Nichols v Amers Pty Ltd ACN 112 055 366 (Civil Dispute)
[2020] ACAT 23
•3 April 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
NICHOLS v AMERS PTY LTD ACN 112 055 366 (Civil Dispute) [2020] ACAT 23
XD1123/2019
Catchwords: CIVIL DISPUTE – breach of contract – termination of contract – term of contract – taxi plate lease
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 48
Cases cited:CIC v ACT Planning and Land Authority [2013] ACTSC 96
Tribunal: Senior Member A Anforth
Date of Orders: 3 April. 2020
Date of Reasons for Decision: 3 April. 2020
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 1123/2019
BETWEEN:
CHRISTINE MARY NICHOLS
Applicant
AND:
AMERS PTY LTD ACN 112 055
Respondent
TRIBUNAL:Senior Member A Anforth
DATE: 3 April 2020
ORDER
The Tribunal orders that:
1.The respondent is in breach of the lease agreement and is to pay compensation to the applicant in an amount to be agreed between the parties or assessed by the Tribunal.
2.The Registrar is to list the matter for directions for the assessment of compensation.
………………………………..
Senior Member A Anforth
REASONS FOR DECISION
Summary
1.The applicant leased taxi plate TX-198 (taxi plate) to the respondent on 22 October 2018 for a term of two years under the terms of a lease agreement (the contract).
2.The contract contained a term entitled ‘Termination of Contract’ which provided for termination of the lease under the following conditions:
(a)If the monthly lease payment in advance was not received, the lessee will send a notice of non-payment of the lease to the lessee.
(b)If the lease payment is not received within 14 days after the due date, the lease plate will become void and the lease plate will be returned to the lessor.
3.The respondent paid lease fees for the plate through to 1 March 2019 and then ceased payments.
4.The respondent surrendered the taxi plates to the applicant on 1 March 2019.
5.The applicant alleged the respondent breached the contract by not abiding by the two-year term of the contract and that she sustained damages as a result.
6.The respondent claims it terminated the contract lawfully under the ‘Termination of Contract’ clause and denies that the applicant has any right to damages.
7.The Tribunal finds the respondent was in breach of the contract by its premature termination within the fixed term.
History of the proceedings in the Tribunal
8.On 20 August 2019, Ms Nichols (the applicant) filed a civil dispute (contract) application (the application) claiming a total amount of $26,172 from AMERS Pty Ltd (AMERS or the respondent). The claim was for:
(a)damages capped at $25,000 for breach of a monthly agreed contract rent of $1,430 from 1 March 2019 to 22 October 2020;
(b)$600 for a taxi meter not returned to the applicant by the respondent; and
(c)$572.50 refund of the ACAT filing fee.
9.The application attached two annexures, including:
(a)the signed contract dated 24 September 2018 between the applicant and the respondent; and
(b)an undated email (which in the respondent submission was dated 6 February 2019) between the applicant and director of AMERS, Mr Muhammad Amer, purporting to recap a conversation the two had on 4 February 2019 regarding the respondent’s alleged unlawful termination of the contract.
10.The contract contained the following terms:
Term of Lease:
The lease of taxi plate and associated services is for a period of Two (2) years commencing on Monday 22 October, 2018, with an option of extending the lease for an additional two (2) years available to Amers Pty Ltd. Lease Amount for further two years shall be decided one month prior to the end of the first two year lease term.
Lease Fee and Payment Mode:
A total lease amount of $1430.00 (inclusive of GST) per calendar month is payable in Lessor’s bank account on or before the first day of each calendar month. This lease is equivalent to $330 per week (inclusive of GST)
The lease amount will be reviewed (in mutual agreement and reflecting the fair taxi market trends) at the end of every 12 months period if the lessee wants to extend on the lease.
Termination of Contract:
If the lease payment is not received within 7 days after due date, the owner will send a notice of non-payment of lease to the lessee.
Should monthly lease payments are [sic] not received within 14 days after due date, this lease will become void and as such, the lease plate will be surrendered to the owner of the plate.
…
Initial Payment and Contract:Contract Start Date: 22 October 2018
First lease Payment from 22 October to 31 October 2018 = $461.29 is due by 22 October 2018.
2nd lease payment for the month of November = $1430 (inclusive of GST) and so on per month until expiry of lease term.
11.A response was filed on 3 October 2019 by the respondent, arguing the contract allowed for termination of the lease agreement at the election of the respondent by cessation of rent. The response contained several documents and annexures, including:
(a)a background of the Canberra taxi industry;
(b)an email exchange between the applicant and the respondent, including:
(i) an email dated 6 February 2019 to Mr Amer from the applicant recapping the conversation between the two on 4 February 2019 (the same email as submitted by the applicant with the application); and
(ii) an email dated 11 February 2019 to the applicant from Mr Amer responding to the applicant’s email from 6 February 2019
(c)an email dated 22 June 2019 to Mr Amer from the applicant enquiring the location of the taxi meter;
(d)the contract;
(e)an unsigned copy of what is purported by the respondent to be the ‘Aerial Capital Group Taxi Lease Agreement’ – ‘Agreement – Taxi Plate Only – Agreement between Licensor (Owner) and Licencee (Operator)’ prepared by Chamberlains Law Firm, Turner ACT (Aerial contract); and
(f)an article published by The Canberra Times on 26 November 2015, titled ‘Taxi plate owner slapped down by ACCC over call to fight fire with fire’, written by Kirsten Lawson. The article reports on the ACCC warning sent to Canberra taxi plate owner Mr Phil Button after The Canberra Times reported Mr Button’s suggestion plate owners should use their control of the taxi dispatch system to protect the value of their taxi plates.
12.The Aerial contract contained a more detailed termination of agreement clause, but it is not the contract used by the parties.
13.A conference was held by the Tribunal on 5 November 2019 in order to attempt to settle the matter. Both parties appeared in person. As a result of the matter not settling at the conference, the matter was set down for hearing on 29 January 2020 and timetabling directions issued relating to filing and serving of evidence issued.
14.On 13 November 2019, the applicant submitted an application setting out the orders sought:
(a)The respondent be ordered to pay the amount claimed.
(b)In the event the respondent seeks to resume operation of the taxi plate, a more formal and agreed leasing agreement be entered into.
(c)The respondent provide full details (taxi plate numbers and lessors) of the number of taxi plates the company operates, the lease fees paid for to each and the leasing agreement of each.
15.On 2 December 2019, the respondent filed the following with the Tribunal:
(a)A written timeline of events.
(b)The statement of Mr Amer.
(c)Orders sought:
(i) The application be dismissed.
(ii) Compensation for the respondent’s time and effort spent on the Application, to the effect of 68 hours at $44.20/hour being $3,005.60.
(iii) $600 to compensate for the applicant’s allegedly false claim in relation to a taxi meter which was allegedly never supplied.
16.On 29 January 2020, the matter was heard before the Tribunal. Both parties appeared in person and were self-represented, with AMERS’ authorised representative Mr Amer assisted by his son, Mr Hamza Muhammed.
17.The decision was reserved by the Tribunal.
18.On 4 February 2020, the respondent made a further written submission. As the decision was reserved, the Tribunal decided not to admit that submission.
The factual background
19.It is useful to trace the sequence of events in the timeframe concerned.
20.Pre-1997, the Government auctioned off taxi plates. Investors bought them for around $200,000 to $250,000 and leased them to taxi operators.
21.The applicant bought the taxi plate in 1994.
22.In September 2018, the applicant and respondent entered into the contract. The contract had a ‘termination of contract’ clause.
23.In January and February 2019, the respondent contacted the applicant to request a reduction in lease price in line with the relevant market lease prices. The parties failed to reach agreement.
24.The respondent came to the conclusion the applicant was colluding to fix lease prices with other taxi plate owners from whom the respondent also leased taxi plates and this, in conjunction with his financial concerns, led to the respondent’s attempt to terminate the contract with the applicant.
25.The respondent gave seven weeks’ notice in writing to the applicant he was terminating the contract on 1 March 2019 by making no payments from that date.
Consideration of issues
26.Did the respondent breach the contract, and if so, did the applicant incur quantifiable damages and to what extent?
27.Did the respondent fail to return a $600 taxi meter to the applicant?
28.The other consequential issues sought by both parties are addressed below.
Contract law
29.There are four essential elements to the formation of a valid lease contract:
1)Intention–the parties must intend their promises to create legally enforceable obligations.
2)Agreement – there must be an offer by one party and an acceptance by the other party on the mutually understood subject matter of the contract.
3)Consideration – there must be an exchange of something of value from each party to the other.
4)The lease must contain the terms that are essential to a lease:
(a) The identity of the parties.
(b) The date of commencement of the lease.
(c) The duration of the lease.
(d) The rent payable.
(e) The manner in which it may be terminated.
30.If parties have expended the time and energy to reduce an agreement to writing the law will generally assume it is a complete record of the contract to the exclusion of anything said during prior discussions (the Parole Evidence Rule).
31.It is common ground that the applicant and respondent intended to create a contract and the contract was in part performed by both parties.
32.Although simple and brief, the contract is not alleged to breach any legal requirement for its validity.
33.The contract between the applicant and the respondent, dated 24 September 2018, is valid and enforceable.
Termination of contract
34.There is only one term in the contract providing for termination:
Termination of Contract:
If the lease payment is not received within 7 days after due date, the owner will send a notice of non-payment of lease to the lessee.
Should monthly lease payments are [sic] not received within 14 days after due date, this lease will become void and as such, the lease plate will be surrendered to the owner of the plate.
35.The respondent states he contacted the applicant in January and February 2019 to discuss reducing the lease fee for the taxi plate. It is noted by the Tribunal that under the contract between the parties, the applicant was not obliged to entertain nor accept a reduction in price from the $330 per week fee agreed upon in the contract.
36.Email correspondence between the two parties indicates that on 4 February 2019, the respondent advised the applicant he was giving “approximately 7 weeks notice to quit” after the parties were unable to agree on a reduced monthly lease fee.
37.It is reported that the respondent stated to the applicant on 4 February 2019 he would make his last payment on 1 March 2019 – because he was exercising his right to terminate the contract – at the reduced monthly payment of $265 instead of the contractual rental fee of $330. The respondent states he and the applicant agreed the respondent will pay $265 rental fee per week during March 2019.
38.On 6 February 2019, the applicant emailed the applicant, reminding him their current contract was for a period of two years, commencing 22 October 2018 and expiring 22 October 2020. The applicant offered to reduce payments for the respondent from $330 to $295 per week ($1,430 to $1,278 per month) from 1 April 2019.
39.On 11 February 2019, the respondent gave the applicant a ‘contract termination notice’ and ‘approximately 7 weeks’ notice which was courteous, but not provided for in the contract.
Interpretation of the contract
40.The applicant argued that the lease was for a fixed term with no provision for early termination except by agreement or for breach. No agreement was ever reached. Termination for breach is set out in the clause set out at paragraph 34 above. Upon termination for breach the innocent party retained its right at common law to damages. There was nothing in the contract that abrogated this right.
41.The respondent argued that the lease had to be read against the background of industry norms which provided for early termination without damages. This was said to arise from the fact that a new lessee for taxi plates would normally be quickly found and so the damages for early termination would be little if any.
42.At common law the innocent party is entitled to damages in the form of lost rent for the balance of the fixed term subject to its duty to mitigate losses by expeditiously seeking a new lessee. The applicant argued that her duty to mitigate in this sense is affected by a collapse in the market for taxi plates following the introduction of Uber and the release of more plates by the government.
43.The only issue that arises in this case that may call into the question the above common law principles is that the termination clause in this lease speaks of the lease being ‘void’ upon rent default by the lessee. Normally a breach, repudiatory or not, gives the innocent party the choice of terminating the lease or seeking specific performance. The lease terminates at the election of the innocent party, but the lease is not ‘void’ at that time; the lease continues to be in force and regulates the post termination rights of the parties. Normally the word ‘void’ connotes that the lease is taken not to have ever come into force and therefore no longer applies to the parties so that no right to damages arises to the innocent party. On this reading the respondent’s argument has some merit. If the lease is rendered void by the respondent’s own rent default, then the respondent escapes further liability under the lease from that point onwards.
44.If the parties had intended that the lease could be unilaterally terminated at the election of one party, whether by rent default or otherwise, then the lease could and should have said so. If the industry norm asserted by the respondent were true and was in fact the basis for the lease between the parties, then this too could and should have been included in the lease. The Tribunal notes, that with the exception of clauses 11.5-11.7, the termination clause in standard Aerial Taxi Lease provided by the respondent only provides for termination on breach by either party. Clauses 11.5-11.7 do provide for the termination of the lease without the accrual of further rights, including damages, where:
…the taxi industry is deregulated by the ACT government including any significant changes in the regulation, registration and issue of taxi plates…
45.It may be that the appearance of Uber and the release of new plates by the ACT government could satisfy this test; but there are two problems this argument faces:
(a)The Uber intervention and the issue of the additional plates by the ACT government preceded the present lease agreement i.e. it did not arise during the terms of the lease.
(b)This term was not included by the parties in their lease.
46.The respondent is an experienced and large-scale taxi operator who was aware of the industry issues and of the terms of the standard Aerial Lease. It was open to the respondent to have negotiated the inclusion of some such term, but it did not.
47.For these reasons the Tribunal is persuaded by the applicant’s argument that the lease was for a two year fixed term which the respondent has breached. Damages are consequential to the breach.
48.The Tribunal does not have the evidence relating to the mitigation issue i.e. whether the applicant has since leased the plates and when this occurred. The matter is to be listed for directions on this issue only.
Taxi meter
49.There was no evidence aside from an initial assertion by the applicant in relation to the supply or non-supply of a taxi meter, which the respondent denies. The Tribunal is not satisfied on the balance of probabilities that the respondent failed to return the meter.
50.The respondent claims the applicant should pay $600 to the respondent for falsifying information for a taxi meter that was never supplied to the applicant. The Tribunal has no jurisdiction to award those type of damages.
51.The applicant seeks orders that the respondent:
provide full details (taxi pate [sic] numbers and lessors) of the number of taxi plates that he operates, the lease fees paid to each and the type of Leasing Agreement (standard industrial form or his concocted “Get out of lease type”) signed with each of them.[1] [errors in the original]
[1] The applicant’s email to the Tribunal of November 14, 2019 at para (xi) of the attached PDF.
52.The Tribunal finds no grounds for such an order.
Order
53.The respondent is in breach of the lease agreement and is to pay compensation to the applicant in an amount to be agreed between the parties or assessed by the Tribunal.
54.The Registrar is to list the matter for directions for the assessment of compensation.
………………………………..
Senior Member A Anforth
HEARING DETAILS
FILE NUMBER:
XD 1123/2019
PARTIES, APPLICANT:
Christine Mary Nichols
PARTIES, RESPONDENT:
Amers Pty Ltd ACN 112 055
COUNSEL APPEARING, APPLICANT
COUNSEL APPEARING, RESPONDENT
SOLICITORS FOR APPLICANT
SOLICITORS FOR RESPONDENT
TRIBUNAL MEMBERS:
Senior Member A Anforth
DATES OF HEARING:
29 January 2020
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