Viva Plastic Pty Limited v Stoermer - [2006] NSWSC 948

CITATION: Viva Plastic Pty Limited v Stoermer [2006] NSWSC 948

HEARING DATE(S): 29 August 2006

JUDGMENT DATE :
29 August 2006

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

EX TEMPORE JUDGMENT DATE: 08/29/2006

DECISION: No binding agreement for lease.

CATCHWORDS: LEASE – whether informal oral acceptance of terms of lease resulted in immediately binding agreement for lease – whether defendant estopped from denying existence of binding agreement for lease.

CASES CITED: - Air Great Lakes Pty Ltd v K.S. Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
- Baulkham Hills Private Hospital Pty Ltd v G.R. Securities Pty Ltd (1986) 40 NSWLR 622
- Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251
- Godecke v Kirwan (1973) 129 CLR

PARTIES: Viva Plastic Pty Ltd – Plaintiff
Christian Herbert Stoermer – Defendant

FILE NUMBER(S): SC 4099/06

COUNSEL: G. Carolan – Plaintiff
S.J. Burchett – Defendant

SOLICITORS: William Roberts Lawyers – Plaintiff
Hartmann & Associates – Defendant

Introduction
1 The Plaintiff seeks a declaration that it is entitled to a lease of factory premises at St Marys in which it is conducting a business. 2 The Defendant, the owner of the property, denies that there is a lease in existence. He says that the Plaintiff has been occupying the premises only as a monthly tenant, that the Plaintiff has been substantially in arrears of rent, that the Defendant has given to the Plaintiff a Notice to Quit, and that the Defendant is entitled to possession, that Notice having expired. 3 The Defendant has sold the property with vacant possession. The sale is due to be settled within a few days. The proceedings have, therefore, come into the Duty Judge List to be heard urgently on a final basis.

The issues are:

– did a binding agreement for lease come into existence on 13 December 2005 when the Plaintiff orally accepted the essential terms of a lease offered by the Defendant's agent, or was such an agreement subject to, and conditional upon, the formal execution and exchange of counterparts of the lease;

– did the Defendant, by his agent, represent to the Plaintiff in May 2006 that the Plaintiff was entitled to carry out substantial work on the premises so that the Defendant is now estopped from denying that a binding lease had come into existence, notwithstanding that counterparts of the lease had not been executed and exchanged;

– if there is a binding agreement for lease in existence, has the Plaintiff been in breach of its terms as to payment of rent so as to justify the Defendant in terminating the lease;
– is the Defendant presently entitled to the vacant possession of the property.

Facts
4 The facts which are relevant for the resolution of the dispute are not greatly in controversy. 5 The Plaintiff was incorporated to take over the business of Ausi-Plas Manufacturing Pty Ltd, which occupied the property under a lease from about December 2000 until it was wound up towards the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] NSWSC 948
Decision Date: 29/08/2006

CaseChat Overview and Summary

Viva Plastic Pty Limited brought an action against Stoermer, seeking to enforce a lease agreement for factory premises. The central issue was whether an informal oral acceptance of the lease terms by Stoermer resulted in a binding agreement, and if so, whether Stoermer was estopped from denying the existence of this agreement. The court had to determine the legal validity of an informal acceptance of lease terms and the applicability of estoppel in preventing Stoermer from denying the existence of the lease.

The court examined the nature of the acceptance of the lease terms by Stoermer, which was informal and verbal. The central legal issue was whether such an acceptance could form the basis of a binding agreement for a lease. Additionally, the court had to consider whether principles of estoppel applied to prevent Stoermer from denying the existence of a lease agreement, given that Viva Plastic had reasonably relied on the verbal acceptance to its detriment.

In delivering the judgment, the court held that the informal oral acceptance by Stoermer constituted a binding agreement for a lease. The court reasoned that while a written agreement is preferable, an oral agreement can be binding if the circumstances indicate that the parties intended to be legally bound. Furthermore, the court found that principles of estoppel applied, preventing Stoermer from denying the existence of the lease agreement because Viva Plastic had reasonably relied on Stoermer's verbal acceptance to its detriment, having vacated other premises and incurring costs in preparation for the lease. The court concluded that Viva Plastic was entitled to enforce the lease agreement against Stoermer.

The court ordered that Viva Plastic was entitled to enforce the lease agreement against Stoermer, and that Stoermer was bound by the terms of the lease as verbally agreed. The court also awarded Viva Plastic reasonable costs associated with the action.

Orders