Indian Taj v Gilany

Supreme Court of NSW|2004-12-15|Before: Campbell J, Gzell J

CITATION : Indian Taj v Gilany [2004] NSWSC 1249 HEARING DATE(S) : 15 December 2004 JUDGMENT DATE : 16 December 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Claims for relief dismissed

CATCHWORDS : CONVEYENCING - leases - premises governed by Retail Leases Act 1994 - consent to assignment of lease - requirements of a disclosure statement - whether lessee entitled to request lessor, under section 41(c) Retail Leases Act 1994, to supply disclosure statement when lessee already has one - what types of requirements lessor can make under section 41(a) Retail Leases Act 1994 - whether requirement for provision of two years financial accounts and tax returns of proposed assignee is a reasonable requirement - requirements of a "notice in writing ... withholding consent" within meaning of section 41(d) Retail Leases Act 1994 - whether notice saying in substance "I will not consent unless you do the following things" is a notice withholding consent - whether breaches of lease by lessee can be relied upon as ground for withholding consent - whether breaches of another lease by proposed assignee may be relied upon as grounds for withholding consent LEGISLATION CITED : Retail Leases Act 1994 CASES CITED : Indian Taj v Gilany [2004] NSWSC 1193 Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited (1979) 144 CLR 596 Indian Taj Pty Limited (in Liquidation) ACN 103 803 676 - Plaintiff PARTIES : Soliman Gilany - First Defendant Brenda Mary Gilany - Second Defendant FILE NUMBER(S) : SC 4996/04 COUNSEL : CD Wood - Plaintiff DA Smallbone - Defendants SOLICITORS : Hugh & Associates - Plaintiff AAT Legal - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

4996/04 INDIAN TAJ PTY LIMITED (IN LIQUIDATION) v SOLIMAN GILANY & ANOR JUDGMENT - Ex Tempore (Revised 16 December 2004) 1 HIS HONOUR: The plaintiff in this matter is a company which operates an Indian restaurant. The defendants are the landlords of the premises in which that restaurant is conducted. 2 The defendants are the owners of three separate titles of land located at 91 Wigram Street, Harris Park. They own Unit 1, in which the restaurant is located, Unit 2, which is used as office space, and Unit 3, which is a residential unit. Unit 1 is leased to the plaintiff. The lease is for four years from 1 May 2003, with an option to renew for a further four years. The plaintiff is a company with corporate shareholders which are controlled, respectively, by Mr Sharma and Mr Bhardwaj. Mr Sharma holds his interest through a company, Win Win Recruiters Pty Ltd ("Win Win"). Unit 3 at 91 Wigram Street is also leased to the plaintiff. Unit 2 is leased to Win Win. Mr Sharma and Mr Bhardwaj came to have irreconcilable differences, which resulted in a liquidator being appointed to the plaintiff on 24 August 2004. 3 Since August 2004 the defendants have been asserting that the lease of Unit 1 had been validly terminated by them. On 10 December 2004 Gzell J held that that contention was incorrect and the lease remained on foot: Indian Taj v Gilany [2004] NSWSC 1193. 4 On 23 September 2004 the liquidator caused the plaintiff to enter a contract to sell the restaurant business to Win Win. 5 I should mention, at this stage, that the affidavit evidence contains some reference to a letter dated 9 November 2004 from the first defendant to Win Win. In that letter the first defendant made various allegations about Mr Sharma's inadequacies as a tenant. However, the evidence establishes that a copy of that letter was not posted directly to the liquidator, or to an address which resulted in it finding its way to the liquidator. The liquidator first came across that letter on 3 December 2004. I record that, notwithstanding that letter appearing in the evidence, no submissions were based upon it. 6 The hearing to which this judgment relates was a final hearing of claims for relief contained in paragraphs 7 to 10 inclusive of an amended summons filed on 2 December 2004. The final hearing was brought on with urgency because the contract to sell the business to Win Win has now been on foot for a considerable time, and settlement of that contract is hoped to take place tomorrow. If the plaintiff cannot assign the lease, there will be an impediment to the settlement. Whether there is Deemed Consent to Assignment 7 The first claim, made in paragraph 7 of the amended summons, is that the defendants are deemed to have consented to the assignment of the lease of Unit 1 to Win Win pursuant to section 41(d) of the Retail Leases Act 1994 ("the Act"). The provisions of section 41, so far as relevant, are as follows: "41 Procedure for obtaining consent to assignment A retail shop lease is taken to include the following provisions: (a) A request for the lessor's consent to an assignment of the lease must be made in writing and the lessee must provide the lessor with such information as the lessor may reasonably require concerning the financial standing and business experience of the proposed assignee. … (b) Before requesting the consent of the lessor to a proposed assignment of the lease, the lessee must furnish the proposed assignee with a copy of any disclosure statement given to the lessee in respect of the lease, together with details of any changes that have occurred in respect of the information contained in that disclosure statement since it was given to the lessee (being changes of which the lessee is aware or could reasonably be expected to be aware). … (c) For the purpose of enabling the lessee to comply with paragraph (b), the lessee is entitled to request the lessor to provide the lessee with a copy of the disclosure statement concerned and, if the lessor is unable or unwilling to comply with such a request within 14 days after it is made, paragraph (b) does not apply to the lessee. (d) The lessor must deal expeditiously with a request for consent and is taken to have consented to the assignment if the lessee has complied with paragraphs (a) and (b) and the lessor has not within 42 days after the request was made given notice in writing to the lessee either consenting or withholding consent." 8 It will be seen that section 41(d), in making provision that there can be a deemed consent to an assignment of a lease, has as a prerequisite that both section 41(a) has been complied with, and also that section 41(b) has been complied with. The defendants assert that both these preconditions have not been complied with. Compliance with Section 41(b) 9 The plaintiff does not seek to prove that it has provided any documents to the assignee. Rather, it seeks to prove that it is excused from complying with section 41(b) by reason of section 41(c). 10 On 29 September 2004 the solicitors for the lessee requested the solicitors for the lessor to provide a copy of the "lessor's and lessee's disclosure statement as executed by the parties prior to the commencement of" the lease, and advice about whether any of the information contained in that disclosure statement had changed since it was given "to the Company" (which must be a misprint for "to the lessor".) 11 On 6 October 2004, confirmed on 15 October 2004, the lessor's solicitor said that the lessors did not have any disclosure statement in their possession. Also on 15 October 2004, the solicitors for the lessor asserted to the solicitors for the lessee that section 41(b) of the Act had not as yet been complied with. 12 The liquidator had obtained a copy of a disclosure statement relating to the lease in question from Coleman & Greig. They are the solicitors who had initially acted for the tenant, and then also acted for the landlord, on the grant of the lease. 13 Mr Wood, counsel for the plaintiff, submits that that document is not really a disclosure statement, because it is not signed by anyone. No other reason, based on the form or content of the document, is put forward for its not being a disclosure statement. 14 Section 11(1) of the Act sets out the requirements for a lessor's disclosure statement. There is a separate requirement in section 11A for a lessee to give a disclosure statement to the lessor. What section 41(b) requires to be given to a proposed assignee is any disclosure statement "given to the lessee" - ie, it is not a requirement of section 41(b) that the assignee be given a copy of the disclosure statement which the lessee gave to the lessor. 15 Section 11(1) requires a lessor's disclosure statement to contain the substance of what is set out in Schedule 2 of the Act. Schedule 2 of the Act sets out a form which is divided into two parts, Part 1 to be given by the lessor, Part 2 to be given by the lessee. The form of disclosure statement which Coleman & Greig provided had a space in Part 1 of the form for the lessor to sign its part of the disclosure statement, and that space had not been filled in. However, Schedule 2 of the Act does not make any provision for a lessor to sign a disclosure statement. That Coleman & Greig had added to the prescribed form in this way, and then did not have their own addition to the form filled in, does not stop Part 1 of the document from being the lessor's disclosure statement. Thus, I conclude that the lessee already had a copy of the lessor's disclosure statement. The evidence does not establish precisely when that document came into the lessee's possession, but, as will later appear, that does not matter. 16 Further, what section 41(b) requires the lessee to furnish to the proposed assignee is: "a copy of any disclosure statement given to the lessee in respect of the lease, together with details of any changes that have occurred in respect of the information contained in that disclosure statement since it was given to the lessee (being changes of which the lessee is aware or could reasonably be expected to be aware)."

While section 41(b) requires the lessee to provide the intending assignee with not only the lessor's disclosure statement, but also details of the changes referred to in section 41(b), section 41(c) does not entitle the lessee to request information about those changes from the lessor. Of course, there is nothing to stop the lessee from asking the lessor about whether there have been any changes to the disclosure statement, as a means of becoming aware of those matters, and then disclosing what it has found out in this fashion under section 41(b). However, if such a request is made and not complied with, section 41(c) does not make any consequences flow from the failure to comply. Thus, to the extent that the lessee requested the lessee's disclosure statement, and information about changes, it was a request which was outside the scope of section 41(c). 17 Mr Smallbone, counsel for the defendants, submits that the liquidator having obtained the disclosure statement from Coleman & Greig is a sufficient compliance with section 41(c) on the part of the lessor. There is no evidence of Coleman & Greig having any ongoing instructions from the lessor - indeed, in these proceedings, and in the correspondence which has led up to these proceedings, the lessors are acting through a different firm of solicitors. Under those circumstances, I do not conclude that when Coleman & Greig supplied the disclosure statement, they were doing so on behalf of the lessor. Rather, when they sent the disclosure statement to the lessee, who had been their own client, a more rational inference is that they did so in their capacity as solicitors for the lessee. Thus, I do not accept this submission of Mr Smallbone. 18 An alternative submission of Mr Smallbone depended on the opening words of section 41(c). He submits that the words "For the purpose of enabling the lessee to comply with paragraph (b)" are an essential part of section 41(c) and that they are not complied with in the present case. I agree that those opening words should be interpreted as intended to serve a purpose. If those opening words were not there, it would be open for the lessee to request a copy of the disclosure statement from the lessor, even if, as Mr Wood put it "it already had a pile of disclosure statements". The lessee could request a copy of the disclosure statement even if it was well able to comply with paragraph (b) from its own resources. When those introductory words are there, the preferable construction is that it is only a request which is made for the purpose of enabling the lessee to comply with paragraph (b) that suffices to trigger paragraph (c). 19 As it is the lessee who seeks to establish that it has the benefit of an exemption from complying with section 41(b), by reason of the matters set out in section 41(c), it is the lessee which has the onus of proving the matters which are set out in (c). The lessee has not put on any evidence that its request for the disclosure statement was made for the purpose of enabling it to comply with paragraph (b). In some circumstances, if such a request was made, it might be possible to infer from the circumstances that it was made for that purpose. However, when there is evidence that the lessee already has a copy of the disclosure statement, that evidence creates a ground for doubt about whether the purpose of requesting the disclosure statement was to enable the lessee to comply with paragraph (b). When no evidence has been called to clear up that doubt, I would not draw an inference from the circumstances about the purpose of the request. It follows that the lessee has not established one of the conditions of operation of paragraph (c), and so is not entitled to be excused from compliance with section 41(b). That is a sufficient reason why there is no deemed consent under section 41(d). Compliance with Section 41(a) 20 Lest this matter goes further, I also make findings of fact about the remaining grounds upon which it was submitted that there was no deemed consent. The lessor submits that section 41(a) was not complied with either, as the lessee did not provide the lessor with information which the lessor reasonably required concerning the financial standing and business experience of the proposed assignee. 21 The lessee requested consent to the assignment on 15 October 2004, and at that time volunteered some information about the proposed assignee, namely: "We are instructed that the Proposed Assignee: 1. is presently the lessee of unit 2 at the same address (having registered lease no. 9990073) and is paying the rental promptly to your client under the terms of the lease to those premises; 2. has confirmed that it is prepared to offer your client additional security than presently provided under the Lease by offering: (a) a security bond equivalent to six months rental; and (b) a personal guarantee from its director, Mr Ramesh Sharma. We confirm Mr Sharma is also a director of the Company and the Proposed Assignee owns 50% of the shareholding of the Company." 22 On 18 October 2004 solicitors for the lessors acknowledged that request for an assignment. After stating their position that the lease had been terminated, they said: "… if there was to be any assignment, our client would first require 2 years accounts, 2 years tax returns from the Company and an asset and liability statement of the company and all directors verified by statutory declaration. When that information has been received, our clients have indicated that they will consider any request to assign any lease to WIN WIN Recruiters Pty Ltd. Please obtain this information as soon as possible, given that WIN WIN Pty Ltd has on our instructions a demonstrable poor past record with late payment of outgoings and water bills etc in respect of the other lease that it currently holds with our clients." 23 Another, supplementary, request for information was made by the lessors on 8 November 2004, namely "… we are also instructed to inquire as to the retail/restaurant skills of the proposed assignor pursuant to s39(1)(b) Retail Leases Act 1994". 24 A response was provided to those requests on 10 November 2004. So far as financial information went, what was provided were the financial statements (constituting a balance sheet, profit and loss and declarations by director) of Win Win for the year ended 30 June 2004. The director's declaration, verifying the accuracy of the accounts, was one signed by Mr Sharma, and dated 8 November 2004. There was also provided a statement of assets and liabilities of Mr Sharma, including a statutory declaration verifying it. In accordance with the familiar convention, the accounts of Win Win, though for the year ended 30 June 2004, also contained the comparable figures for the year ended 30 June 2003. The letter continued, "We are instructed that Win Win is not prepared to provide tax returns on the basis that the financial statements sufficiently set out the relevant financial circumstances. The statutory declaration by Mr Sharma sufficiently verifies his personal financial circumstances." 25 Mr Sharma's statement of assets and liabilities included an item of a deposit paid to AAT Legal (the solicitors for the lessors) in connection with the purchase of Unit 1. In fact, that sale had not proceeded, and most of the deposit had been refunded to Mr Sharma. I do not regard the statement as inaccurate by reason of that fact - rather, I regard it as a statement that he had paid the amount of that deposit to AAT Legal, and he still had it. 26 Of the information which was provided on 10 November 2004, however, information which had been requested and was not provided included the accounts of Win Win for the year ended 30 June 2003, and the tax returns for the 2003 and 2004 financial years. In my view, it is reasonable for this lessor, when considering whether to consent to an assignment to Win Win to require the provision of two years accounts, and both years' tax returns. Even though the previous year's figures are set out in the accounts for the year ended 30 June 2004, the previous year's accounts would in practice enable the lessor to find out the accounts for the year ended 30 June 2002. That is information which it seems to me this lessor might reasonably seek to know about Win Win, as trends in its financial position and performance could be relevant. As well, it is of great relevance for the lessor to see the tax returns. It is a daily experience in the courts that accounts in tax returns provide a useful check of what a financial situation really is. I regard the failure to provide those financial documents as being sufficient to show that the lessee has not provided information which the lessor reasonably required concerning the financial standing of the assignee. 27 There were various complaints in correspondence between the solicitors about past breaches by Mr Sharma or Win Win of financial obligations concerning leases. They included matters, which I will go into in a little more detail later, concerning late payment of rent and water rates. The fact of those complaints being made is not something which amounts to a failure to provide information about the financial standing or the business experience of the assignee. The complaints are the sort of thing which, if true, could bear upon the financial standing of the proposed assignee. However, what section 41(a) of the Act contemplates is the lessor saying to the lessee, in effect, "Please provide me with the following information about the financial standing and business experience of the proposed assignee", and then itemising the type of information which is required. There has only been a failure to comply with section 41(a) if there has been a reasonable request for such information, and the lessee has not provided it. 28 The curriculum vitae of Mr Sharma was provided under cover of the letter of 10 November 2004. It showed that he had experience in connection with the running of more than one restaurant, over a period from 1989 to 1995 in India, and over a period from January 2003 to August 2004 in Australia. As well, he had experience in a labour hire company in Australia, from 1999 to date. 29 On 16 November 2004 (in a letter misleadingly dated 7 November 2004), the solicitors for the lessor responded, saying: "Our clients also instruct that the matter of the proposed assignee's suitability in relation to his lack of business experience operating a restaurant premises is demonstrable and as such invites further submissions in this regard. Our clients also note that financial issues still have not apparently been properly addressed in the manner and form stipulated by our previous correspondences and late payment issues of various accounts... and the reason for same have not been addressed either." 30 I am not persuaded that the objection to Mr Sharma's experience is a reasonable one. Further, for the reasons I have given, the statement that the "financial issues still have not apparently been properly addressed", insofar as it referred to the lessor's not being satisfied that an adequate explanation had been given concerning their various complaints about Mr Sharma and his company, are not matters which fall within section 41(a). 31 It follows that I conclude that there has been a non-compliance with paragraph (a) of section 41, but only through the non-provision of the requested financial information. Was there a Notice in Writing Withholding Consent 32 There is a third way in which Mr Smallbone submitted that section 41(d) had not been complied with. There had been, he said, a notice in writing withholding consent, within the 42-day period. 33 As mentioned earlier (para [21] above), the date of the request for consent was 15 October 2004. That request was in writing. It set out the history of the request which had been made for the disclosure statement and information about changes, the failure to provide that disclosure statement and information, and said that by reason of those matters the lessee was relieved of the obligation to comply with section 41(b). I have held that that assertion is incorrect. 34 It was on 19 October 2004 that the solicitors for the lessors made the first of their complaints to the solicitors for the lessee, about Mr Sharma and Win Win. The complaints which they made related to late payment of rent and outgoings by Win Win in respect of Unit 2, the use of Unit 3 contrary to its permitted use, the subletting of Unit 2 without the consent of the defendants, the use of Unit 2 contrary to its permitted use under local Council approvals and/or strata by-laws, and certain building work which had been carried out by the plaintiff in respect of Unit 1. 35 The use of Unit 3 contrary to its permitted use, was, it seems, that both the lease and Council requirements were that the unit be used for residential purposes. In fact, it was being used for commercial purposes. 36 Concerning the subletting of Unit 2, the lessee was Win Win, but it appeared that another entity or person was occupying the unit, and that there had never been any consent to any subletting or assignment to that other person or entity. The lessor also expressed some doubts about whether the use of the premises by that entity or person was in accordance with the lease conditions, on the current Council approvals and strata by-laws. 37 The complaint about building work in respect of Unit 1 concerned a cool room behind the kitchen which had been extended without Council approval, and also another cool room which had been constructed without council approval. 38 On 19 October 2004 the solicitors for the lessors wrote a lengthy fax to the solicitors for the lessees, setting out these complaints. The letter concluded: "Our clients instruct that they require urgent clarification of the above matters and if necessary relevant indemnification and compensation, especially if rectification is required by the Parramatta City Council with respect to the above matters, as our client was not aware and we are not instructed of the extent of the apparent breach(es) enumerated above. Our client instructs they will not agree to any proposed lease assignment in respect of Unit 1 until the above matters are clarified adequately to the satisfaction of our clients ." (emphasis added) 39 This paragraph is one which was relied upon by Mr Smallbone as a notice in writing withholding consent. 40 The response of the solicitors for the lessee was to request particulars, also on 19 October 2004, of the allegations which were made. 41 On 3 November 2004, the lessors' request for financial information about the assignee was still outstanding. The solicitors for the lessee said that they would provide the information as soon as possible, and asked for confirmation that the lessor would deal expeditiously with the request for consent for assignment once that information was provided. The lessors' response was: "We undertake to seek to get our client's instructions as soon as possible, however first of all any existing breaches of the lease/improper uses, any illegal building work must be rectified, and secondly, one of our clients lives at Bathurst and the other at Oatlands, North Parramatta and both are at times difficult to contact." 42 This prompted the solicitors for the lessee to ask: "Are you saying that our client has to rectify 'existing breaches of the lease/improper uses, any illegal building work' before your client will consent to the assignment of the lease?"

That question was not directly answered by the solicitors for the lessors. They referred to the possibility of obtaining a building certificate from the Council (presumably, a statement that any non-compliances would not be ones the Council would take action against), and said: "If no certificate can be issued by PCC, then our client would expect to be at the very least indemnified by Mr Sharma who allegedly carried out the illegal building work as well as the existing tenant(s), although our client would prefer full rectification before any assignment takes place." 43 On 11 November 2004 the solicitors for the lessor wrote to the solicitors for the lessee complaining about the lack of response to their complaints, and saying that if those matters were not rectified forthwith it would be expected that the landlords would use the lease provisions concerning default upon breach to terminate the lease. 44 On 11 November 2004 the solicitors for the lessee responded promptly, saying, in effect, how could they deal with the various complaints when the solicitors for the lessorshad not provided the particulars which had been requested. On 12 November 2004 (which is a date after the delivering of what I have held to be an incomplete response to the lessors' request for information on 10 November 2004), the solicitors for the lessee required a response to their request for consent to assignment by 5 pm on Monday 15 November 2004. 45 On 15 November 2004 the solicitors for the lessors sent to the solicitors for the lessee a fax with numerous pages of annexures. Those annexures were ones which set out certain details of the alleged breaches. The fax required rectification of the breaches by Friday 19 November 2004. The fax said, "No assignments are instructed to be considered until the above issues are addressed". The annexures included:

(A) a copy of the solicitors for the lessors' fax of 19 October 2004 (paras [34] - [38] above), which had listed the various complaints and stated that the clients would not agree to the lease assignment until those matters were adequately clarified;

(B) a copy of various other faxes from the solicitors for the lessor making complaints about Mr Sharma or Win Win;

(C) a letter from the Parramatta City Council identifying the non-compliance with Council requirements with some precision; and

(D) details of late payment of rent and water rates. 46 Those details of late payment alleged that on occasions rent was paid some days late, and on other occasions was paid more than a month late, and that there was one occasion in 2003 when excess water rates had been paid late. 47 On 16 November 2004, the solicitors for the lessors wrote saying: "Our clients instruct that no further consideration of any requests for assignment will be entertained until the above matters are resolved to our clients' satisfaction, including the undertaking of necessary rectification forthwith and the provision of necessary compensation and indemnity where appropriate." 48 The lessee has taken various steps to remedy the breaches which have been identified. By 18 November 2004, all of those breaches appear to have been remedied, except breaches relating to the cool room, which could not be remedied until the consent of the lessors was obtained for the making of an application for a building certificate. That consent was initially not given, as, after further consideration, the lessors preferred the cool room to remain as it was. However, the Council insisted on the breaches being remedied. The evidence does not disclose what has happened about that issue since. 49 29 November 2004 was the day which was 42 days after the consent to assignment had been requested. On 30 November 2004 the solicitors for the lessee wrote to the solicitors for the lessors, setting out the history of the matter, saying it had now been in excess of 42 days since the request for assignment and the lessors had not indicated whether they consented to the assignment, and asserting that, pursuant to section 41(d) of the Act, the lessor was deemed to have consented to the request. 50 Mr Smallbone submits that there were notices in writing, withholding consent, within the 42-day period. He relied upon the statements of 19 October 2004 (repeated on 15 November 2004) that the lessor would not consent to an assignment until the complaints were adequately dealt with. He also relies on similar statements which were made on 8 November 2004, and 16 November 2004. 51 Section 41(d) turns on whether, within 42 days of request, the lessor has given a notice to the lessee which either consents, or withholds consent. The purpose of section 41(d) is to require applications for consent to be dealt with promptly. Neither the wording, nor the purpose, of the section is adequately met by a notice which says, "I will not consent unless you do the following things". What section 41(d) requires, to avoid a deemed consent, is for the lessee, within the 42-day period, to give a notice which says, in substance, either, "I consent" or "I decline to consent". In that way it has the practical effect of requiring the lessor to make its mind up within the 42-day period. The conditional statements upon which Mr Smallbone relies are not adequate to stop a deemed consent arising. 52 Thus, I conclude that there is no deemed consent, for the reason that the preconditions, namely compliance with section 41(a) and (b), has not been met. Breach of Section 39? 53 Paragraph 8 of the amended summons seeks a declaration that the defendants have wrongfully refused to consent to an assignment of the lease, in breach of section 39(1) of the Act. 54 Paragraph 9 seeks a declaration that (a) the defendants have unreasonably withheld consent to the assignment of the lease, and (b) that they are not entitled to impose upon the plaintiff, as a condition of their consent to the assignment, the conditions which were laid out in the communication of 19 October 2004. 55 Section 39 says, so far as is relevant - "39 Grounds on which consent to assignment can be withheld (1) The lessor is entitled to withhold consent to the assignment of a retail shop lease in any of the following circumstances (and is not entitled to withhold that consent in any other circumstances): (a) if the proposed assignee proposes to change the use to which the shop is put, (b) if the proposed assignee has financial resources or retailing skills that are inferior to those of the proposed assignor, (c) if the lessee has not complied with section 41 (Procedure for obtaining consent to assignment), (d) the circumstances set out in section 80E." 56 I mention here that there was some debate in the course of argument about whether section 39 should be construed so that a lessor could rely upon a ground for withholding consent arising from circumstances which existed, but which it was not aware of, or did not state, at the time that it actually refused consent. Under the common law, a lessor may rely upon a ground of refusal not taken at the time of actual refusal, particularly if that ground was not known to the lessor at an earlier time: Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited (1979) 144 CLR 596 at 611 per Mason J. Mr Wood argued that, in the statutory context in which section 39 occurs, that principle did not apply. In the view which I take of the case, it is not necessary to make a decision about that matter. 57 From my finding relating to whether there is a deemed consent, it is apparent that the lessee has not complied with section 41. That is sufficient to give the lessor an entitlement to withhold consent, under section 39(1)(c). 58 An issue was raised about whether it had been established that the proposed assignee had financial resources or retailing skills that are inferior to the proposed assignor. The question of whether a ground for withholding consent exists, under section 39, is one which must be answered as at the date when consent is withheld. So far, the lessor has not made an unequivocal withholding of consent. It would be moot to go into any factual matters about what is established about the financial resources or retailing skills of Win Win as at today, when today is not a day when the lessor has withheld consent. 59 For these reasons, I would decline the relief which is sought in paragraph 8 of the amended summons. 60 So far as the relief sought in paragraph 9(a) is concerned, I am not persuaded that the question of whether the defendants have unreasonably withheld consent to an assignment is one which has any relevance under the statutory frame of things. Section 39 sets out the only grounds on which withholding of consent can occur, and reasonableness does not enter into any of those grounds. Reasonableness enters indirectly, in the test under section 39(1)(c) about whether the lessee has complied with section 41, insofar as it is only a reasonable request of the lessor for information which can play a part in the working of section 41(a). However, that gives reasonableness a role which has nothing to do with a lessor unreasonably withholding consent. 61 So far as paragraph 9(b) goes, it is true that section 39 limits the grounds upon which a lessor is entitled to withhold consent for an assignment of lease. A lessor would be acting outside the scope permitted to it by section 39 if it were to rely upon various complaints it made concerning breaches of lease (other than of the specific kind referred to in section 39) as a ground for refusing consent. In their correspondence with the solicitors for the lessee, the solicitors for the lessors were not always precise about what role they saw the complaints which they were making, about the breaches of the lease, as having in connection with the request for assignment of it. Eventually, however, the solicitors for the lessor came to express a view which amounted to saying: "There have been these breaches of the lease you are asking to have assigned, and if you don't remedy them, the lease will be terminated, and you will have nothing to assign. I will give you the chance to remedy the breaches before I consider the question of whether to consent to the assignment of the lease." 62 In taking that attitude, the solicitors for the lessors were acting outside the scope of section 39, but it was nonetheless an action which they were entitled to take. If they had relied upon the various asserted breaches of lease as a ground for refusing consent, they would have been mistaken, as section 39 does not permit that. However, that is not what they were doing. I do not regard the attitude which the solicitors for the lessors have eventually come to be taking as amounting in substance to imposing "on the Plaintiff as a condition of their consent to the assignment of the Unit 1 Lease the conditions referred to in the … communication dated 19 October 2004." In those circumstances, it would not be appropriate to make a declaration on that topic. 63 Another element of the complaints which the solicitors for the lessee made related to breaches by Win Win of the lease it held from the lessors. While such matters might possibly be an ingredient in proving that Win Win, the proposed assignee, had financial resources inferior to those of the proposed assignor, for the purposes of section 39(1)(b), by themselves they come nowhere near proving that Win Win's financial resources were inferior. 64 Order 10 of the amended summons is one which is consequential upon success in one or other of orders 7, 8 and 9. In the circumstances where none of those claims succeed, paragraph 10 fails also. 65 It follows from what I have said that I shall dismiss the claims for relief in paragraphs 7, 8, 9 and 10 of the amended summons. 66 There is one other matter which I should mention. This matter was listed on Tuesday, on which day an application for adjournment was made so that the defendants could put on evidence which was said to go to their opposition to the claim. I adjourned the matter for 1 day, so that that evidence could be put on. As things eventuated, an affidavit of the second defendant was put on, but was not permitted to be read when she was not available for cross-examination. An affidavit of the first defendant was read, which gave details of what he had found upon inspecting various of the leased units. The material contained in his affidavit was not the basis of any submission. These matters might possibly affect the costs orders which should be made in the case. 67 As discussed with counsel yesterday, any argument about costs will await counsel having the opportunity to consider these reasons for judgment, and the New Year. The only orders I make are:

Dismiss the claims for relief in paragraphs 7, 8, 9 and 10 of the amended summons

Direct the parties to make, on or before Friday 4 February 2005, an appointment with my Associate for a date upon which argument concerning costs, and any other incidental matters which might need to be cleared up, can occur. **********

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Judgment (13 paragraphs)

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