Fiver Trading Pty Ltd v Spajack Pty Ltd [2005] NSWSC 532

New South Wales Supreme Court

CITATION : Fiver Trading Pty Ltd v Spajack Pty Ltd [2005] NSWSC 532

HEARING DATE(S) : 15/03/05, 16/03/05, 17/03/05 Written submissions: 04/04/05, 22/04/05, 12/05/05

JUDGMENT DATE : 3 June 2005

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Proceedings dismissed with costs

CATCHWORDS : LANDLORD AND TENANT - creation of relationship of landlord and tenant - alleged oral lease - whether concluded oral contract for lease - no question of principle - turns on own facts

Briginshaw v Briginshaw (1938) 60 CLR 336 Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167 CASES CITED : George v Cluning (1979) 28 ALR 57 Vella v Wah Lai Investment (Australia) [2004] NSWSC 748 Walsh v Lonsdale (1882) 21 ChD 9

Fiver Trading Pty Limited - Plaintiff Spajack Pty Limited - First Defendant Stephen Dempsey - Second Defendant PARTIES : Noeleen Astley - Third Defendant

FILE NUMBER(S) : SC 2311/03

Mr J.F. Hassett, Solicitor - Plaintiff COUNSEL : Mr R.D. Newell - Defendants

Hassett Dixon - Plaintiff SOLICITORS : l.C. Muriniti & Associates - Defendants

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

FRIDAY, 3 JUNE 2005

2311/03 – FIVER TRADING PTY LTD v SPAJACK PTY LTD & 2 ORS JUDGMENT 1 By an amended statement of claim filed on 16 February 2005, the plaintiff (Fiver Trading Pty Ltd) claims damages of $24,688.94. In doing so, it alleges an oral lease between the plaintiff and the first defendant (Spajak Pty Ltd) created by words spoken in a conversation between Mr Sussmann on behalf of the plaintiff and Mr Dempsey on behalf of Spajack. The authority of the individuals to speak for and bind the respective companies is not disputed. The oral lease is said to have been granted and taken in or about March 2000 and affected ground floor showroom premises at 1228 Pittwater Road, Narrabeen. It is pleaded in paragraph 9 of the amended statement of claim: "By an agreement made in or about March 2000 the Plaintiff agreed to lease the premises to the First Defendant on a monthly basis upon the same terms and conditions and subject to the same guarantees as the written agreement made with Paltrin Pty Limited referred to in paragraphs 5, 6, 7 and 8 above. Particulars The agreement was oral and was made between Philip Sussmann of the Plaintiff and Stephen Dempsey of the First Defendant." 2 The "written agreement" referred to in paragraphs 5, 6, 7 and 8 was a registered lease entered into in 1996 between the plaintiff as lessor and a company called Paltrin Pty Ltd as lessee. Mr Dempsey and his then wife were the shareholders in and directors of Paltrin. They guaranteed performance of the lease by Paltrin as lessee. The term of that lease began on 23 October 1996 and ended on 22 October 1999. There was an option to renew but there is nothing in the evidence to suggest that the option was exercised and the necessary inference is that Paltrin was, in March 2000, holding over on a monthly basis. A business of selling spa baths was conducted in the premises. 3 The plaintiff pleads several specific terms of the alleged oral lease, including that the first defendant would pay rent to the plaintiff at the rate of $3,910.00 per month (plus GST) from 1 July 2000. 4 The plaintiff also pleads a second oral lease between the plaintiff and the first defendant, again formed by words spoken in a conversation of 18 September 2000 between Mr Sussmann and Mr Dempsey. This alleged lease concerned a garage adjoining the showroom. That lease was said to reserve a rent of $433.33 (plus GST) per month. There is nothing in the affidavits read by the plaintiff that in any way supports or seeks to make good the allegation that any relevant conversation about a garage occurred on 18 September 2000 or at all, much less to show what its content was. 5 The plaintiff alleges breaches of the leases as follows: (a) failure to pay rent from 1 June 2002 to 16 June 2002 (the later date being, on the plaintiff's case, the date on which the first defendant vacated); (b) failure to repair or replace, upon vacating the premises, certain fixtures and fittings that had been damaged or removed. 6 A total of $2,513.12 is claimed for rent, GST and outgoings. Damages for breaches of the supposed covenant to repair were particularised as Cost to remove damaged neon sign $ 1,102 . 20 Cost to replace neon sign 2,600 . 00 Cost to replace glass breakage 704 . 00 Cost to repair and replace garden 10,071 . 60 Cost to replace carpets 3,885 . 75 Cost to replace aluminium window frames 1,958 . 00 Cost to repair walls 715 . 00 Cost to repair tiles at entry 320 . 00 Cost to repair electrical wiring 200 . 00 Cost to remove and replace locks and keys 380 . 00 7 The defendants, by their defence, do not admit the allegations of fact concerning formation of the oral agreement and say that, if such an agreement were formed, it would not comply with s.23C(1)(a) or s.54A of the Conveyancing Act 1919 or the Retail Leases Act 1994. The defendants also say that there was no consideration for the alleged guarantees of the defendants' performance. The allegations regarding the alleged lease of the garage are not admitted. The defendants deny any indebtedness to the plaintiff. 8 The total claim is, as I have said, $24,688.94. As one might expect, proceedings were initially commenced in the Local Court. But when it became clear that reliance would be placed on an oral lease, the plaintiff needed to invoke equitable principle and therefore commenced new proceedings in this court. I heard the proceedings over two and a half days on 15, 16 and 17 March 2005. Written submissions were furnished by counsel on 4 April 2005, 22 April 2005 and 12 May 2005. The transcript runs to more than 200 pages. The significant application of time and resources by the parties was over a claim for $25,688.94. 9 The equitable principle on which the plaintiff relies is most often associated with Walsh v Lonsdale (1882) 21 ChD 9. That case was recently described and discussed by Campbell J in Vella v Wah Lai Investment (Australia) [2004] NSWSC 748: "153 … In that case, the plaintiff and defendant had agreed that the defendant would lease a mill to the plaintiff, on terms which required a certain part of the rent to be paid in advance. The plaintiff went into possession, and paid rent in arrears for some years. The defendant made a demand for the rental which it claimed was payable in advance, then two days later, when that amount had not been paid, put in a distress. The plaintiff began an action claiming damages for improper distress, an injunction to restrain the defendant from selling under the distress and from continuing in possession, and specific performance of the agreement for lease. Fry J granted an interlocutory injunction requiring the defendant to withdraw from possession under the distress, on terms that the plaintiff pay into court the amount the defendant claimed. The plaintiff appealed against the imposition of that term on the grant of the interlocutory injunction.