Wynsix Hotels (Oxford St) Pty Ltd v Toomey

[2004] NSWSC 236

CITATION:	Wynsix Hotels (Oxford St) Pty Ltd v Toomey [2004] NSWSC 236
HEARING DATE(S):	1 and 3 March 2004
JUDGMENT DATE:	31 March 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Relief against forfeiture granted.
CATCHWORDS:	LANDLORD & TENANT [89] Relief against forfeiture- Non payment of rent- Landlords also relied on appointment of receiver by themselves- Whether causing a breach- Whether s 129 notice may be withdrawn- Significance of windfall profit to landlords if relief not given. EVIDENCE [72]- Privilege- Conflicting evidence as to why report commissioned- Decision as to whether it was predominantly for current litigation a question of fact- Evidence Act 1995, s 119.
LEGISLATION CITED:	Common Law Procedure Act 1899 Conveyancing Act 1881 (UK) Conveyancing Act 1919 ss 123, 129 Evidence Act 1995, s 119 Landlord & Tenant Act 1899 s 8 Real Property Act 1900, s 55
CASES CITED:	Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 Batson v De Carvalho (1948) 48 SR (NSW) 417 Billson v Residential Apartments Ltd (1990) 60 P & CR 392 Billson v Residential Apartments Ltd [1992] 1 AC 494 Cadogan Estates Ltd v McMahon [2001] 1 AC 378 Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSW Conv R 55-358 Dendy v Evans [1910] 1 KB 263 Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 Expert Clothing Service & Sales Ltd v Hillgate House Ltd [1986] Ch 340 Halliard Property Co Ltd v Jack Segal Ltd [1978] 1 WLR 377 Hardie Finance Corp Pty Ltd v CCD Australia Pty Ltd (1995) 67 FCR 594 Hayes v Gunbola Pty Ltd (1986) 4 BPR 9257 Hill v Barclay (1810) 16 Ves 402; 33 ER 1037 Horsey Estate Ltd v Steiger & Petrifite Company Ltd [1899] 2 QB 79 Humphreys v Morten [1905] 1 Ch 739 James v Young (1884) 27 Ch D 656 Kemp v Gough & Gilmour Holdings Pty Ltd (1995) 86 LGERA 63 Kwang v Kang [2003] NSWCA 336 Langley v Foster (1909) 10 SR 54 Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562 Re Data Homes Pty Ltd (in liq) [1972] 2 NSWLR 22 Re Wilmer's Trusts [1910] 2 Ch 111 Rugby School (Governors) v Tannahill [1934] 1 KB 695 Shevill v The Builders Licensing Board (1982) 149 CLR 620 Shiloh Spinners Ltd v Harding [1973] AC 691 Sparnon v Apand Pty Ltd (1996) 138 ALR 735 Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No 2) (1998) 83 FCR 397 Trade Practices Commission v Sterling (1978) 36 FLR 244 Tutita Pty Ltd v Ryleaco Pty Ltd (1989) 4 BPR 9635 Warner v Sampson (No 2) [1958] 1 All ER 314; [1958] 1 QB 404 Warner v Sampson [1959] 1 QB 297 World by Nite Pty Ltd v Michael [2004] 1 Qd R 338
PARTIES :	Wynsix Hotels (Oxford St) Pty Limited (P) Barry Michael Joseph Toomey, Ronald Albert Pantlin, Rylenest Pty Limited as Trustee for the Toomey Family Trust, Tresform Pty Limited as Trustee for the Pantlin Family Trust (D)
FILE NUMBER(S):	SC 5544/03
COUNSEL:	P L G Brereton SC and A R R Vincent (P) T Bathurst QC and A J L Ogborne (D)
SOLICITORS:	Steingold Abel Lawyers (P) Cutler Hughes & Harris (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 31 March 2004

5544/03 – WYNSIX HOTELS (OXFORD ST) PTY LTD v TOOMEY & ORS

JUDGMENT

1 YOUNG CJ in EQ: These proceedings principally relate to whether the lessee of the Oxford Hotel in Oxford Street Darlinghurst should be given relief against forfeiture in respect of its lease.

2 The plaintiff is the lessee and the defendants are the lessors of the Oxford Hotel under a lease of Torrens System land dated 19 July 2000 for a term of five years with three options, each of five years.

3 During the term of the lease to date, the plaintiff reckoned that it has expended in excess of $500,000 in refurbishment and renovations to the hotel and says that its activities have doubled the hotel's turnover.

4 The plaintiff was associated with a company, Woongola Holdings Pty Ltd, which entered into other transactions with the defendants as a result of which the defendants took a mortgage over the leasehold interest of the plaintiff and under that mortgage, were entitled to take possession.

5 On 3 November 2003, the defendants, as mortgagees, without notice (there is no complaint about this), appointed Mr Wykes as receiver and manager of the mortgaged property including the lease. Mr Wykes entered into possession.

6 The plaintiff asked for a pay-out figure in respect of the mortgage but there was delay in furnishing this and on 7 November 2003, the defendants served a notice under s 129 of the Conveyancing Act 1919 noting a breach of covenant in clause 12.1(f)(v) of the lease in that the plaintiff had a "receiver of its estate and interest in the lease appointed on 3 November 2003". The notice allowed 10 days for removal of the receiver.

7 A pay-out figure was provided on 11 November 2003, and this figure was later revised upwards by some $160,000 on 13 November 2003.

8 On 13 November 2003, the defendants purported to withdraw the s 129 notice said to have been given as a result of some "misunderstanding" and served a notice entitled "Notice to Terminate" and re-entered. Mr Wykes' appointment as receiver and manager was terminated and he was appointed by the lessors as their agent to re-enter, purportedly pursuant to the notice to terminate.

9 On 14 November 2003, the plaintiff provided two bank cheques in favour of the defendants or their nominees for the total sum claimed as the pay-out figure.

10 On 20 November 2003, the plaintiff forwarded a cheque in the sum of $75,290.60 to the defendants being the arrears of rent claimed by the defendants. From the documents in this case, it would appear that these arrears related to a period no earlier than 3 July 2003.

11 On 24 November 2003, Brownie AJ ordered that on the giving of certain undertakings and on the payment of certain monies (which were given and paid), " … until the determination of the plaintiff's claim in these proceedings for a final order for relief against forfeiture, the Defendants give the Plaintiff exclusive possession of the premises at 134 Oxford Street, Darlinghurst on terms equivalent to the terms of lease registered 7061766R."

12 The final hearing of the proceedings was expedited and came on before me on 1 and 3 March 2004. At the hearing, Mr P L G Brereton SC and Mr A R R Vincent appeared for the plaintiff, and Mr T Bathurst QC and Mr A Ogborne appeared for the defendants.

13 The basic line taken by Mr Brereton was that the only available forfeiture was the non-payment of rent and that where that is the forfeiture the tenant is usually given an order for relief against forfeiture save in special circumstances.

14 Mr Bathurst generally did not cavil with those propositions, but said that the facts of the present case indicated that the landlords were perfectly justified in not wanting to have anything further to do with this tenant and that relief should be refused.

15 I have already set out the basal facts, but it will be necessary in due course to consider the particular facts that are the foundations for Mr Bathurst's submissions.

16 During the course of the proceedings there was a dispute as to whether a financial report about the tenant from Horwath was admissible or was privileged. I held that it was admissible and said that I would give reasons for that decision in my final reasons for judgment.

17 Accordingly, it seems to me that I can most efficiently deal with the matters that arise in this case under the following headings:

1. What are the general rules as to relief against forfeiture of a lease?

2. What special facts need to be considered when deciding to grant or refuse relief against forfeiture in the instant case?

3. What, if anything, is the significance of the s 129 notice and in particular, the alleged breach by having had a receiver appointed?

4. What significance has the fact that, if relief is refused, the landlords might obtain a windfall?

5. What are the reasons for making the evidentiary ruling on the Horwath report?

6. What is the result of the case?

I will deal with these matters in turn.

18 1. Relief against forfeiture of a person's interest under a lease can be granted by a court (a) under the general equitable jurisdiction; or (b) under statutory power.

19 I should point out that in connection with relief against forfeiture it is often important to define terms. A breach of a condition of a lease, even if the provision says that the lease is absolutely void if the condition is broken, merely confers an option on the landlord to terminate the lease, see eg James v Young (1884) 27 Ch D 652, 656. This right to forfeit the lease is termed a "Forfeiture". This is to be distinguished from re-entry which actually puts an end to the lease.

20 So far as the equitable jurisdiction is concerned, there are three situations where equity gives relief as explained by Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] AC 691, 722-723, viz:

(1) where it is possible to state that the object of the transaction and of the insertion of the right to forfeit is essentially to secure the payment of money;

(2) where there has been fraud, accident, mistake or surprise;

(3) where the primary object of a bargain is to secure a stated result which can effectively be obtained when the matter comes before the court and where the forfeiture provision is security for the production of that result.

21 Very similar principles are applied when one is exercising the statutory jurisdiction.

22 Most of the relevant statutory provisions are contained in Part 8 Division 2 of the Conveyancing Act 1919, a Division headed "Forfeiture" which Division comprises ss 128 to 133 of the Act, particularly s 129. Other provisions dealing with forfeiture are to be found in the Landlord & Tenant Act 1899, ss 8 and following which, although they do not cover the field, give a "statutory flavour" to the proposition that relief should be given to a tenant whose rent is not in arrears for more than six months if the rent is paid.

23 The six months rule appears to have come from the Act 4 George II Chapter 28 (1730) being an Act for the more effectual preventing frauds committed by tenants and for the more easy recovery of rents and renewal of leases. It is neither necessary nor useful to trace through the history of the significance of rent being in arrears for less than six months. Some of that history is set out in Billson v Residential Apartments Ltd [1992] 1 AC 494. As noted below, the rent in the current case was owing for less than six months.

24 Generally, the way in which the statutory power to relieve against forfeiture has been exercised, is almost precisely similar to the way in which the equitable power has been and is exercised.

25 The key case on the subject in this State is the decision of Hope J in Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9562. Essentially his Honour said that relief against forfeiture is ordinarily given to a lessee whose sole breach is non payment of rent where the rent has now been paid. However, the matter is always discretionary. The history of payment of rent is not necessarily relevant when considering whether to grant relief against forfeiture, but it is relevant when considering whether such order should be refused in the exercise of the court's discretion. Furthermore, a landlord in a relief against forfeiture case is not entitled to rely on any ground which could have been the subject of a s 129 notice but in respect of which no s 129 notice was issued. That decision has been followed on many occasions since, including by the Court of Appeal in Tutita Pty Ltd v Ryleaco Pty Ltd (1989) 4 BPR 9635. See also my decision in Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247, to which both counsel referred me during the oral hearing. A recent example of its operation in Queensland is World by Nite Pty Ltd v Michael [2004] 1 Qd R 338.

26 2. What then, are the special facts which are relied on by the landlords in the instant case as to why relief against forfeiture should not be given?

27 The plaintiff says there are not any. The plaintiff admits that there have been past defaults in the payment of rent, but says these have not been substantial and have all been rectified. At all times the landlords have been protected by a rent guarantee.

28 The cross examination of Mr Wynne threw up the picture of a man who has his finger in a number of pies, who has substantial capital but this is capital which he moves around from one company to another as it suits him and has a tendency to pay bills at the very last moment.

29 The landlords say that this is quite an unsatisfactory state of affairs, not knowing whether Mr Wynne will favour them with payment this month or somebody else.

30 There was deep cross examination into the financial position of Mr Wynne's companies. Some of this cross examination was very successful in that it appeared that no proper accounts were being prepared which accurately set out the true position of some of these companies. The draft accounts which were produced showed quite considerable oddities, not the least of which were payments of six figure sums of management fees to Mr Wynne who does not seem to have had much to produce for the company in return for those fees.

31 Mr Bathurst also relies on the general law rule that this court should not lend its aid to an insolvent company continuing to trade, see Re Data Homes Pty Ltd (in liq) [1972] 2 NSWLR 22. He says, and there is considerable force in the proposition that, unless Mr Wynne’s current whim is to invest more funds into the plaintiff, it is insolvent.

32 I considered and rejected a similar submission in Hayes v Gunbola Pty Ltd. I adhere to that decision. The factor is not one that compels a decision in favour of the lessor.

33 All of this evidence about the poor financial state of the tenant would have had considerable impact on me were it not for two factors. One, there is a bank guarantee in place for rent for six months. This surely is a sufficient guarantee of the payment of rent and if there is default for a month or so, then fresh ejectment or re-entry can be effected and no financial loss will be suffered. The second is that the prevailing thought amongst courts dealing with this sort of case is to permit the tenant to have relief against forfeiture notwithstanding a poor rent history, at least on the first application for relief against forfeiture an example being the World by Nite case supra.

34 Accordingly, just looking at the basal facts and factors in this case, there should be some order for relief against forfeiture.

35 3. The 129 notice. Section 129 of the Conveyancing Act derives via intermediate steps from the English Conveyancing Act of 1881. That was an Act deliberately to reform the law put in the hands of Mr E P Wolstenholme conveyancing counsel, an expert in conveyancing law.

36 As I have hinted earlier in section 1, there has been from early times relief against forfeiture in equity. From 1730 there has been relief against forfeiture at common law where the rent is not in arrears for more than six months which was passed down to our Common Law Procedure Act 1899 and our Landlord & Tenant Act 1899.

37 However, Lord Eldon's decision in Hill v Barclay (1810) 16 Ves 402; 33 ER 1037 was read as limiting the right of equity to give relief against forfeiture.

38 The legislature in 1881 thought that this narrowed view should be removed and also that relief against forfeiture should be expanded.

39 The scheme of s 129 was that a tenant should have an opportunity to remedy a breach which was capable of remedy and should have time to apply to the court to get relief against forfeiture before re-entry.

40 The obligation to give a s 129 notice, even if there is a breach which is incapable of remedy is made clear by such cases as Horsey Estate Ltd v Steiger & Petrifite Company Ltd [1899] 2 QB 79, 91 and Batson v De Carvalho (1948) 48 SR (NSW) 417, 425.

41 Of course, in this context a breach capable of remedy does not mean a breach which the tenant is able to remedy. In Batson's case Sugerman J gave the illustration of a breach which requires the tenant to effect repairs where the tenant is actually unable to effect repairs because of a war time shortage of building materials. See also the judgment of Mummery, J in Billson v Residential Apartments Ltd (1990) 60 P & CR 392.

42 The Billson case went on appeal to the Court of Appeal and House of Lords where it is reported as Billson v Residential Apartments Ltd [1992] 1 AC 494. The actual decision was reversed because the House of Lords came to the view that the English equivalent of s 129 still was available to a tenant despite the fact that the landlord had physically re-entered. The precise points to which I have referred were not further discussed. Indeed, the report of p 500 shows that Browne-Wilkinson VC as his Lordship then was, told counsel that the court did not intend to decide whether the breach was remedial. Browne-Wilkinson's VC judgment is significant in that it traces the history of s 129, but otherwise does not affect the result of this case.

43 Broadly speaking, breaches of covenant in a lease must be put into two classes: (a) positive covenants; and (b) negative covenants. A positive covenant such as "The tenant shall ensure" is usually (but not always) capable of remedy by actually doing the thing covenanted to be done albeit late. However, a negative covenant, a covenant not to do something, is usually not capable of remedy; see Expert Clothing Service & Sales Ltd v Hillgate House Ltd [1986] Ch 340.

44 In the instant lease, clause 12.1 is headed "Events of Default". The clause continues:

"If at any time: … (f) the lessee … (v) has a receiver or manager of any of its assets appointed … THEN … the lessee will be deemed to have defaulted under this lease and … the lessor has the following rights … B. To re-enter the land and the building, expelling the lessee and the persons under its control."

45 In a technical sense, clause 12 does not involve covenants at all, rather it merely lists events which, if occur, can break the lease. The lease accordingly comes to an end not because of breach but because of agreement; see eg Shevill v The Builders Licensing Board (1982) 149 CLR 620.

46 The cases, or at least the English cases, show that there may well be a vital difference between a provision in the lease being an option to terminate, conditional upon the happening of an event or whether it is truly a re-entry under a forfeiture, Cadogan Estates Ltd v McMahon [2001] 1 AC 378, per Lord Hoffmann at p 385.

47 Lord Millett at 390 made it clear that a proviso for re-entry normally does not impose any obligation express or implied on the part of the tenant not to cause or suffer anything which would entitle a landlord to exercise his right of re-entry.

48 Viewed in this way, there can be no breach of clause 12.1 and accordingly there is nothing on which s 129 can operate.

49 I was referred to the decision of Ashworth J in Warner v Sampson (No 2) [1958] 1 All ER 314; [1958] 1 QB 404, 424, which held that the English equivalent of s 129 does not apply where the forfeiture operates by operation of law such as where the tenant denies the landlord's title. However, this decision was reversed by the Court of Appeal in Warner v Sampson [1959] 1 QB 297, but as the Court of Appeal held there was no forfeiture it did not have to consider the relief point. The case was referred to because, like clause 12.1 in the instant case, if I can quote the words of Lord Hoffmann in Cadogan Estates Ltd v McMahon at 383, "The re-entry clause is expressed as a series of conditions, rather than obligations. Furthermore, the sole purpose of the conditions is to specify the events in which the landlords will be entitled to re-enter and resume possession."

50 However, in Halliard Property Co Ltd v Jack Segal Ltd [1978] 1 WLR 377, Goulding J held that the words "breach of condition" in the English equivalent of s 129(1) must be read widely and apply to a condition that the landlord could re-enter if there was bankruptcy of a surety.

51 In Cadogan at 385, Lord Hoffmann said that this was a question of construction as to which side of the line something fell; was it a condition within 129 or was it merely another expression of the tenant's obligation to yield up possession if certain things happened.

52 In Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSW Conv R 55-358, M McLelland J considered the matter and considered that s 129 applied to cases where the termination was to take place on the happening of an event as well as where it was to take place on a breach.

53 The matter does not need to be decided in this case. However, with respect, I would follow the approach of McLelland J. If that were wrong, I would concur with Goulding J and give s 129 a wide operation. I think this view is reinforced by s 129(10).

54 The right to terminate on the happening of an event that the lessee has a receiver appointed comes very close to a negative covenant promising not to have a receiver appointed. As such it comes within the irremedial class referred to in the cases to which I have already referred. An example of this rule is Rugby School (Governors) v Tannahill [1934] 1 KB 695, where the tenant was using her house as a brothel and that breach was not remedied by ceasing to use the house for such a purpose.

55 Accordingly, the only purpose of the 129 notice was to give the tenant an opportunity to approach the court for relief against forfeiture before re-entry.

56 However, the question is whether an event occurs in clause 12 if the landlord itself has brought about the event.

57 Generally speaking, it is safe to assume that a person consents to what he himself did: Re Wilmer's Trusts [1910] 2 Ch 111, 119 and Kemp v Gough & Gilmour Holdings Pty Ltd (1995) 86 LGERA 63, 67-68. The final words of clause 12 of the lease indicate that if an event happens, then notwithstanding any prior waiver or failure to take action by the lessor or indulgence granted by the lessor to the lessee, the lessor has the right to terminate the lease. This would seem to indicate that it was recognised by the parties that a current waiver or indulgence by the lessors would be operative and lend some support to the view that where there is a landlord who has consented to a receiver being appointed or who has consented to the company being wound up, then there is no event of default.

58 This is reinforced by the fact that s 123 of the Conveyancing Act makes it clear that a consent to what would otherwise be a breach or forfeiture operates to remove that breach or forfeiture as providing a base for re-entry.

59 However, it will be remembered that the landlords having originally given the notice then withdrew that notice and took the position that it had been given by mistake and ought never to have been given. The landlords may well be estopped by taking this position though this is doubtful as it is not at all clear how anyone was affected by the landlords' conduct. If, however, the landlords are to be treated as never having given a s 129 notice, then they could not re-enter for the alleged breach in 12.1(g)(v) as, apart from non-payment of rent, even if the breach is not capable of remedy, a notice must first be given specifying the breach complained of so that the tenant can go as quickly as possible to seek relief against forfeiture before the landlord re-enters; see Billsons' case supra.

60 Even if the notice despite the landlords' now protestations was valid, relief against forfeiture would be given in situations where a landlord himself puts in a receiver as the purpose of clause 12.1(f) is to protect the landlord against a situation where the company is in dire financial straits because of external matters and not to confer some right on the landlord to terminate the lease at whim.

61 Accordingly, it does not seem to me to matter very much whether the putting in of the receiver did amount to a breach of the lease or not.

62 The other matter that must be of concern is whether a person once issuing a s 129 notice can then before its expiry, say that it was issued by mistake (even if that be the truth) and physically re-enter. Once a person takes a step and communicates that step, usually he or she may not withdraw. Moreover, once a person embarks on a course of letting his or her tenant know that proceedings for ejectment will be taken in the "gentleman's way" by notice and action, there may be an election against physical re-entry; see Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377. Again, it is not necessary to pursue this matter.

63 4. A key point in Mr Brereton's presentation was that if the re-entry was allowed to stand, the landlords would get the benefit of millions of dollars which had been spent by the tenant in upgrading the hotel.

64 Mr Pantlin, one of the principals of the trusts behind the landlords, agreed at T48 that it would be advantageous to secure occupation of the premises with the benefit of the increased turnover and the benefit of the development approval which the plaintiff had obtained. Counsel even obtained the following answer:

"Q. And you hope to do that without having to pay yourself one cent for that don't you?
A. Yes.
Q. And so far as you are aware, your partner … shares such hopes?
A. Yes."

65 I should add that during the cross examination Mr Pantlin said that whilst he hoped to obtain the business of the hotel with the benefits without having to pay for them, that was merely the end result. His motive was to remove a tenant that has caused enormous difficulty.

66 He was further cross examined about "enormous difficulty", but although he tried, he was able to convince neither the cross examiner nor the court that there was anything like enormous difficulty in keeping the tenant, though the tenant is obviously a person who has to be watched closely to make sure that he actually pays the debt owing to oneself rather than other debts owed by his enterprise to other parties.

67 Mr Brereton says that equity sets it mind against allowing such windfalls.

68 Mr Bathurst puts that these benefits accruing to the landlords if they retain possession are not windfalls as understood by the authorities in this court.

69 Going back to Mummery J's judgment in the Billson case (because the House of Lords did not have to consider the point and the Court of Appeal did not consider it), the evidence was that the tenant had converted (unfortunately without permission), 24 bed/sitters to 18 self-contained flats at a considerable cost. The value of the premises was supposed to have bee enhanced by what the tenant did by about £170,000. At 411, Mummery J said that if he had jurisdiction "although the defendants have acted in deliberate breach of their obligations, it would, in my judgment, be inequitable to refuse relief from forfeiture since the effect of that would be to deprive them of all benefit of the very substantial expenditure on the acquisition and improvement of the property. In my judgment, that would be unfairly disproportionate to the breach of covenant which they have committed and to their conduct in this affair. I would have exercised a discretion to grant relief on stringent conditions." He then set out the conditions including that the tenant pay for a qualified structural engineer approved by the plaintiff to certify that all the work was properly done.

70 What Mummery J said, with great respect, seems common sense and I consider that it reinforces the submissions that were put by Mr Brereton. This matter of windfall, whilst it might not be within that term as classically defined, makes it more likely that relief against forfeiture should be given rather than less likely.

71 5. A significant point of evidence came up during the hearing which I ruled upon and indicated I would give my reasons for my ruling when I gave my final judgment. A report had been commissioned from Horwath, a well-known firm of accountants. When it was called for by Mr Bathurst, Mr Brereton indicated it was privileged. The ground for this objection was s 119 of the Evidence Act 1995 which provides that evidence is not to be adduced of a confidential communication between the client and another person or between a lawyer acting for the client and another person that was made for the dominant purpose of the client being provided with professional legal services relating to an Australian court proceeding, nor was evidence to be adduced of the contents of a confidential document prepared for that dominant purpose.

72 I took evidence on the voir dire.

73 Mr Wynne, who was the person giving evidence on the voir dire, said that the report was commissioned by his solicitors at the time when the interlocutory proceedings in this matter were before Brownie AJ. He said, however, that the reason for the report was to give himself an indication of the actual position of the company by a third party independent expert. The solicitors' letter commissioning the report to Horwath contain the following paragraphs:

"With a view to assisting our clients and in particular Wynsix Hotels (Oxford St) Pty Ltd in respect of the abovementioned proceedings, we ask that you prepare a report as to the solvency of Wynsix Hotels (Oxford St) Pty Ltd.
This report will be specifically used for the provision of evidence in these proceedings and for the purpose of providing advice to the legal advisers representing Wynsix Hotels (Oxford St) Pty Ltd."

74 However, even in cross examination on the voir dire, Mr Wynne replied:

"Q. Was the purpose to assist you in ascertaining the position of the company?
A. Yes, sir."

75 One needs to judge the question of whether a communication is for the dominant purpose of the client being provided with legal services on the facts as presented. Although there is a conflict between the letter written by the solicitors and the oral evidence of Mr Wynne, I prefer the latter. It is not enough to my mind that a solicitor writing a common form letter uses a formula which would come within s 119 if the client's dominant purpose was otherwise. Here it seems to me the dominant purpose was to find out a qualified third party's opinion as to the solvency of the company rather than deploy the report in the proceedings.

76 In the course of the argument I was referred to the leading authorities on the section, the principal ones being Trade Practices Commission v Sterling (1978) 36 FLR 244, a case of course, decided before the 1995 Act, but in Hardie Finance Corp Pty Ltd v CCD Australia Pty Ltd (1995) 67 FCR 594, R D Nicholson J said that the case was relevant though the new Act went beyond the formulation of Lockhart J in the Sterling case. I was also referred to Sparnon v Apand Pty Ltd (1996) 138 ALR 735 (Branson J); Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No 2) (1998) 83 FCR 397 and the decision of the High Court of Australia in Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 66 and following.

77 Whilst the Esso case at 72 makes it clear that a document may still be produced for a dominant purpose even though there are other purposes for its production, the flavour of what is said in that page is that one still looks for the main purpose and minor and subsidiary purposes.

78 As I have said, it is a question of fact and on the facts of this case the dominant purpose was to see the solvency of the company for general business reasons and a subsidiary purpose was its use in this litigation.

79 I accordingly admitted the document.

80 As things turned out, it was of no great value in assessing the merits of the cases of the parties, but that of course, is by the bye.

81 I should perhaps just say two things, neither of which appertain to the principles of law I have just discussed.

82 First, although judges have to obey and implement s 119 of the Evidence Act to the letter, it is unfortunate that it tends to operate to promote junk expert evidence. The provision operates so that litigants can have their solicitors obtain expert reports from four people, perhaps three eminent experts and some borderline expert, the three "real" experts are unfavourable, but the other is favourable and only that lastmentioned is put before the court. However, as I have said, the legislature has enacted s 119 in the form it has which has doubtless the unintended effect of promoting such junk evidence.

83 The second is that there have recently been reaffirmations by the Court of Appeal of the rule which I have always followed that instant rulings should be given on evidence which are definite and which are usually not accompanied by reasons, see Kwan v Kang [2003] NSWCA 336. Where they are accompanied by reasons, the reasons are short. If a major point of evidence is involved, then for the guidance of practitioners in the future, it may be dealt with in the final set of reasons. It should also be dealt with in the final set of reasons if it is likely to be a matter where reasons will assist the Court of Appeal. I intend to adhere to that practice.

84 6. It follows that relief against forfeiture should be given.

85 Traditionally there were two forms of relief against forfeiture, one where the landlord had re-entered and the other where it had not.

86 Where there had been a re-entry at law, equity's usual order was that there be a regrant of a new lease. That, of course, would have stamp duty implications. Where there had been no re-entry, equity would merely issue an injunction to prevent the landlord re-entering consequent upon that forfeiture, Dendy v Evans [1910] 1 KB 263.

87 In the instant case Brownie AJ made an order that the tenant have exclusive possession pending the hearing of the case. Accordingly, it would seem that the tenant still has some sort of lease despite the re-entry.

88 The lease is registered on the title. Under s 55 of the Real Property Act 1900, the Registrar General may make a recording removing a lease from the Register if satisfied that due re-entry has been made. It would seem that no such application has yet been made. In my view, because of s 55, so long as the lease remains on the title I am able to make the alternate relief against forfeiture order, that is, that the landlords be restrained from taking any action to enforce the forfeiture incurred by the plaintiff up to the hearing of these proceedings and that the landlords be restrained from approaching the Registrar General under s 55.

89 As to costs, the normal rule is that these are paid by the plaintiff. As Simpson CJ in Eq said in Langley v Foster (1909) 10 SR 54, 62 prima facie one of the terms on which relief against forfeiture is granted is that the tenant must pay all the costs of getting relief. Often costs are ordered on the indemnity basis, though, as Lord Templeman said in the Billson case at 541, if there is any general practice to this effect it ought to be re-examined.

90 Despite the normal rule, if the court considers that the landlord ought not to have opposed in toto the tenant’s claim for relief, the court may make the landlord pay some costs; see Humphreys v Morten [1905] 1 Ch 739; Langley v Foster at page 62.

91 Having made those remarks, I will stand over the question of costs and any other conditions to be imposed as a condition of relief until the short minutes are brought in.

92 I will be away from the court from the end of this week until the week commencing 21 June. If parties can agree on a form of order, then I am quite content for that to be made by the Duty Judge or a Master or Registrar. However, in case the question of costs needs to be argued, or there needs to be debate about the order, it seems to me that it is best for me at this stage to continue the order made by Brownie AJ until further order and list the matter for mention before me on 22 June 2004 at 9.30 am. That is a date for mention only; if more than 10 minutes is required, then my Associate should be informed.

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Last Modified: 03/31/2004