Riltang Pty Ltd v L Pty Ltd - [2002] NSWSC 625

No judgment structure available for this case.

Reported Decision:
(2003) NSW ConvR 56-033

New South Wales

Supreme Court

CITATION: Riltang Pty Limited v L Pty Limited [2002] NSWSC 625

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 2945/2001

HEARING DATE(S): 23 May 2002; 30 May 2002; 20-21 June 2002

JUDGMENT DATE: 17 July 2002

PARTIES :

Riltang Pty Limited v L Pty Limited

JUDGMENT OF: Davies AJ at 1

COUNSEL : M.J. Heath (Plaintiff)
S. Epstein SC (Defendant)

SOLICITORS: Dexter Healey (Plaintiff)
Baron & Associates (Defendant)

CATCHWORDS: Landlord and Tenant - Notice of renewal of lease - Whether misdescription of premises invalidated the notice - Whether notice absolute and unconditional

CASES CITED: Bava Holdings Pty Ltd v Pando Holdings Pty Ltd (1998) NSW Conv R 55-862
Carter v Hyde (1923) 33 CLR 115
Cavallari v Premier Refrigeration Co Pty Ltd (1925) 85 CLR 20
Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSWSC 21 July 1987
Health Minders Pty Ltd v Prudential Assurance Co Ltd (unrep) 24 February 1987
Kratzmann (Toowong) Pty Ltd v Marjorie's Investments Pty Ltd (1986) 67 Aust & NZ Conveyancing Reports 803
Quadling v Robinson 137 CLR 192
Setena Pty Ltd v Permanent Trustee Nominees (Canberra) Ltd (1987) NSW Con VR par 55-322
Young v Lamb [2001] NSWCA 225

DECISION: Cross claim dismissed with costs

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

DAVIES AJ

Wednesday 17 July 2002

2945/2001 RILTANG PTY LIMITED A.C.N. 080 820 546 v L. PTY LIMITED A.C.N. 075 256 398

JUDGMENT

1 HIS HONOUR: The plaintiff, Riltang Pty Limited (“Riltang”) is the lessee of premises on the second floor of premises at 34-46 Oxford Street, Darlinghurst, in which Riltang conducts a licensed bar known as the “Q Bar”. A dispute has arisen between Riltang and L Pty Ltd (“L”), the owners of a part of the premises, as to whether Riltang effectively exercised an option available to it to renew its lease for a further seven years.

2 Riltang has not joined in the proceedings Cremorne Arcade Pty Limited (“Cremorne”) and Lampsac Pty Limited (“Lampsac”), the other owners of the premises, as Cremorne and Lampsac are content to accept that Riltang did renew its lease. However, L has joined Cremorne and Lampsac as respondents to a cross claim in which it seeks a declaration that Riltang failed to exercise its option to renew, that on the expiry of the lease Riltang continued in occupation under a monthly tenancy and that the monthly tenancy was validly determined, so far as the portion of premises owned by L is concerned, by a notice to quit dated 22 May 2001.

3 The original lease was between Oscty Pty Limited (“Oscty”) as lessor and Riltang as lessee. It described the demised premises as Level 2, 34-36 Oxford Street and Level 2, 38-46 Oxford Street, Darlinghurst being part of the land in Folio Identifiers 15/6064 and 13897/203. The lease was for a term of seven years commencing 13 October 1993. At some stage during the currency of the lease, the premises were sold, with Cremorne and Lampsac becoming the owners of that part of the premises situate at 34-36 Oxford Street being Lot 15 on a plan of subdivision, and L becoming the owner of that part of the premises which was situate at 38-46 Oxford Street, which was known as Lot 8.

4 The lease contained the following relevant provisions:

“1.1 UNLESS the context otherwise requires:

….

‘lessor’ means the person identified in Item 1 of the Summary of Lease Particulars and includes the lessor its successors and assignees and where not repugnant to the context its servants and agents.

3.7 OPTION FOR RENEWAL. If the lessee desires to have a lease of the premises granted to it for the further term of years specified in Item 6 of the Summary of Lease Particulars to commence immediately after the expiration of the term hereby demised and gives the lessor not less than six (6) months and not more than twelve (12) months notice in writing to that effect prior to the expiration of the term hereof then (provided that at the date of the giving of such notice and at the expiry of the term hereby demised the lessee shall not be in default in complying with any proper notice given by the lessor to the lessee requiring the lessee to remedy any breach committed by the lessee of the covenants terms conditions and restrictions herein contained or implied) the lessor subject to the execution by any guarantor of a guarantee in the form contained in this lease shall grant the lessee a lease of the premises for the further term of years aforesaid commencing on the date of expiration of the term hereby demised at the rent equal to the rent which would have been payable during such term if this lease had been granted for the aggregate of the term hereof and the term of the further lease granted pursuant to this option and otherwise upon and subject to like covenants terms conditions and restrictions as are contained in this lease except this Clause.

18.1 EXECUTION OF LESSOR’S NOTICE. Any notice or other document or writing to be served delivered or given by the lessor hereunder shall be valid and effectual if signed by any managing agent, manager of properties, director, secretary, attorney or solicitor for the time being of the lessor or any other person or persons nominated from time to time by the lessor.

18.2 SERVICE OF NOTICES. Any notice or other document to be served delivered or given hereunder may be served delivered or given in any manner mentioned in Section 170 of the Conveyancing Act 1919 or may be served on the lessee or the guarantor by:-

(i) leaving the same addressed to the lessee or guarantor at or by forwarding the same by prepaid ordinary post to:

(a) the address of the lessee or guarantor as shown herein; or

(b) the last known place of business or place of residence of the lessee or guarantor; or

(c) the lessee’s or guarantor’s registered office if the lessee or guarantor is a corporation; or

(d) the premises; or

(ii) sending same by telex or facsimile machine to the lessee’S (sic) or guarantor’s telex or facsimile machine. “

5 On 20 December 1999 Riltang forwarded the following notice to the agent for the premises, Metro Commercial Sales and Management Pty Limited (“Metro”):

“ Q

Level 2

44 Oxford Street

Darlinghurst, 2010

PH: 9360 1375

Fax: 9380 6456

20th December 1999

Level 3, Suite 302

45-51 Cross Street

Double Bay, 2028

Dear Sir,

RE: OPTION TO RE-NEW LEASE

We would hereby like to exercise our option to re-new the lease on the property at Lot 8, 38-46 Oxford Street, Darlinghurst, 2010, trading as Q, as set out in Item 5 of Annexure ‘A’ of the current lease commencing 13th October 1993, terminating 12th October 2000, with the option being for a further seven years.

As per Clause 3.7 Option for Renewal – we are conveying our wishes with not less than six (6) months and not more than twelve (12) months notice in writing.

Yours faithfully,

Peggy Rutherford

Per:

Mr. T. Cahill

Mr. G.I. Robertson

Riltang Pty. Ltd

ACN 080 820 546”

6 The notice was received by Metro and was seen by Mr Litver shortly thereafter. It was subsequently brought to the attention of Cremorne and Lampsac.

7 There was no response to that notice. Riltang continued in occupation paying the rent. On 25 September 2000, Ms Rutherford wrote to Mr Ritchie, the Commercial Property Manager of Metro as follows:

“I believe we are due for a CPI increase in October, could you please advise what the new rates will be? I would like to be prepared up front.

8 Mr Ritchie replied by FAX as follows:

“To: Q Bar

….

Further to your facsimile of this date we advise your rental will be increased to $78,576.08 from the 13th October 2000. This equates to a monthly payment of $6,548.01. A summary of calculations has been included with this transmission for your reference.

Should you have any further questions or queries please do not hesitate to contact Tim Ritchie on 9362 8888 at any time.”

9 Subsequently, on 22 December 2002 and 30 March 2001, solicitors for Riltang wrote enquiring about the lease. On 24 April 2001, solicitors for L responded as follows:

“So far as concerns any exercise of the option conferred by clause 3.7 of Lease no. U134651, we are instructed that correspondence in that respect dated 20 December 1999 was directed by Peggy Rutherford of ‘Q’ to Metro Commercial, attention Eduard Litver. That correspondence referred only to Lot 8, 38-46 Oxford Street and did not refer to the balance of the premises described in Lease U134651, namely, the 34-36 Oxford Street property now owned by Cremorne Arcade and Lampsac.

The terms of clause 3.7 do not confer any option upon the lessee to a renewal of lease in respect to part only of the leased premises. Accordingly, L Pty Limited does not regard Ms Rutherford’s 20 December 1999 correspondence as having constituted a valid exercise of the option under clause 3.7 or as having been of any legal effect whatever.”

10 As I have mentioned, Cremorne and Lampsac do not contend that Riltang failed to validly exercise its option of renewal. The Court was informed that Cremorne and Lampsac would abide the order of the Court.

Service on Metro

11 The first issue is whether service of the notice of renewal upon Metro, the managing agent, was service upon the lessors.

12 In Kratzmann (Toowong) Pty Limited v Marjorie’s Investments Pty Limited (1986) 67 Aust & NZ Conveyancing Reports 803, Moynihan J held that service on a managing agent was not valid service on the lessor. However, in Setena Pty Limited v Permanent Trustee Nominees (Canberra) Limited (1987) NSW Con VR par 55-322, McLelland J found to the contrary. His Honour said:

“The management of property leased to tenants would ordinarily embrace the receiving of a notice from a tenant exercising an option of renewal of his lease, and in my view a managing agent of such property would, in the absence of proof of some relevant limitation to his authority, be presumed to have authority to receive such a notice (cf. Peers v Sneyd 17 Beav. 151, 51 E.R. 990, R v Chief Immigration Officer (1973) 1 W.L.R. 141).”

13 A like view was taken in Young v Lamb [2001] NSWCA 225. At par 36, Stein JA, with whom the President and Hodgson JA agreed, said:

“What is plain about the definition of ‘lessor’ is that it does not preclude acceptance by the appellant’s agent. It is silent on the matter. Given that the lease contains no address for the lessor, how is the lessee to effect service ‘on the lessor’? It seems to me to make perfect sense to serve the letter on the lessor’s duly appointed agent, Dedricks. The respondents had been notified that Dedricks had been appointed as managing agent. Dedricks wrote to the respondents on 21 April 1998 reminding them of the option. There was no evidence to suggest that the agent’s authority was in any way limited. Indeed, that Dedricks had authority to accept any letter exercising the option is reflected by the course of dealings between the parties.”

14 It follows that the agent’s authority to accept service of a notice of renewal must be determined having regard to the circumstances of the case, including the terms of the lease and the part which the agent performs in the relationship between the lessor and the lessee.

15 In the present case, there are several factors which indicate that Metro was the appropriate recipient of the notice of renewal. First, the lessor was defined in the lease to include, in an appropriate case, the lessor’s agents. Secondly, the address given for the lessor became irrelevant once Oscty had sold the premises. Thirdly, three companies were the lessors, each of which presumably had a different address. Fourthly, Metro, which was the managing agent even before L, Cremorne and Lampsac became the owners of the premises, was the conduit through which all transactions as between the lessors and Riltang took place. Fifthly, cl 18.1 empowered the managing agent to sign notices on behalf of the lessor. Sixthly, Mr Litver, the managing director of Metro was also the managing director of L.

16 It was appropriate for Riltang to serve the letter on Metro. Metro’s address was the only address which Riltang had for the service of the one notice upon the three lessors. No evidence has been given suggesting that there was a limitation upon Metro’s apparent authority or suggesting that service upon Metro was not effective to bring the notice to the attention of all the lessors. In his cross-examination, Mr Litver acquiesced in the proposition that, as managing agent, Metro had authority to accept documents relating to the lease which were served upon it.

17 Neither clause 18.2 nor s170 of the Conveyancing Act 1919 limited the manner in which notice may be served. On the contrary, their terms were wide. In the circumstances of the case, Metro’s address was the most suitable address for service of notice upon the lessors and it was effective, for service upon Metro brought the notice to the attention of all the lessors.

Notice by Riltang

18 There were several submissions of Mr S. Epstein SC, counsel for L which, turning upon niceties or subtleties of language, were a contrast to the impression conveyed by some of the witnesses. The first submission of this nature was that, as the letterhead of the notice of 20 December 1999 referred only to “Q”, the recipients of the notice could not readily determine that the notice was a notice from the lessee Riltang. It was submitted that Peggy Rutherford of “Q” could be anyone.

19 In my opinion, the letter had the character of a letter from Riltang, the lessee, seeking to renew the lease. It was a notice of renewal and, according to its terms, it was written by Peggy Rutherford on behalf of Riltang with the authority of the two directors Mr Cahill and Mr Robertson.

Notice to Lessors

20 It was submitted by Mr Epstein that the notice was not expressed as a notice to the lessors but only as a notice to the managing agent.

21 The notice was, however, plainly a notice of the exercise of the option to renew. It was not addressed to the lessors, for Miss Rutherford was not aware who the lessors were, but the character of the document was that it was a notice of renewal given by the lessee to the proprietor or proprietors of the premises.

22 In fact, Mr Litver, who was named as the person to whose attention the notice should be drawn, was the managing director of L, the only one of the lessors who contends that there was a defect in the notice.

Notice

23 Mr Epstein submitted that the document on its face was merely an expression of a desire to renew the lease and not a notice of the exercise of the option to renew. Reference was made to the opening words, “We would … like to exercise our option”. It was submitted that, having expressed its desire to renew, Riltang did nothing further about the matter.

24 However, there are several indications in the letter of 20 December 1999 showing that it was a formal notice of the exercise of the option to renew. The word “hereby”, used in the first sentence, is a very strong indication that notice of the exercise of the option was being given by that letter. The letter further made clear by the words “we are conveying our wishes with not less than six (6) months and not more than twelve (12) months notice in writing” that the notice was intended to be a notice in writing given in accordance with clause 3.7 of the lease.

25 Similarly, in Young v Lamb, at paras [28] and [30], Stein JA said that the words “we intend to exercise the option to renew the lease” were “sufficiently clear to amount to an operative act as opposed to a mere statement of future intention” and “constituted a clear and unequivocal act to exercise the option. The recipient would have so understood it.” See also Bava Holdings Pty Ltd v Pando Holdings Pty Ltd (1998) NSW Conv R 55-862, where the letter states, inter alia, “we are keen to continue ….”.

Description of the Premises

26 The letter described the property as “Lot 8, 38-46 Oxford Street, Darlinghurst, 2010, trading as ‘Q’”. That description was inserted in error. Ms Rutherford has given evidence that, not being aware of the precise description of the premises, she adopted a description contained in a letter received from Metro. That letter has not been produced, but there are in evidence two facsimiles from Metro, one of 25 September 2000, which is set out above, and one of 9 August 2000, both of which refer to the premises as “8/38 Oxford”.

27 In dealing with a similar issue, McLelland J said in Della Imports Pty Limited v Birkenhead Investments Pty Limited (1987) NSWSC 21 July 1987:

Quadling v Robinson

Carter v Hyde

Cavallari v Premier Refrigeration Co Pty Ltd

The question is whether, on its true construction, the notice given on 22 December 1986 fulfils the description in CL18 i.e. a notice of Della’s desire to take a renewed lease of unit 6 for a further term for a period of five years.

Carter v Hyde

Health Minders Pty Ltd v Prudential Assurance Co Ltd

28 I agree entirely with and adopt the approach taken by McLelland J. In my opinion the recipients of the letter of 20 December 1999 would have been under no misapprehension that the lessee was intending to renew the lease for the whole of the premises. The letter makes no suggestion that the premises would be divided, or that Riltang desired to exercise its option in relation to part only of the premises. The description of the premises was an error which was patent on its face. No one would have been misled thereby.

29 I may add that, apart from the oral evidence of Mr Litver and Mr Ritchie, which on this point I reject, there is nothing in the evidence to suggest that any one was mistaken about the fact that Riltang exercised its option to renew the lease for the whole of the premises. The facsimile from Mr Ritchie of 25 September 2000, which is set out above, in which Mr Ritchie notified an increase in rent for the whole of the premises, makes it plain that he understood the notice to exercise the option to renew the lease for the whole of the premises. He himself described those premises as “8/38 Oxford Street”.

30 I should add that I consider the evidence of Mr Litver that he understood the notice to be seeking renewal of the lease in respect of a part only of the premises to be untruthful. The facts are plain. No one sought clarification of the letter. Mr Ritchie’s facsimile of 25 September 2000 recognized the letter to be “written notice exercising your option to renew the lease”. However, nothing was done about the renewal because, as Mr Litver conceded in his evidence, Mr Litver and L did not wish to renew the lease. The point about the description of the premises appears to have emerged when L consulted its solicitors in April 2001, eighteen months after the notice had been given. It was a lawyer’s point. I consider that Mr Litver and Mr Ritchie, in general, gave answers which they considered would advance L’s case, rather than speaking from their honest recollection.

31 It follows that the notice exercising the option to renew the lease was a valid notice. It was an unqualified and unconditional exercise of the option to renew. Quadling v Robinson (1976) 137 CLR 192 at 200-1; Bava Holdings Pty Ltd v Pando Holdings Pty Ltd.

Estoppel

32 I need not consider the issues of estoppel relied upon by Mr M.J. Heath, counsel for Riltang.

Joinder of Parties

33 Mr Epstein submitted that an order for specific performance could not be made because Cremorne and Lampsac had not been joined as defendants. Mr Epstein relied upon authorities which show that, if an order for specific performance is sought, then all the persons who are to be subject to that order should be joined in the proceedings. Mr Epstein relied, inter alia, upon remarks by Megarry V-C in Tito v Waddell (No 2) [1977] Ch 106 at 323-5.

34 In my view, it would have been preferable for Cremorne and Lampsac to be joined in the proceedings. However, there appears to be no dispute between them and Riltang and they have not been joined. In my opinion, they are not necessary parties to the claim and an order for specific performance may be made. It should be expressed so as to be directed solely to L, the defendant in the proceedings notwithstanding that Cremorne and Lampsac have indicated their preparedness to abide by any order which the Court may make. If the plaintiff had wished Cremorne and Lampsac to be bound by the order made, it should have joined them as defendants.

Notice to Quit

35 The last issue that I should mention is that, in May 2001, L served on Riltang a notice to quit the premises being “Level 2, 44-46 Oxford Street, Darlinghurst – Lot 8 in Strata Plan 4974” at the expiration of one month from the date of the notice. I need not discuss the notice at any length for it was invalid. L, as the proprietor of a part of the demised premises, did not have power to give a notice to quit to the lessee in respect of the part of the premises which it owned. Only the lessors as a whole could give notice to quit. L was not authorized to give a notice to quit with respect to the whole of the premises and the notice did not purport to be a notice to quit in respect of the whole of the demised premises. It may be noted that the description “44-46 Oxford Street” was itself a misdescription as L owned Lot 8, 38-46 Oxford Street.

Orders

36 For the reasons I have given, I shall make the following orders:

(ii) is executed by the lessors

(vi) is at a commencing rent of $78,576.08 per annum being $6,548.01 per month for the demised premises to be reviewed in accordance with terms of the lease and variation.

**********

Last Modified: 07/18/2002

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Citations

Riltang Pty Ltd v L Pty Ltd [2002] NSWSC 625

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CITATION:	Riltang Pty Limited v L Pty Limited [2002] NSWSC 625
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2945/2001
HEARING DATE(S):	23 May 2002; 30 May 2002; 20-21 June 2002
JUDGMENT DATE:	17 July 2002
PARTIES :	Riltang Pty Limited v L Pty Limited
JUDGMENT OF:	Davies AJ at 1

COUNSEL :	M.J. Heath (Plaintiff) S. Epstein SC (Defendant)
SOLICITORS:	Dexter Healey (Plaintiff) Baron & Associates (Defendant)
CATCHWORDS:	Landlord and Tenant - Notice of renewal of lease - Whether misdescription of premises invalidated the notice - Whether notice absolute and unconditional
CASES CITED:	Bava Holdings Pty Ltd v Pando Holdings Pty Ltd (1998) NSW Conv R 55-862 Carter v Hyde (1923) 33 CLR 115 Cavallari v Premier Refrigeration Co Pty Ltd (1925) 85 CLR 20 Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSWSC 21 July 1987 Health Minders Pty Ltd v Prudential Assurance Co Ltd (unrep) 24 February 1987 Kratzmann (Toowong) Pty Ltd v Marjorie's Investments Pty Ltd (1986) 67 Aust & NZ Conveyancing Reports 803 Quadling v Robinson 137 CLR 192 Setena Pty Ltd v Permanent Trustee Nominees (Canberra) Ltd (1987) NSW Con VR par 55-322 Young v Lamb [2001] NSWCA 225
DECISION:	Cross claim dismissed with costs