DISPSOSITION
66 The issues raised by this appeal ultimately turn on the correct interpretation of the sublease and in particular clause 3 and the definition of "shared facilities" in clause 1. For reasons which I now elaborate, I have earlier concluded that Dr Bright as sublessee had the contractual right to make use of the shared facilities and therefore a right of access to the Procedures Room, once the relevant areas of Procedures Room, treatment room and restrooms, along with the relevant equipment were designated by the sublessor. This occurred in February 2001, the lease having been signed with a commencing date several months earlier for 1 September 2000.
67 The language of clause 3 of the sublease is clear enough; "the Sub Lessee may … make use of the Shared Facilities". Neither the qualifying words "at reasonable times" nor the definition of Shared Facilities detract from this constituting a contractual right according to the plain language of the clause. It is fallacious to regard the right as in truth not a right at all but as dependent upon the favourable exercise of a discretion in favour of the sublessee so that the availability of the Procedures Room was entirely dependent upon the continued willingness of Joodie to make it available. It is likewise wrong to extend the concept of reasonable use beyond the requirement of use "at reasonable times on prior arrangement with the sublessor".
68 If one invokes the interpretative approach of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society (1998) 1 WLR 896, quoted with approval by Gleeson CJ, Gummow and Hayne JJ in Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181; (2001) 76 ALJR 246 at 258 [11], one asks this question. What would "a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract "have understood by the reference to "discretion" in the definition of "Shared Facilities"? The answer is clear. The relevant background knowledge was that the Centre had not been completed at the time the lease was entered into so that the designation which was required in the discretion of the lessor related to the particular location of the Procedures Room, treatment room and restrooms. No doubt it might also have encompassed the equipment to be included therein, though that location would be within the bounds of the Centre itself. But once the relevant areas were so designated, as had occurred by May 2001, the discretion had been exercised. Re-designation from time to time, as I have said, may re-shape the relevant areas, but cannot apply so as to exclude a particular doctor.
69 When one turns to clause 3 itself, it is true that a "prior arrangement with the sub-lessor" is necessary for the sublessor to avail itself of his right at reasonable times to make use of the shared facilities. However, that means no more than the need to ensure that the envisaged shared usage could be co-ordinated. The trial judge held that the use by Dr Bright was between two to five hours per week. While the trial judge found that his use of the Procedures Room was unreasonable, it is clear that this was on the premise that use was subject to the "unfettered discretion of the sublessor" (Red, 20H) and that premise, with respect, was incorrect. I have earlier referred to the evidence at Blue, 146 that Ms Kemp informed Dr Bright "I have been informed that your use of the Procedures Room has been fairly heavy" being "up to four hours at a time". Her evidence does not go so far as to indicate that he was using the Procedures Room without first letting the Centre know. In fact she quoted him as saying to the contrary that he did "let them know when I will be using the room". None of this, however, can possibly justify a denial of use of the Procedures Room altogether as occurred here, based on some supposed discretion in relation to reasonable use. And, as I have said, there was no suggestion that any complaint was formalised in the various letters that enumerated other complaints as to the level of Dr Bright's usage.
70 The reasons given for denial of that use were enumerated in the correspondence to which I have earlier made reference. The initial reason was a failure to supply information regarding professional indemnity insurance. Then, when it was supplied, there was complaint about the extent of the cover. The short and correct answer to that purported basis for denial of use is that there was no provision in the sublease requiring insurance. Nor has it been established that there was any breach of the contract with its more limited obligation to insure under clause 5 in relation to the general practice carried out by Dr Bright.
71 Even if it be the case that Dr Bright's insurance cover were insufficient, being $5 million for the kind of cosmetic surgery he was carrying out, there is simply no warrant under the sublease either read on its own or with clause 5 of the contract for denial of access to the Procedures Room on such a basis. That disposes of this basis for denial of access, as well as any argument based upon a failure to give sufficient information. As to the latter, I consider that it is clear on the evidence that Dr Bright did give sufficient information regarding the insurance cover he had taken out. I would accept Dr Bright's submission that the Centre must have been aware of the insurance cover he had prior to 7 May 2001.
72 The next stated reason was a failure on Dr Bright's part to respond to whether he was appropriately trained or qualified in cosmetic procedures to carry out the kind of procedures that he was carrying out. Insofar as that pertained to insurance it afforded no basis for excluding access. Insofar as that question concerned his competence on any other basis, such as whether a particular licence was required to be carried out under the Act, the short answer is that Joodie should have made those enquiries before it entered into the sublease. The sublease provides no warrant for such an enquiry and indeed pre-supposed satisfaction on the sublessor's part.
73 The belated and final reason for denying access was a concern that the procedures carried out by Dr Bright required licensing under the Act and Regulations. The argument advanced by Joodie is that it did not want to be exposed to a penalty for operating an unlicensed day procedure centre.
74 That argument was put in various forms including that even if a licence might not have been required, Joodie was entirely justified in withholding access to the Procedures Room until such time as it could be satisfied that the procedures carried out did or did not require licence and Dr Bright failed to provide that information.
75 There are a number of difficulties with those submissions.
76 It is clearly the case that the sub-licence made no mention of any requirement to provide such information. The right of access was in no way qualified by a requirement that it be contingent upon Joodie not requiring to have a licence. Nor was the sublease expressed to be contingent upon Joodie being afforded such information about the nature of the practice carried on as would enable Joodie to determine whether or not it required a licence. While an analysis of the regulations indicates that the requirements are not limited to simply paying an annual fee of $690 (Regulation 7(b)), but include various matters going to licensing standards, it was not shown that those licensing standards were so onerous as to make obtaining a licence unfeasible, were one required.
77 The argument pressed by Joodie was, explicitly, not that an implied term should be added to the sublease to give it business efficacy so as to require such information to be given by the sublessee or to permit the sublessor to deny access should a licence be required. Rather the matter was put on the sole basis that the clause conferred a discretion to deny access on that or other grounds, a submission which I have earlier concluded cannot be sustained.
78 Thus while one may accept that the licensing standards included the provision of a suitable maintenance programme for various items of equipment, and the requirement that there be such items of equipment (see Part 2 of the Regulations), and while there are significant clinical standards with associated staffing and operational matters under Parts 4 and 5, Joodie could have obtained a licence if it were of the view that such a licence was or might be required. It certainly was not in a position to compel the sublessee, Dr Bright, to do so on pain of losing access to the Procedures Room. I should add that the access that was denied was in any event not limited to procedures that might have required such a licence. That ostensible reason could not have justified total denial of access as occurred here.
79 Accordingly, it would not matter whether a licence was or was not required so far as the unavailability of this basis for denying access was concerned. It is therefore unnecessary for me to consider the question whether, in terms of cl 3(1) of the Regulations, the kind of procedures that were carried out by Dr Bright involved a "a major regional block" or "intravenous sedative otherwise than for the purposes of simple sedation". This is so as in either case to constitute "the prescribed treatment" as would give rise to the licensing obligation for a day procedure centre. Suffice it to say that the evidence on these matters was not such as to reach a concluded view one way or the other. There was some suggestion that a local anaesthetic which blocked pain to the thoracic region might constitute a "major regional block". Likewise there was some evidence that patients could not be roused (see the evidence of the nurse at the centre, Ms Constantinou, in her affidavit of 3 October 2003 at Blue, 148 and following). However, as I have said that need not be resolved in order to conclude, as I do, that there was no basis for denying access even had the procedures that Dr Bright carried out required a licence.
80 Indeed in stipulating for a Permitted Use as the sublease did, cosmetic surgery was the very kind of practice (as distinct from the excluded practice of general medicine) that was likely to require such a licence. The sublease not only lays down no preclusion of such activity as was likely to require a licence but expressly contemplates that activity.
81 Once it be concluded that Dr Bright was not in breach of the sublease, his actions in protesting at the demands made upon him with regard to insurance and information about the procedures he was carrying out take on an entirely different complexion. He was not in breach of the sublease nor has it been shown that he was in breach of the contract. However, to deny him access to the Procedures Room was a clear breach by Joodie as sublessor, of the right of access that Dr Bright enjoyed under the sublease.
82 Moreover, as the evidence demonstrated, he had 30% of his practice consisting of cosmetic surgery requiring access to the Procedures Room. Such a breach removing his capacity to carrying it on conveniently next door was in my opinion clearly fundamental. It went to an essential matter under the contract of sublease. He had paid rent based upon that access. It was entirely unreasonable for Joodie to invite Dr Bright to set up a Procedures Room in his subleased premises, with no reduction in rent for the privilege, quite apart from whether his premises would have been sufficient in size to enable this to be done.
83 Finally, there is the subsidiary question whether Joodie as sublessor would have been the party required to take out a licence, were the premises to require one; see s37. The requirement to take out a licence falls under the legislation upon the person intending to "carry on the business of" the establishment. That may mean either that the licence should be taken out by Dr Bright, or Dr Bright in conjunction with Joodie. Either way, the most that one can derive from that fact is that ultimately there would have needed to have been co-operation between Dr Bright and the Centre so as to enable a decision to be made as to whether a licence was required and to proceed with obtaining the licence. However, there was never any indication from Joodie that it would have permitted the Procedures Room to be used for procedures that required such a licence. No attempt was therefore made to secure such co-operation. Instead, Joodie asserted, without legal foundation, the right to deny access to Dr Bright, on the false premise that Dr Bright's access depended on a favourable exercise of Joodie's discretion, either absolute or qualified.
84 I also agree with Dr Bright's submissions that the repudiatory conduct around 15 or 16 May 2001 was in no way connected with any perceived licensing considerations but rather by concern on Joodie's part as to its own insurance position. The licensing issue was a justification raised well after the repudiation such that the repudiatory intent emerged in mid-May 2001 and was not ex post facto justified by recourse to a perceived concern about licensing.
85 It follows from the conclusion that Joodie had breached the sublease in denying access and that the breach was a fundamental one, that Dr Bright was entitled, as he did, to treat the breach as a repudiation of the sublease. In those circumstances he was entitled to take the course he did of electing to treat the sublease as at an end and to obtain damages in consequence.
86 I should here deal with the question of whether there was any entitlement to terminate the contract which had not been itself breached. In my view the contract and the sublease were mutually dependent in the sense that breach of the contract was a breach of the sublease, though not in terms vice versa. Here, however, the two arrangements were so closely connected that the actions of Joodie in denying access to the Procedures Room, including for the purpose of any general practice carried out in the Procedures Room by Dr Bright, suffice to entitle Dr Bright to terminate the contract as well, once its substratum was removed by terminating the sublease.