Fewson v Wells

[1999] NSWSC 1124

CITATION:	Fewson v Wells [1999] NSWSC 1124
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	3675 of 1999
HEARING DATE(S):	9 November 1999
JUDGMENT DATE:	23 November 1999
PARTIES :	Fewson Pty Limited (Plaintiff) Martin David Wells (First Defendant) Norman Wright (Second Defendant)
JUDGMENT OF:	Windeyer J at 1

COUNSEL :	Mr C.A. Moore (Plaintiff) Mr A. Gelbart (Defendants)
SOLICITORS:	Cutler Hughes & Harris (Plaintiff) Wheelers (Defendants)
CATCHWORDS:	LANDLORD AND TENANT - form and contents of lease - whether lease between plaintiff and defendants contained a three month termination clause - termination clause on a separate piece of paper inserted between pages of lease - not signed by parties - pure question of fact
DECISION:

- 1 -
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

TUESDAY 23 NOVEMBER 1999

FEWSON PTY LIMITED v MARTIN DAVID WELLS & ANOR

JUDGMENT

Issue

1    The question to be decided is whether a lease between Fewson Pty Limited (Fewson) and the defendants, Martin David Wells (Wells) and Norman Wright (Wright) of part of property 54 Duffy Avenue, Thornleigh contained a clause as follows:

38. This lease may be terminated at any time by the lessor or the lessee providing three (3) months notice in writing is given.


The landlord or its agent (Mr Clark) says the clause was included, the tenants say it was not. The landlord puts in evidence the original lease with a page including the clause attached. The tenants put in evidence what they allege is a copy of the lease they signed which does not include the attached page. One side has changed the document. This is the only real issue. There is now no real dispute as to whether one of the two notices of termination was valid if clause 38 was included in the lease. It does not matter which one was valid as all the landlord seeks is an order for possession.

Facts

2    Mr Wright managed a commercial storage operation for Storage Australia (Hornsby) Pty Limited. That company decided late in 1998 to close its Hornsby facility. Mr Wright had come into contact with Mr Wells, who was a customer of the Hornsby storage facility, and they agreed to go into business together, thinking that they would be able to take some of the Storage Australia customers from Hornsby with them. To do this they needed to secure premises as a matter of urgency and according to Mr Wright, needed security for at least twelve months.

3    They made contact with Camelle Real Estate Pty Ltd (Camelle) which company managed the Duffy Avenue property for Fewson. It appears this contact came about through Mr Wells inspecting a property at Pound Road Hornsby, which Camelle had listed for rental and when that property was found to be unsatisfactory attention was directed to the Duffy Avenue property and an inspection arranged of it. The defendants dealt through Mr Clark. It seems likely that discussions took place on 16 January 1999, but on whatever date Clark says that he told Wells and Wright that:

The lease has a three month demolition clause in it. You would have to get out on three months' notice. You may get three months in total at the property, you may get six months or nine, perhaps you'll get twelve months out of it, but I cannot make any promises. The owners are going to demolish the buildings on the property and I understand the property will be rezoned.

4    On 17 January Wells wrote to Camelle for the attention of Mr Clark making an offer to rent part of the Duffy Avenue property for $50,000 per annum. That offer included the following clause:

We understand that the property is subject to a demolition clause, and that three months' notice will be given to quit. A minimum rental period of twelve months is offered.

Wright says that at a meeting on the site Clark said there was a demolition clause and said:

You will get a minimum of twelve months with three months notice to quit once the twelve months is up. You will probably get to stay from eighteen months to two years, because I believe the EPA will object to the development, because of contamination and the council has yet to approve the building and rezoning applications. I also understand the Westleigh Action Group object to the development without widening the roads and improving the rail bridge.
and

These are the areas available in the property (indicating the sheds), work out what area works for you best and then we make a proposal to the owner. You will be here at least eighteen months to two years. The property would be demolished at some stage but as far as I know there is no approval from council yet.

Wright said that he then said:

As long as we get a minimum twelve months with three months notice we have no problem with that, what is a reasonable rent?

Clark denies saying the words attributed to him.

5    It is accepted that there was subsequent discussions on 19 January with Mr Clark under which $65,000 was agreed for rent. It seems Wells and Wright were allowed into possession early before signing the lease at least for the purpose of showing the property to prospective depositors or customers.

6    According to Mr Clark he instructed a member of the staff of Camelle to prepare a lease and to re-type certain pro forma clauses 35, 36, 37, 38 and 39 which he had obtained from the plaintiff for insertion in the lease, and also to insert a typed clause 40 into the lease. He says that was done by the staff member and the lease was returned to him and that the lease in evidence is that document as typed after it was signed by Messrs. Wright and Wells. Only one copy of the lease was prepared. The document is dated 28 January, but it is accepted it was not signed until 29 or 30 January. Mr Wells picked up the lease from Camelle on 29 January or perhaps on 30 January, and shortly thereafter it was returned to Camelle duly signed by the tenants. Of clauses 35 to 39 included on the separate page, if it were included, clause 35 conflicts with the lease because it assumes a longer term than 12 months. Clause 36 related to insurance, clause 37 to security and clause 39 to remediation. The lease described the premises as "54 Duffy Avenue, Thornleigh (area J,K,L as per attached plan)". The term of the lease was one year from 5 February 1999. The document which the landlord propounds as the lease comprises the four A4 pages commercial lease document, the copyright of which belongs to the Real Estate Institute of New South Wales. Those four pages are each side of a double A4 page folded over, so that only one piece of paper comprises the four yellow pages, together with three white sheets of paper, the first containing clause 35 to 39, the second clause 40, which relates to motor vehicle parking and the like, and the third being a plan of the Duffy Avenue property showing various areas. Mr Wells said that the lease which he picked up comprised only the material on the yellow paper, that he read it and took it to Mr Wright at Storage Australia, who asked him if he had read it, and he said "it's what we asked for and it is what we got with respect to the price and term." Wright said that he wanted to read it and he, Wright, took a photocopy of the lease and Wells retained the original.

7    the defendants say on 1 February that they met at the premises at Thornleigh with Mr Rorke and signed the lease in the presence of Mr Rorke, who witnessed it. On 2 February Wells returned the lease to Mr Clark. Mr Rorke, in affidavit evidence, said that the document, when he witnessed the signatures, comprised only the yellow pages. He said that the two typewritten pages and the plan were not there.

8    It is relevant to state that Mr Clark sent a copy of Mr Wells' offer dated 17 January 1999 to Messrs. Bosco Seeto and Associates, who apparently acted as advisers to Fewson, and that Mr Seeto gave instructions that a lease should be offered for twelve months at $65,000, with "three months notice to vacate for demolition". He said that the rental agreement should be prepared "similar to the one that David Booth did for elsewhere in the same building."

9    On 8 February 1999 Mr Clark sent to Mr Liu, who is apparently an employee of, or consultant to, Fewson, a fax stating in part "attached are front and back pages of commercial lease, plus special clauses you wanted inserted with plans of areas". He sent copies of the lease to the defendants and a lease of part of the same premises to P.T. and J.E. Parker Holdings Pty Limited. That lease to the Parker interests was for "areas F, G and H as per annexure A." The term of the lease was expressed to be "six months (subject to the conditions contained in clause 38)". It is clear enough therefore that so far as the Parker lease was concerned, a plan and the additional page of special conditions were included, but little turns on that as it is not established that Clark was concerned with the Parker lease.

10    On about 19 May, Clark rang Wells and told him that the owner had instructed him to give three months notice pursuant to the lease, as the owner wished to do some demolition at the power room in the premises. He said he would come around and give formal notification and Mr Wells told him to come, which he did, and then gave a notice dated 19 May 1999 requiring the premises to be vacated by 19 August 1999. He said that Mr Wells did not object to this but just said OK. As a result of some correspondence between the parties or their lawyers disputing the effectiveness of the notice a further notice was given on 12 July 1999 requiring possession to be given by 13 October 1999. As I have said it is not necessary to determine the effectiveness of the first notice, although I express the view that it was effective if the three months clause was a condition of the lease. In ordinary terms, a period of three months commencing on 20 May would expire on 19 August.

11    Mr Clark said that at the time of serving the notice to quit and explaining the reason for it and the notice under clause 38, the demolition clause, Mr Wright said that there was no such clause, Wells said nothing further and he, Clark, gave them a copy of the lease. The parties are at issue about all the significant conversations, but they are agreed that the meeting which took place upon service of the notice was conducted in at least a polite way, that it was suggested that Clark would assist in trying to locate suitable alternative premises, and that Clark gave them a reference as to their being good tenants. This is dated 20 May. Wells said that what he said (to Wright) after Clark advised him on the telephone that the lease was to terminate could be stated in a court of law, both defendants said that after the notice to quit was served they telephoned the Law Society to obtain assistance in obtaining legal advice and were referred to Mr Wheeler, their present solicitor. Mr Wheeler wrote on 30 June 1999 to Fewson, care of Camelle, disputing the validity of the notice to quit. Among other things he said that there was no entitlement to issue the notice because the lease was for twelve months from 5 February 1999 and it had been agreed to give a minimum of three months notice after the twelve months term. He said that was supported by written evidence, although at least so far as this case is concerned, the only evidence is the offer by Mr Wright. He went on to say that the extra pages were not part of the original lease, and had not been seen previously by his clients nor had they been signed or initialled by them. That latter statement may have been made because the lease itself, at the top of page four of the yellow pages, states "Special conditions forming part of this lease are to signed by both parties and attached."

12    The cross-examination of Mr Rorke was rather inconclusive. He had apparently been asked to make an affidavit and it seems purchased a form of statutory declaration and set out some facts on that, but it is not in evidence. While his evidence is not very clear he did state that the lease agreement was a standard lease agreement from his experience, that he had some experience with leases, that as far as he could remember he thought it was yellow, that there was no mention by anyone when discussing the question with him about white pages, and he said in answer to a question:

Q: Do you know what colour it is asserted the annexures were?
A: No, all I can remember is just a standard lease. There was no add on to any part of the lease that I was a witness to.

His evidence could not determine the matter, but it certainly supports the case of the defendants.

13    In consideration of the evidence of the major witnesses, Mr Clark appeared to be a reasonable witness. Nevertheless he admitted the clauses were not obtained by him from the plaintiff as he had deposed, but were sent by the plaintiff to someone in the office of Camelle. He was not able to say who had typed out the clauses. Cross-examination as to statements in an earlier affidavit got nowhere. He said in evidence that the additional three pages were stapled to the yellow sheet, that he had detached these once only for the purpose of copying them and had then restapled them to the yellow sheets. Counsel for the defendants, in cross-examination and in submissions, made something of this, because if that is the position, the restapling appears, to the naked eye to have gone through precisely the same holes which is probably not something which is likely to happen. A document examiner might have been able to give some helpful evidence about this, but none was called. I do not think the evidence as to the sending of the leases to Mr Liu assists the matter one way or the other. So far as the defendants were concerned, I thought that Mr Wright was an impressive witness. He explained his lack of apparent anger at the termination of the lease by saying that he was by nature not an aggressive man and I accept that. Mr Wells was not so impressive, but the case could not be decided by some view that Clark was a more acceptable witness than the defendants or vice versa. Wells insisted that the agreement was for a twelve month lease and thereafter no termination without three months notice. In other words, he insisted that what was agreed was a fifteen month minimum period. Wright supported this. On that basis it is difficult to accept the statement of Wells that on reading the lease, he saw that it was just what had been agreed, there being nothing in it on his version at all about three months termination.

Competing Claims

14    The facts which would support the plaintiff's claim are (a) that a plan was needed to understand whether or not the premises referred to in the lease were correct; (b) that Mr Wells had said that the lease was just what was wanted and Wright read it and accepted that; and (c) that both parties expected a demolition clause to be in the lease, if the termination clause could be called a demolition clause. In addition to that the evidence is that there was a reasonably friendly conversation when the notice to quit was delivered and the fact that Mr Clark gave a reference to the tenants. As against this the matters which support the tenants are that the evidence of Mr Rorke did assist their case, although I did not consider him very reliable and would not give the evidence much weight; that the employee whom it is claimed typed the lease conditions did not give evidence; and neither did Mr Booth from who Mr Clark claimed that he got the wording of the special conditions. In addition there is the evidence of the defendants that upon receipt of the notice of termination they sought the advice of a solicitor through reference from the Law Society, and that the solicitor, albeit about ten days later, wrote alleging that the three white pages were not in the lease when it was signed.

15    It is difficult to be certain, but in the end I have concluded that the plaintiff has established its case as it is required to do, and that there is more reason to accept its version than the version of the defendants. The main reason for this is that, having regard to the statements of both defendants that they considered that they were entitled to a minimum of twelve months and thereafter three months notice to vacate (which may have been their intention in their offer letter) there is no basis upon which it could be thought the lease was as agreed unless it included the disputed clause. Clause 35 to some extent supports that finding.

16    So far as the notices are concerned, as I have said, I consider the first was valid, but if it were not there is no doubt about the validity of the second notice.

17    The plaintiff is entitled to the declaration sought as to entitlement to possession. I will hear any argument as to when possession should be given. The defendants must pay the costs of the plaintiff.

Last Modified: 12/13/1999