Scolaro v Sebregts

[2001] WADC 65

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   SCOLARO -v- SEBREGTS & ORS [2001] WADC 65

CORAM:   WISBEY DCJ

HEARD:   1, 2 MARCH 2001

DELIVERED          :   19 MARCH 2001

FILE NO/S:   CIV 2291 of 1998

BETWEEN:   RITA ROSA SCOLARO

Plaintiff

AND

ALEXANDER SEBREGTS
First Defendant

ELIZABETH SEBREGTS
Second Defendant

SANDRA SMITH
Third Defendant

DEAN SMITH
Fourth Defendant

ELIANNE SMITH
Fifth Defendant

KENNETH SMITH
Sixth Defendant

INTERCOMM PTY LTD
Seventh Defendant

AUSTRALIAN AND NEW ZEALAND BANKING GROUP LIMITED
Third Party

Catchwords:

Landlord and tenant - Lease - Lease for term of five years - Lease not in registrable form - Entry into possession - Repudiation by tenant - Validity of guarantee

Legislation:

Transfer of Land Act 1983 (as amended) s 58, s 68

Result:

Judgment for plaintiff for $68,211.81

Representation:

Counsel:

Plaintiff:     Mr K Yin

First Defendant             :     Mr A Sebregts & Mr D Smith

Second Defendant         :     Mr A Sebregts & Mr D Smith

Third Defendant           :     Mr A Sebregts & Mr D Smith

Fourth Defendant          :     Mr A Sebregts & Mr D Smith

Fifth Defendant            :     Mr A Sebregts & Mr D Smith

Sixth Defendant            :     Mr A Sebregts & Mr D Smith

Seventh Defendant        :     No Appearance

Third Party                   :     No appearance

Solicitors:

Plaintiff:     Paiker & Overmeire

First Defendant             :     In person

Second Defendant         :     In person

Third Defendant           :     In person

Fourth Defendant          :     In person

Fifth Defendant            :     In person

Sixth Defendant            :     In person

Seventh Defendant        :     No appearance

Third Party                   :     No appearance

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

Chan v Cresdon (1989) 168 CLR 242

Liley v Pipers, vol 172 (1997) C Ch Aust & NZ Conv Rep 242

Petelin v Cullen (1975) 132 CLR 355

Case(s) also cited:

Telado Pty Ltd v Vincent (1996) NSW Conv R 55-786

1. WISBEY DCJ:  Rita Rosa Scolaro brings this action against the seven defendants claiming damages for breach of contract.  There is a third party notice but that issue is not before me. 

2. The facts giving rise to the dispute are quite simple, and many of those essential to a resolution of the dispute are not controversial. 

3. The plaintiff was at all material times the owner of premises situate at 383 Scarborough Beach Road, Innaloo (the premises).  As at November 1997 the premises were vacant and the plaintiff instructed her agent Mr Gianotti of Churchill Knight to arrange to let the premises.  In the event Mr Gianotti entered into negotiations with one Richard Steggall who was associated with a Victorian company Intercomm Pty Ltd, and by letter dated 7 November 1997 (Exhibit P1) Intercomm offered to lease the premises for five years on the terms set out therein.  Following further negotiation the terms of the proposed lease were agreed, and an offer to lease by Vision Telecommunications Pty Ltd executed.  An instrument of lease was then prepared by the solicitor for the plaintiff and forwarded in triplicate by Ms Hatch of Mr Gianotti's office for signature by Vision Telecommunications Pty Ltd and the defendants.  The instrument of lease was subsequently returned duly executed by Vision Telecommunications Pty Ltd and each of the defendants, was executed by the plaintiff, and was stamped.  It was tendered in evidence (Exhibit P7).  A perusal of the document makes it very clear that the tenant is Vision Telecommunications Pty Ltd, and each of the defendants are guarantors, and guarantee the due performance of the tenants' obligations under the lease (whether legal or equitable). 

4. The defendants admit in the defence that they signed the instrument of lease, but assert that they did so in their capacity as directors of Vision Telecommunications Pty Ltd.  They further allege that at the time of the execution of the lease it did not contain the schedule (being pages 1 to 3 thereof), and that as a consequence it failed to contain inter alia a commencing date, description of the premises, description of the term, and the names of the parties thereto, and is void for uncertainty and unenforceable. 

5. Exhibit 7 contains the schedule which has a number of alterations initialled by the plaintiff and Mr Steggall, and I have no doubt that the pages comprising the schedule formed part of each of the three lease documents at the time of execution.  Absent the schedule, and the document would be silent as to all the matters of particular interest to a tenant, and it is inconceivable that the defendants would have executed it if it was in that form.  The instrument of lease which speaks for itself was a complete document and the evidence given by the plaintiff's witnesses confirm that it was in that form when executed. 

6. I do not accept the defendants' evidence that they did not appreciate the capacity in which they were executing the document.  It conflicts with its form and content.  There is no suggestion that there was mutual mistake as to the nature of the document; nor is there is any room for a defence of non est factum (not that that is pleaded).  It would not have been possible to establish that plea because as was stated in Petelin v Cullen (1975) 132 CLR 355 at 359:

   "The class of persons who can avail themselves of the defence is limited.  It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document.  To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part.  Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence." 

7. The defence also alleges that the instrument of lease was subject to the Transfer of Land Act 1893 and because of its form could not be and was not registered, and that by reason of s 58 of the Act was not effectual to pass any estate or interest in the premises, and consequently the relationship between the plaintiff and Vision Telecommunications Pty Ltd was a common law tenancy at will, terminable upon one month's notice (s 71 Property Law Act), and the tenancy was terminated by letter dated 5 May 1998.  The plea purports to be based upon the principles enunciated in Chan v Cresdon (1989) 168 CLR 242. Section 58 of the Act is clearly referable to the concept of indefeasibility, and although it precludes the creation of an estate or interest by an unregistered instrument it does not prohibit the existence of an equitable interest evidenced by the instrument, prior to registration. The position here is clearly different from that in Chan in that cl 24.11 of the instrument of lease specifically provides that the reference to "this lease" to which the guarantee relates, "includes a reference to any tenancy or other rights whether legal or equitable under which the Tenant occupies or is entitled to occupy the Premises".  As was stated in Liley v Pipers, vol 172 (1997) C Ch Aust & NZ Conv Rep 242 at 244: 

   "In the present case the obligations guaranteed by the guarantors are the performance by the lessee of all its agreements and undertakings contained in the above agreement.  The terms of the guarantee do not depend on any characterisation of the tenancy document as a lease at law.  It is the landlord's rights contained in the tenancy document itself, whatever their foundation in law or equity, which are guaranteed." 

8. In any event I do not accept that s 58 of the Act has the effect that the instrument of lease, not being registered or in an approved form for registration, is invalid. Section 68 of the Act dealing with the paramountcy of the estate of the registered proprietor provides inter alia that such estate shall be deemed to be subject to any prior unregistered lease or agreement for lease or for letting for a term not exceeding five years to a tenant in actual occupation.  The section provides recognition for and protection without registration to a letting for a period of not more than five years. 

9. In the circumstances the instrument of lease is effectual in creating a legal estate. 

10. It cannot be disputed on the evidence that Vision Telecommunications Pty Ltd repudiated its obligations as lessee.  By letter dated 6 March 1998 the first defendant requested the plaintiff's agent to relet the premises, and no further rental was paid to the plaintiff.  The evidence establishes that following the notice of repudiation the plaintiff took appropriate steps to relet the premises and mitigate her loss.  She did that firstly by entering into a lease of the premises with Sterling Skills Training Inc for a term of 18 months from 1 June 1998 until 30 November 1999; and then to Adult Shop Com Limited for a term of five years commencing on 24 March 2000 (Exhibit P34).  It is clear from the evidence, and indeed it was not seriously contended otherwise, that the plaintiff has taken appropriate mitigatory steps but notwithstanding has suffered a loss in the sum of $58,590.19 as appears from Exhibit P35.  In the result the plaintiff is entitled to judgment against the defendants in the sum of $58,590.19 together with the sum of $9,621.62 being interest thereon at the rate of 6 per cent from the date of the institution of these proceedings until 19 March 2001. 

1. The plaintiff is entitled to judgment in the sum of $68,211.81.