The Stuart Park Reserve Trust v Peedoms Lawyers [2009] NSWSC 1369

New South Wales Supreme Court

CITATION : The Stuart Park Reserve Trust v Peedoms Lawyers [2009] NSWSC 1369

HEARING DATE(S) : 7 December 2009

JUDGMENT DATE : 18 December 2009

JUDGMENT OF : James J

DECISION : I dismiss the application for summary judgment and the application that the defence be struck out.

LEGISLATION CITED : Crown Lands Act 1989 Uniform Civil Procedure Rules

CASES CITED : The Stuart Park (D580060) Reserve Trust v Emibarb Pty Ltd [2006] NSWSC 603

The Stuart Park (D580060) Reserve Trust - First Plaintiff PARTIES : Wollongong City Council - Second Plaintiff Peedoms Lawyers Pty Ltd - Defendant

FILE NUMBER(S) : SC 20058/09

COUNSEL : J P Gormly SC / D Shoebridge - Plaintiffs N J Owens - Defendant

SOLICITORS : Fisher Cartwright Berriman Pty Ltd - Plaintiffs Yeldham Price O'Brien Lusk - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JAMES J

FRIDAY 18 DECEMBER 2009

20058/09 THE STUART PARK (D580060) RESERVE TRUST & ANOR v PEEDOMS LAWYERS PTY LTD

JUDGMENT 1 HIS HONOUR: This application, in proceedings by The Stuart Park (D580060) Reserve Trust and Wollongong City Council as the plaintiffs against Peedoms Lawyers Pty Ltd as the defendant, is primarily an application for summary judgment pursuant to Pt 13 r 13.1 of the Uniform Civil Procedure Rules. The application is supported by an affidavit by a solicitor who has the day-to-day carriage of the proceedings for the plaintiffs. Exhibited to this affidavit are two large volumes of documents. 2 The background to the proceedings is complex. The account of the background I am about to give, which is necessarily a simplified account, is based on an outline given by counsel for the plaintiffs at the hearing of the application, which was not challenged by counsel for the defendant, and on the documents in the exhibits to the solicitor's affidavit. I have also had some regard to a judgment given by Bergin J (as her Honour then was) in The Stuart Park (D580060) Reserve Trust v Emibarb Pty Ltd [2006] NSWSC 603. 3 The first plaintiff is the trustee of a reserve of Crown land in North Wollongong known as the Stuart Park Reserve. The second plaintiff is the manager of the Reserve pursuant to s 95 of the Crown Lands Act 1989. 4 In 1986 a lease was granted over part of the Reserve to a company called Emibarb Pty Ltd ("Emibarb"). Emibarb conducted a restaurant business in a building on the land leased to it. In 1996 an option to renew the lease for a further term of 10 years was exercised. The restaurant business prospered and the restaurant became a significant tourist attraction. 5 In January 2001 the building in which the restaurant was being conducted was destroyed by fire. The building had been insured and Emibarb received the insurance moneys. 6 It was the wish of both of the plaintiffs and of Emibarb, that Emibarb, using the insurance moneys and other moneys contributed by it, should have a new building constructed in which the restaurant business would be continued. Negotiations for a new lease, which would not commence until 2006, began at least as early as 2002. 7 The defendant, an incorporated law practice, had in the past provided legal services for the Council. By a letter dated 15 July 2002 the defendant submitted a proposal to the Council that it continue to provide legal services to the Council on the terms set out in the letter. It was stated in the letter that Mr JD Peedom would have the primary responsibility for providing legal services. By a letter dated 19 July 2002 from Mr D Williams the Legal and Risk Branch Manager of the Council, the Council accepted the defendant's proposal to provide legal services. Subsequently, the defendant acted as solicitor for the Council in connection with the proposed new lease and especially in communicating with Emibarb's solicitors Messrs Watkins Tapsell (and particularly Mr Rusbourne of that firm). 8 The negotiations for a new lease were protracted and complicated and I will refer to only some aspects of the negotiations. 9 In October 2002 a draft agreement for lease and a draft lease prepared by the defendant were submitted to Emibarb. A clause in the draft agreement for lease provided that the rent payable under the lease should be the current market rent as at the commencement of the lease determined in accordance with clauses 5.12 to 5.20 of an annexure to the draft lease. It was provided in the draft lease that it should incorporate the Law Society's standard form of lease, including cl 5.12, which was in the following terms:- "5.12 In this case the rent is to be the current market rent. This can be higher or lower than the rent payable at the rent review date and is the rent that would reasonably be expected to be paid for the property determined on an effective rent basis, having regard to the following matters: 5.12.1 the provisions of this lease; 5.12.2 the rent that would reasonably be expected to be paid for the property if it were unoccupied and offered for renting for the same or a substantially similar use to which the property may be put under this lease; 5.12.3 the gross rent, less the landlord's outgoings payable by the tenant; 5.12.4 where the property is a retail shop, rent concessions and other benefits that are frequently or generally offered to prospective tenants of unoccupied retail shops; and 5.12.5 the value of goodwill created by the tenant's occupation and the value of tenant's fixtures and fittings are to be ignored." 10 In a letter dated 5 February 2003, which was faxed to the Council on 12 February 2003, Watkins Tapsell commented on the draft documents. In a paragraph in the letter which Watkins Tapsell numbered 2.14 Watkins Tapsell commented on cl 5.12 in the standard form lease. 11 In a fax of 19 February 2003 to the defendant Watkins Tapsell, using the same paragraph numbering as they had in their letter of 5 February 2003, said, with reference to par 2.14:- "2.14 Clause 5.12: We note that you have requested that we provide a proposed clause and we suggest the following: 5.12.6 the valuer is to value the Property and to make no deduction for any additional improvements carried out by the Tenant in reinstating the building that had previously been destroyed by fire on 9 January 2001. 5.12.7 the valuer will take into account the following table of Tenant's fixtures and fittings and landlord's fixtures and fittings (such table not exhaustive):