Gamvrogiannis v Blackshaw

[2000] NSWSC 314

Reported Decision: [2000] NSW ConvR 55-940

New South Wales

Supreme Court

CITATION:	GAMVROGIANNIS v BLACKSHAW [2000] NSWSC 314
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 4768/99
HEARING DATE(S):	15th & 16 March 2000
JUDGMENT DATE:	14 April 2000
PARTIES :	JAMES GAMVROGIANNIS & ANOR v WILLIAM DUNLEAF BLACKSHAW & ANOR
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr L. Young (P) Mr M. Ashhurst (D)
SOLICITORS:	Dibbs Crowther & Osborne (P) Blackshaw Lindsay (D)
CATCHWORDS:	Contract - agreement to grant a lease. Whether a concluded agreement reached before signature and exchange of formal lease document. - Agency - whether one defendant had authority to reach a concluded agreement rather than merely authority to negotiate. - Held no authority to reach concluded agreement.
CASES CITED:	Lezabar Pty Ltd v Hogan (1989) 4 BPR 9498; Masters v Cameron (1954) 91 CLR 353; Allen v Carbone (1974) 132 CLR 528 at 523; Aust Broadcasting Corp v XIV Comm. Games (1989) 18 NSWLR 540 at 548; Pagnan SpA v Feed Products Ltd (1987) 2 Lloyd's Rep 601 at 619; IRC v Raphael (1935) AC 96 at 142; Masters v Cameron (1954) 92 CLR 353 at 362; Gissing v Gissing (1971) AC 886 at 906; Ashington Piggeries Ltd v Christopher Hill Ltd (1972) AC 441 at 502; Blackburn Developments No 19 P/L v Downsearch (1974) 2 BPR 9141; Arjay Invest v Morrison's Outdoor Catering P/L Young J 1 May 1994; Landsmiths P/L v Hall Young J 15 July 1999; Corpoers v NZI Securities Young J 29 March 1989; Stramarcos v Woodhill Young J 31 October 1985; Sinclair Scott v Naughton (1929) 43 CLR 310, 316-317; Barrier Wharfs v W Scott Fell & Co (1907) 5 CLR 647 669; Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68; Hussey v Horne-Payne (1879) 4 App Cas 311; Seppelt & Sons v Comm for Main Roads 1 BPR 97011; Kassabian v Lagonicos (1993) NSW Conv-R55 690; Summit Properties v Comserv (1981) NSW Conv R 55-027 at 56200; Stewart Upton v Pindar Pty Ltd Cohen J 28 April 1988; Eccles v Bryant (1948) Ch 93.
DECISION:	Para 33

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

Friday 14.April 2000

4768 of 1999 JAMES GAMVROGIANNIS & ANOR v WILLIAM BLACKSHAW & ANOR.

JUDGMENT

1   MASTER: This is the hearing of an amended summons filed 15 March 2000 in which the plaintiffs seek a declaration that there is a subsisting agreement for lease in respect of the premises being Shop 1, Ground floor, 40-48 Bay Street, Double Bay upon which land the plaintiffs carry on their business of a restaurant. The defendants are the owners of the relevant land. In the alternative the plaintiffs seek a declaration that the defendants are estopped from denying the agreement for lease. They also seek an order for specific performance of the agreement for lease. 2   The defendants resist the application on the following bases.

1. There was no concluded agreement regarding the following essential terms:-
(a) the land to be demised
(b) the rent to be paid
(c) the parties to the lease
(d) the ancillary covenants to the lease


2. The parties intended that any “agreement” was subject to the execution of formal written leases which event did not happen.

3. The negotiations were between the first plaintiff and the first defendant who had authority to negotiate on behalf of the second plaintiff and the second defendant respectively but no authority to enter into a concluded agreement,

4. No estoppel is available as no detriment has been demonstrated.

3   There are some disputes concerning ancillary matters, namely, waiver and whether and if so what documents constitute a sufficient note or memorandum. In the event that they do not questions of part performance will apply. 4   It is useful to turn to set out a chronology of what has occurred and particularly to consider some of the letters which passed between the parties after the alleged agreement for lease. In April 1992 the plaintiffs entered into a lease of the relevant premises for a period of five years which period expired on 31 March 1997. The lease contained a term for an option for renewal. That required notice of exercise of the option to be given prior to the end of September 1996. The then lessor apparently went into receivership during 1996 and the plaintiffs did not serve the necessary notice exercising the option for renewal within time. A notice was given early in the first week of October. Accordingly, it was not effective. Thereafter there were negotiations between the agent and the first defendant, one of the proposed purchasers. Mr Michael Magowan, an employee of the agent was the defendants’ son-in-law. As a result of discussions with Mr Magowan meetings were arranged so that the first plaintiff and the first defendant, who was one of the incoming purchasers would discuss the question of a new lease of the premises. The first plaintiff was concerned to achieve some finality on that aspect because he was aware of the expiry date of the lease in March and had forward commitments which he had to meet. The meeting occurred on 15 November 1996 and it is as a result of that meeting that the plaintiffs say a binding agreement for lease was consummated. The detail of the conversations were set out by the first plaintiff in paragraph 11 of his affidavit which conversations are in the following terms:-

Plaintiff: “Bill, I would like to finalise the new lease today, as I have many advanced bookings which I have to honour. Also, I do not want to jeopardise the continued trading of my business.”

The defendant: “I understand that, I know you are a good tenant. We should be able to finalise everything today.”

Plaintiff: “I’m happy with my situation here. I’ve enjoyed a good working relationship with the previous landlord and I hope this will continue with you.”

The defendant: “I see no problem there.”

Plaintiff: “Okay. Bill the terms of the current lease I’m okay with except for the current rent lease schedule regarding the rent of $12,750. The rent I’ve been paying in these last 12 months is well above current market rental due to the arrangement made with the previous landlord. It was agreed that I pay a lower rent at the beginning, giving me time to establish myself and then a much higher rent in the later periods. I’ve checked with several agents in the Double Bay area and have been told that a reasonable market rent for these premises would be closer to $10,000 to $10,500 per month.”

The defendant: “I was considering more than that, closer to $11,000 or $11,500.”

Plaintiff: “I really don’t want to leave these Premises. I’m prepared to pay no more than $11,000 per month initially, with annual CPI increases.”

The defendant: “I’m not satisfied with CPI increases, but will agree to 5% annual increases.”

Plaintiff: “That’s quite high, given CPI currently is well below that, but I guess that it won’t stay that low for too long. Okay, I’m happy with that. So that’s $11,000 per month with 5% per annum increase for five years. Okay, that’s fine. I still want first refusal for another five years as mentioned in the lease, that should see me through to retirement I hope.”

The defendant: “I don’t see a problem with that.”

Plaintiff: “I’m glad that’s over. I can plan more confidently now - and my wife will be happy, she’s a bit of a worrier. She hates not knowing what’s going to happen.”

We then stood up and the defendant and I shook hands. Our conversation continued to the following effect:

Plaintiff: “That’s good. $11,000 a month, 5% annual increase for 5 years and right of first refusal for another 5 years. When will you have the lease ready?”

The defendant: “I’ll confirm all this in writing and ask my son David to prepare the lease.”

Plaintiff: “Thanks Bill. I look forward to hearing from him. I’m really glad that its all finalised.”

5   There is reference in the conversations I have quoted above to a right of first refusal. The lease as well as having an option did have a right of first refusal for further leasing. The first defendant conceded that the conversation occurred at least in part in the terms set out above. There was an issue between the first plaintiff and the first defendant as to whether or not the renewal included the right of first refusal. According to the first defendant this was not said by the first plaintiff. However, that is not of great moment because the plaintiff places its case upon the fact that it was the existing lease which was before the parties during the discussion which was the subject of the further agreement. The first defendant was familiar with the terms of the lease prior to the meeting. As that document contained the right of first refusal to lease it would be included in any event notwithstanding what was said about that matter expressly in the conversation. 6   The first defendant suggested in submissions and through cross examination of the first plaintiff that there were further terms, importantly a term dealing with the area to be leased. One side of the side of the shop in question ran along the entry from the street to the lift for the building. There was a proposal to modify that entry to provide better access and a further area which would be more letable than an existing small part of the ground floor of the building. The modification would involve straitening the entry, reducing part of the land leased in one area and increasing it in the other. It also had the effect that a separate area would be available on the ground floor and the parties at one stage contemplated that the plaintiffs might take the lease of this area. Immediately after the November meeting the first defendant sent a letter to the first plaintiff of 18 November 1996

“I refer to our discussion on Friday afternoon and confirm the following arrangement:
1. On expiration of the current lease and subject to completion of the purchase of the building, we will grant you a new lease for a term of 5 years.
2. The rent for the new term will be $132,000 per annum payable at the rate of $11,000 per calendar month.
3. The lease shall be subject to an annual increase of 5% per annum during the term.
4. Stamp duty and legal costs will be disclosed in the lease and shall be payable by the tenant.
5. The owners intend to lodge a plan with Woollahra Council so that a new entrance to the lift will be created in Cross Street next to the present garage entry. The existing entry to the lift will then be converted to shop space. Subject to Council approval, the existing entry area will be allocated to the two existing ground floor tenants. Following the allocation an adjustment in rent will be made based on any variation in the area occupied by each tenant. In order to carry out this work, the present loading dock may be incorporated in the new entrance area leading to the lift. This projected change in the layout was discussed at our new meeting and I am sure it will not cause any inconvenience. Of course the cost of all work will be met by the owners.
6. Your offer to remove all rubbish from the garage of the building is appreciated and in the interest of good relations with other tenants the sooner this is done the better.
7. Your request for an area to be set aside for storage is noted and we will be happy to discuss this with your in due course.
8. My son, David Blackshaw, a partner in Blackshaw Lindsay & le Page, solicitors, of 36A Bay Street, Double Bay, will prepare the agreement to lease shortly. Mr Michael Magowan of Michael Magowan Real Estate will look after rent collections.
The lease document will be delivered to you shortly so that you can obtain advice from you own solicitor before signing same. Please advise if you have any queries.”

7   The first defendant did not give any evidence of conversations on 15 November 1996 in which the discussion occurred concerning the change in entry referred to in paragraph 5 of the above letter. 8   Nothing happened for a while and then in due course later in 1997 an application was made for Council approval to a change in the entrance. Ultimately the defendants did not proceed with the proposal for alteration of the entrance way. On a number occasions the first plaintiff says that he asked for a lease to be prepared. Throughout the period he continued to pay rent of $11,000 per month as had been agreed at the November 1996 meeting. 9   A letter, sent during the period the development application was being considered, from the agent Michael Magowan Real Estate, of 17 September 1997 was as follows:-

“Re: Whole Ground Floor 40-48 Bay Street, Double Bay.
The Development Application has been lodged by the architect Cedric Carle will provide a new rear entrance to the lift, however, the council has not yet approved this amendment. We expect a decision within the next month.
We confirm however that we have accepted your option to renew your current five (5) year lease. We will also grant you a lease of the adjoining shop when the work to complete the new rear entrance has been carried out.
The lease of the new shop will be for a term expiring at the conclusion of your present lease (the option term) so that both leases are in sync.
We estimate that the area of the re-configured shop will be approximately 191 sqm (142.5 sqm - your existing shop plus 48.5sqm - the new area) and the all up cost of the new work is estimated to be in the vicinity of $200,000.
It is difficult at this stage to estimate future rents, however, we feel that the rent for the new shop will be in the vicinity of $1,200 per week.
We also accept your offer to pay half of the cost of a new awning and will discuss the type of awning in due course.
Your comments in due course.”

10   That letter of 17 September 1997 prompted the following response from the first plaintiff to the agent on 15 October 1997.

“Re: Aesops Restaurant - Whole Ground Floor - 40-48 Bay Street, Double Bay.
Thank you for your letter dated 17 September 1997 and I apologise for the delay in this reply.
I acknowledge your comments regarding renewal of my lease option and the granting of an additional lease for the new shop (which you are prepared to lease to me on completion of the building amendments).
After speaking to my solicitor, I find the proposed arrangements unnecessarily complicated ie different leases for the two shops. As the object of the exercise is to incorporate the new area as part of the existing premises, I cannot understand the necessity for having separate leases.
As you are aware the original lease terminated on the 31 March 1997. The option for renewal, although requested and agreed upon has still not been delivered for signature, even after several requests. In view of the new area becoming available in the foreseeable future, I respectfully request that the status quo remain (ie no option renewal be prepared) and a new lease be prepared based on the entire new area available of approximately 191 sqm.
Given my history as the original tenant of this building and my desire to continue trading in these premises, there is no risk involved on your part to delay the signing of a new lease until all building work is finished and the total area is available. At the end of the day this will simplify things greatly and make for a happier tenant and a better long term relationship.
In regard to the estimated future rental for the new area of $1200 per week, I find this, with respect, ridiculously expensive. Based on my current rental that works out to be a 50% increase. I would consider a rental closer to the amount currently being paid on the existing premises.
……”

11 In April 1999 the agent asked for rent including back rent calculated by reference to the escalation of the $11,000 figure at 5% per annum on a compound basis. That was paid by the plaintiffs. By May of that year the first defendant was considering a redevelopment of the whole building and, accordingly, he then commenced discussions with the first defendant to buy him out . Those discussions turned out to be fruitless. By mid 1999 the first defendant was suggesting through the agent that there was no concluded agreement and rent should be based upon rental payable under the old lease. Thereafter the parties shortly became at issue and these proceedings were commenced. 12 Before dealing with the facts further it is useful to set out the principles upon which one must act in determining whether or not there is an agreement between the parties for the granting of a lease. Acknowledging the assistance received from the judgment of Chief Justice Gleeson in Lezabar Pty Ltd v Hogan (1989) 4 BPR 9498 the following principles are relevant.

1. The primary question to be resolved is whether the parties by their conversation in the meeting on 15 November 1996 entered into a binding agreement for the lease of the property.

2. Such a question is normally expressed in terms of the intention of the parties to make a concluded bargain ( Masters v Cameron (1954) 91 CLR 353; Allen v Carbone (1974) 132 CLR 528 at523).

3. As was pointed out in this court in Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1989) 18 NSWLR 540 at 548:-
“That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”


4. When reference is made to the “intention” of the parties, it is to be borne in mind that ordinarily the test of contractual intention is objective. There are some cases in which the issues are such that subjective intention is in question. They would include cases where there are disputes about mistake representation duress or undue influence. Ordinarily, however, what is in issue is not the subjective state of mind of the individual parties but their “intention as expressed”; (cf IRC v Raphael (1935) AC 96 at 142 per Lord Wright; Masters v Cameron (1954) 92 CLR 353 at 362 and see generally Gissing v Gissing (1971) AC 886 at 906 per Lord Diplock and Ashington Piggeries Ltd v Christopher Hill Ltd (1972) AC 441 at 502 per Lord Diplock).

5. The issue is primarily one of the construction of the language of the parties, whether it has been expressed orally or in writing. It is a case of the kind dealt with by the High Court in Allen v Carbone (1974) 132 CLR 528 where the parties made an “informal agreement” which amounts to a “limited consensus” and it is then necessary for the court to make a decision concerning their intention to enter into a concluded contract. In making that decision the Court will construe their language, and characterise their conduct, where appropriate, by reference to any surrounding circumstances which are properly to be regarded as throwing light upon their intention.

6. A surrounding circumstance which will commonly be regarded as of substantial importance is that in respect of a lease of commercial premises for more than three years the parties normally intend to have a formal document in the case of a lease because it has to be registered. See Blackburn Developments No 19 Pty Ltd v Downsearch (Australia) Pty Ltd (1974) 2 BPR 9141, Arjay Investments Pty v Morrison’s Outdoor Catering Pty Ltd Young J 1 May 1994 and Landsmiths Pty Ltd v Hall Young J 15 July 1999.

7. Another surrounding circumstance which commonly could be regarded as of substantial importance is the fact that the parties had solicitors and contemplated obtaining advice from those solicitors before execution. (See Arjay Investments (supra at page 2), Corpers (No 664) Pty Ltd v NZI Securities Australia Ltd Young J 29 March 1989, Allen v Carbone (supra at 533.7), Stramarcos v Woodhill Young J 31 October 1985 and Sinclair Scott & Co Ltd v Naughten (1929) 43 CLR 310 and 316 to 317.

8. Reference may be made to the communications between the parties subsequent to the date of the alleged oral agreement for the purposes showing that “it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature; see Barrier Wharfs Ltd v W. Scott Fell & Co Ltd (1907) 5 CLR 647 669 per Griffiths CJ; see also Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68, Hussey v Horne-Payne (1879) 4 App Cas 311. Similarly when determining whether a contract has in fact been made by correspondence subsequent acts of the parties can be referred to. See B. Seppelt & Sons Ltd v Commissioner for Main Roads 1 BPR 97011.

13 I turn to the facts in the matter and in particular as to whether the parties have reached agreement on all areas. 14 The first of these in respect of which it was submitted that there was no agreement was the area of the land to be demised. This arises because of paragraph 5 in the first defendant’s letter of 18 November 1996. This aspect was not referred to in the first plaintiff’s account of the conversations on 15 November and was the subject of cross examination. The first plaintiff agreed that he did discuss the matters dealt with in paragraph 5 during the course of the meeting. The first plaintiff understood that it was proposed to make a new entrance way and says that there was no agreement as to what were to be the boundary changes. The first plaintiff did not consider himself bound to accept any such changes when they were proposed in the future by the first defendant. In other words the boundary change was a matter for discussion and further agreement. Given that Council approval was necessary this is not surprising as, indeed, no approval may be given. The term was not an “essential” term in the sense that the contract would not be complete without it. As was pointed out in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd it is not necessary for the parties to agree on all matters in order to make a concluded bargain. See also Pagnan S.p.A v Feed Products Ltd (1987) 2 Lloyd’s Rep 601 at 619 where Lloyd LJ said at p 619:

“It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word “essential” in that context is ambiguous. If by “essential” one means a terms without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by “essential” one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If my “essential” one means only a term which the court regards as important as opposed to a term which the court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the judge, “the masters of their contractual fate”. Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called “heads of agreement”.”

15   This seems to me to be an area where the parties had not reached agreement on a minor matter but did not wish it to hold up a concluded agreement. 16   It was suggested that there was no agreement as to the rent to be paid. This is based upon the assumption that there was to be a variation in the area leased as referred to in 1 above. It thus does not affect the matter. 17   It was suggested that there was no agreement on the ancillary covenants to the lease. The conversation which I have set out above concerning the discussions on the 15th clearly has the plaintiff talking about the terms of the current lease and him being happy with those terms except for the rent. In the context of that statement one would infer that the parties were intending to incorporate the existing detailed terms of the then lease which was extant between the parties. See the decision of Kassabian v Lagonicos; Rawstron Investments Pty Ltd v Lagonicos & Ors (1993) NSW Conv - R55 690. His Honour the Chief Judge in Equity, Mr Justice McLelland said:-

“These letters make no reference to the involvement of solicitors or, indeed, anyone else since there was a subsisting lease between the parties in existence, it is, I think, to be implied that the terms of the subsisting lease would form the basis of a new lease, to be altered only to the extent necessary …”

18   It would seem to me that the parties are agreed on the terms of the incidental covenants being those in the existing lease and I do not regard the reference to stamp duty in the letter of 17 September as any way detracting from such a conclusion. The amount of stamp duty and costs no doubt would have been the subject of discussion or concern to a lessee. 19   I return to the more central question of whether the parties intended to make a concluded bargain in their discussion on 15 November 1996. The discussion as recounted certainly had the necessary indicia of a final agreement. The commencing words were, “Bill, I would like to finalise the new lease” followed by an advancement of relevant reasons as to why certainty was required. The response to the opening statement also included “finalise everything today”. The conclusion of the conversation also refers to the matter being finalised with reference to the first plaintiff being glad that certainty had been achieved. There is no reference in the discussions to the plaintiff having the lease checked by solicitors. The only reference was that the first defendant said he would get his son to prepare the lease. 20   The letter of 18 November 1996 talks of an arrangement. I see no difference in terms of terminology because of the fact that the word agreement was not used. An arrangement can include an arrangement under which the parties have agreed to be contractually bound. The particular numbered paragraph 1 is quite straightforward and clearly indicates an intention to grant a new lease from a time certain which . The last sentence of the letter does, of course, refer to the plaintiff obtaining advice from a solicitor and it is not unnatural given the letter was written by the first defendant, himself a solicitor, that he should take this precaution. 21   The plaintiffs relied upon a number of different matters post 15 November 1996 which they suggest make it abundantly plain that the parties intended to be contractually bound as a result of the discussions on 15 May. The points were as follows:-

1. The terms of the letter of 18 November 1996 to which I have referred.

2. The fact that no lease was in fact submitted.

3. The fact that when the defendant was asked for the lease to be supplied his response was, “I’m saving you stamp duty”.

4. Payment and receipt of rent referable to the new rent under the alleged agreement including the letter from the agent calculating new rent pursuant to the alleged agreement.

5. The first defendant offers to buy out the plaintiff.

6. The terms of the letter of 17 September 1997 from the agent to the plaintiffs.

22   On the defendants’ part the acknowledgment which they point to as indicating no intention to reach a concluded agreement was the plaintiff’s letter of 15 October 1997 in response to the 17 September 1997 letter. 23   I turn to each of the plaintiffs’ points mentioned above.

1. The letter of 18 November . There is nothing in this given the conclusion I have reached earlier in paragraph 5 which suggest other than a concluded agreement. Indeed, paragraph 1 is strongly supportive of the existence of a concluded agreement.
2. The failure to send a lease. This fact of itself I would not have thought would lead to a necessary inference that the parties intended to be bound. The subject matter of signing a lease clearly had to be attended to as it was referred to in the conversation.

3. Saving stamp duty. All this indicates is that the lessor intended to grant the new lease and is not necessarily indicative of the contractual obligation to do so. See the comments of Cohen J in Stewart Upton v Pindar Pty Limited 28 April 1988 at pages 5 and 6.

4. The payment of increased rental. For the reasons advanced in 3 above this is not indicative of a concluded agreement.

5. The attempt to buy out the lessee. I would not necessarily infer that this indicates that there was a concluded agreement. At most it would indicate the lessor considered that he would have difficulty getting the tenant out of the premises which is not surprising given what had transpired.

5. The letter of 17 September 1997 . The evidence indicates that this letter was drafted by the first defendant for his son-in-law Mr Magowan. This in the clearest terms in paragraph 2 acknowledges the existence of a concluded agreement.

24 The first defendant’s response of 14 October has to be seen in the light of the proposal in the letter of 17 September to grant a new lease for an additional area. It is an attempt to achieve rationality with documents and the reference to the status quo remaining is only referable to the actual production of the lease document. In my view it does not indicate an intention that there was no concluded agreement. 25 Bearing in mind these matters and in particular the correspondence it seems to me that the parties reached a concluded agreement on 15 November 1996. I am mindful of the fact that the lease was to be registered and solicitors were involved. However, the very terms of the conversation outweighs these factors and there had been a previous lease under which the plaintiffs had operated for many years. 26 So far as a sufficient note or memorandum is concerned, the defendants conceded that in the event that the Court was of the view that there was a concluded agreement that the letter of 18 November 1996 was a sufficient note or memorandum. Clearly the letter states the essential terms of the transaction namely the parties the property and the rental provisions. Whether or not this was signed by Mr Blackshaw on his own behalf or on behalf of himself and his wife is, of course, another area of great difficulty to which I will come shortly. 27 Before dealing with the question of authority and parties it is necessary to deal with two other minor matters that were addressed in the case. 28 The first is that it was suggested that there was some waiver by the defendants given the conduct allowing the plaintiffs to remain in occupation and pay rent. Given the steps the plaintiff was taking in order to compel the plaintiff to produce the lease I would think it is impossible to conclude that there was any waiver. 29 The other was the claim based on estoppel. The difficulty with this claim is that there does not seem to be any relevant evidence of detriment suffered by the plaintiffs. The only suggestion of detriment was that prior to the meeting of 15 November the first plaintiff looked around for other premises and came across one at 24 Bay Street. The premises apparently were slightly larger and the rental was less than his existing premises. He says that as a result of the meeting of 15 November he did not take up that offer. Instead, what has happened is that the plaintiff has continued in occupation at the rental agreed upon which was less than his expired lease. In the event that he is unsuccessful he will need to move to other premises and any detriment he suffers as a result of the first defendant now resiling from his promise would be the costs of and losses suffered as a result of a move to new premises. There is absolutely no evidence to suggest that this will involve him in expense by way of increased rental or some other such matter. In particular the evidence which he gave would suggest that it might have the opposite effect. In these circumstances it would seem that there is no evidence of detriment and such a claim can not succeed. 30 I come to the main difficulty in the case which is whether or not there was appropriate authority both on the part of the first plaintiff and the first defendant to bind respectively the second plaintiff and second defendant to the terms of the concluded agreement. 31 I turn to the question of the authority of the first defendant to act on behalf of the second defendant. In a number of cases courts have referred to the fact that a solicitor has authority to negotiate on behalf of his client as to the terms upon which a contract will be entered into but no authority by virtue of their retainer to enter into such contract or an agreement for lease. See Summit Properties Pty Ltd v Comserv (No 784) Pty Ltd (1981) NSW Conv R 55 -027 at 56200 and Stewart Upton Pty Ltd v Pindar Cohen J 28 April 1988 applying the classic case of Eccles v Bryant (1948) Ch 93. The first defendant was a solicitor and as such may arguably have had the authority a solicitor would have had when dealing with a matter on behalf of himself and his wife. In any event there was specific evidence given by Mr Blackshaw in cross examination concerning the purchase of properties, leasing and mortgaging by both of them. He conceded that he did the day to day running of things on behalf of himself and his wife and gave instructions on behalf of both of them. He conceded that the letter of 18 November was written on behalf of both of them and he conceded he went to the meeting on 15 November representing not only himself but also his wife. Re-examination made it plain, however, in relation to sales of properties, mortgages over properties and leasing that although he negotiated terms on behalf of himself and his wife, his wife always executed the relevant contract, mortgage or lease. In these circumstances it would seem that there is no authority for him to reach a concluded agreement on behalf of his wife in respect of the agreement for lease. 32 In the absence of this authority to conclude the final agreement on behalf of the second defendant there can, in fact, be no concluded final agreement as a result of the meeting of 15 November 1996. Accordingly the plaintiffs’ claim fails. 33 There is also a suggestion that there was no authority on the part of the second plaintiff to enter into an agreement for lease. It should be noted that the second plaintiff and her husband, the first plaintiff, carry on business running a restaurant which is known as Aesops Greek Restaurant. In setting up the meeting of 15 November a letter was written on the letterhead of the restaurant and signed by the first plaintiff. Clearly that was written on behalf of those carrying on the restaurant under that name, namely, the first and second plaintiffs. The terms of the discussion which occurred on 15 November indicated that the first plaintiff was raising the matters on behalf of second plaintiff. In these circumstances, and bearing in mind that the second plaintiff brings these proceedings to enforce the agreement, she has no doubt ratified the first plaintiff’s acts on her behalf. Her ratification can be implied as such conduct shows that she adopts or recognises such transactions. See Boustead on Agency 15th Ed p 66. 34 I order that the proceedings be dismissed and order the plaintiffs to pay the defendants’ costs.

Last Modified: 09/25/2000