Construction Technologies Australia Pty Ltd v Doueihi (No 5)

This is the next chapter in a long-running lease dispute. The essential question which is the subject of these reasons is whether the defendant landlords are required to give their consent to the lodgement of a development application which CTA as tenant wishes to make to the Council. The Court answers that question “yes”. However, it is to be emphasised that it is common ground that once the application is lodged, the defendants are free to oppose the application being granted by the Council.

I dealt with an earlier notice of motion (the “First Motion”) between the parties in my judgment in Construction Technologies Australia Pty Ltd v Doueihi (No 4) [2017] NSWSC 684 (the “Earlier Judgment”). These reasons should be read, and assume familiarity, with the Earlier Judgment. Unless otherwise indicated, defined terms in the Earlier Judgment have the same meaning in these reasons.

It will be recalled that following his judgment in Construction Technologies Australia Pty Ltd v Doueihi [2014] NSWSC 1717; (2014) 17 BPR 33,457, White J (as his Honour then was) made the Orders on 18 December 2014 which included:

In the Earlier Judgment, I refused the First Motion, being a motion filed by CTA for an order that the Court sign the Second s 96 Application on behalf of the defendants. The First Motion relied solely on paragraphs 1 and 2 of the Orders. I held that those paragraphs did not have the effect for which CTA contended.

By amended notice of motion filed on 15 December 2017 (the “Second Motion”), CTA seeks this substantive relief:

The Development Application annexed to the Second Motion (the “Third s 96 Application”) seeks to modify the operating hours mandated by the 2009 Development Consent (Monday to Friday: 7.00am to 6.00pm; Saturday: 9.00am to 2.00pm) to permit operation 24 hours, seven days a week. This is longer than the hours sought in the Second s 96 Application.

In summary, CTA relied on two alternative submissions in relation to the lodgement of the Third s 96 Application:

The Court agrees with the first basis propounded by CTA. The Lease requires CTA to obtain all necessary consents and to abide by all applicable laws. The evidence establishes that for some considerable time CTA has been operating in breach of the 2009 Development Consent by operating for very long hours. It has an express obligation under the Lease to regularise that situation. Pursuant to the defendants’ implied obligation to give CTA the benefit of the Lease or, alternatively, not to derogate from CTA’s grant under the Lease, the defendants must not unreasonably withhold their consent to the Third s 96 Application being lodged. The Court finds that the defendants’ withholding of consent to the lodgement of the Third s 96 Application is unreasonable.

The defendants contended that CTA is precluded from relying on its rights under the Lease pursuant to an issue estoppel, Anshun estoppel, or more general principles prohibiting abuse of process. Those arguments are rejected. In particular, when the long history of the litigation between these parties is taken into account with the difference between the Second s 96 Application and the Third s 96 Application, the Court is satisfied that it was not unreasonable on the part of CTA to confine its arguments in the way it did in relation to the First Motion and not to rely on additional matters, including the proper construction of the Lease, which were argued on the Second Motion.

The conclusions in the preceding paragraphs mean that it is strictly unnecessary for the Court to determine the second basis advanced by CTA. However, if the Court’s conclusion as to the proper construction of the Lease is wrong, the Court would nevertheless have accepted CTA’s submission in relation to paragraph 9 of the Orders and the Court’s supervisory jurisdiction. The defendants also raised Anshun estoppel in respect of this alternative argument and — if it were necessary to decide — the Court concludes that CTA is not estopped from relying on paragraph 9 of the Orders in relation to the Second Motion.

These reasons first address the two alternative bases for the claim propounded by CTA, before turning to the defendants’ positive defences of issue estoppel, Anshun estoppel, and abuse of process.

At the hearing of the Second Motion, Ms K Rees of Senior Counsel appeared with Mr R A Jedrzejczyk of Counsel for CTA. Mr J Lockhart of Senior Counsel appeared with Ms J Steele of Counsel for the defendants.

The relevant history of the dispute between the parties up to the time of the Earlier Judgment is set out at paragraphs [12]–[42] of the Earlier Judgment. However, as there was new evidence before the Court on this application, which was not before the Court on the hearing of the First Motion, it is necessary to set out some additional matters.

The 2009 Development Consent was granted by the Council on 3 April 2009.

In his affidavit sworn 31 August 2017, Mr Stephen D’Emilio (CTA’s solicitor) deposed that in approximately June 2010, CTA moved onto the Property and began manufacturing its products using plant and machinery at the Property. In a letter dated 20 April 2016, Mr D’Emilio wrote that since that point (approximately June 2010), CTA “has conducted its operations during the same business hours as it continues to do today”. Mr D’Emilio also deposed that since approximately 2011, CTA has conducted operations at the Property (including by operating its plant and machinery and receiving deliveries of raw materials) outside of the hours approved in the 2009 Development Consent. None of this evidence was controverted by the defendants.

In an affidavit sworn 30 January 2018, Mr Troy Hogan (a former director of CTA) deposed that CTA commenced production at the Property in about April 2011 and that, since then, CTA had received about half of its deliveries of bulk raw materials outside of business hours.

The First s 96 Application was signed by the defendants on 12 May 2015. On that same day, the defendants lodged a detailed objection to the First s 96 Application with the Council, in which they wrote that “The Owners instruct us that CTA has operated double shifts on the Property in breach of the hours of operation provided by the Consent”. As I found at paragraph [25] of the Earlier Judgment, this appears to be the first reference in the evidence to a concern held by the defendants in relation to CTA’s hours of operation.

The First s 96 Application was lodged with Council on 22 June 2015, but was not refused by Council until 9 December 2015. It was ultimately the subject of an appeal to the Land and Environment Court. In the meantime, the Lease had been entered into on 14 September 2015.

During 2016, as set out in the Earlier Judgment, the parties had further correspondence regarding the Second s 96 Application, which ultimately became the subject of the First Motion before me. The Second s 96 Application sought to modify the 2009 Development Consent by changing the approved hours of operation to Monday to Thursday 6:30am to 12:30am, Friday 6:30am to 6:30pm, and Saturday and Sunday 8:00am to 2:00pm. Importantly for present purposes, it sought extended hours of operation, but not 24-hour operation.

Mr Hogan’s evidence was that in June 2016, he was advised by Mr Chris Young (the town planner retained by CTA in relation to the development applications) that CTA did not need to get permission for after-hours deliveries of materials as they did not involve a “use” of the Property.

The First Motion was heard before me on 16 December 2016 and I delivered the Earlier Judgment on 31 May 2017.

On 19 June 2017, CTA’s lawyers wrote to the defendants’ lawyers:

On 19 July 2017, the defendants’ solicitors responded, disputing each and every part of the letter under reply. Their letter included:

CTA’s solicitors replied on 25 August 2017, continuing the debate and foreshadowing an approach to the Court if the defendants did not consent to the lodgement of the Development Application. The letter included:

On 31 August 2017, CTA filed the original form of the Second Motion which is the subject of these reasons.

CTA’s evidence in support of the Second Motion was due in October 2017. In a second affidavit sworn on 14 December 2017, Mr D’Emilio deposed that in the course of the preparation of CTA’s evidence on the Second Motion, Mr Young (the planner) advised CTA that, “given the nature of CTA’s business activities with respect to the receipt of after-hours deliveries of cement and other raw materials”, CTA would need to amend what was then the Second s 96 Application to seek approval for 24-hour operation.

Mr Hogan deposed that on 24 October 2017, CTA was given advice by a specialist Land and Environment Court barrister, Mr Jason Lazarus, that the delivery of raw materials outside business hours may contravene the hours of operation in the 2009 Development Consent. Mr Hogan says that, upon being told this by Mr D’Emilio, he instructed Mr D’Emilio to amend the then Second s 96 Application to seek hours of operation which were 24 hours, seven days a week. Mr Hogan’s evidence is that the “24–7 hours of operation is to deal with after-hours deliveries of raw materials, which have happened in this manner for some years now”.

On this latest hearing before me, CTA tendered two volumes of access records produced by the defendants for the period 1 January 2011 to 7 December 2016. On the basis of those records, and the evidence set out above, the Court finds that from in or around April 2011, CTA has been operating beyond the hours permitted by the 2009 Development Consent.

It will be recalled that “Marble Plus” is the defendants’ business and operates at the Property, occupying premises adjoining the premises which CTA occupies pursuant to the Lease and sharing certain common access and other areas. Through affidavits sworn by their solicitor, Dr Ashley Tsacalos, on 22 December 2017 and 31 January 2018, the defendants have conveyed to the Court the reasons why they have not consented to the Third s 96 Application being lodged as:

The provisions of the Lease which are relevant to the present dispute are:

It is also necessary to set out the applicable provision of the 2009 Development Consent, which approved the defendants’ original development application in relation to the Property for the “construction of an industrial factory/warehouse building with associated offices, ancillary showroom, basement car park and landscaping”. The 2009 Development Consent included (emphasis added):

CTA’s submissions may be summarised as:

In support of those submissions, CTA relied on two authorities in particular. CTA submitted that, while every contract had to be interpreted in accordance with its specific terms, the present case was similar to the lease considered by White J (as his Honour then was) in Dogrow Pty Ltd v Teakdale Pty Ltd [2013] NSWSC 1380 (“Dogrow”):

CTA submitted that the decision of Bryson J referred to above, CF & SP Pty Ltd v FAI General Insurance Co Ltd (Supreme Court (NSW), Bryson J, 17 December 1998, unrep) (“CF & SP”), was particularly pertinent, because it concerned an implied term of co-operation which was necessary to entitle each of the parties to the benefit under the contract. In that case, Bryson J asked whether there was any term within the lease which would make it apparent that the lessor had retained to itself some ability to decide for its own benefit and in its own interest whether it would give approval to the lodgement of a development application. Bryson J was not persuaded that the lessor had retained such an ability. CTA submitted that there was nothing in the terms of the Lease which would lead the Court to reach a different conclusion in this case.

Attention was also drawn to the decision of Black J in Ryding v Miles [2012] NSWSC 153 (“Ryding”):

CTA submitted that both Dogrow and Ryding support the proposition that the defendants have an obligation under the Lease to give their consent to the lodgement of the Third s 96 Application and that, in the circumstances that have arisen, that consent has been unreasonably withheld, with an eye to the defendants’ own interests rather than to CTA’s right to enjoy the full benefits of the Lease.

The defendants’ submissions may be summarised as:

The defendants referred to Black J’s reasoning at paragraph [38] of Ryding, where his Honour cites Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 124–125 as authority for the proposition that an implied contractual duty to co-operate is limited to the contractual obligations contained in the contract, and would not extend to bringing about something which the contract did not require to happen. The defendants drew from these decisions the proposition that one must be able to identify positively a benefit granted to one party in the lease or contract, which the counterparty must provide.

The defendants distinguished Dogrow on the basis that clause 6.01 of the lease in Dogrow required the tenant “during all proper business hours [to] keep the premises open for business”, and submitted that in Dogrow (at paragraphs [25]–[30]), White J found, by reference to the relevant liquor licence, that the tenant’s obligation was an obligation to keep the business open for 24 hours a day.

As to the reasonableness of the defendants withholding consent, the defendants relied on Tamsco v Franklins Ltd [2001] NSWSC 1205; (2001) 10 BPR 19,077 at paragraph [49] per Young CJ in Eq (“Tamsco”) for the propositions that:

As set out in paragraph [30] above, clause 1.9 of the Lease provides that “if the Landlord’s consent or approval is required it must not be unreasonably withheld or delayed”. With some slight differences of emphasis, the Court accepts CTA’s contention that, on the proper construction of the Lease, the defendants’ consent was “required” under the Lease, so as to enliven its obligation under clause 1.9 not to unreasonably withhold that consent. Further, the Court accepts CTA’s submission that the defendants unreasonably withheld their consent to the lodgement of the Third s 96 Application.

The reasons which follow address, first, whether the defendants’ consent was “required” under the Lease and, second, whether that consent (if required) was unreasonably withheld.

CTA’s submission that the defendants’ consent to the lodgement of the Third s 96 Application was required under the Lease essentially relied on a combination of clause 7.3(2)(c) of the Lease and the implication into the Lease of an obligation on the defendants to co-operate as necessary to give CTA the benefit of the Lease and not to derogate from the grant conferred on CTA by the Lease. The parties were at issue both as to the proper construction of clause 7.3(2)(c) and with respect to the implication of an obligation into the Lease.

Turning first to the construction of clause 7.3(2)(c), it will be recalled (see paragraph [30] above) that this clause provides that the CTA “must, at its own expense, comply with all Laws and Requirements and obtain and comply with the consents or approvals of any Authority which may be necessary or appropriate for the Tenant’s business”.

The principles applicable to the construction of clause 7.3(2)(c) are not in doubt. As stated in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at paragraph [35] (citations omitted):

Nothing in clause 7.3(2)(c) indicates that (as the defendants submitted) it is limited to a situation where, at the outset of the Lease, there is a particular consent or approval that is needed for the tenant’s business. On the contrary, on its proper construction the clause is sufficient to encompass the changing needs of the tenant’s business from time to time. That construction is confirmed both by the words “may be necessary or appropriate…” and by a consideration of the commercial purpose of the Lease. The combined effect of clause 7.1 and Item 12 of the Reference Schedule is that the purpose of the Lease is to entitle (and limit) CTA to operating a “[m]anufacturing facility and ancillary offices and warehousing” for the term of the Lease. The defendants’ interpretation would have the result that the needs of the tenant’s business are determined once and for all at the outset of the Lease. That is not a sensible or commercial result, and it does not reflect the plain words of clause 7.3(2)(c) and the fact that the demise is for the term of the Lease.

The Lease does not contractually limit CTA’s operating hours. It is silent on the hours of operation. The permissible hours of operation have effect pursuant to the 2009 Development Consent and CTA’s general law and contractual obligations (see clauses 7.3(2)(c) and 7.4(1)(a) and (b)) to adhere to the terms of that consent. However, nothing in the Lease or the 2009 Development Consent suggests that CTA is confined to, and prevented from seeking to alter, the operating hours set out in the 2009 Development Consent. On the contrary, the terms of the 2009 Development Consent expressly leave open the possibility of an alteration to the operating hours (“[a]ny alteration to these hours will require the separate approval of Council”).

The consents or approvals that “may be necessary or appropriate for the Tenant’s business” extend to whatever consents or approvals are necessary for CTA to do what is within the uses permitted by the Lease from time to time during the term of the Lease. Having granted the Lease and permitted those uses, without reserving to themselves the right to determine CTA’s hours of operation, the defendants have no legal right to determine whether or not it is necessary or appropriate for CTA’s business to extend its operating hours.

The defendants placed emphasis on the fact that the obligation is couched in the terms “the Tenant must”, submitting that this indicates that the clause is referable to the performance of obligations by CTA, as opposed to something which is voluntary or a matter of CTA’s choice. On the defendants’ view, there would need to be something about the tenant’s obligations in the Lease that required it to operate extended hours. I do not accept that submission. The words “the Tenant must” indicate that if CTA (which is only limited by the prescribed permitted uses under the Lease) chooses to operate its business within those permitted uses in a certain way, CTA must obtain the necessary or appropriate consents or approvals. That is precisely what CTA is seeking to do. It is important to note that CTA is not seeking to change the permitted use under the Lease. That could not be done unless CTA were to change the Lease itself, something which could only be done with the defendants’ consent.

Clause 7.3(2)(c) does not, in my view, invite an inquiry into whether it is necessary or appropriate for CTA’s business to operate in a particular manner. Rather, the question is what consents or approvals may be necessary or appropriate given that — as a matter of fact — CTA is operating, or wishes to operate, its business in a particular manner (provided that manner is within the uses permitted by the Lease).

The defendants submitted that the “second limb” of clause 7.3(2)(c) (“and obtain and comply with”) does not extend to seeking to change a Law or Requirement (and that a planning authority’s conditions of consent are a Law or Requirement). This construction faces similar problems to those discussed at paragraph [46] above. It assumes that the Laws and Requirements as they exist at the outset of the Lease (even if, as here, in its terms a Law or Requirement contemplates an application for its modification) must remain static, with CTA unable to obtain a consent or approval that involves changing the terms of a Law or Requirement. That is an uncommercial construction of clause 7.3(2)(c) and does not accord with the intention of the clause — which was plainly to facilitate the tenant making applications for the necessary or appropriate consents as required for its business from time to time — in circumstances where seeking a consent could entail an application that a planning authority alter the extant conditions of consent.

The Court therefore finds that pursuant to clause 7.3(2)(c) of the Lease, CTA had an obligation to obtain the consent of the Council if it wished to trade on the Premises for longer hours than those permitted by the 2009 Development Consent, including to cure its existing breach of its obligations under the Lease and general law to comply with the 2009 Development Consent (a “Law” or “Requirement” as defined in the Lease).

Turning then to the second part of CTA’s argument, this was that in circumstances where CTA cannot comply with its obligation under clause 7.3(2)(c) without the landlord’s co-operation, there is implied into the Lease a term that the landlord co-operate with the tenant to enable the tenant to fulfil its obligation. The implied obligation was put variously as an obligation of co-operation, an obligation to give CTA the benefit of the Lease, and an obligation not to derogate from the grant conferred on CTA by the Lease. CTA says that such an implied obligation means that the defendants’ consent to the lodgement of the Third s 96 Application is “required” under the Lease.

The observations of Mason J (as his Honour then was) in Secured Income at 607–8 are a convenient starting point for consideration of such an implication:

Given that CTA argued that it was obliged by clause 7.3(2)(c) to obtain the Council’s consent, it was unclear whether CTA was relying on an implication of the first or second of the categories of implication contemplated by Mason J. However, on the basis of the other authorities to which CTA referred (which I consider below), it appears that CTA relies on an implication of the second kind: an implied term of co-operation which is necessary to entitle the other party to a benefit under the contract. I will deal with CTA’s submission on that footing.

The principles applied in the authorities referred to by CTA (set out above at paragraphs [33]–[35]), are applicable in this case. As in CF & SP, in this case, there is no indication in the terms of the Lease or in the nature of the rights which it creates, that the defendants have the opportunity to decide, for their own benefit and in their own interest, whether or not CTA is to be able to get the approval of any public authority necessary for CTA to do anything which is within the uses permitted by the Lease. I respectfully agree with Bryson J’s statements of principle in CF & SP, and find them equally applicable in this case.

It is true that, as the defendants submitted, the lease at issue in Dogrow contained a clause (clause 6.01) requiring that the lessees kept the premises open for business “during all proper business hours” (see Dogrow at paragraph [4]). The defendants distinguished the case on this basis. However, the reasoning in Dogrow did not depend on clause 6.01. At paragraph [46], White J stated that the case before him was “stronger” than that dealt with by Bryson J in CF & SP because of the obligations imposed on the lessee by clauses 6.01 and 6.13 (the latter being a clause similar to clause 7.3(2)(c) in the Lease in this case). Based on those clauses, his Honour found that “the lessor’s consent to the development application was essential to the performance of the lessee’s obligations” (i.e., a situation of the first kind referred to by Mason J in Secured Income). However, his Honour continued:

The defendants also relied on Ryding for the proposition that one must be able to identify positively a benefit expressly granted to one party in the lease or contract, which the counterparty must provide. The defendants submitted that because there was no relevant benefit (in terms of expressly stated operating hours) secured to CTA under the Lease, there was nothing to which an implied obligation could attach. In Ryding, clause 2(vi) of the lease under consideration permitted the tenant to “do all things which shall be convenient or necessary” for its quarrying business. Referring to that clause, Black J held at paragraph [40]:

In the present case, CTA has an obligation pursuant to clause 7.3(2)(c) to obtain and comply with the consents or approvals of any Authority which may be necessary or appropriate for its business. That is sufficient, in my view, to impose an implied obligation on the defendants to co-operate where necessary to permit CTA to comply with that obligation, and to enable CTA to have the benefit both of compliance with that obligation and the benefit of its entitlement under the general law to apply to the Council for an amendment to the 2009 Development Consent..

Before leaving the issue of an implied obligation, I should also make brief mention of a recent decision of Darke J to which CTA referred in its supplementary submissions after the hearing, Maroubra Pool Café Pty Ltd v Fedele [2017] NSWSC 1722. In that case, Darke J considered whether a lessor was obliged to consent to the lessee’s application to modify a development consent in relation to operating hours, by reason of an implied duty of co-operation to allow the lessee to have the benefit of the contract. His Honour considered CF & SP, as well as Secured Income, and found (at paragraph [85]) that there was “nothing in the Lease to suggest that the Lessor is free to stymie the obtaining of a permission of that character” — i.e., a permission to extend the plaintiff’s operating hours. His Honour pointed out that the lessor had reserved to itself no such right in the lease. I consider that the same analysis applies with respect to the Lease in the present case.

Accordingly, pursuant to an implied obligation that the defendants co-operate with CTA to enable it to fulfil its obligation under clause 7.3(2)(c), the Court finds that the Lease “requires” the defendants to consent to the lodgement of the Third s 96 Application.

The defendants accepted that clause 1.9 of the Lease would apply to any implied obligation under the Lease to consent to the lodgement of the Third s 96 Application by CTA, and this is clearly the correct position: see Secured Income at 608–9. However, they submitted that even if clause 1.9 were engaged by an implied obligation, the defendants in this instance have not unreasonably withheld consent, but, on the contrary, have acted reasonably.

The Court is satisfied that the defendants have unreasonably withheld or delayed consenting to the lodgement of the Development Application.

The onus lies on CTA to prove that consent has been unreasonably withheld: see Tamsco at paragraph [49]; Fulham Partners LLC v National Australia Bank Ltd [2013] NSWCA 296; (2013) 17 BPR 32,709 at paragraph [59] per Basten JA (Barrett JA and Bergin CJ in Eq agreeing) (“Fulham Partners”).

The defendants articulate the threshold for the inquiry pursuant to clause 1.9 as requiring that the reasons for withholding consent must be “not unfounded” or “not wholly unreasonable”, relying on Tamsco and a line of English authorities including International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513 at 519–21 (“International Drilling”); Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547 at 564 (“Pimms”); and older authorities cited therein.

However, CTA correctly submits that the question of whether the defendants have unreasonably withheld their consent to the lodgement of the Third s 96 Application must be considered not in the abstract, but according to the specific context of the terms of the Lease between the parties. That proposition is supported by Mason J’s adoption in Secured Income (at 610) of a statement of Walsh J in Colvin v Bowen (1958) 75 WN (NSW) 262 at 264 that “the reason for refusal must be something affecting the subject matter of the contract which forms the relationship between the landlord and the tenant, and not something extraneous and dissociated from the subject matter of the contract”. The English authorities to which the defendants refer do not suggest otherwise: see International Drilling at 520 and Pimms at 566–7.

The thresholds posed by the defendants (“not unfounded” or “not wholly unreasonable”) are not of great assistance in determining this issue, which must turn on the construction of the particular contract with which the Court is concerned. I respectfully agree with the observations of Basten JA (with whom Barrett JA and Bergin CJ in Eq agreed) in Fulham Partners (at paragraph [45]) that:

The defendants’ concerns are summarised at paragraph [29] above. In relation to their concern about the absence of an offer for increased rental, as was the case in Dogrow (see paragraph [38]), in my view, this is at least an veiled attempt to extort a higher rent than that to which the defendants are entitled under the Lease. Where, as here, the Lease provides for how the rent is to be determined, it is “extraneous and disassociated with the subject matter” of the Lease in the sense those words were used by Walsh J (see paragraph [66] above) to seek to take advantage of CTA’s predicament to obtain a rental increase outside the rental regime stipulated in the Lease. Furthermore, it seems to be me to be odd, to say the least, that given the defendants’ alleged concern, there is no evidence that they have even proposed an alternative rental figure. If that concern is genuine, their failure to do so is evidence of unreasonable delay.

In relation to the other concerns noted at paragraph [29] above, the Court does not regard them as reasonable. Here, the consent required and sought is merely consent to the lodgement of a development application. The matters identified by the defendants might be reasonable bases for withholding consent if, for example, they were concerns that would not be able to be dealt with by the Council in considering the Third s 96 Application. The defendants argued that the Council will limit its consideration to “valid planning or building grounds” and will not consider the “reasonable private concerns” held by the defendants in determining whether to consent to the application by CTA to increase the approved operating hours.

The matters which the Council would be permitted to take into consideration in evaluating a development application by CTA to increase its approved operating hours, pursuant to s 79C of the Environmental Planning and Assessment Act 1979 (NSW) (“EPA Act”), include “the likely impacts of that development, including environmental impacts on both the natural and built environments”, and “the suitability of the site for the development” (s 79C(1)(b)-(c)). To the extent that the defendants’ concerns relate to safety and security risks at the Property and the impact on the Property from increased wear and tear, these matters can be considered by the Council under the EPA Act. These concerns of the defendants, if shown to be correct, might demonstrate that their opposition to the approval of the Third s 96 Application was reasonable. However, they do not have that same quality in relation to the withholding of consent only to the lodgement of the Third s 96 Application.

It being recalled that the terms of the Lease to give effect to White J’s original judgment were, with one exception resolved by White J, agreed between the parties (see paragraph [26] of the Earlier Judgment). To the extent that the defendants hold concerns which the Council might not take into account as they relate to the defendants’ private interests (perhaps, for example, their concern about increased insurance premiums), it was open to the defendants to protect those interests by including in the Lease express provisions entitling them to limit CTA’s operating hours. They did not do so. Those private interests do not now form a reasonable basis for refusing to consent to the Third s 96 Application being lodged with the Council for consideration.

Because of the view I have reached in relation to CTA’s rights under the Lease, it is not strictly necessary for me to go on to consider the alternative basis on which CTA said it was entitled to the relief sought in the Second Motion. However, in case the matter goes further, I will briefly deal with CTA’s alternative argument.

As it was originally formulated by Ms Rees SC, CTA’s argument was founded on an appeal to the Court’s jurisdiction to supervise the performance of contracts which are the subject of decrees of specific performance. The most common example is an order for specific performance of a contract for sale of land. In paragraph [70] of the Earlier Judgment I expressed my agreement with White J’s characterisation that the Orders are for specific performance. Paragraph 5 of the Orders is clearly an order for specific performance, requiring the first to fourth defendants to execute a lease in certain terms (which became the Lease). CTA submitted that it followed that the future performance of the Lease was brought within the control of the Court (see, for example, Precision Pest Control Pty Ltd v Ligon 158 Pty Ltd [2004] NSWSC 1163; (2004) 12 BPR 22,681 at paragraphs [8] and [23]–[24] per Palmer J).

I respectfully adopt the summary of the relevant principles set out by White J (as his Honour then was) in another leasing case, Riltang Pty Ltd v L Pty Ltd [2004] NSWSC 977; (2004) 12 BPR 22,347 (“Riltang”):

It is no criticism that, during the course of exchanges between bench and bar table, the basis of CTA’s application underwent some refinement. If, as I have found, the defendants were obliged to consent to the lodging of the Third s 96 Application by reason of the terms of the Lease, then it is unnecessary to decide whether the basis of the jurisdiction was any form of special supervisory jurisdiction deriving from the origins of the Lease in an order for specific performance. The defendants, no doubt cognisant of their obligations to facilitate the just, cheap and quick resolution of the dispute, very sensibly took no point about the form of the proceedings, i.e. a motion in these proceedings or an order for specific performance brought in fresh proceedings. Subject to the special defences of issue and Anshun estoppel raised by the defendants, they accepted that the real question between the parties was whether the defendants were required under the Lease to consent to the Third s 96 Application.

If, contrary to the view expressed above, the Lease did not require the defendants to consent to the lodging of the Third s 96 Application, then the jurisdictional basis for CTA’s claim was less obvious. CTA relied on what it called the Court’s “supervisory jurisdiction” to secure the proper performance of the Orders — pointing to the jurisdiction identified, for example, in the passage from Riltang quoted at paragraph [74] above.

Ultimately, the submission was further refined as relying on paragraph 9 of the Orders, which, it will be recalled, provided: “Grant liberty to apply, and reserve matter for further consideration as to whether further orders may be required, or if the plaintiff does not comply with its undertaking noted in order 1, or regulatory approvals are not obtained.” CTA’s argument ultimately became:

In response to CTA’s submission based on the Court’s supervisory jurisdiction and paragraph 9 of the Orders, the defendants submitted:

The defendants relied on my observations in the Earlier Judgment regarding paragraph 9 of the Orders, in particular:

CTA’s argument that it inadvertently failed to comply with its undertaking in paragraph 1 of the Orders (to do all things necessary to obtain all necessary regulatory approvals for its occupation and use of the premises) and therefore that, pursuant to paragraph 9 of the Orders, further orders are required to enable it to rectify that non-compliance, should be accepted.

Acceptance of CTA’s submission on this point is not inconsistent with the paragraphs of the Earlier Judgment on which the defendants rely (see paragraph [79] above). At paragraph [63] of the Earlier Judgment, I noted that further recourse to the Court would be required if CTA had not complied with its undertaking in paragraph 1 of the Orders. It is convenient at this point to set out some additional paragraphs of the Earlier Judgment with respect to the construction of the Orders (emphasis added):

On the evidence before the Court upon the hearing of the Second Motion, CTA has established that “at the time the approvals were sought” in purported compliance with the undertaking in paragraph 1 of the Orders, it inadvertently failed to include in its development application a request for 24-hour operations, which request was necessary for it lawfully to use and occupy the Property pursuant to the Lease that was to be executed in accordance with the Orders.

The relevant time when approvals were sought in apparent compliance with paragraph 1 of the Orders was 22 June 2015, when CTA lodged an application with Council to modify the terms of the 2009 Development Consent. This lodgement predated the Lease, which is dated 14 September 2015. The evidence establishes that CTA has conducted operations at the Property (including by operating its plant and machinery and receiving deliveries of raw materials) outside of the hours approved in the 2009 Development Consent since approximately 2011 (see paragraph [28] above).

The facts that CTA’s Second s 96 Application, which was at issue in the First Motion before me, sought extended hours of operation but not 24-hour operation, and that the Third s 96 Application seeks 24-hour operation do not reflect an actual change in the regulatory approvals necessary for CTA to lawfully use and occupy the Property pursuant to the Lease. Rather, they reflect a change in CTA’s understanding as to what are the necessary regulatory approvals, as is established by the evidence of both Mr D’Emilio and Mr Hogan on the Second Motion.

The Court is satisfied that CTA has established that in order to operate lawfully in 2015 at the time when the original development application was lodged pursuant to paragraph 1 of the Orders, it needed a modification to the 2009 Development Consent to permit 24-hour operation. In those circumstances, the additional provision made in paragraph 9 of the Orders is enlivened, because that was expressed precisely to address the situation where CTA has not complied with its undertaking in paragraph 1. As an exercise of this Court’s supervisory jurisdiction to secure proper performance of the Orders (see Riltang, above at paragraph [74])) and pursuant to paragraph 9 of the Orders, I would conclude that CTA should now be permitted to lodge the Third s 96 Application to rectify its non-compliance with Order 1 pursuant to Order 9.

In their written submissions, the defendants raised an issue estoppel in respect of CTA’s alternative case (which relies on paragraph 9 of the Orders and the Court’s supervisory jurisdiction). This was not raised in oral argument. On the contrary, Mr Lockhart SC confirmed that the defendants were “certainly not putting issue estoppel” in respect of the construction of the Lease. For completeness, I will briefly address the parties’ written submissions on issue estoppel in respect of CTA’s alternative case.

The defendants submit (and CTA does not suggest otherwise) that issue estoppel covers matters which the Earlier Judgment necessarily established as the legal foundation for its conclusion. The relevant question is whether there is an issue of fact or law that is alleged or denied in the present application which was necessarily decided by the Earlier Judgment. The defendants referred to the statement of Dixon J (as his Honour then was) in Blair v Curran (1932) 62 CLR 464 at 532 (“Blair v Curran”) that “[m]atters cardinal to the later claim or contention cannot be raised if to raise them it is necessary to assert that the former decision was erroneous”.

The defendants say that the Earlier Judgment was final in substance as it disposed of any remaining issues following the Decision, determined the effect of the Orders, and, in so doing, determined the effect of paragraph 9 of the Orders. According to the defendants, the Earlier Judgment determined that the intention of the Orders was to create a process culminating in the execution of a lease which then governed the relationship between the parties, thereby deciding the effect of paragraph 9 of the Orders and precluding CTA from now relying on paragraph 9 for any further orders.

In reply, CTA notes that the principles governing issue estoppel were recently stated by Bathurst CJ (with whom Beazley P and Emmett JA agreed) in Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) 313 ALR 665 (“Ekes”) at paragraphs [110] and [112] as follows:

CTA argues that neither the first nor the second elements of the test identified by Bathurst CJ are satisfied in this case.

First, CTA says that the same question for determination does not arise because whereas the hearing and determination of the First Motion was confined to the proper construction and operation of paragraphs 1 and 2 of the Orders, the present proceedings concern CTA’s ability to exercise the liberty to apply granted in paragraph 9 and the scope of the Court’s jurisdiction to supervise orders for specific performance. CTA drew to attention that at paragraph [53] of the Earlier Judgment, I held:

Second, CTA argues that the Earlier Judgment was not “final” in the sense required to found an issue estoppel, citing Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 at paragraph [25] and El-Saeidy v Land and Housing Corporation (NSW) [2014] NSWCA 172 (“El-Saeidy”). In El-Saeidy, McColl and Ward JJA said at paragraphs [61]–[62]:

Finally, CTA contended that it is clear from paragraphs [54] and [59] of the Earlier Judgment that the observations made in paragraph [63] regarding paragraph 9 of the Orders were matters of context which informed the interpretation of the paragraphs 1 and 2 of the Orders, and were not a determination of the legal effect of paragraph 9 of the Orders.

There is no controversy between the parties as to the principles applicable to the concept of issue estoppel: see Blair v Curran at 532; Ekes at paragraph [110] and [112].

Difficult questions of characterisation can arise in determining whether a judgment is final or interlocutory. In my view, in this case the Earlier Judgment is more appropriately characterised as interlocutory, simply concluding the fate of the particular notice of motion brought by CTA rather than finally determining the rights of the parties in a principal cause pending between them.

However, regardless of whether the Earlier Judgment is characterised as final or interlocutory, the defendants’ submissions on issue estoppel are rejected. The effect of paragraph 9 of the Orders was not a necessary element of the legal foundation for the conclusion reached in the Earlier Judgment. The references to paragraph 9 of the Orders were by way of fortification of the conclusions reached with respect to the construction of paragraphs 1 and 2 of the Orders. As CTA correctly points out, it is noted at paragraph [68] of the Earlier Judgment that CTA expressly did not rely upon paragraph 9 in bringing the First Motion and, as such, the contention that CTA is precluded from relying upon paragraph 9 in the Second Motion on the basis of issue estoppel should be rejected. The “same question” does not arise in these proceedings as in the Earlier Judgment.

The defendants submitted that an estoppel of the kind considered in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (“Anshun”) arises in this case, both in respect of CTA’s arguments concerning construction of the Lease and in respect of CTA’s alternative argument concerning paragraph 9 of the Orders and the Court’s supervisory jurisdiction.

The defendants contend that parties to litigation are expected to bring forward their whole case and it was unreasonable of CTA not to agitate these questions in the earlier proceedings.

The defendants referred to C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at paragraphs [60]–[62] per Campbell JA (Tobias JA agreeing; Handley AJA concurring) as a useful summary of the relevant principles:

Relying on these principles, the defendants submitted that it was clear that it would have been efficient to have dealt with arguments concerning the construction of the Lease at the same time as dealing with an application for precisely the same relief under paragraphs 1 and 2 of the Orders. They argued that the question whether there is an obligation on the defendants under the Lease to consent to the Third s 96 Application falls squarely within the principle that it forms so much part of the subject matter of the initial litigation that it was unreasonable not to have relied upon it in that litigation. The defendants pointed out that construction of the Lease was so closely connected to the earlier proceedings that in the course of argument about the First Motion the Court was taken to the relevant clauses of the Lease, and the contractual basis was referred to before ultimately not being pressed.

As to the unreasonableness of not raising the construction of the Lease in the earlier proceedings, the defendants contended that this is not a case where the separate pursuit of two actions was clearly preferable for some reason of efficiency or time saving, because there is a clear overlap between the arguments, similar evidence was required on both applications, and the same relief is sought.

The defendants made similar points with respect to the reliance on paragraph 9 of the Orders. They noted that reliance on paragraph 9 of the Orders was one of the bases originally set out in the First Motion. Further, applying the Anshun principle, they submitted that it was obvious that in the act of relying upon paragraphs 1 and 2 “directly”, CTA should at the same time have contended that if it failed to obtain relief by references to paragraphs 1 and 2 of the Orders, it would nevertheless be permitted to invoke them indirectly and belatedly, via paragraph 9 of the Orders.

CTA referred to five key propositions regarding Anshun estoppel, which it drew from the judgment of Meagher JA (with whom McColl and Leeming JJA agreed) in Conference & Exhibition Organisers Pty Ltd v Johnson [2016] NSWCA 118 at paragraphs [21]–[24]:

CTA submitted that its prior contentions regarding the effect of paragraphs 1 and 2 of the Orders involved matters of law that are entirely distinct from the issues raised in the current application. Moreover, it argued that it was reasonable for CTA to have confined its earlier motion to what appeared to CTA to be the most efficient legal basis (the residual operation of paragraphs 1 and 2 of the Orders) and the fact that the Court ultimately took a different view on those matters should not prejudice CTA’s entitlement to bring the current application.

The determination of whether, in these proceedings, CTA is asserting a claim or raising an issue that is “so closely related to the subject matter of proceedings already conducted that it ought reasonably to have been asserted or raised” (Tomlinson at paragraph [22]) on the First Motion is not straightforward. In particular, there are good arguments on both sides with respect to the reasonableness or otherwise of CTA’s course of action in not pursuing claims relating to the Lease on the hearing of the First Motion.

This is a case in which the observations of Allsop P in Champerslife, that there can be no “mechanical approach” to determination of Anshun estoppel claims, are particularly apposite. Before addressing the two claims (the one relating to the Lease, the other to paragraph 9 of the Orders) in turn, there is a fundamental contextual consideration on the question of reasonableness which has informed my conclusion that that there is no Anshun estoppel in the present case.

The defendants’ contentions on Anshun estoppel are at their most persuasive if the First Motion and the Second Motion are viewed in isolation. However, to do so would be to prefer the technical over the reality of the legal and commercial situation in which these motions arose: a long running and bitterly fought series of hearings where CTA has been vigorously opposed by the defendants taking all available points at every turn. In making this observation I am not suggesting that the defendants were not entitled to do so.

Nevertheless, the fact remains that the original hearing before White J (as his Honour then was) took seven days. There were then three further contested hearings consequential on his Honour’s judgment (see paragraphs [19], [23] and [30] of the Earlier Judgment). The defendants’ appeal was then heard and dismissed. It is obvious from the entire history of the dispute between these parties that the defendants are, at best, reluctant landlords who, as I observed in paragraph [70] of the Earlier Judgment, are vigilantly maintaining their rights. When all that history is taken into account, the forensic decision taken to confine the First Motion to what was presented as a short, sharp point cannot, in my view, be characterised as unreasonable. The point was clearly arguable. For this reason, CTA’s ultimate lack of success on the First Motion does not alter that conclusion.

Turning to the Lease, insofar as determining Anshun estoppel involves a “value judgment to be made referable to the proper conduct of modern litigation” (Champerslife at paragraph [3] per Allsop P), it is appropriate to take into account the considerations referred to in s 56 of the Civil Procedure Act 2005 (NSW) (“CPA”). The defendants’ submissions that an argument in the earlier proceedings concerning construction of the Lease would not have added substantially to the time or cost of the earlier proceedings have some force, particularly as the construction of the Lease turns almost entirely on legal, rather than factual arguments, and did not require much (or any) additional evidence to be adduced. Of course, CTA says in response that it was reasonable for it, having regard to those same considerations under s 56 of the CPA, to confine its argument in the earlier proceedings to what seemed to it at the time to be the most efficient legal basis to support its claims.

In my view, whether CTA is estopped in the Second Motion from relying on the Lease requires consideration of how one defines the “subject matter” of the First Motion. The factual substratum of the two proceedings is substantially the same, save for the fact that CTA is now seeking the defendants’ consent to a different development application (the Third s 96 Application), one which seeks Council approval for 24-hour operation, rather than merely extended hours of operation.

In the circumstances where the motion now before me relates to a different development application and having regard to the consideration of reasonableness referred to in paragraphs [107] and [108] above, I consider that the issues are not so closely related to the subject matter of the First Motion that it was unreasonable not to raise them in those proceedings. In reaching that conclusion, I have borne in mind that there are a variety of circumstances in which a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate it in other proceedings (Anshun at 603). Having heard and dealt with the First Motion, and bearing in mind that it is a serious step to shut out a claim without determination on its merits (see Habib at paragraph [85]), in my view this is a case where CTA made a reasonable, considered decision to limit the points of argument on the First Motion and confine the submissions to what appeared to be the most time- and cost-efficient to pursue.

In relation to paragraph 9 of the Orders, if it were necessary to decide whether CTA is precluded, by reason of an estoppel of the kind referred to in Anshun, from relying on its alternative argument, the facts do not support the defendants’ complaint. This is because the advice that precipitated CTA’s change in position to seek 24-hour access came after my decision in relation to the First Motion (see paragraphs [20], [21] and [26] above).

In any event, the considerations referred to above in relation to the Lease are still stronger in respect of the paragraph 9 claim. The paragraph 9 claim, as well as relating (like the Lease claims) to a different subject matter in the sense of a different development application, does necessitate adducing additional and new evidence about CTA’s inadvertence to certain matters at the stage of initially seeking regulatory approvals and the events which led to its realisation that it would need to apply for 24-hour access. In those circumstances, even if it had been aware of the need for 24-hour access, in my view it would not have been unreasonable for CTA to seek to avoid the extra burden and factual complexity surrounding the paragraph 9 argument on the hearing of the First Motion.

It was not clear whether the defendants sought to raise abuse of process as a separate defence, or rather to call in aid the concept of abuse of process as a supplement to their Anshun estoppel arguments. Mr Lockhart SC appeared to suggest the latter during oral submissions and otherwise made no reference to an independent defence based on abuse of process.

However, the defendants’ written submissions treat abuse of process as an alternative defence, stating that in any event, the Court should not entertain a second application for the same relief, because there have been no changes in circumstances or evidence which has become available since the time of the original hearing (citing Bajramovic v Calubaquib [2015] NSWCA 139 at paragraph [41] (“Bajramovic”)). The defendants suggest that the “interests of justice” and the “principle of finality of litigation” do not favour permitting CTA to bring a second application, and refer also to CPA ss 56–60.

CTA submits that there is no general principle that, absent a change of circumstances, its application must be dismissed as an abuse of process. CTA emphasises the context within which the relevant observations in Bajramovic were made, citing the observations of Emmett JA (with whom Leeming JA and Adamson J agreed) at paragraphs [40]–[41] as follows:

Relying on the statement in Bajramovic that the “interests of justice” are the overriding principle, CTA submits that such interests point strongly in favour of CTA’s amended motion being heard and determined, because the ability to operate within the extended hours is critical to CTA’s business, the consequences of being denied the opportunity to be heard on the Second Motion are severe, and the defendants have not demonstrated that they will suffer any prejudice if the motion is resolved in CTA’s favour.

Reading the dicta of Emmett JA in Bajramovic in context, in my view his Honour did not lay down a general rule that the only circumstances in which a second application such as the one in this case may be made are where there has been a change of circumstances or newly available evidence. His Honour expressly states that those two factors are “not an exhaustive statement” of the circumstances in which a second application after an initial unsuccessful application may be made.

I accept CTA’s submissions that the interests of justice weigh in favour of CTA being permitted to bring this application, particularly given my findings with respect to the proper construction of the Lease, the evidence concerning the circumstances in which CTA became aware that it needed to apply for consent to 24-hour access and my conclusions that CTA are not otherwise estopped from bringing the proceedings.

CTA has succeeded. The Court will give the parties an opportunity to bring in short minutes to give effect to these reasons. The Court will hear any argument if the parties are unable to agree on the form of orders, including as to costs.