Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors

[2007] NSWSC 329

CITATION:	Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors [2007] NSWSC 329
HEARING DATE(S):	29 & 30/03/07
JUDGMENT DATE :	30 March 2007
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	30 March 2007
DECISION:	See paragraphs 75-77 of judgment.
CATCHWORDS:	LANDLORD AND TENANT – Agreement to lease for a term – No acceptance of offer to lease – No intention to be immediately bound by terms of offer to lease – Held that no agreement to lease for a term.
LEGISLATION CITED:	Centre Based and Mobile Child Care Services Regulation (No. 2) (1996) Conveyancing Act 1919 (NSW) Trade Practices Act 1974 (Cth)
PARTIES:	Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors
FILE NUMBER(S):	SC 3659/06
COUNSEL:	Plaintiff: M Lawson Defendants: P A Beale & M P Tanevski
SOLICITORS:	Plaintiff: Thomas Mitchell Solicitors Defendants: Berryman Partners Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

WHITE J

Friday, 30 March 2007

3659/06 Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors

JUDGMENT

1 HIS HONOUR: These are proceedings for specific performance of an alleged agreement for lease of a childcare centre at 23 James Street, Charlestown.

2 The plaintiff is the lessee of the premises and the defendant is the owner. The plaintiff had occupied the premises under a five-year lease which expired on 21 December 2003. It did not exercise an option for renewal contained in that lease.

3 The plaintiff claims that on or about 29 July 2004, it entered into an agreement for a further lease of the premises for a period of five years commencing on 1 August 2004 with a five-year option of renewal.

4 On 26 July 2004, the defendant’s managing agent, Mr Doug Farr, sent a letter headed "lease proposal - premises: 23 James Street, Charlestown" to Ms Michelle Peden of the plaintiff.

5 The letter set out all the essential terms for an agreement for lease. It also included a schedule of works the lessor was to undertake to the premises. For some years, there had been disputes between the parties about their respective obligations to carry out repairs or improvements to the property.

6 The property was used by the plaintiff as a childcare centre. The Department of Community Services had stipulated that certain works be carried out if the plaintiff was to retain its licence to operate as a childcare centre. The plaintiff was asked to execute the letter to confirm its intention to lease the premises on the terms and conditions set out in the letter.

7 On 29 July 2004, Ms Peden, who is the director and sole shareholder of the plaintiff, signed the letter. On 29 or 30 July 2004, she faxed it back to Mr Farr. When signing it, she added the following:

"Please note: This is agreement is conditional on Tony Wren E-mail dated July 28th 2004 9.19pm”

8 Mr Wren was acting as the plaintiff's agent in negotiating the terms of the proposed lease. It is common ground that the email referred to was an email sent by Mr Wren at 9.20pm on 28 July 2004 to Mr Farr.

9 The issues are, first, whether the letter from Mr Farr of 26 July 2004 was an offer capable of acceptance so as to give rise to binding agreement for lease. Secondly, if it was, whether the plaintiff accepted the offer.

10 These issues encompass the question as to whether the parties intended to be immediately bound by the terms agreed to, or whether they only intended to be bound upon the execution of a lease.

11 The defendant raised no issue as to the authority of Mr Farr to enter into the contract on its behalf.

12 As I have said, the question of what repairs or maintenance to the premises should be carried out, and who was responsible for doing so, had been a vexed issue for a number of years.

13 On 24 August 2000, Ms Peden forwarded three quotes to the defendant for the supply and laying of vinyl floors. All the floors were subsequently re-laid with vinyl times supplied by Noel Davies Independent Carpet Centres. The defendant paid the costs of this.

14 In August 2001, Ms Peden complained that the toilets to the rear of the premises had been vandalised and the building needed re-painting. She claimed that the defendant was responsible for the carrying out such works.

15 In March 2002, she again raised the issue of the repair of the back toilets. She also complained that a sign advertising the defendant's club was rusting and needed to be assessed. She complained that the lino tiles laid twelve to fifteen months previously were cracking and needed urgent repair. She raised other complaints about the state of repair of the building.

16 The defendant considered that the issue concerning the back toilets was not their state of repair, but that the plaintiff needed to have them made suitable for small children. It considered this was not its responsibility. The defendant took issue with a number of the other matters which Ms Peden had raised.

17 In April 2003, the plaintiff deducted from its rental payments, the costs of emergency plumbing work and associated repairs which Miss Peden claimed were to the defendant's account. The defendant disputed this. It said that the lessee was responsible for the repairs and that, in any event, it was not entitled to set off the costs against rent.

18 After expiry of the lease on 31 December 2003, the plaintiff held over as tenant from month to month. Negotiations ensued for a new lease.

19 On 14 March 2004, Ms Peden itemised a list of 14 items requiring repair. These included the replacement of the floor coverings with commercial grade vinyl.

20 On 29 March 2004, Ms Peden met with Mr Farr who was acting as the defendant's agent. She discussed the various items of work which she said needed to be attended to by the landlord.

21 These included matters which had been raised by the Department of Community Services being drainage, the demolition and replacement of existing toilets, the raising of power points, the vinyl flooring, the removal of rubbish and fumigation for vermin, petitioning, and another half a dozen or so items.

22 Ms Peden gave Mr Farr a list of the Department of Community Services' requirements. These were in the form of a schedule headed "Children Services Risk Action Plan". The matters on this list included the following:

“Space requirements: Office space that is inaccessible to children, with area for interviewing of parents to be provided.

Schedule 1
14 (1) (2) (3) (4): Floor covering to be replaced as in poor condition

Kitchen to be upgraded to meet standard ."

23 The reference to schedule 14 (1) (2) (3) (4) was clearly a reference to clause 14 of schedule 1 to the Centre Based and Mobile Child Care Services Regulation (No. 2) (1996).

24 That clause specified that premises used for a childcare service, and all equipment and furnishings usually providing the service, must be maintained in a safe, clean and hygienic condition and in good repair at all times.

25 It did not include further specification as to, for example, the particular grade of floor coverings required in premises used as a childcare centre, or particular requirements of the construction of office space to be provided as an area for the interviewing of parents.

26 On 7 May 2004, Mr Farr submitted a leasing proposal to Ms Peden. Included in this proposal was a schedule of a proposed lessor’s works. The schedule consisted of 14 items. Clause 4 of the schedule dealt with flooring. It stated: "4. Vinyl floor to by addressed. Meeting with representative from Noel Davies Carpets."

27 Another item dealt with petitioning. It said: "7. Petitioning for Interviewing Room to be erected by Lessor”. Another item was "10. Kitchen upgrade to meet standards required by Department of Community Services".

28 On 20 May 2004, the Department of Community Services wrote to Ms Peden advising of additional repairs the Department would require as a condition of licensing. These were, it seems, additional to the repairs indicated in its Risk Action Plan. Its further requirements included that a cleaner's store be provided. The Department said that this could be in the laundry. At the time there was no laundry on the premises, but the construction of a laundry, or the incorporation of laundry facilities within the existing premises, was, I infer, under discussion.

29 On 28 May 2004, the plaintiff's solicitor, Ms Denise Clark, wrote to Mr Farr commenting upon the leasing proposal provided by him of 7 May 2004. Amongst other comments, Ms Clark contended that the works to be carried out by the lessor under the new lease should include the provision of vinyl flooring to a commercial quality which was nonporous. In respect of item 7 of the description of lessor's works dealing with partitioning, Ms Clark wrote, "Interview room - to include door and window to newly partitioned area."

30 On 29 June 2004, Mr Farr, on behalf of the defendant, wrote to the plaintiff. He said, inter alia:

“Our lease proposal was submitted in our letter to you dated 7th May, 2004, and we have received a response from your solicitor and have had a meeting with Mr Tony Wren on the 22nd June, 2004. However, we have not as yet received a counter proposal as advised by Mr Wren.

Please be advised that effective from the 31st July, 2004, the lease commencing on the 1st January 1999 over premises Folio Identifier 1603/755233, 23 James Street, Charlestown, is terminated.

Please note your records that the calendar monthly rent effective from the 1st August, 2004, will be $1,300.00 per calendar month.

We await a formal response to our lease proposal dated 7th May, 2004.”

31 On 5 July 2004, Ms Peden did respond to the lease proposal. She made a counter-offer which proposed a different amount of rent and proposed other terms in relation to the parties' obligations for repair and maintenance and carrying out work. Her offer was not accepted. Negotiations continued between Mr Farr and Mr Wren. Both the plaintiff and the defendant evidently thought the negotiations would be better pursued through their agents.

32 On 14 July 2004, Mr Farr sent a revised leasing proposal to Ms Clark. He rejected further offers which had been made on behalf of the plaintiff relating to rent. He also said that the lessors had agreed to undertake all works required by the Department of Community Services to allow continued licensing of the property and that these included any additional items not previously identified in correspondence. However, negotiations between Mr Wren and Mr Farr continued further. The result of these negotiations was the letter sent by Mr Farr to Ms Peden on 26 July 2004 which, the plaintiff claims, set out the terms of an offer whose acceptance has given rise to a contract.

33 I have already referred to the heading of the letter. The letter opened in the following terms:

“ We write to confirm that we have reached agreement with your property consultant, Mr Tony Wren for a lease over the above premises. The basic terms and conditions of the lease are as follows. Could you please acknowledge your acceptance of these terms by signing where indicated and return to this office.

The proposal is as follows: "

34 There followed a description of the premises, the parties, the term of the lease and an option for renewal, the lease commencement date on 1 August 2004, the rent, a provision for rental reviews, the lessee's responsibility for outgoings, directors' guarantees, the permitted use of the premises and special conditions. The special conditions provided, inter alia, that the lease was subject to a licence being granted by the Department of Community Services for the conduct of a childcare centre on the premises and was subject to the lessor being able to obtain council approval for the proposed works.

35 Under the heading "Repairs and Maintenance", the letter stated:

“ The lease will contain relevant clauses in respect of the Lessee maintaining the premise’s fixtures and fittings. That is, if the plumbing becomes blocked due to objects being placed down the sewer line then the Lessee is responsible to clear the line. If the line is blocked by tree roots then the Lessor is responsible. Items such as fly screens damaged by the Lessee's use of the premises to be repaired and/or replaced.
Lessee to maintain all fixtures and fittings in good condition and replace and/or repair when required, excepting for fair wear and tear. "

36 The letter also stated:

“ Lessor's Works : The Lessor's (sic) have agreed to undertake all works required by the Department of Community Services to allow continued licensing of the property. That includes any additional items not previously identified in correspondence and required by the Department by the 6th August, 2004. See Annexure A.

Lessee's works: The Lessee proposes to construct a covered return verandah to the front and side of the building, incorporating a staff retreat. "

37 Annexure A consisted of eighteen items and included the following:

“2. Existing toilets to be demolished. New toilets to be built with floor raised up above existing ground level.

…

4. Vinyl floor to be addressed. Meeting with representative from Noel Davies Carpets.

…

7. Partitioning for Interviewing Room to be erected by Lessor.

…

10. Kitchen upgrade to meet standards required by the Department of Community Services.

…

16. Hot water system to be regulated to areas where children have access to.

17. Cleaners store must be provided - could be in the laundry.”

38 Thus, item 4 was in the same terms as appeared in the proposal of 7 May 2004. Mr Farr had not incorporated Ms Clark's proposal that the schedule state that the vinyl flooring be of commercial quality and be nonporous. Noel Davies Carpets had made the original vinyl tiles. At least the landlord wanted to reserve its position on responsibility for the quality of the flooring until the question of whether the original supplier would fix the problem had been determined. It proposed that it would meet the requirements of the Department of Community Services for the replacement of the floor covering. However, so far as the evidence reveals, the Department had not stipulated a grade for the replacement flooring.

39 In relation to item 7, Mr Farr had not incorporated the proposal of Ms Clark that the description of lessor's works include a requirement for the inclusion of a door and a window to the newly partitioned area.

40 The schedule contemplated in clause 17 that a laundry would be included in the lessor's works but did not state where the laundry would be located.

41 The letter of 26 July 2004 concluded with a request that Ms Peden execute the letter where indicated to confirm the plaintiff's intent to lease the premises on the terms and conditions as set out in the letter. The provision for execution of the letter by the plaintiff simply provided for a signature of an authorised officer of the plaintiff and for the affixing of that signature to be dated.

42 On 28 July 2004, Mr Wren sent an email to Mr Farr. It is this email to which Ms Peden referred in her acceptance of the leasing proposal of 26 July 2004. The email stated as follows:

“ Following our conversation this morning I am confirming a number of points of attention that need to be considered and reviewed prior to any of the works (sic) are undertaken.
The points are not intended to be an exhaustive review but rather reflect the typical issues that may be confronted.
I have no doubt that when I meet with Neptune representatives re these works we can resolve any differences in expectations that might exists.
Some typical points requiring clarity are:
Item2: Laundry to be included in toilet block Block also needs to be adequately secured typically in the fashion that has proved necessary elsewhere on site.
Item 4: Vinyl flooring standard as per item 10-kitchen upgrade.
Item 7: Partitioning required is from floor to ceiling with viewing window. Paint to match.
Item 14: Lessee to be consulted re colour selection.
N.B. presently there is a point of entry problem in the roof. Possum apparently in roof.
With regard to the plan drawings required for Council, the Plan Centre at Broadmeadow are presently consulting on other child care issues to Michelle Peden and would be well positioned to take on the matter. I will phone through a name for contact tomorrow.
The current imperative is the concept drawing required by DoCS. This has a deadline of next Friday (August 6) and is pivotal to everything under agreement. Perhaps The Plan Centre could attend to this as well on your behalf. ”

43 It is convenient to consider first whether the defendant's offer or proposal contained in Mr Farr's letter of 26 July 2004 was accepted by the plaintiff. For present purposes I will assume that the leasing proposal was an offer capable of giving rise to a contract on acceptance.

44 Counsel for the plaintiff submitted Mr Wren’s email made no substantive change to the requirements of the letter of 26 July 2004. Counsel submitted Mr Wren was doing no more than noting issues which would be likely to arise in the performance of the contract which would come into existence on the acceptance of the offer. It was submitted this did not affect the scope of the parties’ contractual obligations. Rather Mr Wren was noting issues to be confronted before works were undertaken.

45 I do not consider this is consistent with Ms Peden’s words “This agreement is conditional on Tony Wren’s email … ”. Objectively construed, Ms Peden was not saying that she trusted that, in the performance the agreement, the lessor would have regard to the matters raised by Mr Wren without being under any obligation to do so. Rather, she was saying that her acceptance of the lessor’s proposal (or offer) was conditional on the lessor’s agreeing to the matters raised by Mr Wren. Those matters related to the content of the lessor’s obligations to carry out the works.

46 Counsel for the plaintiff also submitted that the matters raised by Mr Wren merely clarified what was already implicit in annexure A to the letter of 26 July 2004. Hence, it was submitted that Ms Peden’s incorporation of the email by reference did not amount to a counter-offer. I do not agree.

47 On the assumption that the letter of 26 July 2004 was an offer capable of giving rise to a binding contract if it were accepted, I do not consider that it was accepted. An acceptance must match precisely the terms of the offer. A purported acceptance which endeavours to clarify an ambiguous term in an offer and which would preclude the offeror from contending for a different construction of that term amounts to a counter-offer. In any event, the email of 28 July 2004 went further than merely clarifying otherwise ambiguous terms. Two examples of this will suffice.

48 The email stipulated that the vinyl flooring should be to the same standard as required by the Department of Community Services for the kitchen. The Department’s requirement was that the flooring of the premises be replaced. The letter of 26 July 2004 offered, or proposed, that the lessor would carry out the works which the Department required. The Department had not specified the required grade of flooring throughout the premises. The lessor had not offered that a vinyl flooring to be installed throughout the premises would be to the same standard as was required in the kitchen. Accordingly the stipulation in the email that vinyl flooring be to the standard required by item 10 for the upgrade of the kitchen was a counter-offer which, if accepted, may well have increased the extent of the defendant’s obligations.

49 Nor had the Department of Community Services stipulated that a viewing window be provided in the partitioning. It might well be implied from item 7 of annexure A to the letter of 26 July 2004, (that partitioning be installed for an interview room), that the partitioning should extend from floor to ceiling. Otherwise the partitioning would not create a room. Nonetheless, assuming that to be so, the stipulation of a viewing window went further than anything the lessor had offered to that date. Indeed an offer to the same effect made by Ms Clark on 28 May 2004 had not been accepted by the lessor, as is apparent from the absence of any change to that item of the schedule of lessor’s works.

50 Counsel for the plaintiff referred to clause 1 of schedule 1 to the Centre Based and Mobile Child Care Services Regulation (No. 2) (1996). It stipulated space requirements for childcare centres. These included that an area be set aside for private consultation between staff of the service and parents of the children provided with the service. However, the Regulation did not include any requirement for a window where that area so set aside was partitioned so as to create a separate room. Nor did the Regulation stipulate the grade of flooring material.

51 Counsel for the plaintiff opened the case on the basis that the matters referred to in Mr Wren’s email were matters which had been agreed to during negotiations to that point. Although Ms Peden asserted this to be the case, there was no evidence as to how such agreement had been reached, but, even assuming that were so, it would not be to the point. The parties were negotiating the terms of a written contract. Their prior negotiations would be superseded by the written contract when it was entered into. Prior negotiations would be inadmissible when it came to construing the written contract except insofar as such prior negotiations established objective background facts known to both parties or the subject matter of the contract. In other words, by way of example, had the letter of 26 July 2004 been accepted without qualification and had that brought a contract into existence, it would not be open to the plaintiff to argue that, on the proper construction of the contract, the obligation of the lessor to erect partitioning included incorporation of a viewing window on the grounds that that had been agreed upon during negotiations.

52 Had the letter, assuming it was an offer capable of giving rise to a contract, been accepted without qualification, the question would rather have been - what was the Department of Community Services requirement for partitioning - which would be a quite different question. Accordingly, the mode of expression of the parties’ obligations is important. A variation to the mode of expression as to the lessor’s obligations to carry out works amounted to a counter-offer even if it reflected what had been agreed upon in negotiations to that point.

53 For these reasons, I conclude that, even if the letter of 26 July 2004 was an offer capable on acceptance of giving rise to a contract, it was not accepted. The purported acceptance was conditional on the matters in Mr Wren’s email of 28 July 2004 and amounted to a counter-offer.

54 It was then submitted that if I were of this view, the further matters raised by Mr Wren in his email had been later accepted by the defendant. It was submitted, upon the defendant’s acceptance of those conditions, a contract came into existence on terms which included the letter of 26 July 2004 and the email of 28 July 2004. This was not how the case was pleaded. In any event, there was no such acceptance. The matter which it was submitted gave rise to an acceptance of the conditions in Mr Wren’s email was the receipt by Mr Farr and the defendant of plans for the work to be done. These plans were drawn by an entity called The Plan Centre on instructions from Mr Wren. The plans were submitted to Mr Farr by at least 30 August 2004. On that date, he sent a copy of the plans to Mr Davies of the defendant. No objection was taken to the plans. Nor, however, was any statement made by the defendant, or on the defendant’s behalf, that the plans were accepted. I do not accept that a contract could come into existence, or did come into existence, by the defendant failing to object to the plans. In any event, the plans did not cover all of the matters raised in the email. For example, they did not cover the grade of vinyl flooring.

55 I turn then to the question as to whether, in any event, the parties intended to be bound by the terms of the letter of 26 July, even if they had been accepted. Even had the letter of 26 July 2004 been accepted without qualification, it would not have given rise to a binding contract. There is a distinction between parties agreeing on terms and their agreeing to be bound by the terms agreed upon. Parties may agree to be bound by certain terms agreed upon whilst also contemplating that their agreement will be replaced, or varied, by a later agreement containing additional or even substituted terms, but the question remains whether they intended to be bound by the terms agreed on. That question is to be determined objectively. For that purpose, regard may be had to communications both before and after the alleged agreement was made.

56 The letter of 26 July 2004 opened by referring to Mr Farr and Mr Wren as having reached agreement for a lease on certain terms. The plaintiff did not plead a case based on a prior oral agreement having been reached between the parties’ agents of which the letter of 26 July 2004 was a memorandum. Neither Mr Farr nor Mr Wren gave evidence in their affidavits of conversations in which such an alleged agreement may have arisen. I refused leave to the plaintiff to amend to plead such a claim.

57 In any event, it would appear from Mr Farr’s request that Ms Peden acknowledge acceptance of the terms that he and Mr Wren had not reached an agreement that their principals should be bound by the terms they had agreed on. So much also appears from Ms Peden’s qualified acceptance of the terms of the letter.

58 The letter stated that it provided the basic terms and conditions of the lease. Clearly, further terms were intended to be included in the lease. That, however, would not preclude the parties from having reached a concluded agreement for lease on the terms agreed to. Of more significance in my view, is that the letter stated that the lease would contain “relevant clauses” in respect of lessee’s obligations to maintain and repair the property. It went on to provide an example, drawn from history, as to who would be responsible for repairs, and stated the lessee was to maintain all fixtures and fittings in good condition and replace and repair them when required, excepting fair wear and tear. The content of the “relevant clauses” to be contained in the lease was not otherwise described. The respective obligations of the lessee and lessor to carry out repairs had been the source of dispute over many years. Objectively, it is unlikely the parties would have intended to be immediately bound by the other terms in the letter when the lessee’s obligations to effect repairs had not been finally settled. The letter concluded by describing the lessee’s execution as being confirmation of its intention to lease on the terms and conditions set out. That is not the language of contract.

59 Counsel for the plaintiff submitted that, because the existing lease was to terminate on 31 July 2004, and because the parties could not have expected a formal lease would have been drawn up and executed before then, it was likely that they intended to be immediately bound by the terms of the agreement for lease upon the plaintiff accepting those terms. Otherwise the plaintiff would be in occupation of the premises after 1 August 2004, without the parties having agreed on terms of that occupation.

60 I accept this is an objective indicator that the parties intended to be bound by the terms agreed on, if there were such agreement. However, it is by no means decisive. The parties could well have intended, and I infer they did intend, that the plaintiff remain in occupation at the increased rent on a tenancy determinable at the will of either party on one month’s notice (Conveyancing Act 1919 (NSW), s 127), until the lease was executed.

61 Moreover, in my view, the parties’ subsequent conduct shows they did not intend to be bound prior to their entry into a lease. Before dealing with that subsequent conduct, it should be noted that the plaintiff commenced paying increased rent of $1,300 per month plus GST from 1 August 2004. That was the rent which would be payable under the alleged agreement. However, it had been stipulated for by Mr Farr’s letter of 29 June 2004 as being the rent which would be payable if the plaintiff remained in occupation after 31 July 2004. It was not suggested, nor could it have been, that the acceptance of the increased rent was an acceptance of the plaintiff’s counter-offer. Nor does the payment and acceptance of the increased rent indicate that the parties understood that a binding contract had come into existence, having regard to the terms of the letter of 29 June 2004.

62 Ms Peden gave evidence that on or about 28 July 2004 Mr Farr said to her words to the effect:

“You have your lease now. You have everything you want. Now you have to pay the increased rent.”

63 She was not cross-examined on that evidence and Mr Farr’s denial of it was equivocal. However, assuming his statement can be treated as an admission against the defendant, it does not take the matter much further. It could not be suggested, and it is not, that, on 28 July 2004, an agreement for lease had come into existence. Mr Farr could not have been directing his attention to the parties’ legal position.

64 The defendant’s solicitor submitted a lease to Ms Clark on 17 September 2004. The memorandum of lease included a provision for the lessor to carry out particular works. These works were described in terms which substantially, but not entirely, incorporated the description of the lessor’s works set out in annexure A to Mr Farr’s letter of 26 July 2004, as modified by Mr Wren’s email. The clause did not incorporate the requirement that the vinyl floor be installed to the standard required for the kitchen.

65 The lease was sent under cover of letter dated 17 September 2004 which stated:

“We enclose herewith a draft lease for your perusal and comment. Please note that the lease has not yet been approved as our client and we reserve the right to make such alteration as our client may require.”

66 There was no objection to the assertion of the lessor’s right to make alterations to the terms of the lease document. Instead, on 23 September 2004, Ms Clark requested three alterations to the lease. The provision dealing with the lessor’s works was in item 19. Ms Clark wrote:

“I am asked if your client would agree to the following conditions which I understand have already been discussed:
1. Item 19 annexure A – the following words to be inserted at the end of the second line after the word ‘manner’
‘such works to be completed within six months from the commencement date of this lease’
2. Item 19(iv) of annexure A – the word ‘commercial’ to be inserted before the word ‘vinyl’.
3. Item 19(xvi) of annexure A – to read ‘hot water to be temperature controlled with thermostatic mixing valves to all taps to which children have access.”

67 Whilst it is possible to analyse this letter as a request to vary the terms of an existing agreement, that is not how the plaintiff’s solicitor expressed herself. Nor is it obvious why the parties would have attempted to vary the agreement if they then considered they were already bound. Rather, the letter from the plaintiff’s solicitor of 23 September 2004 was an attempt to further negotiate the content of the proposed obligations of the lessor, including the time by which the work should be carried out.

68 There was a further attempt, at least the third, to stipulate expressly the grade of vinyl flooring to be provided. In the meantime, some of the work stipulated was being carried out by the defendant. However, this appears to me to have been in anticipation of a lease being entered into rather than pursuant to an existing obligation.

69 On 1 November 2004, there were direct discussions between Messrs Marshall and Davies of the defendant and Ms Peden with Mr Farr and Mr Wren. Mr Davies gave evidence, which Ms Peden denied, of a conversation in which they discussed who would be responsible for replacement of the vinyl floor covers and to what standard they should be replaced. As neither Ms Peden nor Mr Davies was cross-examined on this evidence I cannot resolve whether Mr Davies' version should be accepted. However, it is notable that the plaintiff's request of 17 September 2003 for commercial quality vinyl was not accepted. The plaintiff did not then assert that there was a binding agreement as to the standard required for the replacement vinyl.

70 By 1 November 2004, disputes had arisen as to whether the plaintiff should contribute to the cost of the plans prepared by the Plan Centre. It also appears from an email written by Mr Wren on 9 November 2004 that at the meeting on 1 November, there was discussion about the removal of four existing windows and their replacement with two larger windows. In his email Mr Wren stated that there was "in principle agreement" on this issue. Again, this is consistent with the parties still negotiating the scope of the works the lessor was to carry out.

71 On 23 November 2004, Mr Wren wrote to Mr Farr saying:

“We are anxious to progress the works agreed to in lease negotiations and despite agreement to the rental format and signing of the lease almost four months ago, only absolutely minimal works have been undertaken. I would appreciate your early advice on the status and proposed scheduling of the agreed works.

...”

72 On no view had a lease been signed either four months previously or at all. Moreover, in my view, no agreement for lease had been signed. Whilst Mr Wren’s email may be seen as an assertion that an agreement for lease had been signed, that assertion, in the context of the negotiations to that point, was made only belatedly.

73 In my view, the plaintiff's conditional acceptance of the conditions on which the lessor had indicated its willingness to enter into a lease did not amount to such a contract. After that conditional acceptance, negotiations had continued, but no agreement was concluded.

74 In its statement of claim the plaintiff included a claim for a relief that there be an order for specific performance of the agreement for lease pursuant to s 87 of the Trade Practices Act 1974 (Cth). Quite properly, counsel for the plaintiff accepted that if the evidence did not establish the making of an agreement for lease, reliance on the Trade Practices Act could not take the matter further. Ultimately, no claim was made for relief pursuant to s 87 of the Trade Practices Act.

75 The proceedings were expedited on the basis that there would be a separate hearing on the question of whether an agreement for lease had been entered into and, if so, whether there should be a decree for specific performance. Accordingly, I made an order for the separate trial of the plaintiff’s claims for relief in paras 1, 2 and 3 under the heading "Relief Claimed" in the statement of claim. For the reasons I have given, I order that the plaintiff’s claims for a declaration and for orders in paras 1, 2 and 3 of the claims for relief in the statement of claim be dismissed.

76 The exhibits may be returned after 28 days.

[Counsel Addressed.]

77 I order that the plaintiff pay the defendants' costs of the separate question. I direct that those costs not include the costs of the preparation of the affidavit of Mr Athol Bryan Davies of 19 March 2007. I also direct that the defendants’ solicitor not seek to recover from the defendant the costs of the preparation of that affidavit.

78 I make the last directions because Mr Athol Davies’ affidavit was prepared without any regard to the rules of evidence. After the rulings on objections to it, nothing of substance remained. It is not enough to say that a client or a witness wishes to express himself or herself in his own terms. The party's legal representatives have a responsibility to ensure that affidavits are prepared with regard to the rules of evidence. Upon being read, the affidavit will form the witness’s evidence in chief.

******