Profile Events Pty Ltd v West Beach Trust - [2011] SASCFC 1

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
PROFILE EVENTS PTY LTD v WEST BEACH TRUST
[2011] SASCFC 1
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Sulan and The Honourable Justice White)
21 February 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - MATTERS NOT GIVING RISE TO BINDING CONTRACT - VAGUENESS AND UNCERTAINTY - AGREEMENT SUBJECT TO FURTHER AGREEMENT OR ARRANGEMENT
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHETHER CONCLUDED CONTRACT
LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION - OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES - INFORMATION REQUIREMENTS
LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION - OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES - MINIMUM TERM OF LEASE AND RENEWAL OF TERM
Parties negotiated with the intention of executing a lease - negotiations became protracted - appellant entered into occupation - formal lease never executed - whether effect of dealings between parties was that there would be no binding agreement unless and until a written lease was executed - whether Judge erred in finding that no binding lease entered into - whether parties negotiated with the intention that a formal lease would substitute any agreement entered into - relevance and effect of negotiations after appellant went into occupation of the premises - whether respondent entitled to mesne profits - effect of s 20B of the Retail and Commercial Leases Act 1995 (SA) - whether appellant has a contractual or statutory right of renewal - whether appellant entitled to damages for breach of an agreement to lease - appeal dismissed.
Retail and Commercial Leases Act 1995 (SA) s 3, s 11, s 12, s 12(5)(b), s 20B, s 20B(3), s 20I(b), s 20J, s 20J(4), s 68; West Beach Recreation Reserve Act 1987 (SA), referred to.
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165, applied.
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, discussed.

PROFILE EVENTS PTY LTD v WEST BEACH TRUST
[2011] SASCFC 1
Full Court: Doyle CJ, Sulan and White JJ

DOYLE CJ: West Beach Trust (WBT) owns land and buildings at West Beach, a beachside suburb of Adelaide. Beginning in June 2001 WBT entered into negotiations with Profile Events Pty Limited (Profile Events) with a view to leasing the land and buildings to Profile Events. (I gather that Profile Events was incorporated during the course of these negotiations, but nothing turns on that).
A number of the terms of the proposed lease were agreed between WBT and Profile Events. By this I mean it was agreed that they would appear in the proposed lease. WBT allowed Profile Events to take possession of the premises on 3 December 2001. A number of matters were still being discussed between WBT and Profile Events. Each of them contemplated that a detailed written lease would be prepared and executed. They thought this would be done fairly soon.
In…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Profile Events Pty Ltd v West Beach Trust and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2011] SASCFC 1
Decision Date: 21 February 2011

CaseChat Overview and Summary

Profile Events Pty Ltd (Profile Events) appealed a decision of the District Court concerning a dispute with West Beach Trust (WBT) over the leasing of premises known as the Woolshed. Profile Events sought possession and use of the Woolshed as a function centre, entering into negotiations with WBT, which owned the land. The core of the dispute revolved around whether a binding lease agreement had been concluded between the parties, particularly by 3 December 2001, when Profile Events took possession of the premises.

The legal issues before the Full Court of the Supreme Court of South Australia were whether the parties had reached a concluded agreement for a lease by 3 December 2001, or at any later stage, and if so, what were the terms of that agreement. Specifically, the court had to determine if the parties intended to be bound by an agreement for a lease, notwithstanding the contemplation and subsequent failure to execute a formal written lease document.

The court's reasoning, as articulated by Doyle CJ, focused on the objective construction of the correspondence and discussions between the parties. It was noted that at no stage did the parties expressly state whether a binding agreement had been reached. The court found that up until 3 December 2001, and even as late as 30 November 2001, the parties contemplated the preparation and signing of a formal lease, with commencement of occupation referenced to the signing of such a lease. This indicated that a binding agreement was not intended until the lease was signed. Applying principles from cases such as *Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd*, the court concluded that commercially experienced parties would not typically surrender the benefits of a thoroughly prepared written lease. Therefore, the court found that no concluded agreement for a lease of the type sought by Profile Events was entered into. At best, an interim agreement existed, permitting Profile Events to take possession and pay rent pending the finalisation of a written lease, with parties free to withdraw from negotiations if agreement could not be achieved.

The appeal was dismissed, with the court upholding the orders made by the District Court. The Full Court agreed that Profile Events had not established a binding agreement for a lease, and therefore, its claim for specific performance failed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

I agree in substance with the conclusions of the Judge. My reasons follow.The main issue – facts and Judge’s finding WBT is a body corporate continued in existence by the West Beach Recreation Reserve Act 1987 (SA). The land and buildings in question are part of a larger area owned by the WBT. On the land in question is a large shed known as the Woolshed. The interest of Profile Events was in making use of the Woolshed as a function centre. The Woolshed contained a licensed restaurant and space for other activities. In 2001 the WBT decided to let the premises to an outside operator as a function centre. It had brochures prepared promoting the Woolshed and its facilities. Mr Friebe and Mr Davies were interested in leasing the premises, and entered into negotiations on behalf of or in the name of Profile Events. This led to correspondence between Profile Events and WBT between June 2001 and December 2001, and continuing thereafter. Negotiations on the part of WBT were conducted by Mr Hawke, Mr Shattock and Mr McArdle. Profile Events submitted a series of documents described as expressions of interest or offers. As one might expect, these documents were a mix of self promotion (there is no criticism intended), proposals, suggestions and responses to things said by representatives of WBT. As the correspondence unfolded, and as further documents were presented by Profile Events, the documents reflected agreement on certain matters, and continuing discussions about other matters. It is common ground that by 3 December 2001 a number of significant issues had been agreed. That was when Profile Events took possession of the premises to enable it to get its plans underway. There can be no dispute that at that time the parties envisaged that a detailed written lease would be prepared and executed. Negotiations continued after 3 December 2001. Over a period of time no less than eight draft leases were prepared and discussed by the parties, without final agreement ever being reached. The District Court Judge summarised the issue before him: Profile Events at [17]. He said:[17]As may be seen from the introductory remarks, the parties accepted that they had reached some measure of contractual agreement by the time that the plaintiff took exclusive possession of the property on 3 December 2001. On the plaintiff’s case, the defendant had agreed to grant a lease of the premises for a period of up to 15 years. The defendant’s case was that it had agreed to no more than that the plaintiff could enter into possession of the premises and pay the rent (which had been agreed between the parties as an appropriate rent) pending finalisation of the agreement in a written lease. The resolution of this dispute determines the success or failure of the plaintiff’s claim for specific performance. In relation to the conversations and discussion between Mr Friebe and Mr Davies on behalf of Profile Events, and the representatives of WBT, the Judge by and large accepted the evidence of the latter witnesses when it was in conflict with the evidence of Mr Friebe and Mr Davies. I do not understand Mr McNamara QC, counsel for Profile Events on appeal, to challenge the Judge’s findings in this respect.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It is not necessary to decide this issue, and without further submissions I prefer not to do so. Profile Events claimed that, subject to exercising its rights, it had tenure for 15 years. There is a significant difference between that and a statutory five year term. The lack of a five year term was not the only problem that Profile Events faced. The parties were unable to reach agreement on, or failed to agree on, a number of relevant matters. If the failure by WBT to produce a lease in the terms pleaded by Profile Events was in fact a breach of contract, and if that lease should have been produced fairly promptly, it may well be that the failure by WBT was causative of loss. However, for the reasons indicated, I do not decide that point. It received little or no attention in argument on appeal.Conclusions In my opinion all orders made by the Judge should stand. The appeal should be dismissed. SULAN J: I would dismiss the appeal, and I agree with the reasons of Doyle CJ. WHITE J: I agree with the order proposed by the Chief Justice and with his reasons.

Ratio Decidendi

Legal Principle Established

The Judge had to construe objectively the correspondence and consider objectively the effect of the discussions. At no stage (up to 3 December 2001) did anyone say, expressly, “We have reached a binding agreement for a lease” or “We have not reached a binding agreement for a lease”. As the Judge said, it was a matter of what inference one drew from what the parties said and did. The Judge’s reasons for his decision can be found in the following passages from his reasons:[113]When the events between June and 3 December 2001 are considered as a whole, it is clear that up to 3 December the parties contemplated that heads of agreement followed by a written lease would be prepared and signed. As late as 30 November 2001, the correspondence set the date of commencement of exclusive occupation by reference to the signing of a lease. That is a clear indication that a binding agreement was not intended until a lease was signed, even where heads of agreement were still contemplated. In my opinion, nothing occurred between 30 November and 3 December to alter that position.[114]The fact that the parties contemplated both heads of agreement and a lease up to 3 December is of crucial importance to this question. Both parties were experienced in relation to negotiating leases. As far as the plaintiff is concerned, this experience is evident from Mr Friebe’s evidence (both oral and documentary) taken as a whole. The same conclusion (as far as the defendant is concerned) arises from the evidence of Mr McArdle and the other witnesses from The Trust. Given that commercially experienced parties would not be likely to surrender the advantage to both of them of a thoroughly prepared written lease, the authorities quite rightly state that a court should be slow to conclude that they did so. In my opinion, the application of the legal principles set out earlier in these reasons to the facts found by me lead inevitably to the conclusion that a concluded agreement of the type dealt with in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (supra) was not entered into by the plaintiff and defendant on, before or after 3 December 2001. At best, they entered into an interim agreement which permitted the plaintiff to take possession of the premises in return for a promise to pay rent pending agreement of the terms to be included in a written lease. Specifically, the defendant did not contractually bind itself to grant a lease the terms of which could only be departed from by mutual agreement.…[123]In summary, the position as at the 3rd of December 2001 was that the parties had agreed to dispense with the preparation and execution of heads of agreement and would proceed straight to a written lease. In the meantime the plaintiff was to take exclusive occupation of the premises pending an agreement of the terms to be concluded in the written lease. The plaintiff was to pay rent in accordance with the consensus reached between the parties prior to the 3rd of December 2001, namely a base rent with an additional amount calculated by reference to turnover. The plaintiff was to enjoy a rent free period of 6 months. The parties were free at any time to withdraw from negotiations if agreement as to the terms to be included in the written lease could not be achieved. This contractual position was radically altered by the operation of s20B of the Act which imposed a 5 year term upon the parties. That period of 5 years was not inviolate. If, as alleged by the defendant in its cross-claim, the plaintiff breached the agreement by a persistent failure to pay part of the rent, the defendant could take steps to terminate the lease.Footnote omittedThe reference in [123] to “the Act” is to the RCL Act.Consideration of submissions on the main issue