Fewstone Pty Ltd v Ross Nielson Properties Pty Ltd and George(No 171) Pty Ltd [2003] QSC 82 (4 April 2003)

Last Updated: 4 April 2003

SUPREME COURT OF QUEENSLAND

CITATION:	Fewstone Pty Ltd v Ross Nielson Properties Pty Ltd and George (No 171) Pty Ltd [2003] QSC 82
PARTIES:	FEWSTONE PTY LTD ACN 010 496 465 (Applicant) v ROSS NIELSON PROPERTIES PTY LTD ACN 010 754 873 (First Respondent) GEORGE (NO 171) PTY LTD ACN 099 272 170 (Second Respondent)
FILE NO/S:	SC No 9464 of 2002
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	4 April 2003
DELIVERED AT:	Brisbane
HEARING DATE:	10 February 2003
JUDGE:	Atkinson J
ORDER:	Application for declarations refused
CATCHWORDS:	CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - CONDITIONS OF CONTRACT - RULES OF CONSTRUCTION - where landlord granted tenant a car park licence at the time of granting the lease - where landlord failed to provide the car parks - whether the licence formed part of the lease agreement - whether breach of the licence amounted to a breach of an essential or innominate term of the lease. PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - DECLARATIONS - APPROPRIATE FORM OF RELIEF - DISCRETION OF COURT - DECISION OF QUESTIONS AFFECTING FUTURE ENTITLEMENTS - where applicant sought a declaration of entitlement to terminate the lease - where applicant had not yet elected to terminate the lease - whether the court has discretion to refuse to make such a declaration. Ankar Pty Ltd and Another v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549, cited Associated Newspapers Ltd v Bancks [1951] HCA 24; (1951) 83 CLR 322, applied DTR Nominees Pty Ltd v Mona Homes Pty Ltd and Another [1978] HCA 12; (1978) 138 CLR 423, applied Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7; [1962] 2 QB 26, applied Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73, considered
COUNSEL:	SSW Couper QC for the applicant DC Andrews SC for the first respondent AW Duffy for the second respondent
SOLICITORS:	Biggs and Biggs for the applicant Phillips Fox for the first respondent Jones King for the second respondent

[1] ATKINSON J: This is an application for various declarations concerning a lease and Deed of Car Park Licence entered into between the applicant and the first respondent on 16 July 2001. The applicant, Fewstone Pty Ltd ("Fewstone"), is a company which trades under the name or style of "City Beach". City Beach conducts a chain of retail outlets which sell clothing, shoes, sporting goods and fashion accessories. It conducts 23 retail outlets in Queensland, two in New South Wales, and one in Western Australia. Its gross turnover during the financial year ending 30 June 2002 was some $80,000,000.00.

[2] In March 1999, the first respondent, Ross Nielson Properties Pty Ltd ("Ross Nielson") became the registered owner of land on which two adjacent buildings in the central business district of Brisbane were situated. One of those buildings was a seven level commercial building situated at 171 George Street, Brisbane, formerly known as the Family Services Building, and described as Lot 1 on CP B31910, title reference 18695101 ("171 George Street"). The other was a single level building situated at 151 George Street, Brisbane, commonly known as Morcom House, and described as Lot 4 on CP 816116, title reference 50119602 ("151 George Street"). Ross Nielson carried out a major refurbishment of 171 George Street and leased commercial office space in the building. It appears that Ross Nielson intended to demolish 151 George Street and completely redevelop the site as a high rise residential building.

[3] On 16 July 2001, Fewstone entered into an agreement with the first respondent, Ross Nielson, for the lease of the premises and a licence for the use of the car parks. The lease was the whole of Level One of the building situated at 171 George Street ("the office premises"). The lease was for an initial term of five years. The annual rent was initially fixed at $286,445 with a monthly rent reduction of just under 50 per cent. In addition, Fewstone entered into a licence for the use of four carparks at 151 George Street.

[4] The lease contains the terms usually expected in a commercial lease of its type. It includes clauses dealing with the landlord's entitlement to end the lease early, breach of the lease by the tenant, and what are said to be fundamental terms, breach of which would amount to a repudiation of the lease by the tenant. There is no mention of the car park licence in those terms.

[5] Clause 86 is headed "Whole Agreement" and provides: "This lease and any related agreement comprise the whole of the agreement between the parties in respect of the premises". In the first schedule to the lease, the deed of car park licence (the "licence") between the landlord and the tenant is defined as a related agreement. In cl 88, the tenant warrants that it has relied on its own inquiries in connection with the lease and not on any representation or warranty by the landlord of any person acting or purporting to act on the landlord's behalf.

[6] The licence was entered into by Ross Nielson as licensor and Fewstone as licensee on the same date as the lease. The recitals provide that Ross Nielson is the proprietor of 171 George Street; that Ross Nielson had agreed under the lease to grant to Fewstone a lease of the office premises on the terms contained in the lease; and that Ross Nielson has agreed to grant Fewstone a licence of the licensed area being four single car parking spaces in the car park as indicated on the licensed area plan which must at all times be fully enclosed on 151 George Street.

[7] Pursuant to cl 1.1 of the licence, Ross Nielson granted Fewstone a licence to park vehicles in the licensed area, including commercial vehicles for delivery and dispatch of goods in connection with Fewstone's business conducted from the office premises during the term of the lease, on the terms contained in the licence. Clause 1.3 provided that the licence could be transferred to any person to whom the lease was also transferred. Both the licensor and the licensee were entitled to determine the licence upon the determination of the lease or for breach of covenant in the licence. The licensor was also entitled to terminate the licence for failure to pay.

[8] Under cl 4.11 Fewstone acknowledged that no representations had been made to it by Ross Nielson with respect to the terms of the licence and that Fewstone had not entered into any contract or collateral warranty with respect to parking any vehicles in the car park on the basis of terms additional to or in conflict with the terms and conditions contained in the licence.

[9] Clause 5 of the licence set out what was to occur should 151 George Street be redeveloped as was anticipated. It provided:

"Closure of car park for redevelopment

5

Right to close car park

5.1 At any time during the Lease the Licensor shall have the absolute right to close the Car Park to enable the Licensor to carry out a redevelopment of the Land. However, the closure of the Car Park is subject to the conditions set out in this clause.

Notice of closure

5.2 If the Licensor wishes to close the Car Park then the Licensor must give to the Licensee at least 2 months notice in writing of the intention to close the Car Park and specifying the date of closure.

Suspension of Licence

5.3 On the date of closure the Licensee must cease using the Car Park and the rights and obligations of the parties under this Licence shall, except as provided in this clause, be suspended for so long as the Car Park is closed.

Alternative car parking

5.4 The Licensor must (at its sole cost) hire, license and otherwise arrange for the Licensee to have the use of four (4) car parking spaces (`the Alternative Car Parks') marked on the plan annexed hereto with the letter "A" during the period of closure of the Car Park. In order to assist the Licensee to have full use of the Alternative Car Parks, the Licensor shall ensure that a communications system is installed at the boom gate at the corner of Queenstate Lane in order to enable the Licensee to remotely raise the said boom gate. The Licensor will also arrange for the construction of an awning from the subject building extending over the Alternative Car Parks to an extent to enable them to be used without interruption from rain. The Licensor will also construct either a suitable ramp or automated lifting system to enable persons using the Alternative Car parks to gain ingress into the building and then to the demised premises, which ingress shall be unimpeded.

Agreement for Alternative Car Park

5.5 If the Licensor is required to sign a Licence or other Agreement with the owner or operator of the Alternative Car Park, then the Licensee will sign a Deed in favour of the Licensor agreeing to be bound by and comply with the Licence or other Agreement for the Alternative Car Park.

Fees

5.6 The Licensee shall pay the Monthly Fee (as provided in this License) for parking vehicles in the Alternative Car Park.

Application of this Licence

5.7 The provisions of clauses 2, 3 and 4.14, 4.15 and 4.16 of the Licence shall continue to apply during the use of the Alternative Car Park.

Re-open car park

5.8 Upon completion of the redevelopment of the Land, the Licensor must re-open the Car Park although it may be in a different location on the Land. The Licensor must give the Licensee one months notice in writing of the intention to re-open the Car Park. On the date of re-opening, the Licensee shall discontinue using the Alternative Car Park, and this Licence shall recommence and the parties will be bound by it provided however the Licensee shall not be required to discontinue using the Alternative Car Park and this Licence shall not recommence until such time as the rights or obligations assumed by the Licensee under clause 5.5 have terminated or expired."

[10] The alternative car parks referred to in cl 5.4 and shown on the sketch plan in annexure "A" are located on a separate adjoining property situated at 77 Elizabeth Street, Brisbane described as Lots 1-8 and 13 on RP 602 owned by Ross Clarke, Edward Kann and Serres Pty Ltd. The ramp, awning, automated lifting system, boom gate and communications system contemplated in cl 5.4 of the licence would have to be constructed on 77 Elizabeth Street. That property comprises a building, a laneway called Queenstate Lane and an open area for parking of vehicles. The existing car parking on 77 Elizabeth Street abuts the rear wall of 171 George Street. It appears, however, that the first respondent has not been able to make these alternative car parks available.

[11] It remains to refer to two interpretative clauses which demonstrate the inter-relationship between the licence and the lease.

"Whole Agreement The covenants, agreements and provisions contained in this document and the Lease comprise the whole of the agreement between the parties in respect of the Vehicles and the Car Park. No further or other covenants, agreements or provisions shall be deemed to be implied in this document or to arise between the parties by way of collateral or other agreement by reason of any statement, representation, warranty or undertaking given or made by any party to any other party or any person on their behalf on or prior to the date of this document. The existence of any implied or collateral or other agreement is hereby expressly negatived.

...

Interpretation by Unless the contrary intention appears, and/or

Reference To Lease such interpretation shall be excluded by or be repugnant to the context:

(a) wherever an expression is used in this Deed and such an expression is not defined in this Deed, then this Deed shall be interpreted and/or the expression shall have the meaning defined or attributed to it under the Lease;

(b) the interpretation provisions of the Lease shall apply to this Deed mutatis mutandis and in particular and without limiting the foregoing, with the expression "this Deed" being read in lieu of "the Lease" where it may appear in those provisions."

[12] Mr Hicks, a director of Fewstone, says that City Beach uses the office premises for central administration and management of its business and for the display of merchandise to the directors and employees of City Beach who will decide what merchandise will be sold in City Beach stores. Almost invariably that merchandise is brought to the office premises by sales representatives of manufacturers and distributors. The sales representatives generally park their commercial vehicles in the car parking spaces at 151 George Street.

[13] Mr Hicks says that a very large volume of merchandise is transferred by the sales representatives to the office premises every day. During peak buying seasons, racks and boxes arrive at, or are collected from, the office premises constantly. During less busy times the number of deliveries or collections reduces to 10 per day.

[14] Mr Hicks asserts that the orderly viewing of the merchandise and the ability of the sales representatives to access the office premises easily is essential to the business of City Beach. The car parks at 151 George Street are important to the conduct of the business because the sales representatives have unimpeded and undercover access from the car parks to the elevator which leads to the office premises. The sales representatives often use wheeled racks for the purpose of transporting their merchandise from the car parks at 151 George Street to the office premises. Clothing and items of apparel which are transported to the office premises would be difficult to transport manually over any distance especially in inclement or windy weather. The car parks are also used by the directors of Fewstone. The car parks are secure and can only be accessed by use of an electronic pass or intercom release. Mr Hicks says that the office premises are not suitable for City Beach without such car parking facilities.

[15] On 18 December 2001, the first respondent entered into a contract to sell 151 George Street to Devine Ltd ("Devine"). That contract was completed on 1 July 2002.

[16] On 24 January 2002, Ross Nielson entered into a contract to sell 171 George Street to the second respondent for $22,372,727.00 (the "171 contract"). That contract was completed on 26 March 2002 and the second respondent then became the owner of 171 George Street. Ross Nielson assigned to the second respondent and the second respondent took over and assumed all of the rights and obligations as owner and lessor. Clause 5.2 of the 171 contract set out the encumbrances accepted by the second respondent which included the car park licence dated 16 July 2002 entered into between Ross Nielson and Fewstone. Clause 13 of the 171 contract made provision for the car park licences as follows:

"13 Car Park licences and other agreements

Car parking rights to continue

13.1 The vendor is the owner of the adjoining property, 151 George Street, and pursuant to the Car Park Licences, the vendor has granted the Tenants certain rights to park vehicles on 151 George Street.

13.2 Pursuant to the 151 George Street Contract, Devine has agreed to grant to the vendor as from settlement under the 151 George Street Contract, the Devine Car Park Licence in respect of 64 carparking spaces. The vendor agrees to provide a copy of the proposed terms of the Devine Car Park Licence at or prior to settlement.

13.3 Whilst the Devine Car Park Licence remains on foot, the vendor will grant sublicences to the Tenants to park vehicles on 151 George Street on terms no less favourable than the existing Car Park Licences.

13.4 On or before termination of the Devine Car Park Licence, the vendor will assign the benefit and burden of the Car Park Licences (including any sublicences granted by the vendor under Clause 13.3) to the purchaser.

13.5 The purchaser must execute any document reasonably required by the vendor recording the assignment of those Car Park Licences to the purchaser as from the date of termination of the Devine Car Park Licence. From that date of assignment the purchaser will:

13.5.1 abide by the covenants and obligations to be observed and performed on the part of the vendor under the Car Park Licences; and

13.5.2 indemnify and keep indemnified the vendor against any loss, damage, claim, proceedings, cost and expense arising after the date of assignment as a result of the purchaser not duly observing or performing any of the purchaser's obligations referred to in Clause 13.5.1.

13.6 The purchaser acknowledges that:

13.6.1 the purchaser is aware of the terms of the Car Park Licences including the obligation to relocate tenants under the Car Park Licences to another car park area when 151 George Street is no longer available at the purchaser's cost; and

13.6.2 the obligations contained in this Clause 13 do not merge upon completion."

[17] On 12 March 2002, the solicitors for Ross Nielson wrote to the solicitors for the second respondent with regard to the four Fewstone car parks in the following terms:

"City Beach Car Park

The car park licence for Fewstone Pty Ltd (City Beach), clause 5.4 states "the Licensor is to provide City Beach with 4 alternative car parks during the closure of the car park for the development of the site". The current arrangement as documented in the licence agreement is no longer feasible and an alternative of converting an area in the basement into car parking is the only other option suitable to the tenant. The responsibility and cost for the provision of these car parks will rest with your client.

To assist your client RNP will:

Ø Negotiate the basic terms and conditions (as outlined in attached) with the adjoining landowner for the use of their easement off Queenstate Lane and one car park. We propose the access agreement be documented by Baker & McKenzie and RNP will offer every assistance to have the agreement executed by the adjoining landowner.

Ø Provide a proposed layout of the basement to accommodate the required car parks and associated information. This information is not to be relied upon and should be used for guidance only.

...

Proposed Terms & Conditions to be Negotiated on Behalf of 171 Landlord with Adjoining Landowner, Clark & Kann

171 Landlord Requires

* Unrestricted use of 1 Clark & Kann car park, 24 hrs a day, 7 days a week, for the duration of construction of the adjoining development 151 George Street - "Casino Towers". Devine has estimated a construction period of approximately 24 months due to commence in November 2002. Construction is deemed complete when a certificate of classification is issued by BCC,

* Unrestricted use of the easement from Queenstate Lane to the back of 171, 24hrs a day, 7 days a week,

* A commencement date for the agreement of 30 days from the issue of written notice,

* 3 car parking spaces to allow access for construction equipment for 30 days upon commencement and 30 days following completion of 151 construction,

* The 171 landlord will pay and arrange for the relocation of the 3 vehicles within 1 city block of the building for this period.

171 Landlord will provide at its cost:

* For the duration of construction of the adjoining development "Casino Towers", 2 car parks in the basement of 171 for the exclusive use of Clark and Kann's tenant/s,

* A fee for the unimpeded use of the easement from Queenstate Lane to the back of 171, 24hrs a day, 7 days a week,

* Vehicular access to 171 via a concrete ramp with a secure automatic roller door,

* Removal and make good of the concrete ramp within 30 days of completion of 151 construction."

[18] On 22 May 2002, Ross Nielson and Devine entered into a car park licence agreement pursuant to which Devine granted Ross Nielson the right to permit any occupant of 171 George Street to park vehicles in the car park on 151 George Street ("Devine Car Park Licence"). Devine could terminate the Devine Car Park Licence upon giving 60 days written notice to Ross Nielson provided Devine intended to commence construction of the redevelopment on 151 George Street no later than 90 days after giving such notice. On 5 July 2002, Devine became the registered owner of 151 George Street. Devine's intended redevelopment of 151 George Street is to include several levels of car parking, one of which is to be created as a separate volumetric title, which, upon completion, is to be acquired by the second respondent pursuant to a put option agreement and a call option agreement entered into between Devine and the second respondent.

[19] On 28 August 2002, Devine gave to Ross Nielson notice of termination of the Devine Car Park Licence with effect from 28 October 2002. On 12 September 2002, the solicitors for Ross Nielson wrote to the solicitors for the second respondent enclosing a draft formal agreement for the assignment of the car park licence. This has not been executed by the second respondent. The first respondent no longer has any interest in, or rights to, the properties at 151 George Street and 171 George Street, but it is still bound by the agreements it entered into with Fewstone.

[20] On 19 September 2002, Fewstone was notified by Ross Nielson that Ross Nielson had assigned the car park licence to the second respondent, George (No 171) Pty Ltd. Ross Nielson also gave notice that the car park would close from 28 October 2002 and that the second respondent would be making alternative car parking arrangements for the applicant.

[21] The applicant, Fewstone, has not elected to terminate the lease or the licence but has now applied for declarations that:

(a) the second respondent is bound by the terms of a lease dated 16 July 2001 between the applicant as lessee and the first respondent as lessor and a Deed of Carpark Licence dated 16 July 2001 in which the applicant is described as licensee and the first respondent is described as licensor;

(b) by failing to arrange for the applicant to have use of the alternative carparking spaces provided for in clause 5.4 in the Deed of Carpark Licence, the first and second respondents have breached the agreement comprising the lease and Deed of Carpark Licence;

(ba) alternatively, by failing since on or about 28 October 2002 to provide to the applicant access to the licensed area in accordance with cl 1.1 the first and second respondents have breached the agreement comprising the lease and Deed of Carpark licence;

(c) by reason of the said breach, the applicant is entitled to terminate the lease and Deed of Carpark Licence.

[22] The first question to be determined is whether the lease and licence are to be read together so that breach of one is a breach of the agreement reached between the parties. There seems little doubt that the lease and the licence are interrelated and that they represent the whole of the agreement between the applicant and the first respondent.

[23] Both the lease and licence were however, according to their terms, capable of separate assignment. The lease has been assigned to the second respondent who is now bound by the terms of the lease but the second respondent has not yet formally accepted assignment of the licence although it is bound to do so under cl 13.5 of the 171 contract. The second respondent is not in a contractual relationship with the applicant under the licence merely by becoming the lessor. The first declaration sought ought, therefore to be refused.

[24] Turning to the second declaration sought, the first respondent is in breach of the licence by failing to provide parking in the licensed area or to arrange for the applicant to have use of the alternative car parking spaces provided for in cl 5.4 of the licence. As the licence is part of the agreement between the applicant and first respondent, it would appear that the first respondent has breached the agreement comprising the lease and licence. However, the second respondent is not in breach of the licence. It follows that it is not possible to grant the declarations sought in (b) and (ba) precisely according to their terms.

[25] The third declaration sought is that by reason of the said breach, the applicant is entitled to terminate the lease and deed of car park licence. A breach of contract will normally give rise to a right to claim damages rather than a right to terminate. A right to terminate only arises where the contract expressly provides for termination in the particular situation; or failing that, where there has been a breach of an essential term or a serious breach of an intermediate or innominate term.[1]

[26] There is no contractual right of termination in this case. The licence provides that both the licensor and the licensee could terminate the licence upon the determination of the lease. There is, however, no provision in the lease entitling either party to terminate the lease upon the determination of the licence.

[27] The question remains whether there has been a breach of an essential term of the agreement between the parties or a serious breach of an intermediate term.

[28] The test of whether a term of a contract is essential so that its breach gives rise to a right to terminate is found in the judgment of the High Court in Associated Newspapers Ltd v Bancks:[2]

"The first question is whether the [term] is a condition or essential term of the contract going to its very root, the breach of which would immediately entitle the defendant at his option to rescind the contract and sue for damages for the loss of the contract, or a mere warranty or non-essential and subsidiary term the breach of which would entitle the defendant to damages...

The test was succinctly stated by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd[3]. The decision was reversed on appeal[4], but his Honour's statement of the law is not affected. He said[5]:

"The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor"."

[29] The evidence of whether or not a term is essential is found in the terms of the contract itself, considered as a whole, as applied to the surrounding circumstances.[6] Evidence of the pre-contractual negotiations may be useful in resolving any ambiguity in the meaning of the contract. However, it is the terms of the contract itself which determine whether or not a term is essential in the sense that the contract would not have come into existence without it. There is nothing in this contract to compel that conclusion. There is nothing in the contractual arrangements to suggest that even the slightest breach of the agreement to provide four car parks would entitle the applicant to terminate not only the licence but also the lease.

[30] As to whether or not there is a serious breach of an innominate term, that is essentially a question of fact which, as the respondents submitted, is difficult to determine in a summary application such as this. An innominate term was described by Hale LJ as[7]:

"one which can be broken in so many different ways and with such varying consequences that the parties cannot be taken to have intended that any breach should entitle the innocent party to terminate the whole contract".

[31] Whether or not the innocent party may treat itself as discharged from its obligations under the contract will depend on the nature and consequences of the breach. As the learned authors of Chitty on Contracts[8] observe, breach of an innominate or intermediate term entitles the innocent party to terminate the contract only if -

(1) the other party has thereby renounced his or her obligations under the contract; or

(2) the other party has rendered his or her obligations impossible of performance; or

(3) the consequences of the breach are so serious as to deprive the innocent party of substantially the whole benefit which it was intended that he or she should obtain from the contract.

[32] The test was described by Diplock LJ in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7; [1962] 2 QB 26 at 66 as:

"...does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?"

[33] More recently in BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The "Seaflower"[9]), Waller LJ held that:

"Failure to perform such a term will ordinarily entitle the party not in default to treat himself as discharged only if the effect of breach of the term deprives him of substantially the whole benefit which it was intended that he should obtain from the contract".

[34] Without the four car parks, the parties appear to nevertheless have the benefit of essentially what they bargained for, the use of office premises for the conduct of their business. There is parking nearby even if it is not as convenient as that bargained for. This is, however, a question of fact which as I have said it is inappropriate to finally determine on a summary application. I would therefore leave open the question of whether or not there is a serious breach of innominate term or a breach of a term which would sound only in damages.

It could not, in my view, be said on this summary application that the breach by the respondents is such as to deny Fewstone of substantially the whole benefit which it was intended it should obtain from the contract. The third declaration sought ought therefore to be refused.

[35] The respondents further submit that the court should decline to make the third declaration sought in the exercise of its discretion because to do so would be to give what is in effect an advisory opinion.

[36] In Sanderson Computers Pty Ltd v Urica Library Systems BV[10], the New South Wales Court of Appeal allowed an appeal from a declaration which had been made by the learned trial judge that one party was entitled to terminate a licence agreement. The court[11] referred to its decision Galaxy Communications Pty Ltd v Paramount Films of Australia Inc[12] where Stein JA held:

"... it is one thing to declare the present contractual rights of the parties, but it is another to declare them contingently on the plaintiff electing to take some course that he has not taken, is not bound to take and may not take. As with Dormer v Solo Investments Pty Ltd [1974] 1 NSWLR 428 at 434 the relief here sought is, in substance, that if the opponents elect to give a notice of termination, that notice will be valid and effective to terminate the agreements on the basis of the court's finding ..."

Sheller JA (with whom Mason P and Powell JA agreed) then observed[13]:

"For reasons which are described in the judgment of Priestley JA in Galaxy, there will always be a problem where a claimant which has not terminated an agreement, seeks a declaration that it is entitled to do so. The declaration speaks from the time that it is made. Before a notice of termination is given or expires, events may overtake its validity. It is undesirable that questions such as waiver, and even more undesirable that questions about relief against forfeiture, be dealt with at all before there is a completed termination. Even if the respondent presently intends to give a notice of termination, it may delay it and fresh questions about election and waiver may arise. Such considerations firmly support the conclusion that in the present case his Honour's exercise of the discretion to grant such a declaration miscarried. With all respect to his Honour, until such time as the respondent elected to terminate, the question as to whether it was entitled to do so remained hypothetical and abstract."

[37] The problem is raised in this instance as the applicant has not yet terminated the lease. Some of the declarations sought in the application which were not pressed before me, envisage continuing occupation of the premises by Fewstone. After the court makes a declaration, Fewstone may elect to terminate or it may elect to remain in occupation of the premises notwithstanding the failure to provide the car parks. It may then be open to the respondents to argue that the applicant has waived its right to terminate or is estopped from doing so or has affirmed. If the court declares that the applicant is entitled to terminate and the applicant does not do so, the court is in the invidious position of deciding hypothetical rights. This is a compelling reason for the court to exercise its discretion to refuse the declarations sought.

[38] The court does not lack the jurisdiction to decide such questions. That jurisdiction has been expanding[14] and applied to novel cases.[15] It is a flexible and discretionary remedy. The discretion against granting a declaration is, however, likely to be invoked when the question appears to be hypothetical. As the learned authors[16] of the third edition of Zamir & Woolf, The Declaratory Judgment,[17]say:

"The primary role of the courts is, and always has been, to resolve existing disputes between the parties where the courts' decision will have immediate and practical consequences for at least one of the parties."

Rather, it is a matter relevant to the exercise of the discretion whether to grant a declaration:[18]

"It can now safely be said that even if a particular action for declaratory relief only involves hypothetical issues this does not deprive the court of jurisdiction, and if declaratory relief is refused on the grounds that the issues are hypothetical, the refusal is properly classified as being on discretionary grounds. In Rediffusion (Hong Kong) Ltd v Attorney-General [1970] UKPC 12; [1970] AC 1136 at 1158 Lord Diplock pointed out that:

"All questions involved in quia timet proceedings are hypothetical and future. To exclude the jurisdiction of the court to inquire into them in order to decide whether to exercise its discretion to grant relief, the defendants would have to show that the questions were purely abstract questions the answers to which were incapable of affecting any existing or future rights."

In other words, the refusal of relief is an act of jurisdiction by the court and not an indication of lack of jurisdiction."

The discretionary grounds provide yet another reason in this case for refusing to grant the declarations sought in this application.

Conclusion

[39] For the reasons given, the declarations should be refused.

[1] Ankar Pty Ltd and Another v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549 at 562.

[2] [1951] HCA 24; (1951) 83 CLR 322 at 336-337.

[3] (1938) 38 SR (NSW) 632.

[4] [1938] HCA 66; (1938) 61 CLR 286.

[5] Supra at 641-642.

[6] DTR Nominees Pty Ltd v Mona Homes Pty Ltd and Another [1978] HCA 12; (1978) 138 CLR 423 at 431.

[7] Rice (T/A the Garden Guardian) v Great Yarmouth Borough Council (2001) 3 LGLR 4.

[8] (1994) 27^th Edition, Volume 1, Sweet and Maxwell, London at 12-032.

[9] [2001] 1 Lloyd's Rep 341 at [42].

[10] (1998) 44 NSWLR 73.

[11] At p 79.

[12] New South Wales Court of Appeal, CA No 40080 of 1998, 27 March 1998, unreported.

[13] At p 80.

[14] Imperial Tobacco Ltd v Attorney-General [1981] AC 718 at 750; Human Rights Act (UK) 1998.

[15] In re A (Children) (Conjoined Twins: Surgical Separation) [2000] EWCA Civ 254; [2001] 2 WLR 480.

[16] Lord Woolf and Jeremy Woolf.

[17] (2002) 3^rd Edition, Sweet & Maxwell, London, p 136 at 4.032.

[18] Ibid at 4.033.