Abigroup Limited v Sandtara Pty Limited

COUNSEL : J N West QC/A J Ogborne (Appellant) M L D Einfeld QC/F P Donohoe (Respondent) SOLICITORS : Clayton Utz (Appellant) Verekers (Respondent) CATCHWORDS : COMMERCIAL LEASE - contract of guarantee - tenant went into liquidation - action by landlord against guarantor - orders for costs made - whether respondent entitled to recover costs pursuant to contractual indemnity provision - Supreme Court Act 1970 (NSW), s 76 - Supreme Court Rules (NSW), Pt 52 r 8 - res judicata - anshun estoppel - abuse of process - construction of the terms of contract - cross-appeal - interest on costs - D Supreme Court Act 1970 (NSW), s 76 LEGISLATION CITED : Supreme Court Rules (NSW), Pt 52 r 8 District Court Act 1973 (NSW), s 83A AGC (Advances) Ltd v West (1984) 5 NSWLR 301 Barnett v Eccles Corporation [1900] 2 QB 423 Born v Turner [1900] 2 Ch 211 Drinkwater v Caddyrack Pty Ltd (Unreported, Supreme Court of New South Wales, 25 September 1999) Elders Executors and Trustees & Executor Co Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205 Gomba Holdings Ltd v Minories Finance [1993] Ch 171 GPI Leisure Corp Ltd v Yuill (Unreported, 6 August 1997) Great Western Railway Co v Fisher [1905] 1 Ch 316 Hotham v The East India Company (1787) 1 Term Rep 638; 99 ER 1295 In Re Shanahan (1941) 58 WN (NSW) 132 Jones v Barkley (1781) 2 Dougl 684; 99 ER 434 CASES CITED: Kyrwood v Drinkwater [2000] NSWCA 126 Leda Holdings Pty Ltd v Oraka Pty Ltd [1999] FCA 444 Mackay v Dick (1991) 6 App Cas 251 Maher v Network Finance Ltd (1986) 4 NSWLR 694 Mahoney v Lindsay (1980) 55 ALJR 118 Mansfield v Robinson [1928] 2 KB 353 Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re Elders Trustee and Executor Co Ltd and EG Reeves Pty Ltd (Unreported, Federal Court of Australia, Gummow J, 12 March 1988) Sandtara Pty Ltd v Abigroup Limited (Unreported, Supreme Court of New South Wales, Brownie J, 4 September 1992) Shercliff v Engadine Acceptance Corp Pty Ltd (No 2) (1982) 3 BPR 9207 The Ikarian Reefer (No 2) [1999] 2 LI Rep 621 The Mildenhall Bell Case (1469) YB 9 Ed iV (Easter Term 4A) DECISION : Appeal and Cross-Appeal dismissed with costs

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40209/01 DC 6477/98 STEIN JA GILES JA YOUNG CJ in EQ

Friday, 1 March 2002 ABIGROUP LIMITED v SANDTARA PTY LIMITED

The respondent (Sandtara) was the lessor to Cenrin Pty Limited (Cenrin) of commercial premises. The appellant (Abigroup) was the guarantor of Cenrin's obligations under its lease.

Cenrin failed to pay rent due under the lease and subsequently went into liquidation. Between 1991 and 1998 the parties were involved in a series of proceedings in the Supreme Court. Various orders as to costs were made in those proceedings, mostly in favour of Sandtara, some in favour of Abigroup and some to the effect that there be 'no order as to costs'.

Sandtara brought separate proceedings in the District Court seeking to recover on a solicitor/client basis its costs and expenses incurred in the Supreme Court proceedings. Prior to the hearing the parties agreed on the quantification of the disputed costs on a compromised basis. The agreed sum (exclusive of interest) was $133,313.82.

Patten DCJ held that Sandtara was entitled under its indemnity to recover its solicitor/client costs. However, his Honour decided not to award Sandtara interest at the 'default' rate specified in the lease, rather his Honour awarded interest pursuant to s 83A of the District Court Act.

On appeal, the appellant raised five arguments, some of which overlapped:

The powers and discretions in s 76 of the Supreme Court Act override any contractual right;

An order of the court in relation to costs disposes of the question of costs in personam between the parties so that any later claim for those costs is res judicata;

It is an abuse of process for a party to seek in one court to reverse the effect of a decision in another court;

The bringing of such a claim in separate proceedings offends the principle enunciated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; and

'All costs and expenses' in cl 18.02 of the lease means party/party costs and not solicitor/client costs.

1. His Honour erred in refusing interest at the rate prescribed by cl 3.03 of the lease (2% per month).

On the appeal, per Stein JA, Giles JA and Young CJ in Eq agreeing:

1. The court is not bound to give effect to any extra-curial contract as to costs when exercising its discretion to award costs. However, this does not mean that the discretion takes over from the terms in the contract or that the exercise of the discretion precludes enforcement of the contractual right as to costs. The contractual right simply stands independently of the curial power and order.

3. There was no abuse of process. The proceedings in the District Court did not seek to reverse the decision of the Supreme Court, but rather sought to enforce the respondent's contractual rights.

4. The costs included in cl 18.02 were solicitor/client costs.

On the Cross-Appeal, per Stein JA, Giles JA agreeing (Young CJ in Eq dissenting):

1. The requirement of giving notice was a condition precedent to making a claim for interest under cl 3.03 of the lease. The disclaimer by the liquidator of Cenrin did not waive or render the giving of the notice nugatory.

2. Sandtara was not entitled to recover the contractual interest.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40209/01 DC 6477/98 STEIN JA GILES JA YOUNG CJ in EQ

Friday, 1 March 2002 ABIGROUP LIMITED v SANDTARA PTY LIMITED

1 STEIN JA: The parties were involved in a series of proceedings in the Supreme Court arising out of a lease of commercial premises by the respondent (Sandtara) to Cenrin Pty Limited. The appellant (Abigroup) had guaranteed Cenrin's obligations under its lease. 2 Cenrin failed to pay rent due under the lease and eventually went into liquidation. On 11 December 1993 the liquidator disclaimed the lease pursuant to s 568 of the Corporations Law. The Supreme Court proceedings conducted between 1991 and 1998 resulted in various orders for costs being made, mostly in favour of Sandtara (on a party/party basis), some in favour of Abigroup and some to the effect that there would be no order as to costs. 3 Sandtara brought separate proceedings in the District Court in 1998 which sought to recover all of its costs incurred in the Supreme Court proceedings pursuant to an indemnity in the lease (cl 18.02). It sought these costs on a solicitor/client basis less the costs already paid by Abigroup. Prior to the hearing in the District Court the parties agreed on the quantification of the disputed costs on a compromised basis. The agreed sum, exclusive of interest, was $133,313.82. The court should not and has not been asked to go behind this agreement, which is set out in the judgment of Patten DCJ given on 3 May 2001 (Red AB48). 4 Patten DCJ rejected all of the appellant's arguments and found in favour of Sandtara. Essentially the same arguments have been put by the appellant on this appeal. Sandtara failed on one point, namely, that of the rate of interest to be awarded on the outstanding amount. It claimed to be entitled to a contractual rate of interest (2% per month) pursuant to cl 8.03 of the lease. His Honour held that in the absence of a demand served on Cenrin pursuant to cl 3.09 of the lease, there was no entitlement to interest under cl 3.03. However, his Honour awarded interest pursuant to s 83A of the District Court Act. Sandtara cross-appeals on this issue. 5 The central contractual provision is cl 18.02 of the lease. This provision provides as follows: INDEMNITY BY GUARANTOR . The Guarantor (and if more than one, jointly and severally) hereby unconditionally indemnifies the Landlord and agrees at all times hereafter to keep the Landlord unconditionally indemnified from and against all actions claims demands losses summonses writs proceedings judgments orders decrees damages costs and expenses which the Landlord may suffer or incur consequent upon or arising directly or indirectly out of any breach or non-observance by the Tenant of any of the covenants terms provisions restrictions or conditions in this lease contained or implied and on the part of the Tenant to be performed observed or fulfilled and the Guarantor agrees that this indemnity shall continue and the Guarantor shall remain liable to the Landlord under this indemnity notwithstanding that as a consequence of such breach or non-observance the Landlord has exercise (sic) any of its rights hereunder including its rights of re-entry and notwithstanding that the Tenant (being a company) may be wound up or (being a natural person) may be declared bankrupt and notwithstanding that the guarantee hereby given may for any reason whatsoever be unenforceable either in whole or in part. [My emphasis added] 6 His Honour found that Sandtara was entitled under the indemnity to recover its solicitor/client costs. The appellant propounds five arguments to the contrary. In summary, these are: (a) The powers and discretions in s 76 of the Supreme Court Act 1970 override any contractual right; (b) Any right of a party to the payment of costs by another party is merged in any final order of the court as to costs, accordingly, the decisions of the Supreme Court on costs are res judicata; (c) It is an abuse of process for a party to seek in one court to reverse the effect of a decision of another court; (d) Sandtara was obliged to bring forward in proceedings all claims which it ought reasonably to have expected to raise in those proceedings; its failure to do so meant that it was estopped under the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 from doing so in later proceedings; and (e) 'All costs and expenses' in cl 18.02 of the lease means party/party costs and not solicitor/client costs. Section 76 Supreme Court Act and Res Judicata 7 The appellant submitted that because s 76 of the Supreme Court Act says that costs shall be in the discretion of the court and Part 52A rule 8 of the Supreme Court Rules says that a party cannot recover costs except under an order of the court, the Act and rules displace any contractual entitlement to recover costs. Even if that not be correct, it submitted that once the Supreme Court has spoken on costs, that is an end of the issue, thus removing any right to recover costs on any other basis. In other words, it submitted that any contractual right is extinguished or overridden. Further, it was open to Sandtara to seek indemnity costs in the Supreme Court on the basis of cl 18.02, indeed on one occasion it did so, but unsuccessfully. 8 Reliance was placed by the appellant on the English Court of Appeal decision in Gomba Holdings Ltd v Minories Finance [1993] Ch 171. In that case the court held that under the terms of a mortgage the defendants were entitled to recover their actual costs and expenses and that they were contractually entitled to payment on an indemnity basis. The court said that normally the court's discretion as to costs should be exercised to correspond with the contractual entitlement (194). My reading of Gomba, however, does not assist the submission of the appellant. It certainly does not support the proposition that the power to make an order for costs or the making of an order for costs in a court extinguishes or overrides a contractual right to costs. 9 It is, of course, correct that a court is not bound to give effect to any extra curial contract as to costs when exercising its discretion to award costs. It does not follow, however, that the discretion takes over from the contract and the exercise of discretion against giving effect to the contract precludes enforcement of the contract as to costs. As Salter J said in Mansfield v Robinson [1928] 2 KB 353 at 359, agreements as to costs are common practice and perfectly valid and enforceable. Gomba did not overrule Mansfield, as seems to have been suggested by the appellant. Although Scott LJ noted that some of the dicta in Mansfield was not easily reconcilable, the judgment of the court is consistent with Mansfield, see for example at 194 - 195. For other relevant examples see In Re Shanahan (1941) 58 WN (NSW) 132 at 134; Maher v Network Finance Ltd (1986) 4 NSWLR 694; and Elders Trustee & Executor Co Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205. The contractual right simply stands independently of the curial power and order. 10 In so far as enforcement of the contractual provision as to costs is concerned, there is no issue on the costs judgments in the Supreme Court proceedings which is capable of giving rise to a res judicata. The validity or enforceability of the indemnity provision as to costs in cl 18.02 was never an issue in the Supreme Court. Moreover, the contractual claim for costs had not crystallised until the conclusion of all of the Supreme Court proceedings. Following judgment, there still may have been costs and expenses which would have been incurred by the respondent within cl 18.02. The respondent would have been unable to claim any such costs prior to the conclusion of the Supreme Court proceedings. Accordingly, I can see no basis for any suggestion that Sandtara's contractual rights merged into the judgments for costs made in the Supreme Court. No Anshun estoppel or abuse of process 11 The appellant's submission that the respondent's failure to proceed upon its contractual right under cl 18.02 in the Supreme Court proceedings estopped it from so doing in later proceedings is, in my view, misconceived. As I have already mentioned, Sandtara's right to enforce its contractual right in court had not crystallised before the Supreme Court proceedings were completed. Accordingly, it could not proceed in those proceedings to enforce its contractual indemnity. Therefore, it did not fail to bring all of its claims in those proceedings. It was not, in my estimation, in breach of the principles discussed in Anshun (at 602 - 603). The possibility of conflicting judgments does not arise because no judgment in the Supreme Court pronounced on the respondent's rights to indemnity under cl 18.02. As such, it is not relevant that in one case (before Hodgson J as he then was) Sandtara asked for the contractual indemnity to be taken into account in the exercise of the costs discretion. 12 The authorities discussed earlier make it clear that Sandtara's contractual right of indemnity for all costs remains independently of the court's orders. By seeking costs in the Supreme Court, the respondent did not lose or surrender its contractual rights. 13 Nor can the respondent's proceedings in the District Court be seen as an abuse of process. The proceedings did not seek to reverse the decisions of the Supreme Court, contrary to the appellant's submission, but merely sought to enforce the respondent's contractual rights. The respondent's contractual right was simply not an issue before the Supreme Court. 14 In my view, Patten DCJ was correct to dismiss the appellant's submissions on the effect of s 76 and res judicata, Anshun estoppel and abuse of process. What costs are included in cl 18.02? 15 The remaining dispute is whether the costs in cl 18.02 extend to costs on a solicitor and client basis or are restricted to costs on a party and party basis. Patten DCJ noted the decision of Brownie J, on 4 September 1992 (Sandtara Pty Limited v Abigroup Limited), relying on the statement in Halsbury's Laws of England that ordinarily an indemnifier would be liable for the full costs as between solicitor and a client. 16 It is the submission made on behalf of the appellant that the non-specific provision for 'all costs and expenses' in cl 18.02 means, absent plain reference to some other basis for assessment, the payment of party and party costs. The appellant points to cll 3.04 and 3.09, which specifically utilise the phrase 'solicitor and client' costs, as indicating that cl 18.02 does not import such a notion when the words are not used. 17 Ultimately, it is a matter of construing the words of the indemnity in cl 18.02. It seems to me that the language of the indemnity, in particular its reference to all costs and expenses, is to costs on a solicitor/client basis. The statement in Halsbury, quoted by Brownie J, and the authorities there cited, support this proposition (see Barnett v Eccles Corporation [1900] 2 QB 423 at 428; Born v Turner [1900] 2 Ch 211; and Great Western Railway Co v Fisher [1905] 1 Ch 316). 18 Expressio unius principles should not be applied since the context of the clauses relied on by the appellant (cll 3.04 and 3.09) are quite different from the indemnification clause. 19 Accordingly, it is my opinion that the appellant fails in all of its arguments and the appeal should be dismissed. The Cross-Appeal 20 The respondent submits that his Honour erred in refusing it interest at the rate prescribed by cl 3.03 of the lease (2% per month). 21 By reason of cl 3.09 the tenant, Cenrin, became liable on demand to pay to Sandtara all of its costs and expenses incurred in relation to, or in consequence of, any breach of covenant by it. However, no formal demand was ever made by the respondent on Cenrin. In respect of this, Sandtara says that it did not make a demand because such a course was obviated when the liquidator disclaimed the lease. Making the demand, accordingly, became otiose. Another way in which the argument was put was that the disclaimer amounted to a repudiation, thus the giving of a notice to the tenant may be a futility in any practical sense. It was said that the disclaimer of the lease was tantamount to a waiver of the need for the landlord to serve a demand. Accordingly, the condition precedent of the giving of the notice became dispensed with. 22 Counsel for the respondent accepts that there is no direct authority for the proposition put to the court, but argues that it is self-evident and akin to the principle discussed by Gibbs J in Mahoney v Lindsay (1981) 55 ALJR 118 at 119 23 I do not accept this submission. Clause 3.09 does not impose a positive obligation on the landlord to give the notice. However, it is clearly a condition precedent to a claim for interest under cl 3.03. There is an obvious purpose and use in the giving of the notice. The disclaimer of the lease by the liquidator does not obviate the requirement to serve a notice of demand on the tenant under the clause. Mahoney v Lindsay is not to the point. The act required (of the serving of the demand) is not a nugatory one. Just because a person is inherently unlikely to comply with a demand, which is a condition precedent to the further action, does not relieve the giver of the obligation the necessity to comply with that requirement. The requirement remains for the landlord to make the demand. Nor can I see any room for the doctrine of waiver to operate. 24 Accordingly, it is my view that his Honour was correct to reject the respondent's contention that it was unnecessary for it to serve a demand on the tenant. The cross-appeal should be dismissed. Orders 25 I would propose that the appeal and cross-appeal both be dismissed with costs. 26 GILES JA: In my opinion the appeal and the cross-appeal should be dismissed with costs. I am generally content to adopt the reasons of Stein JA, but since Young CJ in Eq differs from his Honour in relation to interest I add the following on that matter. 27 There may be dispensation with performance of an act a party to a contract is obliged to perform under the contract, in which case that party does not have to perform the act. Sandtara was not obliged to make demand on Cenrin in this sense: demand was a condition precedent to recovery of costs and expenses, but Sandtara would not be in breach of contract if it failed to make demand. 28 There may be prevention of performance of a condition precedent to gaining or exercising a right, in which case the party who would otherwise have to fulfil the condition precedent can gain or exercise the right although the condition precedent has not been fulfilled. But Cenrin did not prevent Sandtara from making demand: neither the disclaimer nor anything else was shown to have had that consequence. 29 It remained that, in order to recover the costs and expenses, Sandtara had first to make demand on Cenrin. If Cenrin had told it that the demand would not be complied with, that would have been quite consistent with Cenrin also maintaining when sued that the necessary demand had not been made. The disclaimer did not rise any higher. 30 On this analysis, I respectfully disagree with Young CJ in Eq's conclusion that the disclaimer made it a nugatory act to make a demand on Cenrin, and join in Stein JA's conclusion that Sandtara is not entitled to recover the contractual interest. 31 YOUNG CJ in Eq: I agree with Stein JA that the appeal in this matter should be dismissed with costs. However, I consider that I should make some additional comments. For the reasons briefly given below, I would allow the cross appeal.

33 Mr West QC who appeared for the appellant submitted that insofar as there is a contractual right of recovery of costs, if the question of costs is raised before a court, the party with the contractual right is obliged to bring it forward at the time the court decides the matter as a question of discretion (though the discretion should ordinarily be exercised to pick up the contractual right) and thereafter the contractual right is lost.

34 This proposition is said to be supported by the decision of the English Court of Appeal in Gomba Holdings Ltd v Minories Finance Ltd [1993] Ch 171 and the subsequent decision of Rix J in The Ikarian Reefer (No 2) [1999] 2 Ll Rep 621, 626. 35 With respect, this shows a complete misunderstanding of the Gomba case. That case was a redemption suit. In such a suit, the sole issue is to find and certify what amount has to be paid by the person redeeming the land if equity is to force a reconveyance on the mortgagee. Unless the mortgage contains some clause imposing a personal liability on someone to pay the figure found, no personal debt is established by the finding in the suit, see the cases referred to in Fisher & Lightwood on Mortgages, Australian edition [40.4] and see Shercliff v Engadine Acceptance Corp Pty Ltd (No 2) (1982) 3 BPR 9207, 9209.

36 It is true that the Gomba case did go further and lay down some general propositions at p 194. Whether these be dicta or not, they do not affect the result of this case. As M H McLelland J said in Elders Executors and Trustees & Executor Co Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205, 9209, "A contractual stipulation as to how costs in future litigation are to be borne between the parties is not vitiated by an inconsistent order for costs in that litigation."

38 Mr West QC submitted that the ordinary approach to a clause under which a tenant or the like agrees to pay the landlord's "costs and expenses" is that only party and party costs are covered. He cites authority including AGC (Advances) Ltd v West (1984) 5 NSWLR 301, 304. He submits that this principle is reinforced by the fact that in several other clauses in the lease where there is a reference to costs the words " as between solicitor and own client" or the like are used. He refers to the decision of Burchett J in Leda Holdings Pty Ltd v Oraka Pty Ltd [1999] FCA 444.

39 On the other hand, Mr Einfeld QC says that that principle does not apply where the provision is contained in an indemnity clause. He cited the judgment of Brownie J in an earlier judgment in these proceedings delivered on 14 September 1992 based on para 314 of the 20th volume of the 4th edition of Halsbury's Laws of England. That paragraph in turn relied on cases such as Great Western Railway v Fisher [1905] 1 Ch 316, 324 which indeed support it.

40 Mr West's riposte was merely that the name given to the clause was immaterial, but such a quip does not take the matter any further. However the Leda case was an indemnity case, but was approached by Burchett, J on the ordinary basis, though the present question, the level of costs was not his Honour's principal concern.

41 As has been said on many occasions, see eg Re Elders Trustee and Executor Co Ltd and EG Reeves Pty Ltd (Federal Court of Australia, Gummow J, 12 March 1988, unreported) "The meaning of any express provision is a question for interpretation in the particular case."

42 However, even though there are provisions in the lease, eg 3.04 expressly mentioning solicitor and client costs, I do not consider that this has great relevance to the construction of the guarantee and indemnity provisions of the lease in section 18 of the document. In my view, the construction submitted by Mr Einfeld and upheld by the trial judge prevail. Construction of clause 3.03 (The Cross-Appeal)

43 The essential point is that the lessor could only seek interest from the lessee if it made a demand on the lessee. As the lessee had disclaimed the lease, it says that it could not do so and the condition precedent had been waived. The guarantor says that as the condition precedent was not fulfilled, it is not liable for the interest. The trial judge agreed with the guarantor on this point.

44 The concept of waiver or dispensation of a condition precedent is well known. Unfortunately, its expression often leaves some doubt as to its true basis.

45 In Jones v Barkley (1781) 2 Dougl 684, 694; 99 ER 434, 440, Lord Mansfield said, "The party must show he was ready; but if the other stop him on the ground of an intention not to perform on his part, it is not necessary for the first to go further and do a nugatory act." This passage was approved by the High Court in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235, 246-7, Dixon CJ adding, "a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so."

46 In Mahoney v Lindsay (1980) 55 ALJR 118,119, Gibbs J, with whom the four other justices agreed, put the law as "if one party to a contract prevents the other from fulfilling a condition of the contract, that is the equivalent to performance by the latter." See also Hotham v The East India Company (1787) 1 Term Rep 638; 99 ER 1295.

47 Lord Blackburn in Mackay v Dick (1881) 6 App Cas 251, 263 explained the origin of the rule. It derived from a dictum in The Mildenhall Bell case(1469) YB 9 Ed IV (Easter Term 4A). That case involved a bond which was to become void if the Great Bell of Mildenhall was not weighed and put in the fire and tuned. The defendant pleaded that the bell had not been weighed and put in the fire. The Court of Common Pleas ruled that as it was the defendant who was to do this, he was not entitled to judgment in the action on that account.

48 Coke on Littleton (1628) 206b, based on Littleton's tenures of 1681 (Littleton J being one of the majority in The Mildenhall Bell case) put the proposition thus: "If a man make a feoffment in fee, upon condition that the feoffee shall re-infeoff him before such a day, and before the day the feoffor disseise the feoffee, and hold him out by force until the day be past, the state of the feoffee is absolute; for the feoffor is the cause wherefore the condition cannot be performed, and therefore shall never take advantage for non-performance thereof. And so it is if A be bound to B that JS shall marry Jane G before such a day, and before the day B marry with Jane, he shall never take advantage of the bond, for that he himself is the mean that the condition could not be performed. And this is regularly true in all cases."

49 Chitty on Pleading 7th edition (1843) Vol 1 p 335 when considering the pleading of excuse for non-performance of a condition precedent says: "The plaintiff must in general show that the defendant either prevented the performance, or rendered it unnecessary to do the prior act, by his neglect, or by his discharging the plaintiff from performance. The performance of a condition precedent may also be excused by the absence of the defendant, if his presence were necessary for the plaintiff's performance; or by his neglect to do the first act, if it were incumbent on him to perform it. It may also be excused in some cases by the defendants not giving notice to the plaintiff. … "Where the respective acts to be done by the plaintiff and the defendant were mutual, and were to be performed at the same time, the plaintiff should aver his readiness to perform his part and either state that the defendant neglected to attend where necessary, or refused to perform his part or discharged the plaintiff from his performance."

50 In view of the fact that I analysed this area of the law and demonstrated how the principle from The Mildenhall Bell case has developed into at least ten popular maxims in GPI Leisure Corp Ltd v Yuill (6 August 1997 unreported) and in Drinkwater v Caddyrack Pty Ltd (25 September 1997, unreported (affirmed by the Court of Appeal as Kyrwood v Drinkwater [2000] NSWCA 126 without reference to this point), there is no need to develop this thought further. It is the basic proposition that applies in this case.

51 The disclaimer of the lease made it a nugatory act to make a demand on the tenant. This must lead to the conclusion that the tenant could not set up the lack of a demand as a defence. The cross-appeal must be allowed.

52 Because I have reached this conclusion, it is not necessary for me to consider whether the effect of the non-waiver clause in section 18 of the lease (cl 18.03) would produce the same result.

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