| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : CARPO HOLDINGS PTY LTD as Trustee for THE CARPO TRUST -v- BOSS LOGISTICS WA PTY LTD as Trustee for THE BOSS FAMILY TRUST [2013] WADC 135 CORAM : STAVRIANOU DCJ HEARD : 18 JULY 2013 DELIVERED : 20 AUGUST 2013 FILE NO/S : APP 2 of 2012 BETWEEN : CARPO HOLDINGS PTY LTD as Trustee for THE CARPO TRUST Appellant
AND
BOSS LOGISTICS WA PTY LTD as Trustee for THE BOSS FAMILY TRUST
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA Coram : MAGISTRATE GLUESTEIN Citation : GER 523 of 2011 (Page 2)
Catchwords: Landlord and tenant - Agreement to lease - Creation of relationship of landlord and tenant - Failure to specify commencement date for lease - Form and contents of agreement
Contracts - General contractual principles - Offer and acceptance - Agreement contemplating execution of formal document - Whether concluded contract
Adequacy of reasons - Section 31 Magistrates Court Act 2004 Legislation: District Court Rules 2005 r 50
Magistrates Court Act 2004 s 31
Magistrates Court (Civil Proceedings) Act 2004 s 40 Result: Appeal allowed
Representation: Counsel:
Appellant : Mr D L Armstrong
Respondent : Mr I Hone
Solicitors:
Appellant : Altorfer & Stow
Respondent : Commercial & Legal Solutions
Case(s) referred to in judgment(s):
Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
(Page 3)
Garrett v Nicholson [1999] WASCA 32; (1999) 21 WAR 226
Masters v Cameron (1954) 91 CLR 353
Meehan v Jones (1982) 149 CLR 571
Mount Lawley Pty Ltd v Planning Commission (WA) [2004] WASCA 149; (2004) 29 WAR 273
Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597
Whitlock v Brew (1968) 118 CLR 445
(Page 4)
Introduction 1 The appellant, Carpo Holdings Pty Ltd as trustee for the Carpo Trust (Carpo), is the registered proprietor of land situated at 89 Anderson Street, Geraldton upon which is constructed a number of sheds. The respondent, Boss Logistics WA Pty is the trustee for the Boss Family Trust (Boss). 2 In July 2011 negotiations commenced between the parties for the grant of a lease of the land by Carpo to Boss. 3 In early August 2011 Boss went into possession of the land which gave rise to a dispute as to whether Carpo had made a binding agreement for lease alternatively a lease of the land to Boss. 4 Carpo's claim for recovery of possession of the land and rent came on for hearing before a magistrate who dismissed each claim. 5 By this appeal Carpo seeks to have the judgment set aside and an order made for possession. 6 Carpo contends that there was no agreement for lease or lease, and that the agreement between the parties was a Masters v Cameron (1954) 91 CLR 353 category three namely one in which the parties intended to postpone the creation of contractual relations until a formal agreement was drawn up and executed. As the final agreement was not executed Boss had no entitlement to possession. Alternatively if the parties intended to be legally bound then any agreement was void for uncertainty or incompleteness.
The appeal 7 An appeal from a decision of a magistrate to the District Court is by way of re-hearing (Magistrates Court (Civil Proceedings) Act 2004 s 50, District Court Rules 2004 r 50). 8 The appellant must demonstrate error in the court below: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 [14]; (2000) 203 CLR 194, 203 - 204. 9 The powers of this court on appeal are only exercisable if it is demonstrated that the magistrate's decision was the result of some legal, factual or discretionary error: Allesch v Maunz [2000] HCA 40 [23]; (2000) 203 CLR 172, 180 - 181. (Page 5)
10 The grounds of appeal focus primarily upon the Masters v Cameron issue and the certainty and completeness of the agreement. As to the latter, attention is directed to the identification of the land and the commencement date of the lease. 11 At trial there were a number of facts in issue. Complaint is made as to lack of relevant findings and the failure to provide adequate reasons. 12 There are additional grounds which deal with the exercise by the magistrate of his discretion as to the costs of an adjournment of an earlier hearing and the dismissal of Carpo's claim for rent. 13 It is appropriate to begin with an outline of the background to the dispute.
The background 14 The negotiations between the parties were conducted by Ian William Carpenter and Catherine Elaine Carpenter as directors of Carpo and Barry Stanley Horsman as director of Boss. 15 On 16 July 2011 Mr Horsman met with Mr and Mrs Carpenter and discussed a lease of the land. Rental and the duration of the term were discussed. The negotiations proceeded to the stage where it was agreed that the name of the proposed lessee was to be provided by Mr Horsman. Thereafter a series of emails were exchanged commencing with Mr Horsman's email to Mrs Carpenter on 18 July 2011 at 8.30 am which reads: Subject: TRADING ENTITY FOR SHED LEASE AGREEMENT ON ANDERSON ST Good morning Cathy and ian, sorry I didn't get to this as promised on Friday. The trading entity is 'The Boss Family Trust' trading as 'BOSS LOGISTICS W.A P/L'. Could you please confirm the results of our conversation regarding the rent, outgoings and any other 'costs' to be considered. I forgot to ask obout [sic] a phone connection, is there one in the shed? Regards Barry Horsman. 16 Mrs Carpenter responded by email dated 18 July 2011 at 9.04 pm as follows: Subject: RE TRADING ENTITY FOR SHED LEASE AGREEMENT ON ANDERSON ST Hi Barry, (Page 6)
The rent we agreed upon was $14000 per year which was half way between your offer of $250 per week ($13000 PA) & our offer of $15000. Plus 1/3rd of outgoings being Water/Sewerage Rates, Council Rates & Insurance premiums. Summary below. Water - $275.10 1/3rd = $91.70 Council - $2640. 1/3rd = $880 Insurance $1311. 1/3rd = $437 There is a phone connection. If all this is OK I will get a lease drawn up by our lawyer. Regards Cathy Carpenter 17 At 10.26 pm on 18 July 2011 Mr Horsman sent an email to Mrs Carpenter in the following terms: 18 Notwithstanding Mrs Carpenter's reference to a lawyer drawing up a lease, the evidence was that Mrs Carpenter intended to prepare the lease herself. She had difficulty preparing the document and eventually on or about 10 August 2011 engaged a Mr D'Souza, a real estate agent, to assist her. 19 On 29 July 2011 at 2.53 pm Mrs Carpenter sent an email to Mr Horsman as follows: Subject: Re 89 Anderson Street I am still waiting on the lease for the above & it should be ready next week sometime. I have made it for 3 year +3+3.
Is this what you wanted. Let me know if I have it wrong.
Please let me know if you are going to move in on Monday 1st as arranged. Regards Cathy Carpenter (Page 7)
20 On 31 July 2011 at 7.22 pm Mr Horsman sent an email to Mrs Carpenter. It reads: Subject: Re 89 Anderson Street Hi Cathy, was going to send you an 'e' tonight as we will be in Perth Monday (tomorrow) and should be back Tues or Wendsday [sic]? all being equal. I will wait until we sign the lease and then if all is in order make the shift the next Monday, if we can get the keys next Friday that would be helpfull [sic]?
Thanks, regards Barry
21 Mrs Carpenter's evidence was that she did not receive the email. No finding was made by the magistrate as to whether the email was received. 22 At this stage it is appropriate to outline the relevant evidence as to the circumstances in which Boss obtained possession on or about 6 August 2011. One of Carpo's primary complaints upon appeal concerns the lack of findings in relation to those circumstances. 23 Mrs Carpenter's evidence was that on 2 August 2011 she spoke to Mr Horsman. He wanted the key to the shed. She gave evidence she told him that she and Mr Carpenter were about to travel to Perth and would not be returning until 7 August 2011. He suggested she leave the key with her son. She did not agree to this. 24 Mr Horsman gave evidence that in a conversation with Mrs Carpenter on 4 August 2011 she agreed to leave the key for the land with her son Matthew Carpenter. On 6 August 2011 Mr Horsman obtained the key from him and went into possession. In an email dated 20 August 2011 from Mr Horsman to Mrs Carpenter there is reference by Mr Horsman to the circumstances in which Boss obtained possession. Relevantly, the email reads: … On or about the 3rd of August Cathy spoke with me at the shed and said that they would be going to Perth and that she would attend to the lease agreement next week, I asked her if I could move in as we had some painting to do before I started to officially move in the following week, I think also Ian was present as he said the lease would start from 5th August, we agreed with that. 25 Matthew Carpenter gave evidence that Mr Horsman telephoned him on 3 August 2011 asking for the key, saying that his mother had forgotten to leave the key with him. He gave evidence that he had no conversation with his mother in relation to handing over the key and did not know of (Page 8)
the arrangements between Mr Horsman and his parents relating to the land. He drove to the land and handed over the key to Mr Horsman. 26 There was clearly a conflict in the evidence as to the obtaining of possession and the conversations in the week commencing the 31 July 2011. Carpo's position was that permission to move in was never granted and the meeting on site which Mr Horsman referred to in the 20 August 2011 email had not occurred. Boss, on Carpo's case, had obtained the key and access by deception. 27 On Monday, 8 August 2011 at 2.36 pm Mrs Carpenter sent an email to Mr Horsman as follows: Subject: Re lease Hi Barry, I will require your ACN or ABN # for the lease as well as address. I am still waiting for Beresford Electronics to get back to me re a time to replace the lights in shed. Will let you know as soon as I am informed. Cheers Cathy 28 Mr D'Souza gave evidence that his attempts to contact Mr Horsman had all been unsuccessful. The magistrate made no findings in relation to Mr D'Souza's evidence as to those attempts. 29 On 16 August 2011 Mr Carpenter had a telephone conversation with Mr Horsman and requested as 'part of the lease conditions a bond of $5,000 and payment of two months rent in advance'. It was Mr Carpenter's evidence that he told Mr Horsman that if he did not agree with either condition Mr Carpenter then had 'seven days to get out'. Thereafter Carpo instructed Mr Hayter, a solicitor, to act on its behalf to secure possession of the land. 30 On 20 August 2011 Carpo's solicitor wrote to Boss. The letter reads: (Page 9)
My client has provided me with copies of various emails and documents and has instructed me that on 16 August 2011 you were given seven days' verbal notice to vacate the premises as you failed to pay to my client a bond of $5,000 and two months rental in advance, which payments were a precondition for granting of a lease to you. My client has instructed me to confirm that if the premises are not vacated by 5.00 pm 23 August 2011 my client reserves all of its rights against you including the issue of proceedings. It goes without saying that when you vacate the premises they must be left in the same state of repair, order and condition as they were in when you took possession on 6 August 2011. HAYTER & CO 31 On 20 August 2011 Mr Horsman emailed Mr Hayter as follows: Subject: Re Horsman 18082011 (3) I respond to your correspondence dated 19th August 2011 and would like to confirm with you the following. On or about the 15th July 2011 I met with your client and his wife and agreed to lease the shed at 89 Anderson Street Geraldton (Webberton). I was told by your clients that they would produce a lease agreement by the 1st of August 2011 for me to sign so that I could start to move into the premises. On or about the 3rd of August Cathy spoke with me at the shed and said that they would be going to Perth and that she would attend to the lease agreement next week, I asked her if I could move in as we had some painting to do before I started to officially move in the following week, I think also Ian was present as he said the lease would start from 5th August, we agreed with that, as your clients had there locks on the gates and shed doors at that time I asked Cathy if she could leave me key to enter on Friday 5th Aug and Cathy agreed to that, however the key was not left so I rang Cathy, she said she had ?????? forgotten ????? and that she would ring Matt, her son and get him to bring a key down for me, I met him at the gate on Saturday morning where he gave me the key to enter the property as initially agreed by Cathy prior. As I said, your clients indicated to me that they were busy and that Cathy would attend the matter within the next week, I was also busy and it suited both parties. In the interim your client sent me an email and requested the trading entity that needed to be entered upon the lease, I responded to her request and in that correspondence clarified with Cathy the lease amounts payable, the term of the lease and if any other costs that may be payable under the terms of the proposal be given to me at that time, there were no other costs mentioned or demanded. On or about Wednesday the 10th Cathy was at the shed and said to me that she was so busy that she couldn't attend the lease agreement and that she would be giving the job to the lawyers to get it done. By this time we had moved a substantial amount of plant and equipment onto the premises and into the shed, had electricians in and out, started working on various plant and (Page 10)
made substantial arrangements for other work to be performed in the shed and ordered the connection of the phones and broadband which have now been connected. On Saturday morning the 13th Aug I had a visit from a Mr Max Correy and a Mr Barry Jones, former landlords of the Geraldton Tannery, a discussion took place and Mr Correy made it clear to me then that he would make it known around town that i had not paid him for past rent at the Tannery (the issues of the Tannery agreement are highly contentious and currently are the subject of legal action). On Tuesday the 16th Aug I received a phone call from Ian Carpenter and he was abrupt, would not listen to what I had to say and made demands without reservation that because he was told that I had not met the demands of the Tannery (and Max Correy in particular) that he now required a $5000 Bond and 2 months lease payments in advance within 7 days and that he didn't want to be ?????? caught ??????. I told him that I would consider his demands but never gave him an indication of my immediate thoughts. I will forward emails to you with the acknowledgements referred to by me and respectfully request that you seriously consider the options that are available to me which does not include vacating the premises on such short notice and or unreasonable demands associated with the contractual interference of Mr Max Correy and on Mr Barry Jones, or yourself. I will be in Sydney all next week, however in the meantime I will discuss these issues with my legal council [sic], I also put your clients on notice herewith that any attempt by any person to interfere with the goods, plant and equipment and activities within the boundaries of the leased area will be met with the involvement of the relevant authorities and any further damages to my operations and reputation will be vigoursly [sic] defend [sic] and if successful punitive damages will be sought in the relevant arena. It is unfortunate that we are in this predicament and it has never been my intention at any time to be in conflict with either Ian or Cathy Carpenter or have any intention of deceiving them in any way whatsoever. Barry Horsman. 32 On 1 September 2011 Carpo commenced proceedings to recover possession of the land. On that same date Carpo wrote to Boss. The letter, whilst marked 'without prejudice save as to costs', was adduced without objection. It reads: Carpo Holdings T/for The Carpo Trust 1st September 2011 Unit 2/5 Wiebbe Hayes Lane Geraldton WA 6530 Mr B Horsman & Boss Logistics (WA) Pty Ltd 89 Anderson Street Geraldton WA 6530 Without Prejudice Save as to Costs (Page 11)
Dear Mr Horsman, We wish to advise you that on a strictly without prejudice basis, we are prepared to give you 7 days' notice from the date of this letter to vacate the premises, for the reasons referred to below. In the event that the premises are not vacated by the due date and are not left in the same state of repair and condition as they were in when you entered the premises, then in those events we reserve all of our rights in that regard. Reasons: • At no time did you or your company pay monies in respect to occupation of the shed. • Failure to negotiate a lease. (No return phone calls to our agent or Carpo Holdings Pty Ltd regarding this matter). • Using the premises in contravention of local laws. (Spray painting). • Using the premises as a residence in contravention of local laws. • Failure to allow adequate access to adjoining shed by claimant when asked several times. – Large trucks & trailers parked in from [sic] of shed door access. Yours faithfully CARPO HOLDINGS PTY LTD IW & CE CARPENTER 33 On 10 September 2011 Mr Horsman sent an email to Mrs Carpenter as follows: I am in receipt of your correspondence dated 1st September 2011. I received this 'notification' today being the 10th September 2011. I have notified your agent, mike Hayter on the 20th August 2011 of the circumstances relating to my companies occupancy of 89 Anderson St, of which you are no doubt aware. My companies stance on this matter is as follows – (1) I refer you to your email to me dated 18th of July where you said you would get the 'lease' drawn by your lawyer, and confirmed the lease annual rent e.t.c (2) – I once again refer to your email dated 29th July which once again refers to 'I am waiting on the lease for the above & should be ready next week sometime', and 'please let me know if you are going to move in on Monday 1st as arranged'. As you know, until you arranged the lease and bought it to me for perusal I was not liable or asked for any monies to be paid, although at that point we had agreed that you (Page 12)
would attend the writing of the lease, and on those grounds you allowed me to take possession of the property and arranged a key for my entry. Your remarks that I 'failed to negotiate a lease' is without foundation and the terms of the lease that were relevant at that time were agreed upon and discussed. Your comments about 'using the premises in contravention of local laws' is without foundation, as you are assuming what you have seen after the fact. Your final comment about 'access to adjoining shed' as you know, I was in Perth at that time, unable to unload the said truck due to you & Ian's interference in the moving of the goods and machinery on my truck into the shed, and you also know that a person designated by me came to the shed to move the truck and you abused him and made slanderous remarks about me to him. At this stage I have no alternative other than to remain in occupancy of the shed and its area due to your breach of promise (which relates to the trades practices act 'misleading and deceptive conduct'). I have sought legal advice on these matters and have been advised to refer to you the following – Under the terms of 'the property law act 1969, section 72(1)', you are required by law to give me one months notice to vacate, I await your formal notice with interest. My company will take legal action in the interim under the trades practises act, 'misleading and deceptive conduct' seeking damages, specified and unspecified. Finally, our altercation is of a civil matter, however the removal, interference or depravation of my goods to me is a lawful matter and if any of the aforementioned acts is attempted the police will be called immediately and the perpetrators will be arrested and charges preferred. As you know, the stealing of my washing machine is just an example. One more thing, I will not tolerate your abuse and Ian's threatening behaviour as demonstrated previously, I have visited the courts regarding this behaviour and I will seek an M.R.O. against any one attempting this again. Yours faithfully Barry Horsman
The agreement
The magistrate's reasons 34 At the commencement of his reasons the magistrate described in a general way the rival contentions of the parties concerning the effect of the negotiations. Subsequently, he identified what he described as being in dispute as follows: What is in dispute is the proper interpretation of the various exchanges of communications referred to in Part 3 and in the context (firstly) of Barry entering into possession of the subject area on the possession date and (secondly) the conduct of the Carpenters after the possession date. 35 The magistrate in his reasons under the heading 'The Facts' identified the witnesses but he did not refer to their evidence or to the competing versions of events particularly in relation to the obtaining of possession. He noted there had been negotiations between the parties and a discussion (Page 13)
on 16 July 2011. He then listed emails and letters passing between the parties. 36 The magistrate in his reasons stated: Cathy raised in emails three things of relevance to this case. Firstly she sought from Barry details of his company that he was to use as the proposed lessee of the subject area. Her email of 8 August says, in part, 'I will require your ACN or ABN for the lease …' Secondly she informed Barry the formal lease was still to be prepared (the inference being that it was being prepared by her solicitor). Her email of 29 July says, in part, 'I am still waiting on the lease for the above and it should be ready next week some time.' Thirdly, and significantly, with the email of 8 August she makes no complaint as to Barry having entered into possession of the subject area (which he had done 2 days earlier). 37 The magistrate noted under what he described as evidence that is not disputed that 'Barry entered into physical possession of the subject area on 6 August when handed the keys by Matt (the Carpenters' son)'. Whilst there was no issue that Boss through Mr Horsman went into physical possession, there was no finding made in relation to the disputed circumstances of that obtaining of possession. 38 Boss submitted the circumstances of entry were irrelevant. It relied upon the fact that Carpo took no steps in relation to the possession and that it had accepted the 'presence and the continuing tenancy'. Further, the continuing proposal of a lease and also the request by Carpo that Boss cease spray-painting, and provide a bond and rent in advance, were an approbation of the agreement and of the occupation of the land. 39 When the magistrate came to make findings as to the parties' intention he recited the submissions of each counsel as follows: Mr Armstrong, for the Claimant, submits that there was never a lease created (nor any agreement to lease) and that therefore the Defendant is a trespasser and accordingly, notice having been given, the Defendant should be evicted fro the subject area. Mr Blyth for the Defendant submits, quite simply, that by reason of the chain of correspondence referred to in Part 3.5 and coupled with the fact of the Defendant, via its principal, Barry, having taken up possession, an agreement to lease was created and the terms adequately and sufficiently set forth in that chain of correspondence and also the pro forma lease form, exhibit 10. (Page 14)
40 The magistrate then stated that he agreed with the submission of counsel for Boss. Immediately thereafter the following appears under the heading 'My Findings': The submissions of the Claimant are fraught with difficulty when one looks at the chain of correspondence set out in Part 3 and the conduct of the Carpenters. Based on the evidence and the exhibit material I am satisfied on the balance of probabilities that the parties entered into or reached an 'agreement to lease', the terms of which were adequately and sufficiently set out in the communication exchange between the parties and the details set forth in the pro forma 'lease form' prepared by Cathy (exhibit 10). The only condition that attached to that last agreement was the preparation and execution of a formal document, again as contemplated by Cathy in her emails. The failure to get such a formal document prepared lies at the feet of the Carpenters because they, in effect, changed their minds on the arrangement – they realised too late that Barry and his company might pose some financial risk to them. Their attempt therefore to try and impose two further conditions on Barry and his company came too late and was, as I find, a futile one in any event since an agreement to lease had already been created and the terms were quite clear. The High Court in Masters v Cameron (1954) 91 CLR 353 pointed out that: 5.1 the parties may intend to be bound immediately, though expressing a desire to daw up their agreement in a more formal document at a later stage, of 5.2 they intend to be bound immediately but may wish the operation of a particular clause or term to be delayed pending the drawing up of a more formal document, or 5.3 they intend to postpone the creation of contractual relations until a formal contract is drawn up and executed. I accept the submission of defence counsel that the first of the three alternatives applies to the present case. I accept that my findings and the orders I propose proclaiming will go no way to resolving the dispute between the parties as to Barry's use of the subject area and his failure it seems to pay any rent. Sadly I expect there will be further litigation between them, particularly given the rather unhelpful remarks of Barry at the close of the case when he said he was unlikely to be paying any rent for what he regarded as an inability for him (or his company) to enjoy proper use of the subject area. I did have some reservations as to his credibility in the witness box, particularly when it became apparent he making up a story as he went along as to the other property he had leased in the town and which was apparently the subject of (Page 15)
some on-going dispute between him and the owners. However my reservations as to his credibility have no impact on my findings as to the reaching of an agreement to lease. There is no uncertainty as to the terms of that agreement to lease – there is a set term (and option to renew), the annual rental fixed, the description of the leased area quite clear (exhibit 1), the parties properly described, details included as to payment of outgoings, and some definition (this may end up being one area for future disputation) as to permitted use of the premises. 41 The magistrate made no finding in relation to what occurred between 31 July 2011 and the taking of possession. More particularly, there is no reference in the reasons to the conversations which Mr Horsman said that he had in that period with Mrs Carpenter and with Matthew Carpenter.
Legal principles as to formation of contract 42 A contract may be inferred in the absence of an identifiable offer and acceptance. The question is whether the parties' conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create legal relations. A contract may be inferred from the acts and conduct of parties, as well as or in the absence of their words. The parties' dealings with each other are relevant both for what was said and not said: Fazio v Fazio [2012] WASCA 72 [188] – [195] (Murphy JA) (29 March 2012). 43 There must be a complete and certain agreement and absent an intention to enter into legal relations there will be no binding contract. The intention is ascertained objectively by reference to what a reasonable observer would have concluded. The word 'intention' describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95. 44 Evidence of the parties' subsequent communications is admissible for the light it casts on their dealings from which the contract was alleged to have arisen: Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181. (Page 16)
45 In ErmogenousGaudron, McHugh, Hayne and Callinan JJ (in joint reasons) said: It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet '[t]he circumstances may show that [the parties] did not intend or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts' [24]. 46 There can be no binding and enforceable contract unless the terms of the agreement, or at least its essential and critical terms, have been agreed upon: Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, 607 (Menzies J). 47 In Masters v Cameron Dixon CJ, McTiernan and Kitto JJ at (360) said that where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any one of three cases: (1) it may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect; or (2) the parties may have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; or (3) the parties do not intend to make a concluded bargain at all, unless and until they execute a formal contract. 48 In the first and second cases there is a binding contract. Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own.
Consideration 49 The magistrate in his reasons after reciting Boss' counsel's submission, stated that based on the evidence and the exhibit material he (Page 17)
was satisfied the parties 'entered into or reached an agreement to lease'. However, he made no finding as to what was discussed or agreed at the meeting of 16 July 2011 or as to any of the discussions between the parties. 50 Mrs Carpenter's email of 18 July 2011 identifies what she describes as the 'agreed rent' and the outgoings. However there is no mention of a commencement date. 51 Mrs Carpenter's email of 29 July 2011 refers to a date of the 'Monday, 1st as arranged' for Boss to move in. It is unclear whether that was a possession date or a commencement date or both and no finding was made in that respect. 52 The magistrate's conclusion was that 'an agreement to lease was created' and that the terms were 'adequately and sufficiently set forth in that chain of correspondence and also the pro forma lease form, exhibit 10'. The conclusion as to the nature of the agreement to lease necessarily required a consideration of all of the circumstances. 53 As at 31 July 2011 Boss, through Mr Horsman, was stating that: I will wait until we sign the lease and then if all is in order make the shift the next Monday. 54 That comment in the circumstances was equivocal. It was consistent with the existence of an agreement and equally consistent with an intention that there be no agreement until there was an executed lease in place. Against that observation what, if anything, were the conversations between Mr Horsman and Mrs Carpenter became important. Mr Horsman's evidence effectively was that the agreement terms were finalised and, relevantly, that there was agreement reached as to commencement and possession. One of the primary submissions made by Carpo is that the agreement was incomplete, there being no agreed date of commencement. 55 In his reasons the magistrate identified and referred to Carpo's conduct subsequent to Boss being in possession. Specifically, and what was described as important, is the absence in Mrs Carpenter's email of 8 August 2011 of complaint concerning possession of the land by Boss. Further, there was a request for details to enable completion of the lease and a statement that the 'lease should be ready next week'. At trial counsel for Boss submitted that the email demonstrated that the 'lease was going to proceed'. However Mrs Carpenter's conduct required (Page 18)
consideration against the background of all the circumstances. One of the circumstances was the manner possession was obtained. It was Carpo's case that it was prepared to allow the possession to continue but only if an agreement was finalised. When it became clear that that could not be achieved steps were taken to secure possession. No finding in relation to that conduct was made.
Uncertainty and incompleteness of contractual terms 56 There is considerable overlap between the issue as to the certainty or completeness of any agreement and the determination as to whether there was an intention to create legal relations. 57 An agreement to lease is sufficient and enforceable if it identifies the lessor and lessee, identifies the premises with sufficient certainty and clarity, enables the commencement and duration of the term to be clearly seen and provides with certainty the rent to be paid: Whitlock v Brew (1968) 118 CLR 445; Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396. 58 The court leans heavily against finding contracts void for uncertainty and will use its utmost endeavours to give meaning to the terms used by the parties in contractual documents so that the contract may be upheld despite a lack of clarity: Meehan v Jones (1982) 149 CLR 571. 59 The magistrate considered that the terms of the agreement were certain and complete. He first referred to the issue as follows: Based on the evidence and the exhibit material I am satisfied on the balance of probabilities that the parties entered into or reached an 'agreement to lease', the terms of which were adequately and sufficiently set out in the communication exchange between the parties and the details set forth in the pro forma 'lease form' prepared by Cathy (exhibit 10). The magistrate subsequently stated: There is no uncertainty as to the terms of that agreement to lease – there is a set term (and option to renew). The annual rent fixed, the description of the lease was quite clear, the parties properly described, details included as to payments of outgoings and some definition (this may end up being one area of contention) as to permitted use of the premises. 60 The magistrate's finding as to the certainty of the agreement placed reliance upon exhibit 10. That document was described as the 'pro forma lease form'. It specified a commencement date of 5 August 2011. However the magistrate made no finding as to whether the particulars (Page 19)
contained in the document were accepted by the parties as part of any agreement. He could not in the circumstances have concluded that the document was contractual in nature in the sense the parties agreed that its terms were the terms of their bargain. 61 The magistrate does not in his reasons identify the basis for his conclusion that the terms of the lease were certain. There is no finding made as to when the agreement was made and the date of commencement of the lease.
The submissions
Carpo 62 Carpo's submission was that there was no agreement as to the commencement date. The date of possession pursuant to a lease was not the same as the commencement date. It was submitted that the parties' negotiations were being conducted on the basis that there would be a lease which would commence upon the signing of a lease. 63 Carpo further submitted the land the subject of the lease was uncertain.
Boss 64 Boss submitted there was agreement that the commencement date was to be 1 August 2011. It submitted that the date of commencement of the lease and the date of possession were the same. The only reference in the communications between the parties to the 1 August 2011 was in Mrs Carpenter's email to Mr Horsman of 29 July 2011. 65 It was further submitted that even though Boss did not take possession on 1 August 2011 that was irrelevant to the question as to whether there was 'a meeting of the minds on the question of the commencement date'.
Consideration 66 The magistrate made no express finding as to the date of commencement of the lease. One possible inference from his reasons is that he concluded that the lease commenced on the date that Boss went into possession of the property. However that is not at all clear. 67 Boss' submission that the commencement date was 1 August 2011 has the difficulty that there was no reply to the email in which that date (Page 20)
appears. Consideration of and a finding in relation to the conduct of the parties subsequent to the email was required. 68 The magistrate did rely upon the taking of possession as a factor in determining the agreement was certain. However the difficulty is that there are no findings concerning the circumstances in which possession was obtained. To form a view that possession was relevant (as the magistrate did) it was necessary in the circumstances to make a finding in relation to those circumstances. 69 No issue as to the description of the land arises given the concessions made by Boss in the evidence and submissions.
The grounds of appeal in detail
Grounds 1, 2, 3 and 4 70 Grounds 1, 2, 3 and 4 may conveniently be dealt with together. They relate to the Masters v Cameron issue, the uncertainty of the agreement and the failure in relation to those issues to make findings and provide adequate reasons. 71 Ground 1 reads: The learned magistrate erred in fact and in law in finding that the appellant and the respondent had entered into or reached an 'agreement to lease' when: (a) It was the intention of the appellant and the respondent that there be no binding agreement between the parties before the execution of a written lease. (b) A written lease had not been entered into by the parties. (c) The terms of the proposed lease was still the subject of negotiations, negotiations had failed and no agreement had been reached. (d) The land the subject of the proposed lease and its use by the respondent was uncertain. (e) Any agreement between the parties was void for uncertainty. (Page 21)
72 Ground 2 reads: The learned magistrate erred in law in that he: (a) Made no finding as to the evidence of the witnesses called for the appellant and respondent, made no assessment of their evidence on matters such as credibility, accuracy and reliability on the issues raised at trial other than for a general observation that he (the learned magistrate) had some reservations as to the credibility of the respondent's director Barry Stanley Horsman. (b) Made no findings to resolve the conflict between the evidence of the witnesses for the appellant and respondent on specific issues raised in the evidence on the negotiations between the parties, the circumstances in which the respondent obtained possession of the premises and whether possession was obtained by deception, the attempts by the appellant itself and through its duly appointed agent to further negotiate with the respondent after it had taken possession, the failure or refusal of the respondent to respond to an email of the applicant dated 8 August 2011 and to phone calls from the appellant's agent, the circumstances and reasons for the parties' failure to enter into a written lease and the refusal of the respondent to vacate possession. 73 Ground 3 reads: The learned magistrate erred in law in making his findings and decision based largely on the contents of emails and letters the subject of the exhibits tendered and not on the whole of the evidence. 74 Ground 4 reads: The learned magistrate erred in fact and in law in finding that the parties intended to be bound immediately (to a lease) though expressing a desire to draw up their agreement in a more formal document at a later stage when: (a) It was the evidence of both parties of an intention to enter into a written agreement before a lease came into being. (b) The appellant through its director Catherine Elaine Carpenter had engaged Oscar Lindsay D'Souza as agent to contact the respondent and to negotiate the terms of a written lease. (c) It was the evidence of the respondent through its director Barry Stanley Horsman that: (i) He sent an email to the appellant on 31 July 2011 that he would enter possession after he had signed the lease. (Page 22)
Consideration 75 Each ground should be allowed. I am satisfied that the magistrate erred in failing to make findings as to the evidence of the witnesses. More specifically, he failed to address adequately the issue of the obtaining of possession. 76 In the hearing before the magistrate there were a number of conflicts in the evidence which did require resolution before any conclusion could be reached as to the nature (in the Masters v Cameron sense) of the agreement. 77 First, there was a dispute as to the circumstances in which possession was obtained; specifically, whether Boss' possession was with Carpo's consent. The only finding made by the magistrate in this respect was that the key had been physically handed to Mr Horsman. 78 Secondly, there was a dispute as to the commencement date. The reasons are not clear as to what the magistrate found was the commencement date. 79 Thirdly, there were issues as to precisely what the negotiations were between the parties. Findings were required to be made and it was insufficient for the reasons to simply catalogue the email exchanges without reference to the oral evidence. 80 In closing submissions at trial counsel for Carpo referred extensively to Mr Horsman's evidence. It is the case the magistrate stated he had reservations about Mr Horsman's credibility. However he stated that this did not impact upon his 'findings as to the reaching of an agreement to lease'. In the circumstances it was incumbent upon the magistrate to make findings upon the oral evidence in combination with evidence as to the other communications. It is impossible to conclude, with respect, what precise findings the magistrate has made as to all of the evidence. 81 The magistrate in his reasons made no reference to the evidence of Mr D'Souza and his attempts to contact Mr Horsman and to commence negotiation as to the terms of a lease. Again, findings in that respect (Page 23)
assume significance in the light of the finding that 'failure to enter into a lease lied [sic] at the feet of the Carpenters'. 82 Section 31 of the Magistrates Court Act 2004 (WA) reads: (1) The Court's reasons for a judgment in a case - (a) need only identify the facts that the Court has accepted in coming to its decision and give the reasons for doing so; (b) need only identify the law that the Court has applied in coming to its decision and give the reasons for doing so; (c) need not canvass all the evidence given in the case; and (d) need not canvass all the factual and legal arguments or issues arising in the case. (2) The fact that a judgment is given orally or in accordance with subsection (1) is not of itself a ground for reversing or modifying it on an appeal. 83 Reasons will also be regarded as inadequate if they are such that justice is not seen to be done: Garrett v Nicholson [1999] WASCA 32; (1999) 21 WAR 226 [783] (Owen J). Nevertheless, a failure to provide adequate reasons will not necessarily result in an appealable error; an appeal court will only intervene when no reasons have been given in circumstances in which they are required or when the inadequacy is such as to give rise to a miscarriage of justice: Mount Lawley Pty Ltd v Planning Commission (WA) [2004] WASCA 149; (2004) 29 WAR 273 [29]. 84 The giving of reasons is a normal incident of the judicial process. Fairness requires that parties know why they won or lost. The basis for the decision must be apparent otherwise the losing party cannot know whether there has been a mistake of law or fact. Reasons do not have to be lengthy or elaborate and not all the evidence must be referred to. Relevant evidence must be referred to and where there is conflicting evidence of significance both sets should be referred to. The reasoning process which led to the result must be disclosed with sufficient certainty to achieve those ends. Reasons will generally be regarded as inadequate if they frustrate a right of appeal: Mount Lawley [26] - [29]. 85 In assessing the adequacy of reasons the reasons must be read as a whole and regard must be had to findings which may be inferred: Beale v (Page 24)
Government Insurance Office (NSW) (19997) 48 NSWLR, 430, 443 (Meagher JA). 86 Whilst I accept that an agreement may be inferred from particular circumstances, the magistrate did not clearly articulate the basis for his conclusion that there was an agreement for lease created. There is no finding as to when negotiations ceased and an agreement was created. Without the appropriate findings as to conduct it cannot be discerned how the magistrate concluded that the parties at some relevant time had reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms, but at the same time proposed to have the terms restated in a form which would be fuller or more precise but not different in effect (Masters v Cameron). 87 The reasons do not, with respect, satisfy the requirements as outlined in Mount Lawley and as required by s 31 of the Act. The relevant evidence relied upon has not been identified. Required findings have not been made and the process of reasoning adopted has not been adequately identified. I have already outlined where findings were required and not made and where the reasons of the magistrate were inadequate or not provided. 88 Grounds 1, 2, 3 and 4 should be allowed. 89 I am satisfied in the circumstances that his Honour made errors of law such that the decision must be set aside.
Ground 5 90 Ground 5 reads: The learned magistrate erred in fact and in law in finding that the leased area was certain when: (a) It was the Carpo's case that the land the subject of negotiations comprised the southern shed and south-west rear portion of the land coloured yellow on a plan the subject of exhibit 1 and as so found by the learned magistrate. (b) It was the respondent's case however as follows: (i) The lease area was the area coloured yellow on the plan and the balance of the rear portion of the Anderson Street property as a whole on which he had placed plant and vehicles including plant and vehicles on areas outside the area coloured yellow. (Page 25)
(ii) It was denied access to the land outside the area coloured yellow which may be the subject of alternative proceedings.
The parties' submissions on ground 5
Carpo 91 Carpo's submission was that because Mr Carpenter had given evidence inconsistent with that of Mr Horsman there could be no certainty as to the land the subject of the agreement to lease. 92 Mr Carpenter's evidence was that the area to be leased was the area coloured yellow on a produced plan. Mr Horsman in his evidence identified a different area. 93 Carpo submitted that the learned magistrate erred in finding that there was no uncertainty in the land which was to comprise the lease. Further, the finding that there is no uncertainty as to the land is contrary to the evidence of Mr Carpenter and Mr Horsman. 94 Carpo submitted that because of the conflict in the evidence of Mr Carpenter and Mr Horsman as to the land to be leased the agreement was certain. 95 Whilst the magistrate had resolved the conflict in favour of Carpo, there has been no reasons given for his preference for the evidence of Mr Carpenter to that of Mr Horsman.
Boss 96 Boss submitted that the evidence of Mr Carpenter as to area to be leased was consistent with the evidence of Mrs Carpenter and Mr D'Souza. Accordingly, his Honour has properly resolved the issue in favour of Carpo upon the evidence. 97 Boss submitted that the learned magistrate was able to find agreement on the essential area to be leased and that he was entitled on the evidence to find as he did in relation to the land.
Consideration 98 The learned magistrate did not err in accepting Mr Carpenter's evidence in the circumstances. Mr Horsman in his evidence accepted that to be the position. Based on the evidence the magistrate found the (Page 26)
produced plan reflected the area of land that was the subject of negotiations. There was no uncertainty as to the description of the land. 99 The ground of appeal must be dismissed.
Ground 6 100 Ground 6 reads: The learned magistrate erred in fact and in law in finding that the appellant tried to impose two further conditions on the respondent but it was too late and he (the learned magistrate) ought to have found that: (a) The conditions (of a security bond and rental in advance) were part of the negotiating process between the parties and occurred during the course of negotiations. (b) It was proposed that the conditions be negotiated. (c) Evidence relating to the imposition of the condition and the reasons were both relevant and admissible and the learned magistrate erred in law in ruling inadmissible certain of that evidence. 101 No submissions were made in relation to this ground. However, given the view I have formed, it is unnecessary to deal with it.
Ground 7 102 Ground 7 reads: Alternatively, if the parties had entered into an agreement for lease the learned magistrate erred in law as follows: (a) In not ordering the respondent pay to the appellant rent and outgoings from the date of possession of 6 August 2011 onwards for its occupation of the leased area as he found it. (b) In finding that it was a live issue as to whether the respondent was denied quiet and peaceable enjoyment of the subject area when the respondent had no counterclaim before the court.
The parties' submissions on ground 7
Carpo 103 Carpo's submission was that if there was an agreement to lease, the learned magistrate erred in not making an order that Boss pay rent and outgoings from the date of possession. If there was an agreement to lease, (Page 27)
then Boss was bound by its terms including obligations to pay rent and outgoings. Accordingly, the magistrate erred in dismissing the claim.
Boss 104 Boss submitted that the claim for rent was never before the learned magistrate. 105 Further, it submitted, the learned magistrate was correct in the finding contained in the addendum to his reasons that: … the issue [being the non-payment of rent] was not argued at trial and was only pleaded in form 5 as a consequential order should the main thrust of Form 5 be acceded to, namely the removal of the defendant by way of an eviction order from the subject area. Further by the irregular use of Form 5, which is not prescribed for rental claims, the respondent would have been embarrassed in comprehending the extent of the Claimant's claim. The appellant would have needed leave to thus enlarge the scope of the proceeding and to address matters of rent and breaches of a lease. No such leave was sought or given.
Consideration 106 The ground of appeal was very much put in the alternative. The claim was not substantively put or argued before the magistrate. The magistrate made no error in dismissing the claim. 107 In any event, given the view I have formed as to grounds 1 – 4, the ground must be dismissed.
Ground 8 108 Ground 8 reads: (Page 28)
The parties' submissions on ground 8
Carpo 109 Carpo's submission was that the hearing listed for 7 November 2011 was vacated because of the ill health of counsel for Boss. It was submitted Carpo has incurred unnecessary costs through no fault of its own.
Boss 110 Boss' submission was that the magistrate correctly determined the issue as to costs thrown away in that no costs could be identified as having been incurred or likely to be incurred.
Consideration 111 The learned magistrate's reason for refusing costs of and occasioned by the adjournment was that he did not consider there would have been any costs thrown away. That was not in the circumstances a sufficient reason even accepting the discretionary nature of a costs order. When a hearing is adjourned there are likely to be some costs incurred. Counsel may need to further consider the material and witnesses may need to be spoken to again and re-arranged. 112 Whilst it may be the case that there would be no or no significant costs, this was not a proper basis for departure from the usual order which would have been that the applicant (Boss) for an adjournment should meet the costs thrown away to be taxed if any. 113 The ground of appeal is made out.
Conclusions 114 This matter has had a long history. I have very carefully considered the hearing before and the reasons of the magistrate. Factual issues arise in the context of a determination being required as to the intention of Carpo and Boss. There were allegations made at the hearing that Mr Horsman had misled Mathew Carpenter to obtain keys for the property. There were factual disputes about whether there were conversations and if so what was said. Findings in relation to those matters are for trial and cannot be determined in this appeal. (Page 29)
115 The orders I make are: |