Counsel and Solicitors Mr D.M. Yates and J.T. Svehla

Counsel and Solicitors Mr G.C. Lindsay and F. Gleeson

for First respondent: instructed by Moore and Bevins

Counsel and Solicitors Mr F.G. Lever instructed by

1. Order that the lease described in para.1 of the amended application be varied in accordance with these reasons. Reserve liberty to apply in this connection.

2. Declare that the respondents are jointly liable to pay to the applicant the sum of $89,887.15 and order payment of that sum accordingly.

3. Declare that each of the respondents is liable to pay one-half of the said sum of $89,887.15.

4. eserve liberty to the applicant to apply for interest pursuant to s.51A of the Federal Court of Australia Act 1976.

5. Order that the respondents pay the costs of the applicants, except for any costs incurred by the applicant in amending its application and statement of claim.

6. Make no order for the costs of the cross-claims.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

By its amended application, Seabridge Australia Pty. Limited ("Seabridge"), the applicant, claims, inter alia, orders under s.87 of the Trade Practices Act 1974 ("the Act") (1) that a lease, made between Lezam Pty. Limited ("Lezam"), the second respondent, as lessor and Seabridge as lessee, be varied so as to reduce the rental payable; and (2) that Lezam and J.L.W. (N.S.W.) Pty. Limited, ("JLW"), the second respondent, pay to the applicant the sum of $89,887.15, together with interest. By its cross-claim, JLW, whilst denying liability to Seabridge, seeks, inter alia, full indemnity or contribution from Lezam. By a second cross-claim, Lezam seeks, inter alia, contribution from JLW in the event that Lezam is found liable to Seabridge. It is convenient to deal first with Seabridge's claim.

2. By its amended statement of claim, Seabridge alleges that Seabridge entered into negotiations with JLW, acting as agent for Lezam, with a view to taking a lease of premises ("the premises") situate at 375-377 Kent Street, Sydney; that JLW represented to Seabridge that the area of the premises was 2,229.0 square metres, comprising a ground floor of 371.0 square metres, and floors 1-4 of 464.5 square metres per floor; that it was the common and usual practice to quote tenancy areas for commercial office buildings in terms of "net lettable" areas calculated in accordance with standards of measurement in the guidelines adopted by the Building Owners and Managers Association ("BOMA"); that, relying on this representation, Seabridge agreed to lease the premises at a rental in the first two years of $455,057.86 per annum calculated at the rate of $255 per square metre per annum ("psmpa") for the ground floor and $194 psmpa for floors 1-4; that, after paying this rental, Seabridge discovered that the net lettable area of the premises was 1,969.42 square metres, comprising a ground floor of 376.95 square metres, two floors of 398.61 square metres, a third floor of 396.69 square metres and a fourth floor of 398.56 square metres; that JLW and Lezam had engaged in misleading or deceptive conduct contrary to s.52 of the Act in that each failed to identify the area of the premises represented to Seabridge as being other than the net lettable area and represented the net lettable area to be 2,229.09 square metres when in fact it was less; and that, by reason of this conduct, Seabridge suffered damage.

3. There is no real dispute about the course of the negotiations between Seabridge and JLW. In November 1986, Guy Wallis Glenny, then an Associate Director of JLW, employed in its City Leasing Department, informed Stephen John Kent, General Manager of Seabridge, that the premises were available for lease. On 19 November, Mr Kent inspected the premises with Mr Glenny. Details were discussed. There are minor differences between Mr Kent and Mr Glenny as to what was said.

4. Mr Kent's version, in his affidavit, is as follows:

"Kent: 'What is the available area?'

Mr Glenny then gave me a figure expressed in terms of square

metres.

Kent: 'What is that in terms of square feet?'

Glenny: 'About 24,000 square feet.'

Kent: 'How is that broken down in terms of floor size?'

Glenny: 'Roughly speaking that breaks down in four upper

floors at 5,000 square feet each and the ground floor

at 4,000 square feet.'

Kent: 'What's the rental rate?'

Mr Glenny then gave me a figure expressed in terms of dollars per

square metre per annum for the ground floor and for the upper

floors.

Kent: 'That's about $24.00 per square foot for the ground floor

and $18.00 per square foot for the others? That's too much.

We would be looking more in the order of $17.00 to $17.50

per square foot.'

Glenny: 'Look they won't come down in terms of rental but they

might be prepared to throw in the naming rights at no

cost.'

Kent: 'What is the value of the naming rights.'

Glenny: 'About $20,000 per annum.'

Kent: 'We're not really interested in naming rights. We would

rather have a lower rental.'

Glenny: 'I'll go and speak to the Pongrasses.'"

5. Mr Glenny's version in his affidavit is as follows:

"I concur with Mr Kent's recollection of the conversation

except for my response to his question:

Kent: 'How is that broken down in terms of floor size?'

To the best of my recollection my response was not in the terms

set out by Mr Kent but in the following terms:

Glenny: 'Roughly speaking, it is broken down into an area of

4,000 square feet for the ground floor and 5,000

square feet for the four upper floors. Obviously

these round figures are not precise measurements from

a survey, but merely approximations.'"

In his affidavit in reply, Mr Kent said:

"Having given careful consideration to the terms of the

response which Mr Glenny says he made, I adhere to my own

version of the conversation. In particular, I have no

recollection of Mr Glenny saying:- 'Obviously these round

figures are not precise measurements from a survey, but

merely approximations.' I accept that, in my conversation

with Mr Glenny, I was given approximations of the floor size

in terms of square feet but I do not believe that the words

'from a survey' were used or any reference was made to the

word 'survey'."

6. On 21 November, Mr Kent reported in writing on the proposal to the directors of Seabridge. He gave "some initial details of lease arrangements" as follows:

"Current lease terms being offered are as follows:-

Rental Rate - $18.00 per sq. ft. for floors other than

the ground floor which is being offered at

$24.00 per sq. ft.

Lease Term - Minimum six years

Lease commencement - 1st January 1987 with the

date possibility of obtaining a rent free

period of between two and three

months

Space availability - Ground floor area approx. 3,000 sq.

ft.

Floors 1 to 4 - 5,000 sq. ft. per

floor..."

7. On 24 November, some of the directors of Seabridge, Mr Kent and Mr Glenny inspected the premises. On that day, Mr Kent wrote to Mr Glenny making a counter offer as follows:

"In view of our verbal advices that we would most likely be

taking the whole of the building, consisting of Ground Floor

and Floors 1-4, it is our belief that the following terms

are acceptable to us:-

1. (a) Lease term - Six years plus an option for further

2 x 2 year terms

(b) Rental rates- Ground floor $23.00 per sq. ft. per

annum

- Floors 1- 4 $17.50 per sq. ft.

per annum

(c) Lease commencement

date - 1st January 1987 with a rent

free period of 3 months from

this date for all floors.

...Prior to making a final commitment, we would request that

an up to date floor plan be provided for all floors,

together with electrical and air conditioning plans."

8. It is common ground that, on 27 November, Mr Kent and Mr Glenny had the following conversation on the telephone:

"Glenny: 'The owners won't budge on the rental but here's

what they're prepared to offer. (Mr Glenny then

quoted a rental rate per square metre per

annum.) A six year lease with two two year

options. A lease commencement date of 1 January

1987 and a rent free term of two and a half

months. Rent reviews are to be every two years

to market. You will also have full naming

rights at no cost. I want to impress on you the

urgency of the situation. The owner is going

overseas on 16 December and he wants to finalise

the lease agreement before then.'

Kent: 'O.K. 'I'll get back to you.'"

9. It is further common ground that, on 28 November, Mr Kent and Mr Glenny had the following conversation on the telephone:

"Kent: 'Look, I had a talk with our Directors

concerning the terms of the lease. They're

still not happy about the rental rate but I'm

sure they would accept if there was a slight

reduction in the rental rate for the ground

floor.'

Glenny: I'll try and get the owner to agree to $255.00 for the

ground floor.'

Kent: 'O.K.'"

10. According to Mr Kent, the conversation continued as follows:

"Glenny: It would assist me in getting the lower ground

floor rental if you could put in a letter of

intent as soon as possible.'

Kent: 'Yes. O.K. I'll organise it straight away, but of course

you appreciate that the final acceptance of the lease is

subject to the landlord producing a survey.'"

On the other hand, Mr Glenny's version is as follows:

"Some time later that day (28 November 1986), Mr Kent

telephoned me and we had a conversation in words to the

following effect:

Kent: 'I've spoken with the Directors and they are prepared to

accept the rental you proposed this morning and all the

other terms we spoke of yesterday. However, entering the

lease is conditional on being provided with a copy of a

survey of the premises specifying the precise areas of the

floors.'

Glenny: 'Okay Stephen, fine. I will ask the Pongrasses to get

the premises surveyed so that the deal can go ahead.'"

11. It appears that nothing turns on the differences between the two versions.

12. On the same day (28 November), Mr Kent wrote to Mr Glenny as follows:

"LETTER OF INTENT

RE 373 - 377 KENT STREET, SYDNEY

Further to our telephone conversation today, we would now confirm

our intention to progress the finalisation of a lease agreement

for the abovementioned property.

We request that the Owner's Solicitors now be instructed to

prepare lease documentation on the basis of the following lease

terms:-

(a) Rental rates- Ground floor $23.75 per sq.ft. per annum

- Floors 1 - 4 $18.00 per sq.ft. per

annum

(b) Lease term - Six years with a further option of 2 x 2

years

(c) Lease commencement

date - 1st January 1987 with a rent free

period of 2-l/2 months."

On 1 December, Mr Glenny wrote to Mr Kent the following:

"SUBJECT TO LEASE

373-377 KENT STREET, SYDNEY

Further to your letters of 24th and 28th November 1986, Lezam Pty.

Ltd. are prepared to agree to the leasing of the above building on

the terms set out in the attached Itemised Lease Schedule.

As you will appreciate, the owners are going overseas on 16

December, and it would be helpful for both parties if the lease

could be processed as quickly as possible.

In the meantime, we would be grateful if you could forward us a

cheque for $37,921.42 which we will place in our Trust Account

pending finalization of the lease.

A copy of the Itemised Lease Schedule has also been dispatched to

your solicitor."

The "Itemised Lease Schedule" was as follows:

"ITEMISED LEASE SCHEDULE

DIRECT LEASE

DESCRIPTION OF PREMISES

Address : 373-377 KENT STREET, SYDNEY 2000

Floors and Areas : Ground Floor - 371.0 sq. metres

(Subject to Survey) Floors 1-4 - 464.5 sq. metres

per floor

Total Area 2,229.O sq. metres

...

LEASE

Date of Commencement: 1st January 1987

Term : 6 years

Option : Two periods of two years each

RENTAL

Date of Commencement: 15 March 1987

Rental : $455,057 per annum

Ground Floor $255 psmpa

Floors 1-4 $194 psmpa

Method of Payment: Monthly in advance

Amount : $37,921.42 per calendar month

..."

13. Beside the figures "$255 psmpa" and "$194 psmpa" appeared, added in Mr Kent's handwriting, the figures: "$23.7O" and $18.03" respectively. It is common ground that Mr Kent's calculations refer to a rate per square foot and are approximately correct.

14. At the bottom of the page, in small, almost illegible print, the following appears:

"Jones Lang Wootton for themselves and the lessors/vendors

of this property whose agents they are, give notice that:

(i) The particulars are set out as a general outline

only for the guidance of lessees/purchasers and

do not constitute an offer or contract;

(ii) All descriptions, dimensions, references to conditions

and necessary permissions for use and occupation and

other details are given in good faith and are believed

to be correct but any intending tenant/purchaser

should not rely on them as statements or

representations of fact but must satisfy themselves by

inspection or otherwise as to the correctness of each

of them.

(iii) No person in the employ of Jones Lang Wootton has any

authority to make or give any representation or

warranty whatsoever in relation to this property."

15. On 16 December, Seabridge executed a lease ("the lease") of the premises at a rent of $455,057.86 per annum payable by monthly instalments of $37,921.42. The lease was expressed to be of land under the Real Property Act 1900 (N.S.W.) described by reference to a certain volume and folio, being "the land...known as 373-377 Kent Street, Sydney." No area or dimensions of the premises were stated in the lease.

16. No survey was produced to Seabridge at this time and that matter was not raised again. The evidence did not explain why the arrangement for the production of the survey to Seabridge was not carried out.

17. In October 1988, during negotiations for a contractual review of the rent payable under the lease as from 1 January 1989, Mr Kent became aware that the total net lettable area of the premises was less than that mentioned in the itemised lease schedule referred to in JLW's letter dated 1 December 1986.

18. The essential allegations made by Seabridge are stated in paras. 8, 9, 13 and 14 of the amended statement of claim as follows:

"8. In the course of...negotiations (for the lease), (JLW)

represented to (Seabridge) that the area of the said

premises was 2,229.0 sq. metres comprised as follows:-

(a) Ground Floor - 371.0 sq. metres

(b) Floors 1 - 4 - 464.5 sq. metres per floor

Total Area - 2,229.0 sq. metres

...

9. At the time the said representation was made it was the

common and usual practice amongst real estate agents, such

as (JLW), and owners of commercial office buildings, such as

(Lezam), to calculate and quote tenancy areas for commercial

office buildings in terms of net lettable areas calculated

in accordance with standards of measurement such as those

set forth in the guidelines adopted by the Building Owners

and Managers Association in that connection and (JLW) and

(Lezam) well knew that any area quoted by them with respect

to the said premises would be understood or would be likely

to be understood by (Seabridge) to be the net lettable area

of the said building.

...

13. After making payment of the said rental for the first two

years of the terms of the said lease, and in the course of

negotiating the rental for the next two years of the said

term, (Seabridge) found that the net lettable area of the

said building was 1,969.42 sq. metres comprised as follows:-

(a) Ground Floor - 376.95 sq. metres

(b) First Floor - 398.61 sq. metres

(c) Second Floor - 398.61 sq. metres

(d) Third Floor - 396.69 sq. metres

(e) Fourth Floor - 398.56 sq. metres

Total Area 1,969.42 sq. metres

14. In the premises (JLW) and (Lezam) by itself and by its agent

(JLW), each engaged in conduct that was misleading or,

alternatively, deceptive in contravention of Section 52 of

the said Act in that each -

(a) failed to identify the area of the said premises represented

to (Seabridge) as being other than the net lettable area of

the said building.

(b) represented the net lettable area of the said building to be

2,229.09 sq. metres whereas in fact the net lettable area

was only 1,969.42 sq. metres."

19. It is convenient to consider each of these allegations separately.

20. The particulars given of the representation alleged are the letter dated 1 December and certain conversations.

21. Turning first to the conversations, I have difficulty in accepting that oral statements of this kind, in the present context, can be relied upon to establish a contravention of s.52. As McLelland J. pointed out in Johnson Matthey Ltd. v. A.C. Rochester Overseas Corp. (Supreme Court of New South Wales, 13 December 1990, unreported), there are reasons of both principle and policy why the courts should not permit the stability of commercial relationships and dealings to be threatened by reliance upon oral statements, said to found an estoppel, made in the course of negotiating a formal contract. I agree. In my opinion, notwithstanding that we are here concerned with a statutory cause of action, this reasoning may be applied, by analogy in the present case. The courts should exercise caution in invoking provisions such as s.52 based upon things said, or not said, in oral discussion in the course of negotiations which lead to a formal document or agreement being drawn up. Much will depend upon the subject matter of the alleged representation. If the oral statement bears upon a matter which has been dealt with specifically by the parties in a formal document or contract, the courts, in my view, should ordinarily be reluctant to interfere by setting aside or altering the formal instrument or contract in the absence of proceedings for rectification of the written instrument purporting to evidence the real agreement. Where, however, an oral statement bears upon a subject not dealt with in the formal contract, the position may be different.

22. In the present case, the lease made no mention of the area leased to Seabridge, although the letter dated 1 December did refer to this matter. The proper inference, I think, is that the parties intended their oral discussions with respect to the area to be leased to be definitively stated in the letter dated 1 December, to the exclusion of what might have passed between them informally earlier. It follows, in my view, that these discussions cannot be relied on by Seabridge for present purposes.

23. I turn next to the letter itself. On behalf of the respondents, three specific matters are now relied on.

24. First, the letter is expressed to be "subject to lease". The evident purpose of this provision was to ensure that no binding commitment to grant a lease was to arise unless and until a formal instrument by way of lease was executed. Accepting this as a matter of contract, the question still remains whether a collateral or extrinsic statement made in the letter can be relied on as misleading conduct for the purposes of s.52. In my opinion, the use of the phrase "subject to lease" in the letter does not preclude possible reliance by Seabridge, for the purposes of s.52, on statements made in the "itemised lease schedule" by way of description of the premises.

25. Secondly, the respondents rely on the circumstance that the areas were expressed to be stated "subject to survey". The apparent object of this phrase was to qualify the statement of the area to be leased by reference to the survey which, it was then contemplated, would be obtained and produced to Seabridge, presumably before execution of the lease. If, for instance, the survey had been obtained, showing dimensions less than those stated in the "itemised lease schedule", and the survey had been shown to Seabridge before it executed the lease, Seabridge could make no complaint in respect of the deficiency. Since the survey was not so produced, it is difficult to see how the respondents can now rely on the rider "subject to survey".

26. Thirdly, reliance is placed by the respondents upon the printed disclaimers at the bottom of the page of the "itemised lease schedule". Mr Kent said of these words:

"I can't say that I read them in detail. I would have

glanced over them at the time."

27. The present question is not whether the disclaimers were incorporated in a contract. The question here is whether the conduct of the respondents, taken as a whole (see Parkdale Custom Furniture Pty. Ltd. v. Puxu Pty. Ltd. [1982] HCA 44; (1982) 149 CLR 191 at p 199), is misleading or likely to be so. Usually, "fine" or inconspicuous print cannot be invoked as an answer to a claim of misleading conduct under s.52 (see the Puxu Case, above, at pp 210-11).

28. I propose now to consider each of the disclaimers in turn, doing so on the assumption, for the purposes of the argument, that the print was sufficiently conspicuous.

"Jones Lang Wootten for themselves and the lessors...of this

property whose agents they are, give notice that:

(i) The particulars are set out as a general outline only for

the guidance of lessees...and do not constitute an offer or

contract."

30. In my opinion, this disclaimer is not an answer to the claim now made by Seabridge. The statement of area in the itemised lease schedule is specific. "Subject to survey" is a qualification which, in the events which happened, had no material operation. Nor is it relevant, for present purposes, to consider whether the letter dated 1 December had, or did not have, any contractual force.

31. Under the second disclaimer, Seabridge was notified that -

"(ii) All descriptions, dimensions, references to conditions

and necessary permissions for use and occupation and

other details are given in good faith and are believed

to be correct but any intending tenant...should not

rely on them as statements or representations of fact

but must satisfy themselves by inspection or otherwise

as the correctness of each of them;"

32. In my view, this disclaimer had no relevant operation here. The exemption clause is expressed in general terms only and, accordingly, should be read down in the case of the specific statement as to area. I think that it was intended that, in this particular area, i.e. dimensions, the specific statement should prevail over the general words of the disclaimer. It is true that the specific statement with respect to dimensions is itself expressed to be "subject to survey". But, as has been said, this is no longer a significant qualification.

"No person in the employ of Jones Lang Wooten has any

authority to make or give any representation or warranty

whatsoever in relation to the property."

34. Again, this is a general provision and not, I think, intended to supersede the specific statement made with respect to the areas of the floors.

35. On behalf of the respondents, reliance is also placed upon the fact that Mr Kent was provided with a floor plan. However, I do not think that this assists the respondents. The only relevant information provided by the plan was the boundary measurements. In my opinion, it was unrealistic and unreasonable to expect Seabridge to use this information to become aware of the actual dimensions of the leased area.

36. It follows, in my view, that even if it be assumed that the disclaimers were sufficiently conspicuous, a question that need not now be decided, none of their terms could have provided an answer to a claim of misleading conduct under s.52. It further follows, in my opinion, that the statements made in the "itemised lease schedule" with respect to the areas of the floors, could, if false, constitute misleading conduct for the purposes of s.52.

37. A separate question arises as to the respective potential liabilities of JLW and Lezam in this respect. It is common ground that Lezam retained JLW to find and introduce to Lezam an acceptable lessee. It is also common ground that Mr and Mrs. Pongrass were the source of the information that the floor area of the subject premises was "approximately five thousand square feet", i.e., 464.52 square metres; that the details in the "itemised lease schedule" were provided by JLW to Seabridge with the knowledge and approval of Mr and Mrs. Pongrass as the controllers of Lezam. It is also common ground that, at this time, Mr Glenny informed Mr and Mrs. Pongrass that Seabridge's agreement to take the lease was subject to their providing a survey of the premises.

38. In Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661, Mason ACJ., Wilson, Deane and Dawson JJ. said (at p 666)"

"It should be observed at the outset that the facts as found

by the trial judge raise the question whether the Lucas

company itself was guilty of any contravention of s.52. It

is, of course, established that contravention of that

section does not require an intent to mislead or deceive and

even though a corporation acts honestly and reasonably, it

may nonetheless engage in conduct that is misleading or

deceptive or is likely to mislead or deceive: Hornsby

Building Information Centre Ltd. v. Sydney Building

Information Centre Ltd...; Parkdale Custom Built Furniture

Pty. Ltd. v. Puxu Pty. Ltd...That does not, however, mean

that a corporation which purports to do no more than pass on

information supplied by another must nevertheless be

engaging in misleading or deceptive conduct if the

information turns out to be false. If the circumstances are

such as to make it apparent that the corporation is not the

source of the information and that it expressly or impliedly

disclaims any belief in its truth or falsity, merely passing

it on for what it is worth, we very much doubt that the

corporation can properly be said to be itself engaging in

conduct that is misleading or deceptive."

See also the discussion by D. Ravech in "Yorke v. Lucas - Case Note" [1990] MelbULawRw 11; (1990) 17 MULR 521.

39. In the present case, so far as concerned the floor areas, JLW had more than a passive role. For one thing, JLW was involved in the site inspection. For another, JLW was a party to the arrangements for a survey. Moreover, for the reasons already given, although a printed form of disclaimer expressed in general terms appeared at the bottom of the page, it had no relevant application here. Nor, for similar reasons, is there any scope for the implication of a relevant disclaimer.

40. In the result, I am of the opinion that the representation alleged in para.8 was made by JLW with the authority of Lezam.

41. In support of this contention, Seabridge relies on the following affidavit evidence of Simon Graham Hill, Deputy Consultant and valuer (the evidence was admitted subject to objection).

"10. In making the measurements referred to in the

preceding paragraph and in making the calculations set

forth in my working papers, I had regard to and

applied the standard called 'BOMA Method for the

Measurement of Buildings'. 'BOMA' is the acronym for

Building Owners and Managers Association of Australia

Limited. This standard is the only widely accepted

standard for the measurement of office or commercial,

industrial and retail properties in Australia. In the

case of commercial office buildings, measurements are

made and areas are calculated on the basis of 'net

rentable areas' (sometimes referred to as 'net

lettable areas') determined in accordance with the

current principles set forth in the standard. Now

produced and shown to me marked 'SGH3' is a copy of

the May 1985 Revision of the standard. This version

of the standard was the one that was in force or (sic)

May 1985 until the publication of the 1989 revision.

Similar standards are applied in relation to the

determination of areas in commercial office buildings.

For example in the United Kingdom the relevant

standard is called the Royal Institution of Chartered

Surveyors' Code of Measurement.

11. In my experience, when real estate agents,

valuers, architects, surveyors and other persons

involved in property management refer to areas

of commercial office buildings in Australia

without qualifying those areas in any way, they

refer to net rentable (or net lettable) areas

calculated in accordance with principles of the

BOMA Standard. This has been my experience

since I commenced my employment in Australia

with Legal and General in May 1986. At all times

since then, when I have been involved in

negotiations concerning commercial office

premises, whether for rent review or for

assessing the suitability of that accommodation

for clients or in making valuations of such

premises, reference by either party to areas has

always been to net rentable (or net lettable)

areas as determined by the BOMA Standard unless

there has been a clear qualification to the fact

that some other area is being referred to. In

my opinion, this practice is widespread

throughout the Australian real estate industry

and has been so since at least May 1986."

42. In my opinion, the evidence of Mr Hill is admissible as "expert" evidence which "consists of a generalisation from observed facts within the personal experience of the witness in a field outside ordinary lay experience" per McLelland J. in Ritz Hotel Ltd. v. Charles of the Ritz Ltd. (No. 7) (1987) 14 NSWLR 104 at p 105. See also Cross on Evidence (4th ed.) para.29025.

43. The document "SGH 3" entitled "BOMA Method for the Measurement of Buildings" refers to "Net Rentable Area" in these terms:

"4. NET RENTABLE AREA (N.R.A.)

Application:-

To be used in relation to commercial office buildings for:-

. Calculating tenancy areas for whole buildings, whole floors,

or sub-divided floors.

. Operating Cost Analysis

. Capital Cost Analysis

. Floor space ratio and site coverage calculation in some

areas.

Definition:-

4.1 The net rentable area of a building is the total of all the

whole floor rentable areas.

4.2 Net Rentable Area - Whole Floors

The whole floor net rentable area is the floor space in

square metres confined within the building at each floor

level adopting the following method of measurement:

4.2.1 Measurement is taken from the internal finished

surfaces of permanent walls and from the internal

finished surfaces of dominant portions of the

permanent outer building walls.

4.2.2 Areas occupied by structural columns and engaged

perimeter columns are included in the net rentable

area.

4.2.3 The following areas of each floor are to be excluded

from the net rentable area:

4.2.3.1 All stairs, toilets, cleaners

cupboards, lift shafts and motor

rooms, escalators, tea rooms and

plant rooms, and other service

areas, where all are provided as

standard facilities in the building.

4.2.3.2 Lobbies between lifts facing other

lifts serving the same floor.

4.2.3.3 Areas set aside as public space or

thoroughfares and not for the

exclusive use of occupiers of the

floor or building.

(Note: Any additional common areas

resulting from the sub-division of a

whole floor for the purpose of sub

leasing does not constitute 'public

areas or thoroughfares' in this

context.)

4.2.3.4 Areas set aside for the provision of

facilities or services to the floor

or building where such facilities

are not for the exclusive use of

occupiers of the floor or building.

4.2.3.5 Areas set aside for use by service

vehicles and for delivery of goods

and access ways thereto where such

areas are not for the exclusive use

of particular occupiers of the floor

or building.

4.2.3.6 Areas set aside for car parking and

access ways thereto where such areas

are not for the exclusive use of

occupiers of the floor or building."

44. In my view, it is reasonable to infer, and, in any event, it is not seriously disputed, that the parties contemplated a lease of an area to be ascertained by internal measurements. Given the widespread adoption of the relevant BOMA standard of measurement, in the absence of any specific statement to the contrary, it is reasonable to infer that the parties must have intended that an appropriate BOMA standard of measurement would apply. It is true that JLW expressed its statement of area to be "subject to survey". But, as has been said, the survey was not forthcoming. In these circumstances, the respondents cannot, I think, rely on this attempt to qualify their statement. The qualification never became operative.

45. In the result, in my view, the allegation made in para.9 has been established.

46. (Paras. 10 and 11 of the amended statement of claim allege that Seabridge relied upon the representation pleaded in paras. 8 and 9. Mr Kent, who had the carriage of the matter on behalf of Seabridge, gave evidence to this effect. I accept his evidence, which was not seriously challenged.)

47. This contention is no longer seriously in dispute, although it should be noted that, during the course of the hearing, Seabridge amended its pleading in respect of the statement of area of the ground floor. Originally, Seabridge alleged that the area of the ground floor was 346.15 square metres and that the area of the third floor was 398.69 square metres.

48. It follows from the findings I have previously made that this contention has been established.

49. As has been said, Seabridge seeks an order varying the amount of the rental payable under the lease, together with an order that the respondents pay it the sum of $89,887.15 being the difference in the amount of rent payable on a "gross" area basis on the one hand, and a rental per square metre calculated by reference to a net rentable area, on the other.

50. In my opinion, it is appropriate that this relief be granted pursuant to s.87(1A) of the Act (now a free-standing provision - see s.87(1C)) and s.87(2)(b) (which empowers the Court, in an appropriate case, to vary a contract or arrangement). Seabridge has, in my view, suffered loss or damage by paying a greater amount than it would have done had it known the true position.

51. On behalf of the respondents, a number of submissions were made in arguing that no relief should be granted. For instance, it was said that Mr Kent's state of mind was irrelevant and that only the board of directors' intentions were relevant. It was also said that relief should be refused because Seabridge, it was claimed, had delayed in bringing these proceedings. In my opinion, none of these arguments has any substance.

52. Since JLW had an active, and not merely a passive role in the negotiations generally and, in particular, in respect of the survey and as JLW had the general carriage of the matter, I think that, as between the respondents, it is appropriate that they be held jointly liable and that, accordingly, it be declared that each respondent is liable for one-half of the amount ordered to be paid to the applicant.

53. Having concluded that it is appropriate that the respondents are jointly liable to pay the applicant the sum of $89,887.15, and that each respondent is liable for one-half of the judgment debt, it is not necessary to make any further orders in the cross-claims. In the circumstances, there will be no order as to the costs of the cross- claims.

54. The respondents must jointly pay the applicant's costs, except for any costs incurred by the applicant in amending its application and statement of claim.

1. Order that the lease described in para.1 of the amended

application be varied in accordance with these reasons. Reserve

liberty to apply in this connection.

2. Declare that the respondents are jointly liable to pay to the

applicant the sum of $89,887.15 and order payment of that sum

accordingly.

3. Declare that each of the respondents is liable to pay one-half of

4. Reserve liberty to the applicant to apply for interest pursuant to

s.51A of the Federal Court of Australia Act 1976.

5. Order that the respondents pay the costs of the applicants, except

for any costs incurred by the applicant in amending its

application and statement of claim.

6. Make no order for the costs of the cross-claims.