[28] In the absence of a contrary intention a concurrent lease passes to the concurrent lessee the concurrent lessor's accrued rights under the existing lease. See Cole v Kelly [1920] 2 KB 106 CA and London & County Ltd v W Sportsman Ltd [1971] Ch 764 CA, 781-2. This accords with the second limb of s117(1) [of the Conveyancing Act 1919 (NSW)]. However the section operates subject to any contrary intention expressed by the parties ... "
60 Here, the parties clearly intended that the arrears of rent owed by Woodfire Pizza Consultancy were not assigned to Mr Vale. Nonetheless, from the time of the lease of the premises to Mr Vale, future rent owed by Woodfire Pizza Consultancy was owed to Mr Vale and not to Rosychamp. In turn, Mr Vale, but not Woodfire Pizza Consultancy, owed rent to Rosychamp from the time he leased the premises. It follows that Mr Vale and Mr Michael Vale are liable as guarantors of the rent owed by Woodfire Pizza Consultancy up to the date of the concurrent lease to Mr Vale except to the extent such arrears in rent were subsequently reduced or discharged. Mr Vale was liable for rent under his lease from Rosychamp. That was a personal liability and not a liability as surety of Woodfire Pizza Consultancy. It is admitted on the pleadings that a lease to Mr Vale was entered into on or about 13 July 2005.
61 At that time the rent was in arrears of $99,296.88. The arrears were reduced by 29 July 2005 to $89,296.88. Colliers did not keep a separate ledger for the rent owed by Woodfire Pizza Consultancy and the rent owed by Mr Vale. They kept a single running ledger. It showed that rental arrears were reduced to $73,720.93 as at 1 January 2006 and as at 17 January 2006. This reflected an additional payment made on 14 December 2005 (albeit by post-dated cheques) to reduce the earlier arrears. There were no other payments to reduce the rent owed by Woodfire Pizza Consultancy as at 13 July 2005.
Attempted Sale of the Red Centre Restaurant Business to Mr Craig Macindoe
62 Prior to Christmas 2005, Mr Craig Macindoe met with Mr Vale in response to an advertisement for the sale of the business for $350,000 plus stock at value. They conducted negotiations during January 2006. On 13 February 2006, Mr Macindoe made an offer of $350,000 for the purchase of the business and all assets of the restaurant. The offer was conditional on, amongst other things, his securing two additional five-year options at a satisfactory rent, vendor finance for $150,000 for 12 months, and assurances by the landlord that additional building works, if any, would not interfere with trade.
63 Mr Vale responded on 21 February 2006 advising, amongst other things, that the sale price would be $350,000 plus stock at cost price, that vendor finance was not available, and that questions of the lease and assurances from the landlord (together with a requested assurance that additional tenancies would not be able to complain about noise), should be taken up with the landlord.
64 On 22 February 2006, Mr Vale wrote to Mr Copley at Colliers advising that an offer had been made to purchase the business of the Red Centre Restaurant for $350,000 which had been accepted, subject to the purchaser being approved by the lessor. This was not an accurate statement of the position. Mr Vale had made a counter-offer to Mr Macindoe. Mr Vale asked Colliers to post to him the appropriate assignment of lease application form to give to the prospective purchaser.
65 Mr Vale's solicitor was Mr Bacina of Leonard Legal. On 17 March 2006, Mr Bacina sent an email to Mr Copley of Colliers confirming a telephone conversation he had had with Mr Copley in which Mr Copley advised that the landlord's position was currently that it would not entertain an assignment of the lease without all arrears being paid. Mr Bacina advised that full payment of arrears of the lease would be made on settlement of the sale of the Red Centre Restaurant. He proposed that a "valid assignment" be prepared and that all necessary steps be taken pursuant to clause 9 of the lease and that on settlement the lessor consent to the assignment of the lease simultaneously with being paid arrears of rent.
66 On 20 March 2006, Mr Bacina asked Mr Copley to obtain urgent instructions regarding Mr Vale's proposal regarding assignment and payment of arrears of rent on settlement of the sale of the business and the provision of an updated lessor disclosure statement. Mr Bacina asked Mr Copley in effect, although not in precisely these words, to identify what provision of the lease gave the lessor the right to withhold consent to the assignment other than clause 9.
67 There was no explanation as to why Mr Vale, through his solicitor, sought Rosychamp's consent to an assignment of the lease to Mr Macindoe. It was clear from Mr Macindoe's offer that he required a new lease, not an assignment of the existing lease. Notwithstanding this, on 22 March 2006, Mr Bacina wrote to Mr Copley at Colliers and formally requested an assignment of the lease between Rosychamp and Woodfire Pizza Consultancy. He asked Colliers to forward necessary documents so that the matter could be expedited.
68 On 22 March 2006, Mr Copley sent to Mr Bacina a copy of an application for assignment, as had previously been provided to Mr Vale. He advised that he was still awaiting instructions from the lessor.
69 On 3 April 2004 Mr Ben Connery of Connery Partners wrote to Mr Copley as follows:
" We confirm we act on behalf of Craig McIndoe [sic] who is proposing to purchase The Red Centre Restaurant. The purchase however is subject to a new Lease being granted to him for 5 years with two 5 year options on terms substantially similar to those in force between the landlord and vendor subject to the following amendments:-
(a) Amend the business hours on page 2 to read '11.30am to midnight'.
(b) Personal guarantees being limited to a total of $50,000.
(c) Delete Clauses 7.6, 8.5, 8.10 and 8.11.
(d) Amend the notice period in Clause 17.5 to 6 months.
(e) In Clause 17.6 delete the words 'solely and directly'. Further an escape clause needs to be added to this clause for our client's benefit. We will provide same shortly.
(f) Delete Clause 18.7 of the Lease.
Please obtain instructions from your client. What additional information do you require? "
70 Mr Connery subsequently advised that Mr Macindoe sought the deletion of clause 7.6(d) and not the whole of clause 7.6. Clause 7.6(d) was a covenant by the lessee not to use or operate any sound or picture producing equipment in the premises if audible or visible from outside the premises. Clause 8.5 related to alterations or refurbishments of the building by the lessor which might adversely affect the lessee's business. Clauses 8.10 and 8.11 imposed obligations on the lessee to redecorate the premises by 30 April 2007 and 30 April 2012 and to carry out a full refurbishment of the interior and exterior of the premises if the option of renewal were exercised. Clause 17.5 required the lessor to give the lessee two months' notice in writing of proposed building works. Clause 17.6 dealt with rent abatement if the lessee's business experienced a trading downturn solely and directly as a consequence of the building works. Clause 18.7 provided for the appointment of the lessor as the lessee's attorney after exercise of the power of re-entry.
71 Rosychamp refused Mr Macindoe's request for a new lease. There was no negotiation about the proposed changes, but rather a flat rejection of the proposal. There is no reason to think that the refusal was based on any reservations as to Mr Macindoe's suitability as a tenant. He had extensive restaurant experience. Rosychamp did not raise any query about Mr Macindoe's experience as a restauranteur, or his financial position.
72 On 26 April 2006, Mr Vale wrote to Mr Copley regarding the arrears of rent. He said that trading had been very difficult since February of that year. He said that $15,000 of additional rent paid in December towards arrears was a loan from his wife's parents. He said that he was unable to make any more payments. He said that all rental arrears would be paid at settlement of the sale to Mr Macindoe.
73 Mr Stephen Wong, the ultimate beneficial shareholder of Rosychamp, instructed Colliers to give notice that the lease would be terminated if the arrears were not paid. On 27 April 2006, he instructed Mr Copley as follows:
" My position is very firm, please proceed this letter as soon as possible without further delay. I am patient enough to take the action until now. Even though the potential buyer Craig has approached me, I would not discuss anything until we clear up the mess. "
74 On the same day, Colliers served notice on Mr Vale that the total arrears were $113,691.08. Colliers noted that the repayment program set out in their letter of 30 November 2005, which had been accepted by Mr Vale on 2 December 2005, had not been adhered to. They advised that:
" In accordance with the terms of your lease and due to failure to adhere to the aforementioned repayment program, we have been instructed by the owner to inform that unless payment of the full arrears is received within 14 days from the date of this letter we will be forced to determine the lease and take possession of the premises without further notice. "
75 Mr Vale responded on 7 May 2006. He asserted that the purchaser had had direct responses with Rosychamp and was under the impression that a new five-year lease with a five-year option would be granted, but required written confirmation from Rosychamp before he signed the contract with Mr Vale. Mr Macindoe gave no evidence of having received such confirmation. To the contrary, he said that he was informed by Mr Copley that the landlord did not agree to his requests for a new lease. Mr Vale's correspondence misstated the facts.
76 In his letter of 7 May 2006, Mr Vale asserted that he had adhered to s 39 of the Retail Leases Act and if Rosychamp was not willing to negotiate terms and conditions of a lease to Mr Macindoe, it would be acting unconscionably in contravention of s 62B of the Retail Leases Act.
77 Mr Vale had submitted an application for consent to an assignment of the lease. However, Mr Macindoe was not seeking an assignment of the lease. Mr Vale's assertion that the landlord was failing to comply with s 39 of the Retail Leases Act by withholding consent on grounds not permitted by that section was an attempt to create a plausible ground for legal complaint. However, there was no factual basis for that complaint because even had the consent sought by Mr Vale been forthcoming it would not have enabled him to sell the business to Mr Macindoe. Mr Macindoe required a new lease, not an assignment of the existing lease. That had been made known to Rosychamp by April 2006. In deciding whether or not to give a new lease to Mr Macindoe, Rosychamp was entitled to have regard to its own interests.
Termination of the Lease
78 On 22 May 2006, Colliers served written notice that the lessor determined the lease as the time for payment of rental arrears specified in their letter of 27 April 2006 had expired. The arrears had not been paid. Colliers advised that in accordance with the lease, termination was effective from the date of the notice and the lessor required the premises to be vacated within seven days. The lease referred to in the notice was the lease to Woodfire Pizza Consultancy. Although not separately addressed to Mr Vale, the notice was understood by all parties to terminate any right of Mr Vale to remain in possession of the premises. At no time did Mr Vale assert that he was entitled to keep possession under a separate concurrent lease. The question whether there were separate leases was not considered by any party.
79 On 24 May 2006, Mr Bacina wrote to Rosychamp's solicitor, Mr Bernard Chiu, and to Colliers, asserting that the attempt to "precipitously force our client from the premises" was unconscionable and evinced a collateral and improper purpose. Mr Bacina asserted that the defendant's failure to respond within 42 days to a formal request for a consent to the assignment of the lease meant that Mr Vale was entitled to proceed on the basis that consent had been given. Of course that was of no avail to Mr Vale because his proposed transaction with Mr Macindoe was not premised upon Mr Macindoe's taking an assignment of the lease.
80 Mr Bacina foreshadowed the institution of proceedings in the Administrative Decisions Tribunal for interim orders to restrain the defendant from taking possession of the premises. In the course of the letter Mr Bacina asserted a number of matters which were incorrect, including that the only proposed variation of the lease sought by Mr Macindoe was in relation to trading hours. He referred to Mr Vale's having informed Mr Copley that both Mr Macindoe and Mr Arena (Mr Vale's business broker) had been informed by Mr Wong that Mr Wong saw no problem in granting a new lease as requested. This was wrong. No such representation was made by Mr Wong.
Institution of Proceedings in the Administrative Decisions Tribunal
81 Mr Wong deposed that he was contacted by Mr Arena in April 2006 and asked to consider granting a new lease for the term of five plus five years, extending the trading hours and removing the demolition clause. Mr Wong refused to meet with Mr Arena and told him that he would consider granting a new lease once he had sorted out the mess with David Vale and his company. Mr Wong also told Mr Macindoe that "I will not be interested to further discuss the terms of the new lease until the mess created by David Vale is resolved and settled." Mr Wong did not tell either Mr Arena or Mr Macindoe that he was willing to grant a new lease or had agreed to grant a new lease to Mr Macindoe.
82 Mr Vale and Woodfire Pizza Company instituted proceedings in the Tribunal on 25 May 2006. On 9 June 2006, the Appeal Division of the Tribunal made an order that Rosychamp not disturb the possession of the premises by Mr Vale and that Mr Vale pay rent by weekly instalments of $3,805.40. This was the then current weekly rent. That rent was paid to 27 June 2006. As a result of Mr Vale's failure to make the instalment payment of $3,805.40 due on 4 July 2006, Rosychamp applied to the Tribunal for the discharge of the order of 9 June 2006. On 9 July 2006, the Tribunal varied the orders and ordered the plaintiff to pay rent in the sum of $3,805.40 from 18 July 2006. It accepted that the plaintiff was unable to pay rent for the period from 27 June to 18 July and did not consider that to be a sufficient basis for discharging the injunction.
Negotiations for Sale of the Business to Mr Michael Moore
83 Mr Vale continued his efforts to sell the business. The advertised price was reduced to $250,000. Mr Vale's broker, Mr Feszt, received a number of serious inquiries. Many other calls were received from persons who did not wish to take the matter further because of the limited lease and the obligation in the lease to refurbish the restaurant by the following April. One interested prospective purchaser was a Mr Michael Moore who said that he had been involved in the establishment of the restaurant 16 years previously and thought that he could turn the business around quickly. On the evening of 28 August 2006 Mr Bacina forwarded to Mr Chiu an email asking for the particulars the defendant would require to consider an application for assignment of the lease to Mr Moore. He asked that Mr Chiu and the defendant refrain from contacting Mr Moore or his solicitor at that time. He gave no reason for that last request.
84 On 29 August 2006, Mr Chiu sent an email to Mr Moore attaching the Colliers standard lease application form document. Mr Chiu said:
" I act for Rosychamp Pty Ltd, the lessor of the premises presently occupied by the Red Centre Restaurant. I understand from copies of emails provided to me yesterday at the Administrative Decisions Tribunal that you have expressed interest in purchasing that business and taking an assignment of the existing lease.
It would assist in the expeditious determination by my client of any application for consent to an assignment that you complete the enclosed application, and provide it to my office together with information relevant to your financial standing and business experience, preferably by 4pm on Wednesday 30th August 2006. This will enable my client to determine the application for consent to an assignment within 7 days of receipt.
I will also forward a copy of the existing lease to you by separate email for your convenience.
I am copying this email to your solicitor and the lessee's solicitor.
... "
85 Mr Bacina complained that notwithstanding his request of 28 August 2006, Mr Chiu had contacted the potential purchaser. Mr Vale's complaint is that in his communication to Mr Moore, Mr Chiu referred to the fact that there were proceedings on foot in the Tribunal between Rosychamp and Mr Vale.
86 Later that day Mr Chiu sent Mr Moore a copy of the existing lease in respect of the Red Centre Restaurant. Mr Moore's solicitor, Mr Cominos, sent an email to Mr Bacina asking to what the Administrative Decisions Tribunal proceedings related. Mr Bacina replied that the proceedings related to arrears of rental and the failure of the landlord to provide air-conditioning services. On 6 September 2006, Mr Moore's solicitor advised that Mr Moore would no longer proceed with the proposed sale. According to Mr Feszt's email of 8 September 2006 Mr Moore decided to withdraw "due to some lease and development concerns".
87 Mr Vale submits that Rosychamp, through Mr Chiu, acted unconscionably in contacting Mr Moore. As I understand his complaint, he says it was unconscionable for Rosychamp to put Mr Moore on notice that proceedings were pending in the Tribunal between Mr Vale and it. Mr Bacina complained on 30 August 2006 that the litigation in the Tribunal concerned allegations made by Mr Vale of the lessor's bad faith and allegations that the defendant had prevented Mr Vale from making a sale of his business. Mr Bacina contended that in those circumstances it was improper for Mr Chiu to have contacted Mr Moore or his solicitor.
88 If the nature of the allegations made by Mr Vale against Rosychamp was material to Mr Moore's decision, there is every reason Mr Moore should have been advised of those matters. It is implicit in Mr Vale's submission that the fact that proceedings were pending in the Tribunal was relevant to a decision by Mr Moore whether to proceed with a proposed purchase of the business and assignment of the lease, and that he was prepared to enter into a contract with Mr Moore without revealing those facts. In essence, Mr Vale's complaint is that it was unconscionable for Mr Chiu to disclose relevant matters to the proposed purchaser which Mr Vale wished to keep secret.
89 I see nothing unconscionable in Mr Chiu's correspondence with Mr Moore. Even if Mr Chiu's intentions went beyond seeking to expedite an application for approval of the assignment of the lease, there was still nothing unconscionable in his communications. Mr Vale's position is that he could have procured an assignment of the lease to a purchaser who was kept in the dark about matters relevant to his decision. If Mr Vale had been dealing honestly with Mr Moore, he would have disclosed the fact that he was in dispute with the lessor. The lessor had an interest in ensuring that any assignee could not complain that he had been induced to take an assignment of the lease through misleading and deceptive conduct, or the non-disclosure of material facts.
90 As it was, Mr Chiu's correspondence with Mr Moore did no more than state the fact that there were proceedings in the Tribunal. There is no reason he should have assumed that Mr Moore would have been kept ignorant of those proceedings. In any event, such evidence as there is as to the reasons which prompted Mr Moore not to proceed is that his decision was motivated by concerns as to the lease and the proposed development works.
Negotiations for Sale of the Business to Mr Krikor Simoniam
91 On 4 September 2006, Mr Vale attended a meeting with Mr Feszt and a Mr Krikor Simoniam. Mr Simoniam said that he was very interested in buying the business. Mr Feszt telephoned Mr Copley of Colliers and told Mr Copley that a purchaser would like to meet with him to discuss taking an assignment of the lease and moving into the premises. On that day Mr Bacina sent an email to Mr Chiu advising that Mr Copley had declined to meet with the potential purchaser as the matter was in litigation. Mr Bacina asserted that Rosychamp was obliged to act in good faith with respect to Mr Vale's sale of the business and contended that there was no possible ground on which Mr Copley could properly refuse to meet with a potential purchaser. That afternoon Mr Chiu advised that Mr Copley denied having refused to meet with the potential purchaser. Mr Chiu confirmed that no such instruction had been given to Colliers. Mr Chiu said that the plaintiff should ensure that an application for consent to assignment, together with necessary information as to the financial standing of the potential lessee was forwarded for consideration as a matter of priority. Mr Chiu stated that the plaintiff had refused to pay rent for his continued occupation of the premises.
92 After further email correspondence Mr Chiu repeated his request for the provision of details concerning the financial standing and experience of Mr Simoniam. He said that it was not clear why a face-to-face meeting was required as Mr Vale was saying that the parties were in a position to effect an immediate exchange of contracts and to seek consent to the assignment of the lease. Mr Chiu said that given the level and nature of disputation between the parties it was appropriate that any queries the potential purchaser might have concerning the lease and the assignment be put in writing. On the following day, Tuesday, 5 September 2006, Mr Bacina repeated his request that a meeting be arranged between Mr Simoniam and the landlord or the landlord's representative.
93 Between 4 and 6 September 2006 there were inconclusive telephone discussions and email correspondence between Mr Feszt, Mr Vale and Mr Copley. Mr Feszt and Mr Vale were trying to arrange a meeting between Mr Copley and Mr Simoniam. Mr Copley asked for an application for assignment and supporting financial information to be provided to him.
94 On 6 September 2006, Mr Chiu was provided with telephone contact details for Mr Simoniam. In an affidavit sworn on 6 September 2006, Mr Chiu deposed:
" I spoke with Mr Simoniam at about 11am today, during which conversation I asked him 'do you want an assignment of the lease' and he said 'no I have a steakhouse in mind like the "Hurricane"' and 'Vale's business is going down and his concept does not work'. I said 'so you are not buying David Vale's business as such' and he said, 'No, I may just buy the equipment, but yes, not the business he is running.' and 'I intend to spend about $400,000 to refurbish the premises.' I asked 'have you received any paperwork for example the existing lease and a lease application form?' and he said 'I have not received any documents'. He also said 'At this stage my concern is whether I can get a long lease because if I am going to invest so much money in the premises, it is in my interest to secure a long term lease, which will allow me to change the restaurant into a steakhouse.' He said 'Would the landlord be prepared to grant a new lease on refurbishment? That's why I want to meet with the landlord, to discuss the concept of a steakhouse and a new lease'. He said 'only if the landlord agrees to my new concept and the refurbishment will I proceed with the purchase'. I asked him 'have you agreed with David Vale on the asking price yet?' and he said 'No, but I can fix him up easily. This is not the issue. At this stage, I just want to ensure that I will get a secured long lease in order to make my investment worthwhile'."
95 Mr Chiu was not challenged on this evidence and I accept it.
96 Mr Chiu also deposed on 6 September to having spoken with Mr Simoniam's solicitor, Mr Edward Teng, at 2.30 pm on that afternoon. Mr Chiu deposed:
" I spoke with Mr Edward Teng, Mr Simoniam's solicitor when he returned from Court at 2.30pm, and he said 'I have a draft contract for sale of business and disclosure statement.' He also said 'I don't have a lease application form'. In answer to my question, 'what is the contract price on the draft?' he said '$350,000 but there will have to be negotiations on the price'. I said 'if your client wants to refurbish the premises and run a steakhouse, he will not be taking an assignment of the existing lease' and he said 'That's correct'. I then asked 'Have you reviewed any of the documents including the lease?' He said 'No, my client asked me to put the matter on hold while he speaks to the vendor and would get back with further instructions'."
97 Mr Chiu was not challenged on this evidence and I accept it.
98 The proceedings were before the Tribunal on 7 September 2006. Acting Judge Chesterman discharged the injunction which had restrained Rosychamp from taking possession of the premises. Mr Vale sought leave to amend his allegations of unconscionable conduct to plead that Rosychamp procured the order discharging the injunction by false evidence of negotiations with a prospective replacement tenant. For reasons I gave at the time, I refused that leave.
99 Immediately following the conclusion of the hearing on 7 September, Mr Vale asked Mr Feszt to arrange a meeting that afternoon with Mr Simoniam. Before meeting with Mr Simoniam, Mr Vale attended with Mr Bacina. In Mr Vale's presence, Mr Bacina sent an email to Mr Chiu at 2.32 pm on 7 September 2006 in the following terms:
" Dear Bernard,
This email is a formal request in writing pursuant to Clause 9.3(a) of the Lease for an assignment of the lease to Mr Krikor Simoniam.
Please confirm that the only information reasonably required by the landlord is that information requested by the Colliers form.
We anticipate this being provided to your shortly.
... "
100 I do not infer from the fact that this email was sent that at this time Mr Simoniam was seeking merely an assignment of lease. A similar request had been made by Mr Bacina on behalf of Mr Vale in respect of the proposed sale of the business to Mr Macindoe notwithstanding that Mr Macindoe's request was not for an assignment of the lease but for a new lease. Later that afternoon, Mr Vale attended a meeting with Mr Feszt and Mr Simoniam. Mr Feszt told Mr Simoniam that Mr Vale was prepared to drop the price lower than the previously advertised price of $250,000 plus stock at value in order to have a "real quick deal". Mr Feszt said that they had to have an exchange immediately. Mr Simoniam and Mr Vale discussed the price and agreed on a price of $150,000 plus stock at value. They discussed the fact that Mr Simoniam needed to bring along an application form which he had for the assignment of the lease. There was discussion about the duration of the lease and the gross rental.
101 On the following morning, 8 September 2006, Mr Vale again re-entered the restaurant, notwithstanding that the locks had been changed. He met Mr Krikor Simoniam and Mr Gary Simoniam at the restaurant that morning. They provided him with a completed application for lease assignment form. The form stated that the proposed assignee was a company called Gplex & Associates Pty Ltd but the applicants for the assignment were described as Mr Krikor Simoniam and Mr Garrabet Simoniam. In the section entitled "Plan of Red Centre Restaurant" they stated that the expected change to the restaurant was to renovate and refurbish to make the restaurant look more modern, to change the menus, and to carry out marketing and aggressive promotions. The purchase price of the business was stated to be $100,000 (not $150,000), being the price for fixtures and fittings with nil value for stock or goodwill. At 10.12 am on 8 September 2006, Mr Bacina sent a scanned copy of the completed assignment form to Mr Chiu to accompany his formal request for an assignment sent at 2.32 pm the previous day. He advised that contracts "will be exchanged today for the sale of the Red Centre." At 11.45 am that morning, Mr Bacina sent a further email to Mr Chiu advising that a contract had been signed by Mr Vale and the purchaser and the deal had been concluded. Mr Bacina contended that there could be no question that there was a validly requested assignment and a valid purchaser. He sought confirmation that the landlord would not take any steps to interfere with Mr Vale's possession of the premises until 24 hours after the landlord had determined the "assignment question".
102 The position was that the lease had been terminated, the Tribunal had lifted the injunction restraining Rosychamp from taking possession of the premises, Rosychamp had already taken possession of the premises, but Mr Vale had got back into the premises.
103 Notwithstanding Mr Bacina's email of 11.45 am, contracts for the purchase of the Red Centre Restaurant business were not exchanged as at 11.45 am. At 12.35 pm on 8 September, Leonard Legal sent to Mr Teng a faxed copy of a front page of a contract for sale of business naming Mr Vale and Woodfire Pizza Company Ltd as vendors. The page was signed by Mr Vale. At 2.59 pm on 8 September 2006, Mr Teng sent a fax to Leonard Legal stating that he enclosed special conditions for annexure to the contract which he had been specifically instructed to add. At 3.24 pm, Mr Bacina sent an email to Mr Teng stating that the changes as discussed in the contract relating to special conditions were acceptable to his client and asking Mr Teng to fax the signed copy of the contract to his office forthwith. At 3.33 pm, Mr Teng sent a fax to Mr Bacina enclosing a copy of the purchaser's signed front page of the contract together with a copy of the ten percent deposit cheque for the purpose of exchange. The signed front page stated that the vendor was Mr Vale (not Mr Vale and Woodfire Pizza Company) and the purchaser was Gplex Associates Pty Ltd. It was signed by Mr Krikor Simoniam and Mr Garrabet Simoniam as directors. The purchase price was $100,000 plus trading stock allocated as nil dollars for goodwill and $100,000 for equipment. The price for trading stock was said to be a maximum of $20,000.
104 There was no evidence as to what was contained in the special conditions.
105 Mr Chiu was not in his office to receive Mr Bacina's email correspondence on the morning of 8 September 2006. He was at the restaurant. Mr Vale attempted to give him copies of the correspondence relating to the exchange of contracts with Mr Simoniam, but Mr Chiu did not look at the documents. At about lunchtime on 8 September, Mr Wong caused the electricity supply to the restaurant to be cut. An unknown person severed the electricity cables so that the electricity could not be reconnected. This meant that the restaurant had to be vacated. There was smoke throughout the restaurant from the ovens. Later that day Rosychamp resecured possession of the premises using security guards. An application was made that afternoon by Mr Vale to the duty judge seeking an order that the defendant not disturb his possession of the premises. Palmer J refused to make the order sought. The application was brought pending determination of an application for leave to appeal from the decision of Acting Judge Chesterman of 8 September 2006 to the Appeals Panel of the Tribunal. On 11 September 2006, the summons filed in this court was dismissed (Vale v Rosychamp Pty Ltd [2006] NSWSC 1341). On the same day, the Appeal Panel of the Tribunal refused leave to appeal from the order of Judge O'Connor of 7 September 2006 discharging the injunction granted on 9 June 2006.
106 On 14 or 15 September 2006, there was an auction on site of the lessee's equipment and fittings and any saleable stock. The vendor was Woodfire Pizza Company. The proceeds, inclusive of GST, amounted to $25,786. After agent's commission and expenses were deducted the amount realised was $14,303.26.
107 In February 2007, the defendant listed the property for sale. The building was sold at auction on 29 March 2007.
108 On 19 March 2007, the proceedings in the Tribunal were transferred to this court.
Rosychamp's Application for Development Approval
109 Mr Vale pleaded that Rosychamp acted unconscionably in contravention of s 62B of the Retail Leases Act in connection with his attempts to sell the business from 2004. One of the particulars of unconscionable conduct was that "[Rosychamp] positively conveyed that it had in contemplation that the building would be occupied pursuant to tenancies in the usual commercial course during the work associated with the proposed redevelopment by proposing clauses in the lease of the premises dealing with the right of the lessee to make claims during the proposed redevelopment works." It is not clear what is said to follow from this allegation.
110 No such representation was made. The lessor's disclosure statement delivered on 27 March 2002 stated that Rosychamp intended to lodge a development application for the redevelopment of the building either to convert the existing commercial accommodation on the upper floors and/or to add floors to the building to allow additional commercial or residential accommodation. The lessee was required to acknowledge the likelihood of disturbance and disruption to its business during the redevelopment. No representation was made as to the lessor's intentions in relation to the occupation of other parts of the building.
111 In any event, Mr Vale did not do anything or fail to do anything in reliance on the alleged representation.
112 On 28 February 2006, the North Sydney Council approved a development application by Rosychamp in respect of the premises. The development application had been lodged on 23 December 2004. The building plans submitted as at 28 November 2005 included a plan for the demolition and replacement of a wall which formed part of the men's toilet facilities in the Red Centre Restaurant. Mr Vale was not notified of that proposed change to the leased premises.
113 Mr Vale submitted that it was unconscionable for Rosychamp to have included in its development application a provision for extending the foyer of the building in a way that would knock down part of the wall of the leased premises even though an area would be added somewhere else. As no construction work was carried out which affected the leased premises, I do not understand how the approval of the development application affected Mr Vale or Woodfire Pizza Consultancy. In any event, the lease expressly provided that the lessor could carry out a redevelopment proposal which might involve the extension, addition to, reduction, variation, modification, redecoration or refurbishment of the building in any manner and that such works could affect the whole, or various parts of the leased premises.
114 Mr Vale said that it was unconscionable for the defendant not to inform him of the proposal in the development application because he was unable to object. However, clauses 17.1, 17.2 and 17.4 of the lease would have precluded any objection. Such a change was covered by clause 17 of the lease. There was nothing unconscionable in Rosychamp lodging the development application which included those matters when the possibility of the leased premises being affected by a redevelopment proposal was expressly raised before the lease was entered into and provisions were inserted into the lease to protect the lessor's position. That was part of the quid pro quo for the grant of the lease.
115 Rosychamp did intend that the building should be partially occupied during the redevelopment. It intended to redevelop the upper floors of the building. The two upper floors had been leased to Brambles Australia Ltd ("Brambles"). Those floors were planned for redevelopment. Brambles vacated the premises in 2004. Mr Vale complains that the floors were not subsequently re-let. One can understand that it would be desirable for the owner of a restaurant in the building that the building be fully occupied. However, there was no provision in the lease requiring Rosychamp to lease all of the parts of the building or use its best endeavours to do so. As it intended to redevelop those floors, it was not unconscionable for it not to lease them after Brambles vacated that area. In any event, instructions were given to Colliers to attempt to find a potential tenant to fill the areas left vacant by Brambles.
116 Mr Vale criticised the adequacy of Rosychamp's attempts to find alternative tenants for that area. He also criticised Rosychamp's attempts to find a tenant for a vacant ground floor shop. Attempts were made to find a tenant for those areas. Advertisements were placed. Colliers were instructed to attempt to find a tenant.
117 However, Mr Vale had no right to insist on Rosychamp letting out the rest of the building. That is particularly so given Rosychamp's declared intention to redevelop.
118 The principal significance of the redevelopment of the building is that Mr Vale submitted that Rosychamp hoped to have the building empty because it considered that would maximise the price it could obtain on selling the building with the benefit of development approval. He submitted that Rosychamp refused to deal with potential purchasers of the Red Centre Restaurant business because it wanted to obtain vacant possession of the leased premises. He submitted that this was unconscionable.
Conclusions on Allegation of Unconscionable Conduct in Dealings with Prospective Purchasers of the Restaurant
119 Section 62B of the Retail Leases Act provides:
" 62B Unconscionable conduct in retail shop lease transactions