Captain Snapper Australia Pty Ltd v South Bank Corporation [2000] QSC 503

\ 0 ll . 00· so '7=) · f! . v/ St t A t. B (a:-- Queensland Government a e e p Or In g Ure a U ~~ Department of justice and Attorney-G~r>eral Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WILSON J No 10699 of 2000 CAPTAIN SNAPPER AUSTRALIA PTY LTD (ACN 055 193 130) and SOUTH BANK CORPORATION BRISBAl'JE .. DATE 08/12/2000 JUDGMENT '.lm floor, The Law Courts, George Street, Brisbane, a. 4000 1 REVISED COPIES ISSUED State Reporting Bureau Date //~ / O I Applicant Respondent Telephotli:l: (07) 3247 43£D Fax: (07) 3247 5532 -- 1 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) HER HONOUR: This is an application for an interlocutory injunction to restrain the respondent landlord from retaking possession of premises at Southbank in which the applicant tenant conducts the Captain Snapper Restaurant pending the hearing and determination of the proceeding. The lease is for 10 years from 20 June 1992. It was signed on 13 May 1993. The description of the premises in the lease is that of a building hatched in black on an attached plan. On that plan, the relevant premises are marked "lease X". On 14 November 2000, the respondent served on the applicant a notice under section 124 of the Property Law Act 1974 to remedy a breach of covenant. In fact, there were two breaches relied on: failure to pay annual rental by equal monthly instalments in advance on the first day of each month (clause 2.1 of the lease) and failure to pay outgoings for each account period (clause 2.5 of the lease). Attached to the notice was a schedule of outstanding amounts. The total amount claimed is $148,669.14. According to the schedule, it is made up of the balance of outgoings adjustment as at 30 November 1999 in the sum of $10,000 and monthly base rent and outgoings from June 2000 to November 2000. In accordance with the requirements of the section, there is a notice at the bottom to the effect that the respondent 2 JUDGMENT 1 10 2 30 4 50 60 -- 2 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) would be entitled to re-enter and forfeit the lease in the event that the applicant failed to comply with the notice within a reasonable time. On 1 December 2000, the respondent's solicitors wrote to the applicant's solicitors advising that they considered that a reasonable time had then elapsed, that there had been a failure or refusal to remedy the breaches, and that if they were not remedied by the close of business on Wednesday, 6 December, the respondent would accept that as a repudiation of the lease and retake possession. The application for interlocutory relief was argued before me two days ago, 6 December 2000. On the giving of undertakings by the parties, the matter was adjourned until this morning for judgment. The applicant submitted that there are serious questions to be tried as to the form of the notice to remedy breach of covenant (that is, whether it satisfies the requirements of section 124 of the Property Law Act) and as to its entitlement to set off damages against the rent and outgoings claimed. In the notice, the premises are described as "shop X, Southbank Parklands, Southbank, Queensland, being a premises on the land described as" - and then the real property description is given. 3 JUDGMENT 1 10 20 30 40 50 60 -- 3 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) It was submitted by counsel for the applicant that that was an inadequate description of the premises; that they should have been described as 11 shop 26A at Southbank 11 • However, the description in the notice follows that in the lease and there are no other premises to which the description 11 shop X 11 could apply. In my view, there is no serious question to be tried as to the form of the notice in so far as the description of the premises is concerned. The other point taken about the form of the notice was that it did not adequately set out how the amount claimed had been calculated. As I have already said, there is a schedule attached to the notice. It was submitted that there is inconsistency between the calculations in a letter from the respondent's solicitors to the applicant's solicitors of 3 November 2000 and the schedule attached to the notice. However, the position is that if the correct calculations are those shown in that letter of 3 November, the amount of the claim would be higher. It would be $150,328.29. I consider that section 124 does not impose an obligation to set out in the notice how the amount claimed has been calculated. In view of that and in view of the fact that the error, if there is one, is small and is in the applicant's favour, I consider that there is no serious question to be tried as to the form of the notice in this regard. 4 JUDGMENT 1 10 2 30 4 50 60 -- 4 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) I come now to the question of set off. The applicant asserts that it is entitled to recover $2 million by way of damages against the respondent and that it is entitled to set off as much of that amount as is necessary to extinguish the respondent's claim. This entitlement to set off is based on the consequences of alleged misrepresentations which induced the applicant to enter the lease and the consequences of interference with the applicant's quiet enjoyment of the premises by way of construction and other activities undertaken by the respondent. Very broadly put, the misrepresentations alleged are these: first, that the food outlets within Southbank would be themed and there would be no crossover of menus; second, that Southbank would be built, managed and run so as to attract and maintain a level of patronage; and, third, that there would be carparking facilities adequate in all the circumstances. Counsel for the applicant summarised his client's position by saying that these were matters which were represented to his client; that they have not come true or they have not been followed through; and that there is a serious question to be tried about them. Counsel for the respondent submitted that it is too late to make claims for losses as a result of misrepresentations leading to entering into the lease. He submitted that any loss which has been suffered was incurred on the entering 5 JUDGMENT 1 10 20 30 40 50 60 -- 5 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) into the lease in reliance on the representations subsequently found to be untrue. Alternatively, the loss consisted of not making foreseen profits. Under both the tort of negligence and the relevant provisions of the Trade Practices Act, damages are an element of the cause of action. Time began to run when the loss was first sustained. It does not start afresh each time further loss is sustained. On any view, the cause of action accrued more than three years ago and, hence, the claim under section 82 of the Trade Practices Act is no longer open and it accrued more than six years ago and, hence, a claim in tort would be defeated if the respondent pleaded the Limitation of Actions Act. 1 10 2 30 Counsel for the respondent submitted further that the applicant cannot rely on these misrepresentations because of the effect of a deed of compromise entered into on 21 December 1998. By clause 2.1 of that deed: "The Tenant [applicant] releases and discharges the Corporation [respondent], its officers, servants and 4 agents, successors and assigns and each of them in respect of all existing and future actions, causes of action, potential causes of action, suits, rights, claims, expenses, losses, proceedings and demands of whatsoever nature (including, without limitation any claim for costs, interest or indemnity) wherever and howsoever arising, known or unknown, which: (a) relate to the Lease up to the date of this Deed of Compromise; or 50 (b) relate to the Premises up to the date of this Deed of Compromise; or (c) relate to the Redevelopment from 1 May 1998 to 31 December 1998 provided the carpark as contained in the Redevelopment is open to the public by 31 December 1998; or 6 JUDGMENT 60 -- 6 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) (d) relate to any works (including by not limited to works known as "the Grand Arbor") undertaken by the Corporation [respondent] in the Corporation Area from 1 May 1998 to 31 December 1999 provided proper and reasonable access for the Tenant [applicant] and its customers is provided and available to the Premises at all times and provided the Corporation [respondent] at 1 all times takes all proper and reasonable steps to 10 prevent or stop significant disruption to the Tenant's [applicant's] trading in the Premises arising from any works in the Corporation Area." Counsel for the applicant submitted that the releases were limited in time, that they do not extend to damage in consequence of the early misrepresentations previously referred to but suffered after 31 December 1998 and that they do not extend to damage from works performed after 31 December 1999. The first aspect of counsel for the applicant's submission is, in my view, wrong as a matter of law. The causes of action arose when the damage was first sustained. Even if there is continuing damage, those causes of action have been compromised. However, with respect to the second point, that relating to damage from works undertaken since December 1999, there is certainly a serious question to be tried as to whether the applicant's rights have been compromised. The difficulty for the applicant is that it has not quantified its alleged damage since December 1999. It claims a capital loss of $1.8 million and loss of profits for the calendar years 1998 to 2000. For 1998, it claims $269,294. For 1999, $344,129. And for the first 24 weeks of 2000, $233,385. 7 JUDGMENT 20 30 40 50 60 -- 7 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) As counsel for the respondent submitted, while that last sum of $233,385 has been apportioned to the period since December 1999, there has been no apportionment according to causal nexus. That is, the applicant has not said how much of that loss is attributable to conduct which induced it to enter the lease and how much is attributable to the consequences of works undertaken since December 1999. There certainly is force in that submission. However, I am conscious that this is an interlocutory application and I would not expect the detailed accounting evidence at this stage that I would expect at a trial. I am prepared to accept that there is a serious question to be tried as to whether damage equal to or exceeding che amount claimed by the respondent, $148,669.14, has been caused to the applicant by conduct of the respondent since December 1999, that being conduct in relation to which the applicant's rights have not been compromised or affected by any relevant time bar. I come now to the balance of convenience. The applicant proffered the usual undertaking as to damages. Its counsel submitted that the balance of convenience lies in favour of granting an injunction until trial. He submitted that if the respondent retook possession, the restaurant business would, of necessity, close. There would a loss of trading and a loss of perishable stock. 8 JUDGMENT 1 10 2 30 4 50 60 -- 8 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J) The respondent's counsel submitted that the balance of convenience lies in favour of refusing an injunction. He submitted that if the present situation is allowed to continue and if the respondent is ultimately successful, the respondent will be left with unpaid debts and an insolvent corporation from which to enforce an undertaking. He submitted that it will be deprived of its existing capacity to seek out new tenants and it will be left with the cost of expensive litigation. It is true that the applicant's director, Mr Carrall, has deposed to a loss of capital of $1.8 million and continuing trading losses. But, on his account, the applicant's parlous financial position is attributable to misdeeds of the respondent. I have taken the view that a large part, but not all, of the alleged misconduct is no longer actionable. In all the circumstances, I consider that the balance of convenience favours maintenance of the status quo until the resolution of the dispute by an early trial and upon condition that the applicant pay money into Court or into an interest bearing deposit by way of security to await the outcome of the litigation. The respondent's counsel sought the full amount claimed in the notice and an undertaking to pay future rent as it falls due. The applicant's counsel offered $50,000. 9 JUDGMENT 1 10 20 30 40 50 60 -- 9 of 10 -- 08122000 Tl-2/MH25 M/T 8904/2000 (Wilson J} As I intimated during submissions, I will not require an undertaking to pay rent as if falls due. The applicant is under an existing opportunity to pay that. If it defaults, that default can become the subject of a further notice under section 124 of the Property Law Act. As to the amount of the security, in all the circumstances, I fix it at $100,000. That amount should be paid within seven days. The respondent should be restrained from retaking possession in the meantime. But if the $100,000 is not paid, the injunction should cease to have effect. HER HONOUR: I reserve costs. HER HONOUR: I am prepared to make those directions. They can be included in the draft order. 10 JUDGMENT 1 10 2 30 4 50 60 -- 10 of 10 --