Progressive Mailling House Pty Ltd v Tabali Pty Ltd

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Citation: (1985) 157 CLR 17

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 545-8 [21.45].

Contents

Background facts

  • Respondent [Tabali, lessor] leased a property to the Appellant [Progressive Mailing, lessee].
  • They had a lease in a registrable form which was left unregistered.
    • A clause allowed the Respondent to retake possession of the property [re-enter] if rent was unpaid.
    • Another clause required the Respondent to make certain arrangements before the Appellant enters, and then notify the Appellant.
  • Appellant took possession of the property prematurely. He then contended that the Respondent failed to make the arrangements.
  • The Appellant failed to make payments, and also made a number of other small breaches of the agreement, which the Respondent demanded remedy for. None was supplied by the Appellant.
  • The Respondent sued in order to regain possession, obtain damages and outstanding rent.

Legal issues

Judgment

  • Firstly, there is the issue of whether the principles of contract law apply to lease agreements.
  • According to Shevill v Builders' Licensing Board[1] and other sources, they do (including the rules regarding termination and repudiation).
  • Repudiation is important here because the Respondent can only recover damages for the loss of benefit (rather than just the outstanding rent etc) through repudiation.
  • The issue is whether the fact that the agreement contains the re-entry clause mean that the Respondent uses that clause and thus cannot claim repudiation.
  • However, this isn't the case. As long as a breach or repudiation has indeed occurred, the Aggrieved power will be entitled to damages regardless of whether it chose to terminate the contract because of a common law right (the right to terminate by breach) or because of a contractual power to do so (the right to terminate by agreement).
    • "this does not mean that such damages are recoverable only in the event of discharge for breach...This essential foundation may be established by a common law rescission of the contract...or by a termination of the contract in the exercise of a contractual power...In either event, assuming repudiation or fundamental breach by the defendant, he...is liable for damages for the loss of bargain[2]."
    • "The well recognised distinction between common law rescission and termination pursuant to a contractual power supplies no reason in principle why such damages are recoverable by the innocent party in one case and not the other, provided of course that the exercise of the power is consequent upon a reach or default of by the defendant which would attract an award for such damages[3]."
  • In this case, the combination of the unwillingness to pay rent as well as other minor breaches formed a conduct which amounted to repudiation.
    • "It is not suggested that the breaches so far discussed that the breaches so far discussed, viewed in isolation, amounted to a repudiation or fundamental breach of the lease. It is the breach of the covenant to pay rent, in association with the other breaches...[4]"

References

  1. (1982) 149 CLR 620, 625
  2. (1985) 157 CLR 17, 31
  3. (1985) 157 CLR 17, 31
  4. (1985) 157 CLR 17, 35-6
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