Maharaja's Palace Pty Ltd v Raj and Jai Construction Pty Ltd

[2018] NSWSC 1269

Supreme Court

New South Wales

Medium Neutral Citation:	Maharaja’s Palace Pty Ltd v Raj & Jai Construction Pty Ltd [2018] NSWSC 1269
Hearing dates:	6-7 August 2018
Date of orders:	16 August 2018
Decision date:	16 August 2018
Jurisdiction:	Equity
Before:	Darke J
Decision:	Statement of Claim is dismissed with costs.
Catchwords:	LAND LAW – leases – agreement for lease – whether oral agreement concluded – no agreement established – not necessary to consider whether acts of part performance give rise to enforceable right to grant of lease
Legislation Cited:	Conveyancing Act 1919 (NSW), ss 23C, 54A
Category:	Principal judgment
Parties:	Maharaja’s Palace Pty Ltd (First Plaintiff) B&B Group Pty Ltd (Second Plaintiff) Satinder Pal Singh Benepal (Third Plaintiff) Raj & Jai Construction Pty Ltd (Defendant)
Representation:	Counsel: Mr A E Maroya (Plaintiffs) Mr G Farland (Defendant)   Solicitors: Hedges Bhatty Solicitors (Plaintiffs) HWL Ebsworth Lawyers (Defendant)
File Number(s):	2018/201326
Publication restriction:	None

Judgment

Introduction

1. In these proceedings a declaration is sought that a binding agreement for lease was made between Maharaja’s Palace Pty Ltd (the first plaintiff), or alternatively Mr Satinder Benepal (the third plaintiff), and Raj & Jai Construction Pty Ltd (the defendant), which ought be specifically performed.

2. The agreement is alleged to concern a number of shops on two levels of a building in Douglas Road, Quakers Hill owned by the defendant. It is alleged that the agreement was concluded in the course of a conversation held in about mid-2014 between Mr Benepal and, representing the defendant, Mr Bhart Bhushan. The existence of the agreement is alleged to be evidenced by various acts of part performance.

3. In brief, it is contended that agreement was reached for a lease of shops 2, 3, 4, 5A, 5B, 6, 7, 8, 12 and 18 for a five year term commencing on 1 June 2015 (with two options to renew for further terms of three years each) at a rental of $198,000 per annum (including GST).

4. The defendant denies the existence of the alleged agreement. Even though the defendant did not specifically plead reliance on s 54A of the Conveyancing Act 1919 (NSW) (or s 23C of that Act), it was accepted that in circumstances where allegations of acts of part performance were contained in the Statement of Claim and denied in the Defence it was open to the defendant to rely upon a lack of writing.

5. The central issues for determination were thus:

1. whether a binding agreement for lease was concluded as alleged; and

2. if so, whether by reason of the operation of the law relating to part performance the agreement gives rise to an enforceable right to the grant of the lease.

Background

6. The defendant’s building includes a number of small shops on the ground floor (shops 1 through to 12). There are two larger areas on the first floor known as shops 17 and 18.

7. In about September 2009 the defendant granted a lease over shop 18 to George and Angie Boules, for a three year term ending on 31 August 2012 with an option to renew for a further 3 years. A business known as Oasis Function Centre was conducted at those premises.

8. At about the same time, the defendant granted a lease over shops 3, 4, 5A, 5B, 6, 7, 8 and 12 to United Vision Group Pty Ltd (“United Vision”). This lease was for a three year term ending on 30 September 2012. There were two options to renew, each for further terms of three years. An Indian restaurant known as Maharaja’s Haveli was conducted at those premises. Mr Benepal was a director of and a shareholder in United Vision.

9. In July 2011 the first plaintiff acquired the Maharaja’s Haveli business from United Vision, and continued to carry on the business at the leased premises. Mr Benepal is the sole director of the first plaintiff. No assignment of the lease was effected at that time.

10. At some time in 2012 the first plaintiff acquired the Oasis Function Centre business from George and Angie Boules. It seems that Mr Bhushan had suggested that this purchase occur, and I infer that he later became aware of the purchase having taken place. The first plaintiff thereafter occupied shop 18 and used it for its business. Again, no assignment of the lease was effected at that time.

11. In late 2012 Mr Benepal took steps to have United Vision de-registered. The de-registration occurred on 21 February 2013. There is evidence that a company associated with Mr Bhushan (Universal Property Group Pty Ltd) became aware on 19 February 2013 of a request by Mr Benepal to have the name of the lessee on the two leases changed to the first plaintiff. The request was forwarded to a solicitor who appears to have acted for the defendant in relation to the leases.

12. A Deed of Assignment of the United Vision lease to the first plaintiff was prepared and entered into on 9 June 2013. Mr Bhushan deposed that he was not aware at that stage that United Vision had been de-registered. There does not appear to have been any steps taken to assign the lease over shop 18. The solicitor was evidently of the view that the first plaintiff was “already on the lease for shop 18”.

13. Mr Bhushan deposed that in about August 2013 he had a discussion with Mr Benepal in which it was suggested that the latter might want to rent shop 2 to use it for the purposes of the restaurant business. According to Mr Bhushan, there was later some discussion about a rent of $3,000 per month plus GST for shop 2, with such rent not to commence until 1 July 2014 in view of the expenditure Mr Benepal would need to incur on a fit out of shop 2. There is documentary evidence which suggests that the keys for shop 2 were provided to Mr Benepal in September 2013, and that in December 2013 a solicitor was engaged (for the defendant) to prepare a lease of shop 2 in favour of the first plaintiff at a rent of $3,300 (including GST). It appears that the solicitor sought further instructions about such a lease but there is no evidence that a lease was ever prepared. Mr Bhushan deposed that due to an oversight, no rent invoices were issued for shop 2.

14. Mr Benepal deposed that he had a discussion with Mr Bhushan in mid-2014 about shop 2 in which it was agreed that there would be no additional rent payable in respect of shop 2. Mr Benepal’s account, both as to its timing and content, is difficult to reconcile with the documentary evidence referred to above. However, there is no doubt that the first plaintiff converted shop 2 into a party room and proceeded to use the room as part of its restaurant business.

15. The area on the first floor sometimes referred to as shop 17 had once been used as a church. This use had ceased by 2014, and the area remained vacant. Mr Benepal became interested in combining the area with shop 18 and constructing a large reception centre. Mr Benepal raised the matter with Mr Bhushan in about early 2014. It appears that this led to further discussions taking place about the possibility of Mr Bhushan, or at least interests associated with him, acquiring a share in the first plaintiff’s business. The alleged agreement for lease is claimed to have been made in the course of these discussions.

Discussions in 2014 and 2015

16. Mr Benepal deposed that about one month after initially raising the matter with Mr Bhushan, a conversation to the following effect took place:

Mr Bhushan:   I will only get involved in redeveloping upstairs into a large reception centre if you sell to me 50% of the Maharaja’s Haveli business downstairs and 50% in the Oasis Function Centre upstairs as well.

Mr Benepal:   Bhaji, lets just redevelop upstairs. I don’t want to include Maharaja’s Haveli at this stage. It is not a viable option for you to enter into the Maharaja’s Haveli business as there are a lot of overheads and it is not profitable. I am only proposing the development of the Oasis Function Centre.

Mr Bhushan agreed that a conversation to that effect occurred (albeit two or three months after the initial discussion), and that he further said:

I will only get involved if all of the businesses are split 50/50 between us.

17. Mr Benepal deposed that two further conversations occurred in the weeks that followed. He says that in the first of those conversations he referred to combining upstairs and downstairs “into one deal so that there can be one lease”. He says that in the second conversation he said he would “agree to a 50/50 partnership for everything” if Mr Bhushan contributed $2 million which would include the cost of renovations for both upstairs and downstairs. Mr Benepal says that both conversations finished with Mr Bhushan indicating that he would go away and consider the matter.

18. Mr Bhushan denied that conversations occurred in those terms, but agreed that there was a conversation in which Mr Benepal said he was agreeable to all the businesses being split 50:50, and he responded by saying that he would get his accountant (Mr “Bobby” Goyal) to contact Mr Benepal to go through the deal. Mr Bhushan deposed that after this conversation he instructed Mr Goyal to negotiate with Mr Benepal on the proposal.

19. Mr Benepal deposed that the pair had a further conversation in which he asked Mr Bhushan about the leasing arrangements. This conversation is central to the claim that a binding agreement for lease was made. Mr Benepal says that the conversation included the following:

Mr Benepal:   Okay I agree. What about the leasing arrangements?

Mr Bhushan:   I will get my accountant to organise one lease for all of the properties and he will arrange it with my lawyers. The new lease will [be] for five (5) years and will have two (2) three (3) year options. Rent will start at $198,000.00 a year. Don’t worry, until that lease is finalised, things can continue as they are now that I will be a 50% partner in this venture. As I have told you before, I own the building so there is no problem with the lease. The advisors can sort all of that out later. I promise that if you let me into the business, I will give a new combined lease for all the existing businesses and the Oasis Function Centre. We will set up a new company and call it B & B being for Benepal and Bhushan. Raj will be the director and shareholder on behalf of the Bathla Group and he will be representing me and the Bathla group in this venture.

Mr Benepal:   Thank you Bhaji. Let’s get started and make this a big and successful business. A lot of work will need to be done and my wife because of her experience as a project manager, is willing to come on board and help with all the administration application for a DA, design and anything else that is required. She can look after upstairs and I will look after downstairs.

Mr Bhushan:   Good! That will take a lot of pressure off me. You will need to run this business as Raj nor I have any time to spend on it. We will be silent partners. Please go ahead and start getting the DA process underway and get quotations for the redevelopment. One of my companies will be doing the actual construction work but you should still get quotations.

20. Mr Bhushan denies that such a conversation occurred, or indeed that he had any other conversation with Mr Benepal concerning any new lease of any of the shops in the building. Mr Bhushan stated that it was not his practice to have discussions with business acquaintances “which involved negotiations about monetary matters”, and that he left such discussions to his accountant, who would seek instructions from him.

21. Mr Goyal is an accountant employed by Universal Property Group Pty Ltd (“Universal”). He describes that company as a member of a group of about 80 companies known as the Bathla Group. Mr Goyal says that the defendant is also a member of the group. Mr Goyal deposed that in about late 2014 or early 2015 he was asked by Mr Bhushan to assist with negotiations with Mr Benepal and Mr Benepal’s accountant, Mr Sami, concerning the proposal for joint operation of the businesses and extension of the existing function centre at the premises. Mr Goyal says that he attended several meetings with Mr Benepal and Mr Sami, and some further meetings with Mr Benepal only, in relation to the proposal. Mr Goyal deposed that one such meeting with Mr Benepal occurred on 1 April 2015 during which there was a conversation to the following effect:

Mr Benepal:   I want a demolition clause with six months notice, instead of three months notice, and a rent free period for the new function centre of six months instead of three months.

Mr Goyal:   Ok, I will discuss it with Bhart [Mr Bhushan].

22. Mr Goyal made a file note after the meeting. Amongst other things, the file note contains references to a demolition clause and a rent free period for the function centre.

23. Mr Benepal denies that a conversation occurs as asserted by Mr Goyal. He says that he did not want a demolition clause.

24. Mr Goyal deposes that about one week later he had a conversation with Mr Benepal to the following effect:

Mr Goyal:   I have spoken to Mr Bhushan. He will not agree to a demolition clause with more than three months notice and will not agree to change the rent free period for the proposed new function centre from three months to six months. I think you should agree with the three months notice for the demolition clause and the three month rent free period so we can proceed.

Mr Benepal:   Okay, I agree, go ahead.

25. Mr Benepal denies that such a conversation occurred.

26. I note in passing that by this time Mr Benepal had engaged architects (Archizone Architects) and lodged a development application (with the consent of the defendant) in respect of the first floor of the building. Also, the second plaintiff, B&B Group Pty Ltd (“B&B”) had been incorporated on 23 March 2015. The shares in the company were held by the first plaintiff as to 50% and by Mr Raj Mohan as to the other 50%. Mr Mohan is Mr Bhushan’s nephew. Mr Mohan and Mr Benepal were appointed as the directors of the company.

27. On about 21 April 2015 a Shareholders Agreement was entered into between the first plaintiff and Mr Mohan. A document headed “Maharajas Haveli Proposal for Partnership” was attached to the Shareholders Agreement as an appendix. The document was stated to form part of the Shareholders Agreement. This document refers to the establishment of a new corporate entity to be owned as to 50% by the first plaintiff and as to 50% by “Batla Group (Raj Mohan)”, with Mr Benepal and Mr Mohan as directors. The document continues:

Once the Company is formed based on the above Share Structure the New Entity has to:

Transfer all business assets including Business names to the new entity

Open a New Bank Account

Apply for New ABN/GST/TFN

Create new MYOB data file

Advise Customers and supplies [sic] who are in the Maharaja’s database and accordingly transfer to new business

Create new employment contract for all employees

Insurance/upper to taken on new business.

Require Shareholder Agreement

Mr Satinder Benepal to be paid $150,000 plus Super initially and upon completion of new function centre wages to be increased to $200,000 plus Super for the management of the function centre, working for 7 days a week.

Mrs Ranbir Benepal to be paid $90,000 plus super for advertising and marketing work.

Upon creating the above Company, Batla Group (Raj Mohan) to invest $1.5 million directly on the existing property owned by Batla Group (Raj Mohan) for the development of the new function centre. Any surplus funds left should be transferred to New Company for future development.

Batla Group (Raj Mohan) then has to transfer $500,000 into the New Entity as a loan from Shareholder. (Batla). This amount will then be paid to Maharaja’s Palace Pty Ltd for the payment of its existing debt.

Maharaja’s Place [sic] will then transfer the Assets into the new entity, as follows:

Stock - $50,000

Plant & Equipment $420,000 existing (excluding Audi)

Plant & Equipment $250,000 new

Oasis Function Centre Goodwill plus renovation $280,000

28. It was thus contemplated that $500,000 would be paid by Batla Group [sic – Bathla Group] to the new entity, which would pay the amount to the first plaintiff, whereupon the first plaintiff would transfer its assets (valued at $1 million) to the new entity. The new entity would hold the assets and be subject to liabilities for loans of $500,000 to each of Batla Group [sic] and the first plaintiff. The document does not include anything about leases or the terms of occupation of the premises.

29. $500,000 was paid to B&B on 15 May 2015. The source of the funds was Universal. The withdrawal was treated as a reduction in the amount of Mr Bhushan’s loan account with that company.

30. Mr Goyal deposed that on 4 June 2015 he had a further meeting with Mr Benepal. Mr Goyal says that he made notes following the meeting, including notes (in the top right of the document) of a discussion about leases. Mr Goyal says that there was a conversation to the following effect:

Mr Goyal:   I have spoken to Mr Bhushan and he will agree to the following terms for the leasing of the shops:

(a)   there will be a lease for the upstairs and a lease for the downstairs shops;

(b)   the lease term will be five years with two options to renew of three years each and with a demolition clause of three months;

(c)   the rent payable for the upstairs area will be $10,000 per month plus GST, to be increased to $15,000 per month plus GST after the first year of the term of the lease and thereafter by increases in accordance with the CPI;

(d)   the lease for the upstairs area will commence from the completion of the fitout upstairs, and there will be a rent free period of three months;

(e)   the rent payable for the downstairs shops will be $15,000 per month plus GST to be increased in accordance with CPI for each year of the term after the first year; and

(f)   the commencement date of the lease term will be 1 June 2015.

Mr Goyal explained that his reference to the upstairs area included both shop 17 and shop 18.

31. Mr Benepal denies that such a conversation occurred.

32. On 24 June 2015 Universal gave instructions to a solicitor (Mr Hardman) to issue a new lease for shops 2, 3, 4, 5A, 5B, 6, 7, 8 and 12. The instructions were given in an email in the following terms:

Kindly issue us a new lease for the above properties together as one.

Previously we had we had [sic] 2,3,4,5 then 6,7,8 then 12 separately.

Now we need to bring all in one and the details are as follows.

New Lease for 2,3,4,5a,5b,6,7,8 & 12/14-18 Douglas Road, Quakershill [sic].

1. The lease name should be B & B Group Pty Ltd, Unit 14-18 Douglas Road, Quakershill [sic].

2. $15,000.00 per month and outgoings as same as before on previous lease.

3. Lease to be commenced from 01/06/2015.

4. Rent increase as per CPI every year.

5. Lease period 5 years lease with No demolition clause.

6. Then 3 + 3 with demolition Clause 3 months.

If you need further assistance please advise me.

(Underlining original)

33. On about 8 July 2015 a proposed new lease was forwarded to B&B. The proposed lease seems to accord with the instructions given to Mr Hardman. The lease was not signed by B&B. Mr Benepal (who it seems was effectively the manager of the company) contends that this was because it was not in accordance with the agreement reached in mid-2014. In particular, Mr Benepal said that it was deficient because it did not extend to the upstairs area (or at least shop 18).

34. However, it does appear that B&B commenced making payments of rent (both in respect of the ground floor shops and shop 18) from about July 2015. The payments seem to have been made at the rates provided for under the existing leases.

Subsequent events

35. On 23 December 2015 Blacktown City Council issued a consent to Mr Benepal’s application for the development of the first floor of the building, namely “internal fitout works to first floor to expand existing function centre, including change of use of part first floor from church to function centre”. Mr Benepal was involved in progressing various aspects of the proposed development throughout 2016. The defendant was also involved from time to time, for example in accepting quotations from consultants and providing owner’s consent to the making of an application for a construction certificate.

35. However, in about late 2016 or early 2017, Mr Bhushan informed Mr Benepal that he had decided not to proceed further with the proposed development. Mr Benepal says that Mr Bhushan told him at that time that he would still be giving him the lease, and he would finalise one lease for upstairs and downstairs. Mr Bhushan denies that he had such a conversation. He further denies that Mr Benepal ever raised with him the omission of shop 18 from the proposed lease that had been provided in July 2015.

36. Mr Benepal deposed that after those conversations with Mr Bhushan he instructed solicitors (Guardian Solicitors) to pursue finalisation of the lease.

37. On 6 February 2017 Ms Cignarella of the managing agent (Marcs Property) sent Mr Benepal a copy of the proposed lease that had been provided in July 2015. Ms Cignarella described it as the “new lease which was prepared and waiting your execution”. By 16 February 2017 Guardian Solicitors had made contact with Mr Hardman. On 17 February 2017 Ms Myers of Guardian Solicitors sent an email to Mr Hardman in the following terms:

We refer to our telephone conversation with your office on 16 February 2017 and have attached copy of correspondence and documents which have just been provided to us by the tenant who wishes us to act in this matter.

We note that the matter may be old going on the correspondence and further the Annexure documents to the lease appear not to be complete.

Would you please call Grace Silveira, Solicitor, of our office on 9836 3522 to discuss this matter as she has some issues she would like to further discuss with you prior to having our client attend to sign the lease documents.

39. It appears that Ms Horan of Mr Hardman’s office then sought instructions from Ms Srirangan of Universal. Ms Horan indicated that they (presumably Guardian Solicitors) “said their clients are keen to sign up a lease”.

40. On 10 March 2017 Marcs Property sent an email to Mr Benepal in the following terms:

As per our discussion, attached again is the lease.

Please advise your intentions at your very earliest convenience.

The terms of the email suggest that the attached lease was in the same terms as the earlier versions, but the evidence is not clear on that point. Neither is it clear whether a draft lease sent by Ms Horan to Guardian Solicitors on 18 April 2017 was in precisely those terms. There seems little doubt, however, that the form of lease remained only over the ground floor shops.

41. On 24 April 2017 Ms Silveira of Guardian Solicitors sent an email to Ms Horan in the following terms:

We refer to your email of 18th instant to Lesley Myers of our office attaching the draft lease and raise the following matters:

On the second page of the lease there is a reference to a Marc Thomas Hardman who will be signing under Power of Attorney on behalf of Universal Property Gro. Please advise the relationship between Universal Property Gro and the Lessor.

I note that the second page of Annexure A is missing – please provide us with a copy for insertion in the lease.

In the third line of Additional Lease Covenant 1(a) we request the deletion of the words “inhibited or”.

Would you please provide us with the Disclosure Statement for our client’s execution.

We would appreciate your urgent response to the matters raised above.

42. On 26 May 2017 Ms Silveira again sought an urgent response to her email of 24 April 2017. This seems to have prompted Universal to request Mr Hardman to amend the demolition clause so that it could be activated at any time, rather than only after the expiry of the initial five year term, as had been provided in the first draft. Mr Hardman made the amendment and sent the revised lease to Universal. For some reason this draft was not provided to B&B or its solicitors, and the matter appears to have stalled.

43. On 9 April 2018 Ms Silveira again chased a response to her emails of 24 April 2017 and 26 May 2017. Ms Horan responded on 10 April 2018, stating that her client had given instructions that they were not proceeding with the matter. Mr Bhushan deposed that by March 2018 a decision had been made to sell the property.

44. The defendant thereafter took steps to terminate the tenancies over shop 18 and the ground floor shops, and recover possession of those areas.

Determination

45. The contention that a binding agreement for lease was concluded as alleged in the Statement of Claim essentially rests upon the testimony of Mr Benepal concerning his discussions with Mr Bhushan. No contemporaneous notes of the discussions are in evidence. There is also an absence of other contemporaneous documents that refer in their terms to the content of any discussions between the two men about a lease. The documents that record the terms of what might be described as the joint venture to be conducted through the new corporate entity (B&B) do not make reference to any discussions about a lease.

46. In these circumstances, it is necessary for the Court to place considerable reliance upon its assessment of the witnesses, particularly Messrs Benepal and Bhushan.

47. I did not find either to be an impressive witness. Mr Benepal’s evidence given in the witness box was often expressed in vague or confusing terms. I have already referred to his evidence about shop 2 which is difficult to reconcile with the documentary evidence. Further, Mr Benepal gave some answers in cross-examination which I cannot accept. His evidence to the effect that all of the discussions about the details of the lease were held with Mr Bhushan, not Mr Goyal, and his denial that he ever spoke to Mr Goyal about having two leases, are examples.

48. I interpolate that I formed a relatively favourable view of Mr Goyal as a witness. His testimony was supported in important respects by notes he made in relation to meetings held with Mr Benepal in April and June 2015. Mr Goyal’s evidence is preferred to that of Mr Benepal to the extent that their accounts diverge.

49. I have come to the overall conclusion that Mr Benepal’s uncorroborated evidence concerning his discussions with Mr Bhushan must be treated with caution.

50. I also have reservations about Mr Bhushan as a witness. I consider that aspects of his testimony were overstated and to that extent unreliable. For example, he was not content to simply deny Mr Benepal’s account of the central conversation about leasing; Mr Bhushan went on to depose that he did not have any other conversation with Mr Benepal concerning any new lease of any of the shops in the building. It would be most surprising if there were no conversations about lease arrangements in the course of the discussions about the joint venture. The proposed joint venture involved the conduct of a business in the building and an associated development of the upstairs area. Mr Bhushan’s evidence in that regard was in any event undermined by his own assertion in cross-examination that he did speak to Mr Benepal about lease arrangements (one lease for the ground floor and one lease for upstairs). I note further that Mr Goyal gave evidence that he understood one of the terms of the joint venture required that a new lease be entered into. That understanding would presumably have come from Mr Bhushan. Mr Bhushan’s evidence that it was not his practice to have discussions with business acquaintances which involved negotiations about monetary matters was also in my view an overstatement of the true position. I will add that whilst Mr Bhushan maintained, correctly in my view, that the $500,000 contributed towards the joint venture was his personal money rather than the money of Universal, his evidence to the effect that his nephew Mr Mohan was acting in the joint venture independently of the Bathla Group was implausible in light of other evidence, including the terms of the appendix to the Shareholders Agreement, the involvement of Mr Goyal in discussions in January 2018 about the purchase of “our share” in B&B, and the circumstances in which Mr Mohan resigned as a director of B&B shortly thereafter.

51. Based on Mr Bhushan’s acceptance in cross-examination that he did speak to Mr Benepal about lease arrangements, and the inherent likelihood that this topic would be raised in the context of the discussions about the joint venture, I am prepared to accept that the two men did speak about lease arrangements for the new entity to be established that would carry on the businesses. This is likely to have occurred in about late 2014, not long before Mr Goyal became involved. However, for the reasons which follow, I do not accept that there was a conversation in the terms of or similar to that deposed to by Mr Benepal in which a binding agreement for lease was concluded. In particular, I am not satisfied that the defendant (for whom I accept Mr Bhushan was, relevantly, acting) bound itself to grant a lease over the ground floor shops (including shop 2) and upstairs shops 17 and 18 (or at least shop 18) for a starting rent of $198,000 per annum.

52. Despite my criticism of Mr Bhushan’s evidence about not involving himself in negotiations about monetary matters, it is likely in my view that his discussions with Mr Benepal about lease arrangements were of a broad or general character only, and that Mr Bhushan did indeed then arrange for the discussions and any detailed negotiations with Mr Benepal to be carried on by Mr Goyal.

53. I generally accept (over Mr Benepal’s denials) the evidence given by Mr Goyal as to his negotiations with Mr Benepal and Mr Sami about the proposed joint venture, including as to leasing. His account of two meetings with Mr Benepal at which leasing was discussed is to a degree supported by his notes. It was not suggested to him that the notes were not genuine, or might be inaccurate. This evidence establishes that in April 2015 there was discussion about the terms of a demolition clause, and a rent free period in respect of the new function centre. These are not minor matters. The evidence also establishes that on 4 June 2015 (after the Shareholders Agreement had been entered into) there was discussion about rents. According to Mr Goyal he spoke about a lease of the upstairs area (shops 17 and 18) to commence at a later time and with a three month rent free period at a starting rent of $10,000 per month (plus GST) increasing to $15,000 per month (plus GST) after one year, and a lease of the downstairs shops to commence on 1 June 2015 at a starting rent of $15,000 per month (plus GST). These amounts together are considerably greater than the $198,000 per annum which Mr Benepal claims to have agreed upon earlier with Mr Bhushan.

54. Mr Goyal’s evidence is further supported by the terms of the instructions given to Mr Hardman in June 2015 for the preparation of a new lease. The form of lease so prepared and submitted is fundamentally at odds with the agreement asserted by Mr Benepal. He stated repeatedly when giving evidence that this form of lease was deficient because it did not include the upstairs area (or at least shop 18), but there is no evidence that this matter was raised by him at the time. Mr Benepal said in cross-examination that he did not provide the lease to a solicitor at that time. He sought to explain his inaction by the fact that he trusted Mr Bhushan who had become a friend he would talk to when he came to the restaurant.

55. However, Mr Benepal also gave evidence that in 2017, after Mr Bhushan had told him that the joint venture was not going to continue, he discussed the form of lease with Guardian Solicitors and told them that the lease was incomplete because it did not include shop 18. I do not accept that evidence. If he had given instructions to Guardian Solicitors to that effect they would scarcely have communicated with Mr Hardman or Ms Horan in February and April 2017 about the form of lease in the terms they did and without saying anything about an erroneous omission of shop 18. I reject Mr Benepal’s suggestion that the solicitors may have “missed” the point he had raised with them. I do not accept that he gave instructions to his solicitors as he suggests.

56. In my opinion, Mr Benepal’s failure in either 2015 or 2017 to take issue with the form of the lease that had been submitted tells strongly against the conclusion that he and Mr Bhushan had earlier reached agreement on the terms alleged.

57. I should add in this context that I do not think that the reference in Ms Srirangan’s email to Ms Cignarella of 19 December 2016 to shop 18 “missing on lease” supports the view that shop 18 had been intended to be included in a new lease on the terms alleged. The reference must be read in its context. The email refers to the (monthly) rent under the new lease of $16,500 (that is, $198,000 per annum) applying only to the ground floor shops, with an additional rent payable for shop 18.

58. There is another strong indication that no binding agreement for lease was concluded as alleged. In this regard, I refer to the somewhat confusing evidence given by Mr Benepal towards the end of his cross-examination to the effect that the rent could have been more than $198,000 per annum (after the upstairs area including the former church area was complete), but he did not know what the rent was meant to be “because the lease was not fully completed and we were discussing rent and everything a lot of times, a number of times with Mr Bhushan”.

59. It follows from the above that I am not satisfied that a binding agreement for lease was concluded as alleged. It is not necessary to consider whether the alleged acts of part performance give rise to an enforceable right to the grant of the alleged lease. I note, however, that reliance was placed on at least some of those acts, not only as acts of part performance strictly so called, but as subsequent conduct that supported the existence of the alleged agreement. I have considered them in that way. However, in my view, neither the acts when viewed individually, nor the acts when viewed together, provide a firm basis to infer the making of the alleged agreement. Many are referable to the establishment and carrying on of the joint venture (including the incorporation of B&B) and do not themselves concern occupation or use of the premises, or the terms of such. It is alleged that shortly after the Shareholders Agreement was made, B&B took occupation of the premises (being the ground floor shops and shop 18), carried on business there, and paid rent. The allegation of taking possession is denied, and I note that rent invoices do not seem to have been issued to B&B. However, even if B&B was in possession and making the payments, these matters carry little weight in circumstances where the amount of rent paid was in accordance with the existing leases, not the alleged agreement.

60. An estoppel case (pleaded at paragraphs 26 to 30 of the Statement of Claim) received little attention in submissions. This case rests upon the making of representations by the defendant in the course of the conversations alleged to have taken place between Messrs Benepal and Bhushan in 2014. As I have not accepted that there was a conversation about the leasing arrangements as alleged, the estoppel case must be rejected. A challenge to the efficacy of certain Notices to Quit issued by the defendant (pleaded at paragraphs 31 and 32 of the Statement of Claim) was not the subject of any submissions. Neither is any relief directed to those notices. The position taken by the plaintiffs is that B&B is in possession of the ground floor shops and shop 18. None of the notices were addressed to B&B, but I do not understand it to claim any entitlement to possession apart from the rights that would arise from the alleged agreement for lease (or the claimed estoppel). In these circumstances I see no reason why the Court should not simply order that the Statement of Claim be dismissed. The Court will also order that the plaintiffs pay the defendant’s costs of the proceedings.

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Decision last updated: 16 August 2018