Northern Beaches Council v Strata Plan 7114

The 1996 Deed

1. On 18 September 1996, a deed between the Council and the OC was entered into (the "1996 Deed"). The deed was clearly a trial agreement, as it was initially intended to operate for one year only.
2. The recitals to the 1996 Deed (CB 1/440) provided that the Council agreed to grant the OC a licence permitting the OC to have exclusive use and occupancy of Lots 412 to 430 inclusive for the term of the Deed (the "19 Lots").

Some relevant terms of the 1996 Deed

1. Clause 1 of the 1996 Deed provided that the Deed was for a term of one year; that is to say, from 30 September 1996 to 29 September 1997. This term was subject to Clause 3 which in turn provided that if, with the consent of the Council, the OC continued to use and occupy the 19 Lots after the expiration of the term, then the OC would do so as a licensee at will, which licence could be terminated at any time by the Council giving the OC not less than 21 days written notice. That continuation of the arrangement was to be upon the same terms and conditions as were contained in the 1996 Deed.
2. Clause 4 of the 1996 Deed acknowledged that the Council would conduct and operate a commercial car park within the Council's Lots.
3. The temporary nature of the 1996 Deed was further emphasised in Clause 7, which provided that the parties would enter into bona fide and meaningful negotiations with respect to the ongoing use of the common property for the operation of the public car parking station.
4. Neither party terminated the 1996 Deed, at least in any formal sense, and until a later Deed of 1999 commenced operation, the OC continued to use and occupy the 19 Lots with the consent of the Council as a licensee at will pursuant to Clause 3 of the 1996 Deed.
5. Clause 4 of the 1996 Deed required the OC to procure an amendment to the By-laws to provide for the provision of the Council's car parking infrastructure on the common property. A draft of the proposed By-law was an annexure to the 1996 Deed.
6. This By-law was registered and became By-law 34.
7. By-law 34, enacted pursuant to the 1996 Deed and registered, provided at Clause (xi) (CB 236) that at the expiration of the term, the proprietor (the Council) must immediately remove the works, restore the common property, and procure the repeal of the By-law by the OC. It was common ground in the proceedings that at the expiration of the term of the 1996 Deed, in December 1997, none of those things occurred. In fact, this has never occurred.
8. Although the Council over time has installed newer car parking equipment in the form of boom gates, ticket dispensers, payment machines, and the like, since the commencement of the 1996 Deed, there has never been any period relevant to the proceedings when the Council's car parking apparatus was not in situ. Indeed, the car parking apparatus remains in situ to this day.

The 1999 Deed

1. On 22 June 1999, the parties entered into another Deed which governed their relations (CB 450) (the "1999 Deed"). In the 1999 Deed, the Council was described as the "Owner" (of the Council Lots), and the OC was described as "the Corporation".
2. Recital D of the 1999 Deed provided that the Council had agreed to license to the OC the exclusive use of the 19 Lots. Recital E provided that the OC had agreed to permit the Council to install certain car parking infrastructure on the common property so as to allow the Council to efficiently manage the car park. The Deed also granted a licence to the Council over those parts of the common property upon which the car parking infrastructure was installed.
3. Clause 2.1 provided that the OC granted the Council a licence for a term of 10 years to operate a public car parking facility. Clause 2.4 provided that "This Licence Agreement" would terminate on the date of termination. The Date of Termination was a defined term referable to item C of schedule 1 of the Deed, being a term of 10 years. Thus, the date of commencement of the licence was 1 July 1999, and the stated date of termination was 30 June 2009.
4. Clause 2.5 of the Deed provided that if the Council continued to operate its car parking business after the termination date, it was to operate on what was effectively a holding over basis, on one month's notice.
5. The 1999 Deed was not in fact terminated until 8 January 2024. On this day it was terminated pursuant to a notice of termination, which had been sent by the OC on 28 November 2023 (CB 1182). It was clear on the evidence that the OC has continued to occupy the 19 Lots beyond the date of the 1999 Deed. Indeed, the OC continues to permit the use of the 19 Lots by residents to this day.
6. It was also clear that in the period from 1 July 2009 (that is to say, the day after the 10 year defined term of the 1999 Deed) until approximately June 2016, the parties treated the 1999 Deed as still being on foot, and for all intents and purposes continued their relationship on the basis that the 1999 Deed would continue to operate to govern their relations on a holding over basis.
7. From about June 2016, which was approximately 7 years after the formal expiration date of the 1999 Deed (CB 465), the OC ceased paying its licence fee to the Council. It did so amidst communications which had gone on for some time concerning whether the arrangements between the parties were fair, and whether the Council was making an adequate contribution to such expenses as cleaning expenses and electricity costs.
8. The OC took the position that it could cease paying the Council the OC licence fee, notwithstanding that the 1999 Deed was not terminated by it until 8 January 2024.
9. In the face of the OC refusing to pay its licence fee to the Council, the Council also ceased paying the licence fee which it was obliged to pay the OC under the 1999 Deed. This occurred around June or July 2016. The Council licence fee, unpaid since that time, is claimed by the OC as part of its cross-claim at [17] (CB 33). The sum claimed is $29,652.82 in respect of the period 30 June 2016 - 30 June 2022.
10. The dealings between the parties continued on that basis that the 1999 Deed remained on foot, but with neither party paying to the other the licence fees owing pursuant to it. This remained the situation until the termination of the 1999 Deed, which, as I have indicated, took effect on 8 January 2024.
11. The Council has claimed in debt in respect of the unpaid OC licence fees in the period up to termination of the 1999 Deed. Thereafter, it claimed damages for trespass arising out of the OC's continued occupation of the 19 Lots.
12. The Council's claim for unpaid licence fees is in the sum of $419,732.14. That claim covers the period up to and including 8 January 2024. Thereafter, the plaintiff claims $7,809 per month up to judgment for each of the 19 Lots. This sum represents the rate which the Council ordinarily charges third parties for monthly pre­paid parking.

Did the 1996 Deed Remain in Force and thus Survive the Termination of the 1999 Deed?

1. The defendant's initial written submissions advanced a case that the 1996 Deed was somehow resurrected on the termination of the 1999 Deed and governed their relations thereafter. Indeed, that was what it pleaded. I think that it is fair to say, however, that by the time of the final oral submissions, that claim was only faintly advanced.
2. The OC's change of position in this respect was, in my view, a correct position for it to adopt. In my view, the entry into the 1999 Deed must be taken to constitute conduct which either terminated the 1996 Deed or, alternatively, the parties by their conduct must be taken to have abandoned the 1996 Deed. In that regard, it will be recalled that the 1996 Deed covered substantially the same ground as the 1999 Deed.
3. I shall briefly return to this issue later in these reasons.
4. I am also of the view that, even leaving aside the conduct of the parties, Clause 2.5 of the 1999 Deed is inconsistent with the proposition that the 1996 Deed had any role to play in the contractual relations between the parties after the termination of the 1999 Deed.
5. Clause 2.5 is in the following terms: "2.5 Should the Owner continue to operate the Business after the expiration of the Management Period such continued operation shall, subject to the Corporation's rights of termination set out elsewhere in this Deed, continue from month to month at the Corporation's discretion and shall be upon the same terms and conditions herein set out from month to month determinable by not less than one (1) month's prior notice in writing from either party."
6. It can be seen, therefore, that after the expiry of the original term of the 1999 Deed, the parties had agreed that it was the 1999 Deed, not the 1996 Deed, which would continue to govern their ongoing contractual relations, albeit on a holding over basis.

The OC's Incorrect Approach to Issues of Contractual Construction in Cases of Long-term Contractual Relations

1. In my view, the approach of the OC in these proceedings to questions of contractual construction, including questions as to the interaction of the 1999 and 1996 Deeds, is misplaced. Its literalist approach, in my opinion, fails to take into account the evolving nature of commercial contracts which operate over a long period of time.
2. This literal approach culminates in the OC arguing that as Clause 2.5 of the 1999 Deed does not refer to the OC licence as being the subject of a holding regime, the only licence fee which would be payable in the long period of holding over was the Council's licence fee. It took that position while simultaneously maintaining that it remained entitled to continue to use the 19 Lots.
3. The OC says that its licence fee, which was in a sum considerably greater than the Council's Licence Fee, simply stopped being payable on the expiry of the 10-year term of the 1999 Deed. Thus, it says that thereafter it could occupy the 19 Lots for no fee.
4. The OC took this position notwithstanding the fact that it continued to pay its licence fee until June 2016.
5. I consider the OC's approach to matters of contractual construction to be an incorrect approach to the evolving nature of long-term contracts. In my view, the correct position is that the parties, by their conduct, must be taken to have agreed that the 1999 Deed was to continue, in toto, to govern their relationship until it was formally terminated. More specifically, the parties must be taken to have agreed that both of their licence fee obligations would continue until the 1999 Deed was terminated.
6. The correct approach to such long-term contracts was, in my respectful opinion, explained by McHugh JA (as his Honour then was) in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Australia) Pty Ltd (1988) 5 BPR 11, 110, where his Honour stated: "It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of "offer", "acceptance", "consideration" and "intention to create a legal relationship" which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship: compare P S Atiyah, "Contracts, Promises and the Law of Obligations", Law Quarterly Review, vol 94, 1978, p 194. A bilateral contract of this type exists independently of and indeed precedes what the parties do. Consequently, it is an error "to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed": Howard, "Contract, Reliance and Business Transactions", [1987] Journal of Business Law, p 127. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract: cf Baltimore and Ohio RR Co v US 261 US 592 (1923); Fincke v US 675 F 2d 289 (1982). Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances. Research in the United States and Great Britain suggests that probably the majority of people in ongoing business relationships regulate their relationships in accordance with what they consider is fair and reasonable or commercially necessary at particular points of time rather than by reference to a priori rights and duties arising under a contract: Beale and Dugdale, "Contracts Between Businessmen", British Journal of Law and Society, [1975] p 45; Lewis, "Contracts Between Businessmen", Journal of Law and Society, [1982] p 153. This is the case even where their relationship is governed by a written contract. There is no reason to suppose that the position is any different in Australia. For this reason "action and conduct before the inception of a controversy is of much greater weight than what they said or did after a dispute arose": Fincke v US at 295. Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed." (At pages 16-18)
7. See also Brambles Holdings Ltd V Bathurst City Council (2001) 53 NSWLR 153 at 76 and following per Heydon JA.
8. In applying that approach in the present case, one sees that the parties' relevant contractual relations commenced in the 1970s and continued at least until the termination of the 1999 Deed. Indeed, the better view in my opinion, is that the Council's right to operate the car park continued thereafter by virtue of By-law 17.
9. The parties' original recitation of their rights and obligations under the 1996 Deed, as I have indicated was, on its face, a temporary one. That said, the parties by their conduct must have agreed to keep the 1996 Deed on foot after the trial period of one year had expired.
10. In my view, it is also clear that the contractual relationship between the parties persisted under the 1996 Deed until the parties entered into the 1999 Deed. This Deed, albeit in some respect different to the 1996 Deed, was clearly intended to cover what was the same ground as the 1996 Deed. The parties, however, did not expressly address the interrelation between the two deeds. The most obvious example of this failure is that the parties did not provide expressly that the effect of the 1999 Deed was to terminate the 1996 Deed.
11. Nonetheless, in my view, it is clear that the parties by their conduct must be taken to have agreed to have either terminated the earlier deed or abandoned it.
12. As to abandonment, the Court of Appeal in Fuller v Albert (No 2) [2021] NSWCA 183 at [19], (Macfarlan and Brereton JJA and Emmett AJA) recently considered the topic of contractual abandonment. The Court stated that "[a] finding that a contract has been discharged by abandonment involves an evaluative assessment of the conduct of the parties over a relevant period of time".
13. See also in Belflora Ply Ltd v Vinflora Pty Ltd and Anor [2020] NSWSC 1229 by Sackar J.
14. I consider that the conduct of the parties clearly leads to the conclusion that the 1996 Deed was either abandoned or was terminated by the 1999 Deed.
15. As I have earlier indicated, by applying the approach described by McHugh JA in Integrated Computers, it is clear in my view that by their conduct, the parties must be taken to have agreed to simply carry on with their relationship as if the 10-year period of the 1999 Deed had never expired. By their actions, the parties should be taken to have continued the 1999 agreement, in toto, or that the 1999 Deed in toto was subject to the holding over regime of Clause 2.5. Thus, on my analysis, both parties were liable to pay their respective licence fees until the deed was terminated.
16. As I have also earlier indicated, this is precisely what the parties did. That is to say that, until June 2016, the parties continued to make payments to each other as if the contractual arrangements of the 1999 Deed remained on foot and binding on both parties, and both parties continued to grant each other the rights under the 1999 Deed.
17. Indeed, in my view the evidence strongly suggests that this was apparently what the OC itself considered to be the correct analysis. This apparent understanding of the rights and obligations of the parties was well illustrated by the initial instructions which its solicitors gave to an expert which it retained in the proceedings. In that letter of instruction of 27 April 2023, the solicitor advised the expert that: "The 10 year of the 1999 Deed has since lapsed, but an agreement on the same or similar terms has continued since 22 July 2009" (See PX17 p. 2)
18. That letter of instruction was withdrawn, and the amended letter did not contain this statement.

The Council's OC Licence fee Claim

1. As I have earlier indicated, the Council seeks recovery of the licence fee which the OC has refused to pay it from June 2016 to the date of termination of the 1999 Deed. In my view, the Council is entitled to do so on the basis that the 1999 Deed remained on foot until it was formally terminated. The Council is thus entitled to judgment accordingly.
2. The OC asserts that it paid monies to the Council on account of its licence fee to the Council, following the expiry of the original term of the 1999 Deed, as a consequence of a mistake. It says it paid these amounts in the mistaken belief that such fees were payable. In my view, there was no mistake. There was no mistake as the OC fees were in fact payable.
3. In my view, at the time of the payment the OC understood this and made the payments as the OC understood that they were due and payable. Indeed, I am of the view that the payments, far from representing a mistake, represent part of the conduct of the parties which had the effect of keeping the 1999 Deed on foot until its termination.
4. In my view, the OC's position as to whether both licence fees remained payable after the expiry of the 10-year period initially contemplated by the Deed is both opportunistic and incorrect. After the expiry of the 10-year period contemplated by the Deed, the parties simply continued their relations as if the entirety of the 1999 Deed remained on foot, albeit on a holding over basis, or perhaps terminable on reasonable notice.

The Council's Trespass/Nuisance Claim

1. This claim concerns a roller door which denies general access to the 19 Lots. The Council's case is that the failure of the OC to remove the roller door after the termination of the 1999 Deed has resulted in trespass or nuisance, insofar as the roller door denies access to the 19 Lots to both it, and to the general public.
2. The evidence was that the roller door is operated by fob keys. These fob keys are apparently provided by the OC to residents who use the 19 Lots for parking. In defence of the Council's trespass claim, the OC said that it had offered a fob key (or keys) to the Council.
3. I do not consider this offer provides answer to Council's trespass case. In my view, it is not available to a trespasser to say to the owner of the property the subject of a trespass, that there are things that the owner could do to ameliorate the effects of trespass. At the end of the day that, in my view, is the effect of the OC's position.
4. I am also of the view that now that the 1999 Deed is, on any view of it, at an end, the OC no longer has any rights to occupy the 19 Lots as a licensee. It follows therefore that it has no right to maintain a structure which in any way impedes the quiet enjoyment of the 19 Lots by the registered proprietor of those Lots, that is to say the Council.
5. In final submissions, the OC argued that the Council could have no case in trespass because the Council could never in fact use the 19 Lots. I do not accept that this is the case. The Council is the registered proprietor of all of the Council Lots. The OC Lots form part of the Council Lots and the concept of the 19 Lots being the subject of a separate legal treatment to the balance of the Council's Lots ends upon the termination of the 1999 Deed.
6. In addition to the foregoing, the Council had rights to use the 19 Lots as part of its car parking operation pursuant to By-law 17.

Damages on the Council's Trespass Case

1. Since the termination of the 1999 Deed, the Council has been invoicing the OC on a monthly basis for each of the 19 Lots and has purported to charge the OC the standard rate, which the Council charges to monthly licensees of its car parking spaces. It does so for each of the 19 Lots. The OC has declined to pay these invoices.
2. Initially this claim was pressed in debt, however, ultimately the debt claim was not pressed. This was a proper course to adopt, as in my view there was no contractual basis for the Council charging the OC for parking at that time.
3. The Council did, however, maintain that the general monthly rate to which I have referred represents the loss which it has suffered as a consequence of the trespass. The Council submitted that the presence of the roller door has deprived the Council of an opportunity to use the 19 Lots in its car parking business. It went on to argue that this loss of opportunity equates to the Council being deprived of the revenue for such use based on its standard third party monthly rate.
4. In my view, the adoption of a standard monthly rate (the existence or quantum of which was not seriously put in dispute) provides an appropriate measure of the Council's loss for trespass.
5. That said, the Council's approach to damages for trespass seems to me to carry with it an unstated assumption that during the period of the trespass it would have always been able to lease all of the 19 Lots. I do not think that this is a realistic assumption.
6. In my view, the quantum of the Council's trespass damages should be reduced by 20% to reflect commercial vicissitudes.

The OC's Cross-Claim

1. The defendant by way of Second further amended cross-claim sought the following: 1. recoupment of monies paid by it under a mistake as its obligations to make such payment; and 2. sums owed by the Council pursuant to its licence fee obligations under the 1999 Deed; and 3. mesne profits arising from the failure of the Council to remove its car parking infrastructure on a small proportion of the common property; and 4. various electricity and cleaning charges.
2. I have already dealt with the restitutionary claim for monies paid under a mistake. As I have indicated, the OC, in my view, is not entitled to such relief as there was in fact no mistake which caused the payment made to the Council. That sum was in fact due and payable, as I consider the OC well knew.

Unpaid Council Licence Fees

1. As to the claim against the Council for unpaid licence fees, the Council accepted that it must pay the licence fees the subject of the 1999 Deed and was content to do so, subject only to the OC issuing it with a tax invoice.
2. On the final day of the hearing, the OC undertook to provide such tax invoice. On that basis, the OC is entitled to that sum which may be set off against the judgment to which the Council is entitled.

The OC's Mesne Profits Claim

1. As to the OC's mesne profits claim, this claim is based on the failure of the Council to remove certain car parking infrastructure as required by the By-laws following the termination of the 1999 Deed (See By-Law 34 PX1 p 232-233).
2. In my view, this mesne profits claim is not available to the OC. This is so by virtue of the fact that by the very letter which enclosed the notice terminating the 1999 Deed, the OC informed the Council that it was not required to remove the car parking infrastructure the subject of the mesne profits claim (DX6 CB 1182).
3. I am of the view that this action unequivocally constituted consent, given by the OC to the Council allowing it to maintain its equipment on the common property. This consent remains up to this day.
4. Consequently, there can be no trespass on the OC's common property by the presence of parking infrastructure, as the alleged trespass is the subject of the OC's consent.

Cleaning Costs

1. As to the OC's claim that the Council is liable to it for the costs of cleaning associated with the operation of the car park, I consider that this claim must fail as there is no contractual basis for it.
2. As I understood its case, the OC relied upon By-laws 17 and 34 to found its right to a contribution towards cleaning costs. I do not consider that either By-law provides a basis for such a claim. By-law 17 merely says that the permission to conduct a public car park was "at its cost". The reference to cost in my view is a reference to operational costs of the car parking station business, and not a reference to the costs which are incurred by the OC in connection with the common property generally.
3. Similarly, By-law 34's obligations in this regard are limited to the maintenance of the car parking infrastructure on the common property. This maintenance obligation does not extend to the costs of the cleaning of the of the common property generally.

Electricity Costs

1. These costs are referable to the period before 21 March 2013. On that day, a separate electricity meter was installed to measure electricity agreed to be attributed to the operation of the car park. After that time, the Council paid electricity costs in relation to the meter attributed to it.
2. In my view, there is no contractual basis for the OC to claim electricity costs from the Council before March 2013.
3. I should add that, in any event, the OC's claim in that regard must be statute based.

Conclusion

1. There should be judgment and verdict for the Council against the OC on the Council's claim. The quantum of the judgment should be the sum sought in respect of unpaid OC licence fees being $419,732.14 together with damages for trespass at the Council's monthly rates. This later sum should be brought up to date to the day of judgment and discounted 20% for vicissitudes.
2. The OC should have judgment in respect of the unpaid Council licence fees, in the sum of $29,652.28, which sum may be set off against the Council's claim.
3. Interest on the judgment sums should be payable at the rates pertaining from time-to-time pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

Costs

1. As to costs, the Council should clearly have the costs of its claim.
2. As to the costs of the cross-claim, I am of the view that while the OC did enjoy limited success on the cross-claim, it only did so on an issue which at the end of the day was conceded by the Council, namely its right to receive the Council Licence fee. Additionally, this issue was, in reality, an issue which turned on a question of law, the costs of which would be dwarfed by the costs of the issues upon which the OC failed in the cross-claim.
3. In those circumstances, I do not believe that it is appropriate to attempt to apportion the costs of the cross-claim between the issue on which the OC succeeded and those upon which it failed.
4. In my view, a practical approach is required in considering costs issues in circumstances such as these. An objective third-party observer, in my view, would readily conclude that the OC had not succeeded on its cross-claim. In those circumstances, in a practical sense the Council was the successful party on the cross-claim (Perry v Stopher [1959] 1 WLR 415 at 426), and it should have the benefit of a costs order in its favour on the cross-claim.
5. I shall direct the parties to bring in short minutes of order which reflect these reasons.

Orders 1. That the parties bring in Short Minutes of Order which reflect these reasons.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 February 2025