Bohisa v Freedom [1999] NSWSC 817

New South Wales Supreme Court CITATION : Bohisa v Freedom [1999] NSWSC 817 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3276/97 HEARING DATE(S) : 27, 28 and 29 July 1999 JUDGMENT DATE : 29 July 1999

PARTIES : Bohisa Pty. Limited (Plaintiff) Freedom Furniture Pty. Limited (Defendant) JUDGMENT OF : Windeyer J at 1

COUNSEL : Mr. J. Stevenson with him Mr. J. White (Plaintiff) Mr. D. Hammerschlag (Defendant) SOLICITORS : Michell Sillar (Plaintiff) Morgan Lewis Alter (Defendant) CATCHWORDS : CONTRACTS - leases - agreement to enter into lease - agreement alleged by exchange of faxes - whether binding agreement in absence of formal documentation - whether if binding agreement the agreement was abandoned - whether if otherwise binding subject to condition precedent not fulfilled. ACTS CITED : Conveyancing Act 1919 Air Great Lakes Pty. Limited v K S Easter Pty. Limited [1985] 2 NSWLR 309 Blackburn Developments No. 19 Pty. Limited v Downs Surgical (Australia) Pty. Ltd. [1994] 2 BPR 97-689 CASES CITED : Chan v Cresdon Pty. Limited (1989) 168 CLR 243 Landsmiths Pty. Limited v Hall [1999] NSWSC 735 Summers v The Commonwealth (1918) 25 CLR 144 Walsh v Lonsdale [1882] 21 Ch D 9 DECISION : Amended Statement of Claim dismissed with costs.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

THURSDAY 29 JULY 1999

3276/97 BOHISA PTY. LIMITED v FREEDOM FURNITURE PTY LIMITED

JUDGMENT

Question for decision

1 The question for decision is whether or not the plaintiff, Bohisa Pty. Limited (Bohisa) is entitled to rent of premises 79 Princes Highway Kogarah for a period from 15 June 1996 to 19 July 1997. Bohisa says that there is an agreement between Bohisa and the defendant, Freedom Furniture Pty. Limited (Freedom No 2 or Freedom) to grant and take a lease of that property for a period of five years from 20 July 1992; that it is entitled to specific performance of that agreement by the Freedom No 2 as lessee, that Freedom No 2 vacated the premises on 7 June 1996 and has refused to pay rent after 15 June 1996; and it is entitled to damages accordingly. Facts 2 The following facts are not in issue. Some are admitted on the pleadings. 3 The premises the subject of dispute were leased by Bohisa to Freedom Furniture Pty. Limited (Freedom No. 1) by lease registered number X617546. That company is not the present defendant. That lease was for a period of five years from 20 July 1987. It contained an option for a further term of five years to be exercised by notice in writing given not less than three months nor more than six months prior to the expiration of the first term. Clause 18 of the lease contained the provisions for exercise of the option and for determination of the rent for the period of the ensuing lease. 4 Four individuals guaranteed the performance by the lessee of its obligations under the lease. The covenants in question are set out in Clause 17 of the lease. Clause 17.7 provided that in case of exercise of option: 17.7 If this Lease shall contain an option for a further lease and the Lessee shall exercise such option the Lessor's obligation to grant such a lease shall be subject to the guaranteeing the Lessee's obligations under such lease and indemnifying the Lessor in respect thereof in the terms of the guarantees and indemnities contained in this clause of this Lease. 5 In June 1991 the lease was assigned by Freedom No. 1 to Pademella Pty. Limited. It seems that on assignment or about that time the lessee Freedom No. 1 changed its name to Feldex No. 1 Pty. Limited and the assignee Pademella changed its name to Freedom Furniture Pty. Limited (Freedom No. 2). Changes such as this can only result in confusion for creditors but that is not in issue here. On 16 May 1992 Freedom No. 2 changed its named to Freedom Furniture Limited. Bohisa consented to the assignment by a deed of assignment which bears date 16 June 1992. The evidence is that it was executed before that date and that consent was given some months earlier and certainly before April 1992. Prior to giving consent to the assignment, Mr. Lyons, on behalf of Bohisa sought advice and received confirmation that the original lessee and the original guarantors were not released from their obligations under the lease on assignment. It was an additional condition of assignment that the obligation of the assignee would be guaranteed by its holding company Jamison Equity Limited, and that took place. While the document in question is called deed of assignment of lease, in fact it was not an assignment of the lease but a consent to the assignment together with the guarantee required from Jamison Equity Limited. However, the original guarantors were party to it. One of the recitals in the document refers to a "transfer of lease of the same date". That transfer was never registered. Thus until it was written off as expired, it seems pursuant to request No. 5530574, as having expired by effluxion of time, the lease on the title was the lease to the company renamed Feldex No. 1 Pty. Limited. 6 There were discussions in April 1992 between Mr. Lyons and Messrs. Hammerschlag and Dewdny representing the assignee. These were in connection with the exercise of the option under the lease which because of the dates of Easter would have needed to be exercised by 16 April. It is not necessary to decide for the purposes of this case whether an equitable assignee of the lease can exercise an option under a registered lease, but only to recognise that the discussions took place with the last date for exercise in mind. 7 On 16 April 1992 there was an exchange of faxes between Bohisa and Freedom No. 2. The first was from Bohisa and was returned with additional words written by Mr. Hammerschlag. I set out the complete document: