Australian Commercial Marketing Pty Ltd v Gold

[2018] NSWSC 1701

Supreme Court

New South Wales

Medium Neutral Citation:	Australian Commercial Marketing Pty Ltd v Gold [2018] NSWSC 1701
Hearing dates:	17-18 September 2018; 22 October 2018
Date of orders:	12 November 2018
Decision date:	12 November 2018
Jurisdiction:	Equity
Before:	Darke J
Decision:	Option to renew Rental Agreement validly exercised by defendant. No concluded agreement for defendant to occupy additional space in premises. Defendant liable to pay outstanding rent, and damages for trespass.
Catchwords:	LAND LAW – licences – written agreement for defendant to occupy part of premises for one year with option to renew for further three years – whether agreement included additional oral terms – whether option to renew could be validly exercised by notice given verbally – rent review clause too uncertain to be enforceable – unenforceability of rent review clause does not render the option unenforceable – option validly exercised – whether further agreement reached as to occupation of additional space in the premises – defendant not entitled to occupy additional space and exclude plaintiff from premises – defendant liable to pay outstanding rent and damages for trespass
Cases Cited:	Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 91 ALJR 486; [2017] HCA 12 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Whitlock v Brew (1968) 118 CLR 445 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
Category:	Principal judgment
Parties:	Australian Commercial Marketing Pty Ltd (Plaintiff/Cross-Defendant) Sharon Gold (Defendant/ First Cross-Claimant) Live Better Wellness Practice Pty Ltd (Second Cross-Claimant)
Representation:	Counsel: Mr I W Raine (Plaintiff/Cross-Defendant) Mr S Jacobs with Mr V Misra (Defendant/Cross-Claimants)   Solicitors: Peninsula Law (Plaintiff/Cross-Defendant) Ash Street Partners (Defendant/Cross-Claimants)
File Number(s):	2017/381552
Publication restriction:	None

Judgment

Introduction

1. These proceedings concern a property at 107 Blackwall Road, Woy Woy. The property contains a residential dwelling that has been converted so as to make it suitable for use as commercial or professional offices. The property is sometimes referred to as “The Professional Centre”.

2. The property is owned by ACM Investments Pty Ltd. That company is the trustee of a superannuation fund. Its directors are Mr John Levis and Ms Christine Levis, formerly a married couple who are now divorced. Since April 2004 the property has been leased to another company associated with Mr and Ms Levis, Australian Commercial Marketing Pty Ltd (ACM). ACM is the plaintiff in these proceedings. The defendant/first cross-claimant is Dr Sharon Gold. Dr Gold practises as a psychologist. In August 2016 ACM and Dr Gold entered into an agreement, described as a Rental Agreement, “for the rent of space” within the property. The term of the agreement was 12 months, from 15 August 2016 to 14 August 2017, with “an option of three years from 15 August 2017 to midnight on 14 August 2020”. The rent was stated to be $300 per week (excluding GST).

3. The parties are in dispute on a range of issues arising from the Rental Agreement and Dr Gold’s occupancy of the premises. These issues will be described in more detail in the course of these reasons. For the moment it is sufficient to note that the principal issues are:

1. whether the agreement gave Dr Gold the right to park in certain areas on the property, and the right to shared use of a shed at the rear of the property;

2. whether Dr Gold validly exercised the option to renew for a further term of 3 years expiring on 14 August 2020; and

3. whether an agreement was reached for Dr Gold to occupy additional space within the property, and if so, on what terms.

4. Dr Gold remains in occupation of the property. She claims that she has exercised the option for a further term of 3 years, and also reached an agreement for the occupation of additional space, at a new rent of $500 per week. Dr Gold seeks relief accordingly. ACM claims that the term of the agreement has expired, and that it gave Dr Gold notice to quit in October 2017. ACM seeks orders for possession, and damages for trespass or unlawful occupation.

5. Evidence was adduced by ACM from Mr and Ms Levis, their son Jack Levis, and a real estate agent, Mr Andrew Quilkey. Dr Gold gave evidence in support of her case. The accounts of events given by Mr and Ms Levis on the one hand, and Dr Gold on the other, are markedly different. The terms of numerous alleged conversations, particularly conversations said to have occurred between Ms Levis and Dr Gold, are disputed. Ms Levis and Dr Gold were cross-examined at great length. The credit of those witnesses (and to a lesser degree that of Mr Levis) was criticised in submissions.

6. Ms Levis and Dr Gold may fairly be regarded as the protagonists in this case. I record later in these reasons some observations about their testimony. For the present it is sufficient to note that it was apparent that a deal of personal animosity has intruded between them, and this detracts from the confidence that might otherwise be placed in the evidence given.

7. It is convenient to now set out a summary of the salient events, largely extracted from the documentary evidence and some of the less contentious aspects of the witnesses’ accounts.

Summary of salient events

8. The property contains a stand-alone single storey building that has been converted from a residential home. The building contains four offices, a reception area, a kitchen, two bathrooms, and some storage areas. A shed located in the rear yard provides further storage space. There is some room at the rear of the building, and at the front of the building near the street, for the parking of cars.

9. As I have said, the property is leased to ACM. It appears that ACM exercised the last of its options to renew its lease, for a five year term ending on 12 April 2019.

10. Mr and Ms Levis were at relevant times up to the date of the making of the Rental Agreement directors of ACM. Ms Levis continued to be recorded as a director of the company until October 2017, although ACM claims that arrangements had been made in about March 2017 for her to cease her involvement with the company, and to resign as a director with effect from June 2017.

11. Both Mr and Ms Levis had made use of the property over a number of years as an office. However, in June 2016 Mr Levis was living and working most of the time in Malaysia and was making little use of the property. Ms Levis continued to use the property for the purposes of her financial advice and mortgage broking business.

12. At that time, Dr Gold was operating her practice from the nearby premises at 105 Blackwall Road. She was looking to move to new premises.

13. In about late June or early July 2016 Dr Gold and Ms Levis had a conversation in which the possibility of Dr Gold taking some space at the property was raised. It appears from a diary note made by Ms Levis that the pair had a meeting on 7 July 2016. It is likely that Dr Gold came to the property on at least one other occasion at about that time. During these visits the terms of a possible agreement were discussed. On 11 July 2016 Dr Gold sent an email to Ms Levis in the following terms:

As discussed, I’m very happy to commit to renting from you at 107 Blackwall Road Woy Woy.

We have agreed on the following terms:

$300 per week… I assumed this was plus GST and payable fortnightly or monthly in advance.

12 months lease with a 3 year option and 3 years option after that.

Rent increases of 3% or CPI whichever is higher.

50% Internet

50% electricity

50% cleaning

50% back to base alarm

100% Payment of phone landline bill for 4342…

(I am happy to take your spare phone number as a second line for my practice if the number can be changed into my practice’s name with the provider).

Office 1 (your old office)

Office 2 with glass facade and desk to remain

Shared reception, kitchen, toilets, shower, storage cupboards and storage areas.

Shared carpark for use by myself, contractor, clients of my practice (I’ve noticed they nearly always park on the street or at Deepwater Plaza)

Carpark to be secured at all times with locks upon leaving premises to prevent strangers using it when we are not on site.

Back to base Building alarm to be activated when leaving premises

Two sets of keys

Practice signage permissible at front of property

New signage at right of front door to reflect the tenants in the building

In future you may landscape front to accommodate two car parks.

Ok to park on lawn at rear if necessary.

Ok to use building shed for file storage if necessary.

Ok to add furnishings and business items to reception

Ok to install blind to cover office glass for client privacy

Ok to have my admin staff on site

Ok to meet and greet each other’s clients

Jack will use reception to work in

We discussed possibility of a third office in future depending on our and your changing needs but there is no guarantee of this space being made available to my practice.

Have I missed anything?

14. Shortly thereafter Ms Levis sent an email to Mr Levis in the following terms:

Please see the terms addressed below re renting space at the office. Have you anything you want covered not there? We will be drawing up a lease. Sharon is moving in on 15 August 2017 [sic]

I infer that “the terms” referred to in the email are those contained in Dr Gold’s earlier email.

15. Mr Levis gave evidence that he did not recall receiving the email, but he accepted that it had been sent to him. There is no evidence of any written response on the part of Mr Levis.

16. By 1 August 2016 arrangements were being made for a telephone line that was connected to the property to be transferred from ACM to Dr Gold.

17. On 4 August 2016 Dr Gold sent an email to Ms Levis which included the following:

Please confirm you approve of these signs for 107 Blackwall Road WOY WOY.

There will be a sofa delivered on Monday lunchtime. Can I drop in Friday and leave you the cash in the envelope for the removalist please?

Do you know the measurement of the glass panel in office 2?

Wayne said he can do the internal frosted sign also, which is very convenient.

I am getting him to quote separately on that one.

He also said the electric sign may well need a DA if it is going to be larger than existing, therefore, I have informed him that I will wait to research this with Gosford Council once I have settled in and have more time available.

I believe that the rental agreement will be ready to read and sign early next week.

18. On 8 August 2016 Dr Gold sent an email to Ms Levis in the following terms:

Please see attached. Please note any changes if needed.

19. The attached document took the form of a Rental Agreement. It included the following:

Rental Agreement between Dr Sharon Gold, representative of Live Better Psychology (tenant) and Christine Levis, representative of Australian Commercial Marketing Pty Limited (ACM; Landlord) for rent of space from the Professional Centre at 107 Blackwall Road, Woy Woy.

The agreement constitutes the following terms:

Live Better Psychology will rent Office 1 and Office 2 for a period of 7 days per week.

One client will be seen per hour per office.

Representatives of Australian Commercial Marketing Pty Limited will meet and greet patients of Live Better Psychology on arrival and offer tea/coffee/water, if they are occupying the reception desk.

As a courtesy, staff will notify each other of the arrival of clients in the building.

…

There will be shared costs of pro rata of electricity, kitchen, bathroom and cleaning.

The agreement is to commence upon Monday 15th of August 2016 for a term of 12 months ending at midnight on 14th of August 2017 with an option of three years from 15 August 2017 to midnight on 14 August 2020. Live Better Psychology must inform ACM four months in advance of intention to take up lease option.

The progress of the arrangement will be reviewed at 3 months.

If Live Better Psychology decided to renew the lease for three years, the option of one additional office (Office 4) and shared use of the small group room adjacent to the reception will be included.

…

Rent:

Rent is for a flat rate of $300 per week exclusive of GST.

Rent is to be paid fortnightly by cheque or internet banking transfer.

…

Storage

Shared storage of storgage [sic] room attached to Office 1 and group room and the rear shed.

The Tenant has 100% use of storage cupboards in Office 2.

…

General Issues

Live Better Psychology have shared use of

Desk in reception

Buffet in reception

Walls

Signage

Group table and chairs

Cappuccino machine

Fridge

Microwave

Shower

Two sets of color-coded keys will be provided which must be returned if Live Better Psychology relocates.

…

Use of kitchen facilities

The Tenant is free to use the kitchen and bathroom facilities.

Clients of the tenant are able to use the kitchen with permission from Dr Sharon Gold only.

20. Later on 8 August 2016 Ms Levis sent an email to Dr Gold in the following terms:

I have made quite a few changes and feel we need to urgently discuss various points. Unfortunately I will be in Sydney tomorrow morning and won’t be back until the afternoon.

21. Attached to the email was a revised Rental Agreement. This document was prepared by Ms Levis with the assistance of Jack Levis. As the parties now accept that this form of document was intended to be executed by them (not the earlier version erroneously executed on a later occasion) its terms are set out in full below:

Rental Agreement between Dr Sharon Gold, representative of Live Better Psychology (“tenant”) and Christine Levis and John Levis, the Directors Australian Commercial Marketing Pty Limited (“co-tenant”) and of ACMI Pty Ltd, the Trustee of Levis Family Super Fund (“landlord”) for rent of space in the Professional Centre at 107 Blackwall Road, Woy Woy NSW.

The agreement constitutes the following terms:-

Occupation of Rooms

Live Better Psychology will have access to the building and Office 1 and Office 2 seven days per week during the course of the lease and may have numerous appointments on a daily basis.

Appointment Management and Meet and Greet

Should a representative of Australian Commercial Marketing Pty Ltd (Trading as Levis Private Financial, as co-tenant) be at the front desk when clients of either Live Better Psychology or Levis Private Financial arrive, as a courtesy, they will be greeted on arrival and asked to take a seat. If convenient they may also be offered tea, coffee or water. However, it is not the responsibility of Australian Commercial Marketing Pty Ltd to meet and greet Living [sic] Better Psychology clients. Therefore should the front desk be unattended, Live Better Psychology and Levis Private Financial will make the necessary arrangements to meet and greet their own respective clients.

As a courtesy, and where convenient, staff will notify each other of the arrival of clients in the building.

Sub-Lease

Office 1 and Office 2 cannot be sub-let without the permission of the landlord and should be done only if suitable to each tenant and the landlord.

Cost Sharing

Costs to be shared 50:50 include electricity, internet, kitchen supplies, bathroom amenities and cleaning costs.

Cleaning

Each tenant is responsible for keeping the premises in a neat and tidy condition at all times, including:

Keeping toilets and basins clean and clutter free

Washing their own dishes and wiping down the kitchen and benches after use

Cleaning the coffee machine and throwing away ground coffee and tea bags after use

Cleaning their respective office space

Taking out their own rubbish

Commencement of Lease

The agreement will commence upon Monday 15th of August 2016 for a term of 12 months ending at midnight on 14th of August 2017 with an option of three years from 15 August 2017 to midnight on 14 August 2020. Live Better Psychology must inform ACM four months in advance of its intention to take up the extension of lease option.

Rent

Live Better Psychology will pay the Levis Family Super Fund rent at a flat rate of $300 per week exclusive of GST. Rent will be subject to annual rent review and may be subject to CPI increase on an annual basis. The availability of additional space will incur an additional charge and is subject to availability on a case by case basis.

Payment Method

Rent is to be paid fortnightly by programmed direct debit/credit to the bank account of The Levis Family Super Fund.

Rent Free Period:

There is no rent free period. The first fortnight rent will be due on 12.8.2016 for 15.8.2016-29.8.2016 and then fortnightly in advance.

Telephone

Each tenant will pay their own telephone line and costs related to the connection and ongoing fees related to the uses of this line and line rental.

The tenant’s EFTPOS machine does not require a telephone line.

Internet

Access to internet is included subject to this cost not exceeding the current $64.95 per month.

Message Bank and Phones

The Tenants will have their own message bank attached to their own phone line. The answering of phones is the responsibility of the owner of the phone line. Suitable arrangements must be made if the phone cannot be answered (i.e go to message bank or diverted) in all instances.

Storage

Levis Private Financial has 100% use of the storage room attached to Office 1 and front interview room and the rear shed although these spaces may be used by Living [sic] Better Psychology subject to approval by Australian Commercial Marketing staff.

Live Better Psychology has 100% use of storage cupboards in Office 2.

Security Measures

Both Live Better Psychology and Australian Commercial Marketing may see clients whenever they wish, however, the following safety and security measures are agreed:

Clients are not to be left unattended in the waiting area if the front desk is unattended and are the responsibility of the owner of that client.

The door between the reception area and back offices must be kept closed at all times

The back door should be locked at all times

The entry doors to the building must always be locked when seeing a client when there is nobody to man the front desk. This is for safety and theft issues.

Live Better Psychology and Australian Commercial Marketing will be responsible for securing the property and closing when the last to leave by:

Checking all external doors are locked

Arming the alarm

Turning off all lights

Switching off air-conditioning

Lock the gate

Each Tenant is to insure it’s [sic] own business contents and have $20 million public liability insurance.

Children

Children are not to be left unsupervised in the building at any time and clients need to be advised of this. There are no facilities e.g., toys for young children and parents need to be advised to bring their own ‘entertainment’.

Animals/pets

Dogs brought in by clients can only attend the practice if they are trained therapy/guide dogs or permission has been discussed with Dr Sharon Gold and Christine Levis in regards to the particulars of the clinical need and that the dog has had appropriate training. Any damages are to be paid by the client.

Common Areas

Australian Commercial Marketing and Live Better Psychology have shared use of:

Desk in reception (only if unoccupied by Australian Commercial Marketing Staff e.g at lunch, on errands, holidays, weekends, after hours, etc to man the desk)

Walls in reception and in Office 1 and Office 2

Signage as agreed between tenants and Australian Commercial Marketing Pty Ltd

Reception coffee table and chairs

Kitchen

Cappuccino machine

Fridge

Microwave

Shower and bathrooms

Keys

Two sets of color-coded keys will be provided which must be returned to Australian Commercial Marketing if Live Better Psychology vacates. Any loss of keys or alarm will need to be replaced by Live Better Psychology at cost.

Occupational Health & Safety

Both Live Better Psychology and Australian Commercial Marketing agree to comply with standard occupational and health safety standards.

Professional Registration

The tenant and landlord to provide evidence of professional registrations as well as evidence of insurances.

Use of Kitchen facilities

Clients of Live Better Psychology are able to use the kitchen with permission from Dr Sharon Gold only.

Changes to Agreement

Any changes to these arrangements may be renegotiated and agreed in writing between parties depending on suitability to both parties.

22. Still later on 8 August 2016 Dr Gold sent an email to Ms Levis in the following terms:

Thank you for adding your changes and fleshing out some of the points.

That all looks fine to me and exactly as we discussed with the exception that we may need to re-discuss the following:

Storage room off Office 1: I thought we had agreed to share the storage room behind your old office as we both needed to, and I recall you mentioned you may also need to use some cupboards in office 2 if you still needed to.

Re the shed I thought you had not yet cleaned it out and we had no time limit as there is no rush but it was okay for us to put some archive boxes in there, if we needed to at some point in the future?

We should be able to sort this out via email?

23. Ms Levis responded by email on 9 August 2016 in the following terms:

That’s great. I’m looking at some options now – we are clearing some things out of the back shed so that’s definitely OK. In regards to the room behind it is very full at the moment – I will see what I can do. Looking at the agreement it is actually a sub-lease agreement. There are pro-formas on line that can be purchased – maybe I should arrange one of those with the things we have agreed so far? What do you think?

24. Later on 9 August 2016 Dr Gold sent a reply in the following terms:

Up to you Chris with regards to the lease document. I am good to go with whatever you decide. As far as I am aware, what we have stands up but I will leave it up to you.

Will pop in tomorrow if I can and you are about tomorrow for a few minutes to update each other?

25. Dr Gold moved in to the property on about 12 or 13 August 2016. She and Ms Levis proceeded to occupy the premises whilst carrying on their respective professional activities. Dr Gold commenced to pay the rent of $300 per week. At some stage Ms Levis and Dr Gold signed the version of the Rental Agreement that Dr Gold had sent on 8 August 2016. Ms Levis and Dr Gold have different versions of when that occurred, and the circumstances in which it occurred. That is one of the many conflicts in the evidence which it is unnecessary to resolve. As I have said, both parties accept that it was intended to execute the version of the Rental Agreement that Ms Levis sent to Dr Gold on 8 August 2016.

26. There is evidence that there was a degree of co-operation between the pair on matters such as kitchen and bathroom supplies. It further seems that Dr Gold and her clients made use of the areas for car parking. This seems to have occurred without complaint from Ms Levis. Whilst I accept that some issues arose between them (such as the manner in which Dr Gold placed her staff members in the reception area) it seems that the parties proceeded more or less in accordance with the terms of the Rental Agreement.

27. It further appears that Ms Levis and Dr Gold developed something of a friendship, and a social relationship. They went out for dinner or drinks after work on numerous occasions between September 2016 and September 2017. One evening in October 2016, for example, they went to an Indian restaurant in Umina. Dr Gold gave evidence to the effect that on this occasion she told Ms Levis that she loved the building and “will be definitely staying”. Dr Gold says that there was also some discussion about how much Dr Gold would be prepared to pay to rent “the whole building”. Ms Levis denies that there was any conversation of that nature, but does recall Dr Gold saying that she was happy at the premises. In cross-examination Ms Levis agreed that Dr Gold had said that she would definitely be staying.

28. Dr Gold deposed that at the end of that dinner she believed that an agreement had been reached for her to take the whole building for 3 years from the end of the first year at “market rent”. She further deposed that throughout the months that followed there were numerous conversations in which she and Ms Levis talked about Dr Gold taking over the whole building. Ms Levis denies that conversations took place in the terms asserted by Dr Gold. This issue will be returned to later in these reasons.

29. In late December 2016 the marriage between Mr and Ms Levis broke down, and they separated almost immediately. They both gave evidence, and I accept, that they did not thereafter have any face-to-face contact with each other. They had a lengthy discussion on the telephone on 17 February 2017 about a financial settlement between them. Mr Levis made a note of the matters discussed. The note includes the following:

I understand that the following broad points of agreement were reached, albeit that they remain on a non-prejudicial for both Parties:

…

2.   Basis of settlement:

We agree to a 50:50 split of value (assets net of liabilities) across the board with open disclosure to each other.

In the main we should seek to convert asset to cash, discharge liabilities, then divide the balance equally.

Where liquidation is not practical and/or desirable, we agree to be sufficiently flexible and considerate of each other to reach an appropriate/agreed value and/or to find an arrangement that negates an immediate requirement to liquidate a particular asset.

3.   Sequence of settlement

As much as practical we will seek to settle matters broadly in the following sequence:

(a)   ACM assets (including motor vehicle – Dualis) liquidated (or otherwise valued)

(b)   Audi motor vehicle sold or otherwise valued (net of loan) – value divided 50:50

(c)   Subject to the above, ACM restructured (JL) and Levis Private Financial business transferred to CL

(d)   36 Mercator Parade placed on the market and sold by auction

(e)   107 Blackwall Road placed on the market and sold by auction [1]

(f)   RPC shares sold at prevailing net value

(g)   Subject to the sale of Blackwall Road and liquidation of RPC shares and liquidation of all non-cash assets, Levis Family Super Fund is audited and wound up [2]

(h)   Subject to all matters within LFSF being attended to (including wind up), ACM Investments is wound up and proceeds shared [3]

4.   Other matters:

(a)   Access:

CL has consented to JL accessing both the Mercator Parade and Blackwall Road premises between 12:00 noon and 4:00pm, Sunday 19 February 2017 … JL undertakes only to remove personal belongings, company files and associated paperwork … CL is to make available required security codes (for Blackwall Road), keys etc. to ensure easy access and is to keep her mobile phone open for calls should JL have any issue with access.

…

1. JL is prepared to examine an alternative arrangement if the preference of CL

2. If Blackwall is retained, LFSF may need to be maintained with the single asset being the Blackwall Road property

3. Note: there is approximately $39K in carried forward capital losses … potential case to keep ACMI live

30. By that stage Ms Levis, in her capacity as company secretary of ACM Investments Pty Ltd, had obtained an appraisal from Mr Quilkey concerning the 107 Blackwall Road property. Mr Quilkey noted in his report that the property had a floor space of about 128m2. He stated that a fair rent would be about $290 per m2 gross per annum exclusive of GST (that is, a gross rental income of $37,120 plus GST). Mr Quilkey further stated that if the property was sold with an established 5 year lease, plus options, buyers would see value up to a price range of $585,000 to $600,000, and a bit more if the tenant covered outgoings such as Council rates and insurance.

31. Mr and Ms Levis continued to communicate about financial issues. There is evidence that on 14 March 2017 Ms Levis sent an email to Mr Levis about forthcoming taxation changes. Ms Levis referred to the possibility of selling the property at a price of $600,000. Mr Levis, in his email reply of 15 March 2017, indicated that the property should be sold before 30 June 2017. His email concluded with the following:

The only issue in relation to the Blackwall Rd property is that for $10k CGT I would not be willing to sacrifice $100k on property, i.e. I would not want to let it go for $600k. What is Sharon’s position.

32. Later on 15 March 2017 Ms Levis replied in the following terms:

Can you please arrange a property appraisal/proposal on Blackwall Rd. Sharon is not interested.

33. It seems that Ms Levis, not unreasonably, interpreted Mr Levis’ question concerning Dr Gold’s position to be directed to whether Dr Gold was interested in purchasing the property. In cross-examination, Ms Levis said that her response “Sharon is not interested” was based on an earlier discussion in 2016 in which Dr Gold had said the building was worth only $500,000, from which she deduced that Dr Gold would not be interested in purchasing the property for $600,000. Dr Gold deposed that in about February or March 2017 she had a conversation with Ms Levis in which Ms Levis asked her whether she might be interested in buying the property for $650,000, to which Dr Gold said no.

34. I note in passing that Dr Gold gave evidence that on about 24 March 2017 she had a conversation with Ms Levis at an Indian restaurant in which she told Ms Levis that she was “definitely taking up the option”. This is one of the numerous conversations alleged by Dr Gold to have included discussion about her taking over the whole building. The conversation is denied by Ms Levis. Another discussion of that nature is alleged to have taken place at the Empire Bay Tavern on 11 April 2017. Dr Gold gave evidence that on this occasion she told Ms Levis that she was “taking up the option for the whole building”. Ms Levis denies that, and further says that they were at the Empire Bay Tavern on 18 April 2017, not 11 April 2017.

35. Under cl 8 of the Rental Agreement, Dr Gold was required to inform ACM “four months in advance” of her intention to take up the extension of lease option. As the extended term would commence on 15 August 2017, Dr Gold was required to inform ACM by no later than 14 April 2017.

36. Dr Gold gave evidence that on 1 May 2017 she wrote a letter to Ms Levis and had her assistant (Tracey Hancock) deliver the letter to Ms Levis. Ms Levis says that she did not see the letter until she was given a copy by Dr Gold on 25 September 2017. The letter is in the following terms:

This letter is to formally confirm my verbal confirmation and advice that we do wish to take up the option of the whole building and that we have agreed that we will discuss the fee subject to you being able to consult from the premises when required and have a small sign so that your clients do not think you have closed your business.

We have discussed your proposed fee of $600 per week including GST and outgoings and I confirm my offer of $500 per week including GST and outgoings.

We agreed to be flexible and supportive of the needs of your business and the Practice as to when you will vacate your office and the small room.

37. It was put to Dr Gold in cross-examination that she did not write the letter until September 2017. Dr Gold denied the allegation.

38. On 13 June 2017 Ms Levis sent a letter to Mr Levis (as managing director of ACM) in the following terms:

Effective today, 13 June 2017 I resign as both director and employee of Australian Commercial Marketing Pty Ltd.

Could you please confirm that under the terms of our agreed arrangements, the trading name Levis Private Financial will be transferred to my new company Levis Financial Solutions Pty Ltd.

39. Both Mr and Ms Levis gave evidence to the effect that in early March 2017 it had been decided between them that Ms Levis would immediately cease her involvement with ACM. Mr Levis also gave evidence that it was agreed, however, that Ms Levis’ resignation as a director would not occur until her birthday in June 2017.

40. Dr Gold gave evidence of further conversations with Ms Levis in which there was discussion about Dr Gold taking the whole building. Particular mention should be made on a conversation said to have occurred in August 2017 shortly before Ms Levis left to go on a holiday to Germany. Dr Gold says that during this conversation agreement was reached as to the rent that would be payable once she took the extra space. She alleges that a figure of $500 per week was agreed. Ms Levis agrees that there was a conversation in August 2017 about what rent might be paid “for the whole office”, in which Dr Gold put forward the figure of $500, but she says that she did not agree to that, or any other, figure. No contemporaneous record of the conversation is in evidence. However, on 10 September 2017, the day after Ms Levis had returned from Germany, Dr Gold sent her an email which included the following:

This is to confirm that we agreed before you left that we will take over the building for $500 per week and you will consult as required.

I also confirm I’m quite happy for my staff to take phone messages for you and to collect mail and deal with any off the street enquiries.

We have agreed the signage will be changed so that passerby [sic] recognize the building as occupied by the Live Better Practice but that you will have a small sign so that your clients do not worry you have closed down.

I confirm we should remove the Levis sign on the front of the building and all internal signs relating to your business.

I will arrange the new street signage with Wayne and seek your prior approval.

I’m happy to commence the new rental arrangement from 1 November 2017 but if you need longer in a room that should be fine as long as we have one extra room to use.

The grounds should continue to be maintained by you. I assume you will keep using the small storage shed but I will need to store boxes of files in there in the next few weeks.

41. Ms Levis responded by email on 12 September 2017 in the following terms:

Thank you for your email. As discussed today it is best we sit down & discuss the options to make sure there is minimal disruption to your business. I believe a sale can take place (if necessary) with a rental agreement in place. At this stage I am dealing with the sale of my home & John has agreed that we leave decisions regarding 107 Blackwall Rd until we sell the home. Please don’t be alarmed as I want to ensure that you can retain tenancy. Lets talk next week. Tomorrow I am having my hand operation & I am busy on the weekend but one night next week should be OK.

42. The terms of the conversation referred to in the second sentence of the email are disputed as between Dr Gold and Ms Levis.

43. It seems that there was a rupture in the relationship between Ms Levis and Dr Gold over the weekend of 23-24 September 2017 when they were in Melbourne together.

44. Ms Levis gave evidence that on 25 September 2017 Dr Gold gave her the signed copy of the Rental Agreement, and a copy of the 1 May 2017 letter about taking up the option. It seems that an argument then broke out between them. Ms Levis gave evidence that she was distressed by this and accordingly has since ceased going to the property. She also arranged for Mr Levis to step in to deal with the matter.

45. On 6 October 2017 Mr Levis informed Dr Gold that the options available to her were entering into a lease of the entire premises for $3,300 per month plus outgoings, purchasing the property for $850,000, or vacating by 31 October 2017.

46. The matter was not resolved. Dr Gold has continued to maintain (and ACM has denied) that an agreement was reached for the taking of extra space for a 3 year period at a rent of $500 per week. Both parties retained solicitors.

47. ACM served a notice to quit upon Dr Gold on 13 October 2017, calling for her to vacate the property by 30 October 2017.

48. On about 1 November 2017 Mr Levis placed a padlock on the gate to the driveway of the property. It seems that Dr Gold removed the padlock and has placed her own lock on the gate to secure it after business hours.

49. Solicitors for Dr Gold sent a letter to the solicitors for ACM on 6 November 2017 denying the validity of the termination. It was asserted in the letter that Dr Gold had verbally exercised the 3 year option on 24 March 2017. The letter seems to proceed on the basis (no longer advanced) that the terms of the agreement are as set forth in the document that was executed.

50. The bank account into which Dr Gold had been paying rent was closed in December 2017. No rent has been received since that time although Dr Gold says (and I accept) that she has remained willing to pay the rent under the Rental Agreement.

51. The proceedings were commenced by ACM on 18 December 2017.

52. In January 2018 Dr Gold took steps to have some of the locks changed at the property. This is also the subject of some dispute, but it seems clear that at least the lock on the rear shed, and the lock on one of the offices, was changed by Dr Gold. That was the office, sometimes referred to as Office 3, that had formerly been used by Ms Levis.

The terms of the agreement

53. It is common ground that the agreement reached was between ACM and Dr Gold. It was ultimately accepted that the second cross-claimant, a company associated with Dr Gold, was not a party. Its claims were not pressed.

54. It is also common ground that the agreement included the terms contained in the form of Rental Agreement that was sent by Ms Levis to Dr Gold on 8 August 2016 (set out at [21] above). However, Dr Gold alleges that the agreement also includes an oral term that she would be entitled to use the car parking spaces at the premises, and a term that she would have shared use of the rear shed for storage. Dr Gold further contends that the written agreement should be rectified so that it incorporates terms to that effect.

55. Before turning to those issues, I should record some matters concerning the principal witnesses, Ms Levis and Dr Gold, both of whom were extensively cross-examined.

56. I generally found Ms Levis to be a satisfactory witness, who by and large appeared to be genuinely attempting to answer the questions put to her. There were some occasions when her answers were inaccurate, and required qualification or correction. One example is her answer (at Transcript 72) to the effect that she had never given Dr Gold consent to use the rear shed. Another example is her answer (at Transcript 128) to the effect that she had no reason to believe that Dr Gold wanted to take over the whole building. On these (and other) occasions, Ms Levis quite readily provided the requisite qualification or correction. I have considered the particular criticisms that were levelled at Ms Levis’ evidence in the submissions made on behalf of Dr Gold. They do not persuade me that I should regard Ms Levis as an unreliable witness, or a witness lacking in credit. That is not to say that I accept her evidence as accurate on all matters. For example, I think that it is likely, based on her email to Mr Levis of 15 March 2017, that she did speak to Dr Gold in March 2017 about whether Dr Gold might be interested in purchasing the property.

57. I generally have less confidence in the evidence given by Dr Gold. She gave extensive accounts of conversations alleged to have taken place over the period from about June 2016 to September 2017 and she displayed confidence in the witness box concerning the accuracy of her recollections. However, Dr Gold seemingly conceded that some parts of the conversations may be inaccurate; for example as to whether she saw Mr Levis at the premises in February 2017, and as to whether Ms Levis had told her in October 2016 that she was separating from Mr Levis. I also observed that on occasions Dr Gold seemed eager to give rather expansive answers to questions that required only a brief response, and on a number of occasions gave answers that were not responses to the question asked. Dr Gold displayed a readiness to assert that Mr and Ms Levis were lying. This assertion was made, for example, in relation to their evidence that they did not have contact with each other in early 2017 following their separation. It was also made in relation to Mr Levis’ evidence that the only time he went to the premises in February 2017 was on Sunday 19 February. On this occasion, Dr Gold added the gratuitous comment that Mr Levis had a history of lying. Elsewhere in her cross-examination Dr Gold gave an unresponsive answer that referred to Mr Levis “taking money out of the business”. Finally, Dr Gold suggested in her affidavit (and also during her cross-examination) that Ms Levis had been physically assaulted by Mr Levis in February or March 2017. I should record that this was denied by both of them. In the course of her cross-examination, Dr Gold gave further details that had not been included in her affidavit. Dr Gold sought to explain that these details were not included in the affidavit because she was concerned about Ms Levis’ safety. I found that explanation to be unsatisfactory. These matters together have caused me to view Dr Gold’s evidence with some caution.

53. As mentioned earlier, it was apparent that some personal animosity has developed between Ms Levis and Dr Gold. The testimony of each of them needs to be viewed in that context.

54. Where it has been necessary to make findings about the disputed conversations, the Court has where possible rested upon contemporaneous documents or other objective circumstances as a basis for its conclusions as to what is likely to have been said.

55. Dr Gold deposed that the subject of car parking came up in her first conversation with Ms Levis. Dr Gold deposed that when Ms Levis was showing her the rear of the premises she said:

You can have car parking as part of the lease. There is room for three car parks in front of the shed, and room for two cars to park on the grass.

Dr Gold deposed that when they went back inside she told Ms Levis that she would need the parking because she has disabled clients, and Ms Levis said:

I will move my sign at the front and create a disabled car space at the front.

61. Ms Levis’ account of their first conversation does not include any discussion of parking. Neither does her account of a second conversation that she says occurred a few days later. Later in her affidavit Ms Levis denied that there was any discussion of parking spots at the first meeting.

62. In cross-examination, Ms Levis gave evidence that between her first meeting with Dr Gold and when Dr Gold moved in, asphalt was placed in what had been a garden area at the front of the property so the area became suitable for parking. Ms Levis was challenged about her denial of any discussion of parking spots. Ms Levis said she “could not tell” whether there was any such discussion, and later conceded that she did not recall whether there was or was not discussion on that topic. However, Ms Levis stated that she had not guaranteed Dr Gold a car spot, and there had been no discussion about it going into any agreement. She said that the “landscaping” of the front area was nothing to do with Dr Gold but was rather something that had been in prospect for some months. Ms Levis agreed that after Dr Gold moved in Dr Gold and her staff made use of the parking spaces, and she had not tried to stop them from doing so. Ms Levis said that “she could park there” but it was not part of the agreement.

63. Dr Gold’s email of 11 July 2016, which refers to matters said to have been agreed, includes the following:

…

Shared carpark for use by myself, contractor, clients of my practice (I’ve noticed they nearly always park on the street or at Deepwater Plaza)

Carpark to be secured at all times with locks upon leaving premises to prevent strangers using it when we are not on site.

…

In future you may landscape front to accommodate two car parks.

Ok to park on lawn at rear if necessary.

64. However, the form of Rental Agreement sent by Dr Gold to Ms Levis on 8 August 2016 made no mention of parking. In cross-examination, Dr Gold said this was “just an oversight”.

65. It is likely that car parking was mentioned in the course of the initial discussions between Ms Levis and Dr Gold. I am prepared to accept that Ms Levis may well have said something about Dr Gold being able to make use of the parking areas. She is likely to have said something about “landscaping” the area at the front so as to create an area that could be used for parking. However, I do not accept that there was a conversation in the terms of that deposed to by Dr Gold. I am not satisfied that Ms Levis made any promises about car parking being available to Dr Gold, or that any consensus was reached about the terms of use of any of the parking areas.

66. Parking is mentioned in Dr Gold’s 11 July 2016 email in terms that suggest that the parties envisaged some sharing of the area at the rear, and that a future landscaping at the front might create additional car parking spaces. These rather general statements were not included in any of the later documents that passed between Dr Gold and Ms Levis. Neither were any other statements about parking. I note that Dr Gold, in the email she sent late on 8 August 2016, described the Rental Agreement sent by Ms Levis as “exactly as we discussed” save for the issue of storage. In cross-examination, Dr Gold agreed that she would have read the Rental Agreement carefully at the time. It is unlikely that Dr Gold would have overlooked parking had it been a matter upon which an agreement had been reached.

67. One matter Ms Levis and Dr Gold agreed upon in their cross-examinations was that parking was “not an issue”. In my opinion it is likely that the subject did not progress to the point where there was mutual assent to terms regulating use of car parking spaces by Dr Gold, her staff and clients. I am not satisfied that there was an oral term as contended for by Dr Gold. I have had regard to the subsequent conduct of the parties, but consider that it is equivocal. It seems to me to be consistent with the parties dealing with parking on an ad hoc basis, with ACM permitting the use of car spaces by Dr Gold rather than Dr Gold using car spaces as a matter of contractual right. Proceeding in that fashion would accord with the good state of relations that existed between the parties up to September 2017.

68. For similar reasons, I am not satisfied on the evidence that the parties shared a common intention as to the terms of use of the parking areas that might form the basis of a claim to rectify the terms of the written Rental Agreement.

69. Before leaving this topic I should note that the particulars to the pleading identify a conversation on about 12 August 2016 as the basis of the alleged oral term, but no evidence was adduced of a conversation at about that time concerning parking.

70. As for storage, it is my view that by her email of 9 August 2016 Ms Levis on behalf of ACM agreed to Dr Gold’s request to be allowed to store some “archive boxes” in the rear shed. The agreement should be taken to include a term to that effect. The term effectively supersedes the contents of the earlier conversations insofar as storage is concerned.

71. It follows from the above that the terms of the agreement are found in the Rental Agreement (set out at [21] above) together with a term to the effect that Dr Gold would be permitted (without extra charge) to store some archive boxes in the rear shed.

Option to renew

72. The next matter to consider is whether Dr Gold validly exercised the option to renew for a further three years expiring on 14 August 2020. The parties raised two main issues in relation to the option to renew. These are:

1. whether reaching agreement on the amount of rent is a condition precedent to the exercise of the option; and

2. whether the option is required to be exercised in writing.

Both issues involve questions of construction of the agreement.

73. The option to renew is contained in cl 8 of the Rental Agreement. Clause 8 provides:

The agreement will commence upon Monday 15th of August 2016 for a term of 12 months ending at midnight on 14th of August 2017 with an option of three years from 15 August 2017 to midnight on 14 August 2020. Live Better Psychology must inform ACM four months in advance of its intention to take up the extension of lease option.

Clause 9 then provides:

Live Better Psychology will pay the Levis Family Super Fund rent at a flat rate of $300 per week exclusive of GST. Rent will be subject to annual rent review and may be subject to CPI increase on an annual basis. The availability of additional space will incur an additional charge and is subject to availability on a case by case basis.

74. Both parties submitted that the second sentence of cl 9 was concerned with rent after the expiry of the 12 month term on 14 August 2017; that is to say, it is concerned with rent during the three year option period.

75. ACM submitted that if Dr Gold wanted to take up the “extension of lease option” there had to be a rent review, but the second sentence of cl 9 did not contain any mechanism to ascertain the rent. It was put that there would thus need to be an agreement as to rent for the three year option period, and the reaching of such an agreement should be regarded as a condition precedent to the exercise of the option.

76. Dr Gold submitted that the second sentence of cl 9 contains two parts. It was put that the first part, which stipulates that rent “will be subject to annual rent review”, should be construed as meaning a review to “market” rent. It was put that the second part, which stipulates that the rent “may be subject to CPI increase on an annual basis”, should be construed as conferring on ACM a unilateral right or discretion to so increase the rent.

77. As to the mode of exercise of the option, ACM submitted that written notice was required because there had to be an agreement reached as to the rent and this amounted to a variation to the agreement which, by cl 25, needed to be in writing. Dr Gold submitted that the last sentence of cl 8 called only for Dr Gold to inform ACM of her intention to take up the option, and the ordinary meaning of “inform” included the telling of something, by spoken words. It was pointed out that the agreement itself contemplated the parties engaging on a variety of matters on a daily basis and in close proximity, so the formality of a written notice would not be expected.

78. It appeared to be common ground that if the option was to be exercised Dr Gold had to inform ACM of her intention to take up the option no later than 14 April 2017.

79. The Rental Agreement, as a written commercial agreement, has to be construed in accordance with the well-established principles laid down by the High Court in cases such as Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 91 ALJR 486; [2017] HCA 12 at [16].

80. The terms of the agreement were settled between two professionals who were not trained as lawyers. The language of the agreement should be considered in that light. Clause 8 clearly indicates that the term of the agreement (which was there labelled as a lease) was 12 months with an option for a further three years. Exercise of the option is dealt with in the final sentence of cl 8. The language does not suggest that anything is required in that regard other than informing ACM within the specified period of an intention to “take up the extension of lease option". The language does not indicate that taking up the option depends in any way upon reaching an agreement as to rent.

81. If it was so dependent, the option would be unenforceable, being no more than an agreement of the parties to agree at some time in the future (see Booker Industries Pty Ltd v Wilson Parking (QLD) Pty Ltd (1982) 149 CLR 600 at 604). I do not think that reasonable business persons in the position of the parties here would have understood the agreement to so provide. The existence of an enforceable option for a further 3 years appears to be one of the cardinal objects sought to be secured by the agreement.

82. It is true that insofar as the second sentence of cl 9 operates, it applies to the option period. However, it does not provide any mechanism for the carrying out of the rent review. I am unable to accept the submission that it should be read as providing for a review to “market” rent on the basis that the provision could not mean anything else. It seems to me, particularly having regard to the balance of the sentence which refers to annual CPI increases, that it is far from certain that “annual rent review” must mean a review to “market rent”. Why not a fair rent, a reasonable rent, or a fair and reasonable rent? The provision fails in my view to identify how the review is to be conducted so as to determine the rent. To that extent at least, the second sentence of cl 9 is too uncertain to be enforceable.

83. It does not follow that the option to renew is unenforceable. It may be regarded as an option to continue the lease on the same terms for the further period. Those terms provide, in cl 9, for the rent to be $300 per week (excluding GST), subject to rent review. If the rent review provision is not enforceable the rent remains at $300 per week (excluding GST). The rent review provision can be severed from the balance of the contract, leaving it to stand (see Whitlock v Brew (1968) 118 CLR 445 at 461). That seems to me to accord with the intention of the parties as disclosed by the terms of the Rental Agreement. ACM submitted that it would not be a commercially sensible construction of the agreement that the rent would remain at $300 per week (excluding GST) throughout the extended 3 year period. However, that outcome, which is the result of inadequate drafting, strikes me as a much less inconvenient or unexpected outcome than an unenforceable option, which would be the result if ACM’s submissions were accepted.

84. For the above reasons, it is my opinion that reaching agreement on the amount of rent is not a condition precedent to the exercise of the option.

85. The basis of ACM’s submission that written notice of the exercise of the option is required thus falls away.

86. The last sentence of cl 8 provides that in order to “take up” the extension of lease option, Dr Gold must inform ACM four months in advance of her intention to do so. I agree with Dr Gold’s submission that upon its true construction the provision allows Dr Gold to inform ACM of her intention by means of verbal communication. That accords with the ordinary meaning of the words used. The parties have not stipulated for any particular means of communication of the intention to take up the option, such as a written notice. It would have been a simple matter to do so had that been intended.

87. In my opinion, upon the true construction of the agreement, the option to renew can be validly exercised by Dr Gold verbally informing ACM of her intention to take up the option. If that mode of exercise is employed, proving that the option has been exercised may be more difficult than would be the case if the information was given in writing. However, that mode of exercise, if proven, is effective, as long as it occurs no later than 14 April 2017.

88. I am satisfied on the evidence that Dr Gold did inform ACM that she intended to take up the extension of lease option, and the option was thereby validly exercised. The evidence shows that this occurred in about mid-October 2016.

89. Dr Gold deposed that on about 18 October 2016, whilst she and Ms Levis were having dinner at an Indian restaurant in Umina, she told Ms Levis that she loved the property “and will definitely be staying”. In her affidavit in response, Ms Levis deposed that she recalled Dr Gold saying on that occasion that she was happy at the premises. In cross-examination, Ms Levis agreed that Dr Gold had also said that she would definitely be staying.

90. I am satisfied that on that occasion Dr Gold made a clear statement in those terms. Viewed objectively, the making of that statement amounted to Dr Gold informing ACM of Dr Gold’s intention to take up the extension of lease option, for the purposes of cl 8 of the Rental Agreement. “Staying” should be regarded as a reference to staying in the premises beyond the initial 12 month period. The option was validly exercised at that time.

91. Dr Gold alleges that if the option had not been exercised on about 18 October 2016 it was exercised on about either 24 March 2017 or 11 April 2017. In light of Ms Levis’ acceptance of what was said in October 2016, it is not necessary to consider these alternatives.

92. Dr Gold’s affidavit evidence indicates that she held a belief that the option included not only the extra 3 year period, but also extra rooms in the building. She deposed that this was discussed at her initial meeting with Ms Levis, and I note that the form of Rental Agreement sent by Dr Gold to Ms Levis on 8 August 2016 contained a provision to that effect. However, this provision was not included in the revised Rental Agreement which Ms Levis prepared and Dr Gold accepted. I infer that it was deliberately deleted by Ms Levis. The option contained in the agreement does not include additional rooms. Any subjective belief held by Dr Gold to the contrary was erroneous, but does not affect the conclusion that the option was validly exercised.

93. The subject of additional space is referred to in cl 9 of the Rental Agreement. It is clearly stated there that the availability of additional space was “subject to availability on a case by case basis”, and would incur an additional charge. There was no entitlement under the agreement to additional space. Any entitlement to additional space would need to be the subject of another agreement.

94. As it happened, Dr Gold seems to have thought that it would be necessary for an agreement to be reached as to the amount payable in respect of additional space. She deposes to a number of conversations with Ms Levis in which she says these matters were discussed. Dr Gold alleges that an agreement was eventually reached for additional space, for a new rent of $500 per week. ACM denies that such an agreement was made. I turn now to that issue.

Agreement for additional space

95. Dr Gold asserts that the agreement was made in the course of conversations that occurred on about 18 October 2016, 24 March 2017, 11 April 2017 and August 2017. (The August conversation was inadvertently omitted from paragraph 21A of the Second Further Amended Statement of Cross Claim. However, leave was granted to file the pleading with it included in paragraph 21A, and the case was conducted on the basis that the August 2017 conversation was relied upon as part of this aspect of Dr Gold’s case.)

96. The conversation on about 18 October 2016 is the conversation in which Dr Gold said that she would definitely be staying. Dr Gold deposed that there was a discussion in the following terms:

Ms Levis:   “How are you liking working from the premises?”

Dr Gold:   “I love the property and will be definitely staying.”

Ms Levis:   “What will you pay for the whole building?”

Dr Gold:   “I think market is $450 to maybe $500 at a stretch including outgoings.”

Ms Levis:   “I think that the best thing to do would be to get a real estate agent to do the market value. Are you happy with that?”

Dr Gold:   “Yes. I think we should work it out per square metre, and calculate the market value from that.”

Ms Levis:   “That’s ok. Who would think just walking out that day I would meet you and this would all happen?”

Dr Gold went on to refer to a discussion which included Ms Levis saying that she was separating from Mr Levis.

97. In her affidavit in response, Ms Levis denied that she asked “What will you pay for the whole building?”, and denied that any particular figure was mentioned. She denied that she spoke about getting a real estate agent to “do the market value”, and denied any discussion of square metreage. Ms Levis also denied saying that she was separating from Mr Levis. She explained that at that time the question of separation had not arisen for her.

98. In cross-examination, Ms Levis maintained her position, and said that at no stage did she ever offer Dr Gold the whole building. She added that she had “specifically taken out the paragraphs where she did want to take on more of the building”. I take that as a reference to the option provision contained in the form of Rental Agreement sent to her by Dr Gold. Ms Levis suggested that it was not until August 2017 that Dr Gold brought up the topic of taking over the whole building.

99. The conversation on about 24 March 2017 is alleged to have occurred at an Indian restaurant (either in Umina or Ettalong, probably the former). Dr Gold deposed to a conversation in the following terms:

Ms Levis:   “When you want the whole building, I need two weeks’ notice to get my stuff out and you can take the whole building at any time.”

Dr Gold:   “I’ll need to take it in line with my business plans, so August is good for me but I can think about whether or not I can do it earlier. I am definitely taking up the option though.”

100. In her affidavit, Ms Levis denied the conversation. She stated that at no time did she offer Dr Gold “the whole building”. By reference to her diary, she also suggested that the pair did not go out to a restaurant on 24 March 2017. In cross-examination, Dr Gold agreed that she could not be certain that the conversation occurred on that date.

101. The conversation on about 11 April 2017 is alleged to have occurred at the Empire Bay Tavern. There is again a dispute about the date, but given my conclusion that the option was exercised in October 2016, the precise date is not important. Dr Gold deposed that she had told Ms Levis that “we are taking up the option for the whole building”, and went on to speak about building up her team of staff. She says that Ms Levis said:

…

John still keeps changing his mind about whether he wants to buy our house in St Hubert’s Island or sell it but I’m definitely keeping this building so you don’t have to worry and can go ahead with your plans. I might need to use the room once or twice a month. You know I don’t have that much foot traffic. I’ll drop you an email confirming everything.

102. Ms Levis denies the conversation. In cross-examination, Ms Levis stated that she did not know at that time whether she would be keeping the building and was not in a position to offer anything to Dr Gold.

103. Dr Gold deposed that as she did not receive any email from Ms Levis, she wrote a letter on 1 May 2017. That is a reference to the letter which is set out at [36] above. Dr Gold deposed that she had her assistant deliver it to Ms Levis. Ms Levis says that she did not see the letter until she was given a copy of it on 25 September 2017. It was put to Dr Gold in cross-examination that the letter was written after 1 May 2017, and backdated. Dr Gold denied that.

104. The terms of the letter, in particular the references to “your proposed fee of $600 per week including GST and outgoings” and “my offer of $500 per week including GST and outgoings”, are curious. They are not reflected in the narrative of the events up to 1 May 2017 that is set forth in Dr Gold’s affidavit. They bear some similarity to part of the conversation Dr Gold alleges occurred in August 2017. In cross-examination, Dr Gold was pressed about why no conversation of that character was included in her narrative at a point prior to August 2017. At one stage during her cross-examination Dr Gold said:

The thing was that we agreed that I was taking the whole building and we were going to get the market rent.

Later, Dr Gold said that there had been a discussion at Ms Levis’ house on the Easter weekend in which Ms Levis spoke about a fee of $600 per week including GST and outgoings. When asked about why this conversation did not appear in her affidavit, Dr Gold suggested that this was because she was not willing to put anything in the affidavit “that I didn’t feel pretty confident that it was actually the truth”.

105. The conversation in about August 2017 is alleged to have occurred in the hallway of the property. Dr Gold deposed that the conversation was in the following terms:

Ms Levis:   “I think $600 per week should be the rent because you’re taking two extra rooms.”

Dr Gold:   “It’s not really double and we agreed we would get a market appraisal.”

Ms Levis:   “The valuation was $600,000 and at 5% return that roughly works out at $600 a week. I tell you what, if I can keep my signage how does $500 sound?”

Dr Gold:   “Are you sure? I’m not sure about you keeping the signs up.”

Ms Levis:   “Well I had been thinking about $550 but $500 sounds fairer if I can use office 4 once or twice a month if I need it.”

Dr Gold:   “That’s all right, I agree but I may need office 4 from September as I have a new intern starting. Would you like me to give you the dates we use it and you invoice us a sessional fee?”

Ms Levis:   “That’s fine. You don’t have to pay anything for it.”

106. In cross-examination, Dr Gold said that after the conversation the pair shook hands and hugged.

107. Ms Levis agreed that a conversation occurred in August 2017, but disagrees as to it terms. She says that Dr Gold barged into her office and the following conversation occurred:

Dr Gold:   “How much would you consider for the whole office?”

Ms Levis:   “I don’t know but I would think that it would need to be at least twice what is paid now.”

Dr Gold:   “I would only pay $500 per week.”

Ms Levis added that she did not say that she agreed to any figure, or said that any figure sounded fair.

108. In cross-examination, Ms Levis said that on that occasion she did not promise Dr Gold the office and did not agree to anything with her. In one answer Ms Levis seemed to accept that her moving out was raised as a possibility.

109. This conversation is said to have occurred not long before Ms Levis left for a holiday in Germany. On 10 September 2017, shortly after Ms Levis returned, Dr Gold sent her an email, some of which is set out above at [40]. There was a further conversation between the pair on 12 September 2017, the terms of which are also in dispute. Later on 12 September 2017 Ms Levis sent an email to Dr Gold in the terms set out above at [41].

110. The agreement contended for by Dr Gold is essentially to the effect that until 14 August 2020 she would be able to occupy, in addition to the space provided for under the original Rental Agreement, the other two offices (subject to Ms Levis having reasonable use of office 4 as required, and signage rights) at a rent of $500 per week.

111. For the following reasons, I am not satisfied that any agreement to that, or similar, effect was concluded between ACM and Dr Gold.

112. I do not accept that a conversation occurred in October 2016 in the terms asserted by Dr Gold. As mentioned earlier, Dr Gold seemed to concede that her account was inaccurate as to whether Ms Levis told her that she was separating from her husband. I think that Dr Gold’s recollection is wrong in that regard; I prefer Ms Levis’ evidence on this matter, which is inherently more likely to be true. I accept that Ms Levis did not tell Dr Gold in October 2016 (or at any other time) that she was going to separate from Mr Levis. Rather, she told Dr Gold of the separation in January 2017 after it had occurred. This error of Dr Gold’s undermines the reliability of her account of the conversation, and to some extent her testimony concerning her conversations with Ms Levis more generally.

113. In addition, it is unlikely that Ms Levis, in response to Dr Gold’s statement about definitely staying, would have asked what Dr Gold would pay for the whole building. Ms Levis had only two months earlier deliberately removed from the form of Rental Agreement a provision that would have included additional space if the option for a further three years was exercised. She would not have assumed that Dr Gold staying would mean that Dr Gold would be occupying more space, or even the whole building. There is no good reason to think that Ms Levis would have changed her position in this regard between mid-August 2016 and mid-October 2016.

114. I have concluded that the October 2016 conversation, as recounted by Dr Gold, is an inaccurate reconstruction of events she apparently claims to recall in some detail. To the extent that she asserts that there was at that time a discussion about rent “for the whole building”, I reject her account.

115. The reliability of Dr Gold’s testimony more generally is also undermined by the claim that in about February 2017 she was introduced by Ms Levis to Mr Levis at the premises, and they then spoke about Dr Gold “taking over the whole building in August”. I think that this is another inaccurate reconstruction of events. I accept the evidence given by both Mr Levis and Ms Levis that no such meeting occurred. They explained that they had not had any face-to-face contact since their breakup in early January 2017. Mr Levis firmly denied that he ever had such a discussion with Dr Gold about her occupation of the premises. Dr Gold seemed to accept in cross-examination that she was wrong on this matter, but suggested that she instead met Mr Levis at the premises in late 2016. That suggestion was not put to Mr Levis. I am not satisfied that there was ever any discussion between Dr Gold and Mr Levis as alleged.

116. These inaccuracies, coupled with Dr Gold’s willingness to cast Mr and Ms Levis as liars, or as otherwise unworthy, make it difficult to accept at face value her accounts of conversations. I have, as I have said, treated her evidence with some caution accordingly.

117. In that light, I have given close consideration to the suggestion that the letter dated 1 May 2017 was in fact written by Dr Gold in September 2017. Upon reflection, I am prepared to accept that Dr Gold wrote the letter on 1 May 2017 as she claims, even though I also accept Ms Levis’ evidence that she did not see the letter until September 2017.

118. The 1 May 2017 letter provides support for the conclusion that by that time Dr Gold had raised with Ms Levis the subject of taking occupation of the whole building. However, the letter was written some weeks after the conversation that is said to have occurred at the Empire Bay Tavern, and in those circumstances I would not be prepared to treat the letter as a particularly accurate record of the detail of any discussion that had taken place.

119. Dr Gold relies upon the conversations she says occurred on about 24 March 2017 and 11 April 2017. Her account of the March conversation suggests that there was then an acceptance on the part of Ms Levis that Dr Gold would be taking the whole building, such that it was only a matter of timing. I am not satisfied that Ms Levis ever expressed an acceptance that Dr Gold would be taking the whole building. I think it is unlikely that there was any conversation along those lines, whether on or about 24 March 2017, or at some earlier time as suggested by Dr Gold in her affidavit. The terms of the 1 May 2017 letter do not themselves suggest that there had been a conversation of that nature. In relation to the alleged March 2017 conversation, I prefer Ms Levis’ denial of the conversation to Dr Gold’s assertion of it.

120. Nevertheless, the terms of the 1 May 2017 letter suggest that by April 2017 Dr Gold had specifically raised with Ms Levis her desire to occupy more space. Despite Ms Levis’ evidence to the effect that the matter was not raised until August, it seems to me unlikely that Dr Gold would have left the matter until so late. As staffing and other arrangements would need to be made if this was to occur, Dr Gold is likely to have raised it some months prior to the end of the initial twelve month period. In my view it is likely that in April 2017 Dr Gold and Ms Levis had a conversation (or possibly more than one conversation) in which Dr Gold spoke about wanting to take up additional space in the building. In addition, having regard to the terms of the 1 May 2017 letter, I consider it likely that in the course of the conversation (or conversations) there was some discussion of what would be an acceptable fee.

121. Dr Gold does not depose to any conversation at that time about figures, and her recollection of the discussion which she says occurred over the Easter weekend cannot be regarded as firm; but the 1 May 2017 letter does suggest that some figures were mentioned. The 1 May 2017 letter also suggests that the question of an appropriate fee, and the extent to which Ms Levis would continue to make use of the premises, were left undetermined, as matters to be the subject of further discussion.

122. I should add that it seems to me unlikely that Ms Levis, in the course of these discussions, would have made any statement to the effect that she was “definitely keeping” the building. The question of what was to happen with the property of the marriage, including the family home and the assets of the superannuation fund, remained unresolved. As she stated in the course of her cross-examination, she “was in a state of flux” about those matters. I accept that evidence, and also Ms Levis’ affidavit evidence to similar effect (see at paragraphs 60 and 70).

123. There seems to be no dispute that in August 2017 Dr Gold raised the question of the fee (or rent) for taking up additional space in the building. Dr Gold’s version of the conversation is to the effect that agreement was reached on a fee of $500 per week for occupation of the two extra rooms, but with Ms Levis able to use her existing office once or twice a month if necessary. Ms Levis’ version of the conversation is to the effect that Dr Gold told her that she was prepared to pay $500 per week for “the whole office”, but she (Ms Levis) did not agree to that figure.

124. I am not satisfied that a conversation occurred to the effect of that asserted by Dr Gold. I consider it unlikely that in the circumstances then prevailing Ms Levis would have been prepared to agree to what Dr Gold says was discussed. Ms Levis firmly denied in the witness box that she had at any time agreed that Dr Gold could “take over the whole office”. I accept her denial. The uncertain state of affairs concerning the matrimonial property is likely to have caused Ms Levis to go no further than discuss Dr Gold’s proposed take-over of the whole building as a possibility. She and Mr Levis were still discussing whether the family home should be sold. The family home was a potential alternative location for Ms Levis’ business if she was to no longer use the Blackwall Road property. She and Mr Levis were still discussing whether the Blackwall Road property itself would be sold. Any agreements made with Dr Gold would be relevant to that issue also. In addition, Ms Levis is unlikely to have agreed to bind ACM to a new agreement without having first discussed it with Mr Levis. That is particularly so in circumstances where it was agreed in March 2017 that Ms Levis would cease her involvement with ACM, and would resign as a director effective from June 2017. There is no suggestion that Ms Levis ever had a discussion with Mr Levis in 2017 about entry into a new agreement. Under the terms of the Rental Agreement, and as understood by Ms Levis, the option to renew did not extend to occupation of any additional space in the building.

125. I do not think that any concluded agreement was reached in the discussion that occurred in August 2017. The discussion was inconclusive, in the manner stated by Ms Levis, with the matter left for further discussion to occur upon Ms Levis’ return from holidays. Further, in light of the manner in which the parties had earlier dealt with each other, they can be expected to have wanted the terms of any new agreement (or any variation of the existing agreement) to be put into writing.

126. I am not satisfied that Dr Gold’s email sent on 10 September 2017, the day after Ms Levis returned from holidays, accurately reflects the discussion of August 2017. It was written some weeks after the discussion and, again, I would not be prepared to treat it as a particularly accurate record of the detail of the discussion. The terms of the email do suggest that agreement was reached on the $500 per week figure, but they also indicate that other matters, such as when the new agreement would commence, and who would be responsible for maintenance of the grounds, were yet to be agreed. To the extent that the email suggests consensus was reached as to the fee or rental, I think it is inaccurate.

127. It was put to Ms Levis in cross-examination that she did not in her email of 12 September 2017 deny the existence of the agreement referred to in Dr Gold’s email of 10 September 2017. Ms Levis said that she “didn’t agree with it either”. I do not think that the omission of a denial of an agreement is of much weight in the circumstances. As I have noted, Dr Gold’s email itself suggests that there were matters that remained to be agreed. Further, Ms Levis’ email followed a discussion between the pair that had occurred earlier on 12 September 2017.

128. Ms Levis’ email suggests that on that occasion she told Dr Gold that they should have a discussion about “the options” to make sure there was minimal disruption to Dr Gold’s business. That is probably a reference to the prospect that the Blackwall Road property might be sold. It is likely that the discussion that took place earlier on 12 September 2017 included discussion about what might happen to Dr Gold’s occupation in the event of a sale. The terms of Ms Levis’ email suggest that she understood that Dr Gold had a “tenancy” that could be “retained” in the event of a sale. The reference to a “tenancy” is consistent with either the existing Rental Agreement, or some new or varied agreement. I note that Dr Gold does not suggest that there was any further discussion about the terms of her agreement on that occasion.

129. In my opinion, the position remained that no agreement for additional space, as alleged by Dr Gold, had been concluded. That seems to me to be so, whether the matter is viewed in a framework of offer and acceptance, or in terms of whether there was a manifestation of mutual assent (see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [71]-[81]; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [369]).

130. It is not necessary to consider whether Ms Levis had authority, either actual or ostensible, to conclude the alleged agreement on behalf of ACM.

Damages for trespass

131. It was therefore not open to Dr Gold to assert that she was entitled to occupy more space than was provided for under the existing Rental Agreement. More importantly, Dr Gold took steps to occupy the extra space she claimed she was entitled to. From at least about early November 2017 her conduct, which included padlocking the gate to the driveway and later changing the locks on the rear shed and Office 3, was wrongful. It amounted to an impermissible exclusion of ACM from the premises, and was a trespass. The wrongful conduct did not commence when Ms Levis left the premises in late September 2017 following an argument with Dr Gold. I do not think that those circumstances constituted a wrongful exclusion of ACM even if Dr Gold was then incorrectly asserting that she had a right to occupy additional space.

132. ACM claims damages for trespass or unlawful occupation. Its claim is essentially based on the report of Mr Quilkey dated 8 May 2018. In that report, Mr Quilkey expresses the opinion that the current market rent of the premises was $42,000 per annum plus GST and outgoings. That is approximately $800 per week plus GST plus outgoings.

133. The conclusions I have reached mean that Dr Gold, having exercised the option for a further 3 years, was entitled to remain in occupation in accordance with the terms of the Rental Agreement, and Dr Gold remained bound to pay rent of $300 per week plus GST. Rent has not been paid since 4 December 2017. It seems that ACM has since that time expressed an unwillingness to accept rent, it having taken the view that Dr Gold’s rights under the Rental Agreement had been brought to an end by service of the notice to quit on 13 October 2017. In my view, Dr Gold is liable under the Rental Agreement to pay the outstanding rent from 4 December 2017 up to the present.

134. In these circumstances, damages for Dr Gold’s wrongful conduct should be assessed on the basis that absent that conduct ACM could have continued to occupy the property subject to Dr Gold’s rights, or entered into an agreement with a third party for that party to occupy the property subject to Dr Gold’s rights.

135. Mr Quilkey’s report (made at approximately the mid-point between November 2017 and the present) provides a starting point for such an assessment. His opinion of the current market rent was not the subject of any real challenge, including as to his assumption of a floor space of 128m2.

136. Dr Gold did not address any submissions, either in writing or orally, to quantum of damages, save that it was accepted that if Dr Gold’s case in relation to additional space was not accepted, the Court would make “some proper and proportionate orders in relation to rental”.

131. I do not think it would be appropriate to assess damages on the basis of the difference between Mr Quilkey’s $800 per week plus GST and the $300 per week plus GST payable by Dr Gold under the Rental Agreement. This is because I consider that some discount needs to be applied to accommodate a degree of sharing of the premises with Dr Gold.

132. When regard is had to the fact that another occupant could have its own use of two of the four rooms, and parking spaces, it is likely that the rental value of such occupancy in conjunction with Dr Gold’s, would exceed the $300 per week plus GST payable by her, but be less than $500 per week plus GST. The Court was in effect invited to do the best it could on the available evidence. I think that as parking is likely to be considered a tangible benefit, a rental value in the range of about $350 to $400 per week plus GST seems reasonable. As some contribution towards outgoings could also be expected, a figure towards the top of that range would be proper. I note that some evidence of the quantum of outgoings on the property was adduced, but it was not the subject of any analysis in submissions.

133. In all the circumstances, and doing the best I can, I would conclude that a proper figure for damages would be $22,000. That is the equivalent of about $385 per week plus GST for 12 months from early November 2017 to date. I agree with the submission of ACM that interest should be added in an amount calculated at Court rates for half of the 12 month period from early November 2017 to early November 2018. That is an amount of $605.

Other matters

140. Dr Gold validly exercised the option under the Rental Agreement for a three year term ending on 14 August 2020. Subject to paying the rent that has been unpaid since December 2017 and the damages of $22,000 plus interest, and subject further to Dr Gold forthwith doing or allowing what is necessary to enable ACM to resume its rights of occupation of the premises, I think that Dr Gold should be entitled to enforce her rights under the option. Prima facie, a party to a lease, or even a licence, who has exercised a right to an additional term of occupation, has a strong claim as against the grantor for protection of the right, including if appropriate by orders for specific performance.

141. ACM submitted that relief should be withheld on discretionary grounds due to the intolerable situation that has developed between the parties. I fully accept that Ms Levis would not want to resume occupation of the premises whilst Dr Gold is in occupation, and I suspect that the converse is also true. However, Ms Levis is not to be equated with ACM, and in any event it remains open to ACM to enter into an agreement with a third party for that party to occupy the remaining parts of the premises. Moreover, I do not think it can be fairly said that the intolerable situation is the fault of Dr Gold alone. Both sides must accept some responsibility. It would not be fair to Dr Gold to deprive her of the benefit of the option, provided she makes the payments referred to above, and does what is necessary to enable ACM to resume its rights of occupation.

142. ACM also argued that relief should not be, or could not be, granted to Dr Gold in respect of the option because the headlease from ACM Investments Pty Ltd to ACM terminates on 12 April 2019. I do not agree. That circumstance does not itself render performance of the Rental Agreement impossible. The evidence tends to indicate that ACM may well be able to secure further rights of occupancy from ACM Investments Pty Ltd. If it fails to do so, and if it thereby finds itself in a position where it cannot continue to perform its obligations to Dr Gold, then it will at that point be in breach of the Rental Agreement and liable to Dr Gold accordingly. As matters currently stand there is no occasion to withhold relief on this ground.

143. A number of arguments were raised on the pleadings but were not supported by any submissions. These include a number of claims made by Dr Gold as to the existence of certain estoppels by convention (as to an annual rent review to a market rate, and as to the oral exercise of the option) and equitable estoppels by representation or misleading or deceptive conduct (as to an entitlement to occupy additional space from August 2017). In the absence of submissions I do not propose to deal with these claims. I note further that at least the equitable estoppel and misleading or deceptive conduct claims appear to be precluded by my findings of fact concerning the alleged agreement for additional space.

Conclusion and orders

144. A declaration should be made that ACM and Dr Gold entered into a Rental Agreement in respect of the premises at 107 Blackwall Road Woy Woy in the terms of the form of the Rental Agreement sent by Ms Levis of ACM to Dr Gold on 8 August 2016, subject to an additional term that Dr Gold may without extra charge store some archive boxes in the shed at the rear of the premises.

145. A declaration should be made to the effect that Dr Gold validly exercised the option under the Rental Agreement for a 3 year term ending on 14 August 2020.

146. A declaration should also be made that the notice to quit served on 13 October 2017 by ACM is invalid and of no effect.

147. Judgment should be entered in favour of ACM against Dr Gold for the amount of rent outstanding under the Rental Agreement since 4 December 2017 which is $16,170 (calculated at the rate of $300 per week plus GST for 49 weeks) together with the amount of $22,000 plus interest of $605. The total judgment sum is thus $38,775.

148. Subject to Dr Gold paying that sum, and subject further to Dr Gold forthwith doing or allowing what is necessary to enable ACM to resume its rights of occupation of the premises, an order should be made for ACM to perform its obligations under the Rental Agreement.

149. The Summons and the Second Further Amended Statement of Cross Claim should otherwise be dismissed.

150. As both parties have had success and failure in roughly equal measure, it seems to me that it would be appropriate to order that each party bear its own costs of the proceedings.

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Endnotes

Decision last updated: 12 November 2018