(3) Just as it would be wrong of a lease to trespass on the general concept of unreasonableness in s 133B of the Conveyancing Act, so would also the adoption of any other special factor, such as debilitating collateral purpose.
54 Accordingly, although the court has to work out what was the real and true reason for the refusal of consent, the mere fact that the landlord has in mind some collateral purpose or some back-up scheme, which is outside what is contemplated by the tenant of the assignment, does not necessarily mean that the refusal of consent will be unreasonable.
55 If the consent is based on the area of concern that is legitimate for the landlord to take into account, the mere fact that that may involve a motive or a collateral purpose will not be enough for the tenant to succeed in showing that the landlord's refusal was unreasonable.
56 Mr O'Loughlin in his written submissions said that there were thirteen reasons why the landlord was entitled to refuse consent in the instant case. It should be noted that the better authorities are that a landlord can rely at the hearing on any ground which is available to support its attitude, notwithstanding that it was not taken at the time of refusal; see Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596, 611. However, as the task of the court is to find the real reason for refusal, if no reason is given at the time of refusal, or if only some reasons are given, which are not the reasons relied on at the trial, then the court may have little difficulty in finding that the additional reasons were not the real reasons.
57 Mr O'Loughlin's points were that the assignee/sublessee had not shown that it was a respectable and financially responsible person; that it was not an experienced retail trader with management and size comparable to Franklins; it had no proven history of running an independent retail business; other tenants opposed an unknown operator acquiring the lease; that the store was supposed to be occupied by an anchor tenant and the name IGA Riverwood was nowhere near as big a name such as Woolworths or Coles; that the second and third plaintiffs were distributors and not retailers, and would only be a vehicle to permit inexperienced retailers to trade; and that the landlord had had a previous and unfavourable experience with the second plaintiff. There were other reasons given as well.
58 The evidence, however, made it clear that Mr Saric, the controlling director of the third defendant, was anxious to have two anchor tenants in his shopping centre. It was also clear that in this he had support from some of the specialty shop holders.
59 Originally there were two anchor tenants, one was Franklins, the other Woolworths; neither was considered second rate. It came out clearly in the evidence that Mr Saric took the view that on the material before him Coles was the only possible competitor for Woolworths and that any other person, unless the contrary could be demonstrated, would be no second anchor tenant but only a weak second link.
60 The evidence shows that from at least September Mr Saric was in deep negotiations with Coles to see whether one or other of its supermarket divisions would be interested in taking a lease over the premises. The submission was that a landlord who took that attitude had made it plain that it would not consider any other reasonable application for assignment, it would disregard the fact that the tenant had a lease with options for over thirty years to run and was putting pressure on the tenant so that there would be a surrender of the lease and a new lease granted by the landlord at a higher rent.
61 However, the evidence does not bear that out in this particular case. The evidence of Mr Saric, which I accept, was that because of tenant disquiet, and his own view that it would only be if the second supermarket in the centre was competitive with Woolworths, that it would not be appropriate to consent to a transfer of the lease.
62 When one looks at the guidelines which are set out in cl 17.2, that appears to be the very matter that the parties considered was appropriate in consideration of the assignment. It is clear that the assignee or sublessee did not meet the tests in cl 17.2, but even when one puts these aside and asks the basal question, has the tenant shown that the landlord's approach was unreasonable, one has to come to the answer no.
63 Even if there was a collateral purpose involved, having accepted Mr Saric's evidence, the collateral purpose was for the good of the shopping centre and the tenants. The court at present is a bit hamstrung in that it was very strange that there was very little evidence put forward by the plaintiffs, and when the third defendant at the last minute tried to do so the approach to put in further evidence about how the shopping centre operated was rejected.
64 However, there is sufficient evidence from what the third defendant did put in to show that it is a very real concern for the operation of shopping centres that they be properly balanced, that there be anchor tenants which will attract business to the centre and that there be available specialty shops and one has to be very careful about the way in which assignments are considered.
65 In the light of all that material, it would seem to me that the landlord's approach was reasonable or, at least, the tenant has not demonstrated that it was unreasonable.
66 There was some suggestion in the submissions of Mr Williams that what the landlord was seeking to achieve was unattainable anyhow because the ACCC would not permit Coles to be a tenant. The only evidence of this was a statement made by a solicitor in a brief to counsel to advise. Whilst that statement may be admissible, its weight would be little more than a scintilla.
67 At the heel of the hunt Mr Studdy, for Franklins, endeavoured to reopen so as to put in proper evidence as to what was the real ACCC position, but Mr Williams objected to this. It just seemed to me that as the plaintiffs' evidentiary material was so weak I could not conclude on that evidence any attitude as to the ACCC to Coles in this particular centre and so I did not give Mr Studdy leave to reopen. This was just again an example of waiting six weeks then rushing the case on and presenting it without the evidence that one would expect.
68 I should note that Mr O'Loughlin relied on the words of Meagher JA in Haberecht v Chapman (1993) ANZ Conv R 277, 279 to reinforce his argument. Although one must be careful to treat every case of alleged unreasonable refusal of assignment on its own facts, what his Honour said in that case does reinforce the view to which I have come.
69 His Honour said that in that case there were two reasons why the landlord's refusal was not wrongful:
"One is that the uncontested evidence was that some of the other tenants in the Moree Market objected to the proposed assignee, one of them even threatening to vacate his premises if the assignment were made. In my view, even if their reasons were wholly fallacious, a landlord would be entitled to take the view that potential discontent amongst his tenantry was sufficient reason to refuse consent."
70 Accordingly, in my view, there is not enough material from which I could find that the landlord's views were unreasonable and, accordingly, I must answer question 4 in favour of the third defendant.
71 5. As has been noted cl 17.6 is in slightly different terms with respect to a sublease. However, I consider that what I have said in sections 3 and 4 of these reasons means that question 5 must also be answered favourably for the third defendant.
72 6. It follows that no declaration should be made as sought in paragraph 7.
73 7. It further follows that the plaintiffs must pay the costs of the third defendant of this application to decide the separate question.
74 It will be necessary to now consider what, if any, orders for costs should be made in respect of the Franklins interests and what should happen to the rest of the proceedings. I will stand the matter down to 2pm.
LATER
Following the reasons I gave this morning the parties agree that the orders in the short minutes should be made. Thus, I make orders in accordance with the short minutes and that terminates the dispute. The exhibits are to be returned.