Findings
40 I am assisted by the approach adopted by Wootten J in Spectra Pty Ltd v Pindari Pty Ltd (1974) 2 NSWLR 617. It seems to me that the failure to stipulate a period in that case is analogous to the failure to stipulate the period in this case. I am of the view that the parties intended to include a Redevelopment Clause in this Lease. The alternative inferences that present on the document alone are that there was sufficient indifference to the stipulation of the period either to fail to notice the omission of Item 26 or to fail to include it.
41 I conclude that the reasonable inference is that the parties agreed to the inclusion of the Redevelopment Clause but did not agree to any limitation on the period during which a decision under Clause 30 could be made.
42 I am satisfied that it would not be doing violence to the terms of the whole of the Lease to construe it as meaning that the defendant could make a decision under Clause 30.2 at any time during the period of the lease. This conclusion is consistent with the approach adopted in Caltex Oil (Aust) Pty Ltd v Alderton (1964) 81 WN Pt 1 (NSW) 297 in that the words "during the period stipulated in Item 26" are regarded as superfluous.
43 Although I have not implied a term stipulating a reasonable period, I agree with the defendant's submission that the time at which the decision was made and, in particular, notice was given was within a reasonable period having regard to the fact that the Notice provided a Termination Date about eight weeks earlier than the original Termination Date of the Lease.
44 I turn now to the evidence in relation to the conversation alleged by Mr Casey.
45 Mr Hotz said he did not expect to have a Redevelopment Clause in the Lease because he had spent a substantial amount of money on the premises and he intended to stay there for six years. Inconsistently with that expectation the clause was within the Lease when he received it and executed it.
46 M. Hotz accepted that if clause 30 was operative it was a "critical" clause but "only if it had relevance to the Item which wasn't there, so I didn't think it was critical".
47 The communications between the plaintiff and Marinya and Marinya's solicitors and the plaintiff at around the time that Mr Hotz said he observed that Item 26 was not in the lease gave me the distinct impression that there was co-operation between the plaintiff and Marinya. This co-operation included a sharing of the cost of the fit out.
48 It seems that notwithstanding this co-operative and on one view of it, trusting relationship, Mr Hotz would have me believe that he scanned the Lease and found a meaningless clause on which he understood he could ride free of any redevelopment decision: Nicolene Ltd v Simmonds (1953) 1 QB 543 at 552 per Denning LJ.
49 The plaintiff's objection to the defendant's development application may be viewed as providing some support for the likelihood that the conversation did take place. On this occasion, in marked contrast to the circumstances surrounding the negotiation of the lease, Mr Hotz did instruct lawyers to act for the plaintiff. The argument is that the reason for this difference in approach and the need for the objection was that Mr Hotz was concerned about the operation of clause 30 and the common assumption that the rights under the redevelopment clause could be exercised at any time by a new owner.
50 The letter of objection directed to Marinya makes no mention of the inapplicability of clause 30 or any suggestion that it was inoperative. The thrust of the letter was that the Lease contained an option allowing the plaintiff to renew for a further term of three years and that it intended to exercise its option and remain in occupation in the premises.
51 Mr Hotz is a man of experience in the business world for some twenty years. He claimed that he did not tell any other person about the view that he held that Clause 30 was inoperative. It is very difficult to understand why he would not tell the other directors or his lawyers when they were instructed to object to the Development Application. That seemed a relevant and appropriate time for such a communication to occur. Mr Hotz would have me believe that this was a "risk' of which he was aware from June 1997 and he kept it to himself.
52 A further matter of relevance is the conversation deposed to by Mr Hotz when he telephoned Mr Casey in 1999 to enquire of him whether the rumour that the building was for sale was true. At this time no suggestion was made to Mr Casey that any purchaser of the property should be informed that Mr Hotz regarded the Lease between the plaintiff and Marinya as having an inoperative clause 30. No steps were taken by the plaintiff to ensure that any prospective purchaser was given notice that the property that it was about to purchase included a Lease of the premises, which included a clause which the plaintiff regarded as inoperative.
53 Further, on 24 September 1999 when Marinya notified the plaintiff that the purchaser was the defendant, no steps were taken between that time and 1 November to notify the defendant of that position. It was not until after the service of the Termination Notice this matter was raised for the first time in the plaintiff's solicitor's letter which also claimed that the plaintiff had not been advised by Marinya that the site was to be redeveloped during the term of the lease.
54 I am satisfied that Mr Hotz' silence is attributable, not to keeping the "risk" to himself, but to an understanding that, although the clause was within the Lease and the parties understood it could be operated at any time, the plaintiff was comforted by the fact that Marinya had indicated that it would not redevelop whilst it was the owner.
55 The danger emerged with the appearance of a prospective purchaser, the defendant, and the lodgment of the Development Application. In my view the subsequent conduct of the plaintiff is consistent with an understanding that the rights under the clause 30 could be exercised at any time during the period.
56 On all the evidence, and having regard to my observations of the witnesses, Mr Casey and Mr Hotz, I am satisfied on the balance of probabilities that the conversation did take place between Mr Casey and Mr Hotz in the terms deposed to by Mr Casey. In those circumstances I am satisfied that the parties intended clause 30 to operate and that a decision could be made to redevelop at any time during the period of the Lease.
57 I am satisfied in all the circumstances that the Notice of Termination is a valid Notice under Clause 30.2 of the Lease.
58 The consequence of my finding in respect of the Notice of Termination is that the plaintiff is not entitled to take a renewed Lease of the premises. In those circumstances the right to exercise the option is not triggered.