Woy Woy Promenade Pty Ltd v Nu Squeeze Cafe Pty Ltd

[2009] NSWCA 107

New South Wales

Court of Appeal

CITATION:	Woy Woy Promenade Pty Ltd v Nu Squeeze Cafe Pty Ltd [2009] NSWCA 107
HEARING DATE(S):	1 May 2009
JUDGMENT DATE:	14 May 2009
JUDGMENT OF:	Giles JA at 1; Hodgson JA at 53; Macfarlan JA at 57
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	LANDLORD AND TENANT - agreement for lease - shop in new centre - subject to termination if Building Works not completed by stated date - what were Building Works and whether completed - not completed because did not substantially comply with development consent - no question of general principle - election or waiver not raised at trial - whether could be raised on appeal - could have been other evidence - should not be permitted on appeal.
CASES CITED:	Coulton v Holcombe (1986) 162 CLR 1; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418.
PARTIES:	Woy Woy Promenade Pty Ltd - Appellant Nu Squeeze Cafe Pty Ltd - Respondent
FILE NUMBER(S):	CA 40219/08
COUNSEL:	D Pritchard & M Holmes - Appellant M Hadley - Respondent
SOLICITORS:	McLachlan Thorpe Partners - Appellant Harrington Maguire & O'Brian - Respondent
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 4134/06
LOWER COURT JUDICIAL OFFICER:	Curtis DCJ
LOWER COURT DATE OF DECISION:	29 April 2008

CA 40219/08
DC 4134/06

GILES JA
HODGSON JA
MACFARLAN JA

Thursday 14 May 2009

WOY WOY PROMENADE PTY LTD v NU SQUEEZE CAFÉ PTY LTD & ORS

Judgment

1 GILES JA: In proceedings in the District Court the appellant claimed from the respondents $156,918.43 as rent, outgoings and car parking fees payable under a lease of shop 4 in the Pavilion Retail/Commercial Centre, Woy Woy (“the Pavilion Centre”), together with interest.

2 By the allegations in the statement of claim the appellant claimed on the basis that -

(a) the parties entered into a deed of agreement for lease in September 2003 (“the deed”);

(b) in accordance with the deed, the lease commenced on 9 March 2004 when the first respondent started trading from shop 4;

(c) the lease was for a term of two years with options for renewal;

(d) the first respondent vacated shop 4 on or about 30 November 2004;

(e) the first respondent failed to pay the rent, outgoings and car parking fees for November 2004 and for the balance of the two year term; and

(f) the second and third respondents were liable as guarantors of the first respondent’s promise to pay.

3 The substance of the respondents’ defence was that the first respondent had validly terminated the deed with effect from 30 November 2004, in accordance with an entitlement to do so if the appellant failed to complete “the Building Works” by 30 June 2004; and that no separate lease had come into existence, but if it had the lease also was subject to termination for failure to complete the Building Works.

4 Whether the parties’ rights and obligations were governed by a lease rather than the agreement for lease appears to have fallen away at trial, and was not addressed in the reasons of the trial judge. His Honour said that the issue before him was whether the first respondent had been entitled to terminate the deed, meaning for failure to complete the Building Works by 30 June 2004. He held that it had been, and ordered judgment and costs against the appellant.

5 The conduct of the trial, and accordingly the orders, did not give separate attention to the rent, outgoings and car parking fees for November 2004. The respondents accepted that the appellant was entitled to recover $7,223.52 plus interest. We were informed that the parties had arranged recovery between themselves, and that if the appeal otherwise failed it was not necessary to correct the judgment below or adjust the order for costs.

6 On appeal the appellant expressly disclaimed reliance on a lease as distinct from the agreement for lease. The issue again was whether the first respondent had been entitled to terminate the deed.

The deed

7 The appellant acquired adjoining sites in George Street, Woy Woy and developed them by the construction of the Pavilion Centre. In general terms, the deed provided for the appellant to carry out the Building Works (see later) and the Lessor’s Works (certain works in shop 4, essentially provision of services) (cl 2); for the first respondent to carry out the Lessee’s Works (essentially the fit-out of shop 4) (cl 3); and for the grant of a lease commencing on the Commencement Date, in the event the day on which the first respondent started trading from shop 4 (cl 4).

8 Clause 1.1 of the deed contained a number of definitions. The definitions particularly material to the Building Works and their completion were -

“Authority” means any government or any governmental, semi-governmental, city, municipal, civic, administrative, fiscal, statutory or judicial body, instrumentality, department, commission, authority, tribunal, agency or other similar entity;
“Building Works” means the construction of the Centre by the Lessor including substantially those in accordance with the Centre Plan and all Consents;
“Centre” means every building and other structure to be constructed on the Land to be known as the centre specified in Item 2 of the Reference Schedule;
“Centre Plan” means the floor plan for the construction of the Centre annexed hereto and marked “Leasing Plan” varied from time to time under clause 2.3;
“Consent” includes each and every consent or approval required from each relevant Authority (and includes a judgment, decision or determination by a court);
“Land” means the land described in Item 3 of the Reference Schedule;

9 The Land was described in the Reference Schedule by a title reference, being a lot in a Deposited Plan comprised in a stated Certificate of Title Folio Identifier. A floor plan was annexed to the deed, although marked “Centre Plan” and not “Leasing Plan”.

10 Clause 2 provided, so far as presently material -

“2.1 The Lessor must at the cost of the Lessor and in a proper and workman-like manner and substantially in accordance with all Consents substantially carry out:
(a) the Building Works; and
(b) the Lessor’s Works.
...
2.3 The Lessor:

(a) May make changes to the Building Works, Centre Plan and/or the Lessor’s Works which are required by an Authority;

(b) May make changes to the Building Works and the Centre Plan which it considers necessary or desirable at the Lessor’s discretion;

(c) ...
2.5 (a) The Lessor agrees to use reasonable endeavours to complete the Building Works in accordance with the Lessor’s obligations by 31 October 2003 but, subject to clause 2.5(b), the Lessee is not entitled to any compensation or to terminate this Agreement if the Lessor for any reason whatsoever fails to complete the Building Works in accordance with the Lessor’s obligations by 31 October 2003 or any time thereafter.
(b) Despite clause 2.5(a), if the Lessor fails to complete the Building Works in accordance with the Lessor’s obligations by 30 June 2004, either party may by notice in writing to the other party terminate this Deed without being liable to pay the other party damages, costs, expenses or compensation.”

11 By cl 8 the second and third respondents guaranteed the first respondent’s “obligations contained or implied under the Agreement to Lease”.

12 By a letter from its solicitor dated 29 October 2004 the first respondent gave notice that it “hereby terminates the Agreement to Lease pursuant to Clause 2.5(b) of [the deed] and advises that it will vacate the premises by the 30th November 2004”. It was not in dispute that, if there were the entitlement to do so the letter validly terminated the deed and the appellant could not recover the rent, outgoings and cark parking fees from November 2004.

The Centre Plan

13 The Pavilion Centre adjoined the Deepwater Plaza shopping centre. Both premises had frontages to George Street. Between them was an area used as a car park for Deepwater Plaza, entered from George Street.

14 The Centre Plan was a floor plan showing the lower level car park, the first level shops and the second level offices of the Pavilion Centre. It included in outline the wall of Deepwater Plaza on its side of the car park area, with a break in the outline for what in fact was an entrance into the shopping centre. The words “adjoining car park” appeared between the Pavilion Centre and the outline.

15 Car parking spaces were marked in the car park area next to the Pavilion Centre. At some distance in from George Street, at least sixteen car spaces plus the width of the footpath, there was shown a marked pedestrian crossing running from the Deepwater Plaza wall to the Pavilion Centre. A symbol at the Pavilion Centre end of the marked pedestrian crossing was agreed to indicate a kerb scoop, that is, a depression in what was in fact a kerb and gutter with a gutter-height step up from the car park area to a very narrow footpath along the Pavilion Centre side of the car park area.

16 The first level of the Pavilion Centre was in fact about one and a half metres above the ground level of George Street and the car park. Opposite the Pavilion Centre end of the marked pedestrian crossing the Centre Plan showed an entrance into the first level, with steps up to the entrance. As well, it showed a ramp from the end of the marked pedestrian crossing, rising towards George Street to an entrance into the first level about half-way between the entrance last mentioned and another entrance up steps from George Street at the corner of the Pavilion Centre. Shop 4 was close to the entrance at the top of the ramp.

17 The boundary between the Land and Deepwater Plaza was not specifically identified on the Centre Plan. There was no survey evidence, but the car park area was Deepwater Plaza’s land and from other evidence the boundary was in fact such that the kerb scoop and the marked pedestrian crossing were on Deepwater Plaza’s land. They were not within the Land.

The Council’s Consent

18 The development consent for the Pavilion Centre dated 6 August 2002 issued by Gosford City Council (“the Council”) included as condition 5 that the development should be -

“ … generally in accordance with plan(s) numbered 0167DA1.01 and DA1.04 to DA1.11, dated May 2002, and DA1.02A and DA 1.03A stamped ‘amended’ dated received 11.7.02 (11 sheets), submitted/drawn by J A Isaac Property Group Pty Limited, D & R Architects, as amended in red, or where modified by any conditions of this consent.”

19 It also included the condition -

“22. The proposed direct pedestrian linkage to Deepwater Plaza as indicated in red on the Consent Plans to be deleted until such time as agreement has been reached with the adjoining land owner (Deepwater Plaza) to proposed pedestrian crossing. Continuation of landscaping as indicated in red on landscape plan No 02442-L301B to be provided.”

20 Save as next mentioned, neither the plans amended in red listed in condition 5 (“the consent plans”) nor other copies of those plans without the red amendments were in evidence.

21 There were in evidence three photocopy pages of parts of plans on which someone had written “DA02A” and “DA03A”, apparently attachments to a letter from D + R Architects dated 10 July 2002 (“the page plans”). The letter was stamped as received by the Council on 11 July 2002. None of the page plans bore a stamp “amended”. One of the page plans, with “DA03A” written in manuscript, showed a marked pedestrian crossing well in from George Street and about where the Centre Plan showed a marked pedestrian crossing, leading to steps up to an entrance to the Pavilion Centre. Next to the marked pedestrian crossing was noted, as part of the page plan, “possible pedestrian access subject to negotiation with adjoining owner”. The letter of 10 July 2002 included,

“6. The pedestrian crossing in Deepwater Plaza has been noted on DA 1.03A as ‘Possible Pedestrian Crossing’, pending the outcome of discussions with the owner of Deepwater Plaza.”

22 There was also in evidence, in unsatisfactory and incomplete photocopy form which did not include the plan number, a “Main Floor Plan” stamped “Amended date rec 11.07.02” and also stamped “Gosford City Council 6 Aug 2002 Development Consent”. It showed the same marked pedestrian crossing, with the same notation, which on the larger plan could be seen to be running from Deepwater Plaza.

23 In none of the page plans and the Main Floor Plan was there a ramp from the end of the marked pedestrian crossing up to the first level of the Pavilion Centre. Where the ramp was shown on the Centre Plan there were what appear to be planter boxes and possibly a seating area, although it is not easy to see whether the seating area was inboard of where the ramp was shown on the Centre Plan.

24 The evidence included, again in unsatisfactory photocopy form, a copy of plan 02442-L301B bearing the stamp “Gosford City Council 6 August 2002 Development Consent”. This was the landscape plan referred to in condition 22. It showed the Pavilion Centre end of a marked pedestrian crossing approximating the marked pedestrian crossing on the Centre Plan, but with a crossing-through of the pedestrian crossing and the word “Delete”: whether or not in red could not be seen. As in the plans described in the three previous paragraphs, the marked pedestrian crossing led to steps up to an entrance into the first level of the Pavilion Centre. There was no ramp from the end of the marked pedestrian crossing. Rather, the landscape plan showed a ramp from the George Street corner of the Pavilion Centre, going towards the rear of the premises to an entrance into the first level about half-way between the commencement of the ramp and the marked pedestrian crossing.

25 The photocopy quality of the Main Floor Plan was such that it is difficult to see whether it similarly showed a ramp from the George Street corner of the Pavilion Centre. As best as can be discerned, that can not be excluded.

26 The ramp was constructed as shown in the Centre Plan. Discrepancy between the Centre Plan and the consent plans was not addressed in the evidence. I will return to whether the ramp was constructed contrary to the development consent. There can conveniently be described at this point what later occurred.

27 On 26 March 2004 the Council notified the appellant that it intended to issue an order under s 121B of the Environmental Planning and Assessment Act 1979. The stated reasons for the order included that the development consent was not being complied with in that “[a] direct pedestrian linkage to Deepwater Plaza Shopping Centre has been installed without the agreement of that land owner which impacts on the safety of the public”. The proposed order included that the appellant comply with condition 22 of the development consent in relation to that matter.

28 It is evident from other matters in the proposed notice and from other evidence that the Council was essentially concerned with disabled access to the Pavilion Centre. The ramp as constructed was the only disabled access, but the narrowness of the footpath along the Pavilion Centre side of the car park area and the absence of a kerb scoop precluded wheelchair access; further, there were safety concerns in the absence of a marked pedestrian crossing.

29 There was much correspondence between the appellant, Deepwater Plaza and the Council. The appellant came close to obtaining Deepwater Plaza’s agreement to the kerb scoop and marked pedestrian crossing, but did not achieve it. In June 2005 the Council threatened proceedings in the Land and Environment Court “to secure the establishment of the required disabled access”. In late July 2005 the appellant’s architects sent to the Council a “conceptual drawing entitled ‘proposed pedestrian ramp’”, with which the Council indicated agreement in principle. The drawing was not in evidence and the proposed ramp was not otherwise explained in the evidence, but it appears that relocation of the ramp as constructed was in contemplation. In a subsequent letter to Deepwater Plaza the appellant said that it was “not economical for us to now locate the pedestrian ramp and further, it would contradict the conditions of the Council DCP”. Any contradiction would, of course, be overcome by Council’s consent. So far as the evidence went, that is where matters stood at the time of trial.

30 The evidence did not include clear complaint from the Council that the ramp as constructed was not the ramp shown on the consent plans. However, it should be repeated that the Council’s concern was with disabled access, rather than with a complying building.

Failure to complete the Building Works

31 The appellant was obliged under cl 2.1 of the deed “substantially in accordance with all Consents [to] substantially carry out … the Building Works”. The definition of Building Works brought in substantial accordance with the Centre Plan and repeated substantial accordance with all Consents.

32 The trial judge found that the “building” was completed in January 2004. As I have indicated, the completion included construction of a ramp as shown in the Centre Plan. But agreement was not reached with Deepwater Plaza authorising the proposed pedestrian crossing. The kerb scoop was not constructed, and the pedestrian crossing was not marked, prior to 30 June 2004 or so far as appears thereafter.

33 The respondents rested their entitlement to terminate the deed on failure to complete the Building Works by 30 June 2004 in that –

· the kerb scoop had not been constructed;

· the pedestrian crossing had not been marked; and

· the ramp had been constructed contrary to the development consent.

34 The trial judge found the entitlement to terminate the deed in failure to construct the kerb scoop and mark the pedestrian crossing. His Honour did not deal with failure to complete the Building Works in that the ramp had been constructed contrary to the development consent,

(a) The kerb scoop and the marked pedestrian crossing

35 The core meaning of Building Works was “the construction of the Centre”, as expanded by reference to the definitions of the Centre and the Land meaning the construction of every building and other structure to be constructed on the lot in the Deposited Plan. The curious additional words “to be known as the centre” in the definition of the Centre did not add to this.

36 The appellant submitted that the kerb scoop and the marked pedestrian crossing were not part of the Building Works because they were neither a structure nor on the Land; and that if they were, the failure to complete in that respect was a change within cl 2.3(a) of the deed because required by the Council through condition 22. The respondents submitted that the kerb scoop could be a structure, but that as to both the kerb scoop and the marked pedestrian crossing they were part of the Building Works even if not a structure or on the Land because they were shown on the Centre Plan as ancillary features of the construction of the building on the Land; and that the Council’s requirement through condition 22 was conditional and as between the appellant and the first respondent the appellant was obliged under the deed to obtain the necessary agreement from Deepwater Plaza.

37 It would be unrealistic to exclude the kerb scoop and the marked pedestrian crossing from the Building Works on the construction of the deed advanced by the appellant, and I incline to the view that they were part of the Building Works. But the appellant’s obligation to conform to the development consent plainly authorised any change to the Building Works in that respect. The obligation overrode the depiction of those features of the construction of the building shown on the Centre Plan, and the appellant did not undertake to overcome all obstacles presented by conditions of an Authority’s consent or approval. At most it undertook to take reasonable endeavours to obtain the necessary agreement from Deepwater Plaza, and it was not shown that it failed to do so prior to (or after) 30 June 2004.

38 Accordingly, and respectfully disagreeing with the trial judge, in my opinion there was no entitlement to terminate the deed because the kerb scoop had not been constructed and the pedestrian crossing had not been marked.

(b) The ramp

39 At trial the respondents contended that the “direct pedestrian linkage” referred to in condition 22 was, or at least included, the ramp, and that the construction of the ramp contrary to the development consent was in contravention of condition 22 because the agreement of Deepwater Plaza to the proposed pedestrian crossing had not been obtained. The appellant contended that the direct pedestrian linkage was only the marked pedestrian crossing, and that the construction of the ramp was authorised although the marking of the pedestrian crossing and associated construction of the kerb scoop were not. From remarks during the hearing the trial judge appeared to be firmly in favour of the latter view.

40 From the examination of the plans in evidence earlier in these reasons, there was a prior question. The issue on appeal was rather different from that at trial. I have described the ramp as shown on the landscape plan 02442-L301B. If the ramp as shown in the landscape plan represented the ramp shown in the consent plans, the ramp as constructed was not in accordance with the development consent quite apart from condition 22. It went from a different place at ground level in a different direction. In that event, the direct pedestrian linkage was not and did not include the ramp, because it was the marked pedestrian crossing going to the steps up to the entrance to the Pavilion Centre, and had no connection with the ramp. But compliance with condition 22 was not to the point. What was the ramp shown on the consent plans?

41 The appellant submitted that it should be inferred that the consent plans showed the ramp as it was constructed. It said that it could not reasonably be thought that such a departure from the approved plans would have escaped the Council’s attention at the time of construction, and that the proposed order notified on 26 March 2004 did not complain of non-compliance beyond condition 22; and it said that thereafter the Council was concerned with disabled access, and not with illicit construction of the ramp.

42 However, the landscape plan was an approved plan, and can not stand with the ramp as constructed. It showed planter boxes where the ramp was constructed. Its approval as part of the development consent strongly suggests that the depiction of the ramp in the consent plans was as in the landscape plan. The page plan with DA03A written on it, apparently received on 11 July 2002, appears to be a copy of what became one of the consent plans, and the Main Floor Plan appears to be a copy of one of the consent plans. These plans are not consistent with the ramp in the consent plans being as shown in the Centre Plan, and also strongly suggest that the depiction of the ramp in the consent plans was as in the landscape plan.

43 The Council’s later limited action could be explained by practical attention to disabled access rather than a complying building. In the unsatisfactory state of the evidence, I do not think that the inference suggested by the appellant should be drawn, but rather conclude that the ramp was constructed otherwise than as the consent plans showed.

44 In my opinion, therefore, the Building Works were not in this respect completed in accordance with all Consents. They were contrary to the Council’s development consent.

45 The question then is whether, as the appellant submitted, there was nonetheless substantial compliance with the development consent. The appellant submitted that it did not matter whether the ramp ran as depicted on the landscape plan or as constructed – whichever was the case, it said, there was disabled access, and no detriment in the functioning of the Pavilion Centre.

46 For a number of reasons, I do not accept the submission. Substantial compliance is not just a question of functionality, and as a part of the building there was a marked difference between the ramp as depicted on the landscape plan and the ramp as constructed. Even as to functionality, it is not self-evident that the different points of commencement for the ramp (one at George Street, the other well into the car park area) were of insubstantial consequence. For example, the suitability of disabled access from the George Street footpath may have been markedly different from that of disabled access from the car park area. The ramp as constructed could not be properly used for disabled access in the absence of the kerb scoop, or safely in the absence of the marked pedestrian crossing, both of which may not have been concerns or may have received Deepwater Plaza’s agreement if the ramp had been as shown on the landscape plan. In the absence of evidence going to these matters, I do not think it should be found that the non-compliance was insubstantial. As well it was open to the Council to require that the ramp as constructed be removed. Even if replaced by a conforming ramp or another ramp (see the appellant’s proposal in July 2005), the prospective interference with the first respondent’s trading was a measure of substantial non-compliance.

47 Accordingly, in my opinion there was an entitlement to terminate the deed because the ramp had been constructed contrary to the development consent.

Election against or waiver of termination

48 Election and waiver were not pleaded below. Nor were they raised in submissions, save that counsel for the respondents observed that there had been no suggestion of waiver or estoppel or any conduct that would otherwise prevent them from relying on cl 2.5(b) of the deed.

49 The appellant submitted that it should be permitted to raise election and waiver on appeal. It said that the first respondent’s payment of rent after 30 June 2004 and until October 2004 was a clear election and founded a clear waiver, and that other evidence could not reasonably have been given to negate election or waiver. It said that election and waiver were always relevant to the question of valid termination, as indicated by the observation made by the respondents’ counsel.

50 These last submissions were rather remarkable. Even if relevant, election and waiver were not relied on, and that was the point of counsel’s observation. Pointing out that something is not an issue does not make it an issue.

51 There had to be conduct unequivocally affirming the deed, with knowledge of the facts entitling termination. While the evidence of it was sketchy, the payment of rent was accompanied by complaints about access to the ramp; in substance, about the absence of the kerb scoop and the marked pedestrian crossing, affecting access by potential customers to shop 4. It is not clear that the respondents knew of the consent plans, or of condition 22; some knowledge may be inferred from the letter of 29 October 2004, which referred to inquiries indicating “that the work in accordance with the development consent has not been complied with and Council has now issued an order requiring compliance”, but when any knowledge was acquired is unclear. Neither other communications with the appellant nor knowledge of construction of the ramp contrary to the development consent was explored at the trial, as matters bearing upon whether there was election or waiver by the payment of rent. This could well have been done if election or waiver had been pleaded. In my opinion, the appellant should not now be permitted to rely on election or waiver: it is sufficient to refer to Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 and Coulton v Holcombe (1986) 162 CLR 1 at 7-8.

Orders

52 I propose that the appeal be dismissed with costs.

53 HODGSON JA: I agree with the orders proposed by Giles JA and with his reasons. I would add the following comments.

54 In my opinion, it was a matter of some significance to the respondents that there be appropriate disabled access to their shop. (Plainly, in my opinion, access via a lift from the underground car-park was not appropriate disabled access.) The absence of that kind of access would discourage not just disabled persons from attending the shop, but also persons with prams or strollers, and perhaps also persons with wheeled cases or trolleys. These classes of persons would not make up a major proportion of likely customers, but would make up a proportion that was not trivial or insignificant.

55 In my opinion, the existence of condition 22 of the development consent makes it unlikely that the Council consented to the building of the ramp in the position where it was actually constructed. It is reasonable to accept that the Council would have been concerned about disabled access, and to build the ramp in that position without the access deleted by condition 22 would not have provided disabled access.

56 This consideration also reinforces the conclusion that what was constructed could not be considered as being “substantially in accordance with all Consents”, as required by Clause 2.1 of the deed. Although it was put for the appellant that it had not been shown there was disabled access via the footpath along George Street to the ramp shown on what were apparently the approved plans, that footpath was a wide footpath along a public road of a kind to which disabled access is normally available. The photograph at Blue 161 depicts such access to the continuation of that footpath in front of Deepwater Plaza.

57 MACFARLAN JA: I agree with Giles JA and also with the additional comments of Hodgson JA.

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