Australvic Finance Pty Ltd v Elcheikh & Ors [2010] VCAT 956 | Case summary

Repudiation - termination of lease by repudiation and acceptance.

Australvic Finance Pty Ltd v Elcheikh & Ors [2010] VCAT 956 | Case summary | Zoe

The respondents, Henry Elcheikh and his wife Claudette Elcheikh, are the owners of premises at 434 Bell Street, Preston ("the premises").
Michael Kyriackou is a director of the applicant, Australvic Finance Pty Ltd ("A Finance") and of Australvic Home Loans Pty Ltd ("A Home Loans"). A Finance commenced this proceeding on 16 June 2009 to enforce rights which it claimed to have under a lease of the premises or under an agreement for a lease of the premises. It sought orders for specific performance of an agreement for a lease by execution of an existing draft lease, an injunction restraining the respondents from excluding it from the premises and damages. On 18 June 2009 it obtained an interlocutory injunction so restraining the respondents until the hearing and determination of the proceeding or until further order.
Henry Elcheikh and his brother Fred Elcheikh are partners in a café business called Goldies at a shop in the Epping Plaza Shopping Centre. Fred Elcheikh was at the café when Henry Elcheikh and Mr Kyriackou had a meeting there. I will need to refer to the evidence of Fred Elcheikh concerning that meeting. Otherwise, he played no part in the events which have led to this proceeding. Henry Elcheikh played a major part. Whenever in these reasons for decision I refer to "Mr Elcheikh" I mean Henry Elcheikh.
Mr and Mrs Elcheikh filed a counterclaim against A Finance, A Home Loans and Mr Kyriackou, alleging that one or other of those three is in possession of the premises. In the counterclaim they sought an order that whoever is in possession of the premises must deliver up possession, and sought damages or compensation for use and occupation of the premises.
Although Mr and Mrs Elcheikh acknowledge that in late 2008 they permitted Mr Kyriackou or A Home Loans to take possession of the premises, the character that they have ascribed to the legal relationship under which possession was given has varied throughout the course of the proceeding to date. In the first version of the counterclaim, filed on 25 November 2009, the relationship was described as an "interim tenancy". In a second version filed on 4 January 2010 there appeared to be an assertion that there was an agreement for a lease between themselves and A Home Loans but the agreement was that the parties were not finally to be bound until they executed a formal lease. In his final address, Mr Herbert of Counsel, for Mr and Mrs Elcheikh, submitted that there had been merely a tenancy at will. Consistently, however, they have maintained that they had effectively terminated whatever relationship there was and that, if there had been a lease or an agreement for a lease, it had been terminated as a result of a "fundamental breach" (as one version of the counterclaim put it) or repudiation which they had accepted.
The applicant in the proceeding has been A Finance, not A Home Loans. The reason is that A Finance maintains that Mr and Mrs Elcheikh agreed to the lease being "assigned" from A Home Loans to A Finance. That is how Mr Matters of Counsel for A Finance (and for A Home Loans and for Mr Kyriackou) put the matter in his final address.

Mr Elcheikh's version of how the receipt came to be written and given was as follows:
- (a) Before 1 November 2008 he and Mr Kyriackou had been negotiating about a possible lease of the premises for a business involving cars. Mr Kyriackou had mentioned that he wanted to rent out cars, conduct a car wash and possibly apply for a motor car traders licence.
- (b) They had agreed upon:
  - (i) rent of $52,000 per year plus outgoings;
  - (ii) a term of one year with three successive options for further terms of five years each;
  - (iii) annual increases in rent in proportion to increases in the Consumer Price Index;
  - (iv) a two-month rent free period from the commencement of the lease;
  - (v) the permitted uses for the premises being the uses which Mr Kyriackou had mentioned;
  - (vi) payment at the outset of a security deposit equivalent to one month's rent, $4,333.33, plus one month's rent in advance.
- (c) Mr Kyriackou had telephoned him to arrange a meeting so that he could pay the security deposit and collect the keys, and he had said that he wanted a receipt for the security deposit as evidence of a binding agreement for the lease.
- (d) In anticipation of the meeting, Mr Elcheikh purchased a receipt book.
- (e) The meeting occurred at Goldies café on 1 November 2008. Mr Kyriackou handed him a cheque for $4,000.00. He did not notice the date of the cheque, but Mr Kyriackou asked him not to bank the cheque until 1 December 2008. The cheque was drawn on the account of A Home Loans.
- (f) Mr Elcheikh wrote out the receipt and handed it to Mr Kyriackou. Although Mr Kyriackou had not previously mentioned the name of any company as being the proposed tenant, Mr Elcheikh addressed the receipt to A Home Loans because that was the name printed on the cheque.
- (g) He also handed to Mr Kyriackou a set of keys to the premises. He himself retained another set of the same keys.
- (h) He banked the cheque shortly after 1 December 2008. It was dishonoured.
The version which witnesses for A Finance gave was different. It was as follows:
- (a) The negotiations for the lease had not begun until mid November 2008. The only proposed use of the premises which Mr Kyriackou had mentioned during the negotiations was car rental.
- (b) The matters on which Mr Kyriackou and Mr Elcheikh had reached agreement were substantially those mentioned in Mr Elcheikh's version (as set out in item (b) in paragraph 16 above), with these exceptions. First, the matter of payment of outgoings was not specifically mentioned during the negotiations. Secondly, the security deposit agreed upon was $4,000.00, not $4,333.33. Thirdly, and most importantly, they had agreed that the two-month rent-free period would not begin to run until Mr and Mrs Elcheikh had completed certain works which Mr Elcheikh had agreed to do so that the premises were fit for occupation.
- (c) Mr Kyriackou had told Mr Elcheikh by telephone, before their meeting at which the cheque for $4,000.00 was handed over, that he wanted his company A Home Loans to be the tenant.
- (d) The meeting at Goldies café on which the cheque was handed over did not take place on 1 November 2008. It occurred late in the month of November. On 1 November Mr Kyriackou had been travelling by car to Mount Hope, near Cobar, New South Wales, for a holiday with members of his family.
- (e) At the meeting at Goldies café Mr Kyriackou handed over the cheque of A Home Loans for $4,000.00. The cheque was post-dated 1 December 2008. The meeting took place a few days before that date. Mr Kyriackou asked Mr Elcheikh not to bank the cheque until 3 December because he had to arrange for funds to be deposited into the account to meet the cheque.
- (f) Mr Elcheikh did not give Mr Kyriackou the receipt. He did not write out the receipt in Mr Kyriackou's presence.
- (g) Mr Elcheikh did not give Mr Kyriackou any keys during that meeting or Goldies café.
- (h) Funds necessary to meet the cheque had not been deposited into A Home Loans' bank account by the time that the Elcheikhs presented the cheque for payment. So it was dishonoured.
- (i) On 11 December 2008 Mr Kyriackou's son, Anthony Katranis, met Mr Elcheikh at Goldies café. Mr Katranis paid him $4,000.00 in cash, to replace the cheque. Mr Elcheikh then wrote out the receipt and handed it to Mr Katranis.
- (j) Immediately thereafter, Mr Katranis accompanied Mr Elcheikh to a key cutting shop in the Epping Plaza Shopping Centre. Mr Elcheikh had a set of keys to the premises cut and handed the set to Mr Katranis.
Mr Elcheikh denied that there was any meeting with Mr Katranis at which Mr Katranis paid him $4,000.00 or any other sum or at which or following which he handed to Mr Katranis any keys to the premises.
So there was dispute about whether the receipt had been given in return for delivery of the cheque or had been given in return for payment of $4,000.00 in cash, and dispute about whether the cash payment had been made at all.
The three questions formulated for my determination did not include a question whether $4,000.00 in cash had been paid to Mr and Mrs Elcheikh. While Counsel for the parties did not agree that I should treat that question as an additional question and answer it, Counsel did not submit that I should not attempt to answer that question at all. I took the view that my findings in the case would be incomplete and not fully explicable unless I did make a finding about that alleged payment. So, in my order dated 20 April 2010, I recorded a finding that on 11 December 2008 A Home Loans had paid to Mr Elcheikh $4,000.00. Below I shall give reasons for that finding.
I now summarize my findings about how the receipt came to be given and how keys came to be delivered. Below I shall give reasons for those findings. I concluded that neither of the competing versions was completely correct, but each was partly correct. My findings are:
- The negotiations about the possible lease which took place before any meeting at Goldies café took place after 1 November 2008 and later in the month of November, before 25 November.
- Except that the parties did not agree, by the end of those negotiations, that the tenant should pay outgoings, Mr Elcheikh's version of what he and Mr Kyriackou had by then agreed upon was correct. They had agreed also on permitted uses being car rental and any other related business permitted by law.
- The meeting at Goldies café, at which Mr Kyriackou handed over a cheque, did not occur on 1 November 2008. The cheque was post-dated 1 December 2008. The meeting occurred shortly before 25 November 2008.
- At the meeting, Mr Elcheikh delivered to Mr Kyriackou a set of keys to the premises and retained another set of the same keys. He did not deliver the receipt at the meeting.
- The parties agreed that the lease would commence on 1 December 2008 but A Home Loans could enter into possession of the premises at once if it wished.
- Mr Elcheikh wrote out the receipt after his meeting with Mr Kyriackou, in anticipation of the cheque being banked and cleared. The date "1.11.08" he wrote on the receipt was a transcription error for 1 December 2008, which was the date on the cheque.
- On 11 December 2008, at Goldies café, Mr Katranis paid over to

The negotiations which concluded upon Mr Kyriackou's handing over of the cheque for $4,000.00 included meetings between Mr Kyriackou and Mr Elcheikh at the premises, and in particular on one occasion during which they met at the premises then went together to a nearby McDonalds outlet and continued their discussions there. Mr Elcheikh's version of events had those negotiations taking place in October 2008. He placed them in that month because, and in my judgement solely because, the date of 1 November 2008, which he wrote on the receipt, led him to say that the cheque was handed over on that day and so the negotiations must have commenced before that day.
I am quite satisfied that the handing over of the cheque did not occur on 1 November 2008. That day was a Saturday. Melbourne Cup Day occurred on the following Tuesday. Mr Kyriackou gave evidence that, as was his practice each year on the Saturday before Melbourne Cup Day, he travelled by car from Melbourne to Mount Hope, near Cobar, for recreation with several members of his family. The practice was to spend the Sunday and Monday there and return to Melbourne on the Tuesday. That is what he did in 2008. Both his son, Anthony Katranis, and his brother-in-law, John Dimitriou, gave evidence that they were at Cobar that weekend in 2008 and that Mr Kyriackou was there with them. The evidence of those three persons in that regard was consistent and credible. I accept it.
Fred Elcheikh was at Goldies café on the occasion when Mr Kyriackou handed over the cheque. Like his brother, Fred Elcheikh specified 1 November 2008 as the date of that occasion. He did not, however, give evidence of any fact or circumstance which led him to specify that date. Although Fred Elcheikh gave evidence that he saw the cheque being handed over and saw his brother hand keys to Mr Kyriackou on that occasion, he did not give evidence that he saw his brother writing a receipt or handing a receipt to Mr Kyriackou. Claudette Elcheikh was not present at any meeting between her husband and Mr Kyriackou. She too specified 1 November 2008 as the date of a meeting which her husband had told her was going to take place so that he could collect a cheque for a security deposit. She did not, however, give any convincing reason for identifying that date. Peter Theodore, Mr Elcheikh's brother-in-law, also gave evidence that he was at the café on that occasion. He did not specify a date for it.
In an affidavit which he swore on 16 June 2009 in support of A Finance's application for an interlocutory injunction, Mr Kyriackou swore that "on or about 1 November 2008" Mr and Mrs Elcheikh had agreed to grant a lease to A Finance, and went on to exhibit the receipt. What he swore in that affidavit was inconsistent with his other evidence at the hearing and, I think, was wrong. The error is explicable by the influence which the date written on the receipt had upon the hasty preparation of an affidavit for the purpose of making an urgent application. In the same way, I think, Mr Elcheikh, Mrs Elcheikh and Fred Elcheikh were influenced by the date written on the receipt to identify a date which, in the light of other evidence I have mentioned, was an impossible date.

While identification of the exact time at which negotiations commenced or occurred does not really matter very much, I think it likely that they did not commence until mid November 2008 as Mr Kyriackou's version had them commencing. On 24 November 2008 Mr Elcheikh gave instructions to his solicitor, Kristy Burrows of Beaumont Lawyers, to prepare a lease to A Home Loans. So negotiations must have concluded by that date, and I find that on or shortly before that date the meeting at Goldies café, at which the cheque for $4,000.00 was handed over, occurred. It seems unlikely that the negotiations about which I was given evidence took more than a month. It is more likely that they took only a week or two. Once the date written on the receipt is explained as a mistake, as I think it must be, there is no other reason to prefer Mr Elcheikh's version that the negotiations commenced in October 2008 and concluded on 1 November 2008. I prefer Mr Kyriackou's version in this respect and find that the negotiations took place from mid November 2008 to 24 November 2008.
The negotiations included a meeting at the premises during which, according to Mr Elcheikh, he took Mr Kyriackou on a thorough tour of the premises, which were vacant. Some years earlier they had been used as a car sales yard. They had been left vacant because Mr Elcheikh had been considering turning them into a residential development. The building on the premises was in need of repair and there was long grass and rubbish which needed to be cleared. Mr Elcheikh's evidence was that he told Mr Kyriackou that the premises were being offered for lease in their existing condition and that Mr Kyriackou said that he would attend to fixing whatever had to be fixed. Mr Kyriackou's evidence was that Mr Elcheikh undertook to remove the grass and rubbish, to replace the front fascia of the building and to repair the offices in the building. Mr Kyriackou made no later complaint that the fascia replacement and the painting had not been done. His complaint has been that other works, which I shall mention below, had not been done. At all events, I have concluded that until the end of November 2008 the question of whether Mr and Mrs Elcheikh were to do any and which work at the premises did not assume any particular importance.
Either on the occasion of that tour of the premises, or on some other occasion on which Mr Kyriackou and Mr Elcheikh met at the premises, they went on to the McDonalds outlet where they negotiated at greater length about the possible lease.
By the conclusion of the meeting at Goldies Café at which Mr Kyriackou handed over the cheque for $4,000.00, the parties had agreed upon all the matters which appear in the receipt, that is to say: a lease to A Home Loans for a term of one year, with three successive options to renew for terms of five years each, at a rental of $52,000.00 per year which would increase each year in proportion to the increase in the Consumer Price Index published by the Commonwealth Statistician, with car rental being a permitted use. They had also agreed upon a rent-free period of two months.
Mr Elcheikh gave evidence, which I accept, that before the meeting at Goldies café at which the cheque was handed over he had purchased a receipt book because Mr Kyriackou, when he telephoned to appoint the meeting, said that he wanted a receipt for a cheque so that there would be a binding agreement between them.
I have found that the meeting occurred on or shortly before 24 November 2008 and have explained why. All the evidence is that Mr Kyriackou handed Mr Elcheikh, at that meeting, a cheque for $4,000.00. The cheque itself was not tendered in evidence. The cheque book of A Home Loans was tendered. It contained a butt for the cheque. The butt was dated 1 December 2008. Mr Kyriackou swore that he had written 1 December 2008 as the date on the cheque also, because he needed time to put funds into the bank account to meet the cheque, as he told Mr Elcheikh, asking him not to bank the cheque until 3 December. I accept that evidence. I find that the cheque was drawn on the account of A Home Loans, with that company's name printed on the cheque, and that the cheque was post-dated 1 December 2008.
The cheque was for $4,000.00. There was dispute about whether the amount agreed upon as a security deposit for the lease was $4,000.00 or $4,333.33. I think it is more probable that the agreed amount was $4333.33, and find accordingly, for three reasons. First, $4333.33 was the equivalent of one month's rent at the agreed rental of $52,000.00 per annum, which is what one would ordinarily expect a security deposit payable in respect of commercial premises to be equivalent to, and there was no apparent reason why Mr Elcheikh would have agreed to any smaller amount. Secondly, the wording of the receipt - "deposit of bond", not just "bond" - implied that the sum was to be a partial payment. Thirdly, when Mr Elcheikh's solicitors eventually drew a lease and Mr Elcheikh delivered the draft lease to Mr Kyriackou, he did not ever protest that the provision in it for payment of a security deposit of $4333.33 was wrong or was not in accordance with what the parties had agreed.
The receipt did not identify a commencement date. I do not think that there was any dispute that the commencement date was to be 1 December 2008. That was the date on which Mr Elcheikh instructed his solicitors that the lease was to commence and the solicitors prepared the draft lease accordingly. Mr Kyriackou did not ever claim that the commencement date should have been, or was agreed to have been, something else. Nor was there any dispute that by the conclusion of the negotiations the parties had agreed upon a rent-free period of two months, so that rent would not become payable until 1 February 2009, even though the receipt did not mention that.
Mr Elcheikh alone gave evidence that he delivered the receipt to Mr Kyriackou during this meeting, after having written it out in his presence. Neither Fred Elcheikh nor Peter Theodore said so. Mr Kyriackou denied having been given the receipt at the meeting. Anthony Katranis gave evidence that Mr Elcheikh handed the receipt to him on 11 December 2008 after Mr Katranis had paid $4,000.00 in cash. For reasons I shall give below, I regarded Mr Katranis as a credible witness and, with one exception, I will be accepting his account of what happened on 11 December 2008. Acceptance of his account means that Mr Elcheikh cannot have given the receipt to Mr Kyriackou. Moreover, it is improbable that a person who has been handed a cheque and told not to bank it for a few days would immediately give a receipt for the amount of the cheque without waiting to see whether the cheque was met on presentation. For all those reasons, I find that Mr Elcheikh did not deliver the receipt to Mr Kyriackou on the same day that Mr Kyriackou handed over the cheque.
However, I find that Mr Elcheikh did give Mr Kyriackou a set of keys to the premises at the meeting after Mr Kyriackou had handed over the cheque. Mr Kyriackou denied that had happened but Fred Elcheikh, like his brother, gave evidence that it had. Mr Elcheikh gave a credible explanation for having delivered the set of keys. He said that Mr Kyriackou had promised to cut the grass at the premises, and not require Mr Elcheikh to do that, if he (Mr Elcheikh) would allow him (Mr Kyriackou) into the premises straight away.
Although I cannot make any finding about precisely when Mr Elcheikh wrote out the receipt, I think it likely that he wrote it out shortly after the meeting at which the cheque had been handed over and before he banked the cheque. There are features of the receipt which suggest the likelihood that Mr Elcheikh had the cheque in front of him when he wrote the receipt. The name of A Home Loans was reproduced more or less correctly on the receipt. Once one concludes, as I have done, that the date "1.11.08" written on the receipt was wrong, the most plausible explanation for that date having been written is that Mr Elcheikh was attempting to copy the date from the cheque (1 December 2008) but made a transcription error. I find that that is what must have happened.

During the first week of December 2008 the cheque for $4,000.00 was presented and dishonoured. Mr Kyriackou gave evidence that he became aware of the dishonour on 9 December 2008 and proceeded to place funds in his son's bank account so that the cheque could be replaced by a cash payment of $4,000.000.
On 11 December 2008 Mr Katranis withdrew $4,500.00 from his bank account. His bank statement, put into evidence, established that fact. Mr Katranis gave evidence as follows. At his father's request he went to Goldies café on 11 December 2008 with $4,000.00, in cash, of the $4,500.00 which he had withdrawn earlier. He met Mr Elcheikh. He paid him the $4,000.00 cash. Mr Elcheikh wrote out the receipt and handed it to him. Mr Katranis wanted to be able to bring motor cars to and onto the premises that day, and so needed keys. He and Mr Elcheikh went to a key cutting shop in the Epping Plaza Shopping Centre where Mr Elcheikh had a set of keys cut. Mr Elcheikh handed him the freshly cut set of keys. Mr Katranis then went to the premises, unlocked them and enabled a tow truck driver to unload 12 cars onto the premises. A tow truck driver's receipt dated 11 December 2008 was put in evidence.
Mr Elcheikh denied that there had been any such meeting, denied that Mr Katranis had made any payment to him, denied that he had given the receipt to Mr Katranis and denied that he had given keys to Mr Katranis.
Mr Katranis' evidence, particularly the detail about the visit to the key cutting shop, rang true to me. One is always sceptical of evidence about a cash payment when there is no documentary evidence to support it. But in this case, there was a receipt in existence, although there was a dispute about which $4000.00 the receipt was for, and there was Mr Katranis' bank statement. Something else reinforced my view that Mr Katranis was a truthful witness. There was evidence that the fabric of the building had been damaged in 2009 by something having collided with it. In cross examination Mr Katranis admitted that he had been driving a forklift truck which had collided with the building and damaged it. There had been no other evidence of how the damage had occurred. An untruthful witness would not have made the admission that Mr Katranis made.
With one exception I accept Mr Katranis' evidence about the events of 11 December 2008. The exception is that I think it unlikely that Mr Elcheikh wrote out the receipt in his presence. For reasons already given I think it likely that the receipt had been written out earlier. I find that Mr Elcheikh handed the receipt to Mr Katranis in return for a payment of $4,000.00 cash made by Mr Katranis to Mr Elcheikh on 11 December 2008. I find that on that day Mr Elcheikh also delivered a set of keys to the premises to Mr Katranis.
As I have also found that Mr Elcheikh had handed a set of the same keys to Mr Kyriackou earlier, but had retained a set himself, it follows that I have concluded that Mr Elcheikh delivered a set of keys to an agent of A Home Loans on two separate occasions. Why that happened twice, not once, remains a mystery.
In accepting Mr Katranis' evidence of what happened on 11 December 2008 I am necessarily rejecting Mr Elcheikh's denials in that regard. That does not mean that I think that Mr Elcheikh was being untruthful. On the whole I regarded him as a truthful witness, although his evidence contains some demonstrable errors suggesting that his memory was not completely reliable. His evidence that he handed the receipt to Mr Kyriackou on 1 November 2008 was demonstrably wrong. His evidence (to which I shall refer shortly) that he executed a formal lease was also, I think, demonstrably wrong. It is hard to understand how he could have no recollection of events involving Mr Katranis on 11 December 2008. One possible explanation comes from his evidence that during December 2008 Goldies had to close its doors for a few days because a wall of a nearby shop had collapsed. It is possible that Mr Elcheikh's preoccupation with that business worry at the time caused him to forget something which ought to have been memorable, namely, a cash payment to him of $4,000.00.
In an affidavit sworn on 18 June 2009, which was a second affidavit in support of the application for an interlocutory injunction, Mr Kyriackou gave a third version of how the receipt was delivered. He said that

During December 2008 Beaumont Lawyers prepared a draft lease, using a Law Institute of Victoria standard form Lease of Real Estate (October 2007 Revision). It named A Home Loans as the proposed tenant, and specified a term of one year commencing on 1 December 2008. The parties had not expressly agreed that 1 December 2008 was to be the commencement date, but, because the date of the A Home Loans cheque had been 1 December 2008, the specification of that date in the draft lease as the commencement date reflected the parties' probable intention. The draft lease identified the three options to renew for five years each and specified a security deposit of "$4333.33 equivalent to one month's rent".
In some respects the draft lease contained other things to which the parties had not expressly agreed.
- (a) The rent was specified as "$4333.33 plus GST (if any) per calendar month". According to the evidence, the parties had never discussed the potential incidence of Goods and Services Tax (GST) or whether the tenant would be required to pay GST.
- (b) The latest date for exercising the first option for renewal was specified as 31 August 2009. The parties had not discussed when or how an option for renewal was to be exercised.
- (c) The schedule to the draft lease named Michael Kyriackou and Brian William Fisher as guarantors. That was because of Mr Elcheikh's instructions that there should be guarantees by the directors of A Home Loans. The parties had not discussed guarantees or the identity of guarantors.
- (d) The tenant was being required to pay outgoings. I have found that the parties had not expressly agreed about that.
- (e) Annual increases in rent were expressed to be at the flat rate of 5% per annum, not in proportion to CPI increases as the parties had discussed.
- (f) Apart from an additional provision (in item 22 of the schedule) that the tenant would be entitled to a two-month rent-free period from the commencement date (to which the parties had expressly agreed) there were other additional provisions to the effect that any works done to the building by the tenant had to be approved by the landlord but were the tenant's responsibility.
Once the draft lease had been prepared, Mr Elcheikh collected multiple copies of it from Beaumont Lawyers and also collected a disclosure statement. In his oral evidence he said that he had signed the disclosure statement and a copy of the lease. This was the second respect in which I thought that his evidence was demonstrably wrong. No copy of any lease signed by Mr Elcheikh ever emerged at the hearing. His wife did not give any evidence of having signed a lease. I concluded that he was probably confusing the lease with the disclosure statement and had signed the disclosure statement only.
On a date which Mr Elcheikh identified as 19 December 2008 he delivered to Mr Kyriackou copies of the draft lease. Mr Elcheikh gave evidence that at the same time he delivered the disclosure statement. Mr Kyriackou did not dispute that copies of the draft lease were delivered to him but did dispute that a disclosure statement was ever delivered. Any issue about delivery of a disclosure statement is irrelevant to the questions I have been asked to determine and I say nothing else about it.
When Mr Kyriackou read the draft lease he observed that Mr Fisher's name appeared in it. Mr Kyriackou's evidence was that Mr Fisher had not been a director of A Home Loans for some time and it was not feasible to ask him to guarantee A Home Loans' performance of obligations under a lease.

According to Mr Kyriackou's version of events, four things of importance occurred during January 2009. The order in which they occurred was not made clear, so the order in which I list them is not necessarily the chronological order.
First, he gave evidence that he telephoned Mr Elcheikh and said that he would like the draft lease to be changed so that A Finance was named as the tenant instead of A Home Loans. He explained why: so that Mr Fisher would not have to be involved. He said that Mr Elcheikh, who was wanting a lease to be signed as soon as possible, agreed to the request that A Finance should be the tenant instead of A Home Loans. Mr Elcheikh's evidence was that Mr Kyriackou did not at that time ask him to agree, and that he did not ever agree, to that.
Secondly, there was another meeting at Goldies café at which Mr Kyriackou, Mr Elcheikh and Mr Theodore the electrician were present. Topics discussed were electrical repairs and the state of the roof. Earlier Mr Elcheikh had committed himself to do something about checking the electrical wiring. At this meeting he made a firmer commitment: he would engage an electrician to check the wiring and do whatever was necessary to achieve a certificate of electrical safety. That was his evidence. As to the roof, the evidence revealed a dispute about exactly what Mr Elcheikh agreed to do. According to Mr Kyriackou, Mr Elcheikh agreed to perform whatever repairs were necessary to stop water entering through the roof. According to Mr Elcheikh, he agreed only to arrange for a tradesman to examine the roof and investigate the cause of any water entry. I find Mr Elcheikh's version to be the more probable, because Mr Kyriackou's version would have had Mr Elcheikh signing, as it were, a blank cheque for the cost of repairs before he knew exactly the extent of the repairs required and how much they might cost him.
Thirdly, Mr Kyriackou claimed that Mr Elcheikh agreed to do other works too, by way of plastering work and repairs to ceilings, to a connecting door and to the floor. Mr Elcheikh obtained from a tradesman a quotation for doing work of that kind and gave evidence that he had done so because Mr Kyriackou had asked him to agree to do that work, and he wanted to investigate the cost of doing it, but swore that he did not ever agree that he would get that work done. He told me that, if the doing of that work at his expense had been the difference between Mr Kyriackou signing or not signing a lease, he may well have agreed to do it, but that had not been the difference and the fact was that he did not agree to do it. Like the matter of repairs to the roof, this matter was the subject of disputed and rather vague oral evidence. If, as I have found, Mr Elcheikh did not agree to repair the roof it is improbable that he agreed to do other structural repairs. I find that he did not agree.
Fourthly, Mr Kyriackou alleged that Mr Elcheikh told him that the two-month rent-free period would not begin to run until all the work that he had promised to do had been completed. This allegation explains the fact that no rent whatever has been paid to Mr and Mrs Elcheikh, for A Finance and Mr Kyriackou allege that because the promised work was never performed the obligation to pay rent had never begun and would not begin until the work was completed and then the two-month rent-free period had run.

Mr Elcheikh's evidence was that he had never told Mr Kyriackou, and had never agreed, that the two-month rent-free period would be postponed or extended in the way that Mr Kyriackou had alleged. 6. Indeed Mr Kyriackou's allegation was that Mr Elcheikh had first made that promise, that the rent-free period would not begin to run until all that work that he had agreed to do had been completed, on 13 December 2008 during the meeting at the premises on that day, and had repeated the promise in January 2009. Mr Vasilaras, who was present at the meeting on 13 December 2008, did not give evidence of Mr Elcheikh having made any such promise. 7. Mr Matters submitted that there was some documentary evidence in support of the alleged promise. On 2 April 2009 Mr Elcheikh sent to Mr Kyriackou by mobile telephone a text message which read: "Mike this month the electrics and works on the offices will be completed, 1st of May will be the end of rent-free period. Call me 2 discuss". The message showed, Mr Matters submitted, that the promise to do work and the promise of the rent-free period were interdependent, supporting the case that Mr Elcheikh had promised that there would be no obligation to pay rent before the "electrics and works on the offices" had been completed. 8. When in the chronology of events I come to deal with that telephone text message I shall say why I accept an explanation that Mr Elcheikh gave for sending it. But I point out that, even if (contrary to my opinion) Mr Elcheikh was acknowledging by sending the message that the promise to do work and the promise of the rent-free period were interdependent, the acknowledgement in that form of the message took was not consistent with Mr Kyriackou's case. For the message did not state or imply that the rent-free period would commence to run only once the works had been completed. Read in a light most favourable to Mr Kyriackou's case the message could mean no more than that the rent-free period would end (not commence to run) on 1 May 2009. 9. In the end, therefore, resolution of the dispute about whether there was a postponed or extended rent-free period agreed upon comes down to the circumstance of disputed oral evidence and an assessment of the probabilities. Mr Kyriackou's version would have had Mr Elcheikh agreeing to a rent-free period of uncertain duration, for the date by which any work that he had undertaken to do was necessarily uncertain. It would be an odd thing for a landlord to agree to. So I have concluded that Mr Kyriackou's version is less probable than Mr Elcheikh's version, namely, that he had promise to allow a two-month rent-free period, that he had separately and independently promised to do certain limited works, and that the second promise had no bearing upon the date of commencement of the rent-free period or the length of that period. I prefer Mr Elcheikh's version because it is more probable, and find accordingly. 10. By the end of January 2009 A Home Loans had not executed the draft lease which Beaumont Lawyers had prepared. One 2 February 2009 Mr Elcheikh sent Mr Kyriackou a telephone text message stating that he needed a signed copy of the lease so that he could use it to obtain loan funds, and saying: "The sooner I get my funds the sooner I can start those works" at the premises. On 4 February 2009 Mr Elcheikh sent Mr Kyriackou another telephone text message saying: "If I don't get the lease the works will be delayed until March". The messages are evidence that Mr Elcheikh had agreed to do works at the premises. They do not assist in the identification of what works he had agreed to do. 11. Mr Kyriackou gave evidence that shortly before 13 February 2009 he told Mr Elcheikh by telephone that he wanted to make amendments to the draft lease. There was no evidence of him telling Mr Elcheikh what amendments he wanted to make, although, as I have said, Mr Kyriackou's version of events was that in January 2009 he had told Mr Elcheikh that he wanted a Finance to be the tenant instead of A Home Loans. As to the telephone conversation shortly before 13 February 2009, Mr Kyriackou went on to give evidence that Mr Elcheikh had told him that he should amend the lease, sign it and return it to Beaumont Lawyers. Mr Elcheikh did not concede that such a conversation occurred. I am prepared to proceed on the basis that it did. It would not be surprising if Mr Elcheikh, having demonstrated that he was anxious to get into his hands as soon as possible a lease executed by the proposed tenant, invited Mr Kyriackou to make amendments to the draft lease so that he might consider them. The evidence of the telephone conversation was a long way short, however, of any evidence of Mr Elcheikh having accepted, without having seen them, any amendments that Mr Kyriackou saw fit to make. 12. On 13 February 2009 A Finance sent, by facsimile transmission, to Beaumont Lawyers, a letter signed by Mr Kyriackou and a different draft lease. The letter alleged that the different lease reflected "the agreement reached between the landlord and tenant". I shall continue to refer to that draft lease, sent by facsimile transmission on 13 February 2009, as "the different lease", and to the draft lease prepared by Beaumont Lawyers as "the Beaumont lease". 13. The letter of 13 February 2009 also asked Beaumont Lawyers to advise when their clients intended "to commence works on the roofing and wiring". 14. Mr Kyriackou had had his solicitor, Mr Pinto of Felipe Tellez, Barrister and Solicitor, prepare the different lease by dismantling a copy of the Beaumont lease, replacing the schedule with an amended schedule, and adding extra sub-clauses to item 22 in the schedule. 15. In three respects the schedule to the different lease differed from the schedule in the Beaumont lease. First, the tenant was named as A Finance instead of A Home Loans. Secondly, Mr Kyriackou was named as a single guarantor whereas the Beaumont lease had named him and Mr Fisher as guarantors. Thirdly, there was an additional page with three extra sub-clauses to item 22: * 22.10 The Landlords acknowledges that it must immediately make all proper and necessary repairs to the roof and electrical wiring to the property and that such building works must be undertaken in a proper and workmanlike manner by qualified tradespeople at the sole expense of the Landlords. * 22.11 Until such time as the building works referred to in 22.10 herein are completed to the tenant's satisfaction, notwithstanding anything herein contained the Landlords agree and acknowledge that the Tenant shall be entitled to free rent. * 22.12 Notwithstanding anything herein contained the Landlords agree and acknowledge that the tenant shall be entitled to a two (2) month rent free period commencing from the date of completion in respect of 22.11. 16. Mr Kyriackou's signature, as director of A Finance, appeared on the different lease. 17. I now pause in the narrative of events to consider, at two moments in time, what legal relationship had been created between Mr and Mrs Elcheikh on the one hand and Mr Kyriackou, or any company of which he was a director, on the other. The first moment is 11 December 2008, when (on my findings) Mr Elcheikh delivered the receipt and delivered possession of the premises. The second moment is 13 February 2009 when A Finance sent the different lease to Beaumont Lawyers. As to later events, all I say at the moment is that Mr and Mrs Elcheikh never agreed to the terms of the different lease, and no lease was ever executed by both parties to it and exchanged.

As at 11 December 2008, when on my findings there was a transfer of possession, was there anything which had not been agreed upon, and remained to be negotiated? No commencement date for a lease had specifically been agreed upon. But, as I have said above, by the tender and acceptance of a cheque dated 1 December 2008 the parties seemed to have proceeded on the basis that the commencement date was to be 1 December 2008, and in the course of this proceeding there has been no dispute that 1 December 2008 was the proposed commencement date. So that was not a matter that remained to be negotiated.
The parties had agreed upon three successive options to renew for five years each but had not discussed any date by which an option had to be exercised. When a vaguely expressed option for renewal is meant to have legal effect, the courts are reluctant to decide that the vagueness results in a lease being void for uncertainty: Brown v Gould [1972] Ch 53. Where the date by which the option must be exercised is not specified, the date becomes the date of the expiration of the term of the lease: Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617. So the absence of express agreement about the date for exercise of an option for renewal did not prevent there having been a concluded lease or agreement for a lease. The date was not a matter which remained to be negotiated. The parties did not regard it as essential to their bargain. As was later evidenced by the Beaumont lease and the different lease respectively, the parties became content to adopt the commonplace provision that the last date for the exercise of an option for renewal was three months before the date of expiration of the term of the lease.
As at 11 December 2008 the parties had not agreed upon the identity of any guarantor or guarantors. It was not, however, a matter that remained to be negotiated. The matter had simply not arisen during negotiations. It did not arise until Mr Burrows of Beaumont Lawyers sought instructions from

Mr Kyriackou. He had done so on the occasion that Mr Kyriackou had handed over the cheque for $4,000.00. I have found that there was no effective delivery of possession until 11 December 2008 when Mr Elcheikh received $4,000.00 in cash and delivered to Mr Katranis the receipt and the second set of keys. But the delivery of the set of keys on the earlier occasion did have some legal significance. Mr Elcheikh was giving A Home Loan permission to enter the premises if it chose to do so. In fact, it did not. I regard that permission as a licence to occupy the premises, not as a tenancy at will or a tenancy of any kind. Perhaps any distinction between a licence and a tenancy at will in the circumstances I have described is a distinction without a practical difference. At all events, on and after 11 December 2008 the legal relationship between the parties was something other than a licence or a tenancy at will. 2. Mr Herbert's alternative submission was that the case fell within the third class of case identified in the majority judgement of the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360, namely, a case in which the intention of the parties was not to make a concluded bargain at all unless and until they executed a formal contract (a formal lease). It is true that the parties contemplated that a formal lease would be prepared by solicitors and executed. At the meeting at Goldies café at which Mr Kyriackou handed over the cheque, Mr Elcheikh told him that he (Mr Elcheikh) would get a lease drawn up. But in my opinion the passage from the cross-examination of Mr Elcheikh that I have set out above demonstrated that the parties intended that they should be bound as soon as the receipt and possession were given, as happened on 11 December 2008. The case falls into the first class of case identified in Masters v Cameron, above, namely "one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect". 3. I characterise the legal result of what had happened by 11 December 2008 as the creation of a lease, not as the creation of an express agreement for a lease. I regard the parties as having intended that A Home Loans should be a tenant as soon as the receipt and the second set of keys to the premises were given on 11 December 2008. They were not merely agreeing that there should be a tenancy at some identifiable future time. The lease was a parol lease, for it was not created by deed or wholly recorded in writing. Some of its essential terms were recorded, in a very abbreviated form, in the receipt. Others were not. As a parol lease it would be effective at law if it fell within the scope of section 54 (2) of the Property Law Act 1958. It met two of the three criteria contained in section 54(2), because it was for a term not exceeding three years and it took effect in possession (for the tenant's right to take possession arose upon its creation on 11 December 2008). Whether the lease was for "the best rent which can reasonably obtained without taking a fine", the third criterion, was not something which the evidence could have enabled me to determine. I was not required to determine it, for the questions formulated for my determination only required me to determine whether there is or had been a lease, not whether that lease was effective at law. 4. If the parol lease did not fall within the scope of section 54(2), it could be treated as an agreement for a lease (even though it was not expressly such an agreement) and would be as good as a lease if it was specifically enforceable and if there was either a sufficient memorandum of it in writing or some act of part performance, under the doctrine of Walsh v Lonsdale (1882) 21 Ch 9. Again, whether the parol lease could be regarded as an enforceable agreement for a lease under that doctrine is not something which the questions formulated for my determination required me or entitled me to embark upon. I do make the observation that it seems unlikely that the receipt could be a sufficient memorandum in writing of an agreement. It did not identify the landlords by name and did not specify a commencement date for the term of one year. In his final address

Mr Matters for A Finance referred me to authorities beginning with Hodson v Hewland [1896] 2 Ch 428 for the proposition that continuation in possession of premises, after an agreement for a lease of those premises had been made, could be relied upon as part performance of the agreement. The submission was apparently made in anticipation of a finding that possession was delivered before the lease or agreement was made. I have found otherwise. While I see no reason why the delivery of possession on 11 December 2008 should not be regarded as part performance of an agreement for a lease, if that is the way that the case needs to be viewed, I repeat that I was not deciding any issue of enforceability, only whether there is or was a lease. 5. There has been no dispute that, if there is or ever was a lease or an agreement for a lease between any of the parties, it was a retail premises lease as defined by the Retail Leases Act 2003 (for a "lease" is defined in section 3 of the Act as meaning, amongst other things, a lease or an agreement for a lease, whether or not in writing). Section 16(1) of the Act provides that a landlord or a tenant must not enter into a retail premises lease that is not in writing and signed by all parties, and specifies a penalty for breaching that provision. Section 16(2) goes on to provide that a failure to comply with the section does not make the retail premises lease illegal, invalid or unenforceable. I have borne in mind that the application of the section is a point in favour of the argument that the parties in this case did not intend to bind themselves legally until they had executed and exchanged a formal lease, because entering into a lease in the way that I have found it was entered into seems to have been a breach of section 16(1) and the parties might be thought to have intended not to break the law. I have also borne in mind that both parties engaged solicitors for the respective purposes of preparing and advising upon a formal lease document and that in many cases that is a guide to an intention not to be bound until the formal lease document was executed and exchanged. I have concluded, however, that those two considerations were outweighed by other features of the case which pointed to the intention as at 11 December 2008 that there should be and was then a lease. 6. So by 11 December 2008 A Home Loans and Mr and Mrs Elcheikh were in the legal relationship of tenant and landlords under a parol lease of the premises for one year which had commenced on 1 December 2008, with all the basic or essential terms of the lease having been agreed upon or (in the matter of the last date for the exercise of an option for renewal) existing by virtue of the operation of legal principles. 7. By 13 February 2009 the terms of the lease had been fleshed out somewhat and, in one instance, added to by variation. 8. The parties had intended that there should be a formal lease document prepared and executed. Mr Elcheikh, when receiving the cheque for $4000.00 during the meeting at Goldies Café, told Mr Kyriackou that he (Mr Elcheikh) would get a lease drawn up. He did. He instructed solicitors to prepare one. Mr Kyriackou engaged solicitors too. Their conduct in that regard seems to me to have indicated that they expected that there would be fuller terms and conditions set out in a standard form lease used by solicitors and that, provided that those fuller terms did not conflict with what they had expressly agreed, they would become bound by them. 9. Beaumont Lawyers, for Mr and Mr Elcheikh, used a particular standard form when preparing the lease. Mr Elcheikh delivered the draft Beaumont lease to Mr Kyriackou and was anxious for it to be executed, demonstrating that he (Mr Elcheikh) was content for him and his wife to enter into an instrument of lease in that standard form. Mr Kyriackou used that standard form as the basis for the preparation of the different lease which he sent to Beaumont Lawyers on 13 February 2009, demonstrating that he too was content for a company of which he was a director to enter into an instrument of lease in that standard form. 10. There were some respects in which the Beaumont lease was inconsistent with what had been expressly agreed between the parties. It expressed the rent as a monthly sum "plus GST (if any)". There was provision for the tenant to pay outgoings as well as rent. The annual increases in rent were specified as a constant percentage rather than in proportion to CPI increases. The fact that in the different lease Mr Kyriackou did not attempt to change the Beaumont lease in those respects suggests that the parties probably would have been content to depart from what they had expressly agreed and to adopt those inconsistent provisions, so that what became payable was $4,333.00 per month plus GST (if applicable) plus outgoings, but no instrument of lease including those inconsistent provisions was ever executed and exchanged. 11. There were other respects in which the Beaumont lease was different from, but not inconsistent with, what had been expressly agreed between the parties. There was the specification of the deadline for the exercise of an option for renewal, being three months before the date of expiration of the term. There was the amplification of the permitted use so that it was expressed to be not only car rental but also any other use permitted by the relevant authority. Those were part of the amplification of the essential terms of their agreement that the parties had anticipated that there would be, and were content that there was, in a formal lease instrument prepared by solicitors. By their conduct to which I referred in paragraph 87 above the parties adopted the amplification in those respects, so that in my view by 13 February 2009 they had become terms of the lease between A Home Loans and Mr and Mrs Elcheikh even though no formal lease instrument was ever executed and exchanged. 12. The additional term, introduced as a variation by the end of January 2009, was the promise by Mr and Mrs Elcheikh to perform electrical wiring work and to diagnose the cause of water entry through the roof of the premises.

I now summarise, from the above, the reasons for my answer to question (b): what were the terms of the lease.
Term (i): A commencement date of 1 December 2008. This was implicitly agreed upon when Mr Kyriackou handed over, and Mr Elcheikh accepted, a cheque bearing that date.
Term (ii): A duration of one year from the commencement date. The receipt recorded that, although it did not specify a commencement date.
Term (iii): Rental of $52,000.00 per annum, payable by monthly instalments of $4,333.33 each on the first day of each month. The receipt mentioned the annual figure. The parties had discussed a bond equivalent to one month's rent, and a two-month rent-free period, so the implication was that rent was payable monthly. The tenant A Home Loans was not required, under the lease, to pay GST on the rent or to pay outgoings. Although A Home Loans probably would have agreed to pay GST and the outgoings once it executed and exchanged a formal instrument of lease, the fact is that the parties had not so agreed expressly.
Term (iv): A rent-free period of two months after the commencement date so that rent did not become payable until 1 February 2009. I have found that the parties expressly agreed upon a two-month rent-free period.
Term (v): The tenant was obliged to pay a security deposit of $4333.33. I have found that the parties expressly so agreed.
Term (vi): The tenant had three successive options to renew for periods of five years each. The receipt recorded that.
Term (vii): If the lease was renewed by the exercise of an option to renew, the rent would increase on 1 December each year in proportion to nay increase in the Consumer Price Index published by the Commonwealth Statistician. That is what the words "increase yearly by CPI" on the receipt signified. Although the parties probably would have agreed instead to a yearly increase of 5% as had been specified in both the Beaumont lease and in the different lease, in fact they had not expressly agreed to that.
Term (viii): The permitted use of the premises was car rental or any other use permitted by the relevant municipal authority. This was an amplification of the words "for the purposes of car rental" on the receipt and by their conduct the parties had demonstrated that they accepted that amplification.
Term (ix): Within a reasonable time after the commencement date the landlords would perform such electrical wiring work at the premises which was necessary for the provision of a certificate of electrical safety and would perform such work as was required to diagnose the cause of water entry through the roof of the building on the premises. This was a term introduced into the lease in January 2009 by way of an agreed variation. There was no agreement that the landlords would perform any other work. There was no agreement that the tenant's obligation to pay rent would not begin to run until the work had been completed. The landlords' obligation imposed by this additional term was independent of the tenant's obligation to pay rent. There was no express agreement as to the time within which the work which the landlords agreed to do would be completed, but the fact that a two-month rent free period was agreed upon suggests to me that the parties probably contemplated that it would be completed either during that period or shortly thereafter, that is to say, within a reasonable time.
Term (x): The terms and conditions set out in any standard form lease commonly used by conveyancing solicitors in Victoria in 2008 would apply to the lease insofar as they were not inconsistent with any of the terms set out above. The parties contemplated and intended that there should be a formal instrument of lease prepared by solicitors and executed by each of them. By their conduct the parties demonstrated that they were content with the standard form which the solicitors used.

It is now well established that a lease, just like any other contract, may be terminated if one party to it repudiates it and the other party accepts the repudiation. A repudiation occurs when one party clearly indicates an absence of readiness or willingness to perform that party's obligations under the lease. If what the defaulting party is unready or unwilling to perform is sufficiently serious, the other party may accept the repudiation, discharging both parties from any further obligation to perform the lease.
Whether there has been a repudiation is to be determined upon objective inquiry. Whether the defaulting party intended to repudiate is not relevant. What matters is "the conduct... of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way". Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at page 647 (per Brennan J) (italics added).
A refusal to perform a contract according to its terms unless the contract is renegotiated may, therefore, amount to a repudiation of the contract: Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VicRp 52; [1977] VR 454. In that case a purchaser of land who had defaulted in payment of instalments of the purchase price stated to the vendor, which was willing to accept late payment, that he would only make payment if the vendor renegotiated the contract by reducing the size of the instalments. The purchaser's words and conduct showed that he was refusing to be bound by the contract, in that "he did not intend to pay the two instalments owing or any others until a demand which he was not entitled to make was complied with" (at page 458).
Moreover, an attempt to impose upon a party to a contract a new term which had never been agreed to may amount to a repudiation of the contract. In Freedom Homes Pty Ltd v Boros [2002] Qd R 377, house owners who were a party to a domestic building contract refused to pay to the builder two progress payments required under the contract unless the builder removed and replaced some plasterboard. The Queensland Building Tribunal found that there had never been any need to remove and replace plasterboard, and decided that the refusal to pay, unless the builder complied with a demand that the owners were not entitled to make, amounted to a repudiation of the contract which the builder was entitled to accept and did accept. The Court of Appeal dismissed an appeal from a lower Court's decision to refuse leave to appeal from the Tribunal's decision. At page 379, McPherson JA, with whom Thomas JA and Moynihan J agreed, stated:

Mr and Mrs Elcheikh's solicitor the different lease, containing the three extra sub-clauses to item 22 in the schedule, and thereafter failed to accede to their solicitors' request to remove from it any reference to works by the landlord being completed "to the tenant's satisfaction" and failed to pay rent. By that conduct, A Home Loans clearly indicated an unwillingness to perform the parol lease in the terms agreed to by the parties to it and an unwillingness to execute an instrument of lease which reflected those terms. Instead, by that conduct, A Home Loans was demanding that Mr and Mrs Elcheikh should enter into a lease in different terms, including quite extraordinary terms that the works had to be completed "to the tenant's satisfaction" and that the two-month rent free period would not commence until they were. A Home Loans was attempting to impose unilaterally new terms for which there was no contractual warrant or authority. 2. This case bears some similarities to a leading case on the subject of repudiation of leases: The Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17. In that case the parties had also agreed upon a two -month rent free period and there was a dispute about when that period was to commence. A clause in the instrument of lease required the landlord to carry out certain works and provided that the tenant was to take possession fourteen days after the landlord had notified the tenant that the works had been completed. Another clause provided that the first payment of rent was to be made two months after the expiration of that period of fourteen days. In fact the tenant took possession before the lease was executed. The landlord notified the tenant that the works had been completed but the tenant claimed that they had not been completed satisfactorily and so the obligation to pay rent had not commenced. 3. The High Court held that the tenant's stance, that the completion of the works was a condition precedent to its liability to pay rent, got no support from the provisions of the lease. Because the tenant was in possession when the lease was executed, the tenant had not entered into possession pursuant to the clause which had required the landlord to give notice of the completion of the works. So the fourteen day period envisaged by the clause had no application and the commencement of the obligation to pay rent had no connection with the completion of the works, satisfactory or otherwise. 4. At page 37, Mason J. stated:

In the present case, A Home Loans also "persisted in maintaining a claim which was without any foundation", namely (as the letter accompanying the different lease proffered on 13 February 2009 put it), that the different lease reflected the agreement which had been reached between the parties named in it. It did not, and there was never any foundation for an assertion that it did. In reality A Home Loans was demanding that Mr and Mrs Elcheikh enter into a different lease from the one that had been created by the end of 2008: a different lease which not only would provide that the commencement of the two-month rent free period was dependent upon the completion of works by Mr and Mrs Elcheikh but also would provide that the works had to be completed "to the tenant's satisfaction" before any obligation to pay rent could ever commence. While there may have been a bona fide dispute as to whether the obligation to pay rent and the obligation to complete works were interdependent, there was not and could not have been any bona fide dispute as to an entitlement to require the works to be completed "to the tenant's satisfaction".
In my view, what A Home Loans was attempting to do, taking advantage of having been allowed to take possession of the premises, was to renegotiate the lease. It was threatening to take legal proceedings if Mr and Mrs Elcheikh did not accede to its demand and renegotiate to its liking. Thereby it was refusing to perform the lease, and indicating that it would perform only a lease which was negotiated to its liking. By that conduct it repudiated the lease.
I have not overlooked that the letter dated 13 February 2009 which accompanied the proffered different lease was signed by Mr Kyriackou on behalf of A Finance, not A Home Loans, and that when sending and receiving subsequent correspondence Felipe Tellez was explicitly doing so on behalf of A Finance, not A Home Loans. Nevertheless I consider that there is no difficulty in characterising the repudiatory conduct as being that of A Home Loans as well as a director of A Finance. Mr Kyriackou was a director of A Home Loans as well as a director of A Finance. He signed the letter of 13 February 2009. He physically gave instructions to Mr Pinto of Felipe Tellez.
In the Progressive Mailing House case the repudiation was held to be the failure to pay rent, coupled with the maintenance of a baseless claim that the obligation to pay rent had not commenced. In the present case there was also a failure to pay rent after 1 February 2009 when, in accordance with the terms of the lease as I have found them to have been, the obligation to pay rent commenced because the two month rent free period had expired. There was also the maintenance of a baseless claim that the obligation to pay rent had not commenced. And there was more: an illegitimate demand that Mr and Mrs Elcheikh accept a different lease which contained a term, most disadvantageous to them, to which they had never agreed. There was no foundation for an assertion that they had agreed to it. The failure to pay rent after 1 February 2009 would not alone have amounted to repudiation of the lease, in my opinion, but, combined with the other features of the conduct to which I have referred, it did.
The letter from Beaumont Lawyers to Felipe Tellez dated 14 May 2009 which I set out in paragraph 124 above amounted to an acceptance of the repudiation. A Finance and A Home Loans had failed to comply with the request made in Beaumont Lawyers' earlier letter dated 23 April 2009, that they respond favourably to the requirement that the provision in the different lease about works being completed "to the tenant's satisfaction" be removed and that the first month's rent be paid. The letter dated 14 May 2009 notified A Home Loans that Mr and Mrs Elcheikh had elected to treat the lease as being at an end.
Despite the termination of the lease on 14 May 2009 by the acceptance of the repudiation, A Home Loans remained in possession of the premises. It did not do so pursuant to any lease or other tenancy agreement. I was not required to decide in what capacity it was in possession after 14 May 2009.

Australvic Finance Pty Ltd v Elcheikh & Ors

At a glance

Court

Decision date

Source

Judgment (101 paragraphs)

Australvic Finance Pty Ltd v Elcheikh & Ors (Retail Tenancies) [2010] VCAT 956 (4 June 2010)

Parties

Legislation Cited (1)

Cases Cited (4)