and in this capacity he managed the company's Commercial Office Development Portfolio, which at the time comprised about 6 projects, including the 2 Market Street proposal.
Mr McDermott's responsibilities in respect of 2 Market Street included the leasing of the project. As at early 1989 the construction was approximately 50% complete. Mr McDermott eventually assumed responsibility for the whole of the project including leasing, construction and development. He had no involvement in the original application to the Council for development approval or the amendment. He says he was unaware of any curfew condition and had not examined the development consent.
During this period Mr Hansen was the Managing Director of Wilson, Mr Watson was New South Wales State Manager, and Mr Craig Smith was New South Wales Development Manager.
Mr McDermott gave evidence that in 1989 he attended a meeting also attended by Messrs Hansen and Watson and a Mr Rowley of Leda, at which discussion took place about the base rental. His best recollection was that the meeting took place between 5 July and 8 August. He said that as the meeting broke up, Mr Watson said to him, in relation to the premises, words to the effect:
"There's a restriction on trading hours which applies to the car park as there is on others in Sussex Street. They are not being enforced elsewhere. We are prepared to take the chance that the Council won't enforce the condition."
Mr Watson is alleged to have further stated:
"If the Council ever seek to enforce the condition we will seek to have the condition changed."
This conversation is alleged to have taken place out of the hearing of Messrs Hansen and Rowley. Mr McDermott's affidavit asserts that he had a clear recollection of the conversation because he felt very "embarrassed" at having negotiated the major commercial aspect of the lease, namely the rental, in ignorance of a condition, which was said to affect the use proposed under the lease. After Messrs Watson and Hansen left, he said he obtained a copy of the development consent and read it.
This conversation is denied by Mr Watson.
The accuracy of Mr Watson's recollection on this matter, in my view, for reasons set out below, is open to doubt.
On 26 September 1989, a diary note by Mr Craig Smith records a meeting with Mr Kanagarajan, an officer of the Council, at which Mr Watson was also present. It records that:
"KK explained that for WP (Wilson) to legally operate the 2 Market Street site while fit outs were continuing we would have to apply for the public licence.
He intimated that Council believed all operators were trading illegally but the Council had more pressing problems to deal with. Their view is that public parking entails anyone who is not a tenant of a building." (Emphasis added)
The heading to Mr Smith's File Note is "2 Market Street".
Mr Watson stated that he had no recollection of any mention of 2 Market Street at that meeting. However, in his evidence in chief, he asserts that there was nothing said at the meeting concerning a curfew. He attributes a specific statement to Mr Kanagarajan at that meeting to the effect that he was concerned that some operators of private car parks were accepting casual parkers in car parks where no licences existed. That is not what is recorded in the note of Mr Smith. That note does not refer to casual parkers nor does it refer to the absence of licences. My impression is that Mr Watson's recollection was vague in relation to what was said at this meeting.
Another significant matter which casts doubt on the reliability of Mr Watson's evidence, in my view, is the evidence he gave concerning the letter of 28 November 1990 which he wrote to Mr McDermott. In that letter he confirmed that the lease commencement date could not occur until two outstanding matters had been addressed to the reasonable satisfaction of Wilson. The second of those was:
"Confirmation of the existence of 301 linemarked bays in the premises in accordance with Council and D.A. specifications". (Emphasis added)
When asked, whether at the time he sent the letter, he had documents which could be described as "council and D.A. specifications", he categorically denied that he did. He went on to say that he was there seeking confirmation of the bays because Leda wanted Wilson to take up occupation of the car park and Wilson wanted to put off occupation of the car park because the economic climate at the time was not favourable. He was referring to the Christmas period. In evidence he described his request in the letter as "a delaying tactic" used to postpone occupancy.
There are several further aspects of the evidence of Mr Watson which lead me to reject his evidence as to the conversation with Mr McDermott. He said, it was not his practice as State Manager to ascertain whether there had been Council approval, in relation to car parks under construction, or proposed. His view was that the onus to ascertain the nature of any restrictions rested on the owner and that it was not his practice to make any inquiries beyond perhaps asking the owner about the matter. There is no evidence that he made any inquiries as to a curfew condition. He also said that it was not his practice to ask for any document that might bear on the way the car park could be conducted. I find this difficult to accept from a responsible State Manager of a large chain of car parking stations.
Also in his first affidavit, Mr Watson made no reference to the meeting with Mr McDermott or Mr Rowley concerning negotiations about 2 Market Street prior to mid-August 1989. He claims that he did not think it was pertinent. Mr Watson also gave evidence that he was not aware until about October 1993 of any curfew conditions or policy of the Council to apply such condition within the central business district. He said that he had never discussed such a requirement with anyone within Wilson, but that he had heard of a curfew condition on a particular car park in Melbourne. Mr Watson said that he never turned his mind to the question of whether there was any restriction on access to the subject car park nor did he make any enquiries of Council, and stated that there was no practice for employees of Wilson to enquire of the Council in relation to restrictions.
The applicant submits in relation to Mr McDermott's evidence that he was slow to make concessions. It was suggested that he showed a tendency to grasp for an answer favourable to Leda rather than make concessions. It was also said that Mr McDermott was mistaken as to the identity of the person with whom he had the alleged conversation and that it was actually with Messrs Hannan and Brennan and not Mr Watson. It was hypothesised that the conversation really took place in November and not August 1989. It was further suggested that Mr McDermott, in October 1989, may well have been busy on a number of matters and that he sent a facsimile of a number of approvals to Hannan & Associates without reading any of them. It was said that at meeting of 14 November it was probable that someone mentioned council approvals being qualified as to the operating hours of car parks and that Mr McDermott and Mr
Brennan, who took the Minutes, did not remember the discussion taking place at the 14 November meeting.
In my view, this chain of events, posited by the applicant is, speculative in the extreme and does not accord with the probabilities indicated by the surrounding circumstances. In circumstances where Wilson and its senior officers had such a lengthy period of association and interest with the site, it would be reasonable to expect that the State Manager would at least take some steps to acquaint himself with documents and conditions of major importance to his employer's commercial interests.
I accept that some valid comment can be made as to Mr McDermott's testimony, but having regard to the above considerations, I prefer the version of Mr McDermott. I am persuaded that Mr Watson made the statements attributed to him by Mr McDermott. I am satisfied that from that occasion Mr Watson and Wilson were aware of the curfew condition and were cognisant of its significance.
Transmission of the Approvals - October 1989
There is an issue between the parties as to whether on or about 4 October 1989 Mr Craig Smith received a copy of the full development approval of the site, including seven pages of conditions which include the curfew condition, or whether
he only received two pages which evidence the approval but did not include the curfew condition.
It is common ground that in September 1989 Mr Craig Smith was anxious to obtain a licence from the Council for operation of the public car park on the site. He needed a copy of the relevant development consent to enclose with the licence application and he asked Mr Brennan of Hannan & Associates for a copy of the development approval for the site. This request was communicated to Mr McDermott by Mr Brennan. Mr Brennan's recollection was that Mr Craig Smith said:
"In order to make the application for a licence we need the drawings specifications, owner's letter of consent and the original Development Approval for the site."
At that time Mr Brenann was employed by Hannan and Associates Pty Limited as tenancy co-ordinator. Mr Hannan was the principal of that company. Mr Brennan was responsible for co-ordinating the fit out of tenants' premises to suit their requirements. His particular responsibility in relation to the Leda transaction was to ensure that Wilson's needs were met in relation to alterations to the building. He was employed by Hannan & Associates from February 1989 to January 1991.
Mr Hannan recalled the request by Mr Smith of the developmental approval in the following way:
"We cannot open the Car Park until we have obtained a licence from the Sydney City Council. In order to get the licence we need a copy of the DA to be appended to the application to Council, specifications and the consent of the owners, Leda and Armstrong Jones, to our application to Council." (Emphasis added)
There was no suggestion that Mr Smith only wanted part of the development approval.
It is common ground that on 3 October 1989, Mr McDermott transmitted a 20 page facsimile to Mr Brennan. The cover sheet reads:
"VIC,
ATTACHED PLEASE FIND THE VARIOUS DEVELOPMENT APPROVALS.
WOULD YOU PLEASE PASS ON TO WILSON PARKING TO ASSIST THEM WITH THEIR VARIOUS APPLICATIONS TO COUNCIL." (Emphasis added)
The pages transmitted to Mr Brennan included covering letters from the Council and the Council Resolutions of 7 July 1987 (the original consent) and of 12 April 1988 (the amended consent) which gave development consent on conditions which included the curfew condition. There was also transmitted a resolution dated 13 April 1989, by Council's Central Sydney Planning Committee, which varied the consents to permit a change of proposed use of level 24 from plant to office space.
Exhibit 1 is the document transmitted to Mr Brennan. It comprises twenty pages in total including the cover sheet. The pages are numbered sequentially on the transmission.
Mr Brennan did not specifically recall what he did with the facsimile. However, he did sign a "Transmittal of Documents" form, dated 4 October 1989 enclosing documents and this records the enclosure as being:
"(1) COPY OF DA APPROVAL"
Mr Brennan believed that he handed all the pages received from Mr McDermott to Mr Ayers of Wilson for delivery to Mr Smith at a site meeting on 4 October at which both Mr Brennan and Mr Ayers attended. There is no record in the Minutes of that meeting with respect to anything being handed to Wilson but this was a matter which would not call for a formal record.
The Transmission of Documents form signed by Mr Brennan on 4 October 1989 was addressed "To Wilson Parking. Attention: Mr Craig Smith." It referred to the project 2 Market Street. The enclosures were described as:
"1 COPY OF DA APPROVAL,
1 COPY VENTILATION SPEC
NOTE: AUTHORIZATION FROM BUILDING OWNER TO FOLLOW."
The "instruction" line of the form records the words "As requested for Council licence". The sender is designated "V Brennan".
In relation to the reference to the owner's authorization, the Tenancy Meeting No 6 of 17 October 1989 which Mr McDermott attended with Messrs Hannan, Brennan and others, records:
" - Licence application to Council awaiting Armstrong Jones' consent.
Hannan and Associates to follow up urgently."
The reference to Armstrong Jones resulted from the request by Mr Smith for consent of the owners".
Mr Hannan gave evidence that he recalled seeing an envelope addressed to Wilson at the reception desk of his office and that he inspected it. Mr Hannan said he saw the transmittal document that described the documents attached to it. He further says that he checked the annexure. However, in cross-examination he was not sure of this. He said that the development application attached was a full photocopy of the McDermott facsimile.
Mr Craig Smith denies ever receiving a copy of the facsimile sent by Mr McDermott, except for 2 pages which were attached to an application for licence for a parking station. These two pages are simply the first page with the Council Crest and a general description of the consent. The second page is the first page of a six page Council resolution which sets out the first few conditions only. It is obvious from this page that the Council resolution of 12 April 1988 is not complete and that there were more conditions on subsequent pages because the last condition on the page is not complete.
The written consent of Armstrong Jones to the application for a licence for a parking station is dated 26 October 1989. The National Mutual consent is dated 10 October 1989. The application for licence for a parking station is dated 3 November 1989.
The applicant submits that the Court should find that Mr Craig Smith received only two pages of the DA approval and not the entire document and that he should be accepted when he said he was not aware of the curfew condition.
The Council file shows only the two pages, numbered 7 and 8 of the transmission referred to in the preceding paragraph. On this basis, it is said, to be probable that Mr Brennan only photocopied those pages of the 20 page transmission from Mr McDermott and that only those pages were delivered to Mr Craig Smith. The submission for Leda is that Mr Craig Smith received the whole 20 pages and that he arranged for the photocopying of pages 7 and 8. There is a direct conflict.
Again, in weighing the probabilities it is necessary to look at the surrounding circumstances.
The submissions for the applicant refer to the following matters.
First, the 20 page facsimile original from Mr McDermott was still on the file of Hannan and Associates. Therefore a copy must have been made at the office of Hannan and Associates. Included in the material from Mr McDermott were two other development approvals. However, in order to properly appreciate the requirements of the then current development approval it was necessary to look at the three approvals. The applicant submits that it is likely that Mr Brennan selected from the 20 page facsimile only those two pages which set out the 1988 approval and the first few conditions. Mr Brennan thought it unlikely that he only transmitted two pages.
The applicant points out that Mr Brennan did not know on 3 or 4 October of the curfew condition and suggests that therefore it would have been more likely that he would only transmit the first two pages. This does not follow.
It is then said that if Mr Brennan needlessly photocopied the entire 20 page facsimile and had it delivered it to Wilson it would have been unlikely that Mr Craig Smith would retain two pages only and discard the balance. It must, however, be borne in mind that a substantial period of time has elapsed since October 1989 and that the documents may have simply been misplaced, refiled or discarded from the Wilson file. It is not necessary to draw any inference that on the respondents' version, Mr Smith "discarded" the balance.
The applicant submits that it is likely that Mr Brennan would be likely to exercise some degree of judgment and extract what he saw as the important provisions of a development approval and only send or deliver those pages.
However, it is important to bear in mind that the express instruction from Mr McDermott to Mr Brennan was to pass them on to Wilson. There is no suggestion in the instruction that Mr Brennan should only select some material and not pass on the balance. The instruction only called for passing on and did not call for the exercise of judgment. Mr Brennan's role was that of a conduit not that of an editor, and there was no readily apparent reason why anyone at the office of Hannan and Associates should selectively remove two pages out of twenty pages to send to Mr Smith.
The applicant submits that the evidence of Mr Hannan as to his inspection of the envelope at the reception desk is inherently incredible and contradicts the evidence of Mr Brennan that the documents were handed over and not sent. While I agree that Mr Hannan was somewhat vague as to what took place it is clear that Leda was a valued client and that Mr Hannan was keen to ensure that good relations were maintained. His evidence accords with the probabilities and I accept his version of what occurred.
The applicant points out that on 26 April 1990 Mr Craig Smith sent a facsimile to Wilson's in-house solicitor, Mr Vis in Perth, attaching only the same 2 pages of the consent. He said that it was his practice with documentation of a legal nature to send the whole of the documents in his possession. In my view, this subsequent conduct by Mr Smith is of no assistance in determining what in fact happened in relation to the receipt of the facsimile or part of it from Mr McDermott in October 1989.
Mr Craig Smith - Credit
I have considerable reservations as to the reliability and accuracy of Mr Smith's recollection. I do not accept his evidence as to the non-receipt of the copy of the full facsimile. The likelihood is that he did receive it and that he read it and saw the curfew conditions.
In an internal memorandum of 4 December 1990 Mr Craig Smith wrote to Mr Hansen stating that he could not find a copy of the "original" development approval on the file. He sought to explain the reference to "original" as meaning the "complete" development approval because he could find only two pages at that time. I find this attempted explanation unconvincing. It is significant that the memorandum does not suggest that he had never seen the original development approval, but simply that he could not find a copy of it.
Mr Smith agreed that he would have read any development approval document if it was sent to him. I accept this as evidence that he read the development consents since he specifically asked for the consent in order to make the licence application.
During cross-examination, Mr Craig Smith's attention was drawn to a denial by him of an assertion by Mr Gore, who was State manager of Wilson from November 1987 to October 1988, that the Wilson company did not strictly comply with conditions including curfew conditions. The form of the denial was:
"I deny that any curfew conditions of which I was aware were not strictly complied with..."
He did not say he was not aware of any curfew conditions.
When questioned about the meaning of the words "curfew conditions of which I was aware", he sought to explain his language by saying he was not aware of any curfew conditions and he therefore denied the statement by Mr Gore. This answer was in response to a suggestion that he was in no position to deny Mr Gore's statement if he was not aware of any curfew conditions at all. It was then put to him that his statement was not correct because if he knew nothing about curfew conditions he would simply not know whether they were "strictly complied with". He conceded that the statement was incorrect "in that format".
Additional doubt was cast on the accuracy of Mr Craig Smith's recollection by the fact that in his affidavit evidence he gave two inconsistent dates as to the first time he received the licence to operate the car park which contained the curfew condition. In his first affidavit, he refers to a time on or about 6 June 1993. In his third affidavit, his recollection was that the 1993 licence did not come to his attention until sometime prior to 27 July 1993. There was no explanation of this change. This is an important matter which went to the delay in sending the letter of 27 July 1993 by Wilson to National Mutual notifying it that in the preceding week the Council had attached a condition to the licence imposing a curfew imposing a curfew.
The evidence indicates that the licence was issued on 8 June 1993 and expired on 31 December 1993. The licence refers to conditions attached to the licence and these include the curfew condition.
There is in evidence a facsimile from Mr Kanagarajan of Council, dated 2 August 1993, attaching a copy of Council papers which included the 1993 licence together with the Council's 12 April 1988 development consent. When pressed on this discrepancy, Mr Craig Smith sought to explain it by
saying that using the words "on or about 6 June 1993" he really meant "sometime in that period".
Mr Craig Smith also agreed that at no time between 6 June and 22 November 1993 did Wilson complain to Leda or National Mutual about the failure to disclose the existence of the curfew condition.
On balance I prefer the recollection of Mr Brennan to that of Mr Smith as to what was transmitted by Hannan and Associates to Mr Smith under the Transmittal Notice of 4 October 1989.
I therefore find that the full set of faxed documents, including pages 2 to 20 of the facsimile from Mr McDermott were received by Mr Smith on or about 4 October 1989. If the documents were, as seems likely, handed to Mr Ayers then Mr Smith would have probably received a full set of the documents. There was no suggestion that Mr Ayers might in any way have edited or selected certain documents.
A suggestion was made by the applicant that even if the whole 20 pages were received by Mr Smith, it could not be concluded that he became aware of the curfew condition. In my view, given the position and responsibility of Mr Smith and his evidence as to reading documents, it is likely that he read the development approvals and became aware of the curfew condition which is clearly set out in two of the approvals.
I therefore conclude, that since about 4 October 1989, Wilson and the applicant, through Mr Smith, were well aware of the curfew condition. I am also of the view that in these circumstances, where Mr McDermott knew he had sent the consents to Mr Smith, it was reasonable for Mr McDermott to believe that Wilson was aware of the existence of the curfew condition. I do not think that any attempt was made on the part of Leda to suppress any communication of knowledge of the curfew condition. Indeed, if that had been the intention of Mr McDermott it is unlikely that he would have sent to Mr Brennan the 20 pages of documents in which the curfew condition was set out in two of the approvals. This is inconsistent with any conscious non-disclosure.
I also find it improbable that if Mr Smith had received only two pages of the facsimile, which on their face clearly indicated the existence of further conditions, he would have failed to obtain a complete copy of the development approval to see whether, and if so what, conditions applied to the car park. The conditions were an important part of any approval. In addition, page 8 of the facsimile makes it clear that the consent to the amended application and drawings was to be read in conjunction with previously submitted drawings. In order to understand the operation of the consent as set out on pages 7 and 8, it was essential to at least look at the drawings the subject of the original consent of July 1987 which had been amended by the 1988 consent. Moreover, an examination, even of those two consents, would not be complete without looking at the further amendments granted pursuant to the resolution of the Central Sydney Planning Committee in 1989.
The Ayers Allegations
Mr Ayers worked for Wilson between October 1984 and December 1990 as Operations Manager. He was responsible for the day to day management for all commercial car parks operated by Wilson in Sydney. His function was to ensure that the car parks were opened, manned and efficiently run. Mr Ayers refers to a conversation in 1990 with an unnamed Wilson Parking "executive" to the effect that under Council conditions the Wilson station should not be opening until 9.30 am. He cannot identify or remember who the "executive" was, but suggests it was probably one of two people, including Mr Watson.
I find this evidence equivocal and unsatisfactory. I therefore give it no weight in reaching a conclusion as to the knowledge of Wilson as to the parking condition. Furthermore, under cross-examination, he conceded that he did not always tell the Council the complete truth when making application for approval. This makes his evidence unreliable.
Wilson's Files
In my view it is likely that Mr Craig Smith as Development Manager of Wilson, in the relevant period, would have read the development file in relation to the subject site. The site had an important location for Wilson and negotiations had been going on for a number of years between Wilson and developers. Wilson was keen to secure the operation of the car park on the site. The car park operation they wished to secure was a large one involving a multi-million dollar operation. It is against this background and the likelihood that Mr Smith would have read the Wilson files, that his evidence must be approached when balancing the probabilities as to what Mr Smith understood during 1989 to 1993 as to the existence of the curfew condition.
Mr Robert Smith
Mr Robert Smith was the principal of Sydedale, the Project Manager for Leda at the relevant times. He was involved in negotiations for the site and he worked closely with the architects, Donald Crone & Associates. He was aware of the terms of the development consents.
Mr Robert Smith said that he it would have been necessary for him to explain to Wilson and to any other party interested in the car park that it had been designed in such a way that tenants' cars could enter from both Kent and Sussex Streets and that if the Council stopped the public car park being open before 9.30am, then the tenants cars could enter from Kent Street. The entrance and circulation arrangements were unusual and called for some explanation. He said that he had to explain the circulation of cars, if the curfew was applied, because it was important for occupants to understand why the car park was designed in the way it was. Mr Robert Smith said that on one occasion he met Mr Craig Smith on site with plans and showed him how the car park worked, according to those plans. He said he explained that the ramping system was so designed to allow tenants to enter from Kent Street if the curfew applied.
Although his evidence is general, his recollection is consistent with surrounding circumstances. It is likely that an operator or prospective operator of the car park would want to know why the car park was designed with two entrances and with the traffic flow which it had. It is also likely that a person with Mr Smith's responsibility would have explained the underlying reason. His evidence affords further support for the conclusion that Mr Craig Smith was informed that a curfew condition applied to the premises at relevant times.
Termination and Rental Variation Clause
The drafting history of what finally became the Rental Variation or Termination clause 9.1, in the executed lease is consistent with an awareness in both parties of the curfew conditions.
On 22 September 1988 Mr Craig Smith as Development Manager submitted an offer to operate the car park on the site. Clause
18 of that offer dealing with rent variation or termination was in these terms:
"Should any public authority, instrumentality or other competent body by an Act, regulation or legislation restrict the car parking trade carried on from the property then Wilson reserves the right to elect to renegotiate the terms of the lease (including the rent payable) or to terminate the same." Emphasis added
On 5 July 1989 Wilson made a further offer, which contained a reference to clause 18 which then read:
"Should any public authority, instrumentality or other competent body by any action, regulation, or legislation restrict the car parking trade carried on from the property then Wilson reserves the right to elect to renegotiate the terms of the lease (including the rent payable) or to terminate the same." Emphasis added
In this draft the word "action" replaces the word "Act".
On 19 September 1989 the solicitors for Wilson submitted an Agreement for Lease, with an annexed Lease which contained a more elaborate provision in relation to the variation of rent. The material parts of this provision read:
"If at any time during the term of the Lease ... the Lessee's trade or business carried on in ... the Leased Premises is restricted by reason of any law, regulation or action of the relevant local government authority or any other authority having jurisdiction in the matter the Lessee may elect thereafter to either to determine this Lease upon fourteen (14) days' written notice ... or to continue this Lease ... but to pay during the period of such restriction ... a rent calculated in accordance with the following formula..." (Emphasis added)
This clause is substantially in the form to which the parties finally agreed.
The significant point is that the variation and termination clause was altered, from referring to any "Act" of a public body to refer instead to any "action" of the relevant Local Government Authority.
This refinement is consistent with, but in no means determinative of, an awareness in the parties of the possibility of action by a Local Government Authority.
Some evidence was led as to the form of other leases or agreements with respect to variation or termination in other parts of the city. I am not satisfied that there was any standard practice or clause applied in all cases. I think that the best guide is obtained from consideration of the drafting history of the particular lease in question. In the present case, the tightening of the wording in the variation of rental clauses is a matter which ought be taken into account when ascertaining the understanding of the parties. It is clear from the evidence that Mr Tony Vis, who appears to be the in-house solicitor for Wilson was involved in the drafting of the agreement for lease and the lease itself but the Court has not had the benefit of any evidence from him as to the reasons underlying the change in wording of this clause.
Wilson's Experience
It is clear that prior to and during the relevant period Wilson was a major lessor and owner of car parks in Australia and overseas. It claimed 20 years experience. In a brochure published sometime between May 1988 and December 1990, Wilson claimed widespread experience and expertise as car park operators and that it was the largest and most widely respected operator and consultant throughout Australia and South-East Asia. It offered services such as feasibility studies, site selection, and comment, design and layout, and making submissions to relevant authorities. Such services it was claimed had been supplied by Wilson to a wide range of property owners including local authorities and private developers. It also claimed to be the operator of 32 car parks in Perth, 30 in Sydney, 26 in Melbourne, 12 in Adelaide, 6 in Brisbane, 4 in Tasmania and 59 in Hong Kong.
The job description for the State Manager included the following duties; to direct the Development Manager in his duties and to assist in personal presentation and negotiation of development propositions to prospective landlords; to ensure that Wilson had up to date information with respect to property and development activity in the branch and to direct the evaluation of probable sites for development purposes; it indicated that the State Manager in conjunction with the Development Manager would maintain liaison with developers, investors, real estate agents and planning authorities. In every sense, Wilson claimed to be an expert in running car parks. This material indicates that Wilson had a close familiarity and detailed understanding of car park development which would carry with it an appreciation of the importance of knowing the precise terms of development consents which might affect operation of the car parks.
Failure to call Mr Hansen
The evidence shows that Mr Paul Hansen was General Manager of Wilson for some time prior to 1988 from at least 1987. In 1988 he became Managing Director of Wilson. At all times he was based in Perth. He was regarded by Mr Craig Smith as the man who would approve offers. He was also described as the "final man", and "the man in charge". At a meeting attended by both Mr Watson and Mr Hansen, Mr Hansen was regarded by Mr Watson as having "the sole right to negotiate". It appears that Mr Hansen had the authority to decide whether Wilson entered into leases. The correspondence shows that at material times he was
actively involved in the process of negotiation and decision-making in relation to the subject site.
The failure to call Mr Hansen in these circumstances, to state his knowledge of events was not satisfactorily explained. Ms Norman is a partner in the solicitors for the applicant. An affidavit by her was filed, the substance of which is, that in October 1993 she spoke with Mr Hansen, the former Managing Director of Wilson who from about mid 1991 up to 1992, was the Managing Director of the applicant. She prepared a draft statement for him. She said that in September 1994 she spoke with him and sent him a draft affidavit based on the draft statement. On 27 September 1994, Mr Hansen stated that he was not prepared to get involved and indicated that he was not prepared to sign any documents as he did not want to give evidence. He said that he will be "a kind of hostile witness."
Mr Hansen left the employ of the applicant in 1992. On the evidence, in my view it seems likely that he would have been informed of the curfew condition and in addition that he could have given some evidence relating to the knowledge of Wilson in relation to the condition. His knowledge or lack of it at the relevant times could have been a material matter.
In relation to the absence of Mr Hansen, Leda submits that there is no evidence as to what Mr Hansen would have done if he had been confronted with the revelation of the condition, nor is there any evidence as to what Mr Hansen knew as to the existence of the existence of the curfew condition. This it is said, is important in a situation where Wilson claims that it had no knowledge of the curfew condition on the premises prior to entry into the lease with National Mutual. On the other hand, Leda's case is that it should be inferred from the testimony and material in evidence Wilson through Mr Hansen and others, was aware of the condition.
The mere fact that Mr Hansen did not wish to attend does not mean that it would not be normal to expect the applicant to call him. He seems effectively to have been the chief executive officer during the period and might normally be expected to give evidence as to whether the applicant had any knowledge.
Leda submits that the failure to call Mr Hansen is significant in two ways. First, the failure to call him left an evidentiary gap in the applicant's case as to what knowledge Wilson and the applicant had of the curfew condition and as to whether the decision to enter into the lease was induced by any representation or whether Wilson relied, in making the decision to enter into the lease and decisions as to the terms of the lease on any such representation. Second, failure to call Mr Hansen on these questions can be taken to support the inference that he could give no evidence useful to Wilson as to its lack of knowledge. This in turn could be taken as consistent with an inference that Wilson had the relevant awareness and knowledge.
In Payne v Parker [1976] 1 NSWLR 191, at 201, Glass JA set out nine propositions which arise from the principle in Jones v Dunkel (1959) 101 CLR 298. These include:
"(2) The reasoning which is permissible involves the treatment of a failure to adduce evidence as a reason for increasing the weight of the proofs of the opposite party or reducing the weight of the proofs of a party in default:
... The principle may be invoked for a deficiency in evidence either of a party bearing the legal onus of proving an issue, or of a party bearing the evidentiary burden only ... If the failure is one of the latter kind, the direct evidence of the party with the onus of proof can be more readily accepted, and inferences in his favour more confidently drawn ... If the failure is of the former kind, a consonant formulation would be that the direct evidence of the party carrying the onus may be more readily rejected, and the inferences for which he contends may be treated with greater reserve. The default "brings a greater slur on his cause": Ward v Apprice (1704) 6 Mod Rep 264; 87 ER 1011".
As a result of the failure to call Mr Hansen, Leda claims that there is both a critical evidentiary gap in the applicant's case with respect to knowledge, reliance and inducement, and further, that the fact Mr Hansen was not called, in circumstance where he would normally have been expected to give evidence, allows an inference to be drawn that the applicant did in fact have the relevant knowledge.
I do not accept the suggestion that as at 1996 Mr Hansen was no longer "in the camp" of Wilson and therefore if called could not be expected to be called in Wilson's case. He was
the Managing Director and the "decision-maker". Apart from expressing an unwillingness to appear, which can readily be remedied by issue of a subpoena, I am not satisfied that he was unable to give any relevant evidence. Ms Norman, the solicitor for Wilson, charged with this matter, was called to give evidence which sought to explain why Mr Hansen was not called. This evidence did not satisfactorily explain the decision not to call him. It is clear that no effort was made to serve a subpoena on Mr Hansen to attend and give evidence at the hearing or to contact him for the purpose of arranging for him to attend. It was clearly decided not to call him. He is apparently located in Perth.
In these circumstances, I am satisfied that Mr Hansen was a material witness who might normally be expected to have given evidence as to his knowledge, reliance and whether he was induced to enter the agreements or the lease. I consider that the principles in Jones v Dunkel (supra) apply and this failure strengthens the inference, which I am otherwise satisfied I should make, as to knowledge and understanding of the condition by the applicant.
Failure to Call Mr Ell
It was submitted that Mr Ell was a witness who might normally be expected to have been called by Leda with respect to the position as to whether Leda withheld information from Wilson in relation to the curfew condition and also as to Leda's awareness of the condition and the time at which it became aware of the condition of the relevant consent. I consider that the failure to adduce evidence from Mr Ell can be used to strengthen the inference sought to be derived by Wilson to the effect that his evidence would not have assisted the case put forward by Leda. The inference being that evidence from Mr Ell would not support Leda's submission that its officers considered that there was no necessity to disclose the condition because the substance of it was known to Wilson. This goes both to the duty to make disclosure and to the reasonableness of remaining silent on this question.
In reaching my conclusions in this matter, I have taken the failure to call Mr Ell into account along with the failure to call Mr Hansen.
Conclusion on the trade practices claim and misrepresentation
I am satisfied that the knowledge and understanding of Mr Watson, Mr Hansen and Mr Craig Smith as to the curfew condition can be attributed to the applicant.
I consider the evidence discloses that Wilson and the applicant were aware of the curfew condition and that it was reasonable for Leda to act on the basis that Wilson and the applicant knew of the curfew condition and understood its importance.
The applicant has not made out a case of misleading or deceptive conduct nor of any misrepresentation or failure to disclose any relevant material on the part of the respondents.
It is therefore not necessary for me to deal with the issues of reliance by the applicant nor the arguments as to innocent misrepresentation or damages and I will not do so.
The scenario which emerges from the evidence, in my opinion, is that during the period of negotiations leading up to the execution of the lease, Wilson and the applicant were both actually aware of the curfew condition imposed by the Council development consent and they understood the importance and consequences of that condition. Wilson and the applicant each held the view that the Council was unlikely to enforce the curfew condition in the foreseeable future but regarded enforcement action as a possibility. Indeed, there was no evidence that prior to the purported rescission by the applicant on 22 November 1993, Council ever took any action or instituted any legal proceedings against Wilson, the applicant or National Mutual to enforce the curfew condition.
This fact of subsequent non-enforcement by a Council, in my view, can be taken into account to support a conclusion that it was not unreasonable from a purely commercial viewpoint, as from say August-September 1989 to hold the view that the condition could be ignored for practical purposes. Wilson and the applicant, in my view, considered that the commercial
risk, which they both fully appreciated, in relation to the possible enforcement by Council of the curfew restriction, and that the contingent risk of enforcement was a remote one was adequately provided for in the Agreement for Lease and Lease documents negotiated between them in the period before and after September 1989.
Mistake
The applicant submitted that at the time of entry into each of the relevant agreement and the lease pleaded in the Amended Statement of Claim, the representative of Wilson and Leda had a common understanding that there was no impediment to tenants of the building having access during the morning peak hours periods to levels 1-4 of the car park. This was a mistaken understanding and therefore the applicant was entitled to rescind for common mistake in accordance with the principles set out in Solle v Butcher [1950] 1 KB 671 at 693, where Denning LJ said:
"A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault."
Wilson asserts that the lease was voidable because it was entered into under a fundamental common mistake affecting the operation of the formal written agreements and the lease. It
is also submitted that provided Wilson can show that the mistake fundamentally affected the operation of the lease of 10 September 1992 then it should be entitled in equity to an order for rescission of the lease. It was said the common mistake fundamentally affected the operation of the lease because it completely undermined the operation of the "Tenant Priority" Clause in the Lease (cl4.3) which reads as follows:
"4.3 Tenant Priority
The Lessee covenants that subject to the requirements of all relevant government and local authorities in relation to public parking, the tenants and occupiers of the building of which the Leased Premises forms part will receive and be given priority over members of the general public throughout the term of this Lease for a maximum of one hundred and forty five (145) permanent specific bays and a maximum of one hundred and thirty one (131) permanent non-specific bays PROVIDED such tenants and occupants pay to the Lessee the current rates charged from time to time by the Lessee for such specific and non-specific car parking spaces and comply with the Lessee's mode of operation of and the licence agreements relating to the Leased Premises from time to time." (Emphasis added)
It is said that all projections and costings by Wilson assumed that tenants could and would park extensively on levels 1 to 4 and the common mistake fundamentally affected the operation of the lease on Wilson's business and its financial position. The applicant further submits that knowledge by Wilson of the curfew condition is irrelevant because the claim is based on mistake, either common or unilateral, and that whatever
finding is made as to Wilson's and the applicant's awareness it is clear that there was a real misapprehension as to the practicability of Wilson and the applicant continuing to operate the car park during the curfew period because Council might decide to enforce the condition.
In my view, the present is not a case of common mistake. There was no common misapprehension as to entitlement nor as to fact. All the parties knew of and fully appreciated the existence and importance of the condition. The parties acted on the assumption, which at all relevant times proved to be correct, that the planning law would probably not be enforced either by the Council or by some other authority to require compliance with the condition. Council has never taken any effective legal action to prevent the clear breach of its development approval condition as to the curfew.
In short, the evidence discloses that both parties to the Lease were content to ignore the curfew condition on the basis that they could get way with it and rely on the Council's manifest lethargy. Indeed, Mr Ken Kanagarajan confirmed to Mr Craig Smith on 27 July 1993 that:
"... the previous officer in charge of licensing car parks had been taken off the case as he was very inefficient..."
Moreover, 9.1 of the Lease expressly envisaged and provided for the contingency of Council taking action to enforce the curfew. Further, the evidence of Mr Robert Smith, to the effect that the design of the car park allowed for entry through the Kent Street entrance, if the curfew was enforced, is indicative of the fact that the parties were not under a common misapprehension of fact.
The proposition of Mason ACJ and Murphy and Deane JJ in Taylor v Johnson (1983) 151 CLR 423 at 432, in relation to unilateral mistake is not applicable in the present case. Their Honours said:
"It [the proposition] is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under a serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension."
In my view, as a result of the findings set out above, neither the doctrines of common or unilateral mistake have any relevance or application in the present matter.
Frustration
The applicant submits that the express inclusion in the licence conditions, of the curfew condition, imposed by the development consent, on 8 June 1993 gave rise to a situation fundamentally different from the situation contemplated by the lease on its true construction in the light of the surrounding circumstances.
It is well-settled law that the ordinary principles of contract apply to leases and that these include the doctrine of frustration. See The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 per Deane J at 52-53; National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675.
In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, Mason J said at 360:
"The critical issue then is whether the situation resulting from the grant of the injunction is fundamentally different from the situation contemplated by the contract on its true construction in the light of the surrounding circumstances."
Notwithstanding that there was express provisions made in clause 9.1 of the lease, with respect to prospective restrictions on Wilson, it is said that the restriction repeated in the Licence of mid-1993 was so fundamental that it was outside the operation of clause 9.1 This was said to be so because customers who had been assumed would make up around 90% of those paying to use the park would no longer be able to have access during the crucial morning period. It is submitted notwithstanding clause 9.1, that the lease should be treated as having been discharged by frustration.
Codelfa (supra) makes it clear that the contemplation of the parties at the time the contract was entered into must be determined by looking at the terms of the contract and all relevant surrounding circumstances to the extent that the circumstances do not contradict the written terms of the contract. See Codelfa at 357-358 per Mason J. The performance of the contract in the new situation must be fundamentally different from performance in the situation contemplated by the contract.
In the present case, no new or supervening conditions or circumstances have arisen different from those which prevailed or were contemplated by the parties at the time when the Agreement to Lease and the Lease itself were executed. All that has happened is that a binding condition of development consent which to the knowledge of the parties since 1989 has affected the hours of operation since 1988 was also included for the first time in the 1993 car park licence. This inclusion did not make any difference. The condition was no more valid or binding than the existing condition of development approval which had been operative since 1988. Mere re-iteration of a condition does not reinforce its legal effect. In this case there has not been any fundamental change after contract which could justify the application of the frustration doctrine. As at 1989 on the facts as I find them, the parties were aware that the contemplated operation of the public car park was contrary to the development
approval condition. This remained the position at all relevant times.
The operation of the car park had been "restricted" since 1987 since the curfew condition was imposed on the original approach. There has been no new or different condition arising from the inclusion of an identical curfew condition in the Licence issued on 8 June 1993.
In addition, the allegedly frustrating event is expressly governed by the terms of the Lease. In my view, the parties have made express provision in clause 9.1 of the Lease which covers the contingency that action is taken by the Council which might restrict the operation of the car park. This is a further reason why the doctrine does not apply here. Cf Thors v Weekes (1990) 92 ALR 131, per Gummow J at 142; Treitel, Frustration and Force Majeure, 1994 at par 8-041 ff.
Termination
In my view, even if the applicant was entitled to determine the lease (which in my view, it was not), the letter of 22 November 1993 by which it purportedly rescinded the lease was ineffective because it did not give the requisite notice, nor did it purport to determine the lease as required by clause 9.1 It was in terms an unjustified attempt to rescind. In terms it relevantly reads:
"We hereby give notice that we rescind the Lease from the date of entry into the Lease."
The right given by clause 9.1(1) to Wilson was to elect to determine or continue with a varied rent on fourteen days written notice to the lessor. The letter of 22 November is clearly not an election under cl 9.1.
Estoppel
The respondent, also submitted an argument in relation to waiver or estoppel. It was said that because the applicant made payments under the lease, between June and November 1993, amounting to approximately $655,000, without reservation of its rights in any respect, it was estopped from asserting any right to terminate or rescind the lease. It was also submitted that the delay between receipt of the licence in June/July 1993 and the decision conveyed in the letter of 2 November 1993, the applicant had waived any rights to claim.
During this period, however, Wilson was seeking legal advice and deciding what course of action it should take. I am not satisfied that the lapse of time or the conduct of the applicant was such as to amount to a waiver. I am not persuaded that the respondents have made out a case based on estoppel because it has not been shown that the respondent relied on any conduct of the applicant to its detriment.
Conclusion
My conclusion therefore is that the application should be dismissed with costs.
I am satisfied that the applicant/cross-respondent unlawfully repudiated the lease by its letter to National Mutual, the cross-claimant dated 22 November 1993, and I direct the parties to bring in Short Minutes of Order to give effect to this finding, which include the specific amount of damages and the interest to be awarded to National Mutual.
I order that the applicant pay the National Mutual's costs of the cross-claim.
I reserve liberty to restore the matter on 48 hours with respect to the Short Minutes of Order.
I certify that this and
the preceding fifty-one (51)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 13 November 1996
Counsel for Applicant: Mr R B S MacFarlan QC
Mr A Leopold
Solicitor for Applicant: Freehill, Hollingdale & Page
Counsel for Respondent: Mr L G Foster SC
Mr N Manousaridis
Solicitor for Respondent: Baker & McKenzie
Date of Hearing: 3, 4, 5, 6, 7 June and
12, 13, & 14 June 1996
Date Judgment Delivered: 13 November 1996
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