Tomich v Crosstown Holdings Pty Ltd
[2020] WASC 212
•11 JUNE 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: TOMICH -v- CROSSTOWN HOLDINGS PTY LTD [2020] WASC 212
CORAM: MASTER SANDERSON
HEARD: ON THE PAPERS
DELIVERED : 11 JUNE 2020
PUBLISHED : 11 JUNE 2020
FILE NO/S: CIV 3054 of 2019
BETWEEN: MARZENA MICHELLE TOMICH
Plaintiff
AND
CROSSTOWN HOLDINGS PTY LTD
Defendant
Catchwords:
Property law - Option in a lease - Whether option could be exercised by email - Turns on own facts
Legislation:
Electronic Transactions Act 2001 (WA)
Result:
Option validly exercised
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Muries Lawyers |
| Defendant | : | Arns & Associates |
Case(s) referred to in decision(s):
Bellaire Pty Ltd v Roselink Enterprises Pty Ltd [2014] WASC 142
Con‑Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Murray & Roberts Australia Pty Ltd v G B Lifestyles Pty Ltd [2013] WASC 345
MASTER SANDERSON:
On 29 November 2019 the plaintiff issued proceedings seeking certain declarations in relation to a lease agreement between the plaintiff and the defendant. As it transpired the facts were not in dispute. With the agreement of the party, Acting Master Whitby on 18 February 2020 made orders the matter proceed by way of affidavit. The parties filed written submissions. It was intended the matter would be heard at a special appointment. With the intervention of the pandemic the parties then agreed the matter should be determined on the papers.
Strictly speaking it would have been preferable, procedurally, if both parties had applied for summary judgment. As will become clear, one party had to win and one party had to lose. Although that procedural step has not been taken I have, nonetheless, resolved the issue between the parties essentially on a summary judgment basis.
The material facts are set out in the statement of claim and are further supplemented by an affidavit of the plaintiff sworn 19 March 2020. In summary, the plaintiff is a psychologist trading as Equanimity Psychology Services.[1] On or about 2 December 2018 the plaintiff entered into a lease of a property in Palmyra from which she conducted her business.[2] A copy of the lease appears as attachment MMT 1 to the plaintiff's affidavit. Clause 26 has the sub‑heading 'Notice'. That clause reads as follows:
[1] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [3].
[2] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [5].
Notice
All notices, requests, demands, consents, approvals, agreements or other communications to or by a party to this Lease:
(a)must by in writing:
(i)(If served or made in person or by post) addressed to:
A.the address of the recipient shown in this Lease;
B.if the recipient is a corporation, its registered office, postal address or principal pace of business; or
C.any other address as the recipient may have notified the sender; or
(ii)(if served or made by facsimile) addressed to the facsimile number specified in Item 2 of the Particulars or any number nominated by the recipient to the sender;
(b)may be signed:
(i)If given by a natural person, by the sender or the sender's lawyer; or
(ii)If given by a corporation, by a director, secretary, manager or lawyer for the sender;
(c)is deemed duly given or made:
(i)(if served or made in person or by post) when delivered to the recipient at an address specified in paragraph (a)(i); or
(ii)(if served or made by facsimile) upon transmission being completed,
but if delivery or receipt is later than 4.00pm (local time) on a day on which business is generally carried on in the place to which the communication is sent, it is deemed to have been duly given or made at the commencement of business on the next such day in that place.
As the plaintiff notes in her affidavit, the email addresses of the parties are noted in cl 1 and cl 2 of pt B of the lease.[3] The facsimile address of each party is not stated in the lease. The plaintiff confirms there was never any communication in writing sent by facsimile transmission between the parties.[4] However the parties have communicated by email.
[3] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [8].
[4] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [9].
The lease contained an option. It is found in cl 19 and reads as follows:
Option
If:
(a)the Lessee at least three (3) months but not earlier than six (6) months prior to the expiry of the Term gives the Lessor notice to renew the Term for a Further Term; and
(b)no Event or Default has occurred which has not been remedied or waived; and
(c)the Guarantor executes a guarantee and indemnity in the same terms as the Guarantee and Indemnity in respect of the Further Term,
the Lessor will at the Lessee's cost grant the Lessee a lease of the Premises for the next consecutive Further Term at the Rent and on the terms and conditions of this Lease other than this right of renewal unless there is more than one Further Term in which case the number of Further Terms is reduced by one.
On 30 September 2019 the plaintiff purported to exercise the option by sending an email to the defendant.[5] There is no dispute the email was received by the defendant. However, by letter dated 15 October 2019 the defendant disputed the validity of the purported exercise of the option.[6] Essentially, it was said the option had to be exercised either in writing or via facsimile transmission. It could not be exercised by email. It is worth noting that to exercise the option the plaintiff had to give notice to the defendant not before 1 July 2019 and not after 30 September 2019. Accordingly, by the time the defendant raised the issue of the effectiveness of the notice the time for exercising the option had expired.
[5] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [11].
[6] Affidavit of Marzena Michelle Tomich sworn 19 March 2020 [13].
The issue for determination then is quite straightforward. Was the email sent by the plaintiff to the defendant notice under the terms of the lease such that the option was exercised? Or because the purported notice was not in writing - and presumably that means a letter - and was not by facsimile transmission it was ineffective.
A statement of the present law in relation to options in this State is found in Murray & Roberts Australia Pty Ltd v G B Lifestyles Pty Ltd [2013] WASC 345. Martin CJ said at [81] ‑ [83]:
81In the past, it was generally thought that options had to be exercised in strict compliance with the provisions of the option - United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 All ER 104, 107; [1968] 1 WLR 74; United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 (Denning LJ); Hare v Nicoll [1966] 2 QB 130, 141 (Willmer LJ), 148 (Winn LJ); Tonitto v Bassal (1992) 28 NSWLR 564. More recently, a somewhat more refined approach has emerged which distinguishes between terms which, upon the proper construction of the option, must be strictly complied with for its valid exercise, and terms which are not of that character - see Phillips Fox (A Firm) v Westgold Resources [2000] WASCA 85 [67] - [70]; Buckland v Bay of Islands Electric Power Board [1980] ANZ Conv R 513, 80 ‑ 81; Boreland v Docker [2007] NSWCA 94. Put another way, if particular requirements for the exercise of an option are, as a matter of construction, intended by the parties to be essential for the exercise of the option to be effective, compliance with these requirements is necessary if the stated contractual relationship is to result - Comdox v Robins [2009] NSWSC 367 [23].
82However, it has been suggested that the debate over whether the terms upon which the option could be exercised should be construed 'strictly' or 'liberally' may distract from the primary duty of the court to construe, and to give effect to, the intention of the contracting parties - C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 [81]; Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716; Comdox v Robins; see also Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 776 (Hoffman LJ).
83If, on the proper construction of the option, it is not essential that it be exercised precisely in accordance with a particular method, it will be sufficient if the actions of the optionee convey clearly and unequivocally that the exercise of the option was intended - Phillips Fox (A Firm) v Westgold Resources [70]. See Ballas v Theophilos (No 2) (1957) 98 CLR 193, 196 (Dixon CJ); Prudential Assurance Co Ltd v Health Minders Pty Ltd (1987) 9 NSWLR 673 at 677B - 678A; Whitegum Petroleum Pty Ltd v Bernadini Pty Ltd [2010] WASCA 229 [32].
It is the primary submission of the plaintiff, cl 26 of the lease mandates only that a notice must be in writing. Both sub‑paragraph (i) and (ii) deal only with two possible modes of service. The clause does not say, for instance, that service must be either by post or by facsimile. It may well be the case when this standard form lease was drafted there was no other way of communicating between lessor and lessee other than by post or facsimile. Be that as it may, I see nothing in the clause which would prevent communication by email.
The question then is whether or not an email can be considered as notice 'in writing'. In Bellaire Pty Ltd v Roselink Enterprises Pty Ltd [2014] WASC 142 I determined that where there was no evidence an email had been printed out it could not be said that the notice was 'in writing'. I still adhere to that view, although perhaps with less conviction than I did six years ago. So I will approach this matter on the basis that cl 19 does not preclude notice being given by email but unless the email is printed out notice is not given in writing.
It is then necessary to consider the terms of the Electronic Transactions Act 2011 (WA) (the Act). Section 8(1) of that Act reads as follows:
For the purposes of a law of this jurisdiction, a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications.
The general rule in s 8(1) of the Act is qualified by s 9(1) of the Act. That is in the following terms:
If, under a law of this jurisdiction, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication, where -
(a)at the time the information was given, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference; and
(b)the person to whom the information is required to be given consents to the information being given by means of an electronic communication.
The difference between the parties in this case relates to the issue of consent. The plaintiff says consent may be implied because over the period of the lease prior to the purported exercise of the option, the parties had communicated on 79 separate occasions by email.[7] That, it was submitted, shows the defendant had no difficulty with communication by email and shows the efficacy of the system. Why all of a sudden, when the option is under consideration, should the use of email no longer be acceptable? Further, the email addresses of both parties had been incorporated in the body of the lease document.[8] That, by implication, shows the defendant had consented to transmission by email.
[7] Plaintiff's outline of submissions filed 17 April 2020 [4(e)]; [19] and [23].
[8] Plaintiff's outline of submissions filed 17 April 2020 [13].
The defendant takes the contrary view. It says there was no consent and the surrounding circumstances do not imply consent.[9] Counsel for the defendant pointed out the fact that communications may have taken place by email was of no real significance.[10] Here we are dealing with a notice and there is nothing in the past conduct of the defendant which could imply a consent for electronic communications in relation to notices. It was further submitted the inclusion of an email address did not amount to consent to notices being served by email.[11]
[9] Defendant's outline of submissions filed 7 May 2020 [29].
[10] Defendant's outline of submissions filed 7 May 2020 [31].
[11] Defendant's outline of submissions filed 7 May 2020 [19].
On balance, I am satisfied the plaintiff's argument ought be accepted. The starting point is to bear in mind what was said by Martin CJ in Murray & Roberts Australia Pty Ltd. What is important is the intention of the contracting parties. The intention in this case was that the plaintiff should give the defendant notice at least three months before the expiry of the lease that it intended to exercise the option. There can be no doubt the email sent by the plaintiff clearly and unequivocally showed the plaintiff intended to exercise the option. The email was received by the defendant the day it was sent. It was not read until the following day but that is neither here nor there. The very purpose of the option clause had been served. Requiring strict adherence to the terms of the option agreement and saying that in all the circumstances the defendant had not consented to the notice being sent by email would fly in the face of commercial reality.
The plaintiff also based its case on estoppel. Strictly speaking it is not necessary for me to deal with this issue but as it was addressed by both parties in their written submission I will deal with the issue. As the plaintiff's argument was that in relation to email correspondence the defendant is estopped from denying the option could be exercised by an email transmission. This would appear to be an argument for common law estoppel generally known as estoppel by convention. In Con‑Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Gibbs CJ, Mason, Wilson, Brennan & Dawson JJ said (at 244):
… Estoppel by convention is a form of estoppel founded not on representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.
It is the plaintiff's argument that because the email addresses of both parties were in the body of the lease and because the parties had communicated extensively by email, the defendant was estopped from denying the option could be exercised by email.[12] The defendant on the other hand maintained there was no assumed state of affairs in relation to the option. It was to be exercised in the manner prescribed in the lease and not otherwise.[13]
[12] Plaintiff's outline of submissions filed 17 April 2020 [22].
[13] Defendant's outline of submissions filed 7 May 2020 [31].
Without delving into the complex and confusing body of law which surrounds estoppel to any extent, I am satisfied the plaintiff's arguments on this point carry the day. The parties had assumed throughout the term of the lease correspondence by email was appropriate. There is every reason to think the plaintiff was justified in extending that belief to the exercise of an option. In my view, the defendant would be estopped from denying the manner of exercise of the option was appropriate.
Accordingly, I will make declarations largely in terms of the plaintiff's prayer for relief in the writ of summons. The costs of the application, including the reserved costs, ought be borne by the defendant.
I make the following orders:
1.There be a declaration the plaintiff has validly exercised the option.
2.The defendant pay the plaintiff's costs of the application, including reserved costs, to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson11 JUNE 2020
0
10
1