Clasic International Pty Ltd v Lagos - [2002] NSWSC 1155

Reported Decision:
60 NSWLR 241
(2003) NSW ConvR 56-053

New South Wales

Supreme Court

CITATION: Clasic International Pty Ltd v Lagos and Ors [2002] NSWSC 1155

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 4302/02

HEARING DATE(S): 27 and 28 November, 2002

JUDGMENT DATE: 28 November 2002

PARTIES :

Clasic International Pty Ltd - Plaintiff
Timothy Lagos - First Defendant
Con Kariotoglou - Second Defendant

JUDGMENT OF: Palmer J

COUNSEL : R. Carruthers - Plaintiff
P.D. Rodionoff - Defendants

SOLICITORS: Alan Brown & Co - Plaintiff
Cumberland Frank - Defendants

CATCHWORDS: LANDLORD AND TENANT - RETAIL LEASE - CONTRACT - COMMON MISTAKE - MISTAKE OF LAW - Plaintiff and Defendants entered into agreement for lease of retail shop for a period of less than five years in contravention of s.16(1) Retail Leases Act 1994 (NSW) - parties unaware of Act and provisions of s.16(2) extending term of lease to five years - parties would not have entered into agreement for lease if they had known of effect of Retail Leases Act. Held: Parties had been induced to enter agreement for lease by a common mistake as to a fundamental matter - distinction between mistake of fact and mistake of law now abolished for all purposes in Australia.

LEGISLATION CITED: Corporations Act 2001 (Cth) - s.131
Duties Act 1997 (NSW) - s.304
Retail Leases Act 1994 (NSW) - s.3, s.7, s.16, s.79
Supreme Court Rules - Part 36 r10B

CASES CITED: Solle v Butcher [1950] 1 KB 671
Cheshire and Fifoot's Law of Contract, 8th Aust Ed

DECISION: Plaintiff's Summons dismissed; agreement for lease set aside.

Introduction
1 The Defendants are the registered proprietors of a property at 57 and 57A Boomerang Place, Seven Hills, which comprises a shop on the ground floor and a flat above the shop (“the Premises”). By a letter dated 8 August 2001, the First Defendant, Mr Lagos, on behalf of all Defendants, agreed to give to the Plaintiff a lease of the Premises for a term of one year with an option to renew the lease for a further three years (“the Agreement for Lease”). 2 By Summons filed on 9 September 2002, the Plaintiff claims a declaration that the Premises are a retail shop as defined in s.3 of the Retail Leases Act 1994 (NSW) (“RLA”) and that, by virtue of s.16(1) and (2) RLA it is entitled to a valid lease for a term of two years with an option for a further three years, commencing on 2 October 2001. The Plaintiff seeks consequential orders that the Defendants execute and register a lease in the approved form according to the terms set out in the Agreement for Lease. 3 Alternatively, the Plaintiff seeks damages against the Defendants arising from their failure to enter into the lease, an order that the Defendants provide to the Plaintiff receipts for payment of rent and an order that the Defendants carry out certain minor repairs to the Premises. 4 By their Amended Defence and Cross Claim…

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: [2002] NSWSC 1155
Decision Date: 28 November 2002

CaseChat Overview and Summary

In Clasic International Pty Ltd v Lagos, the plaintiff sought to enforce a lease agreement for a retail shop entered into with the defendants. The dispute centred on the enforceability of the lease agreement, which was for a period shorter than five years, a term that contravened section 16(1) of the Retail Leases Act 1994 (NSW). Both parties were unaware of the Act and its provisions, including section 16(2), which extends the term of a lease to five years. The crux of the matter was whether the agreement could be invalidated due to the common mistake regarding the statutory requirements.

The court was required to determine if the common mistake about a fundamental matter rendered the lease agreement unenforceable. It needed to assess whether the distinction between a mistake of fact and a mistake of law was relevant in this context, considering that this distinction has been abolished in Australia for all purposes. Additionally, the court had to consider whether the parties would have entered into the agreement if they had known of the effect of the Retail Leases Act.

The court found that the parties had been induced to enter the agreement due to a common mistake regarding a fundamental matter. It held that the distinction between a mistake of fact and a mistake of law is no longer relevant in Australian law. Consequently, the court determined that the lease agreement was unenforceable due to the common mistake about the statutory requirements. The court ruled that the parties would not have entered into the agreement if they had been aware of the provisions of the Retail Leases Act.

In conclusion, the court found in favour of the defendants, holding that the lease agreement was unenforceable. The court's decision underscored the impact of common mistakes on the validity of lease agreements and the irrelevance of distinguishing between mistakes of fact and law in such contexts.

Orders