Adrian Akhurst v ACN 062 671 854 Pty Ltd No. Scciv-03-1795

ADRIAN AKHURST v ACN 062 671 854 PTY LTD
[2004] SASC 101
Civil

BESANKO J: This action was commenced on 21 December 2003. The plaintiff is Mr Adrian Akhurst, and the defendant is an incorporated company, ACN 062 671 854 Pty Ltd.
The defendant is the registered proprietor of land at 220 – 224 Kensington Road, Marryatville in the State of South Australia. On the land there is a petrol station, convenience store, office and workshops. I will refer to the land and buildings as “the property”.
On or about 4^th July 1998 the plaintiff and the defendant agreed that the plaintiff would lease the property from the defendant subject to the terms and conditions contained in a memorandum of lease. The memorandum of lease was signed by both parties but it was not registered. The term of the lease was a period of three years commencing on 4^th July 1998 and expiring on 3^rd July 2001. The lease contained provisions dealing with rights of renewal. Part 12 of the lease is as follows:
“PART 12 - RENEWAL
12.1 First Right of Renewal
The Lessee may make a written request for an extension of the lease for the further Term set out in Item 5 of the Reference Schedule upon the same terms and conditions as are herein contained (save for the exclusion of this clause) not less six (6) nor more than nine (9) months before the expiration of the Term set out in Item 4 of the Reference Schedule which the Lessor shall grant if there is not at the time of such request an existing breach or non-observance of any of the covenants and conditions herein contained by the Lessee and if the due observance or performance by the Lessee of its duties and obligations hereunder has been guaranteed by any Guarantor then the Lessor may require such Guarantor to extend or renew such guarantee for the said extension before granting such request.
12.2 Second Right of Renewal
The Lessee may make a written request for a second extension of the lease for the Term set out in Item 5 of the Reference Schedule upon the same terms and conditions as are herein contained (save for the exclusion of this clause) not less six (6) nor more than nine (9) months before the expiration of the Term set out in Item 4 of the Reference Schedule which the Lessor shall grant if there is not at the time of such request an existing breach or non-observance of any of the covenants and conditions herein contained by the Lessee and if the due observance or performance by the Lessee of its duties and obligations hereunder has been guaranteed by any Guarantor then the Lessor may require such Guarantor to extend or renew such guarantee for the said extension before granting such request.”
The lease also contains a provision dealing with holding over. Clause 9.5 is as follows:
“9.5 Holding Over
In the event of the Lessee holding over after the expiration or sooner determination of the Term with the consent of the Lessor the Lessee shall become a monthly tenant only of the Lessor at a monthly rental equivalent to a monthly proportion of the total annual rental payable by the Lessee hereunder at the expiration or sooner determination of the Term and otherwise on the same terms and conditions as those herein contained so far as applicable.”
The plaintiff’s case is that in October 2000 he exercised the first right of renewal by giving a written request for an extension of the lease to Mr Laurie Head, an agent of the defendant. As a result, the term of the lease was extended until 3^rd July 2004. The defendant does not deny that Mr Head was its agent in October 2000. The defendant says that the plaintiff did not give a written request for an extension of the lease to Mr Head in October 2000, and therefore did not exercise the first right of renewal.
The written request for an extension of the lease which the plaintiff says was given to Mr Head was in the following terms:
“Viewlink Pty Ltd
1^st Floor
540 Princes Highway
Noble Park
Victoria 3174
Re: Lease of United Marryatville, 224 Kensington Road
I Adrian Akhurst as lessee of the above premises hereby exercise my right of renewal for the next 3 year period in accordance with the lease.
Yours faithfully
Adrian Akhurst”
I will refer to this letter as “the written request”. Viewlink Pty Ltd and the defendant are members of the United Petroleum group of companies, and no point is taken about the fact that the letter is not addressed to the defendant. The written request is undated.
The plaintiff says that on or about 29^th October 2003 he exercised the second right of renewal by giving a written request for an extension of the lease to the defendant, and that as a result the term of the lease was extended until 3^rd July 2007. The defendant says that by letter dated 29^th October 2003 the plaintiff purported to exercise the second right of renewal in the lease, but that by reason of its failure to exercise the first right of renewal, and on the proper construction of the terms of the lease, the plaintiff was as at 29^th October 2003 holding over under clause 9.5 of the lease and that that had been the position since the expiration of the initial term of three years. The defendant says that as at October 2003 the plaintiff was a monthly tenant of the property, and that the purported exercise of the second right of renewal was ineffective.
The plaintiff seeks a declaration that the lease has been extended until 3^rd July 2007.
The defendant says that it has served an effective notice of termination on the plaintiff, and that the plaintiff’s monthly tenancy of the property was terminated with effect at midnight on 31^st December 2003, and that as from that date it has been entitled to vacant possession of the property. In its counterclaim, the defendant seeks declarations that on and from 4^th July 2001 the plaintiff has been a tenant holding over in the property on a monthly tenancy and that the termination notice dated 12^th November 2003 was a valid notice of termination and the plaintiff’s monthly tenancy of the property was thereby terminated at midnight on 31^st December 2003. The defendant also seeks orders that the plaintiff remove the caveat it has lodged and that it deliver up vacant possession of the property to the defendant.
The plaintiff’s claim, and the defendant’s defence and counterclaim raises one factual issue for determination. That issue is whether the plaintiff gave the written request to Mr Head in October 2000. The plaintiff’s case is that he gave the written request to Mr Head and the defendant’s case is that the written request was not given to Mr Head. I did not understand either party to dispute the proposition that the relief claimed by each party would follow upon the determination of this issue.
Was the Written Request given to Mr Head?
Mr Akhurst gave evidence on his own behalf. He also tendered a number of documents.
Mr Akhurst said that the written request was signed at the time he gave it to Mr Head. A computer disk from Mr Akhurst’s computer was tendered and Mr Akhurst said that the computer disk showed that the written request was prepared on 16^th October 2000.
Mr Akhurst said that the written request was prepared about the same time as a cheque for rent was prepared. He identified a cheque for rent prepared on 17^th October 2000. The cheque butt was tendered in evidence. Mr Akhurst’s bank statements for September to November 2000 were tendered. The bank statements show that the cheque for rent prepared on 17^th October 2000 was banked by the defendant on 23^rd October 2000.
Mr Akhurst said that he handed the cheque for rent and the written request to Mr Head at the same time. Mr Akhurst was not able to be precise as to the date upon which he handed the cheque to Mr Head. It became apparent in the course of cross-examination, that Mr Akhurst could remember very little of the circumstances surrounding the occasion when he gave the written request to Mr Head. He could not be certain that the cheque handed over with the written request was a cheque for rent or a cheque for fuel. He could not remember the terms of any conversation he had with Mr Head at the time. Mr Akhurst could remember the written request being folded, and that it was handed over in the office on the property, although he could not remember whether Mr Head read the written request at the time or whether anyone else (other than Mr Head and himself) was present.
I pause at this point to say that I accept that Mr Akhurst prepared the written request on 16^th October 2000, and that a cheque for rent was prepared on 17^th October 2000. I accept that it was Mr Head’s practice to go to the property and collect cheques for rent and fuel. I accept that on occasions Mr Head collected the cheques from Mr Akhurst’s office manager, Ms Diana Thwaites, and on other occasions, from Mr Akhurst. I accept that the cheque for rent made out on 17^th October 2000 was banked by the defendant on 23^rd October 2000.
Mr Akhurst was the only witness called by the plaintiff. In order to determine if I accept his evidence that he gave the written request to Mr Head, I must have regard to the whole of the evidence, and I turn now to consider the evidence called by the defendant.
The defendant called three witnesses. The first witness was Mr Head. At the relevant time, he was the manager for South Australia for the defendant and its associated companies. Mr Head said that he did not remember being given the undated letter seeking a renewal. He said that he would not have accepted a letter which was unsigned and undated. He was asked to assume that the written request was signed when it was handed to him. He said that he would still not have accepted it because it was a request for an extension of a lease and it was undated. Mr Head said that he did not deny being given the written request by Mr Akhurst, but that he could not remember that happening. Mr Head said that he went on a holiday overseas on 30^th September 2000 and did not return until Sunday 22^nd October 2000. He did not go into work on 23^rd October 2000. He returned to work on 24^th October 2000. I accept that evidence. It is confirmed by a copy of his airline ticket and a page from his passport. The plaintiff could not have given the written request to Mr Head between 30^th September and 23^rd October 2000. Mr Head had an assistant at about this time, Mr Peter Aristide, but Mr Akhurst said that he did not give the written request to Mr Aristide.
The defendant called Mr Kinsman Jacques. Mr Jacques was employed as the national property manager for the defendant and its associated companies between 2001 and 2003. He said that in late 2001 and early 2002 he reviewed the file kept by the defendant in relation to the lease of the property to the plaintiff. He noted that there was no evidence of a renewal of the lease. He said that he had a conversation with Mr Akhurst during which he told Mr Akhurst that he had been through the file and that he had found a memorandum of lease which was unsigned. He told Mr Akhurst that he had looked at the terms of the memorandum of lease, and that the lease had expired some time before and that he had no evidence whatsoever on the file that Mr Akhurst had exercised his option to renew the lease. Mr Jacques said that Mr Akhurst said that he was aware of those facts and that he had been very busy and had forgotten. Mr Jacques asked Mr Akhurst if he was aware that he was on a monthly tenancy, and Mr Akhurst said that he was. Mr Jacques said to Mr Akhurst that he need not be concerned as the defendant was not doing anything at that moment other than reviewing its options in relation to the property. Mr Jacques asked Mr Akhurst if he wanted to stay, and Mr Akhurst said that he did. Mr Jacques asked Mr Akhurst whether he would be interested in remaining on the property if the defendant redeveloped the site and rebuilt it with a new workshop. Mr Jacques asked Mr Akhurst whether he would like any changes if the workshop was rebuilt, and Mr Akhurst said that he would like to have the front wall moved out as close as possible to the footpath thereby giving him more of a showroom effect.
In cross-examination, Mr Akhurst said that he could recall having a conversation with Mr Jacques, but he could not remember the nature of the conversation. He said that he could not recall a conversation along the lines referred to above, but said that he would not have agreed that he was a monthly tenant because of his belief that he had renewed the lease. Mr Akhurst was not very firm in his denial that he had a conversation with Mr Jacques along the lines referred to above. In any event, I find that Mr Jacques was an honest witness who was not shaken in cross-examination. I accept that the conversation took place in the terms deposed to by Mr Jacques.
The defendant called Mr Ronald Newton. Mr Newton is a valuer. He prepared a valuation of the property in September 1998, and he updated that valuation in October 2002. His two valuation reports were put before me. His report dated 22^nd September 1998 includes the following:
“Lessee:  Adrian Akhurst
Term:                 Three years commenced 4^th July 1998
Further terms:              Two, each for three years
Rent:  $48,000 per annum payable monthly in advance
Outgoings:                   payable by lessee
Reviews:  annual adjustments
Use of premises:           service station and automotive workshop
Tenancy details have been confirmed on site with Mr Akhurst, however we have not been supplied with a full copy of the lease.”
In the valuation dated 15^th October 2002 Mr Newton states:
“The premises were subsequently let to the workshop operator who trades as AA Automotive, a specialist MG repairer/restorer. Lease details are:
Lessee:              Adrian Akhurst
Term:        Three years commenced 4^th July 1998
Further terms:      Two, each for three years
Rent:                  $48,000 per annum payable monthly in advance
Outgoings:           Payable by lessee
Reviews:            Annual adjustments
Use of premises:    Service station and automotive workshop
This has subsequently reverted to a monthly tenancy, as confirmed on site by Mr Akhurst. However, we have been supplied with brief particulars only, not a full copy of the original lease.”
Mr Newton said that he had a conversation with Mr Akhurst during the course of preparing his valuation dated 15^th October 2002 during which Mr Akhurst confirmed that the lease had reverted to a monthly tenancy. He said that it was important for him to confirm the details of the tenancy arrangement, and he denied that he had confused a statement about the fact that Mr Akhurst was paying rent on a monthly basis with a statement to the effect that the tenancy was a monthly tenancy. Mr Newton said, and I accept, that it was a very important consideration in the preparation of the valuation that he confirm the tenancy details.
In cross-examination, Mr Akhurst was asked whether he told Mr Newton that he was a monthly tenant. He said:
“AI don’t remember. I very much doubt that I would say that. I might have said that we were originally on a monthly tenancy and we had entered into a three plus three plus three lease.”
Mr Newton was an honest witness who was not shaken in cross-examination. I accept that the conversation took place in the terms deposed to by Mr Newton.
The plaintiff pointed to another matter which he said supported his contention that the first renewal notice had been given. He pointed to letters from the defendant in March and July 2001 making adjustments to the rent (to use the words in the letters) “in line with the lease agreement”. I do not think that this fact is of any great significance bearing in mind that under clause 9.5 of the lease the holding over continues on the same terms and conditions as are contained in the lease so far as applicable.
The defendant pointed to another matter which it said supported its contention that the written request had not been given to Mr Head, and that is, the fact that there was no response at the time from the defendant. The defendant said that under clause 12.1 of the lease the lessee does not have an automatic right to an extension. The lessee makes a written request for an extension and the lessor grants that request if “there is not at the time of such request an existing breach or non-observance of any of the covenants and conditions herein contained by the lessee”. I would not be disposed to place much weight on this point. It is not uncommon for parties to act in a somewhat informal fashion.
I find that Mr Akhurst prepared the written request on 16^th October 2000. I do not think he can remember giving it to Mr Head. I think he is unintentionally reconstructing what he thinks he must have done at the time bearing in mind that he went to the trouble of preparing the written request and the importance (looking back) of the matter. He could remember few details of the circumstances surrounding the handing over of the written request, and his initial recollection of when that was done was wrong having regard to Mr Head’s absence overseas. Furthermore, I accept Mr Head’s evidence that he would not have accepted a written request for an extension which was undated. If there is any doubt about the matter, it is to my mind clearly resolved in favour of the defendant when regard is had to the evidence of Mr Jacques and Mr Newton. I find on the balance of probabilities that the written request in relation to the first right of renewal was not given to Mr Head. It is not suggested that it was given to the defendant in any other way. As I understand it, the plaintiff did not dispute that if I decided the question of fact against him, then the defendant was entitled to relief in relation to its counterclaim.
Conclusion
For the above reasons, I make the following declarations and orders:
1      The plaintiff’s claim is dismissed.
2      On the defendant’s counterclaim:
2.1A declaration that on and from 4^th July 2001 the plaintiff has been a tenant holding over in the Premises at 220 – 224 Kensington Road, Marryatville, South Australia (Certificate of Title Register Book Volume 5043 Folio 186) on a monthly tenancy.
2.2A declaration that the Termination Notice dated 12^th November 2003 was a valid notice of termination and the plaintiff’s monthly tenancy of the Premises was thereby terminated at midnight on 31^st December 2003.
2.3    That the plaintiff remove the caveat (Number 9724864) forthwith.
2.4That the plaintiff deliver up vacant possession of the Premises to the defendant on (date).
I will hear the parties as to the date to be inserted in paragraph 2.4 above, costs and any further orders.

[2004] SASC 101

2 April 2004