G & L International Trading Limited v Gasoline Alley Services Limited
[2021] NZHC 1614
•1 July 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-000374
[2021] NZHC 1614
BETWEEN G & L INTERNATIONAL TRADING LIMITED
Plaintiff
AND
GASOLINE ALLEY SERVICES LIMITED
Defendant
Hearing: 30 June 2021 Appearances:
K Sun for Plaintiff/Applicant
D Sheppard for Defendant/Respondent
Judgment:
1 July 2021
JUDGMENT OF VENNING J
This judgment was delivered by me on 1 July 2021 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Capstone Law Limited, Auckland
Fitzherbert Rowe, Palmerston North
G & L INTERNATIONAL TRADING LIMITED v GASOLINE ALLEY SERVICES LIMITED [2021] NZHC 1614 [1 July 2021]
Application
[1] The applicant, G & L International Trading Limited (G&L) applies for interim injunctive orders:
(a)permitting it to remain in possession of premises at 116 Carbine Road,
Mt Wellington, until further order of the Court; and
(b)requiring Gasoline Alley Services Limited (GAS) to continue to supply motor fuels and petroleum products to it on the terms of a retailer Supply Agreement dated 31 July 2019, until further order of the Court.
Background
[2] G&L operated a petrol station and café at 116 Carbine Road, Mt Wellington. G&L’s directors and shareholders are Michelle Lee and Xiang (Simon) Guo. GAS is a supplier of petroleum products to retailers throughout New Zealand and has supplied petrol and petroleum products to G&L for the last 14 years. It has also been the sublessor of the 116 Carbine Road premises to G&L.
[3] The property at 116 Carbine Road is owned by William Eatson. Mr Eatson leased the premises to GAS Again Supply Corporation Limited ((headlessor) (a company controlled by him)) on 1 February 2001. On 16 March 2001 the headlessor entered a headlease with GAS. The final expiry date of the headlease was 31 March 2015 with no right of renewal.
[4] GAS subleased the premises first to L.W.D. Li Da International Trading Investment Limited (LWD) pursuant to a deed of lease dated 10 July 2002 (the sublease). LWD subsequently assigned the sublease on to New Zealand Kate Supplies Limited which in turn assigned the sublease to G&L on 7 December 2007. The sublease expired on 14 March 2015.
[5] Ms Lee has deposed that when G&L purchased the business of the fuel station and café at 116 Carbine Road from New Zealand Kate Supplies Limited on 7 December 2007 it paid $400,000. Since 2007 G&L has been operating the fuel station
and café. During that time they have been buying motor fuels and petroleum products exclusively from GAS.
[6] GAS obtained a one-off further lease term from the headlessor in August 2015 to expire on 31 March 2021. On 14 March 2017 G&L and GAS entered a new sublease which also expired on 31 March 2021.
[7] On 2 February 2021 GAS gave written notice to G&L confirming that the sublease would come to an end on 31 March 2021. It required G&L to vacate the premises by that date. GAS also gave notice it was terminating the fuel Supply Agreement with G&L on that date. GAS ceased supplying G&L with motor fuels and petroleum products from 31 March 2021.
[8] In response G&L issued these proceedings against GAS. G&L asserts that GAS is estopped from allowing the sublease to expire on the sublease expiry date. In the substantive proceeding it seeks damages in the sum of $600,000 (excluding GST) being the value it places on its business. G&L seeks injunctive relief pending the hearing of its substantive claim.
[9] GAS’s position is that it has no fixed term lease of the premises that it is able to on-lease to G&L as no further headlease has been entered into. Further, even if GAS could procure an extension or renewal of the headlease it does not want to commit to a new headlease to G&L.
Application for interim injunction
[10]The principles to apply on an application for interim injunction are settled:1
(a)the applicant must establish there is a serious question to be tried;
1 American Cyanamid Co v Ethicon Ltd [1975] AC 396, [1975] 1 All ER 504 (HL); Klissers Farmhouse Bakeries Limited v Harvest Bakeries Limited [1985] 2 NZLR 140 (CA); and NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90.
(b)the balance of convenience must be considered; that requires consideration of the impact on the parties (and any relevant third party) of the granting of or refusal to grant the order; and
(c)an assessment of the overall justice of the position is required as a check.
[11] At stages (b) and (c) the Court will consider whether damages will be an adequate remedy, whether there is a status quo to be preserved, and the relative strengths of the competing cases.
[12] The nature and effect of the injunction orders sought are mandatory. A number of cases have suggested that in the case of a mandatory injunction as opposed to one that merely preserves the status quo, the Court will adopt a more cautious approach. More recently, in Commerce Commission v Viagogo AG the Court of Appeal noted that arguments attempting to distinguish between a mandatory injunction and a prohibitory injunction may well be barren.2 What matters is the practical implications of the order for the affected parties. That will inform the appropriate assessment of the overall interests of justice.
Background to the lease and Fuel Supply Agreement
[13] At that time G&L bought the fuel station and café, there was seven years, three months remaining under the sublease before its then expiry date of 14 March 2015. The sublease did not provide a right of renewal.
[14] On 14 March 2015 the sublease expired. On 31 March 2015 the headlease expired, also with no right of renewal. However, GAS obtained a new headlease from the headlessor in August 2015. The new headlease was only achieved after a lengthy process.
2 Commerce Commission v Viagogo AG [2019] NZCA 472 at [90].
[15] The final expiry date of GAS’s lease of the premises under that new headlease was 31 March 2021. The new headlease confirmed there was no right of renewal. It provided:
RIGHTS OF RENEWAL: None – the Landlord shall give notice, should
the premises be able to be leased beyond the final expiry date; such notice to be given at least six (6) months prior to the final expiry date.
FINAL EXPIRY DATE: 31 March 2021.
No notice of extension was given by the headlessor.
[16] On 14 March 2017 GAS entered a new sublease with G&L. The Deed of Renewal of Lease that was completed between GAS and G&L also confirmed the term of the sublease expired on 31 March 2021:
1. The Landlord [GAS] hereby grants to the Tenant [G&L] a new lease
… for a period of six (6) years and seventeen (17) days from and including 15 March 2015 to and including 31 March 2021, …
[17] There was no right of renewal in the sublease. In fact it was expressly excluded.
[18] Between the expiry of the initial sublease on 31 March 2015 and the new sublease on 14 March 2017 G&L had remained in possession of the premises as a monthly tenant. In the background section to the new sublease G&L acknowledged that was the basis it remained in possession.
[19] During the term of that new sublease, the parties also entered a Retailer Supply Agreement on 31 July 2019 (Supply Agreement) for the supply of petroleum products. The Supply Agreement provided for an initial term of 15 years commencing on 1 August 2019.
[20]However, cl 16.3 of the agreement provided
GAS rights of termination on Retailer breach: If at any time during the Term of this agreement:
…
(f)the Retailer’s right to occupy the Premises expires without renewal or is terminated for any reason or otherwise comes to an end
…
Then GAS may, without notice, terminate this agreement or suspend supplies under it without payment of compensation and/or pursue any other rights and remedies of GAS without prejudice to any other of its rights or remedies and without releasing the Retailer from any liability to GAS, including liability for any antecedent breach or non-observance of this agreement.
[21] In May 2017, shortly after the new sublease was concluded, G&L purchased new fuel pumps. Ms Lee says that was at the behest of GAS. The new fuel pumps cost just over $50,000. GAS provided an interest free loan to enable G&L to purchase the pumps.
G&L’s case
[22] G&L wants to remain in possession of the premises and continue operating its business from there. Ms Lee says that all of the value in G&L’s business is inextricably linked with the physical premises. Without a renewed sublease, G&L is unable to sell its business. If the sublease is not renewed, G&L will lose all its value and she and her husband will also be left without income.
[23] G&L argues that GAS is estopped from relying on the provisions in the new sublease and the Supply Agreement. It argues that GAS is obliged to enter a new headlease with the landlord and then grant a further sublease to it for the premises and continue supplying fuel to it.
GAS’ position
[24] GAS relies on the lease documents. At present it does not have a headlease for the premises. It says the short answer to the plaintiff’s claim is that the Court cannot give G&L the remedy it seeks.3 But even if GAS was able to obtain a renewed headlease from the landlord it does not want to maintain a business relationship with G&L because of the difficulties it has experienced with G&L in the past. It denies that
3 Shotover Gorge Jet Boats v Marine Enterprises Ltd [1984] 2 NZLR 157 at 157.
it has created any belief in G&L that it would grant it a further sublease after 31 March 2021 and would continue to supply it with fuel products after that date.
Equitable estoppel
[25] G&L’s claim against GAS is based on equitable estoppel. The requirements for an equitable estoppel are settled.4 In this case G&L must show that:
(a)GAS has created a belief that it would obtain a new headlease after 31 March 2021 and would grant a new sublease to G&L (and would continue to supply fuel to it);
(b)G&L has reasonably relied on that belief;
(c)G&L will suffer detriment if the belief is departed from; and
(d)it would be unconscionable for GAS to depart from the belief.
Preliminary issue – headlease renewal
[26] Mr Sun submitted that “a foundational issue” to be determined is whether GAS had in fact renewed the headlease. Mr Sun submitted the Court should find that GAS has renewed the headlease. He noted that GAS apparently has plans to renovate the premises. He referred to a conversation that Ms Lee had with Mr Ali on 3 February 2021 in which Mr Ali talked about refurbishing the premises. Then between 16 March 2021 and 24 March 2021 GAS’s contractors visited the premises numerous times to inspect and take various measurements for renovation purposes.
[27] Further, upon notification from GAS, BP sent an email to inform customers the premises would not accept BP fuel cards from 31 March 201 until 17 May 2021 due to renovations, and on 1 April 2021 GAS rather than the head landlord issued the trespass notice on the plaintiff with respect to the premises.
4 Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.
[28] Mr Sun submitted that on the balance of probabilities, GAS’ actions proved that it had in fact renewed the headlease.
[29] Against that, both GAS’ executive director Timothy Ellis and its general manager Mr Ali each depose that no further headlease has been entered into. At the present time, GAS is holding over and occupying the premises as a periodic tenant/sub-lessor.
[30] On the evidence the Court is satisfied that, at present, GAS does not hold a new headlease with the landlord. It is currently holding over as a monthly tenant. There is no certainty that GAS will be able to obtain a new headlease. Mr Eatson, the sole director of the headlessor company is about 90 years old and is understood not to be in good health. Obtaining the first extension of the headlease to 31 March 2021 was not an easy process as was recorded in an email of GAS’ managing director on 9 February 2017 when negotiating with G&L for the new sublease.5 The most that can be said is that GAS might be able to negotiate a new headlease with the landlord. But if it does, it does not want to grant a new sublease to G&L.
[31] However, for present purposes, I will assume, in G&L’s favour, that GAS might be able to obtain a new headlease from the landlord. The issue then becomes whether the Court should direct GAS to take all reasonable steps to obtain such a headlease and then to grant a sublease to G&L. Even stating the proposition in that way highlights the practical difficulties with the injunctive orders sought.
Serious question to be tried
[32] Mr Sun submitted that GAS had created an expectation that it would enter a new headlease and grant a sublease to G&L because:
(a)the first renewal of the sublease was signed in March 2017, two years after the expiry of the original sublease;
5 The position is further complicated in that GAS’ headlessor is not the owner of the property. It is not currently clear whether there is a lease in place between Mr Eatson and the headlessor even though Mr Eatson controls the headlessor.
(b)during the period between March 2015 and March 2017 G&L did not have a formal sublease with GAS but was allowed to continue to operate and trade;
(c)in May 2017 GAS persuaded G&L to purchase brand new gas pumps which cost $50,000 (financed by GAS). The pumps have a life span of 30 years;
(d)on 31 July 2019 G&L and GAS entered a retail supply agreement under which GAS agreed to supply automated fuels to G&L. The Supply Agreement had an initial term of 15 years commencing 1 August 2019; and
(e)Ms Opinion, the GAS Auckland area manager, exchanged texts with Ms Lee after G&L received the letter of termination and Ms Opinion said she was shocked by the letter of termination.
[33] The express terms of the relevant documents are clear. The headlease and new sublease expired 31 March 2021. As GAS was holding over as a monthly tenant of the headlessor it was entitled to serve the trespass notice on G&L on 1 April 2021. GAS was also entitled to terminate and cancel the Supply Agreement under the provisions of that agreement given that G&L no longer had the right to occupy the premises after 31 March 2021.6
[34] The issue is whether that clear contractual situation is affected by the equitable estoppel relied on by G&L. The only suggestion of express representations by GAS are in Ms Lee’s account of her discussions with Mr Ali in early February 2021, the comments of Ms Opinion in her texts, and Ms Lee’s vague statement that in numerous discussions she had with Mr Mistry (who she says was the leasing officer with GAS) his responses led her to believe that the sublease would be renewed.
6 Under cl 16.3(f).
[35] Ms Lee’s statement about Mr Mistry’s comments is so vague and lacking in detail that the Court can place no weight on it.7 Further, Mr Mistry has sworn an affidavit confirming that he is the capital and refurbishments project manager (not the leasing manager) and that when Ms Lee asked him about the sublease he told her he was not sure and did not know about it. In her affidavit in reply Ms Lee did not respond to that evidence.
[36] As noted, on 3 February 2021 Ms Lee had a meeting with Mr Ali to discuss the termination letter. Ms Lee apparently recorded the conversation. Ms Lee referred to Mr Ali’s recorded comments:
You know there is a lot of work that we need to do right now in the next two months. Do the measurements, do the planning, do all the things in the shop and you know, we are looking to demolish everything in the shop and stuff. You know there is a lot of work that needs to be done.
[37] There is nothing in that record of what Mr Ali said that suggested GAS would not rely on the letter of termination in relation to G&L. Mr Ali’s comments are consistent with GAS’ position that if it is able to achieve a new headlease it will want to refurbish the premises and re-let it to a new tenant. They do not support the suggestion that Ms Lee believed GAS would grant G&L a new sublease.
[38] Later, in response to Ms Lee asking if there was anything wrong with what they were doing, Mr Ali apparently said:
No no no Michelle … it is purely a commercial decision that the board has made, and that we have made as well with the board, that we are going to redevelop the site.
[39] While that is different to Mr Ellis’ evidence and the formal notice of breach that he had previously issued, (as discussed below), it cannot be construed as a representation that GAS would grant a further sublease to G&L. It was, as Mr Sheppard submitted, no more than “comforting sounds” by Mr Ali. Actually, the comments confirm that GAS’ board had decided not to renew G&L’s lease.
7 Eng Mee Yong v Letchumanan [1980] AC 331 (PC).
[40] Nor do Ms Opinion’s text responses to Ms Lee assist G&L. Ms Opinion was GAS’ area manager. She has confirmed in evidence that she was on leave at the time she engaged in the text communications with Ms Lee in response to Ms Lee’s phone calls. Ms Opinion was unaware that a notice had been served. Again her text messages do not support G&L’s argument of any representation that the lease would be renewed. They are at most personal sympathetic responses. Ms Opinion properly referred Ms Lee to Mr Ali as she had no input into leasing arrangements. Ms Opinion has confirmed that at no time, either verbally or in writing, did she suggest to either Ms Lee or her husband that G&L’s lease would be renewed. That was in any event beyond her responsibility.
[41] On the evidence there is no express representation that G&L can rely on to support its position that GAS created a belief it would grant G&L a new sublease and would continue to supply it with fuel past 31 March 2021.
[42] G&L is then left with the other matters it relies on to support the belief. Before addressing those matters I note two further difficulties with the plaintiff’s case. Mr Sun was unable to say when the belief was created, and nor was he able to say how long G&L believed the sublease would be granted for. Both are important aspects of any belief that G&L seeks to rely on.
[43] The suggestion that the delay of two years in obtaining a renewal of the sublease in the first instance somehow supports a belief that the new sublease would be renewed a second time is a difficult proposition for G&L. The original sublease, which expired in March 2015, had seven years, three months to run when G&L bought it. The sublease renewed in March 2017 only ran until 31 March 2021, a period of four years, (without any right of renewal). Rather than suggesting there was likely to be a new or further renewal the short period of time left in the new sublease (which expressly excluded any further renewal) and the length of time it had taken for the headlease to be renewed should have confirmed to G&L that, if anything, there would be no further sublease after 31 March 2021. The exact period of time that the lease had to run was expressly recorded. There is no basis to suggest the background to the sublease could create any belief of a further renewal.
[44] Next, G&L relies on its purchase of the petrol pumps as somehow supporting G&L’s belief there would be a long term relationship with GAS. There is a difference between Ms Lee and Mr Ali as to why there was a delay in concluding the new sublease and in relation to the circumstances surrounding G&L’s purchase of the new fuel pumps. Mr Ali says the reason for the delay between the execution of the new headlease in August 2015 and the execution of the new sublease with G&L in March 2017 was the discussions between the parties regarding the need for G&L to replace the fuel pumps. Ms Lee disputes that and says she was persuaded by GAS to buy the new gas pumps in about May 2017.
[45] The contemporaneous documents support Mr Ali’s evidence. An internal email from Mr Murray of GAS to Ms Brodie of 9 February 2017 (before the sublease was renewed) refers to a quote for the installation of the new pumps at Carbine Road and carries onto say:
I think that Michelle [Ms Lee] needs to show some good faith and meet her earlier commitment to replace the dispensers. Gas has completed the work that we said that we would do and her commitment to Gas & to Bill [landlord] was to replace the dispensers.
At the end of the day if he closes the premises then Gas will be forced to remove its tanks and Michelle will have to take the dispensers off but there will be some residual value for these to someone in our network. …
[46]Further, Ms Brodie then sent an email to Ms Lee on 27 February 2017 noting:
Nahid [Mr Ali] says we will need the sub-lease signed and would then be able to provide a loan to cover the $50k quotes. The loan would be interest-free and repayable at 2d/litre on all invoiced product, i.e. if you are delivered 1000 litres you are billed $20 (on the same invoice).
I’ve been trying to find time to come and see you with the sub-lease, which [Mr Ali] says we will need to have signed first, but unfortunately have mostly been on the South Island this month and I’ve just not managed to get there. …
[47] Ms Lee confirmed her agreement to that email. The written communications at the time support Mr Ali’s evidence that the new fuel pumps were part of the arrangement regarding the new sublease. It must have been clear to Ms Lee and G&L that there was no suggestion that, because the pumps might have a life of 30 years that the new sublease would extend beyond its expiry of 31 March 2021.
[48] Ms Lee suggested that G&L was placed under pressure by GAS to install the new pumps. Certainly it appears GAS was not prepared to enter the new sublease until that issue was resolved, but for the above reasons that does not advance G&L’s case. Further, there are a series of emails on 30 March 2017 and on 21 April 2017 in which Ms Lee refers to various of the old pumps not working and inquiring as to the date for the installation of the new pumps which confirm the old pumps needed to be replaced.
[49] The last substantive issue relied on by G&L is the Supply Agreement. It is correct that the Supply Agreement entered on 31 July 2019 referred to a term of 15 years. GAS’ response is that the new supply agreement was needed because GAS had entered into the AA Smartfuel program and as a result its supply arrangements were to be updated. They were updated for all its retailers in standard terms. GAS advised G&L and its other retailers of the reason for the new supply agreement by a regional roadshow, a conference and a memorandum of 10 June 2019. The memorandum advised:
GAS entry to the AA Smartfuel program has necessitated certain changes to the Retailer Supply Agreement that exists between it and the GAS Retailers making up the network. In making the necessary changes, GAS has taken the opportunity to modernise the document and to update it in certain important respects. The wording and content of this latest document are fundamentally unchanged from previous versions of the Agreement, but certain provisions have been replaced, others have been materially altered and some are new to the Agreement. These changes are summarised and explained in this memorandum in order to make your review of it easier and to aid your understanding of the changes and, in particular, their purpose. GAS has set out to change nothing other than aspects of the Agreement that are now out of date, incorrect, inconsistent with GAS participation in the AA Smartfuel program or now required by it.
[50] Further, cl 16.3(f) of the 2019 Supply Agreement was, as Mr Sheppard submits, tied inextricably to the term of the lease. The clause enabled GAS to terminate the Supply Agreement upon the expiry of the sublease on 31 March 2021. It is inevitable that the supply agreements GAS had with its various retailers would not coincide with all the expiry dates of leased premises subleased by GAS (or other landlords). For that reason cl 16.3(f) was incorporated in the Supply Agreement.
[51] G&L fails to satisfy the Court that it has an arguable case GAS created a belief that it would obtain a new headlease and would grant a further sublease to G&L.
Reasonable reliance
[52] Mr Sun argued that G&L’s belief the sublease would be renewed was reasonably held because it did not know its belief was untrue until it received the letter of termination.
[53] Again, an initial difficulty for G&L is that it is unable to say when that belief was created. Further, no reasonable person in the shoes of G&L could have had an expectation the sublease would be renewed past March 2021 because:
(a)G&L accepted the terms of the sublease had a final expiry date of 31 March 2021 with no right of renewal when it entered the new sublease in March 2017;
(b)G&L was expressly advised of the reasons for the updated 2019 Supply Agreement. The Supply Agreement included a term enabling cancellation past 31 March 2021; and
(c)G&L had been issued with a notice of breach of the Supply Agreement which confirmed that GAS was reserving its rights under both the lease and Supply Agreement (which included rights of termination). Despite that G&L continued to breach the Supply Agreement by failing to open on weekends, on Saturdays and Sundays, and some public holidays.8
[54] Finally, at no point in her evidence does Ms Lee say that G&L did anything (or failed to do anything) in reliance on the belief that a further sublease would be granted after 31 March 2021.
Detriment
[55] I note that the damages sought in the substantive claim is $600,000 being the value Ms Lee attributes to the business. When G&L paid $400,000 for the business the sublease had seven years, three months to run. Ms Lee’s assessment of value at
8 The Supply Agreement also included a waiver clause: cl 21.
$600,000 is a bare assertion. The value of the lease (goodwill) would most likely have decreased over time rather than increased as the time left under the lease reduced.
[56] The further difficulty for G&L is that it would have been unable to sell its business between March 2017 and March 2021 with anything other than a lease that was due to expire as at 31 March 2021.
Unconscionability
[57] Next Mr Sun suggested that it would be unconscionable for GAS to terminate the sublease because GAS will confiscate G&L’s assets without paying anything for them.
[58] As Mr Sheppard noted, GAS is not purporting to terminate the sublease. Rather the sublease has expired. Under cl 33 of the original lease (incorporated in the sublease) G&L may remove its fixtures and fittings from the premises and in relation to the new fuel pumps cl 60 provides that if GAS wants to acquire the pumps GAS was required to buy them at a price equal to the off-site value to be determined by an arbitrator in the event of disagreement. Otherwise G&L would be free to remove them and sell them.
[59] Mr Sheppard confirmed GAS’ offer to purchase G&L’s stock and trade and its tangible assets at cost price and the fuel pumps at a current value of $40,000 despite it having no obligation to do so was still open.
[60] For the above reasons the plaintiff fails to meet the test of a serious question to be tried in the substantive proceeding.
Balance of convenience
[61] As G&L fails to meet the standard of a serious question, the balance of convenience does not arise in this case. But if it did, the balance favours GAS.
[62] GAS’ position is that if it was able to take up a new headlease it would close the premises for a period of renovation, remove and write off all of the interior fitout
and then spend a large capital outlay on a total upgrade before leasing the premises to a new tenant. GAS is not prepared to have G&L remain as a tenant as it regards it as unsuitable. In Mr Ali’s opinion G&L has caused damage to GAS’ brand. Mr Ali deposes that during the period of G&L’s tenancy fuel volume sales have continuously declined over the last six years, a decline not suffered generally through the GAS network. On GAS’ estimates if a new retailer took over the operation of the Carbine Road property the site would do an increased fuel volume of about 40 per cent.
[63] Mr Ellis, the executive director of GAS, has detailed G&L’s breaches of the 2019 Supply Agreement. On 3 August 2019, three days after the agreement was completed, G&L kept the service station closed in breach of the requirement that it be open. Also, the premises were in an unpresentable state with a number of vehicles parked across the forecourt. The service station was closed on the following Saturday as well. On 14 August 2019 Mr Ellis issued a written notification of breach. Despite that, the premises were closed on Sunday, 21 September and Sunday 28 September. In October G&L resumed its practice of not opening the service station on both Saturdays and Sundays. It was also shut on Labour Day. It remained shut on other periods, including from Christmas Eve through to and including 2 January 2020 and except for the months of February and March 2020, from January 2020 until March 2021 G&L did not operate the service station on Sundays. Also there were a number of Saturdays and public holidays it did not operate on.
[64] In response Ms Lee does not dispute the breaches but says the revenue on the weekends and public holidays remain negligible. G&L therefore decided to close on Sundays from January 2020 onwards. As the company was her family’s only source of income they did not want to make a loss. She notes that G&L only received one notice of default.
[65] Ms Lee and G&L’s response overlooks the company’s obligations under the Supply Agreement. G&L has breached those conditions. GAS should not be required to re-enter a sublease and supply agreement with an unsatisfactory tenant and retailer.
[66] In any event, damages would be an adequate remedy for G&L. It could claim for lost income and the lost value of its business in its proceedings if it wishes to pursue them.
The overall justice
[67] While one might have a degree of sympathy for the position that Ms Lee and her husband find themselves in, it is a consequence of the contractual agreements they have entered. The interests of justice and certainty in commercial affairs support GAS being able to rely on its contractual position.
Result
[68]The application for injunction is dismissed.
Costs
[69] GAS is entitled to costs. Mr Sheppard suggested that solicitor/client costs would be recoverable under the terms of the sublease as it incorporates the original sublease. I am not at present sure that cl 6 of the original sublease covers the costs of the litigation in this case.
[70] If the defendant wishes to pursue solicitor/client costs it is to file and serve a memorandum within 10 working days. Any reply within five working days. I will then deal with costs on the papers. If GAS resolves not to pursue the issue of solicitor/client costs, it is to have costs on a 2B basis with disbursements as fixed by the Registrar.
Venning J
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