(a)

Statements of the evidence of each witness that party will call; and

(b)

Copies of each document that party will place in evidence.

10 Any material in reply must be file and served on or before 29 May 2006.

11 Without leave of the Tribunal neither party may adduce evidence in chief beyond that contained in the material filed and served in accordance with Orders 8 and 9.

12 Costs reserved.

1 On 11 January this year Sparkling Waters Pty Ltd as lessor of premises known as Shop 15, Little Saigon Shopping Centre, 63-67 Nicholson Street, Footscray, served a lengthy notice under Section 146 of the Property Law Act 1958. That notice was said to be given in pursuance of a lease between Sparkling Waters Pty Ltd which is respondent in this proceeding and Lin Creations Pty Ltd which is the applicant. The notice was of unusual length and referred to a congeries of covenants and alleged defaults. Upon one numeration there were no less than 10 separate matters taken up. Each alleged breach in a Notice under Section 146 of the Property Law Act separately has the potential, assuming that the proviso for re-entry in the relevant lease is in the usual form, to entitle the lessor to forfeit the relevant lease. Therefore, it would seem that if any one alleged breach is properly made out then the lessor will have an entitlement to forfeit and re-enter when the notice expires without the breach being rectified, even if other alleged breaches are either found to be unsustained as breaches or are rectified within the term of the lease. So much follows from the judgement of O'Brian J in the unreported decision Grantville Grove Pty Ltd v Mylonopoulos (delivered 7 December 1994) Butterworths Unreported Cases BC 9406136. Lin Creations Pty Ltd was therefore in a position of a ship under attack with no less than 10 torpedoes running towards it. Any one of them if it struck below the waterline could destroy the tenancy.

2 A fundamental and primary question however has arisen which for the moment distracts attention from the multiplicity of breaches alleged and that is under what lease was Lin Creations Pty Ltd tenant from Sparkling Waters Pty Ltd at the time the relevant notice was served. The notice proceeded upon the footing that Lin Creations held as tenant pursuant to an instrument of lease dated 1 December 2002. Lin Creations however alleged that it was tenant under a lease entered into originally in 1999 and which was the subject of a renewal by way of exercise of option. No document had been propounded as giving effect to the exercise of the option either by way of a notice to renew in accordance with the fairly orthodox covenant to renew in the 1999 lease which expired in 2002 or by way of a further deed or an instrument of lease in the same form. It is Lin Creations' case however that in the events that occurred and by reason of the dealings between the parties, effectively it received a new lease on the same terms as the 1999 lease. This is important because the notice under Section 146 of the Property Law Act is predicated upon the instrument of lease dated 1 December 2002 which has been executed by the parties being binding between them. That lease is on materially different terms and covenants from the 1999 lease. The present application is brought before me for interlocutory relief by Lin Creations Pty Ltd which seeks to have Sparkling Waters Pty Ltd restrained pending the hearing and determination of this proceeding from acting to forfeit and re-enter. The questions which I must consider therefore are whether in the circumstances there is one or more serious question to be tried as to the validity of Sparkling Waters Pty Ltd's threat to forfeit and re-enter and whether if such one or more serious questions to be tried exists, the balance of convenience favours the grant or refusal of the interlocutory relief.

3 As I have said, the fundamental and important question is under what lease is Lin Creations Pty Ltd in possession? It may be that with regard to a number of the alleged breaches of covenant, the 1999 lease, if in force has analogues to the covenants relied upon in the 2002 lease. One point however in which the leases are quite different and at odds is the extent of the lessee's obligation to insure. The 1999 lease included an obligation to provide public liability insurance but not to insure the building improvements themselves. The 2002 lease clearly imposes an obligation on the lessee to insure the improvements. Lin Creations Pty Ltd has produced a certificate of insurance that complies with the terms of the 1999 lease but would not comply with the terms of the 2002 lease if it were in force. In the result therefore, if I accept it as being established beyond the existence of a serious question to be tried that the 2002 lease was in force according to its terms between the parties on 11 January there is a clear breach of covenant established and that breach of covenant remains unremedied. In accordance with the principle exemplified in Mylonopoulos' case injunctive relief would have to be denied and Sparkling Waters Pty Ltd would be left to proceed to forfeiture and re-entry as it may be advised. On the other hand if there is a serious question as to whether the 2002 lease was binding between the parties on 11 January this year, then there must likewise be a serious question to be tried as to the validity of the entire notice under Section 146 which is predicated upon an entirely different state of affairs. There is in addition a range of affidavit material that seeks to put, so far as the applicant is concerned, a number of, or perhaps all of the alleged breaches in issue on bare questions of fact. As it is however it is unnecessary for me for the purposes of this determination to turn to any of this material.

4 Lin Creations principal deponent, Ms Tran who is the principal of the company has sworn that she was told by a representative of Sparkling Waters that the option to renew the 1999 lease was exercisable and would be exercised provided that Lin Creations Pty Ltd had paid a monthly supplement of $500 in cash to Sparkling Waters Pty Ltd. This she said Lin Creations Pty Ltd agreed to do and thereafter Lin Creations Pty Ltd sealed a lease which Ms Tran says she believed was simply a reiteration of the 1999 lease with only its temporal provisions changed.

5 As it is however the deed which was sealed on 1 December 2002 was materially different in a number of respects including the insurance covenant to which I have made reference to already.

6 An associate of Ms Tran and Mr Nguyen has also sworn an affidavit which is supportive of the interpretation put by Ms Tran. Mr Twigg who appears on behalf of Sparkling Waters Pty Ltd submits that in the circumstances no serious question has been shown to exist. He has taken me to a number of standard authorities on the principles of mistake, namely Cheshire and Fifoot's Law of Contract; a decision of the English Court of Appeal Riverlate Properties Limited v Paul [1975] Ch 133; a decision of the High Court of Australia in Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422.

7 Mr Twigg submits that these authorities establish the proposition that a party cannot be relieved from the consequences of a unilateral mistake made by that party if the other party to the contract is unaware of the mistake and does not induce the mistake. My own researches took me to a decision of the High Court of Australia in Equiscoup v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 211 ALR 101. In that case a borrower company and guarantors had entered into arrangements for so called tax effective finance which did not work out, that is, the tax advantages in contemplation were not achieved. The borrowers and guarantors denied liability to repay. They contended amongst other things that the documents which they signed did not reflect the actual deal between the parties. At page 108, paragraph 33, in a joint judgment of Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ, their Honours said:

Yet fundamental to the respondent's case is the operative agreements between the parties were wholly oral and reached earlier than the execution of the written agreement was the proposition that the written agreement subsequently executed not only may be ignored they must be. That is not so. Having executed the agreement each respondent is bound by it. Unless able to rely on a defence of non est factum or able to have it rectified. The respondents attempted neither. [emphasis in the original]

8 There may be seen to be a resemblance between the case mounted by Lin Creations Pty Ltd here and the one unsuccessfully taken to the High Court by Glengallan Investments Pty Ltd in seeking to retain a favourable determination of the Queensland Court of Appeal. Here Mr Searle says on the basis of the material that he puts to me, the 2002 lease not only may be ignored but must be ignored.

9 The propositions advanced by Mr Twigg with respect to unilateral mistake are undoubtedly correct. Mr Twigg also took me to a passage from the 1990 edition of Commercial Tenancy Law in Australia by Professor Bradbrook and Dr Croft at paragraph 16.19, page 239 where the learned authors state:

Surrender by operation of law, that is surrender of a lease takes place where the tenant accepts a new interest inconsistent with the demise. It is on this principle that a new letting to an old tenant commencing immediately operates as a surrender of the original term. The lessor could have no power to create a new term if the original term existed.

10 The learned author cited a number of authorities for that proposition.

11 So said Mr Twigg even if there were some form of continuation of the 1999 lease, the execution of the deed of lease on 1 December 2002 operated as surrender and re-grant. The basis upon which the 1999 lease might be contended to have continued was under Section 18 of the Retail Tenancies Reform Act 1998 where the notice required by the section had not been given by the landlord

12 Mr Twigg was critical of the way in which the case was advanced by the applicant company. He noted a lack of explanation as to correspondence which deponents for Sparkling Waters Pty Ltd had brought to light. There was a letter from Sparkling Waters Pty Ltd's, solicitors, stating that a purported exercise of the option to renew Lin Creations 1999 lease was out of time and that a new lease would have to be negotiated between the parties. Further, the letter which covered the document which became the deed of lease of 1 December 2002 described it as a new lease, not as a renewal. These matters, according to Mr Twigg, were wholly unexplained by Lin Creations Pty Ltd. The file from its then solicitor had not been produced, no parts of it were put into evidence; no affidavit was obtained from the former solicitor. All these matters were simply ignored.

13 For his part Mr Searle said that the principles relied upon by Mr Twigg as to unilateral mistake were beside the point. Mr Searle said Lin Creations' case was not that Lin Creations had laboured under a unilateral mistake but rather that it had been misled by those representing the landlord, specifically a Mr Loc Huu Lam into the belief that Lin Creations was executing a deed in 2002 on the same terms as the 1999 lease. These matters if found as facts after trial, would, in Mr Searle's submission establish a misrepresentation which would entitle Lin Creation to some form of relief. It might also constitute misleading and deceptive conduct. In those circumstances he submitted there was a serious question to be tried. What then am I to make of all this?

14 Certainly the mode in which the applicant's case on this point is propounded is problematic and worrying indeed. Mr Twigg's observation as to the lack of material from Lin Creations former solicitor is very telling. When I enquired as to this point from Mr Searle he said that there was some delay in the provision of the relevant file but his instructor had been told that it had been removed to a farm conducted by the father-in-law, of the principal of the former solicitor's firm and that it would be produced perhaps in a few weeks. All of this is unsatisfactory. There was no explanation as to why the former solicitor himself was not requested to go on affidavit. No explanation as to why a subpoena duces tecum could not have been issued requiring the firm to produce the file at this hearing rather than at its leisure in a few weeks. One is troubled with the thought that perhaps the lack of energy in prosecuting the attempts to recover this file is to some degree informed by a concern that the content of the file would not in due course assist the applicant's case. Though there has been some explanation of the non-appearance of this file, it is difficult to escape the usual Jones v Dunkel [(1959) 101 CLR 298] inference which would be drawn in these circumstances. Nevertheless, I accept that it is going too far to accept Mr Twigg's submission that this is a matter of mere unilateral mistake. The purport of Ms Tran's affidavit is that Mr Lam led her to believe that her company was entering into a deed on the same terms as the 1999 lease. In the literal sense of course this could not be the result of an exercise of the option to renew. The Full Court of the Supreme Court of Victoria in B.S. Stillwell v Budget Rent-A-Car [1990] VicRp 52; [1990] VR 589 has held that the preferred analysis of an option to renew a lease is that it is an irrevocable offer on the part of the lessor. That offer can be accepted only according to its terms. Any other action which leads the parties to some new contractual arrangement amounts to the acceptance of the counter offer by the lessor, not the exercise of the option to renew. On the account given by both parties that there was no written notice within the time stipulated by the 1999 lease and that whatever new arrangement the parties entered into was the result of further negotiation and offer and counter offer. What divides the parties is that Lin Creations says it was led to believe that apart from the supplementary $500 per month payment it was receiving a tenancy on the same terms as in 1999.

15 Sparkling Waters Pty Ltd says that it was clear to all parties that it was back to the year zero, that all terms of the lease were up for re-negotiation and that Lin Creations Pty Ltd had the advantage of legal advice, committed to a new form of lease in the terms of the document which was executed. Ms Tran says that having limited command of English she was able to identify nothing other than the rental figures appearing in the schedule which appeared to line up with the 1999 lease. A comparison of the two schedules shows that those figures do line up.

16 Mr Twigg observed that she struck out an allegedly absolute guarantor, indicating he said a greater acquantanship and perception of the terms of the document than her affidavit material would give.

17 For all the reasons that I have mentioned I believe that the applicant labours under very significant weaknesses in its case. It is not in my view however so weak as not to constitute a serious question to be tried as to whether there has been misleading and deceptive conduct as to the terms of the new lease, to use a neutral term on the part of Sparkling Waters Pty Ltd. There is a serious question to be tried on that point but in my view it is a pretty weak one. That then leaves me to consider the balance of convenience and the decision of the Court of Appeal in Optus Network Pty Ltd v Stonnington City Council [1996] VICSC 12; [1996] 2 VR 209 tells me that one of the matters that I can and should consider in striking the balance of convenience is the strength or otherwise of the serious question found to exist. Here, the evidence which I do not see to be seriously controverted is that if the lessor is permitted to do as it wishes to re-enter and forfeit, Lin Creations Pty Ltd will suffer irreparable damage. That is a very strong matter lying in the balance of convenience favouring the grant of interlocutory injunctive relief. On the other hand the relative slightness of the serious question to be tried throws itself into the balance on the other side. The seriousness of the consequence to Lin Creations if this injunction is not granted however outweighs the consideration of the relative weakness of its case and so the balance of convenience in my view favours the grant rather than the refusal of the injunctive relief sought.