Wasada Pty Limited v State Rail Authority of New South Wales [2003] NSWSC 894

New South Wales Supreme Court

CITATION : Wasada Pty Limited v State Rail Authority of New South Wales [2003] NSWSC 894 HEARING DATE(S) : 25/8/03-26/8/03, 28/8/03, 25/9/03 JUDGMENT DATE : 14 October 2003 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Landlord entitled to possession of premises

CATCHWORDS : LANDLORD AND TENANT - allegation of entitlement to renewal of lease on particular rental basis - no question of principle Fair Trading Act 1987 LEGISLATION CITED : Real Property Act 1900 Trade Practices Act 1974 CASES CITED : Watson v Foxman (2000) 49 NSWLR 315 PARTIES : Wasada Pty Limited - Plaintiff State Rail Authority of New South Wales - Defendant FILE NUMBER(S) : SC 3089/03 COUNSEL : TS Hale SC; TH Thawley - Plaintiff B Coles QC; G Curtin - Defendant SOLICITORS : Kemp Strang - Plaintiff Henry Davis York - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

14 OCTOBER 2003

3089/03 WASADA PTY LIMITED v STATE RAIL AUTHORITY OF NEW SOUTH WALES JUDGMENT 1 HIS HONOUR: In this case the plaintiff asks the Court to decide that it is entitled in equity to a lease of certain land in Waverton for a term which will expire on 28 February 2011 at a rental which is, broadly, the market rental from time to time of the Land in its unimproved state. It seeks the Court's decision that a Notice to Quit which the State Rail Authority of New South Wales ("SRA") gave it on 22 April 2003, is invalid. Alternatively, it seeks certain orders for restitutionary relief, or under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987, connected with the value of buildings which have been erected on the Land. The Site 2 The SRA has at all relevant times been the registered proprietor of a parcel of land ("the Land") which is very approximately rectangular in shape (though tapering at its southern end), and lies immediately to the east of Waverton railway station. The long side of the rectangle runs in a north-south direction. Bay Road lies on its northern boundary. As one goes south from Bay Road, the level of the Land drops. 3 In 1984 there was a service station building constructed on the eastern part of the Bay Road frontage of the Land. A taxi truck business operated from a lower level of that service station. The western part of the Bay Road frontage of the Land, immediately adjoining the railway station, was vacant. This was because there had been contingency plans in existence for decades to increase the number of railway tracks from two to four, and to run the extra tracks through the western part of the Land. Further south on the site were three structures containing garages, in a poor state of repair. 4 The Land (though not including a block about 16m x 17m which lay on the Bay Road frontage and at the western side of the block), was occupied on a yearly tenancy, determinable on three months notice, by Waverton Car Park and Service Station Pty Ltd. That company in turn sub-let most of the land which was let to it to Mayled Nominees Pty Limited, a company owned by Mr and Mrs Mayled, which operated a business called Tower Taxi Trucks from the site. Either Mayled Nominees Pty Limited or Waverton Car Park and Service Station Pty Ltd also further sub-let the garages on a weekly basis, and conducted a casual on-site car park. Proposed Rental Increase 5 In January 1984 the SRA notified Waverton Car Park and Service Station Pty Ltd that it had decided to increase the rental of the part of the Land which was leased, from $5,500 per annum to $26,520 per annum. 6 This claim for a significant increase in rental set off various events. Mr and Mrs Mayled were unwilling to the pay significantly increased rental. They did not sign any document agreeing to the increase. Though Waverton Car Park and Service Station Pty Ltd told the SRA, with much reluctance, that it would agree to the increased rental, no documentation was signed formalising an increase payable by that company. 7 The General Manager of Tower Taxi Trucks, for several years prior to 1984, had been Mr Michael Sprague. His brother-in-law, Mr Michael Bugden, has been a member of the Institute of Chartered Accountants since 1974. He had had experience working for KPMG, auditing companies, including ones involved in property development. In 1984 he had gone into business as a project manager, managing building, development and property transactions for clients. He looked after tasks involving approval, design, construction and marketing for clients. He was a man who had extensive experience of business affairs and transactions. 8 Mr Sprague and Mr Bugden agreed with the Mayleds in principle that, in some way, Mr Sprague and Mr Bugden would arrange to purchase the business of Tower Taxi Trucks, that Mr Bugden and interests associated with him would contribute half of the purchase price of the business in return for a 50% share, and that Mr Sprague and interests associated with him would contribute the remaining 50% of the purchase price in return for a 50% share. 9 In 1984 Mr Peter Hatton, through his wife's company Hilrest Pty Ltd, conducted a retail liquor store in leased premises in Bay Road Waverton, located just to the west of the railway station. The lease of those premises was due to expire, and the landlord's plans were such that it was unlikely to be renewed. Mr Sprague visited the liquor store from time to time. Mr Hatton became aware that the management of Tower Taxi Trucks was unhappy about the rental increase which the SRA wanted. Mr Sprague introduced Mr Hatton to Mr Bugden in about mid-1984. Mr Hatton put a proposal to them that the Tower site be upgraded to include a new truck depot and storage, and also a retail liquor store, which his business would occupy. Mr Hatton offered to contribute half the costs of the redevelopment, and said he could arrange a meeting with the SRA to present the proposal for a new development and a new lease. Mr Bugden told him that they were interested, but needed to get a new lease before they could complete the purchase of Tower. Mr Hatton suggested that he could propose the new lease to the SRA at the same time as proposing the new development. 10 Mr Hatton knew Mr David Hill, the then Chief Executive of the SRA. Through that contact, a meeting was arranged between Mr Hatton and Mr Declan Wood, who was then the Chief Property Manager of the SRA. In all, Mr Hatton had two meetings with Mr Wood. Though there is no documentary record of the meetings, Mr Hatton's evidence that he had two such meetings is corroborated by Mr Graham Truelove, who was then an assistant to the Chief Executive of the SRA. Mr Truelove made arrangements connected with each meeting, and took Mr Hatton to each meeting, though he did not stay for the discussion at the meetings. 11 The plaintiff's case is based upon representations it says were made by Mr Wood to Mr Hatton, at the second of the meetings. In assessing Mr Hatton's evidence about the meetings, one needs to place them into the context of documentary records of what was occurring concerning the leasing of the Land and the advancement of plans for the development of the land. The Documentary Context for Evidence about the Meetings 12 On 12 December 1984 Mr Wood wrote to Mr Mayled, referring to a letter of 12 September 1984 expressing a wish to take over the tenancy. It continued: "… The Authority is prepared to transfer this tenancy to you under similar terms and conditions of the present Agreement. Rental will remain at $26520 per annum with the payment of rates, taxes and outgoings being your responsibility. It should be noted and understood that the Authority is presently engaged in a proposal which effects this site and as such, the Authority is only prepared to allow the site to be occupied until 30th June 1985. Should you desire to enter into a tenancy on this understanding, I will arrange for the necessary documents to be prepared. …"