Makary v Hamdan; Hamdan v Makary

[2019] NSWSC 460

Supreme Court

New South Wales

Medium Neutral Citation:	Makary v Hamdan; Hamdan v Makary [2019] NSWSC 460
Hearing dates:	8 – 9 April 2019
Date of orders:	26 April 2019
Decision date:	26 April 2019
Jurisdiction:	Equity
Before:	Darke J
Decision:	Judgment for possession entered against the defendant in favour of the plaintiff.
Catchwords:	ESTOPPEL – equitable estoppel – proprietary estoppel – company associated with the defendant held a five year lease with an option to renew for a further five years over a property owned by the plaintiff – defendant carried out renovation works on the property – whether plaintiff had assured the defendant that a further five year lease with a five year option would be granted if renovation works to the property were undertaken – assurance held not to have been made – estoppel claim dismissed   LAND LAW – leases – claim by landlord for possession of property – defendant continued to occupy property following the termination of a lease –defendant continued to pay rent to the plaintiff whilst negotiations for a new lease were on foot – plaintiff commenced proceedings for possession of property – whether defendant occupied property under a tenancy at will or a periodic tenancy – defendant held to occupy property under tenancy at will – tenancy terminated by commencement of proceedings – judgment for possession entered against the defendant
Cases Cited:	Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 Javad v Aqil [1991] 1 WLR 1007
Category:	Principal judgment
Parties:	Colin Makary (First Plaintiff/Cross Defendant) Makary Investments Pty Ltd (Second Plaintiff) Bilal Hamdan (Defendant/First Cross Claimant) Gas Point Guildford Pty Ltd (Second Cross Claimant)
Representation:	Counsel: Mr P Wallis (Plaintiffs/Cross Defendant) Mr M Davis (Defendant/Cross Claimants)   Solicitors: Eden York Lawyers (Plaintiffs/Cross Defendant) Masri Lawyers (Defendant/Cross Claimants)
File Number(s):	2018/64580; 2018/17272
Publication restriction:	None

Judgment

Introduction

1. This consolidated proceeding concerns a service station site in Fairfield Road, Guildford West. The service station is part of the parcel of land contained in Auto Consol 7814-55. The first plaintiff, Mr Colin Makary, is the registered proprietor of the land. Mr Makary, or alternatively the second plaintiff Makary Investments Pty Ltd, seek orders for possession of the service station against the defendant, Mr Bilal Hamdan. Mr Hamdan and a company associated with him, namely Gas Point Guildford Pty Ltd, bring their own claim in which it is alleged that Mr Makary is bound by an estoppel that precludes him from denying the existence of an equitable lease of the service station for a term of 5 years with an option for a further 5 year term. An order for specific performance is sought to compel the grant of a lease accordingly.

2. The claim for possession is relatively straightforward. In summary, it is alleged that:

1. Mr Makary granted a lease of the premises in favour of Makary Investments Pty Ltd for a term ending on 1 January 2016;

2. Makary Investments Pty Ltd granted a sublease of the premises to Gas Point Guildford West Pty Ltd (“Guildford West”), a company associated with Mr Hamdan, for a term ending on 31 December 2015 with an option for a further term of 5 years;

3. Guildford West failed to exercise the option, and went into liquidation on 11 November 2015;

4. neither Mr Hamdan, nor any person or entity associated with him, subsequently entered into any lease of the premises for a term;

5. since the termination of the Guildford West tenancy the premises have been occupied by Mr Hamdan on the basis of either a tenancy at will or a periodic tenancy from month to month; and

6. any tenancy has been terminated by the giving of notice or the commencement of the proceedings.

3. The estoppel asserted by Mr Hamdan is the basis of his defence to the claim for possession. The alleged estoppel is in the nature of an equitable proprietary estoppel. It is alleged that in a conversation between Mr Makary and Mr Hamdan in about July 2014, Mr Makary agreed that if Mr Hamdan undertook a renovation of the service station he would grant a lease for a 5 year term with a 5 year option. Mr Hamdan alleges that he subsequently carried out (or caused to be carried out) a renovation of the service station at considerable expense, acting on the assumption that a lease for 5 years with a 5 year option would be granted. Mr Hamdan contends that it would be unconscionable if Mr Makary was permitted to depart from the assumption he induced.

4. Mr Hamdan’s version of the conversation is disputed by Mr Makary. So, too, are some later conversations alleged by Mr Hamdan in which reference is said to have been made to the earlier promise of a new lease, or which otherwise relate to that earlier promise. An assessment of the credibility and reliability of the evidence given by Mr Hamdan and Mr Makary concerning these matters is of central significance to the determination of the matters in dispute between the parties.

Summary of relevant evidence

5. As noted above, a sublease of the service station premises had been granted to Guildford West for a term ending on 31 December 2015, with an option for a further term of 5 years. Since its incorporation in 2010, the directors of Guildford West were Mr Hamdan, Mr Wassim Jreij and Mr Leon Elias. Messrs Jreij and Elias were shareholders in the company. Guildford West operated the service station business at the premises. Mr Hamdan did not at first play an active role in the operation of the service station. However, in early 2014, Mr Hamdan became the sole shareholder in and sole director of Guildford West. Mr Hamdan says that Messrs Jreij and Elias transferred their interests in the business to him.

6. Mr Hamdan deposed that when he took over he telephoned Mr Makary and informed him that he was “now running the petrol station”. According to Mr Hamdan, Mr Makary said that was no problem, and that “as long as you can pay my rent, I am happy”. Mr Hamdan further says that Mr Makary declined a request for a reduction in rent. Mr Hamdan deposed that the conversation took place in the Arabic language.

7. Mr Hamdan further deposed:

After I had things in order at the Station, I decided that given that it was old and looked very out of date, business at the Station might increase if its appearance was improved. I was also aware that the lease was about to run out.

I spoke with Colin Makary in about July 2014 about undertaking renovations to the Station over the phone. I don’t remember the exact date, but I remember that it was about 16 or 17 months before the sublease was due to end and that was 31 December 2015.

I said to him words to the following effect, but spoken in Arabic:

Mr Hamdan:   Colin, the Petrol Station is no good. It’s very old. I want to renovate it and make it look better, but if I do that, I want to take up a 5 year lease with a 5 year option.

Mr Makary:   If you do the renovation, I will give you 5 by 5. A 5 year lease and 5 year option.

Mr Hamdan:   Thank you Colin. I will do the renovation and let you know when it is done so that I can arrange the new lease.

Mr Makary:   Yes, we can arrange the lease after you are finished.

That evening, I spoke with my wife about the Station. I told her about the agreement that I had reached with Colin and she was supportive of the renovations because of the option that we would be given.

8. Mr Hamdan’s wife, Meassar Hamdan, deposed that in June or July 2014 her husband told her that:

Colin had agreed to give us a lease for 5 years with a 5 year option if we renovate.

9. Mr Makary denied that there were ever any discussions about Mr Hamdan undertaking renovation works in exchange for him giving a 5 year lease with a 5 year option. Mr Makary does however state that he received a telephone call from Mr Hamdan in about July 2014 in which Mr Hamdan said words to the following effect:

I am now looking after the service station and that [sic] I have ordered a new digital sign that will be installed this Friday and the rental will always be on time as usual.

10. Mr Makary says that Mr Hamdan did not say anything about any financial problems, partnership issues or restructuring, and he took Mr Hamdan’s words to mean that he may have been required to manage or run the business himself.

11. Mr Hamdan deposed that shortly after his discussion with Mr Makary he commenced certain repairs and renovations at the service station. These works included new signage, the installation of a new storage room, painting, the installation of new shelving and cabinets, the building of a new kitchenette and office space, and the installation of air conditioning. Mr Hamdan claims that the works cost him more than $177,000. A number of invoices in evidence appear to relate to various works carried out at the premises. The invoices all bear dates in the period from April to June 2015. The amounts of the invoices add up to about $177,000. One of the invoices (for $60,500) was issued by Bill’s Quality Kitchens which is a kitchen renovation business operated by Mr Hamdan. No documents were adduced in evidence to show who made payments or when payments were made in respect of the invoices.

12. Mr Hamdan deposed that during the renovations he was in regular contact with Mr Makary (who was then in Lebanon) and spoke to him “no less than 30 times during late 2014 and 2015” about the renovations and the service station. This is denied by Mr Makary. Mr Hamdan also says that he sent some photographs of the renovations to Mr Makary.

13. Mr Hamdan deposed that in about October 2015, after he completed the renovations, he telephoned Mr Makary (who was still in Lebanon) and had a conversation with him in Arabic to the following effect:

Mr Hamdan:   I finished the renovations. It looks excellent. Can you please give me your solicitor’s details so that we can organise the 5 by 5 lease?

Mr Makary:   Don’t worry, when I come back, I will take care of you.

Mr Makary denied that this conversation took place.

14. In the meantime, on 13 February 2015 Gas Point Guildford Pty Ltd (“Guildford”) was incorporated. Mr Hamdan is the sole director of and shareholder in the company. Mr Hamdan does not refer to Guildford in his affidavit. However, he gave evidence in the witness box to the effect that at some time in 2015 (before Guildford West went into liquidation on 11 November 2015) he “changed the company name” to Guildford. I took this to mean that Guildford became the company operating the service station business instead of Guildford West.

15. Mr Hamdan also gave evidence in the witness box to the effect that he told Mr Makary in a telephone conversation “about the change of the name and about the company”. This was not suggested to Mr Makary in his cross-examination. In any event, there does not seem to have been any attempt made to effect a formal transfer of the sublease from Guildford West to Guildford.

16. The option to renew the sublease was required to be exercised by the end of September 2015. On 9 October 2015, RM Legal, solicitors retained by what may be described as the “Makary interests”, sent a letter to Guildford West (addressed to the premises) which included the following:

We note the sub-lease shall expire on 31 December 2015.

We note that you have failed to exercise your right to renew the option period.

As a result of your failure, you have lost the opportunity to use the option period.

You are required to vacate the premises by the sub-lease expiry date.

17. Mr Makary, who indeed had been in Lebanon for a lengthy period, returned to Australia on about 11 October 2015. He deposed that he went to the service station at some time between 13 and 15 October 2015 and met with Mr Hamdan. Mr Makary deposed that Mr Hamdan kept saying “I want my five years” and “It is owed to me”, and also said “It is the other five years in the lease that was in the company”.

18. Mr Makary further deposed:

He said word[s] to the effect of: “I will close the service station down”.

He said: “I received a notice from your solicitor (RM Legal)…because I did not exercise the last 5 years option…..I forgot and did not know. If you try to get me out I will not let anyone get in…..I will close it down…..even if someone else gets in I will not let them run it.”

I said: “I thought you are not interested…if you are let’s try and work on a five years agreement.”

We sat down and set out some terms for a new lease but just for 5 years and with no option period. I left those instructions with my solicitors RM Legal. I left Australia again on 24th November 2015.

19. Mr Hamdan deposed that he and Mr Makary met at the service station in early 2016 when Mr Makary returned from Lebanon. That date appears to be incorrect. The extract from Mr Makary’s passport indicates that he left Lebanon on 11 October 2015 and returned to Lebanon on 25 November 2015. He did not return to Australia until May 2016. In any case, Mr Hamdan deposes that:

In early 2016, Mr Makary returned from Lebanon. He came to the Station to say hello and he had a look at the Renovations. Mr Makary spoke to me and he also walked around and greeted the operators of the mechanics garage, adjacent to the Station. At that time we had a conversation to the following effect in Arabic:

Mr Hamdan:   What do you think of the Renovation?

Mr Makary:   It’s good, but how much did you pay? $10,000 for this?

Mr Hamdan:   Are you serious? Of course it was a lot more than that. When can we arrange the new lease and option?

Mr Makary:   Lets meet later to discuss.

We later arranged to meet at a coffee shop on the corner of Merrylands Rd and McFarlane Street in Merrylands. When we met at the coffee shop, I had a conversation with Mr Makary to the following effect, in Arabic:

Mr Hamdan:   So what’s going on? You said you would give me a lease for 5 years with a 5 year option.

Mr Makary:   I can’t give you a 5 year option any more.

Mr Hamdan:   I spent the money, I need the option. You told me that you would give me an option. What’s changed?

Mr Makary:   I have to increase the rent to $15,500 plus GST.

Mr Hamdan:   What? You know it’s not worth that. The large diesel tank is leaking and doesn’t work. I’ve repaired dozens of cars because of that. How can you say that rent is reasonable?

Mr Makary:   I will give it to you for $12,200 plus GST if you do the VR1.

Mr Hamdan:   I need the 5 year lease with the 5 year option Colin.

Mr Makary:   Don’t worry Bilal. I will take care of you.

20. On 4 November 2015 Prestige Solicitors, who had been retained by Mr Hamdan, sent a letter to RM Legal in the following terms:

RE: GAS POINT GUILDFORD WEST PTY LTD SUBLEASE FROM MAKARY PREMISES: 54C FAIRFIELD ROAD GUILDFORD

We refer to the above matter and to your letter to Gas Point Guildford West Pty Ltd which we have just received by our client Bilal Hamdan on 3 November 2015.

We advise that our client had already exercised its option to renew the lease for a period of 5 years pursuant to clause 15 of the lease.

We enclose for your attention a copy of our letter posted to your office on 17 September 2015 to which we did not receive the courtesy of your reply. We note that discussions have also taken place between the parties since this time.

We await receipt of the new lease accordingly for our client’s execution. Should you have any queries please contact the writer.

The attached copy letter dated 17 September 2015 was correctly addressed to RM Legal. It contains a statement to the effect that Guildford West hereby exercised its right to renew the lease pursuant to cl 15 of the lease.

21. However, on 5 November 2015, RM Legal sent a letter to Prestige Solicitors which included the following:

We refer to your facsimile dated 04 November 2015 and confirm we did not receive the letter you claim was posted to our office.

The notice is defective in form, content and substance since the tenant did not personally attend to executing same.

We note your client failed to provide a Notice to Renew during the required period. Additionally, your client even admitted to our client for not providing a Notice.

Our client has been generous enough in offering your client a new lease.

If your client does not wish to proceed with a new lease, please advise your client to vacate the premises upon expiry of the sublease.

22. Prestige Solicitors responded by letter later on 5 November 2015 in terms which include the following:

We refer to the above matter and advise we dispute the contents of your facsimile letter of even date.

We note that our client did advise the landlord of proceeding to exercise its option to renew the lease pursuant to clause 15 of the lease, and this was confirmed by our office.

Our client made further discussions with the landlord to advise of renovations to the premises to which our client had just recently spent over $100,000.00 to implement such renovations. We note that the renovations were made since discussions took place between the parties of our client’s intention to exercise the option to renew the lease.

Our client wishes to proceed in formalising its position as a tenant and we await receipt of the relevant documentation to be forwarded to our office.

23. On 6 November 2015 RM Legal sent another letter to Prestige Solicitors. The letter included the following:

We refer to your facsimile dated 05 November 2015 and reiterate your client failed to provide Notice to Exercise the Option Period.

We are instructed to cease further discussions regarding your client’s failure to exercise the option period.

Our clients are currently in discussions to organise a new lease.

Please advise if your client shall proceed with the new lease.

If so, we shall forward the lease to your office to be signed by your client within seven (7) days.

24. Guildford West was placed into liquidation by court order on 11 November 2015. It seems that the liquidation was the result of a failure on the part of Guildford West to pay a debt claimed to be due by United Petroleum.

25. Later in November 2015 the solicitors engaged in further correspondence about the terms of a new lease. On 20 November 2015, Prestige Solicitors sent an email to RM Legal which included the following:

We refer to the above matter and are instructed to have the following amendments:

Commencement date: 1 January 2016

Termination date: 30 December 2026

Rent to read $12,200 plus GST

Special condition 7: to incorporate that the sublessee will pay up to $30,000 anything over this amount will be paid by the sublessor.

We look forward to receiving the amendments in order for our client to execute.

26. RM Legal sent an email in response shortly thereafter which included the following:

We are instructed an agreement has been reached between both parties on the following terms:

Commencement Date: 1 January 2016

Termination Date: 30 December 2020

Term: 5 years with no Option

Rent: $12,200.00 plus GST

Please see attached VR1 Compliance Invoice. Your client will be responsible for full payment of the Invoice. Your client shall be responsible for all items mentioned in the Invoice. Our client shall be responsible for all other items not mentioned in the Invoice.

Our client shall be responsible for damage to underground tanks.

27. On 1 December 2015 Prestige Solicitors sent an email to RM Legal in the following terms:

We refer to the below email received by your office on 20 November 2015 and are instructed that our client rejects the amendments noted below as this was not what was negotiated between the parties prior to your client going overseas.

We are instructed that the options given to my client was as follows:

Our client attend to VR1 compliance up to an amount of $35,000 anything over this amount is borne by your client and therefore the rent amount is $12,200 plus GST, with a 3% increase; otherwise

If our client chooses not to obtain the VR1 compliance than the rent amount is $12,700 plus GST with a 3% increase.

If your client is not agreeing to our point 1 of this email any more than [sic – then] our client will not attend to the VR1 compliance and will revert to point 2 in our email.

Please confirm your clients position so that the sublease may be finalised and executed by the parties.

28. On 9 December 2015 RM Legal sent an email to Prestige Solicitors which included the following:

With respect to the VR1 Compliance, your client will be responsible for total payment of the invoice.

Secondly, your client shall attend to matters noted in the invoice.

Nevertheless, our client will attend to all other matters not noted in the invoice. More specifically, our client shall be responsible to rectify damage to the underground tanks.

Our client will not deviate from the above terms.

Please have your client sign the sublease in duplicate and return same to our office.

29. On 11 December 2015 Prestige Solicitors sent an email to RM Legal in the following terms:

We refer to the below and are instructed that our client has agreed to these terms.

We note that Sublessee details need to be amended to read GAS POINT GUILDFORD PTY LTD ACN 604 219 730.

Kindly amend and have this forwarded to our office in order for our client to sign.

30. On 15 December 2015 RM Legal sent a form of sublease to Prestige Solicitors. Guildford was named as the sublessee. The term of the sublease was 5 years ending on 30 December 2020. The sublease contained no option to renew. It seems to have been contemplated that a fresh lease (referred to as the Head Lease) would be entered into between Mr Makary and Makary Investments Pty Ltd for a term ending on 6 January 2021.

31. Despite the terms of the 11 December 2015 email from Prestige Solicitors, and numerous follow-up requests from RM Legal, the sublease was not executed and returned by Guildford.

32. I interpolate at this point that Meassar Hamdan deposed that on or around December 2015 she overheard a telephone conversation in Arabic between her husband and Mr Makary to the following effect:

Mr Hamdan:   Colin, where have you been? I need to speak to your lawyer. When are we going to arrange the 5 year lease and option that you promised me? I have done the renovations as agreed.

Mr Makary:   I am coming to Australia and you will be happy. Don’t worry, we will sort it out when I return.

33. Also, Mr Robbie Mustafa, a close friend of Mr Hamdan’s, deposed that in late 2015 he overheard a telephone conversation between Mr Hamdan and Mr Makary (said to be calling from Lebanon) to the following effect:

Mr Hamdan:   I have done all the renovations to the station, why are you giving me a hard time, you told me once work is finished you would give me a five year lease with a five year option.

Mr Makary:   How many times have I told you not to stress you will be happy when I come to Australia, you have a family and I have a family.

Mr Hamdan:   Please send me your lawyers details so that I can get my lawyer to contact them.

34. Mr Makary retained new solicitors, M Law Group, in March 2016. Mr Makary gave evidence that about that time he became aware that Guildford West had gone into liquidation. M Law Group took steps in April 2016 to terminate any tenancy held by Guildford West.

35. In late April 2016 M Law Group was contacted by Mr Adam Salameh, an accountant retained by Mr Hamdan. On 28 April 2016 Mr Salameh sent an email to M Law Group which included the following:

As per our conversation we need to highlight the terms and conditions of the lease as per instructions from Mr Bilal Hamdan please prepare the following lease on these conditions as before highlighted as per his instructions with the owner Mr Makary, these are the following terms and conditions:

5 Year Lease

Rent $12200.00 plus gst

Vr 1 on the tenant

Cpi 1.25% like previously notified

Petrol Station and some confectionary

Please prepare ASAP and Mr Bilal Hamdan will be more than willing to sign immediately. Thank you

36. On 2 May 2016 M Law Group responded by email, stating that they had instructions to commence proceedings for possession of the premises. Later on 2 May 2016 Mr Salameh sent an email to M Law Group which included the following:

Why have you changed proposition since our discussion over the phone and you had considered and thanked Mr Hamdan for giving you instructions to draw up the new lease and it is all running fine, what has changed from last week till now as Mr Hamdan was on belief that all was already signed from before with the previous lawyer and Colin before he went to Lebanon.

37. On 4 May 2016 Mr Salameh sent a lengthy email to M Law Group. The email included the following:

Till this date Mr Hamdan was on the belief all the details were prepared under New Co and was a matter of time just to sign and move on.

Why do you keep going backwards to the old Liquidated Co, as the lawyer and Mr Hamdan and Mr Makary has been clearly updated with all the information and changes from old co to the new Co and agreed to Give 5 years and 5 years option when he upgrades and renovates the petrol Station, to which he has done and Mr Colin Makary has backed down And we have witnesses to this.

…

We cannot see any reasoning as to why Mr Makary is declining to sign the new lease with New Co Gas Point Guildford Pty Ltd, as they had discussed fully the new terms and conditions prior to him leaving and avoiding Mr Hamdan.

Once again there is no reason as to why the tenanted place under the New Co is not given a new lease, there is no common or logical reason as to why he has to evict.

38. I note in passing that it appears, and is accepted by counsel for Mr Hamdan, that the statement in this email about the agreement to give five years and a five year option is the first occasion the agreement alleged by Mr Hamdan is referred to in the correspondence between the parties.

39. The parties seem to have then reached an impasse. It appears that Mr Makary wanted to be reimbursed for certain legal costs, including the costs involved in ascertaining the identity of the actual occupant of the service station. An agreement was reached for Mr Hamdan to pay a sum of $8,000 in that regard. That sum was paid later in 2016, although the evidence is not clear as to precisely when that occurred.

40. By 26 May 2016 Mr Hamdan had retained a new solicitor, Mr Masri of Masri Lawyers.

41. On 9 June 2016 Mr Masri sent an email to M Law Group. After referring to the $8,000, the email continued:

In addition my client intends to enter a new lease and we understand the rent has been agreed between our respective clients and is to be increased by CPI during the lease period of five years. My client is also seeking an additional option period of five years.

Please advice [sic] the further lease conditions your client proposes.

42. On 30 June 2016 M Law Group sent a Lease Terms Summary Sheet to Mr Masri. The sheet referred to a lease of the service station from Mr Makary to Mr Hamdan for a five year term with an option for a further five years. There is no evidence of any response from Mr Masri. On 29 July 2016 M Law Group sent an amended Lease Terms Summary Sheet to Mr Masri. This sheet referred to a lease of five years with no option to renew.

43. It took some time for Mr Masri to obtain instructions concerning this proposed lease. On 5 October 2016 Mr Masri sent an email to M Law Group stating that Mr Hamdan wanted amendments in respect of outgoings, and a five year lease with two options to renew for further terms of five years.

44. There were further communications between the solicitors in the period from November 2016 to January 2018. A Notice to Terminate directed to Mr Hamdan was served on 30 November 2016. This notice, which assumed the existence of a monthly tenancy, required Mr Hamdan to vacate the premises within one month from the date of service of the notice. Another Lease Terms Summary Sheet was sent by M Law Group on 12 March 2017. This sheet referred to a sublease with a term ending on 31 December 2020. A draft sublease was submitted by M Law Group on 30 March 2017. M Law Group submitted further draft documents, including a sublease, on or shortly after 19 May 2017. However, it is clear that no agreement for a new lease was ever reached.

45. Nevertheless, on 17 January 2018 Makary Investments Pty Ltd commenced proceedings in the Local Court against Mr Hamdan, seeking to recover about $22,000 in legal fees said to be due under a lease agreement alleged to have been made in March 2017. Those proceedings were transferred into this Court by order made on 21 September 2018. In the meantime, Mr Makary commenced the proceedings in this Court on 27 February 2018. The principal claims made in those proceedings are summarised above at [1] to [3]. The claim for fees originally made by Makary Investments Pty Ltd in the Local Court is no longer pressed.

Determination

46. It is convenient to deal first with Mr Hamdan’s equitable estoppel claim. Mr Hamdan bases his claim upon the conversation he says he had with Mr Makary over the telephone in about July 2014, and the subsequent carrying out of renovation works at the service station. Mr Hamdan’s version of the conversation is set out above at [7]. However, for the reasons which follow, I am not satisfied that a conversation occurred at any time between Mr Hamdan and Mr Makary to the effect, or substantially to the effect, of the conversation asserted by Mr Hamdan.

47. I am unable to accept Mr Hamdan’s evidence on this matter. He was an unimpressive witness. He gave much of his evidence in an unsatisfactory manner, including during the period when he had the benefit of an interpreter. On occasions Mr Hamdan appeared to adopt an overly defensive attitude; more often he appeared belligerent or excitable. Mr Hamdan frequently gave answers that were not responsive to the questions asked. That occurred despite repeated exhortations to focus upon the questions and answer accordingly. Mr Hamdan often interrupted the cross-examiner, and even the interpreter. My overall impression was that Mr Hamdan’s evidence needed to be treated with considerable caution.

48. Mr Makary on the other hand gave his evidence in a generally satisfactory way. He appeared to be making a genuine effort to answer the questions put to him. He also seemed to have a reasonable recollection of the events, even allowing that the salient events occurred more than 3 years ago. Whilst Mr Makary essentially adhered to his affidavit evidence, he made some concessions in the course of his cross-examination.

49. The impressions I formed of the two witnesses have led me to conclude that where their evidence is in conflict, the evidence of Mr Makary should be preferred unless Mr Hamdan’s evidence is firmly corroborated by contemporaneous documentary evidence, or other evidence of a reliable character.

50. There are no documents in evidence that contemporaneously record or refer to a conversation in the nature of that alleged by Mr Hamdan. The earliest (and it seems the only) documentary reference to a conversation of that nature is contained in Mr Salameh’s email of 4 May 2016. Even allowing for the possibility that Mr Hamdan is wrong in placing the conversation with Mr Makary as occurring as early as July 2014, the documentary reference was not made until well after the alleged conversation. The invoices in evidence suggest that the renovations carried out at the service station had commenced by April 2015 at the latest.

51. It is difficult to understand why any agreement by Mr Makary to give a five year lease with a five year option would not have been referred to in the documents that passed between the solicitors for the respective parties in late 2015. During that period, the parties were initially in dispute about whether Guildford West had exercised its option to renew the sublease, and thereafter in negotiations for a new lease. Had Mr Makary already agreed with Mr Hamdan to give a five year lease with a five year option it would reasonably be expected that the agreement would find expression in the correspondence that passed between the solicitors.

52. I note that the letter from Prestige Solicitors of 5 November 2015 refers to the expenditure upon renovations but does not state that Mr Hamdan (or any company associated with him) was thereby entitled to a five year lease with a five year option. The letter suggests only that the renovations occurred after discussions had taken place concerning “our client’s intention to exercise the option to renew the lease”. Thereafter, Prestige Solicitors made no reference to any agreement for a five year lease with a five year option in the course of the negotiations for a new lease, even in the face of the RM Legal email of 20 November 2015 in which it was stated that the parties had reached agreement upon a lease for five years with no option to renew. The email from Prestige Solicitors of 1 December 2015 took issue with some aspects of the RM Legal email, but was silent about the term of the lease. On 11 December 2015 Prestige Solicitors sent an email in which it was stated that their client had agreed to the terms of a proposed lease for a term of five years (see also the emails sent by Mr Salameh on 28 April 2016 and 2 May 2016).

53. Moreover, the tenor of the solicitors’ correspondence provides support for Mr Makary’s account of what occurred in October 2015 when he met Mr Hamdan at the service station. I prefer Mr Makary’s evidence in this regard, including his evidence to the effect that Mr Hamdan said that he was owed “the other five years in the lease that was in the company”, and that the pair then proceeded to discuss terms for a new lease. It is likely that discussions concerning the terms of a new lease took place on more than one occasion prior to about 24 November 2015 when Mr Makary left Australia to return to Lebanon. I do not accept that in the course of those discussions Mr Hamdan asserted that he had been promised a lease for five years with a five year option. In particular, I do not accept that a conversation occurred at the coffee shop in Merrylands as deposed to by Mr Hamdan.

54. I have considered the evidence given by Meassar Hamdan and Robbie Mustafa. However, I do not think that the evidence of either of them provides firm corroboration of Mr Hamdan’s evidence about the conversations he says he had with Mr Makary. Neither witness can be regarded as independent. Further, even leaving that aside, it is difficult to ascribe much weight to the evidence they gave. Each of them claimed to have a clear recollection of the terms of an overheard telephone conversation between Mr Hamdan and Mr Makary in late 2015 in which the former refers to a promise of a five year lease with a five year option once renovations had been done. Both accounts of the conversations suggest that Mr Hamdan said he wanted to contact Mr Makary’s lawyers about the matter. However, as noted above, the communications from Mr Hamdan’s solicitors to Mr Makary’s solicitors in late 2015 make no mention of a five year lease with a five year option, let alone an entitlement to such based on a promise given by Mr Makary. In these circumstances, and bearing in mind the obvious difficulty involved in seeking to accurately recall the terms of a conversation said to have occurred more than two years prior to the making of the affidavit, I do not think that these recollections of Meassar Hamdan and Robbie Mustafa can be regarded as accurate or reliable. The likelihood is that any conversations between Mr Hamdan and Mr Makary in 2015 (following the completion of the renovations) were concerned with either the exercise of the five year option, or the terms of a new lease, rather than the assertion by Mr Hamdan of an entitlement to a five year term with a five year option based upon a promise made by Mr Hamdan. I note that Mr Hamdan gave an answer in cross-examination to the effect that he called Mr Makary in Lebanon and asked him for the name of the barrister or solicitor “to renew option”. Meassar Hamdan also gave evidence about conversations with her husband in June or July 2014. Again, I do not think that her account can be regarded as accurate or reliable. Aside from the difficulty involved in seeking to accurately recall the terms of a conversation so long after the event, the terms of the first conversation, at least insofar as reference is made to not having “any lease time left”, seem unlikely. The sublease term did not end until 31 December 2015, and there was an option to renew for a further five years.

55. Having considered all of the evidence, I am not persuaded that Mr Makary made any promise to Mr Hamdan, or gave any assurance to Mr Hamdan, that a five year lease with a five year option would be granted if Mr Makary renovated the service station. I accept Mr Makary’s denial that there was ever any discussion to that effect. I should add that it strikes me as inherently unlikely that a clear promise or assurance of that nature would be given by Mr Makary in the course of a conversation in which no mention was made of either the nature or scope of the renovations proposed to be carried out, or the rent that would be payable under the new lease.

56. I accept that Mr Hamdan caused the renovation works to be carried out at the service station as alleged. I further accept that he incurred some liabilities to contractors in that regard. However, Mr Hamdan was not thereby acting in reliance upon any promise or assurance given to him by Mr Makary. If Mr Hamdan actually held any assumption that a five year lease with a five year option would be forthcoming, the assumption was not one that could be reasonably said to have been induced by Mr Makary.

57. It follows from the above that the equitable estoppel claim must be rejected. It is not necessary to consider whether the claim should fail for other reasons, for example that the terms of the promised lease, including as to rent, were insufficiently certain (compare Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [202]-[216] per Gleeson JA).

58. The equitable estoppel claim was the basis of Mr Hamdan’s defence to Mr Makary’s claim for possession. It was not submitted that the possession claim would fail for other reasons if the estoppel claim was not made out. In my opinion, Mr Makary is entitled to possession of the service station premises. No lease or agreement for lease was entered into by Mr Hamdan after 30 December 2015 when the sublease to Guildford West came to an end. In my opinion, at least since expiry of the period of notice specified in the Notice to Terminate served on 30 November 2016, Mr Hamdan’s occupation was in the nature of a tenancy at will rather than a periodic tenancy terminable on a month’s notice. Throughout 2017 and into 2018 the parties continued their dialogue about a proposed new lease. Even though it appears that Mr Hamdan paid an amount for rent each month during that time, I do not think that the parties should be taken to have entered into a periodic tenancy. The better view is that Mr Hamdan was merely permitted to remain in possession whilst the discussions continued in the hope or expectation that an agreement would eventually be made (see Javad v Aqil [1991] 1 WLR 1007 at 1012-13).

59. The tenancy at will was brought to an end by the commencement of the proceedings for possession in February 2018. Judgment for possession will be entered against Mr Hamdan in favour of Mr Makary. A writ of possession should issue to enforce the judgment, but in order to give Mr Hamdan a reasonable time to vacate the premises, the writ should not be executed for 28 days.

60. As for costs, it seems to me that it would be appropriate for Mr Hamdan and Guildford to pay 80% of the costs of Mr Makary and Makary Investments Pty Ltd. In circumstances where Makary Investments Pty Ltd effectively abandoned its claim for fees, that order would in my view reflect the degree of success achieved by the Makary interests and the Hamdan interests respectively on the various claims made.

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Decision last updated: 26 April 2019