Ozemac Pty Ltd v Jackanic - [2022] VCC 290

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-17-04057

Ozemac Pty Ltd (ACN 607 250 822)	Plaintiff
V
John Ivan Jackanic	First defendant
and Luciana Jackanic and Jimmy Stevens Group Pty Ltd (ACN 617 220 005)	Second defendant Third party

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JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	24 March, 30 September, 1, 2, 5, 6 and 27 October 2020, submissions filed 10 November, 1 and 22 December 2020
DATE OF JUDGMENT:	17 March 2022
CASE MAY BE CITED AS:	Ozemac Pty Ltd v Jackanic
MEDIUM NEUTRAL CITATION:	[2022] VCC 290

REASONS FOR JUDGMENT
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Subject:LICENCES, CONTRACT
Catchwords: Licence of industrial premises – whether oral agreement reached to extend licence for further period – whether plaintiff entitled to overhold – whether plaintiff can recover damages for alleged lost production costs and damage to property – counterclaim – whether defendants entitled to damages for clean-up costs and rent foregone
Legislation Cited: Property Law Act 1958
Cases Cited:Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; Hobbs v Petersham Transport Co. Pty Ltd (1971) 124 CLR 220; Moore v Aubusson [2020] NSWSC 1466; Rolfe v Investec Bank (Aust) Ltd [2014] VSCA 38; Turner v York Motors Pty Ltd (1951) 85 CLR 55; Watson v Foxman (1995) 49 NSWLR 315
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APPEARANCES:	Counsel	Solicitors
For the plaintiff	Mr L E P Magowan	Fraser Barrett Baird
For the defendants	Mr M D Tehan	Mills Oakley

HER HONOUR:

1In March 2017, the plaintiff entered into a short-term agreement (“the licence”) with the defendants to occupy industrial premises situated at Unit 12, 6-10 Maria Street, North Laverton (“the property”). The defendants own the property.
2The licence commenced on 17 March 2017 and was due to expire on 28 April 2017. Although the document the parties signed was described as a licence, the defendants admitted the allegation pleaded that the plaintiff was granted a short-term lease because it was given exclusive possession. The defendants charged the plaintiff a licence fee of $8,000 plus GST for the term of the licence. The plaintiff also paid the same amount as a security deposit.
3The plaintiff did not vacate by the expiry date. On or about 30 April 2017, the defendants changed the locks to the property. The plaintiff later removed some of its goods and equipment. The defendants subsequently disposed of the remainder of the plaintiff’s materials left behind at the property.
4The plaintiff pleads there was an oral agreement made during a telephone call on 1 April 2017 between the director of the plaintiff and the leasing agent for the defendants to the effect that the licence would be extended for one month to 28 May 2017 (“the second licence”). The defendants deny that any extension was given. The plaintiff claims, in the alternative, that it was entitled to remain in the property as a tenant on an overholding basis.
5The plaintiff also claims the defendants breached a second oral agreement made during a telephone call between the director of the plaintiff and the first defendant on 5 May 2017, regarding the removal of the plaintiff’s property from the property on 7 May 2017 (“the 5 May agreement”). The defendants deny there was an agreement in the terms alleged by the plaintiff. However, they submit that if the Court did find there was such an agreement, the plaintiff breached it in a manner that amounted to repudiation.
6The plaintiff seeks damages as a consequence of not being able to stay on at the property and by reason of the defendants disposing of its goods, contrary to the 5 May agreement. The damages claimed include costs for damage to its goods and equipment as well as lost production costs. It also seeks a declaration that the licence has been unlawfully terminated.
7The defendants counterclaim, alleging the plaintiff failed to comply with several of its obligations under clause 11 of the licence in relation to yielding up of the property, including by failing to move out on time and failing to clean the property properly. The defendants claim the costs of a clean-up bill and rent foregone from an incoming tenant, who they claim could not occupy the property due to the plaintiff’s plant and equipment still being on site.
8For the following reasons, I was not satisfied the plaintiff proved the defendants agreed to extend the licence beyond its expiry date. Nor was I satisfied the plaintiff was entitled to stay on an overholding basis as it had no lawful entitlement to remain in occupation of the property after 28 April 2017.
9On 27 April 2017, the defendants’ agent offered the plaintiff limited access to remove its goods from the property. The arrangements made in early May 2017 to enable this process to occur were subsequently varied from time to time by agreement. The plaintiff did remove some of its goods. The remainder left at the property were disposed of to make way for an incoming tenant. I was not persuaded on the evidence that the defendants acted in breach of any obligation owed to the plaintiff regarding the removal of the plaintiff’s goods from the property. Given the plaintiff failed to prove any breach by the defendants, it is not entitled to an award of damages.
10For the reasons outlined below, I find that the defendants are entitled to some but not all the amounts claimed in their counterclaim.

Factual narrative
11The plaintiff is a company which produces concrete panels for use in apartment buildings. It conducts business from its premises at 151-153 Northbourne Road, Campbellfield. Mr Dimce Nedeljkovic is a director and shareholder of the plaintiff.
Licence Agreement
12In early 2017 Mr John Jackanic, the first defendant, engaged CBRE to advertise and lease the property. Mr Ricardo Cappelletti, a sales and leasing agent at CBRE, was responsible for the listing. The property was advertised, but several months passed before a tenant was found.
13Mr Cappelletti had previously dealt with Mr Nedeljkovic when he was looking at another property for Ozemac. Mr Cappelletti considered the plaintiff would be suited to a short tenancy of a property with a crane. He raised the possibility with Mr Jackanic of leasing the property to the plaintiff for a month.
14Around the same time, Mr Cappelletti was also engaged in discussions with Jimmy Stevens Group Pty Ltd (“JSG”) regarding a longer-term tenancy at the property. On 15 March 2017, JSG’s sole director and secretary Jimmy Iliopoulos emailed Mr Cappelletti and stated he was “very keen to do a deal and get the ball rolling on this place”. Mr Cappelletti responded on the same day and asked Mr Iliopoulos to complete an “informal offer spreadsheet”. He later sought details of the ABN and entity under which JSG would be taking the lease.
15On 17 March 2017, the plaintiff and the defendants entered into the licence.
16On 19 March 2017, JSG entered into a Heads of Agreement with a company belonging to the defendants to commence leasing the property on 8 May 2017 (“the Heads of Agreement”).[1] On 23 March 2017, Mr Iliopoulos transferred the holding deposit pursuant to the Heads of Agreement. The Heads of Agreement was later amended in April 2017 to provide for a lower rent as a result of issues which arose concerning the rear yard of the property.
[1]The Heads of Agreement describes the “Lessor” as Slavonia Pacific Pty Ltd. Mr Jackanic gave evidence that Slavonia Pacific is a company associated with the defendants. The subsequent lease with JSG names the defendants as lessors.
17In late March 2017, an issue arose concerning an area at the rear of the property (“the misidentified area”). The misidentified area had previously been used by a company belonging to Mr Jackanic to store material, but did not appear on the title to the property and was in fact a mixture of common property and property belonging to an adjoining owner. As a result, the misidentified area could not be used exclusively by a tenant of the property.
18Ms Ashby, a representative of the Owners Corporation, raised this issue with Mr Jackanic by telephone on 24 March 2017. She then emailed Mr Jackanic a copy of the plan of subdivision. Mr Jackanic forwarded that email to Mr Cappelletti shortly afterwards, asking him to “have a chat with the current people” (being the plaintiff) and to “pass the information to the new prospective tenant” (being JSG). Mr Cappelletti passed that information on to JSG that same day, and said the landlord was willing to reduce the rental to compensate for the loss of the yard/parking.
19On 3 April 2017, Mr Jackanic received an email from Ms Ashby advising that the tenant of the property was required to remove their vehicles and other materials from the misidentified area as soon as possible. Mr Jackanic forwarded that email to Mr Cappelletti, asking Mr Cappelletti whether he had made “any special deal with the tenant [i.e. the plaintiff] in reference to the rent”. Mr Jackanic also asked Mr Cappelletti about the arrangements with JSG.
20On 4 April 2017, Mr Cappelletti replied to Mr Jackanic’s email stating that the plaintiff had agreed to the amount of $5,500 for the term and was due to vacate on 28 April 2017. Mr Cappelletti noted that Mr Jackanic would have to refund the plaintiff a certain amount. He also said he was “not the property manager” and did not have authority to chase this down. Mr Cappelletti further requested that preparations for the lease to JSG be paused as he was “waiting to see” if the incoming tenant JSG would take the property “with the limitations on the yard”.
Second Licence Agreement
21In early April 2017, Mr Cappelletti and Mr Nedeljkovic spoke on the phone. The plaintiff’s case is that Mr Cappelletti called Mr Nedeljkovic on 1 April 2017 and offered the plaintiff a one-month extension of the licence so that it would expire on 28 May 2017.
22The defendants deny that the plaintiff was offered any such extension. They say that Mr Cappelletti called Mr Nedeljkovic on 3 April 2017 regarding the rental discount to be offered to the plaintiff as a result of the loss of exclusive possession of the misidentified area. The nature of this discussion held in early April 2017 is critical to the plaintiff’s claim and requires the Court to make findings of fact. These findings are dealt with later in these reasons.
23On 13 April 2017, Mr Jackanic and Mr Nedeljkovic spoke for the first time. During that conversation, Mr Jackanic explained that the plaintiff could not use the misidentified area as a storage area and workshop. Mr Nedeljkovic assured Mr Jackanic that he would arrange for someone to clear the area that afternoon. The plaintiff did not clear the area. Mr Jackanic’s subsequent attempts to contact Mr Nedeljkovic regarding this issue went unanswered.
24On 26 April 2017, Mr Cappelletti sent an executed copy of the Heads of Agreement signed by JSG to the defendants’ lawyers and asked them to begin lease preparations.
25On 27 April 2017, the day before the expiry date, Mr Cappelletti briefly spoke on the phone to Mr Nedeljkovic. During that conversation, Mr Cappelletti told Mr Nedeljkovic that the licence was due to expire the following day. He also said the plaintiff could have a “few days grace” from that date to remove its goods from the property. Mr Nedeljkovic gave evidence that he was not prepared for that information in light of the conversation he alleges that he had with Mr Cappelletti on 1 April 2017. He asked Mr Cappelletti how the plaintiff could vacate the property when it had been told that it could stay longer. He said Mr Cappelletti told him that “John wants the property to be vacated”. Mr Nedeljkovic said that he protested to Mr Cappelletti that to move in one day was almost impossible and that in any case he would be on a pre-booked holiday in Lakes Entrance the next day for four days. He said that he would call Mr Jackanic when he came back to arrange the removal of property. Mr Nedeljkovic gave evidence that Mr Cappelletti agreed to this course of action.
26Mr Cappelletti gave evidence that he told Mr Nedeljkovic that the plaintiff had a one-month licence over the property, and that Mr Jackanic had been attempting to contact Mr Nedeljkovic urgently for some time with no response. In cross-examination, Mr Cappelletti agreed that, with Mr Jackanic’s permission, during the telephone call he had offered Mr Nedeljkovic “a few days grace” for the plaintiff to move out.
27Mr Nedeljkovic said that after this telephone call, once he had cooled down, he decided to go to the property on 28 April after the workers had finished for the day to collect the plaintiff’s materials. He then called Mr Austin Sheriff, a professional driver and crane operator who did some truck-driving for the plaintiff, to get two trucks to assist with the collection. He then claimed he had gone to the factory after 6.00pm on 28 April but that neither he nor Mr Sheriff could open the gate.
28Mr Nedeljkovic’s lawyers wrote in a letter to the defendants on 17 May 2017, identifying the date that he had attended the factory to find the gates locked on 5 May 2017, without raising 28 April.[2] When this was put to Mr Nedeljkovic in cross-examination, he suggested that he and Mr Sheriff had attended on both dates. Mr Sheriff could not remember the exact date that he had attended the property to find it locked, but deduced from the documents that it was 28 April 2017. It was Mr Jackanic’s evidence that the locks were not changed until 30 April 2017.
[2]This is reflected in the plaintiff’s amended statement of claim dated 27 May 2020, which does not plead that Mr Nedeljkovic attended the premises on 28 April 2017, only 5 May 2017.
29On 28 April 2017, Mr Jackanic attempted to call Mr Nedeljkovic, but did not speak to him. Later that day, Mr Jackanic sent Mr Nedeljkovic an SMS at 3.04pm, in which Mr Jackanic told Mr Nedeljkovic that your lease finished today and he noticed the plaintiff’s material was still at the property. He wrote that he would be changing the locks on the factory in the morning and the plaintiff would not be able to enter the factory the next day. Mr Jackanic asked Mr Nedeljkovic to contact him and let him know of his intentions. Mr Nedeljkovic did not respond to the SMS.
30Mr Jackanic sent an SMS to Mr Nedeljkovic on 30 April 2017 telling him that the locks on the factory had been changed. Mr Jackanic also sent an email to his solicitors that day informing them that he changed the locks at the factory on 30 April 2017.
31Mr Jackanic sent Mr Cappelletti an email on 1 May 2017 informing him that the factory locks were changed the previous day. He asked him to pursue Mr Nedeljkovic for a response. He noted that the plaintiff’s stock, finished slabs and rubbish were still in the factory.
32Mr Jackanic also sent an email on 1 May 2017 to Mr Ashley Fernando (an employee of the plaintiff) explaining that the locks were changed on Sunday 30 April, and noting that the plaintiff no longer had right of entry without Mr Jackanic’s permission and attendance. Mr Jackanic went on to say that for the plaintiff to move its materials, tools and whatever the plaintiff had there, he needed to contact him and let him know of his intentions. Mr Jackanic sought a response by 4.00pm on 1 May before “we start the process of removing your material and equipment.” He advised he would need a couple of hours’ notice to get to the factory. Mr Jackanic received no response to the email. Mr Nedeljkovic’s evidence at trial was that Mr Fernando never told him about the email.
33Mr Jackanic sent a further email to Mr Cappelletti on 1 May 2017 saying he would be meeting with some cleaning contractors to get a quote, and would contact some precast concrete companies to offer them the materials left behind by the plaintiff. Mr Jackanic obtained a quotation from a commercial cleaner on 3 May 2017 and a quotation from a forklift hire company on 4 May 2017.
5 May agreement and subsequent events
34On 5 May 2017, Mr Jackanic and Mr Nedeljkovic had a conversation during which they agreed that the plaintiff would remove its rubbish from the property, including its concrete slabs, and clean the front and back yards. Once that was done, the plaintiff would be able to attend to remove the other material it had left behind at the property. Mr Nedeljkovic gave evidence that this conversation took over two phone calls that he placed to Mr Jackanic after he came back from holidays, and while he had been told to “take everything except the beds, remove everything”, he considered all the remaining materials “urgent” to collect. Mr Nedeljkovic gave evidence that Mr Jackanic told him that there was a tenant at the property, but that he would contact them and arrange for the plaintiff to attend the property on the following Saturday.
35Mr Jackanic gave evidence that this conversation took place in person. He agreed he had asked Mr Nedeljkovic to “organise to… move your stuff out and clean the yard up and move your stock out.” Mr Jackanic said he told Mr Nedeljkovic that he would need to take the damaged concrete panels out first before the casting tables or material and equipment still left in the factory. He emphasised that he wanted the rubbish moved out and the property cleaned up first. Mr Nedeljkovic gave evidence that he agreed to Mr Jackanic’s request about taking everything first before the beds, but reiterated that he wished to remove everything from the property urgently.
36Mr Jackanic sent an email to Mr Nedeljkovic on 5 May 2017 which read:
“Dimce I have sent the details of our conversation to my Solicitors and am waiting for their instructions I will NOT be able to let you in the factory on Sunday depending on my Solicitors advice it would have to be next week before I can give you the answer what are yours legal rights in this case. John”
37On Saturday 6 May 2017, Mr Jackanic received an SMS from Mr Sheriff, who was at the time unknown to Mr Jackanic. Mr Sheriff sought to pick up the plaintiff’s steel casting tables from the property the following day. Mr Jackanic responded to the SMS refusing Mr Sheriff’s request and stating his solicitor was sending detailed instructions to the plaintiff on Monday morning.
38Later on 6 May 2017, Mr Jackanic received a voice-to-text message from Mr Nedeljkovic, asking for him to call and noting that he had organised everything for the next day. At 8.11pm that day, Mr Jackanic received a further SMS from Mr Sheriff which said he had hired a special trailer with a lean over frame.
39On 7 May 2017, Mr Jackanic received an email from Mr Nedeljkovic, stating that he had hired a special trailer following their phone conversation, and threatening to seek damages for various matters. Mr Nedeljkovic said he would not contact Mr Jackanic anymore either by phone or email.
40Although 8 May 2017 was to be the “Lease Commencement” date under the Heads of Agreement with JSG, as a result of this ongoing dispute between the parties, JSG was unable to obtain vacant possession of the property on that date. The defendants and JSG ultimately agreed that JSG would surrender its original lease and enter into a new lease with the defendants for a two-year term.

41On 8 May 2017, Mr Cappelletti sent an email to Mr Iliopoulos of JSG, noting his appreciation for JSG’s patience with the “situation the temporary tenant has caused”. The email attached a draft lease and disclosure statement, which was sent to Mr Iliopoulos in final form on 11 May 2017.
42On 11 May 2017, Mr Nedeljkovic sent an email to Mr Jackanic attaching invoices for the damage said to be done by the obstruction or removal of the plaintiff’s production beds and other tools from the property. The total sum claimed was $89,249.97. The email further stated that the plaintiff’s solicitor would contact Mr Jackanic soon.
43On 12 May 2017, Mr Cappelletti emailed Mr Jackanic informing him that the commencement date of the JSG lease had to be postponed to 1 June 2017, as JSG had been unable to “fully utilise the factory as [the plaintiff’s] equipment is occupying at least 80% of the premises”.
44On 15 May 2017, the defendants’ solicitors wrote to Mr Nedeljkovic setting out losses totalling $23,500 which the defendants claimed to have incurred by reason of the plaintiff’s failure to vacate and make good the property. The plaintiff was requested to remove all concrete slabs and steel plates, fixtures, and other items and to remove the steel platform. The plaintiff’s solicitors responded on 17 May 2017, claiming that Mr Cappelletti had “offered an extension of the licence for an unspecified period” on 1 April 2017 and that offer of an extension was accepted. The plaintiff’s solicitors suggested that their client had been “wrongfully deprived of the benefit of the licence” and was therefore “entitled to full damages for the loss particularly in relation to construction materials wrongfully disposed of by [Mr Jackanic].” They further claimed that the plaintiff had “presented at the property with trucks for the purpose of removing all equipment and making good the premises on 5 May 2017” but that the defendants “wrongfully refused access” to the plaintiff. No mention was made of the plaintiff having attended the property on 28 April 2017. The plaintiff’s solicitor noted that they would supply details of their client’s claim, but that it would “substantially exceed the sum of $164,000”.
45Mr Cappelletti emailed Mr Jackanic on 17 May 2017 responding to the allegations made by the plaintiff’s solicitors noting that:
(a)   Mr Cappelletti had only been engaged as the leasing agent, not the managing agent, for the property;
(b)   an extension of the licence agreement was never offered to the plaintiff;
(c)   Mr Cappelletti had told Mr Nedeljkovic that the property might be available should the incoming tenant not proceed with their lease;
(d)   the new tenant was committing to their lease and so no extension was available;
(e)   any such extension would have had to be signed off by Mr Jackanic and Mr Nedeljkovic, and there was no correspondence reflecting an offered extension; and
(f)    Mr Cappelletti had called Mr Nedeljkovic on 27 April 2017, who until that date had not been contactable either by him or Mr Jackanic, to remind him that he had to vacate on 28 April 2017.
46On 23 May 2017, the plaintiff’s solicitors emailed the defendants’ solicitors noting that their client had attended the property that morning to collect materials and equipment as arranged. They were instructed that a substantial amount of material and equipment was removed.
47On 25 May 2017, the defendants’ solicitors emailed the plaintiff’s solicitors noting that the plaintiff had collected some of its property but that there were still concrete slabs on the floor and rubbish in the front and side yards, including steel tables for the concrete casting and various other materials. The email stated that “[t]he concrete slabs need to be removed first.” The solicitors advised that the defendants had a new tenant coming on 1 June 2017.
48On 30 May 2017, the plaintiff’s solicitors emailed the defendants’ solicitors advising that Mr Nedeljkovic had attended the property on 26 May to remove material but was unable to gain access due to a truck being inside the premises. He also attended on 30 May 2017 to remove concrete panels and other items but was unable to do so due to the clutches of the crane at the premises having been removed. The plaintiff was unable to lift the concrete panels without use of the overhead crane. In response, the defendants’ solicitors emailed the plaintiff’s solicitors back that same day, noting that the truck belonging to the new tenant blocking the property could have been moved if Mr Nedeljkovic had requested it, but that the load-bearing capacity of the crane on the property was insufficient to lift the weight of the concrete panels. The email also offered for Mr Jackanic to be available the following day for the plaintiff attend the property.
49On 31 May 2017, Mr Jackanic hired a crane truck to move concrete panels in order to remove rubbish from the property at a cost of $1,116.50. Mr Jackanic gave evidence that this invoice from Bronco Group, being a part of the JSG Group, and addressed to Slavonia Pacific had not been paid. Mr Jackanic also said that JSG will bill him but that he did not have to pay until this court case is over with the plaintiff. He went on to say: “they won’t cause me to pay the bill, but I said look, when the court case is finished with them then we will proceed”.
50On 1 June 2017, the defendants’ solicitors emailed the plaintiff’s solicitors setting a new deadline of 7 June 2017 for the plaintiff to remove all its property and rubbish from the property.
51On 5 June 2017, Mr Nedeljkovic attended the property to remove the remaining items. The plaintiff’s case is that the concrete panels, which had been moved from inside the property to outside on the street, were broken. Mr Nedeljkovic had not brought a forklift to move them. The plaintiff’s solicitors sent an email to the defendants’ solicitors later that day claiming that their client was “unaware that the panels had been removed from the premises or that they were broken”, and noting that one of the casting beds had been “damaged beyond repair”. They suggested that the crane on the premises was certified to lift 5 tonnes, less than the weight of each of the concrete panels, and that use of this crane was “one of the reasons [the plaintiff] licensed the premises”. They went on to confirm that their client’s damages claim was now “in excess of $200,000” and that further damages were “likely to be incurred as a consequence of the damaged casting beds, which are [sic] client required to fulfil current contracts it had in place with third parties.”
52On 10 June 2017, the defendants’ solicitors emailed the plaintiff’s solicitors, extending the deadline for the plaintiff to remove the materials from the property to 15 June 2017 and warning that, if this did not occur, “the property and rubbish will be disposed of”. The email noted that the casting beds had not been touched, the concrete panels had not been damaged, and that the weight of some of the panels exceeded 7 tonnes.
53The plaintiff’s solicitors responded to that email at 5.30pm on 14 June 2017, requesting an extension of time to 4.00pm on 16 June 2017. The defendants’ solicitors agreed to that extension, expressly “on the understanding that anything not removed by 16 June 2017 will be disposed of by my client and my client will hold your client responsible for all such disposal costs”.
54Mr Jackanic attended the property at 7.00am on Sunday 18 June 2017 to meet Mr Nedeljkovic. He sent Mr Nedeljkovic an SMS at 8.09am noting that he was at the factory but that no one else was there. Mr Nedeljkovic gave evidence that he attended, along with two staff members (Mr Sheriff and “Reza”) who arrived by 9.00am. When the staff members arrived, a truck was blocking the driveway. There were keys to the truck on its floor.
55During their attendance, Mr Sheriff and Reza collected one piece of concrete slab. Mr Jackanic’s evidence was that Mr Sheriff said to him that they would cut the steel table into three or four pieces on Monday or Tuesday, and pick it up on the Wednesday. Mr Jackanic sent an SMS to Peter Iliopoulos (Jimmy’s brother) from JSG at the time recording this. Later that night, Mr Jackanic sent another SMS to Jimmy Iliopoulos stating that Mr Sheriff and Reza had told him that they would come in and cut the steel table into three pieces to pick up on Wednesday, and that the plaintiff had new tables and would not be using that one again.
56On 20 June 2017, the defendants’ solicitors sent an email to the plaintiff’s solicitors, noting that the removal deadlines had again not been met. The email offered for Mr Jackanic to meet representatives of the plaintiff the following day so the material could be removed, and again warning that if this deadline was not met all the plaintiff’s remaining “property and rubbish will be disposed of” at its own cost. At 9.05am on 21 June 2017, the defendants’ solicitors sent another email to the plaintiff’s solicitors, noting that they had received no response to their email of the previous day and reiterating that the deadline for removing the plaintiff’s materials was 5.00pm that day.
57On 30 June 2017, JSG entered a new lease over the property and a Deed of Surrender of Lease in respect of the former lease which commenced on 8 May 2017. The new lease commenced on 1 July 2017. Clause 3.2 of the Deed of Surrender provides an indemnity from JSG in favour of the defendants in respect of any claims made by the plaintiff.
Plaintiff’s Claim
58In its further amended statement of claim dated 27 May 2020, the plaintiff alleges the defendants breached the licence, the second licence, and the 5 May agreement by:
(a)   not permitting the plaintiff access to the property from 1 May 2017;
(b)   reletting the property to JSG during the “over-holding period” from 1 May 2017 to 28 May 2017;
(c)   either themselves or by their agent disposing of or damaging plant and equipment belonging to the plaintiff and causing the plaintiff to incur loss or damage in the amount of $367,789.98; and
(d)   wrongfully retaining the plaintiff’s $8,800 security deposit.
59The plaintiff pleads in the alternative that the second licence agreement constituted a representation by the defendants’ agent that the plaintiff would be granted additional time to remove its goods from the property, that it acted in reliance on that representation to its detriment, and that the defendants are therefore estopped from relying on clauses 10 and 11 of the licence (“the estoppel claim”).
60Finally, the plaintiff claims that the defendants owed it a duty of care as bailee over its goods stored at the property, and that the defendants knowingly breached that duty by moving, disposing of and/or damaging those goods.
Counterclaim for costs incurred and rent foregone by the defendants
61The defendants’ further amended defence and counterclaim is dated 9 July 2020. The defendants counterclaim for various costs arising from the state in which the plaintiff left the property, either directly or by way of a promise to repay JSG, together with some rent foregone from JSG. The amounts sought at trial are as follows:
(a)   $1,116.50 for the cost of engaging a crane truck to move concrete panels in order to remove rubbish from the property;
(b)   $18,645 for clean-up and removal of rubbish, crane hire and the storage of metal panels;
(c)   $690 for the hire of a bin to remove material, plus labour; and
(d)   $6,948.93 for rent foregone due to be paid by JSG.
62The defendants concede that any amount awarded on their counterclaim should be reduced by $8,800, being the amount of the security deposit paid by the plaintiff and retained by the defendants.
Third party claim against JSG
63The defendants make a third-party claim against JSG which is contingent upon the Court finding they have a liability to the plaintiff to pay damages. If they are held liable to the plaintiff they claim to be “entitled to an indemnity in respect of such amounts from JSG, by operation of clause 3.2 of a Deed of Surrender of Lease between JSG and the defendants dated 30 June 2017”. By this clause, JSG:
“indemnifies, releases and forever discharges the [defendants], their servants, officers and agents from all liabilities in connection with any disruption to any business of [JSG] which was operating out of the Premises during the term of the Lease, and any claim made by the previous occupier of the Premises, Ozemac Pty Ltd, including but not limited to any claim made with respect to the removal and/or damage to any property of Ozemac Pty Ltd.”

64The third party did not appear at the trial. The defendants said at the commencement of the trial that the third party had been served but has not filed a notice of appearance. It has not participated in the matter beyond producing some documents to the plaintiff's solicitors.

Issues for determination
65The parties provided an amended list of issues which they considered necessary for the determination of the dispute. These issues, some of which overlap, are broadly as follows.
(1) Was the plaintiff’s tenancy extended in early April 2017?
66The plaintiff alleges that on 1 April 2017, Mr Cappelletti called Mr Nedeljkovic and offered a one-month extension, postponing the expiration date of the licence to 28 May 2017.
67During cross-examination, it was suggested to Mr Nedeljkovic that the conversation he believed occurred on 1 April 2017 in fact occurred on 3 April 2017 based on his telephone records from the time. Mr Nedeljkovic insisted that a short conversation had occurred on 1 April 2017 whereby Mr Cappelletti had told him that:
(a)   the contract had failed with the incoming tenant, and that the plaintiff did not have to worry about how long it could stay in the factory;
(b)   the plaintiff would just need to continue to pay; and
(c)   the plaintiff could “continue renting further than 28th”.
68Mr Nedeljkovic was insistent that the relevant telephone call occurred on 1 April 2017. When he was presented with the telephone bill of Mr Cappelletti in cross-examination – which indicated that he called Mr Nedeljkovic on 3 April and not on 1 April[3] – Mr Nedeljkovic refused to concede the proposition that he may have been mistaken with the date. Instead, he suggested that the call was unrelated to the property, and was instead about other properties which the plaintiff was looking at. When Mr Cappelletti was cross-examined, counsel for the plaintiff did not put to him that the conversation occurred on 1 April 2017, or that the 3 April 2017 conversation was in fact about other properties.
[3]For completeness, Mr Cappelletti confirmed that at all times he only had one mobile telephone, and made all of his calls from it.
69Mr Nedeljkovic’s evidence was that the telephone call was “short”, by which he meant less than five minutes. Mr Cappelletti’s phone bill, however, reveals the telephone call went for 9 minutes and 20 seconds.
70By his own admission, Mr Nedeljkovic’s recollection of the conversation was imperfect. On a number of occasions, he indicated that he could not recall details of the telephone call. He agreed in cross-examination that Mr Cappelletti had said to him that if the new contract fell over, the plaintiff might be able to stay longer if the defendants agreed.
71Mr Nedeljkovic was not consistent in his evidence concerning the conversation. For example, his evidence in chief did not address the duration of the alleged extension. In cross-examination, he suggested that the extension offered was for one month. When it was put to him that the letter from his solicitors dated 17 May 2017 made no reference to this one-month period, Mr Nedeljkovic accepted that his earlier evidence was wrong, and that the one-month period was not raised during the conversation. However, when Mr Nedeljkovic was recalled, he suggested that the one-month period was raised by Mr Cappelletti in another conversation on 18 April 2017, during which Mr Cappelletti also agreed to reduce the rent for the property. On the basis of the two alleged conversations, Mr Nedeljkovic said that he understood that the plaintiff could continue its tenancy. This account departs from the plaintiff’s pleaded case, in which it alleges that the relevant extension was agreed on the 1 April 2017 and makes no reference to any subsequent conversation.
72Neither does Mr Nedeljkovic’s account accord with Mr Cappelletti’s evidence that, after the early April 2017 conversation, he did not speak to Mr Nedeljkovic until the end of April 2017. In his cross-examination of Mr Cappelletti, counsel for the plaintiff asked one question about a conversation on 17 April 2017, but did not put the substance of the alleged conversation to Mr Cappelletti, nor challenge him further on his non-recollection of the alleged conversation. I accept and prefer Mr Cappelletti’s evidence that he did not speak to Mr Nedeljkovic on or around 17 and 18 April 2017.
73The plaintiff pleads in the amended statement of claim that the second licence was for a period of one month. However, both Mr Nedeljkovic in his oral evidence and the plaintiff’s solicitors’ letter dated 17 May 2017 claimed the licence was extended for an unspecified period.[4]
[4]Mr Nedeljkovic gave evidence that the solicitors’ letter was prepared on the basis of instructions provided by him.
74In closing submissions, counsel for the plaintiff submitted that Mr Nedeljkovic inferred that there would be an extension for one month on the basis that rent had effectively been paid in advance because of the issue in relation to the misidentified area, suggesting that people make assumptions and conflate what is said from what is inferred.
75The fact that Mr Nedeljkovic may have made assumptions is insufficient. The plaintiff needed to prove that the defendants assented to the extension of the licence. It has not done so.
76The alleged agreement is oral and there is nothing in writing. The documentary evidence, including several text messages sent between Mr Jackanic and Mr Cappelletti discussing the issue with the misidentified area, is inconsistent with any extension having been agreed in early April 2017. For example, on 3 April 2017 (two days after the alleged extension on the plaintiff’s case, and the same day as the conversation on the defendants’ case), Mr Jackanic asked Mr Cappelletti “when is our tenant due to move out?”. The next morning, Mr Cappelletti replied “they are due to vacate on the 28^th of April, 2017”. This communication is inconsistent with an allegation that Mr Cappelletti had agreed to an extension only days earlier.
77Mr Cappelletti gave evidence that his phone call with Mr Nedeljkovic on 3 April 2017 concerned the rental discount to be offered to the plaintiff as a result of the loss of exclusive possession of the common property. He also denied ever offering an extension to the plaintiff.
78Mr Nedeljkovic’s conduct around the end of April 2017 and the start of May 2017 is not consistent with someone who believed they had a tenancy which had a further month to run. For example:
(a)   on 28 April 2017, Mr Jackanic sent an SMS to Mr Nedeljkovic which stated that “the term of your lease finished today 28^th of April 2017”; and
(b)   on 30 April 2017, Mr Jackanic sent an SMS to Mr Nedeljkovic which stated that “the locks on [the property] have been changed, and you and staff are restricted to enter the factory”.
Mr Nedeljkovic never responded to those SMS messages. Instead, he alleges (which the defendants deny) that he attended the property to remove the plaintiff’s goods on 28 April 2017, but was unable to do so. He then commenced a holiday on 1 May 2017.

79On 30 April 2017, Mr Jackanic sent an email to Mr Fernando in which he stated that “the lease at [the property] ended on April 28”. There was never any response to this email. Even when Mr Nedeljkovic did respond to Mr Jackanic on 5 May 2017, he did not refer to the licence having been extended. His communications in early May 2017 only concerned arrangements for picking up goods from the property.
80Even when Mr Nedeljkovic became more demanding about the goods left at the property, and sent an invoice for “damage done by obstructing of removing our production beds and other tools”, he did not assert any entitlement to remain in the property. The first time any such entitlement was asserted was by a letter from the plaintiff’s solicitors sent on 17 May 2017.
81Neither party’s conduct was consistent with a mutual agreement that the licence would run past its expiry date of 28 April 2017. In the days and weeks following the expiry date, when there were discussions about the removal of the goods left behind at the property, the plaintiff never asserted an entitlement to stay. In fact, Mr Nedeljkovic went on holidays and did not respond to SMS messages or emails. It is surprising that the plaintiff did not complain at the first opportunity to its landlord when told its licence would expire on 28 April 2017 in circumstances when on its case, the defendants’ agent had already agreed to an extension in early April 2017.
82The plaintiff claims that the locks at the property were changed by the defendants on 28 April 2017 in breach of the licence. Although Mr Nedeljkovic and Mr Sheriff both gave evidence that the locks were changed on 28 April 2017, their evidence was conflicting. Mr Jackanic’s evidence was that he had only changed the padlock to the front gate of the property. However, Mr Sheriff gave evidence that he tried his key to the door of the factory, but could not open it. Mr Nedeljkovic gave evidence that he tried to open the gate but neither he nor Mr Sheriff could open it.
83In contrast, Mr Jackanic’s evidence that the locks were changed on 30 April 2017 accords with the contemporaneous documents, including the SMS messages discussed above. The plaintiff itself identifies the date that the locks had been changed as either 29 or 30 April 2017 in at least two documents filed in this proceeding, both of which were produced much closer in time to the events in dispute.[5] As such, I prefer and accept Mr Jackanic’s evidence that the locks were changed on 30 April 2017 after the expiration of the licence.
[5]In their reply and defence to counterclaim filed 9 November 2017 and in their further and better particulars dated 12 December 2017.
84Moreover, JSG had entered into a Heads of Agreement to take a two-year lease over the property, commencing on 8 May 2017, less than two weeks prior to the alleged second licence agreement. JSG had paid a holding deposit. Mr Cappelletti was involved in the execution of that Heads of Agreement, and corresponded with the new tenant and the solicitors about the payment of the holding deposit and the preparation of the lease. After Mr Cappelletti became aware of the misidentified area issue, he notified JSG.
85On 27 March 2017, Mr Cappelletti noted in a response to an enquiry in respect of the property that there was already “a deal in place”, but that in light of the misidentified area issue “it may fall over”. He used similar words in an internal email within CBRE to describe the property on 4 April 2017.
86Mr Cappelletti was extensively cross-examined about the references to how the “deal may fall over”. The plaintiff’s counsel sought repeatedly to have Mr Cappelletti accept propositions that by 3 April 2017, in respect of the JSG tenancy, it “had fallen over”, it “was likely to fall through”, “there was a concern that the deal…would fall through”, “was not going to go through”, and “had fallen through”.
87Mr Cappelletti’s evidence was that he had not heard back from JSG by that time after notifying them of the common property issue a few days earlier, and that he did not know what their position would be. He noted that there was a Heads of Agreement in place, that JSG had paid moneys, and so “it was looking good in a general sense”. He accepted that until a lease was signed, he would be proactive, because any deal could fall over prior to be it being signed. Mr Cappelletti frankly conceded that by 3 April 2017 he “wasn’t sure which way [JSG’s tenancy] was going to go”, because he hadn’t heard back from them.
88Further, JSG told Mr Cappelletti “a week or two” after 4 April 2017 that it intended to maintain its arrangement to lease the property. An amended Heads of Agreement was executed by JSG on 25 April 2017, which again provided for JSG to occupy the property from 8 May 2017 at a lower rent. On the plaintiff’s case, Mr Cappelletti was involved in the preparation of this document, notwithstanding that he knew that the plaintiff was going to occupy the property until the end of May 2017.
89I was not persuaded that Mr Cappelletti believed the deal would “fall over” with the result that the Court should find he then offered the plaintiff an extension to the licence for that reason.
90I found Mr Cappelletti to be an impressive and credible witness whose evidence was clear and consistent. He readily acknowledged the limitation of his memory some years after the relevant conversations, but was adamant that he did not offer any extension to the plaintiff’s tenancy during their phone call in early April 2017. Being an experienced managing agent, it does not fit with the apparent logic of events that he would have offered the plaintiff an extension of the licence of his own volition without having obtained instructions from the defendants to do so. The contemporary emails and messages are inconsistent with any such agreement having been made and lead to the opposite conclusion.
91I prefer and accept Mr Cappelletti’s evidence that he did not tell Mr Nedeljkovic the defendants agreed to extend the licence beyond the expiry date. I am fortified in that view by the contemporaneous documents such as Mr Jackanic’s SMS on 28 April 2017 to Mr Nedeljkovic that the licence was to expire that day. This is not consistent with Mr Jackanic having agreed to an extension – quite the opposite. Additionally, the lack of immediate protest by the plaintiff to Mr Jackanic at the time is revealing. Mr Nedeljkovic agreed in cross-examination that he never said to Mr Jackanic that he had an extra month. No claim was made until 17 May 2017 that the licence had been extended for an unspecified period. This was contrary to the plaintiff’s pleaded case that the extension was for one month only. Mr Nedeljkovic’s evidence about the length of the extension granted vacillated in a way which was unconvincing.
92In preferring Mr Cappelletti’s account, it is not to be taken that I consider Mr Nedeljkovic gave evidence which he knows to be false. As noted in Watson v Foxman,[6] human memory is fallible over time. Given this, weight should be given as far as possible to contemporary materials, objectively established facts, and the apparent logic of events.[7]
[6] (1995) 49 NSWLR 315 at 219
[7]        Moore v Aubusson [2020] NSWSC 1466 at [31]
93Having regard to all of the evidence, I was not satisfied on the balance of probabilities that the plaintiff proved the defendants agreed to the licence being extended beyond the expiry date of 28 April 2017.
(2) Did the parties agree that the plaintiff could “hold over” and extend its tenancy at the property in late April 2017?
94The defendants contend it is well-established that, absent agreement to the contrary, a fixed term lease will expire automatically at the end of the term.[8] That automatic position may be altered by agreement between the parties, including by operation of a “holding over” clause. However, absent such agreement, a tenant who stays in the property after the expiry of its lease becomes either a tenant at sufferance or a trespasser.
[8]        Cobb v Stokes (1807) 103 ER 380
95Clause 2.4 of the licence relates to holding over. It provides that if the licensor permits the licensee to use the licence area after the expiry date, the licensee does do under a licence from month to month. Either party could then terminate on one month’s notice, ending on any day, with the month-to-month licence continuing on the same terms as the licence.
96The plaintiff asserts an agreement regarding continued occupation had been reached in a telephone call between Mr Nedeljkovic and Mr Cappelletti on 27 April 2017, where Mr Cappelletti offered a “few days grace” for the plaintiff to move out of the property. The plaintiff suggests that Mr Cappelletti was clear that the plaintiff was not to be locked out of the property until at least 4 May 2017.
97Further, because of the discounted rent, the plaintiff suggests that it had overpaid the previous month’s rent, leaving “a surplus of rent which had effectively been prepaid.”
98The plaintiff points to the following in support of its position:
(a)   A section of paragraph 7(a) of the defendants’ Further Amended Defence, which reads;
“… say that during the telephone call between Mr Nedeljkovic and Mr Cappelletti, Mr Cappelletti told Mr Nedeljkovic that the licence would expire on 28 April 2017 and the defendants would allow the plaintiff a few days’ grace to remove its goods from the premises”.
(b)   the viva voce evidence given by Mr Nedeljkovic and Mr Cappelletti in relation to what occurred during the course of that conversation on the evening of 27 April 2017, in particular:
(i)Mr Nedeljkovic’s evidence that during the phone call with Mr Cappelletti, he was told “Okay, when you come back from holiday, call John to organise the time to remove your stuff from the property”; and
(ii)Mr Cappelletti’s evidence that he thought the defendants “had no other option” but to grant the plaintiff a few days grace, and that it “seems correct” that the plaintiff ought to have had access to the property until at least 4 May 2017 to “remove – to exit the property”.

99However, as the defendants note in their submissions, the plaintiff did not advance this position in any of its pleadings. Whereas the plaintiff has consistently pleaded that any rights (proprietary or otherwise) arose from the conversation on 1 April 2017 and from a conversation on 5 May 2017, it does not rely on either of these conversations in its closing submissions, instead focussing on the purported 27 April 2017 discussion between Mr Cappelletti and Mr Nedeljkovic.
100The defendants say that after the expiry of the licence, the plaintiff had become a tenant by sufferance at the property. While a tenancy by sufferance may convert into a tenancy at will if the landlord consents, Mr Cappelletti’s grant of “a few days grace” was given for the limited purpose of enabling the removal of the plaintiff’s goods, and not on the same terms as the licence.[9] The defendants note that, while termination of a tenancy at will may entitle a tenant to have a reasonable time to enter and remove their goods, that does not carry with it a right to exclusive possession.[10]
[9]        Turner v York Motors Pty Ltd (1951) 85 CLR 55
[10]        Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47
101The defendants further suggest that, although a tenancy at will may be converted into a periodic lease if the tenant pays rent and the landlord accepts it, the plaintiff never paid such rent and so this possibility does not arise. The defendants note that a tenancy at will is terminable by either party at will, without prior notice.[11] As the seventh edition of Butt’s Land Law states:[12]
“a tenancy at will is determined by any act of the landlord inconsistent with his or her will that the tenancy should continue…”
[11]        Ibid
[12]        At 7.250 (citations omitted). See also Greco v Swinburne Ltd [1991] 1 VR 304 at 313
102Unless the plaintiff establishes that the defendants consented to the plaintiff remaining on the property following the expiry of the licence on 28 April 2017, and that the plaintiff paid rent in respect of such occupation, the defendants claim they were entitled to eject the plaintiff from the property, and did not have to provide notice before doing so.
103The defendants further note an SMS sent from Mr Jackanic to Mr Nedeljkovic the day after the 27 April conversation which read:
“Dimce this is John the owner of the factory in Maria Street Nth Laverton your lease finished today and I noticed that your material is still here. For Your Information I will be changing locks on the factory in the morning and you would not be able to enter the factory tomorrow.
Please call me and let me know your intentions. By not taking my calls and refusing to talk to me is not helping me, or you the term of your lease finished today 28^th of April 2017. Hope you take this message seriously and contact me URGENTLY John”
(emphasis added)
In light of this communication, the defendants suggest that, even if the 27 April 2017 conversation had granted some licence or other right, it had been revoked in clear terms by the landlord the following day. They emphasise the “clearly limited basis” on which any “few days grace” was given, suggesting that the effect of this limitation is that there is not holding over on the same terms, but – if anything – a very limited new licence. They further note that even if the Court accepted the plaintiff’s case that its lease was extended to give a few days grace, and that it was locked out, the plaintiff has not established that the lockout caused any loss. The plaintiff did not take any step during the “few days grace” period to remove their goods, so any breach of that “few days grace” by the defendants cannot be causative of any loss to the plaintiff. The “few days grace” was then overtaken by the alleged subsequent 5 May agreement.
104The defendants did not permit the plaintiff to use the property after 28 April 2017. The licence was not extended and the parties’ conduct after 28 April 2017 is inconsistent with the defendants permitting or consenting to a holding over. For example, on 28 April 2017, Mr Jackanic sent an SMS to Mr Nedeljkovic stating inter alia: “your lease finished today and I noticed that your material is still here. For Your Information I will be changing locks on the factory in the morning and you would not be able to enter the factory tomorrow”. Shortly after, Mr Jackanic changed the locks.
105Insofar as the 27 April conversation between Mr Cappelletti and Mr Nedeljkovic is alleged to provide the foundation for a breach of the “holding over” provision of the licence, it cannot do so. That is because clause 2.4 of the licence is triggered if the defendants permit the plaintiff “to use” the licence area. Item 5 of the licence identifies the permitted use as the “manufacture of concrete panels”. It is clear that the scope of the discussion on 27 April 2017 was only for the plaintiff to attend the property to remove material: not to “use” the property, or to carry out activities falling within the permitted use. Further, clause 2.4 provides that any holding over is “on the same terms as” the licence, which was clearly not the case given the limited basis on which Mr Cappelletti allowed the few days grace. Accordingly, no holding over arose for the purposes of the licence.
106Even if Mr Cappelletti’s conversation with Mr Nedeljkovic constituted the necessary “consent” for the purpose of holding over, Mr Jackanic withdrew any consent prior to the expiry of the licence in his SMS to Mr Nedeljkovic on 28 April 2017. This message was sent prior to the end of the lease which means that no holding over commenced as the landlord did not consent.
107I am not persuaded on the evidence that it was proved the defendants consented to the plaintiff overholding the licence. All that was done was to give the plaintiff supervised access to the property for a few days to remove its goods and equipment. This did not amount to a continuation of the licence on the same terms and conditions. The plaintiff did not pay additional rent in respect of a further period of occupation. What had been agreed between the parties was that the defendants would refund a part of the rent paid for the term of the licence because of the problems caused by the misidentified area – not that rent would be payable referrable to some future period of occupancy beyond the expiry date.
(3) Did the defendants breach the licence by failing to give the plaintiff one month’s notice to vacate the property?
108The obligation to give a month’s notice prior to requiring the plaintiff to vacate the property arises by operation of clause 2.4 of the licence. However, that obligation only arises if the defendants permitted the plaintiff to use the property after 28 April 2017. For the reasons given under issue 2 above, the plaintiff was not permitted to overhold or extend its tenancy. That being so, no obligation to give a month’s notice arose under clause 2.4 of the licence.
(4) Did the defendants breach s146 of the Property Law Act?
109In its further amended statement of claim, the plaintiff claims the defendants breached s146 of the Property Law Act 1958 (“the Act”) when they changed the locks at the property without 14 days prior written notice.
110Section 146 of the Act concerns the exercise of a right of re-entry or forfeiture for a breach of a lease. It reads:
“146 Restrictions and relief against forfeiture of leases and under-leases
(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease or otherwise arising by operation of law for a breach of any covenant or condition in the lease, including a breach amounting to repudiation, shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice—
(a)       specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and
(c) in any case, requiring the lessee to make compensation in money for the breach—

and the lessee fails, within a reasonable time thereafter, or the time not being less than fourteen days fixed by the lease to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.
…”

111The defendants contend they did not lock the plaintiff out of the property in breach of the licence. Their position is that the licence had simply expired and, if the Court is satisfied that no extension was agreed in early April 2017, then s146 has no application.
112The plaintiff never paid rent under the alleged holding over, which at law meant it was a tenancy at will and could be determined without prior notice.[13] In any event, the scope of the “few days grace” granted by Mr Cappelletti was limited to the removal of the plaintiff’s goods from the property: not anything in the nature of exclusive possession which would answer the description of a lease. As set out above, any necessary consent to a holding over was withdrawn by Mr Jackanic prior to the end of the licence. The licence simply came to an end on 28 April 2017. It was not terminated as a result of any breach by the plaintiff. Given these circumstances, no obligation arose under s146 of the Act for the defendants to serve a notice requiring the plaintiff to remedy any breach. The section has no application to the facts of this case.

(5) Was there an enforceable agreement made on 5 May 2017 concerning the removal of the plaintiff’s material from the property?
[13]        See Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47
113In its amended statement of claim, the plaintiff claims that on 5 May 2017 Mr Nedeljkovic and Mr Jackanic made the 5 May agreement during a conversation whereby they agreed that Mr Nedeljkovic would remove all of the plaintiff’s property from the property on 7 May 2017.
114The defendants note that one of the features of the 5 May agreement was that there was an agreed sequence by which the goods on the property were to be removed. The first step was that the plaintiff would remove its rubbish from the property, including its concrete slabs, and clean the front and back yards. Once that was done, the plaintiff would be able to attend to remove the other material it had left behind at the property. Mr Nedeljkovic conceded in his evidence that this sequence was agreed. Mr Jackanic sent an email later that day to Mr Nedeljkovic advising that he was seeking instructions from his solicitors regarding their conversation. He would not be able to let him into the factory on Sunday and depending on his solicitors’ advice, it would have to be next week before he could give him an answer.
115The day following the 5 May conversation, Mr Sheriff, on the instruction of Mr Nedeljkovic, hired or booked a frame for the purpose of removing the steel casting beds, and sought to attend the property on 7 May 2017 to remove the beds.
116Further, when the plaintiff sought to attend on 7 May 2017, it had not arranged the necessary mobile crane to move concrete panels exceeding the weight which the crane at the property was certified to carry. Under cross-examination, Mr Nedeljkovic conceded that he intended to leave behind the heavier panels on 7 May 2017, but that he had not disclosed this intention to Mr Jackanic.
117As can be seen from the factual narrative above, the parties had discussions on 5 May 2017 regarding the process for removal of the plaintiff’s property at the factory.
118Mr Jackanic refused to let Mr Sheriff in on 7 May 2017 because the plaintiff was seeking to remove the steel beds first, did not have an appropriate crane to do so, and it was contrary to the order of removal of items which had been discussed.
119I was not persuaded on the evidence led that that the discussions held amounted to an immediately binding and enforceable agreement, which the defendants then breached by refusing to allow the plaintiff to attend on 7 May 2017 to remove its goods at the property. The nature of the conversations held on 5 May 2017 was to discuss the proposed process for the plaintiff to remove its materials from the property. So much was confirmed by the later SMS sent on 5 May 2017 whereby the first defendant said he needed to first obtain advice from his solicitors before making arrangements and he would not be able to let Mr Nedeljkovic in on 7 May as a consequence.
120Even if the 5 May agreement was made as alleged, it was clearly varied as the defendants made multiple subsequent offers to allow the plaintiff to attend the property to remove its materials. The plaintiff was given repeated opportunities to access the property to remove its goods. It subsequently did avail itself of those opportunities and removed some but not all of its materials. All the defendants’ offers were made with the caveat that if the plaintiff did not do so, the defendants would remove the materials themselves at the plaintiff’s expense.
121In summary, I was not satisfied an enforceable and binding agreement came into effect on 5 May as alleged by the plaintiff. Therefore the issue of breach does not arise. But if I am wrong on that, the defendants allowed the plaintiff to have access on many occasions subsequent to 5 May 2017, with the result that the plaintiff suffered no loss as it was able to remove its materials and in fact did so.
(6) Did the defendants breach the licence, the second licence, and the 5 May agreement?
122A series of breaches are alleged against the defendants:
(a)   wrongfully not permitting the plaintiff to access the property from 1 May 2017;
(b)   re-letting the premises to JSG during the period from 1 May 2017 to 28 May 2017;
(c)   disposing of or damaging plant and equipment belonging to the plaintiff (whether by themselves or by their agent); and
(d)   wrongfully retaining the plaintiff’s $8,800 security deposit.
123The defendants concede that, while they did not grant exclusive possession or a lease to the plaintiff after 1 May 2017, they did allow representatives of the plaintiff to attend in order to collect the goods left behind at the property. As discussed above, the defendants did make several offers to allow the plaintiff to access the property to collect their materials after 1 May, which the plaintiff did take up to some extent.
124In circumstances where the licence had come to an end on 28 April 2017, the plaintiff no longer enjoyed exclusive possession of the property. It was incumbent upon it to adhere to the terms of the limited arrangement offered to them by the defendants to remove their materials from the property. Neither the refusal to allow the plaintiff to occupy the property after 1 May 2017, nor the re-letting to JSG were breaches of the licence. That is because that agreement came to an end on 28 April 2017, and was never extended.
125As for the disposal or damage of plant and equipment “belonging to” the plaintiff, clause 11 of the licence agreement provided:
“11 Yielding up
11.1           Removal and reinstatement
(a) On or before the earlier of the Expiry Date and the date this Licence is terminated, the Licensee must:
(i)remove all of its property from the Licence Area, excluding any partitions or items installed;
(ii)make good any damage caused to the Licence Area or the Building to the satisfaction of the Licensor acting reasonably by the Licensee's property being removed from the Licence Area above;
(iii) leave the Licence Area vacant and in a clean and tidy condition; and
(iv) repair or reinstate the Licence Area to the same condition it was in when the Licensee first occupied it, fair wear and tear excepted.

(b) The Licensee acknowledges and agrees that all equipment and furniture in the Premises belongs to the Landlord and must not be removed by the Licensee at the end of the Licence.

11.2 Property not removed
If the Licensee does not comply with clause 11.1 on time:
(a)the interest of the Licensee in any property of the Licensee remaining in the Licence Area immediately passes to the Licensor to the intent that the Licensee's property will be deemed to have become the property of the Licensor;
(b) the Licensor may, at the Licensee's expense, remove and dispose of the Licensee's property on the Licence Area in any way the Licensor in its absolute and unfettered discretion thinks fit (including, without limit, storing, selling or destroying the whole or part of the Licensee's property) and repair any damage caused, at the Licensee's cost; and
(c) the Licensor may carry out, at the Licensee's expense, any work necessary to restore the Licence Area to the same condition it was in when the Licensee first occupied it, fair wear and tear excepted.”

126By operation of this clause, any items which belonged to the plaintiff which were left on the property after the expiry of the licence on 28 April 2017 became the property of the defendants. The alleged 5 May agreement did not alter the parties’ proprietary interests in those goods.
127As no extension of the licence was granted, the defendants were not in breach when it refused to let the plaintiff use the property after the expiry date. I was not persuaded that the defendants agreed to a “second” licence. That being so, the defendants were entitled to relet the premises to JSG. Further, by reason of clause 11 of the licence, the defendants were entitled to remove and/or dispose of the plaintiff’s property as they saw fit.
128The plaintiff further claims that the defendants wrongly retained the $8,800 “Bank Guarantee/ Security Deposit” identified under item 6 of the licence (“the security deposit”). The defendants have retained the security deposit of $8,800 and accept that any damages awarded to them on counterclaim should be reduced by this amount. The defendants were entitled to retain the security deposit given the plaintiff’s failure to leave on time and leave the premises in a proper and tidy state.
(7) Are the defendants estopped from relying on clauses 10 and 11 of the licence?
129While the estoppel claim was pleaded by the plaintiff, it was not pursued in the plaintiff’s closing submissions. Further, as I have found that the licence was not extended, I do not consider that there was any representation regarding an extension made by the defendants or their agent which was sufficiently “precise and unambiguous” to create an estoppel during the conversation in early April 2017.[14]
[14]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1 at [35] (per French CJ, Bell and Kiefel JJ)
(8) Did the defendants owe the duties of a bailee and breached those duties?
130The plaintiff alleges by its amended statement of claim dated 27 May 2020 that bailment duties arise from the licence, the second licence, and the 5 May 2017 agreement.
131In Hobbs v Petersham Transport Co. Pty Ltd,[15] Windeyer J held that:

“A bailment comes into existence upon a delivery of goods of one person, the bailor, into the possession of another person, the bailee, upon a promise, express or implied, that they will be re-delivered to the bailor or dealt with in a stipulated way. A carrier to whom goods are delivered for carriage is a bailee. But a person who undertakes that he will carry goods is not a bailee of them unless they be actually delivered to and received by him.”

(emphasis added)
[15] (1971) 124 CLR 220 (“Hobbs”)

132In Rolfe v Investec Bank (Aust) Ltd,[16] Nettle and Beach JJA and McMillan AJA held that “even where a defendant has actual knowledge of a plaintiff leaving some of the plaintiff’s chattels on the defendant’s land, and assents to the chattels remaining there pro tem, the relationship thus constituted between plaintiff and defendant may not necessarily amount to more than one of licence without obligation on the part of the defendant to take care of the chattels.”[17] The Court of Appeal quoted with approval the following finding from Trainor J of the Supreme Court of British Columbia in Coopers & Lybrand v Sterling Circuits Inc and Sun Life Assurance Co of Canada,[18] in relation to a lessor who had permitted a lessee’s trustee in bankruptcy to leave the lessee’s chattels on vacated leased premises for a reasonable time:
“I am not satisfied that the possession acquired … by virtue of the goods being left or stored in [the defendant’s] premises amounted to custody and control giving rise to bailment. The relationship established was in reality the granting of a right or licence to allow the plaintiff’s goods to remain on the premises for a time.”
[16] [2014] VSCA 38 (“Rolfe”)
[17] Ibid at [61]
[18] (1988) 47 DLR (4th) 614 at [12]–[13] (“Coopers”)
133The plaintiff explicitly agreed by clause 11.2(a) of the licence that its interest in any of its property remaining at the property after the expiry of the licence would immediately pass to the defendants.
134Even assuming that the plaintiff could “have a few days grace” to remove its goods from the property, it is clear in the circumstances that this was not a promise to re-deliver in the sense described in Hobbs, but rather a very limited licence similar to those recognised in Rolfe and Coopers.
135But even if clause 11 of the licence somehow did not apply and a bailment arose, the plaintiff’s bailment claim fails at a simple factual level. On 5 May 2017, Mr Jackanic and Mr Nedeljkovic agreed a process by which Mr Nedeljkovic could remove the goods from the property. At that point, the defendants had discharged their duties as a bailee.
136The position here was that the licence had come to an end. The defendants were willing and indeed very keen for the plaintiff to remove its goods and equipment left behind and endeavoured to reach an agreement for that to occur. The defendants granted the plaintiff a limited licence to enter the property to remove its goods. In my view, the circumstances did not give rise to the creation of a bailment. I was not persuaded that the alternative claim of bailment was made out on the facts. That being so, no question of breach of duty by the defendants as bailee arises for consideration.
(9) Counterclaim - are the defendants entitled to damages?
137The defendants’ counterclaim seeks recovery of clean-up costs and rent said to have been foregone as result of the inability to let the property due to the messy state left behind by the plaintiff. The amount sought at trial was $18,600.43. This represented clean-up costs of $20,450.50 and rent foregone of $6,948.93, less the security deposit retained by the defendants of $8,800.
(i) clean-up costs
138Extensive photographic evidence submitted by the defendants shows concrete panels, other equipment and rubbish left behind by the plaintiff. It cost money to move the materials and clean the property.
139By their further amended defence and counterclaim, the defendants contend that they and the incoming tenant JSG incurred costs and expenses by reason of the plaintiff’s breaches of its end of licence obligations. These obligations arose by operation of clauses 11.1(a)(i), 11.1(a)(iii) and 11.1(a)(iv) of the licence, and included requirements for the plaintiff to remove its property from the licence area, to leave that area in a clean and tidy condition, and to repair or reinstate the area to the same condition it was in when they plaintiff first occupied it, fair wear and tear excluded. The plaintiff admits in its further amended reply dated 17 August 2020 it was placed under end of licence obligations at the expiry of the licence but denies the licence expired on 28 April 2017.
140The defendants submit that clause 11 of the licence clearly renders the plaintiff liable for the defendants’ costs of carrying out work to restore the property to the condition it was in when the plaintiff first occupied it. Alternatively, the plaintiff’s failure to leave the property clean is an obvious breach of clause 11.1 of the licence. On either case, the costs of cleaning up are losses which naturally arise from the plaintiff’s breach of the licence under ordinary contractual principles, and thus should be awarded to the defendants.
141The defendants further claim that by “operation of clauses 11.2(b) and 12(b) of the licence, the plaintiff is liable to pay the defendants’ reasonable costs, charges, and expenses in connection with the plaintiff’s default under the lease, alternatively the licence”, and demand payment of their reasonable costs, including the amount that they contend they are liable for to JSG.
142The defendants contend that as part of their lease agreement with JSG, they are obliged to reimburse JSG for the costs and expenses which JSG were required to pay as a result of the plaintiff’s breach of its end of licence obligations.
143The sum of $19,751.40 comprises two payments made paid by JSG. The first is for an invoice of $18,645 for clean-up and removal of rubbish, crane hire and the storage of metal panels dated 1 June 2017. The second is an invoice issued by Bronco Group to Slavonia Pacific Group Pty Ltd dated 31 May 2017 for $1,116.50 for crane truck hire. These invoices have not been paid by the defendants.
144The defendants claim the sum of $690 representing $440 for the cost of a take away bin hire and labour costs of $250. This expense was incurred to remove rubbish left behind by the plaintiff. Mr Jackanic gave evidence he had paid an invoice provided by Take Away Bin Hire dated 9 November 2017 for $440. He also paid an additional sum of $250 to a labourer who assisted him loading up the bin.
145The defendants contend that their agreement with JSG regarding reimbursement of clean-up costs incurred by JSG was contained in oral conversations between the first defendant and Peter Iliopoulos on or about 18 June 2017.
146
Mr Iliopoulos forwarded the invoice to Mr Jackanic on 18 June 2017, which he attached to an email. Mr Iliopoulos writes to Mr Jackanic “Please see tax invoice attached to pass onto person responsible for storage and clean-up bill of factory”.

Mr Jackanic gave evidence that the invoice had not been paid by the defendants, but had been passed on to JSG for payment because he had assumed that the plaintiff would be responsible for the costs of cleaning up and removal of rubbish and materials. Mr Jackanic gave evidence that he believed the plaintiff was responsible for payment of that invoice because:
“that was part of the agreement when they leave the factory. They – they signed the lease, that they’re going to clean the factory, make it - you know, make it useable for the next tenant. Well, Ozemac hasn’t moved one rubbish bin or bucket of rubbish from the place since they left - not one. So it’s their responsibility to move the stuff out.”
147Mr Jackanic also gave evidence that the invoice from Bronco Group for $1,116.50 for “crane truck hire” has not been forgiven by JSG. However, when asked if there was ever any discussion about whether the defendants would be responsible for these costs during his phone call with Mr Iliopoulos on 18 June 2017, Mr Jackanic replied “No”.
148When taken to an invoice issued by BTI Cleaning Services for $4,070, Mr Jackanic confirmed that this was only a quote and that the company had not been engaged to perform cleaning services at the premises. This sum was not pursued by the defendants at trial.
149The defendants submit that by simple operation of the licence, they are entitled to their costs of restoring the property to its original condition. They claim that the fact that some of those costs have been incurred but not yet paid to JSG does not alter the assessment because they remain a liability of the defendants to JSG, and have not been forgiven by JSG.
150During cross-examination of Mr Jackanic, counsel for the plaintiff asked if he recalled giving evidence regarding these amounts in the counterclaim which, if recovered, would be repaid to JSG. Mr Jackanic confirmed that he did, suggesting that he presented JSG with the quotations and that they agreed to perform the clean-up themselves and recover costs from the defendants if they were successful in their counterclaim.
151Counsel for the plaintiff then took Mr Jackanic to clause 3.1 of the Deed of Surrender of Lease between the defendants’ and JSG dated “June 2017”. This clause reads:

“3.1On and from the Surrender Date [30 June 2017], the parties release and forever discharge each other, their servants, officers and agents from all liabilities, obligations, claims, suits, damages and causes of action arising out of, based upon or in any way relating to:
(a)the Lease [between the defendants & JSG over the property commencing 8 May 2017]; or
(b)the Tenant’s [JSG’s] occupation of the Premises,

in respect of the period before and after the Surrender Date arising under the Lease, the general law and by statute, except in respect of obligations expressly contained in this Deed.”

152Mr Jackanic noted that this was a legal document written by his solicitor, and that he had not read that particular clause or document “with understanding”. Mr Jackanic noted that his education was limited in this regard. When it was put to him in cross-examination, Mr Jackanic denied that the verbal agreement was “complete and utter made up rubbish”.
153The plaintiff’s closing submissions in regard to the counterclaim read, in their entirety:
“To the extent that the Tenant [i.e. the plaintiff] is successful in relation to its claim, then the counterclaim obviously falls away.
In the Landlords’ [i.e. the defendants’] submissions (at paragraph [90]) they seek clean up costs of $20,451.50. These amounts have obviously not been paid by the Landlords. There is no proof of loss.
The notion that the Third Party has somehow formed a [sic] agreement with the Landlords in relation to these amounts is, with respect, a pure nonsense in circumstances in which the Third Party is being sued by the Landlords and there is a release in relation to the Deed of Surrender.”

154The plaintiff points to clause 3.1 of the Deed of Surrender in support of the final proposition above.
155In reply, the defendants’ submit that Mr Jackanic’s evidence that he is liable to JSG for the clean-up costs remains unchallenged, and should be accepted. They note that the defendants were left with a messy property which they could not rent for a number of months because of the plaintiff’s failure to leave properly at the end of its lease.
156I am not persuaded that the defendants have proved they are entitled to recover the sums paid by JSG from the plaintiff. Self-evidently, these sums have not been paid by the defendants. They claim they have a liability to repay these amounts to JSG pursuant to an oral agreement. Mr Jackanic’s evidence was to the effect that he considered the responsibility to pay these sums rested with the plaintiff. The deal was that JSG wanted to do the cleaning up itself. It was agreed that JSG would bill the defendants but would not pursue payment pending resolution of the court case with the plaintiff. The nature of the deal with JSG was a loose one and to the effect that if the defendants recovered the sums paid by JSG from the plaintiff then they would reimburse JSG. There was no discussion with JSG, as Mr Jackanic stated in his evidence, that he or his wife would be responsible for any of these costs. I am not satisfied on the basis of the evidence that the defendants ever accepted or agreed that they had a liability to repay JSG the sums spent by JSG – quite the reverse. It would be different if in fact the defendants had reimbursed JSG for the clean-up costs. That being so, I do not consider the defendants have proved this aspect of its counterclaim and they are not entitled to recover the sums paid by JSG.
157Given my finding that the defendants do not have a legal liability to repay JSG, the question of whether JSG would be unable to recover the amounts paid from the defendants because of the release contained in clause 3.1 of the Deed of Surrender does not arise for consideration.
(ii) rent foregone
158The defendants claim rent foregone by reason of the state of the property is also a loss which falls within either of the limbs in Hadley v Baxendale.[19] The inability to obtain rent from a future tenant by reason of a past tenant’s failure to leave the property clean is a loss which naturally arises from the plaintiff’s breach. Alternatively, given that the parties knew that the plaintiff would be manufacturing large concrete panels at the factory, the loss of rent from a future tenant would reasonably have been contemplated by the parties at the time of entry into licence.
[19] (1854) 9 Ex 341
159The claim is made on the basis that the defendants had to put off JSG until 1 July 2017 whereas they had been due to occupy the property on 8 May 2017 under their original lease. Mr Jackanic gave evidence that they had to postpone the date because the incoming tenant could not fully use the premises, at most only 30 percent of the factory floor and something had to be done.
160The foregone rent pleaded in the counterclaim is $6,948.93. This figure is less than the calculation which arises from the evidence of Mr Jackanic (who gave evidence that the new tenant only commenced paying rent on 1 August or 1 September 2017). Despite this, the defendants only seek the amount sought in their counterclaim. The plaintiff did not cavil with the figure claimed but disputes its liability to pay the sum claimed. Mr Jackanic repeatedly denied the proposition put to him in cross-examination that JSG had been occupying the premises from 1 May 2017 onwards. He allowed JSG to move some “stuff” in but that was all.
161The Deed of Surrender reveals that JSG were to commence under the original lease on 8 May 2017. That lease was surrendered and the new lease commenced on 1 July 2017. In the absence of any evidence to the contrary, the defendants did not receive any rent from JSG or indeed anyone else during this intervening period. Contemporaneous documents support this conclusion. On 8 May 2017, Mr Cappelletti emailed Mr Jimmy Iliopoulos, passing on the defendants’ appreciation for his “help and patience with the situation the temporary tenant has caused” and requesting payment of a security bond to CBRE’s trust account. Mr Cappelletti confirmed in an email dated 26 June 2017 to Mr Iliopoulos that all amounts paid under the original lease on 8 May 2017 would be credited to the new lease. Later, Mr Iliopoulos emailed Mr Cappelletti on 7 July 2017 requesting the defendants’ bank details, the amount of the rent and the date it was due to allow him to setup an automatic transfer, noting that he had “tried to find it in the lease but thought it would be quicker to ask”. In my view, the defendants are entitled to recover the rent forgone as claimed. I accept that this is a loss which flowed directly from the plaintiff’s breach of the licence by failing to leave on time and remove its goods and equipment promptly which meant that the new tenant could not move in on 8 May 2017.

Conclusion
162In summary, I was not persuaded that the defendants agreed to extend the licence beyond its expiry date or that the plaintiff was entitled to remain in the property on an overholding basis. Any subsequent concession made by the defendants to allow the plaintiff supervised and limited access to the property to remove its goods and equipment did not amount to an extension of the licence. The permission given to the plaintiff for limited and supervised access the property to remove its goods and equipment did not amount to “use” of the property as defined in the licence. The alternative claims made based on estoppel and bailment were not made out on the evidence.
163I was not persuaded that there was a binding and enforceable agreement made on 5 May 2017 relating to the removal of the plaintiff’s goods and equipment which the defendants then breached. As the evidence shows, the negotiations between the parties regarding access and removal of the plaintiff’s goods were ongoing and varied from time to time up until they came to a halt in late June 2017. The defendants were at all times entitled to rely upon clause 11 of the licence and could lawfully remove and or destroy goods left behind by the plaintiff. By doing so, they did not breach any obligation owed to the plaintiff.
164As the plaintiff failed to prove any breach on the part of the defendants, the plaintiff’s claim for damages does not arise for consideration.
165The plaintiff failed to comply with its obligations set out at clause 11 of the licence to “leave the [property] vacant and in a clean and tidy condition” at the end of its tenancy. I find that the defendants were entitled to retain the sum of $8,800 paid by the plaintiff as a security deposit because of the breaches by the plaintiff of its obligations under clause 11. The plaintiff’s claims are dismissed.
166I find that the defendants are entitled to the sums of $690 and $6,948.93 claimed in their counterclaim and should have judgment in their favour in the sum of $7,638.93.
167I will hear from the parties on the form of the final orders to be made, including the disposition of the third-party claim and costs.

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Certificate

I certify that these 42 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 17 March 2022.
Dated: 17 March 2022
Associate to Her Honour Judge A Ryan