ISPT Pty Ltd and AWPF Management No. 2 Pty Ltd v Cao and Zhao [2023] NSWSC 1115

Supreme Court New South Wales

Medium Neutral Citation: ISPT Pty Ltd and AWPF Management No. 2 Pty Ltd v Cao and Zhao [2023] NSWSC 1115 Hearing dates: 21 – 22 August 2023 Date of orders: 14 September 2023 Decision date: 14 September 2023 Jurisdiction: Equity Before: Nixon J Decision: (1) Direct that the parties bring in short minutes of order that give effect to these reasons for judgment, and that deal with the calculation of interest if it can be agreed. (2) If the parties cannot agree on the form of orders referred to in order (1), leave is granted for the parties to approach the Associate to Nixon J to relist the matter. Catchwords: REAL PROPERTY – COMMERCIAL LEASES – lease of restaurant for three-year term – public health orders imposed from March 2020 onwards in response to COVID-19 pandemic prohibited or restricted dining on premises – tenant closed restaurant when restrictions first imposed and ceased paying rent – claim against guarantors for unpaid rent and damages – whether discharge by frustration – whether a lease is capable of being frustrated – no binding precedent to the effect that the doctrine of frustration is incapable of applying to a lease – whether the public health orders rendered the leasehold estate unusable and unsaleable – whether essential term regarding the opening of the premises for business became incapable of performance – whether frustration can be established by radical change in the nature of tenant's business – no finding made as to whether tenant's business had been rendered unviable by the public health orders – held that lease not frustrated REAL PROPERTY – COMMERCIAL LEASES – claim for unpaid rent and outgoings up to the date of termination – claim for loss of future rent – whether Plaintiffs had taken reasonable steps to mitigate loss – held that failure to mitigate not established – whether Plaintiffs entitled to costs of making good the premises – whether tenant was obliged to remove fixtures and fittings – held that claim for costs of making good the premises not established Legislation Cited: Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) Frustrated Contracts Act 1978 (NSW) s 7(1) Public Health Act 1902-1952 (NSW) s 58 Public Health Act 2010 (NSW) s 7 Public Health (COVID-19 Additional Restrictions for Delta Outbreak) Order (No 2) 2021 (NSW) Public Health (COVID-19 Places of Social Gathering) Order 2020 (NSW) Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Order 2021 (NSW) Retail and Other Commercial Lease (COVID-19) Regulation 2020 (NSW) Retail Leases Act 1994 (NSW) s 5(a) Cases Cited: Ashington Holdings Pty Ltd v Wipema Services Pty Ltd (No 2) [1998] NSWSC 414 Bank of New York Mellon (International) Limited v Cine-UK Ltd [2021] EWHC 1013 (QB) Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 Chinatex (Australia) Pty Limited v Bindaree Beef Pty Limited [2018] NSWCA 126 City of Subiaco v Heytesbury Properties Pty Ltd (2001) 24 WAR 146; [2001] WASCA 140 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Cricklewood Property and Investment Trust Ltd v Leighton's Investment Trust Ltd [1945] AC 221 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 Diakou Nominees Pty Ltd v Gouger Street Pty Ltd & Anor; Gouger Street Pty Ltd v Diakou Nominees Pty Ltd [2023] SASC 66 Dyco Hotels Pty Ltd & Ors v Laundy Hotels (Quarry) Pty Ltd [2021] NSWCA 332 Dyco Hotels Pty Ltd v Laundy Hotels (Quarry) Pty Ltd [2021] NSWSC 504 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The "Sea Angel") [2007] 2 Lloyd's Rep 517; [2007] EWCA Civ 547 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Firth v Halloran (1926) 38 CLR 261; [1926] HCA 24 Foot Locker Retail Ireland Ltd v Percy Nominees Ltd [2021] IEHC 749 Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10 Halloran v Firth (1926) 26 SR (NSW) 183 Hugo Boss Retail, Inc v A/R Retail, LLC, 145 NYS 3d 329, 2021 Karacominakis v Big Country Developments Pty Ltd & Big Country Developments Pty Ltd & Ors J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors Hollingsworth & v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313 Krell v Henry [1903] 2 KB 740 Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6 Lee v YOUth OK Pty Ltd [2022] NSWSC 1356 London and Northern Estates Co v Schlesinger [1916] 1 KB 20 Luxer Holdings Pty Ltd v Glentham Pty Ltd (2007) 35 WAR 254; [2007] WASCA 209 Matthey v Curling [1922] 2 AC 180 Minister of State for the Army v Dalziel (1944) 68 CLR 261 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 Ooh! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd (2011) 32 VR 255 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Re Equity Trustees Executors & Agency Co Ltd and Considine's Contract [1932] VLR 137 Re Willmott Forests Ltd (in liq) (2012) 36 VR 472; [2012] VSCA 202 Robertson v Wilson (1958) 75 WN (NSW) 503 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5 Scanlan's New Neon Ltd v Tooheys Ltd; Caldwell v Neon Electric Signs Ltd (1943) 67 CLR 169 The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; [1985] HCA 14 Thearle v Keeley (1958) 76 WN (NSW) 48 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 Woolworths Group Ltd v Gazcorp Pty Ltd [2022] NSWCA 19 Texts Cited: JW Carter, Carter on Contract (2022, JW Carter Publishing Pty Ltd) Category: Principal judgment Parties: ISPT Pty Ltd ACN 064 041 283 (First Plaintiff) AWPF Management No. 2 Pty Ltd (Second Plaintiff) Howard Cao (First Defendant) Yuan Zhao (Second Defendant) Representation: Counsel: J Mee (Plaintiffs)