Darzi Group Pty Ltd v Nolde Pty Ltd - [2019] NSWSC 335

Supreme Court

New South Wales

Medium Neutral Citation: Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWSC 335
Hearing dates: 22 February 2019 and 11, 13, 14 March 2019 (supplementary written submissions)
Date of orders: 29 March 2019
Decision date: 29 March 2019
Jurisdiction: Equity
Before: Henry J
Decision:
(1) Dismiss the plaintiff’s summons.
(2) Order the plaintiff to pay the defendant's costs of the summons.
(3) Dismiss the cross-summons.
(4) Order the cross-claimant/defendant to pay the cross-defendant/plaintiff's costs of the cross- summons.

Catchwords:
CONTRACTS – formation – agreement – intention to make concluded bargain – formal lease not executed or exchanged – where heads of agreement signed, tenant already in possession and parties negotiating the terms of a formal lease through solicitors – held no intent to be bound in the absence of a formal executed lease
LEASES AND TENANCIES – formal requirements – agreements for lease – creation of relationship by payment of rent – retail and commercial tenancies legislation – Conveyancing Act s 127 – Retail Leases Act ss 3, 8, 16, 18
Legislation Cited: Retail Leases Act 1994 (NSW) ss 3, 8, 16, 18, 20
Conveyancing Act 1919 (NSW) s 127
Uniform Civil Procedure Rules 2005 (NSW) r 42.1
Cases Cited: Alan Ramsay Sales & Marketing Ltd v Typoo Tea Ltd [2016] 4 WLR 59
Aspromonte Pty Ltd v Zagari (1999) 9 BPR 17,247
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666
Darter Pty Ltd v Malloy [1993] 2 Qd. R. 615
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640
Empirnall Holdings v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150
Lighting By Design (Aust) Lty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23
Long v Piper [2001] NSWCA 342
Maddison v Alderson (1883) App Cas 467
Masters v Cameron (1954) 91 CLR 353
Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605
Pozetu Pty Ltd v Alexander James Pty Ltd [2016] NSWCA 208
Robophone Facilities Ltd v Blank [1966] 3 All ER 128
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Smith v NSW Bar Association (1992) 176 CLR 256
Summit Properties Pty Ltd v Comserv (No 784) Pty Ltd (1981) 2 BPR 97,093
Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Viva Plastic Pty Ltd v Stoermer [2006] NSWSC 948
Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387
Wayne Edward John Streat v Fantastic Holdings Limited [2011] NSWSC 1097
Whiteway House No.199 Pty Ltd v Abracoona Pty Ltd (1998) 9 BPR 16,523
Texts Cited: Brendan Edgeworth, Butt’s Land Law (7th ed, 2017, Lawbook Co.)
JW Carter, Contract Law in Australia (7th ed, 2018, LexisNexis Butterworths)

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: [2019] NSWSC 335
Decision Date: 29 March 2019

CaseChat Overview and Summary

The case of Darzi Group Pty Ltd v Nolde Pty Ltd involved a dispute over the formation of a commercial lease. The plaintiff, Darzi Group, alleged that the defendant, Nolde, had entered into a binding agreement for lease, while Nolde contended that no such agreement existed. The case was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether a binding agreement for lease had been formed between the parties. The court had to consider the intention of the parties to create a binding agreement and whether the necessary formalities had been met for the creation of a lease. The court also considered the implications of the Retail Leases Act and the Conveyancing Act in determining whether an agreement for lease could be recognised in the absence of a formal executed lease.

The court found that, despite the parties having signed heads of agreement and the tenant being in possession of the premises, there was no evidence of an intention to be bound in the absence of a formal executed lease. The court held that the mere signing of heads of agreement, without the execution of a formal lease, did not create a binding contract. The court further found that the negotiation of lease terms through solicitors did not indicate an intention to be bound until a formal lease was executed. The court concluded that the agreement was not binding and dismissed Darzi Group's claim.

The court ordered that Darzi Group pay Nolde's costs of the proceeding. This case serves as a reminder of the importance of ensuring that all necessary formalities are met in the creation of binding agreements for lease, particularly in the context of commercial and retail tenancies.

Orders