Sansom Nominees Pty Ltd v Meade & Ors [2005] WASC 9

Sansom Nominees Pty Ltd v Meade & Ors [2005] WASC 9 - WASC 2005 case summary — Zoe

[5]

Lessor and lessee - Action for recovery of rent - Alternative claims for damages, rectification and damages for misleading and deceptive conduct - Covenant for lessor to remove and reinstall air-conditioning and remove ceiling to leased premises - Covenant by lessee, at its expense, to carry out internal reconfiguration of leased premises and to fit out the realigned premises to requisite standard and in accordance with plans to be approved by lessor - Lessee allowed into possession before commencement of term for fit out to be commenced and possibly completed before commencement of term - Loan from lessor to lessee for fit out to be available on completion of fit out, and repayable with interest over balance of term - Interrelationship and mutual dependence of lessor's and lessees' covenants with respect to air-conditioning and ceiling removal and fit out - Fit out not undertaken nor detailed plan submitted to lessor - Air-conditioning and ceiling work not undertaken - Lessee remaining in possession and using demised premises for intended trade - Failure to pay rent - Refusal to allow lessor entry to undertake air-conditioning or ceiling works - Lessees' counterclaim for alleged loss of profits arising from inability to sublet portions of demised premises to related sublessees - Counterclaim for damages in equity - Claim by lessees' guarantor to set off damages against liability upon its guarantee - Claim for rectification of lease - Claim for damages for alleged misleading and deceptive conduct with respect to representations concerning future conduct - Future representations reduced to covenants in lease - Readiness and willingness of parties to perform obligations assumed by lease - Effect of waiver of obligations to carry out fit out and air-conditioning and ceiling works at times implied in lease - Claim by lessee for injunction to restrain lessor undertaking air-conditioning and ceiling work - Claim by lessor for specific performance to compel performance on prescribed terms of air-conditioning and ceiling work and other activities

[102]

24 Because the first defendants' covenant to perform a fit out of the premises in accordance with plans to be submitted to the lessor for approval, it is necessary to examine the provisions of the lease which relate to alterations to any part of the demised premises and alterations to the electrical systems and installations. Sub-clause 6.2(a) of the lease contains a general prohibition against the lessee making, or suffering, any alteration or any structural alterations to be made to the leased premises and prohibiting cutting, maiming or injuring of any of the principal structure or walls or any part of them without the prior written consent of the lessor. Similarly, sub-cl 6.2(b) contains a prohibition against the lessees making any alterations or additions to any plant, equipment, fixtures or fittings forming any part of the building or the leased premises (including the air-conditioning plant, electrical fittings, plumbing and fire warning or prevention system) without the consent in writing of the lessor first being obtained. This sub-clause also provides that where it is necessary or desirable for alterations or additions to be made the work may only be done under the supervision of the lessor's architect and any other architects or consultants approved by the lessor. Sub-clause 6.2(c) forbids the lessees, without the prior consent in writing of the lessor, to install any electrical equipment in the leased premises which overloads the cables, switchboards or sub-boards through which electricity is conveyed, provided that if any consent to necessary alterations is required that electrical work shall be effected by the lessor at the expense of the lessees. Similarly, there is a prohibition set out in cl 6.2(e) against the lessees making any alterations or additions to any partitions within the leased premises without the prior written consent of the lessor, which shall not be unreasonably withheld. This covenant also provides that any application for consent for the erection, alteration or additions to any partitions should be made by the lessor in writing and be accompanied by detailed plans and specifications and, if approved by the lessor, should be constructed under the supervision of the lessor's architects.

[254]

113 The fact that the lessor's obligations to remove the existing air-conditioning and ceilings and install new air-conditioning under subcl 10(5)(a) of the lease was to be performed "as soon as is reasonably practicable after the date of the lease", also imports a notion of dependency upon the wishes and circumstances of the lessees and their performance of the permanent fit out. This is because the removal of the old ceiling and air-conditioning and installation of new air-conditioning will be certain to be disruptive of any trading operations of the first defendants in any part of the leased premises involving intrusive trades and the dismantling of major old structures with all that that would entail. The co-ordination of this work with the trading operations or, more probably, with the suspension of trading operations of the first defendants would require their co-operation. Also, because the fit out was to be performed by the first defendants, in accordance with the sequence specified by Annexure "A", this meant that there was to be a temporary fit out and occupation of the old TAB premises which were to be used up to the time of Yo-Yo's vacating the east side. The clear implication is that, upon Yo-Yo's vacating the east side, the way would be clear for the first defendants to expand into the entire premises after a short intermediate stage in which the defendants would set up temporarily in Yo-Yo's. The implication is that the main fit out would occur while the first defendants were temporarily occupying Yo-Yo's. It follows from this that the practicability of undertaking the lessor's works would have regard to this staging in the progress towards the permanent fit out. As the lessor's works would be a substantial interuption to the business of the first defendants a proposal to follow this staging and suit the convenience of the first defendants is plainly one of the considerations which would determine the practicability of the timing for the landlord's works.

[321]

164 While the covenants for the lessor's works as set out in the First Schedule cl 10(5)(a) made no mention of a replacement for the existing ceilings which were to be removed, there had been conflicting proposals about this obligation in the negotiations and correspondence which led to the agreement for lease in November 1997 and in the further negotiations leading up to the execution of the lease itself. The defendants' first offer to lease the premises (Exhibit 86) of 1 November 1997 made no mention at all of the lessor's works but sought a contribution by the lessor of $200,000 to the lessees' fit out. The response from the plaintiff's agent of 5 November 1997 (Exhibit 87) offered an unspecified contribution to the total fit out and an upgrading of ceiling, lighting and air-conditioning but without detail. A facsimile from the defendants' agents of 17 November 1997 (Exhibit 89) for the first time sought a provision requiring the lessor to air-condition the ground floor and to remove the false ceiling, but for the lessees to be responsible for the installation of a shop front at their cost. The disclosure statement required under s 6(4) of the Commercial Tenancy (Retail Shops) Agreements Act 1985, delivered by the plaintiff (Exhibit 90) and dated 19 November 1997, originally provided for "air-conditioning & suspended ceilings to be fitted by landlord together with new shop front". But this was altered by manuscript to provide "air-conditioning to be fitted by landlord", while including a provision that the landlord was to provide, at its cost, a suspended ceiling. This same document had originally proposed that the fit out to be provided by the lessees would include new ceilings but that detail was also removed by manuscript alteration. The plaintiff's agent, by facsimile dated 19 November 1997 (Exhibit 4), in the course of dealing with proposed terms, point by point, noted that the premises will be fitted with new air-conditioning and the existing ceilings removed at the lessor's cost, the style and type to be agreed between the parties. There is no further contemporary correspondence between the parties or their agents on this issue in evidence before the date of the execution of the lease which, as seen, itself specified the obligation as being the removal of the existing ceilings.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (364 paragraphs)

Sansom Nominees Pty Ltd v Meade & Ors [2005] WASC 9 (17 February 2005)

Parties

Legislation Cited (4)

Cases Cited (41)