Richard Pike v Mangrove District Services Pty Limited

[2000] NSWSC 914

CITATION:	Richard Pike v Mangrove District Services Pty Limited & Anor [2000] NSWSC 914
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 20021/99
HEARING DATE(S):	25/07/2000, 26/07/2000, 31/07/2000, 08/08/2000
JUDGMENT DATE:	15 September 2000
PARTIES :	Richard Pike (Plaintiff/Cross Defendant) Mangrove District Services Pty Limited (First Defendant) Gael Gwen MacPherson (Second Defendant/Cross Claimant)
JUDGMENT OF:	Bergin J at 1

COUNSEL :	N. Confos - Plaintiff/Cross Defendant J. Gersten - Solicitor/Advocate for Second Defendant
SOLICITORS:	Otto Stichter & Associates - Plaintiff/Cross Defendant La Fontaine - Second Defendant/Cross Claimant
CATCHWORDS:	LEASES - Application for possession of premises. Lessee company operating brothel failure to pay rent. Lessee company deregistered pursuant to S. 601AB of the Corporations Law. Property of Company vests in ASIC. Claim in trespass against occupier of premises. Claim for relief against forfeiture.
LEGISLATION CITED:	Ss 601AB; 601AD; 601AE of Corporations Law.
CASES CITED:	Ramsden v Dyson (1866) LR 1 HL 129
DECISION:	Order for possession.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW

BERGIN J

DATE: 15 SEPTEMBER 2000

20021 OF 1999 - RICHARD PIKE V MANGROVE DISTRICT SERVICES PTY LIMITED & GAEL GWEN MACPHERSON

JUDGMENT

1 This is an application by the plaintiff for possession of premises operated as a “brothel/massage parlour” situated at and known as 49 and 51 Albion Street, Harris Park in the State of New South Wales, being more particularly described as the whole of the land comprised in Certificates of Title Folio Identifiers 101/875560 and 102/875560 (the premises).

2 The plaintiff, Richard Pike, is the registered proprietor of the premises in addition to a number of other properties. As the plaintiff is often overseas or interstate, the plaintiff’s daughter, Philippa Ann Pike (Pike), apparently formerly known as Philippa Kemp (Kemp), manages some of the plaintiff’s properties, including the premises, pursuant to a Power of Attorney granted to her by the plaintiff in September 1992 (the Power of Attorney).

The Lease

3 The plaintiff relies upon an unregistered lease claimed to have been granted to the first defendant, Mangrove District Services Pty Limited (Mangrove), for the period 31 March 1998 to 30 March 2003 (the Lease). The Lease is dated 31 March 1998 and was executed by Pike, as Kemp, on behalf of the plaintiff pursuant to the Power of Attorney and by Mangrove under seal signed by the second defendant, Gael Gwen MacPherson (MacPherson), as “sole Secretary/Director” of Mangrove.

4 The Lease comprises a front sheet of two pages which is the Land Titles Form 97-07L (the Form) setting out details including the Property Leased, the Lessor and Lessee. In the Lessee portion of the Form there was originally typed “Bluewater District Services Pty Limited ACN 076 272 654” (Bluewater). The word “Bluewater” is crossed out and the word “Mangrove” is written in and “O76 272 654” is crossed out and replaced by “082 053 049” also in handwriting. These changes were written and initialled by MacPherson.

5 Paragraphs (G)1 to 3 of the Form provide the term of five years commencing on 31 March 1998 and terminating on 30 March 2003. Paragraphs (G)7 and 8 provide that the Lease incorporates the provisions set out in Annexure “A” (the Annexure) to the Lease and the provisions set out in Memorandum No. W265447 (the Memorandum) filed in the Land Titles Office.

6 The Annexure deals with a number of important aspects to the relationship between the plaintiff and Mangrove including rent (cl.2), permitted use (cl.3), changes to the Memorandum (cl.4), the security deposit (cl. 5), environmental compliance (cl.10) and termination (cl.11).

The Rent

7 Mangrove covenanted to pay rent during the term of the lease in the manner and at the rate provided in cl. 2 of the Annexure (cl. 2.1 of the Annexure and cl. 3.1 of the Memorandum). For the first year, 31 March 1998 to 30 March 1999, the rent was fixed at $23,833.33 to be paid by eleven equal monthly payments of $2,166.67 commencing on 30 April 1998 (cl. 2.3.1 of the Annexure). This accommodated a rent free period of one month which was later extended to two months which meant that the first rental payment was due on 31 May 1998.

8 The rental agreed for the second year, 31 March 1999 to 30 March 2000, was $28,600 payable by twelve equal monthly payment of $2,383.33 commencing on 31 March 1999 (cl. 2.3.2 of the Annexure). For the third year, 31 March 2000 to 30 March 2001, the rent agreed was $31,200 payable by twelve equal monthly payment of $2,600 commencing on 31 March 2000 (cl. 2.3.3 of the Annexure). The rental for the balance of the term was subject to review, the formula for which was also agreed (cl. 2.4 of the Annexure).

Termination

9 If any rent remained unpaid for fourteen days after the date upon which it was payable the plaintiff was entitled to “re-enter into and possess” the premises or “call for an immediate surrender of the Lessee's estate” (cl. 11.1(a) of the Memorandum).

10 A further matter entitling the plaintiff to repossess the premises was if Mangrove “ceases or threatens to cease to carry on business” (cl. 11.1(b) of the Memorandum).

11 Demand or acceptance of rent after default was without prejudice to the exercise by the plaintiff of the powers conferred to repossess the premises or call for surrender of the Lessee's estate (cl. 11.2 of the Memorandum).

12 A further basis for termination of the Lease was provided in cl. 11 of the Annexure as follows:-

The Lessor and the Lessee agree that if during the term of this Lease Parramatta City Council shall issue a notice (to the effect of) prohibiting the use of the premises as a brother/massage parlour (sic) then and in such event either the Lessor or the Lessee may by two (2) months' notice in writing to the other party terminate this Lease whereupon the Lessee shall forthwith reinstate the demised premises in accordance with the provisions hereof and vacate the premises (as reinstated) by the expiry of the said notice of termination.

Additional Matters

13 The plaintiff agreed to certain additional covenants which included the inspection by an electrician of the wall air-conditioning unit in No. 51 Albion Street and the hot water heaters in Nos. 49 and 51 Albion Street to ensure that they were working in a satisfactory manner. The plaintiff also agreed to replace the paling fence and entrance gate on the Una Street frontage. The plaintiff further agreed to replace and move the sewer vent, relocate the water meter at No. 49 Albion Street, supply a grate for fitting to the outside bedroom wall of No. 49 and ensure that all taps in the premises were in satisfactory working order (cl.13 of the Annexure).

14 The plaintiff agreed that Mangrove would be permitted to make two wall openings, approved by the plaintiff, between Nos. 49 and 51 to allow for the fitting of a standard size door. Mangrove agreed to notify the plaintiff prior to the commencement of such work (cl.14 of the Annexure).

15 Clause 10 of the Annexure provided as follows:

ENVIRONMENTAL COMPLIANCE
(a) The Lessee warrants that the use of the Demised Premises complies and continues to comply and will continue during the term to comply with, any environmental matters that apply to the use of the Demised Premises;
(b) The Lessee will do all such things and execute all such documents as are required to maintain and/or renew any licences, authorisations or approvals relating to the compliance referred to sub-clauses (a) hereof;
(c) If any statutory authority issues a notice to the Lessee during the term in respect of any environmental matter, the Lessee must comply with the requirements of that notice within the time specified at the Lessee’s expense;
(d) The Lessee must notify the Lessor within forty-eight (48) hours of the Lessee becoming aware of any breach of sub-clause (a) hereof or the receipt of any notice referred to in sub-clause (c) hereof;
(e) The Lessee must remedy any failure to comply with any environmental law, remediate any area of the Demised Premises, the Building and/or the Land, or make good any damage caused to any person or property by any such failure.
Failure to pay Rent

16 The first defendant paid a security deposit of $3,000 and proffered the first rent cheque in May 1998 for the month of June 1998 in the sum of $2,166.67. The rent cheque received in May 1998 was paid personally to Pike when she attended the premises and met with MacPherson and a person known as Kimball Werner (Werner). At that meeting Pike said to Macpherson “I’ve come to pick up the rent” and MacPherson, in Pike’s presence, directed Werner to give Pike a cheque. A cheque drawn on Mangrove’s account was then given to Pike by Werner. That was the only rent received by the plaintiff.

Demands for arrears

17 On 21 July 1998 Messrs Robilliard & Robilliard, the solicitors for the plaintiff, by letter to the Secretary of Mangrove enclosed a Notice of Intention to Re-enter the premises. That letter noted:

We understand that our client’s daughter, Ms Philippa Kemp, has spoken to Ms Gael MacPherson of your company concerning outstanding rent due under the terms of the lease. On our instructions, our client has agreed that provided the outstanding rent (together with the rental instalment due on 31 July 1998) is paid to our client on or prior to 9 August 1998, our client will not take any action under the terms of the enclosed Notice. However, if the outstanding rental is not paid by 9 August 1998, our client will require immediate possession of the premises.

The Notice of Intention to Re-enter the premises was stated to be a notice pursuant to clause 11.1 of the Memorandum and particularised unpaid rent in the amount of $4,333.34 representing rent for two months. MacPherson tendered a cheque for the rent but that cheque was dishonoured.

18 A further notice was given to the Secretary of Mangrove on 1 October 1998 by Pike on behalf of the plaintiff. That notice indicated that Mangrove was “four months in arrears in rental payment”.

Commencement of Proceedings and their history

19 When the rent was not paid Pike instructed solicitors Messrs Otto Stichter & Associates and these proceedings were commenced against Mangrove by way of Statement of Claim on 29 January 1999 seeking orders for possession based on the non-payment of rent at that stage in the amount of $13,000.02 for the period 30 June 1998 to 30 November 1998.

20 The proceedings have had a lengthy and, in many respects, unsatisfactory history much of which appears in my judgment of 31 July 2000 rejecting an application for further adjournment. MacPherson has in the past represented herself in the proceedings and from time to time instructed various legal representatives. In May 1999 MacPherson was successful in an application to be joined as second defendant and was granted leave to file a cross claim. Mangrove has not filed an appearance or Defence and MacPherson’s Defence and Cross Claim were filed on 28 May 1999.

21 In the Defence MacPherson admitted Mangrove was a company "duly incorporated liable to be sued in its corporate name and style" (par. 1). The Defence pleaded a non admission of the allegations that:

· the plaintiff had granted the Lease to Mangrove;

· Mangrove had covenanted to pay rent to the plaintiff;

· the plaintiff was entitled to re-enter possession of the premises if Mangrove failed to pay the rent; or

· Mangrove had failed to pay $13,000 in rent for the period 30 June 1998 to 30 November 1998. (par. 2).

22 MacPherson claimed she was the lawful occupier of the premises "pursuant to an agreement to grant a lease made between herself and the Attorney for the plaintiff made in or about September 1998".

23 The terms of MacPherson’s Cross Claim, which are denied by the plaintiff, include the following:

2 In or about March 1998 the cross claimant together with one Kimball Werner were involved in negotiations for a lease of the premises at 49-51 Albion Street, Harris Park (“the subject premises”) by a company to be formed or acquired with Phillippa Ann Pike, the duly empowered attorney of the cross defendant.
3 To the knowledge and understanding of the cross claimant an agreement was reached to grant a lease to a company bearing the same name as the first defendant which company was to be a company in which the cross claimant was a director and shareholder.
4 In the events which happened no such lease was granted in March 1998.
5 The cross claimant moved into occupation of the subject premises on 1 April 1999 and commenced renovations and repairs of the property for the purpose of operating the business of a brothel on the said premises.
6 Thereafter from 1 April 1998 to 1 June 1998 the cross claimant performed substantial repairs and renovations on the subject premises:
PARTICULARS OF RENOVATIONS
The Cross Claimant does not presently have in her possession the records of work carried out by way of repairs and renovations. Full particulars of these repairs and renovations will be provided following the issue of subpoenas in these proceedings
7 The renovations and repairs were carried out with the full knowledge and consent of the attorney for the cross defendant:
PARTICULARS OF KNOWLEDGE
Conversations between the cross claimant and the attorney for the cross defendant in and from March 1998 including site inspections from time to time, there being approximately twelve such inspections of the premises during the period in which the work was being carried out.
8 In about September 1998 the cross claimant and the attorney for the cross defendant came to an agreement the relevant terms of which were:
(a) the cross defendant would grant the cross claimant a lease of the subject premises commencing in January 1999;
(b) the rent payable under the lease was to be $500 per week commencing in January 1999;
(c) the term of the lease was to be for five years commencing on 1 January 1999;
(d) subject to obtaining all necessary consents, the cross claimant was to be permitted to conduct the business of a brothel on the subject premises;
(e) in the event that the necessary consents could not be obtained to conduct the business of a brothel on the subject premises the cross claimant was to be granted one month’s grace to vacate the premises;
(f) in the interim the cross claimant was to be allowed to set-off against any rent which might otherwise be payable the cost of renovations and repairs effected by the cross claimant and the cost of preparing and submitting a development application/building application for approval for the operation of a brothel at the premises;
(g) the cross claimant would be entitled to quiet enjoyment of the premises during the term of the lease.
9 In accordance with the agreement reached between herself and the attorney for the cross defendant, cross claimant carried out substantial work and renovation and repair of the subject premises and also prepared and submitted for approval by Parramatta City Council a development application/building application seeking approval of the said Council for the operation of the business of a brothel at the subject premises.
10 In breach of the said agreement the cross defendant has failed and refused to grant the cross claimant a lease in the terms agreed or in any other reasonable terms and has commenced these proceedings seeking to obtain exclusive possession of the subject premises.
11 In further breach of the said agreement, the attorney for the cross defendant sought to interfere and did interfere with the cross claimant’s quiet enjoyment of the subject premises by, inter alia, sending agents to harass, threaten and intimidate the staff of the cross claimant working at the subject premises and the cross claimant thereby suffered loss and damage through loss of income.
12 In the circumstances the cross defendant is estopped from denying that the cross claimant is entitled to a lease of the subject premises on the terms pleaded above.
13 The cross claimant pleads further and it is the fact that by reason of the acts of part performance by the cross defendant in performance of or in reliance on the agreement pleaded above, the cross claimant is entitled to an order for specific performance of the said agreement on the terms pleaded above.

24 MacPherson was dilatory in complying with directions for the purpose of preparing the matter for hearing. Although the plaintiff made applications for summary judgment, such were adjourned or deferred when MacPherson provided reasons for her delay in complying with directions including the provision of medical evidence relating to an illness.

25 On 3 April 2000 the matter was listed before Master Malpass on the plaintiff’s Motion for summary judgment. MacPherson successfully applied to further adjourn the matter but such was granted on terms including that MacPherson undertook to pay $500 per week to the plaintiff, the first payment to be made by 4pm on 7 April 2000. Those payments, which are less than the rental amounts under the Lease for the third year, have been made since that date. Other directions and orders were made for the final preparation of the matter.

26 When this matter was called on for hearing on 25 July 2000 before me Mr J.Gersten announced his appearance as “solicitor/advocate” for Mangrove and MacPherson. Subsequently Mr Gersten indicated that he did not appear for Mangrove as it was deregistered on 8 February 2000. He submitted that the Statement of Claim alleges that rent in the amount of $13,000.02 had not been paid and informed the Court that MacPherson had tendered a bank cheque in that amount to the plaintiff’s solicitor on 20 July 2000. In those circumstances Mr Gersten submitted that the proceedings were “unnecessary”.

27 Mr N.Confos, of counsel, who appeared for the plaintiff wished to proceed with the application for possession. After a number of adjournments requested by the parties to enable discussion to occur the evidence commenced at 3 pm on the first day of the hearing and continued on Wednesday 26 July 2000 and Monday 31 July 2000. The evidence concluded on this latter date and final submissions were heard on 8 August 2000.

28 On 8 August 2000 Mr Gersten no longer appeared for MacPherson. Mr Morgenstern, solicitor, of La Fontaine, Solicitors & Barristers, appeared for MacPherson and after an application which was not opposed I allowed MacPherson to make some final submissions personally.

29 By reason of the deregistration of Mangrove the plaintiff was granted leave to amend the Statement of Claim during the trial to reflect this event and to make a claim against MacPherson in trespass seeking possession and damages.

30 MacPherson was granted leave to file an Amended Defence and Cross Claim which “reasserted” the particulars and claims in the original pleading and included, for the first time, a claim for relief against forfeiture. This was coupled with an adjournment application to apply to reinstate Mangrove. That application was rejected and is the subject of a separate judgment of 31 July 2000.

31 MacPherson’s Amended Cross Claim seeks declarations that MacPherson was the “real party in interest” in respect of the Lease; that MacPherson holds the beneficial interest in the Lease; that Mangrove held the Lease “in trust” for MacPherson and a general claim for specific performance to “give effect to any declarations”.

Further Notices Served

32 After MacPherson filed her Defence and Cross Claim in May 1999 in which she denied the existence of the Lease and claimed that she was the lawful occupier of the premises the plaintiff served a Notice of Claim for Possession and the Statement of Claim on the Occupier of the premises on 27 July 1999.

Mangrove and ASIC

33 Mangrove was incorporated on 20 March 1998 with its registered office from 8 April 1998 and principal place of business from 1 July 1998 at 51 Albion Street, Harris Park. The company search obtained by the plaintiff on 18 May 2000 (Ex. A) states that Mangrove was deregistered on 8 February 2000 the reason for which is stated as s. 601AB of the Corporations Law (the Law).

34 When a company is deregistered its property vests in the Australian Securities and Investment Commission (ASIC) by force of s. 601AD(2) of the Law. Section 601AE provides:

"(1) [Where property held by company on Trust]
If property vested in ASIC under subs. 601AD(2) was held by the company on trust, ASIC may:
(a) continue to act as trustee;
(b) apply to a Court for the appointment of a new trustee;
(2) [Where property not held on trust]
If the company did not hold the property on trust, ASIC may:

(a) dispose of or deal with the property as it sees fit;

(b) apply any money it receives to:

(i) defray expenses incurred by ASIC in exercising
its powers in relation to the company under this
Chapter; and
(ii) make payments authorised by subs. (3);
(3) Obligations attaching to property
The property remains subject to all liabilities imposed on

the property under a law and does not have the benefit of
any exemption that the property might otherwise have because
it is vested in ASIC. These liabilities include a liability that:

(a) is a charge or claim on the property; and
(b) a right is under a law that imposes rates, taxes or

other charges.

(4) [Limitation on obligations under subs (3)]
ASIC's obligation under subs. (3) is limited to satisfying
the liabilities out of the company's property to the extent that
the property is properly available to satisfy those
liabilities.

35 By reason of s. 601AE(4) ASIC is not liable to account for or pay any liabilities which are unable to be satisfied out of the company's property.

36 In the circumstances I required notification of these proceedings to be given to ASIC. Perhaps not surprisingly ASIC advised by letter of 3 August 2000 (Ex. AA) that in this particular circumstance where the property vested in ASIC is a leasehold interest, ASIC did not intend to take any action pursuant to the law to deal with that interest.

37 ASIC also advised that its records and material provided to it appeared to "raise issues of insolvent trading and trading whilst deregistered." It advised that it is ASIC policy not to permit reinstatement of an insolvent company. (Ex.AA).

38 ASIC responded on the basis that the leasehold interest remained with Mangrove at the time it was deregistered and thus vested in ASIC. If that is the case then it is clear from the correspondence that there are no funds available to ASIC to satisfy any outstanding arrears of rental or damages.

39 Although no documentary evidence has been tendered which identifies the directors and shareholders of Mangrove during the period March 1998 to February 2000 the plaintiff has accepted that Macpherson was not a director or shareholder during that period. This is so notwithstanding the fact that MacPherson held herself out as the sole director and secretary of Mangrove when the Lease was executed.

40 I am satisfied that MacPherson acted as agent for Mangrove at the time of the execution of the Lease and during the period up to October 1998 when by letter of 8 October she advised the plaintiff that Mangrove was not then a registered company and that any “paperwork” in Mangrove’s name was “invalid and illegal”.

41 It seems to me that Mangrove’s failure to pay any rental after the first payment in May 1998 and the notification to the plaintiff that the “paperwork”, which I take to include the Lease, was “invalid and illegal” amounted to an abandonment and surrender of the Lease from November 1998. Accordingly no leasehold interest vested in ASIC in February 2000.

42 From November 1998 MacPherson has refused to allow the plaintiff to re-enter into possession. MacPherson alleges that she is entitled to occupy the premises on the basis of an alleged agreement reached with Pike in August 1998, although this was the subject of some amendment during the course of MacPherson’s oral evidence. The plaintiff alleges MacPherson is a trespasser and has no entitlement to occupancy of the premises.

MacPherson's occupancy

43 MacPherson's evidence in her affidavit of 7 May 1999 was that she had been in occupation of the premises since about June 1998 and had conducted the business of a brothel at the premises. Also in that affidavit MacPherson claimed that, with the consent of Pike, she had carried out "certain renovations and improvements" to fit the premises out for operation as a brothel. She claimed she was unable to "give an exact figure" for the materials and labour for those improvements and made a broad claim that such figure exceeded the amount of any alleged outstanding rent.

44 There is little doubt that Mangrove did fit the connecting doors between the premises and that there was an agreed rent free period of two months at the beginning of the Lease. However MacPherson now wishes to rely upon the expenditure, whatever it may have been, to give her some entitlement to occupancy of the property. Lord Kingsdown’s speech in Ramsden v Dyson (1866) LR 1 HL 129 is relevant to Mangrove’s position. His Lordship said at 171:

If, on the other hand, a tenant being in possession of land, and knowing the nature and extent of his interest, lays out money upon it in the hope or expectation of an extended term or an allowance for expenditure, then if such hope or expectation has not been created or encouraged by the landlord, the tenant has no claim which any court of law or equity can enforce.

45 There is absolutely no proper evidence of the amount spent on those doors and there is no evidence at all of any amount spent on the fit out of the premises. Mangrove was not encouraged in the manner described by Lord Kingsdown and by reason of my findings later in this judgment there is no evidence that MacPherson was so encouraged.

46 MacPherson detailed the negotiations for a lease with the plaintiff and gave evidence that initially she was negotiating on behalf of Bluewater, a company of which she claimed to be the sole director and shareholder. By this time, May 1999, MacPherson claimed that she had become aware that she had never been a director or shareholder of Mangrove.

47 Also in her 7 May 1999 affidavit MacPherson claimed that "negotiations about the figure of rent set in the lease registered in the name of Mangrove District Services Pty Limited were conducted on the basis that Werner would be a partner in the venture and would make a financial contribution to the venture."

48 MacPherson claimed that Werner did not make any financial contribution to the venture. In June 1998 MacPherson appointed Mr Neil Eveleigh as manager of the business and claimed that at that time there were "8 to 10 girls working at the premises."

49 MacPherson was hospitalised in late July until early August and thereafter claims to have had a number of conversations with Pike in relation to the premises. It is to be remembered that by 21 July 1998 Messrs Robilliard & Robilliard had made written demand for the arrears of rental and confirmed a discussion between MacPherson and Pike in which Pike agreed not to take any action if the rental arrears were paid by 9 August 1998. As I have already said a cheque was proffered but dishonoured.

50 MacPherson claims that in August 1998 the following conversation took place with Pike:

"Pike: The Mangrove lease is dead. I will give you another lease, a residential lease with commercial usage rights, in your own name. The money you have put into the property will be credited to you.
MacPherson: You know that I have to lodge a DA/BA and get that approved before this business can operate properly. I will need the application form signed with the owner's consent. "

This conversation is denied by Pike.

51 MacPherson alleges another conversation later in August in the following terms:

"Pike: Do you want to put the lease into Bluewater or into your own name?
MacPherson: The original lease negotiations were about a lease in the name of Bluewater so can you have your lawyers contact Phillip Brophy (my solicitor) because we have already done a lot of work on that.
Pike: Yes.

This conversation is denied by Pike.

52 Macpherson alleges a further conversation took place in early September 1998 when Pike allegedly telephoned her at home:

"Pike: I will write off the fact that place hasn't been paying me, except for the rent that Kimbal did pay me, and the bond. I accept that you have been ripped off. The increase in the value of the property because of the renovations and the fact that it can operate successfully as a brothel has helped me because I can mortgage it for more.
MacPherson: What about the rent? I can't pay much at the moment because of what I have spent and because of what Kimbal has done to me.
Pike: The rent can be $100 per week until you can get back on your feet.
MacPherson: That will be until sometime in the new year and I will need to get the DA/BA approved, for which I will need your consent.
Pike: I will need to talk to my advisors. You won't be back on your feet properly until January. Then we can talk about a full lease.

Pike denies this conversation.

53 MacPherson then made a claim in paragraph 21 of her 7 May 1999 affidavit which is important. Her evidence was:

Notwithstanding that conversation, I have never received a form of lease in my name, or in the name of Bluewater District Services Pty Limited has ever been sent to me for signature.

54 In what might seem to be a strange contrast to the alleged conversations between MacPherson and Pike, MacPherson claimed that she spoke to Mr John Steffel on 18 and 19 September 1998. It is alleged that Mr Steffel informed her that he was going to "kick her out of the premises". Mr Steffel was assisting Pike to serve documents and to attempt to obtain arrears of rent.

55 On 24 September 1998 MacPherson wrote to Pike. This letter is in stark contrast to the conversations MacPherson alleges took place in August and September 1998 with Pike. The letter makes allegations against the plaintiff for not complying with matters alleged to have been included in the Lease, for instance, there is an allegation, quite baseless on the evidence, that the plaintiff failed to provide a rent free period for set up as agreed to in the Lease.

56 MacPherson has apparently been involved in disputation with Werner generally and also in relation to her ANZ bank account. The letter of 24 September 1999 suggested that Pike had colluded with Werner and that she, MacPherson, was surprised to find that her account did not have enough money to cover the cheque that was tendered to Pike for the rent.

57 By this time MacPherson claimed that the value of the business that she had built up was $130,000. She claimed she was making "other arrangements for rental payments". Whatever those other arrangements were, if any, the plaintiff was not paid any money by MacPherson.

58 MacPherson suggested in her 24 September 1998 letter that the plaintiff was not in a position to take possession of the property, claiming that there had been a mistake about registration of the Lease. She claimed "this lease that appears to have been registered is the wrong one, and with my true intent to pursue my lease from the beginning when I found this property, leaves Pike/Steffel as persons acting without substance or rights under any lease, till I alone determine the amendments on the real lease which were previously agreed to by Pike". MacPherson signs off by claiming that any actions by Pike are "indefensible and fraudulent" alleging a criminal offence.

59 MacPherson wrote again to Pike on 8 October 1998. In this letter she claimed there had been a "series of leases" prepared which included Bluewater and Mangrove. In this letter MacPherson claimed "Mangrove D.S.P/L is not now a registered Company due to a former shareholder's failure to pay for and complete the corporate obligations which he had undertook". In this letter MacPherson does allege a conversation between herself and Pike. MacPherson alleges that she was “told by P. Pike 'that (she) accepts that the Mangrove lease is dead, and that I can have another….residential with commercial usage rights, under my name' and I have not been informed by Pike/s of anything but this since early May '98”. There is no mention of the alleged conversations having occurred in August and September 1998.

60 The letter complains that "despite many conversations and meetings" with Pike she had not carried out her "agreements" to change the lease to MacPherson's name. Reference is then made to the demand served on 1 October 1998 and MacPherson suggests that any dispute should be conducted in the Rental Tenancies Tribunal and that any paperwork headed in Mangrove's name was "invalid and illegal" as the company did not then exist.

61 On 26 March 1999 an advertisement appeared in the Daily Telegraph as follows:

"Harris Park 51 Albion Street 9633-4433
Re-opened, exotic, 10 new ladies. Escorts avail, all CCs/Eftpos. Pkg."

62 On 1 July 1999 Parramatta City Council notified the plaintiff that it had conducted a recent inspection of the premises and had identified that conditions existed which justified the Council in serving an order upon the plaintiff to cease using the premises for the purposes of a brothel as the use of the premises as a brothel was a prohibited use.

63 The order was issued on 5 August 1999 and on 21 December 1999 a summons was issued against the plaintiff for the alleged offence that the plaintiff had failed to comply with the order requiring the cessation of the use of the premises as a brothel within 28 days of receipt of that order.

64 This summons, which is in evidence, particularises the matters upon which the Council, through its Informant, relies to establish that the prohibited use continued after notice was given of the Council’s intention to make an order and after the order was issued. In what may be regarded by some as a fairly startling manner of investigation, particularly if the ratepayers are funding it, the particulars refer to a private investigator, who is named, attending the premises on 19 June 1999, 18 July 1999 and 25 September 1999 who, it is alleged, on each occasion paid $80 or $70 to certain females and sexual intercourse occurred. I understand from the parties that this summons has been adjourned pending the hearing of these proceedings.

65 MacPherson complains that she was not allowed to appear or obtain representation in those proceedings to explain the difficulties. She alleges that she in fact did lodge the appropriate development or building application with the Council and alleges that she was granted approval by the Council.
66 MacPherson gave evidence that she obtained approval in “early 1998” as the Council “didn’t want trouble”. She alleged she attended the Council and was asked to “wait downstairs, we will give you a delegated authority on a DA/BA”. No documents have been tendered to prove any such approval has been given notwithstanding every opportunity having been afforded to MacPherson to do so. I am not satisfied on the evidence before me that such approval was granted.

67 The Council had made a search in relation to the premises and because the Lease was not registered the plaintiff is prosecuted as the owner/defendant in permitting the use as a brothel. Pike gave evidence that once it became clear that rental was not going to be paid and the difficulties arose with the premises, she was advised not to register the Lease.

68 Both Pike and MacPherson gave evidence and were cross-examined in detail. MacPherson's oral evidence included claims that there were other leases in existence. She claimed that the original lease was in her own name but she could not find it at the time of the hearing as she had moved everything into storage (Tr.63). MacPherson claimed that she signed that original lease in her name and that she had solicitors acting for her at the time, Messrs Morgan Lewis and Alter. She originally claimed that "it was quite possible" that she gave the lease to Pike when she saw her in January 1998. (Tr.64). Pike denied this meeting and gave evidence that the first time she met MacPherson was in April 1998.

69 When it became clear that MacPherson was expanding her claim to include a claim that a “series” of leases had been prepared including one in her own name she was asked the following:

Q. As at 1 April you had already signed the lease on behalf of Mangrove.
A. A couple of them, yes, all in my name, I had a variety of them.
Q. The question is as at 1 April you had already signed the lease that had been given to Mangrove District Services?
A. As with the other two leases in Bluewater and Gael MacPherson
and the cheque was drawn on Mangrove purely as, you know, convenience.
Q. According to what you say you had a lease in your name which you say you think you might have given to Miss Pike?

A. Directly.

Q. You than arranged for a lease to issue in the name of Bluewater
Services?
A. District Services Pty Limited.
(Tr.64)

70 MacPherson's claims continued in respect of this series of leases and she was then asked the following:

Q. Where were you when you handed the copy of the lease which you had signed in your name to Miss Pike?
A. In the back yard, actually.

Q. What, at Watsons Bay?
A. No, at 49-51 Albion Street. Being on one title the property was
divided.
Q. Just tell me where were you when you handed the lease?

A. In the back yard of the property on one title.

Q. That was in January 1998?
A. Yes late January.

(Tr.65)

71 MacPherson claimed that this lease was signed by her and by Pike or the plaintiff. This evidence is totally at odds with MacPherson's evidence in paragraph 21 of her affidavit of 7 May 1999 in which she claimed never to have received a lease in her name.

72 During her further evidence MacPherson was carefully taken through the Lease and identified her handwriting and initials upon it. When she was asked whether she paid any rent between November 1998 and April 2000 she said that she “wasn't well enough” (Tr.98). As to the claim made by MacPherson that Pike had offered her a lease in August 1998 and September 1998 the following evidence was given:

Q. Did you pay any rent of $100 a week at all?
A. No. She never came back to me with a lease. She gave

me - I had so many leases, they were like confetti.

Q. Confetti.
A. There were five leases.
Q. Five leases between you and the plaintiff?
A. Yes. I had the G.M., I had the Bluewater. Then I had the
alteration to Ritchie Allen, which is Max Blanco - his solicitor was supposed to be negotiating. He threw away all the costs on that as a sub-tenant. Then it was back to Bluewater, and then there was Mangrove.
Q. All signed?
A. I signed all of them. Whether they signed them or not I do
not know.
Q. You told me that the plaintiff signed the first lease, that was the one in your name that you handed over in the back yard, and we know who signed the Mangrove one. Who signed the Bluewater one?

A. I did.

Q. What about the Ritchie Allen one, who signed that?
A. Max Blanco, the solicitor, I believe was handling that.
Q. What was the fifth one?

A. Back to Mangrove - Bluewater, back to Mangrove.

Q. So there was another lease in Mangrove's name, was there?
A. No. It was supposed to be typed up properly without the deletion.
Q. What does all that mean?
A. This one here, that didn't have, that has all the handwriting notes
on it that was.
Q. That you signed?

A. That was supposed to be the draft.

Q. That's the one you signed under seal you are referring to?
A. That's the one I was told to take to a lawyer.
(Tr.99-100)

73 It appeared peculiar that MacPherson should be negotiating with Pike in August 1998 for a lease in her name when on her oral evidence she already had a lease in her name signed the previous January. She was asked:

Q. Why didn't you say to her "don't be silly, I have already got a lease in my name"?
A. I know.
Q. You didn't say that?
A. But she was trying to give me a hard time.
(Tr.69)

74 The frustration of the plaintiff in not being able to obtain rent from or possession of the premises whilst MacPherson was running this brothel, which she admitted was making $23.000 profit per week, not paying any rental and alleging leases were descending upon her like confetti must have been compounded by MacPherson’s reported claims in a Sydney Morning Herald article (Ex.2). That article “The Madam who won’t give up on a business for pleasure plan” detailed MacPherson’s Land and Environment Court proceedings in relation to a “giant purpose built bordello” at Taren Point and reported a claim by MacPherson that she was paying $4,833 rental per month elsewhere.

75 The plaintiff has been led a merry dance since August 1998. I have observed Pike and MacPherson very closely in the witness box and I am satisfied beyond any doubt that the conversations alleged to have occurred in August 1998 and September 1998 did not occur. I am also satisfied that MacPherson’s wild allegations about harassment are baseless as no proper evidence has been called in respect of them. I accept Pike’s evidence in preference to that of MacPherson.

76 Pike was careful to take the matter step by step and consult with her lawyers. Once the plaintiff consulted solicitors steps were taken to have this matter heard as soon as possible. The history that I have recounted earlier indicates delay with MacPherson chopping and changing her position both as to representation and as to the nature of her claims.

77 I am satisfied that there was no agreement struck in August or September 1998 between MacPherson and Pike. MacPherson’s late plea for relief against forfeiture is extremely bold in circumstances where no money has been paid to the plaintiff at all for two years and no case has been proved in relation to any amounts being expended on improvements by MacPherson. Indeed the $13,000 proferred on 20 July 2000 was a bank cheques obtained by Bluewater District Services Pty Ltd.

78 I am satisfied that MacPherson does not have any entitlement to occupy the premises and that she has remained on those premises as a trespasser. The plaintiff is entitled to an order for possession.

79 The plaintiff has been precluded from obtaining possession by the failure of MacPherson to vacate the premises. I am satisfied that in the circumstances the plaintiff is entitled to recover from MacPherson the amount of $500 per week from 1 November 1998 to the date of the execution of the writ of possession or vacation of the premises by MacPherson whichever first occurs.

80 The figure of $500 is based upon the assessment made by John Plumtre-Woods, a real estate agent who was called to give evidence. A single dwelling would bring $380 per week in the same area. These are two dwellings and as Macpherson said herself the figure of $500 is a “bargain”. The plaintiff’s claim may therefore be quite conservative but I intend to adopt the assessment of $500 as appropriate in the circumstances.

81 Taking into account the payments that MacPherson has made since Master Malpass made his orders I am satisfied that MacPherson should pay the plaintiff the amount of $37,500 representing 75 weeks, from 1 November 1998 to 7 April 2000 when Master Malpass made his orders, less $255 which was not paid for registration of the Lease or the mortgagee's consent.

82 In the circumstances I do not intend to reduce the amount payable by the security deposit amount of $3,000 which was paid by Mangrove to the plaintiff. That amount is appropriately left with the plaintiff in respect of the period 1 July 1998 to 1 November 1998 during which no rent was paid by Mangrove before it abandoned the Lease. MacPherson is to pay the balance outstanding to the plaintiff $37,245 and $500 per week until the premises are vacated or the writ of possession is executed.

Orders

83 Judgment for the plaintiff for possession of the premises. I grant leave to issue a writ of possession forthwith. Judgment for the plaintiff in the amount of $37,245 and $500 per week until the Writ is executed or the premises are vacated, whichever first occurs. The second defendant is to pay the plaintiff's costs of these proceedings from 1 November 1998.

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Last Modified: 09/27/2000