Powell v Bochas

[1995] QSC 99

IN THE SUPREME COURT

OF QUEENSLAND

No. 148 of 1995

Brisbane

Before the Hon. Justice Williams

[Powell v. Bochas]

BETWEEN:

BRIAN CHARLES POWELL and LISA SUSAN POWELL

Plaintiffs

AND:

BOCHAS PTY LTD

Defendant

JUDGMENT - WILLIAMS J

Judgment delivered 01/06/1995

CATCHWORDS:     Lease - option to renew - exercise to be in writing - oral statement of intention to exercise option - held not to be sufficient - conduct of defendant in circumstances held not to give rise to waiver, estoppel, or false and misleading conduct - Traywinds Pty Ltd v. Cooper (1989) 1 Qd.R. 222 considered - Mander Forklift Pty Ltd v. Dairy Farmers Co-operative (1990) A.T.P.R. 46-061 approved - S. & E. Promotions Pty Ltd v. Tobin Brothers Pty Ltd (1994) 122 A.L.R. 637 distinguished.

Counsel:Varley for plaintiffs

N. Thompson for defendant

Solicitors:Barwicks for plaintiffs

Nicol Robinson & Kidd, Town Agents for Neilson Stanton and Parkinson, Gympie for defendant

Hearing dates:   25 and 26 May 1995

IN THE SUPREME COURT

OF QUEENSLAND

No. 148 of 1995

BETWEEN:

BRIAN CHARLES POWELL and LISA SUSAN POWELL

Plaintiffs

AND:

BOCHAS PTY LTD
  Defendant

JUDGMENT - WILLIAMS J

Judgment delivered 01/06/1995

At all material times, consequent upon assignments, the plaintiffs were lessees and the defendant the lessor pursuant to the terms of the lease which is ex. 1 in the action.  The original term thereof was to expire on 31 January 1995, but cl.24.1 created a "first option" in favour of the plaintiffs.  Pursuant to the provisions of that clause the option had to be exercised by 31 October 1994; it was worded as follows:

"The option for renewal contained in this Clause shall be exercisable by notice in writing delivered by the Lessee to the Lessor not less than three (3) calendar months prior to the expiration of this term."

It is sufficient to record that the option was exercisable by a lessee who had "observed and performed all the covenants, agreements and stipulations" imposed by the lease; it was conceded that the plaintiffs satisfied that condition precedent to the exercise of the option.
           The plaintiffs acknowledge that they did not give notice in writing as required.  Their contention is that in a telephone conversation between the male plaintiff and a director of the defendant (James) on 28 October 1994 words were used by the male plaintiff indicating an intention to exercise the option, and it is then further contended that the defendant cannot be heard in law to deny the proper exercise of the option.  The plaintiffs case as pleaded includes the following allegations:

1. The defendant by its director (James) accepted "the exercise of the option as so made";

2. The defendant by its conduct induced the plaintiffs to assume that the option had been effectively exercised;

3. The defendant knew or intended or ought to have known that the plaintiffs believed that the option had been properly exercised;

4. After 28 October 1994 the plaintiffs acted to their detriment by expending certain sums of money on repairs and improvements which they would not have done if the option had not been exercised;

5. It was unconscionable for the defendant to insist on compliance with cl.24.1 of the lease;

6. Written notification on 19 December 1994 was sufficient to exercise the option;

7. By reason of the defendant's silence when it must have known that the plaintiffs were proceeding on the assumption that the option had been properly exercised, the defendant (a corporation engaged in trade and commerce) engaged in conduct which was misleading or deceptive or by its silence made a false or misleading representation such as would in either case entitle the plaintiffs to relief pursuant to s.87 of the Trade Practises Act. 

   It is clear, as a general proposition, that there must be strict compliance with the notice requirements of an option if it is to be validly exercised.  Recently I had occasion to examine a number of authorities relating to that proposition, and I do not repeat now what I then said:  Mackay Estates Pty Ltd v. Berger and Raleigh, (unreported, Townsville No. 111 of 1989, judgment delivered 24 April 1995).  Here the requirements of the contract were not satisfied and it follows that the option was not duly exercised.  The plaintiffs can only succeed if they establish that the defendant cannot rely on what otherwise would be the position at law.
              Counsel for the plaintiffs made much in his final submissions of the decision of the Full Court in Traywinds Pty Ltd v. Cooper (1989) 1 Qd.R. 222. Therein it was held that no particular form of words was necessary in exercising an option provided that the statement by the option holder was unqualified. In that case a notice in writing (as required by the lease) was given, and the only question for the Court was whether or not the words used therein manifested a sufficient notification of intention to exercise the option. That approach would also apply to those cases where the option could properly be exercised orally; as is demonstrated by cases such as Niesmann v. Collingridge (1921) 29 C.L.R. 177 an option may be verbally exercised where the contract does not require writing. (See also Mackay Estates.)  This was not such a case. 
              It should be clearly noted that there was no suggestion, either in evidence or in submissions from counsel for the plaintiffs, that the defendant prior to the telephone conversation on 28 October 1994 indicated that an oral exercise of the option would be acceptable. 
              In those circumstances the approach adopted in Traywinds is not relevant.  The question here is not whether the words used were sufficient to constitute an exercise of the option.  The critical question is whether or not the defendant's conduct during the course of the telephone conversation and subsequently, given the words used by the male plaintiff, deprives it of the right to submit that in law there has been no valid exercise of the option. 
              It is against that background that I turn to the evidence.  At the outset I must deal with some issues of admissibility.  Throughout the trial on a number of occasions I admitted evidence on a provisional basis and indicated that the matter should be more fully addressed at the end of the trial.  In his final address counsel for the plaintiffs, relying on Pollitt v. The Queen (1992) 174 C.L.R. 579, Walton v. The Queen (1989) 166 C.L.R. 283 and Ratten v. The Queen (1972) A.C. 378, submitted that statements made by the male plaintiff to the female plaintiff before and after the telephone conversation in question, and statements made by him shortly thereafter to a real estate agent, were admissible as probative of his intention or state of mind at the time. I have grave doubts as to the validity of those submissions. But in the end result it is not necessary for me to make a final decision thereon. I am prepared, disregarding the evidence provisionally admitted, to make findings of fact which would only be confirmed if regard could properly be had to that other evidence.
              Counsel for the defendant also objected to the relevance of evidence led on behalf of the plaintiffs to the effect that during the approximate six month period prior to 28 October potential disputes with respect to the lease had been resolved amicably between the plaintiffs and the defendant.  Those potential disputes related to responsibility for maintenance of various parts of the leased premises.  I am strongly inclined to the view that such evidence is inadmissible on the ground that it is irrelevant.  But even if it be admissible it would not cause me to alter the conclusions I have reached with respect to the conversation of 28 October and the all important conduct of the defendant at that time and thereafter.
              The leased premises were in fact a motel in the Noosa district.  The plaintiffs carried on the business of moteliers and, it would seem, improved its profitability during their occupancy.  Again I am of the view that what the plaintiffs paid for the acquisition of the lease and business, and any consequences of their work on profitability, are irrelevant for present purposes; the defendant's objections to the evidence are sound but again consideration of it would not lead to any different findings.
              On or about 10 October the plaintiffs decided to put the business on the market.  They did so by listing it with a real estate agent named Jackson who was an employee of the L.J. Hooker organisation.  At that time the lease provided by cl.24.1 for a first option period of three years from 31 January 1995, and cl.24.2 provided for a second option period of three years to run from the expiration of the first option period.  In consequence any purchaser of the business would be acquiring a potential six year term of occupancy of the motel premises.  There was at least one prospective purchaser who indicated that an additional three year option period (making a potential nine year term in all) would make the business more viable.  That resulted in Jackson and the male plaintiff having a discussion about obtaining an additional three year option period from the defendant.  The probability is that in the course of that discussion some reference was made by Jackson to the exercise of the option in accordance with cl.24.1. 
              The male plaintiff gave evidence that prior to making the telephone call on 28 October he was conscious of the fact that the option had to be exercised by 31 October, and had to be exercised in writing.  Having heard the plaintiff in the witness box I am by no means satisfied that he was fully aware of those matters; particularly I am not satisfied that he realised that to be effective in law the notice had to be given in writing.  He may well have seen the word "writing" in cl.24.1 but he did not appreciate the significance of it.
              There was no disputing that on 28 October the male plaintiff telephoned James.  Other evidence clearly established that the phone conversation went for more than seven minutes.  The male plaintiff's evidence as to what was said in the course of that conversation is as follows:

   "I contacted Mr James and mentioned to him that I would like to discuss several points with him.  I advised him that the property was on the market and he asked me if I minded telling them how much for, which I replied, $199,500 and he also asked me if I would tell him the turnover.  Again, I replied $180,000.  I then said to him, 'We are exercising our option' which he replied, 'O.K.'.  I then carried on saying that 'That leads me onto my third point, which is we would like to discuss another three years'.  There was then some discussion on what sort of monetary figures should be included.... He then explained to me that he didn't believe a motel lease was the same as a shop lease where you automatically extend, that some inducement would have to be sorted out.  I asked how that was done and we talked possibly a formula that could be used, he would go away and research that and talk to the appropriate people and come back to me.... We then carried on and I asked because of this inducement thing whether he would be prepared to give me a letter of intent and he replied 'No'."

That is the sum total of the plaintiff's evidence with respect to that critical conversation.  I am prepared to accept that shortly prior to that conversation the male plaintiff wrote on ex.10 the following:

"1.For sale.

2.Option.

3.3 yr + extra"

I am also satisfied that during or at the conclusion of the conversation he placed a tick alongside each of the first two items and also wrote the letters "O.K." against the second.  He wrote against the third:

"Letter of intent - no. Money."

The male plaintiff also expressly conceded that between 28 October and early December when he had occasion to speak to James about some damage to motel property there was no communication between the parties. 
           In all the circumstances I am prepared to find on the balance of probability that from and after the phone conversation of 28 October the male plaintiff believed that he had exercised the option. 
           Under cross-examination counsel for the defendant did not expressly put to the male plaintiff that no words along the lines "we are exercising our option" were used by the male plaintiff in the course of that telephone conversation.  The male plaintiff denied that the words he used carried the meaning that the plaintiffs "intend to exercise the option".  It is also perhaps of some significance that under cross-examination the male plaintiff, for the first time, asserted that the response of James was to say "Fine, O.K.". 
           The male plaintiff also accepted under cross-examination, and I find this to be a fact, that "predominantly most of the conversation was to do with the extra term at the end".  That was the main purpose of the male plaintiff making the telephone call.  The plaintiffs were interested in selling the business and it had been made clear to them that the business would be more readily saleable if there was an additional three year option period included in the lease.
           I accept the evidence of James that he was generally aware that the option had to be exercised by the end of October 1994.  He was, as he frankly conceded, expecting to receive a notice of exercise of option from the plaintiffs.
           His recall of the critical conversation of 28 October is no more detailed than that of the male plaintiff.  His evidence thereon was as follows:

"Well, the conversation opened with Mr Powell informing us the property had been placed on the market.  I also inquired just out of general interest the price.... Around the $199,000 - I can't remember the exact figure.  Then I also inquired of his turnover out of curiosity.... That was $180,000 was his turnover.... The conversation flowed straight onto the three year extension.  Another three year term.... Brian asked whether or not we would be, would we consider a further three year term.  It was presently two, in the lease.  Would we consider another three year term?  And I said 'Well, yeah, I don't have a problem with that.  But there again, it can't be treated as a lease where you just extend it, within the motel industry, you paid lease premiums.  If you buy a lease on a property you actually pay the price and actually calculate it is the part of the length of the lease.'... Well Brian indicated that he was, he was obviously surprised... I said there would have, I said it is not like a shop rent where you just automatically get asked for extension - if that suits everyone, it automatically goes on the rent increase.  With motels you actually pay a premium for any extension.... I indicated to him I was fully aware of how that figure could be - would be calculated.  That there would be someone around and it would be suitable for him to get back with the figure in mind.... I can't remember exactly what he said, I presume he was to come back to me and that is the way I left it with him.... I left it totally up to Brian to come back to me.  He was the one looking for the extension not me.  His responsibility."

(That is how the transcript reads, though my impression was that the witness said he was not aware of how the figure was to be calculated; that is why he asked the male plaintiff to come up with a figure.  Probably in the long run nothing turns on that difference.)
           Under cross-examination James denied that there were any words used along the lines "we are exercising our option".
           I should record that I formed an unfavourable assessment of the male plaintiff's evidence with respect to the question of expenditure subsequent to 28 October.  In earlier affidavits in these proceedings, and in his evidence-in-chief, he asserted that he had expended considerable sums of money, thereby acting to his detriment, on the basis that the option had been duly exercised.  Even after it was drawn to his attention that liability to pay certain of those sums had accrued prior to 28 October he continued to give evidence that other amounts, subject to the same observation, were only made because of his belief that the option had been duly exercised.  When one disregards payments where liability had accrued prior to 28 October, payments which had to be made if the plaintiffs were to meet their obligation to keep the premises in good and tenantable repair until the expiry of the term in January 1995, and payments which would have merely increased the value of tenants fixtures which the plaintiffs could remove at the expiration of the term, there is no real substantial evidence of the plaintiffs acting to their detriment by making payments subsequent to 28 October. 
           However, the plaintiffs willingness to give evidence of matters which could not be justified, and his general demeanour, caused me to have serious concern as to the accuracy of his evidence with respect to the telephone conversation of 28 October.
           There was a telephone conversation between the male plaintiff and James on or about 2 December during which damage caused by a burst hot water system was discussed.  It was agreed that part of that damage would be covered by an insurance claim to be made by the defendant.
           The next conversation was on 16 December when the male plaintiff telephoned James regarding the roof leaking.  On this occasion James referred the male plaintiff to the conditions of the lease and suggested that he should seek legal advice.  That resulted in the male plaintiff consulting his solicitor, Fogg, on 19 December.  It was in the course of that consultation that Fogg became concerned as to whether or not there had been compliance with cl.24.1 of the lease and in consequence he wrote the letter of 19 December which is ex.2.  Materially that letter stated:

"Pursuant to the terms of the Lease dated 4 July 1991, subject to Deed of Variation dated 21 August 1992, our clients hereby exercise their option to extend the Lease for a further term of three (3) years commencing 1 February 1995."

The defendant's solicitors immediately replied (letter dated 20 December 1994, ex.3) stating that the letter of 19 December purporting to exercise the option to renew the lease was out of time.  That letter correctly pointed out that failure to exercise the option within the required time resulted in the loss of the option entitlement. 
           It would seem that the solicitors for the plaintiffs did not consult their clients that day, but responded on the basis of instructions already received (letter 20 December 1994, ex.4).  Therein reference was made to "an unfortunate oversight", clearly a reference to the failure to give written notice within the time prescribed by the terms of the lease.  The letter emphasised the plaintiffs' good history as lessees.
           The contents of ex.3 were communicated to the plaintiffs on 21 December and there is no dispute that on the afternoon of that date the male plaintiff telephoned James.  According to the male plaintiff he "questioned him about what was going on, and basically where the thing was going".  He said that he "reminded him of our telephone conversation we had, and the content of that".  The male plaintiff says that James responded that the plaintiffs were in breach of contract because it had not been put in writing and reference was made to the terms of the lease.  James in his evidence broadly agreed with that:

"He asked me what was going on with - regarding the letters that I had received from his solicitor and why we wouldn't consider his option."

He agrees that he referred the male plaintiff to "the condition of the lease".
           There is also no doubt that shortly after that telephone conversation James rang the male plaintiff back and indicated that he would be prepared to put some proposal to him.  That would appear to be the "without prejudice" proposals which preceded the letter from the solicitor for the plaintiffs of 12 January 1995 (ex. 5). 

           In that letter of 12 January 1995 the solicitor for the plaintiffs set out in some detail what the plaintiffs contended to be the substance of the phone call on 28 October 1994.  That is the first occasion on which it was asserted that there had been an oral exercise of the option on 28 October.  In the reply (letter 12 January 1995, ex. 6) the solicitors for the defendant indicated that the defendant's contention was that "all that was discussed was the possibility of obtaining a further option in addition to those already existing".
           Those are all of the matters which, as I understand the submissions, could be relevant to considering the contentions of the plaintiffs.
           When pressed in the course of his submissions to give particulars of the "inducements" emanating from the defendant on which the plaintiffs were relying counsel specified two:

1. The response by James "Fine. O.K." and thereafter the defendant's silence on the question of the exercise of the option;

2. The agreement of James to become involved with the plaintiffs in negotiations towards a possible additional option period of three years.

   I am satisfied that in the course of the telephone conversation on 28 October the male plaintiff made a short statement in relation to the option which had to be exercised by the end of that month.  I am not, however, prepared to accept that he used the precise words: "We are exercising our option".  Neither plaintiff could give any word for word detail of the conversation in question other than that the male plaintiff used those words.  The impression created by each plaintiff in the course of evidence was that those words had been memorised and nothing was going to make them change one word.  Given the totality of the evidence given by each, it was highly improbable that each had an honest independent recollection of those precise words being used.  As already noted, the first matter dealt with in the telephone conversation was the sale of the business, and most of the time was spent discussing the possibility of obtaining an additional three year option period.  As a lead-in to the latter topic I am satisfied that the male plaintiff made a statement intimating to James that the plaintiffs intended to exercise the first option.  I am not able on the evidence to make a finding as to the precise words that he used; but that is not necessary.  Indeed even the words "we are exercising our option" could well have been regarded by the other party as a statement of intention.  By contrast, nothing was said by the male plaintiff to indicate that he was by the words he then used, and without more, and in particular without any writing, purporting to exercise the option so that it was binding on the defendant.             James' inability to recall any such statement is perhaps explicable by the fact that it was not regarded by him at the time as being important; the formal exercise of the option was something to be done in the future.  But whatever the explanation for his inability to recall the statement (and even it be an explanation which reflects badly on his credit) I am satisfied that in making a response along the lines "fine" or "O.K.", or a combination of both, he was doing no more than acknowledging the statement of intention made on behalf of the plaintiffs.  The statement was not such as called upon him to elect whether or not to accept an oral exercise of the option in lieu of the written notice required by the lease, and in context his answer could not objectively be taken as an acceptance of what was then said by the male plaintiff as a due exercise of the option.
              As previously noted the male plaintiff believed at the end of the conversation that he had exercised the option.  That view was not a consequence of anything said by or anything done by James on behalf of the defendant.  That belief was essentially the product of the male plaintiff's misconception as to what was required in order to exercise the option.  Immediately before making the telephone call he believed that he could exercise the option by making some oral statement to that effect, and at the end of the conversation he believed that the option had been exercised because he had made such a statement.  His belief was not induced by any words or conduct emanating from James.
              But that is not necessarily the end of the matter.  It is still possible, given the issues raised in the statement of claim, for the plaintiffs to establish that the defendant could not now be heard in law to deny the proper exercise of the option.
              Since at least Low v. Bouverie (1891) 3 Ch. 82 it has been recognised that in order to create an estoppel the statement by which the defendant is held bound must be "clear and unambiguous" (see per Kay L.J. 113). In the context of this case the words of the defendant were merely "fine" or "O.K.", or a combination thereof. What is in consequence called for is a consideration of the statement to which that reply was made. For words of acquiescence to give rise to an estoppel the statement thereby accepted would have to be clear and unambiguous. For the reasons already given the statement accepted by James was no more than a statement of intent to exercise the option, or at worst for the defendant an ambiguous statement capable of bearing that meaning. In those circumstances it cannot be said that the evidence establishes a clear and unambiguous acceptance by the defendant of an express oral exercise of the option; that is, acceptance in a form contrary to the procedure required by the lease.
              In the course of final addresses counsel dealt reasonably extensively with a series of cases, particularly in the Federal Court, dealing with the circumstances in which silence may constitute a representation or may be evidence of false, misleading or deceptive conduct.  It is not necessary to refer to those cases in any detail.  Whether silence will constitute a representation or found an estoppel depends upon the circumstances of each case and may be affected by a consideration of the obligation of the party remaining silent to make full disclosure.  I agree entirely with the observation of Cole J in Mander Forklift Pty Ltd v. Dairy Farmers Co-operative (1990) A.T.P.R. (Digest) 46-061 at 53,228, where he said:

   "Silence concerning a view of the proper interpretation of a contract, or that a mutually known term of a contract will be enforced can rarely, if ever, constitute conduct within s.4(2) of the Trade Practises Act 1973.  (Generally see Rhone-Poulenc Agrochimie S.A. v. U.I.M. Chemical Services Pty Ltd (1986) 12 F.C.R. 477; Henjo Investments Pty Ltd v. Collins Marrickville Pty Ltd (1988) 79 A.L.R. 83). To construe s.52 as imposing an obligation upon a party to a contract to advise the other party both of its interpretation of clauses in the contract, and that the clauses in the contract will be enforced or adhered to destroys the very basis of objective interpretation of contracts to which Mason J referred in Codelfa Construction Pty Ltd v. State Rail Authority of N.S.W. (1982) 149 C.L.R. 337 at 352."

In the circumstances of this case I hold that the silence of James, that is his not saying to the male plaintiff that the option should be exercised in writing, did not constitute false, misleading or deceptive conduct on the part of the defendant.  Further, I am not satisfied (essentially for reasons already given) that such silence induced in any way the plaintiffs to believe that the defendant was accepting that the option had at that time been duly exercised.  There is nothing in the evidence to indicate that James was aware that any "silence" on his part was creating an erroneous belief or impression in the mind of the male plaintiff as to the position with respect to the exercise of the option.
           The evidence here clearly does not establish the matters which the Court held in S. & E. Promotions Pty Ltd v. Tobin Brothers Pty Ltd (1994) 122 A.L.R. 637 gave rise to an estoppel with respect to the exercise of an option. The passage in the judgment of the Full Court of the Federal Court at 656 makes it clear that the defendants there clearly knew that the lessee was proceeding on the assumption that it was unnecessary for it to exercise any option under the 1986 sublease because a new sublease had already been agreed upon. The evidence there was so strong that the Court was able to say that for the defendants not to have known of the assumption on which the lessee was proceeding would "have been shutting their eyes to what should have been obvious".
           Even when one has regard to what was said here in the course of the telephone conversation about the additional three year option period, the facts come no where near establishing a similar scenario to that before the Court in Tobin.  There was here no agreement that any additional option period would be given, and James expressly refused to give any letter of intent in that regard.  The probability is that those matters were left open for future negotiation, but those negotiations could have taken place at any time in the future;  they did not have to be concluded before or contemporaneously with the exercise of the first option. 
           Counsel for the plaintiffs also relied upon the decision in Update Constructions Pty Ltd v. Rozelle Childcare Centre Ltd (1990) 20 N.S.W.L.R. 251. There a contract provided for written notice to be given as a prerequisite before variations to the contract became binding. No written notice was given, but the Court held that the circumstances were such that the proprietor was estopped from relying upon the requirement for written notice. The decision was largely dependent upon the particular conversation in the course of which oral authority was given to proceed with the variation. Because of that the decision is of no relevance here.
           Returning to the allegations made in the statement of claim and set out above, the following summary should be recorded:

1. James did not by his words or conduct accept the oral statement of the male plaintiff as due exercise of the option.  Nothing that was said or done by James indicated that the defendant was waiving compliance with cl.24.1 of the lease.

2. Given that the male plaintiff only made a statement of intention to exercise the option, nothing said by James in the course of the telephone conversation induced the plaintiffs to assume that the option had been effectively exercised.  Further, nothing done by or on behalf of the defendant subsequently, including any silence, induced the plaintiffs to assume that the option had been effectively exercised in the course of the telephone conversation. 

3. On the evidence I am not satisfied that the defendant knew or ought to have known that the plaintiffs believed that the option had been properly exercised by the male plaintiff making the statement which I find he did in the course of the telephone conversation of 28 October. 

4. For reasons which have been previously canvassed I am not satisfied that subsequently to 28 October the plaintiffs expended moneys which they would not have done (or been obliged to expend) if the option had not been exercised.

5. The evidence does not establish that it was unconscionable for the defendant to insist on compliance with cl.24.1 of the lease.

6. The written notification of 19 December was out of time.  Of itself it could not in law constitute due exercise of the option.  But even in the context of all that was said in the telephone conversation of 28 October and the silence of the defendant thereafter I can find no basis for concluding that in law the letter of 19 December should be regarded as a valid exercise of the option.

7. The issues of false, misleading or deceptive conduct have already been extensively canvassed in these reasons, and the contentions of the plaintiffs rejected. 

   It follows that the defendant is not estopped from denying that the plaintiffs have validly exercised the option in question.  No basis for the relief claimed by the plaintiffs has been established, and their action must be dismissed.  The defendant has counterclaimed for a declaration that the option was not validly exercised, and in my view it is entitled to such an order.
              The orders of the Court will therefore be:

1. Dismiss the action of the plaintiffs.

2. On the defendant's counterclaim declare that the plaintiffs failed to exercise the option contained in cl.24.1 of the lease the subject of these proceedings.

3. Order that the plaintiffs pay the defendant's taxed costs of and incidental to the action and the counterclaim.