JB Holdings Ltd v Atlas Trading Company Ltd [1993] FJHC 111; Hbc0387j.93s (25 November 1993)

IN THE HIGH COURT OF FIJI
(AT SUVA)
EVICTION PROCEEDINGS

ACTION NO. 387 OF 1993

IN THE MATTER of an Application under Section 169 of
PART XXIV of the Land Transfer Act 1971 for an Order for Vacant Possession

BETWEEN:

J.B. HOLDINGS LIMITED
a limited liability company having its
registered office at Suva
Plaintiff

AND

ATLAS TRADING COMPANY LIMITED
a limited liability company having its
registered office at Suva
Defendant

M. Raza: For the Plaintiff
M. Narsey: For the Defendant

Dates of Hearing: 31st August, 8th September 1993
Date of Judgment: 25th November 1993

JUDGMENT

The Plaintiff seeks an order for vacant possession by the Defendant of premises situate at 36-38 Cumming Street, Suva comprised in Certificate of Title No. 11999 of which the Plaintiff is the registered proprietor.

The Defendant was Lessee of the Plaintiff under a Lease Agreement dated 19th April 1988 for a term of five years commencing on the 1st of May 1988 at a monthly rental of $1,550.00.

Clause 5(1) of the lease is in the following terms:

"The Lessee shall have an option for a renewal of this tenancy for a further term of five years at such rental as is determined by the Prices and Incomes Board PROVIDED HOWEVER the rent shall not in any event be decreased."

On the 6th of February 1993 the Defendant gave notice to the Plaintiff of its intention to renew the lease pursuant to Clause 5(1) for a further term of five years.

On the 15th of March 1993 the Plaintiff wrote to the Defendant in a letter which, omitting formal parts was as follows:

"We thank you for your letter dated 6th February, 1993; and wish to advise you that your new rental from 1st May, 1993 will be $3,600.00 per month."

The Plaintiff states in an affidavit sworn by Kishore Jairam a Director of the Plaintiff on the 6th of August 1993 that the Defendant verbally agreed with the Plaintiff to pay the increased rental of $3,600.00 per month.

Through its solicitors the Defendant denies this and states that the Plaintiff unilaterally increased the rent and that this is contrary to Clause 5(l) of the lease which, according to the Defendant's counsel, means that any increase in rent had to be determined by an independent third party.

It is common ground between the parties that the Prices and Incomes Board has been abolished at least in respect of commercial rentals. Consequently the Plaintiff argues that it was free to negotiate a new and higher rental of the premises and if the Defendant did not agree to any higher rental, on being given a Notice to Quit, it was obliged to vacate the premises.

On the 28th of May 1993 the Plaintiff through its solicitors gave the Defendant a Notice to Quit the premises on or before the 30th of June 1993 failing which eviction proceedings would be commenced in this Court.

The Defendant has failed to vacate as requested. Thus the Plaintiff issued the Originating Summons herein on the 9th of July 1993. I have received verbal and written submissions from the parties. The Defendant submits that the effect of Clause 5(1) of the lease is that since the Prices and Incomes Board no longer exists for the purposes of determining commercial rentals this Court has power to appoint an independent third party to determine a fair and reasonable rental of the premises.

On the other hand the Plaintiff argues that if the parties had wished it would have been open to them to provide in Clause 5(1) for the appointment of an independent assessor if the Prices and Incomes Board was not able to fix the new rental and that in the absence of such provision in Clause 5(1) the Defendant had the option of:

(a) paying any increased rent proposed by the Plaintiff, or

(b) any other rent agreed by the parties, or

(c) vacating the premises on receipt of a valid Notice to Quit by the Plaintiff.

In the event the Plaintiff argues that since the Defendant did not agree to the higher rent proposed by the Plaintiff, on being given a Notice to Quit the Defendant was obliged in law to vacate the premises.

The Defendant has made comprehensive written submissions in which its counsel cites a number of authorities most of which are directly irrelevant to the question before the Court and the remainder of which are distinguishable on their facts from those in the instant case.

In the first category are the cases of Gerraty v. McGavin [1914] HCA 23; (1914) 18 CLR 152, Commissioner of Taxes (QLD) v. Camphin [1937] HCA 30; (1937) 57 CLR 127, Wilson v. Stewart [1889] VicLawRp 115; (1889) 15 VLR 781 and Re Dawdy (1886) 53 LT 800.

In the second category are the cases of Gilbert J. McCaul Aust (Pty) Ltd v. Pitt Club Ltd (1959) 59 SR (NSW) 122 at 123, Sudbrook Trading Estate Ltd v. Eggleton (1982) 3 All E.R. 1, Brown v. Gould (1972) Ch. 53 and the decision of Scott J. in Rattan Lal v. Morarbhai Parbhu Civil Appeal No. 9 of 1991 confirmed in the Court of Appeal in Civil Appeal No. 76 of 1991 (judgment on 24th August 1993).

I shall refer briefly to Sudbrook Trading Estate Ltd v. Eggleton, Brown v. Gould and Rattan Lal v. Morarbhai Parbhu in a moment but I am obliged to say that counsel do not help the Court in any way by citing cases which obviously have no relevance to the case presently before the Court. In this case I have wasted my time in reading the cases in the first category I have mentioned and a judge should not be made to do this.

The facts in Gilbert J. McCaul Aust (Pty) Ltd v. Pitt Club Ltd are clearly distinguishable from those in the present case and I shall not amplify that statement. In Sudbrook Trading Estate Ltd v. Eggleton counsel for the Defendant relies on a passage in the judgment of Lord Diplock at p.5 of the report, which counsel sets out in his submission.

In that case because of the reluctance of the owners of the properties to abide by an agreement with the lessees and appoint a valuer in terms of the agreement to determine the price payable under an option to purchase the Court ordered that the options should be performed in accordance with the terms of the leases. The Court also declined to substitute its own machinery for the purpose of giving effect to the agreement between the parties.

It will thus be seen that conditions as to how the leases were to be specifically performed in Sudbrook were stated in the leases; in the present case Clause 5(l) is silent as to the terms on which the lease is to be renewed in the absence of the Prices and Incomes Board.

In the next case referred to by the Defendant Gilbert J. McCaul Aust (Pty) Ltd v. Pitt Club Ltd the Court said at p.123 of the judgment that only by performing the conditions prescribed in the offer to renew a lease could the offer be accepted and result in a new agreement for a lease. That case is clearly different from the present in that again there is now no Prices and Incomes Board to determine the new rental.

In Brown v. Gould (supra) Megarry J. (as he then was) held that the Court was reluctant to hold void for uncertainty any provision that was intended to have legal effect, it being accepted that the option to renew the lease in dispute was intended to have business efficacy.

This I have little doubt was the intention of the parties here but failing provision in Clause 5(1) for some alternative body or person to determine the new rent if for some reason the body named in the clause can no longer do so, I fail to see how the clause can have legal effect unless the Court reads into it words which it would have been easy for the parties to have inserted had they turned their minds to it.

The Court also held in Brown v. Gould that where the option was expressed to be exercisable at a price to be determined according to some stated formula without any effective machinery being in terms provided for working out that formula, the Court had the jurisdiction to determine it.

It will be noted that in the instant case the only formula stated presumes the continued existence of the Prices and Incomes Board and again in my view it would be wrong to read into Clause 5(1) any alternative formula when it would have been perfectly possible for the parties to have done so themselves had they been so minded.

In my judgment the Plaintiff was not wrong in law in exercising what I have stated above to be the third option open to it on the facts of this case.

The last case cited by the Defendant, Rattan Lal v. Morarbai Parbhu is again clearly distinguishable from the facts of the present case. In Rattan Lal the Plaintiff unilaterally purported to increase the rent of certain premises. The Defendant refused to pay the increased rent causing the Plaintiff to serve the Defendant with a Notice to Quit the validity of which was not disputed. The Defendant vacated the premises two months later whereupon the Plaintiff sued for arrears of rent of the monthly amount to which it had purported to increase the rent. The Learned Magistrate found for the Plaintiff whereupon the Defendant appealed successfully to the High Court. The decision of Scott J. was upheld by the Court of Appeal.

Again however the facts in that case are different from those in the present. I do not dispute the remarks of Scott J. at p.3 of his judgment and which are quoted by the Defendant here. Scott J. and later the Court of Appeal stated that it is trite law that a contract cannot be varied unilaterally and without the consent of both parties. Thus, a landlord who wishes to increase the rent of his premises may undoubtedly make an offer to his tenant which, if accepted, amounts to a variation of a term of the contract of the tenancy which then continues as varied. However Scott J. went on to say, and I consider his words appropriate here, that in the absence of agreement the contract is determinable by either of the parties as provided by the terms of the contract.

In this case in contrast to Rattan Lal the Plaintiff is not attempting by its Summons to recover arrears of rent beyond the amount due under the former lease. It does not want the Defendant to remain on the premises at the old rental and so, the Defendant not agreeing to pay the proposed higher rental, the Plaintiff wants it to leave. Clearly there is nothing unreasonable in this unless the contention of the Defendant is right and the Court should itself appoint some third party to decide the new rental. For the reasons I have given above I do not consider this Court should do so.

To summarise my conclusions, in my judgment this case is not concerned with when and how an option to renew a lease should be given but rather with a simple question of interpretation of a document. In my view the interpretation for which the Plaintiff argues is correct. I therefore order that the Defendant give immediate vacant possession of the premises situate at 36-38 Cumming Street, Suva being those described in the Originating Summons herein. I direct however that there is to be a stay of execution on this order for one month from the date of this judgment and I further order the Defendant to pay the Plaintiff's costs of these proceedings to be taxed in default of agreement.

JOHN E. BYRNE
JUDGE

HBC0387J.93S