Miwa Pty Ltd v Siantan Properties Pty Ltd [2010] NSWSC 1203

Miwa Pty Ltd v Siantan Properties Pty Ltd [2010] NSWSC 1203

On the proper construction of the original lease, clause 16.1 should be read as excluding clause 17.7 from the renewed lease because treating the fixed $45,000 fitout contribution as payable again irrespective of any fitout or cost would be absurd. In any event, the covenant to pay rent free of all deductions excluded the asserted set-off, and there was no evidence of fitout expenditure. The bank guarantee did not expire with the lease, and although the rent claim against the lessee was statute-barred, the call on the demand guarantee was not barred and the beneficiary's right to call was not extinguished. The plaintiff therefore was not entitled to restrain the call on the guarantee.

Jurisdiction
Australia
Judgment Date
21 October 2010
Procedural Posture
Summons Seeking a Permanent Injunction Restraining the First Defendant From Calling on or Dealing With the Proceeds of a Guarantee Bond / Principal Judgment After Interim Injunctions Had Been Granted and Continued
Outcome
The injunctions were dissolved and the summons was dismissed, with the plaintiff ordered to pay the first defendant's costs.
Legal Topics
['option to Renew Lease' 'fitout Contribution Clause' 'covenant to Pay Rent Without Deduction' 'equitable Set Off' 'demand Guarantee or Bank Guarantee' 'statute Barred Rent Arrears' 'construction to Avoid Absurdity']
['real Property' 'leases' 'guarantee Bonds' 'limitation of Actions' 'deeds and Construction'] ['option to Renew Lease' 'fitout Contribution Clause' 'covenant to Pay Rent Without Deduction' 'equitable Set Off' 'demand Guarantee or Bank Guarantee' 'statute Barred Rent Arrears' 'construction to Avoid Absurdity']

Case Brief

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Procedural Posture

Summons Seeking a Permanent Injunction Restraining the First Defendant From Calling on or Dealing With the Proceeds of a Guarantee Bond / Principal Judgment After Interim Injunctions Had Been Granted and Continued

Legal Issues

  1. 1 ['Whether clause 17.7 of the original lease, requiring the lessor to pay $45,000 as a fitout contribution, was included in the equitable lease arising on exercise of the option.' 'Whether the plaintiff was entitled to set off the claimed $45,000 fitout contribution against rent payable under the lease.' 'Whether the first defendant was entitled to call on the bank guarantee if no rent was owing or if the rent claim was statute-barred.' 'Whether the bank guarantee or entitlement to call on it expired or was revoked when the lease ended or by later conduct.' "Whether the first defendant's call on the bank guarantee was statute-barred."]

Ratio Decidendi

On the proper construction of the original lease, clause 16.1 should be read as excluding clause 17.7 from the renewed lease because treating the fixed $45,000 fitout contribution as payable again irrespective of any fitout or cost would be absurd. In any event, the covenant to pay rent free of all deductions excluded the asserted set-off, and there was no evidence of fitout expenditure. The bank guarantee did not expire with the lease, and although the rent claim against the lessee was statute-barred, the call on the demand guarantee was not barred and the beneficiary's right to call was not extinguished. The plaintiff therefore was not entitled to restrain the call on the guarantee.

Court Disposition

The injunctions were dissolved and the summons was dismissed, with the plaintiff ordered to pay the first defendant's costs.

Orders

  • ['That the injunctions granted on 6 May 2010 and continued on 7 May 2010 be dissolved.' 'That the summons be dismissed.' 'The plaintiff pay the costs of the first defendant.']