Ulladulla Fish Traders Pty ltd v Ulladulla Fisherman's Co-op

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.