Kiama Development Co Pty Ltd v Wilcox [1999] NSWSC 277
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New South Wales
Supreme Court
CITATION : Kiama Development Co Pty Ltd v Wilcox [1999] NSWSC 277
CURRENT JURISDICTION : Equity Division
FILE NUMBER(S) : 3483/98
HEARING DATE(S) : 27 November, 2 December 1998
JUDGMENT DATE :
1 April 1999
Kiama Development Co Pty Ltd (P1)
John Desmond French (P2)
Lynda Marie French (P3)
PARTIES : Rosanna Wilcox (D1)
Birgitta Spicer (D2)
Graham Milton Wilcox (D3)
John William Spicer (D4)
JUDGMENT OF : Young J
COUNSEL : Solicitor for Plaintiffs: Douglas Knaggs
Counsel for Defendants: R C McDougall QC and G R Waugh
SOLICITORS : Solicitor for Plaintiffs: Douglas Knaggs
Solicitor for Defendants: Martins
CATCHWORDS : Landlord & Tenant [45]; Covenants; Tenant spruiking to divert business from landlord's shop to tenant's shop; Whether nuisance; Landlord & Tenant [86]; Notice before re-entry; Whether necessary for sublease of Crown land; Real Property [57]; Crown lands; Special Lease; Sub-letting; Minister aware of sublease; Sublease valid; Trade & Commerce [129]; Trade Practices; Injunctions; Corrective advertising; Both parties to display corrections; Words & Phrases; Cafe ; Nuisance
Conveyancing Act 1919 (NSW) s 129
Crown Lands Act 1989 (NSW) ss 6, 139, 140
Crown Lands Act 1884 (NSW) (repealed)
Crown Lands (Continued Tenures) Act 1989 (NSW) Pt 5 Sch 2 para 3(1)
Crown Lands Consolidation Act 1913 (NSW) ss 6(2), 226(1)(b) (repealed)
ACTS CITED : Crown Land Regulation 1995 (NSW) regs 38, 39
Fair Trading Act 1987 (NSW) ss 42, 68, Pt 5
Forfeiture of Leases Act 1901 (NSW) s 1(6)(a)
Real Property Act 1900 (NSW) ss 42, 43
Trade Practices Act 1974 (Cth) s 80
Supreme Court Rules (NSW) Pt 20 r1(3A)
DECISION : See paras 185 and 186
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG, J
Thursday 1 April 1999
3483/98 - KIAMA DEVELOPMENT CO PTY LTD & ORS V WILCOX & ORS
JUDGMENT
1 HIS HONOUR: This is a dispute between two groups of people who carry on the business of selling fish and chips in adjoining premises on land near the Blowhole at Kiama. They sue each other for breaches of a sublease and also for false and deceptive conduct under the Fair Trading Act 1987. There are various ancillary disputes.
2 The first plaintiff, Kiama Development Co Pty Ltd is a company which is controlled by Mr and Mrs French, the second and third plaintiffs, Mr French being the dominant shareholder. The defendants and cross claimants are Mr and Mrs Wilcox and Mr and Mrs Spicer.
3 The proceedings were heard before me on 27 November and 2 December 1998. At the hearing, Mr D Knaggs, solicitor appeared for the plaintiffs and Mr McDougall QC and Mr Waugh of counsel appeared for the defendants. In the course of the proceedings I read over 40 affidavits. It was abundantly clear from the material that each side considers the other to be unprincipled liars and deceivers of the public, people who have no reputation in the community at all and who have used their best efforts to damage the other's business in whatever way possible. In short, the parties regard each other as the landlord from hell and the tenants from hell.
4 At the end of the hearing, I then stood the matter over to the new year so that submissions could be completed in writing, particularly on the part of the plaintiffs' solicitor. Submissions were made late in January and the matter was put back in the list on 11 February 1999. This evoked further written submissions, the last of which were received on 9 March 1999.
5 There have been a series of disputes heard in various courts over the sublease and associated matters between the parties, sometimes also involving other people as well. Over the last two years the parties have litigated in the Local Court, the District Court, the Land and Environment Court and, up until last December, before Hulme J, Cohen J and Windeyer J in this Court and in the Court of Appeal. The Court of Appeal proceedings are reported as Wilcox v Richardson (1997) 43 NSWLR 4. Since the end of last term, the parties have been back before the vacation judges with various aspects of their dispute, and Levine J, Hamilton J and Bryson J have all spent some time on the disputes between these parties. Abadee J was also approached by Mr French in person but declined to hear him as he had a solicitor on the record.
6 The parties have also involved the police and the local council. The plaintiffs have employed at least one private investigator to obtain evidence against the defendants. Numerous tourists have been hassled. The plaintiffs seem to have no problems with Mr French collecting the pension whilst controlling three companies. The female defendants who claim to be schoolteachers have no problems with combining their activities during the week as role models to the younger generation, with their weekend activities of vilification. Altogether a most unsavoury case, but one in which the parties are entitled to a decision.
7 The fee simple of the land in question is vested in the State of New South Wales. By Special Lease 1989/1, registered Y836612, the State granted to John and Judith Richardson a lease over Lot 276 DP 728098 for 20 years expiring on 31 July 2009. The Crown also granted Special Lease 1989/2 to Mr and Mrs Richardson over Lot 277 DP 728098, which is registered Y836613.
8 DP 728098 is in evidence as page 86 of DX01. The plan shows that there is a single weatherboard building with verandah occupying virtually the whole of Lot 276 and spreading over onto Lot 277. This building is known as "The Cargo Shed".
9 On 31 March 1993, a sublease was granted by the Richardsons to Mr John Richardson's brother Ray Richardson and Mr Ray Richardson's companion, Miss Smith. The sublease was only over part of the land contained in Lot 276 being identified as Shop 1, Kiama Wharf, Kiama. The sublease was for four years from 1 January 1993.
10 The terms of Special Lease 1989/1 included a term that the use of the site for a restaurant, bistro or similar undertaking is not permitted. It also provided (clause 12) that the lessee should not sublet.
11 The sublease required the lessee to use the premises only for the carrying on of the purpose referred to in Item 2 of the Reference Schedule which was simply "A café for the sale of seafood and soft drink". A special condition was that the lessors covenanted that they would not permit the sale of cooked seafood, soft drinks, ice creams or takeaway food from Lot 277.
12 In December 1994, Mr and Mrs Wilcox and Mr and Mrs Spicer purchased that sublease. They say that at the time of the purchase the head lessor, John Richardson, ran a fresh fish shop in the middle section of the relevant building.
13 There was litigation between the present defendants and John Richardson which was unfavourable to the present defendants but they appealed to the Court of Appeal where they were successful. They obtained a declaration that they were entitled to easements and ancillary rights over parts of the building outside the leased area as described in the Court of Appeal's judgment.
14 In September 1996, following the first instance decision in that case, John Richardson commenced work on a competing fish and chip takeaway in the former fresh fish shop area. This was opened in February 1997.
15 The erection of signs by the competing businesses commenced almost immediately.
16 On 14 May 1997, the first plaintiff completed the purchase of the head lease 1989/1 and also the purchase of lease 1989/2. Up until the end of July 1997, the plaintiffs refitted the premises other than that part which was subleased to the defendants.
17 The sublease had contained an option to renew. The defendants exercised this option and on 19 December 1997, and after some litigation, there was a consent declaration that the option to renew had been duly exercised and a new sublease expiring on 31 December 2000 was granted. The new sublease is registered as 3950222D. It contains virtually identical provisions to the earlier sublease, Item 2 being "A café for the sale of seafood and soft drink" and there is a special condition as to the non-provision of cooked seafood etc from the premises comprised in Crown Lease 1989/2 as there was in the former lease.
18 The sublease is subject to the terms and conditions in Memorandum 691346A. Under clause 4 of that Memorandum, the lessee covenanted with the lessor, so far as is relevant, as follows:
"4(b) To use the leased premises solely for the carrying on of the purpose referred to in ITEM 2 of the Reference Schedule and to keep the demised premises open for business during ordinary business hours unless prevented by any circumstances beyond his control;
4(f) Not to erect or display any sign notice or advertisement on the premises or the building without the written consent of the lessor PROVIDED THAT the lessor will not unreasonably withhold his consent to a sign notice or advertisement which he considers to be of reasonable dimensions appearance and position in keeping with the general character of the building;
4(i) Not to obstruct misuse or damage the common areas or any part thereof;
4(k) Not to do or permit to be done anything which may be or grow to be or cause any nuisance damage or obstruction to the lessor or the tenants or occupiers of the building or of any adjoining or neighbouring premises and not to do or permit to be done any illegal or immoral act on the premises; ..."
19 Clause 6(c)(i) of the Memorandum provided that certain covenants "are essential terms of the lease" and of the covenants that are relevant in the present case, clause 4(b) was included amongst the essential covenants. None of the other provisions in clause 4 were so designated.
20 On 8 April 1998, the Minister for Land and Water Conservation gave his consent to the sublease. The Minister's letter contained the following:
"It must be noted that although the Minister has granted consent to the new sub-lease for which the purpose is 'a café for the sale of seafood and soft drink', the provisions of Special Lease 1989/1, Kiama, as head lease, which provide that the premises cannot be used as a restaurant, bistro or similar undertaking, mean that the premises cannot lawfully be used for the purposes of café. ... In these circumstances the Minister withholds his consent for the use of the premises as a café and requires your clients ... as sublessees provide a written undertaking acknowledging the contents of this letter and agreeing to be bound by the provisions of this letter ...".
21 This letter of consent is attached to affidavit DA18 of Mrs Spicer and I must infer from that affidavit that those undertakings were given to the Minister.
22 Since about September 1997, the situation has thus been that there is a building erected known as The Cargo Shed most of which is on Lot 276 but a small part is on Lot 277. There are two businesses being carried on in The Cargo Shed each of which sells fish and chips. The plaintiffs were operating what has been called in evidence "the Western Shop" whilst the defendants have been conducting business in what has been called in evidence "the Southern Shop". In addition to cooked fish and chips, the first plaintiff in the Western Shop also sells fresh fish and prawns. The evidence is that it obtains that fish and prawns from wholesalers in Wollongong and it also obtains fresh fish from the Shellharbour Fish Market.
23 The parties have been on each others' nerves since July 1997. Their disputes first seem to arise over signage but they have escalated. Although there are a plethora of complaints, one against the other, the principal complaints concern derogatory signs about each others' businesses and spruiking to induce tourists and locals to buy fish and chips from one business rather than the other. However, the technical issues between the parties have to be dealt with at some length.
24 In an endeavour to compress these reasons as far as possible, I will deal with the matters that arise between the parties under the following heads:
(A) Do any matters of res judicata or issue estoppel affect the decision in this case?
(B) Do the principles of illegality affect this case at all?
(C) Have the defendants breached:
(i) clause 4(b);
(ii) clause 4(f);
(iii) clause 4(i);
(iv) clause 4(k)
of Memorandum 691346A?
(D) Does s 129 of the Conveyancing Act 1919 affect the plaintiffs' claim to evict the defendants?
(E) Has the sublease come to an end by way of repudiation?
(F) Is the first plaintiff entitled to re-enter?
(G) Is the first plaintiff entitled to an order for possession?
(H) Have the defendants been guilty of false and misleading or deceptive conduct under the Fair Trading Act in that they represented to potential customers that:
(i) the second plaintiff does not declare rent received from the defendants as taxable income;
(ii) the second plaintiff had purchased a new Mercedes Benz for $140,000;
(iii) the second plaintiff wrongly received pension payments;
(iv) the second plaintiff was a perjurer;
(v) the second plaintiff deposits rubbish in garbage bins designated for use by the general public;
(vi) the second plaintiff is a director of five companies with assets of $5 million;
(vii) the second plaintiff illegally made holes in the carpark adjoining the Western Shop;
(viii) the second plaintiff bought frozen prawns from overseas and sold them for massive profits;
(ix) the second plaintiff erected a sign which was misleading;
(x) there had been many complaints about food poisoning by people who ate food sold at the plaintiffs' business.
(I) Are the plaintiffs entitled to a declaration that any of the matters particularised in (H) constituted an unlawful interference with the plaintiffs' business?
(J) Are the plaintiffs entitled to injunctions to restrain repetition of any such acts?
(K) Are the plaintiffs entitled to damages under the Fair Trading Act or for breach of the sublease?
(L) Are the plaintiffs entitled to costs against the defendants?
25 The defendants, in their further amended cross claim also seek relief. I will identify these claims by continuing the alphabetical sequence so that in due course I can deal with them in a logical order.
26 (M) Have the plaintiffs been guilty of false, misleading or deceptive conduct under the Fair Trading Act in that -
(i) they have displayed a sign "The Truth";
(ii) they have displayed the sign "The Simple Fact";
(iii) they have distributed a flyer "A Restaurant at the
Harbour";
(iv) they have displayed signs with the words "Main
Entrance";
(N) Injunctions to prevent recurrence;
(O) A declaration that the plaintiffs have unreasonably withheld consent to erect signs;
(P) An order that the defendants may now erect such signs;
(Q) Declarations that the plaintiffs have breached the covenant for quiet enjoyment in the sublease;
(R) If necessary relief against forfeiture.
27 I will deal with each of these in turn and then state (S), the result of this case.
28 (A) As I have noted above, there has been much previous litigation between the parties.
29 The litigation that was before Windeyer J in December 1997 followed a notice to vacate given by the first plaintiff on 21 November 1997 based on a breach of, inter alia, clauses 4(b), (f) and (k) of the sublease. Those proceedings were 5156 of 1997 in which the plaintiffs were Mr and Mrs Wilcox and Mr and Mrs Spicer and the defendant, Kiama Development Co Pty Ltd, the first plaintiff in the instant proceedings. The plaintiffs sought a declaration that the notice to vacate "is unenforceable and of no force or effect". On 19 December 1997, Windeyer J made the following notes of his orders:
"I give leave to Mr John French, a director of the defendant, to appear for the defendant. By consent ... I make orders as sought in paragraphs 2 ... of the summons. I order the defendant to pay the plaintiffs' costs agreed at $2000".
30 Mr McDougall QC and Mr Waugh submitted that in these proceedings "By reason of the consent declaration ... the plaintiffs are now estopped from relying upon any of the matters particularised in it as giving a present entitlement to possession; and from relying on any matters which could have been, but were not, asserted in November 1997 to support the Notice to Vacate as giving a current entitlement to possession. See Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502".
31 A consent judgment may, in appropriate cases, give rise to a res judicata. However, as Spencer Bower Turner and Handley remark in the 3rd ed of Res Judicata (Butterworths, London, 1996) paras 38-39, it is often difficult to determine what questions were concluded by the consent judgment. As the learned authors of that book say:
"The court will examine the available evidence to ascertain the matters in dispute: As in Cloutte v Storey [1911] 1 Ch 18 at 26, 33. Any issue which the parties recognised was the subject of the litigation and was fundamental to the judgment or order will be conclusively determined. Where, however, there are no such materials neither party is estopped from disputing anything but the actual judgment or order; see Goucher v Clayton (1865) 13 WR 336 per Wood VC at 337 ...".
32 The material before me shows that the prime matter concerning Windeyer J on 12, 18 and 19 December 1997 was an application by the present defendants for orders that the first plaintiff was in contempt in not doing the work which the Court of Appeal ordered it to do. It seems that after Windeyer J dealt with that matter, orders were made in 5156/97 by consent. I do not know what the evidence was or what the issues that were tendered were, but I do know that the suit was to stop the present first plaintiff implementing its notice to vacate. I also know that that notice to vacate was based, inter alia, on alleged breaches of the provisions of the sublease which I have set out.
33 In ejectment, the only question on which the judgment is conclusive, is whether the claimant was entitled to possession on the day named in the writ, see York Motors Pty Ltd v Turner (No 2) (1954) 71 WN (NSW) 173, where Brereton J discussed the matter of estoppels in ejectment proceedings in some detail. It is for that reason that res judicata usually plays little part in ejectment proceedings because as each claim is made the claim for possession is made at a different date. Issue estoppel is a different matter and the general rule is in ejectment proceedings that have been established by verdict or by default or by consent all issues necessarily involved in the proceedings are binding on the parties and their privies though they are free to show that circumstances have changed thereafter. (See Lewis and Cassidy on Tenancy Law (Butterworths, Sydney, 1966) Book 1 p 465).
34 Although the decision of Brereton J in the York Motors case went on appeal, see (1955) 55 SR (NSW) 220, the learning on estoppel was not affected by the decision on appeal.
35 In the instant case, counsel for the defendants point to the cross examination of Mr French (eg T6) that the breaches referred to in the notice to vacate were the same as the breaches relied on in the present case. This cross examination continued on for some pages. Despite this, it does not appear to me to be clear what was the issue that could be formulated with complete precision that could be said to have been determined in favour of the defendants.
36 Accordingly I do not consider that any res judicata or issue estoppel arose from the consent order made by Windeyer J.
37 I should note in case it be thought I have overlooked it, that the proceedings before Windeyer J were not in ejectment but were declaratory proceedings. A declaratory judgment is a judgment which creates a res judicata even by consent; see Spencer Bower Turner and Handley at para 159. However, again one has to find what were the issues which the consent declaration covered. This brings about the same problems that have been discussed earlier.
38 The submissions by counsel for the defendants also seek to rely on the Anshun principle. However in ejectment it is very hard to do this because each action tries title as a particular date. Indeed even if the question is whether a notice to vacate is sufficient, a declaration that it is invalid may be grounded on a large number of possible reasons both substantial and technical. The mere fact that a notice specifies certain grounds in itself is not enough because it could fail either because one or more of those grounds was not made out, or for some technical reason. As far as I know the Anshun principle has not been applied to make people seek to raise in the one action every possible ground on which they could have a notice declared void and to prevent them from ever litigating factors which were not raised. Just as if a notice given on a certain date is declared void another notice can be given, so it seems to me that it is not to be expected within the Anshun principle that every possible defect must be raised in any attack on a notice.
39 Accordingly, in whichever form an estoppel is raised I do not consider it affects the present case.
40 (B) Mr Knaggs put particular store on the submission that the sublease was illegal and void.
41 The submission is that the head lease was a special lease granted under the Crown Lands Consolidation Act 1913. Under s 6(2) of that Act, Crown lands may not be leased unless the dealing is authorised by the Act. Far from being authorised, the purported sublease was prohibited by s 226(1)(b) of the Act. That paragraph provided that no lease, with immaterial exceptions, shall confer any right to sublet for other than grazing purposes.
42 The Crown Lands Consolidation Act 1913 was repealed as from 1 January 1990 by the Crown Lands Act 1989. Under s 6 of that Act Crown land is not to be leased or otherwise dealt with unless the sale, lease etc is authorised by the new Act or the Crown Lands (Continued Tenures) Act 1989. Under paragraph 3(1) of Part 5 of Schedule 2 of the Crown Lands (Continued Tenures) Act, "A special lease remains subject to the conditions to which it was subject immediately before the commencement of this clause."
43 Under ss 139 and 140 of the Crown Lands Act 1989, the Minister, on application by the holder, may revoke conditions attached to a holding of land. Regulations 38 and 39 of the Crown Lands Regulation 1995 provide that applications for revocation are to be in the approved form.
44 The submission is that because of s 226(1)(b) of the 1913 Act there is a statutory prohibition on subletting and because of such prohibition any attempt to do so is illegal and void. Mr Knaggs appreciates that the point is raised late, he says this is unfortunate. An argument could be put that it is more than unfortunate because there is an estoppel as a result of the proceedings before Windeyer J, but I suppose the counter argument could be one cannot have an estoppel in the face of a statute.
45 In additional written submissions, Mr Waugh put that as the new sublease was granted in 1997, well after the 1913 Act had ceased to operate, it was irrelevant. However, this submission misses the point that the restriction is in the head lease which was granted under the 1913 Act.
46 Mr Waugh then puts that the defendants have the benefit of the indefeasibility provisions of the Real Property Act 1900, ss 42 and 43. This again is not necessarily an answer as, if the legislation so requires, even a registered interest can be null and void if it is against a statutory provision, Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1.
47 However, despite my views on the defendants' submissions referred to in the previous paragraphs, I reject the submission that the sublease is void for illegality. Section 226(1) of the 1913 Act does not make it illegal for there to be a subletting, it merely makes it a condition of the lease between the Minister and the lessee that there is to be no subletting. That is a matter which the Minister may enforce by means of re-entry or other action for ejectment. In the instant case, as the evidence shows, the Minister has in fact consented to the sublease and so has waived any right to forfeiture. Where both sets of parties to the present proceedings and also the Minister consent to the sublease and there is no prohibition, there can be no problem.
48 To make the point another way and, perhaps more clearly, no offence is committed under the Crown Lands Consolidation Act if a person sublets. No consequences flow from such a breach except possible action forfeiting the lease or an action for damages. Accordingly, the point on illegality fails.
49 (C) I now need to turn and examine each of the provisions noted above which is said to have been breached by the tenants. The list originally also included an alleged breach of clause 4(s) of the Memorandum, but this was abandoned in submissions.
50 (i) The plaintiffs say that the defendants are in breach of clause 4(b) of the Memorandum which deals with the use to which the premises may be put.
51 Two issues were raised: (a) that the defendants were not using the demised premises for the permitted purpose, namely, a café for the sale of seafood and soft drinks; and (b) that the defendants were using the premises for another purpose, namely the business of attrition and spruiking.
52 Submissions were directed as to what was a café. Mr Knaggs points to the Oxford English Dictionary definition of "café" which notes that the word comes from the French word for "coffee house" so that a café is a "coffee house, a restaurant; now a certain class of restaurant." He also points to the definition in the Macquarie Dictionary which defines a café as a low priced restaurant or a building where light refreshments are served.
53 In its ordinary sense, "café" does not connote a place where takeaway food is sold. However, one cannot just read words apart from their context. In the instant case, the head lease prohibited the use of the premises as a restaurant and furthermore, special condition 1 contains a covenant on the part of the lessors that they will "not sell or permit the sale of cooked seafood, soft drinks, ice creams or takeaway food items" from Special Lease 1989/2. This would be quite an absurd covenant if the sublessee was not permitted to use the premises, inter alia, for takeaway food. Accordingly, in my view, in this particular lease "café" denotes a place where takeaway food may be sold.
54 As to the other argument put, it certainly can be the case that one can use premises for the purposes of operating a propaganda machine. However, one has to be very careful in distinguishing between using premises for a purpose and uses for incidental activities. Thus a cornflakes manufacturer who includes plastic toys in its cornflakes packet would be using its factory for the production of cornflakes and solely for the production of cornflakes despite the fact that it may also be using the premises for buying toys and inserting them in the cornflakes packets. A topless bar which sells alcoholic liquor is still a bar for the purpose of selling liquor notwithstanding that it employs topless waitresses even though many of the clientele may come for the purpose of ogling the waitresses rather than drinking the product. The mere fact that the defendants go about promoting their business by spruiking does not, in my view, detract from them using the demised premises for the purpose set out in the sublease.
55 Accordingly, in my view there is no breach of clause 4(b).
56 I should note, however, that the defences suggested by the defendants were not very helpful. They say that their spruiking activities took place off the demised premises. It is true that some of them did, but the parts of the building that are available to the defendants in association with the demised premises were used for spruiking and I consider Mr Knaggs is correct in his submissions to say that even part of the demised premises themselves were so used when one looks properly at the definition.
57 Secondly it is said that the spruiking was provoked by the plaintiffs' own conduct. Even if this were true it would be irrelevant except that the court might consider that it could be grounds for the grant of relief against forfeiture.
58 Thirdly it is said that such spruiking promotes competition, which is always encouraged by the law. This is just too broad a statement to be of any practical utility. One could just as easily say the law also permits reasonable restraints on competition such as requiring particular tenants only to conduct certain businesses.
59 (ii) The next allegation is that the defendants are in breach of clause 4(f) of the Memorandum. Clause 4(f) requires the sublessees not to erect or display any sign, notice or advertisement without the landlord's consent. There is no doubt at all that they displayed the signs referred to in affidavit PA03.
60 One of these signs had a yellow background and read "Kiama Harbour's Famous Fish & Chips Cooked While 'U' Wait". Although the defendants' submissions say that this sign was for part of the time on council land, it is clear that from at least January 1998 it was on the demised land.
61 The only defences to the claim under clause 4(f) are:
1. That the signs were permitted because of an agreement between the parties in interim proceedings before Cohen J on 7 October 1998 which is embodied in Exhibit DX07; and
2. That as request for permission to put up the signs has been sought on many occasions and refused on specious grounds, there has been an unreasonable refusal by the landlord to allow the signs to be displayed with the result that they may be erected without its consent.
62 The agreement, DX07, does not appear to be one which affects the parties' rights in the proceedings, it merely sets out a regime which both of them, without admissions, would abide by pending the hearing. One of the matters agreed upon was "8. The plaintiffs give permission to the defendants to erect a second sign from the verandah". The sign in question may have been the yellow sign to which I have referred, but if it was cl 8 does not excuse the other two signs which were erected dealing with who could use certain chairs and tables. It may be that, after 8 October 1998, the landlord could not complain about the yellow sign until the finalisation of the proceedings, but there is no reason why the landlord could not rely on the erection of that sign before 8 October as a breach of covenant.
63 Accordingly, the defendants' only real answer to the claim is that because of the plaintiffs' unreasonable refusal to consent they may erect reasonable signs without consent.
64 Certainly the correspondence shows that there were applications for consent to signs and that consent was unreasonably withheld. The landlord's solicitor argued that on the proper construction of the sublease only one sign could be erected by the tenants because the sublease referred to "any sign" in the singular. This was plainly absurd. Again, there was a refusal to display the yellow sign on the basis that it was not in Kiama Council's heritage colours which the evidence again shows was quite absurd.
65 In Treloar v Bigge (1874) LR 9 Ex 151, 156, it was laid down as a rule of construction and has been followed ever since that "The true interpretation of the words (of a covenant such as 4(f)) ... is to release the (tenant) from his covenant not to assign without the plaintiff's assent, if that assent is arbitrarily withheld." However, before the release is given, the consent must have been applied for and unreasonably withheld: Barina Properties Pty Ltd v Bernard Hastie (Australia) Pty Ltd [1979] 1 NSWLR 480, 493.
66 In the case of what I have described as "the yellow sign" there is no doubt that consent was asked for and unreasonably withheld. There cannot, accordingly be a breach of clause 4(f) in respect of that sign.
67 The other two signs referred to in Mr French's affidavit of 18 November 1998 dealing with seating do not appear to have been the subject of an application for consent if one looks at Mr Spicer's affidavit DA24 and the paragraphs of that affidavit referred to in 16.3 of the defendants' written submissions. It follows that those signs, being the signs referred to in that affidavit of Mr French in photographs JDF2 and JDF3 were a breach of clause 4(f) of the sublease.
68 (iii) The next breach alleged is over clause 4(i) of the Memorandum which prohibits the tenants from obstructing, misusing, or damaging any part of the common area.
69 The debate on this issue was both as to fact and also what was "the common area" for the purpose of this clause and also clause 4(k).
70 As to the facts, Mr French in his affidavit PA04 gives an example of the typical incidents about which he complains. He there says that during the weekend of October 31/November 1 1998, both Mrs Wilcox and Mrs Spicer, between noon and 3 pm, continuously intercepted people as they walked up to the entrance of the shop operated by the plaintiffs by blocking their path.
71 Again, on 18 November 1998, Mr French says that Mr and Mrs Wilcox came into the first plaintiff's shop and started to scream in the presence of the staff and customers that they did not have enough room to pass through the shop where they had a right of passageway. Mr French says that he told the Wilcoxes that they only had right of passage and should move as they were interfering with the shop's staff and customers. Mrs Wilcox refused to move and, when she finally moved, said to Mr French "Your time has now come you old man, we'll see you out of here soon."
72 Although considerable space was spent in the written submissions in directing my attention to matters of credit of the various witnesses, it seems to me obvious from the whole of the evidence that there was considerable activity by the defendants, particularly Mrs Spicer and Mrs Wilcox, in making nuisances of themselves in the vernacular sense. They would, without doubt, on any version of the evidence, approach potential customers of the plaintiffs, or tourists merely taking in the beauties of the area and regale them with their tales of woe about the plaintiffs and would make derogatory comments of the plaintiffs, or exhibits signs about the plaintiffs and would steer the first plaintiff's potential customers away from its shop. The exact details of what they did, when they did it and where they did it may be the subject of a little bit of debate, but there is no debate at all about the fact that they were doing these things. The video tape which I saw is a good example. I will come back to the detail when dealing with the complaints made under the Fair Trading Act.
73 I am quite satisfied that the conduct included obstructing the passageways around the demised premises.
74 I should however make it clear that not every part of the conduct of the defendants criticised by Mr Knaggs in his written submissions was conduct about which the plaintiffs had a legal basis for complaint. Unless it fell within conduct proscribed by the sublease or contravened the Fair Trading Act, no matter how distasteful the conduct, it did not give rise to a cause of action. Likewise if the distasteful conduct occurred in a place not covered by the sublease, no relief can be given on a claim for breach of the sublease. On the other hand, when one sees the video tape of the female defendants' activities and reads the almost uncontradicted evidence, it can clearly be seen that the female defendants were not at all concerned to confine their distasteful activities to council land.
75 Having said that, the key matter of present concern is whether the obstruction occurred "within the common areas".
76 Mr Waugh in his additional written submissions put that the Memorandum is a standard form and that it is not surprising that it may be difficult to apply its terminology to a particular lease. He puts that there is in fact very little common area or curtilage in the present case and that the paths etc are in fact on council land.
77 As I have indicated earlier, The Cargo Shed and its verandah occupy virtually the whole of Lot 276. However, in the Court of Appeal decision of Wilcox v Richardson (supra) the principal question was "what were areas outside the area of Shop 1 which were to be considered to be common areas in the sub-demise"? Handley, JA made it quite clear at page 17 of the report that the present defendants had the right to use the parts of the building he specified as ancillary to the demised premises.
78 At least some of the obstructive conduct, in particular the incident of 18 November, took place in passageways in The Cargo Shed building. This was to my mind in a part of the common area. There was thus at least some breach of clause 4(i).
79 I do not consider that in view of my general findings in this case, I need go further than merely finding some breach or no breach of the relevant clauses of the Memorandum. The reason for this attitude will become clear, I hope, as these reasons progress.
80 (iv) The next complaint is as to a breach of clause 4(k) of the Memorandum which is aimed at preventing the defendants from being a nuisance to the lessor or neighbouring occupiers.
81 Again, there is copious evidence of the conduct of the defendants, particularly the female defendants spruiking and accosting passers by.
82 The defendants submit that this conduct would not constitute nuisance as a matter of law within the meaning of the covenant. They submit that the word "nuisance" should be given its technical legal meaning, that the defendants are not liable for congestion and crowds which impede competing businesses and their actions could not be said to be wholly unnecessary for the carrying on of their business.
83 There is some support for the proposition that "nuisance" should be given its technical legal meaning, see the cases referred to in Bradbrook & Croft Commercial Tenancy Law in Australia 2nd ed (Butterworths, Sydney, 1997) at [7.14]. However, often courts consider such covenants are "Framed for the very purpose of securing a much more adequate protection than that given by the ordinary law of nuisance": Ives v Brown [1919] 2 Ch 314, 321. It is necessary to look at each individual covenant to see what the word "nuisance" means in its context.
84 In the instant case, the word "nuisance" is not conjoined with "annoyance". However, it is conjoined with actions which may grow to cause damage or obstruction to the lessor or adjoining occupants. Furthermore, there is a combined term "any nuisance damage or obstruction" which seems to me to take the word "nuisance" out of its technical legal meaning of the tort of nuisance.
85 The case which comes closest to the present is Thompson-Schwab v Costaki [1956] 1 WLR 335. In that case the defendant was soliciting people outside the plaintiffs' residential premises in the West End of London for the purposes of her business of prostitution. This was held to be a nuisance to the plaintiffs and to justify the grant of an injunction. In the present case the defendants are soliciting not for prostitution but for the purposes of getting more business for their fish and chip shop. Although their soliciting might not have quite the same impact as the defendant in the Thompson-Schwab case, it still is conduct which could be said not to be reasonable according to the ordinary usages of people living in society: Sedleigh-Denfield v O'Callaghan [1940] AC 880, 903.
86 The evidence in the present case not only includes statements from the plaintiffs and their customers as to the aggravation the defendants' spruiking causes them, but there are also newspaper letters which show that quite a number of people who come to the area are disturbed and offended by the defendants' conduct. Even discounting some of these for the fact that they may be promoted by one side or the other, there is sufficient there to show that the conduct is disturbing.
87 In my view breach of the covenant against nuisance has been made out.
88 (D) The effect of s 129 of the Conveyancing Act. This section provides that apart from non-payment of rent, a landlord cannot exercise its right of re-entry or forfeiture for breach of covenant unless and until it has served on the tenant a notice specifying the breach complained of, requiring the breach to be remedied and if need be, specifying compensation.
89 No notice that exactly complies with s 129 was given in the instant case. Counsel for the defendants say that it ineluctably follows that the plaintiffs cannot succeed in ejectment.
90 Mr Knaggs for the plaintiffs puts up five answers to that proposition, namely:
(a) Section 129 does not apply to Crown Leases and the sublease of a Crown Lease is a Crown Lease within the meaning of s 129(6)(a) of the Conveyancing Act;
(b) The informal notices satisfy the requirement of the section;
(c) Clause 6(d)(iv) of the Memorandum entitles the plaintiffs to terminate notwithstanding s 129;
(d) A s 129 notice issued after the proceedings commenced may suffice;
(e) Section 129 does not apply where there has been repudiation by the tenants of the sublease.
I will examine these matters briefly in turn.
91 (a) It is certainly correct to say that s 129 by virtue of subsection (6)(a) does not extend "to any Crown lease". There is no definition in the Conveyancing Act of the term "Crown Lease". Mr Knaggs submits that it does not mean "Crown-Lease" as defined in s 5 of the Crown Lands Consolidation Act of 1913 because the legislature has deliberately not used the hyphen. Nor, he submits, does it mean a lease in which the Crown is the lessor because if that were meant the simpler term to use would have been "lease from the Crown". Thus, s 129 does not apply to a head lease or any sublease where the subject of the lease or sublease is land which is Crown lands.
92 This argument was put up at the heel of the hunt and was not answered by the defendants whose submissions came earlier.
93 Section 129 has its genesis in s 1 of the Forfeiture of Leases Act 1901. Section 1(6)(a) is in virtually identical terms to the existing paragraph save that the reference to the Mining Act has been updated. The section itself came from the Act 44 & 45 Victoria C 41 Sec 14 of the United Kingdom Parliament. The corresponding English section has never referred to Crown Leases for obvious reasons.
94 In 1901, the Crown Lands Act in force was that of 1884 which does not appear to contain any definition of "Crown-Lease". Accordingly, I am not particularly impressed with Mr Knaggs' argument about the hyphen; indeed, I may not have been impressed about it even if history did not show it to be erroneous.
95 The only line of cases that might appear helpful are those dealing with rating of subleases of Crown lands but having perused cases such as Sydney Grammar School v Sydney City Council (1957) 3 LGRA 68, it does not seem to me that any assistance can be had in that area.
96 It seems to me that one needs to go back to the purpose for the exception in the original Act and in the present Act. In my view the reason for the exemption was that there was a special statutory regime set up for termination of Crown Leases and it was not meant to contradict this regime by the additional safeguards in s 129.
97 Accordingly, in my view it is only where the Crown is the lessor so that the forfeiture of lease provisions under the Crown Lands Act 1989 applies that s 129(6)(a) exempts the landlord from compliance with s 129.
98 (b) Mr Knaggs relies on cases such as Ex parte Dally-Watkins; Re Wilson (1955) 72 WN (NSW) 454 and Johnson v Senes and Berger [1961] NSWR 566 for the proposition that the informal notices given in the present case were sufficient. Although those cases make it clear that a s 129 notice does not have to be strictly in the form set out in the 6th Schedule to the Conveyancing Act, as Wallace J said at p 568 in Johnson's case: "I do not understand that an informal notice or one contained in correspondence can legitimately omit any of the main features or effect of the form otherwise the Court would be overriding the Act."
99 Perhaps the first serious notice requiring rectification of breaches of covenant was that given on 12 January 1998 which is headed "Notice requiring Rectification of Breaches of Covenant". That notice, however, refers to the covenants in the expired sublease. The new formal sublease was registered on 7 April 1998 and I need to look for notices given after that date. There were letters of 29 April and 27 June 1998, making it clear that the landlord thought that the tenants were in breach, but neither of these letters came anywhere near compliance with the material that has to be put in a statutory notice under the 6th Schedule. Accordingly, I do not consider that this submission holds up.
100 (c) Clause 6(d)(iv) of the Memorandum seems to me only to deal with claims for damages and does not go to ejectment. Even if that were incorrect, the provision of the sublease could not prevail against s 129.
101 (d) Mr Knaggs says that a valid s 129 notice was given after the proceedings were commenced and a further amended summons was subsequently filed. As a cause of action can be relied on that has arisen since the proceedings were commenced the court should now allow a cause of action based on the expiry of the new s 129 notice.
102 Part 20 r1(3A) of the Supreme Court Rules says that an amendment may be made to add a cause of action arising after the commencement of the proceedings but in such a case the date of the commencement of the proceedings so far as that cause of action is concerned shall be the date on which the amendment is made.
103 The facts behind this assertion seem to lie in affidavits that are on the court file which I have not formally read but which may well have been read before Bryson J during vacation. It would seem that a s 129 notice was served on the defendants about 22 December 1998 which does comply with s 129 of the Conveyancing Act. Some of the particulars, particularly the breaches of clause 4(k), refer to acts which were allegedly done between 8 and 17 December 1998, about which I have received no evidence. The last amended summons that I gave leave to file was filed on 27 November 1998. I cannot see on the file any further amended summons or an amended summons relying on a cause of action which arose after the proceedings commenced. In any event there would need to be a re-opening of the case to rely on the evidence that has not been read to me and that has not been sought. The only re-opening that has been sought has been to allow further submissions. The attitude I have taken is that this case has gone on long enough, that I would publish my reasons with limited leave for counsel and solicitors to debate matters which had not been raised in writing. This present matter goes beyond anything that has been sought or granted.
104 I should also remark that in perusing the more recent affidavits I saw a comment by Mr French in an affidavit that I would be giving judgment in February or March 1999 by which time he may well be insolvent; accordingly he had to move the Vacation Judge. There is not a word in that affidavit about the fact that the prime reason why judgment was not given in December was that his solicitor wished to make further submissions, which submissions were only received about 29 January 1999.
105 (e) Up until recently, it was thought that doctrines of frustration and repudiation may well not apply to leases because a lease granted a form of estate as well as granting contractual rights. However, recent decisions of both the High Court and the Court of Appeal in NSW have made it clear that ordinary contractual principles apply to leases. Accordingly, a lease can terminate by repudiation and acceptance of the repudiation. Whether there has been repudiation in this case will be discussed in the next section, but the question here is, does s 129 apply where the landlord alleges that there has been a repudiation so that it cannot accept the repudiation until the notice has been given?
106 I think the answer to this is "No". However, in saying this the nature of repudiation must be considered. Courts do not lightly infer repudiation and they will only do so if, (in this case) the subtenants, have evinced a complete intention not to be bound by the sublease. If such a situation arose, then it would seem to be completely futile to provide for a s 129 notice. The section speaks in terms of a right of re-entry or forfeiture under a stipulation for breach of covenant. It would seem to me that where the complaint is not of breach of a particular covenant, but a complete repudiation of all the obligations under the sublease, the section does not apply.
107 Accordingly, unless the landlord can establish a repudiation, s 129 of the Conveyancing Act prevents an order being made for possession in these proceedings.
108 (E) Have the subtenants repudiated the lease?
Repudiation is not to be lightly inferred. It involves expressly or impliedly saying that the subtenants have evinced an intention not to abide by the terms of the sublease. It will not be sufficient merely to show that there has been a breach of condition, or even a long term breach of something fundamental such as consistent non-payment of rent. The sublessees' failure must go to the root of the sublease and make further commercial performance impossible: Shevill v The Builders' Licensing Board (1982) 149 CLR 620.
109 The instant sublease is peculiar in the sense that it, in clause 6(c)(i) differentiates between covenants which are essential terms and those which are not. The covenant to pay rent and clause 4(b) are essential terms, but the other matters complained of in the summons are not. There has been no non-payment of rent and I have held there has been no breach of clause 4(b). Accordingly all that the landlord has established is some breaches of covenant of inessential terms.
110 Furthermore, the payment by the subtenants of their rent and their continued occupation appear to me to evince an intention that they will be bound by the sublease despite breaches from time to time.
111 Accordingly I find that the subtenants have not repudiated the sublease.
112 (F) It follows from what I have said in (D) and (E) that the plaintiffs are not entitled to re-enter.
113 (G) It follows from what I have said in (F) that the plaintiffs are not entitled to an order for possession.
114 (H) I now turn to the issue of whether the defendants were guilty of false and misleading or deceptive conduct under the Fair Trading Act in respect of each of the 10 classes that I have noted above.
115 Before dealing with each of the ten heads, I should make some general findings as to credit. Both sides submitted that the other were liars and unreliable people whose credit was of little worth. I think to a considerable extent all those submissions were correct. Both sides seem to be motivated by malice and seek to denigrate each other whenever they possibly can. I have borne those facts in mind when making my assessment of credit in the facts finding process.
116 I will now deal with each of the heads of complaint.
117 (i) The second plaintiff does not declare rent received from the defendants as taxable income.
118 Mr Barrie Keenahan, a private investigator of Wollongong, called in at the Kiama Harbour Wharf on Sunday 17 May 1998. He says that he was reading some newspaper reports about the landlord which Mrs Wilcox had told him had been exhibited out the front of her shop. He said that as he was reading Mrs Wilcox said, "Our landlord is on the pension and he does not declare the $2000 a week we pay him rent, he has just purchased a new Mercedes for $140,000. He is cheating the Government and system in claiming the pension. He is a liar and cheat. We have had him in court and he purged [perjured] evidence. I have evidence of that." Mrs Wilcox then produced photostat copies of the second plaintiff's 1998 pension card and a copy of a means and assets information document relating to him. She handed those documents to other people as well. Later Mrs Wilcox said, "We pay our landlord $2000 a week for rent and he is too lousy to pay for a garbage bin for his shop, he walks around and puts his rubbish into bins around town because he is too lousy to pay for a bin."
119 On 27 May Mr Keenahan returned and whilst he was waiting to be served with fish and chips Mrs Wilcox said, "Our landlord is the director of five companies and has assets of $5,000,000. He does not declare the income from his companies and he has applied to the Attorney General's Office to pay off his fines because he is a pensioner. I went into Wollongong to the Attorney General's Office and gave them information on his assets. He is a horrible man ... He has illegally dug holes in the car park to put his seats and tables and the Council has got onto him about it. He buys prawns from overseas which are frozen and sells them at massive profits. I'm going to make it hard for him. We sell fresh fish and prawns, his fish and prawns are not fresh. He told me he will drive me out of here when my lease runs out and I pay him $2000 a week rent, but he won't drive me out. I'm going to ring Ray Martin next and give him all the information I have. He will investigate him and get his pension taken off him." By "landlord" Mrs Wilcox was referring to Mr French. The reference to "Ray Martin" was to a television journalist whom Mrs Wilcox considered would be likely to publicise such allegations.
120 There was no cross examination of Mr Keenahan because the parties recognise that with 42 affidavits and a two day expedited hearing it was not possible to test every piece of evidence and that I should assume that where there was a denial the parties were at issue. Whilst this did save money, it does mean that I am a little hindered in my findings of fact.
121 The evidence shows that Mr French is indeed an aged pensioner. He says that the rent is $2000 per month but it is paid to the first plaintiff and not to him. Mrs Wilcox agreed that she said to people "We have to pay him $2000 per week rent". She denies saying that she ever said he did not declare that rent for tax purposes.
122 The rent payable under the current sublease is set out as being $8,666.67 per month to be paid direct to the sublessor, Kiama Development Co Pty Ltd, so that it would seem that the $2000 per week of the defendants' evidence rather than the $2000 per month of the second plaintiff's evidence is the correct figure.
123 How Mr French became an aged pensioner is not clear because the records from the statutory authorities show that he is a one-half beneficial shareholder in the first plaintiff and that he, together with the third plaintiff, are the sole directors. Furthermore, the first plaintiff is also associated with two other companies, Terralong Estates Pty Ltd and Kiama Holdings Pty Ltd, of which Mr French is also the director and the holder of shares beneficially. However, there is very little evidence to show what the assets are of those companies and there is no evidence to show that the rent received by the first plaintiff is or is not declared by the first plaintiff for taxation purposes.
124 The statement that "We pay him $2000 a week rent" is inaccurate in that no rent is actually paid to Mr French. There is, accordingly, no need for Mr French to declare that rent as taxable income. The statement is, accordingly, false even to the extent that it was admittedly made by Mrs Wilcox.
125 (ii) The allegation is that the second plaintiff had purchased a new Mercedes Benz for $140,000. If this was said it was false as the second plaintiff owns a Toyota Corona and the third plaintiff owns a 1984 Mercedes which Mr French values at $25,000.
126 Mrs Wilcox denies that Mr Keenahan correctly reported what she says, but in her affidavit DA19, she makes it clear that Mr Keenahan could well have got that impression. She says "I have noticed John and Linda (sic) French drive to the Harbour in a white Mercedes Benz about this time. Previously they had arrived in a mid 1980's gold Mercedes Benz or a white Toyota. A customer said about this time that 'The new Mercedes probably cost about $130,000'."
127 In the light of this material which was present in Mrs Wilcox's mind, in the light of the malice she bears towards Mr French and in the light of her other comments about Mr French, it seems to me more likely than not that despite her denials, she did utter those words in Mr Keenahan's presence. They were false.
128 (iii) The allegation is that the second plaintiff was accused of wrongfully receiving pension payments. Mrs Wilcox's answer is "I am not aware if John French is cheating the Government and system in claiming the pension and I deny saying this to Mr Keenahan." That is a rather milk and water-type denial. She does not deny that she may have said it from time to time, it is consistent with her general banter that the second plaintiff is a liar, a cheat and a rogue who is asset rich yet still preys on his subtenants and the Government. I believe it is more likely than not that she did say those words.
129 (iv) The allegation is that the first and second defendants said that the second plaintiff was a perjurer. The second plaintiff says that he denies that he ever gave perjured evidence though he did make a mistaken statement to a court in Wollongong and it is correct that the magistrate at the time referred the matter to the Attorney General. Mr French also swears that he has heard Mrs Wilcox say "He has committed perjury". Mrs Wilcox puts that she has said "French has been reported for possible perjury". Her counsel put that this is consistent with the newspaper cuttings annexed to her affidavit, but headings such as "Kiama landlord 'lied on oath' Charge of perjury considered" scarcely suggest that such charges are only possible. The second article which is attached claims that the second plaintiff "had deliberately lied under oath, a court heard yesterday".
130 Having seen the video tape and having cognizance of the way in which the defendants carried on generally in respect of Mr French, I cannot accept that Mrs Wilcox was so mild as to use the word "possible". Her whole gamut was to blacken the character of Mr French and to have customers diverted to her shop. "Possible perjury" is just too weak to achieve that aim. Accordingly I find that those words were said.
131 (v) The next allegation is that the first and second defendants have said that Mr French deposits rubbish from his business premises in public garbage bins. Mr French denies that he does this though he says that he does clean up litter left by the public around his shop and does put some of that in the bin. Mrs Wilcox denies saying the words, but then says that if she had said them they would be true. This is borne out by the evidence of Mr Cross, a former employee of Mr French who swore an affidavit on behalf of the defendants.
132 Of course, the mere fact that words are literally true does not deprive them of the capacity to be false and misleading in appropriate cases.
133 The statement of Mr Keenahan was that Mr French was supposed to have walked around Kiama putting his rubbish into bins around town. This was never established as being true. I am not satisfied on the balance of probabilities that Mrs Wilcox did say those words. It is word against word, the reference to Kiama generally rather than the public bins near the Blowhole make me a little suspicious as does the background of evidence given on this issue such as that of Mr Cross. Accordingly, I would not find this alleged breach established.
134 (vi) The second plaintiff is a director of five companies and has assets of $5 million. This seems to me very close to the allegation in (iii) and the same considerations apply to it.
135 In her affidavit Mrs Wilcox says she had investigated Mr French's affairs and knew he was a director of three companies. However, mere fact would not stop her from exaggerating if she thought it was appropriate to do so.
136 I should note that when Mrs Wilcox was cross examined, none of the cross examination went anywhere near the present point. However, the "no Browne v Dunn" arrangement made between counsel would account for some of this. I must, however, be careful that this informal arrangement does not make the burden of proof shift. Although I have some suspicion about this, it seems that it falls just the other side of the line to (iii) and it is something that I should not find established.
137 (vii) This is an allegation that the second plaintiff illegally made holes in the car park. Mr French agrees that he erected metal posts at the western end of the car park, but he says that those posts were stolen. It would seem that the holes were dug on Lot 277. I think the probabilities must be that Mr Keenahan did not note accurately what Mrs Wilcox said so that I should not find this matter established.
138 (viii) There is an allegation that the second plaintiff buys frozen prawns from overseas and sells them for massive profits. Mr French agrees that he does sell frozen prawns, but denies that they are sold at massive profits. Although the prawns may have come from overseas, they are in fact purchased from a wholesaler in Wollongong.
139 Mrs Wilcox says that Mr French sold cooked prawns for $27.90 per kilogram when she was selling fresh prawns for $19.90 a kilogram and she would comment about this. It seems to me that whilst it was true that Mr French was selling frozen prawns, it was an exaggeration to say "He buys prawns from overseas" and "sells them at massive profits". It is more likely than not that those words were said in my view and I find (viii) established.
140 (ix) This deals with the allegation of a sign which is misleading.
141 It seems to me that there is so much discussion in this case about various signs and whether they were permitted by the council or the sublease or what have you, that even if these words were said, it would be very difficult to say that they were false and misleading referring to signs generally.
142 (x) There is insufficient evidence to establish that words were said about customers of the plaintiffs' business suffering from food poisoning.
143 (I) In view of what I have said under (H) it is necessary to consider whether the matters found in (H) together show an unlawful interference with the second and third plaintiffs' business or were false and misleading in trade and commerce.
144 Little attention was paid in the submissions of either side to the matter of unlawful interference with trade or business. The tort is dealt with by Fleming on Torts 9th ed (LBC, Sydney, 1998) pp 765-766. It does not seem to me that even if all the allegations under (H) had been proved, that the tort has been made out. The defendants' conduct seems to be conduct predominantly committed in their own interests in an endeavour to procure people not to enter into or renew a contract with the plaintiffs. (This high faluting language is hardly appropriate for competing fish and chip shops, but it is the test I must apply). The defendants' conduct is thus not actionable as unlawful interference of business.
145 So far as s 42 of the Fair Trading Act is concerned, the matters that I have found established are false and misleading in trade and commerce. The more interesting question is whether they ground in damages or an injunction, a question with which I will deal in sections (J) and (K).
146 (J) The High Court in respect of s 80 of the Trade Practices Act 1974 (the corresponding section to s 65 of the Fair Trading Act, now being considered) have found that the statutory power to grant injunctions was an exclusive charter where there is a contravention of a provision of the relevant part of the Act: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, 162. Although s 65 may be invoked by a competitor, the essential thrust of s 65 is that it is a public interest provision and the court must bear that in mind when making an order: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 110 ALR 47.
147 Although the court is empowered to grant an injunction in such terms as it determines to be appropriate and may do so whether or not it appears that the defendants intend to engage again in the conduct, the injunction is to protect against the false and misleading conduct, not to deal with a wider class of conduct of which the conduct in contravention of Part 5 of the Act is a part.
148 Further, it must always be remembered that, when granting an injunction under s 65 of the Fair Trading Act, the court must, as is the case with ordinary injunctions in nuisance and other cases, frame the injunction sufficiently clearly that the party enjoined knows "What is expected of him as a matter of fact": Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 12 ATPR 41-019, 51,351.
149 I cannot see any real purpose in granting an injunction in the traditional form because it is not only hard to frame, but also relatively useless. Furthermore, the court does not, as a general rule, order an apology for the reasons that I set out in Summertime Holdings Pty Ltd v Environmental Defenders' Office Ltd (to be reported in 45 NSWLR). Mr Knaggs says that the right of free speech is no defence to a claim under the Fair Trading Act. That is so, but that right does disincline the court to order people to give apologies.
150 However, under the corresponding section in the Trade Practices Act, the Federal Court has held that it is sometimes appropriate to make an injunction in the form of an order for corrective advertising; see for instance Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1985) 8 ATPR 40-654.
151 I believe that such corrective advertising in the form of signs which are approved by the landlord and by me to be displayed for a defined period would be sufficient relief. It may be that for the sake of future peace the advertisements should merely be in the form of a class B apology, but I will leave the drafting until the time short minutes are brought in.
152 (K) Do any damages flow under the Fair Trading Act or for the breaches of the sublease which I have found established?
153 Damages for breach of the Fair Trading Act come under s 68 which provides so far as is relevant that "A person who suffers loss or damage by conduct of another person that is in contravention of Part ... 5 ... may recover the amount of the loss or damage...". I have underlined the word "by" because the High Court has held in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, 525, that the word "by" indicates the necessity to prove causation.
154 What damage was caused by those statements in (H) which I have found proved?
155 Mr Knaggs submits that the answer to that question is $750 per day. He gets that by referring to evidence that in one of the stoushes between the parties in the Wollongong Local Court the defendants asked for that amount of witness expenses on the basis that being in Wollongong Court and not being about to spruik, they would have lost that amount. Mr Knaggs concedes that without that evidence there would be no evidence to quantify the damages.
156 I do not consider that this material is sufficient to quantify the damages. What must be shown is that the damage was caused by the false and misleading comments, not the spruiking generally.
157 Furthermore, there is no evidence that anyone ever believed what Mrs Wilcox was saying. The evidence that the defendants' conduct affected the sales of the second and third plaintiffs' business is slim. Indeed, no attempt was made to produce any trading figures of the plaintiffs' business or any accountant's evidence to give some credibility to there being a loss. This evidence must have been within the plaintiffs' camp, and its non-production leads me to infer that it could not have been produced.
158 Thus, in my view, damages can only be nominal. I would assess them at $1,000.
159 So far as breach of the lease is concerned, I have found breaches of clauses 4(f), 4(i) and 4(k). There is no proof of any loss caused by these breaches. The plaintiffs are entitled to nominal damages which are included in the $1000 just referred to.
160 (L) I now have to consider how the costs of these proceedings (other than the cross claim) should be paid or borne. It follows from what I have said, that the plaintiffs have succeeded on some minor matters and have failed on the major matters which they raised. They have failed to get ejectment, they have failed to get substantial damages. My view is that each side should pay its, his or her own costs of the action to date.
161 (M) I now pass to the cross claim. The first question is whether the plaintiffs have been guilty of false and misleading conduct under the Fair Trading Act in respect of all or any of the four matters that I outlined in the opening of this judgment. I will deal with these seriatim.
162 (i) (1) Did the display of the sign "The Truth" constitute conduct contravening s 42 of the Fair Trading Act?
163 The defendants say that this sign was misleading and deceptive because the sign contains the statement "As owners of The Cargo Shed at Kiama" which they say is false because the plaintiffs are merely lessees from the Crown. Then it is said that it is false to say "We have attempted to negotiate with the tenants to have a café/restaurant". The defendants say there have been very few negotiations, and in any event, the erection of a restaurant is contrary to the head lease. Then it is said that the statement "They want to be the only shop on the site" is untrue as is the statement "They will do anything they can to get rid of us or any other competition".
164 There is no doubt at all that the sign was displayed. It is also correct to say that the statements made on the sign were not completely accurate and true. However, the conduct of the defendants generally do show that they will go to considerable pains to get rid of competition by the plaintiffs and their conduct in spruiking is not the ordinary conduct one expects of fellow traders.
165 In my view the sign was to a slight degree false and misleading.
166 (ii) The second complaint is as to the sign "The Simple Fact". There are some minor quibbles as to whether the expression "Nothing Has Changed" is correct and as to whether "They renewed their lease this April" is correct, but neither expression read in context should be given the relatively artificial construction the defendants put on them.
167 The main complaint is that the sign implies that the defendants are preventing the plaintiffs from opening an eat-in restaurant which is not the case. The restaurant cannot be opened because of the terms of the head lease. I do not consider that the sign makes that implication. It merely says "The front shop people are delaying our plans". Accordingly I do not find the sign "The Simple Fact" false or misleading.
168 (iii) The next complaint is about a flyer headed "A Restaurant at the Harbour" which is annexed BS12 to Mrs Spicer's affidavit DA18. This flyer repeated much of the material in the two signs. It does suggest that the defendants have successfully delayed the building of a restaurant on the site and want to be the only operators on the site and are bent on destroying any competition. I do consider this goes beyond a truthful statement and does contain false and misleading statements.
169 (iv) The most significant matter under this head is that the defendants complain that the plaintiffs put up a sign "Main Entrance" which would lead members of the public to think that the plaintiffs' shop was the principal fish and chip shop in the building and thereby direct custom away from the defendants.
170 There is no doubt at all that this sign was erected by the plaintiffs.
171 The plaintiffs seem to think that their stratagem in registering the words "Main Entrance" as a business name and pretending that "Main Entrance" was the name of their shop excuses the erection of the sign over the entrance to their premises which conveys the false and misleading impression that the entrance to the plaintiffs' shop is the principal entrance to fish and chips purveyors in the building. As I say, there is no denial merely gloating over cleverness. This, to my mind, is a serious matter of false and misleading conduct in trade and commerce.
172 (N) What should be done about the breaches set out in (M)?
173 The defendants do not seek damages but they do seek injunctions. I believe that they are entitled to an injunction to restrain any recurrence of the conduct involving the sign "Main Entrance". So far as the other matters are concerned, I would be prepared to make a similar order to that which I forecast in the case of breaches by the defendants requiring corrective advertising so far as "The Truth" and the flyer were concerned.
174 (O) I have already held under section (C)(ii) that in respect of the signs for which the defendants have sought consent, such consent has been unreasonably withheld. I would be prepared to make a declaration to that effect. However, there has not been an actual application in respect of each sign that the defendants wish to erect and, for the reasons already given, in respect of such signage for which there has been no application, there can have been no unreasonable refusal to consent.
175 (P) The defendants seek a declaration that they may now erect such signs. It follows, for the reasons given in (C)(ii) and (O) that such a declaration should be made in respect of the signs the subject of the declarations referred to in (O).
176 (Q) The defendants say that if the court finds their conduct in approaching customers outside the building a breach of clauses 4(i) or 4(k) then the same conduct by the plaintiffs in approaching potential customers handing out flyers and distributing samples must similarly amount to a breach of the covenant for quiet enjoyment. Furthermore there has been interference by Mr French with the coolroom motors as deposed to by Mr Cross in his affidavit DA32.
177 There are some difficulties with the first proposition. The landlord is the first plaintiff. The person who was issuing the flyers was the second plaintiff. It does not necessarily follow that what the second plaintiff was doing was an act authorised by the first plaintiff especially when it is remembered that the second plaintiff and the third plaintiff are personally the operators of the competing business.
178 However, the present state of the law is that the landlord is obliged not only to behave properly towards the subtenant itself but to make sure that those persons under its control behave properly. Mr French was under the control of the first plaintiff or vice versa and the first plaintiff is liable for his conduct. The conduct in handing out the flyers is as much a breach of the covenant for quiet enjoyment by the landlord as is the conduct of the defendants in their activities with respect to clause 4(k) of the sublease.
179 As to the allegation that Mr French put paper across the front of the radiator and compressor of the defendants' business so as to cause the motors to overheat, Mr Cross says he was told this by Mr French. Mr French denied it under cross examination. I cannot be satisfied that the allegation has been made out.
180 I do not consider that I should make any injunction in respect of the breach of covenant for quiet enjoyment but I think I should find nominal damages in the sum of $1000 because the conduct is much the same as the conduct for which I found nominal damages the other way.
181 (R) Relief against forfeiture is sought, but in view of my previous findings it is unnecessary.
182 (S) Before dealing with the result of this case I should make some general comments. The first is that although the parties have a great propensity for irritating each other, the current litigation has really been a complete waste of time in that some of their irritations have been found to sound in nominal damages and some have not. At a recent mention of the matter I indicated that this might be a case where a Supreme Court Judge ought to, in the exercise of his powers as a Justice of the Peace, bind all the natural persons over to keep the peace for a year on a $100,000 good behaviour bond. If police time were to be wasted again in the future by trivial incidents then the court could merely call up the bond, have the Sheriff sell both businesses, pay the proceeds to the Crown as a fine and the problem would be solved for the people of Kiama. I may raise this matter again when short minutes are brought in.
183 The case was peculiar in many ways. Apart from the lack of cross examination, both sides seemed to keep back any figures as to their trading. This gave me the general impression that neither could really say that their businesses were detrimentally affected by the other's activities. However, there was some material which was of concern such as the declaration by the second plaintiff annexed as RW1 to Mrs Wilcox's affidavit DA19, in which Mr French applied to the Wollongong Local Court for time to pay a fine on the basis that he owned no house or land, a car worth $500, furniture worth $4000 and a computer worth $1000 and was a pensioner. The "shares or investments" portion of the form as the declaration of assets was left blank even though Mr French owns shares in three companies including the first plaintiff which was receiving $2000 a week in rent.
184 Another matter of concern was that it both appeared in the cross examination of Mr French and also what happened before Abadee J in vacation, that although Mr Knaggs was the solicitor on the record and conducted the case in court, most of the affidavits were in fact prepared by Mr French himself and on occasions Mr French would approach the court himself. Affidavits prepared by a party, especially where the case involves very hot feelings between the litigants is something to be avoided at almost every cost. Again, and I am not saying that this necessarily happened in the instant case, solicitors who have their name on the record and who have their names on affidavits do impliedly acknowledge to the court that they take responsibility for those affidavits and embarrassment can be caused to solicitors if they allow clients to use their name at least without proper supervision.
185 For the reasons I have already given the result of the case is that the plaintiffs' claim for possession fails. The plaintiffs are entitled to nominal damages of $1000 plus corrective advertising. The defendants succeed for nominal damages for $1000 plus some corrective advertising.
186 I have already indicated there should be no costs on the claim. So far as the cross claim is concerned virtually the same matters were agitated and I do not consider there should be any order for costs on the cross claim either.
187 At the last time the matter was mentioned in court, I indicated that I would just publish my reasons and then stand the matter over for short minutes to be brought in. The main difficulty about those short minutes will probably be the corrective advertising. What I have in mind is one advertisement or poster containing mutual apologies which might be displayed outside The Cargo Shed so that members of the public can be corrected in any false impression that they may have formed about all or any of the parties as a result of any previous activity of any of the parties.
188 I believe, in view of what has happened in the past that defendants' counsel should produce the first draft and submit it to the solicitor for the plaintiffs in due time for there to be a meaningful response before the next appearance in court.
189 In view of the overly generous provision I have already made for the tendering of additional submissions and the length of time that has passed, I would be loath to permit any further reopening of argument even if someone alleges that a point dealt with in these reasons was not addressed in submissions.
190 It may be a vain hope, but I trust these reasons, the finding that both sets of parties were somewhat at fault and the cost of this litigation will mean that for the balance of the term of the sublease, the parties will be able to co-exist. I realise that the result is virtually a draw and that there is no bar on fresh ejectment proceedings, but some estoppels may have been created.
191 In view of what has happened in the past, I should remind everyone that it is a contempt of court to misrepresent the judgment of the court; see Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, 92 and my extra-judicial commentary on that case (1993) 67 ALJ 487-490 which I now formally adopt without repeating what I there said.
192 Accordingly I will merely stand the matter over for mention on 22 April 1999 at 9.30 am for short minutes to be brought in. Should the date I have chosen be inappropriate, the advocates for the parties may alter it by arrangement with my Associate, provided adequate notice is given.
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Last Modified: 04/01/1999
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