Brownbuilt v Darnley

[2000] NSWSC 1111

CITATION:	Brownbuilt v Darnley [2000] NSWSC 1111
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3943 of 2000
HEARING DATE(S):	20 November 2000
JUDGMENT DATE:	20 November 2000
PARTIES :	Brownbuilt Pty Ltd (Plaintiff) Darnley Developments (Victoria) Pty Ltd (Defendant)
JUDGMENT OF:	Windeyer J at 1

COUNSEL :	Mr A P Coleman (Plaintiff) Mr D Pritchard (Defendant)
SOLICITORS:	Barker Gosling (Plaintiff) Gadens (Defendant)
DECISION:	Paragraphs 12

1

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

MONDAY 20 NOVEMBER 2000

3943/00 BROWNBUILT PTY LTD v DARNLEY DEVELOPMENTS (VICTORIA) PTY LTD

JUDGMENT

1    HIS HONOUR: In these proceedings the plaintiff seeks to set aside a statutory demand served on it by the defendant company demanding rent claimed to be due by the plaintiff to the defendant for the months of April to August 2000, together with interest and some amount said to be payable for rates.

2    Those amounts are claimed to be due pursuant to a lease dated December 1998. That lease, a copy of which is in evidence, was from Email Limited to the plaintiff for a term of one year only with an option for renewal which was not exercised on its terms. There were negotiations between the plaintiff company and the then lessor, Email Limited, which arose as a result of the plaintiff having offered to lease only a portion of the original leased space at a reduced rent which was not acceptable to Email Limited. Email then offered to continue the lease as a monthly tenancy under the terms of the existing lease agreement at an annual rental of $500,000 with the site to be vacated not later than 31 March 2000. That was accepted by the plaintiff company through a letter written by Mr Smith, its National Manufacturing Manager, stating that the rent of $41,666 per month would be paid and the site vacated no later than 31 March 2000.
3    The premises were sold by Email Limited to the defendant company under a Contract for Sale which was completed on 6 March 2000. On the evidence of Mr Smith, there had been discussions between himself and Messrs Farrer & Hutchins of the defendant company in January 2000 about the plaintiff company remaining on the site, he saying that the plaintiff company would be interested in remaining on the site for not less than one month but probably not more than six months beyond 31 March if an agreement in relation to the rent could be reached. He said that Mr Hutchins said that the rent was either $35,000, $36,000 or $38,000 per month and that he, Mr Smith, had said that he did not know that Brownbuilt could afford that much and that nothing further was said. The evidence of the defendant's witnesses contradicts that but no decision need be made on it or could be made on it on the present application.

4    There is evidence, which is once again contested, of a further conversation in February 2000 in which Mr Smith says that he told either Farrer or Hutchins that Brownbuilt would only want to pay a nominal rent since they would only have a few machines on its premises and that one of them had said that the defendant company was fairly relaxed about Brownbuilt staying on site for another three months or so. There is evidence of some further conversation between February and May as to an offer of $25,000 per month but it is not suggested that offer was ever accepted.

5    A direction to pay future rent to the defendant company was forwarded to the plaintiff company on 6 March 2000. A letter was sent by Mr Smith to the defendant company on 9 March asking when vacant possession might be required to be given and what arrangement could be made for partial occupation beyond 3 April. Why 3 April was selected I do not understand the evidence to show.

6    In any event, the defendant company wrote on 14 March seeking payment of land tax and payment of rent from 1 March to 31 March of $41,666.66. The plaintiff company responded claiming that Email had been paid for the month of March prior to the date of the settlement and that Email was responsible for the land tax.

7    There was then further correspondence as to non-payment of rent for April and May and seeking payment of amounts due for outgoings, and there was a letter of 23 May 2000 threatening to place the matter in the hands of solicitors unless the rent due for April and May was paid. Brownbuilt responded by referring to arrangements with Email which apparently related to some set-off of rent because an entity called the Email Training Centre had occupied part of the premises and in that letter an offer of $25,000 per month was made which was rejected and the full amount was demanded by letter dated 19 June 2000.

8    It is accepted that so far as the statutory demand referred to rent owing pursuant to a lease dated December 1998 this was a defect. This has no bearing on the substance of this claim because pursuant to s459J(1)(a) there could be no substantial injustice to the plaintiff caused by that defect. It is also accepted that what came into existence by the correspondence in October 1999 was an arrangement for a new lease from month to month at a rental of $41,666 per month to expire on 31 March 2000 but otherwise upon the terms of the old lease which would include a holding over clause on a monthly basis.

9    The lessee's relationship with the new owner would be on the same terms as its relationship with Email Limited so the only basis for suggesting that rent at the monthly figure would not continue to be payable would be if some agreement had been made between the parties on the basis of the conversations which I have briefly set out or if in some way some estoppel might arise in favour of the plaintiff company on the basis of those conversations.

10    It is clear and it is accepted quite rightly by counsel for the plaintiff that there was no binding agreement which could arise on the basis of those conversations. He argues, however, that there would be an estoppel because the plaintiff company was staying in the premises relying on some representation made by representatives of the defendant company that the rent would be otherwise than that which would otherwise apply. Taken at their highest, I do not think that those conversations could give rise to any such representation.

11    In those circumstances, it is not necessary to consider the submissions on the lack of evidence that in the absence of any such representation the defendant would have left the premises earlier. In fact, the plaintiff company was well aware of the demands for the monthly rental at the figure of $41,666 which had been made and yet it did not leave the premises. This does not necessarily mean that the defendant company, or its representatives, have acted perfectly in not making the position clearer. All it means is that the plaintiff company has, in my view, not established that there is a question to be tried on the defendant's claim against it for rent.

12    In those circumstances, the originating process should be dismissed with costs.

13    The exhibits can be returned.

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Last Modified: 12/14/2000