Petria Pty Limited v Makhoul

[2004] NSWADTAP 47

Appeal Panel - Internal

CITATION:	Petria Pty Limited v Makhoul [2004] NSWADTAP 47
PARTIES:	APPLICANT Petria Pty Limited RESPONDENT Edward Makhoul
FILE NUMBER:	049015
HEARING DATES:	20/09/2004
SUBMISSIONS CLOSED:	09/20/2004
DATE OF DECISION:	11/01/2004
DECISION UNDER APPEAL:	Makhoul v Petria Pty Limited [2004] NSWADT 51
BEFORE:	Chesterman M - ADCJ (Deputy President); Boyce P - Judicial Member; Weule B - Non Judicial Member
CATCHWORDS:	Claim for declaration of rights,obligations and liabilities under a lease - leave to appeal out of time
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	049015
DATE OF DECISION UNDER APPEAL:	03/10/2004
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Administrative Decisions Tribunal Rules (Transitional) Regulation 1998
CASES CITED:	Makhoul v Petria Pty Limited [2004] NSWADT 51 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Puya v Coranton Pty Ltd [2000] NSWADT 161 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 386
REPRESENTATION:	APPLICANT D L Warren, barrister RESPONDENT R Lee, barrister
ORDERS:	1. Leave is granted to appeal out of time; 2. The appeal is allowed and Orders 1, 2 and 3 of the Tribunal are set aside; 3. Both parties have liberty to apply within 28 days to argue the costs of this appeal. If no application is made within that time, no order for costs.

Outline of facts

1 In this case, the Appellant (the respondent at first instance) appealed against the decision of the Tribunal, constituted by Judicial Member Fox, in Makhoul v Petria Pty Limited [2004] NSWADT 51. The principal focus of the appeal was Order 1 of the Tribunal, which required the Appellant to tender to the Respondent (the applicant at first instance) a lease ‘in accordance with’ an option of renewal contained in an expired registered lease (the ‘former lease’). The appeal also challenged the validity of Order 3, which stated that the rent payable under this lease was ‘not determined’, but must ‘take into account the expenditure of [the Respondent] on those items listed in letter 30th May 2001 which are either refurbishment to the building or are otherwise fixtures’.

2 The Notice of Appeal was filed one day outside the time limit of 28 days prescribed by Rule 14(3) of the Administrative Decisions Tribunal Rules (Transitional) Regulation 1998. The explanation provided was that counsel had been slow in settling the terms of the Notice. We were satisfied that, since lateness of only one day was in issue, this was a satisfactory explanation. We accordingly granted leave under s 44 of the Administrative Decisions Tribunal Act 1997 for the time for filing the Notice to be extended.

3 The former lease was between the Appellant as lessor and, as lessees, the Respondent (Mr Eddie Makhoul) together with Mr Franco Andreaccio and Mr Gainfranco Inverso. We will refer to the latter two gentlemen as ‘the co-lessees’.

4 The former lease was of premises at 20 Norton Street, Leichhardt (‘the premises’) for use as a restaurant and was governed by the provisions of the Retail Leases Act 1994 (‘the Act’). There was some dispute as to the precise description of the premises, but this issue did not arise on the appeal.

5 The former lease was for six years, between 1 May 1995 and 30 April 2001, with two six-year options of renewal. The initial rental was $3,379 per month. In consequence of a stipulation for annual increases of 5%, the monthly figure was $4,313 during the last year of the term. An accompanying provision for the payment of a proportion of the outgoings gave rise also to a dispute, but again this issue did not have to be given consideration in the appeal.

6 Clause 15 of the former lease relevantly made the following provision for determination of rent if an option of renewal was exercised:-

… a rental to be agreed upon between the parties and failing agreement such rental shall be such amount as shall be determined by a valuer being a member of the Real Estate Institute of New South Wales appointed by the President of such Institute…
7 At [29] in its judgment, the Tribunal pointed out that the rent to be determined under this clause by a valuer would be the current market rent because that was the ‘obvious intent’ of the clause. It referred also to the effect of s 31 of the Act on the determination.

8 From the middle of 1996 onwards, the Applicant had sole conduct of the business carried on at the premises.

9 The Appellant’s estate agent was Mr Nick La Rosa, of Richardson & Wrench Leichhardt. On or about 15 January 2001, the Respondent gave to Mr La Rosa a letter headed ‘Edward Makhoul Café Jovanotti’, in the following terms:-

Dear Nick, I would like to exercise my option on the lease for the premises on 20 Norton Street, Leichhardt, Yours Faithfully, Eddie Makhoul.
10 Mr La Rosa expressed to the Respondent the opinion that this purported exercise of the option was defective because it was not signed by the co-lessees as well as by the Respondent. The Tribunal found that Mr La Rosa ‘tried to preserve the rights which flowed from that’ by writing a letter dated 20 February 2001 to the Respondent and the co-lessees. It was headed ‘without prejudice’ (which, as the Tribunal noted, may not have been effective to avoid any admission that the original notice of exercise was valid) and was in the following terms:-
We are in receipt of your request to continue your tenancy by exercise of option in your current lease from PETRIA PTY LTD. Subject to an inspection of the premises and your commitment to rectify past damages, we grant on behalf of the Lessors the further term effective 22nd May 2001. The commencement rental for the new period shall be Five thousand, two hundred & fifteen dollars per calendar month, plus G.S.T.
11 The Respondent’s reaction, in a letter dated 19 March 2001, was to complain that the proposed new rent, representing an increase of just over 20%, was excessive and proposing instead an ‘increase of 5% as per usual for the last 6 years’.

12 On 28 May 2001, the Appellant’s solicitor wrote to the Respondent and the co-lessees purporting to reject the purported exercise of the option on account of alleged breaches of the former lease. These breaches were listed in detail.

13 Between 19 March and the end of May 2001, the Respondent and Mr La Rosa had discussions about the rent, and about the Respondent’s desire to make improvements to the premises and the outside of the building. These culminated in an on-site meeting on 29 May 2001 between the Respondent, Mr La Rosa and Mr Mario Fuda, a director of the Appellant. The Tribunal noted that Mr Fuda had a limited command of English.

14 At that meeting, the Respondent offered to pay rent at $4,900 per month, intending it to be a fixed rent for the whole of the term. But the Tribunal found that ‘Mr La Rosa, on Fuda’s behalf, accepted the offer as made for the first year only, to be increased thereafter by 5% annually’.

15 The Tribunal found nonetheless that the meeting of 29 May ‘resulted in an agreement’ which was ‘evidenced by’ a letter dated 30 May 2001 from Mr La Rosa to the Respondent and the co-lessees.

16 This letter was headed ‘Re: Meeting 29th May 2001 with landlord “Petria Pty Ltd” – Norton Street, Leichhardt’. It commenced as follows:-

We refer to our recent meeting regarding your intended works agreement/schedule in lieu of continued tenancy.

It was understood that over the next six (6) weeks you will engage a designer to redecorate your leased premises, namely above mentioned and will submit proposed drawings to the lessors by the 15th July 2001.

17 It then stated that the plans should include a substantial number of works within nine listed categories. Relevantly, these included tiling the floor areas of two toilets and ensuring that ‘timber cutting used for fireplace’ should be ‘organised & stored – so not visible to the eye’.

18 The final four paragraphs of the letter were as follows:-

The above-intended works schedule will require the final consent from your lessors, prior to commencement.

You are then required to complete the work in a tradesman like manner by the 1st September 2001, to the satisfaction of the lessors.

Upon the works being completed to the satisfaction of the lessors, it is understood that an extension to the existing lease will be granted.

Should you have any queries or wish to discuss the above please do not hesitate in contacting the writer.

19 The Respondent put the works into effect, closing the restaurant for six weeks in July-September 2001. He spent more than $50,000 on refurbishment of the outside and inside of the building. Mr Fuda was aware that the works were proceeding.

20 The Tribunal found, however, that ‘not quite all of the works were completed within the deadline set in the letter’ and that ‘the toilet floor tiling and the woodshed construction are still to be done’ (that is, presumably, as at 28 January 2004, the final day of the Tribunal hearing).

21 The Respondent tendered two separate authorities, dated 15 September 2003 and signed by each of the two co-lessees. Each of them was in the following terms:-

I … hereby authorise Eddie Makhoul of … to deal with all matters concerning the Lease and business conducted over and at 20 Norton Street Leichhardt including but not limited to paying rent, exercising the options pursuant to the Lease, hiring and firing of staff and all disputes and all banking.
22 At the hearing before the Tribunal, Mr Andreaccio was cross-examined on a short affidavit, which went little further than to confirm this authority and the Respondent’s sole conduct and ownership of the business since mid-1996. Mr Inverso did not give evidence.

23 So far as this appeal is concerned, the relevant orders sought from the Tribunal by the Respondent were orders declaring that (a) the option to renew the former lease for a further six year term had been validly exercised and (b) the rent for the new term had been agreed. The claim fell within the category of a retail tenancy claim, as provided for by s 71 of the Act.

24 There was no accompanying unconscionable conduct claim under ss 62A and 71A. There is a good reason for this, namely, that the conduct of the Appellant that might have been held unconscionable occurred before 12 October 2001, the date of commencement of s 62A. Section 62A(2) provides that conduct before this commencement cannot form the basis of a claim.

25 In a cross claim, the Appellant sought declarations that (a) there had been no valid exercise of the option and (b) there was no entitlement to a new lease.

The Tribunal’s decision

26 In its decision, Makhoul v Petria Pty Limited [2004] NSWADT 51, the Tribunal held first, at [12 – 13], that the wording of the Respondent’s letter of 15 January 2001 constituted a clear and unequivocal statement sufficient to exercise the option contained in the former lease.

27 At [13] the Tribunal stated, however, that it could not interpret the letter as purporting to exercise the option on behalf of all of the three lessees because its ‘plain words’ showed that it was written on behalf of the Respondent alone.

28 The Tribunal then observed, also at [13], that ‘it appears to follow’ from this that the option had not been validly exercised. It referred to the decision of Judicial Member Donald in Puya v Coranton Pty Ltd [2000] NSWADT 161. Here it was held, on the basis of judicial decisions reached before the Act was passed, that where a lease has been granted to more than one lessee, a notice of exercise of an option to renew must be given by or on behalf of all the lessees.

29 The Tribunal held next, at [16], that the written authorities given on 15 September 2003 by the co-lessees ‘could not cure the defect in the exercise document, if defect it be’.

30 At [17], however, the Tribunal considered the possibility that, because under the Act refusal by a lessor of consent to the assignment of rights under a lease from ‘sleeping’ lessees to an active lessee may be difficult to maintain, the principle applied in Puya might not be applicable to the present case. It held, however, that for reasons set out later in its judgment, it did not need to decide whether it was bound by this principle.

31 At [23], the Tribunal ruled that the letter of 30 May 2001, which it described as a ‘letter of offer’, had the effect of superseding the letter of 28 May from the Appellant’s solicitors purporting to refuse the option exercise.

32 Having described the works carried out by the Respondent, to the knowledge of Mr Fuda, the Tribunal found at [25] that ‘not quite all’ the works had been completed within the deadline and that the toilet floor tiling and the woodshed construction were still to be done. It rejected, however, the Appellant’s claim that ‘the deadline in effect rendered time of the essence and that the failure to complete the works on time ended the [Appellant’s] offer of a lease’. It stated that there had been ‘almost complete performance’ by the Respondent.

33 The Tribunal then held as follows at [27] (in the following quoted passage, ‘Respondent’ has been substituted for ‘Applicant’, to maintain consistency with the labels used in this judgment):-

27 The whole course of conduct, as proven before me, was designed to lead the [Respondent] to believe that a full renewal of the Lease, in accord with the option would be granted to him and his Co-Lessees. Whatever opportunity the Lessor had of taking the point that the exercise was not valid, if it survived the letter of 20 February 2001, and if it survived the 30 May 2001 letter of offer, failed when Mr Fuda watched the [Respondent] close the restaurant to commence refurbishment. Broadly in accord with the principles in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR, the Lessor cannot now be allowed to say that it is not now bound to offer a lease, in terms of the option, to all three Lessees. The written authorities given by Inverso and Andreachhio, although not in any way relevant to this aspect of my findings, certainly make it clear that the submission of such a document would not be a futile exercise.
34 At [28 – 30], the Tribunal pointed out that the parties, in seeking to determine a new rent, could have, but had not, made use of the valuation mechanism provided for in Clause 15 of the former lease (see [6] above). This mechanism was, it said, still available to them. But as things stood, the proper amount of the rent had not yet been resolved.

35 The Tribunal then stated as follows, at [31] (in the following quoted passage, there is a further substitution, of ‘Appellant’ for ‘Respondent’):-

31 The [Appellant] argued that I have no power to make any orders favouring Inverso and Andreaccio because they are not parties to the application and drew my attention to the fact that the [Respondent] could easily have joined them in the litigation. That seems to me to be correct. As a matter of law the obligations and benefits of the Lease are complied with and received by the applicant on behalf of all three Lessees. That consideration does not prevent me pursuant to the Section 72 (1) (c) (i) making orders against the [Appellant], in favour of the [Respondent] as one of the Lessees, and his two co-Lessees, all based on the offer of 30th May 2001, which, by its conduct, the [Appellant] cannot now deny. Whether all three Lessees then acknowledge their entitlement and obligations by executing the document is a matter for them. That being the case, I am also satisfied that it is appropriate pursuant to Section 72 (i) (f) (iii) to define the property leased, and I do so.
36 The principal order against which the Appellant has appealed, being Order 1, was in these terms:-
Petria Pty Limited obliged to tender to Edward Makhoul:- Lease in accordance with Option of Renewal contained in Lease registered as 2767538U.
Grounds of appeal relating to estoppel

37 The written and oral submissions put to us on the Appellant’s behalf claimed that the Tribunal’s decision should be set aside on account of several errors of law. We were not asked to grant leave, under s 113(2)(b) of the Administrative Decisions Tribunal Act, for the appeal to extend to the merits.

38 The Appellant made a number of criticisms of what appears to be the principal ground of the Tribunal’s decision, set out at [31]. This was that once Mr Fuda had seen the Respondent close the restaurant and commence refurbishment, in accordance with the ‘letter of offer’ dated 30 May 2001, ‘the Lessor cannot now be allowed to say that it is not now bound to offer a lease, in terms of the option, to all three Lessees’. In so deciding, the Tribunal relied ‘broadly’ on ‘the principles in Waltons Stores (Interstate) Ltd v Maher’.

39 The Appellant’s main criticisms of this reasoning were as follows: (a) that the Tribunal has no jurisdiction in a retail tenancy claim under the Act (whatever might be position in an unconscionable conduct claim) to apply these principles, which are principles of equitable estoppel, in order to find that a lease has ‘sprung into existence’; (b) that the terms of any such lease were in any event too uncertain to form the basis of an order; (c) that any estoppel arising out of these events would have to be in favour of all three lessees, to whom the letter of 30 May 2001 hade been addressed, but there was no evidence of any reliance by the co-lessees on representations made by or on behalf of the Appellant; (d) that the Respondent had not sought relief on the basis of equitable estoppel and its possible relevance to the circumstances, together with that of the contractual doctrine of part performance, had scarcely been discussed at the hearing, with the consequence that neither party had had a sufficient opportunity to address these matters in their submissions; (e) that the Tribunal made no detailed analysis of the representations by the Appellant on which it based its decision; and (f) that, assuming that the relevant representations were those contained in the letter of 30 May 2001, the detriment suffered by the Respondent, namely, carrying out some of the works listed in the letter without being offered renewal of the lease, had not been ‘caused by’ the representations.

40 We will deal first with the last two of these grounds ((e) and (f)), as they appear to us to raise the most important issue in the appeal. The Respondent’s written submission elaborated upon the latter ground by claiming that there were two reasons why the detriment to the Respondent was not caused by the representations in the letter.

41 The first of these reasons was that much of the Respondent’s expenditure in carrying out the works was not required or requested by the Appellant. We can deal with this straightaway by saying that there was no finding by the Tribunal to this effect and that, since leave has not been sought for this appeal to extend to the merits, it is not a matter which we can make our own finding.

42 The second reason put forward by the Appellant was that the Respondent did not in fact comply with the strict requirements of the Appellant’s letter, which required timely and complete performance of them. In consequence, the detriment suffered by the Respondent should be regarded as ‘self-imposed’.

43 The Appellant argued in this connection that the Tribunal’s approach to the issue – namely, to hold that ‘almost complete performance’ of these requirements was sufficient to impose on the Appellant an obligation to renew the lease – involved an impermissible mixing of the contractual doctrines of part performance and making time ‘of the essence’ with the principles of estoppel. Furthermore, there were no detailed factual findings made to support this characterisation of the performance as ‘almost complete’.

44 The Appellant relied here on Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 for the proposition that where the time has elapsed for the fulfilment of a non-promissory condition which is a condition precedent to the formation of a contract, either party may withdraw from the transaction without giving prior notice making time of the essence.

45 The Respondent’s submissions did not deal at length with these matters. The written submission included the assertion that ‘the whole course of conduct by the Appellant could only have been designed to lead the Respondent to believe that a full renewal of the lease would be granted’.

46 In our judgment, the Tribunal’s reasoning with regard to these issues of estoppel was indeed affected by legal error, along the lines urged by the Appellant.

47 We would identify the errors in this way. The Tribunal held, correctly in our view, that the letter of 30 May 2001 constituted an offer on the Appellant’s behalf, which expressly set out precise conditions to be fulfilled. It was not to be interpreted as evidence of an agreement binding the Respondent and the co-lessees to carry out the specified works, under threat of legal action if they failed to do so.

48 It was accordingly not open to the Respondent to make any claim based on having ‘substantially’ complied with the conditions, or on an argument that time was not of the essence and had not been made so by any appropriate notice from the Appellant. In so far, therefore, as the Tribunal appeared to base its decision on the concept that ‘almost complete’ performance could be treated as equivalent, in substance, to complete performance, it was relying on principles that were inapplicable to the legal relations between the parties at the time.

49 We agree also with the Appellant that, if these principles were in fact applicable to the case, it was incumbent on the Tribunal to make specific findings on the degree of performance achieved by the Respondent, so as to provide an adequate basis for the conclusions being drawn.

50 Furthermore – and this appears to us to be the crux of the matter – there was no evidence on which the Tribunal could make a finding to the effect that Mr Fuda’s representations to the Respondent included a representation that a new lease would be granted even if ‘timely and complete performance of the works’ (to quote from the Appellant’s written submission) did not occur. Mr Fuda’s awareness that the Respondent closed the restaurant and commenced the refurbishment could not be interpreted as conveying any such representation. The Tribunal’s findings contain nothing to suggest that at any stage after the letter of 30 May did Mr Fuda or anyone else on the Appellant’s behalf indicate to the Respondent that the conditions stipulated in the letter for renewal of the former lease had in any way been relaxed by the Appellant.

51 The Tribunal’s approach in paragraph [27], however, implied necessarily that despite the clear requirements in the letter, from which the Appellant never departed, the Appellant became bound to offer a new lease once, to its knowledge, the Respondent had commenced the works. This would be the case irrespective of the extent to which the Respondent’s performance of the works fell short of what was stipulated. The second sentence of [27] in fact states: ‘Whatever opportunity the Lessor had of taking the point that the exercise was not valid … failed when Mr Fuda watched the [Respondent] close the restaurant to commence refurbishment (emphasis added).

52 In this part of the Tribunal’s explanation of the Appellant being bound by an estoppel, the question whether the Respondent complied with the offer’s requirements wholly, substantially or scarcely at all is treated as irrelevant. There appears to us to be no ground for holding that the Appellant was bound by considerations such as appear in Waltons Stores (Interstate) Ltd v Maher even if (to take an extreme example) the Respondent, having closed the restaurant and embarked on the works, decided one week or even four weeks later to reopen the restaurant, leaving the works only quarter-done or half-done.

53 This conclusion is sufficient, in our view, to justify setting aside the Tribunal’s order in so far as it was based on principles of estoppel. We will now comment briefly on the other grounds of appeal that were raised in connection with the Tribunal’s invocation of these principles.

54 Referring back to the list set out above at [39], we are not persuaded by ground (a), which was that the Tribunal has no jurisdiction in a retail tenancy claim to apply principles of equitable estoppel in order to find that a lease has ‘sprung into existence’. It appears to us that these principles – which have their origins in laws of evidence – might well form part of a party’s claim that, despite initial appearances, an agreement for a lease has arisen, falling within the broad definition of ‘retail shop lease’ in s 3 of the Act. But we do not need to decide the point.

55 We are equally not inclined to accept ground (b). This was, in brief, that the terms of any lease which the Appellant would be bound to grant were too uncertain to form the basis of an order. We note however that what was offered in the letter of 30 May 2001 was ‘an extension to the existing lease’ and that, as pointed out by the Tribunal at [28 – 30], the sole significant issue of uncertainty regarding any extension, namely the amount of the rent, was ultimately capable of resolution through the valuation mechanism established by Clause 15.

56 Ground (c) is in essence that any estoppel arising out of these events would have to be in favour of all three lessees, yet there was no evidence of any reliance by the co-lessees on representations made by or on behalf of the Appellant. As it is not necessary for us to determine this question we would prefer not to do so. We would only say that if an estoppel had arisen as argued by the Respondent, we see no reason in principle why the obligation created by it in his favour could not have taken the form of an obligation to offer to him and the co-lessees an ‘extension to the existing lease’. This could be a benefit that he alone could claim by virtue of his reliance, to his detriment, on representations by the Appellant. It would not, of course, have ripened into an actual lease unless the co-lessees had joined with him in accepting the offer.

57 As to ground (d), which was not strongly pressed at the appeal, we would say this. It does appear from the transcript of the hearing that not much attention was paid to principles of equitable estoppel or part performance. But in this appeal, the parties have had a full opportunity to redress any such defect of procedure. It therefore could not of itself provide a basis for allowing the appeal.

Other grounds of appeal

58 The Appellant challenged also the Tribunal’s ruling, contained in paragraph [31], that although the co-lessees were not parties to the proceedings the Tribunal could still make orders against the Appellant, in favour of the Respondent and the two co-lessees. The orders in fact made were expressed to be pursuant to s 72(1)(c)(i) of the Act, which empowers the Tribunal in a retail tenancy claim to make

(c) an order that a party to the proceedings:

(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of a lease …

59 The arguments put by the Appellant included the following: (a) that neither the Act nor the Administrative Decisions Tribunal Act 1997 authorised the making of orders against, or indeed in favour of, non-parties; (b) that the Respondent should have applied under s 67(4) of the latter Act for an order joining the co-lessees and (c) that, particularly in relation to Mr Inverso, it was contrary to basic principles to make an order affecting the rights of non-parties, particularly when he had not taken any part in the proceedings whatsoever.

60 In relation to the first of these arguments, the Appellant maintained that the definition of ‘retail tenancy claim’ in s 70 of the Act does not provide anywhere for orders that would affect non-parties. Subparagraph (ix), referring to declarations, might provide the basis for an order such as the Tribunal made. But it is limited to declarations of the rights, obligations and liabilities of ‘the parties under a lease’.

61 While we agree that joinder of the two co-lessees may well have been desirable, we do not think that it was necessarily beyond the power of the Tribunal to make an order which might operate for the benefit of a non-party. No such limitation appears in s 72(1)(c)(i), under which the Tribunal’s orders were expressed to be made. No authorities were cited to us in support of the argument that ‘basic principles’ would be contravened. In these circumstances, we will not make a final determination regarding these matters.

62 The principal contentions put forward by the Respondent were (a) that his letter of 15 January 2001 was, after all, a valid notice of exercise of the option; (b) that in any event, Mr La Rosa’s letter of 20 February 2001 remedied any defects in this notice through a form of ratification; and (c) that the outstanding issue of the rent to be paid was independent of the question of exercise of the option and could, in due course, be determined following the procedure stipulated in Clause 15.

63 The Tribunal, in paragraphs [17], [19], [27] and [30], made statements to the effect that this line of reasoning might well be acceptable, but ultimately, as paragraph [31] makes clear, based its decision on the estoppel that it held to have arisen.

64 We do not share the Tribunal’s doubts as to the authority of Puya v Coranton Pty Ltd [2000] NSWADT 161. A consideration of major importance in that decision, and in the decisions which it purported to follow, was, as expressed by Judicial Member Donald at [18], that ‘a lessor with three lessees is entitled to rely on the security that they all continue to be liable for the obligations under the lease’. We do not see how, as a matter of law, the greater facility for assignment that the Act has created renders that consideration less compelling.

65 In the present case, an assurance that the two co-lessees would continue to be liable for the obligations arising under a new lease was not conveyed in the Respondent’s letter purporting to exercise the option. That position was not changed by Mr La Rosa’s letter of reply. In such circumstances, we are bound to accept the Appellant’s submission that neither the first of these letters, nor the two of them in combination, led to a valid exercise of the option.

66 For these reasons, we allow the appeal so far as concerns Order 1 and set aside this Order.

67 The Appellant, as indicated earlier, also challenged Order 3, relating to the amount of the rent that would be payable under the new lease. The principal ground of challenge was uncertainty. But as we see it, this Order cannot stand alone once Order 1 is set aside. The same applies to Order 2, which purported to define the premises covered by the new lease.

68 We have some sympathy for the Respondent, who would appear to have incurred significant expenditure making improvements to the premises and the building in which they were situated, but has not been offered a new lease. It may be that some claim for damages is or would have been available to him. But no such claim was made in these proceedings.

69 Both parties have liberty to apply within 28 days to argue the costs of this appeal. If no application is made within that time, there will be no order for costs.