Steven Chambers v Dr Jack Vaisman
[2008] NSWDC 198
•11 September 2008
Reported Decision:
7 DCLR (NSW) 282
District Court
CITATION: Steven Chambers v Dr Jack Vaisman [2008] NSWDC 198 HEARING DATE(S): 27/8/08 - 28/8/08
JUDGMENT DATE:
11 September 2008JURISDICTION: Civil JUDGMENT OF: Rolfe DCJ DECISION: See paragraph 35 of Judgment CATCHWORDS: Claim by Plaintiff for rent owing under lease, Defence of estoppel based on alleged representations by Plaintiff's agent that Defendant would not be liable for rent . Estoppel claim not made out. - Consideration of holding over provision and whether notices of increase in the rent were served in accordance with the provisions of S 130 (1) c of the Residential Tenancies Act 1987 LEGISLATION CITED: Residential Tenancies Act 1987 CASES CITED: White & Ors v Cariste Pty Ltd (2004) NSWCA 460 PARTIES: Steven Chambers (Plaintiff)
Dr Jack Vaisman (Defendant)FILE NUMBER(S): 1078/07 COUNSEL: J O'Connor (Plaintiff)
H W M Stitt ( Defendant)SOLICITORS: M Tierney (Plaintiff)
P Bard (Defendant)
JUDGMENT
1 The plaintiff, Steven Chambers, is the registered proprietor of Unit 5, 8 Gow Street Balmain (the “Property”). The Property was one of a number of units which the plaintiff owned in the building at 8 Gow Street Balmain.
2 The plaintiff sold most of the other units. Although he sought to sell the Property, it was passed in at auction in early 2002.
3 On 19 March 2002, Brian Bryce wrote to Dennis Vertzayias of N G Farah Property Managers Pty Limited (“NGF”), the agents who had acted on the auction sale of the Property for the plaintiff. In his letter (exhibit 4), Mr Bryce expressed an interest in leasing the Property for one year and paying rent of $1900 per week on condition that he would have the option of purchasing the Property at the end of the lease for $2,500,000.
4 Mr Vertzayias, by his letter dated 20 March 2002 (exhibit 3), informed Mr Bryce that the Property was no longer on the market for sale but that if his offer to lease the Property was conditional upon an option to purchase, the purchase price would have to be around $3,000,000. Mr Vertzayias also said in his letter that, subject to the plaintiff’s approval, the offer to lease the Property had been accepted at $1,900 per week.
5 The following evidence establishes that, rather than approving Mr Bryce as the tenant, the plaintiff approved the defendant.
6 On 25 March 2002, Mr Bryce wrote to Mr Vertzayias (exhibit 7) and said, amongst other things:
- “Further to our conversation this morning this confirms that the tenancy agreement you are preparing will be signed by Dr J Vaisman, managing director of Advanced Medical Institute, a company in which I have a substantial shareholding.”
The letter went on to say:
“Dr Vaisman will be happy to sign any guarantees etc on my behalf.”
7 Marinos Euripidou is the managing director of NGF. His evidence in exhibit C and during cross-examination establishes that Mr Vertzayias was not involved on the leasing side of things at NGF and that the agent who handled the leasing of the Property was Demos Mastoris. Unfortunately, Mr Mastoris died before the proceedings were commenced and so there is no affidavit evidence from him before the Court.
8 In his affidavit of 13 August 2008 (exhibit B) the plaintiff said that in April 2002 he had a telephone conversation with Mr Mastoris and Mr Mastoris said to him:
“We have found a good tenant for the Gow Street property. His name is Jack Vaisman. He is a well-to-do doctor and will have no problems paying the rent.”
9 Mr Chambers was very pleased with this development, although, as he said in his evidence given during cross-examination, his main aim was to have the Property tenanted so he would receive a cash-flow which would assist him in making his mortgage payments in connection with the Property.
10 I am satisfied from the plaintiff’s evidence that he was prepared to leave the leasing of the Property entirely in the hands of Mr Mastoris. In this regard, I am satisfied on the evidence given by Mr Euripidou in cross-examination that the practice of NGF was to vet prospective tenants for its landlord clients as best as it could.
11 The plaintiff gave his evidence in a straightforward way. I regard him as a truthful witness and I accept he had the conversation with Mr Mastoris set out in paragraph 7 above.
12 On 5 April 2002, by letter of that date (annexure B to exhibit C), Mr Mastoris wrote to Baker & McKenzie Solicitors, attention Richard Doyle. The evidence establishes that Baker & McKenzie were the solicitors instructed by the defendant, Dr Vaisman. The defendant’s evidence was that he wanted Mr Doyle to read the lease on his behalf and so he asked Mr Bryce to have the lease sent to Mr Doyle. Mr Doyle had been introduced to the defendant in 1999 and the defendant had instructed him to do legal work either for him or his company, Australian Medical Institute Pty Limited (“AMI”), from time to time. The defendant also used at least one other solicitor for his and AMI’s legal work.
13 In the letter of 5 April 2002, Mr Mastoris said to Baker & McKenzie:
“Please find enclosed the residential tenancy agreement for 5/8 Gow Street Balmain. Brian Bryce will be residing at the property, however, Dr Jack Vaisman will have the agreement in his name.
Please contact me if you have any queries regarding the matter.”Please check the agreement and forward it to Dr Vaisman care of Mr Bryce for signing.
14 There is no evidence that Baker & McKenzie had any queries regarding the matter.
15 On 15 April 2002 the plaintiff and the defendant entered into the residential tenancy agreement in relation to the Property (exhibit D) (the “Lease”). The term of the Lease was for 12 months beginning on 15 April 2002 and ending on 15 April 2003.
16 The plaintiff has brought these proceedings against the defendant claiming unpaid rent due under the Lease. The plaintiff claims that on 14 April 2003 the defendant held over under the Lease until the Property was vacated on 12 July 2005.
17 The defendant denies he is liable at all to the plaintiff.
18 Mr Stitt appeared for the defendant. His principal submission was that the defendant was not liable to the plaintiff by reason of the representations pleaded in paragraph 6 (d) of the Amended Defence. He submitted that if the Court was satisfied that the representations were made out that the plaintiff would be estopped from denying, first, that the defendant had no liability under the Lease and, secondly, had no liability for any occupation of the Property after the expiry of one year from the date of the Lease.
19 In his affidavit of 21 July 2008 the defendant said that in either late March or early April 2002 Mr Bryce asked him to sign a lease of the Property. In particular, the defendant said they had the following conversation:
“Bryce: Jack, I need you to sign a lease for me. Julian and I have found this great property in Balmain, but the real estate agents will not let me sign the lease because I am not a resident.
Vaisman: Okay. If I were to sign the lease would I have any liability? If things go wrong I do not want to be held liable.
Bryce: The real estate agent is N.G. Farah. I told them that I was going to approach you to sign the lease on my behalf. They agreed to this and they assured me they will only look to me for all payments in relation to the property.
Vaisman: How long is the lease for?
Bryce: The lease is for 12 months.
Vaisman: So I would only be signing the lease for a 12 month period?
Bryce: That’s correct. I actually offered to purchase the premises as an investment property but they were not interested. So we decided that we would rent the property for 12 months until we can figure out if we are staying in Australia or not.
Vaisman: How much is the rent per week?
Bryce: About $1,900.00 per week.
Vaisman: Do I have to contact them or do anything other than sign the lease?
Bryce: No, I have completed all the negotiations with N.G. Farah and they are ready for you to sign the lease.
Vaisman: That will be no problem. I will sign the lease. You just bring me the lease or send it to Richard Doyle, my lawyer at Baker and McKenzie, and I will sign it and have returned. When does it have to be signed by?
Vaisman: That will be fine.”Bryce: I need it to be signed ASAP.
20 The defendant also said that, after the Statement of Claim was served on him, he forwarded it to his solicitors on or around 2 February 2008 and instructed them to file a defence. He also attempted to contact Mr Bryce but was unable to locate him.
21 I am satisfied on the whole of the evidence that Mr Bryce’s whereabouts are unknown. Consequently, as well as not having evidence before it from Mr Mastoris, the Court also has no evidence from Mr Bryce.
22 The evidence establishes that after the Lease was entered into between the plaintiff and the defendant the defendant did not reside at the Property but Mr Bryce and his son Julian resided there. This was not in contravention of the Lease, as the terms of it make clear: “no more than (4) persons may ordinarily live in the premises at any one time”. The evidence also establishes that, of the rent payments made, all of them were made by Mr Bryce.
23 Mr Stitt urged the Court to accept the defendant’s evidence on the basis that NGF had obviously agreed to a “fronting arrangement” whereby the defendant signed the Lease on the basis that Mr Bryce could live in the Property and pay the rent without the defendant having any liability whatsoever under the Lease.
24 I reject the submission made by counsel for the defendant. As a matter of commonsense, there would have been no point in NGF having the defendant sign the Lease if it had agreed that only Mr Bryce would be liable for the rent. The inference the Court draws from the evidence is that NGF required the defendant to sign the Lease as the tenant in order to ensure the defendant was liable for the rent. Moreover, so far as the defendant is concerned, there is nothing in NGF’s letter to Baker & McKenzie which suggests anything other than the fact that the defendant would be the tenant under the Lease. In addition, consistently with the contents of that letter, Mr Bryce handed the Lease to the defendant for him to sign. The Court infers in those circumstances that Mr Bryce obtained the Lease from Baker & McKenzie before he took it to the defendant to sign.
25 In reaching its conclusion, the Court rejects the evidence of the defendant that in his conversation with Mr Bryce he was informed that NGF would only look to Mr Bryce for payments of rent. My assessment of the defendant whilst giving evidence about this was that he had convinced himself that this was said during his conversation with Mr Bryce in order to avoid any liability under the Lease. The truth was revealed in cross-examination when the defendant acknowledged that he asked Mr Bryce to have the Lease sent to his solicitor, that he was conscious things could go wrong and that he thought he could be liable for the rent because Mr Bryce asked him to sign the Lease. In my assessment, this is why the defendant insisted that the fixed term of the Lease should be for no more than one year. The reality was that Mr Bryce was a good friend whom the defendant trusted. He was also a shareholder in AMI. Because of this, to put it in the vernacular, the defendant was prepared to “stick his neck out” for Mr Bryce.
26 Accordingly, the defendant’s estoppel case is not made out.
27 It follows that the second limb of Mr Stitt’s estoppel case cannot be made out. In this respect the defendant was familiar with leases. He chose to sign the Lease. It was for a fixed term of 12 months, but it also contained the following holding over provision:
At the end of the term the tenant can stay in the residential premises at the same rent (or at an increased rent if the rent is increased in accordance with the Residential Tenancies Act 1987) but otherwise under the same terms unless or until the agreement is ended in accordance with the Residential Tenancies Act 1987.”“CONTINUATION:
28 The defendant was therefore bound by the holding over provision.
29 Mr Stitt’s next submission was that, although the defendant had taken no steps to terminate the Lease, he had no additional liability for rent owing once the plaintiff purported to serve the notice dated 18 August 2003 (Annexure ‘D’ to exhibit C) seeking to increase the rent from 27 October 2003 from $1900 per week to $2200 per week. The nub of the submission was that, because Mr Bryce paid the extra rent, he must have acted upon this notice; accordingly, the Lease between the plaintiff and the defendant must have terminated and a separate tenancy created between the plaintiff and Mr Bryce.
30 Although Mr Stitt relied on White & Ors v Cariste Pty Ltd (2004) NSWCA 460 to support his submission, in my opinion that case has no application here because the holding over provision in the lease in that case and the facts were very different. In the case before this Court, there is no evidence of a new tenancy between the plaintiff and Mr Bryce. Rather, the Continuation Clause in the Lease (set out above) provides for the rent to be increased at the end of the fixed term and during the period of the periodic tenancy until the Lease “is ended” in accordance with the Residential Tenancies Act 1987 (the “Act”). In this respect, the plaintiff submitted he had lawfully increased the rent under the Lease in compliance with the provisions of the Act. The notices of increase of rent dated 18 August 2003 and 6 October 2004 were addressed to the defendant at the Property and served by post.
31 The defendant submitted that the plaintiff had not served the notices of increase in the rent in accordance with the service provisions set out in s 130 of the Act because the defendant had not received them as the Property was not occupied by him.
32 S 130 (1) of the Act provides:
(1) A notice or other document (other than a notice of termination) required to be given to a tenant under this Act may be given:“S 130 (1)
(a) by delivering it personally to the tenant or a person apparently of or above the age of 16 years by whom the rent payable by the tenant is ordinarily paid,
(b) by delivering it to the residential premises occupied by the tenant and by leaving it there with some person apparently of or above the age of 16 years for the tenant.
(d) in such other manner as may be prescribed for the purposes of this section of approval by the Tribunal.”(c) by sending it by post to the residential premises occupied by the tenant, or
33 In light of the above, the plaintiff submitted that, as the defendant had the right to occupy the Property under the Lease, even though the plaintiff was on notice through NGF that the defendant was not residing there (and that Mr Bryce and his son were), the defendant was “deemed” to have occupied the Property. Counsel for the plaintiff submitted that the defendant’s choice not to occupy the Property made no difference. Had the Parliament intended the word “occupied” in s 130 (1) (c) to mean “resided”, the Parliament would have said so.
34 The Court is satisfied that service of the notices of rent increase addressed to the defendant were served in accordance with the Act, particularly having regard to the definition of “tenant” and “tenancy” set out in S 3 of the Act thus:
“ “tenancy” means the right to occupy residential premises under a residential tenancy agreement.
“tenant” means the person who has the right to occupy residential premises under a residential tenancy agreement, and includes the person’s heirs, executors, administrators and assigns.”
There is no doubt that the defendant had the right to occupy the Property and the Property constituted “residential premises” as defined under s 3 of the Act. Given the specific references to both “residential premises” and “tenant” in s 130 (1) (c) of the Act, it seems to me that the Parliament, in its use of “occupied” in prescribing the mode of service by post set out in s 130 (1) (c), intended that a notice could be served by post on a tenant at residential premises “occupied” by a tenant in the sense that such a tenant had a right of occupation of those premises. This interpretation is also consistent with the definition of “tenancy” set out above.
35 It follows that the defendant is liable to the plaintiff for the amount of rent owing under the Lease, as adjusted by the rental increase notices, from 15 April 2002 up to 12 July 2005 when the Property was vacated. I shall now stand the matter down so the parties can do the calculations and judgment can be entered. If need be, I will then hear argument on costs.
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