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Cornerstone Properties Pty Ltd v Crisp-Air Ltd[2013] QDC 147

Cornerstone Properties Pty Ltd v Crisp-Air Ltd[2013] QDC 147

DISTRICT COURT OF QUEENSLAND

CITATION:

Cornerstone Properties Pty Ltd v Crisp-Air Ltd [2013] QDC 147

PARTIES:

CORNERSTONE PROPERTIES PTY LTD

ACN 084 212 831 AS TRUSTEE FOR THE COLEBARD STREET TRUST

(Applicant)

v

CRISP-AIR PTY LTD ACN 010 323 305

(Respondent)

FILE NO/S:

DC No 4455 of 2011

PROCEEDING:

Civil

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

10 July 2013

DELIVERED AT:

Brisbane 

HEARING DATE:

20 March 2013, 8 July 2013

JUDGE:

Devereaux SC DCJ

ORDER:

1. Application dismissed

2. Costs reserved

CATCHWORDS:

LANDLORD AND TENANT – TERMINATION OF THE TENANCY – FORFEITURE – NOTICE AND DEMAND BEFORE RE-ENTRY – where plaintiff leased to the defendant land on which there was a warehouse – where lease ran for a period of three years – where lease was effectively extended until 25 June 2012 – where plaintiff sent two notices to remedy breaches of lease – where a notice of termination was sent to defendant – where plaintiff re-entered premises – whether the plaintiff lawfully terminated the lease and whether the plaintiff took steps to mitigate damage

PROCEDURE – INFERIOR COURTS – QUEENSLAND – DISTRICT COURTS – CIVIL JURISDICTION – PRACTICE – TRIAL AND JUDGMENT – where plaintiff brought interlocutory application to amend the claim substantially and adduce evidence in proof – whether leave should be granted to the plaintiff to file and serve a reply to the second further amended defence and to re-open its case and adduce further evidence

Property Law Act 1974 (Qld), s 124

Uniform Civil Procedure Rules 1999 (Qld), r 5, r 149(1)(c), r 153, r 375, r 380

Aon Risk Services Aust Pty Ltd v ANU (2009) 239 CLR 175

EB v CT (No. 2) [2008] QSC 306

Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17

COUNSEL:

RN Traves QC and RJ Anderson for the Applicant/Plaintiff

GW Dietz for the Respondent/Defendant

SOLICITORS:

Broadley Rees Hogan for the Applicant/Plaintiff

Dowd and Company for the Respondent/Defendant

Introduction

  1. [1]
    This is an application by the plaintiff, brought after trial before judgment, for leave to file and serve a reply to the second further amended defence and to re-open its case and adduce further evidence. I will refer to the parties as plaintiff and defendant, not applicant and respondent.
  1. [2]
    In the proceeding, the plaintiff claims damages for breach of a lease. The plaintiff leased to the defendant land at Acacia Ridge on which there was a warehouse. The lease commenced 26 June 2006 for a term of three years. By a deed of variation, the lease was effectively extended so that it ran from 26 June 2009 to 25 June 2012.
  1. [3]
    The plaintiff sent two notices to remedy breach of lease, as required by the terms of the lease and s. 124 of the Property Law Act 1974 (PLA). The first notice was dated 24 June 2010; the second notice, 2 July 2010.[1] The defendant did not remedy the alleged breaches and the plaintiff purported to end the lease, pursuant to its terms, by sending a notice of termination on 21 July 2010. On 31 July 2010, the defendant vacated the premises. On 1 August 2010, the plaintiff re-entered the premises.
  1. [4]
    The parties entered into a deed of settlement and release on or about 28 February 2011. The defendant paid an amount for arrears of rent and operating costs for the period 1 April to 1 August 2010.[2]
  1. [5]
    The plaintiff filed the claim on 4 November 2011. The trial proceeded on 29 and 30 November 2012. Judgment is reserved.
  1. [6]
    The issues under consideration are whether the plaintiff lawfully terminated the lease and, if so, whether the plaintiff took reasonable steps to mitigate the damages which it says flow from the loss of the lease.
  1. [7]
    Counsel for the plaintiff, during submissions after the close of evidence, did not abandon reliance on an allegation of repudiation by the defendant. Counsel for the defendant countered that no material facts were pleaded in support of such a claim.[3] No more was said about it.
  1. [8]
    I do not understand the plaintiff to assert a right to terminate and sue for loss of bargain damages for breach of an essential term, short of repudiation.[4] That would seem still to require a valid notice, given the nature of the alleged breach (non-payment of rent and operating costs), the terms of the lease and s. 124 of the PLA.[5]
  1. [9]
    At the end of the trial I said I would receive from the plaintiff further written submissions on three points: two points concerned the validity of the two notices; the third was whether the plaintiff would call further evidence concerning certain construction work within the premises.[6]

The application to re-open

  1. [10]
    Soon after the trial, the plaintiff brought this application. The plaintiff seeks not just to adduce further evidence in proof of a pleaded claim but to amend the claim substantially (by way of reply) and adduce evidence in proof.
  1. [11]
    The court has power to order the amendment: Uniform Civil Procedure Rules 1999 (UCPR) rr. 375 and 380. Keeping in mind the philosophy of the UCPR set out in r. 5 and the remarks of the joint judgment in Aon Risk Services Aust Pty Ltd v ANU (2009) 239 CLR 175 at [102] and [111-113], it seems to me that considerations relevant to the exercise of discretion to order the amendment in this case include:
  • The advanced stage of the litigation, the parties having had the opportunity to present their cases;
  • The nature of the amendment and the importance of it to the plaintiff;
  • The explanation for the delay in seeking to present the case as now sought through the amendment;
  • Costs associated with the amendment;
  • Whether the amendment would facilitate the resolution of the real issues between the parties.
  1. [12]
    The principles relevant to the discretion to permit the plaintiff to re-open its case and lead further evidence were, with respect, neatly assembled by Applegarth J. in EB v CT (No. 2) [2008] QSC 306 at [2 - 4]. The guiding principle is whether or not the interests of justice are better served by allowing or rejecting the application. Some other considerations are whether the further evidence would affect the result of the case and whether the evidence was reasonably available earlier to the party applying.
  1. [13]
    The amendment sought is to file a further amended reply alleging, relevantly, the notice of termination was valid because the defendant had repudiated the lease by certain conduct. I will attempt to summarise the proposed allegations: the defendant was subject to a deed of company arrangement executed on 8 March 2007; from July 2009 to July 2010 the defendant was almost always in arrears and the amount of arrears escalated from about $4,000 in March 2010 to nearly $66,000 by 31 July 2010; from 2 June 2010 the defendant was unable to meet its future obligations under the lease and intended to abandon or seek a release from the lease; a series of communications demonstrated the hopelessness of the defendant’s position and its intentions with respect to the lease. So, it is said, the defendant repudiated the lease; or agreed to vacate (in effect, surrendered the lease) with the plaintiff’s rights reserved; or is to be taken as having waived any breach of s. 124 of the PLA.
  1. [14]
    Having examined the materials the plaintiff relies upon in the application, I am not satisfied the interests of justice call for the amendment and presentation of further evidence.
  1. [15]
    The plaintiff’s first argument concerned the development of the defendant’s case, from one that ‘merely put the plaintiff to proof on’ the validity of notices[7] and concentrated attention on whether the plaintiff had failed to mitigate its loss, to one that, by amendment the day before trial, asserted the first notice and the notice of termination were invalid. The plaintiff amended the statement of claim to include reliance on the second notice. The defendant then filed, at the start of the trial, the second further amended defence attacking the second notice.
  1. [16]
    The statement of claim included the following:

‘Breach of the Lease, Termination and Mitigation

  1. On 24 June 2010, the Plaintiff caused its solicitors, Broadley Rees Hogan, to forward to the Defendant a Form 7 Notice to Remedy Breach of Covenant dated 24 June 2011.

Particulars

  1. The Notice to Remedy Breach of Covenant was forwarded to the Defendant by Express Post and courier at 17 Colebard Street East, Acacia Ridge, Queensland, 4110.
  2. The Notice to Remedy Breach of Covenant was forwarded to the Defendant as a consequence of the Defendant’s breach of certain covenants in the Lease to pay Rent, pay Taxes and Charges, pay Services, pay Operating Costs and pay GST in the sum of $46,830.27.
  3. The Plaintiff informed the Defendant by letter dated 24 June 2010 that it regarded a period of fourteen days from the time of service of the Notice to Remedy Breach of Covenant to be an adequate time to remedy the breaches specified in that Notice. The Plaintiff further stated that if the breaches were not remedied within that period, the Plaintiff would regard itself as legally justified to terminate the Lease.
  1. As a consequence of the Defendant’s breach of the Lease by its failure to remedy the breaches contained in the Form 7 Notice to Remedy Breach of Covenant dated 24 June 2010, the Plaintiff caused its solicitors, Broadley Rees Hogan, to forward to the Defendant a Notice of Termination of the Lease dated 21 July 2010:

Particulars

  1. The Notice of Termination of Lease was forwarded to the Defendant by courier and Express Post at 17 Colebard Street East, Acacia Ridge, Queensland, 4110.
  2. The Notice of Termination provided that the Leases was terminated in accordance with Clause 50 because of the Defendant’s default under the Lease and/or the Defendant’s repudiation of the Lease. Further, the Notice of Termination of Lease directed the Defendant to immediately vacate the Premises, remove the Defendant’s property and deliver to the Plaintiff the keys and security devices for the Premises.
  1. On 31 July 2010, the Defendant vacated the Premises.’
  1. [17]
    The defence, before the amendment just prior to trial, included the admission of paragraph 24 of the statement of claim and the following:

‘5. As to the allegations contained in paragraph 25 of the State of Claim, the Defendant:

  1. (a)
    Admits receiving a Form 7 Notice to Remedy Breach dated 24 June 2010;
  2. (b)
    Admits receiving a Notice of Termination of Lease dated 21 July 2010;
  3. (c)
    Says that the Plaintiff has not particularised the Defendant’s alleged breaches of the Lease pursuant to which the Plaintiff issued to the Defendant the Notice of Termination of the Lease; and
  4. (d)
    Accordingly, says that in the premises of the matters pleaded in subparagraph (bc), the matters referred to in paragraph 25 of the Statement of Claim are embarrassing and liable to being struck out.’
  1. [18]
    The defence plainly did not attack the (first) notice on the ground relied on at trial. The plaintiff was first made aware of the defendant’s complaint about the notice late on 27 November 2012. The trial was set to (and did) commence on 29 November 2012. The plaintiff submits the letter enclosing the proposed amended defence disguises the significance of the changes, among other things, by asserting ‘there is no change in the factual substance’ of the defence[8] and fails to address what was, in effect, the withdrawal of an admission.
  1. [19]
    Nothing turns on the assertion in the letter. Arguably, it was correct to say the new pleading produced no factual dispute – it raised, for the first time, a matter of law. And I am not persuaded by the argument that the new pleading constitutes the withdrawal of an admission. The earlier pleading, by admitting paragraph 24 of the statement of claim and by answering paragraph 25 as set out above, did no more for present purposes than admit receipt of the notices. The real problem with the new pleading was that it raised, for the first time and less than 36 hours before trial, ‘a matter that if not stated specifically may take another party by surprise’ : UCPR r 149(1)(c). Also, the plaintiff submits with some force that it was for the defendant to raise the matter of law as a denial of the performance or occurrence of a condition precedent: UCPR r 153.
  1. [20]
    The plaintiff’s legal representatives responded with the amended statement of claim which introduced reliance on the second notice. That led, in turn, to the second further amended defence, which added the attack on the second defence. I remarked at the start of the trial my surprise at the nature of the defence, having regard to the pleadings as filed before trial. The plaintiff’s trial counsel replied, ‘That’s a recent matter that’s been raised by the defendant. I’m content to meet it .. but it is a recent issue, and that’s why there’s been a flurry of activity and there’s a resultant amendment to the statement of claim.’[9]
  1. [21]
    Despite the force in the complaints about the lateness of the change in or revelation of the defendant’s case, I am not satisfied the process brought about an injustice. Counsel and solicitors, no doubt under pressure, were able to digest the news and formulate an alternative case, namely, to rely also on the second notice. The plaintiff was made aware of the defendant’s intended response to reliance on the second notice,[10] although the second further amended defence was served only on the morning of the trial. The plaintiff did not seek to adjourn the trial.[11] That position might have been influenced by the proper observation of the philosophy and obligations referred to in UCPR r 5. But the plaintiff had an opportunity to present its case.
  1. [22]
    The plaintiff points to several matters that favour the application:
  • Although the materials relied on to re-open the case were available at the time of trial they were not relevant to the case as conducted by the parties. The application should not be refused on the ground that the evidence sought to be led is not truly fresh.
  • The further evidence sought to be led is not lengthy and is documentary. It largely comprises communications between the parties. It is annexed to affidavits. The defendant has not expressed a requirement to cross-examine the deponents.
  • There would be no procedural unfairness to the defendant.
  1. [23]
    The course of correspondence between the lawyers for the parties just before trial reveals the path to trial but does not explain the delay in seeking to pursue a case founded on repudiation of the lease by the defendant. The amendment is dramatic in nature and suggests only that upon reflection, and perhaps having heard the evidence at trial, the plaintiff regrets not pursuing such a case earlier.
  1. [24]
    Whether the amendment and further evidence would facilitate the resolution of the real issues between the parties and would be in the interests of justice probably reduces to whether there is a sufficiently strong case of repudiation to call for those steps to be taken at this late stage of proceedings. I am not satisfied there is.
  1. [25]
    The evidence sought to be led includes e-mail correspondence between Elizabeth Pidgeon, a director of the plaintiff and Rod Hooper and Tony Petley, directors of the defendant. I do not set it all out here. It shows, from August 2009 to June 2010, increased concern on the plaintiff’s part that the defendant could not pay rent on time. That difficulty was acknowledged by the directors of the defendant. Various reasons were given for late payments and there was discussion of the possibility of subleasing. The arrears grew and the defendant offered small instalments.
  1. [26]
    The reasonable inference from the correspondence is that the defendant, though struggling to do so, sought to continue the lease. This is so at least until 14 July 2010, after the two notices to remedy breach had been served. Mr Petley wrote, conceding the defendant did not have cash to pay rent ‘at this stage’ and that attempts to find an alternative tenant had failed. The plaintiff particularly relies on the following part of Mr Petley’s e-mail: ‘If we can be released from the lease at the end of this month or as soon as possible thereafter that would be ideal for us.’[12]
  1. [27]
    On 21 July 2010, the plaintiff terminated the lease. The plaintiff’s solicitors wrote to the defendant confirming the lease had been terminated and advising the defendant could remain in possession until 31 July 2010. Thereafter, the correspondence shows the defendant’s co-operation in leaving the premises and traces the discussions about arrears up to the execution of the deed of 28 February 2011.
  1. [28]
    The plaintiff contends the defendant repudiated the lease. In Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33, Mason CJ, referring to Shevill v Builders' Licensing Board (1982) 149 CLR 620 at 625-627, said:

'What needs to be established in order to constitute a repudiation is that the party evinces an intention no longer to be bound by the contract or that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way.'

  1. [29]
    It is unnecessary to decide whether the evidence the plaintiff seeks to lead establishes, on the balance of probabilities, repudiation of the lease by the defendant. Cross examination might test or cast a certain light over the evidence. There might be other evidence which affects the cogency of the proposed evidence. The question, it seems to me, is whether the interests of justice require the exercise of discretion to permit the plaintiff at this stage of this proceeding to present an alternative case taking into account the considerations I have set out above. In one respect, it reduces to the question whether, if the plaintiff were to fail in its reliance on the first and/or second notices the amendment and further evidence would change the result of the trial. I think it would not because I do not think the evidence is sufficiently strong to persuade a court[13] that an objective assessment of the defendant's conduct leads to the conclusion that it repudiated the lease.
  1. [30]
    The plaintiff’s contention that the defendant repudiated the contract is largely based on what it asserts is a demonstrated inability to perform the essential obligation to pay the rent and outgoings. Repudiation is not necessarily established by proving default in payment of rent.[14] Of course, the plaintiff says there is more than mere non-payment of rent. But in my opinion, the evidence of the defendant’s conduct - including such non-payment of rent as occurred and Mr Petley’s statement that it would be convenient if the defendant were to be released from its obligations under the lease – is not sufficiently likely to influence the result of the trial in favour of the plaintiff as to call, in the interests of justice, for the amendment and further evidence.
  1. [31]
    Put another way, I am not satisfied the amendment and further evidence are necessary to facilitate the determination of the real issues between the parties. The issue between the parties was the regular - and admittedly worsening - late payment of rent by the defendant. The lease provided the mechanism for determination of that issue. I am not satisfied the proposed evidence sufficiently shows that the defendant’s position amounted to a demonstrated intention no longer to be bound by the contract or to fulfil it only in a manner inconsistent with its obligations as to require the exercise of discretion in favour of the plaintiff.
  1. [32]
    The other allegations contained in the proposed Amended Reply – that there was an agreement to end the lease with the reservation of the plaintiff’s rights or that the defendant waived reliance on the notices notwithstanding their asserted invalidity – are not viable.
  1. [33]
    As to the first, even if Mr Petley’s words and the defendant’s conduct were to be interpreted as agreeing to leave the premises I am not persuaded the materials support a finding that the defendant agreed to do so while acknowledging the reservation of the plaintiff’s rights under the lease or otherwise, particularly any right to recover loss of-bargain-damages. The parties behaved reasonably towards each other during the period when the defendant vacated the premises but that does not lead to a finding that they agreed as the plaintiff seeks to prove.
  1. [34]
    As to the second, it is enough to say I am not satisfied there is evidence of words or conduct which would give rise to an undertaking by the defendant not to rely on s. 124 of the Property Law Act 1974.
  1. [35]
    One submission made by the plaintiff on the application was that the failure to appreciate the nature of the defendant’s case ought not be attributed to the plaintiff but to its counsel who did not object to the amendments. In my view, counsel acted properly in not opposing the amendments. I most likely would have granted leave to amend over any objection. The amendments brought into full relief a fundamental issue which requires adjudication in the proceeding.
  1. [36]
    In summary, the plaintiff’s legal representatives were faced with late but reasonable amendments to the pleadings. They adjusted the plaintiff’s case to meet the amendments and the case proceeded. Judgment is pending. The application for leave to amend and adduce further evidence is to be refused for the reasons I have given.

Footnotes

[1] Together with covering letters and the Notice of Termination dated 21 July 2010 they comprise Exhibit 3.

[2] Amended statement of claim paragraphs 27-28; Second further amended defence paragraphs 6-7.

[3] 2-23.20-40

[4] 2-33.35-55

[5] World Best Holdings Limited v Sarker [2010] NSWCA 24 at [43]

[6] 2-39.1-10; 2-36.40 – 2-37.20

[7] Plaintiff’s outline of argument in the application, paragraph 12

[8] Affidavit of Stuart Alexander Rees filed 18 March 2013, Exhibits p 4

[9] 1-12.10

[10] Letter from defendant’s solicitors to plaintiff’s solicitors: see Affidavit of Stuart Alexander Rees filed 18 March 2013, Exhibits p 31

[11] The correspondence reveals adjournment was, at some time on 28 November 2012, contemplated.  See Affidavit of Stuart Alexander Rees filed 18 March 2013, Exhibits p 28.

[12] Affidavit of Elizabeth Ann Pidgeon filed 18 March 2013, Exhibits p 26

[13] Of course, I am not ignoring the fact that I would be the court.

[14]Progressive Mailing House per Brennan J at 40

Close

Editorial Notes

  • Published Case Name:

    Cornerstone Properties Pty Ltd v Crisp-Air Ltd

  • Shortened Case Name:

    Cornerstone Properties Pty Ltd v Crisp-Air Ltd

  • MNC:

    [2013] QDC 147

  • Court:

    QDC

  • Judge(s):

    Devereaux DCJ

  • Date:

    10 Jul 2013

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
2 citations
Jump To
Cite 1 - (2009) 239 CLR 175
Cite 2 - (2009) 239 CLR 175
EB v CT (No 2) [2008] QSC 306
2 citations
Jump To
Cite 1 - [2008] QSC 306
Cite 2 - [2008] QSC 306
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
3 citations
Jump To
Cite 1 - (1985) 157 CLR 17
Cite 2 - (1985) 157 CLR 17
Cite 3 - (1985) 157 CLR 17
Shevill v Builders' Licensing Board (1982) 149 CLR 620
1 citation
Jump To
Cite 1 - (1982) 149 CLR 620
World Best Holdings Ltd v Sarker [2010] NSWCA 24
1 citation
Jump To
Cite 1 - [2010] NSWCA 24

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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