Elite Promotions & Management Pty Limited v 5A Investments Pty Limited & Ors [2011] NSWSC 590

Supreme Court New South Wales

Medium Neutral Citation: Elite Promotions & Management Pty Limited v 5A Investments Pty Limited & Ors [2011] NSWSC 590 Hearing dates: 22 & 24 September 2010 Decision date: 17 June 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: The plaintiff's claim against the first defendant to set-off sums expended in fit-out of the property as prepayments of rent fails and is dismissed. The plaintiff's claim against the third defendant to set-off sums expended in fit-out of the property as prepayments of rent fails and is dismissed. Catchwords: REAL PROPERTY - Leases - construction of "lessor's works" - works defined in lease as 'works described in the Plan and Specification' - plaintiff submits prior heads of agreement aid to construction - use of different terminology and provision in lease for mechanism to define lessor's works entails heads of agreement does not assist construction - representations said to be made by lessor to mortgagee as to lessor's works inadmissible as subjective understanding of mortgagee not a permissible basis for interpretation - sketch plan exchanged and initialed at time of execution of lease encapsulates works. REAL PROPERTY - Leases - lessee asserts variation of registered lease such that lessee to take over lessor's works with lessee's expenditure to be treated as prepayment of rent - discussions as to arrangements for lessee to perform works and for expenditure to be credited as prepayments of rent amount to personal agreement between lessee and lessor - if lessee can establish it paid moneys in relation to obligations of lessor, lessee would be entitled to set-off such sums as prepaid rent - insufficient evidence to establish that lessor did not perform its obligations and that its obligations were performed by lessee - claim against lessor fails - claim against mortgagee must also fail. REAL PROPERTY - Leases - mortgagee consents to grant of lease under (NSW) Real Property Act (1900) s 53(4) - s 53(4) does not render mortgagee liable to perform lessor's covenants - s 53(4) renders mortgagee bound by lease if mortgagee consents to lease before registration -whether mortgagee could be bound by oral agreement in respect of prepaid rent - oral agreement merely personal agreement between lessee and lessor and cannot bind mortgagee - in any event mortgagee only consented to lease as registered that did not include oral agreement. REAL PROPERTY - Leases - equitable estoppel - mortgagee said to be estopped from denying consent to oral agreement varying lease - no evidence mortgagee knew of alleged variation - no evidence as to parties proceeding on footing that agreement was varied - mortgagee did not remain deliberately silent - no evidence lessee reasonably relied on such belief - mortgagee not estopped from denying consent to variation. REAL PROPERTY - Leases - tenant's right of equitable set-off - exclusion by clear words - whether 'without deduction' constitutes such clear words - 'without deduction' apt to exclude common law right to deduct by way of recoupment - such words not sufficiently clear to capture equitable set-off - in circumstances of present case, where express term of oral agreement provided for lessee to be credited as prepaid rent with payments for works within responsibility of lessor, 'without deduction' did not exclude right to equitable set-off - whether set-off available against mortgagee - lessee's personal claim against lessor cannot bind mortgagee in possession - mortgagee in possession has independent statutory right to enforce rent covenant against lessee unaffected by personal claim of lessee against lessor - mortgagee entitled to recover rent accruing to tenant after notice of mortgage regardless of prepayments to lessor prior to mortgage. Legislation Cited: (NSW) Real Property Act, s 53, s 60, s 63 Cases Cited: Australian Receivables Ltd v Tekitu Pty Ltd [2008] NSWSC 433 Batiste v Lenin [2002] NSWSC 233 British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 Carrathool Hotel Pty Ltd v Scutti [2005] NSWSC 401 Citibank Pty Ltd v Simon Fredericks Pty Ltd [1993] VR 168 Connaught Restaurants Ltd v Indoor Leisure Centre Ltd [1994] 1 WLR 501 De Nicholls v Saunders and Another (1870) LR 5 CP 589 Edlington Properties Ltd v J H Fenner & Co Ltd [2006] EWCA Civ 403 Federal Commissioner of Taxation v Steeves Agnew & Co (Vict) Pty Ltd 82 CLR 408 Grant v NZMC Ltd [1989] 1 NZLR 8 (NZCA) Hudson v Shewket [2003] NSWSC 648 Miwa Pty Ltd v Siantan Properties Pty Ltd [2010] NSWSC 1203 Lee-Parker v Izzet [1971] 1 WLR 1688 Ory v Betamore Pty Ltd (in liq); Farrow Mortgage Services Pty Ltd (in liq) (1993) 60 SASR 393 R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 310 Partnership Pacific Securities Limited [1994] 1 Qd R 410 Reeves v Pope [1914] 2 KB 284 Sandback Holdings Pty Ltd v Durkan [2010] WASCA 122 Saratoga Integration Pty Ltd v Canjs Pty Ltd [2010] NSWSC 654 Texts Cited: Andrew Waite, "Disrepair and Set-off of Damages against Rent: The Implications of British Anzani" (1983) The Conveyancer 373. V K & M R Leong Nominees Pty Ltd v Batur [2003] VSC 17 Category: Principal judgment Parties: Elite Promotion & Management P/L (plaintiff) 5A Investments Pty Ltd (first defendant) Alex Georgeski (second defendant) Kingsway Group Limited (third defendant) Representation: RI Goodridge (plaintiff) A Georgeski (in person, first & second defendants) GK Burton SC (third defendant) Simpson Freed Lawyers (plaintiff) Willis & Bowring (third defendant) File Number(s): 2009/ 289211