One Four Wat Pty Ltd v Chong Ming Investments Pty Ltd
[2012] QCAT 704
| CITATION: | One Four Wat Pty Ltd v Chong Ming Investments Pty Ltd [2012] QCAT 704 |
| PARTIES: | One Four Wat Pty Ltd (t/as Trustee of the Wishart Friendly Grocer Trust) (Applicant) |
| v | |
| Chong Ming Investments Pty Ltd (Respondent) |
| APPLICATION NUMBER: | RSL039-12 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 9 November 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Notice of Dispute filed by One Four Wat Pty Ltd on 16 March 2012 is dismissed for want of jurisdiction. 2. No order as to costs. |
| CATCHWORDS: | LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – JURISDICTION, POWERS AND APPEALS OF COURTS AND TRIBUNALS – JURISDICTION GENERALLY – where offer existing tenants given Notice of Dispute under Retail Shop Leases Act 1994 – where landlords made offer to lease to applicant – where contractual provision that there will be no binding agreement until the Lease is signed – whether offer constitutes binding contract to grant lease – whether dispute is within Tribunal’s jurisdiction Queensland Civil and Administrative Tribunal Act 2009, ss 32, 47, 100 ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”).
REASONS FOR DECISION
In order to confer jurisdiction over an alleged retail tenancy dispute, something more than section 103 of the Retail Shop Leases Act 1994 (“the RLSA”) is required. Specifically, there must be an agreement under which “A” gives or agrees to give “B”, for valuable consideration, a right to occupy premises that are a retail shop, within the meaning of the RSLA.[1] In the absence of such an agreement, the claim of jurisdiction must fail. For the reasons following, I find no such agreement in this case, so the Respondent Landlord’s objection to jurisdiction must be upheld.
[1]The Dictionary contained in the Retail Shop Leases Act 1994 contains definitions of “lease”, “retail shop”, “retail tenancy dispute”.
In or about July 2010, Wade Trask, principal of the Applicant One Four Wat Pty Ltd (“the lessee”), became interested in leasing Shop 1 in Wishart Shopping Village, Wishart, Brisbane, which is owned by Chong Ming (”the Landlord”).[2] He contacted Savills, the then agent for Chong Ming, and on 11 March 2011 Savills emailed to him a draft offer to lease. Under the heading “Binding Agreement”, the draft contained these rather awkwardly worded and punctuated sentences:
For retail premises – Upon written agreement between the parties there will be no binding agreement until the Lease is signed. If the Lessee does not sign the lease the legal costs for preparation of [it] will be deducted from the deposit ...[3]
[2]These expressions are adopted for convenience of reference to the respective parties, not to preclude the issue of jurisdiction.
[3] Statement of Wade Albert Trask dated 27 July 2012 at [37], and annexures, page 55.
On the same day (11 March 2011), Trask instructed Mr Horrell, a solicitor, to act for the Lessee. Horrell immediately emailed the Landlord’s agent, raising several “issues” in response to the draft offer, and proposing a “counter offer”.[4] In particular, the Lessee “reserve[d] the right to negotiate on the standard lease when it [was] produced”[5], and also sought an amendment to the “Binding Agreement” section of the draft. With respect to that section the “counter offer” stated: “My client does not agree with the first sentence”. The first sentence of that section, as quoted above, omitting the words “For retail premises”, reads: “Upon written agreement between the parties there will be no binding agreement until the Lease is signed.” But the “counter offer” proceeded to deal, not with that sentence, but with the second sentence in the “Binding Agreement” section, namely the one relating to liability for costs “if the lessee does not sign the lease”.
[4] Email Horrell to Chong Ming’s agent 14 March 2011 at [12].
[5] As above, n 4 at [6].
Clearly, and quite reasonably, the Landlord’s agent interpreted Horrell’s reference to the “first sentence” of the “Binding Agreement” section as intended to refer to the second sentence thereof. In response, the agent sent a second draft, omitting the second sentence[6], and substituting:
A disclosure statement and ancillary documents must be delivered to the Tenant in accordance with the Retail Shop Leases Act, to be prepared at the Lessor’s expense.
[6] The sentence omitted was in relation to costs if no lease was signed.
Meanwhile the stipulation that “there will be no binding agreement until the Lease is signed” remained in the document.Following two further amendments[7], not now material, the Landlord’s agent sent a third draft offer in which the “Binding Agreement” section reads:
For retail premises – Upon written agreement between the parties there will be no binding agreement until the Lease is signed. A disclosure statement and ancillary docs must be delivered to the Tenant in accordance with the RSLA, to be prepared at the Lessor’s expense.
[7] As requested in letter from Horrell to landlord’s agent, dated 14 March 2011.
The third draft, containing the provision quoted above, was signed by the Lessee on 14 March 2011, and by the Landlord on 15 March 2011.[8]
[8]Statement of Wade Albert Trask of 27 July 2012 at [39]; photocopy offer to lease in evidence.
It is apparent that, following the Lessee’s receipt of the first draft offer on 11 March 2011, the Lessee and its solicitor had three opportunities to object to inclusion of the words “... there will be no binding agreement until the Lease is signed”, but did not do so.
It is a reasonable inference that the Landlord inserted that provision because on 15 March 2011 it was in no position to grant a lease. At that time, Shop 1 was still occupied by another person (“the sitting tenant”), as the Tenant’s principal, Wade Trask, was well aware.[9] When the offer was signed the sitting tenant was in arrears of rent and under threat of eviction. However, the notice to remedy the breach had not expired, and the Landlord’s solicitor awaited the result of the notice before preparing the lease.[10]
[9]As above, n 8 at [8]. See also email from Lessee’s solicitor to Landlord’s solicitor dated 23 March 2011.
[10] Email from Landlord’s solicitor to Lessee’s solicitor dated 22 March 2011.
On 12 April 2011 the Landlord’s solicitor told the Lessee’s solicitor that the sitting tenant had remedied his breach, and that accordingly the Landlord was unable to “satisfy the precondition for the continuation of these arrangements with you client”[11].
[11] Letter from Mathieson to Horrell dated 12 April 2011.
Thereupon the Lessee asserted that the parties had a binding agreement[12], and the Landlord, relying on the provision that there would be “no binding agreement until the lease is signed”, denied liability.[13] The Lessee claims compensation under s 43 of the RSLA.
[12] Letter from Horrell to Mathieson dated 18 April 2011.
[13] Letter from Mathieson to Horrell dated 19 April 2011.
In order to decide the question of jurisdiction, the Tribunal must decide for itself whether the subject “offer to lease” constitutes a binding agreement.[14]
[14]Federated Engine-Drivers’ and Firemens’ Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398; R v Hickman (1945) 70 CLR 598; R v Blakeley & Ors (1950) 82 CLR 54; Timbarra Protection Coalition Inc v Ross Mining NL (1999) NSWCA 8 at [39], [94], [123], [124].
I am not persuaded by the Respondent’s submission[15] that the jurisdictional issue be postponed to the substantive hearing. No doubt such a diversion or postponement of decision-making is possible[16], but an eventual “no-jurisdiction” decision is likely to result in considerable wastage of costs.
[15] Applicant’s submissions dated 27 September 2012 at [5]-[6].
[16] Khatri v Price & Anor (1999) 95 FCR 287.
Nor am I persuaded that it is necessary to conduct an oral hearing on the present issue in case cross-examination shows that the phrase “no binding agreement” does not mean what it says, but is in need of esoteric exegesis.[17] Evidence of pre-contractual dealings and surrounding circumstances is admissible to resolve an ambiguity but not to create one.[18]
[17] Applicant’s submissions dated 27 September 2012 at [15].
[18] Crawley v Crawley Land & Ors [2012] QSC 294 at [88]-[89].
Appropriately, each set of submissions refers to the unanimous decision of the High Court in Masters v Cameron.[19]In that case a memorandum recorded:
I ... agree to sell my farming property ... for the sum of Seventeen Thousand Five Hundred Pounds (17,500 pounds) cash ... This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors on the above terms and conditions ...
[19] (1954) 91 CLR 353, unanimous decision of Dixon CJ, McTiernan and Kitto JJ.
It was held that no binding agreement existed, despite the phrase “on the above terms and conditions”, because the formal contract was –
“... to be acceptable to the vendor's solicitors, and the meaning is sufficiently evident that the contract shall contain, not only the stated terms and conditions expressed in a form satisfactory to the solicitors, but also whatever else the solicitors may fairly consider appropriate to the case.”[20]
[20] Above n 19 at 364 per curiam.
The actual decision in Masters v Cameron[21] was recently followed by a full Court of the Federal Court in Factory 5 Pty Ltd (In Liq) v State of Victoria (No 2)[22], where it was agreed that a certain appointment would be made, subject to the parties reaching agreement on a legally binding long form agreement. In the Court’s opinion an objective bystander would appreciate that at the time the letter was signed, the parties had not yet agreed on all the critical terms sufficient to create a legally binding contract.
[21] (1954) 91 CLR 353.
[22][2012] FCAFC 150. See also Guilfoyle Developments Pty Ltd v Frumar [2012] NSWSC 859.
In the oft-cited passages in Masters v Cameron,[23] the Court distinguished three types of cases:
a) where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect;
b) where the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; and
c) the “fundamentally different” case where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
[23] Above n 19 at 360-361.
In my view the documentary and undisputed circumstances of the present case and the reasons for placing it in category “(c)”, above, are, if anything, stronger than those in Masters v Cameron[24]. The document expressly states that there will be no contract unless and until a formal lease is signed. It may be inferred that the Lessee’s consciousness of the fragility of the arrangement inspired its urgent demands for a formal lease[25] – demands that would have been unnecessary, or at least less important, if it had been confident that it already had a legal right to receive a formal lease. The Lessee and its solicitor had no fewer than three opportunities to object to the “no contract” proviso, but did not do so. A few days before the offer was signed the Lessee’s solicitor warned the Landlord: “[M]y client reserves the right to negotiate on the [expected] standard lease”[26]. At the time when the document was signed it was common knowledge that there was a sitting tenant whom the Landlord might not be entitled to evict. In those circumstances it would be surprising if a commercial Landlord, assisted by a professional land agent, made a contract that it might very well be unable to fulfil, or if a would-be Lessee reasonably expected it to do so. In cases of this kind it is important to turn a practical eye to the commercial context in which the disputed arrangements were made.[27] I suspect that if the Landlord’s offer had been professionally drawn (as it was not) the proviso “... there will be no binding agreement until the Lease is signed” might have been replaced, or reinforced, by an explicit condition precedent that the sitting tenant was lawfully evicted.
[24] Above n 19.
[25]See, for example, emails from Horrell to Landlord’s agent 22 March 2011 and to Landlord’s solicitor 23 March 2001; Landlord’s solicitor to Horrell 22 March 2011.
[26] Email from Horrell to Landlord’s agent dated 11 March 2011.
[27] ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549 per Gleeson CJ, Hope and Mahoney JJ agreeing.
I am by no means satisfied, on the balance of probabilities, that the subject document constitutes a binding contract to grant One Four What Pty Ltd a retail shop lease of Shop 1, Wishart Shopping Village. Accordingly the Tribunal is without jurisdiction to hear and determine these proceedings. They are without substance, and will be dismissed.
The Landlord applies for costs[28], although no particulars of costs are supplied. However, I do not consider that the matter is so free from difficulty as to provide a compelling reason[29] to depart from the Tribunal’s usual practice in that regard.[30] There will be no order as to costs.
[28] Queensland Civil and Administrative Tribunal Act 2009, s 47(2)(c).
[29]Cf Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2012] QCAT 412 at [29].
[30] Queensland Civil and Administrative Tribunal Act 2009, s 100.
ORDERS
The Notice of Dispute filed by One Four Wat Pty Ltd on 16 March 2012 is dismissed for want of jurisdiction.
No order as to costs.
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