Howard v 185 Elizabeth Street

[2006] NSWSC 614

CITATION:	Howard v 185 Elizabeth Street [2006] NSWSC 614
HEARING DATE(S):	23/05/06
JUDGMENT DATE :	23 May 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	05/23/2006
DECISION:	See paras 30-32 of judgment.
CATCHWORDS:	LANDLORD & TENANT – Plaintiffs and defendant commenced negotiations for creation of lease agreement – Defendant forwarded leasing proposal to plaintiffs – First plaintiff made alterations to leasing proposal – Leasing proposal allegedly returned to defendant – Leasing proposal expressed not to create binding legal relations – No memorandum or note indicating defendant’s acceptance of altered leasing proposal – Section 54A Conveyancing Act 1919 (NSW) considered – Whether serious question to be tried that parties created binding lease agreement - LANDLORD & TENANT – Leases and licences – Defendant entered into lease agreement with third party in relation to commercial premises – Third party gave licence to plaintiffs to occupy premises – Plaintiffs allegedly in arrears – Third party sent plaintiffs notice of termination of licence agreement – Defendants subsequently terminated lease agreement with third party – Whether serious question to be tried that plaintiffs entitled to possession of premises pursuant to licence agreement or otherwise.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW)
PARTIES:	Eleanor Howard & Anor v 185 Elizabeth Street Pty Ltd
FILE NUMBER(S):	SC 2721/06
COUNSEL:	Plaintiff: M Dicker Defendant: In person
SOLICITORS:	Plaintiff: Sparke Helmore Lawyers Defendant: N/A

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

WHITE J

Tuesday, 23 May 2006

2721/06 Eleanor Howard & Anor v 185 Elizabeth Street Pty Ltd

JUDGMENT

1 HIS HONOUR: The principal issue on the present application is whether there is a serious question to be tried that the second plaintiff, Australian Commercial & General Corporation Pty Limited (ACG), is entitled to possession of suites 111-114, 185 Elizabeth Street, Sydney, pursuant to an agreement for lease allegedly made with the defendant. The defendant is the owner of the premises.

2 There is a further question as to whether it is seriously arguable that the first plaintiff, Ms Howard, or a company associated with her, is entitled to possession of suite 111 pursuant to a licence given to her by a previous lessee of the suite. Consequential questions arise with respect to what orders should be made concerning the removal of the plaintiffs’ goods.

3 On 6 May 2006, Hamilton J made orders by consent and without admissions, restraining the defendant, up to and including today, from leasing, licensing, granting occupation of or otherwise dealing with the premises. Orders were also made requiring the defendant to grant supervised access to Ms Howard, or any person authorised in writing by her, to the premises between specified hours on Thursday 18 May and Monday 22 May 2006 for the purposes of checking documents and goods, sorting documents, and removing documents and goods to which she, or persons associated with the plaintiffs, are entitled.

4 Today, the plaintiffs seek the continuation of the injunction restraining the defendant from leasing or otherwise dealing with the premises. They also seek orders for the provision of access to the premises on further occasions and, as I understand it, the plaintiffs also claim orders, which would have the effect of allowing them to have possession of suites 111-114, 185 Elizabeth Street.

5 On 27 June 2005, the defendant granted a lease of suites 111-114, 185 Elizabeth Street for a term expiring on the 31 March 2006 to Kalpage & Co, Todow Limited Partnership and W Lawyers Pty Limited. On 25 January 2005, the firm called W Lawyers Pty Limited gave a licence to Ms Howard to occupy suite 111, 185 Elizabeth Street for the period from 31 January 2005 to 27 February 2005. The defendant says that it did not consent in writing to that licence, as required by the lease. However, there is clearly a serious question to be tried as to whether it nonetheless consented.

6 The letter from W Lawyers to Ms Howard of 25 January 2005 states that:

"Each party to this agreement is to give one month's notice of their intention to vacate the premises."

7 Thus, after 27 February 2005, the licence between W Lawyers and Ms Howard was terminable on one month's notice. It appears that the premises were occupied by a company associated with Ms Howard called Pro Vital Total Health (Aust) Pty Limited, pursuant to that licence.

8 On 21 February 2006, a Ms Schneider, who is a property manager of Jones Lang Lasalle, the managing agents for the building, forwarded to Ms Howard a leasing proposal for suites 111-114. The letter stated:

"If you are in agreement with the proposal could you please sign where indicated and return to the office and I will proceed to prepare the lease document."

9 The leasing proposal enclosed with that letter provided for the leasing of the four suites as commercial office space with the lease to start on 1 April 2006 and expire on 28 February 2009. The rental commencement date was stated to be 1 April 2006. The proposal included a provision that the lessee was required to provide to the lessor an unconditional bank guarantee or security deposit for an amount equivalent to three months of gross rental plus GST equating to $4709. The document was headed "Leasing Proposal Prepared for Australian Commercial & General Corporation Pty Limited" and it included the following special conditions:

"This leasing proposal does not represent a binding legal document and is subject to execution of the lease by both the lessor and lessee.

Occupation of the premises will only be permitted on receipt by the lessor of cleared funds for the required security deposit, cheques for stamp duty, cheque for legal costs and the properly executed lease."

10 Ms Howard deposes that in discussions with Ms Schneider it was agreed that two tenants then occupying rooms 112 and 113 would remain as tenants of ACG and that ACG would be given possession of room 114 for "our" in house solicitor. Ms Howard amended the leasing proposal document in two respects before signing it on behalf of ACG. She gave oral evidence that she delivered the leasing proposal as amended and signed by her to Ms Schneider's office on 23 February 2006.

11 Ms Schneider deposes that at no time before 5 April 2006 did she receive the signed proposal. There is a conflict of evidence about this, which cannot be resolved on the present application. There is a serious question to be tried as to whether the signed proposal was returned to Jones Lang Lasalle's office on 23 February 2006.

12 The two alterations made by Ms Howard to the document were as follows. Under the heading "Fit Out" the document stated that: "the lessee leases the premises in its current state and condition", Ms Howard inserted in writing the words:

"and the lessor acknowledged that they are aware that the outgoing tenant has assigned that obligation to "make-good" for consideration paid/to be paid to ACG" (sic)

13 The second alteration was made against the heading "Special Condition". The typed document provided:

"should the lessee require the premises vacated by all occupants at the lease commencement date then the lease is subject to vacant possession of the premises."

Ms Howard added the following in handwriting " (as discussed) two to remain. "

14 There is no signed acceptance of the leasing proposal by or on behalf of the lessor. Indeed, on this application there is no evidence that Ms Schneider orally accepted the amended proposal. Ms Howard said that the handwritten changes, which she made, were in accordance with her previous discussions with Ms Schneider.

15 However that may be, there is no serious question to be tried that the delivery of the leasing proposal as signed by Ms Howard and delivered to Jones Lang LaSalle of 23 February 2006, assuming that it was signed and returned to Jones Lang LaSalle on that day, created a binding agreement for lease.

16 The proposal expressly stated that it was not a binding legal document and was subject to the execution of the lease by the parties. Even if there had been an agreement between the parties on the terms of the lease, that statement demonstrates that the parties did not intend to be bound by the terms upon which they had agreed until the formal documents of lease were executed by both of them.

17 Nor is there any memorandum signed by or on behalf of the lessor accepting the terms as modified by Ms Howard. Section 54A of the Conveyancing Act 1919 (NSW) provides that:

“(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.”

18 There is no signed memorandum or note of the final terms of what is alleged to be the agreement for lease signed by or on behalf of the lessors. Thus assuming that the amendments made were in accordance with discussions, which Ms Schneider had with Ms Howard, and assuming also Ms Schneider had authority to agree upon such terms on behalf of the lessor, nonetheless the agreement would still be unenforceable pursuant to s 54A of the Conveyancing Act. There were no sufficient acts of performance of the alleged agreement for lease to take the case outside s 54A of the Conveyancing Act. Nor is there evidence that the plaintiffs acted to their detriment in reliance upon there being a binding agreement for lease by reason of which the defendant might be estopped from denying such an agreement. So far as appears on the evidence before me, no rent has been paid, the security deposit has not been paid and the plaintiff has not taken possession of suites 112-114. This is sufficient to determine the first issue.

19 It should be noted that there is a great deal of correspondence after 23 February 2006 which might bear on this question. The times at which the correspondence was brought into existence is a matter of some dispute. The defendant says that the offer contained in the leasing proposal was withdrawn on 2 March 2006. The plaintiff says that that letter was not delivered until 5 April 2006 and that the offer had already been accepted. It is not necessary to decide on this application when the letter dated 2 March 2006 was delivered to the plaintiffs.

20 On 5 April 2006, Ms Howard forwarded by facsimile a bundle of correspondence to Mr Troy Shephard of Jones Lang LaSalle. Included with the facsimile were two documents bearing date 23 February and 28 February 2006, addressed to Ms Schneider and signed by Ms Howard. It is not clear to me whether Ms Schneider or Ms Howard say that the correspondence was forwarded on the dates on which they bear. It is sufficient to say that the correspondence of those dates is consistent with there being no concluded agreement as at 23 or 28 February 2006 on the terms for an agreement for lease.

21 Thus the facsimile of 23 February 2006 appears to dispute the amount for which a security deposit should be provided and raises questions as to the fit-out of the premises. The facsimile bearing date 28 February 2006 contains a statement that Ms Howard notes that:

"I returned the lease proposal to you last Thursday and to date have not received a lease nor had the answers to questions raised on the detail of the document given to you."

22 This suggests that as at 28 February 2006, assuming the document was brought into existence on the date which it bears, the terms of an agreement for lease were still a matter of discussion. However, even if that is not the correct inference to be drawn from those documents, and even if the parties had agreed upon the terms of an agreement for lease, it is clear for the reasons I have given that there was no binding agreement by the parties to be bound by the terms they had agreed.

23 By letter dated 22 March 2006, the firm W Lawyers wrote to Ms Howard at ACG in relation to the lease of offices 111-113, 185 Elizabeth Street. They asserted that the licence agreement with Ms Howard had been repudiated by her by the non-payment of rent. They required that she vacate the premises by Friday 23 March 2006. They also said that their client's lease expired at the end of March 2006 and if Ms Howard wished to obtain a new lease after that date she should deal directly with Ms Schneider.

24 As I understand it, the plaintiff contends that this document may not have been delivered on the date which it bears but was, rather, forwarded with other correspondence on or about 5, 6 or 7 April 2006. However that may be, it is clearly a notice of termination of the licence agreement between her and the former lessees of the premises. In any event, the licence given by or on behalf of the former lessees of the premises to Ms Howard would have to have expired by the end of their tenancy. Their lease expired on 31 March 2006.

25 On 7 April 2006, the solicitors for the defendant served a notice of termination of the lease on Kalpage & Co, Todow Limited Partnership and W Lawyers Pty Limited and required them to vacate the premises by 31 May 2006. On the same day the solicitors for the defendant wrote to Ms Howard. They advised, among other things, that the lessor was not prepared to proceed with the lease of suites 111-114, 185 Elizabeth Street. They contended that Ms Howard was not entitled to occupy any premises in the building and demanded that she refrain from contacting other tenants in the building.

26 As I understand the plaintiffs’ submissions, they complain that no notice requiring them to vacate the premises had been given, at least no notice addressed to ACG. They also sought to put some reliance upon the fact that the former lessee had been given until 31 May 2006 to vacate. I do not think there is any substance in either of these matters. Indeed, on 11 April 2006 the solicitors for the defendant, by letter addressed to the then solicitor for the plaintiffs, stated that his client had no right to currently occupy suites 111-114 and demanded that his client vacate those suites by 13 April 2006. Moreover, the fact that the former lessees were given notice to vacate by 31 May 2006 does not mean that the defendant recognised that either ACG or any licensee from a former lessee was entitled to occupy the premises, either up to 31 May 2006 or at all.

27 For these reasons I do not think there is a serious question to be tried that either the first or the second plaintiff is currently entitled to possession of the premises.

28 The question then is whether any orders should be made to provide the plaintiffs with further opportunities to obtain access to the premises to remove their goods from the premises. I think it is clear that from at least 11 April 2006 the plaintiffs have had ample opportunity to remove their goods from the premises. There has been a good deal of correspondence passing between the parties in which the defendant has demanded that the plaintiffs remove their goods. The defendant has asserted that it would treat items not removed as having been abandoned. However, quite properly, counsel for the defendant today recognised that the defendant will be a gratuitous bailee of such goods of the plaintiff as are not removed from the premises, and such goods will have to be dealt with accordingly. The defendant has today offered to allow the plaintiffs to have supervised access to the premises between 9.00am and 5.00pm on one day this week of the plaintiffs' choosing for the purposes of the plaintiffs removing their goods from the premises.

29 I do not consider that the plaintiffs have any legal right to a greater allowance than that which is now offered. I will ask counsel for the defendant to formulate the order, which I understand his client will consent to. Otherwise the injunction given on 16 May 2006 will expire today according to its terms.

[Counsel and the first plaintiff addressed.]

30 I order that the defendant grant supervised access to the first plaintiff, or any person authorised in writing by the first plaintiff, to the premises known as suites 111, 112, 113 and 114, 185 Elizabeth Street, Sydney between the hours of 9.00am and 5.00pm on Monday 29 May 2006 for the purposes of:

(a) checking documents and goods;
(b) sorting through documents; and
(c) removing documents and goods to which the plaintiffs, or persons associated with them, are entitled.

31 The costs of today's proceedings will be the defendant's costs in the proceedings.

32 I stand the matter into the Registrar's list on 6 June 2006 for the Registrar to make directions as to the final hearing or disposition of the proceedings. The exhibits may be returned after 28 days.

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