Ausko Cooperation Pty Ltd v Junapa Pty Ltd - [2021] NSWSC 615

Supreme Court

New South Wales

Medium Neutral Citation: Ausko Cooperation Pty Ltd v Junapa Pty Ltd [2021] NSWSC 615
Hearing dates: 19 May 2021
Date of orders: 1 June 2021
Decision date: 01 June 2021
Jurisdiction: Equity
Before: Darke J
Decision:
Statement of Claim is dismissed with costs.

Catchwords:
CONTRACTS – formation of contracts – intention to make concluded bargain – lessee sought to negotiate new five-year lease with lessor – retail shop premises – parties reached consensus as to terms necessary for a new lease but did not execute a lease document – previous lease dealt comprehensively with the parties’ obligations to each other – no discussion of a number of important matters including insurance, bank guarantee and guarantee of lessee’s obligations – requirements of Retail Leases Act 1994 (NSW) not met – not implicit that the parties intended to be bound on the terms of previous lease save for changes to accommodate the matters agreed upon in negotiations – held that the parties did not intend to be bound immediately – no binding agreement reached
LAND LAW – leases – Retail Leases Act 1994 (NSW) (“the Act”) – “retail shop lease” – necessary that there be a concluded agreement intended to be binding whereby a right of occupation is granted – no such agreement concluded for a right of occupation for a 5 year term with an option for a further term of 5 years – section 8 of the Act is concerned with when a retail shop lease is deemed to have commenced or been entered into not whether a retail shop lease has come into existence – no retail shop lease came into existence

Legislation Cited:
Retail Leases Act 1994 (NSW) ss 3, 8, 11, 12A, 15, 16, 16BA

Cases Cited:
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Blackburn Developments No 19 Pty Ltd v Downs Surgical (Australia) Pty Ltd (1974) 2 BPR 9141
Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWCA 210
Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWSC 335
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 531
In the matter of Creditors’ Trust Deed established in the administration of Bevillesta Pty Ltd [2013] NSWSC 1258
Masters v Cameron (1954) 91 CLR 353
Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313
Streat v Fantastic Holdings Limited [2011] NSWSC 1097
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21

Category: Principal judgment
Parties: Ausko Cooperation Pty Ltd (Plaintiff)
Junapa Pty Ltd (Defendant)
Representation:
Counsel:
Mr D Weinberger (Plaintiff)
Mr B M Green (Defendant)
Solicitors:
Keystone Lawyers (Plaintiff)
Kent Attorneys (Defendant)

File Number(s): 2021/31966
Publication restriction: None

Judgment

Introduction

These proceedings were commenced by Summons filed by the plaintiff on 4 February 2021. The plaintiff sought to challenge the validity of a Notice to Vacate that had been served by the defendant in respect of certain shop premises on the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NSWSC 615
Decision Date: 01 June 2021

CaseChat Overview and Summary

The dispute between Ausko Cooperation Pty Ltd and Junapa Pty Ltd centred around the formation of a new five-year lease for retail shop premises. The lessee, Ausko, sought to negotiate a new lease with the lessor, Junapa, intending to continue occupying the premises. While the parties reached an agreement on the necessary terms for the new lease, they did not formalise this agreement in a written document. The previous lease provided a comprehensive outline of the obligations of both parties, but several critical aspects, such as insurance, bank guarantee, and the guarantee of the lessee's obligations, were not discussed during the negotiations. The case ultimately turned on whether a binding agreement had been formed despite the absence of a formal lease document and whether the requirements of the Retail Leases Act 1994 (NSW) were met.

The central legal issues revolved around whether the parties intended to create a binding agreement for a new lease and whether such an agreement met the statutory requirements under the Retail Leases Act 1994 (NSW). The court had to determine if the parties' conduct demonstrated an intention to be immediately bound by the agreed terms, despite the absence of a formal lease document. Furthermore, the court examined whether the requirements of the Act, including the necessity of a concluded agreement intended to be binding, were satisfied.

The court held that the parties did not intend to be immediately bound by the terms they had agreed upon. While there was consensus on the necessary terms for the new lease, the absence of a formal document and the omission of critical discussions on important matters indicated that the parties did not intend to create a binding agreement at that time. The court emphasised that a retail shop lease requires a concluded agreement intended to be binding, which was not present in this case. Additionally, the court clarified that section 8 of the Retail Leases Act 1994 (NSW) pertains to when a lease is deemed to have commenced rather than the existence of the lease itself. Consequently, the court ruled that no retail shop lease came into existence.

The court's decision concluded that no binding agreement was reached between the parties. Consequently, the court ordered that Ausko Cooperation Pty Ltd was not entitled to the rights of occupation under the terms they had negotiated with Junapa Pty Ltd. The court further clarified that the absence of a formal lease document and the incomplete discussion of critical matters meant that the requirements of the Retail Leases Act 1994 (NSW) were not fulfilled, leading to the determination that no retail shop lease had been established.

Orders