[2021] NSWCA 112
Burton v Babb [2020] NSWCA 331
China First Pty Ltd v Mount Isa Mines Pty Ltd [2019] 3 Qd R 173
[2018] QCA 350
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
(2010) 84 ALJR 446
Source
Original judgment source is linked above.
Catchwords
(2021) 247 LGERA 318[2021] NSWCA 112
Burton v Babb [2020] NSWCA 331
China First Pty Ltd v Mount Isa Mines Pty Ltd [2019] 3 Qd R 173[2018] QCA 350
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1(2010) 84 ALJR 446(2010) 266 ALR 462(2010) 2 ASTLR 553(2010) 4 BFRA 701[2010] HCA 19
McCrohon v Harith [2010] Aust Torts Reports 82-056[2010] NSWCA 67
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410(1996) 139 ALR 193(1996) 21 ACSR 635(1996) 35 IPR 446[1996] ATPR 41-521[1996] FCA 870
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52[1969] UKPC 16
Ross v Lane Cove Council (2014) 86 NSWLR 34(2014) 199 LGERA 298[2014] NSWCA 50
State of Victoria v Sutton (1998) 195 CLR 291(1998) 72 ALJR 1386(1998) 156 ALR 579
(1998) 83 IR 1
Judgment (8 paragraphs)
[1]
Introduction
These proceedings involve a dispute between a landlord and tenant concerning the tenant's exercise, or purported exercise, of an option to renew the lease.
The landlord's predecessor in title and the Mid-Coast Council apply to be joined to the proceedings. They wish to be heard about the validity or invalidity of the tenant's exercise of the option because that may affect the quantum of damages that the tenant claims against them in separate proceedings for alleged negligence and historical breaches of the lease.
The applications raise the following questions for determination. Are the former landlord and the Council persons who ought to have been joined as parties to these proceedings, or whose joinder is necessary to the determination of all matters in dispute in these proceedings? If so, are there any discretionary matters that weigh against joining them?
For the reasons that follow, the answer to the first question is: No. The second question does not arise
[2]
Context in which the present joinder applications are made
[3]
The lease and the fire
On or about 7 November 2018, Whitehorn Estates Pty Ltd (Whitehorn) (as lessor) and United Petroleum Pty Ltd (United) (as lessee) entered into a lease of part of the land in folio identifier 12/1019549 (the Lease and the Premises).
The Premises included a service station, convenience store, and associated facilities. Part of the Premises were located in a building on the land known as "The Rock".
The Lease was for a term of five years, commencing on 1 July 2016 and expiring on 30 June 2021. The Lease included three options for United to renew for a further period of five years each.
In relation to the options to renew, clause 4.4 of the Lease provided (emphasis added):
"The tenant can exercise the option only if -
4.4.1 the tenant serves on the landlord a notice of exercise of option not earlier than the first day stated in item 12D in the schedule and not later than the last day stated in item 12E in the schedule;
4.4.2 there is at the time of service no rent or outgoing that is overdue for payment; and
4.4.3 at the time of service all the other obligations of the tenant have been complied with or fully remedied in accordance with the terms of any notice to remedy given by the landlord.
If this lease is extended by legislation, items 12D and 12E in the schedule are adjusted accordingly."
The Schedule to the Lease provided that the period in which United could exercise the first option to renew was between 1 January 2021 and 1 April 2021. If all three options to renew were validly exercised, the last of the five-year terms would expire on 30 June 2036.
Clause 8.2 of the Lease relevantly provided:
"If the property or the building of which it is part is damaged (a term which includes destroyed)
…
8.2.2 if the property is still useable under this lease but its useability is diminished due to the damage, the tenant's liability for rent and any amount in respect of outgoings attributable to any period during which useability is diminished is reduced in proportion to the reduction in useability caused by the damage;
8.2.3 if the landlord notifies the tenant in writing that the landlord considers that the damage is such as to make its repair impracticable or undesirable, the landlord or the tenant can terminate this lease by giving not less than 7 days notice in writing of termination to the other and no compensation is payable in respect of that termination;"
On or about 31 July 2018, "The Rock" building was entirely destroyed by fire. From about 24 December 2018, United operated its business from another area of the land which it is convenient to refer to as the Temporary Premises.
Whitehorn sold the land on which the Premises are situated, and transferred the Lease, to Coastal Service Centres Pty Ltd (Coastal) with effect from 20 June 2019.
[4]
Common Law Division proceedings
In May 2019, United commenced proceedings against Whitehorn in the Common Law Division of this Court, claiming:
1. damages for Whitehorn's alleged negligence in failing to take reasonable care to minimise the risk of potential damage to the Premises by fire;
2. damages for Whitehorn's alleged breach of its obligations under the Lease to provide quiet enjoyment of the Premises to United and not to derogate from the grant of the Lease, which breaches allegedly flowed from the fire; and
3. damages for Whitehorn's alleged failure to take steps to repair "The Rock" building in breach of its maintenance obligations under the Lease.
In August 2020, United amended its claim in the Common Law Division proceedings by joining Mid-Coast Council (the Council) as a second defendant to those proceedings, claiming damages for alleged negligence in the exercise of the Council's statutory powers relating to the approval of development applications and fire safety measures.
The damages claimed by United against each of Whitehorn and the Council include damages for loss of profits during the period between the fire and United's commencement of trading from the Temporary Premises, and loss of profits thereafter due to reduced trading volumes at the Temporary Premises compared to trading volumes at the Premises. United contends, and Whitehorn denies, that the Temporary Premises are substantively less fit than the Premises for the purposes for which it was entitled to use the Premises under the terms of the Lease.
The evidence served by United in support of its claims for loss of profits in the Common Law Division proceedings includes evidence quantifying the profits that United claims it will lose in the following alternative scenarios:
1. if it continues to operate from the Temporary Premises until 30 June 2021 (on the assumption that the Lease expires at the end of its five-year term and is not renewed);
2. if it continues to operate from the Temporary Premises until 30 June 2026 (on the assumption that the first option to renew the Lease is validly exercised);
3. if it continues to operate from the Temporary Premises until 30 June 2031 (on the assumption that the second option to renew the Lease is validly exercised); and
4. if it continues to operate from the Temporary Premises until 30 June 2036 (on the assumption that the third option to renew the Lease is validly exercised).
[5]
Equity Division proceedings
As I have already mentioned, Coastal became the registered proprietor of the Premises and the lessor under the Lease on 20 June 2019.
The present proceedings were commenced in the Equity Division of the Court in November 2019. Coastal sued United to recover amounts of rent and outgoings that it claimed United had failed to pay in the period since 21 June 2019. United had made some payments, but Coastal claimed that the amounts paid fell short of what was owing under the Lease. Coastal's claim to recover the alleged shortfall did not touch upon Whitehorn's cross-claim against United in the Common Law Division proceedings for rent and outgoings in respect of the period up to 20 June 2019.
Coastal also claimed a declaration that United was in breach of a term of the Lease that required it to open its business at times that were usual for the kind of business conducted by United. Coastal alleged that usual hours for United's business were 24 hours, seven days per week.
United's defence admitted that it had paid rent and outgoings in the amounts set out in Coastal's claim during the period from 21 June 2019. On the basis that rent is required to be adjusted under clause 8.2.2 of the Lease by reason of the allegedly diminished useability of the Premises following the fire, United denied that it had any further liability to Coastal for rent and outgoings. In its first cross-claim filed on 29 October 2020, United sought declaratory relief concerning the amount of rent payable, adjusted in accordance with clause 8.2.2 of the Lease.
United's defence also admitted that it was not opening its business 24 hours, seven days per week, but pleaded instead that it was operating during usual business hours for a business of its kind.
On 25 March 2021, United served a notice on Coastal exercising or purporting to exercise the option to renew the Lease for a further term of five years commencing on 1 July 2021 (the Option Notice).
Sections 133E and 133F of the Conveyancing Act 1919 (NSW) (Conveyancing Act) provide:
133E Breach of certain obligations not to preclude option except in certain circumstances
(1) This section applies to a lease that contains -
(a) an option exercisable by the lessee, and
(b) provision by which the lessee's entitlement to the option is made to depend on performance by the lessee of any specified obligation, whether such performance is required before, or after, or before and after, the giving of any notice by which the option is exercised.
(2) Despite any provision of the kind referred to in subsection (1)(b), no breach by the lessee of any relevant obligation precludes the lessee's entitlement to the option unless -
(a) the prescribed notice has been served on the lessee in respect of the breach, and
(b) the lessee's rights are extinguished in relation to the notice.
(3) In subsection (2) -
breach of an obligation includes, where the obligation requires any thing to be done, any neglect or failure to do the thing concerned.
obligation includes any agreement, covenant, condition or stipulation by which the lessee is required to do or refrain from doing any thing.
prescribed notice means a notice in writing -
(a) specifying the lessee's breach of the relevant obligation and served on the lessee -
(i) within 14 days after the giving of a notice by which the option is exercised, if the breach occurred before the giving of that notice, or
(ii) within 14 days after the breach, if the breach occurred after the giving of that notice, and
(b) states that, subject to any order of the court under section 133F, the lessor proposes to treat the breach as precluding the lessee from entitlement to the option.
(4) For the purposes of subsection (2)(b), the lessee's rights are extinguished in relation to a prescribed notice -
(a) if an order for relief against the effect of the breach in relation to the lessee's entitlement to the option is not sought from the court within one month after service of the prescribed notice, or
(b) if proceedings in which such relief is sought are disposed of, in so far as they relate to that relief, otherwise than by granting relief, or
(c) if such relief is granted on terms to be complied with by the lessee before compliance by the lessor with the order granting relief, and the lessee fails to comply with those terms within the time stipulated by the court for the purpose.
133F Court may grant relief from breach of certain obligations
(1) Relief referred to in section 133E may be sought -
(a) in proceedings instituted in the court for the purpose, or
(b) in proceedings in the court in which -
(i) the existence of an alleged breach by the lessee of the lessee's obligations under the lease, or
(ii) the effect of the breach from which relief is sought,
is in issue.
(2) The court may, in proceedings in which relief referred to in section 133E is sought -
(a) make such orders (including orders affecting an assignee of the reversion) as it thinks fit for the purpose of granting the relief sought, or
(b) refuse to grant the relief sought.
(3) The court may, in proceedings referred to in subsection (2), take into consideration -
(a) the nature of the breach complained of,
(b) the extent to which, at the date of the institution of the proceedings, the lessor was prejudiced by the breach,
(c) the conduct of the lessor and the lessee, including conduct after the giving of the prescribed notice referred to in section 133E(2),
(d) the rights of persons other than the lessor and the lessee,
(e) the operation of section 133G, and
(f) any other circumstances considered by the court to be relevant.
(4) The court -
(a) may make an order under subsection (2) on such terms as to costs, damages, compensation or penalty, or on such other terms, as the court thinks fit, and
(b) may make any consequential or ancillary order it considers necessary to give effect to an order made under that subsection."
[6]
The joinder applications
Whitehorn and the Council are not, and have never been, parties to the Equity Division proceedings.
United, Whitehorn, the Council and Coastal are all parties to the Common Law Division proceedings, as explained at [13]-[23] above.
By notices of motion filed on 9 December 2022 and 15 December 2022 Whitehorn and the Council apply to be joined to the Equity Division proceedings as the second and third cross-defendants (respectively) to the second cross-claim.
Coastal neither consents to nor opposes the joinder applications.
United opposes the joinder applications.
[7]
Consideration and determination
I have considered all of the parties' written and oral submissions in relation to the applications.
Whitehorn and the Council rely on rule 6.19, rule 6.24 and/or rule 6.27 of the Uniform Civil Procedure Rules 2005 (NSW).
Rule 6.19 provides:
"(1) Two or more persons may be joined as plaintiffs or defendants in any originating process if:
(a) separate proceedings by or against each of them would give rise to a common question of law or fact; and
(b) all rights of relief claimed in the originating process are in respect of, or arise out of, the same transaction or series of transactions,
or if the court gives leave for them to be joined.
(2) Leave under subrule (1) may be granted before or after the originating process is filed."
As United submitted, rule 6.19 applies only to joinder by the moving party on the relevant originating process when some relief is sought by the moving party against the proposed defendant: Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496 at 503. Rule 6.19 does not apply to the present application by Whitehorn and the Council to be joined to the Equity Division proceedings.
Rule 6.24 relevantly provides:
"(1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party."
Rule 6.27 provides:
"A person who is not a party may apply to the court to be joined as a party, either as a plaintiff or defendant."
In order to bring itself within r 6.24, an applicant for joinder must demonstrate that one of the two limbs of r 6.24(1) is satisfied either the applicant "ought to have been joined" (by the plaintiff or relevant moving party), or their joinder is "necessary to the determination of all matters in dispute" in the proceedings. Although joinder under r 6.24 is discretionary, no occasion for the exercise of that discretion arises unless one of the two limbs of r 6.24(1) is satisfied: Burton v Babb [2020] NSWCA 331 at [30]-[32] and [42] (Payne JA and Simpson AJA); AQC Dartbrook Management Pty Ltd v Minister for Planning and Public Spaces (2021) 105 NSWLR 152; (2021) 247 LGERA 318; [2021] NSWCA 112 at [14]-[15] (Meagher and Leeming JJA) and [176]-[179] (Preston CJ of LEC).
[8]
Endnotes
241 CLR 1 at [131].
241 CLR 1 at [137]-[138].
241 CLR 1 at [131].
241 CLR 1 at [153].
195 CLR 291 at [76].
The declarations and orders made by the primary judge are reproduced in full in Appendix I to the judgment of the Full Court of the Federal Court: (1996) 64 FCR 410 at 587-595.
64 FCR 410 at 527.
241 CLR 1 at [144].
News Ltd v ARFL (1996) 64 FCR 410; (1996) 139 ALR 193; (1996) 21 ACSR 635; (1996) 35 IPR 446; [1996] ATPR 41-521; [1996] FCA 870 (at 64 FCR 527); Xinfeng Australia International Investment Pty Ltd v GR Capital Group Pty Ltd [2019] NSWSC 1547 at [70].
[2019] 3 Qd R 173; [2018] QCA 350 at [60].
T45.10-45.20.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 April 2023
In its defence filed in the Common Law Division proceedings, Whitehorn denies the alleged negligence and also denies that United has suffered loss and damage as a result of the alleged negligence. In paragraph 7 of its Amended Defence filed on 30 November 2022, Whitehorn pleads the following matters in further answer to United's claim to have suffered loss and damage (emphasis added):
"a. … Whitehorn has no liability for any loss or damage suffered by United after 20 June 2019 and therefore, to the extent that United has suffered any loss or damage after 20 June 2019, then any liability with respect to such loss and damage lies with Coastal not with Whitehorn;
b. the loss and damage claimed by United is not only a consequence of the Fire Event but also the failure of:
(i) United, after 21 December 2018, to manage and operate the Temporary Premises, so as to provide services and amenities comparable to the leased part of the Rock and to operate its service station business 24 hours per day, 7 days per week and to otherwise mitigate any loss and damage …
(ii) Coastal to comply with the Maintenance Term, the Further Maintenance Term, the Structural Maintenance Term the Quiet Enjoyment Term and the Non-Derogation Term and to make good damage to the leased premises in a timely manner after 20 June 2019;
(iii) the Second Defendant to take all reasonable steps to minimise the risk of potential damage by fire and comply with the Public Authority Duty of Care …
c. … the Fire Event did not diminish the useability of the premises to the extent that, in the application of clause 8.2 of Annexure B of the Lease, no rent or outgoings were payable under the Lease, for the period to 20 June 2019;
d. as alleged in paragraphs 15 and 16 below, and paragraph 11 of the Cross Claim filed in these proceedings by Whitehorn on 4 September 2019 (Cross Claim), in breach of the express terms of the Lease, United failed and refused to pay to Whitehorn any rent, outgoings, interest or GST which it was obliged to pay to Whitehorn in the period from 21 December 2018 to 20 June 2019 pursuant to the terms of the Lease;
e. after 20 June 2019 and until 28 February 2022, United failed to pay Coastal the full amount of rent and outgoings that was payable under the Lease as at 1 April 2021;
f. as at the last permissible date for the exercise of the option for renewal provided for in clause 4 of Annexure B of, and Item 12 of the Schedule to, the Lease (1 April 2021) rent and outgoings amounts, payable to both Whitehorn (to 20 June 2019) and Coastal (after June 2019), were overdue for payment under the Lease;
g. as at 1 April 2021, United was in breach of clause 16.1.2 of Annexure B to the Lease ('the Usual Opening Hours Covenant');
h. in these premises, pursuant to clause 4.4 of Annexure B of the Lease, United had no entitlement to a renewal of the Lease after the expiry of its term on 30 June 2021 and any purported exercise of any option to renew the Lease by United was therefore invalid or of no force or effect;
i. to the extent that United has suffered any loss of profits arising from reduced trading volume at the Temporary Premises (which was not admitted) then, in the premises pleaded above, United has not suffered any such loss after the expiry of the Lease on 30 June 2021 and, or in the alternative, any such losses were not caused by any breach of duty of care by Whitehorn but rather were caused by:
(i) Coastal's breach of the terms of the Lease after 20 June 2019; and
(ii) United's failure to manage and operate the Temporary Premises and otherwise mitigate any losses;
as pleaded in paragraph 7(b) above."
Whitehorn also pleads that it is entitled to set off against any liability that it may be found to have to United (which is denied) amounts of $259,802 and $7,654 in respect of rent and outgoings (respectively) that United allegedly failed to pay to Whitehorn during the period from 24 December 2018 to 20 June 2019 in breach of the Lease.
Whitehorn has filed a cross-claim against United and Coastal in the Common Law Division proceedings. As against United, Whitehorn claims damages for United's alleged breach of the Lease in failing to pay the rent and outgoings as referred to immediately above. As against Coastal, Whitehorn claims an indemnity or contribution in respect of any liability that Whitehorn may be found to have to United in respect of any loss or damage arising after 20 June 2019, being the date on which Coastal became the registered proprietor of the Premises and the lessor under the Lease.
In its reply to the defence filed by Whitehorn in the Common Law Division proceedings, United pleads that the rent payable under the Lease in respect of the period from 24 December 2018 to 20 June 2019 should be substantially reduced pursuant to clause 8.2 of the Lease. I assume that this was also pleaded in United's defence to Whitehorn's cross-claim, but that defence was not part of the evidence before the Court in the present joinder applications.
The Council's defence to United's claims in the Common Law Division proceedings denies the alleged negligence and denies that United has suffered any loss or damage as a result of the alleged negligence. In further answer to United's claim for damages, the Council pleads in paragraph 48 of its further amended defence filed on 9 December 2022 that it (emphasis added):
"(a) repeats the matters alleged in paragraph 43 above (the limited damage to and the continued usability of the Leased Premises);
(b) repeats United's allegation, in paragraph 4 of the 9 August 2019 Reply to the First Defendant's Defence, that the Fire Event substantially diminished the useability of the Leased Premises, and thus the rent and outgoings payable between 31 July 2018 and 20 June 2019;
(c) says that the Fire Event damage did not diminish the useability of the premises to the extent that, in the application of clause 8.2 of the Lease, no rent or outgoings were payable under the November 2018 lease, for the period to 20 June 2019;
(d) says that United paid Whitehorn no rent or outgoings for the period from 1 August 2018 to 20 June 2019;
(e) further says that after 20 June 2019 and until 28 February 2022, United failed to pay Coastal Service Centres Pty Ltd the full amount of rent and outgoings that were payable under the Lease as at 1 April 2021;
(f) says that as at the last permissible date for the exercise of the option for renewal provided for in clause 4 Item 12 of the Lease (ie., 1 April 2021) rent and outgoings amounts, payable to both Whitehorn (to 20 June 2019) and Coastal Service Centres Pty Ltd (after 20 June 2019), were overdue for payment under the Lease;
(g) in the premises alleged, since 2 April 2021 United had no entitlement to a renewal of the lease after the expiry of its term on 30 June 2021."
In its reply filed on 31 January 2023, United joins issue with paragraph 48 of the Council's defence.
The Common Law Division proceedings have not yet been listed for hearing.
On 1 April 2021, Coastal served on United a notice pursuant to s 133E stating that, subject to any order of the Court under s 133F, United was precluded from exercising the option to renew because, at the time the Option Notice was served, there were rent and outgoings overdue for payment in the amount of $292,918.31 and United was also in breach of the usual opening hours clause of the Lease (the Prescribed Notice).
At the hearing of the joinder applications, the Court was informed that the amount of $292,918.31 referred to in the Prescribed Notice was the amount of the shortfall in rent and outgoings claimed by Coastal in the Equity Division proceedings. That is to say, Coastal had not relied on any failure by United to pay rent or outgoings to Whitehorn during any period prior to 20 June 2019 as a breach precluding United's entitlement to the option.
The Court was also informed that United had filed a notice of motion in the Equity Division proceedings on or about 27 April 2021 claiming declaratory or other relief in relation to the validity of the Prescribed Notice and, in the alternative, claiming relief under s 133F of the Conveyancing Act. As will be seen, those claims for relief were subsequently incorporated into the second cross-claim filed by United in the Equity Division proceedings on 4 April 2022.
On 17 January 2022, Coastal and United agreed to settle Coastal's claims in the Equity Division proceedings and United's claims in the first cross-claim in the Equity Division proceedings on terms that were reflected in the following declaration and orders by consent entered on 27 January 2022 (as amended on 27 October 2022):
"1. The Court declares that the rent payable pursuant to the lease dated 7 November 2018 between Whitehorn Estates Pty Ltd (ACN 605 915 786) and the defendant (Lease), being the lease that now binds the plaintiff as lessor and the defendant as lessee, is adjusted pursuant to clause 8.2 of the Lease to reflect the following liability of the defendant to pay at:
(a) $373,171.86 per year (plus GST) from 20 June 2019 to 30 June 2019;
(b) $384,366.83 per year (plus GST) from 1 July 2019 to 30 June 2020;
(c) $395,897.84 per year (plus GST) from 1 July 2020 to 30 June 2021;
(d) $407,774.78 per year (plus GST) from 1 July 2021 to 30 June 2022 (Abated Rent).
2. The defendant pay to the plaintiff, within 14 days of the date of these orders, any difference between the rent paid to date by the defendant and the Abated Rent payable under the Lease for the period from 20 June 2019 to the date on which payment is made (Shortfall Amount).
3. No interest is payable on the Shortfall Amount.
4. The Court declares that the outgoings payable pursuant to the Lease be adjusted downwards by 21% pursuant to clause 8.2 of the Lease and paid by the defendant at that reduced amount from the date of the parties agreeing to these orders.
5. Judgment for the defendant on the plaintiff's Amended Statement of Claim filed on 11 September 2020 (ASOC).
6. No order as to cost (with the intent and effect that the parties bear their own costs of the plaintiff's ASOC).
7. The defendant's Cross-Claim filed on 29 October 2020 (First Cross-Claim) be otherwise dismissed.
8. No order as to costs (with the intent and effect that the parties bear their own costs of the defendant's First Cross-Claim)."
On 18 January 2022, Coastal served on United a document that referred to clause 8.2.3 of the Lease (on the assumption that the Lease had been validly renewed, which remains in dispute) and advised United that Coastal considered that the damage to the Premises was such as to make its repair impracticable or undesirable. The parties refer to this document as the Notice of Consideration, and I will adopt the same convention.
After the declarations and orders were made on 27 January 2022, the only issues remaining to be determined in the Equity Division proceedings are:
1. the issues concerning the Option Notice and Prescribed Notice that were the subject of the notice of motion filed by United on 27 April 2021 and were incorporated in the second cross-claim filed by United on 4 April 2022; and
2. issues concerning the Notice of Consideration, which were also pleaded in the second cross-claim.
United's contentions pleaded in the second cross-claim (as amended on 1 November 2022) may be summarised as follows:
1. the Prescribed Notice served by Coastal on 1 April 2021 was invalid because:
1. at the time it was served, the parties were in genuine dispute about whether the rent was subject to abatement under clause 8.2.2 of the Lease and, if so, the amount of the abatement; and
2. the Prescribed Notice failed to specify the amount of rent said to be overdue, separately from the amount of outgoings, or how that amount had been calculated;
1. alternatively, if the Prescribed Notice was valid, the Court should make an order under s 133F of the Conveyancing Act relieving United against the effect of the breaches specified in the Prescribed Notice because, inter alia, the parties were in genuine dispute about rent abatement at the time the notice was served and that dispute was resolved by the orders made on 27 January 2022 and United's payment of the "Shortfall Amount" referred to in those orders in full on 28 February 2022;
2. Coastal intends to rely on the Notice of Consideration to terminate the Lease pursuant to clause 8.2.3 of the Lease if United is found to have validly exercised the option to renew or if United is granted relief against forfeiture pursuant to s 133F of the Conveyancing Act;
3. the Notice of Consideration was invalid; and
4. the doctrine of estoppel by convention or promissory estoppel operates to preclude Coastal from departing from a common understanding and assumption by the parties or from representations by Coastal to the effect that Coastal would rebuild "The Rock" building and service station and would not seek to terminate the Lease under clause 8.2.3.
United claims:
1. a declaration that the Prescribed Notice was invalid and of no effect;
2. alternatively, an order under s 133F of the Conveyancing Act that United be relieved against the effect of the breaches of the Lease alleged in the Prescribed Notice;
3. a declaration that United did, by the Option Notice, validly exercise the option to renew the Lease for a further term of five years commencing on 1 July 2021;
4. a declaration that the Notice of Consideration was invalid and of no effect;
5. alternatively, a declaration that Coastal is estopped from taking any steps referable to the Notice of Consideration, or from issuing any further notice pursuant to clause 8.2.3 of the Lease with respect to the damage to the Premises caused by the July 2018 fire; and
6. an order restraining Coastal from taking any steps referable to the Notice of Consideration, including terminating the Lease.
In its defence to the second cross-claim, Coastal:
1. pleads that there was rent overdue under the Lease in respect of the period from 20 June 2019 at the time that United served the Option Notice, with the result that the condition in clause 4.2.2 of the Lease was not satisfied and United was thereby precluded from exercising the option to renew the Lease and so has not validly exercised that option;
2. pleads that the Prescribed Notice was valid and United should not be granted relief against forfeiture under s 133F of the Conveyancing Act; and
3. denies that any estoppel operates to preclude it from terminating the Lease (assuming that it has been validly renewed, contrary to Coastal's primary contentions above).
The second cross-claim has been listed for hearing commencing on 27 July 2023.
The principles articulated by the High Court upholding the appeal by Walker Corporation Pty Ltd in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; (2010) 84 ALJR 446; (2010) 266 ALR 462; (2010) 2 ASTLR 553; (2010) 4 BFRA 701; [2010] HCA 19 (White City) govern the exercise of the power to join persons as parties to proceedings under r 6.24 and/or r 6.27, including the application of the two limbs of r 6.24(1).
In White City, Poplar Holdings Pty Ltd (Poplar), as nominee of John Alexander's Clubs Pty Ltd (JACS), acquired an option to purchase land with funds lent by Walker Corporation Pty Ltd (Walker) secured by unregistered mortgage over the land. Relying on a memorandum of understanding that it had entered into with JACS before Poplar acquired the option, White City Tennis Club (the Club) commenced proceedings in this Court seeking a declaration that Poplar held its interest on constructive trust for the Club. Walker was not a party to those proceedings. The Club's claim was dismissed at first instance, but succeeded on appeal. Walker then applied to the Court of Appeal to be joined as a respondent to the appeal and for orders setting aside the Court of Appeal's declaration that Poplar held its interest in the land on constructive trust for the Club and ordering Poplar to transfer the land to the Club upon the Club paying a sum equivalent to the price that Poplar had paid to purchase the land as nominee of JACS. The Court of Appeal dismissed Walker's application, and Walker then appealed to the High Court.
The High Court accepted as correct the general principle that (emphasis added): [1]
"… where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined."
The High Court also accepted the correctness of the general proposition that (emphasis added): [2]
"… if a court makes an order affecting a person who should have been joined as a necessary party, while the order will not be a nullity, that person is entitled to have the order set aside, and is not limited merely to seeking the favourable exercise of a discretion, whether or not the person in question becomes a party."
The High Court held that the Court of Appeal's declaration and orders had directly affected Walker. [3] Walker's entitlement to have the Court of Appeal's declaration and orders set aside rested on (emphasis added): [4]
"… matters of right affecting non-parties which rest on general law principles of natural justice."
The High Court referred to State of Victoria v Sutton (1998) 195 CLR 291; (1998) 72 ALJR 1386; (1998) 156 ALR 579; (1998) 83 IR 1; [1998] HCA 56 (Victoria v Sutton) and News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; (1996) 139 ALR 193; (1996) 21 ACSR 635; (1996) 35 IPR 446; [1996] ATPR 41-521; [1996] FCA 870 (News Ltd v ARFL) as establishing the general principles referred to above.
Victoria v Sutton concerned an amalgamation agreement between the Builders' Labourers' Federation (the BLF) and the Construction, Forestry, Mining and Energy Union (the CFMEU) which purported to dispose of all of the assets of the BLF to the CFMEU. The BLF had earlier been deregistered, and a custodian had been appointed to all of its assets, pursuant to Commonwealth and Victorian legislation. The custodian had taken steps to have the BLF's funds held on deposit vested in himself, but had not been registered as the proprietor of real property owned by the BLF. The real property remained registered in the name of certain members of the BLF, who held the position of "trustee" under the BLF rules and held the real property on trust for the members of the BLF. An order made by the Victorian Governor in Council under the relevant Victorian legislation provided that any disposition of funds or property of the BLF without the prior written consent of the custodian was void, at the option of the custodian. The custodian was not aware of the amalgamation agreement between the BLF and the CFMEU, and did not consent to the disposition of the BLF's assets to the CFMEU. The CFMEU commenced proceedings against the custodian in the Industrial Relations Court seeking declarations and orders in relation to the amalgamation agreement and the property of the BLF. The registered proprietors of the real property were not joined as parties to those proceedings and no order was made appointing any members of the BLF to represent the interests of the members of the BLF as a whole. The Industrial Relations Court held that the amalgamation agreement was valid and effective in law and that the CFMEU was beneficially entitled to the BLF's funds and real property in the possession, custody, or control of the custodian. The custodian was ordered to do all things necessary to vest those funds and property in the CFMEU.
The majority of the High Court (Gaudron, Gummow, and Hayne JJ) held that the funds of the BLF, once vested in the custodian, were beyond the reach of the purported disposition by the BLF to the CFMEU under the amalgamation agreement. A differently constituted majority (Gaudron, McHugh, Gummow, and Hayne JJ) held that the purported disposition of real property under the amalgamation agreement was ineffective because the custodian had avoided the disposition by the pleading in his defence filed in the Industrial Relations Court. McHugh J, writing separately, considered that that the failure to join the registered proprietors of the real property and members of the BLF in a representative capacity as parties to the Industrial Relations Court proceedings was a further reason for setting aside the orders of the Industrial Relations Court. [5] In the passages to which the High Court later referred with approval in White City, McHugh J wrote (at [77]-[78], footnotes omitted and emphasis added):
"[77] The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. That practice also assists in avoiding duplication of hearings on the same issues and in avoiding the spectre of inconsistent decisions by courts or the judges of the same court. In Pegang Mining Co Ltd v Choong Sam Lord Diplock, delivering the opinion of the Judicial Committee of the Privy Council, said:
'In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard … a better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?'
[78] The test for determining whether a person is a necessary party has usually arisen in the context of a person seeking to join proceedings rather than a failure to join a relevant person. But the same principle must apply in both situations. Thus, in News Ltd v Australian Rugby Football League Ltd, the Full Federal Court held that an order 'which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside.' …"
His Honour held (at [81]):
"Both before and after the filing of the Custodian's pleading, the beneficial interest in the property belonged either to the CFMEU or to the members of the BLF. Consequently, they were entitled to be heard and should have been represented in the proceedings."
News Ltd v ARFL concerned a rugby league competition established by News Ltd and Super League Pty Ltd (Super League) to rival the established competition conducted by the Australian Rugby Football League (ARFL) and NSW Rugby League (NSWRL). The proceedings included cross-claims by the ARFL and NSWRL and certain clubs loyal to them (the loyal clubs) against other clubs which had aligned themselves with Super League by making their players and coaches available to a franchisee, which in turn made them available for Super League's rival competition (the rebel clubs and the franchisees). Those cross-claims concerned alleged breaches of the rebel clubs' contractual duties to the ARFL and NSWRL, alleged breaches of the rebel clubs' fiduciary duties in transferring the loyal clubs' assets to the Super League venture, and alleged inducement or participation by News Ltd and Super League in the rebel clubs' alleged breaches of contract and fiduciary duties.
The primary judge found in favour of the ARFL and NSWRL and made extensive orders that effectively restrained News Ltd, Super League, and the rebel clubs from conducting the rival competition for five years. The relief granted by the primary judge included declarations and orders to the following effect: [6]
1. a declaration that the rights of News Ltd, Super League, and the franchisees under any contract which any of them had with any Super League player or any Super League coach were held in trust for NSWRL (orders 12(a) and (b));
2. an order requiring News Ltd, Super League and each of the franchisees to give notice in writing within 48 hours to Super League players and Super League coaches that Super League nominates them to play or coach and attend and participate in the ARFL competition, and requiring the Super League players and coaches to do so (order 15); and
3. an order restraining News Ltd, Super League and each of the franchisees from making any payment to any player or coach who failed to act in accordance with that nomination and requirement (order 15A).
The Super League players and coaches had not been joined as parties to the proceedings.
On appeal, the Full Court of the Federal Court of Australia held that the orders referred to above affected in a direct and substantial way the Super League players' and coaches' rights against, and obligations to, their Super League employers, in a way which restricted their freedom to choose the employer for whom they would work. The Full Court held that those orders should be discharged by reason of the failure of the cross-claimants (ARFL, NSWRL and the loyal clubs) to join the Super League players and coaches to the proceedings. [7]
The Full Court referred (at 524) to a fuller extract of the passage from the Privy Council's decision in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52; [1969] UKPC 16, to which McHugh J had referred in Victoria v Sutton (emphasis added):
"Lord Diplock, delivering the opinion of the Judicial Committee of the Privy Council in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, said this (at 55-56):
'The cases illustrate the great variety of circumstances in which it may be sought to join an additional party to an existing action. In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach which makes it undesirable in the present case, in which the facts are unique, to attempt to lay down any general proposition which could be applicable to all cases.
It has been sometimes said as in Moser v Marsden [1892] 1 Ch 487 and in Farbenindustrie AG Agreement [1944] Ch 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between 'legal' and 'commercial' interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?'
An order which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside."
The Full Court continued (at 525, emphasis added):
"In our opinion, the question should be decided according to the test proposed by Lord Diplock. The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.
Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. Where the question arises after final orders have been made in the proceedings, the inquiry must be directed to the orders actually made, or which, on appeal it is contended should be made: cf Associated Grocers Co-operative Ltd v Hubbard Properties Pty Ltd (1986) 42 SASR 321 at 341."
Whitehorn's submissions relied on Ross v Lane Cove Council (2014) 86 NSWLR 34; (2014) 199 LGERA 298; [2014] NSWCA 50 (Ross v Lane Cove), in which the Court of Appeal applied the principles in White City and News Ltd v ARFL to proceedings brought in the Land and Environment Court in which a local council sought orders against the former owner of certain land requiring him to demolish unauthorised works on the land and to reinstate the land in accordance with the relevant development consent. Any such orders would require the demolition and reinstatement to be carried out by the former owner. The new owner was not joined to the proceedings. The Land and Environment Court made the orders sought by the local council. The Court of Appeal held that the new owner was a necessary party to the proceedings because she was directly affected by the orders sought by the local council.
In each of the cases referred to above, the party seeking to be joined to the proceedings had a right or liability that would be directly affected by the relief sought in those proceedings.
In White City, Walker had an interest in the land that was the subject matter of the proceedings as equitable mortgagee. The High Court described the Club's claim for a declaration of constructive trust as "seeking to overreach" Walker Corporation's interest. [8]
The beneficial interest in the funds and real property that were the subject of the proceedings in Victoria v Sutton belonged either to the members of the BLF or to the members of the CFMEU. That was the question to be determined in the Industrial Relations Court proceedings. The BLF members' claim to beneficial ownership entitled them to be heard in and joined as parties to those proceedings.
In News Ltd v ARFL, the Super League players and coaches had contractual rights and obligations vis-à-vis their Super League employers. The orders made by the primary judge would affect those rights and obligations in a direct and substantial way, including by altering the party for whose ultimate benefit the players' and coaches' obligations were performed and by requiring the Super League employers to withhold payment from players and coaches who failed to comply with requirements that the Court ordered the Super League employers to impose on those players and coaches. Although these effects on the Super League players and coaches were consequential, in the sense that they flowed from the effect on News Ltd, Super League and the franchisees of the orders made against them, they were nevertheless direct effects of those orders on the employment contracts to which the Super League players and coaches were parties. [9]
In Ross v Lane Cove, the new owner was directly affected by the demolition and reinstatement orders sought by the council against the former owner because those orders would require the former owner to enter onto the new owner's land to carry out the demolition and other necessary work. The orders afforded the former owner a defence of lawful authority to any claim of trespass that the new owner might otherwise have brought in relation to that interference with her possession of the land. In addition, the new owner's statutory rights to apply for a modification of the development consent (which would retrospectively cure the former owner's breach) or a building certificate (which would provide some measure of protection) were adversely affected by the injunction granted on the application of the local council, which required demolition by the former owner within a short time frame.
By contrast, it was held in China First Pty Ltd v Mount Isa Mines Pty Ltd [2019] 3 Qd R 173; [2018] QCA 350 (China First) that chargees of a crane, ore unloading equipment and a conveyor belt, which had been left on a part of a wharf at the Port of Townsville formerly licensed to the licensee, were not entitled to be joined to proceedings in which the licensor had sought and obtained orders permitting it to cause that equipment to be dismantled and delivered to the former licensee and requiring the licensee to accept the equipment so delivered. The chargees were not entitled to be joined, notwithstanding that the dismantling and removal of the charged equipment may affect its value, with resulting adverse financial consequences for the chargees. The Queensland Court of Appeal held that these were financial effects, which were consequential in nature. After undertaking a detailed survey of the cases, Gotterson JA (with whom Fraser and McMurdo JJA agreed) said (emphasis added): [10]
"These cases reveal a systematic approach taken by courts to the determination of whether orders made or sought have had, or if made, will have, a direct effect on a legal right or liability. That approach has involved an identification of the specific legal right or liability said to have been affected or liable to be affected, and an assessment of its legal characteristics. Next, the court has inquired into whether the right or liability itself has been affected, or is liable to be affected. Typically, the inquiry has sought to establish whether there is an effect on the existence of the right or liability or on its legal characteristics; or whether there is an effect on the legal environment in which the right might be exercised or the liability discharged, such as would impact upon its exercise or discharge from a legal perspective. An effect of either kind has been regarded by courts as a direct effect on the right or liability for the purposes of the test."
The submissions made on behalf of Whitehorn and the Council also referred to Xinfeng Australia International Investment Pty Ltd v GR Capital Group Pty Ltd [2019] NSWSC 1547 (Xinfeng). In that case, Ward CJ in Eq (as the President of the Court of Appeal then was) discussed the principles in White City, News Ltd v ARFL and Victoria v Sutton, and referred to numerous other cases in which those principles have been applied. Each of those cases turned on its own facts, none of which were analogous to the present case in any relevant way.
The subject matter of the Common Law Division proceedings and the subject matter of the Equity Division proceedings have been described in detail earlier in these reasons. I reject the submissions made on behalf of Whitehorn and the Council that the two proceedings involve the same subject matter.
The subject matter of the Equity Division proceedings is United's claimed entitlement as against Coastal to exercise the option to renew under the Lease or, if it is precluded from doing so by a breach identified in the Prescribed Notice, United's claim under s 133F of the Conveyancing Act for relief against forfeiture. If the option is declared to have been validly exercised, or if relief is granted under s 133F, then the subject matter extends to Coastal's rights under clause 8.2.3 of that further lease and whether it is estopped from exercising any such rights.
As United submitted, neither Whitehorn nor the Council have any rights or liabilities in respect of the option or in respect of any new lease to be entered into between United and Coastal if the option is found to have been validly exercised or if relief against forfeiture is granted. The estoppels pleaded by United in the second cross-claim in the Equity Division proceedings are not capable of operating against Whitehorn or the Council. United seeks no relief against Whitehorn or the Council in the Equity Division proceedings.
By reason of s 133E(2)(a) of the Conveyancing Act, the breaches or alleged breaches of the Lease that Coastal may rely on as precluding United from its entitlement to the option to renew are limited to the breaches specified in Coastal's Prescribed Notice. Those breaches do not include alleged non-payment of rent by United to Whitehorn in the period up to 20 June 2019. The outcome of the Equity Division proceedings will not affect Whitehorn's cross-claim against United in the Common Law Division proceedings for unpaid rent and outgoings.
There is much force in United's submission that the judgment entered in favour of United on 27 January 2022 in the Equity Division proceedings determined (in United's favour) the dispute as to whether United was in breach of the usual operating hours clause of the Lease when it served the Option Notice. However, it is not necessary for me to express any concluded view about that, and I prefer not to do so in circumstances where the very limited observations made by the solicitor appearing for Coastal on the joinder applications left Coastal's position unclear. [11] If that issue remains in dispute, then any determination in the Equity Division proceedings as to whether United was in breach of the usual operating hours clause as at the date of the Option Notice, and whether any such breach precluded United from exercising the option, will not directly affect any right or liability of Whitehorn or the Council for all of the reasons explained below.
The substance of the submission made by Whitehorn and the Council in support of their respective joinder applications was that the declaration sought by United in the Equity Division proceedings that it had validly exercised the option to renew the Lease would affect the quantum of any damages that Whitehorn or the Council may be ordered to pay United in the Common Law Division proceedings if United succeeds in its claims against Whitehorn for negligence and breaches of the Lease in the period up to 20 June 2019 and in its claims against the Council for negligence, and if United also succeeds in establishing that such negligence and/or breaches caused some loss of profits. If the option to renew was validly exercised, this would extend the period of time during which United may potentially succeed in proving in the Common Law Division proceedings that it has earned less in profits from trading out of the Temporary Premises than it would have earned from trading from the Premises in the counterfactual scenario that there had been no negligence or breach. It was submitted on behalf of Whitehorn and the Council that this potential effect on the quantum of any damages awarded against them in the Common Law Division proceedings is significant in monetary terms. It was submitted that Whitehorn and the Council would be denied procedural fairness if their potential liability to United in the Common Law Division proceedings were to be adversely affected by a declaration made in the Equity Division proceedings that United had validly exercised the option to renew the Lease, without the Court having joined Whitehorn and the Council to the Equity Division proceedings so as to afford them an opportunity to be heard about the validity or otherwise of United's exercise of the option.
As United submitted, any declaration in the Equity Division proceedings that the Lease was validly renewed will not, by its terms, affect any right or liability of Whitehorn or the Council. Indeed, any such declaration will have only a consequential effect in the sense explained in China First on any liability that Whitehorn and/or the Council may be found to have to United in the Common Law Division proceedings. It will not affect the potential liability itself, but only the potential quantum of damages that may be awarded against Whitehorn and/or the Council if United succeeds in establishing liability for negligence and/or Whitehorn's alleged breaches of the Lease prior to 20 June 2019.
That is to say, any declaration in the Equity Division proceedings that the Lease has been validly renewed will be one matter that shapes the counterfactual scenario that is relevant to the assessment of damages in the Common law Division proceedings for the loss of profits allegedly suffered by United as a result of Whitehorn's and the Council's negligence and Whitehorn's breaches of the Lease before it transferred the Lease to Coastal on 20 June 2019.
It is relevant to note that other potential outcomes in the Equity Division proceedings may have a similarly consequential effect on any liability of Whitehorn and/or the Council to United in the Common Law Division proceedings. If the Lease is not declared to have been validly renewed in the Equity Division proceedings, then any relief granted to United under s 133F of the Conveyancing Act will affect the counterfactual scenario referred to above. Irrespective of whether a declaration is made or s 133F relief is granted (but assuming one of those two outcomes), the counterfactual scenario referred to above will be affected by the outcome of the claims and defences in the Equity Division proceedings concerning the Notice of Consideration, conventional estoppel, and promissory estoppel.
During the course of the hearing of the joinder applications, there were numerous changes in the submissions made on behalf of Whitehorn and the Council concerning the manner in which they each contended they should be entitled to participate in the Equity Division proceedings in order to protect their "interests". The final iteration of their submissions may be summarised as follows.
Whitehorn and the Council seek to be joined to the Equity Division proceedings in order to make submissions supporting Coastal's pleaded defence to the second cross-claim to the effect that, when the Option Notice was issued, United was in breach of its obligations under the Lease to pay rent to Coastal by reason of the shortfall referred to at [24] above, and that clause 4.2.2 of the Lease therefore precluded United from exercising the option to renew. Whitehorn and the Council also wished make submissions supporting Coastal's pleaded position concerning the validity of its Prescribed Notice. The Council also wished to make submissions opposing any grant of relief to United under s 133F of the Conveyancing Act, although counsel for Whitehorn expressly eschewed the notion that Whitehorn had any interest that entitled it to be heard in relation to s 133F.
Neither Whitehorn nor the Council claimed to have any interest entitling them to be heard in relation to the Notice of Consideration, and United's contention that Coastal is precluded by conventional estoppel or promissory estoppel from departing from a common assumption or representation that it would not seek to terminate the Lease under clause 8.2.3. That is correct, in my opinion, yet difficult to reconcile with their claim to be entitled to be heard in relation to the validity of the exercise of the option, having regard to the obvious matters referred to at [84] above.
The fact that Whitehorn and the Council wish to be heard only in support of Coastal's defences in relation to the validity of the exercise of the option and the validity of the Prescribed Notice serves to illustrate that they have no interest in the subject matter of the Equity Division proceedings, and no right or liability that will be directly affected by the Court's determination of those issues, for the reasons I have explained above. This is also illustrated in relation to s 133F of the Conveyancing Act by the Council's failure to articulate any reason why any submission that it might make would be relevant to the Court's exercise of the discretion to grant relief against forfeiture to United in all the circumstances of this case. The Council is a stranger to the relationship between lessee and lessor, and has no other interest in the property that would be affected by the grant of relief under s 133F.
It was submitted on behalf of Whitehorn and the Council that if they are not joined to the Equity Division proceedings then they will not be bound by any declaration made in those proceedings as to the validity of United's exercise of the option or by any order made under s 133F of the Conveyancing Act granting relief against forfeiture. It was submitted that Whitehorn and the Council would therefore be entitled to agitate for a determination of those issues in the Common Law Division proceedings that may be inconsistent with the determination in the Equity Division proceedings. It was submitted that this would result in undesirable multiplicity of proceedings and, potentially, inconsistent findings. It was submitted that these were further reasons why Whitehorn and the Council should be joined to the Equity Division proceedings.
I reject those submissions. Whitehorn and the Council have no right to be heard in relation to those issues for all of the reasons explained above. No injustice arises from Whitehorn and the Council being excluded from the hearing and determination of those issues merely because that determination in the Equity Division proceedings, after a contested hearing between the only parties to the relevant legal relationship (United and Coastal), may affect the counterfactual scenario for the purpose of assessing any damages for loss of profits in the Common Law Division proceedings. It is not uncommon for events occurring after a cause of action has arisen in tort or contact to be taken into account in the assessment of the damages payable by an unsuccessful defendant if they are material to that assessment: McCrohon v Harith [2010] Aust Torts Reports 82-056; [2010] NSWCA 67 at [54]-[56] (McColl JA, Campbell JA and Handley AJA agreeing). Thus, no multiplicity of proceedings or risk of inconsistent findings arises by reason of Whitehorn and the Council not being parties to the Equity Division proceedings.
For all of those reasons, neither Whitehorn nor the Council are persons who ought to have been joined to the Equity Division proceedings by United or whose joinder is necessary to the determination of all matters in dispute in those proceedings, and there is no other reason that favours joining them to those proceedings pursuant to r 6.27. Their applications to be joined as additional cross-defendants to the second cross-claim in the Equity Division proceedings are dismissed. I am not aware of any reason why costs should not follow the event, but I will hear the parties in relation to costs.