Moratic Pty Ltd v Lawrence James Gordon & anor

(NSW) Gaming Machines Act 2001, s 19(1), (2)(a), (3)(c) (NSW) Liquor Act 1912, s 21(2) LEGISLATION CITED : (NSW) Liquor Act 1982, Pt V, ss 80(2)(a), (3), 154 (NSW) Liquor and Registered Clubs Legislation Amendment Act 1997, Sch 1, paras [14], [19] (VIC) Licensing Act 1928, s 19

Ajayi v R T Briscoe (Nigeria) Limited [1964] 1 WLR 1326; [1964] 3 All ER 556 Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (The Leonidas) [1985] 1 WLR 925 Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (in liq) [1982] QB 84 Amherst v James Walker Ltd [1983] 1 Ch 305 BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 Butts v O'Dwyer (1952) 87 CLR 267 Byrne v Australian Airlines (1995) 185 CLR 411 Cairns v Burgess (1905) 2 CLR 298 Castlemaine Tooheys Ltd v Carlton and Untied Breweries Ltd (1987) 10 NSWLR 468 Central London Property Trust v High Trees House Ltd [1947] KB 130 Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (1992) 28 NSWLR 338 Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Combe v Combe [1951] 2 KB 215 Commonwealth v Verwayen (1990) 170 CLR 394 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226 Crabb v Arun District Council [1976] Ch 179 Dabbs v Seaman (1925) 36 CLR 538 Eslea Holdings Limited v Butts (1986) 6 NSWLR 175 Foran v Wright (1989) 168 CLR 385 Grundt v Great Boulder Gold Mines Limited (1937) 59 CLR 641 Ha v State of New South Wales (1997) 189 CLR 465 CASES CITED : Hamlyn & Co v Wood & Co [1891] 2 QB 488 Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1967] 1 WLR 287 Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Jabetin Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602 Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101 Legione v Hateley (1983) 152 CLR 406 McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 Masters v Garcia (2005) 65 NSWLR 92 Meredith v Fitzgerald (1948) 77 CLR 161 Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203 MK & JA Roche Pty Limited v Metro Edgley Pty Limited [2005] NSWCA 39 Pondicil Pty Limited v Tropical Reef Shipyard Pty Limited (FedCA, Cooper J, 1994, BC9406064) Proprietors Strata Plan 30102 v Energy Australia (NSWCA, 29 September 1997, BC9704799 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Secured Income Real Estate v St Martin's Investments Pty Ltd (1979) 144 CLR 596 State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503 The Moorcock (1889) 14 PD 64 Thompson v Palmer (1933) 49 CLR 507 Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 Handley, Estoppel by Conduct and Election, Sweet & Maxwell, 2006 Meagher, Gummow & Leeming, Equity Doctrines and Remedies, 4th ed

Moratic Pty Limited (plaintiff) PARTIES : Lawrence James Gordon (first defendant) Judith Ann Gordon (second defendant)

COUNSEL : Mr A Hatzis (plaintiff) Mr G Carolan (defendants)

SOLICITORS : McGlynn & Partners (plaintiff) Back Schwartz Vaughan (defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5748/06 Moratic Pty Limited v Lawrence James Gordon & anor JUDGMENT 1 HIS HONOUR: The plaintiff Moratic Pty Limited is the lessee, by assignment of a lease originally granted on 1 February 1993 to Mr and Mrs Danaher, of the Oaklands Hotel, in respect of which it holds an hotelier's licence to which seven Poker Machine Entitlements are attached. The defendants Mr Lawrence James Gordon and Mrs Judith Ann Gordon are the lessors, and owners of the freehold. The term of the lease will expire on 31 January 2007. Moratic has exchanged contracts for the sale of some of the PMEs. Although a PME allocated in respect of a hotelier's licence is transferable to another hotelier's licence, a transfer does not have any effect unless it approved by the Liquor Administration Board, and an application for such approval must demonstrate, to the satisfaction of the Board, that the proposed transfer is supported by each person who, in the Board's opinion, has a financial interest in the licence [(NSW) Gaming Machines Act 2001, s 19(1), (2)(a), (3)(c)]. The Gordons, who do not support the proposed transfer, claim that they have a financial interest in the licence by reason of a lessee's covenant to pay, in addition to the fixed rent, a "further rent" equivalent to 4% of annual liquor purchases for the hotel (clause 20). No amount has ever been demanded or paid under that covenant, and Moratic brings these proceedings to resolve whether clause 20, in the events which have happened, confers on the Gordons a financial interest in the licence, claiming a declaration that it is not liable to pay any amount under clause 20. The Gordons have brought a cross-claim for the "further rent" under clause 20, for the whole of the term of the Lease from its inception to date. It is common ground that if clause 20 is enforceable, the amount due to the Gordons as at 30 June 2006 would be 4% of $972,478, although there is an issue as to whether interest should be allowed. 2 Moratic contends that it is not liable to pay any amount under clause 20, by reason of an implied variation of the lease, or an estoppel, or an implied term of the lease. Only variation was explicitly pleaded, but the other grounds were argued without objection, and the pleading contains allegation of the facts necessary to found an equitable promissory estoppel or a conventional estoppel. Indeed, the contractual variation case and the estoppel case are closely related: they depend on the same factual basis, and both involve a supervening change in the legal relationship between the parties arising from conduct after the inception of the lease, whereas implication of a contractual term in the lease depends on the presumed intention of the parties when the lease terms were agreed. Accordingly, the issues may conveniently be arranged and stated as follows: · Does the lease contain an implied term to the effect that clause 20 would apply only if the lessee invoked its (former) statutory right to deduct from the rent a proportion of any licence fee which the lessee pays, or that it would not apply if the provision which created that right were repealed? I conclude that there was no such implied term. · Should the parties be taken, by their subsequent course of conduct - in particular, the absence of any payment, and of any demand for payment (or objection to non-payment) of "further rent", while the standard rent was paid monthly, and annual increments in the standard rent were demanded and paid in accordance with the lease, and the consent of the Gordons as lessors given to the transfer of the lease to Moratic in 1999 without assertion of any right under clause 20 or any objection on account of past non-payment of "further rent" - to have agreed to vary the lease by omitting clause 20? I conclude that there was no such contractual variation. · Has that same subsequent course of conduct produced an estoppel precluding the lessors from insisting on performance of the lessee's obligations under clause 20? I conclude that there is no promissory estoppel, because the requisite knowledge to affect the Gordons' conscience in equity is not established; but that the Gordons as lessors and Moratic as lessee dealt with each other on the conventional basis that the only rent payable under the lease was the standard rent, as varied by the annual increments, and a conventional estoppel precludes either from departing from that conventional basis of their relationship. Background

3 On 1 February 1993, the Gordons granted to the Danahers a lease of the Oaklands Hotel for a term of twelve years expiring on 31 January 2005. By the lease, in addition to covenants to pay the rent reserved by the lease of $26,000 per annum, increasing on the second and each subsequent anniversary of the commencement date to an amount equal to that payable in the immediately preceding year plus 4% (clause 4.1), and each year to obtain or renew at their own expense the licence (clause 7.2), the lease contained a covenant by the lessee (clause 20) to pay a "further rent" calculated at the rate of 4% of the value of liquor delivered to or for the Hotel, in the following terms: It is acknowledged by the parties hereto that when the gross amount including any duties thereon paid or payable for all liquor which during the preceding year ending the 31st December each year was delivered to the Lessee or any other person for sale in the demised premises or on behalf of the Lessee or purchased by him for any booth or stand in respect of which a Licence shall have been granted to the Lessee or any other person exceeds the sum of $1.00 then on the 1st day of January during each year of the term hereby granted the Lessee shall pay to the Lessor by way of further rent the sum equal to an amount computed at the rate of $4.00 for every $100.00 or fraction thereof of which the gross amount of purchases is in excess of $1.00 …

4 The effect of clause 7.2 was to require the tenant to pay the ad valorem licence fee then payable under (NSW) Liquor Act 1982, Pt V (as enacted), which at that time was calculated at the rate of 10% of the amount paid for liquor delivered upon or from the licensed premises [(NSW) Liquor Act 1982, ss 80(2)(a), (3) as originally enacted]. However, the holder of an hotelier's licence who was not the owner of the relevant hotel had a statutory right to deduct from the rent payable to the owner of the freehold two-fifths of any licence fee paid by the licensee [(NSW) Liquor Act 1982, former s 154; see also (NSW) Liquor Act 1912, s 21(2)]. Thus a covenant, such as clause 20, to pay "further rent" calculated at 4% (which is two-fifths of ten percent) of the total amount payable for liquor delivered upon the premises had the effect of requiring the tenant to pay an amount equivalent to that which it was entitled to deduct from the rent under s 154, and in practice indemnified the landlord against the right of deduction provided by (former) s 154.

5 Following the decision of the High Court of Australia in Ha v State of New South Wales (1997) 189 CLR 465 (in which similar ad valorem licence fees imposed in respect of tobacco were held to be excise duties and therefore constitutionally void), those provisions of the Liquor Act which levied ad valorem licence fees were repealed [(NSW) Liquor and Registered Clubs Legislation Amendment Act 1997, Sch 1, para [14]], together with (former) s 154 [Sch 1, para [19]]. This occurred while the Danahers were the tenants, before the assignment of the lease to Moratic.

6 While the Danahers owned the hotel business, the Gordons each year sent them a written reminder that the rent increased by 4% in accordance with clause 4.1 of the Lease. At no time prior to the assignment of the lease to Moratic in 1999 did the Gordons claim, or assert any entitlement to claim, further rent under clause 20. The evidence is silent as to whether the Danahers paid the whole of the licence fee, but in the absence of evidence to the contrary, I infer that they did, as clause 7.2 of the Lease required. Mr Danaher's affidavit, which was filed for Moratic and read in Moratic's case, is also silent as to whether they claimed the deduction to which they were entitled under s 154 while it was in force. It is inherently probable that no deduction was claimed, since any such claim could have been met by a counter-claim for "further rent" under clause 20, for exactly the same amount. Moreover, it would have been a very significant matter for Moratic to establish that such a deduction was claimed yet no further rent demanded, and as Moratic as plaintiff bears the onus of proof, I infer that no such deduction was claimed. Thus while s 154 was in force, although the "further rent" was not formally demanded or paid, in substance it was paid by the Danahers through their payment of the whole of the licence fee without claiming a deduction under s 154.

7 On 14 May 1999, the Danahers sold the hotel business (including eight poker machines and one card machine) to Moratic, for $100,000, subject to the transfer of the lease and the extension of its term to 31 January 2007. In entering into this transaction, Moratic did not contemplate paying any rent under clause 20, and arrived at the price on the assumption that the only rent payable was that provided for by clause 4.1. The evidence does not disclose how Moratic came to make this assumption: it may have been a combination of inadvertence to clause 20 and information provided by the Danahers, but there is no evidence of any relevant communication with the Gordons. By Variation of Lease dated 26 May 1999, the term of the lease was extended to 31 January 2007, and by Transfer of Lease dated 2 June 1999, the lease was transferred to Moratic; the Gordons' consent is endorsed on the Transfer. At the time of the transfer of the lease to Moratic, the Gordons said nothing to Moratic to suggest that there had been a default in respect of "further rent", nor otherwise mentioned to Moratic anything about clause 20.

8 Thereafter, the Gordons each year sent Moratic a reminder that in accordance with the lease the rent increased by 4%, and setting out the new rent calculated on a weekly and monthly basis. However, they never demanded, asserted any entitlement to, or otherwise mentioned, "further rent" under clause 20.

9 As a result of the commencement, on 2 April 2002, of the Gaming Machines Act, seven PMEs were allocated in respect of the hotelier's licence. In late 2005, Moratic agreed to sell two blocks, each of three PMEs, for prices of $340,000 plus GST and $285,000 plus GST respectively. On 11 November 2005, Moratic lodged a Transfer form with the Liquor Administration Board for transfer of three of the PMEs. On 25 November 2005, the Gordons' solicitor lodged a submission with the Board which claimed a sufficient financial interest to require the support of the Gordons before any transfer application could be approved, asserting for the first time an entitlement to be paid further rent under clause 20. This submission was accepted by the Board, which refused to approve the transfer application in the absence of the Gordons' consent. The two contracts for sale of the PMEs were subsequently rescinded by the proposed purchasers.

10 On 10 October 2006, Moratic exchanged contracts with a new purchaser for the sale of a single PME for $60,000 plus GST. On 7 November 2006, Moratic exchanged contracts with another purchaser for the sale of a block of three PMEs, for $280,000 plus GST. The lease includes a lessee's covenant to transfer the licence to the lessor upon termination (clause 7.11), and when the lease expires on 31 January 2007, any capacity of Moratic to sell the PMEs will evaporate, and they will revert to the Gordons [Jabetin Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602; Masters v Garcia (2005) 65 NSWLR 92].

11 The first issue is whether, as Moratic submitted, the lease contained an implied term to the effect that clause 20 would not apply if s 154 were repealed, or (as the submission was refined in argument) would apply only if the lessee invoked its statutory right of deduction under s 154.

12 Such a term, it is said, is to be implied to give effect to the presumed intention of the parties [Castlemaine Tooheys Ltd v Carlton and Untied Breweries Ltd (1987) 10 NSWLR 468, 486-7 (Hope JA); Byrne v Australian Airlines (1995) 185 CLR 411, 448 (McHugh and Gummow JJ); State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503, [43]], in order to give efficacy to the particular contract [BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266, 282-3; NSW v Banabelle, [44]]. The requirements for implication of a contractual term in that context are well-established [see generally BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282 - 283 (PC); Secured Income Real Estate v St Martin's Investments Pty Ltd (1979) 144 CLR 596, 605 - 606; Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 347; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 66, 117-8, Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 422, 441; NSW v Banabelle, [45]-[46]]. For a term to be implied

· it must be reasonable and equitable, as between the parties; · It must be necessary to give business efficacy to the contract. While this means that mere reasonableness is insufficient, it does not mean that a term will be implied only if the contract would be ineffective without it; rather, the term must be necessary to give the contract the efficacy which the parties must have intended it have [The Moorcock (1889) 14 PD 64, 68; Hamlyn & Co v Wood & Co [1891] 2 QB 488, 491; Butts v O'Dwyer (1952) 87 CLR 267, 280; Hospital Products Ltd v United States Surgical Corporation, 66; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 257-8; NSW v Banabelle, [48]-[49]]. · it must be so obvious that 'it goes without saying'; · it must be capable of clear expression; and · it must not contradict any express term of the contract

13 Although it might be argued that the circumstance that payment of "further rent" under clause 20 was neither demanded nor tendered at any stage during the lease, before or after its assignment to Moratic, supports an inference that the original parties to the lease must have intended that clause 20 not apply unless the lessee invoked the statutory deduction, the force of that argument is much weakened by the availability of an alternative explanation for the absence of insistence on payment of "further rent" prior to 1997, namely that it was paid in substance, by the Danahers paying the licence fee without claiming any deduction.

14 More significantly, however, the legal history of provisions such as clause 20, illuminates whether such a term is necessary to give business efficacy to the contract. In Meredith v Fitzgerald (1948) 77 CLR 161, the High Court considered a substantially identical covenant in the context of the corresponding provisions of the (VIC) Licensing Act 1928, which imposed an annual fee for a licence equal to four percent of the amount paid or payable for all liquor purchased during the preceding year for the premises (s 19(1)(a)), and provided that, notwithstanding anything to the contrary in any agreement, any licensee of premises of which he was not the owner who paid the annual license fee might deduct from the rent payable by him for the premises a sum equivalent to three-eighths of the licence fee, or might recover that amount from the owner in a court of competent jurisdiction (s 19(3)). The appellant Meredith was the licensee and lessee of a hotel under a lease by which she covenanted to pay, firstly, a fixed annual rent and, secondly, by way of further rent, an annual sum equal to an amount computed at the rate of £1/10 for every £100 or fraction thereof of the gross amount paid or payable for liquor purchased during the preceding year for the premises. She argued that the covenant to pay further rent was void as an agreement "to the contrary" within s 19(3)(a), because it provided for payment to the lessor of an amount equivalent to that proportion of the licence fee which the legislation provided should be borne by the lessor (£1/10 percent being equivalent to three-eighths of four percent). The High Court (Latham CJ, Rich, Starke and Williams JJ; Dixon J dissenting) held that the covenant for further rent was not an agreement "to the contrary" and was enforceable. The essential basis of the reasoning was that a covenant to pay rent fixed by reference to an anticipated outgoing was not an agreement "to the contrary" and in no way prevented the exercise of the tenant's statutory right of deduction, but legitimately guaranteed to the lessor a minimum rental income. Latham CJ said (at 168-9):- This reasoning shows that there could be no objection to a rent on the ground that it actually included an amount calculated as probably representing the amount of land tax that would become payable. Further, it would be no objection that the rent (as in the present case) included a sum representing the tax payable at the time when the lease was entered into or that it varied with the amount paid for liquor - which is a measure of the amount of business done by the licensee. There is no agreement to pay three-eighths of the licence fee as it may vary from time to time. The further rent is fixed at 1 pound 10s. per 100 pounds of purchases of liquor, and would remain so fixed if the percentage determining the licence fee were altered.

15 And later (at 171):- The "further rent" is payable independently of the actual payment of the licence fee by the tenant and independently of the amount of any licence fee which the tenant pays. If the tenant did not pay the fee or paid only part of it, or if the amount of the fee were reduced or increased, the "further rent" would remain unchanged. Thus, the reservation of the further rent fixed an amount of rent payable in addition to the other rent by a provision which is independent of the amount of the licence fee which happens to be actually paid, though the further rent is calculated in substantially the same way as the licence fee under existing legislative provisions. In my opinion, for the reasons stated, this provision is not an agreement to the contrary within the meaning of s. 19 (3).

16 Williams J said (at 182-3):- As the Chief Justice of the Supreme Court has pointed out, it was expected and no doubt hoped that the method of calculation adopted in the lease would fix the further rent at an amount to all intents and purposes equal to the sum the tenant would be entitled to deduct or recover. But the lease contained no provision for altering the formula in the event of an alteration of the formula in the statute. Nothing in the lease prevented the tenant deducting from the rent at which the landlord was willing to let the premises or recovering from the landlord three-eighths of the licence fee which he had actually to pay to renew the licence whether the statutory formula remained the same or was replaced by a new percentage.

17 Thus the independence of the covenant for further rent from the amount of and changes in the licence fee was a significant element in the reasoning that held that the covenant was not an agreement "to the contrary": it was not a covenant to pay (or indemnify the lessor in respect of) the lessor's portion of the licence fee, but a covenant to pay an additional rent which, though calculated according to the same formula as then applied to calculate the lessor's portion of the licence fee, would remain the same regardless of whether or not the licence fee changed. Had the "further rent" not been independent of actual payment of the licence fee, but been conditional upon payment of the licence fee, it would have been an agreement "to the contrary", because it would have fettered or nullified the licensee's right to deduct three-eighths of the licence fee from the rent. This tells against the implication of any such term as Moratic propounds, because, since the efficacy of a covenant such as clause 20 depends at least in part upon its independence from the amount of and changes in the licence fee, the term for which Moratic contends would have jeopardised or detracted from the validity of clause 20. Parties are to be taken to intend their bargains to be valid and effective, rather than void, and where parties adopt drafting devices which have been the subject of judicial consideration they are presumed to intend the provision to have the effect which the courts have previously given it. Accordingly, these parties should be presumed to have intended clause 20 to be valid on the basis of, and to have the effect it was given in, Meredith - including that it operated independently of the statutory right of deduction. That means, in particular, that it was intended to operate according to its terms, requiring payment of additional rent of 4% of purchases, regardless of any increase or reduction in the licence fee - and for that purpose, abolition of an ad valorem licence fee is no more than the most extreme version of its reduction.

18 Moreover, reduction or abolition of the licence fee and the statutory right of deduction, while the obligation to pay "further rent" remained, would not necessarily be detrimental to the lessee's position: while the lessee would remain obliged to pay the "further rent", and would no longer be entitled to deduct the lessor's proportion of the licence fee from the rent, on the other side of the ledger it would no longer have to pay either its own or the lessor's proportion of an ad valorem licence fee. Thus it is wrong to suppose that the lessee would necessarily be disadvantaged if a covenant such as clause 20 remained in force notwithstanding reduction or abolition of the licence fee (and the concomitant right of deduction), and it is therefore not obvious that the parties must have intended clause 20 to have no operation in that event.

19 Accordingly, an implied term, whether to the effect that clause 20 would apply only if the lessee invoked its statutory right of deduction under (former) s 154, or to the effect that it would not apply if s 154 were repealed, is not only not necessary to give business efficacy to the contract, nor obvious, but might well have deprived it of efficacy. Such a term should therefore not be implied in the lease ab initio. Accordingly, if Moratic is to succeed, it can do so only by establishing that the original rights of the parties under the lease were subsequently affected, by a supervening variation of the lease or an estoppel.

20 The second issue is whether the parties should be taken, by their subsequent course of conduct - in particular, the absence of any payment, and of any demand for payment (or objection to non-payment) of "further rent", while the standard rent was paid monthly, and annual increments in the standard rent were demanded and paid in accordance with the lease, and the consent of the Gordons as lessors to the transfer of the lease to Moratic in 1999 given without assertion of any right under clause 20 or any objection on account of past non-payment of "further rent" - to have agreed to vary the lease by omitting clause 20.

21 The terms of a contract may be varied by implied agreement arising from a course of dealing between the parties, and a party that seeks to rely on a term incorporated as a result of a course of dealing need not show that the other had actual knowledge of the term [Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31, 90, 104-105, 130; Proprietors Strata Plan 30102 v Energy Australia (NSWCA, 29 September 1997, BC9704799, p5], because the issue depends not on the actual subjective intentions of each party, but on what each was reasonably entitled to conclude from the attitude of the other [McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 (Lord Reid); Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (1992) 28 NSWLR 338, 343-4 (Cohen J); Pondicil Pty Limited v Tropical Reef Shipyard Pty Limited (FedCA, Cooper J, 1994, BC9406064; Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1967] 1 WLR 287 (Lord Diplock)]. Nonetheless, more is required to produce this result than mere failure to insist upon performance of a contractual obligation, even if protracted: a party to a contract does not lose its contractual rights by omitting immediately, or even promptly, to demand strict performance - unless there has been some event which amounts to a repudiation or waiver or founds an estoppel [Amherst v James Walker Ltd [1983] 1 Ch 305, 315 (Oliver LJ)]. Moreover, contractual variation requires a mutual intention to vary the existing contractual terms, and consideration.

22 It is one thing to find that, in the absence of a written contract, the parties have by a course of dealing objectively adopted certain terms (as occurred in Proprietors Strata Plan 30102 v Energy Australia), but where the parties have recorded their agreement in writing and in detail, a mutual intention to vary the contract by omitting one of its express written terms is not lightly to be inferred from a course of conduct when the parties do not advert to the relevant term. I am quite unable to find in the conduct of the Gordons and the Danahers, prior to assignment of the lease to Moratic, enough to warrant implication of an agreement to vary the terms of the Lease: at least until 1997, the absence of a demand for "further rent" is, at best, equivocal, and may more readily be explained by the circumstance that the Danahers paid the licence fee without claiming any deduction - so that any claim for "further rent" during that period would have been met by a counter-claim for the lessor's proportion of the licence fee - than by an intention to vary. The absence of payment or demand for "further rent" after 1997 may be attributed just as easily to oversight or ignorance, as to an intention to vary the terms of the lease. I am not satisfied that the Danahers and the Gordons adverted to clause 20, or intended to vary the terms of the lease by omitting it.

23 As to the position at the time of the 1999 assignment, there is no evidence of any dealing between Moratic and the Gordons at the time of the assignment that could have worked a variation. The circumstance that Moratic did not contemplate that further rent would be payable, and the mere consent by the Gordons to the transfer of the lease, in the absence of any evidence of any communication on the subject, do not establish a contractual intention to vary. And after the 1999 assignment, once again, the absence of payment of or demand for "further rent" may be attributed just as easily to oversight or ignorance as to an intention to vary the terms of the lease

24 Finally, consideration is required to support a contractual variation. Here, the suggested variation would have been exclusively for the benefit of the lessee, but it was entirely unsupported by any consideration moving from the lessee.

25 Accordingly, I reject the submission that there was a contractual variation of the lease to the effect that clause 20 was omitted: there was no mutual intention to vary the lease to that effect; and there was no consideration for any such variation.

26 The third issue is whether that same subsequent course of conduct produced an estoppel precluding the lessors from insisting on performance of the lessee's obligations under clause 20. Moratic submits that the Gordons' conduct - in particular, their failure to demand payment (or object to non-payment) of "further rent", while receiving monthly rental payments and demanding annual increments under clause 4.1 from 1991 until 2005, and permitting the transfer of the lease to Moratic in 1999 without then asserting any right under clause 20 or any objection on account of non-payment of "further rent" - founds an estoppel precluding the Gordons from now claiming to be entitled to "further rent" under clause 20. This conduct is said to have conveyed a representation that the lessors would not enforce any rights they might have had under clause 20, as a result of which Moratic assumed that clause 20 would not be invoked, upon which assumption Moratic relied in acquiring the hotel business for the agreed price, and thereafter paying only the standard rent, so that Moratic would suffer detriment if the Gordons were permitted now to deny the truth of the assumption, including (1) having paid a price for the business greater than would have been acceptable or appropriate had it been thought that clause 20 would be invoked, (2) having incurred a liability which it would not otherwise have incurred to pay the "further rent" for the period since 1991; and (3) having become obliged to find and pay the arrears of "further rent" in a lump sum, rather than progressively each year as the lease required. In those circumstances, Moratic contends that it would be unconscionable for the Gordons to deny the truth of the assumption, that no rent would be payable under clause 20.

27 Moratic's submissions primarily invoked the principles of equitable promissory estoppel, in the context of representations relating to the enforcement of rights under a pre-existing contract between the parties. It was in that context that the doctrine was originally formulated and expounded by Lord Denning MR [Central London Property Trust v High Trees House Ltd [1947] KB 130; Combe v Combe [1951] 2 KB 215], and explained by the Privy Council in Ajayi v R T Briscoe (Nigeria) Limited [1964] 1 WLR 1326, 1330; [1964] 3 All ER 556, 559: The principle, which has been described as quasi estoppel and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party. This equity is, however, subject to the qualifications (1) that the other party has altered his position, (2) that the promisor can resile from his promise on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position, (3) the promise only becomes final and irrevocable if the promisee cannot resume his position.

28 The scope of the doctrine has since expanded beyond pre-existing contractual relations, and in Australia has been described by Brennan J, in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, in the following terms (at 428):- In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.

29 In promissory estoppel, as with equitable estoppel generally, equity comes to the relief of a plaintiff who has acted to its detriment on the basis of a fundamental assumption in the adoption of which the defendant has played such a part that it would be unfair or unjust if it were left free to ignore it, on the footing that it would be unconscionable for the defendant to deny the assumption [Grundt v Great Boulder Gold Mines Limited (1937) 59 CLR 641, 675; Thompson v Palmer (1933) 49 CLR 507, 547; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 404 (Mason CJ and Wilson J)]. The unconscionability which attracts the intervention of equity is the defendant's failure, having induced or acquiesced in the adoption of the assumption or expectation, with knowledge that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion [Waltons v Maher, 423 (Brennan J)].

30 Although Moratic relied primarily on equitable promissory estoppel, the analogous but distinct doctrine of common law conventional estoppel [MK & JA Roche Pty Limited v Metro Edgley Pty Limited [2005] NSWCA 39, [71]], which precludes either party from denying an assumption which has formed the conventional basis of a relationship between them [Legione v Hateley (1983) 152 CLR 406, 430 (Mason and Deane JJ)], also operates alongside contractual variation and proprietary estoppel in the field of consensual departures from contractual rights, sharing some characteristics with each. The analogies and distinctions between contractual variation and conventional estoppel appear from the observations of Lord Denning MR in Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (in liq) [1982] QB 84, 121, to the effect that if parties to a contract by their course of dealing put a particular interpretation on its terms, on the faith of which each to the knowledge of the other acted and conducted their mutual affairs, they are bound by that interpretation just as much as if they had recorded it as a variation of the contract. With reference to Grundt v Great Boulder Proprietary Gold Mines, his Lordship explained that such parties had by their course of dealing adopted a conventional basis for the governance of their relations and were bound by it - because, having regard to the dealings between the parties, it would be unjust to allow either to insist on the strict interpretation of the original terms. Nor is it necessary that the parties, in adopting their assumption, have adverted to the express terms of the contract. As Lord Denning MR said in Amalgamated Property Co v Texas Bank [at 121]:- There is no need to inquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it.

31 Thus whereas an intention to vary the original terms is necessary to support a contractual variation, no advertence to the original terms is necessary to found a conventional estoppel having the same effect. An estoppel by convention depends upon the adoption by the parties of an assumption as the conventional basis of their relationship [Dabbs v Seaman (1925) 36 CLR 538, 549; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226, 244-5]. Any requirement that the assumption be of a state of facts (as distinct from law) has been discarded [Eslea Holdings Limited v Butts (1986) 6 NSWLR 175, 185-9; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 415-6, 432, 452, 458; Foran v Wight (1989) 168 CLR 385, 435, 457; Commonwealth v Verwayen (1990) 170 CLR 394, 413, 445, 501; Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (in liq) [1982] QB 84, 122; Meagher, Heydon and Leeming, Equity Doctrines & Remedies, 4th ed, [17-020]; MK & JA Roche v Metro Edgley, [71]].

32 In Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066, 65 NSWLR 300, I compared the elements of these two related estoppels - both are included in the rubric of estoppel in pais [Legione v Hateley, 430 (Mason and Deane JJ)] - so as to reveal their analogies and distinctions in the following terms. In equitable promissory estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of a legal relationship with the defendant; (2) that the defendant has induced or acquiesced in the plaintiff's adoption of that assumption; (3) that the plaintiff has acted in reliance on its assumption; (4) that the defendant knew or intended that the plaintiff so act; and (5) that it will occasion detriment to the plaintiff if the assumption is not fulfilled [Waltons v Maher, 428-429 (Brennan J)]. In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff [Waterman v Gerling, [83], [96]].

33 The similarities between the two doctrines should not be allowed to mask their differences, which reflect the disparate origins of promissory estoppel and conventional estoppel. Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscionable (or unconscientious) insistence by the defendant on its strict legal rights. On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding.

34 The differences in the second and third elements outlined above, impact on the requisite state of knowledge of the defendant, particularly in a case of acquiescence (or inducement by silence). In the case of promissory estoppel where the defendant has not positively encouraged the plaintiff to adopt the relevant assumption, a plaintiff must show that the defendant at least failed to deny the assumption with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment, and that the assumption could be fulfilled only by a diminution or suspension of the defendant's contractual rights [see generally Waltons v Maher, 428-429 (Brennan J); Meagher, Gummow & Leeming, [17-050]]. It is essential to an equitable estoppel that the defendant knows or intends that the party who adopts the assumption will act or abstain from acting in reliance on it [see Crabb v Arun District Council [1976] Ch 179, 188; Waltons v Maher, 423 (Brennan J)]. Such knowledge or intention may easily be inferred where the adoption of the assumption is induced by the making of a promise, but it may also be found where the defendant encourages a plaintiff to adhere to an assumption already formed, or acquiesces in an assumption when in conscience objection ought to be stated [Waltons v Maher, 423 (Brennan J)]. The cases emphasise that a party who seeks to set up an equitable estoppel of this type must show that the other has made, whether by words or conduct, an unequivocal representation that it did not intend to enforce its strict legal rights [Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (The Leonidas) [1985] 1 WLR 925, 941 (Robert Goff LJ); Legione v Hateley, 435-7; Foran v Wright, 410-11, 435-6]. Although there are cases in which silence, when there is an obligation to speak, may convey such a representation, silence is usually not unequivocal, as there can be multiple reasons for a party remaining silent [The Leonidas, 941; Handley, Estoppel by Conduct and Election, Sweet & Maxwell, 2006, p54, [3-013]]. Brennan J, in the passage cited above, limited the circumstances in which silence would found an equitable estoppel to those in which the relevant assumption of the plaintiff could be fulfilled only by a diminution of the defendant's rights (or an increase in its obligations) and the defendant, with knowledge that the plaintiff's reliance on the assumption may cause detriment to the plaintiff if not fulfilled, failed to deny to the plaintiff the correctness of the assumption. His Honour had earlier explained (at 427):- Silence will support an equitable estoppel only if it would be inequitable thereafter to assert a legal relationship different from the one which, to the knowledge of the silent party, the other party assumed or expected: see Ramsden v. Dyson, at pp 140-141; Svenson v. Payne (1945) 71 CLR 531, at pp 542-543; Willmott v. Barber (1880) 15 ChD 96, at pp 105-106. What would make it inequitable to depart from such an assumption or expectation? Knowledge that the assumption or expectation could be fulfilled only by a transfer of the property of the person who stays silent, or by a diminution of his rights or an increase in his obligations. A person who knows or intends that the other should conduct his affairs on such an assumption or expectation has two options: to warn the other that he denies the correctness of the assumption or expectation when he knows that the other may suffer detriment by so conducting his affairs should the assumption or expectation go unfulfilled, or to act so as to avoid any detriment which the other may suffer in reliance on the assumption or expectation. It is unconscionable to refrain from making the denial and then to leave the other to bear whatever detriment is occasioned by non-fulfilment of the assumption or expectation.

35 Thus, in promissory estoppel, it is the defendant's knowledge of the potential for the plaintiff to incur detriment if it remains silent that may impose on the defendant's conscience an obligation to speak.

36 In a case of conventional estoppel, however, all that is required is the mutual adoption of the relevant assumption, as Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ emphasised in Con-Stan Industries [at 244]:- Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted upon by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.

37 Although I accept that detriment is an element of conventional estoppel [see Waterman v Gerling, [96]], and that each party must know or intend that the other act on the relevant assumption, there is no requirement that either have induced, or acquiesced in, the adoption of the assumption by the other, and in particular there is no requirement that either know that the other may incur detriment by reliance on the assumption. To the contrary - since the assumption is one common to both parties, and may involve a mistaken interpretation of the contract - the possibility that either party might incur detriment by reliance on it will usually not occur to the other.

38 It is convenient first to consider those elements which involve the conduct of Moratic.

39 There is evidence, from Moratic's principal Mr Bode, that at the time of purchase of the hotel business, Moratic did not contemplate any rent being payable under clause 20 and arrived at the purchase price on that basis. Although slight and unelaborated, that evidence is uncontradicted and unchallenged, and it is consistent with the Danahers' past conduct in paying no "further rent", with Moratic's subsequent conduct in paying only the rent reserved by clause 4.1, and with the absence of any demand by the Gordons for "further rent". Accordingly, I accept that Moratic assumed, at the time of its purchase of the hotel business and subsequently, that the only rent payable under the lease was that reserved by clause 4.1 - the necessary though unspoken corollary of which was that clause 20 was a "dead letter".

40 I also accept that Moratic acted, and conducted its relationship with the Gordons, in reliance upon the assumption that the only rent payable under the lease was that reserved by clause 4.1. This follows from acceptance of Mr Bode's uncontradicted and unchallenged evidence that the purchase price was reached on that basis, and from the uncontroversial fact that Moratic only ever paid the rent reserved by clause 4.1, and no "further rent".

41 I further accept that Moratic will suffer detriment if its assumption is falsified. First, it will have acquired the hotel business at a price which it would not otherwise have been prepared to pay; secondly, it will be saddled with a liability to pay "further rent" in respect of the whole of the lease term from 1993, before as well as after the assignment, which it would not otherwise have incurred; and thirdly, in respect of the period since 1999, there is detriment in being required to pay the accumulated arrears of "further rent" in a lump sum, rather than progressively year-by-year [cf Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101; Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203, [58]].

42 It is then necessary to consider those elements which involve conduct of the Gordons.

43 Did the Gordons induce, or acquiesce in, the adoption by Moratic of the relevant assumption? There is no evidence of any representation made by the Gordons, prior to or at the time of the assignment, which could have affected Moratic's decision to purchase the hotel business. The evidence does not reveal any dealings between Moratic and the Gordons prior to or at that time. There is no evidence that the terms of the lease, let alone clause 20, were at that time the subject of any discussion between Moratic and the Gordons. There was no unequivocal representation by the Gordons to Moratic, at that time, to the effect that the only rent payable under the lease was that reserved by clause 4.1. Even if the annual reminders of the 4% increase had conveyed to the Danahers a representation to the effect that that was the only rent payable, the evidence does not disclose how Moratic came to make its assumption, and does not implicate the Gordons in its adoption. Moreover, there is no evidence that the Gordons knew at that point that Moratic was adopting or acting on the relevant assumption, and more particularly there is no evidence that the Gordons knew that Moratic might incur detriment by doing so.

44 After the 1999 assignment, the annual reminders of rent increases were directed to Moratic. Although, at least generally speaking, a lessor has no obligation to remind its lessee of its covenants or the consequences of a breach [Handley, Estoppel by Conduct and Election, Sweet & Maxwell, 2006, p54, [3-013]; Cairns v Burgess (1905) 2 CLR 298], if it choses to do so, such reminders or demands could potentially found an estoppel. However, a demand for rent does not ordinarily convey a representation that the amount demanded is the only rent payable, and will not necessarily prevent a landlord from later recovering amounts which it had by miscalculation or oversight failed to demand; usually, such demands are to be read as excepting errors and omissions [Mineaplenty Pty Ltd v Trek 31 Pty Ltd [2006] NSWSC 1203, [57]-[64]]. In Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101, where an equitable estoppel was upheld, there was an express agreement to accept a lesser rent, in lieu of the rent payable under the lease. It was clear that the tenant knew that a concession was being made, and assumed that payment of the concessional rent would be accepted in full satisfaction, and that that assumption was encouraged by the lessor. But in Mineaplenty, where no estoppel was found, neither party supposed that any concession, or any departure from the terms of the lease, was involved, and neither intended to depart from the terms of the lease: there was no representation or assumption that an amount other than what was properly due under the lease would be accepted, and the amounts charged by the annual notices and the monthly invoices were incorrect by error or oversight, not by intention [Mineaplenty, [57]-[59]]. Similarly, in the present case, the evidence does not reveal a representation or assumption that an amount other than what was properly due under the lease would be accepted; there was merely an absence of payment of or demand for "further rent", which has not been shown to have been intentional.

45 I therefore do not accept that the Gordons induced Moratic to adopt the relevant assumption. As will be seen, I accept that, at least after 1999, they knew that Moratic had adopted and was acting on the relevant assumption, but once again there is no evidence that they knew that Moratic might incur detriment by doing so: the Gordons had adopted the same assumption, and it could not have occurred to them that any potential detriment was involved. Thus after as well as at the time of the assignment of the lease, the Gordons did not have the requisite knowledge - that Moratic's reliance on the relevant assumption might incur detriment if it were not fulfilled - to impose on their conscience an obligation in equity to deny the assumption. Accordingly, they have not been sufficiently implicated in Moratic's adoption of the assumption to found an equitable promissory estoppel: as the Gordons neither induced the adoption of the assumption, nor acquiesced in it with knowledge that Moratic's reliance on it may cause detriment if it were not fulfilled, equity did not require that in conscience they warn Moratic that they denied its truth. Indeed, as they had adopted the same assumption, they could hardly have done so; no such promissory estoppel as is contended for by Moratic arises.

46 This is a case of conventional rather than of promissory estoppel. The Gordons adopted the same assumption: the overwhelmingly probable explanation for the absence of any demand on their part for "further rent", at least after 1997, and moreso after the assignment of the lease to Moratic in 1999, particularly in the light of their annual reminders in respect of the 4% increment under clause 4.1, is that, like Moratic, they assumed that the only rent payable was that reserved by clause 4.1. In that context, and in the absence of other evidence, the circumstance that payment of "further rent" under clause 20 was neither tendered nor demanded at any stage during the lease, before or after its assignment to Moratic, shows that lessor and lessee conducted their relationship on the basis of the assumption that the only rent payable under the lease was that reserved by clause 4.1, and each knew that the other was doing so. The inference that the Gordons adopted and conducted their relationship with the lessee on that basis, and knew that Moratic was also doing so, is all the more readily to be drawn in the absence of any explanation on the part of the Gordons for their not having insisted upon payment of "further rent" at any earlier stage. If there were an explanation for their not having earlier demanded "further rent", other than that the parties treated clause 20 as a "dead letter", it was open to them to advance it, and they did not do so. 47 Accordingly, all the elements necessary to found a conventional estoppel have been established [see [39]-[41] and [46] above]:

· Moratic assumed that the only rent payable by it under the lease was that reserved by clause 4.1, · The Gordons adopted the same assumption; · Both parties conducted their relationship on that basis; · Each party knew that the other was conducting the relationship on that basis; and · Departure from that assumption would occasion detriment to Moratic.

48 Accordingly, the lessors and the lessees were dealing with each other on the conventional basis that the only rent payable under the lease was that reserved by clause 4.1. Once such a convention is established, it matters not if the terms of the lease provide otherwise, nor whether the parties adverted to those terms. Both parties are estopped from denying the truth of the assumption - on the basis of which they conducted their relationship - that the only rent payable under the lease is that reserved by clause 4.1 (and accordingly, that none is payable under clause 20).

49 No term to the effect that clause 20 would apply only if the lessee invoked its statutory right of deduction under (former) s 154, or to the effect that it would not apply if s 154 were repealed, should be implied in the lease ab initio. Particularly in the light of Meredith, such a term is not only not necessary to give business efficacy to the contract, nor obvious, but might well deprive clause 20 of any validity or effect.

50 There was no contractual variation of the lease to the effect that clause 20 was omitted: there was no mutual intention to vary the lease to that effect; and there was no consideration for any such variation.

51 Moratic assumed, at the time of the purchase and subsequently, that the only rent payable under the lease was that reserved by clause 4.1, the necessary though silent corollary of which was that clause 20 was a "dead letter". Moratic acted, and conducted its relationship with the Gordons, on that basis, and will suffer detriment if the assumption is falsified, in that it will have acquired the hotel business at a price which it would not otherwise have been prepared to pay; it will be saddled with a liability to pay "further rent" in respect of the whole of the lease term from 1993, before as well as after the assignment, which it would not otherwise have incurred; and it will be required to pay the accumulated arrears of "further rent" in a lump sum, rather than progressively year-by-year. But as the Gordons neither induced Moratic's adoption of the assumption, nor acquiesced in it with knowledge that Moratic's reliance on it may cause detriment if it were not fulfilled, they have not been implicated to the requisite degree in Moratic's adoption of the assumption so as to found an equitable promissory estoppel. No such promissory estoppel as is contended for by Moratic arises.

52 However, the Gordons adopted the same assumption: that the only rent payable was that reserved by clause 4.1. The Gordons as lessor, and the lessee - at first the Danahers from 1997, and subsequently Moratic from 1999 - conducted their relationship on the basis of that assumption, and each knew that the other was doing so. Regardless of the terms of the lease, and of whether the parties adverted to those terms, both parties are therefore estopped from denying the truth of the assumption - on the basis of which they conducted their relationship - that the only rent payable under the lease is that reserved by clause 4.1 (and accordingly, that none was payable under clause 20).

53 It follows that Moratic is entitled to succeed upon a conventional estoppel, that the only rent payable under the lease is that reserved by clause 4.1 - the necessary corollary of which is that clause 20 is a "dead letter", and that Moratic is not liable to pay the Gordons any amount under it.

54 My orders are:- 1. DECLARE that the Plaintiff is not liable to pay to the Defendants any amount pursuant to the provisions of clause 20 of Lease registered number I271579 of the premises known as the Oaklands Hotel, Millthorpe Street, Oaklands.

3. ORDER that the Defendants pay the Plaintiff's costs.

4. ORDER that the exhibits be returned at the expiration of 28 days unless Notice of Appeal or a Summons for Leave to Appeal has by then been filed.

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