Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd - [2008] WASCA 23

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: LIGHTING BY DESIGN (AUST) PTY LTD -v- CANNINGTON NOMINEES PTY LTD [2008] WASCA 23

CORAM: PULLIN JA
BUSS JA
LE MIERE AJA

HEARD: 16 AUGUST 2007

DELIVERED : 8 FEBRUARY 2008

FILE NO/S: CACV 73 of 2007

BETWEEN: LIGHTING BY DESIGN (AUST) PTY LTD
Appellant
AND
CANNINGTON NOMINEES PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :SANDERSON M
Citation  :LIGHTING BY DESIGN (AUST) PTY LTD v CANNINGTON NOMINEES PTY LTD [2007] WASC 88
File No  :CIV 1190 of 2007

Catchwords:

Contract law - Whether the conduct of the parties gave rise to an enforceable agreement to lease - No written contract

Equity - The doctrine of part performance - Whether part performance sufficient to avoid the consequences of non-compliance with s 4 of the Statute of Frauds 1677 (Imp) and s 34 and s 35 of the Property Law Act 1969 (WA) - Claim for specific performance

Legislation:

Law Reform (Statute of Frauds) Act 1962 (WA), s 2
Property Law Act 1969 (WA), s 34, s 35, s 36
Statute of Frauds (1677) (Imp), s 4

Result:

Appeal allowed

Category: A

Representation:

Counsel:

Appellant: Mr G R Donaldson SC
Respondent: Mr N D C Dillon

Solicitors:

Appellant: Lavan Legal
Respondent: Aherns Lawyers

Case(s) referred to in judgment(s):

Alderson v Maddison (1881) 7 QBD 174
Australian and New Zealand Banking Group Ltd v Widin (1990) 26 FCR 21
Basingstoke and Deane Borough Council v Host Group Ltd [1988] 1 WLR 348
Biss v Hygate [1918] 2 KB 314
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Broughton v Snook [1938] 1 Ch 505
Brown v Gould [1972] 1 Ch 53
Burns Philp Hardware Ltd v Howard Chia Pty Ltd (1987) 8 NSWLR 642
Chaproniere v Lambert [1917] 2 Ch 356
Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR(NSW) 47
Cooney v Burns (1922) 30 CLR 216
Dale v Hamilton (1846) 5 Hare 369; 67 Eng Rep 955
Damevski v Giudice [2003] FCAFC 252; (2003) 133 FCR 438
Darter Pty Ltd v Molloy [1993] 2 Qd R 615
Edmund Barton Chambers (Level 44) Co‑Operative Ltd v Mutual Life & Citizens' Assurance Co Ltd (1986) 6 NSWLR 322
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Fleming v Beevers [1994] 1 NZLR 385
Francis v Francis [1952] VLR 321
Gors v Henderson (1998) Aust Contract R 90‑099
Hodson v Heuland [1896] 2 Ch 428
Humphreys v Green (1882) 10 QBD 148
Industrial Rollformers Pty Ltd v Ingersoll‑Rand Australia Ltd [2001] NSWCA 111; (2001) Aust Contract R 90‑129
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Australia) Pty Ltd (1988) 5 BPR 11,110
J C Williamson Ltd v Lukey (1931) 45 CLR 282
Javad v Aqil [1991] 1 WLR 1007
Kalnenas v Kovacevich [1961] WAR 188
Kellow‑Falkiner Motors Pty Ltd v Nimorakiotakis [2000] VSCA 1; [2001] ANZ ConrR 230
Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241
Kingswood Estate Co Ltd v Anderson [1963] 2 QB 169
Last v Rosenfeld [1972] 2 NSWLR 923
Maddison v Alderson (1883) 8 App Cas 467
Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281
McBride v Sandland (1918) 25 CLR 69
McMahon v Ambrose [1987] VR 817
Meates v Attorney‑General [1983] NZLR 308
Miller & Aldworth Ltd v Sharp [1899] 1 Ch 622
Millett v Regent [1975] 1 NSWLR 62
Mitchell v Wieriks; Ex Parte Wieriks [1975] Qd R 100
Morphett v Jones [1818] 1 Swans 172; 36 Eng Rep 344
Nunn v Fabian (1865) 1 LR Ch App 35
Regent v Millett (1976) 133 CLR 679
Riches v Hogben [1986] 1 Qd R 315
Spencer v Commonwealth (1907) 5 CLR 418
Steadman v Steadman [1976] AC 536
Strachan & Co Ltd v Lyall & Sons Pty Ltd [1953] VLR 81
The Commonwealth Oil Refineries Ltd v Hollins [1956] VLR 169
The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Theodore v Mistford Pty Ltd [2005] HCA 45; (2005) 221 CLR 612
Thwaites v Ryan [1984] VR 65
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Turner v York Motors Pty Ltd (1951) 85 CLR 55
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32
Watson v Delaney (1991) 22 NSWLR 358
Western Australian Trustees Ltd v Poon (1991) 6 WAR 72
Wills v Stradling (1797) 3 Ves Jun 378; 30 Eng Rep 1963

PULLIN JA: The primary issue in this case is whether the respondent agreed to lease some commercial premises on land in Albany Highway, Cannington to the appellant. The appellant says that the agreement to lease should be inferred from dealings between the appellant and the respondent's agent. The master found that there was no agreement to lease. I agree with that finding for the following reasons.

Background to the dealings between the appellant and the respondent's agent

The appellant leased the premises from a company called 'Parkworld'. The lease was for a term of seven years commencing on 26 May 2004 and expiring in 2011 (Parkworld lease). The lease was in the form of a tripartite deed. The parties were Parkworld, as landlord, the appellant as tenant, and Norman Young MacKay, Shirley Anne MacKay (Mr and Mrs MacKay) and Graeme Stuart MacKay (G S MacKay) as guarantors. The obligations of Parkworld and the appellant were set out in Pt 1 to Pt 12 of the Deed and the obligations of the MacKays were set out in Pt 13 of the Deed.
Parkworld sold the land of which the premises formed part, to the respondent, and on 14 July 2006, the respondent became the registered proprietor of the land. By reason of s 68 of the Transfer of Land Act 1893 (WA), the respondent became registered proprietor free of encumbrances and in particular free of the unregistered Parkworld lease.

The appellant becomes a tenant at will on 14 July 2006

Immediately upon registration of the respondent's transfer, the appellant had no right to possession of the premises enforceable against the respondent. The appellant nevertheless continued to occupy the premises. If the occupation had been without the consent of the respondent, then the appellant would have been a trespasser, but if with the consent of the respondent, then the appellant was a tenant at will. The respondent did not contend that the appellant was a trespasser. The respondent impliedly consented to the appellant remaining in possession and so the appellant was initially a tenant at will. A tenancy at will arises whenever a person, with the consent of the owner, occupies land as tenant on terms, implied or expressly agreed, that either party may determine the tenancy at any time. See Megarry & Wade, The Law of Real Property, 6th ed, 792 ‑ 793. Unless parties agree that the tenant at will should occupy premises rent free, the landlord is entitled to compensation for 'use and occupation of the land' or upon a 'quantum valebat' (that is to charge market rent): Turner v York Motors Pty Ltd (1951) 85 CLR 55, 65 (Dixon J) and Megarry & Wade, 793.
A tenancy at will may convert into a weekly, monthly or periodic tenancy, depending on the intention of the parties, if payment of rent is made or measured with reference to a week, month or other period: Megarry & Wade, 794. It is not inconsistent with a tenancy at will that the tenant pays the landowner some compensation for the use of the land, but payment and receipt of a periodical rent affords strong evidence of the creation of a periodical term: Turner v York Motors, 65 (Dixon J). The parties in this case were at issue about whether there was an agreement for lease expiring in 2011. They did not concern themselves with any issue about whether, in the absence of the agreement contended for by the appellant, the appellant was a tenant at will or a periodic tenant. The appellant did not contend that the contended for agreement for lease came into existence before 1 August 2006 and so the appellant was unquestionably a tenant at will until then. The appellant may have become a periodic tenant after rent was paid. Further analysis of this point is unnecessary.

Evidence regarding the parties' beliefs and understandings

The evidence referred to under this heading does not relate to the events relied upon by the appellant as giving rise to the agreement for lease for which it contends. Those events will be referred to under the next heading. Whether any of the evidence of the beliefs or understandings of the parties referred to under this heading is relevant to the issue about the agreement for lease will be considered later in these reasons.
Before the respondent became the registered proprietor of the premises, the respondent received legal advice to the effect that it was not bound by the terms of the Parkworld lease. Soon after settlement, Mr Bagga, a director of the respondent, advised Collier's International (WA) Pty Ltd (Colliers), which had managed the property for Parkworld, that the respondent considered it was not bound by the Parkworld lease and proposed to relet the premises at the prevailing market rental. Colliers did not then advise the appellant that this was the respondent's position.
The appellant, through its directors, was aware of the sale of the property to the respondent. The directors wrongly assumed that the respondent, as new owner of the property, would take the place of Parkworld and would be bound by the terms of the Parkworld lease. The appellant did not register the Parkworld lease or lodge a caveat to protect its interest and was not aware that it could take that step.
On 1 July 2006, the respondent entered into a management agreement with Colliers. By this agreement, Colliers agreed to provide management services in respect of the property on terms and conditions set out in that agreement. On 14 July 2006, being the date of registration of the land in the name of the respondent, the market rental of the premises was in the range of $190,000 to $210,000 per annum. The rent payable under the Parkworld lease was $148,478.88 per annum. On 15 September 2006 and 6 October 2006, the respondent appointed C B Richard Ellis and Colliers to find a new lessee for the premises under a new lease for a rental in excess of $210,000 per annum. On 4 December 2006, the appellant became aware that these agents were advertising to lease the premises. On 9 February 2007, the respondent's solicitors wrote to the appellant terminating any lease held by the appellant.
From the foregoing it appears that the respondent believed or understood as a result of legal advice, that it was not bound by the Parkworld lease and was free to advertise and lease the premises to another party. The appellant, on the other hand, believed or understood until 4 December 2006 that it occupied the premises and was entitled to possession of the premises pursuant to the provisions of the Parkworld lease, which it believed bound the respondent. Someone in Colliers had been told about the respondent's belief or understanding. However, it may be inferred that the person in Colliers responsible for preparing and sending the invoices and the Colliers' letters referred to under the next heading, thought that the Parkworld lease continued and bound the appellant and the respondent.
The appellant commenced proceedings in the Supreme Court on 23 February 2007 claiming that it was entitled to remain in possession. Master Sanderson dismissed the appellant's claim. That led to this appeal.

Events relied upon by the appellant from which it contends an agreement to lease may be inferred

On 1 August 2006, Colliers sent an 'invoice/statement' to the appellant which identified the property and included in it a list of 'new charges', including management fees, GST, postages and petties and an item 'retail rent (01/08/2006‑31/08/2006) $12,373.24'. The invoice showed the current amount due as $13,969.43, arrears of $2,775.08 and the total on the invoice as $16,744.51. Being an invoice it suggested that Colliers, on behalf of the respondent, was seeking payment of these moneys from the appellant. The amount of rent shown on the invoice was the same amount which was payable under the Parkworld lease immediately before the respondent became registered proprietor. The appellant paid $13,969 on 4 August 2006 and remained in possession.
By letter dated 30 August 2006, Colliers wrote to 'The Directors, Lighting by Design'. The letter was headed:
1425 Albany Highway, Cannington
Rental Statements
It enclosed two 'rental statements' for the 'above property'. It read:
As you are aware, the property sold some time ago and a reconciliation of your account has resulted in the attached 2 invoices.
On your old account, it is acknowledged the audit adjustment of 2004/05 is in dispute and we will seek direction from the owners as to how they wish to handle this matter. At this point in time, could you please pay the electricity which is highlighted on the second page of the statement and covers the period 25 May 2006 to 26 June 2006.
In respect of the new ownership structure, would you please forward your cheque for September's rental as soon as possible. If you are using EFT would you please note the new numbers being the property number 601056 and your new tenant number 009454, we would ask that you quote these numbers on any remittance you make.
Should you have any queries in relation to this matter please do not hesitate to contact me.
The parties agreed that on or about 6 September 2006 the appellant paid the amount owing for the September rent and remained in possession.
By letter dated 19 September 2006, Colliers wrote to 'Mr and Mrs MacKay T/as Lighting By Design (Aust) Pty Ltd' concerning 'insurance requirements'. This letter read:
1425‑1427 Albany Highway, Cannington
Lighting by Design - Insurance Requirements
Reference is made to our previous correspondence dated 7 July 2006 requesting a copy of evidence of currency with regard to your insurance cover on the above tenancy.
Under the terms and conditions of your Lease, you are required to maintain insurance policies for each of the following:
Public Liability (Minimum $10 million), Industrial Special Risks, Workers Compensation & Plate Glass (if applicable)
and provide our office with evidence of currency immediately after each renewal date.
We have not received a Certificate of Currency for the Public Liability cover and ask that you forward this documentation to our office as soon as possible.
Should you have any queries concerning this request please do not hesitate to contact the writer.
This letter claimed amounts which Parkworld would have been entitled to under the terms of cls 7.1 and 7.3 of the Parkworld lease.
On 19 October 2006, Colliers wrote to 'Mr and Mrs MacKay T/As Lighting By Design (Aust) Pty Ltd' concerning 'arrears'. The letter read:
1425‑1427 Albany Highway, Cannington
Arrears
We advise that your rental for the above property is currently in arrears in the amount of $2,103.64.
As you are aware, under the terms of your Lease all rental and other payments are due on the 1st day of each month. We therefore request that you please bring your account up‑to‑date within three days of the date of this letter.
Failure to settle all arrears could result in legal action being instigated for full recovery without further advice to yourself. All costs associated with such action, including the application interest charges, will be your responsibility in accordance with your Lease.
Naturally this is not our preferred course of action and we look forward to immediate settlement of your account in full.
On 14 November 2006, Colliers wrote to 'Mr and Mrs MacKay T/As Lighting By Design', the topic of the letter being 'CPI Rent Review - Due 1 July 2006'. It read:
We advise that under the terms and conditions of your Lease your rent is to be reviewed commencing 1 July 2006 in line with the June 2006 Consumer Price Index.
The Consumer Price Index for June 2006 has now been released and we calculate the increase for your tenancy as follows:
June 2005 quarter        146.30
June 2006 quarter        153.20
Current Annual Rent     $148,478.88 x 153.20 / 146.30 =
$155,481.64 per annum ($12,956.80 per month)
Please be advised that your new monthly rental figure of $12,956.80 will be reflected on your December 2006 statement along with the adjustments for July, August, September, October and November 2006. We would ask that you please adjust your records accordingly to reflect the above.
Should you have any queries please do not hesitate to contact the writer.
Under the Parkworld lease, a rent review was to be carried out on the basis set out in that letter.
By letter dated 20 November 2006, Colliers wrote to 'Mr and Mrs MacKay T/As Lighting by Design', the subject being 'Water Rates 2006/2007'. The letter read:
Please be advised that we are in receipt of the Water Rates for the period 1 July 2006 to 30 June 2007.
We enclose herewith a copy of the Rates Notice for your records.
The Lessor has undertaken to pay the Rates in one moiety and as such we detail the amounts payable under the terms and conditions of your Lease as follows:
Total Annual Service Charges:    $4,044.75
Total Property GLA of   1820.00sqm x Tenancy area of 1140.00sqm = $2,533.52 + GST
1st instalment due 1 December 2006                  $2,533.52 + GST
The instalment will be reflected on your December 2006 Tax invoice.
Should you have any queries whatsoever in relation to this matter please do not hesitate to contact the writer.
Under the Parkworld lease, water rates were chargeable to the appellant as calculated in the letter.
On 1 December 2006, Colliers wrote to 'Mr and Mrs MacKay T/As Lighting by Design (Aust) Pty Ltd' concerning the subject of 'Land Tax 2006/2007'. The letter read:
Please be advised that we are in receipt of the Land Tax for the period 1 July 2006 to 30 June 2007.
We enclose herewith a copy of the Land Tax Notice for your records.
The Lessor has undertaken to pay the Land Tax in one moiety and as such we detail the amounts payable under the terms and conditions of your Lease as follows:
Total Annual Service Charges:    $5,400.40
Total Property GLA of   1820.00sqm x Tenancy area of 1140.00sqm = $3,382.67 + GST
1st instalment due 1 January 2007  $3,382.67 + GST
The first and only instalment will be reflected on your January 2007 Tax invoice.
Should you have any queries whatsoever in relation to this matter please do not hesitate to contact the writer.
Under the Parkworld lease, land tax was chargeable to the appellant as set out in the letter. The parties agreed that part of the amount claimed was paid on or about 1 December 2006 and the appellant remained in possession.
It is obvious that in none of the documents referred to, neither party purported to make an express offer that there should be a new lease and consequently there was no express acceptance of any offer.
Other events occurred after 4 December 2006, but the appellant agreed that those events were irrelevant to the issue about whether an agreement to lease may be inferred. This was because, on 4 December 2006, the appellant became aware that the respondent contended that it was not bound to allow the appellant to continue in possession. The appellant conceded that nothing occurred before 1 August 2006, when an invoice was sent, from which any inference could be drawn. Thus if any agreement is to be inferred it arose sometime between 1 August 2006 and 4 December 2006.

Can there be a contract in the absence of an identifiable offer and acceptance?

It is not necessary that a contract be detected using the 'classical theory of contract based upon offer and acceptance': Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [1] (Mason P). A contract may be inferred from the acts and conduct of parties as well as or in the absence of their words: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 11,117, per McHugh JA who then continued:
The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract.

In Meates v Attorney‑General [1983] NZLR 308, Cooke J said that:
The acid test in the case like the present is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain (377).
This was approved by Ormiston J in Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32, 82 ‑ 83 and by Heydon JA in the Brambles Holdings Ltd case, [75]. See also American Restatement of Contracts, 2nd § 22(2) and other English, Australian and American authorities and texts referred to in Cheshire and Fifoot Law of Contract, 8th Aust ed, 3.5.

The subjective intention or understanding of each of the parties

The respondent understood, based on legal advice, that it was free to relet the premises to persons other than the appellant and it intended doing so. It did not therefore intend to enter into contractual relations with the appellant. However, the short answer to the question whether the evidence about subjective intentions or understandings of the parties is relevant to determining whether a contract exists, is that it is not relevant. See Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95, [24] (Gaudron, McHugh, Hayne and Callinan JJ). At [25] their Honours said:
Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
See also Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [38], where the High Court approved what was said in Ermogenous and quoted above.

Did the parties enter into an agreement to lease?

It is therefore necessary to carry out an objective analysis of the dealings between the parties to determine whether it may be inferred that the parties entered into a contract and, if so, its terms. This analysis must be carried out by taking into account the circumstances which prevailed at the time of the dealings: Ermogenous [25] and Integrated Computer Services, 11,117.
The relevant circumstances were that the Parkworld lease did not bind the respondent, that the appellant was, when the communications began to pass between Colliers and the appellant, a tenant at will (and later possibly a monthly periodic tenant), that the Parkworld lease was a tripartite deed, the parties being the appellant, the then lessor and the MacKays as guarantors, and that G S MacKay was not involved in the communications between Colliers and the appellant.
Bearing in mind those circumstances, the question is what inference should be drawn from the invoices sent by Colliers to the appellant, by the content of the letters and by the payments made and received and the fact that the appellant remained in possession. In Kellow‑Falkiner Motors Pty Ltd v Nimorakiotakis [2000] VSCA 1; [2001] ANZ ConrR 230, Charles JA (Ormiston and Buchanan JJA agreeing) approved what was said by Nicholls LJ in Javad v Aqil [1991] 1 WLR 1007, 1012 ‑ 1013. His Lordship said:
[W]hen one party permits another to enter or remain upon his land on payment of a sum of money … almost inevitably there will be some consensual relationship between them. It may be no more than a licence determinable at any time, or a tenancy at will. But when and so long as such parties are in the throes of negotiating larger terms, caution must be exercised before inferring or imputing to the parties an intention to give to the occupant more than a very limited interest, be it licence or tenancy. Otherwise the court will be in danger of inferring or imputing from conduct, such as payment of rent and the carrying out of repairs, whose explanation lies in the parties' expectation that they will be able to reach agreement on the larger terms, an intention to grant a lesser interest, such as a periodic tenancy, which the parties never had in contemplation at all.
What was said in Javad's case is not directly applicable to the circumstances here, because in Javad's case there was negotiation going on between the parties about the terms of a new lease. Nevertheless, Charles JA in Kellow‑Falkiner referred at [41] to the 'cautious approach' reflected in Nicholl LJ's observations about inferring or imputing an intention to the parties. The same caution must be applied in this case to avoid the expectation, or in this case the hope, of the appellant being imputed as the intention of both parties.
Here there had been no suggestion in the correspondence or invoice that the respondent was proposing a new lease. There was no suggestion that the parties were discussing the terms of a new lease. There was no discussion about the length of any term for a possible new lease. No reasonable person in the position of these parties would have concluded from the sending of the invoices, the sending of the Colliers' letters or the payment of money, that the appellant and respondent were thereby entering into a new agreement for lease on the same terms as the Parkworld lease but varied so that the term was no longer a seven year term but instead a term commencing on 14 July 2006 (or on a date between 1 August 2006 and 4 December 2006), rather than 26 May 2004, and concluding in 2011.
The appellant did not make any submission about the date on which the alleged agreement came into existence. It only submitted that it was not before 1 August 2006 and not after 4 December 2006. In my opinion there was no point through that period that any inference should be drawn that the parties had reached agreement for a lease as alleged by the appellant.
The appellant points to circumstances in the correspondence in support of its contention that there was an agreement, as alleged by it. It refers to the fact that 'the Lease' and 'your Lease' was referred to in the Colliers' correspondence. However, a reasonable person in the circumstances would observe that this was nothing more than a continued reference to the Parkworld lease and not some new lease. The appellant also points to the fact that the rent proposed by the respondent was the same as the rent under the Parkworld lease. Reasonable persons would understand that this was nothing more than a claim for payment to cover the use and occupation of the premises while the appellant continued to occupy them. Reasonable persons would understand that what the respondent was proposing was a figure which it was prepared to accept as payment for its consent to allow the respondent to continue in occupation. The only reasonable inference is that the respondent gave consent to the appellant remaining in occupation if it continued to make payments equivalent to the rent and other amounts which the appellant would have been obliged to pay under the Parkworld lease. The fact that rent was being asked for at the same rate as was payable under the Parkworld lease at 14 July 2006 and then pursuant to rent review and the fact that terms of the Parkworld lease were referred to may have been consistent with the existence of a new lease, but mere consistency with the alleged contract will not be enough to allow the inference to be drawn. See Industrial Rollformers Pty Ltd v Ingersoll‑Rand Australia Ltd [2001] NSWCA 111; (2001) Aust Contract R 90‑129, 142. The payment of rent and outgoings at the rate specified in the Parkworld lease is also consistent with a tenancy at will or a periodic tenancy. In my opinion that is the only reasonable inference which can be drawn.
The conclusion that no new agreement to lease should be inferred is further supported by the fact that not all of the former guarantors were involved in the dealings between Colliers and the appellant. Mr G S MacKay was not addressed in any of the correspondence. In any event the question of guarantee did not arise in the documents referred to. It is hardly likely that reasonable persons would conclude that the premises were to be relet to the appellant without guarantors. In response to this point, the appellant submitted that the court should decree specific performance of the contended for agreement, subject to a condition in the decree that the MacKays agree to guarantee the new lease. That submission highlights the deficiency in the appellant's case. If that decree were made, then the MacKays would be free to choose whether or not to provide the guarantee. They were not parties to the litigation so they could not be ordered to become guarantors. That supports the conclusion that no inference can be drawn that there was an agreement for lease concluded between the parties, as alleged by the appellant.
The appellant also struggled to define the critical and essential aspect of the new agreement for lease, namely the length of the term of the lease. It pleaded in its statement of claim that the new lease was on the same terms as the Parkworld lease which meant it was contending for a lease for seven years from 26 May 2004. During this appeal the appellant instead contended that the term was for a term of less than seven years, ie from the date on which the respondent became registered proprietor in 2006 until the expiry date of the Parkworld lease. Reasonable persons in the position of the parties would not have concluded that there was an agreement commencing in 2004 as the statement of claim alleged because the respondent had nothing to do with the property at that time. That was the reason why the appellant was driven to the contention that the term commenced when the respondent became registered proprietor. The fact is that there was no discussion between the parties about a new lease for the term proposed and no inference can be drawn from any of the material relied on by the appellant that the parties reached agreement, as contended for by the appellant, about the period of any new term.
For those reasons the master was correct to conclude that there was no agreement for lease of the kind alleged by the appellant.

The master's reasons

The master correctly identified the issue at [46].
The master said that the fact of registration 'destroyed' the appellant's lease of the premises. The master said the parties interacted on the basis that they were landlord and tenant and said at [48]:
From a date prior to the purchase of the property Mr Bagga [the respondent's director] believed that on registration of the [respondent's] purchase of the property it would not have a lease with the [appellant]. He was right. The [appellant] may have believed it did have a lease with the [respondent]. Nothing in those respective positions can be so construed as to amount to a meeting of the minds which would give rise to a contractual relationship. True it is that there need not be a readily identifiable offer and acceptance before it can be said there is a concluded contract between the parties. But the parties must act in a fashion consistent with a concluded agreement. That did not happen in this case.

The appellant's first ground of appeal

The appellant's first ground of appeal is that the master erred in treating the state of mind of the respondent's director, Mr Bagga, as determinative of the question of whether the dealings between Colliers and the appellant gave rise to a contract 'by which the appellant's continuing occupation of the premises … was subject to the terms of the lease … between the appellant and the former registered proprietor of the land that includes the [p]remises'.
The master's reasons at [48] read in one way might give rise to the suggestion that he did concern himself with the subjective intention of the appellant and the respondent. However, the preferable reading of [48] is that the master noted the fact that the parties had given evidence about their subjective beliefs and merely observed that on that evidence the parties did not have the same intention. In the last three sentences in [48] the master turned to the issue about whether there needed to be an identifiable offer and acceptance. The master correctly concluded that this was not necessary. When the master said 'but the parties must act in a fashion consistent with a concluded agreement' this should be understood as meaning that the acts of the parties must show that a concluded agreement was reached. That reveals no error.

Ground 2 of the appeal

However, even if the master's reasons should be read as revealing error on the basis that he took into account the parties' subjective intentions, the appellant's second ground of appeal is that the master should have found that there was the agreement contended for by the appellant.
I have already explained in my reasons above, why I conclude that there was no agreement. As a result, ground 2 must be dismissed.

Ground 3

Ground 3 depends upon ground 2 succeeding. It must therefore be dismissed.

Other issues

For the reasons given above, the appeal should be dismissed and it is not strictly necessary to deal with other issues between the parties or to deal with the respondent's notice of contention. However, because there were submissions made about mistake and part performance, I will make very brief observations about them.

Mistake

The respondent contended that if there were an agreement to lease then it was vitiated by mistake. This issue was not dealt with by the master in his reasons. It is raised in this appeal in the respondent's notice of contention. The respondent submits that the evidence at trial established that the appellant understood that the Parkworld lease bound the respondent but that the respondent understood that the Parkworld lease did not bind the respondent. It was submitted that as a result both parties were under a 'mutual or common mistake' in relation to the 'fundamental contractual position of both parties'. This was pleaded in par 43 of the defence and counterclaim.
The mistake in this case is not a mistake which bears upon the formation of the contract or relates to the subject matter of the contract. Even if it could somehow be shown objectively that there was a misunderstanding between the parties about whether the Parkworld lease continued in force between them or not, it would not make a new agreement of the kind which was contended for by the appellant, void or voidable. If the parties were conscious of the other's understanding of the position, it might have driven them to reach an agreement to overcome the uncertainty. However, in the absence of any knowledge by either party of the other's view about the effect of the Parkworld lease, what each understood is irrelevant and therefore no question of mistake arises. Either the parties entered into an agreement for lease or they did not. If they did, then what they individually thought the legal position was before they entered into the agreement would be irrelevant.

Part performance

If an agreement for lease may be inferred then it would be unenforceable by reason of s 4 of the Statute of Frauds (applied by s 2 of the Law Reform (Statute of Frauds) Act 1962) but enforceable if the agreement were partly performed. A question, which was also raised, about whether it would also be unenforceable by reason of s 34 of the Property Law Act 1969, was briefly touched upon at the hearing. However, if s 34 applied, it would still be necessary to consider whether there was part performance by reason of s 36(d) of the Property Law Act. It is therefore not necessary to spend time on the question about the applicability of s 34 because of my conclusion about part performance.
The acts of part performance, being payment of rent and continued possession, relied on in this case are also acts relied upon by the appellant to prove the agreement. The appellant submitted in its written submissions that:
As a matter of principle and authority there is no reason why acts constituting matters objectively determinative of the existence of a contract and acts of part performance of that contract cannot be co‑extensive. [46]
I assume that the authority the appellant relies on is referred to in par 52 of its written submissions which reads:
For cases the facts of which are similar to this, and where acts were held to constitute acts of part performance see Strachan & Co Ltd v Lyall and Sons Pty Ltd [1953] VLR 81, Miller v Aldworth v Sharp [1899] 1 Ch 622, Rawlinson v Ames [1925] Ch 96, Kingswood Estate v Anderson [1963] 2 QB 169, McMahon v Ambrose [1987] VR 817, Khoury v Khouri [2006] NSWCA 184 at [89].
In my view, none of these cases provide authority for the submission that acts constituting 'matters objectively determinative of the existence of a contract' and acts of 'part performance' can be 'co‑extensive'. In each of those cases, the plaintiff had proved the existence of an oral agreement or a partly oral agreement by one set of evidence and the acts of part performance were proved by a separate set of evidence. So, for example, in Miller's case, there was an oral agreement and then a subsequent payment of rent; in Kingswood there was an oral agreement and the acts of part performance involved the tenant leaving controlled premises and moving into other premises; in Rawlinson there was an oral contract and alterations to premises on the faith of the oral agreement. Buss JA refers to the cases of Miller, Strachan for a different point and refers also to the cases of Nunn v Fabian (1865) 1 LR Ch App 35; Darter Pty Ltd v Molloy [1993] 2 Qd R 615 and Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281. In all of those cases there was also an oral agreement followed by separate acts of part performance. Thus, none of the authorities referred to support the appellant's submission that the evidence to prove part performance and to prove a noncompliant agreement (ie not complying with statute) may be 'co‑extensive'.
I agree with Buss JA that the law of part performance is the subject of debate in Australia. I also agree with Buss JA that the approach of Lord O'Hagan in Maddison v Alderson (1883) 8 App Cas 467, as approved by Isaacs and Rich JJ in McBride v Sandland (1918) 25 CLR 69 should be followed, unless and until the High Court decides otherwise. See also Gors v Henderson (1998) Aust Contract R 90‑099, (Steytler J) (as he then was). Those authorities say that acts of part performance must be unequivocal and in their own nature referable to 'some such agreement' as that alleged.
According to Fullagar and Starke JJ in Thwaites v Ryan [1984] VR 65, the acts of part performance should be examined first and then the result of that inquiry should be compared with the general nature of the contract pleaded. See also McBride v Sandilands, 77 ‑ 78. Assuming that reasoning to be correct, it suggests that the evidence about acts of part performance and the evidence about the agreement must be separate sets of evidence.
In my opinion, the appellant's submission that the acts or evidence of the acts to prove the agreement may be 'co‑extensive' with the acts or evidence of part performance must be rejected. Counsel for the appellant acknowledged that this was a 'particularly difficult issue'. It is difficult because if the appellant's submission is to be accepted, then equity will have reached the stage of completely overriding the effect of the Statute of Frauds and the Property Law Act provision.
In any event, the fact that the appellant remained in possession as a tenant at will and then paid rent and outgoings on a monthly basis between July and the date when the respondent gave notice of

termination, is not unequivocally referrable to a lease for a fixed term from 14 July 2006 (or from a date between 1 August 2006 and 4 December 2006) until 2011. Those acts may be referrable to an agreement of the sort contended for, but they are not unequivocally referrable to such an agreement. The relevant acts were equally referrable to a tenancy at will or a periodic tenancy.

The appeal should be dismissed.
BUSS JA: The material facts, Master Sanderson's reasoning, the grounds of appeal and the notice of contention are set out in the reasons of Le Miere AJA.
I would allow the appeal. My reasons are as follows.

The conduct of and issues in the appeal

The appeal was conducted by the parties on the basis that the Parkworld Lease was not binding as between them.
The critical issue in the appeal is whether the learned master erred in failing to hold that there was an agreement to lease between the appellant and the respondent, as alleged by the appellant, which had been partly performed and was specifically enforceable.
The respondent filed a notice of contention in which it sought to uphold the learned master's decision on various grounds.

The learned master's reasoning

I agree with Le Miere AJA's examination of and conclusions in relation to the learned master's reasoning.

The appellant's case in relation to the agreement to lease

In par 37 of its statement of claim, the appellant pleaded, relevantly, that the appellant and the respondent (by the conduct of its agent, Colliers) made an agreement by which 'the [appellant's] continuing occupation of the Premises was to be subject to and governed by the terms and conditions of the Parkworld Lease'.
The agreement to lease was alleged to be constituted by the conduct of the appellant and the respondent (by Colliers). No written or oral agreement was alleged. The appellant submitted that the term of the agreement to lease commenced on a date not before 1 August 2006 and not after 4 December 2006.

In par 38 of its statement of claim, the appellant alleged that the agreement to lease had been partly performed by the appellant 'by its conduct pleaded at pars 18, 20, 22 and 28 above'.
The relevant acts of part performance relied on by the appellant were, in substance, these:
(a)On 4 August 2006, the appellant paid to Colliers an amount equal to the rent payable under the Parkworld Lease for the period 1 August 2006 to 31 August 2006 (par 18).
(b)On or about 6 September 2006, the appellant paid to Colliers an amount equal to the rent payable under the Parkworld Lease for the period 1 September 2006 to 30 September 2006 (par 20).
(c)By a facsimile dated 23 October 2006, the appellant sent Colliers certificates of currency in respect of insurance policies, the lessee under the Parkworld Lease being obliged to maintain such insurance and provide such certificates to the lessor (par 22).
(d)On or about 1 December 2006 and 11 December 2006, the appellant paid to Colliers the amounts referred to in an invoice for rent (relevantly, increased rent, reviewed in accordance with a provision in the Parkworld Lease, for the period 1 December 2006 to 31 December 2006 and adjusted increased rent, reviewed in accordance with that provision, for the period 1 July 2006 to 30 November 2006) and an amount for water rates and council rates (calculated in accordance with a provision in the Parkworld Lease, for the period 1 July 2006 to 30 June 2007) which Colliers sent to the appellant on or about 1 December 2006 (par 28).
The respondent, in its defence and counterclaim, denied that there was an agreement to lease, or part performance of any such agreement, as alleged by the appellant.
Although it does not affect the outcome of the appeal, I note the embarrassing form of the appellant's plea of part performance. The plea in the statement of claim anticipates reliance by the respondent on s 4 of the Statute of Frauds 1677 (UK) and ss 34 and 35 of the Property Law Act1969 (WA). The appellant should, of course, have pleaded part performance in its reply as an answer to a pleaded defence based on s 4 or ss 34 and 35.

The relevant aspects of the doctrine of part performance

Equity developed the doctrine of part performance to enable justice to be done in cases where a partly performed contract was unenforceable as a result of non‑compliance with s 4 of the Statute of Frauds. It would not permit the Statute itself to become an instrument of fraud. See Last v Rosenfeld [1972] 2 NSWLR 923, 927 (Hope J); Theodore v Mistford Pty Ltd [2005] HCA 45; (2005) 221 CLR 612 [31] (Gleeson CJ, McHugh, Gummow, Callinan and Heydon JJ). By s 2 of the Law Reform (Statute of Frauds) Act 1962 (WA), the provisions of s 4 of the Statute continue in force in this State.
The doctrine of part performance may also be invoked against a party who relies on s 34 or s 35 of the Property Law Act. See s 36(d), which provides that nothing in s 34 or s 35 affects the operation of the law relating to part performance.
In McBride v Sandland (1918) 25 CLR 69, Isaacs and Rich JJ referred to the classic statement of principle by the Earl of Selborne LC in Maddison v Alderson (1883) 8 App Cas 467, 469:
In Maddison v. Alderson 8 App. Cas., at p.469, Lord Selborne L.C., in a passage now classical, stated the result of the authorities to be that in a suit founded on part performance of a parol contract relating to land the defendant is really charged 'upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the Statute) upon the contract itself.' It is clear from what the learned Lord Chancellor says, that in such a case the Court is not asked to give a better remedy in aid of a legal right, based on the contract, but is called upon to enforce an equity (independent of the Statute, as Story observes - Equity Jurisprudence, sec. 754) which has arisen by force of circumstances subsequent to the contract itself, namely, by acts of part performance sufficient to attract the equitable jurisdiction of the Court (77).
Equity treats the acts of part performance, for probative purposes, as a satisfactory substitute for the statutory requirement of writing in the context of the defendant being charged upon the equities arising from part performance as distinct from the contract itself. See Fleming v Beevers [1994] 1 NZLR 385, 393 (Cooke P, Gault and Tipping JJ).
The reasons of Isaacs and Rich JJ in McBride enunciate certain elements of the doctrine of part performance which are essential to raise the equity:
(1) The act relied on must be unequivocally and in its own nature referable to 'some such agreement as that alleged.' That is, it must be such as could be done with no other view than to perform such an agreement (Maddison v. Alderson 8 App. Cas., at p.479; Gunter v. Halsey Amb, 586; Ex parte Hooper 19 Ves., 477, at p.479).
(2) By 'some such agreement as that alleged' is meant some contract of the general nature of that alleged (Maddison v. Alderson 8 App. Cas., at p.485; Savage v. Carroll 1 Ball & B, 265 at p.282; Fry on Specific Performance, 5th ed., at p.292).
(3) The proved circumstances in which the 'act' was done must be considered in order to judge whether it refers unequivocally to such an agreement as is alleged (Savage v. Carroll 1 Ball & B, 265, at p.282; Hodson v. Heuland (1896) 2 Ch., 428). Expressions are found in some cases which, if literally read, are to the effect that mere possession by a stranger is sufficient to let in parol evidence of any contract alleged. Those cases were prior to Maddison v. Alderson 8 App. Cas. 467, and the expressions if literally read appear to be too wide, because, so read, they would conflict with the requirement that the act must unequivocally refer to some such contract as is alleged, and because bare possession does not necessarily connote trespass or, alternatively, a contract at all; indeed, some contracts would not justify the act done. Possession may be the result of mere permission. But if the circumstances under which the possession was given are proved, then the Court may judge whether the act indicates permission or contract, and, if contract, its general character. For instance, in Frame v. Dawson 14 Ves., at p.388, the expression 'some agreement' is used, we think, in contra-distinction to the specific terms of the agreement, and not in the most general sense of any agreement whatever.
(4) It must have been in fact done by the party relying on it on the faith of the agreement, and further the other party must have permitted it to be done on that footing. Otherwise there would not be 'fraud' in refusing to carry out the agreement, and fraud, that is moral turpitude, is the ground of jurisdiction (Fry on Specific Performance, 5th ed., par. 588; McCormick v. Grogan L.R. 4 H.L., 82, at p.97; Whitbread v. Brockhurst 1 Bro. Ch., 404, at p.417; Phillips v. Alderton 24 W.R., 8).
(5) It must be done by a party to the agreement (Fry on Specific Performance, par. 589).
These requirements must be satisfied before the actual terms of the alleged agreement are allowed to be deposed to.
Further, when those terms are established, it still remains to be shown:-
(6) That there was a completed agreement (Thynne v. Glengall 2 H.L.C., 131, at p.158).
(7) That the act was done under the terms of that agreement by force of that agreement (Thynne v. Glengall 2 H.L.C., 131, at p.158) (78 ‑ 79).
The Australian and English authorities have diverged, to some extent, in relation to the doctrine of part performance, including the meaning to be ascribed to the word 'unequivocal' in the test formulated by the Earl of Selborne LC in Maddison (479). The meaning of 'unequivocal' in this context was explored by Hill J in Australian and New Zealand Banking Group Ltd v Widin (1990) 26 FCR 21. After noting, at 35, that the High Court had cause to consider the doctrine of part performance in a number of early cases: McBride, Cooney v Burns (1922) 30 CLR 216 and J C Williamson Ltd v Lukey (1931) 45 CLR 282, his Honour said:
In McBride v Sandland (supra) Issacs and Rich JJ (at 78) made it clear that the contract to which the acts of part performance must unequivocally be referrable meant 'some contract of the general nature of that alleged'. Knox CJ in Cooney v Burns (supra) thought that by the agreement was meant 'some agreement for the disposition of some estate or interest in the land in question' (at 222).
However, in the United Kingdom a more liberal view was taken in Kingswood Estate Co Ltd v Anderson (supra) and Wakeham v Mackenzie [1968] 1 WLR 1175; [1968] 2 All ER 783 and ultimately by the House of Lords in Steadman v Steadman. In the last case the House held that a payment of money coupled with the sending of a transfer and the announcement to a magistrate that the parties had agreed to arrears of maintenance being remitted (save for £100) was a sufficient act of part performance of an agreement for the sale of a matrimonial home.
The majority of their Lordships accepted that the acts of part performance must, on the balance of probabilities, point to the existence of some such contract as alleged. They approved the decision in Kingswood Estate Co Ltd v Anderson, including the passage from E Fry, A Treatise on the Specific Performance of Contracts already set out: see per Viscount Dilhorne (at 553), Lord Simon (at 561), and per Lord Reid (at 542), but see the judgment of Lord Morris, dissenting and Lord Salmon (at 569).
In Millett v Regent, at first instance (unreported, 22 July 1974), Holland J of the Supreme Court of New South Wales applied the rule stated in Kingswood Estate Co Ltd v Anderson. By the time the appeal was heard, the House of Lords had decided Steadman. The New South Wales Court of Appeal [1975] 1 NSWLR 62 expressed differing views as to the applicability of Steadman. Glass JA was of the view that, the High Court having expressed the test in terms of the traditional view in Maddison v Alderson, the Court of Appeal was bound by that formulation and could not apply the more liberal test in Steadman. Neither Hutley nor Mahoney JJA found it necessary to consider whether Steadman was consistent with Australian authority. However, Mahoney JA said (at 74):
'The term 'unequivocally', and the similar terms which have been used in this regard in other cases, do no more than indicate that, in being satisfied that such a contract was made, the court will require evidence of the appropriate degree of cogency to establish that, for example, the appropriate basis for the intervention of equity against the statute requiring the contract to be in writing is made out: cf Briginshaw v Briginshaw (1938) 60 CLR 336 at 365.
When Regent v Millett went on appeal to the High Court (reported at (1976) 133 CLR 679) the Court was unanimously of the view that part performance was made out. None of the judges found it necessary to consider the questions raised by Steadman. Gibbs J with whose judgment Stephen, Mason, Jacobs and Murphy JJ agreed, said (at 683) that the Earl of Selborne's test in Maddison v Alderson at 479:
' ... has been consistently accepted as a correct statement of the law. It is enough that the acts are unequivocally and in their own nature referable to some contract of the general nature of that alleged: see McBride v Sandland at 78.
...
It may be said immediately that if the reasoning of their Lordships in the recent case of Steadman v Steadman is accepted, the appellants' arguments must fail. However it is unnecessary for the present decision to consider the questions that are raised by that case.
Subsequently Holland J in Ogilvie v Ryan[1976] 2 NSWLR 504, a case where the proper test to be applied affected the outcome, took the view that he should follow the approach of Glass JA in Millett v Regent and not apply the more liberal approach in Steadman. As to the implications possible to be drawn from Steadman, see G Jones and W Goodhart, Specific Performance (1986), pp 103 ‑ 106.
The liberal approach in Steadman has not been adopted in other States of Australia. Fullagar J in Thwaites v Ryan [1984] VR 65 at 87 expressed doubt as to at least part of the formulation but was of the view that the conduct in question did not enable him to say ' ... for Ryan to have done all this, I really think there must have been a contract'.
In Riley v Osborne [1986] VR 193, Kaye J accepted the test of Fullagar J in Thwaites v Ryan (supra) at 76 expressed in the following terms:
'In respect of each act of alleged part performance that was actually done, was it on the balance of probabilities unequivocally referable to some act between the actor and the deceased, that is to say, was it such that, on the probabilities, it must have been done with a view to performing such a contract?'
Subsequently the Full Court of the Supreme Court of Victoria, in McMahon v Ambrose [1987] VR 817 expressed the view that the Court was bound by the orthodox interpretation of Maddison v Alderson adopted by the High Court in McBride v Sandland and Cooney v Burns: see too in Victoria, Butler v Craine [1986] VR 274 at 282, per Marks J; and in Western Australia in Trifid Pty Ltd v Ratto [1985] WAR 19 at 37. More recently Brennan J in Waltons Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 387 at 432 restated the test of part performance consistently with the orthodox view. His Honour made no reference to Steadman.
It may be possible to reconcile what is said in Steadman with the orthodox approach taken by the High Court to date and while there is much to be said for the adoption in Australia of Steadman, these are matters for the High Court rather than an intermediate Court of Appeal (35 ‑ 37).
There is some authority (for example, Chaproniere v Lambert [1917] 2 Ch 356, 361) for the extreme view that the acts of part performance relied on by the plaintiff must be referable to the particular contract alleged and no other title. That view is not, however, supported by current authority or by principle. See Meagher Gummow and Lehane's Equity Doctrines & Remedies (4th ed) at [20‑190]; Gors v Henderson (1998) Aust Contract R 90‑099, 91,035 ‑ 91,036 (Steytler J, as his Honour then was); Watson v Delaney (1991) 22 NSWLR 358, 366 (Meagher JA, Mahoney JA agreeing); Francis v Francis [1952] VLR 321, 331, 340 (Smith J).
In my opinion, on the authority of McBride (78) (Isaacs and Rich JJ), Cooney (222) (Knox CJ) and Regent v Millett (1976) 133 CLR 679, 683 (Gibbs J, with whom Stephen, Mason, Jacobs and Murphy JJ agreed), the phrase 'some such agreement as that alleged' in the speech of the Earl of Selborne LC in Maddison (479) means some contract of the general nature of that alleged, and the phrase 'unequivocally, and in their own nature' in that speech requires that the acts in question must be such as could be done with no other view than to perform some contract of the general nature of that alleged (479). This approach must be followed unless and until the High Court decides otherwise. See Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241 [88], [90] (Bryson JA, Handley and Hodgson JJA agreeing); Riches v Hogben [1986] 1 Qd R 315, 330 (Williams J); McMahon v Ambrose [1987] VR 817, 847 (Marks J); Gors, 91,036.
In McBride, Isaacs and Rich JJ held that the acts of part performance relied on by the plaintiff must be done under the terms of the alleged contract and by force of that contract (79). Compare the different views expressed in Millett v Regent [1975] 1 NSWLR 62, 65 ‑ 68 (Hutley JA), 71 (Glass JA) and 75 ‑ 76 (Mahoney JA). Also see J D Heydon, Part Performance [1975] ACLD 60; K Mackie, Part Performance of Contracts - Recent Australian Developments (1987 ‑ 89) 9 U Tas L R 61. On appeal to the High Court in Regent v Millett, Gibbs J said:
The taking of possession was pursuant to the contract. It is true that the contract did not require the respondents to take possession, but if it were necessary that the acts of part performance should have been done in compliance with a requirement of the contract, the utility of the equitable doctrine would be reduced to vanishing point, and many cases which have proceeded on the opposite view would have been wrongly decided. The Judicial Committee in White v Neaylon ((1886) 11 App Cas 171) indeed appears to have held that the effecting of improvements on property which were neither required nor permitted by the contract may be acts of part performance; but however that may be, it is clear that if a vendor permits a purchaser to take possession to which a contract of sale entitles him, the giving and taking of that possession will amount to part performance notwithstanding that under the contract the purchaser was entitled rather than bound to take possession (683 ‑ 684).
Those observations of Gibbs J indicate that the acts of part performance on which the plaintiff may rely are not confined to those acts which the plaintiff is obliged to perform under the alleged contract, but may include acts which the plaintiff has performed in the exercise of a right conferred by that contract.
In McBride (77), Isaacs and Rich JJ noted the statement of Lord O'Hagan in Maddison (469) to the effect that the proper course in a proceeding in which the plaintiff relies on the doctrine of part performance is that of 'seeking to establish primarily such a performance as must necessarily imply the existence of the contract, and then proceeding to ascertain its terms'. His Lordship held that the court below had erred in reversing that order. Isaacs and Rich JJ then commented:
No harm can arise from reversing the order as a matter of convenience in taking evidence, provided the necessary elements of part performance are borne in mind and properly applied to the circumstances when the facts come under consideration. But if the terms of the oral bargain are first ascertained and then the alleged acts of part performance are judged of merely by their consistency with and applicability to that bargain, grievous error may result (77 ‑ 78).

In Thwaites v Ryan [1984] VR 65, Fullagar J (with whom Starke J agreed) followed the approach of Lord O'Hagan in Maddison, as approved by Isaacs and Rich JJ in McBride, and said that:
[I]t is wrong first to postulate the contract pleaded and then to ask if the alleged acts were a part performance of it, or of a contract of its general nature … One must first seek to find such a performance as much imply a contract, and then proceed to ascertain the general nature of such contract as the performance implies, and then to compare that result, if one gets to it, with the general nature of the contract pleaded (77). [emphasis in original]
Also see Francis (340). Compare the views expressed in Millett v Regent (73) (Glass JA).
In my opinion, the approach of Lord O'Hagan in Maddison, as approved by Isaacs and Rich JJ in McBride, should be followed unless and until the High Court decides otherwise.
It is important to distinguish between the examination of the alleged acts of part performance relied on by the plaintiff at the first stage of the process; that is, when considering whether the relevant acts are unequivocally, and in their own nature, referable to 'some such contract as alleged', and the examination of those alleged acts of part performance at the second stage of the process (assuming the first stage to have been satisfied); that is, when considering whether the whole of the evidence (including those acts) proves the pleaded contract itself and, as a result, the defendant's reliance on s 4 of the Statute or ss 34 and 35 of the Property Law Act would be a fraud in equity. See the views expressed in Stonham, Vendor and Purchaser (1964), 98, footnote 10(b).
Where a lessee continues in possession after the expiration of the lease, the continued possession is not part performance of a new agreement to lease because it may be explained by the lessee's holding over. See Morphett v Jones (1818) 1 Swans 172, 181. The continuance in possession may, however, be part performance if it is combined with the payment of rent or rates at an amount greater than the amount reserved under the initial lease. See, for example, Nunn v Fabian (1865) 1 LR Ch App 35, 40 ‑ 41; Miller & Aldworth Ltd v Sharp [1899] 1 Ch 622, 623 ‑ 626; Strachan & Co Ltd v Lyall & Sons Pty Ltd [1953] VLR 81, 81 ‑ 83; Darter Pty Ltd v Malloy [1993] 2 Qd R 615, 622 ‑ 623; Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281, 287 ‑ 288. Also see Story's Equity Jurisprudence (English ed, 1884) § 763; F W Maitland, Lectures on Equity, Specific Performance, (1909) 242.
As noted in Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed), ordinarily the performance of acts of part performance which are sufficiently referable to the alleged agreement makes it inequitable for the defendant to rely on the Statute. The learned authors add:
It may be possible to conceive of a case where the doing of acts of part performance, otherwise sufficient, does not, in particular circumstances, make it inequitable for the defendant to plead the statute (see I C F Spry, Equitable Remedies, 6th ed, pp 285 ‑ 6); but there does not seem to be any reported instance [20‑210].
The relationship between the doctrine of part performance and the remedy of specific performance was explained by Dixon J in J C Williamson:
In cases of specific performance, the party is said to be charged upon the equities arising out of the acts of part performance and not merely upon the contract. The acts of part performance must be such as to be consistent only with the existence of a contract between the parties, and to have been done in actual performance of that which in fact existed. But in such a case the equity which so arises is to have the entire contract carried into execution by both sides. Because the acts done upon the faith of the contract could not have taken place if it had not been made, and the contract is of a kind which it is considered equitable to enforce in specie, a party who has so acted in partial execution of the contract obtains an equity to its complete performance (300).

Are the acts of part performance relied on by the appellant unequivocally, and in their own nature, referable to some such agreement as that alleged?

In my opinion, the general class of contract within which the agreement to lease alleged by the appellant falls is an agreement to lease between the appellant and the respondent, for a substantial term, in respect of the relevant premises occupied by the appellant.
The acts of part performance relied on by the appellant must be evaluated in the context of the agreed basis on which the appeal has been conducted; namely, that the Parkworld Lease was not binding as between the appellant and the respondent, and there was no lease agreement between them upon the respondent becoming the registered proprietor of the land.
The critical acts of the appellant, for the purposes of the doctrine of part performance, are:
(a)the appellant having continued in possession of the premises in question after the respondent became the registered proprietor; and
(b)the appellant having paid to Colliers, on or about 1 December 2006 and 11 December 2006, the amounts referred to in an invoice for rent (relevantly, increased rent, reviewed in accordance with a provision in the Parkworld Lease, for the period 1 December 2006 to 31 December 2006, and adjusted increased rent, reviewed in accordance with that provision, for the period 1 July 2006 to 30 November 2006) and for water rates and council rates (calculated in accordance with a provision in the Parkworld Lease, for the period 1 July 2006 to 30 June 2007) which Colliers sent to the appellant on or about 1 December 2006.
The appellant's payment of increased rent including adjusted increased rent (in accordance with a provision in the Parkworld Lease) and the appellant's payment of an amount for water rates and council rates for the period 1 July 2006 to 30 June 2007 (in accordance with a provision in the Parkworld Lease) is, on the balance of probabilities, consistent only with having been paid in discharge of an obligation under an agreement to lease for a substantial term (as distinct from a tenancy at will or a periodic tenancy).
In my opinion, on the balance of probabilities, the critical acts of the appellant, in combination with the other acts of part performance relied on by the appellant (see [63], [84] ‑ [85] above), could have been done with no other view than to perform some contract of the general nature of that alleged; namely, an agreement to lease between the appellant and the respondent, for a substantial term, in respect of the relevant premises occupied by the appellant.
I consider, therefore, that the appellant has established its plea of part performance.

Was there an agreement to lease as alleged by the appellant?

I turn now to consider whether, on all the evidence (including the acts of part performance relied on by the appellant), there was an agreement to lease between the appellant and the respondent that was subject to and governed by the provisions of the Parkworld Lease (with necessary modifications).
As I have mentioned, the appellant alleges that the agreement to lease was constituted by conduct. It does not rely on a written or oral agreement. Also, it submits that the agreement was made not before 1 August 2006 and not after 4 December 2006.
The existence of a contract and its terms, including an agreement to lease and its terms, may be implied or inferred. As McHugh JA (with whom Hope and Mahoney JJA agreed) said in Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11,110:
It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of 'offer', 'acceptance', 'consideration' and 'intention to create a legal relationship' which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship. Compare PS Atiyah, 'Contracts, Promises and the Law of Obligations', Law Quarterly Review, vol 94, 1978, p 194. A bilateral contract of this type exists independently of and indeed precedes what the parties do. Consequently, it is an error 'to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed': Howard, 'Contract, Reliance and Business Transactions' [1987] Journal of Business Law, p 127. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract: cf Baltimore and Ohio RR Co v US 261 US 592 (1923); Fincke v US 675 F2d 289 (1982). Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances (11,117).
Those observations were applied by the Court of Appeal of New South Wales in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [74] ‑ [77]. Also see Damevski v Giudice [2003] FCAFC 252; (2003) 133 FCR 438 [82] - [88]; Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32, 82 ‑ 83.
I have read Le Miere AJA's proposed reasons. His Honour has analysed the correspondence (including invoices and statements) passing between the parties and the other conduct of each of them in the context of the relevant surrounding circumstances including the absence of a lease agreement between the appellant and the respondent upon the respondent becoming the registered proprietor of the land. His Honour has also analysed the affidavit and other evidence. Subject to my findings (which I set out below) in relation to the alleged agreement to lease (in particular, the date on which it was made and its terms), I respectfully agree with his Honour's analysis and conclusions in relation to the relevant correspondence, conduct and evidence. It is unnecessary for me to reproduce, in these reasons, his analysis or conclusions.
The court must ascertain objectively whether the appellant and the respondent intended to contract on the basis alleged by the appellant. The uncommunicated (subjective) beliefs or expectations of each of them are irrelevant.
I consider that an agreement to lease is to be inferred from the correspondence, other conduct and evidence in question, in the context of the relevant surrounding circumstances. The agreement was made on or about 1 December 2006, upon the appellant paying to Colliers part of the amounts referred to in the invoice which Colliers sent to the appellant on or about that date. The terms of the agreement, also established by inference, were these:
(a)the lease was for a term commencing on the date on which the agreement was made (that is, on or about 1 December 2006) and terminating on 24 May 2011;
(b)the provisions of the Parkworld Lease applied (with necessary modifications to reflect the different parties and the different commencement dates of the terms);
(c)the provisions of the Parkworld Lease applied (with the necessary modifications I have mentioned) to the appellant's occupation of the relevant premises between 14 July 2006 (when the respondent became the registered proprietor) and the date on which the agreement was made; and
(d)the appellant was to procure guarantees and indemnities (in terms of those contained in the Parkworld Lease) from the guarantors named in the Parkworld Lease (Norman MacKay, Shirley MacKay and Graeme MacKay) of the appellant's obligations to the respondent.
At all material times, Norman MacKay and Graeme MacKay were directors of the appellant.
The appellant has established, on the whole of the evidence (including the acts of part performance on which it relies), the making of an agreement to lease, in the terms I have mentioned.

Notice of contention

I agree with Le Miere AJA, for the reasons he gives, that the grounds of the respondent's notice of contention are without merit.
I also note the following:
(a)As to the second ground of the notice, the term 'CPI' is comprehensively defined in cl 2.1 of the Parkworld Lease.
(b)As to the second ground of the notice, the 'Commencement Date', for the purposes of the rent review dates in Item 6 of the First Schedule to the Parkworld Lease (and otherwise), is 14 July 2006, being the date from which the provisions of the Parkworld Lease applied (with the necessary modifications I have mentioned) to the appellant's occupation of the relevant premises: see [93] above.
(c)As to the second ground of the notice, the expression 'market review' is not uncertain. It requires that the rent be reviewed to the current market rent as at the relevant anniversary of the Commencement Date. The meaning of 'current market rent', and its method of determination, are explained in Edmund Barton Chambers (Level 44) Co‑Operative Ltd v Mutual Life & Citizens' Assurance Co Ltd (1986) 6 NSWLR 322, 324 ‑ 325 (McHugh JA); Burns Philp Hardware Ltd v Howard Chia Pty Ltd (1987) 8 NSWLR 642, 657 ‑ 658 (Priestley JA).
(d)As to the fifth ground of the notice, Ms Costello's affidavit is, relevantly, inconsistent with par 16 of the agreed facts at the trial. Paragraph 16 provides:
On or about 1 December 2006 and 11 December 2006 the [appellant] paid the invoiced amounts referred to in the letter received from Colliers dated 1 December 2006.

Should specific performance be ordered?

There are two types of specific performance which apply to two different categories of agreement. The primary category is referred to as specific performance in the strict, proper or narrow sense. It applies to what are referred to as 'executory' agreements. These agreements contemplate the execution of a formal document or other act in law under which the rights of the parties are to be governed. The secondary category is referred to as specific performance in the wider sense or as relief analogous to specific performance. It applies to what are referred to as 'executed' agreements. These agreements do not contemplate the execution of a formal document or other act in law under which the rights of the parties are to be governed. See McMahon (826) (McGarvie J). Also see Meagher Gummow & Lehane's Equity Doctrines & Remedies (4th ed):
The first, and most frequently cited [judicial pronouncement], is that of Lord Selborne LC in Wolverhampton and Walsall Railway Co v London and North‑Western Railway Co (1873) LR 16 Eq 433 at 439: specific performance in the proper sense, said his Lordship, 'presupposes an executory as distinct from an executed agreement, something remaining to be done, such as the execution of a deed or a conveyance, in order to put the parties in the position relative to each other in which by the preliminary agreement they were intended to be placed'. In Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 394; [1925] ALR 13 at 18 Isaacs and Rich JJ cited Lord Selborne's observations and continued:
It is of some importance in this case to notice that distinction because, though as is said 'equitable relief approximate to specific performance' may be given in the second class [scil the class of executed agreements], yet 'the peculiar doctrines of the Court as to the specific performance of executory contracts do not necessarily apply to the other forms in which the Court grants specific relief.' [see Fry Specific Performance 5th ed paras 38, 43, 841]
In JC Williamson Ltd v Lukey (1931) 45 CLR 282 at 297; [1931] ALR 157 at 161 Dixon J, referring to an executed contract, said:
... it is evident from a mere statement of the nature of the agreement in this case that it falls outside the scope of the remedy of specific performance. The parties meant their oral contract to be a final expression of obligation for the regulation of their future relations. It was not an agreement preliminary to a further transaction which, when carried out, should define their relative positions.
Unlike a contract to assure property, it did not require the parties to adopt a formal instrument or to do some act in the law which should thereafter afford the measure of their rights or duties. Specific performance, in the proper sense, is a remedy to compel the execution in specie of a contract which requires some definite thing to be done before the transaction is complete and the parties' rights are settled and defined in the manner intended.
Specific performance is a discretionary remedy for the enforcement of contracts. The court's discretion cannot be fettered by the contract: Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442 at 451.
The distinction thus drawn is between executory and executed contracts. An executory contract is one which requires the execution of an instrument, or the doing of an 'act in the law', which will put the parties in the position relative to each other which the contract contemplates. The typical example of an executory contract in this sense is an agreement to assure an interest in property. A contract to sell land, for instance, requires the execution of a conveyance or transfer; a contract to sell goods ‑ if property in the goods does not pass when the contract is entered into - requires the doing of an act which will cause property to pass. When a court directs a party to such a contract to perform that party's obligations thereunder according to its terms, that is a decree of specific performance. Another example is an order to carry out a promise to execute a partnership deed: Renowden v Hurley [1951] VLR 13 at 22; [1951] ALR 47 at 55. An executed contract is one which does not require the execution of an instrument, or the doing of an act in the law, for the purpose of placing the parties in the position contemplated: the contract itself does so. Under the contract with which the court was concerned in J C Williamson Ltd v Lukey (1931) 45 CLR 282; [1931] ALR 157, the plaintiff was accorded the right, subject to various detailed terms and conditions, to sell sweets in the defendant's theatre. The plaintiffs had the right by virtue of the contract itself; no further instrument or act in the law was needed to give it to them. If the court directs a party to such an executed contract to perform that party's obligations, or some of them, thereunder according to its terms, that relief, though it may sometimes be described as specific performance, is not specific performance in the proper sense: it is, in the terminology of Isaacs and Rich JJ in Pakenham Upper Fruit Co Ltd v Crosby (1924) 35 CLR 386 at 394; [1925] ALR 13 at 18, relief approximate to specific performance [20‑005] ‑ [20‑010].
In my opinion, the intention of the appellant and the respondent, objectively ascertained from the correspondence passing between the parties and the other conduct of each of them in the context of the relevant surrounding circumstances (including, in particular, the duration of the term, the requirement for guarantees and indemnities and the making of the agreement to lease by reference to the written instrument of lease between Parkworld and the appellant), was that the agreement to lease between them should be embodied in a written instrument.
The respondent permitted the appellant to undertake the relevant acts of part performance which are referable to the agreement to lease made between them. Also, the respondent did not, at any time before the appellant performed the relevant acts of part performance, inform the appellant that the respondent considered itself entitled, in any event, to terminate the appellant's occupation of the premises on 28 days' notice if the appellant did not accept any terms which the respondent might seek unilaterally to impose. I am satisfied that it would be inequitable for the respondent to rely on s 4 of the Statute or s 34 or s 35 of the Property Law Act.

During the period from the time the respondent became registered proprietor of the property until 11 December 2006 and subsequently the appellant acted as if there was an agreement between it and the respondent on the terms contained in the Parkworld Lease. The appellant paid the rent and outgoings in the invoices/statements sent to it by Colliers. The appellant forwarded to Colliers copies of certificates of insurance evidencing that it had maintained insurance cover in accordance with the terms of the Parkworld Lease. On 1 December and 11 December 2006 the appellant paid the increased rent in accordance with the rent review and the rates and taxes in accordance with the terms of the Parkworld Lease.
Objectively viewed the appellant and the respondent conducted themselves as if there was an agreement between them for the respondent to lease the Premises to the appellant on the same terms as those contained in the Parkworld Lease, including the term of the Parkworld Lease that is for a term expiring on the Termination Date prescribed in the Parkworld Lease.

The guarantee

Norman MacKay, Shirley MacKay and Graeme MacKay were parties to the Parkworld Lease, where they were described as the Guarantor. By cl 13.1 of the Parkworld Lease the Guarantor guaranteed the payment of the rent and other sums of money payable under the lease and the performance of the tenants' covenants under the lease and indemnified the respondent against any loss suffered by the landlord. The MacKays did not expressly agree to give to the respondent a guarantee and indemnity in the terms of the Parkworld Lease.
I have found that the respondent acted and conducted itself so as to give rise to an agreement for lease with the appellant on the same terms as those contained in the Parkworld Lease with any necessary modifications. The respondent did not expressly make that agreement for lease with the appellant conditional upon or subject to the MacKays giving a guarantee and indemnity.
Senior counsel for the appellant at first submitted in effect that the guarantee was part of the agreement for lease and that it had been partly performed by the guarantor not disclaiming the guarantee. However, senior counsel did not press a submission that it should be inferred that the MacKays had agreed to give a guarantee and indemnity. In any event the MacKays are not parties to this appeal or the action giving rise to this appeal and no finding to that effect would be binding upon them.
The letters from Colliers to the appellant between 19 September and 1 December 2006, to which I have referred, refer to 'the terms and conditions of your lease'. I have found that that would have been understood by a reasonable person in the position of the appellant to refer to an agreement between the appellant and the respondent containing the same terms and conditions as those contained in the Parkworld Lease with any necessary modifications. The Parkworld Lease contained the guarantee by the MacKays to which I have referred. The agreement to be inferred from the conduct of the appellant and the respondent, by its agent Colliers, contains a term that the appellant would procure a guarantee from the MacKays in the same terms as cl 13.1 of the Parkworld Lease with any necessary modifications.
Senior counsel further submitted that the appellant could not 'come to equity and contend that we have a lease without the guarantees' (ts 21 ‑ 22). Senior counsel submitted, in effect, that if it allowed the appeal the court should make it a condition of an order of specific performance that the guarantors under the Parkworld Lease provide a guarantee in the same terms (ts 22 ‑ 23).
Specific performance is an equitable remedy. A court may refuse an order for specific performance on discretionary grounds. Discretionary grounds for refusing an order of specific performance include unfairness, hardship or that the remedy sought is specific performance of part only of a contract. In this case it might be argued that specific performance of the agreement for lease, in the absence of a guarantee, would expose the respondent to a substantial risk that it would not obtain all of the benefits under the agreement because the appellant might become unable to meet its obligations under the agreement.
Orders of specific performance may be granted subject to conditions: see Meagher R, Heydon D and Leeming M, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002) [20‑275].
The appellant submitted that any grant of specific performance of the agreement for lease should be subject to the MacKays giving a guarantee and indemnity in the terms of the guarantee and indemnity in the Parkworld Lease. If, contrary to my finding, it is not a term of the agreement inferred between the appellant and the respondent that the appellant would procure a guarantee from the MacKays in the same terms as cl 13.1 of the Parkworld Lease with any necessary modifications, then it would be appropriate to make any order for specific performance of the agreement for lease conditional upon the appellant procuring the MacKays to give a guarantee and indemnity in the terms of the guarantee and indemnity in the Parkworld Lease. The making of such a conditional order would remove any unfairness, hardship or oppression from enforcing the agreement for lease in the absence of an enforceable guarantee.

Notice of contention

The respondent contends that the judgment should be affirmed on six grounds. The first is, in effect, that no agreement to lease was concluded between the appellant and the respondent and alternatively any agreement for lease was unenforceable because it did not comply with s 4 of the Statute of Frauds, s 34 or s 35 of the Property Law Act and was not partly performed. I have considered and rejected those contentions in the course of considering the appeal.
The second ground of contention is that if the court finds that there was an agreement for lease and it was partly performed then the discretion to award specific performance should not be exercised for two reasons. The first is that execution of a document to give effect to the agreement would be inappropriate because the Parkworld Lease is uncertain, incomplete, defective and or requires rectification. It is submitted that the Parkworld Lease provides that the Minimum Rent (as defined) was to be reviewed at the times and manner specified in item 6 of the First Schedule to the lease but item 6 fails to specify the times and mechanism for the review.
Clause 3.6(1) of the Parkworld Lease provides that the Minimum Rent is to be set or reviewed at the times and in the manner specified in Item 6 of the First Schedule. Clause 3.6(2) provides that the Minimum Rent as increased by the CPI Review shall be an amount determined by the formula which is then set out. Item 6 of the First Schedule sets out rent review dates during the term. It specifies 'CPI Review' on each of the first to sixth anniversaries of the Commencement Date. That specifies both a time and mechanism for each of the rent reviews during the term of the lease. Item 6 of the First Schedule provides that during the first option term (in the event that the option is exercised): '7th anniversary of Commencement Date ‑ Market Review'. It is further provided that there is to be a CPI review on each of the eighth to eleventh anniversaries of the Commencement Date. So far as the first review is concerned, that is the 'Market Review', the date is specified ‑ the seventh anniversary of Commencement Date.
The respondent says that the rent review clause is uncertain because there is no mechanism for determining 'market review'.
In Brown v Gould [1972] 1 Ch 53 a lease of certain business premises contained an option to renew the lease providing for
such new lease to be for a further term of 21 years at a rent to be fixed having regard to the market value of the premises at the time of exercising this option taking into account to the advantage of the tenant any increased value of such premises attributable to structural improvements made by the tenant (56).
The landlord contended that the option to renew was void for uncertainty. Megarry J held that the option was valid and enforceable. Megarry J at 60 said that if the parties disagree as to the rent payable under a proper formula then since the lease provides no other machinery, the court has jurisdiction to determine it. Brown v Gould was cited with apparent approval by Malcolm CJ, with whom Pidgeon and Franklyn JJ agreed, in Western Australian Trustees Ltd v Poon (1991) 6 WAR 72, 82.
The next question is whether the language of item 6 of the First Schedule provides a proper formula or whether it is too uncertain to be valid. In Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, Barwick CJ said:
But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning … the court … will decide its application … no narrow or pedantic approach is warranted (436 ‑ 437).
The provision for 'market review' is capable of being construed. In the context of the Parkworld Lease it means that the rent is to be reviewed and the new rent is to be the market rent at the time of review. The most frequently quoted decision in relation to market reviews is Spencer v Commonwealth (1907) 5 CLR 418 and the judgment of Griffiths CJ contains a statement that goes to the heart of any market review:
In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by enquiring 'what would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and not unwilling vendor would come together (432).
A rent review provision requires a notional letting on certain terms to be postulated. The terms of that notional letting is a question of construction. For example, in general, if and so far as a rent review provision does not otherwise require, either expressly or by necessary implication, the parties to a lease are to be taken as having intended the notional letting postulated by the rent review provision to be a letting on the same terms, other than as to quantum of rent, as those subsisting under the actual existing lease: see Basingstoke and Deane Borough Council v Host Group Ltd [1988] 1 WLR 348, 354.
I reject the ground upon which it has been contended that the rent review provision in the Parkworld Lease, and therefore the agreement for lease between the appellant and the respondent, is uncertain.
The second reason why it was contended the court should not in the exercise of discretion order specific performance is that the agreement for lease was entered into by the appellant and/or the respondent by common or alternatively mutual mistake. The respondent submitted that the evidence at trial established that at all relevant times the appellant understood that the Parkworld Lease remained in force and bound the respondent and the respondent believed the Parkworld Lease bound the appellant but did not bind the respondent. Thus, it was submitted, the parties were under a mutual or common mistake in relation to the fundamental contractual position of both parties.
In common mistake both parties make the same mistake. Each knows the intention of the other and accepts it, but each is mistaken about an underlying and fundamental fact. In mutual mistake, the parties misunderstand each other and are at cross purposes. Neither of those situations applies to this case. Whatever the parties' beliefs were as to whether the Parkworld Lease had been extinguished upon registration of the respondent as registered proprietor, the agreement to lease arose by subsequent conduct, objectively viewed. I accept the submission of the appellant that the previous beliefs of the parties as to the legal regime upon the respondent becoming the registered proprietor are irrelevant in the sense that they do not give rise to any operative mistake.
The respondent's fourth contention is that if the respondent is required to execute a lease agreement in terms of the Parkworld Lease, then the lease should be subject to rectification to incorporate agreed dates when the rent reviews are to occur and a mechanism for the market review due under the lease, the parties to be ordered, subject to further order, to agree the terms of the clauses incorporating the mechanism for market review.
The claim for rectification is misconceived. Rectification for common mistake can be employed in two circumstances:
(1)where a prior agreement is reached and the parties then erroneously record that agreement in a written document; or
(2)where the parties have formed a common intention not amounting to a concluded bargain and they have then drawn up a contract to give effect to that intention but it fails to do so because of some slip: Seddon NC and Ellinghaus MP, Cheshire & Fifoot's Law of Contract (8th Aust ed, 2002) [12.30].
Neither of those circumstances apply in this case nor is there any unilateral mistake in circumstances where rectification would be ordered.
The fifth ground of contention is that the master erred in not admitting into evidence the evidence of Mr David McDonald as set out in [11] of his affidavit sworn 27 March 2007 as follows:
In my experience in property and leasing law, insurances for a property are a normal outgoing incurred by a landlord and passed on to a tenant.
The respondent submits that the master should then have found that it is an implied term of a tenancy at will, the term being implied by custom and practice, that a tenant at will is required to insure for public liability, industrial special risks, workers compensation and plate glass. The master should then have found that the request by the respondent's agent by its letter dated 19 September 2006 for the appellant to provide evidence that it had maintained insurance policies for public liability, industrial special risk, workers' compensation and plate glass was referable to the tenancy at will and not to the agreement for lease asserted by the appellant.
The sentence referred to by the respondent was the penultimate sentence of [11]. The final sentence was:
I say that it is certainly an implied term of a tenancy at will that a tenant will pay reasonable outgoings and that those outgoings will include insurance of the occupied premises.
Counsel for the appellant submitted that the penultimate sentence was irrelevant. Counsel also submitted that it had not been established that Mr McDonald had the requisite expertise to support the opinions that he put forward. In response to that submission counsel for the respondent submitted that Mr McDonald had the necessary expertise to give the opinions that he offered. Mr McDonald's affidavit states that he was a former solicitor instructed by the respondent. He further said that he handles a range of legal issues relating to the property affairs of the respondent and had provided general leasing legal advice and advice relating to a range of property law matters and general legal advice as well as contractual legal advice to Mr Bagga and his companies relating to his business interests since 2001. Mr McDonald deposes that he has practised in the area of property law, leasing advice in general contractual wills and probate advice exclusively for the last 12 years.
The evidence did not establish that Mr McDonald had sufficient experience or expertise to give an opinion that leases usually contain provisions that insurances are to be paid by a landlord and passed onto a tenant. There was no evidence that Mr McDonald had drafted or examined sufficient leases in the course of his professional practice to be able to give such an opinion. More importantly, such an opinion is irrelevant. The respondent wishes to argue that such provisions are a normal incident of a tenancy at will. Evidence that leases for an unspecified, but definite, term contain such provisions says nothing about the provisions of a tenancy at will. The master made no error in not admitting the evidence.
The respondent further submits that the master erred in not admitting into evidence the evidence of Ms Costello set out in her affidavit sworn 29 March 2007. Ms Costello's evidence is that the increased rent was paid in full on 11 December 2006 rather than on 1 December 2006. That is only relevant if on 4 or 5 December 2006 the appellant became aware, as the respondent alleged, that the respondent did not agree to the appellant occupying the Premises for the term stated in the Parkworld Lease and on the terms specified in the Parkworld Lease. I have found that the evidence does not establish that the appellant knew or became aware on 4 or 5 December 2006 that the respondent did not agree to leasing the Premises to the appellant on the terms specified in the Parkworld Lease. Accordingly, the judgment should not be affirmed on this ground of contention.
The final ground of contention concerns the costs of the action. Consideration of the appropriate costs order should be deferred until after the court has delivered its reasons for decision on the appeal.

Appeal should be allowed

For the reasons stated I would allow the appeal and make orders for specific performance.

Orders to be made

An agreement between the appellant and respondent for the lease of the Premises is to be inferred from the acts and conduct of the parties. The terms of the agreement are that the respondent is to lease the Premises to the appellant on the same terms as the terms contained in the Parkworld Lease with any necessary modifications. The agreement was in existence no later than when the appellant paid the water rates and council rates for 2006 ‑ 2007 and the increased rent after the rent review. The trial judge made no finding when that occurred. The evidence of Mr MacKay was that the December 2006 tax invoice showed the increased monthly rental for December 2006 and the amounts due for water rates and council rates and he arranged for the December 2006 tax invoice to be paid by two cheques, one on 1 December 2006 and one on 11 December 2006. The agreed statement of facts included the fact that the appellant paid the increased rent and council and water rates on 1 December and 11 December 2006. It is sufficient that the appellant paid part of the increased rent and council and water rates on 1 December 2006. I find that it is to be inferred that the appellant and respondent made the agreement for lease no later than 1 December 2006.
In the appellant's notice of appeal it sought a declaration that as of from 12 July 2006 or from some other date prior to 9 February 2007 the appellant has occupied the Premises on the terms and conditions of the Parkworld Lease and for the balance of the term of the Parkworld Lease expiring on 24 May 2011.
However, the appellant's grounds of appeal contended only that the master ought to have made orders for specific performance requiring the respondent to execute an instrument in the terms of the Parkworld Lease. The appellant's written submissions referred only to an order for specific performance. In his oral submissions senior counsel for the appellant submitted that if the appeal was allowed the court should make an order for specific performance of the oral agreement but did not submit that a declaration should be made. Thus, it appears that the appellant does not press for a declaration. However, if the appellant does press for a declaration then counsel should bring in short minutes which will set out the terms of a declaration in conformity with these reasons for judgment.

In its written submissions the appellant sought specific performance 'in the customary sense', as explained by Mason J in The Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, 26 ‑ 27; ie specific performance requiring the respondent to execute an instrument in terms of the Parkworld Lease. In Progressive Mailing House Mason J said:
As an agreement for lease was capable of specific performance equity would decree specific performance of the written lease by ordering the execution of a lease under seal. In the meantime, in accordance with the doctrine of Walsh v Lonsdale (1882) 21 Ch D 9, the relationship between the parties in equity was that of landlord and tenant (26).
In this case there was no express agreement that the appellant and the respondent would execute an instrument of lease. Nor was a draft lease prepared. However, that is not a bar to the court granting specific performance in the sense of an order that the parties execute an instrument of lease. In principle there is no reason why a court of equity should not order the parties to an agreement for a lease to execute an instrument of lease unless they had expressly agreed to do so. In this case it is to be inferred that the respondent agreed to grant to the appellant a lease of the Premises for a term terminating on the Termination Date specified in the Parkworld Lease on the terms of the Parkworld Lease, subject to any necessary modification. Where parties have orally agreed to the sale and purchase of land or to the grant of a lease, a court of equity may order specific performance of an order that the parties execute an instrument to give effect to their agreement.
The respondent did not submit that, if the court found that the evidence established an enforceable agreement for lease, specific performance should not be ordered in the sense of an order that the parties execute a written lease in the terms of the Parkworld Lease. In [5] of its notice of contention the respondent submitted that if the court finds the learned master should have awarded the appellant specific performance of the asserted lease agreement and 'accordingly, the respondent is required to execute a lease agreement in terms of the Parkworld Lease', then the respondent contends the master should have also have found that the lease should be rectified. That is, the respondent did not contest that the appropriate relief was an order for specific performance in the sense of an order that the parties execute a written lease in the terms of the Parkworld Lease.
There should be an order for specific performance that the appellant and the respondent execute an instrument by which the respondent leases the Premises to the appellant. The term of the lease should commence on 1 December 2006 and terminate on the Termination Date specified in the Parkworld Lease, that is, on the day prior to the seventh anniversary of the Commencement Date as defined in the Parkworld Lease, that is 24 May 2011. The execution of the lease is to be subject to a guarantee and indemnity in the terms of the guarantee and indemnity in the Parkworld Lease being executed by each of Norman MacKay, Shirley MacKay and Graeme MacKay.
I would order that the appeal be allowed and the orders made by the master be set aside; that the agreement for lease be specifically performed; that the appellant execute and deliver to the respondent a lease of the Premises commencing on 1 December 2006 and terminating on 24 May 2011 and otherwise containing the terms and conditions contained in the Parkworld Lease with any necessary modification and upon the appellant executing and delivering to the respondent a lease in the stated terms including a guarantee and indemnity executed by Norman Young MacKay, Shirley Ann MacKay and Graeme Stuart Young MacKay in the terms of the guarantee and indemnity in the Parkworld Lease the respondent shall execute the lease and deliver it to the appellant. I would order that the lease be settled by the master if the parties fail to agree it.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: LIGHTING BY DESIGN (AUST) PTY LTD -v- CANNINGTON NOMINEES PTY LTD [2008] WASCA 23 (S)

CORAM: PULLIN JA
BUSS JA
LE MIERE AJA

HEARD: 16 AUGUST 2007

DELIVERED : 8 FEBRUARY 2008

SUPPLEMENTARY
DECISION :13 MARCH 2008

FILE NO/S: CACV 73 of 2007

BETWEEN: LIGHTING BY DESIGN (AUST) PTY LTD
Appellant
AND
CANNINGTON NOMINEES PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :SANDERSON M
Citation  :LIGHTING BY DESIGN (AUST) PTY LTD v CANNINGTON NOMINEES PTY LTD [2007] WASC 88
File No  :CIV 1190 of 2007

Catchwords:

Civil practice and procedure - Costs - Whether the court should direct the taxing officer to make a reasonable allowance for senior counsel

Legislation:

Legal Practice Act 2003 (WA), s 207, s 210, s 215
Rules of the Supreme Court 1971 (WA), O 66 r 1(1), O 66 r 10(2)
Supreme Court Act 1935 (WA), s 37(1)
Supreme Court (Court of Appeal) Rules 2005 (WA), r 5(1)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Appellant: Mr G R Donaldson SC
Respondent: Mr N D C Dillon

Solicitors:

Appellant: Lavan Legal
Respondent: Aherns Lawyers

Case(s) referred to in judgment(s):

Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23

PULLIN JA: The 2006 Determination which is set out in Le Miere AJA's reasons does not abrogate or affect the discretionary power of this court with respect to costs.
However, it should be a rare case for parties to feel the need to trouble the Court of Appeal with a request that it give a direction that the briefing of senior counsel was necessary or for the parties to spend time debating the issue before the court as they did in this case. In my opinion, it was certainly not necessary in this case. This case raised complex legal and factual issues, and in my view both parties should have recognised that it was highly unlikely that the taxing officer would have refused to allow fees for senior counsel.
Generally speaking, the Court of Appeal is assisted by the appearance of senior counsel. It would be undesirable if it became the norm for parties to engage in debate in cases involving senior or second counsel about whether a direction should be given to the taxing officer to allow the fees of senior or second counsel. That debate should only occur in the rare case where there are grounds to direct the taxing officer not to allow fees for senior or second counsel.
In my view it was not necessary to include in the formal orders, a direction to the taxing officer to allow the fees of senior counsel.
BUSS JA: On 8 February 2008, this court delivered judgment in Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23. The court ordered, relevantly, that the appeal be allowed and that the respondent pay the appellant's costs of the appeal to be taxed.
The appellant was represented by senior counsel at the hearing of the appeal.
The question now before the court is whether the court should direct the taxing officer, in taxing the appellant's costs of the appeal, to make a reasonable allowance for senior counsel.
Le Miere AJA has decided that the court should not make such a direction. I respectfully disagree with his Honour. In my opinion, for the reasons set out below, in the present case, the court should direct the taxing officer to make a reasonable allowance for senior counsel.

The statutory and regulatory framework

Section 37(1) of the Supreme Court Act 1935 (WA) provides:
Subject to the provisions of this Act and to the rules of court and to the express provisions of the Magistrates Court (Civil Proceedings) Act 2004, or any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid.
Section 37(1) confers a broad discretion on the court in relation to costs with full power to determine, relevantly, to what extent such costs are to be paid. This discretionary power enables the court to make orders with respect to the allowance of costs for counsel generally, including an order that reasonable allowance be made, alternatively that no allowance be made, for senior counsel. Also see O 66 r 1(1) of the Rules of the Supreme Court1971 (WA), which should be read together with s 37(1).
By O 66 r 10(2) of the Rules of the Supreme Court, relevantly, in the case of an appeal, the costs of the proceedings giving rise to the appeal, as well as the costs of the appeal and of the proceedings connected with it, may be dealt with by the court hearing the appeal. Rule 5(1) of the Supreme Court (Court of Appeal) Rules2005 (WA) provides that the Court of Appeal Rules must be read with the Rules of the Supreme Court.
Section 215(1) of the Legal Practice Act 2003 (WA) provides, relevantly, that the taxation of bills of costs of legal practitioners, as between legal practitioner and client or party and party, is regulated by a legal costs determination in force under s 210. By s 215(3), however:
Nothing in subsection (1) is to be construed as limiting the power of a court, a judicial officer or a taxing officer of a court to determine in any particular case before that court or judicial officer the amount of costs allowed.
Section 210(2) of the Legal Practice Act empowers the Legal Costs Committee (established under s 207) to make legal costs determinations regulating the remuneration of legal practitioners in respect of, relevantly, contentious business carried out by practitioners in or for the purpose of proceedings before the Supreme Court.
Currently, there is a legal costs determination in force under s 210 which regulates the remuneration of legal practitioners in respect of contentious business carried out in connection with Supreme Court proceedings. It is known as the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (the 2006 Determination), and it came into operation on 1 July 2006. Clause 5(1) provides:
The practice of certification for second counsel or for Senior Counsel is no longer required by the Scale, which brings the practice in this State into line with other Australian jurisdictions. However, where fees are claimed for second counsel or for Senior Counsel, it is anticipated that the Taxing Officer shall consider whether the briefing of second counsel, or Senior Counsel, was reasonably necessary in the circumstances.
The relevant item in the Scale is item 22, which is headed 'Appeals to the Court of Appeal and Single Judge Appeals (including appeals by way of case stated)'. Item 22(g) specifies a maximum allowance for 'Counsel fee on hearing (including preparation)' and Item 22(h) specifies a maximum allowance for 'Counsel fee for Senior Counsel (including preparation)'.
The 'practice of certification' for second counsel or for senior counsel, which cl 5(1) of the 2006 Determination refers to and states is 'no longer required by the Scale', was embodied in the scale contained in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 (the 2004 Determination) and also in previous scales of costs with respect to contentious business in the Supreme Court. Item 22 of the 2004 Determination specified, relevantly, the maximum allowance for 'Counsel, fee for Senior Counsel' where two or more counsel are 'certified for'. It was essential for an application to be made to the appellate court for a certificate. The taxing officer was unable to make an allowance without a certificate.

Analysis and conclusion

In my opinion, cl 5(1) of the 2006 Determination does not abrogate or affect the discretionary power which s 37(1) of the Supreme Court Act, and O 66 r 1(1) and O 66 r 10(2) of the Rules of the Supreme Court, confers on this court with respect to costs. Section 215(3) of the Legal Practice Act states, relevantly, that nothing in s 215(1) (which stipulates that the taxation of bills of costs of legal practitioners is regulated by a legal costs determination in force under s 210) is to be construed as limiting the power of a court to determine in any particular case before that court the amount of costs allowed.
The apparent purpose of cl 5(1) of the 2006 Determination, and the consequential amendment to the scale, is to enable the taxing officer to make an allowance for second counsel or for senior counsel without it being essential for the party claiming costs to obtain a certificate, order or direction from the appellate court. Before the 2006 Determination came into operation, it was not unusual for a party who had failed (because of oversight or otherwise) to make application to the appellate court, when judgment was delivered and formal orders were made, for a certificate for second counsel or senior counsel, later to make such an application. This involved inconvenience to the appellate court and a waste of the parties' time and money. Clause 5(1) of the 2006 Determination avoids that consequence by abrogating the necessity for a certificate from the appellate court.
If, notwithstanding cl 5(1) of the 2006 Determination, a party entitled to costs makes application to the appellate court, when judgment is delivered and formal orders are made, for a direction that the taxing officer make a reasonable allowance for second counsel or senior counsel, the court should ordinarily decide that issue. By the time the application is made, the members of the appellate court will have read and considered the appeal book, heard oral argument and had an opportunity to engage in debate with counsel in relation to the merits of the appeal, determined whether the appeal should be allowed or dismissed, delivered or published reasons for decision, and made formal orders including orders as to costs. Plainly, the members of the appellate court will ordinarily be well placed (indeed, in an ideal position) to decide immediately whether the briefing of second counsel, or senior counsel, was reasonably necessary in the circumstances.
If, however, a party entitled to costs fails to make application to the appellate court, when judgment is delivered and formal orders are made, for a direction that the taxing officer make a reasonable allowance for second counsel or senior counsel, the taxing officer should ordinarily decide that issue.
The overriding considerations, in determining which of the appellate court or the taxing master should make a determination as to whether it was reasonably necessary for a party to retain second counsel or senior counsel, are the convenience of the court, expedition in decision‑making, and the minimisation of expense.
In the present case, the questions raised in the appeal, including in the notice of contention, were of some complexity, and, in my opinion, it was reasonably necessary for the appellant to brief senior counsel. In the circumstances, I would direct the taxing officer to make a reasonable allowance for senior counsel in taxing the appellant's costs of the appeal.

LE MIERE AJA: On 8 February 2008 the court handed down its reasons for judgment and made orders to give effect to its decision to allow the appeal. The court reserved its decision on one issue. That issue is whether the court should direct the taxing officer to make a reasonable allowance for senior counsel.
The appellant submitted that the court should direct the taxing officer to make a reasonable allowance for senior counsel. The respondent opposed the proposed order on the grounds that the matter should be left to the discretion of the taxing officer and that in any event it was not reasonable and proper to retain senior counsel.
Section 215(1) of the Legal Practitioners Act 2003 (WA) (the Act) provides that, subject to exceptions not presently relevant, the taxation of bills of costs of legal practitioners as between party and party is regulated by a legal costs determination in force under s 210 of the Act. The legal costs determination currently in force is the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA) (the 2006 Determination) which came into operation on 1 July 2006. Clause 6 of the Schedule to the previous determination, the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 (WA) included Item 19 'Trial: Counsel Fees'. Item 19(b) was:
Fee on brief for Senior Counsel, ie first day of trial and preparation (where two or more counsel are certified for).
Clause 5(1) of the 2006 Determination states:
The practice of certification for second counsel or for Senior Counsel is no longer required by the Scale, which brings the practice in this State in line with other Australian jurisdictions. However, where fees are claimed for second counsel or for Senior Counsel, it is anticipated that the Taxing Officer shall consider whether the briefing of second counsel, or Senior Counsel, was reasonably necessary in the circumstances.
Item 19(b) now refers merely to 'Fee on brief for Senior Counsel, ie first day of trial and preparation'.
The intent of the 2006 Determination is that whether fees should be allowed for second counsel or for senior counsel is a matter for the discretion of the taxing officer. In the first instance it is for the taxing officer to consider whether the briefing of senior counsel was reasonably necessary in the circumstances. It is not appropriate for this court to express an opinion whether or not the briefing of senior counsel was reasonably necessary in the circumstances.
For those reasons, the court will not make a direction that the taxing officer make a reasonable allowance for senior counsel.