SANDBANK HOLDINGS PTY LTD -v- DURKAN (as Administrator of the Estate of MARTIN DURKAN) & ANOR - [2009] WADC 11

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SANDBANK HOLDINGS PTY LTD -v- DURKAN (as Administrator of the Estate of MARTIN DURKAN) & ANOR [2009] WADC 11

CORAM: O'BRIEN DCJ

HEARD: 2-5 DECEMBER 2008

DELIVERED : 4 FEBRUARY 2009

FILE NO/S: CIV 1589 of 2004

BETWEEN: SANDBANK HOLDINGS PTY LTD
Plaintiff
AND
MONIKA DURKAN (as Administrator of the Estate of MARTIN DURKAN)
First defendant
MONIKA DURKAN
Second defendant

Catchwords:

Lease - Representations by defendants to induce lease - Breach of lease by lessor - Conversion of tenant's property - Unjust enrichment - Counterclaim for unpaid rent and other expenses - Turns on own facts

Legislation:

Fair Trading Act 1987

Result:

Plaintiff's claim dismissed
Counterclaim partially successful

Representation:

Counsel:

Plaintiff:     Mr B Wheatley
First defendant              :     Mr R Lee
Second defendant          :     Mr R Lee

Solicitors:

Plaintiff:     Mossensons
First defendant              :     Gibney & Co
Second defendant          :     Gibney & Co

Case(s) referred to in judgment(s):

Bonham-Carter v Hyde Park Hotel Ltd (1948) 64 TLR 177
Craig v Marsh (1935) 35 SR(NSW) 323
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Fathers v Cook [2006] WASC 129
Heggies Bulkhaul v Global Minerals Australia Pty Ltd [2003] NSWSC 851
Hollins v Fowler (1875) LR7HL 757
Ideas Plus Investments Ltd v National Australia Bank Ltd [2006] WASCA 215
Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204

O'BRIEN DCJ:

General Summary

On 12 November 1999 Mr O'Sullivan, as the agent and director of the plaintiff, entered into an agreement to buy a restaurant business ("business") in Safety Bay. The plaintiff company was not then incorporated but nothing turns on that.
The business was owned by Mr Yap and Ms Tan.
The restaurant operated in premises in Shop 1, 304 Safety Bay Road, Safety Bay. The defendants, Monika Durkan and Martin Durkan, owned the premises. Mr Durkan died in 2002 and his wife is a party to the proceedings as a defendant in her own right and as a defendant as administrator of his estate.
The plaintiff claims that in early November 1999, Mr O'Sullivan met with Mr Durkan who made representations to him which induced him to buy the business and undertake renovations in the restaurant.
The plaintiff claims that Mr Durkan represented that in return for Mr O'Sullivan undertaking alterations and renovations to the premises and restaurant ("renovations"), Mr Durkan would reimburse him for the cost at the rate of $1,000 per month free of interest. The reimbursement was to be by way of offset against any rent due and owing from month to month. It is convenient to adopt the term "rent relief" when referring to this claimed agreement relating to the rent as that is the term generally used during the trial.
Further, the plaintiff claims that those representations were that if Mr O'Sullivan agreed to enter into an agreement to purchase the business, Mr Durkan would agree to a lease of the premises for three years with two further options of three years each.
The plaintiff claims that in the beginning of January 2000, Mr Durkan told Mr O'Sullivan that it would be cheaper for him to enter into an assignment of the existing lease rather than take a new lease. Mr O'Sullivan agreed with this proposal. A new lease was never executed and all of the dealings between the parties were pursuant to the existing lease ("lease").
An agreement to purchase the business was signed on 18 November 1999. The tenants and Mr O'Sullivan signed an Application for Approval to Assign Lease on 30 November 1999.
Mr O'Sullivan claims that he took possession of the premises on 19 November 1999 and commenced the renovations. There is no evidence to the contrary.
The sale of the business settled on 29 February 2000.
The assignment of lease is dated 1 March 2000. The expiration of the lease was 31 May 2004. Unknown to Mr O'Sullivan, the lease expressly prohibited rent relief as follows:
"3.1Rent
To pay the Rent without set-off (whether arising at law or in equity) and free and clear of all deductions whatsoever at the times mentioned in the Schedule….PROVIDED THAT….the rent shall be subject to review and variation as …set out [in the lease]."
The plaintiff claims that Mr Durkan refused to give the rent relief as promised.
On 24 December 2001, Mr Durkan issued a default notice alleging failure to pay rent for December 2001. Pursuant to that, the defendants terminated the lease and re‑took possession of the premises on 11 January 2002.
The plaintiff claims that the representations were made in trade and commerce and were misleading or deceptive contrary to s 9 and s 10 of the Fair Trading Act 1987 ("FTA") in that Mr Durkan failed to disclose to Mr O'Sullivan that the terms of the lease prohibited rent relief. In the alternative, he claims the representations were negligent.
Further, the plaintiff claims the defendants breached the lease. The plaintiff claims that the default notice was in breach of the lease as there was no default by the plaintiff. In effect, this claim is that Mr O'Sullivan made payments before the assignment of the lease, or alternatively before the liquor licence was transferred, which were not taken into account in determining whether he was in default of payment of rent.
The agreement to purchase the business contained a special condition as follows:
"Assignment of lease is subject to and conditional upon the Director of Liquor Licensing approving the transfer of the liquor licence attached to the premises."
Clause 5.1 of the deed of assignment of lease provided:
"5.1Condition precedent
This deed of assignment of lease is subject to and conditional upon the Director of Liquor Licensing approving the transfer of the liquor licence attached to the premises from the assignor to the assignee."
The transfer of the liquor licence was a requirement pursuant to s 84 of the Liquor Licensing Act 1998. Before the transfer of the licence, the plaintiff had made certain payments to the defendants.
By decision dated 26 November 1999, the liquor licensing authority ("LLA") had suspended the licence on the application of Mr Yap and Ms Tan. The LLA approved transfer of the liquor licence from Mr Yap and Ms Tan to Mr O'Sullivan effective from 28 February 2000. The licence contained a clause that the licence "is suspended with effect from 18 November 1999".
As I understand the position, the licence remained suspended pending local council approval of the building works in the renovations and completion of works required by the LLA.
The LLA lifted the suspension on 13 April 2000 and the licence took effect from that date. Mr O'Sullivan claims the defendants were not entitled to be paid rent prior to 13 April 2000.
The breach of contract claim is that as the plaintiff was under no legal obligation to pay rent and outgoings before either 28 February 2000 when the licence was transferred, alternatively, before 13 April 2000 when the suspension of the liquor licence was lifted and that any payment made before those dates should have been "brought into account" in determining whether he was in breach of the lease for arrears of rent when the default notice was issued in December 2001. In short, the plaintiff claims that because of payment of rent and outgoings before either 28 February 2000 or 13 April 2000, the plaintiff was not in default.
In the alternative, Mr O'Sullivan claims that the default notice was in breach of an implied term of the lease that the liquor licence approved for transfer would be capable of operational use by Mr O'Sullivan and would not be subject to suspension. I reject this claim. The plain words of the Application for Approval of the Assignment of Lease and the Agreement to Purchase only refer to the transfer of the licence. The fact that it remained suspended pending compliance by the plaintiff with certain requirements of the liquor licensing authority is irrelevant.
The plaintiff claims loss of payments made before the lease was assigned on 1 March 2000 or, alternatively, loss of the payments made before 13 April 2000; the purchase price of $27,000 paid for the business; damages for loss of plaintiff's goods which were retained by Mr Durkan; and reimbursement for renovations.
To the extent that the plaintiff claims payments made before 13 April 2000, I would dismiss the claim as I have rejected the claim of an implied term of the lease as outlined above. Further, the date of the transfer of the licence was 28 February 2000.
In the alternative, Mr O'Sullivan claims that he acted to his detriment in entering into an agreement to purchase the restaurant, the assignment of the lease and by spending money on renovations and that it would be unconscionable for Mr Durkan to deny the rent relief. Mr O'Sullivan claims the defendants are now estopped from denying the existence of the representations and are estopped from relying on any provisions in the lease which prevent Mr O'Sullivan from relying on the rent relief. As I understand this claim, it depends on a factual finding that the representations were made.
Further and in the alternative, the plaintiff claims that the defendants have wrongfully converted or have been unjustly enriched by retaining its goods and the benefit of the renovations and alterations to the restaurant.
The defendants deny the representations were made.
The defendants counterclaim for the cost of property removed by Mr O'Sullivan from the premises; unpaid rental; unpaid rates and taxes; unpaid legal and other costs associated with its default in performing the lease; and loss of rental and outgoings and rates and taxes from the date of eviction to re‑letting the premises.

The claimed representations

The fundamental factual issue for determination is whether the plaintiff has established on the balance of probabilities that Mr Durkan made the representations. The evidence is as follows.
Mr O'Sullivan testified that towards the end of 1999 he made some inquiries about purchasing a restaurant business.
He said he was introduced to Mr Durkan by a third party, probably around 29 October 1999.
Mr Yap telephoned Mr O'Sullivan probably around 1 November 1999.
Mr Yap explained that he was the proprietor of a restaurant known as the Palm Tree, Yakayu Restaurant. Mr Yap said he wanted to sell the restaurant and invited Mr O'Sullivan to come and have a look at it.
Mr O'Sullivan said he went to Mr Durkan's house on 2 November 1999 and they discussed the business and Mr Durkan arranged for him to see the restaurant.
On about 3 November 1999 Mr O'Sullivan went to the restaurant. Mr Yap and Mr Durkan were there. Mr Durkan showed him around.
Mr O'Sullivan said he was not really interested in the restaurant at that stage because it was rundown, it was not trading and there were cockroaches running around the place.
Mr O'Sullivan said he commented to Mr Durkan that it would take a lot of money to get the place established and mentioned a figure of $40,000. He said it would not be fair if he had to pay it, as it was Mr Durkan's building.
Mr Durkan responded that he did not have that type of money to put into the building and according to Mr O'Sullivan he said "If you were to put your money in, then I'll reimburse you as rent relief" … "You won't have to pay the full amount of rent".
Mr O'Sullivan testified, "So he got me interested".
Mr O'Sullivan testified that Mr Durkan mentioned a rent reduction of $1,000 a month. In evidence, Mr O'Sullivan made no mention of the reimbursement being interest free as pleaded.
There is no evidence that Mr O'Sullivan then knew the amount of the monthly rent.
Mr O'Sullivan testified that he intended to spend $40,000 on the restaurant and Mr Durkan's representation that he was going to give him $1,000 deduction a month on rent "was the inducement that I needed to go into the contract".
Mr O'Sullivan said they discussed the terms of the lease (although there is no evidence as to what terms were discussed. At that stage, Mr O'Sullivan had not seen the lease. Indeed, he claims not to have received a copy of it until August 2000). Mr Durkan said that he could have a brand new lease of three years with two options of three years.
Mr O'Sullivan testified "That was good enough for me. We shook hands".
He said things happened pretty quickly after that. He signed an agreement to purchase the business on 12 November 1999. Mr Yap and Ms Tan signed the agreement on 15 November 1999.
There was a schedule of plant and equipment prepared titled "Plant List" which reflected items included in the purchase price. Mr O'Sullivan testified that he negotiated a purchase price of $27,000.
The agreement to purchase was conditional on the assignment of the lease.
McGees were property consultants who managed the defendants' shopping centre in which the business operated. Mr Kevin Brown was the property manager. Mr Peter Keenan took over from Mr Brown when Mr Brown retired in August 2001.
On 2 December 1999, Mr O'Sullivan paid $4,767.62 to McGees. He paid this because Mr Durkan said it was "for a bond and rent". There is no evidence that Mr O'Sullivan objected to the payment or that he believed it was not his obligation to pay it.
Mr Brown interviewed Mr O'Sullivan on 13 December 1999 to determine if he was a suitable tenant. Mr O'Sullivan claims that he told Mr Brown of the discussions he had with Mr Durkan. He said Mr Brown said nothing. This evidence does not advance the plaintiff's case.
In any event, Mr Brown could not recall specifically raising the issue of the rent. As far as he was concerned the rent was the amount in the Agreement to Purchase the business. He said that Mr O'Sullivan did not mention that he had a private agreement with Mr Durkan about rent relief. He said that Mr O'Sullivan mentioned that he intended to spend $40,000 to $50,000 to change the style of the restaurant from a Middle Eastern style restaurant to a seafood restaurant. Mr Brown said that there was no discussion as to who was to pay for the fit out, that was the tenant's responsibility.
Mr Brown approved Mr O'Sullivan as a suitable tenant and confirmed this with the defendants by letter dated 13 December 1999.
McGees had written to Mr Yap on 22 November 1999 requesting payment of $2,422.54 for rent; $650 for the assignment of lease fee; and $500 for solicitors' fees. In fact it was Mr O'Sullivan who paid those amounts, totalling $3,572.54, to McGees on 13 December 1999.
On 21 January 2000, Mr O'Sullivan paid the sum of $2,422.54, which was the amount of rent for January 2000. He said that Mr Durkan came to the restaurant in January 2000 and said that as Mr O'Sullivan had been in there for "a while now" he needed some money for rent. There is no evidence that Mr O'Sullivan objected to this payment.
As the proposed assignee, the plaintiff agreed to the following:
"… If we enter into possession of the premises prior to the execution of us of an assignment of lease then in consideration for permission being granted to us to enter into possession aforesaid we will be bound by the Terms and Condition of the Lease as if we had executed the said Assignment." (cl (c) in the Application for Approval to Assign the Lease)
I therefore find that although Mr Yap and Ms Tan may have been liable under the lease to pay the rent as they were still legally the tenants, Mr O'Sullivan was prepared to take over Mr Yap's liability to do so. He did so either because he became a short term tenant pending the assignment of the lease or because he was bound under the terms of the Application for Approval to Assign the Lease which he signed on 30 November 1999.
From 2 December 1999, when he made the first payment of rent until November 2001, when he made the last payment, Mr O'Sullivan continued to pay rent as required by the lease.
Meanwhile, Mr O'Sullivan had commenced the renovations; applied to the local council for a building licence with the defendants' consent on 2 December 1999; and set in train the application to transfer the liquor licence. On 22 December 1999, the defendants signed a letter consenting to "alterations to licensed premises" which was apparently required by the LLA.
Mr O'Sullivan said that Mr Durkan came to the restaurant in March checking out the renovations. He said that Mr Durkan was a frequent visitor. Mr O'Sullivan testified that when he received the rental invoice for March 2000, he asked Mr Durkan then about the rent relief because it was not reflected in the March invoice. Mr Durkan's response was "Wait till you're trading. We'll look at it again then".
Mr O'Sullivan said he contacted Mr Durkan at his house after he started trading on 19 April 2000 to raise the issue of rent relief. He told Mr Durkan that he was now trading and requested the rent relief that had been agreed.
He said that Mr Durkan's response was that he did not like the wrought ironwork; that it was not how he wanted it; and that Mr O'Sullivan had to pay the full amount of the rent pursuant to the lease. He then told Mr O'Sullivan to get out or get lost. He told Mr O'Sullivan that he would throw him out [of the premises] if he did not pay the full amount of the rent.
Mr O'Sullivan said that he spoke to Mr Brown in April 2000 and said that he wanted rent relief. Mr Brown's response was he had been instructed by Mr Durkan to work strictly to the terms of the lease.
Mr Brown testified that Mr O'Sullivan did enquire about rent relief but he could not be sure when this occurred. When the issue was raised, Mr Brown said that he told Mr O'Sullivan that he was instructed to act strictly in accordance with the lease. He said that he could not agree to anything outside the lease.
Mr Brown said he could not recall the discussion about rent relief word for word. In broad general terms he said Mr O'Sullivan asked if rent relief was possible.
Mr Brown said he never discussed the amount of rent with Mr Durkan as "it was covered at the time of the assignment".
Mr Keenan testified that he had a conversation with Mr O'Sullivan in November 2001, which he could only vaguely recall, wherein Mr O'Sullivan said, in effect, that he was paying too much rent and should have been paying "market rent".
In cross‑examination, Mr O'Sullivan testified that on 12 December 2001, Mr Durkan demanded payment of the outstanding rent. Mr O'Sullivan said that he offered him cash less $1,000 to reflect the rent relief he said had been agreed upon. By letter dated 13 December 2001, McGees wrote to Mr O'Sullivan informing him that a discount in rent for cash payment was not negotiable and that unless the outstanding rent was paid by 17 December 2001, the matter would be placed in the hands of the defendants' solicitors. There was no mention in that letter of any discussion about the claimed rent relief.

Were the representations made?

The only direct evidence of the discussions on 3 November 1999 is from Mr O'Sullivan. Mr O'Sullivan testified that he was induced to enter into the agreement to buy the restaurant by the representations made by Mr Durkan. Whether or not the representations were made must be assessed not only by Mr O'Sullivan's evidence but also in the context of his conduct after the claimed representations were made.
I accept Mr O'Sullivan's evidence that he did have discussions with Mr Durkan about varying the term of the lease to allow for a three‑year lease with two further three-year options. This is confirmed in Mr Brown's letter to Mr Durkan dated 13 December 1999 after Mr Brown's interview with Mr O'Sullivan wherein he confirmed his instructions to vary the lease.
Mr Brown also wrote to Ilbery Barblett, the defendants' solicitors, on 10 January 2000, instructing them to vary the lease "to incorporate two additional option periods of three (3) years each, the first commencing on 1 June 2004".
Alongside that paragraph in the letter, Mr Brown wrote in handwriting "14^th instructed solits (sic) to delete this instruction and proceed with existing term". Mr Brown said that he could not recall why he made that notation but he would have received instructions to instruct the solicitors and he would not have done anything without instructions. Mr Brown could not recall why the instruction to vary the lease was withdrawn.

I accept Mr O'Sullivan's evidence that Mr Durkan represented to him that he could have a "new" lease. Whether these discussions related to an entirely new lease which seems to be the import of Mr O'Sullivan's evidence, or whether they related to a variation of the existing lease which the instructions to the defendants' solicitors appear to reveal, remains unclear. Suffice to say, I accept that there were some discussions relating to either a new lease or a variation of the existing lease.
In the course of final submissions, counsel for the plaintiff submitted that the representation about rent relief was one which was to take effect when the plaintiff started trading. That was not pleaded. The first time that Mr O'Sullivan raised that time frame at trial was in cross examination almost as a throw away line. I then asked:
"Do you say that the rent reduction or offset was due from 19 April?---Yes, I do. That was the time that the trading - the deal was, once trading opens."
That testimony is inconsistent with evidence that he requested rent relief when he received the invoice for the March 2000 rent.
In the circumstances, it is my view that the plaintiff is bound by its pleadings as to the time frame in which the rent relief was to take effect.
Mr O'Sullivan asserted that the representations induced him to purchase the business and testified that when the representations about rent relief were made, that got him "interested". Despite him saying that he shook hands on the "deal", I am far from satisfied that he then had a firm intention to buy the business at that time.
He signed the agreement to purchase the restaurant which was on condition of the assignment of the lease. There is no evidence that he queried this with anyone or made enquiries about a new lease.
He then took possession of the restaurant on 19 November 1999.
He signed the Application for Approval to Assign the Lease on 30 November 1999 wherein he agreed to be bound by the terms of the lease if he went into early possession.
He paid the full rent up until he received the March 2000 invoice without querying the amount paid or raising the issue of the rent relief.
He paid rent, outgoings and complied with the financial obligations under the lease from 2 December 1999 until November 2001.
Once Mr Durkan accepted Mr Brown's recommendation that Mr O'Sullivan was a suitable tenant, the assignment of lease was prepared.
In the meantime, Mr O'Sullivan commenced the renovations.
According to Mr O'Sullivan, he did not raise the issue of rent until he received the March 2000 invoice. The next conversation he said he had with Mr Durkan regarding rent was just after 19 April when he started trading.
The plaintiff claims that Mr Durkan refused the rent relief on the basis that he did not like the wrought ironwork. This was not followed up during the trial.
Thereafter, Mr O'Sullivan paid the rent and outgoings pursuant to the lease.
Mr O'Sullivan signed the agreement to purchase which had the rent noted without reference to any rent relief. He signed the Assignment of Lease committing himself to the terms of the lease which had a provision prohibiting rent relief.
He paid rent regularly (although on occasions he was in arrears).
There was a rent review advised by letter dated 24 May 2000.
Mr Keenan testified that there was a rent review based on the CPI index in June 2001. Mr Keenan said Mr O'Sullivan did not make any response to that. This rent review was around the time that Mr O'Sullivan was experiencing financial difficulties outlined below. There is no evidence that he queried the rent increase or made any mention of the claimed agreement with Mr Durkan about rent relief.
Mr O'Sullivan conceded that from mid 2000 he was having financial difficulties.
There is evidence that Mr O'Sullivan was overdrawn on his BankWest account from at least 20 November 2000.
In mid 2001 the plaintiff had multiple creditors pressing for payment.
The plaintiff had difficulty in paying rent between April 2001 until termination of the lease.
Two creditors had successfully sued the plaintiff for funds.
The plaintiff was behind in its mortgage repayments on a house it owned at 272 Safety Bay Road and on its equity loan with BankWest.
In order to settle financial problems, Mr O'Sullivan sold the house at 272 Safety Bay Road.
In September 2001 the settlement statement relating to that sale reveals:
(1)$13,794.03 was paid to McGees. This brought the plaintiff up to date with its financial obligations under the lease until the end of September 2001;
(2)the sums of $2,736.31 and $624.52 were paid to the bailiff in connection with claims by South West Printing and John D Cullin respectively;
(3)$297,000 was paid to BankWest to discharge the mortgage over the property;
(4)BankWest received $40,000 to reduce the plaintiff's equity loan.
The defendants' solicitors wrote to the plaintiff on 11 December 2001 demanding payment of unpaid rent in the sum of $2,985.41; advising that if it was not paid by 17 December 2001 the matter would be placed in the hands of the landlord's solicitors and a default notice would issue; and explaining the consequences of the default notice.
The default notice was issued on 24 December 2001. On 7 January 2002, Mr Keenan wrote to Mr O'Sullivan demanding immediate payment of outstanding rent and due rent for January totalling $5,970.82, informing that otherwise the premises would be repossessed on 10 January 2002. Mr Keenan said he spoke to Mr O'Sullivan within a couple of days of the letter and Mr O’Sullivan told him that he did not have the resources to pay the arrears and that they needed to be patient.
There are invoices for work done at Mr O'Sullivan's expense on the restaurant over a period from 23 November 1999 until 5 May 2000 totalling around $28,365.00. There is no evidence that Mr O'Sullivan ever submitted these to Mr Durkan or indicated at any time that he required reimbursement for the monies expended on the renovations other than the two times he said he raised rent relief with Mr Durkan.
He paid rent until he fell into arrears finally in December 2001. Apart from once raising the issue of rent relief with Mr Brown, Mr O'Sullivan did not otherwise raise the issue with Mr Brown or Mr Keenan who each visited the restaurant every two weeks until the lease was terminated.
Mr O'Sullivan said he continued to pay rent because Mr Durkan told him he would throw him out if he did not. The defendants were entitled to terminate the lease and retake possession if the rent was not paid. However, even if the statement had been made and even if Mr O'Sullivan believed it, it is reasonable to expect that he would have taken some legal advice or at least raised the issue of rent relief when he was forced into the drastic position of having to sell the property at 272 Safety Bay Road.
Mr O'Sullivan was not naïve. He had not had any experience in business before deciding to buy the business. However, he incorporated a company; arranged the transfer of the liquor licence; complied with requirements to obtain a building licence; and ran the restaurant for almost two years.
I am not satisfied that Mr Durkan made the representation about rent relief as outlined by Mr O'Sullivan for the following reasons.
The claimed representations were very vague. No time period was specified for rent relief. There is no evidence that Mr O'Sullivan even knew the amount of the rent on 2 November 1999.
Mr O'Sullivan's evidence contains an inconsistency as to the time frame when the rent relief was to commence.
He signed documents which bound him to the terms of the lease and the existing rent. He continued to pay the rent and comply with the terms of the lease without any objection.
Assuming that he did raise the issue of rent relief with Mr Durkan as he claimed in March 2000 and after 19 April 2000, that was not in any detailed way. If the representations were made and were the inducement Mr O'Sullivan needed to buy the business, as he testified, it is reasonable to expect that he would have sought legal or other advice in the light of Mr Durkan's attitude and especially before, if not after, he had to sell his other property to settle arrears.
Even when his whole livelihood was threatened in the face of letters of demand and a default notice, he did not seek legal advice about the rent relief and there is no evidence that he then raised the issue of rent relief with Mr Durkan or McGees.
When he received the letter dated 7 January 2002, he asked Mr Keenan to be "patient". He did not claim that he had been paying too much rent or that he was in credit because rent relief had not been given.
The first time the issue was raised in any formal sense was in the Commercial Tribunal and this was not until 14 February 2002 notwithstanding, on Mr O'Sullivan's account, he had paid $1,000 a month too much rent for almost two years.
Further, although Mr Durkan could not give evidence, the little evidence about him reveals him to be a man actively interested in his investment who employed professional and competent property managers. I find it highly unlikely that he would have committed to giving rent relief of $1,000 per month on the vague and uncertain estimate by Mr O'Sullivan that it would take $40,000 to get the restaurant "established" and without any detailed information as to the nature and extent of the renovations then contemplated by Mr O'Sullivan. There may well have been some discussion about a reduction in rent but I am far from satisfied that the representations were made in the terms outlined by Mr O'Sullivan.
Thus the plaintiff's claim for damages based on the claimed representations fails.
Given my finding in relation to the alleged representations, it is unnecessary for me to address the defence that the claim pursuant to the FTA is out of time.
Further, I observe that in the context of the plaintiff's claim under the FTA, it is the plaintiff's case that at the time the representations about rent relief were made, Mr O'Sullivan had understood that there would be a new lease. Accordingly, there is no merit in the plaintiff's claim that Mr Durkan failed to disclose that the [existing] lease prohibited rent relief. On Mr O'Sullivan's account, there was no need for Mr Durkan to mention that. It is not to the point that sometime later, Mr O'Sullivan agreed with the proposition put by Mr Durkan that it would be cheaper to extend the existing lease rather than to enter into a new lease.

Breach of contract

The plaintiff claims that the defendants breached the lease by terminating the lease on 11 January 2002.

Payments made before 1 March 2000

The plaintiff claims that he was not in default of the lease by being in arrears of rent as he had made payment to McGees of $4,767.62 on 2 December 1999; $3,572.55 on 13 December 2000 of which $2,422.54 was rent; and $2,422.54 rent on 21 January 2001. These payments were made before the assignment of lease came into operation on 1 March 2000.
Although not specifically pleaded in terms in the statement of claim, it is the plaintiff's case that the plaintiff was not obliged either under the agreement to purchase or the lease to pay these amounts; they were not taken into account by the defendants; and the plaintiff was not therefore in default of his financial obligations under the lease when the default notice was issued on 24 December 2001.
As to the payments made by the plaintiff before the commencement date of the assignment of the lease, it is my view that even if the agreement to purchase was not binding until all conditions precedent had been fulfilled and even if the commencement date of the lease was not until 1 March 2000, it is clear that as between the plaintiff, through Mr O'Sullivan, and the defendants, that the plaintiff was a tenant for the reasons expressed earlier in this judgment. At the very least, because he was in possession, he assumed the obligation to pay the rent and fees otherwise payable by Mr Yap and Ms Tan. Further, he was bound by cl (c) relating to early possession in the application for approval to assign lease.

Payment of outgoings

The plaintiff also claims in the alternative that he was not in breach of the lease to pay outgoings when the default notice was issued as he had overpaid the defendants in the sum of $3,235.48 for variable outgoings. McGees informed the plaintiff about the overpayment by letter dated 27 September 2002, nine months after the lease was terminated. There is no evidence that the plaintiff or the defendants were aware of this overpayment prior to then.
The lease provided as follows:
"5.23At its sole discretion, the Landlord may apply, without notice, any funds held by the Landlord on account of the Tenant towards satisfaction of any amount then payable by the Tenant to the Landlord under this Lease."
There was no evidence and no submissions from counsel about this clause. Given that the overpayment of outgoings did not come to the defendants' notice until after an audit had been done in 2002, the defendants clearly did not exercise their discretion under this clause.
"Rent" is defined in the lease as being the rent in item 6 of the Schedule and any agreed variation or as determined in accordance with the provisions of the lease.
The tenant covenanted to pay rent in cl 3.1:
Under the lease rent was to be paid in advance "by equal successive calendar monthly payments…on the first day of each month in each year …".
"Outgoings" are defined as those in item 8 of the Schedule. Outgoings include insurance premiums; council rates; various taxes including land tax; cleaning the premises and common areas; caretaking and security expenses; the cost of certain repairs and maintenance and so on (this list is a summary only).
Under the lease the tenant covenants with the landlord relevantly to "duly and punctually pay the Outgoings …".
Clearly "rent" constitutes a different payment from payment of "outgoings".
The question is whether the over payment of outgoings could be brought into account and credited against the rental arrears. In my view, this should be answered in the negative.
First, cl 3.1 requires the tenant to pay the rent without any set off. Second, the defendants did not exercise their discretion under cl 5 "to apply … any funds held by the Landlord on account of the Tenant towards satisfaction of any amount then payable by the Tenant to the Landlord under this Lease". Third, overpayment of outgoings is not payment of rent.
I refer to Heggies Bulkhaul v Global Minerals Australia Pty Ltd [2003] NSWSC 851 at 197, wherein the Court accepted the following propositions put by the defendants in that case and conceded by the plaintiff at 197:
"(i)overpayments are not rent, since 'rent' is a sum issuing out of the land demised payable by the lessee to the lessor for the right to occupy that land and all that went with it and use it for the purposes for which it was demised (Junghem v Wood (1958) 58 SR(NSW) 327, at 330);
(ii)at common law overpayments of rent cannot be set off against arrears of rent (Fuller v Happy Shopper Markets Ltd [2001] EWHC 702 (CH); [2001] 1 WLR 1681, at 1689 and 1601);
(iii)overpaid rent does not run with the lease but is a personal claim by a tenant against the former landlord (Ory & Ory v Betamore (1993) 60 SASR 393, at 405-406)."
Accordingly, it is my view that the overpayments for outgoings could not be offset against any arrears of rent.
Even if the payment of rent made before March 2000 could be regarded as an "overpayment", the same reasoning also applies in relation to the rental payments made before 1 March 2000.
I reject the plaintiff's claim that the defendants breached the lease by issuing the default notice and terminating the lease.

Conversion/unjust enrichment claim

The plaintiff claims in par 29 of the statement of claim:
"29.Further or alternatively, the defendants have wrongfully converted or have been unjustly enriched by retaining the plaintiff's goods and the benefit of the renovations and alterations to the restaurant."
In their reply, the defendants:
"(a)say that every opportunity was afforded to the plaintiff to remove its goods from the premises following termination of the lease, but prior to June 2004 and in breach of clause 3.17(b) of the lease, the plaintiff failed to do so;
(b)say that on or about 21 June 2004, the plaintiff by its representatives attended the premises and removed chattels, plant and equipment pursuant to an order of the Commercial Tribunal;
(c)say any goods, fixtures and fittings not removed by the plaintiff became the property of the defendants pursuant to clause 3.17(c) of the lease."
The plaintiff claims the cost of those goods claimed to have been retained and the cost of the renovations.

The property and "renovations" the subject of the plaintiff's claim

(i) Property purchased with the business

Pursuant to an order of the Principal Registrar on 27 November 2008, the plaintiff lodged a list of fixtures and fittings and the "value" of each item. This details those items which the plaintiff claims were retained by the defendants.
In written submissions dated 15 December 2008, the plaintiff detailed a number of items which it submitted should be "deleted from the list" (namely, items numbered 2, 14 and 16). Other items mentioned below, according to the written submissions, should now be treated as "renovations". It is submitted that the remainder of the items in the list were those which the plaintiff purchased from Mr Yap and Ms Tan for which the plaintiff paid $27,000. The amended list relates to the plaintiff's "goods" which it alleges were "retained" by the defendants.
The amended list also includes a sum of $8,000 which is said to be the shortfall between the forced sale of property leased under a hire purchase agreement and the proceeds of the sale of the goods. As I understand the plaintiff's claim (although it is by no means clear), it is that the defendants refused to allow the plaintiff to recover the leased property and therefore wrongly converted that property. For reasons outlined below, I reject this claim.
The value of the "renovations and alterations" is set out in Annexure A to the affidavit of Mr O'Sullivan sworn on 4 December 2008. In the plaintiff's written submissions, the following items in the amended list are claimed to be part of the renovations; namely, item 1 (iron works $8,000); item 6 (mirrors $620.00); item 7 (blinds $5,290.00); and item 8 (carpets $1,049.00).

(ii) The renovations

There are invoices for 132 expenses which are said to relate to the renovations. Mr O'Sullivan's affidavit itemises the invoices and cross‑references those to the particulars. There is no dispute that these expenses were incurred by the plaintiff.
The invoices relate to equipment hire; brick paving; hardware items and paint; materials used in construction of various items; plumbing and electrical costs; labour costs; and decorative items.
The expenses range from $3.50 (hardware) to $8,000.00 (security panels). Some of the bigger expenses included a security safe ($580); Tasmanian oak timber ($639.94); carpets ($1,049); security system ($1,350); security panels ($8,000); mirrors ($620); windbreak for the alfresco area ($5,290); and electrical supplies ($725.84).
Apart from reference to a few of the invoices when Mr O'Sullivan testified, there is no evidence as to what work each invoice related. Mr O'Sullivan's affidavit was intended to be a shortcut way of the plaintiff proving its case that the expenses were incurred in renovating the restaurant. However, Mr O'Sullivan simply deposed that the invoices reflected the renovation work and their cost. There is no detail in the affidavit as to exactly what work was carried out and why.

How the renovations came about

Mr O'Sullivan testified that he intended to spend about $40,000 to get the restaurant established. I have rejected Mr O'Sullivan's account of the representations he said Mr Durkan made before he entered into the agreement for purchase relating to reimbursement for the cost of the work which Mr O'Sullivan intended to carry out in the restaurant.

It appears that the renovations contemplated included work to the alfresco area. The alfresco area was not part of the leased premises.
Mr O'Sullivan testified that in order to "redefine" the premises to obtain the relevant liquor license, he was required to undertake some improvements to the premises before the effective transfer of the liquor licence. He agreed in evidence that this would be at his cost.
Mr O'Sullivan testified that a disabled toilet was required. He also said that the slate flooring had to be removed and replaced with carpet. However, it is by no means clear whether this was required by the LLA or was part of the general renovations.
By decision made on 13 April 2000, the LLA wrote to Mr O'Sullivan advising that all necessary work as outlined in the plans lodged on 23 December 1999 had been completed. However, the plans were not tendered and apart from Mr O'Sullivan's evidence, there is no other evidence as to what work the LLA required.
The defendants signed Mr O'Sullivan's application for a building licence dated 2 December 2000. They also provided their signed consent for the plaintiff to "do alterations to licensed premises" dated 22 December 2000. This consent appears to have been required by the LLA.
I have no doubt that Mr Durkan knew that work was being carried out as he visited the restaurant frequently. However, there is no evidence that he knew of the particular expenses incurred, for example, for repairs, purchase of decorative items and so on. This is understandable because Mr O'Sullivan testified that he never submitted the invoices to Mr Durkan before the lease was terminated.
There is no evidence that Mr Durkan generally disapproved or rejected any of the work. The only reference to Mr Durkan's opinion about the renovations is the evidence of Mr O'Sullivan that when he requested rent relief after he started trading, Mr Durkan is reported to have said that he did not like the wrought ironwork. Counsel did not explore this further.
The most that can be discerned from the evidence is that Mr Durkan consented to the renovations generally and knew that they were being carried out but there is no admissible evidence that he expected to pay for them.
The evidence outlined below also establishes that Mr Durkan consented to Mr O'Sullivan using the alfresco area rent free in exchange for Mr O'Sullivan undertaking renovations to that area.
Apart from what was required by the LLA and the renovations to the alfresco area, both of which were to be at Mr O'Sullivan's expense, it would appear that there were other unspecified renovations as a part of the general fit out of the restaurant.
Mr Brown testified that any work done on renovating the restaurant would be the cost of the tenants. This evidence was in general terms and not further explored.

Summary of the plaintiff's claim in par 29 of the statement of claim

For the moment, I put aside the shift in the plaintiff's claim between the pleaded particulars and what is claimed in the written submissions as outlined below.
As pleaded, the plaintiff's claim in par 29 does not make sense.
However, it would seem that the plaintiff's claim is that the defendants converted the items in the amended list and those in Annexure A by wrongfully retaining them. Alternatively, the plaintiff claims that the defendants were unjustly enriched by retaining the items in the amended list and receiving the benefit of the renovations to the restaurant.
I shall deal with the claim of conversion and the "claim" of unjust enrichment separately.

Conversion: the law

"Conversion" may be defined as an intentional exercise of control over a chattel which so seriously interferes with the right of another to control it that the intermeddler may justly be required to pay its full value: Fleming, "The Law of Torts", 9^th ed, pp 60-61; Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204.
The plaintiff must have possession of the property in question or the right to immediate possession.
There need not be any dishonest intent on the part of the defendant.
If the defendant refuses to surrender property in circumstances where it would be unreasonable to do so immediately on demand, that is not conversion. The defendant may postpone surrender pending a reasonable time in which to confirm the title of the claimant: Craig v Marsh (1935) 35 SR(NSW) 323 at 326 applying Hollins v Fowler (1875) LR7HL 757 at 766). Whether the refusal is reasonable is a question of fact.

Conversion: the evidence

The claim in conversion is not particularised as to date, requests for return of the property or the refusal to return the items. The plaintiff relies on the evidence of Mr O'Sullivan to the effect that he asked Mr Durkan for the return of his property and a letter demanding its return written by his then solicitors dated 21 January 2002 to the defendants' solicitors.

Evidence of alleged retention and refusal to return property in the amended list

Mr O'Sullivan testified that after he was locked out of the restaurant on 11 January 2002, he arranged to meet Mr Durkan at the restaurant on 18 January 2002 so that he could retrieve his property. He said that Mr Durkan refused to open the door to the restaurant. Mr O'Sullivan said he handed over a list of items he wanted to retrieve and Mr Durkan went through the list and specified certain items that he could not take. There was an exchange between the two men which, it would seem, Mr Durkan interpreted as including a threat by Mr O'Sullivan to kill him. This illustrates that the relationship between the two men had deteriorated.
Mr Durkan then drove off. On or about 21 January 2002, Mr O'Sullivan was served with an interim restraining order taken out by Mr Durkan.
In the circumstances as outlined by Mr O'Sullivan, it is clear that what transpired was a dispute as to the legal entitlement to certain items. Further, I infer that Mr Durkan interpreted Mr O'Sullivan's verbal exchange with him as a threat. In those circumstances, it was entirely reasonable for Mr Durkan to refuse to hand over of the property immediately. First, because it would appear there was a dispute as to the plaintiff's entitlement to certain property; secondly, it was reasonable for Mr Durkan to leave the scene to prevent an escalation of the verbal exchange between the two men.
On his instructions, Mr O'Sullivan's solicitors wrote a letter to Mr Durkan dated 21 January 2002 demanding the return of his property which was listed in an annexure to the letter. The property included goods and materials used in at least part of the renovations. However, as there was no detailed evidence as to what renovations were carried out, it is not possible to be precise as to what items in the annexure related to the renovations.
By letter dated 31 January 2002, the defendants' solicitors informed of the defendants' instructions as follows (not exhaustive):
•The defendants had provided ample opportunity for Mr O'Sullivan to remove the property;
•That the list presented by Mr O'Sullivan contained items which he was not entitled to recover;
•Certain alterations were not done with the consent of the defendants;
•Agreed that the defendants had consented to the upgrade of the alfresco area and that the defendants would not charge the plaintiff any rent for its use;
•Itemized a number of items which the defendants agreed could be removed;
•Proposed that Mr O'Sullivan remove the specified items on an agreed date between 4 and 8 February 2001 and that Mr O'Sullivan arrange for the hire purchase company to remove the leased property;
•Proposed that Mr O'Sullivan could make good the specified unauthorized alterations on condition he pay a bond and provide a schedule of the work to be performed.
There is no evidence of any action by the plaintiff in response to the proposal to collect the specified property between 4 and 8 February 2002.
However, I infer that Mr O'Sullivan did not take up the offer to remove property nor did he make arrangements for the hire purchase company to remove the leased goods.
The evidence establishes that the next thing to happen was that Mr O'Sullivan took proceedings in the Commercial Tribunal on 12 February 2002. Those proceedings were in the nature of a reference of certain questions arising under a retail shop lease. The questions he posed included whether he was entitled to be reimbursed for the renovations to the restaurant and whether the landlord could be "instructed to allow [him] to recover [his] possessions".
The matter was set down for mediation in March 2002.
The Commercial Tribunal made two orders.
The first was issued on 20 June 2002. The order was that the defendants give the plaintiff access to the premises within seven days "to remove any movable items of plant referred to in [a] list…and that the [plaintiff] be entitled to remove those items". As far as I can make out, the property the subject of the order appears to be tenant’s fixtures and fittings and not any property or materials connected with the renovations.
Mr O'Sullivan testified that he went to the premises on 27 June 2002 but as far as he could recall he was only given access for two hours. He removed certain items which were recorded in a list (Exhibit 11.3). He said he was not allowed to remove any of his "fixtures and fittings". He did not elaborate on the reason or who prevented him from doing this or what he considered his fixtures and fittings to be.
The plaintiff then made a further application to the Commercial Tribunal which made the second order on 24 July 2002 directing that the plaintiff have access to the premises to remove certain items but "excluding the bar, mural and patio".
Mr O'Sullivan testified that he went to the restaurant and removed all movable items. However, it would appear that not all moveable items were in fact taken as is evident from the present action.
There is no evidence explaining why the property in the amended list was not removed. There is no evidence of a refusal by the defendants to return that property after the first order of the Commercial Tribunal. The most that can be gleaned from the evidence is that Mr O'Sullivan considered that he had insufficient time to remove all the property. There is no evidence to suggest that the defendants did not comply as far as they were able with the order of the Commercial Tribunal made on 24 July 2002. I simply do not know why all the property was not removed.
As I observed earlier, the date of the claim conversion is not pleaded. However, it would seem that the claim relates to the property remaining in the restaurant after some had been removed by Mr O'Sullivan pursuant to the order of the Commercial Tribunal. I consider that against the following factual background.
There is no evidence of the defendants refusing to return the property other than Mr O'Sullivan's evidence that Mr Durkan refused to do so on 18 January 2002 and as outlined in the letter from the defendants' solicitors dated 31 January 2002. In my view the refusal was reasonable as outlined above.
There is no evidence explaining why the property now the subject of the claim remained in the restaurant. There is no evidence as to what happened to the allegedly retained property after Mr O'Sullivan attended on 27 July 2002 pursuant to the order of the Commercial Tribunal.
The evidence adduced at trial only establishes that for some unknown reason, the plaintiff did not recover the property in the amended list.
Further, from 12 February 2002, the disputed property was the subject of litigation.
In my view, on that factual foundation, there is no evidence of wrongful conversion by the defendants of the plaintiff's property in the amended list.
In any event, the terms of the lease would appear to be a complete answer to any claim for wrongful conversion.

The terms of the lease

I now examine the terms of the lease.
Pursuant to the lease the tenant covenants:
"At or prior to the expiration or sooner determination of the Term, to take, remove and carry away from the leased premises all signs, fixtures, fittings, plant, machinery, equipment or other articles upon the Leased premises in the nature of trade or tenant's fixtures brought upon the leased Premises by the Tenant … And the tenant shall make good to the satisfaction of the landlord any damage which may be occasioned by such removal (cl 3.17(b))."
Pursuant to cl 3.17(c) any signs, fixtures, fittings, plant, equipment or other articles not removed in accordance with subclause 3.17(b) "shall be deemed absolutely abandoned by the tenant and shall become the absolute property of the landlord without compensation to the tenant … and may be sold or stored in the absolute discretion of the landlord at the cost in all respects of the tenant".
It is my view that the defendants did all they could within the factual framework outlined above to facilitate the removal of the property from the restaurant. As I have outlined, there is no evidence explaining why property remained in the restaurant. Given cl 3.17(c) of the lease, the property remaining is deemed to have been abandoned by the plaintiff and became the property of the defendants. In those circumstances, there is no substance to the claim that the defendants converted the property, let alone wrongfully.
I would dismiss the plaintiff's claim in conversion insofar as it relates to the property in the amended list.

The hire purchase agreement

Mr O'Sullivan had entered into a hire purchase agreement with Service Finance Corporation Limited on 9 March 2000. The schedule to that agreement lists the leased property. Most of it appears to include moveable items, for example, a hot water urn, mobile trolley, refrigerator, dishwasher, oven steamer and freezer. Mr O'Sullivan testified that this property remained in the premises and that it was sold at auction in February or March 2002 to repay his debt under the leasing agreement. The shortfall was about $10,000 but Mr O'Sullivan negotiated repayment of $8,000 with the owner which was accepted in full satisfaction of the debt.
The plaintiff claims that the defendants should reimburse the $8,000.
There is no evidence that the defendants refused to allow removal of those items. Indeed, the letter from the defendants' solicitors dated 31 January 2002 proposed a reasonable course of action in relation to the removal of the leased property from the restaurant. There is no evidence relating to the removal of the leased property (if indeed it was removed from the premises) or to the circumstances of the sale.
In the circumstances, I reject the plaintiff's claim insofar as it relates to reimbursement of the shortfall between the value of the sale of the leased property and the debt owed pursuant to the leasing agreement. The sale of the leased property would appear to be a matter as between Service Finance Corporation Limited and the plaintiff governed by the terms of the contract between them.

Conversion claim: the renovations

I also reject the plaintiff's claim that the defendants wrongfully converted the goods and materials encompassed in the renovations for the following reasons.
As mentioned previously, some renovations were carried out pursuant to a requirement of the LLA. Some were carried out in the alfresco area. Some were part of the general refurbishment of the restaurant.
There is insufficient evidence to establish what renovations were undertaken for these specific purposes.
The evidence as to who was to bear the cost of the renovations boils down to the following.
Mr Brown testified that the tenant was responsible for work done on the restaurant. Mr O'Sullivan applied for a liquor licence and it would appear that certain improvements were required by the LLA before the licence would be granted. The evidence does not establish in detail what improvements were required. However, as best as I can make out from the evidence, these improvements included the erection of disabled toilets. Although Mr Durkan consented to "alterations" [necessary] to obtain the liquor licence, that is a far cry from acknowledging any obligation or undertaking to pay for them.
Mr O'Sullivan testified that he was to bear the cost of the improvements required by the LLA.
Mr O'Sullivan testified that Mr Durkan gave him the use of the alfresco area (which was not part of the leased premises) and this was to be rent free. The lease provides that:
"If the Tenant shall desire … the Tenant may, at the tenant's cost and expense in all respects, carry out the works to extend the front of the Leased Premises … to construct an alfresco dining area." (cl 19)
Subject to the tenant complying with certain conditions, the lease provides that upon the tenant giving notice [of the extension], the landlord will grant a lease of the alfresco area to the tenant.
There is no evidence of a lease of the alfresco area as far as I can make out. It would seem that the agreement between Mr Durkan and Mr O'Sullivan regarding the alfresco area was a variation of cl 19 in that, according to Mr O'Sullivan, Mr Durkan authorised the use of the alfresco area rent free. This is confirmed in the letter dated 31 January 2002 from the defendants' solicitors.
There is scant evidence as to what renovations were carried out and still less as to which specific renovations were done to comply with the liquor licensing requirements, or which were part of the general fit out of the restaurant or which related to the alfresco area. In any event, it would seem, that overall, the renovations were undertaken for these purposes. Whether the renovations related to any of these purposes specifically, it is my view that the plaintiff was required to pay for them and there is no evidence of any agreement by the defendants to reimburse the plaintiff for any of the renovations other than Mr O'Sullivan's evidence of the representation which I do not accept for reasons already outlined.
The plaintiff adduced no evidence to enable a finding as to whether the items in Annexure A constituted his personal property or (tenant's fixtures) or a fixture. I observe that neither party raised this point. I mention it for the sake of completeness. It is obvious that more probably than not, hardware, brick paving, lighting, carpets, tiles, plumbing, materials used to erect, for example, a bar, constitute fixtures. Without dealing with every item outlined in Annexure A, an examination of that document leads me to the conclusion that those items are either fixtures or there is no evidence to enable me to make a finding as to whether items which are not obviously fixtures, are fixtures or not.
Those items which are fixtures become part of the freehold and the plaintiff would have no right to remove them. As to the other items, there is insufficient evidence to make a finding as to whether they constitute fixtures (part of the realty) or tenant's fixtures. In this regard, the plaintiff has not proved its case in relation to the claimed conversion of the goods and materials used in the renovations.
The totality of the evidence causes me to find that:
(1)It was Mr O'Sullivan who paid for the renovations;
(2)Mr Durkan consented to the renovations in general terms and knew the renovations were being carried out;
(3)The defendants did not agree to reimburse the plaintiff for the renovations by rent relief or at all;
(4)There is no evidence as to Mr Durkan's specific knowledge of the particular work done;
(5)There is no evidence that Mr O'Sullivan made any demand to be paid for the renovations other than what he said about requesting rent relief;
(6)In those circumstances, there is no evidence that Mr Durkan realised that he would be expected to pay for the renovations or reimburse the plaintiff for their cost;
(7)The plaintiff was responsible for the costs of renovations required by the LLA and those to the alfresco area;
(8)Insofar as the items in Annexure A may be tenant's fixtures (as to which there is insufficient evidence), cl 3.17(b) and (c) of the lease as outlined above are an answer to the plaintiff's claim in conversion;
(9)The items in Annexure A are either fixtures which became part of the realty or there is insufficient evidence to establish their status.

Accordingly, I reject the plaintiff's claim as it relates to the alleged wrongful conversion of the fixtures and fittings and goods and materials connected with the renovations.

Unjust enrichment "claim"

At my request, the parties' solicitors filed the written submissions concerning the plaintiff's claim in par 29.
In the submissions filed on behalf of the plaintiff on 15 December 2008, the plaintiff submits that the "claim for unjust enrichment gives rise to a claim in restitution which seeks to reverse the defendants' gain. The claim is an alternative to the plaintiff's claim for breach of contract and the tort of conversion". The submissions further assert that the plaintiff's claim for recovery of the "fixtures and fittings" (that is, the property in the amended list) is on the basis of the plaintiff's mistaken belief that it was entitled to recover the same from the defendants on termination of the lease. Further, the submissions assert that the plaintiff "also seeks to recover the costs of the renovations and alterations in the mistaken belief that it was entitled to recover the same from the defendants by way of rent relief".
The plaintiff's case was not pleaded in this way nor was it opened on this basis.
I reject those two submissions purportedly based on "mistaken belief". First, those assertions were not pleaded. Secondly, there is not one iota of evidence of any mistaken belief on the part of the plaintiff, through Mr O'Sullivan. In any event, even if the alleged mistaken beliefs were established, they would not lead to the remedy of restitution. The alleged mistaken beliefs are not in the same category as the mistakes of fact or law referred to in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 which might form a foundation for an unjust enrichment "claim".
The plaintiff's case appears to be that unjust enrichment is a cause of action as an alternative to the claim in conversion. This is misconceived: Fathers v Cook [2006] WASC 129 at 144
I refer to the case of Ideas Plus Investments Ltd v National Australia Bank Ltd [2006] WASCA 215 wherein the Court summarised the law relating to the concept of unjust enrichment as follows:
"63Goff & Jones 'The Law of Restitution' 6^th ed (2002) at [3], describe the law of restitution as the law relating to all claims, quasi-contractual or otherwise, which are founded upon the principle of unjust enrichment. The authors go on to say (also at [3]) that they understand quasi-contract to be 'that part of restitution which stems from the common indebitatus counts for money had and received and for money paid, and from quantum meruit and quantum valebat claims'. They add (at [3]):
'The action also lay to recover money which the defendant had acquired from the plaintiff by a tortious act; and, in the rare cases, where the defendant had received money which the plaintiff could identify as his own ... at the time of the receipt and for which the defendant had not given consideration, the plaintiff could assert his claim by means of this action'.
64Quasi-contractual claims were traditionally regarded as resting upon the basis of implied contracts. However, that basis became increasingly regarded as unworkable: United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 28‑29; Cowern v Nield [1912] 2 KB 419; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 63; Kiriri Cotton Co Ltd v Dewani [1960] AC 192 at 204; Nissan v Attorney-General [1970] AC 179 at 228 and Mason v The State of New South Wales (1959) 102 CLR 108 at 146; and it has now effectively been abandoned, with the courts accepting that claims for money had and received should be recognised as lying, not in implied contract, but in restitution or unjust enrichment: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 710 and Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 540.
65Goff & Jones, at [17], point out that the principle of unjust enrichment presupposes three closely interrelated things: first, the defendant must have been enriched by the receipt of a benefit; second, that benefit must have been gained at the plaintiff's expense; and, third, it would be unjust to allow the defendant to retain that benefit. (There has sometimes been a reference in the cases to a fourth factor, being that of whether there is any specific defence available to the defendant: see, for example Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at 227; McDonald v Coys of Kensington [2004] EWCA Civ 47 at [22] and Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd's Rep 319 at 327). However, in Australia, courts have declined to accept the notion that unjust enrichment is a definitive legal principle according to its own terms and not just a concept. This was made plain by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-379, where Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referred to two cases rejecting that notion, as follows:
'In Pavey&Matthews, Deane J stated (at pp 256-257):
"To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate ... That is not to deny the importance of the concept of unjust enrichment in the law of this country. It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case".
Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation (at p 673):
"In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment" '.
66Similarly, in Roxborough Gummow J said (at 544):
'Considerations such as these, together with practical experience, suggest caution in judicial acceptance of any all-embracing theory of restitutionary rights and remedies founded upon a notion of 'unjust enrichment'. To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around'."
In my view, there is no factual or legal foundation on any of the evidence as outlined to establish any "claim" of unjust enrichment.

The counterclaim

The defendants filed particulars of damages on 1 December 2008. The document refers to paragraph numbers in the counterclaim which do not exist and refers to claims which are not pleaded. For example, par 5 of the particulars refers to par 50 of the counterclaim (which paragraph does not exist) and to "the loss of rent on leasing of the defendants not leasing the leased premises at full rental value" (which is not pleaded).
Accordingly, the filed particulars of the defendants' damages are largely unreliable and of no use in assessing the defendants' loss and damages, if any. This is unsatisfactory.
Further, most of the defendants' claims of loss were unsupported by evidence.
In Bonham-Carter v Hyde Park Hotel Ltd (1948) 64 TLR 177, at 178, Lord Goddard CJ said:
"Plaintiffs must understand the fact that if they bring actions for damages it is for them to prove their damage; it is not enough to write down the particulars, and, so to speak, throw them at the head of the Court saying:
'This is what I have lost; I ask you to give me these damages'.
They have to prove it. The evidence in this case with regard to damages is extremely unsatisfactory."
This dicta applies equally to a defendant who counterclaims. Apart from the claim for unpaid rent and outgoings which are quantified, the defendants have not proved the quantum of damages.
I consider each claim in the counterclaim.

Claim of failure to deliver up: par 36

The defendants claim that on termination of the lease the plaintiff failed to deliver up a bar, slate flooring and a fireplace in accordance with its obligation under par 3.17(a) of the lease. This does not appear to be in dispute. However, there is no evidence to prove the quantum of loss.

Claim for unpaid rent, outgoings and proportionate rates and taxes: pars 37, 38, 42 and 46

The plaintiff had an obligation to pay rent (cl 3.1) as reviewed from time to time (cl 3.2); proportionate rates and taxes (cl 3.4(a)); outgoings (cl 3.4(b)); and interest on unpaid amounts (cl 3.3).
Pursuant to cl 5.2(b), the tenant covenanted to pay those expenses from the date of termination of the lease for the unexpired residue of the term or until re‑letting. It is not in dispute that the plaintiff did not pay these from 1 December 2001 until the premises were re‑let on either 9 or 16 June 2003.
The defendants rely on a document referred to as a Tenant Reconciliation Document ("TRD") which purports to record every transaction of monies charged to the plaintiff and receipts from the plaintiff to support the damages referred to in pars 37, 38, 42 and 46 of the counterclaim (see Exhibit 5, pp 281-284).
The TRD reveals that the plaintiff was not in arrears as at 30 November 2001. The TRD records that from 1 December 2001 until 30 June 2003, a total of $51,868.08 was charged to the plaintiff.
Mr Keenan testified that the new tenant started paying rent from around 9 June 2003.
The figures in the TRD were not challenged. However, I would exclude the following.
There is no evidence about and no proof of cost for the title search (21/1/02). Although Mr Keenan testified that he employed static guards whilst property was removed, the dates on the TRD (15/7/02, 19/8/02, 1/9/02) do not correspond with his evidence. In any event, there is no proof that the plaintiff is liable for these expenses. There is no proof of the value of the lock replacement and "lock out costs" (21/1/02).
It would seem that the premises were re-let on 16 June 2003 with the new tenant paying rent from 9 June 2003. Accordingly, I would allow rent and outgoings for eight days.
I would also deduct the amount of $3,235.48 being the amount of outgoings overpaid which is conceded by the defendants although the TRD refers to the period as between 1 July 2001 and 30 June 2002.
I would award the defendants the following:
Total of claimed amount in the TRD
from 1/12/01 to 30/6/03     $51,868.00
Less title search     $12.10
Less static guard    $233.44
Less lock$163.00
Less lock out costs     $70.40
Less 8 days rent and outgoings
for June 2003    $352.18
Less overpayment of outgoings         $3,235.48          $4,066.60
Total$47,801.40

Claim for costs associated with the plaintiff's default: par 39

In cl 3.5(b) of the lease, the tenant covenants to pay legal and other costs, charges and expenses and any consultants' fees for which the landlord shall become liable or incur in consequences of or in connection with default or breach of the lease by the tenant. However, this obligation is subject to the landlord demanding such payment. There is no evidence that the defendants made a specific and unequivocal demand.
In any event, there is no evidence as to the quantum claimed in the particulars of the defendants' damages filed on 1 December 2008.
I reject the defendants' counterclaim as pleaded in par 39.

Claim to reinstate and clean the premises: pars 43, 45

This claim is made pursuant to cl 3.17(b) and cl 3.6(d) of the lease. There is no evidence to support the substance of these claims nor the quantum of damages sought in the defendants' particulars of damages.
I reject the defendants' counterclaim as pleaded in pars 43 and 45.

Claim for rent and outgoings for alfresco area: par 47

The defendants claim payment of rent and outgoings for the alfresco area. I have found that the plaintiff did not lease the alfresco area. The evidence outlined earlier establishes that Mr Durkan gave Mr O'Sullivan the use of it rent free. This claim fails.

Summary of findings

I dismiss the plaintiff's claim.
I dismiss the defendants' counterclaim in pars 39, 43, 45 and 47.
I uphold the defendants' counterclaim as pleaded in par 36 but award nominal damages of $10.00.
I uphold the defendants' counterclaim in pars 36, 37, 38, 42 and 46. I award the defendants damages of $47,801.40. I shall hear submissions from counsel on any interest payable.