The connections of a failed luxury central Brisbane food market have won a heated court battle for the right to tenant a strategic retail space at Inala Plaza shopping centre.
Ha Tinh Pty Ltd won the fight for the prized space over the Malaysian-owned discount variety store chain, The Reject Shop.
The company is owned by Thi Nhung Bien who – with husband Tony – was connected to the multimillion-dollar Mercado food hall in Bowen Hills’ fashionable King St that included two restaurants as well as a butchery, bakery, bottle shop, fishmonger and patisserie. The lavish food hall was launched as an equivalent to London’s Harrods’ Food Hall and Galería Canalejas in Madrid. It shut its doors in May 2019 just six months after opening amid litigation from disappointed suppliers.
Inala Plaza is in a different retail category to King St but the tenancy was valuable enough for Bien to launch action in Brisbane’s Supreme Court when she learnt that Peter Wen – manager of the family-owned Plaza – intended to renege on a deal she had done to take over the space.
Bien had signed up a 10 x 10 lease in February 2021- after extensive toing and froing as to the terms – to take effect after expiration of The Reject Shop’s lease in July 2022.
Her lease was conditional upon the Plaza providing vacant possession and required the landlord to use its best endeavours to do so before January 2023, with Bien entitled to extend that date by up to 5 years.
A condition she had proposed for the deal but rejected by the landlord, was an obligation not to extend the expiry date of the existing tenant’s lease.
On the understanding that the exclusion of such clause allowed the Plaza to do so, Wen later undertook negotiations with the existing tenant for a further lease term.
He thereafter notified Bien that agreement in principle had been reached with the existing tenant for it to enter into a new lease starting on 1 July.
Ha Trinh immediately notified its objection contending that the best endeavours clause prevented it from so acting.
It sought and obtained ex parte injunctive relief in September 2022 – pending trial – to prevent any new lease being granted.
Inala Plaza’s response was that the best endeavours obligation in clause 30 should be interpreted in the context of the factual situation and the one that lent greatest business efficacy was that which prevented the Plaza from entering into a lease with parties other than the existing tenant.
It argued the court should consider extrinsic evidence – to gain a different understanding of the clause – namely the agreed rejection of the clause prohibiting the granting a new lease to the existing tenant.
Any reasonable reader would conclude from such rejection – it asserted – that neither party intended the remaining provisions of the lease to have that effect.
Justice Elizabeth Wilson was not convinced and ruled such evidence inadmissible.
“In this case, the lease was negotiated between the parties’ lawyers, over a protracted period of time, to include an entire agreement clause which indicates the parties intended the contract to fully articulate their rights”.
Neither did she consider there was any ambiguity in clause 30 which would warrant consideration of such extrinsic evidence because the clause was “prima facie clear in its terms”.
The obligation to use “best endeavours to obtain vacant possession” was not ambiguous, notwithstanding the absence of any objective method to determine how any steps taken would be measured.
Neither was there a carveout permitted to allow the Plaza to negotiate a new lease with the existing tenant while still using best endeavours to obtain vacant possession.
“In my view”, she observed “the language used during the negotiations is inconsistent with the respondent reserving itself a general power to enter into a lease with the existing tenant”.
The court also rejected the Plaza’s claim the lease should be rectified because there was no mistaken expression of the true intention of the parties. That Mr Wen had always intended to reserve the right to be able to offer a new lease to the existing tenant was immaterial.
The judgement is silent on what use the space is intended to be put by the new tenant but presumably it will be a new eatery.