Piazza Trevi v Cromwell BT Pty Ltd as custodian for the Cromwell Symantec... [2017] NSWSC 794 | Case summary

Piazza Trevi v Cromwell BT Pty Ltd as custodian for the Cromwell Symantec... [2017] NSWSC 794 | Case summary | Zoe

[2]

Construction of contracts

French CJ, Nettle and Gordon JJ reaffirmed the approach to construing commercial contracts in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104 (Mount Bruce Mining) at [46] - [52]: [46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. [47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. [48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. [49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. [50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations. [51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". [52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd. (citations omitted) (See the judgments of Bell and Gageler JJ at [119] - [121] and Kiefel and Keane JJ at [107] - [113] which are of similar effect).
Mount Bruce Mining was most recently approved by the High Court in Simic v New South Wales Land and Housing Corporation [2016] HCA 47 at [18] and [78] and applied by the New South Wales Court of Appeal in Port Macquarie-Hastings Council v Diveva Pty Ltd [2017] NSWCA 97 at [29].
Further guidance on the construction of commercial contracts was provided by Kiefel, Bell and Gordon JJ in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 at [16] - [17], citing Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640: It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract (Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656 [35] and the cases at fn 58; [2014] HCA 7). In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it (Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35] and the cases at fn 60). Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd ((2014) 251 CLR 640 at 656-657 [35] and the cases at fn 60), that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement.
The UK adopts a similar, although not identical, approach to contractual interpretation. In the recent case of Wood v Capita Insurance Services [2017] UKSC 24, the Supreme Court (leading judgment by Lord Hodge) described contractual interpretation at [12] as involving: an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated…To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.

[3]

Estoppel

The principles of equitable estoppel as initially set out by Brennan J in Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9 were summarised by Priestley JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 610: For equitable estoppel to operate there must be the creation or encouragement by the Defendant in the Plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the Plaintiff by the Defendant, and reliance on that by the Plaintiff, in circumstances where departure from the assumption by the Defendant would be unconscionable.
This passage was followed by the Full Federal Court (Neaves, Gummow and Higgins JJ) in a case considering whether a lessor was estopped from denying a lessee was entitled to exercise an option to renew; S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 at 653.
On the question of representation, French CJ, Kiefel and Bell JJ in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 333 ALR 384 noted at [35]: [35] It has long been recognised that for a representation to found an estoppel it must be clear. In Low v Bouverie, it was said that the language used must be precise and unambiguous. This does not mean that the words used may not be open to different constructions, but rather that they must be able to be understood in a particular sense by the person to whom the words are addressed. The sense in which they may be understood provides the basis for the assumption or expectation upon which the person to whom they are addressed acts. The words must be capable of misleading a reasonable person in the way that the person relying on the estoppel claims he or she has been misled. The statement that the tenants would be "looked after at renewal time" is not capable of conveying to a reasonable person that the tenants would be offered a further lease. (footnotes omitted).
Adopting a similar approach, Keane J noted at [142]: [142] Crown relied upon the proposition affirmed by Mason and Deane JJ in Legione that a representation must be "clear", "unequivocal" and "unambiguous" before it can found a promissory estoppel. Nothing in the subsequent decisions of this Court has detracted from that requirement, which addresses the concern that a doctrine which is apt to preclude a party to a contract from relying upon its terms should not be so broad in its operation as to deny the party the benefit of its bargain by dint of representations which are so equivocal or ambiguous that they could not be given effect as terms of a contract. This concern was acknowledged in Legione by Mason and Deane JJ, who cited with approval the speech of Lord Hailsham of St Marylebone LC in Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd : "it would really be an astonishing thing if, in the case of a genuine misunderstanding as to the meaning of an offer, the offeree could obtain by means of the doctrine of promissory estoppel something that he must fail to obtain under the conventional law of contract. I share the feeling of incredulity expressed by Lord Denning MR in the course of his judgment in the instant case when he said: 'If the judge be right, it leads to this extraordinary consequence: A letter which is not sufficient to vary a contract is, nevertheless, sufficient to work an estoppel - which will have the same effect as a variation.'" [143] It would tend to reduce the law to incoherence if a representation, too uncertain or ambiguous to give rise to a contract or a variation of contractual rights and liabilities, were held to be sufficient to found a promissory estoppel. Practical considerations such as the need of commerce for certainty, both as to the terms to which parties have agreed to be bound, and as to whether their bargaining process has concluded, also provide strong support for this approach.
On the question of reliance, Gageler J's remarks in Sidhu v Van Dyke (2014) 251 CLR 505 at [90] - [93] are instructive: [90] Paraphrasing Dixon J in Thompson v Palmer , the respondent bore the onus of establishing that she believed the appellant's representations and that, on the faith of that belief, she took a course of action or inaction which would turn out to be to her detriment were the appellant to be permitted to depart from those representations. The respondent did not need to establish that the belief to which she was induced by the appellant's representations was the sole or predominant cause of the course of action or inaction she took but, in the language of Rich, Dixon and Evatt JJ in Newbon v City Mutual Life Assurance Society Ltd, she did need to establish that the belief was a "contributing cause". [91] To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief.
On the question of detriment, Bathurst CJ said in Ashton v Pratt (2015) 88 NSWLR 281 at [141] - [142]: [141] The relevant detriment is that which the party asserting the estoppel would suffer, as a result of her original change of position, if the assumption which induced it was repudiated by the party estopped: Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 at [42], Grundt v The Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674-675 and Sidhu at [81]. [142] What now appears clear is that there is no need to mould any remedy in the case of equitable estoppel to reflect the minimum relief necessary to remove the detriment: Giumelli at [48], Delaforce at [56]-[57] and Sidhu at [85]. Prima facie the courts should enforce a reasonable expectation which the party bound created or encouraged. However, relief will be limited where the enforcement of a Plaintiff's expectation would be out of all proportion to the detriment: Delaforce at [62] and Sidhu at [85]. This is because in those circumstances good conscience does not require the promisor be held to his or her promise.

[6]

The nature of an option

There is a degree of controversy surrounding what Dixon J coins the "academic riddle" of the juristic nature of an option, namely whether it is an irrevocable offer or a conditional contract and proprietary right; Lontav Pty Ltd v Pineross Custodial Services Pty Ltd (No 2) [2011] VSC 485 at [114].
In my view, the law as it stands in New South Wales treats an option as no more than an irrevocable offer to make a contract; Gerraty v McGavin (1914) 18 CLR 152 (Gerraty); Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd (1959) SR (NSW) 122 (McCaul); B.S. Stillwell & Co. Pty Ltd v Budget Rent-A-Car System Pty Ltd [1990] VR 589 (B.S. Stillwell). The New South Wales Full Court (Owen J, Roper CJ in Eq and Herron J) in McCaul held at 123: In the present case the lessor irrevocably offered to grant a lease. Its offer prescribed the time and manner for acceptance. Only by performing the conditions prescribed could it be accepted and result in an agreement for a lease. A purported acceptance without performance of the prescribed conditions would not and could not be an acceptance of the offer. It would in reality be a counter offer by the original offeree requiring acceptance by the original offeror if an agreement were to result. If a conditional offer is made and the offeree without performing the condition purports to accept it, that is to say makes a counter offer and that counter offer is accepted, it is a loose although not uncommon use of language to say that the original offeror has waived performance of the condition which was prescribed by his offer as being the manner of accepting it. In contemplation of law the original offeror has done no such thing. What he has done is to accept a counter-offer and in the result an agreement is made but it is not an agreement consisting of the original offer and an acceptance of that offer.
McCaul was later applied by Wootten J in Evanel Pty Ltd v Stellar Mining N/L [1982] 1 NSWLR 380 (Evanel), a decision approved by the Court of Appeal; Stellar Mining NL v Evanel Pty Ltd (1983) NSW ConvR 55-118 per Hope JA (Glass and Samuels JJA agreeing). McCaul and Evanel concerned breaches of conditions which attached to the right to exercise the option in a lease (namely, payment of rent) which is now (and at the time of Evanel) covered by Division 4, Part 8 of the Conveyancing Act 1919 (NSW) (see section 133E(1)(b)). However, the Full Court's characterisation of an option as an irrevocable offer remains undisturbed by such statutory intervention. The analysis of an option in McCaul was not doubted by Stephen J in the principal judgment in Bowman & I H Bowman Pty Limited v Durham Holdings Pty Limited (1973) 131 CLR 8 (Bowman) at 17-18. Further, McCaul was most recently cited with approval by the New South Wales Court of Appeal in Mitchell v Leafs Gully Farm Pty Ltd [2016] NSWCA 92 at [32] per Leeming JA (with Beazley P and Payne J agreeing).
This characterisation is important when considering the requirements for exercising options to renew, and the application of the doctrines of relief against forfeiture and waiver to option cases - all of which I will now address.

[7]

Exercising options to renew

As Windeyer J remarked, when it comes to options "it is a cold hard world"; Burrell v Cameron (1997) 8 BPR 15,443, at 15,446. A purported exercise of an option to renew must clearly and unequivocally express the fact it is intended to exercise the option; Ballas v Theophilos (No 2) (1957) 98 CLR 193 at 196 per Dixon CJ. Further, an option gives rise to a contract if and only if the conditions set out in the option are strictly complied with; In the Matter of Qatar No.2 Pty Ltd ACN 001184407 and Qatar No.3 Pty Ltd ACN 001184416 [2015] NSWSC 2088 (Qatar) at [26] per Brereton J.
Campbell JA collected the principles relevant to exercising an option to renew in Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at [69] - [72]: [69]…..It is uncontroversial that a valid exercise of an option must be a clear and unequivocal election to acquire the relevant property upon the terms specified in the option: Prudential Assurance Co Ltd v Health Minders Pty Ltd (1987) 9 NSWLR 673 at 677-678, 681-682, 683; Quadling v Robinson (1976) 137 CLR 192 at 201. Whether the document in question involves a clear and unequivocal election to acquire the relevant property upon the terms specified in the option is decided from the point of view of a reasonable recipient of the document, with knowledge of the relevant context. In Health Minders at 677, Kirby P said: The appropriate question to be asked is what anybody who received the letter, subsequently said to amount to the exercise of the option, would fairly have understood to be the meaning of it, in all the circumstances of its receipt: cf Carter v Hyde (1923) 33 CLR 115 at 126; adapting Romer J in Jones v Daniel [1894] 2 Ch 332 at 335. The addition by Isaacs J of the phrase 'in the circumstances of its receipt', adds instruction that the consideration which will govern the meaning to be ascribed to the letter is not to be judged in isolation, weighing only the words used. It is to be judged against the background of the dealings between the parties: cf Braham v Walker (1961) 104 CLR 366 at 376 and Lamont v Heron (1970) 126 CLR 239. The parties did not dispute that this Court could look to those dealings, at least up to the time for the exercise of the option had expired." [70] Samuels JA at 681 and McHugh JA at 683 each adopted a test of enquiring what a piece of writing purporting to exercise an option would fairly be understood as meaning. Samuels JA expressly adopted Isaac J's addition of the words "in the circumstances of its receipt"; McHugh JA did not expressly do so, but gave a reference to Carter v Hyde (1923) 33 CLR 115 at the page where that addition occurs. In Young v Lamb [2001] NSWCA 225; (2001) 10 BPR 18,553, Stein JA (Mason P and Hodgson JA agreeing) adopted the test stated by Kirby P in Health Minders at 677. [71] This way of approaching the question of whether the option has been validly exercised is consistent with the objective theory of contract formation. [72] There is no need for a valid notice exercising an option to use any particular form of words, so long as it conveys in substance that the person serving the notice unequivocally elects to acquire the relevant property on the terms of the option….

[8]

Waiver of an option to renew

A waiver of a right is "an intentional act, done with knowledge, whereby a person abandons a right by acting in a manner inconsistent with that right"; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [56] per Gummow, Hayne and Kiefel JJ. In light of the nature of an option, once the date for exercising an option passes then the doctrine of waiver cannot operate since there is no longer a contractual right to waive.
In Bowman for example, Stephen J noted at 17-18: The appellants rely upon Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd [1959] SR (NSW) 122 ; 76 WN (NSW) 72 , and the authorities and texts to which the Full Court there referred and contend that the doctrine of waiver is wholly inapplicable; there was, they say, no obligation binding upon the respondent which the appellants might be said to have waived, instead there was only a right available to the respondent, the right to purchase by exercise of the option, and this right it might retain for a further 12 months but only by the observance by it of certain conditions which it failed to fulfill. The absence of any obligation resting upon the respondent means, it was said, that there was nothing capable of being waived by the appellants; accordingly there was nothing upon which the doctrine of waiver might operate.
Gray J approved the reasoning in McCaul in B.S. Stillwell, observing at 603-604: But assuming that such an analysis be correct in relation to the present option, the reasoning in Gilbert J. McCaul in relation to waiver is unaffected. Upon the assumption of a conditional contract it remains to true that the grantee cannot be required to perform the conditions. The grantor has no right to have the conditions performed, and thus, has nothing to waive. If the grantee fails to perform the conditions but seeks to renew the lease, he is merely making an offer.
This authority is consistent with John S. Ewart's remarks in Waiver Distributed at 63, in the context of a terminated lease: We see, therefore, that any operation which "waiver" may be supposed to have, must be confined to cases in which there is a right of election, and in which the right has not yet been exercised. But there is no opportunity for "waiver" in that kind of case, for there is no forfeiture to "waive."

[9]

Relief against forfeiture

The nature of an option also explains why relief against forfeiture cannot, in my view, be invoked where forfeiture arises from a failure to exercise an option to renew. A mere failure by a lessee to exercise their option to renew (either on time, in the required form, or at all) does not invoke the court's jurisdiction to grant relief against forfeiture of that lease, since there is no loss of a proprietary right to relieve against.
As noted by DJ Farrands in The Law of Options and Other Pre-emptive Rights (Farrands) at 105: … the equitable rules which provide relief against forfeiture do not apply to forfeiture of an option. It has been established for some time that a court of equity will not and cannot relieve a grantee from any failure to satisfy any conditions precedent. In this context Mellish LJ in Finch v Underwood stated: The tenant must take the covenant to renew as he finds it; if it contains conditions precedent he must comply with them before he can claim the benefit of it, and if he has not done so a court of equity cannot relieve him. (footnotes omitted).
Brereton J expressed a view consistent with McCaul and Farrands in Qatar, noting at [26]: …counsel was not, despite a number of requests on my part, able to identify any authority for the proposition that relief could be, or had ever been granted, in respect of an option. As it seems to me, one reason for that is that it has always been held that options must be strictly complied with, because an option gives rise to a contract if and only if the conditions set out in the option are satisfied.
An arguably contrary view was contemplated by Young J, as his Honour then was, in Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd (2000) 10 BPR 18,085 (Leads) at 18,088: [20] There is great doubt that even if this principle does apply it can operate in a situation where what is forfeited is the equitable interest in property that exists under an option to renew a lease prior to the exercise of the option. There is discussion of this in the article by Professor A G Lang, "Forfeiture of Interests in Land", Law Quarterly Review, vol 100, 1984, p 427 at p 449 and following. [21] The view that I have tentatively taken and which is, I think, reinforced by the judgment of Peter Murphy J in Hillier v Goodfellow (1988) V Conv R 54-310, is that equity does have jurisdiction to make such an order but one must find that there is unconscionable conduct before one can exercise that discretion.
White J went on to summarise the diverging positions in Mcgregor v Henry [2006] NSWSC 368 at [44]: Equity regards the time for exercise of an option as being essential. There is much authority that equity cannot relieve a tenant from the consequences of failing to exercise an option for renewal in time (see for example Finch v Underwood [1876] 2 Chancery Div 310 at 314 and 315; Kim v Abbey Orchid Property Investments Pty Ltd 1981) NSW Conv R 55-039; Wallville Pty Ltd v Liristis Holdings Pty Ltd [2001] NSWSC 894 at [29]). On the other hand, in Hillier v Goodfellow [1988] Vic ConvR 54-310, Murphy J stated that the principle is a prima facie one which applied as a general rule, and that equity might grant relief against a minor time defalcation which was accidental and inconsequential, and not wilful or deliberate (63,968, 63,970). In Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459; (2000) 10 BPR 18,085, Young J, as his Honour then was, expressed the tentative view (at [20] and [21]) that equity does have jurisdiction to relieve against the forfeiture of an equitable interest in property that exists under an option to renew, but said that before the jurisdiction could be exercised there must be a finding of unconscionable conduct. As the issue of the availability of this jurisdiction was not argued, I will express no view about it. The requirement stated by Young J in Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd that before the jurisdiction can be exercised, assuming it exists, there must be a finding of unconscionable conduct, must be reinforced by the decisions of the High Court in Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2004) 217 CLR 315 and Romanos v Pentagold Investments Pty Ltd [2003] HCA 58; (2003) 217 CLR 367. (my emphasis).
Neither Young nor White JJ adverted to the Full Court's characterisation of an option in McCaul, though Professor A G Lang's article referenced by Young J does include a reference to the case in footnote 95 at p 451.
As stated, the plain language of McCaul is that an option to renew clause is a contractual right, operating as an irrevocable offer by the lessor and not an enforceable right giving rise to a proprietary interest in the leasehold land. Forfeiture only occurs where an interest, estate or other proprietary right of one person is determined in favour of another person; Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [18-210]. A failure to properly exercise an option to renew is therefore no forfeiture of any interest, and thus equity cannot intervene to relieve the lessee against such failure. On that basis, I respectfully would not follow Young J's analysis.
It may also be observed that even if the above analysis was not an appropriate characterisation of an option, the authorities support the proposition that the doctrine of relief has no application to cases where forfeiture does not arise from an act or omission amounting to a breach. The unstated premise of relief against forfeiture is that such indulgence relies upon a lessee, mortgagee or some other party being in breach of a condition. So much is made clear from the seminal cases on relief against forfeiture, which speak strictly of relief against forfeiture for breach of a covenant or condition (see, for example Shiloh Spinners Ltd v Harding [1973] AC 691 at 723 per Lord Wilberforce and Legione v Hateley (1983) 152 CLR 406 (Legione v Hateley) at 449 per Mason and Deane JJ). This is also reflected in the legislation now applying to relief against forfeiture, with the provisions of the Conveyancing Act 1919 (NSW) relating to a forfeiture for "a breach of any covenant, condition, or agreement (express or implied) in the lease" (section 129(1)), or a "breach by the lessee of any relevant obligation" (section 133E(2)) (emphasis added).
Generally with options to renew, the obligation to grant the option only bites if the lessee elects to exercise its contractual right to renew, and does so in accordance with the contract. The mere failure of the lessee to exercise its contractual right can therefore not, on any reading, be construed as a breach. Without a breach, the loss of the lessee's option to renew cannot properly be characterised as forfeiture of the lease which equity has jurisdiction to relieve against.
If this view is incorrect and the court does have discretion to relieve against forfeiture arising from a failure to exercise an option to renew, the principle basis' of jurisdiction in which the courts may exercise their indulgence are set out in Shiloh at 723-724 per Lord Wilberforce and approved in Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2004) 217 CLR 315 (Tanwar) at [58] and are as follows.
First, courts will generally relieve if the forfeiture is meant to secure the performance of a primary stipulation, and the party benefiting from the forfeiture can be compensated, such as forfeiture for non-payment of rent. These limited cases will require consideration of whether the applicant for relief's conduct was wilful, the gravity of the breaches, and the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach.
Secondly, equity may intervene where the right to forfeiture arises from one of "the special heads of fraud, accident, mistake [and] surprise." Russell L.J summarised authorities relevant to these special heads in Samuel Properties (Developments) Ltd v Hayek [1972] 1 WLR 1296 at 1304: The next case cited was Harries v. Bryant (1827) 4 Russ. 89. That also concerned a lease for lives with a covenant for renewal on the falling of each life on payment of a small fine, provided application were made within six months of the dropping of a life. A life dropped in January 1822 and no application was made until November, the lessee not knowing until then the identity of the person named as the life. The claim for a new lease was refused, Sir John Leach M.R., saying at p. 91: "A court of equity will relieve against the effect of an express covenant, where strict performance of the condition is prevented by ignorance not wilful, or by unavoidable accident. Ignorance is considered to be wilful, where a person neglects the means of information, which ordinary prudence would suggest; and accident is not unavoidable, which reasonable diligence might have prevented." In the course of argument the following citation was quoted, at p. 90: "In Bateman v. Murray (1803) 5 Bro.P.C. 20 in the House of Lords, Lord Thurlow L.C. said, 'Courts of equity will relieve the lessee, if he has lost his right by fraud of the lessor, or accident on his own part; but will never assist him where he has lost his right by his own gross laches or neglect: 'and again:' Where the lessee has lost his legal right, he must prove some fraud on the part of the lessor by which he was debarred the exercise of his right, or some accident or misfortune on his own part, which he could not prevent, by means whereof he was disabled from applying for a renewal at the stated times, according to the terms of his lease.'" …. Yet another case cited, Reid v. Blagrave (1831) 9 L.J.O.S. Ch. 245 concerned a lease for lives renewable on notice and payment of a fine. Sir John Leach M.R. said, at p. 248: "no accident will entitle a party to renew unless it be unavoidable. I am of opinion, that nothing but accident, which could not have been avoided by reasonable diligence, will entitle the Plaintiff to a renewal in this court."
Along with wilful ignorance, mere forgetfulness of a covenant of a lease is also not a mistake which the lessee can be relieved against; Barrow v Trustees [1891] 1 Q.B. 417 per Lord Esther M.R at 420.
There is some debate as to whether unconscionable behaviour operates as an additional or all-encompassing further basis for relief. As noted in Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [18-280]: Unconscionable behaviour may be used loosely, as a portmanteau term that refers to conduct grounding relief on the basis of one of the 'special heads' of fraud, accident, mistake or surprise. When that manner of speech is used, however, the starting point for anaylsis is the particular head of relief that the Plaintiff relies on. Analysis then moves though the other elements of the forfeiture doctrine (see Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2004) 217 CLR 315 at [5], [20] - [26], [37] - [39], [58] - [67]). The judicial statements which have suggested that the law accepted and applied in the Shiloh Spinners decision is to be replaced or supplemented by a stronger notion of unconscionable conduct are problematic.

[13]

Mr Hristaki (Chris) Jovanovski

Mr Jovanovski affirmed two affidavits (CJ1 and CJ2).
Mr Jovanovski was born in 1949 in Macedonia. In 1968 he received a Diploma in Mechanical Engineering from a technical school in Macedonia. However in 1969 he emigrated to Germany where he stayed until 1972 emigrating then to Johannesburg in South Africa. He lived in South Africa for 28 years. He emigrated to Australia in 2009 and received permanent residency in 2011 (CJ1 [1] - [8]).
He is the sole director, secretary and shareholder of the Plaintiff. He caused the company to be registered on 22 January 2009 (CJ1 [10] - [12]).
In the middle of 2012 the company purchased the Foyer Café business operating at the Premises for $935,000. After purchasing the business he negotiated a new lease at the Premises with the then landlord, the RMS (CJ1 [13] - [14]).
On 25 September 2012 he executed a sub-lease of the Premises on behalf of the Plaintiff. On 26 September 2012 he received the Lessor's Disclosure Statement (CJ1 [15] - [18]).
At the time of the purchase of the Foyer Café business Ms Katerina Samaris acted for him as the conveyancer on behalf of the Plaintiff in relation to the purchase of the business and sub-lease (CJ1 [16]).
He received advice from Ms Samaris that he should read the Lessor's Disclosure Statement carefully to make sure he checked the terms. He did just that before he signed the document (CJ1 [20] - [21]).
Since 2012 onwards the Plaintiff has operated the Foyer Café business at the Premises. The Premises also holds a liquor licence (CJ1 [22] - [23]).
In 2013, Mr Jovanovski executed on behalf of the Plaintiff a document entitled a Deed of Covenant which was to acknowledge the landlord of the building containing the Premises was changing from RMS to the Defendant. Mr Jovanovski asserted that in about 2015 the Plaintiff paid to upgrade the kitchen on the Premises to a gas kitchen at a significant cost to the Plaintiff. He had not at the date of his first affidavit been able to exhibit any documents relating to the improvements (CJ1 [24] - [31]).
In late 2015, Mr Jovanovski decided to try and sell the Foyer Café business. He consulted HLB to have them assist in that sale. They were engaged on 11 December 2015. The person he dealt with at HLB was Mr O'Connor (CJ1 [32] - [36]).
From that time he was actively marketing the Foyer Café business for sale through numerous agents. A number of potential purchasers were brought to the Premises (CJ1 [38] - [44]).
To the best of Mr Jovanovski's recollection, the first time he met with Mr Gothard was in about late 2013 at the Premises. He recalled at the meeting complaining about the rent being too high and the hope that it could be more reasonable in the future. He said Mr Gothard responded by simply indicating the Lease had a long way to go and there could be discussions (CJ1 [45]).
Mr Jovanovski appreciated that on 16 September 2016 his then solicitor Mr Russell sent a letter to the Defendant which he did not see, he asserted, before it went. However on 17 September 2016 he called Mr Russell to ask whether there had been a reply. Immediately after that telephone call he called Mr Gothard and asked him whether he had received a letter from his solicitor and if he had an answer. He asserted that Mr Gothard responded by saying he should not worry and that there was plenty of time to exercise the option and that "we will get back to you" (CJ1 [47] - [50]).
Mr Jovanovski said he understood that what was said by Mr Gothard was that he had plenty of time to exercise the option and that the Defendant would allow him to do so. He also believed as a result that the Defendant would negotiate in relation to a new lease. He also said that as a result of the conversation with Mr Gothard he decided to wait until he heard back about the request for a new 5+5 lease before taking any further steps in relation to the renewal of the option, although he believed he had communicated clearly to the Defendant that he wanted to exercise the option regardless of any other negotiations (CJ1 [51] - [52]).
However during this period he continued to actively market the Foyer Café business for sale (CJ1 [53]).
In late September 2016, having not heard from Mr Gothard or anyone from the Defendant, he again telephoned Mr Gothard. Mr Gothard indicated that he would get back to him very soon, but also said "it will be fine". Again, as a result of the latter statement, he believed the Defendant would offer a new 5+5 lease or that he would be granted the option to renew for five years (CJ1 [56] - [57]).
On 18 October 2016, he received a telephone call from Mr Gothard and was asked to attend a meeting, being the 26 October Meeting. During the Meeting Mr Gothard told Mr Jovanovski that he did not exercise the option in time and that the Defendant was not going to grant the option. Mr Jovanovski would have until 31 May to vacate the Premises. At the meeting Mr Gothard handed him a letter which confirmed that the Defendant did not propose to offer the Plaintiff a renewal or extension of the Lease after the expiry date on 31 May 2017 (CJ1 [58] - [59]).
Mr Jovanovski told Mr Gothard he could not believe what was happening and that Mr Gothard had told him that there was plenty of time to exercise the option and now he was being given notice. He said Mr Gothard apologised and said it was his bosses whom he had never met and that he simply received instructions from them by email (CJ1 [59]).
Mr Jovanovski said he attended a further meeting in November 2016, being the 15 November Meeting, and on this occasion a friend of his, Mr Sam Lewis, and his son attended the Meeting. He recalled at the Meeting Mr Lewis indicating to Mr Gothard that the Plaintiff was seeking to have the option renewed and it was unfair of the Defendant not allow the Plaintiff to do so. Mr Jovanovski said again Mr Gothard said it was not him but his bosses (CJ1 [60]).
Mr Jovanovski's affidavit of 12 May (CJ2) was in response to both Mr Gothard's affidavit of 28 April (AG) and Mr Williams's affidavit of 26 April 2017 (DW).
Mr Jovanovski denied that at any meeting with Mr Williams Mr Gothard said that the Defendant had acted within the terms of the Lease and the RLA. He also denied Mr Gothard had ever said at any meeting that Mr Jovanovski was well aware of the option date and that it had been discussed previously. Further Mr Jovanovski did not recall any discussions regarding the rent or rent levels at the 26 October Meeting (CJ2 [3] - [4], [15]).
Mr Jovanovski also denied that his friend Mr Lewis introduced himself as a lawyer at the 26 October Meeting. He also denied Mr Lewis said words to the effect that Mr Jovanovski had missed the option and that it was an honest mistake. Mr Jovanovski did recall however Mr Lewis saying that the Defendant had taken the view that Mr Jovanovski had missed the option but that he thought there was further time to consider a new lease. Mr Jovanovski also denied Mr Gothard said at the 26 October Meeting that he was surprised that the option was missed by accident and that it had triggered the Defendant's view on the future of the café and the building in general (CJ2 [5] - [7]).
As far as Mr Gothard's affidavit was concerned Mr Jovanovski indicated that he had never seen Mr Gothard make any notes of any meetings in his presence (CJ2 [9] - [10]).
Mr Jovanovski denied certain other events including ever meeting with Mr Gothard alone (CJ2 [11]).
Mr Jovanovski agreed he had a telephone conversation with Mr Gothard on 12 September 2016 and further asserted that during this conversation Mr Gothard said to Mr Jovanovski that he should not worry about the option, that there was plenty of time, and there would not be a problem (CJ2 [12]).
Mr Jovanovski denied Mr Gothard ever said to him during the 26 October Meeting that they had had a previous discussion in which he had been told that he needed to exercise the option by 31 August (CJ2 [16]).
Amongst other things Mr Jovanovski denied that he had ever said that he had slipped up in exercising the option (CJ2 [17]).
Mr Jovanovski gave some brief evidence in chief when he was called. He indicated Mr O'Connor had told him that at one point that he had received an offer and a deposit. However when Mr Jovanovski was told that the offer was $850,000 he told Mr O'Connor he was not interested in selling the Foyer Café business as the offer was too low. He was then cross-examined.
Mr Jovanovski agreed that his son Vinnie worked in the business and has done for a long time and he was still there (T26/35-40). He also agreed Mr Lewis was a lifelong friend of his and he spoke to him regularly (T26/40-45).
Mr Jovanovski asserted that he had only met with Mr Gothard twice (T28/14-20).
Mr Jovanovski agreed when he first met Mr Gothard he raised the question of the rent and his difficulties in meeting the current rent (T28/40-47).
Mr Jovanovski asserted the only meeting he ever had with Mr Gothard was when Mr Gothard handed him the Termination Letter (T29/30-38).
Mr Jovanovski said in September 2016 he called Mr Gothard and asked whether he had received the emails and that he had not responded to his solicitor. Mr Jovanovski asserted that Mr Gothard responded by saying that he need not worry and that he had plenty of time (T33/1-20).
When shown the 16 September Letter, Mr Jovanovski said that he did not recall ever seeing the email or any draft (T34/5-13).
Mr Jovanovski agreed he may have received an email from Mr Russell enclosing a copy of the 16 September Letter, but his son wrote and read his emails (T34/35-45).
Mr Jovanovski said he had only seen for the first time in the witness box the 16 September Letter. He accepted that it may have been emailed to his son but his son did not give it to him (T36/40-50).
While his son did not give the 16 September Letter to him, he did want Mr Russell to exercise the option (T37/15-25).
It was put to Mr Jovanovski he was not attempting to answer questions to which he responded that he had never seen the emails before, he was not deaf, but he was not a solicitor, he was not an advocate and he simply ran a coffee shop and that all he wanted to do was to discuss the opportunity to get a lease and instead he was given a notice (T39/15-30).
Mr Jovanovski was asked how many times Mr Gothard had told him not to worry to which he answered that he did tell him that but it was only once (T40/10-20).
Mr Jovanovski could not remember Mr Gothard telling him that he needed to exercise the option by 31 August 2016 but that that may have been said by Mr Gothard (T41/1-15).
Mr Jovanovski denied he ever told Mr Gothard in a telephone call that Mr Gothard was correct about the exercise of the option on 31 August (T43/15-20).
Mr Jovanovski accepted Mr Gothard may have told him that he needed to exercise the option by August 31 but he also said he need not worry about things and that he had plenty of time (T44/1-10). When asked about the telephone call on 12 September Mr Jovanovski said that he did not remember what Mr Gothard had said (T46/30-40). Mr Jovanovski then asserted that during the conversation on 12 September Mr Gothard said that Mr Jovanovski should not worry about the option as there was plenty of time and it would not be a problem (T47/20-30).
When asked again how many times Mr Gothard had said not to worry Mr Jovanovski said he was only told once (T47/45-50).
It was put to Mr Jovanovski that he was making his evidence up. He said he did have a conversation with Mr Gothard (T48/5-10).
Mr Jovanovski appreciated he had to tell the truth in his affidavits but he asserted in respect of Mr Gothard "Anthony is lying. You know that. He was told by his bosses to lie" (T49/1-10).
He was asked whether he could recall a conversation with Mr Gothard on 30 June 2016 to which he responded that he never sat down with Mr Gothard in June (T49/45-50).
It was put to Mr Jovanovski that during a meeting in June he was told that 31 August was the date for the exercise of the option to which he responded that he would hand deliver the letter to Mr Gothard's office on the day. He denied saying that and said that Mr Gothard "is lieing" (T51/30-40).
Mr Jovanovski indicated he had retained a "Samara" who he consulted about the Lease and that she went through the Lease with him in 2012 (T54/5-49).
It was put to Mr Jovanovski that the reason he asked Mr Russell to send the 16 September Letter was because he was panicking because he realised he missed the exercise date. Mr Jovanovski said he did panic when he found out but he did not know what he had to do (T56/15-20).
Mr Jovanovski agreed that he would have received an explanation about the option in 2012 (T56/45-50).
He denied that he discussed the terms of the Lease with any of the brokers retained (T57/1-7).
Mr Jovanovski agreed at the meeting with Mr Lewis, Mr Lewis said to the meeting that Mr Jovanovski had made a mistake (T57/30-35).
Mr Jovanovski agreed in 2014 he received a letter indicating a change of ownership of the Premises (T58/40-45).
It was again suggested Mr Jovanovski was making his evidence up. He denied that (T62/40-50).
Mr Jovanovski agreed in early 2016 he was trying to do the best he could to get the best price for the sale of the business. He would be prepared to sell at $1.1 million although he agreed he was advertising it at $1.2 million (T65/1-20).
Mr Jovanovski agreed he was told by HLB there were potential purchasers in the range of $800,000 to $900,000 but that he did not want to sell at that price (T65/20-30).
Mr Jovanovski also said he had paid $935,000 for the Foyer Café business and "I spent a lot of money on doing it" (T65/44-46).
Mr Jovanovski agreed that in mid-2016 if he did not get a buyer he would have to exercise the option (T66/15-20).
He denied telling Mr Gothard that if he did not get a buyer he would exercise the option on the last day (T66/25-35).
Mr Jovanovski said he was told by Mr Gothard that if a sale occurred at $850,000 then the Defendant would give a 5+5 lease (T67/20-25).
Mr Jovanovski agreed it was Mr Hadanich who had offered the $850,000 which he rejected. He also agreed that by June 2016 Mr Hadanich was out of the picture (T67/40-50).
Mr Jovanovski also accepted he knew that the Defendant would have to approve any new tenant (T69/30-45).
It was put to Mr Jovanovski that he did not speak to Mr Gothard in late September to which he said he could not remember the dates and "all that" (T72/35-45).
Mr Jovanovski agreed at the 15 November Meeting when Mr Lewis was present, Mr Lewis said that the Defendant was legally entitled to take the position that he did (T70/25-35).
Mr Jovanovski appeared to agree at this meeting he said that he had slipped up but he believed the Defendant should honour the purported exercise of the option anyway because it was only two weeks late (T78/15-25).
Mr Jovanovski agreed he knew he was two weeks late because the Lease required him to do it by 31 August (T79/15-20). He said however he knew he had a document which said 30 September (T79/15-16).
Mr Jovanovski agreed he was told by Mr O'Connor in the first few months of 2016 that the Defendant was looking for a new lessee to take over the Premises. Mr Jovanovski indicated that he was told by Mr O'Connor that he wanted a lessee who could spend a large sum of money on the Premises (T80/5-20).

[14]

Mr Patrick O'Connor

Mr Patrick O'Connor affirmed two affidavits (PO1 and PO2).
Mr O'Connor is a chartered accountant with ten years' experience in the accounting industry. From February 2009 to July 2016 he was an employee of HLB Mann Mann Judd (PO1 [2] - [3]).
In late 2015 the Plaintiff engaged HLB to act as advisors on the marketing and possible sale of the Foyer Café business on the Premises. Mr O'Connor had the day to day carriage of the matter under the supervision of Mr Simon James, a partner of HLB (PO1 [4] - [5]).
In order to be able to sell the business the lessor would be required to consent to an assignment of the existing Lease of the Premises to any prospective purchaser. To that end Mr O'Connor had had several discussions with Mr Gothard in relation to potential sale of the business (PO1 [6] - [9]).
Mr O'Connor said that in early 2016 he had a conversation with Mr Gothard in which he indicated that if Mr Jovanovski could not sell the business he would exercise the option but that he was also interested in trying to negotiate a new 5+5 lease. He said that Mr Gothard indicated that he understood that and there would be no problems (PO1 [10]).
In or about June 2016, he said he attended a meeting with Mr Gothard and a representative of a prospective purchaser. The purchaser indicated that they were interested in buying the business particularly if the Defendant would be prepared to make a contribution to the fit-out of the Premises. Mr O'Connor said Mr Gothard indicated that he would not rule that out and that a proposal would have to be put (PO1 [11] - [12]).
In his second affidavit Mr O'Connor indicated with greater particularity that he had met with Mr Gothard on 12 January 2016. Mr O'Connor asserted he asked Mr Gothard whether the Defendant would consider a 5+5 lease for an assignee to which Mr Gothard indicated that the Defendant would consider it, but they would need tick all the boxes in terms of their financials and experience. There would also have to be a market rent review and that the rent may go up by at least 10 or 20% (PO2 [6] - [8]).
Mr O'Connor said he told Mr Gothard that the last fit-out was done around 2012 when the current lease was signed and that Mr Jovanovski had received an incentive of approximately $116,000 for the fit-out. He further asked Mr Gothard whether the Defendant would consider contributing to a fit-out or providing a lease incentive. Mr Gothard indicated he could not say one way or the other but it would be good to have a renewal of the look of the restaurant (PO2 [8]).
Mr O'Connor took a file note of the meeting of 12 January. The file note in broad terms accords with his affidavit evidence in particular that the last fit-out was undertaken in 2012 (PO2 [9]).
Mr O'Connor said that in early 2016 his instructions were still to attempt to sell the Foyer Café business with the existing Lease which included a five year option but to explore the availability of the 5+5 lease for the Plaintiff or any prospective purchaser (PO2 [10] - [11]).
Mr O'Connor annexed to his affidavit a number of ads placed at various points in 2015. In one of the ads (CB 205) there is reference to a new fit-out "(costs circa $128K) installed in January 2013". That information is again repeated at CB 208 (PO2 [13]).
Mr O'Connor said on 8 April 2016 he took Mr Hadanich to a meeting with Mr Gothard. Mr O'Connor says that subsequent to the meeting Mr Hadanich made an offer of $850,000 which was ultimately rejected. On 6 June 2016 Mr Hadanich wrote requesting a return of the deposit (PO2 [14] - [22]).
Mr O'Connor said at no time during any meeting with Mr Gothard did he observe him taking and/or typing any notes (PO2 [24]).
In examination in chief Mr O'Connor said that at the meeting of 12 January 2016 he told Mr Gothard that if the business could not be sold the Plaintiff would exercise the option to which Mr Gothard implied that there would be no dramas, no worries and no problems (T9/5-25).
Mr O'Connor was cross-examined.
He said that at the meeting of 12 January 2016 his client was either going to exercise the option or get a new 5+5 lease but he was trying to sell the business before the option date. In early 2016, when he was discussing the matter with Mr Jovanovski, Mr O'Connor appreciated that the option had to be exercised by a particular date (T12/10-20).
He did have a copy of the Disclosure Statement but he could not recall when in 2016 he got a copy of the actual Lease (T12/30-35).
He agreed that his email of 23 May referred to the Lease but he believed that was a reference to the Disclosure Statement (T13/5-10).
Mr O'Connor agreed he did not have a diary note of the meeting he had with Mr Gothard and Mr Hadanich but he did have a clear recollection of certain "specifics" (T17/5-10).
Mr O'Connor accepted Mr Gothard expressed a view there was a large amount of money that may have to be required for a fit-out and that it was possible this was an amount much larger than Mr Hadanich had in mind (T17/15-25).
Mr O'Connor also agreed that he had no potential buyer as at April 2016 who was prepared to spend more than half a million dollars on a fit-out (T17/25-30).
Mr O'Connor agreed Mr Gothard said in relation to matters that were raised he could not say yes or no (T18/20-25). He believed however that Mr Gothard was looking for a new and improved look at the café (T18/25-30).
Mr O'Connor agreed that Mr Gothard told him in January 2016 that any new lease would have to be approved by the management of the Defendant and that Mr Gothard would not have power to enter into any new lease (T21/30-40).
At the April meeting in 2016 Mr O'Connor agreed Mr Gothard did indicate that there would an uplift in rent. Mr O'Connor also agreed there was a discussion with Mr Gothard about wanting to renew the look and the question asked as to whether the Defendant would contribute to the fit-out. Mr O'Connor denied however that Mr Gothard said that the Defendant would not contribute to the fit-out and that it was not his practice to do so (T22/30-45).

[16]

Mr Anthony Gothard

Mr Gothard swore only one affidavit (AG).
He indicated he was currently employed by the Defendant and had been since November 2014. He originally worked as Property Manager for the North Point Tower and then was appointed Senior Manager - Asset Services in August 2015. He remains in that role (AG [7] - [9]).
Mr Gothard said that on 1 September 2015 he received an email from Mr Jovanovski. He replied on 8 September 2015 (AG [11] - [12]).
He recalled he first met with Mr Jovanovski on 17 September 2015. Prior to meeting with him he read the schedule to the Lease. At that meeting Mr Jovanovski told him that the Plaintiff was having trouble paying the rent, he had 11 staff working for him and he was losing money. Mr Gothard said that he told Mr Jovanovski during a meeting that he thought the rent under the Lease was lower than market rent. Mr Jovanovski complained in effect that he was forced to accept a big increase in the rent and that it was not affordable. He told Mr Gothard that he was aware there was an option to be exercised sometime in 2016 but the business was on the market. Mr Gothard told Mr Jovanovski that the Lease expired in 2017 and he had a five year option that would have a specific date to be exercised by some months prior to that. Mr Gothard made a file note of that meeting (AG [13] - [15]).
Mr Gothard indicated he first met Mr O'Connor on 12 January 2016. Mr O'Connor explained to Mr Gothard that he was attempting to assist Mr Jovanovski in selling his Foyer Café business and that he had a five year option but he needed a longer lease for any purchaser and asked Mr Gothard whether the Defendant would enter into a new lease immediately. Mr Gothard said that he responded by saying that in theory they would but they would need to see who the tenant was and whether or not the financials and experience levels were appropriate. However he indicated the rent would be higher than the current rent because the current rent was under market. Again Mr Gothard made a file note of that discussion (AG [16] - [17]).
Mr Gothard indicated that over the next couple of months he recalled meeting with Mr O'Connor on approximately 3 or 4 occasions, some with prospective purchasers of the business (AG [18]).
On 24 February 2016, he received a telephone call from Mr Jovanovski. Mr Jovanovski indicated to him that he was looking to sell the Foyer Café business and that he had someone interested and asked what he needed to do to transfer the Lease. He also asked for a meeting. Mr Gothard indicated he would email a tenant application form to be completed and stressed that no sale or assignment could take place until the Defendant approved the situation and there was appropriate documentation in place. Again Mr Gothard made a file note of that conversation (AG [20] - [21]).
That same day Mr Gothard sent an email to Mr Jovanovski which attached a copy of the tenant application form. However he received no response from Mr Jovanovski on 24 February 2016 so on 10 March 206 he sent a follow up email (AG [22] - [23]).
In March 2016 he recalled reviewing the terms of the Lease and in particular the termination date and the period when the option needed to be exercised. He recalled calculating the last date on which notice was to be given as 31 August 2016 (AG [24] - [25]).
On 8 April, Mr Gothard said he met with Mr O'Connor. He was introduced to prospective purchasers. He was asked by Mr O'Connor whether the Defendant would provide a new lease to which he responded that that would be considered however the rent was likely to be 15, 20 or 30% higher as it seemed a bit light on currently and the Defendant would also require a new fit-out (AG [26]).
The purchaser (whose identity Mr Gothard could not recall) asked whether the Defendant would contribute to a fit-out to which Mr Gothard indicated that the Defendant would probably not. In response the purchaser indicated that the proposition was not going to work as the asking price was too high. Again Mr Gothard made a diary note of this meeting (AG [26] - [27]).
On 26 April 2016, Mr Gothard said he received a phone call from Mr Jovanovski who indicated that he had another buyer interested to which Mr Gothard indicated that the tenant application form would need to be completed. Mr Gothard made a file note of this conversation (AG [29] - [30]).
In June 2016, Mr Gothard met with Mr O'Connor and two gentlemen who were introduced as the operators of Vivo Café and the prospective purchasers of the Foyer Café business. During the discussion one of the persons indicated that a longer term lease would be necessary. Mr Gothard said he indicated that the Defendant would consider a new lease however the rent would likely be $1,100 a metre and not the current $800 (AG [31]).
The purchaser indicated that he would be happy for the rent to be whatever the market assessed it to be however the current Lease and fit-out was of no value and again he asked whether the Defendant would assist with the fit-out. Mr Gothard said he responded and that matter should be taken up with the tenant (AG [31]).
Mr Gothard did not receive any completed tenant application form and he did not on this occasion make a file note of the meeting (AG [33] - [34]).
Mr Gothard indicated that on 30 June 2016 he had a meeting with Mr Jovanovski. Mr Jovanovski indicated that the rent was too high and a discussion followed as to rents in Chatswood. Mr Jovanovski indicated that he wanted to talk to Mr Gothard soon about what should be done with the Lease and indicated there was a date it needed to be exercised by. Mr Gothard said he told Mr Jovanovski that the date for exercise was 31 August 2016. Mr Jovanovski responded by saying OK and that he would hand deliver the letter to Mr Gothard's letter on the last day. Mr Gothard made a file note of this Meeting (AG [35] - [36]).
In September 2016, he had no meetings with Mr Jovanovski but on 12 September 2016 he received a call from him. Mr Jovanovski asked Mr Gothard for the Lease registration number and asked Mr Gothard to email a copy of the Lease to him. Mr Jovanovski indicated he wanted to renew the option. Mr Gothard said he told Mr Jovanovski that he had needed to exercise the option by 31 August 2016, and that he knew this because Mr Gothard had told him before and it was now too late (AG [38] - [38]).
That same day Mr Gothard sent an email to Mr Jovanovski which attached a copy of the Lease. On 13 September he received a phone call from Mr Jovanovski asking whether the Lease had been sent to which Mr Gothard indicated it had been (AG [39] - [40]).
Further on 16 September 2016 he received a telephone call from Mr Jovanovski in which Mr Jovanovski said to Mr Gothard that Mr Gothard was right and that Mr Jovanovski was wrong. Mr Jovanovski indicated that he did have to exercise the option by 31 August but asked Mr Gothard if he had heard from his solicitor as he would be sending a letter soon (AG [41]).
On 16 September 2016 Mr Gothard received a letter from Mr Nigel Russell of Emil Ford Lawyers (AG [42]).
Mr Gothard denied any conversation by telephone with Mr Jovanovski on 17 September and denied that any such conversation took place (AG [43]).
On 26 October 2016, in company with Mr Williams, Mr Gothard met Mr Jovanovski. On this occasion he handed him what he described as a section 42 notice (AG [45]).
During the 26 October Meeting, Mr Gothard said he told Mr Jovanovski that the Lease expired on 31 May 2017 and that the option had not been exercised and the Defendant would not be renewing the Lease. He informed Mr Jovanovski that he would have to vacate the Premises by 31 May. Mr Jovanovski indicated he could not believe this was happening and that it was not fair. A discussion then ensued about the rent and again Mr Jovanovski indicated that it was not fair because he had paid a million dollars for the business and he was then being kicked out on the street. Mr Jovanovski then asked when the option had been discussed to which Mr Gothard indicated that at the meeting in June he had told Mr Jovanovski that the option needed to be exercised by 31 August. Mr Jovanovski said that Mr Gothard knew that he wanted to exercise the option and that he would be speaking to his solicitor (AG [46]).
The next day, 27 October 2016, Mr Gothard made a diary note of the meeting (AG [47]).
In November 2016 he was contacted by telephone by Mr Sam Lewis who introduced himself as a long-time friend of Mr Jovanovski. He also told Mr Gothard he was a lawyer by profession but he was helping Mr Jovanovski out as a friend. Mr Lewis told Mr Gothard that Mr Jovanovski had been occupied lately, going through a divorce which had torn his family apart and he was now facing the loss of his Foyer Café business. Mr Lewis said to Mr Gothard that although the Defendant was legally entitled to take the approach which it did, he thought that approach was very harsh and asked whether the Defendant would contemplate a submission from Mr Jovanovski in order for him to stay (AG [49]).
Mr Gothard said he was looking for expressions of interest from high end café and restaurant operators and that the Defendant was approaching operators who would be prepared to spend over a million dollars refitting the Premises and pay a higher rent. From what Mr Jovanovski had told Mr Gothard, Mr Gothard did not believe Mr Jovanovski was in a position to do either of those things. Mr Lewis asked whether Mr Gothard would change his mind to which Mr Gothard indicated that he doubted it. Mr Gothard did not make a file note of the telephone call (AG [49] - [50]).
Subsequently however Mr Gothard received another telephone call from Mr Lewis who indicated that Mr Jovanovski wanted Mr Lewis to have another meeting with Mr Gothard to try to change his mind. Mr Gothard indicated he was happy to meet but he should appreciate the Defendant's position on the matter (AG [51]).
On 15 November 2016, in company with Mr Williams, Mr Gothard met Mr Jovanovski, his son Vince and Mr Lewis (AG [52]).
At the 15 November Meeting, Mr Lewis introduced himself as a friend of some longstanding and asked what the Defendant's motivation was although it was legally entitled to take the position it did. Mr Gothard explained that the Defendant wanted to increase the presentation of the shop and the building with a new fit-out. Mr Gothard indicated that Mr Jovanovski had been quite vocal in his criticism of the rent being too high and that he could not afford any more. Mr Lewis indicated that the Defendant would be taking a risk in trying to find a new tenant to which Mr Gothard indicated that as property experts he did not believe that would be a problem. During the conversation Mr Jovanovski indicated that he had slipped up in exercising the option late but believed the Defendant should honour it anyway because he was only two weeks late. Mr Jovanovski also indicated that he thought it was unfair the Defendant would not accept the option notice. Mr Gothard indicated to the meeting that he did fully expect the Plaintiff to exercise the option (AG [52]).
Further discussion ensued about prospective purchasers and fit-out. Mr Gothard made a file note of the meeting (AG [52] - [53]).
Mr Gothard was cross-examined. Mr Gothard agreed he was the point of contact with the relevant tenants for the buildings he had responsibility for (T97/5-10).
Mr Gothard also agreed that a tenant with a problem or wanting information would have approached him (T97/15-20).
Mr Gothard also agreed that from time to time he would volunteer information to tenants, as an example indicating to Mr Jovanovski the date of the exercise of the option (T97/25-30).
Mr Gothard agreed that he took steps to ensure Mr Jovanovski felt he could trust and rely upon him (T98/20-30).
Mr Gothard agreed that initially he had taken instructions from Mr Trent Logue and he was in the business of following his instructions (T99/1-10).
Mr Gothard agreed that he owed a duty to his employer to make sure that he did not derogate from that duty and that he would act in accordance with the instructions of his employer when dealing with tenants. Mr Gothard however would not accept that he would say things to tenants which were not true (T99/15-30).
Mr Gothard agreed that he received an email from Mr Logue dated 8 March 2016 which instructed him to "stay quiet on the options". Mr Gothard agreed that he followed those instructions however he did not stay quiet in relation to the exercise of the option for the Foyer Café business (T100/25-38).
He explained that when he met Mr Jovanovski on 30 June, Mr Jovanovski raised the question of the option to which Mr Gothard responded by indicating the exercise date was 31 August (T101/10-20).
Mr Gothard agreed that as at 8 March 2016 he appreciated the Defendant did not want the option to be exercised (T103/1-5).
Mr Gothard agreed that Mr Jovanovski missing the option triggered the Defendant to start looking at what it was going to do in relation to the Premises and its future (T107/45-50).
Mr Gothard agreed that the impression he gave as to the triggering of the Defendant's consideration of the future of the Premises occurred earlier in March, not in the November as suggested and to that extent it was slightly inaccurate (T108/10-15).
Mr Gothard agreed that his affidavit evidence in some respects was not as detailed as the file notes and that his evidence might be read as something in addition to the file notes (T110/15-30).
Mr Gothard also agreed his affidavit evidence did not give a complete description of the conversations that occurred (T110/40-50).
Mr Gothard explained that the particular system used for the file notes was called Sage CRM. When a meeting was dialled in, the system defaulted a half hour meeting and the times were set automatically. The entries could be edited, and Mr Gothard said he had edited file notes on one or two occasions (T112/10-25). He had not edited any of the notes he created after he created them although the system would allow that to occur (T112/30-50). When asked why his affidavit contained a much greater level of detail than his file note for the 12 January 2016 meeting with Mr O'Connor he said he had a recollection of the detail because of the nature of the conversation (T115/15-25).
Mr Gothard stated that the 12 January 2016 meeting was the first time had had met with Mr O'Connor (T115/45-50).
Mr Gothard agreed that the conversation he set out with Mr Jovanovski where Mr Jovanovski admitted he was wrong as to the date for the exercise of the option was a conversation in respect of which he did not make a file note (T116/5-10). Asked why he did not make a file note he indicated that he had an incredibly busy day and wanted to get home for his tenth wedding anniversary (T116/203-33). It was put to Mr Gothard that Mr Jovanovski did not make an admission as to the incorrect date. Mr Gothard rejected that suggestion (T116/30-40).
Mr Gothard stated that in the course of the meetings he never took written notes (T118/35-40).
In his file note dealing with the 26 October Meeting he understood the response to Mr Jovanovski's question as to when previously the option date had been discussed to be a reference to the meeting he had with Mr Jovanovski on 30 June (T120/5-30).
Mr Gothard accepted there were both gaps in his affidavits and his diary notes about things which occurred between himself and Mr Jovanovski (T120/45-50).
Mr Gothard accepted his affidavit and/or diary notes included everything he could recall but there may have been other matters discussed which were not recorded (T121/15-30). He also agreed he did not have a complete recollection or complete file of evidence of the conversations he had with Mr O'Connor (T121/45-50).
Mr Gothard did not accept there had been negotiations concerning rent at any point. He stated that he and Mr Jovanovski had previously discussed what the market rent level might be and that occurred the first time he met Mr Jovanovski (T123/20-35).
Mr Gothard agreed Mr Jovanovski did complain to him about the rent and expressed dissatisfaction about it. At the 26 October Meeting, Mr Gothard responded by saying the Defendant and the Plaintiff were too far apart on expected rent levels. Mr Gothard agreed that the 26 October Meeting was the first time Mr Jovanovski had been told that there was not to be renewal of the Lease (T125/30-45).
Mr Gothard made the point that there was a distinction between the exercise of the option and negotiating a new lease. Mr Jovanovski had said in September that he wanted to exercise the option to renew the Lease and Mr Gothard told him it was too late (T126/5-50). Mr Gothard clarified issues by stating that the 26 October Meeting was the first time he told Mr Jovanovski the Lease would not be renewed but not the first time he told him the option had not been exercised in time (T127/45-50).
In further clarification Mr Gothard said that an option lease is where the lessee has an option to renew under the lease in which case notice is given by a certain date and the notice is received the lessor who would then be obliged to provide a new option. A new lease or renewal of a lease is a fresh start of negotiations. The entitlement to stay expires at the expiration of that lease and negotiations could continue to renew the lease (T128/15-25).
Mr Gothard did not recall Mr Jovanovski asserting during the 26 October Meeting that Mr Gothard had previously told him that he had plenty of time. He did not deny however that that might have been said in the course of that meeting (T130/10-30).
Mr Gothard would not accept that prior to the 26 October Meeting, Mr Jovanovski said to Mr Gothard that he had told him he had plenty of time. Mr Gothard instead said that he told Mr Jovanovski that that option had been missed (T132/5-25).
Mr Gothard could not remember conversations in mid or late September concerning solicitor's letters and the like (T133/5-28).

[17]

Mr Daniel Williams

Mr Williams swore one affidavit (DW).
Mr Williams is employed by the Defendant as a Manager - Asset Services. He has been employed in that role since September 2015 prior to which he was employed by Jones Lang LaSalle as a property manager for approximately one and a half years. He has a Bachelor of Science in Environmental Science and a Masters in Real Estate. He is also a chartered surveyor (DW [1] - [2]).
Sometime in October 2016 Mr Gothard approached him and asked him would he accompany him to a meeting at the Premises. The meeting took place on 26 October 2016 at 3.30pm (DW [6]).
Mr Williams said that Mr Jovanovski asked what was to be discussed. Mr Gothard responded that Mr Jovanovski had not exercised the option in time and that the Defendant would not be offering a new lease. Discussion then ensued about negotiations and Mr Gothard said to Mr Jovanovski that the parties were too far apart on rent levels. Mr Jovanovski asserted this was unfair and further he asserted that Mr Gothard told him "we" had plenty of time. Mr Gothard indicated that Mr Jovanovski was well aware of the option date, it having been discussed previously. Mr Williams made a file note of the meeting (DW [7] - [9]).
On 15 November 2016 at 11am, Mr Williams again joined with Mr Gothard at a meeting with Mr Jovanovski, Mr Jovanovski's son, and Mr Sam Lewis. Mr Lewis commenced the discussion by indicating that Mr Jovanovski had missed the option and it was an honest mistake. Mr Gothard responded saying he was surprised there was an accident and it had triggered the Defendant's view on the future of the Premises and the building in general. Mr Gothard had made it clear the Defendant was looking for a future tenant to undertake a $1 to $1.5 million on a fit-out. Mr Jovanovski's son responded saying the rent was high and they were struggling and that business was tough. Mr Lewis made the point that in his view the Defendant had acted extremely unfairly. Mr Gothard indicated that the Defendant worked on behalf of its investors. Mr Lewis indicated he would make contact with one of the investors who was from South Africa. Again Mr Jovanovski asserted that he had called Mr Gothard prior to the option date and Mr Gothard had indicated there was plenty of time. Mr Gothard denied that he had said any such thing prior to the option date or at all but he did accept there would be plenty of time to discuss future plans. Mr Williams again made a diary note of this conversation (DW [12]).
Mr Williams was cross-examined. Mr Williams was not aware at the time of the meeting that Mr Gothard had been under instructions prior to the date of the exercise of the option to stay quiet on the exercise. Mr Gothard had not discussed this with Mr Williams prior to the meeting (T135/10-20).
Mr Williams recalled Mr Jovanovski asserting to Mr Gothard during the meeting that Mr Gothard had told him that he had plenty of time (T135/40-45).
Mr Williams agreed that he had identified Mr Jovanovski as X in his diary note (T142/1-10).
Mr Williams agreed that at the 26 October Meeting when Mr Jovanovski said to Mr Gothard that he had been told by him that he had plenty of time, Mr Gothard did not say in turn that he denied such an expression was ever used. Mr Williams agreed that he did not hear Mr Gothard make a denial (T143/14-20).
Mr Williams agreed that his diary note was only a summary and not the direct words used (T143/40-50).
Mr Williams explained in relation to the 15 November Meeting that there was not a two week gap between the time he made the note and the creation on the face of it of the record. He made the note straight after the meeting when he got back to his desk and sent an email to himself but it was in his drafts and it sat there and he did not save it and he did not save it until a later date (T144/15-40).
Mr Williams stated that Mr Gothard never said that he had acted on instructions from bosses which instructions he got by email (T145/45-T146/15).
Mr Williams said that Mr Gothard had said that the instruction was from senior management and that the Defendant wanted to act in the best interest of the investors (T146/15-30).

[19]

Plaintiff's submissions

The Plaintiff submits the operative date for exercise of the option to renew was 30 September 2016 (Plaintiff's closing submissions [86]; Statement of Claim [10]).
The Plaintiff accepts clause 13 of the Lease provided for the option to be exercised by 31 August 2016 (Plaintiff's opening submissions [9]), but item 6 of the Disclosure Statement superseded or was a "minor variation" on clause 13 of the Lease, making 30 September 2016 the relevant date by which the option had to be exercised (Plaintiff's opening submissions [16]; Plaintiff's closing submissions [78], [80]).
The Plaintiff bases this submission on the "great weight" to be given to Disclosure Statements under the RLA (Plaintiff's closing submissions [65] - [70]). Further, the Plaintiff maintains first, item 6 of the Disclosure Statement is not affected by the entire agreement clause in the Lease because from a temporal point of view, the clause only applies to promises, representations, warranties or undertakings made prior to the Lease. Citing Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, the Plaintiff submits the entire agreement clause should be read down so as not to bar future variation of the Lease (Plaintiff's opening submissions [11] - [16]; Plaintiff's closing submissions [74] - [76]).
Secondly, the Plaintiff maintains its reliance on item 6 of the Disclosure Statement is not undermined by the fact it was not registered, in contrast to the Lease registered in April 2013 (Plaintiff's opening submissions [17] - [21]; Plaintiff's closing submissions [81] - [85]). According to the Plaintiff, the unregistered status of the Disclosure Statement "is no bar to an action based on that document" (Plaintiff's closing submissions [85]).
The Plaintiff also concedes however, that even on the later date, being the 30 September 2016, there was no written notice exercising the option to renew the Lease, departing from its pleaded position in paragraph [26] - [27] of the Statement of Claim (Plaintiff's opening submissions [22]; Plaintiff's closing submissions [55]).

[29]

Plaintiff's witnesses: Mr Jovanovski and Mr O'Connor

The Plaintiff invites me to prefer the evidence of Mr Jovanovski at each turn to that of Mr Gothard, wherever the two conflict.
The Plaintiff submits Mr Jovanovski should be considered as a witness of truth. It concedes Mr Jovanovski had an "incomplete" recollection of documents and dates, but submits his confusion and poor comprehension should not be mistaken for contrivance and calculated deceit (Plaintiff's submissions in reply [6]).
Further, the Plaintiff maintains that while there were certain inconsistencies with Mr Jovanovski's evidence, he at all times remained resolute and unwavering in his recollection of Mr Gothard telling him he did not need to worry about the date of exercising the option in mid-September (Plaintiff's closing submission [61]; Plaintiff's submissions in reply [9]; T161/15-30).
The Plaintiff also points to the fact Mr Jovanovski volunteered his phone records on the opening day of the trial and his honesty in conceding he did not read certain documents as further evidence of him being a witness of truth (Plaintiff's submissions in reply [10]; T162/12-22).
I am unable to accept the Plaintiff's invitation for numerous reasons. First, Mr Jovanovski's evidence was mired in inconsistencies, largely unsupported by contemporaneous records, and undermined by contemporaneous records that did exist, all of which will become more apparent in the analysis to follow. Despite making no notes, Mr Jovanovski professed an ability to replicate in some details conversations he alleged having with Mr Gothard (eg. CJ1 [49] - [50]; CJ2 [15]), and dispute details of conversations alleged by the Defendant (eg. CJ2 [17]; Defendant's closing submissions [11] - [30]). He gave some evidence which bordered on incredulous, especially his evidence of never seeing the 16 September Letter until he was in the witness box (T34/5-25).
Further, Mr Jovanovski's performance in this witness box did little to assist his case. He impressed me as a truculent and argumentative witness. Whilst I do understand that he feels indignant about the Defendant refusing to acknowledge his purported exercise of option or alternatively provide him with a new lease for the Premises, he behaved in a way which quite frankly detracted from whatever relevant evidence he could give.
As submitted by the Defendant, correctly in my view, Mr Jovanovski's apparent language difficulties cannot disguise the fact he was purposefully evasive and unreliable (Defendant's closing submissions [11]). Many of the answers he gave were, in my view, fuelled by a desire to resist directly answering questions (for example, T36/10-15; T38/17-20; T39/42-45; T40/15-20; T48/40-45). Such sidestepping, coupled with his attempts to castigate the Defendant's counsel by numerous retaliatory retorts to various question posed of him (for example, T39/46-50; T49/25-27; T53/45-50; T56/24-30; T57/9-11), seriously tainted the credibility of his evidence as whole.
In respect of Mr O'Connor, in my view he made very little contribution, if any, to the Plaintiff's case. Playing his role as broker he was obviously privy to a number of important meetings especially with representatives of the Defendant but in the end his evidence does not, in my view, corroborate in any material way the important aspects of the Plaintiff's case.

[30]

Defendant's witnesses: Mr Gothard and Mr Williams

The Plaintiff submits the file notes relied upon by the Defendant's witnesses, and Mr Gothard in particular, are inaccurate due to the not infrequent disparity between such notes and the corresponding conversations in the affidavits. The Plaintiff maintains it challenged the accuracy of the file notes in cross-examination, citing T110/48-T111/2, T112-T113/8 and T121 as evidence of such a challenge.
The Defendant submits Mr Gothard and Mr Williams' evidence was almost entirely consistent with the contemporaneous file notes prepared by both men. Further, Mr Gothard's recollection of the timing of his conversations with Mr Jovanovski was corroborated by the phone records of Mr Jovanovski. The fact Mr Gothard was not privy to these records at the time of swearing his affidavit fortifies, according to the Defendant, the case for why Mr Gothard should be accepted as a witness of truth (Defendant's closing submissions [4] - [10]; T185/32-43).
Further, the Defendant notes both Mr Gothard and Mr Williams gave evidence in a direct and forthright manner, with Mr Gothard in particular freely making concessions without equivocation (Defendant's closing submissions [31]; T182/25-32).
Mr Gothard impressed me as being a careful professional and a man of integrity. Almost without exception he kept contemporaneous diary notes of his various meetings especially with Mr Jovanovski, but to a lesser extent with Mr O'Connor. Those notes played a very significant role in my determination of a number of factual issues in the matter. Whilst there are discrepancies between some of the notes and conversations, and Mr Gothard himself acknowledged the incompleteness of certain file notes (T120/25-35), by and large, whether in file note or email form, the notes largely corroborate the sequence and content of conversations Mr Gothard has deposed to.
Mr Williams did not play an important role from the Defendants' point of view and was only involved in a number of meetings in late 2016, first meeting Mr Jovanovski at the 26 October Meeting. Although he purports to make some detailed diary notes it is clear that he was not overly familiar with the various participants and I am not certain although his notes give the appearance of fulsomeness, they are entirely accurate. That said, insofar as they are not, they do not, in my view, materially assist the Plaintiff.

[34]

12 January meeting - O'Connor representation

The Plaintiff invited me to accept Mr O'Connor's account of the 12 January meeting (PO1 [10]) as a representation by the Defendant to the Plaintiff that should negotiations for a 5+5 lease fail, the Plaintiff would be permitted to exercise the option even if it was not exercised by the sunset date of 31 August (T155/15-20; T156/12-20; Plaintiff's closing submissions [123]).
There are several reasons why I cannot accept this invitation.
First and most critically, in my view, on no reading of this conversation could such representations be inferred. In isolation, the words cannot sensibly mean the Plaintiff was free to exercise the option whenever it wished and the Defendant would still grant the option.
In my view, the ordinary and indeed only take on this conversation is that Mr Gothard told Mr O'Connor there would be no problems with the Plaintiff exercising the option to renew if it could not negotiate a new 5+5 lease. This conversation cannot, in my view, be taken any further, and particularly not to the level suggested by the Plaintiff as amounting to an assurance the Defendant would allow the Plaintiff to exercise the option even if the sunset date of 31 August had passed, should a new lease not be negotiated.
This view is fortified by Mr O'Connor's additional recollection of the conversation in his second affidavit (PO2 [8]) and his file note of the meeting (CB 199) which make clear Mr Gothard was not making any assurances about the Plaintiff's tenure. Rather, both pieces of evidence place Mr O'Connor's initial recollection of the conversation in the context of wider discussion centring on the Plaintiff's sale of its Foyer Café business and whether the Defendant would consider granting a fresh 5+5 lease - a context corroborated by Mr Gothard in cross-examination (T104/30-35). This was also evidenced in Mr Gothard's reminders to Mr Jovanovski and Mr O'Connor that the Defendant would need to approve any assignment of the lease if the Foyer Café business was sold (CB 294; AG [20]).
On these grounds, even if I accept Mr O'Connor's initial account of the conversation, I am not satisfied the words spoken by Mr Gothard, both in context and isolation, purported to do anything more than inform Mr Gothard that if a new 5+5 lease could not be negotiated with the Defendant, the Plaintiff would still have the opportunity to exercise the option to renew pursuant to clause 13 of the Lease. I therefore reject the Plaintiff's reliance on the O'Connor Representation as an assurance by the Defendant that the Plaintiff would be granted a lease, whether this was a fresh 5+5 lease or an additional five years on the existing Lease pursuant to the option to renew, even if the option was not exercised on time.

[37]

30 June Meeting - Mr Gothard and Mr Jovanovski

The file note entry of 30 June 2016 following the 30 June Meeting, probably the most significant exchange between Mr Jovanovski and Mr Gothard, is, I am satisfied, an accurate contemporaneous record by Mr Gothard which corroborates his evidence entirely.
This 30 June Meeting is important because Mr Gothard informed Mr Jovanovski unequivocally as to the date by which he had to exercise the option (being 31 August 2016). Mr Gothard gave evidence of this meeting in his affidavit (AG [35]). It is true some of the detail set out in the affidavit does not appear in the diary note (CB 311), however, and most importantly, Mr Gothard recalled in his affidavit, his diary note, and in cross-examination (T101/15-20) telling Mr Jovanovski the date for exercising the option was 31 August 2016, and further indicated Mr Jovanovski said he was aware of this and would deliver the notice on the last day.
The substance of this representation is also supported by Mr Gothard's file note of the 26 October Meeting recording: CJ said AG was aware of his desire to exercise the option and AG stated that during previous meeting CJ explained that he was aware that he needed to exercise by end of August and had told AG that he would do so on the last day. (CB 316).
Mr Jovanovski denied the 30 June Meeting ever taking place (CJ2 [11]; T49/45-50; T73/20-27). I note in passing it was not expressly put to Mr Gothard his note of the 30 June Meeting was either inaccurate or false. Counsel for Plaintiff in closing oral submissions provided me with transcript references where the Plaintiff submits it did challenge Mr Gothard on the 30 June Meeting file note (T118/35-T119/50), however on inspection these references primarily relate to Mr Gothard's recollection and file note for the 26 October Meeting.
I am satisfied Mr Gothard's file note of the 30 June Meeting is an accurate account of the conversation that took place, and I do not find Mr Jovanovski's flat denials of any conversation of the kind ever taking place convincing. I accept Mr Gothard had reviewed the Lease in March (AG [24] - [25]), presumably for the purposes of responding to Mr Logue's email, and thus was aware of the impending sunset date of 31 August and able to respond to Mr Jovanovski's question. On the face of this contemporaneous file note, and without any evidence to the contrary, I am satisfied on 30 June 2016 Mr Gothard, in response to Mr Jovanovski's request, explicitly and directly told Mr Jovanovski the sunset date was 31 August 2016, and Mr Jovanovski responded saying he would deliver his notice on the final day.
Thus, even if I accept, which I do not, that Mr Gothard gave Mr O'Connor assurance the Plaintiff would be granted, at the least, a further five year lease even if the option was not validly exercised, such a representation would be dispelled by this clear indication by Mr Gothard on 30 June 2016, directly to Mr Jovanovski, that 31 August was the sunset date for the Lease.

[38]

12 September 2016 - First Jovanovski representation

In his second affidavit, Mr Jovanovski recalled having a phone conversation with Mr Gothard requesting a copy of the Lease (CJ2 [12]). The timing of this conversation is corroborated by Mr Gothard's recollection (AG [38]), the email Mr Gothard sent to Mr Jovanovski at 1.42pm that day enclosing the Lease "as discussed earlier" (CB 312), and Mr Jovanovski's phone records showing a call to Mr Gothard at 11.52am that day (Exhibit D4, CB 232, sequence 36).
Mr Gothard did not make a file note of this conversation. Nonetheless, I accept Mr Gothard's version of the conversation that transpired, where Mr Gothard told Mr Jovanovski he had to exercise the option by 31 August 2016 and it was now too late (AG [38]). This is corroborated by Mr Gothard's file note of the October 26 Meeting (CB 316) which recorded "CJ asked when he called to discuss the option. AG said it was mid-September and the option needed to be exercised by 31 August."
Further, in cross-examination Mr Jovanovski conceded it could be possible Mr Gothard told him on 12 September that he needed to exercise the option by 31 August 2016 (T41/1-10). Indeed, much of Mr Jovanovski's cross-examination was hindered by an inability to recall with detail timing and the substance of conversations that took place less than a year ago in September 2016. In contrast to Mr Gothard, whose recollection of timing of conversations set out in his affidavit (AG [37] - [41]) was corroborated by phone records (Exhibit D4 CB 232) and his oral testimony (for example, T115/5 - T116/39; T126/35-40; T132/6-10), Mr Jovanovski provided consistently tentative and evasive responses to whether conversations in September took place and at what time (for example, T33/1-30; T33/40-50; T36/10-15; T39;35-50; T40/22-25). This vagueness casts further doubt on his ability to recall with some precision the details of Mr Gothard's alleged representation there was "plenty of time" to exercise the option (CJ2 [12]), and fortifies in my mind why Mr Gothard's version of the 12 September conversation should be accepted.

[39]

16 September 2016 - call from Mr Jovanovski and the 16 September Letter

While Mr Jovanovski contends he asked his lawyer Mr Russell to email the Defendant asking to exercise the option to renew but also seek a new lease (CJ1 [46]), the Plaintiff, correctly in my view, does not seek to characterise the 16 September Letter as an exercise of an option to renew (T152/15-30), retreating from its original pleaded position (Statement of Claim [27]).
As is later expanded upon in [349], the email simply makes the point Mr Jovanovski was desirous of "negotiating" for a new five year lease, with a further five years commence 1 June 2022. In my view, the Letter is deliberately silent on the option to renew as the parties were aware the date for exercising the option had passed. The reference to the Lease's registration number and Mr Jovanovski's acknowledgement he provided the Lease to Mr Russell (CJ1 [46]), furthers the likelihood Mr Russell, and in my view Mr Jovanovski, had read the Lease and were aware pursuant to clause 13 the sunset date of 31 August had passed. This is confirmed by Mr Jovanovski's evidence in cross-examination where he accepted in mid-September before the 16 September Letter was sent, he knew the option to renew had expired (T55/42-50).
I do not accept Mr Jovanovski's denials of ever seeing the 16 September Letter (T38/23-33), particularly as Mr Russell sent the Letter to Mr Jovanovski shortly after sending it to the Defendant (Exhibit D3). I am satisfied I can draw a Jones v Dunkel inference from the failure of the Plaintiff to call Mr Russell, that he would not have given evidence which could have assisted the Plaintiff's case.
Further, I am satisfied by the terms of the 16 September Letter, and Mr Jovanovski's own concessions that by mid-September he was two weeks late to exercise the option (T79/5-20; T79/35-40), that the conversation deposed to by Mr Gothard as occurring on 16 September (AG [41]) did take place. Namely, I accept Mr Jovanovski phoned Mr Gothard on 16 September, as reflected in his phone records (Exhibit D4, CB 232-233, sequence 47 and 48), and told Mr Godard he realised he was wrong and had to exercise the option by 31 August 2016. It follows that I therefore reject Mr Jovanovski's denial of this conversation (CJ2 [14]). In this context, the 16 September Letter was, in my view, an attempt by Mr Jovanovski to salvage his chances of securing a further Lease, once he realised the option to renew was no longer available to him.

[42]

15 November Meeting - Mr Gothard, Mr Williams, Mr Lewis and Mr Jovanovski and Mr Jovanovski's son

Finally, I accept Mr Gothard's account of the further meeting between Mr Gothard and Mr Williams for the Defendant, and Mr Jovanovski, Mr Lewis, and Mr Jovanovski's son, Vince, for the Plaintiff.
Prior to the 15 November Meeting I am satisfied Mr Gothard was contacted by telephone by Mr Lewis who introduced himself as an old friend of Mr Jovanovski (AG [49]). I am satisfied further that in the course of that conversation Mr Lewis acknowledged Mr Jovanovski had missed the option and realised he had made a big mistake. He also acknowledged the Defendant was legally entitled to take the approach they did, but asked for an opportunity for Mr Jovanovski to make submissions on behalf of the Plaintiff in an attempt to persuade the Defendant it ought to be allowed to stay. This phone conversation fits consistently with the 15 November Meeting.
At the 15 November Meeting, I am satisfied Mr Lewis again accepted the Defendant was legally entitled to take the position that it did and more importantly during the course of the conversation I am satisfied Mr Jovanovski admitted that he had slipped up in exercising the option but believed the Defendant should honour it because it was only two weeks late. These findings are based on Mr Gothard's version of what occurred both in his affidavit (AG [52]), his file note in the form of an email to himself the same day at 12.26pm (CB 318), and in part by the file note of Mr Williams which noted Mr Lewis admitted the Plaintiff had missed the "notice for lease option" by accident (CB 222). Further, in cross-examination Mr Jovanovski himself accepted Mr Lewis had acknowledged the Defendant was legally entitled to terminate the Lease (T70/25-35) and had said Mr Jovanovski had slipped up but that the Defendant should grant the option anyway because it was only two weeks late (T78/20-25).
Mr Williams also recalled Mr Jovanovski saying at the 15 November Meeting that he had called Mr Gothard to discuss the option prior to the sunset date and that Mr Gothard had told Mr Jovanovski that everything would be OK and that he would have plenty of time. Whilst I accept Mr Jovanovski made that assertion at the Meeting, I am also satisfied Mr Gothard responded by indicating his denial that such an exchange ever occurred.
I am fortified in the views that I have expressed in relation to the 15 November Meeting by the failure of the Plaintiff to call Mr Lewis or Vince. I infer they would be unable to assist Mr Jovanovski in what he alleged took place at the meeting.

[44]

Was the sunset date 31 August 2016 or 30 September 2016?

Since the Plaintiff did not press it ever validly exercised an option to renew by the alternative sunset date of 30 September (Plaintiff's opening submissions [22]; Plaintiff's closing submissions [55]), except on 24 February 2017 being well beyond either contended sunset date (CB 152) (T152/15-30), it is strictly unnecessary to determine when the operative date to exercise the option was. Nonetheless, since the Plaintiff still sought, somewhat perplexingly, to establish 30 September as the operative date to exercise the option, I will provide a short analysis of why I am satisfied the operative date for exercising the option to renew was 31 August 2016, pursuant to clause 13 of the Lease, and why that right was not exercised.
Nothing in the Disclosure Statement, or might I add in the Plaintiff's submissions, indicates the document, and thus item 6, has contractual force. Factors militating against construing the Disclosure Statement as some form of contractual variation on the Lease are the following.
First, the statutory provisions concerning the Disclosure Statement make clear the Statement's purpose is not to supplant any contractual terms, but to ensure fully informed consent and arm's length independent decision making on the part of both parties, with the Lessor required to provide the Statement at least 7 days prior to execution of the lease (section 11 of the RLA). This characterisation is consistent with the instructions Mr Jovanovski recalled receiving from his conveyancer upon receipt of the Disclosure Statement in September 2012: 'Read the document and make sure you check the terms, it's a summary of the lease' (CJ1 [20]). In light of this statutory purpose, and Mr Jovanovski's knowledge of such a purpose, the Disclosure Statement cannot in my view be characterised as intending to supplant or superimpose terms in existing contractual arrangements.
This view is compounded by the existence of the entire agreement clause in the Lease, making it clear the parties intend for the provisions of the Lease to constitute the entire agreement. In my view, the Plaintiff's argument the entire agreement clause does not apply to the Disclosure Statement runs contrary to a reasonable commercial construction of the clause. The section relied upon by the Plaintiff, namely that no prior promises, representations, warranties or undertakings shall be deemed to be implied or arise in the Lease, does not mean the parties have agreed for the Lease to not operate as the entire agreement. The entire agreement clause is clearly intended to capture both past and future representations made between the parties, and make clear that the Lease as it stands is the only and entire agreement binding the parties. True it is that future variations may be made to the Lease, but only if supported by consideration. The Disclosure Statement clearly falls outside this category, and rather than replacing, superseding or superimposing terms onto the Lease, was intended by the parties to act as a summary of the Lease they signed the day before.
In addition to the entire agreement clause making it clear the Lease exhaustively sets out all relevant provisions, the terms of the option come solely and directly from the Lease itself. Item 6 does not refer to, or purport to materially, or at all, change or vary clause 13 of the Lease. It does not set out the operative terminology of clause 13 nor provide any sort of methodology as to how 30 September is calculated. In my view, the Disclosure Statement purports to be no more than a summary of the Lease executed the day before.
The contractual significance of the Disclosure Statement as a whole is further undermined by the fact the parties clearly abandoned observance of the provision under section 11 of the RLA that the Lessor's Disclosure Statement be provided 7 days prior to the execution of the lease. The Disclosure Statement was instead executed the day after the execution of the Lease, meaning the parties and in particular the Plaintiff could not and did not rely on the terms of the Disclosure Statement in agreeing to the Lease.
This view is demonstrated in Mr Jovanovski's concessions he recognised the relevant date was 31 August 2016. While he recalled being happy when he found item 6 of the Disclosure Statement because "I knew I saw it somewhere" (T55/20-30), he also conceded he knew he had to exercise the option by 31 August (T67/45-T68/5), and that by mid-September he knew he was two weeks late (T79/5-20; T79/35-40). Indeed, in closing oral submissions counsel for the Plaintiff conceded, correctly in my view, there was no evidence Mr Jovanovski relied on 30 September as the sunset date for the option to renew (T158/15-20).
I am therefore satisfied the recording of 30 September in the Disclosure Statement can be construed as no more than a mistaken calculation of clause 13 of the Lease, and 31 August 2016 was accordingly the correct sunset date under the Lease, to the knowledge of both parties.

[47]

Estoppel, misleading and deceptive conduct, unconscionable conduct

I am also satisfied the Plaintiff does not have a claim for equitable nor statutory relief on the basis of the preclusionary doctrines of estoppel, misleading and deceptive conduct and/or unconscionable conduct.
For reasons already established, the O'Connor representation, and specifically the words "Yeah understood, there will be no problems" in context are not capable of conveying to a reasonable person that the tenants would be offered a further lease, whether in the form of a fresh 5+5 lease or a five year extension of the existing Lease. The same applies to the First and Second Jovanovski representations in September which, if they took place, could not have been the basis for the Plaintiff thinking prior to 31 August 2016 the option to renew date would be extended, or a 5+5 lease would be granted.
I am also not satisfied the Plaintiff relied on any representations allegedly made by the Defendant to take a course of action which led to its detriment. The sales campaign was launched prior to any of the alleged representations being made, and was driven by the Plaintiff's desire to recoup its initial expenditure, as was its rejection of Mr Hadanich's offer in June 2016. Further, in finding Mr Jovanovski simply forgot about the 31 August sunset date, I reject the Plaintiff's contention it did not exercise the option to renew out of reliance on the Defendant's representations.
In addition, while Mr Gothard accepted Mr Jovanovski knew and trusted him as an advisor in relation to the tenancy (T98/30-49), Mr Gothard did nothing, in my view, to betray this trust. This is particularly so in light Mr Gothard telling Mr Jovanovski the operative sunset date on 30 June 2016, and making clear to Mr O'Connor at the 8 April Meeting the Defendant's desire to secure a tenant who would contribute to a substantial re-fit of the Premises. This level of plain dealing on behalf of the Defendant falls well short of a "high level of moral obloquy" required to prove unconscionable conduct, and further fortifies, in my view, why the purported representations relied upon by the Plaintiff were not capable of amounting to a misleading assurance as to the security of the Plaintiff's tenure.
On these grounds, I am satisfied the Plaintiff's claim for relief under the preclusionary doctrines of estoppel, misleading and deceptive conduct, and/or unconscionable conduct must fail.

Parties

Applicant/Plaintiff:

Piazza Trevi

Respondent/Defendant:

Cromwell BT Pty Ltd as custodian for the Cromwell Symantec House Trust.

Legislation Cited (4)

Australian Consumer Law (Competition and Consumer Act 2010(Cth)

Australian Consumer Law (Competition and Consumer Act 2010 (Cth) Sch 2) Conveyancing Act 1919(NSW)

Retail Leases Act 1994(NSW)

Conveyancing Act 1919(NSW)

Cases Cited (50)

256 CLR 104 Port Macquarie-Hastings Council v Diveva Pty Ltd [2017] NSWCA 97 R v Navarolli (2009) 194 A Crim R 96 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 Samuel Properties (Developments) Ltd v Hayek [1972] 1 WLR 1296 Shiloh Spinners Ltd v Harding [1973] AC 691 Sidhu v Van Dyke (2014) 251 CLR 505 Simic v New South Wales Land and Housing Corporation [2016] HCA 47 Stellar Mining NL v Evanel Pty Ltd (1983) NSW ConvR 55-118 Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2004) 217 CLR 315 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Watson v Foxman (1995) 49 NSWLR 315 Wood v Capita Insurance Services [2017] UKSC 24 Texts Cited: D J Farrands, The Law of Options and Other Pre-emptive Rights, (1st ed, 2010, Thomson Reuters) J D Heydon, Cross on Evidence, (9th ed 2013 LexisNexis Butterworths) John S Ewart, Waiver Distributed, (1917, Cambridge: Harvard University Press) J D Heydon, M J Leeming and P G Turner, Meagher Gummow & Lehane's Equity Doctrines & Remedies, (5th ed 2015, LexisNexis Butterworths) Category: Principal judgment Parties: Pizza Trevi Pty Ltd (Plaintiff) Cromwell BT Pty Ltd as custodian for the Cromwell Symantec House Trust (Defendant) Representation: Counsel: H Somerville (Plaintiff) M K Condon SC (Defendant)

[2013] SASC 77

[2011] VSC 485

[2013] TASSC 59

(2008) 238 CLR 570

(2015) 88 NSWLR 281

(2012) 247 CLR 345

(2005) 63 NSWLR 557

(1989) 16 NSWLR 582

(1957) 98 CLR 193

(2011) 82 NSWLR 665

(1973) 131 CLR 8

(2004) 218 CLR 592

(2009) 238 CLR 304

(2014) 251 CLR 640

(2003) 214 CLR 118

(1914) 18 CLR 152

(2013) 249 CLR 435

(2001) 51 NSWLR 572

(1959) 101 CLR 298

(1983) 152 CLR 406

(2015) 256 CLR 104

(1994) 122 ALR 637

(2014) 251 CLR 505

(2004) 217 CLR 315

(1988) 164 CLR 387

(1995) 49 NSWLR 315

(2016) 333 ALR 384

(1937) 59 CLR 641

(1987) 9 NSWLR 673

(1976) 137 CLR 192

(1923) 33 CLR 115

(1961) 104 CLR 366

(1970) 126 CLR 239

(2003) 217 CLR 367

(1982) 149 CLR 337

Cited By (1)

Jude Trading Pty Ltd v Mosszan Pty Ltd; Mosszan Pty Ltd v Jude Trading Pty Ltd

Piazza Trevi v Cromwell BT Pty Ltd as custodian for the Cromwell Symantec House Trust.

At a glance

Court

Decision date

Before

Source

Judgment (50 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (50)

Cited By (1)