[3] The events leading up to, and indeed after, the unenforceable agreement are somewhat extraordinary.
[4] Castle Co has been operating a coffee shop at the leased premises since the lease was assigned to it in late 2008. The lease expired on 28 February 2013. Under the terms of the lease, the lessor was obliged to give at least 6 months, but not more than one year, notice of its intention either to offer a renewal or extension of the lease or informing the lessee that it did not intend to make such an offer.[1] It did not at any time comply with its obligation to do so, despite reminders from Castle Co's representative of the requirement.
[5] However, on 31 January 2012, Mr Moles, a director of Castle Co, met with, and provided to, a representative of the State of Queensland, Mr Garry Tweedie, a proposal for the grant of a new lease to Castle Co dated 20 January 2012.[2] Mr Tweedie was the Director of Corporate Services at Redcliffe Hospital for 12 years before his retirement in August 2013. The proposal included upgrading fitout. Mr Moles indicated that if required, he would obtain conceptual sketches of the proposed upgrade to fitout.[3] He says that Mr Tweedie said this was not necessary and he was not at any later time asked for them. Mr Tweedie recalls receiving the proposal, and believes he indicated that it would be considered. He expresses some concern about its vagueness (although does not suggest that he conveyed any such concerns to Mr Moles). He asserts that he did not believe it would be for him to negotiate a new lease.
[6] Mr Moles then, over an extended period of time, diligently followed up with Mr Tweedie, in relation to the offer and the intentions of the State of Queensland. He followed up with telephone calls, in meetings, and e-mails.
[7] Between February 2012 and October 2012, Mr Moles says that Mr Tweedie told him variously that, he expected a decision by the end of May; that a decision was delayed because of the general election; that a proposal would be made in September 2012; that he would follow up if he heard nothing within a week; and in October 2012, that he had passed it on to Property Management Services and that they would contact Castle Co soon.
[8] Mr Tweedie confirms the latter, saying he had told Mr Moles 'on several occasions' that he was not the decision-maker and that in due course it would be transferred to Property Management Services.[4] Broadly speaking, Mr Tweedie otherwise generally acknowledges having told Mr Moles from time to time that it was being looked at but does not indicate by whom and it does not appear from the evidence that it was considered by anyone over the February to October 2012 period. Mr Tweedie also says that he made it clear that he was a point of contact only not the decision-maker. We do not accept the latter for the reasons explained below.
[9] In late October, Mr Moles contacted Property Management Services and was informed that there was no record of information from Mr Tweedie. Later that day, a Mr Finn at Property Management Services told him that he had to discuss the proposal with Mr Tweedie. Essentially, Mr Finn said that all decisions about the lease were made by the hospital, that is, Mr Tweedie and his hospital committee. Once they had been made, details would be sent to Property Services to prepare the documentation.[5]
[10] Mr Tweedie apparently considered this an attempt by Mr Moles to 'bypass' him, and says it was intended that he would remain the initial point of contact.[6] The email correspondence between Mr Tweedie and Property Management Services representatives[7] makes it clear that Property Management Services expected all contact about the lease to be with Mr Tweedie's office and that Mr Tweedie, when he finally approached them, did so about lease documentation only.
[11] On 29 October 2012, in an email to Mr Tweedie, Mr Moles pointed out the requirement under the lease for the State of Queensland to give notice to the lessee of at least 6 months about its intentions.[8]
[12] Eventually, after more follow-up by Mr Moles, Mr Tweedie and Mr Moles met again on 2 November 2012. Mr Tweedie proffered a letter to Mr Moles from the Executive Director, Medical Services which referred to Castle Co's proposal for development of a new lease and 'confirmed' that Mr Tweedie had been requested to 'progress the preparation and negotiations for a new lease in consultation with all parties.'[9] Mr Moles says that during this meeting Mr Tweedie asked whether Castle Co was generally happy with the terms of the lease. Mr Moles said that he was. Mr Moles says that Mr Tweedie proposed that the new lease should be on the same terms except for the name of the lessee and the rent, saying that he would engage a local valuer for a market rental assessment and a local solicitor to prepare the lease document. Mr Moles agreed with all of these proposals.
[13] Mr Tweedie generally agrees with this except to say that he asserts that he told Mr Moles that someone else would negotiate the rent and finalise the lease.[10] This assertion appears inconsistent with a plain reading of the letter provided, which advises Mr Moles that Mr Tweedie is to negotiate the terms. It also appears to be generally inconsistent with the outline of events as set out in a briefing note later prepared in response to Mr Moles complaint to the Minister for Health.[11]
[14] Also, inconsistently, Mr Tweedie took numerous steps to progress the lease and deal with the rent issue.[12] In the days immediately after the meeting, Mr Tweedie obtained a Revenue Agreement concerning the proposed lease from the Chief Executive of Metro North[13] and provided a work request form to Property Services for lease documentation.[14] An email from lawyers asked to prepare documents to Mr Finn in Property Services (and copied to Mr Tweedie) refers to the lawyers being told by Mr Finn that Mr Tweedie was consulting with Knight Frank concerning market rent.[15] An email trail, including email from Mr Finn, confirms he made the assertion.[16] Also, Mr Tweedie's email to Mr Moles on 27 November says that he was awaiting market assessment.[17]
[15] While saying that he thinks Property Management Services suggested it, Mr Tweedie acknowledges that he did approach Knight Frank for a market rental assessment but Knight Frank indicated that as there were no market comparatives, it would not be a useful exercise.[18] This documentation trail and Mr Tweedie's actions in contacting Knight Frank tends to support Mr Moles version of events, as does the draft Amendment to Lease document containing the terms which Mr Moles says were agreed at the meeting and prepared after the meeting at Mr Tweedie's request.[19] Therefore, we accept Mr Moles evidence about what happened at the meeting of 2 November.
[16] Thereafter, Mr Moles regularly followed up on progress. On 27 November, Mr Tweedie advised him by email[20] that he had received the draft lease and was awaiting market rental assessment, saying that he would arrange a further meeting with Mr Moles once he received the market rental assessment. The draft lease highlighted the need for 2 items to be dealt with: namely, rent and, although an option had not at that point been proposed by Mr Moles or discussed, the type of rent review if the option was exercised.[21] The only reference, at this point, to an option (of 5 years) had been made by Mr Tweedie in the Revenue Agreement.
[17] Then on 12 December 2012, Mr Tweedie sent an email to Mr Moles advising that the 'final component' of the lease would need to be finalised early the following year. On 14 January 2013, Mr Moles emailed requesting an update. A meeting was arranged by Mr Tweedie for 24 January 2013.
[18] At that meeting, Mr Moles says that Mr Tweedie proposed that the new lease rental at $40,841.01 for the first year and that the lease be for 5 years with an option for a further 5 years. Mr Moles says he agreed to these terms. Mr Tweedie said he would email the draft lease which he said was '90%' complete after the meeting. Mr Moles says that although there was no specific discussion about the rent review in respect of the option, that he expected the same mechanism for rent increase during the lease term to be used, that is, 5% increase.[22] Also, during the meeting Mr Tweedie gave him a tax invoice for $17,870.07 for rent arrears,[23] accrued because the annual increases provided for in the existing lease document had never been invoiced as the lease term progressed. The calculation sheet refers to the new annual rental rate at 1 March 2013 of $40,841.01.
[19] Mr Moles says that he did not understand from his negotiations with Mr Tweedie that the negotiations were subject to a new lease being signed, although a new lease was of course to be signed embodying the terms agreed.
[20] Once again Mr Tweedie has a different version of events. In his affidavit, he says he impressed on Mr Moles that someone else would be negotiating final terms and that the starting point for minimum rent would be the $40,841.01 being the rent if increased in accordance with the current terms. He further says he does not recall discussing rent on the exercise of the option term. He denies any verbal agreement for a new lease.[24] Under cross-examination, however, he said somewhat inconsistently that he 'would have inferred' that someone else would be negotiating the final terms. He further said that the reference to annual rent of $40,481.01 on the calculations sheet was only the rent to apply while continuing to negotiate rent, although he was equivocal as to whether he had advised Mr Moles that he had not expected the lease to be completed by 28 February.
[21] Ultimately, we accept Mr Moles version of events. Firstly, clause 3.2 of the existing lease provided for the same rent as applied in the final year for any holding over period. Therefore, it seems inherently unlikely that Mr Moles would have agreed to pay more for holding over than the lease required. Secondly, it is, once again, more consistent with the events which followed. In particular, although Mr Moles then followed up requesting the draft lease documentation, he did not follow up about rent. Given his overall diligence in endeavouring to progress this lease extension or renewal, we accept that he understood all matters to have been agreed at the conclusion of the 24 January 2013 meeting.
[22] Also, Mr Tweedie went into the meeting knowing because of Knight Frank's advice that a market rent assessment was not a feasible mechanism to set rent. He arranged the meeting and went into it having had the opportunity to consider alternative bases for proposing the commencing rent in circumstances when the end date of the existing lease was imminent. With this background in mind, the calculation notes appear, consistent with Mr Moles version, to advance an alternative basis for the proposed commencing rent for a renewal or extension. Further, Mr Tweedie's equivocation about whether he articulated that the agreement was unlikely to be finalised by 28 February 2013, casts doubt on his version as does the contents of the briefing note prepared in early August which is discussed in later paragraphs.
[23] In any event, if he considered rent was still to be negotiated, Mr Tweedie might have been expected to respond to Mr Moles request for the lease document by pointing out, as he had previously that, that it could not yet be completed until matter/s were agreed. He did not.
[24] On 28 January 2013, Mr Moles emailed advising that he had not received the draft lease and requesting it so that 'due diligence' could be done.[25] Mr Moles does not have a legal background. He says that he meant reviewing the lease, making sure the lease terms were as agreed and that the names were correct. As our previous findings indicate, we are satisfied that he is an accurate and truthful witness generally. There is no basis to reject his evidence about this point and we accept it.
[25] On 22 February 2013, on the request of Mr Tweedie, Mr Moles and Mr Tweedie met. At this meeting, Mr Moles says Mr Tweedie advised him that the new lease had been taken out of his hands, was now with 'Metro North', and that someone would contact him the following week. He said that he expected Metro North would probably rubber stamp his work and complete the lease. Mr Tweedie denies the latter. He says, although it does not seem to be suggested that it was communicated to Mr Moles, that he had been requested to cease 'negotiations' until a further review was done. He apparently had some concerns and sought some legal advice[26] although he did not, in doing so, disclose the state of the negotiations to the lawyer whose advice he sought.
[26] Nobody from Metro North did contact Mr Moles the following week. On the final day of the lease 28 February 2013, he made contact with a Mr Don Bambry who told him that he intended to review the operation of the shop and requested to inspect it on 1 March 2013. During the inspection, Mr Moles pointed out that a new lease had already been agreed upon between him and Mr Tweedie, and also gave him a letter attaching some documents. Mr Bambry told Mr Moles that he was now in charge not Mr Tweedie. He said that another review would be done within a week.
[27] There was no advice to Mr Moles within a week. Mr Moles emailed Mr Bambry on 11 March, to be told in response that there was 'no news yet' because of other decisions being made at Metro North. On 1 May 2013, Mr Moles telephoned Mr Bambry. At this stage, Mr Bambry told him that a decision would be made by 30 June 2013. He followed up with Mr Bambry again on 1 July, to be told that there had been no decision as yet.
[28] On 9 July 2013, Mr Bambry and his assistant arrived unannounced at the coffee shop premises and asked to take photographs, which Mr Moles agreed to allow. They also re-inspected, discussed ownership of the equipment on the premises and possible cost of a refit. Mr Bambry said he would then update Mr Moles on a weekly basis. This did not happen. On 24 July 2013, Mr Moles telephoned him for an update, and was advised that a decision would be made by the end of July 2013.
[29] Having received no further advice from Mr Bambry, Mr Moles endeavoured to contact him on 1 August 2013. The call was returned on 2 August, when Mr Bambry advised that there was no news, as he had yet to obtain some further advice. Subsequently, Mr Bambry advised on 16 August and 6 September that there was no news. On 14 October 2013, Mr Bambry advised that Castle Co may receive correspondence that week.
[30] Eventually, on 29 October 2013, Castle Co did receive correspondence from the Director Commercial Activities from Metro North. It was advised, amongst other things, that there was no intention to offer Castle Co a renewal or extension of its lease; that it was proposing to seek offers to operate the premises by way of public tender; and that Castle Co must vacate the premises by 28 April 2014. Mr Moles telephoned Mr Bambry to enquire why, and was told 'it was nothing except that Castle Co did not give full details of the proposed refurbishment.'[27]
[31] In the meantime, at the end of March 2013, Mr Moles had made a formal complaint to the Minister for Health about what was termed the 'misleading and unconscionable conduct of Metro North' relating to the events that had transpired. Consistently with Mr Moles evidence, it asserts that Mr Tweedie had advised that a new lease was to be prepared on the basis of a 5 year term and 5 year option.
[32] The State of Queensland submits that the fact that he does not in the correspondence refer to the new agreed rental amount, or specifically assert that there is a binding agreement, is significant. However, Mr Moles is not a lawyer and had taken no legal advice at that point. We are satisfied that he used words in the sense that a lay person does. Mr Moles received some correspondence from various persons at Queensland Health from time to time concerning his complaint. There are various documents relating to this complaint in evidence, including a briefing note to the Minister for Health.
[33] Mr Tweedie deposes in his affidavit filed in the proceedings to having prepared the briefing note to the Director-General dated 5 August 2013.[28] The briefing note includes a statement that at the meeting on 24 January 2013, 'Mr Moles was given verbal advice that the new rental offer would be $41,000 per year' for the first year.[29] Mr Tweedie further deposes to this statement being inaccurate and says that events were as he now sets out.[30]
[34] In evidence at the hearing, Mr Tweedie asserted that in fact he had not prepared the briefing note, that it was prepared on his behalf. Mr Tweedie's significant recanting negatively affects his credibility and the weight to be attached to his statements about this. Further, the briefing note could only have been prepared on his instructions as he was the only person other than Mr Moles at the meeting on 24 January 2013. We conclude that he therefore gave the instructions as to the making of the rental offer. We ultimately consider that the briefing note as prepared in the months following the meeting with Mr Moles is more consistent with the events than Mr Tweedie's most recent version of events.