CTHHCA

Drake trading as Drake's Handmade Jewellery v Tenakau Investments Pty Ltd

[1954] HCA 72

High Court of Australia|2013-02-07|Before: Ms P

At a glance

AI case summary

Result

respondent. 1. Any interim orders discharged; 2. Application dismissed for want of jurisdiction; 3. Applicant's costs application refused and dismissed.

Key principles

The Retail Leases Act 1994 does not apply to a periodic tenancy arising as a holding over from a lease entered into before 1 August 1994, the commencement date of s 6(1)(c),...
Where a lease proposal expressly states that it is subject to lessor approval, execution and exchange of formal lease documentation, and that no binding agreement exists until...
A sitting tenant under a pre-existing periodic lease who neither enters possession under the proposed new lease nor pays the higher rent stipulated in it does not 'enter into'...
Uncorroborated oral evidence of a lessee who is found to have been dilatory, careless of his own interests, and to have given false evidence on material matters will be preferred...

Issues before the court

Whether the Tribunal has jurisdiction under the Retail Leases Act 1994 to determine claims of breach of lease, unconscionable conduct, and...
Whether the parties reached a binding agreement for a new lease in December 2010 or in February-March 2012.

Plain English Summary

A jewellery maker who had occupied a market stall since 1993 argued that the landlord had agreed to a new two-year lease in late 2010 and had later behaved unconscionably by refusing to honour it. The tribunal found that the original lease had expired in 1994 before the Retail Leases Act began, leaving only a month-to-month holding-over tenancy to which the Act never applied. It also found that none of the later lease proposals ever became binding because every proposal said, in writing, that there would be no contract until the tenant signed a formal lease document, which never happened. Because the Act did not govern the arrangement the tribunal had no power to decide the dispute and dismissed the case.

AI-generated legal information, not legal advice. Zoe can make mistakes — check the cited source, and for advice about your situation consult a qualified Australian lawyer.

Deep Dive

2,397 words · generated 24/04/2026

What happened

Scott Drake had occupied Suite 3 at Pennant Hills Market Place since a written commercial lease dated 19 June 1993 granted by Tenakau Investments Pty Ltd. That lease was for an initial term of 12 months with an option to renew for a further two years that could be exercised only by written notice given between three and six months before expiry. The lease contained a holding-over clause providing that, absent one month's written notice to vacate, the tenancy would continue as a monthly periodic tenancy at the same or agreed rent.

Judgment (8 paragraphs)

[1]

INTRODUCTION 1The Applicant Lessee commenced these proceedings by his Application for Original Decision filed 16 July 2012 in which he seeks a declaration that the parties entered into a lease in December 2010 of premises known as Suite 3, Pennant Hills Market Place, 4-10 Hillcrest Road, Pennant Hills, with the Respondent as Lessor and the Applicant as Lessee. The Applicant seeks a declaration that the Respondent has breached the lease and has wrongfully purported to terminate the lease. 2In addition, or alternatively, the Applicant seeks a declaration that the Respondent has engaged in unconscionable conduct in connection with a retail shop lease transactions and/or conduct that is misleading or deceptive to the Applicant in connection with the lease. In addition or alternatively, the Applicant also seeks a declaration that the Respondent has engaged in conduct: "that is likely to mislead or deceive the Applicant in connection with the lease". 3In relation to the allegation of unconscionable conduct, misleading or deceptive conduct, or conduct that is likely to mislead or deceive, the Applicant states in the Application: "The Respondent has refused to date to recognise the lease. Within the meaning of Section 62B(3) of the Act, the Respondent has unduly taken advantage, or purported to have taken advantage, of the relative strength of its bargaining position as against the Applicant. The Respondent by the conduct of itself, its servant's or agent's conduct, has purported to require the Applicant to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the Lessor Respondent. The Respondent by itself, its servants or agents, exerted or purported to exert, undue influence or pressure upon the Applicant. The Respondent by itself, its servants or agents, used or purported to use unfair tactics against the Lessee Applicant. The Respondent by itself, its servants or agents, failed to disclose to the Applicant sufficiently, or at all: i)Any intended conduct of the Lessor which might affect the interests of the Lessee; and ii)Any risk to the Lessee arising from the Lessor's intended conduct. The Applicant was a long term dutiful tenant of the premises and had (amongst other things) incurred expenditure in relation to the premises and his tenancy. The Respondent thereby failed to act in good faith and thereby engaged or purported to engage in conduct contrary to Section 62D of the Retail Leases Act. 4The Respondent Lessor did not file a Response but sought that the Application be dismissed and in para 81 of the affidavit of Paul L a Greca argued that there is a binding agreement of the parties for a lease reached in 2012 and based upon a lease proposal by the lessor dated 16 December 2010.

[2]

THE EVIDENCE 5The evidence in the proceedings comprised the following: 5.1 The Applicant's Original Application filed 16 July 2012; 5.2 The Applicant's Application for urgent interim order filed 16 July 2012; 5.3 The Applicant's Affidavit sworn 22 October 2012; 5.4 The Statement of Paul La Greca, the Agent for the Lessor dated 21 November 2012; 5.5 The Statement of Richard Jack, Senior Manager of Banna Property Pty Ltd, the managers of the relevant shopping centre for the Lessor dated 4 February 2012 ; 5.6 The Statutory Declaration of Jason Michael Griffin, former employee of Banna Property Pty Ltd made on 31 January 2013; 5.7 Exhibit A1 - letter of Steve Rayward dated 5 February 2013 addressed to the Tribunal and enclosing an amended letter of 19 December 2012; 5.8 Exhibit R1 - letter of 28 June 2012 from the solicitors for the Lessor to the Lessee enclosing Notice of Breach of Covenant; 5.9 Oral evidence of Mr Richard Jack; 5.10 Oral evidence of Jason Michael Griffin.

[3]

THE FACTS 6By written commercial lease dated 19 June 1993 ("the 1993 lease"), the Applicant leased the premises, including a 2 parking space, from the Lessor for a term of 12 months with an option to renew the lease for a further term of 2 years. The lease also contained a holding over provision in the following terms: "Unless either party gives the other written notice at least one month before the end of the term that vacant possession shall be given on that day, the lease shall continue as a periodic lease from month to month at the same rent or at a rent which both parties agree to." 7In his Affidavit the Lessee says: "When the lease commencing on 1 July 1993 expired, I exercised my option to extend the lease for a further 2 years to expire on 30 June 1996." 8However, Clause 32 of the written lease required that the option could only be exercised by notice given not more than 6 months and not less than 3 months prior to the expiration of the lease. It is clear that the option was not available to the Lessee when the lease expired because it could only be exercised in that window of 3-6 months prior to the expiry of the term. 9Clause 32 of the 1993 lease requires that the exercise of the option be by "notice in writing". The Lessee produced no copy of any notice exercising the option. The records of the Lessor's Agent do not include any such notice or any other evidence that the option was exercised or that the lease was renewed. Neither party has produced any lease document or record of a lease being prepared, submitted to the lessee or executed by either party. The Tribunal is comfortably satisfied that the option was not exercised. The Tribunal finds that the Lessee did not give any written notice exercising the option and did not give any oral or written notice prior to the option expiring on 31 March 1994.This finding is also supported by other findings about the Lessee being dilatory and careless about of his interests in responding or not responding to lease proposals and other important correspondence from the Lessor's agent about his tenancy. 10The tenancy continued from 1 July 1994 as a periodic tenancy from month to month pursuant to the holding over provision. The rental apparently was increased at times by agreement. 11The evidence in the Lessee's Affidavit from other sources leads to the conclusion that the Agent for the premises, which was Peter A Simon Real Estate Pty Ltd initially, and later Banna Property Group, tended to correspond with the Lessee in writing about renewal of the lease and keep records of communications, whereas the Lessee more often than not communicated orally rather than in writing, and did not keep records of oral communications. 12On 27 August 2008, the Agent, Peter A Simon Real Estate Pty Ltd wrote to the Lessee on behalf of the Lessor proposing a 5 year lease at an increased rental. It was nearly 2 months before the Lessee responded to that proposal in writing and rejected it. The Lessee alleges that the Lessor's agent then assured him orally from time to time up till July 2009 that a new lease would be prepared in accordance with the Lessee's proposals, but none was. The lessee does not testify that he made any written request for the lease after October 2008 or any written complaint about the delay. 13In about July 2009 there was a change of Lessor's agent and Banna Property Group took over. 14On 11 August 2010 Banna Property Group, provided the tenant with a lease proposal. It involved an increase in rental to $15,000 per annum plus GST, a 2 year term from 1 October 2010 with a rental increase for the second year, and no option for renewal. The proposal included a "special condition": "The offer is subject to: a)Tenakau Investments approval; b)Execution and exchange of agreed lease documentation; and c)No binding lease agreement shall exist between the parties until agreed lease documentation has been executed by the Lessee." 15The Lessee rejected the proposal. Apparently he did that orally; not in writing. He testified he told Mr Griffin, of Banna Property Group he wanted a 2 year lease with an option to renew for 2 or 3 years. 16Then a further lease proposal was provided by Banna Property Group on 16 December 2010 and the tenant's response requiring numerous changes was communicated orally the same day. 17It is common ground that the Lessee rejected that proposal and the lease continued as a monthly tenancy. 18The Lessor's Agent provided a further lease proposal to the Lessee dated 16 December 2010. It was for a lease of 2 years commencing 1 February 2011 at a rental of $15,600 per annum plus GST with provision for a 5% increase in the second year. The offer included use of 2 car spaces but did not include any option for renewal. The offer included the following special condition: "The offer is subject to: a)Tenakau Investments approval; b)Execution and exchange of agreed lease documentation; and c)No binding lease agreement shall exist between the parties until agreed lease documentation has been executed by the Lessee. 19After receipt of that document, the Lessee spoke with Jason Griffin who managed the property at Banna Property Group. The lessee rejected the proposal. The issues of disagreement included his address, the absence of an option to renew, the term of the lease being too short, the rent being too high, and the make good provision. He also had issues about signage, water usage, outgoings and payment. Mr Drake claims that he was: "... re-assured by Jason Griffin in words to the effect: 'I will prepare a standard lease based on our discussions as a draft for you to check. As it will not be completed until January because of the Christmas break, I will make it from January 2011 for 2 years. You can have whatever period you choose for the option period." 20However, the Tribunal does not accept that this was the response of Mr Griffin. The reasons we reject Mr Drake's allegation is that Mr Griffin denies it, and the lease subsequently submitted to the Lessee on 17 December 2010 did not satisfy the requirements he had raised with Mr Griffin. It was not consistent with Mr Griffin having agreed to the lessee's objections to the lease proposal.When the draft lease was provided to the Lessee on 17 December 2010 by Mr Griffin and was not to his satisfaction, again the tenant apparently raised his extensive objections orally. He did not put the extensive and detailed "errors or omissions" in writing at all. He declined to sign the lease. 21In his Affidavit, the Lessee says: "There were a number of errors or omissions in the draft lease he provided to me including: a)My correct address b)The length of the lease c)The inclusion of an option period d)There was no provisions in relation to parking e)The increase in rent in the second year of 5% to be amended to CPI f)Amendments were needed to the make good provision to allow for the condition of the premises when the lease commenced g)The air-conditioner was the responsibility of the owner h)Signage i)Parking." 22He wanted the term of the lease to be longer than 2 years. With regard to the issue of an option for renewal, the lessee wanted an option for another 2 years. The lease submitted to him had no option for renewal. 23The Lessee alleges he had discussions with Jason Griffin about those issues on 17 December and Mr Griffin: "agreed to make these changes to the lease and I then signed the proposal, a copy of which is attached and marked with the letter 'K'. I then handed the original of the document to Jason Griffin who said, 'I will prepare the lease for you to sign as agreed'." 24Mr Griffin denies that he agreed to the requirements of the Lessee and denied he said he would prepare a lease that would accommodate the requirements of the Lessee raised in the discussion. He denies the Lessee in his presence signed the lease proposal or gave him a signed copy of the lease proposal. His evidence is that although conversations took place between him and the Lessee after the issue of the proposal of 16 December 2010 and then after the issue of the draft commercial lease, they could not reach an agreement in the subsequent months up to his departure from Banna Property Group on 26 May 2011. He said: "I wish to state that while various aspects of the lease were discussed during the course of negotiations, ultimately no agreement had been reached between Scott Drake and myself, acting on behalf of Banna Property Group on the behalf of the Lessor, for a new lease of the premises at any time during my tenure as property manager for Pennant Hills Market Place." 25He said that particularly in relation to the draft lease, Scott Drake did make several amendments to the lease proposal, but he did not provide it to Mr Griffin as he claimed, and Mr Griffin specifically denied having told him: "I will prepare a lease for your to sign, as agreed". He denies that then or subsequently he provided the tenant with any assurance that the lease would be prepared in accordance with his requirements. His evidence is that at no point were the lease terms agreed. 26The Tribunal prefers Mr Griffin's version of events. One reason is that the Lessee's evidence that the changes he wanted were agreed to on behalf of the Lessor is not consistent with the Lessee signing a copy of the lease proposal of 16 December 2010 and returning it to the Lessor without any alterations or addendum to detail numerous changes he required. Another reason is that searches of the records of Banna Property Group found no trace of the alleged signed copy of the proposal of 16 December 2010, or any record of it having been received from the Lessee. A further reason is that there is no evidence that the Lessor ever approved changes the Lessee required. Finally, the fact that no lease was prepared that accommodated the changes required by the Lessee is more consistent with Mr Griffin's version of events than with the Lessee's version. Another factor supporting that conclusion is other adverse findings in these reasons about the Lessee's credibility. 27Banna Property Group generally provided important communications in writing, and kept reasonable records, but the Lessee did not. In particular he relied largely on oral communications and he generally, it appears, made no records of them. The Tribunal thereforegenerally preferred to rely on the Agent's version of events where it is contradicted by the uncorroborated evidence of the Lessee. 28Mr Griffin left Banna PropertyGroup for other employment on 26 May 2011. He left briefing notes for his successor, Paul La Greca, in which he said that he had had discussions with the Lessee regarding a new lease, but that a lease had not been agreed upon between the parties and this needed to be revisited. 29The Lessee alleges that on 17 December 2010 he returned the lease proposal of 16 December 2010 signed and dated by him. On 9 August 2011 Banna Property Group wrote to him about a new lease. In the first paragraph the letter stated: "We refer to your lease of the above mentioned premises which expired on 30 June 1996 (sic). We note that from this date the lease has continued as a periodic lease from month to month. Further to this we advise that the Lessor now wishes to enter into negotiation with you for a new lease of the premises." 30On 9 August 2011 Banna Property Group as managers of the Centre wrote to the Lessee. They advised that the Lessor wished to enter into negotiations for a new lease and the current lease was merely a periodic lease from month to month. It requested that the Lessee meet with Paul la Greca within 7 days to discuss the market rental for the premises and to outline the terms and conditions proposed until a new lease. The Lessee, however, did not have a meeting with Paul La Greca until 25 August 2011. 31The meeting occurred at the subject premises. Richard Jack also attended. At that meeting the Lessee did not make any mention of any alleged lease or agreement to lease arising from the lease proposal of 16 December 2010 and subsequent events. That is the evidence of Mr Jack, Mr La Greca and the Lessee himself. He did acknowledge that he had received the lease proposal.But he did not at that meeting or any prior occasion indicate to Paul La Greca or Richard Jack that he had accepted any lease offer on or since 16 December 2010. 32Paul La Greca and Richard Jack informed the Lessee that they wished to discuss the terms of a new lease proposal and that any prior lease proposals were not being considered. The Lessee did not then inform them that he had already accepted any previous lease offer. He did say that he was open to discussion for a new lease proposal and he was then informed that a new lease proposal would be sent to him. 33On 6 October 2011 Banna Property Group wrote to the Lessee enclosing a lease proposal. The letter referred to the meeting and said: "We thank you for your comments and have taken them on board in relation to new lease terms and have tabled these with the Lessor. The accompany lease proposal outlines the Lessor's broad terms and conditions under a new lease. In specific response to your request to retaining signage as detailed in Clause 36 of your existing lease, the Lessor wishes to advise that this clause will not be incorporated into any new lease and also such signage will be required to be removed. We wish to advise that signage to the exterior of the Centre is by negotiation with the Lessor, the Lessor reserves the right to grant approval to such signage." 34The lease proposal enclosed was for a term of 1 year with no option for renewal. It was to commence on 1 November 2011, and expired on 31 October 2012. It require the Lessee to undertake refurbishment work to the premises before 31 March 2012 including new carpet, new painting, and removal of neon shopfront signage. The proposal was that there would be exclusive use of one car space. There was a requirement for the Lessee to make good the premises at the end of the tenancy. 35The proposal was subject to special conditions which were: "The offer is subject to: a)Tenakau Investments approval; b)Availability of premises; c)Satisfactory financial and credit references; d)Execution and exchange of lease documentation; e)No binding lease agreement shall exist between the parties until agreed lease documentation has been executed by the Lessee; and, f)This proposal is valid for a period of 14 days." 36The Lessee acknowledges in his affidavit that he received the proposal on 6 October 2011, although the assertion of the Respondent is that it was delivered to him on 7 October. 37The Lessee sent a letter to Paul La Greca. It is dated 4 October. He complained that he had still not received any communication or documentation in regard to his lease. Then he said: "I have been waiting since December 2010, after giving your predecessor the signed lease proposal (dated 16/12/10). I was/have been told that further formal documentation would be forwarded to me. I have enquired about the further documents etc on numerous occasions since and been told all is 'OK', with apologies about the delays (the delays apparently due to management has been busy with other non-related 'to my business' issues including a changes [sic] of managers etc) and when able the documents will be able to be sent to me soon etc." 38The Lessee's letter dated 4 October 2011 was not received by the Banna Property Group until 14 October 2011. The Tribunal finds on the balance of probabilities that the letter dated 4 October was not prepared or posted till after the lessee received the letter of 6 October and the enclosed lease proposal. The lease proposal of 6 October 2011 offered the lessee a lease of only 1 year instead of 2. On the balance of probabilities It was then that the Lessee decided to contend that he had accepted the offer of 16December 2010. 39On 14 October 2011 when the letter dated 4 October2011was received, Richard Jack wrote to the Lessee and informed him that the letter had been received that day and that the lease proposal dated 16 December 2010 had not been approved by the Lessor. The letter stated: "The offer of 6 October 2011 and delivered to you by hand on 7 October is more in line with the current market conditions applicable. For your convenience a copy of the lease proposal dated 6 October 2011, which was delivered by hand to the premises on 7 October 2011, has been enclosed for your consideration." 40On the last day for acceptance of the lease proposal of 6 October (20 October 2011) the Lessee wrote to Paul Le Greca. He claimed that he had not received the proposal of 6 October until 18 October 2011, and referred to the lease proposal being: "... greatly different from the accepted proposal (the copy of which I sent to you etc) and previous assurances/promises given to me by Banna Property Group representative/s." 41In relation to the lessee's claim that he did not receive the lease proposal of 6 October 2011 till 18 October, it is noted that he contradicts that assertion in para 38 of his affidavit where he swore that he received the lease proposal of 6 October 2011 on that day. It is also contradicted by evidence in the Respondent's case that it was hand delivered to the premises on 7 October 2011. 42His letter of 20 October did not signify that the Lessee accepted the lease proposal. The offer then expired. 43The letter of 20 October was not received by Banna Property Group until 25 October 2011.On 26 October 2011, Richard Jack again wrote to the Lessee and the letter was hand delivered the same day. He said: "I refer to your letter addressed to Paul La Greca dated 20 October 2011, regarding the recent correspondence and letter of offer. There appears to be some confusion with regard to the offer. For simplicity: 1)Please disregard the proposal dated 16/12/10. The Lessor has indicated they will not approve the proposal. 2)The revised offer dated 6 October 2011 is the current offer and will remain valid until 1 November 2011. I have enclosed the current offer in case you have disposed of the paper work, thinking, at the time, it had been sent in error." 44The Lessee responded to the letter of Wednesday 26 October by a letter dated Friday 28 October. The 26th October was a Wednesday. The letter was not received by Banner Property Group till Tuesday 1 November, the day the extended offer was to expire. The letter commenced: "It is noted that in the terms Banna Property Group were agreed as set in terms of the proposal dated 16/12/10 accepted 17/12/10." 45This, of course, misrepresented what had happened, because the Lessor had never agreed to the numerous requirements of the Lessee that were inconsistent with the lease proposal of 16/12/10 and the lessee had not signed the lease submitted in accordance with the proposal. 46The letter noted that the proposal of 6/10/11: "substantially varies the approved terms of Banna Property Group", and requested, "additional time to obtain advice and to consider my position". It said that he should be able to respond "by mid-November". 47He did not reply by mid November. Banna Property Group wrote to him on 22 November asking for his response by 5pm on 25 November. The Lessee did not do so. Instead, he sent a letter of 24 November (received 25 November) acknowledging receipt of the letter of 22 November, and advising that he would forward "a detailed response" in the week commencing 28 November. He did not do so. 48Instead, the Lessee sent a letter of 30 November (received 2 December) avoiding the issue. In that letter he suggested that a lease be prepared, "as previously agreed" (i.e. in accordance with the proposal of 16 December 2010). 49The reply from Banna Property Group is dated 5 December 2011. It stated: "As previously advised, on two separate occasions, the offer dated 16.10.10 [sic] is no longer valid. We note that you continue to ignore the offer dated 6.10.2011 and assume you do not find the terms acceptable. Taking the above into account, the Lessor now retracts all offers to lease premises within the Centre and provides one month's notice to vacate. Noting that you are a tenant in good standing we leave you with the option to discuss extending the vacate date to a mutually agreed upon date and ask that you discuss this, as well as your make good obligations within the lease, with Mr Paul La Greca, the property manager." 50In his affidavit sworn 22 October 2012, the Lessee did not mention that letter. Neither in his Affidavit evidence, nor in his oral evidence, did he testify that he had not received the letter, although it was in evidence as Annexure A14 to the Affidavit of Paul La Greca. 51On Tuesday 20 December 2011 Banna Property Group sent a letter to the Lessee with a further lease proposal for the subject premises. The method of delivery is not stated. In the normal course of post, that letter should have been delivered to the subject premises on Thursday, 22 December or Friday, 23 December 2011. However, the Lessee claimed not to have received that letter until "2 February 2012 upon my return to work". He did not give evidence as to the period(s) for which he was not attending work between 20 December 2011 and 2 February 2012. 52Meanwhile, on 30 January 2012, a letter from Banna Property Group was hand delivered to the premises giving notice that the lease proposal of 20 December 2011 was withdrawn and the lease would not be renewed and termination would be effective as at Monday, 27 February 2012. The letter also stated: "We wish to further advise you of your obligations on vacating the premises and requirements to provide the premises in the condition and state of repair as so required by Conditions 12 and 21(a) of the lease. We also ask that you hand over all keys to the premises. On behalf of the landlord, we thank you for some 18 years of tenancy, however, the Lessor now wishes to pursue alternative uses, and therefore seeks vacant possession to undertake works to the premises as it so requires." 53The Lessee alleges that he did not receive that letter until "2 February 2012 upon my return to work." 54The Lessee then instructed Stewart Cuddy & Mockler, solicitors, to act for him and they wrote to Banna Property Group on 8 February 2012. In that letter they threatened litigation against the Lessor on the basis that, "Our client had agreed to accept the terms of an earlier proposed lease, but the lease was not provided in spite of promises to do so." 55The letter stated that the Lessee was prepared to meet with representatives of the Banna Property Group to discuss the matter "forthwith". 56The solicitors wrote again to Banna Property Group on 16 February advising they had received no reply to their earlier letter. They sent that letter by fax. On 17 February, Banna Property Group replied. In that letter, it was stated in relation to the lease offer of 16 December 2010: "Despite our belief that the lease proposal was never sent back to our offices, as a sign of good faith we are prepared to offer the tenant a lease on the same basis as outlined in the lease proposal dated 16 December 2010, subject to the lease start remaining at 1 February 2011, and subject to the tenant paying all back rent owing from the start date. (In this respect we note that Section 8 of the Retail Leases Act provides that if a tenant starts to pay rent as Lessee or ends in possession as Lessee (notional possession in this example) then the lease is considered to have been entered into (at the time of notional entry) even if neither party has executed the lease at that time.) If the tenant rejects our proposal, then we will consider negotiating a new lease, but we put the tenant on notice that that landlord will not agree to a term that extends beyond 31 January 2013. Please advise of your client's intention within 7 days." 57By 28 February, there had been no response by or on behalf of the Lessee. Banna Property Group wrote to the solicitors noting that no response had been received and advising that if they did not have a response advising of the Lessee's intention by close of business on 29 February, it would be assumed that the tenant has accepted the lease proposal and they would begin to charge the Lessee the rental that was payable under the lease proposal "and invoice for the back charge in rent". 58The response from the solicitors was by facsimile on 29 February 2012. It stated: "The offer contained in your letter dated 16 December 2010 was accepted by our client as discussed with your then representative. The documentation was signed and returned. Our client is prepared to proceed on that basis. Please prepare the lease as agreed. Please confirm that you have a copy of the signed agreement as agreed." 59By facsimile of 6 March 2012, Banna Property Group informed the solicitors: "The lease will be prepared, however, due to legislative restraints, we cannot back date the lease to coincide with the commencement date under the agreed lease proposal. Therefore, the start date of the lease provided will be 1 April 2012, and the terminating date will remain as 31 January 2013. A retail lease with a Section 16 Certificate to be executed by the Lessee's solicitor) and a Disclosure Statement will be issued. Please advise if you wish to forward these documents to your office or to your client. We further note a clause will be inserted in the lease to facilitate the payment to the Lessor of the back charge rent payable under the agreed lease proposal." 60An e-mail was also sent on 6 March to the solicitors asking again if they could indicate whether they wanted the lease documentation sent to them or directly to the Lessee. 61On 15 March 2012, the lease documents, the Lessor's Disclosure Statement, Section 16 form, and draft lease were sent to the Lessee's solicitors. It was requested that: "You review this Disclosure Statement with your client and arrange for them to sign and return the original copy so that we can arrange for our solicitors to prepare a new lease reflecting the agreed terms." 62Banna Property Group again sent an e-mail to the solicitors for the Lessee on 23 March 2012 requesting a signed Disclosure Statement and Section 16 Certificate so that they could instruct the Lessor's solicitors to prepare the lease for execution. 63On 11 April 2012, Banna Property Group wrote to the Lessee acknowledging receipt of rental payment cheques, but informing him in light of his acceptance of the lease proposal dated 16 December 2010, the rental had increased and he was in arrears. The outstanding amount for the month of April was $215 plus GST. 64The letter also reminded the tenant that the amount owing for "back charge of rent" (for the period from 1 February 2011 to 31 March 2013) was $2,230 plus GST. The lease proposed incorporated a requirement that these arrears be paid before 1 April 2012. 65On 18 April 2012, Banna Property Group commenced invoicing the Lessee for under-payments in respect of rent. Those invoices were issued monthly. 66On 4 May 2012, a further letter was sent to the Lessee by Banna Property Group regarding the arrears of rental and of the non-payment of the "back-charge of rent" for the period prior to 31 March 2012. A copy of the letter was sent to the solicitors for the Lessee. 67The Lessors engaged solicitors and the solicitors wrote by e-mail to the Lessee's solicitors on 18 May 2012 enclosing a further copy of the draft lease and other supporting documentation and setting out in an attached letter dated 17 May what was required from the Lessee by way of documentation, insurance, a bank guarantee, and payments of arrears of rent, and registration fees for the lease. Neither the Lessee nor his solicitors responded to that letter. 68In the letter the Lessor's solicitors stated: "Based on the fact that your client is a sitting tenant, pursuant to a number of authorities (one of which includes Helou and Ors v Bong Bong Pty Ltd & Anor trading as Regional Retail Properties [2006] NSWADT 128), our client's position is thatthe tenant is bound to the renewal lease regardless of whether or not the tenant returns the executed lease, due to the fact that the parties have reached consensus as to its major terms." 69The Lessor's solicitors again wrote to the Lessee's solicitors on 29 May 2012 by e-mail attaching a copy of their previous letter and copies of the lease and documents. 70On 31 May 2012, the Lessee's solicitor sent an e-mail to the Lessor's solicitor and stated: "My apologies for the delay in responding. We will discussing the proposed lease with our client over the weekend and will get back to you Monday". But there was no further response by or on behalf of the Lessee. 71On 20 June 2012, the Lessor's solicitors sent a further e-mail to the Lessee's which said: "I note that on 31 May, you advised that you would respond to me on 4 June, but we did not hear further. When, due to the lack of response, I called you on 11 June, you advised that you would respond that day, but we still have not received a response. The matter is obviously long outstanding and we really want to resolve it. Can you please advise your instructions by COB today, or we will seek further instructions from our client concerning your client's continuing breach." 72On 28 June 2012, the solicitors for the Lessor sent a letter to the Lessee at the subject premises serving a Notice of Breach of Covenant. The Notice allowed 14 days for the Lessee to pay the arrears of rental and a note to the Notice stated: "Note: The Lessor will be entitled to re-enter or forfeit the lease in the event of the Lessee failing to comply with this notice within a reasonable time - see Section 129 of the Conveyancing Act 1919." 73The Lessee's response was to commence these proceedings on 16 July and to seek an urgent interim order for a stay of the proposed termination of the lease. It appears that such an interim order was later granted. 74On 31 July 2012, Mr Richard Jack met the Lessee at the subject premises and served him with a Notice on behalf of the Lessor that the lease would not be renewed or extended upon its expiry on 31 January 2013. 75After the proceedings had commenced, the Banna Property Group wrote to the Lessee on 29 August 2012, detailing the arrears of rental owing. In that letter they also stated: "In light of the decision by the ADT and our commitment to pursue mediation, we do not seek to re-enter the premises or forfeit the lease. We do, however, stand by our Notice of Lease Termination issued to you by hand by Richard Jack on 31 July 2012, and the lease will not be re-newed upon expiry on 31 January 2013." 76Mediation did not result in an agreement. There was a settlement offer made by the Lessor, but on 28 September, more than a month after the mediation, the Lessee wrote to the Lessor advising that he rejected the settlement offer. 77The hearing was set down for 7 and 8 February 2013. Neither party was legally represented at the hearing and the hearing was completed on 7 February.

[4]

ISSUE 1: WAS THERE A LEASE FOR THE PERIOD 1 July 1994 TO 30 June 1996? 78For reasons set out earlier in these reasons the Tribunal is comfortably satisfied that there was no renewal of the 1993 lease.

[5]

ISSUE 2: WHAT WAS THE NATURE OF THE TENANCY AFTER 30 June1994? 79The tenancy was a holding over under the 1993 lease and is described on the front page of the lease in the following terms: "Unless either party gives the other written notice at least one month before the end of the term that vacant possession shall be given on that day, the lease shall continue as a periodic lease from month to month at the same rent or at a rent which both parties agree to." 80After 30 June 1994, there was a periodic lease from month to month. Generally the terms of the 1993 lease applied.

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ISSUE 3: DID THE PARTIES AGREE TO A LEASE IN December 2010? 81The Lessee seems to have had 2 different positions. The first is that he rejected the proposal in the lease proposal dated 16 December 2010 because of a whole series of issues, some of which were quite significant, such as the fact that he wanted an option for a further 2 years and the Lessor did not propose any option at all. 82He did not put in writing to the Lessor those significant differences. He complained about them orally to Mr Griffin. Mr Griffin subsequently submitted a lease to the Lessee but this was not acceptable to the Lessee as it did not incorporate the changes that he had already asked for. 83According to paragraph 27 of his Affidavit, those issues were quite serious. They included:

He wanted a term of more than 2 years.
He wanted an option for a further 2 years.
He wanted the lease to include parking.
He was not agreeable to the rent increasing by 5% in the second year. He wanted the increases to be CPI increases.
He wanted amendments to the "make good provision""to allow for the condition of the premises when the lease commenced".
He wanted it clarified that the owner was responsible for the air-conditioner.
He was not agreeable to the signage provisions.
There were other issues about parking. 84He did not elaborate on some of these items in the hearing, but there is no evidence that he ever documented his complaints and provided them in writing to the Lessor. What he did do, though, was refuse to execute the lease submitted. 85The Tribunal does not accept the evidence of the Lessee that in his discussions with Mr Griffin on 17 December 2010 after earlier discussions with the Lessee about his objections to the terms of the lease proposal, Mr Griffin said that he would prepare the lease in accordance with the requests of the Lessee. We do not accept that Mr Griffin agreed to the changes in the lease. That is not consistent with his evidence and is not consistent with the fact that after the first discussions the lease prepared did not accommodate the Lessee's wishes. 86The Tribunal finds it more likely than not that the Lessee's conduct of signing a copy of the lease proposal was an after-thought done much later in the hope that he could somehow salvage a lease in accordance with the Lessor's proposal of 16 December 2010 amended to incorporate his objections at the time, or, at worst, the lease proposed by the Lessor in the lease proposal.The Tribunal does not accept that he sent a signed copy to Banna Property as he alleges. 87The Tribunal is comfortably satisfied that the Lessee did not forward a signed copy of the lease proposal to Banna Property Group. His evidence that he did do that is untrue. 88In addition, the lease proposal of 16 December 2010 is clearly subject to conditions being "Tenakau Investments Approval", "execution and exchange of agreed lease documentation", and also "no binding lease agreement shall exist between the parties until agreed lease documentation has been executed by the Lessee." The latter provision was in every lease proposal submitted to the lessee on behalf of the lessor and both parties were well aware of it. 89The Tribunal accepts the evidence of Mr Griffin that the Lessor did not approve the amendments the Lessee proposed to the lease proposal and the Lessee did not agree to the Lessor's Lease Proposal.The Lessor had not been informed that the Lessee would accept the Lease Proposal, because the Lessee had not indicated he would and the Agent had not told the Lessor he would.The Lessee did not sign any lease. 90The conclusion is that there was no agreement in December 2010 for a lease.

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ISSUE 4: DID THE PARTIES AGREE TO A LEASE IN 2012? 91The Lessee repeatedly in the period leading up to February 2012 had claimed that there was an agreement for a lease in accordance with the lease proposal dated 16 December 2010 and alleged that this had been agreed to by the Lessor by its agent. 92By letter of 17 February 2012, from Banna Property Group to the solicitors for the Lessee, Banna Property Group made an offer for a lease in those terms, subject to a subsequent proposal in the facsimile of 6 March 2012 to amend the start date as 1 April 2012, and include a provision which would cover payment of what would otherwise have been arrears of rental for the period prior to 1 April 2012. 93The facsimile from the Lessee's solicitor of 29 February 2012 accepted the proposal and asked for submission of the lease. There was no response by or on behalf of the Lessee in relation to the change to the commencement date and provision for payment of the arrears of rental in respect of the period prior to 1 April 2012. 94The draft lease documentation was sent to the solicitors for the Lessee on 15 March 2012, and on the evidence has not been rejected by the Lessee, nor has the Lessee or his solicitors proposed any alteration. 95Section 8 of the Retail Leases Act, 1994 provides: 8 When the lease is entered into (1) For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first). (2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered to have been entered into as soon as both parties have executed the lease. Note: Therefore, if the lessee starts to pay rent as lessee or enters into possession as lessee, the lease is considered to have been entered into even if neither party has executed the lease at that time. Money paid in advance (purportedly as rent) as a deposit to secure premises for a proposed lease does not constitute rent paid as lessee under the lease. 96In this matter the Lessee was already in possession of the retail shop as Lessee under a periodic lease from month to month when the new lease was proposed. He therefore did not enter into possession of the retail shop as Lessee under the lease. In addition, the Lessee, although the rental payable from 1 April 2012 under the new lease was higher than the rental payable under the periodic lease from month to month, did not pay the higher rental. He also did not pay back money which the new lease required him to pay. Accordingly, the Tribunal finds that the Lessee did not begin "to pay rent as Lessee under the lease". Accordingly, Subsection 8(1) does not apply. 97Neither party executed the lease and accordingly, Subsection 8(2) of the Act does not apply. 98The gist of the agreement reached by the parties was that the lease would be in accordance with the proposal contained in the lease proposal of 16 December 2010. The special condition contained in that document made the offer subject to approval by the Lessorand "execution and exchange of agreed lease documentation", and, "No binding lease agreement shall exist between the parties until agreed lease document has been executed by the Lessee". Both parties were well aware of those conditions. 99The submission of the lease documents by the Lessor's solicitors to the Lessee's solicitors probably satisfies the requirement that the Lessor approves the lease. But on the other hand, there has been no "execution and exchange of agreed lease documentation" and, the condition requiring execution of the lease documentation by the Lessee has not been satisfied. 100The Tribunal finds that there has been no consensus of the Lessor and Lessee as to the terms to be given effect by an executed lease, and that in addition, it was the agreement of the parties that there would be no binding lease agreement between them "until agreed lease documentation has been executed by the Lessee". The Lessee did not execute the lease. 101The Tribunal therefore finds that there was no agreement reached in respect of the proposal contained in the letter of 17 February 2012 from Banna Property Group to the solicitors for the Lessee, being an offer by the Lessor of "a lease on the same basis as outlined in the lease proposal dated 16 December 2010 ..." 102There is authority that a Lessee holding over under its expired lease is not entitled to possession under a new lease yet to be executed (AXA Trustees Ltd v Ergun [unreported 31.8.00] SCNSW, Harrison M. No.11163 of 2000; RandiWix Pty Ltd v Prokana Pty Ltd (No.2) [2003] NSW ADT4; 2004 NSW ConvR 56-060). 103In Masters v Cameron [1954] HCA 72; 1954 (91CLR 353), the High Court considered an agreement for the sale of real property which included a provision: "This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors on the above terms and conditions ..." The document identified the parties, the property, the price and the date for possession, and the Court held (at para. 8): "All the essentials of a contract are there; but whether there is a contract depends entirely upon the meaning and effect of the final sentence in that portion of the document which the Appellant signed".Their Honour described three types of situations where parties have been in negotiation and reach agreement on the terms of a contractual nature, and also agree that the matter of their negotiations shall be dealt with by a formal contract. The first is one where the partieshave reached finality in arranging all the terms of their bargain they intend to be immediately bound to performance, but still propose to have terms restated in a form which will be fuller or more precise, "but not different in effect". 104The second is where: "The parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that to which their agreed terms express or imply, but never the less have made performance of one or more of terms conditional upon the execution of a formal document." 105The third situation is where: "One in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract." 106The Court held that what interpretation should be adopted depends on the intention disclosed by the language the parties have used. 107At paragraph 11 of the Judgment, their Honours said: "Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own." 108They explained that the parties may have made such provision because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, or they may wish to reserve to themselves a right to withdraw at any time until the formal document is signed. 109In this case, the lease proposals clearly define the documentation as of the third type with there being no binding agreement until such time as the Lessee had signed a lease submitted by the Lessor. 110The conclusion is that there was no lease or enforceable agreement for a lease arrived at in the dealings following the letter of 17 February 2012 from Banna Property Group to the Lessee's solicitors. Accordingly the lease continued to be a periodic tenancy from month to month.

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ISSUE 5: DOES THE RETAIL LEASES ACT APPLY TO THE TENANCY AFTER 30 June 2004? 111The Retail Leases Act did not commence until 1 August 1994. By that time the nature of the tenancy was a periodic lease from month to month. 112It is common ground that the premises are a retail shop. Section 6 of the Act provides: 6 Leases to which Act does not apply (1) This Act does not apply to any of the following leases of retail shops: (b) leases for a term of 25 years or more (with the term of a lease taken to include any term for which the lease may be extended or renewed at the option of the lessee), (c) leases entered into before the commencement of this section, (d) leases entered into under an option granted or agreement made before the commencement of this section, (e) any other lease of a class or description prescribed by the regulations as exempt from this Act. (2) This Act does not apply to any lease referred to in this section that is assigned to another person after the commencement of this section. Note: Part 9A provides for certain exemptions regarding Sydney (Kingsford-Smith) Airport. 113Whether the lease is seen as a holding over under the 1993 lease or a new periodic lease commencing on 1July 1994, it was entered into before 1 August 1994 when the Act and Section 6 commenced. Accordingly, the periodic lease from month to month comes within paragraph (c) of subsection 6(1) and the Retail Leases Act 1994 does not apply. 114Section 6A of the Act deals with the application of the Act to short-term leases. Subsection 6A(1) provides that generally the Act does not apply to short term leases. It says that subject to subsection 6A(2) the Act does not apply to a lease of a retail shop "for a term less than 6 months without any right for the lessee to extend the lease ( whether by means of an option to extend or renew the lease or otherwise)." Subsection 6A(2)creates exceptions to the rule in subsection 6A(1). 115But there is no express or implied provision in section 6A or elsewhere that limits the operation of para 6(1)(c) to exclude the application of the Act to any lease entered into before the commencement of section 6. 116As a consequence, the Tribunal does not have jurisdiction in respect of this lease under Section 71 of the Retail Leases Act 1994 for retail tenancy claims or under Section 71A of the Retail Leases Act 1994 for unconscionable conduct claims.The Application should therefore be dismissed for want of jurisdiction. COSTS 117Pursuant to section 77A of the Retail Leases act 1994 and section 88 of the Administrative Decisions Tribunal Act 1997, the general rule is that each party to proceedings in the Tribunal pays his or her own costs, but the Tribunal has power to make a costs order. 118Neither party had legal representation at the hearing. The Respondent appears to not have had legal representation at all in the proceedings. The Applicant sought costs in the application but the applicant has generally been unsuccessful. Some of his evidence in the proceedings was false and knowingly so. The Tribunal finds that there is no justification for an order for the Respondent to pay any of the applicant's costs. ORDERS 119The orders therefore are:

Drake trading as Drake's Handmade Jewellery v Tenakau Investments Pty Ltd

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