Brett Pty Ltd v Goldana Investments - [2003] NSWSC 414

No judgment structure available for this case.

Reported Decision:
(2004) NSW ConvR 56-083

Supreme Court

CITATION: Brett Pty Ltd v Goldana Investments [2003] NSWSC 414

HEARING DATE(S): 15/05/03

JUDGMENT DATE:
16 May 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Barrett J

DECISION: Motion for summary dismissal dismissed

CATCHWORDS: PROCEDURE - summary dismissal - whether plaintiff's claims devoid of substance - CONTRACT - offer and acceptance - course of correspondence - whether lapsed offer could be regarded as renewed - whether specified manner and form of acceptance could be found to be non-compulsory

LEGISLATION CITED: Supreme Court Rules, Part 13 rule 5(1)(a)

CASES CITED: Blacktown Municipal Council v Doneo [1971] 1 NSWLR 157
Bray v Federal Commissioner of Taxation (1968) 117 CLR 349
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Gilbert J McCaul (Aust) Pty Ltd v The Pitt Club Ltd (1957) 59 SR (NSW) 122
Livingstone v Evans [1925] 4 DLR 769
McRae v Coulton (1986) 7 NSWLR 644
Motel Marine Pty Ltd v IAC (Finance) Pty Ltd (1964) 110 CLR 9
Perpetual Executors and Trustees Association of Australia Ltd v Hosken (Registrar of Titles) (1912) 14 CLR 286
Rajski v Powell (1987) 11 NSWLR 522
Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617

PARTIES :
P & J Brett Pty Limited - Plaintiff
Goldana Investments Pty Limited - Defendant

FILE NUMBER(S): SC 5947/02

COUNSEL: Mr P P Strasser - Plaintiff
Mr M K Condon - Defendant

SOLICITORS: Grech Partners - Plaintiff
Phillip A Biber - Defendant

- 17 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 16 MAY 2003

5947/02 – P & J BRETT PTY LIMITED v GOLDANA INVESTMENTS PTY LIMITED

JUDGMENT

The substantive proceedings

1 The application with which I am dealing (an application by the defendant for summary dismissal) must be approached in the light of the circumstances from which the substantive proceedings arise.

2 By lease dated 19 May 1995, a predecessor in title of the defendant as lessor let to the plaintiff as lessee a shop in the Greystanes Shopping Centre. The plaintiff conducts its newsagency business in that shop. The lease was for a term of five years and was registered under the provisions of the Real Property Act 1900. It contained an option to renew. At some time in 1997 (at all events, before the balance of the events I am about to relate), the defendant became the registered proprietor of the shop, subject to the lease.

3 The plaintiff purported to exercise the option to renew. The parties are in dispute as to whether the option was validly and effectively exercised. But it is not that dispute that is the subject matter of these proceedings. Rather, the plaintiff contends that it is the equitable lessee of the shop by virtue of an enforceable contract to grant a lease constituted by certain letters.

4 The contract pleaded in the plaintiff’s statement of claim is a contract to the effect that the defendant would grant and the plaintiff would take a lease of the shop upon the same terms as the 1995 lease but with five variations, being variations as to the identity of the lessor, the commencement date, the date of expiry, the amount of the annual rent and monthly instalments and a provision for annual rent increase. The defendant denies that any such contract came into existence between the parties.

5 The parties’ competing contentions can be understood only if the key links in the chain of correspondence are set out in full. The parties to that correspondence are KMPB Group Pty Limited (“KMPB”), purportedly on behalf of the defendant, and Grech Partners, solicitors, purportedly on behalf of the plaintiff. On 29 August 2002, KMPB wrote to Grech Partners as follows:

“August 29 2002

Tel: (02) 9621 2500 Fax: (02) 9671 7941

Dear Sirs,

RE: NEW LEASE FOR GREYSTANES CENTRE NEWSAGENCY

SHOP 13 – GREYSTANES SHOPPING CENTRE

We refer to our previous correspondence regarding the above matter.

After conferring with the owner, we hereby give the details of the new lease offer for the above premises as follows:

Shop No. : 13

Property : Greystanes Shopping Centre

Area : 133.8 sqm Subject to final survey

Permitted Use : Newsagency

Outgoings : 2.39%

Promotion Levy : 5%

Lease Commencement : October 1, 2002

Rent Commencement : As above

Term : 5 years

Option : 5 years

Could you please arrange the offer to be signed below by your client in agreement to the above and return a copy of this letter to our office. And if we get the return signed copy, we will prepare the Disclosure Statement as soon as possible.

Please note this offer is open for a period of 7 days, therefore, after September 6, 2002, this offer will become invalid.

Thank you for your attention in relation to this matter.

KMPB GROUP Pty. Ltd.

Signature: ______________________

Date: __________________________ “

6 On 2 September 2002, Grech Partners wrote to KPMB as follows:

“2 September 2002

KMPB Group Pty Limited
Level 11
22-24 Market Street,
SYDNEY, NSW 2000

RE: NEW LEASE FOR GREYSTATES CENTRE
NEWSAGENCY
SHOP 13/665 GREYSTANES CENTRE

We advise that we have obtained instructions from our client to respond as follows:

1. The lettable area is now about 10% smaller since the installation of the firewall. Accordingly, our client cannot understand a justification in increasing the rent by 5%. If there should be an adjustment in rent, we would advise that rent should be appropriately reduced to compensate our client for reduced floor space.

2. With respect to the promotion levy, kindly account for the amount sought by providing us with details of all promotional activity undertaken by the lessor over the last 12 months;

3. With respect to the Bank Guarantee, we have heard your arguments re commercial practice. In this regard, we advise that commercial practice between the Lessor and our client has dictated that a 1-month bond has always been accepted. We note that the amount sought by way of bank guarantee is not insignificant and we would appreciate the Lessor accepting a bond of 1 month as has been the case for the last 12 years;

4. With respect to rent increases, we are instructed that a 5% annual increase in rent is most unjustified and would make running the business unfeasible in the future. We advise that our client is happy for a 2.5% annual increase or CPI. We are the view that 5% annually is far too high for any business to sustain in the complex; and

5. All other terms are agreed.

We advise that our client continues to reserve all rights as previously stated with respect to the option to renew issue under the current lease and all future correspondence engaged in between the parties will be remain subject to this reservation.

We seek your urgent response to the matters raised herein.

GRECH PARTNERS

Per:”

7 On 9 September 2002, KMPB wrote to the plaintiff as follows, with a copy to Grech Partners:

“9 September 2002

Mr Paul Brett

CC: Grech Partners

Dear Sir,

RE: LEASE

SHOP 13, GREYSTANES SHOPPING CENTRE

We refer to your letter of 2 September 2002 in regards to the above issue.

Upon instructions from the owner, please be advised as follows:

1. The offer to lease in our letter of 29 August 2002 is reasonable, to which the owner wishes to stick.

2. Your current lease status is monthly tenancy, which can be terminated by either party by one month written notice, as confirmed on many occasions, ie. In the correspondences of 9 August 1999, 4 May 2001 and 4 September 2001.

Thank you for your attention in relation to this matter.

KMPB Group Pty Limited

Helen James

8 On 11 September 2002, Grech Partners wrote to KMPB as follows:

“11 September 2002

KMPB Group Pty Limited
Level 11
22-24 Market Street,
SYDNEY, NSW 2000

RE: RETAIL LEASE OF SHOP

SHOP 13 GREYSTANES SHOPPING CENTRE

We refer to all previous correspondence and advise that we are instructed by our client to accept the offer for a new Lease on the terms set out in your letter dated 29th August 2002.

We would be pleased to receive, as a matter of urgency, the Disclosure Statement with the Lease so that we can finalise this matter prior to the October date.

We look forward to receiving same at your earliest opportunity.

GRECH PARTNERS

Per:”

9 On 12 September 2002, KMPB wrote to the plaintiff as follows:

“12 September 2002

Mr Paul Brett
P. & J. Brett Pty Limited t/as
Greystanes Centre Newsagency
Shop 13
655-699 Merrylands Road
Greystanes NSW 2145
Tel: 02 9631 6032
Fax: 02 9896 5802
CC: Grech Partners
Fax: 02 9671 7941

RE: WITHDRAWAL OF LEASE OFFER FOR

SHOP 13, GREYSTANES SHOPPING CENTRE

We refer to our letter of 9 September 2002 to which we have received no response.

We on behalf of the owner advise that our lease offer of 29 August 2002 has been withdrawn from the date of this letter and reconfirm your monthly lease which can be terminated by either party with one month written notice.

Thank you for your attention in relation to this matter.

KMPB Group Pty Limited

Helen James

10 On 13 September 2002, Grech Partners wrote to KMPB as follows:

“13 September 2002

KMPB Group Pty Limited
Level 11
22-24 Market Street,
SYDNEY, NSW 2000

RE: RETAIL LEASE OF SHOP

We have just been instructed by our client that he has received a facsimile from your office advising that the offer to Lease, as made pursuant to your letter dated 29th August 2002 has been withdrawn.

We wish to advise that we accepted the offer by letter to you dated 11th September 2002, copy enclosed, and further advise that accordingly, by your letter dated 9th September 2002, no mention was made that the offer would be withdrawn.

We accordingly request, as a matter of urgency that a Disclosure Statement and the Lease as set out in our letter to you dated 11th September 2002.

In the event that you wish to maintain that the Lease Offer had expired we then re-assert our position that we still have a Lease given that our client exercised the option under the existing Lease, despite what you might say or what position you hold in that regard.

We trust that this matter will be finalised in the interest of both parties and we look forward to your urgent response.

GRECH PARTNERS

Per: (sgd)”

11 On 19 September 2002, Grech Partners sent to KMPB a letter in part as follows:

“19 September 2002

KMPB Group Pty Limited
Level 11
22-24 Market Street,
SYDNEY, NSW 2000

RE: RETAIL LEASE OF SHOP

SHOP 13/665 GREYSTANES CENTRE

As previously advised in our letter dated 13 September 2002, our client had accepted the offer of the new Lease upon the agreed terms in our letter dated 11 September 2002.

We urgently seek your confirmation that our client is entering a new lease and again request that as a matter of urgency that a Disclosure Statement and new Lease be forwarded to us.”

The defendant’s application

12 On 15 May 2003, I heard an application by the defendant for an order of summary dismissal in respect of the plaintiff’s claim. That application is founded on Part 13 rule 5(1)(a) of the Supreme Court Rules, the defendant’s contention being that no reasonable cause of action is disclosed by the plaintiff’s statement of claim. Before outlining the basis on which the defendant advances its application, I should say something about the test to be applied in determining that application.

13 In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, Barwick CJ formulated the test as follows:

‘It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.’

14 The Chief Justice later said (at 130):

‘... in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.’

15 In Rajski v Powell (1987) 11 NSWLR 522 at 524, Kirby P explained why the summary dismissal jurisdiction must be used with care:

Dey v Victorian Railways Commissioners

16 The defendant thus faces a task of quite daunting proportions. Mr Condon of counsel, who appeared for the defendant, submitted nevertheless that this is one of the exceptional cases to which Kirby P referred.

Matters agreed

17 Before proceeding to the respective arguments, I record two matters that were agreed for the purposes of this application, but with the parties reserving their positions on them in relation to further stages of the proceedings. First, it was agreed that letters written by KMPB and Grech Partners should be regarded as having been written with the authority of (and so as to bind) the defendant and the plaintiff respectively. Second, it was agreed (to the extent that it needed to be) that letters and other conduct after formation of any alleged contract may be taken into account for the purpose of deciding whether a contract was in reality formed.

The parties’ contentions

18 The defendant says that no reasonable cause of action is disclosed by the statement of claim because either

(a) the letter of 9 September 2002 from KMPB was not, construed objectively, capable of conveying the meaning that the defendant’s previous offer had been renewed; or

19 The KMPB offer of 29 August 2002 conveyed, on the agreed basis as to authority of KMPB and Grech Partners, an offer by the defendant to the plaintiff. It stated that the offer was “open for a period of 7 days” and “therefore, after September 6 2002, this offer will become invalid”. The offer also specified, by the third last paragraph of the letter and the endorsement at its end, a manner and form of acceptance. According to the defendant’s submission (which I do not understand to be disputed), Grech Partners’ letter of 2 September 2002 was a counter offer.

20 The first difference between the parties concerns the effect of KMPB’s letter of 9 September 2002. In characterising that letter as a renewal or revival of the 29 August 2003 offer, the plaintiff attaches particular weigh to the words “to which the owner wishes to stick”. Those words, the plaintiff says, demonstrate an intention of the defendant that the offer of 29 August 2002 should be regarded as still capable of acceptance – and this was so even though the particular period specified for acceptance had passed. By stating its wish “to stick” to the 29 August 2002 offer, the defendant was, in the plaintiff’s submission, re-stating that offer in a way that made the re-statement effective as of 9 September 2002. The plaintiff also says that the renewal or revival did not, however, include the time stipulation for acceptance (which would have been nonsensical in any renewal of offer effected on 9 September 2002), that stipulation being replaced by an implied term allowing acceptance of the offer within a reasonable time after 9 September 2002.

21 The defendant’s view of the words “to which the owner wishes to stick” in the letter of 9 September 2002 is that they conveyed no more than a message that the 29 August 2002 letter spoke for itself according to its terms. The words demonstrated no more than an intention of the defendant to rely on those terms as articulated on 29 August 2002, they being in no way altered or affected by anything said in the letters of 2 and 9 September 2002. The defendant also says that the offer of 29 August 2002 was, in any event, incapable of resurrection since the stated period for acceptance, which formed an integral and indispensable part of it, had passed.

22 The alternative contention of the defendant (that is, (b) above) proceeds on the basis that the letter of 11 September 2002, being a letter from the plaintiff’s solicitors, was, in any event, incapable of constituting acceptance of the offer of 29 August 2002 even if that offer had been renewed and revived by the letter of 9 September 2002. This is because the stipulated manner of acceptance entailed signing “by your [ie, Grech Partners’] client in agreement to the above”, so that something that was neither “signed” by the plaintiff nor cast precisely in the particular form of words specified in the 29 August 2002 letter was not an effective acceptance.

23 The plaintiff says that the stipulated manner and form of acceptance were not made compulsory in such a way as to preclude altogether and render ineffective any other unequivocal statement of intention to be bound, including one made through an agent.

Assessment of contentions

24 Mr Condon and Mr Strasser referred to various reported cases in support of the propositions they sought to advance. Since my task on this application is not to determine the correctness of those propositions but, rather, to decide whether those advanced in support of the plaintiff’s case are so clearly untenable that none of them can possibly succeed, I shall refer to only a few of those cases.

25 For the proposition that the words in the letter of 9 September 2002, “to which the owner wishes to stick”, used in relation to the original offer of 29 August 2002, are capable of amounting to a renewal or revival of the original offer, the plaintiff prayed in aid a 1925 decision of the Supreme Court of Alberta, Livingstone v Evans [1925] 4 DLR 769. In that case, an offeror made an offer to sell at a particular price to which the offeree responded with a counter offer to purchase at a lower price. The offeror then sent a telegram saying, “Cannot reduce price”. This was held to be a renewal of the original offer to sell. Walsh J said:

“His [the offeror’s] statement that he could not reduce that price strikes me as having but one meaning, namely, that he was still standing by it and, therefore, still open to accept it.”

26 So too in this case, says the plaintiff, the defendant’s statement that it wished to “stick” to the 29 August 2002 offer was a statement that that offer was still open despite the impossibility, because of the passage of time, of any acceptance occurring by the originally specified deadline. The substitution, by implication, of a reasonable time for acceptance, is said to flow from principles discussed in cases such as Blacktown Municipal Council v Doneo [1971] 1 NSWLR 157.

27 Every case of this kind turns entirely on the precise terms used and the context in which they are used. Resort to decided cases is of limited utility. There is, in the correspondence itself, an element that tends to give a measure of plausibility to the plaintiff’s contention that the offer of 29 August 2002 was renewed after its initial lapse. I refer to the following passage in KMPB’s letter of 12 September 2002:

“We on behalf of the owner advise that our lease offer of 29 August 2002 has been withdrawn from the date of this letter …”

28 Particularly in light of the last matter to which I have referred, the plaintiff’s contentions as to renewal or revival of the 29 August 2002 offer after its lapse according to its own terms are not so devoid of substance and merit as to warrant summary dismissal of the plaintiff’s claims.

29 On the question whether the manner and form of acceptance specified in the 29 August 2002 letter were, by that letter, made compulsory in such a way that nothing other than communication strictly as prescribed could give rise to a contract, the plaintiff regarded as applicable to this case the following observation of Owen J, Roper CJ in Eq and Herron J in Gilbert J McCaul (Aust) Pty Ltd v The Pitt Club Ltd (1957) 59 SR (NSW) 122 (at 123):

“In the present case the lessor irrevocably offered to grant a lease. Its offer prescribed the time and manner for acceptance. Only by performing the conditions prescribed could it be accepted and result in an agreement for a lease. A purported acceptance without performance of the prescribed conditions would not and could not be an acceptance of the offer. It would in reality be a counter offer by the original offeree requiring acceptance by the orignal offeror if an agreement were to result.”

McCaul v Pitt Club

“If the offeror prescribes the only way in which his offer must be accepted, an acceptance in any other way is a counter-offer.”

30 Mr Strasser did not disagree with these statements of principle. But he submitted that they are not applicable to this case. In doing so, he pointed to the words “the only way” in the American Law Institute’s formulation. Mr Strasser saw this aspect of the present case as turning upon a question referred to by Wootten J in Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617 (at 622) in relation to a stipulation, “Should the lessee desire to exercise this option it shall give to the lessor notice in writing to be sent by prepaid registered mail”:

“The question is whether this should be construed as a stipulation that prepaid registered mail is to be not merely a sufficient method of giving notice, but the sole and essential method of doing so. If the latter is the construction, it means that the clause is saying that the notice would not be validly given if it were taken to the registered office of the company and placed in the hands of its secretary.”

31 Mr Condon pointed to particular reasons why the defendant would wish to make the specified manner of acceptance the sole permitted and effective manner. The parties had been in dispute over other matters. The defendant should therefore be presumed, it was said, to wish to avoid possibilities of further dispute by obtaining the plaintiff’s own execution, as distinct from that of an agent (in relation to which questions of authority might arise), on a form of acceptance spelling out the particular matters of awareness and understanding included in the endorsement at the foot of the letter of 29 August 2002.

32 That may be so. But the reference in the endorsement to signing by “your client” (being the plaintiff) is not necessarily inconsistent with signing by an agent. There is no requirement that the signing be done “personally” (cf Motel Marine Pty Ltd v IAC (Finance) Pty Ltd (1964) 110 CLR 9) or “under his own hand” – or, as it would be in this case, “under its own seal” or “under its directors’ own hands” – (cf Bray v Federal Commissioner of Taxation (1968) 117 CLR 349). It may therefore be that, contrary to Mr Condon’s submission, the prima facie rule stated by Hope JA in McRae v Coulton (1986) 7 NSWLR 644 at 663 applies and the long established common law principle qui facit per alium facit per se applies.

33 Nor, it seems to me, is it clear beyond all argument that strict and faithful adherence to the particular form of words in the endorsement would be essential to effective acceptance. One need only refer to the observation of Griffith CJ in Perpetual Executors and Trustees Association of Australia Ltd v Hosken (Registrar of Titles) (1912) 14 CLR 286 at 289 that prescribed forms can be “good servants but bad masters”.

34 In light of these considerations, the plaintiff’s contention that the letter of 11 September 2002 is capable of operating as an acceptance of a renewal of the offer of 29 August 2002 is not so devoid of substance and merit as to warrant summary dismissal of the plaintiff’s claims.

Conclusion and disposition

35 It follows from my assessment on both the matters raised by the defendant that its application for summary dismissal must be dismissed.

**********

Last Modified: 05/19/2003

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Citations

Brett Pty Ltd v Goldana Investments [2003] NSWSC 414

Cases Citing This Decision

0

Cases Cited

8

Statutory Material Cited

1

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69

D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12

CITATION:	Brett Pty Ltd v Goldana Investments [2003] NSWSC 414
HEARING DATE(S):	15/05/03
JUDGMENT DATE:	16 May 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Motion for summary dismissal dismissed
CATCHWORDS:	PROCEDURE - summary dismissal - whether plaintiff's claims devoid of substance - CONTRACT - offer and acceptance - course of correspondence - whether lapsed offer could be regarded as renewed - whether specified manner and form of acceptance could be found to be non-compulsory
LEGISLATION CITED:	Supreme Court Rules, Part 13 rule 5(1)(a)
CASES CITED:	Blacktown Municipal Council v Doneo [1971] 1 NSWLR 157 Bray v Federal Commissioner of Taxation (1968) 117 CLR 349 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Gilbert J McCaul (Aust) Pty Ltd v The Pitt Club Ltd (1957) 59 SR (NSW) 122 Livingstone v Evans [1925] 4 DLR 769 McRae v Coulton (1986) 7 NSWLR 644 Motel Marine Pty Ltd v IAC (Finance) Pty Ltd (1964) 110 CLR 9 Perpetual Executors and Trustees Association of Australia Ltd v Hosken (Registrar of Titles) (1912) 14 CLR 286 Rajski v Powell (1987) 11 NSWLR 522 Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617
PARTIES :	P & J Brett Pty Limited - Plaintiff Goldana Investments Pty Limited - Defendant
FILE NUMBER(S):	SC 5947/02
COUNSEL:	Mr P P Strasser - Plaintiff Mr M K Condon - Defendant
SOLICITORS:	Grech Partners - Plaintiff Phillip A Biber - Defendant