Braham v Stephan - [2015] VSC 87

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2015 00456

MICHAEL STANLEY BRAHAM and CHARIS QUINCEY BRAHAM	Plaintiffs
v
ANTHONY STEPHAN	First Defendant
and
REGISTRAR OF TITLES	Second Defendant

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 March 2015
DATE OF JUDGMENT:	13 March 2015
CASE MAY BE CITED AS:	Braham v Stephan & Anor
MEDIUM NEUTRAL CITATION:	[2015] VSC 87

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LEASES – 99 year lease at nominal rent – Lease included option to purchase for nominal consideration – Option to be exercised at any time within lease term – Breach of lease – Whether lessee repudiated the lease – Whether breach sufficiently serious to justify termination – Held: no repudiation and no right to terminate – Lessor’s relief limited to damages for breach – Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd & Anor (2007) 233 CLR 115; Apriaden Pty Ltd v Seacrest Pty Ltd & Anor (2005) 12 VR 319.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J D McKay	Hub Property Specialists
For the First Defendant	Mr J L-M Leung	Aitken Partners
No appearance by the Second Defendant, Registrar of Titles

HIS HONOUR:

Until March 2010, the first defendant, Anthony Stephan, was the registered proprietor of the land known as 14A Black Hall Road, Menzies Creek, in Victoria (‘the Land’). The Land is divided by the Belgrave-Gembrook Road and comprises a larger undeveloped northern portion and a smaller developed southern portion on the other side of the road. Mr Stephan sold the Land to the plaintiffs, Michael Braham and his wife, Charis Braham. They became registered proprietors of the land in March 2010. They purchased the land under a contract of sale which obliged them to lease the northern portion to Mr Stephan for 99 years at peppercorn rental of $1 which has been paid (the ‘Lease’).

The Lease contains an option for Mr Stephan to purchase the northern portion for $10 (the ‘Option’). The Option is exercisable at any time during the 99 year term of the lease. The lease has approximately 94 years to run.

The reason for these unusual arrangements lies in the fact that it was not then possible, or at least feasible, for the land to be subdivided into two lots — comprising the northern portion and the southern portion respectively. Subdivision may, however, be possible at some time in the future. It is illegal to sell undivided land in Victoria.[1]
[1]Sale of Land Act 1962, s 8A.

The parties were well aware of the situation when they entered into the relevant contractual arrangements. It is necessary to describe the terms of the contractual arrangements in some detail.

First, the contract of sale relevantly provided:

(1) Mr Stephan agreed to sell the Land to…

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: [2015] VSC 87
Decision Date: 13 March 2015

CaseChat Overview and Summary

The case of Braham v Stephan involved a dispute concerning a 99-year lease at a nominal rent, which included an option to purchase the property for nominal consideration. The lease allowed the lessee to exercise the purchase option at any time during the term of the lease. The primary issue before the court was whether the lessee had repudiated the lease and if the breach was serious enough to justify termination. The court had to consider whether the lessee's actions constituted a repudiation of the lease and whether such a breach warranted termination of the agreement.

The court examined the nature of the breach and the principles established in previous cases such as Progressive Mailing House Pty Ltd v Tabali Pty Ltd, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd, Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd & Anor, and Apriaden Pty Ltd v Seacrest Pty Ltd & Anor. It was determined that the lessee's actions did not amount to a repudiation of the lease, and therefore, the lessor did not have the right to terminate the lease. The court held that the lessor's relief was limited to damages for the breach of lease.

In conclusion, the court found that the lessee had not repudiated the lease and that the breach was not sufficiently serious to justify termination. The lessor was entitled to damages for the breach, but not to terminate the lease. This decision reinforces the principle that not all breaches of lease warrant termination, and the court will consider the severity of the breach in determining the appropriate remedy.

Orders