Crabb & Crabb v Esquela Pty Ltd

[1999] QSC 76

IN THE SUPREME COURT
OF QUEENSLAND  Writ No.  36 of 1999
CAIRNS
[Crabb & Crabb v Esquela Pty Ltd]
BETWEEN:                IAN PHILIP CRABB

DIANA RUTH CRABB

Plaintiff
AND:  ESQUELA PTY LTD
  Defendant
  REASONS FOR JUDGMENT
  BEFORE THE HONOURABLE JUSTICE JONES
  DELIVERED THE 12^th DAY OF APRIL, 1999

1. This is a hearing for a judgment summons for declaration that an agreement to lease certain shop premises is valid and for an order for specific performance of that agreement pursuant to O.18A Rule 1 of the Rules of the Supreme Court.

2. The writ was issued on 1 March, 1991 and the defendant company entered an appearance on 2 March, 1999.

3. The plaintiff relies upon a handwritten document, dated 8 April, 1998 signed by "M.L. Bridgewater" on behalf of the defendant, as either setting out the terms of the lease agreement or being a sufficient memo of those terms, coupled with other facts such as the plaintiff's occupation of the premises and the payment of rent.

4. The plaintiff contends that the handwritten document was created to acknowledge that a formal lease document was to be prepared by its solicitors and that in the meantime the plaintiffs occupied the premises only at will.

5. The document states as follows:-

   "Lease agreement to be drawn up between Leading Edge Video BellaVista and Esquela Pty Ltd on the following basis.

-          12 months + 3 + 3 year option

-          Shop area - 64.6m ²  @ $210 m².

-          Rent Structure

3 months from 14.4.98 @ $800 per month

6 months from 14.7.98 @ $950 per month as from 14.1.99 full rental of $1130.50 per month.

M.L. Bridgewater

Esquela Pty Ltd. 

8/4/98."

1. The background to the plaintiff's occupation of the shop premises and to this particular dispute includes a number of conversations about the duration of tenancy, whether the plaintiff's business would be relocated to a different part of the shopping complex.  As part of this background on 19 February, 1999 the defendant wrote -

   "I wish to advise that a lease agreement can be formalised with Mr. and Mrs.  Crabb and will be transferable providing that prospective client can show satisfactory financial references and business history."

On 4 March, 1999 the defendant gave notice of expiry of the lease on 14 April, 1999 and in the alternative purported to terminate the tenancy.  A notice to similar effect was written the next day quoting the expiry date as 14 April, 1999.

1. The dispute is complicated by the fact that the plaintiff's have entered into a contract for the sale of their business which they would hope would include a transfer of the lease and the defendant has purported to lease the premises to someone else.  As a primary issue, a determination has to be made as to whether the long term lease was a matter to be dealt with by the intended formal contract or whether that document was simply to evidence what had already been agreed.  In Master -v- Cameron -[1] the court (Dixon CJ, McTiernan and Kitto JJ) said (at 360):-

   "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 of three classes.  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, secondly, it may be a case in which the parties have completely agreed upon all 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 the formal document.  Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract."

   [1] (1954) 91 CLR 353

1. It seems to me that this case gives rise to a preliminary question as to the nature of the parties' agreement.  It is not possible to determine this question in a summary way.

2. The affidavits filed in support of and opposing the judgment summons raised issues of fact particularly about the terms of rent and basis upon which the lease may be transferred which also cannot be dealt with in a summary way.

3. For these reasons I am satisfied that the defendant has identified an issue that has to be tried and I would therefore dismiss the judgment summons.  In so doing I indicate to the parties my preparedness to consider making directions for the speedy determination of the matter. 

4. I reserve the question of costs.