//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2013] NSWSC 1453
Supreme Court of NSW
2013-09-17
Rein J, Mr J
Original judgment source is linked above.
Judgment 1REIN J: These proceedings concern the lease of three shops at the fisherman's wharf at Ulladulla NSW. The shops are within a complex leased by the Cooperative from the State Government and used by the Cooperative for the receipt and processing of fish by society members, who are all fisherman or involved in the fishing industry in the region. The plaintiff has leased premises from the Cooperative for many years prior to 2010, but in 2009 the building was renovated. The Cooperative has, since 2010, leased shop 1 and 3 to the plaintiff and was in the process of sub leasing shop 2 to Mr and Mrs Parese when the plaintiff took issue with the terms of the proposed sub-lease to Mr and Mrs Parese. 2The sub-lease for shop 1 contains the following permitted use clause (item 17): Permitted use: Preparation of fresh seafood and retail sale of and wholesale of, fresh, frozen and cooked seafood and other takeaway items, cafe and restaurant which may include a licensed restaurant. And the following exclusivity clause (item 29): The Lessor must not allow any person, other than the Lessee, to carry on any business that includes (nor grant to any person a sublease or licence for the purpose of) the sale of any fresh or cooked seafood or the operation of any cafe or restaurant within the land the subject of the Perpetual Lease and/or the Special Lease referred to in Item 23. The restriction does not apply to the business conducted by the Lessor as at the date of grant of the initial term of this lease commencing on 2 April 2010. This restriction does not apply to the Sub Lease of Shop 3, Fishermen's Wharf, Ulladulla. (emphasis added) 3Similar clauses are contained in the sublease for shop 3 and it was agreed that there is no relevant distinction between the two subleases to the plaintiff. 4The proposed sublease for shop 2 contained the following permitted use clause (see p 134 Exhibit A1, item 17): Permitted use: Retail sale of: (a) live fish and crustacea (b) frozen fish and crustacea in Cryovac packs; and (c) processing and mincing fish and crustacea for retail sale as bait and burly EXCLUDING the retail sale of fresh and/or cooked fish and crustacea And the following restriction on use (item 25): The Sublessee must not carry on any business (nor grant to any person a Sublease or licence) for the purpose of the sale of any fresh or cooked seafood or the operation of any café or restaurant within the land the subject of the Perpetual Sublease and/or the Special Sublease referred to in Item 22. 5I should note that Mr Trebeck submitted that in the shop 2 sub lease (1)"live fish and crustacea" should be read as "live fish and live crustacea" and (2)"frozen fish and crustacea in Cryovac packs" should be read as "frozen fish and frozen crustacea in Cryovac packs" and that Mr Minehan did not contest this construction. 6The sublease for shop 2 does not contain an exclusivity clause. 7The wording for the permitted use and exclusivity clauses for shop 1 and 3 was submitted to the Cooperative's solicitors by the plaintiff's solicitors and accepted by the Cooperative without any alteration except for the words excluding its effect from Shop 1 or Shop 3 respectively. 8The plaintiff contends that the permitted use clause in the proposed shop 2 sublease infringes the exclusivity clause in the shop 1 and shop 3 sublease. 9There are four issues which I need to determine: (1)Is frozen seafood "fresh seafood" within the meaning of the exclusivity clause? (2)Is live seafood "fresh seafood" within the meaning of the exclusivity clause? (3)Are bait and berley "fresh seafood" and hence prohibited by the exclusivity clause? (4)Are the answers to 1-3 above altered if the sale is for the export as opposed to retail and wholesale within Australia? 10The matter is one of considerable urgency to the parties as at the moment the Cooperative has not proceeded with the lease to the Pareses and cannot do so until the matter in dispute is resolved (see orders made on 3 April 2013 by Windeyer AJ). By an Amended Cross Summons which was only filed on the second day of the hearing (the first Cross Summons was filed at the end of the first day of the hearing) the Cooperative seeks declarations that it is entitled to enter into a lease permitting a list of various products to be sold more extensive than those contained in the Parese lease and there is a question as to whether the Court should deal with the expanded categories found in the Amended Cross Summons and not found in the proposed Parese lease. 11Mr Trebeck made the point that his cross examination of Mr Turk was informed by the nature of the dispute framed by the plaintiff's Summons which in turn was focused on the clause in the Parese lease as set out in [4] above. He contended that the late filing of the Cross Summons and Amended Cross Summons should not be permitted to expand the case with which the Court is dealing since there are categories of seafood with which the Amended Cross Summons seeks to deal what is not the subject of any proposed lease. Mr Minehan invited the Court to express its views on the categories of seafood (if any) which the Court regards as precluded by reason of the exclusivity clause as the Cooperative is keen to know what it could and could not permit. 12I accept that molluscs (such as oysters and abalone) and invertebrates (such as squid and octopus) have been included in the Amended Cross Summons and yet the Parese lease does not mention either of these classes. There was also a suggestion that another category of product "frozen but thawed" seafood should be considered but that is neither mentioned in the Parese lease or in the Amended Cross Summons. In my view, none of the issues which I have identified in [9] are sensitive to the particular class of seafood involved and I propose to express my views on each of those disputed categories and invite submissions from the parties on the form of orders to be made, a course which both counsel appeared to accept as appropriate (see T88.1-8 and T91.42-45). 13The context of the dispute is of course found in the terms of a lease of shops 1 and 3 and the exclusivity clause, which must be viewed in the light of the permitted use clause. As was said in Bickmore v Dimmer [1903] 1 Ch 158, in construing a covenant in a lease the Court is required to have regard to the whole of the lease and the purpose for which it is granted: at 165 at per Vaughan Williams LJ 14Mrs Young, who is a director and principal shareholder of the plaintiff gave evidence and was cross examined as did Mr Pugilisi who is a director and chairman of the Cooperative. 15Mrs Young, who has been selling seafood for 30 years, gave evidence that: (1)When fish and crustacea are sold "live" they are usually, if not invariably, selected by the customer. The fish are then gutted and scaled. Crustacea are often taken live from the premises but she has never heard of a customer selecting a live fish and leaving with the live fish (para 71 of her first affidavit dated 28 March 2013). (2)Cryovacing and freezing is often used to extend the life of the product (see para 73). (3)Prawns are generally frozen at the point of catch (see para 74) but some species are not (see para 78). (4)Freezing is designed to retain the "freshness" of the product. (5)Some prawns are bought for bait (see para 76). (6)She sells product that has been frozen whilst still fresh as "thawed for your convenience" (see para 72 of her first affidavit). She claims that a product frozen but then thawed is "fresh" (T24.10). She does not label the product as fresh but rather as "thawed for your convenience" to avoid misleading consumers (T24.30-46) although if the product was from overseas which is required to be marked with its country of origin it would not be necessary because the customers would know that it must have been frozen (T25.30). (7)Oysters in their shell are fresh oysters (T26-T27). (8)Many products which would not have been eaten by consumers thirty years ago such as krill, mackerel and sea cucumbers are now purchased for the table (T35). 16Mr Pugilisi, who has been a fisherman all his life and who at one stage also had a fish shop, gave evidence that: (1)He considers fresh seafood to include seafood which has been cleaned and gutted shortly after it has been caught and ready to purchase and be cooked without further processing: para 55. (2)That seafood which has not been promptly frozen after its catch or has been frozen more than once and thawed more than once would not be fresh seafood: see para 55. (3)When live seafood is sold it needs to be killed, shucked or processed in some way before it can be ready to be cooked or ready for human consumption. He says he has always considered live seafood to be different from fresh seafood because of its need to be killed and processed (para 55). (4)He considers frozen seafood which has not been thawed to be very different to fresh seafood (para 56). (5)He considers a live fish, even one that is killed at the fish shop as different to a fish that was on display dead. He expressed the view that live fish commands a premium because they can be eaten fresher (T46-47). (6)In cross examination he maintained that a fish which had been killed, gutted and scaled he would still regard it as live fish: T50. 17The plaintiff called Mr Peter Doyle as an expert in its case. Mr Doyle was not available for cross examination as his availability to give evidence was not checked by the plaintiff's lawyers. The defendant's solicitors did not give notice to the plaintiff's solicitors that Mr Doyle was required for cross examination until 28 August 2013 although the plaintiff's solicitor was clearly under the impression that Mr Doyle would be required and thought Mr Doyle was available: see affidavit of Mr Gray of 16 September 2013. The Cooperative's solicitors were not informed before Friday last week that Mr Doyle was in Europe and not available or that he claimed, by reason of his medical condition (supported by a highly uninformative medical certificate), unavailable for cross examination even by videolink: see Annexures M, N, O W and X to Mr Stuart Gray's affidavit dated 16 September 2013. Because no notice had been given by the defendants' solicitors within the 35 day period required by rule 31.29 of the Uniform Civil Procedure Rules 2005 (NSW), I allowed the plaintiff to read Mr Doyle's evidence notwithstanding his unavailability. 18Mr Trebeck contended that given the absence of cross examination of Mr Doyle, I should treat his evidence as unassailed. Mr Minehan disputed that that would be appropriate in the circumstances to which I have referred and submitted that the report was flawed for a number of reasons. Mr Minehan further contended that since there had been no evidence from Mr Doyle on the live/fresh issue I had evidence only from Mr Graham Turk, the defendant's expert, on industry meaning of "live" and should accept that evidence and reject the plaintiff's contentions on that point. In relation to Mr Doyle's report I think there are some difficulties with it, and also having regard to the reasons for his unavailability even for videolink, I am not prepared to proceed on the basis that since he was not been cross examined I must accept what he says. I will deal with Mr Turk's report below. 19Mr Peter Doyle is very experienced fish retailer who has been involved in the fish restaurant business for many years. As I have noted I did not have the opportunity to observe him in the witness box. 20Mr Turk is the Chairman of the board of Sydney Fish Markets having previously been the manager of the Sydney Fish Markets for many years. Mr Turk was required for cross examination and was cross examined. I thought he was an impressive witness. The Sydney Fish Market is the largest fish market in the Southern Hemisphere and I think that his extensive experience in the markets makes his views very credible. Mr Doyle also has an impressive background but I agree with Mr Turk's comment that Mr Doyle's area of expertise is more in the role as restaurateur, albeit with a heavy emphasis on seafood. 21Mr Turk identified the following categories of seafood: (1)Live seafood (2)Fresh seafood (3)Frozen seafood (4)Thawed seafood (previously frozen) (5)Cooked seafood (a)Made from seafood never frozen (b)Made from seafood frozen but thawed (c)Made from frozen seafood 22Mr Turk expressed the view that "fresh seafood in the seafood industry means aquatic fish, molluscs, invertebrates and crustacea intended for human consumption and presented as either chilled or ambient temperature" (see Exhibit A2, p 343) and that "fresh" can include cooked seafood but it has to have been cooked from fresh "green" product which has not previously been frozen. There was no dispute about this.
Is Frozen Seafood Fresh Seafood? 23Mr Turk expressed the view that "fresh seafood" in the seafood industry: (1)does not include frozen seafood (2)does not include product that has been frozen but is now thawed (3)includes cooked seafood that has never been frozen (4)does not include cooked seafood that has been frozen and thawed 24Mr Doyle's central premise, as I understand it, is that "fresh" relates to whether the product purchased or sold "is spoiled or unspoiled", not "whether the seafood is fresh, frozen, treated or canned". He says that seafood that is "sound and unspoiled" is seafood "that tastes and smells like it just it came out of the water. 25Mr Doyle explained that seafood that is frozen immediately after it is caught can be described as "Fresh Frozen" or "Frozen at Sea" or "Snap Frozen" and he said that in his opinion and experience "those involved in the trade of seafood believe that fresh wholly relates to whether the product they are purchasing is spoiled or unspoiled. 26This view is expressed notwithstanding Mr Doyle having noted that "the Macquarie Dictionary" defines fresh (as best pertaining to seafood) as "not canned or frozen; not preserved by pickling, salting, drying etc" and that the Australian Competition and Consumer Commission ("ACCC") Food descriptors guideline states that "fresh" generally refers to food that is put on sale at the earliest possible time and close to the state it would be in at the time of picking, catching, producing et cetera. The term "fresh generally implies the goods have not been frozen or preserved": see Exhibit A1, p 185 and see Exhibit A2, p 396. Mr Doyle poses and answers the question "does the customary or trade meaning of 'frozen fish and crustacea' include 'fresh seafood'". That is not the relevant question, rather it should be: "Does the customary or trade meaning of fresh seafood include frozen seafood?" 27I am unable to accept that the description "fresh" is determined by whether the seafood it is "spoiled" or not. Canned and pickled fish and smoked salmon is not "spoiled" and fish which has been frozen is not spoiled rather they have both been treated in some way. 28I note that according to Mr Doyle, less than 5% of cooked prawns caught in NSW and Queensland are frozen after being caught. Whatever the percentage of seafood that is frozen immediately, I accept that freezing a fish or prawn at the time it is caught and killed it is will dramatically slow deterioration of the product but notwithstanding Mrs Young's and Mr Doyle's view of the frozen product as "fresh", in my view the natural meaning of fresh food does not include frozen food. This view is strengthened by recourse to the dictionary definition to which Mr Doyle referred and Mr Turk's evidence on this point which I accept. It is also reinforced by the industry standards to which Mr Turk and Mr Doyle have referred (the Codex Alimentarius, at Exhibit A2, p 362, and ACCC Food Descriptors). For the Court to be persuaded that the words used in the contract do not bear their natural meaning the plaintiff must establish that within the seafood industry there is a common use of "fresh" to include frozen seafood: see on industry meanings Appleby v Pursell [1973] 2 NSWLR 879 at pp 889 per Reynolds JA and 892-3 per Bowen J and it must be a meaning that is "both certain and notorious" Vince Cole Pty Ltd v Skischufabrik Dynafit (Unreported, NSW Court of Appeal, 28 October 1985) per McHugh JA with whom Hope and Priestley JJA agreed and cited in Lewison and Hughes, The Interpretation of Contracts in Australia (2012) Lawbook Co, p 191. I am not persuaded that there is a common use of "fresh" to include frozen seafood or that that meaning is certain and notorious. 29There is a further matter which is very relevant to the construction issue and that is that the permitted use clause in the shop 1 and shop 3 subleases specifically recognises "frozen" as a separate category by its use of "fresh, frozen and cooked seafood". The exclusivity clause omits "frozen" and its omission has significance given its express inclusion in the permitted use clause. Further if there is any ambiguity in the term, it should be construed contra proferentem (see JP Morgan Australia Ltd v Consolidated Mineral Pty Ltd [2011] NSWCA 3, [53]), the wording of the exclusivity clause being both proffered by the plaintiff and for its benefit. 30It follows that in my view the Cooperative lease can permit the sale of frozen seafood in shop 2. The Cooperative does not intend to permit sale of frozen but later thawed seafood (see Amended Cross Claim, para A(d), (e), (f)) so it is not necessary to address this topic.
Is Live Seafood Fresh Seafood? 31Mr Turk expressed the view that "fresh seafood" does not include live seafood. He acknowledges that live seafood could be considered as the ultimate in freshness but says it should always be treated as a separate category to fresh seafood. One reason he gives is that live seafood must be kept in a manner which sustains them in a live state. He says of live finfish: Live seafood must obviously be kept in a manner which sustains them in a live state. This will vary depending on the animal concerned. Live finfish must be kept swimming in water at a temperature range that is within their level of tolerance. They also require a supply of air or oxygen through the water in order to maintain the level of dissolved oxygen in the water. And of live crustacea: Live crustacea such as lobsters, prawns and crabs can be kept in water or for some time out of water and are frequently transported at ambient temperature out of water. Frequently they may be covered by wet cloth, seaweed or sawdust but it is important that they not be chilled otherwise the animal will die. And of live molluscs: Live molluscs such as oysters are kept out of the water at temperatures close to that of their natural environment. 32Mr Turk, in contrast to Mr Puglisi, readily conceded that a gutted fish was not a live fish and Mr Minehan accepted in oral submissions that Mr Turk's evidence should be preferred to that of Mr Puglisi. 33I accept that live seafood may require different forms of handling to seafood which has recently expired but is not frozen and I accept that in the industry a distinction is drawn for various purposes between live fish and fresh fish, (see for example pp 423-436 which deals with competency standards set by the Department of Education, Employment and Workplace Relations of Exhibit A2). However I am unable to accept that seafood which is alive and sold in a fish shop for human consumption is not "fresh" seafood, for the purposes of the subleases and having regard to the commercial context of the sublease. 34I take this view for the following reasons: (1)The natural meaning of "fresh" seafood in a fish shop would, in my view, include anything alive at the time it is purchased for consumption. (2)An oyster, for example, still in its shell and sold a few days after it was harvested would in common parlance be described as fresh - it would not be in the least misleading to so describe it. (3)As Mr Turk himself acknowledged live seafood can be considered as the ultimate in freshness. (4)Live fish, sold for human consumption is bought with the intention that the fish will be killed and gutted at the shop in almost all cases or, exceptionally, with the knowledge that it will expire within minutes of departure from the shop, and live oysters and abalone are purchased with the intention that they will be eaten fresh, that is within a few days of purchase. Some consumers, I was informed, prefer to eat seafood, such as oysters, while the item is still alive. There was evidence that fish out of water will die within 5-10 minutes and an oyster in its shell out of water has a life of about 6 days. In other words, purchases of live seafood at a fish shop are made for consumption within a very short period. Different considerations might apply if the proposed business for shop 2 was, for example, the sale of fingerlings for acquaculture purposes. A fish shop is not, in handling live fish, oysters or lobsters creating the normal acquatic environment for the creatures but rather simply keeping them alive for a very short period for the impending sale and consumption. (5)I have set out earlier in [26] the relevant portion of the ACCC guidelines. A live oyster for sale in a fish shop meets all the requirements of the guidelines description. The oyster on sale in the fish shop has been picked from its natural environment has been put on sale at the earliest possible time and has not been frozen or preserved in any way. The same applies to a lobster or yabbie. A fish in a tank at the fish shop (or restaurant) is not in its natural environment but whilst caught in one sense it is not picked until removed from the tank. Mr Minehan contended that when a person selects a fish from a tank even if he has it gutted, scaled and cleaned he is still buying a live fish as he is paying the premium for it being live a the time of sale. It is possible to view the matter that way but I am inclined to think what the customer is buying is a fish that was alive when he selected it but not alive when it is handed over to him or her. In the rare case of someone who wishes to conduct his own preparation of the fish for eating, the short duration of the life expectancy out of water discourages the notion that the customer has in any practical sense purchased a "live fish". (6)The plaintiff since the commencement of the sublease (and for many years prior to that) has been selling live oysters and without complaint from the Cooperative. If "fresh seafood" does not include live oysters, abalone, mussels and crustacea such as lobster then the plaintiff has been in breach of the subleases since their inception. I raised this issue with Mr Minehan and he informed me that whilst the Cooperative maintains that the subleases permitted use clause does not permit the sale of live seafood the Cooperative accepts that it has waived any non compliance and would make no complaint about the plaintiff's breaches in the past or in the future. I think the absence of any reference to "live" in the permitted use clause is a factor in determining how the exclusivity clause is to be construed. I think it is obvious that it was understood that seafood that was alive in the limited sense which I have described was permitted to be sold and hence it was not necessary to address the issue of live in the permitted use clause and accordingly not necessary for it to be spelt out the exclusivity clause either.
Bait and Berley 35The question here is: is the sale of bait and berley made of minced and processed fish and crustacea sale of fresh seafood? Mr Turk expressed the view that bait, berley and baitfish was not fresh seafood. Mr Doyle did not express any view on the subject. I accept that seafood is food for human consumption. Bait and berley is not sold for human consumption and is therefore not seafood. Mrs Young's evidence was that the fish and crustacea used for bait is product that has passed its use by date. That fact reinforces the notion that bait is not a sale of seafood since if the product has passed its used by date it is not fit for human consumption. Nor is it "fresh" or "cooked" as the exclusivity clause requires. 36Mr Trebeck argued that if bait included even one tentacle of an octopus that was fit for human consumption it amounted to a sale of fresh seafood. I am unable to accept that contention. What is sold is bait and that product is not intended for human consumption and hence is not "seafood". Even if some part of the admixture might, if sold separately, be seafood does not render the combined product, seafood.
Export 37I accept Mr Trebeck's submission that the permitted use clause and the exclusivity clauses focus on sale not the form of sale or destination. An export sale of fresh seafood, in the unlikely case that one were made out of shop 2, would still be a sale of seafood.
Conclusion 38My conclusion is therefore that the Cooperative would be in breach of the sub lease for shops 1 and 3 if it enters into a sublease for shop 2 that permits the sublessee to sell by wholesale or retail, whether for export or not, live seafood of any description but not in breach of the shop 1 and 3 subleasees' exclusivity clauses if it permits the sublessee of shop 2 to sell frozen seafood or bait and berley (whether frozen or not).
Costs and Orders 39I shall hear the parties on the issue of the orders to be made and on the issue of costs.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 October 2013
Ulladulla Fish Traders Pty ltd
Ulladulla Fisherman's Co-op