Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors [2007] NSWSC 329

New South Wales Supreme Court

CITATION : Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors [2007] NSWSC 329

HEARING DATE(S) : 29 & 30/03/07

JUDGMENT DATE : 30 March 2007

JURISDICTION : Equity Division Expedition List

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 30 March 2007

DECISION : See paragraphs 75-77 of judgment.

CATCHWORDS : LANDLORD AND TENANT – Agreement to lease for a term – No acceptance of offer to lease – No intention to be immediately bound by terms of offer to lease – Held that no agreement to lease for a term.

Centre Based and Mobile Child Care Services Regulation (No. 2) (1996) LEGISLATION CITED : Conveyancing Act 1919 (NSW) Trade Practices Act 1974 (Cth)

Kinda Kapers Charlestown Pty Ltd PARTIES : v Newcastle Neptunes Underwater Club Inc & Ors

FILE NUMBER(S) : SC 3659/06

COUNSEL : Plaintiff: M Lawson Defendants: P A Beale & M P Tanevski

SOLICITORS : Plaintiff: Thomas Mitchell Solicitors Defendants: Berryman Partners Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

WHITE J

Friday, 30 March 2007

3659/06 Kinda Kapers Charlestown Pty Ltd v Newcastle Neptunes Underwater Club Inc & Ors JUDGMENT 1 HIS HONOUR: These are proceedings for specific performance of an alleged agreement for lease of a childcare centre at 23 James Street, Charlestown. 2 The plaintiff is the lessee of the premises and the defendant is the owner. The plaintiff had occupied the premises under a five-year lease which expired on 21 December 2003. It did not exercise an option for renewal contained in that lease. 3 The plaintiff claims that on or about 29 July 2004, it entered into an agreement for a further lease of the premises for a period of five years commencing on 1 August 2004 with a five-year option of renewal. 4 On 26 July 2004, the defendant's managing agent, Mr Doug Farr, sent a letter headed "lease proposal - premises: 23 James Street, Charlestown" to Ms Michelle Peden of the plaintiff. 5 The letter set out all the essential terms for an agreement for lease. It also included a schedule of works the lessor was to undertake to the premises. For some years, there had been disputes between the parties about their respective obligations to carry out repairs or improvements to the property. 6 The property was used by the plaintiff as a childcare centre. The Department of Community Services had stipulated that certain works be carried out if the plaintiff was to retain its licence to operate as a childcare centre. The plaintiff was asked to execute the letter to confirm its intention to lease the premises on the terms and conditions set out in the letter. 7 On 29 July 2004, Ms Peden, who is the director and sole shareholder of the plaintiff, signed the letter. On 29 or 30 July 2004, she faxed it back to Mr Farr. When signing it, she added the following: "Please note: This is agreement is conditional on Tony Wren E-mail dated July 28th 2004 9.19pm" 8 Mr Wren was acting as the plaintiff's agent in negotiating the terms of the proposed lease. It is common ground that the email referred to was an email sent by Mr Wren at 9.20pm on 28 July 2004 to Mr Farr. 9 The issues are, first, whether the letter from Mr Farr of 26 July 2004 was an offer capable of acceptance so as to give rise to binding agreement for lease. Secondly, if it was, whether the plaintiff accepted the offer. 10 These issues encompass the question as to whether the parties intended to be immediately bound by the terms agreed to, or whether they only intended to be bound upon the execution of a lease. 11 The defendant raised no issue as to the authority of Mr Farr to enter into the contract on its behalf. 12 As I have said, the question of what repairs or maintenance to the premises should be carried out, and who was responsible for doing so, had been a vexed issue for a number of years. 13 On 24 August 2000, Ms Peden forwarded three quotes to the defendant for the supply and laying of vinyl floors. All the floors were subsequently re-laid with vinyl times supplied by Noel Davies Independent Carpet Centres. The defendant paid the costs of this. 14 In August 2001, Ms Peden complained that the toilets to the rear of the premises had been vandalised and the building needed re-painting. She claimed that the defendant was responsible for the carrying out such works. 15 In March 2002, she again raised the issue of the repair of the back toilets. She also complained that a sign advertising the defendant's club was rusting and needed to be assessed. She complained that the lino tiles laid twelve to fifteen months previously were cracking and needed urgent repair. She raised other complaints about the state of repair of the building. 16 The defendant considered that the issue concerning the back toilets was not their state of repair, but that the plaintiff needed to have them made suitable for small children. It considered this was not its responsibility. The defendant took issue with a number of the other matters which Ms Peden had raised. 17 In April 2003, the plaintiff deducted from its rental payments, the costs of emergency plumbing work and associated repairs which Miss Peden claimed were to the defendant's account. The defendant disputed this. It said that the lessee was responsible for the repairs and that, in any event, it was not entitled to set off the costs against rent. 18 After expiry of the lease on 31 December 2003, the plaintiff held over as tenant from month to month. Negotiations ensued for a new lease. 19 On 14 March 2004, Ms Peden itemised a list of 14 items requiring repair. These included the replacement of the floor coverings with commercial grade vinyl. 20 On 29 March 2004, Ms Peden met with Mr Farr who was acting as the defendant's agent. She discussed the various items of work which she said needed to be attended to by the landlord. 21 These included matters which had been raised by the Department of Community Services being drainage, the demolition and replacement of existing toilets, the raising of power points, the vinyl flooring, the removal of rubbish and fumigation for vermin, petitioning, and another half a dozen or so items. 22 Ms Peden gave Mr Farr a list of the Department of Community Services' requirements. These were in the form of a schedule headed "Children Services Risk Action Plan". The matters on this list included the following: "Space requirements: Office space that is inaccessible to children, with area for interviewing of parents to be provided. Schedule 1 14 (1) (2) (3) (4): Floor covering to be replaced as in poor condition Kitchen to be upgraded to meet standard ."