Woodford Nominees Pty Ltd v Masjakin Medical Pty Ltd and E Bruce Fraser Pty Ltd

[1997] QCA 76

IN THE COURT OF APPEAL	[1997] QCA 076
SUPREME COURT OF QUEENSLAND

Appeal No. 9625 of 1996

Brisbane

[Woodford Nominees P/L v. Masjakin Medical P/L & Anor]

BETWEEN:

WOODFORD NOMINEES PTY LTD
ACN 010 124 544

(Plaintiff) Appellant

AND:

MASJAKIN MEDICAL PTY LTD
ACN 010 599 261
and
E BRUCE FRASER PTY LTD
ACN 010 535 501

(Defendants) Respondents

Davies JA Williams J Mackenzie J

Judgment delivered 18 April 1997

Separate reasons for judgment of each member of the Court each concurring as to the order made.

APPEAL DISMISSED WITH COSTS

CATCHWORDS:	LANDLORD AND TENANT - whether agreement to lease - offer and acceptance - agreement as to calculation of rent increase.
LANDLORD AND TENANT - claim for damages for "renovation costs" - terms of lease.
Counsel:	Mr RN Alldridge for the appellant Mr D Murphy for the respondents
Solicitors:	McCarthy Durie Ryan Neil for the appellant H Drakos & Co for the respondents

Hearing Date: 8 April 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 9625 of 1996

Brisbane

Before Davies J.A. Williams J. Mackenzie J.

[Woodford Nominees P/L v. Masjakin Medical P/L & Anor.]

BETWEEN:

WOODFORD NOMINEES PTY. LTD.

ACN 010 124 544

(Plaintiff) Appellant

AND:

MASJAKIN MEDICAL PTY. LTD.

ACN 010 599 261 and

E. BRUCE FRASER PTY. LTD.

ACN 010 535 501

(Defendants) Respondents

REASONS FOR JUDGMENT - DAVIES J.A.

Judgment delivered 18 April 1997

I agree with the reasons for judgment prepared by Williams J. and with the orders he proposes.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 9625 of 1996

Brisbane

Before Davies JA

Williams J

Mackenzie J

[Woodford Nominees P/L v. Masjakin Medical P/L & Anor]

BETWEEN:

WOODFORD NOMINEES PTY LTD
ACN 010 124 544

(Plaintiff) Appellant

AND:

MASJAKIN MEDICAL PTY LTD
ACN 010 599 261
and
E BRUCE FRASER PTY LTD
ACN 010 535 501

(Defendants) Respondents

REASONS FOR JUDGMENT - WILLIAMS J

Judgment delivered 18 April 1997

This is an appeal from the decision of a District Court judge dismissing the appellant's action.

In essence the appellant alleged that in about the month of December 1994 there was an

exchange of correspondence between the parties which resulted in there being an agreement for a lease

of certain premises and that the respondents, as lessees, were bound by the terms thereof. For reasons

which he gave the learned trial judge came to the conclusion that the parties did not reach an agreement

to enter into a lease and in consequence he dismissed the action.

The appellant was the owner of business premises at 151 Old Cleveland Road, Capalaba.

There is no dispute that by lease dated 30 July 1990 the respondent leased those premises for a term

commencing on 3 October 1989 and terminating on 2 October 1994. There was a clause therein giving

the respondents the option to renew the lease for a further period of five years provided they complied

with the formal requirements of that clause. There is no dispute that the option was not exercised in

accordance with the relevant clause and that lease formally terminated on 2 October 1994. But

thereafter the respondents remained in possession of the premises paying the rental as provided for by

the lease.

In order to understand what subsequently transpired it is necessary to record that by the terms

of the aforesaid lease the rent for each year was to be increased by no less than 7% over that provided

for in the immediate preceding year; if the Consumer Price Index (All Groups) for the city of Brisbane

was more than 7% for the period in question then the rent was to be increased by that greater amount.

After 2 October 1994 there was some communication between the parties or persons acting

on their behalf and the learned trial judge made credibility findings favouring the witnesses for the

respondents. But it is not necessary to refer to such matters in any detail.

Against that background the following letter dated 8 December 1994 was sent to the principal

of the appellant; it was signed by the principals of each of the respondent companies:

"Re: Lease on premises at 151 Old Cleveland Road, Capalaba.

As you know our lease expired in October, 1994.
As discussed verbally, we would like to take up our option for a further five year lease
of all three shops.
We would prefer rental increases for the first and all subsequent years to be limited to
C.P.I. increase only, if you are agreeable to this. Until your reply we will continue
payments at the present rate of $4,002 per month.
Please notify us as soon as possible so the rent adjustment can be made by periodical
bank authority."
To that the appellant replied by letter dated 20 December 1994 in the following terms:

"Re: Lease on premises at 151 Old Cleveland Road, Capalaba

We refer to your letter dated 8 December 1994 and wish to advise that the rental for
the period October 1994 to September 1995 will be $4,096 (Four Thousand and
Ninety-six Dollars) per month.
Could you please arrange for the adjustment to be made to the periodical bank
authority.

Thanking you for your assistance in this matter."

It was accepted that by December 1994 the respondents had no right to exercise any option

in the earlier lease, and the reference to "option" in the letter of 8 December 1994 must be disregarded.

In the course of argument it was accepted that the letter of 8 December 1994 should be regarded either

as an invitation to treat or as an offer to take a lease of the subject premises for a period of five years

on the rental terms stated therein.

For there to be an enforceable agreement for lease there had to be a communication of an

acceptance of that offer from the appellant to the respondents; there had to be a coincidence of offer

and acceptance. The real question is whether or not the letter of 20 December 1994 constitutes such

an acceptance.

The oral evidence is to the effect that the parties on each side of the record calculated the

monthly rent adjusted by the relevant C.P.I. index figure (presumably using as the base the last rent

under the expired lease) as being $4,076 per month. The evidence from witnesses for the appellant

could not offer any explanation for the adoption in the letter of 20 December 1994 of the figure of

$4,096. Evidence from the respondents' side indicated that it was appreciated that the figure of $4,096

was some $20 above the figure calculated by using the C.P.I. formula.

Following receipt of the letter of 20 December 1994 the respondents paid the monthly rental
at the rate of $4,096, and also paid for arrears of rent at that rate backdated to October 1994. In

about March 1995 the respondents intimated to the appellant that they wished to vacate the premises

and it would appear that they did so on 2 July 1995; rent at the rate of $4,096 per month was paid up

until that date.

The question is whether or not the learned trial judge was correct in holding that the exchange

of correspondence referred to above did not constitute an agreement to enter into a lease.

It must be conceded that the conduct of the respondents in paying rent at the rate of $4,096 per

month after December 1994 is a relevant circumstance. There can, of course, be acceptance of an offer

(or counter-offer) by conduct. But the real question is whether or not there was here such coincidence

of offer and acceptance as gave rise to an agreement for lease.

The offer of 8 December 1994 was clearly predicated upon rent increases throughout the whole

of the term of a five year lease being limited to C.P.I. increases. The appellant never specifically agreed

to that; the response of 20 December 1994 does not expressly accept that condition. It is, however,

true that the figure of $4,096 stated to be the rent for the period from October 1994 to September

1995 is very close to the base rent adjusted by the relevant C.P.I. increase; there is only a $20 per

month difference. But what of the remaining four years if there be a lease for five years? Was the base

for calculating the second year's rent to be $4,076 or $4,096? If the letter of 20 December 1994 was

to be read as providing that the rent for the ensuing twelve months was to be $20 per month above the

C.P.I. calculation was the rental for the next twelve months to be $20 per month above the C.P.I.

calculation or some other sum per month above the C.P.I. calculation? If so, how was that extra

amount to be calculated? If there was a dispute between the parties as to the rent payable in the third

year of the lease on what basis was the court to resolve that dispute? Was there certainty as to the rent
payable in these later years?

Once those questions are posed it becomes obvious, in my view, that there was no coincidence

of offer and acceptance. There was no agreement between the parties as to the basis on which rent was

to be calculated throughout the term. It follows that the learned trial judge was right in concluding that

there was no binding agreement for a lease reached.

The appellant also claimed the sum of $14,919.38 by way of damages. This was said to be for

"renovation costs" incurred by the appellant, as landlord, before the premises could be re-let. In

support of its case the appellant relied on cll.7.04, 16.01 and 16.03 of the original lease. Those clauses

permitted the appellant, as lessor, to recover certain expenses incurred in remedying defects in the

building caused by the lessee's occupation.

However, the evidence indicates that prior to the subject lease the lessor had made some

structural alterations to the premises permitting the whole of the premises to be used as one area. When

the respondents vacated the appellant wished to restore the premises to its original configuration of three

separate areas for ease of further leasing. It was that work which cost most of the $14,919.38 claimed.

Carrying out that work was not covered by any of the terms of the lease and was not recoverable. It

may well be that some small proportion of the total amount claimed was expended in rectifying damage

to the premises for which the respondents were responsible, but it was not possible for the learned trial

judge, nor is it possible for this court, to separate out those amounts. It follows that the learned trial

judge was correct in concluding that the appellant's claim for $14,919.38 had not been made out.

It follows that the appeal should be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 9625 of 1996

Brisbane

Before Davies JA

Williams J

Mackenzie J

[Woodford Nominees P/L v. Masjakin Medical P/L & Anor]

BETWEEN:

WOODFORD NOMINEES PTY LTD
ACN 010 124 544

(Plaintiff) Appellant

AND:

MASJAKIN MEDICAL PTY LTD
ACN 010 599 261
and
E BRUCE FRASER PTY LTD
ACN 010 535 501

(Defendants) Respondents

REASONS FOR JUDGMENT - MACKENZIE J.

Judgment delivered 18 April 1997

I agree with the reasons of Williams J and the orders proposed by him.