LANDLORD AND TENANT – RENEWAL OF OPTIONS – EXERCISE OF OPTIONS
– VALIDITY OF EXERCISE – where two leases over
land for 10 years
– where leases contained three options to renew each for five years
Source
Original judgment source is linked above.
Catchwords
LANDLORD AND TENANT – RENEWAL OF OPTIONS – EXERCISE OF OPTIONS– VALIDITY OF EXERCISE – where two leases overland for 10 years– where leases contained three options to renew each for five years– where plaintiff failed to givewritten notice exercising the options torenew leases – where options lapsed – whether the parties reachedagreementfor new leases on terms as if options validly exercised –whether offer and acceptanceLANDLORD AND TENANT – LEASES AND TENANCY AGREEMENTS – TERM OFLEASE OR TENANCY – DURATION – HOLDING OVER AFTEREXPIRATION OF TERM– where the plaintiff continued in occupation of premises after end ofterm of leases as monthly tenant– whether monthly tenancy could beconstrued as one pursuant to holding over provisions in leasesESTOPPEL – ESTOPPEL BY CONVENTION – where defendant retainedvaluer to assess market rent and obtained information fromplaintiff in period
leading up to expiry of options – whether shared assumption by parties
that options had been exercised
Property Law Act 1974 (Qld) s 241
Amalgamated Investment
& Property Co Ltd (in liq) v Texas Commerce International Bank Ltd
[1982] QB 84, cited
Ambu Nair v. Kelu Nair [1933] HCA 61
(1933) 49 CLR 507,
cited
Australian Energy Ltd v Lennard Oil NL [1986] 2 QdR 216,
cited
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61
(2001) 53 NSWLR
153, cited
Cave v Mills [1862] EngR 494
(1862) 7 H&N 913
(1862) 158 ER 740,
cited
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur
Insurance (Australia) Ltd [1986] HCA 14
(1985-1986) 160 CLR 226, cited
Duncan
Properties Pty Ltd v Hunter [1991] 1 QdR 101, applied
Ewing
International LP v Ausbulk Ltd (No 2) [2009] SASC 381, cited
Gibson v
Manchester City Council [1979] UKHL 6
[1979] 1 WLR 294
[1979] 1 All ER 972,
cited
Grundt v Great Boulder Pty. Gold Mines Ltd [1937] HCA 58
(1937) 59 CLR 641,
cited
Gilbert J. McCaul (Aust.) Pty Ltd v. Pitt Club Ltd [1959] SR
(NSW) 122, cited
Integrated Computer Services Pty Ltd v Digital Equipment
Corp (Aust) Pty Ltd (1988) 5 BPR 11,110, cited
Legione v Hateley
[1983] HCA 11
(1983) 152 CLR 406, cited
Queensland Independent Wholesalers Ltd v
Coutts Townsville Pty Ltd [1989] 2 QdR 40, cited
Republic of India v
India Steamship Co Ltd (No 2) (The Indian Grace) [1997] UKHL 40
[1998] AC 878,
cited
Re Copperart Pty Ltd (1995) 16 ACSR 351, applied
Smith v
Baker (1873) 28 LT 637
(1873) LR 8 CP 350, cited
Thompson v
Palmer [1933] HCA 61
(1993) 49 CLR 507, cited
United Scientific Holdings Ltd v.
Burnley Borough Council [1978] AC 904, cited
Verschures Creameries
Ltd. v. Hull and Netherlands Steamship Co (1921) 2 KB 608, cited
Winks
v WA Heck & Sons Pty Ltd [1986] 1 QdR 226, cited
Yorkshire Insurance Co. v. Craine (1922) 2 AC 541, cited
Judgment (303 paragraphs)
[1]
LANDLORD AND TENANT - RENEWAL OF OPTIONS - EXERCISE OF OPTIONS - VALIDITY OF EXERCISE - where two leases over land for 10 years - where leases contained three options to renew each for five years - where plaintiff failed to give written notice exercising the options to renew leases - where options lapsed - whether the parties reached agreement for new leases on terms as if options validly exercised - whether offer and acceptance
[2]
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - TERM OF LEASE OR TENANCY - DURATION - HOLDING OVER AFTER EXPIRATION OF TERM - where the plaintiff continued in occupation of premises after end of term of leases as monthly tenant - whether monthly tenancy could be construed as one pursuant to holding over provisions in leases
[3]
ESTOPPEL - ESTOPPEL BY CONVENTION - where defendant retained valuer to assess market rent and obtained information from plaintiff in period leading up to expiry of options - whether shared assumption by parties that options had been exercised
[1] MARGARET WILSON J: The plaintiff operates the Maraboon Motor Inn at Emerald in Central Queensland. The motel stands on three parcels of land, two of them owned by the defendant and leased to the plaintiff pursuant to leases for 10 years from 1 July 1999. Each lease contained a renewal option, which the plaintiff did not validly exercise.
[28]
[2] The plaintiff seeks a declaration that it is the lessee of those two parcels on terms as if the options had been validly exercised for the rent stipulated in certain correspondence and consequential orders. The defendant seeks by counterclaim declarations that the options were not validly exercised, that the leases have expired by the effluxion of time, and that it is entitled to recover possession of the land, and consequential relief.
[29]
[3] Robert Maxwell Waterson ("Max Waterson") is the father of Robert Duncan Waterson ("Robert Waterson") and Christopher Paul Waterson ("Chris Waterson").
[30]
(a) Robert Waterson and Chris Waterson were the directors of the plaintiff, and Max Waterson was a shareholder in the plaintiff;
[31]
(b) Frederick Mark Murray ("Murray"), John James Crossan ("Crossan") and Max Waterson were the directors of the defendant, which held the two parcels of land on trust for the Weemah Park Unit Trust.
[32]
[5] The Waterson family had various businesses.[1] Robert Waterson was formerly a teacher, but for about ten years had been occupied in the family businesses, attending to their bookkeeping and financial management. He lived in Victoria. I am satisfied that he had authority to act on behalf of the plaintiff at all material times.
[33]
[6] Murray was a surveyor by profession. He lived in Emerald, where his wife Anne Murray practised as a solicitor.
[34]
[7] There was always a certain amount of friction between Robert Waterson and Murray.[2]
[35]
[8] Crossan was a retired solicitor. He and Max Waterson were aged in their early 70's.[3] Crossan lived about 50 km outside Emerald, where he carried on business as a grazier.
[36]
[9] The motel expanded over time. In 1993 the parties entered a lease for seven years from February 1994, but only in relation to one of the parcels of land. Then they entered into leases for the two parcels ("lots 2 and 52") in 1999.
[37]
[10] The third parcel of land ("lot 1") was owned by Radfizz Pty Ltd (a company associated with Crossan) and the plaintiff.
[38]
[11] In all material respects, the leases were in identical terms. Under each, the term was 10 years commencing 1 July 1999, and the rent was expressed as an amount per annum payable by equal monthly instalments in advance. The leases contained provisions for rent review after five years, three options to renew each for five years, the fixing of the rent payable during the renewed terms, and holding over if the plaintiff remained in possession after the expiration of the leases.
[39]
[12] The provisions about the first option to renew were in these terms -
17.1.1 not less than six (6) months prior to the expiration of this Lease gives written notice to the Lessor that it wishes to renew this Lease; and
[42]
17.1.2 has at all times up to the date of expiration of the terms of this Lease complied punctually with its obligations under this Lease,
[43]
then the Lessor will grant to the Lessee a further lease of the Premises on the following conditions:
[44]
17.1.3 the term of the further lease will be the period referred to in item 8 of the Reference Data;
[45]
17.1.4 the rent for the first year of the further term will be determined in accordance with cl 3.2.2 as if that year were a continuation of the term of this Lease and the date of commencement of the further term were a Market Review Date;
[46]
17.1.5 the terms and conditions will be the same as the terms and conditions of this Lease except for the changes specified in the Modification Schedule at the end of this clause; and
[47]
17.1.6 the Lessee will pay all costs of the Lessor including the legal costs of the Lessor calculated on a solicitor and own client basis of and incidental to the grant of the new lease
[48]
A. This cl 17.1 and Items 8 and 9 of the Reference Data will be deleted
[49]
B. The Market Review Dates to be inserted in Item 5 of the Reference Data will be the Market Review Dates referred in Item 9 of the Reference Data.
[50]
C. The rent for the second and subsequent years of the further term will be determined in accordance with cl. 3.2.1(b)."
[51]
[13] Item 8 of the Reference Data was as follows -
[52]
[14] Clause 3.2 was concerned with Rental Reviews. The rent was fixed for the first five years at the amount shown in Item 4(b)(i) of the Reference Data. There was then to be a review of the rent payable from 1 July 2005, which was a Market Review Date stated in Item 5 of the Reference Data, the new rent being -
[53]
(a) the Rent reserved and payable during the Lease year last concluded; and
[54]
(b) the annual market rent for that Lease Year calculated in accordance with cl 3.3 and cl 3.4."
[55]
The rent so determined was then to be reviewed annually in accordance with cl 3.2(1)(b), which provided that the rent for the ensuing year be the higher of that obtained by a calculation involving a CPI index and that payable in the Lease Year last concluded.
[56]
(1) At any time not earlier than three (3) months (in which regard time is not essential) prior to each date stated in Item 5 of the Reference Data ('the Market Review Date') the Lessor may notify the Lessee in writing of the amount which the Lessor considers to be the annual market rent appropriate to the Premises as from the Market Review Date.
[57]
(2) Should the parties be unable to agree on the rent to apply from the Market Review Date, the Lessee may notify the Lessor in writing within the time specified in cl. 3.4.(1) that the Lessee requires the rent to be determined in accordance with cl 3.4.
[58]
(3) Unless notice is given by the Lessee within the time specified in cl. 3.4(1), the amount stated in the Lessor's notice given under cl. 3.3(1) becomes the Rent reserved by this Lease on and from the Review Date in substitution for the amount appearing in Item 4 of the Reference Data or, where applicable, the Rent previously determined.
[59]
(4) If the Lessor fails to give notice referred to in cl. 3.3(1) within the period of three (3) months, the Lessor will not forfeit its right to give notice at an [sic] later date or its right to receive the benefit of any increase in Rent as from the Market Review Date AND in that case the relevant provisions of cl. 3.3, cl. 3.4 and 3.5 take effect by reference to the date of delivery of the notice by the Lessor and any increased Rent agreed to be paid or payable takes effect and is calculated from the Market Review Date. date of service of the Notice."
[60]
[16] Clause 3.4 provided an Expert Determination Procedure to be invoked where the Lessee disagreed with the Lessor's notice of proposed rent given under cl 3.3(1). That clause began -
[61]
"3.4 Dispute as to Rent/Expert Determination Procedure
[62]
If the Lessee disagrees with the Lessor's notice of proposed rent given under cl. 3.3(1), then the following procedure applies:
[63]
(1) Within twenty-one (21) days of the delivery of the Lessor's notice given under cl. 3.3 (1) (in which regard time is essential) the Lessee must give written notice to the Lessor that it disputes the rent proposed;"
[64]
[17] Clause 15.8 dealt with Holding Over in these terms -
[65]
If the Lessee with the consent of the Lessor remains in occupation of the Premises after the expiration of the term of this Lease then:
[66]
15.8.1 the Lessee will be a tenant from month to month of the Lessor of the Premises on the terms of this Lease so far as they are applicable to a monthly tenancy;
[67]
15.8.2 the monthly tenancy may be determined by either party in the manner prescribed by Div 4 of Part VIII of the Property Law Act1974; and
[68]
15.8.3 the rent payable in respect of the monthly tenancy will be the amount of Rent payable monthly under this Lease immediately prior to the expiration of the term and will be payable in advance."
[69]
(a) the options had to be exercised in writing before 1 January 2009;
[70]
(b) the first step in fixing the rent from 1 July 2009 was notice by the defendant to the plaintiff of what it considered to be the annual market rent from 1 July 2009;
[71]
(c) the earliest date upon which the defendant could give that notice was 1 April 2009 (although in that regard time was not essential);
[72]
(d) the plaintiff then had 21 days in which to give the defendant notice that it disputed the rent (time in that regard being essential);
[73]
(e) if the plaintiff did not dispute the rent notified by the plaintiff, then that became the rent payable from 1 July 2009;
[74]
(f) if the plaintiff did dispute the rent, then it was to be determined by a valuer in accordance with cl 3.4;
[75]
(g) if the plaintiff remained in possession after the end of the leases, it would be on a month to month basis at the rent payable immediately prior to the end of the leases.
[76]
[19] The rent for the sixth year of the leases was not reviewed in accordance with the procedure in cl 3.3. The plaintiff engaged a valuer to undertake a rent review and then put a proposal to the defendant that the rent for the ensuing year be $350,000 with CPI increases until the next review. That was accepted.
[77]
[20] By letter to the directors of the defendant dated 22 February 2008, Robert Waterson on behalf of the plaintiff submitted a proposal that the leases be extended by the provision of two further five year options for renewal beyond the three options already provided. That would have increased the total period under the initial leases and options from 15 years to 25 years. The defendant made no written response to that letter. On 18 April 2008, he spoke with Murray about the proposal. Murray's response was that he did not see why the defendant could not run the motel when the leases expired; he commented[4]-
[78]
[21] On 29 May 2008 the proposal was discussed at a meeting of the plaintiff's directors. The minutes record -
[79]
"4. Weemah situation: John would possibly extend lease, Mark already telling people he is going to run the Motel.
[80]
Robert to re-approach Weemah: we are not looking to sell, but still wish to extend. Would undertake not to sell without Weemah approval within 5 yrs."
[81]
[22] On or about 5 June 2008, Robert Waterson had a telephone conversation with Crossan. At Crossan's suggestion, Robert Waterson re-submitted the proposal to the defendant under cover of a letter dated 6 June 2008. In the covering letter he said -
[82]
"The proposal is relatively unchanged, but I would make the following notes:
[83]
prefer to continue running the Maraboon Motel business for at least another five years (rather than selling the business now).
like to involve Dennis Daly in the business in a manner which would motivate him to remain with the business for at least another five years.
[84]
undertake not to sell the business within the next five years without the consent of Weemah Park.
[85]
There is no doubt that Glenlaton Investments is requesting a lease extension to increase the value of that Land, however the offer made is mutually advantageous and not an attempt to gain advantage at the expense of Weemah Park.
[86]
The consideration offered to Weemah Park is commensurate with the increase in value gained by Glenlaton Investments.
The additional one-off increase in rental above CPI has a flow on effect. (We acknowledge that CPI has risen since our initial request - Brisbane 12 months CPI to March 08 was 4.8%.)
This high CPI has also impacted on the cost of running the Motel.
The consideration offered would be available for Weemah Parks use now.
Increased competition in Emerald is starting to reverse the historical 'boom' trend of the town. Our May 08 occupancy was down by 328 rooms on last year, over $23,000 ex GST. (This was the first month that the Mayfair Park Motel operated on all rooms.)
[87]
Our previous request was targeted for July 1st 2008. As Glenlaton Investments would need to arrange finance to purchase the extension it may now be difficult to implement any change (if agreed) by that date."
[88]
[23] According to Robert Waterson, the plaintiff had no plan to sell the business in the immediate future, but the "idea" of selling was always present in the sense that all options with respect to business assets needed to be kept in mind.[5] He wanted to give the directors of the defendant some comfort that the business would not be sold in the immediate future.[6]
[89]
[24] For some years, Murray had thought the rent being paid was too low.[7] It is clear that he and Crossan thought the plaintiff would sell the business, and they did not want that to happen.[8] Conscious of his own age (he was then almost 74), Crossan did not savour the prospect of the leases being extended for 25 years.[9]
[90]
[25] By letter dated 4 July 2008 Crossan, in his capacity as a director of the defendant, wrote to the secretary of the plaintiff -
[91]
"Your letter of 22nd February last was tabled at a meeting of Weemah Park Directors on 25.6.2008 and after much discussion and consideration it was resolved that an extension be not granted and we will proceed to get a market appraisal for review at the end of your principal lease."
[92]
[26] Murray gave the following evidence in cross-examination -
[93]
"So when it was resolved in late June of 2008 by the directors of Weemah Park that there be a market review of the rent obtained, it was with a view to fixing the rent that would be payable from the start of the option period, wasn't it?-- That's correct.
[94]
Because at that stage it was the understanding of Weemah Park that Glenlaton would be continuing under the option?-- That's correct." [10]
[95]
And at that stage Crossan wanted the plaintiff to remain as the operator of the motel for the long term.[11]
[96]
[27] The defendant retained its accountant Peter Maundrell ("Maundrell") to obtain a valuation of the market rental. In September 2008 the plaintiff provided Maundrell with information he requested for the use of the valuer; that information included data about the occupancy rate. In October 2008, in response to a telephone inquiry by Murray, Robert Waterson sent occupancy rate data to Murray by email.
[97]
[28] The report of the valuer, Pat Lyons of Taylor Byrne, is dated 8 December 2008. It deals with the market rent for the whole site - that is, the three parcels of land. The report concluded -
[98]
"The Annual Market Rental of the Maraboon Motor Inn in terms of the conditions of the relevant lease agreements as at 8 December 2008 is considered to be:-
[99]
(Five Hundred and Seven Thousand and Five Hundred Dollars
[100]
The valuer recommended that 62/70 of that amount be apportioned to the two parcels of land owned by the defendant (and the balance to the third parcel).
[101]
[29] The last day on which the options might be exercised was 31 December 2008. It passed without the plaintiff exercising the options in writing.
[102]
[30] Precisely when the valuer's report was received by the defendant was not established at trial. On 20 January 2009 Crossan wrote to his fellow director Max Waterson -
[103]
"The first option period for the lease of Maraboon Motor Inn commences on 1st July 2009 and following the last meeting of Weemah Park instructions were given to our accountant Peter Maundrell & Co to obtain a rental assessment of the property from Taylor Byrne Valuers of Emerald and Rockhampton.
[104]
A rental assessment has now been received and attached hereto is a copy of that assessment for your perusal. A copy has been made available to Mark.
[105]
Under the terms of the lease 3.3(1) Weemah Park is required to notify Glenlaton Investments P/L in writing of the amount of rent the lessor considers to be the annual market rent appropriate to the premises from 1st July next.
[106]
No correspondence has yet been sent to Glenlaton and as a Director of Weemah Park your comments are awaited.
[107]
On my reading of the rental assessment I believe the Valuer has suggested the rent for Lots 2 & 52 to be $377,000.00 plus GST and Lot 1 $130,500.00 plus GST total $507,500.00 plus GST."
[108]
[31] On about 20 January 2009, Max Waterson showed this correspondence to his son Robert, and asked him to check the calculations in it.
[109]
[32] After he wrote the letter of 20 January 2009 Crossan received a telephone call from Murray, who told him the plaintiff had not exercised the options. Crossan looked up the leases. He considered Murray was correct. After some time, he contacted Max Waterson, and told him the plaintiff had "slipped up on exercising the option", and would become a tenant from month to month. [12] Crossan never wavered from that view.[13]
[110]
[33] Robert Waterson gave evidence of having a telephone conversation with Murray between 20 and 25 January 2009 when Murray said he did not believe the plaintiff had validly exercised the options.[14] Murray remembered such a conversation, but thought it was later: at one point he said he thought it was after an email of 6 February 2009 (to which I will come in a moment),[15] and at another he denied it was between 20 and 25 January 2009.[16]
[111]
[34] There was a conversation between Robert Waterson and Crossan before Robert Waterson wrote a letter to the directors of the defendant dated 25 January 2009 purporting to exercise the options. It is common ground that Robert Waterson sought Crossan's advice on what he should say in the letter. The plaintiff pleaded as follows -
[112]
"23 On 25 January 2009, Mr John Crossan of the Defendant said to Mr. Robert Duncan Waterson of the Plaintiff in a telephone conversation, inter alia;
[113]
23.1 Mr. Crossan believed that the option had been validly exercised;
[114]
23.2 Mr. Crossan said to Mr. Robert Duncan Waterson:
[115]
'...remember there are three votes in Weemah and Mark is only one of them';
[116]
23.3 Mr. Robert Duncan Waterson asked Mr. Crossan if he should submit, on behalf of the Plaintiff, further correspondence exercising the option;
[117]
23.4 Mr. Robert Duncan Waterson asked Mr. Crossan what such correspondence should say;
[118]
23.6 Mr. Crossan then proceeded to provide Mr. Robert Duncan Waterson with some sample wording to be included in such correspondence." [17]
[119]
[35] Robert Waterson's evidence of this conversation was -
[120]
"What did you say to Mr Crossan?-- I said, 'Look, I've been talking to Mark and he's of the opinion we haven't exercised the option. I believe we have. Is there anything that we need to do? Do I need to send in a formal letter to Weemah Park?' John then said, 'You probably should.' I asked him, 'Should it be a really detailed letter with me explaining why I believe we've exercised the option, or should it just be something short', and I said - I think I said to him something like, 'We don't want to start a blue here' or, 'Let's not enter into a big argument. Should it be a detailed letter or just a short one?' John's specific words were, 'The less said in a letter the better.' He then gave me some of the sample words. Now, it's only - it's only two lines long. The words he gave me, you know, 'hereby exercise our right under the terms of our lease to exercise the option to renew.' Now, I took those words, and although I probably haven't duplicated them exactly, I've used those words in writing that letter, and I sent it within minutes of - I faxed it within minutes of having the telephone conversation.
[121]
And did Mr Crossan in that conversation say anything to you about the position that had been indicated to you by Mr Murray about his view?-- I had said to him I was just a bit worried about what Mark had said, and John said, 'Don't worry about Mark. Remember there are three votes in Weemah and Mark is only one of them.'" [18]
[122]
[36] This version of the conversation is consistent with Robert Waterson's having spoken with Murray. Crossan did not recollect Robert Waterson saying Murray had told him the options had not been properly exercised.[19] (Of course there was another source from which Robert Waterson may have learnt that the defendant was asserting the plaintiff had not exercised the options - his father Max Waterson.) Robert Waterson told Crossan he wanted to exercise the options and asked what he should say.[20] According to Crossan, he told Robert Waterson "The less said the better."[21] Crossan said in cross-examination -
[123]
"... I was one of three directors of Weemah Park. I wasn't in a position that I could make decisions and I listened to what he had to say and I thought I was helpful to him by telling him the less said in his letter the better." [22]
[124]
He recalled at one stage saying that there were three directors of Weemah Park, but he was not sure whether it was in that conversation.[23]
[125]
[37] Shortly after speaking with Crossan, Robert Waterson sent a letter in the following terms to Crossan and Murray. He faxed it to Crossan and emailed it to Murray. Then he posted the original on 27 January 2009.[24]
[126]
On behalf of Glenlaton Investments Pty Ltd I hereby exercise our right under the terms of our lease to exercise the option to renew for the further term of five years from 1 July 2009.
[127]
[38] Crossan was cautious in what he said to Robert Waterson. He did not say that he believed that the options had been validly exercised. Nor did he say that he considered they had not been and that plaintiff would have a month to month tenancy. He appreciated that there was always a degree of friction between Robert Waterson and Murray, and adopted the position of peacemaker. I think it is more probable than not that he said something along the lines "The less said the better," and I do not think anything turns on his precise words in that regard. I think it is more probable than not that it was during that conversation that he referred to there being three directors of Weemah Park and Murray being only one of them. I am satisfied that he told Robert Waterson the thrust of what he should say in the letter.
[128]
[39] On 6 February 2009 Murray emailed Robert Waterson. He sent a copy to Crossan. Murray said in the email -
[129]
"In relation to your email, I wish to advise you that your Notification of Intention to take up the options is Null & Void as it is well past the date stipulated in the lease document.
[130]
I intend to further speak about this matter with both Max & John and will advise further following such discussions.
[131]
In relation to the rental I have to say that I personally don't consider it very satisfactory as it does not align very favourably with other motels in Emerald. I note in particular that the small motel next door has a room rate some 20% greater than that adopted for the Maraboon.
[132]
I am however obliged to accept this and do so without any further argument."
[133]
He chided Robert Waterson for having communicated directly with the valuer, describing his conduct as -
[134]
"... a little over the top especially in view of the fact that Weemah Park could be searching for a new leasee [sic] at this present time."
[135]
[40] I am satisfied that by the time Murray sent that email both he and Crossan knew that Max Waterson had passed the internal correspondence of 20 January 2009, or at least the contents of it, on to Robert Waterson - and they were annoyed that he had done so.[25]
[136]
[41] Murray did not speak with Max Waterson as foreshadowed in his email of 6 February 2009. Nor did he revert to Robert Waterson as he said he would.[26]
[137]
[42] Some correspondence of an administrative nature about changed arrangements for paying the rent under the then existing leases followed.
[138]
[43] About this time Max Waterson put a financing proposal to Crossan and Murray, which involved the Weemah Park Unit Trust (of which the defendant was trustee)[27] borrowing money from a bank and repaying loans from the beneficiaries. Robert Waterson helped his father Max prepare the proposal.
[139]
[44] On 1 April 2009 Crossan on behalf of the defendant wrote to Robert Waterson in these terms -
[140]
As you are aware rental on the above property is due for review and a valuation assessment received from Taylor Byrne Valuers.
[141]
At a meeting of the Directors of Weemah Park held at Emerald on 18th March last a resolution was passed that the rent assessment be adopted on and from 1st July 2009 i.e. Lots 2 & 52 commence at $449,500.00 and Lot 1 $58,000.00 plus GST.
[142]
The proposal to borrow further funds is currently being considered and whence this matter is resolved we will notify you in relation to rental payments."
[143]
The rent specified in that letter was approximately $60,000 per annum more than that payable under the leases.[28]
[144]
[45] On 13 April 2009 Robert Waterson wrote to the directors of the defendant disagreeing with the rent proposed in the letter of 1 April 2009. Relevantly, he said -
[145]
"Rather than resorting to dispute resolution under the terms of the lease we would much rather continue the co-operative business relationship we have mutually enjoyed and reach a negotiated agreement on the new rental."
[146]
He offered to meet to discuss the new rental and asked whether the directors would have the valuer consider the points he had raised about the assessment of the market rent.
[147]
[46] Robert Waterson telephoned Max Waterson, who declined the invitation to a meeting. He said the other matter referred to in the letter should be taken up with Murray.[29] Murray acknowledged receipt of the correspondence in an email to Robert Waterson on 15 April 2009. He discussed obtaining a valuation of the freehold to support the financing proposal. Robert Waterson responded that evening: he hoped they could sort out their differences about the rent assessment rather than proceed to an expert determination.
[148]
[47] The next day Robert Waterson sent Murray a copy of the email he had previously sent the valuer. He said that he was doing so "as requested" - but Murray was adamant he had made no such request.[30] Later that day Robert Waterson emailed Murray again, suggesting he delay obtaining the freehold valuation until the rent was "sorted".
[149]
[48] On 17 April 2009 Murray instructed Taylor Byrne to value the defendant's interest in the freehold.
[150]
[49] On 23 April 2009 Robert Waterson wrote to the directors of the defendant -
[151]
"After further consideration and discussions with Mark, the Directors of Glenlaton Investments Pty Ltd have determined to accept the rentals for the further term of the lease of the Maraboon Motor Inn as adopted at your meeting of 18th March and set out in your letter of 1st April, 2009."
[152]
[50] Copies of the letters of 1 and 23 April 2009 were provided to the valuer by someone in Murray's office.[31] However, as the plaintiff conceded at the trial, neither Crossan nor Murray instructed the valuer that the options had been exercised.[32] The valuation of the freehold, dated 6 May 2009 was emailed to Murray on 11 May 2009. The valuer (Pat Lyons) said -
[153]
"As discussed previously the first option period for the above leases falls due on 30 June 2009. We have undertaken a separate rent review of the property for the lessors. Rent was assessed at $507,500 which has been accepted by both the lessees and lessors. Letters to this affect are attached as annexures to this report.
[154]
The rental of $507,500 was assessed for the full complex including Rooms 62-69 with the rental to be apportioned in the ratio of 62/70 or $449,500 for the subject property and 8/70 for the part excluded from our valuation i.e. Rooms 62-69."
[155]
[51] Meanwhile negotiations with banks (Rabobank and Westpac) were continuing. It was Max Waterson who had the contact with Westpac on behalf of the defendant. When Westpac asked for more information, Robert Waterson (who was helping his father) supplied it by email on 25 May 2009. Robert Waterson said in cross-examination -
[156]
"The - the approval of any loan that they wanted required a secured tenant, and that - yes, that gave me relief from my concerns."[33]
[157]
[52] About this time Robert Waterson asked his solicitors to advise what was necessary to document the extension of the leases on the basis of the options having been exercised.[34] They advised that the Department of Natural Resources would require a "Form 13 Amendment".
[158]
[53] On 28 May 2009 Robert Waterson telephoned Crossan about the need for a Form 13. Crossan replied that he did not know what a Form 13 was, but that he would look into it and get back to him. Crossan's wife downloaded a Form 13 from the internet.
[159]
[54] There was another telephone conversation between Robert Waterson and Crossan on about 5 June 2009, when Crossan said that there was no need for a Form 13.[35] According to Robert Waterson, Crossan said it was not necessary -
[160]
"If you fill in this form with the Department of Natural Resources you'll have to pay stamp duty for the renewed option period."[36]
[161]
[55] Crossan recalled saying that the form was unnecessary, but had no other recollection of the conversation. He thought the form was unnecessary because the plaintiff had a month to month tenancy - but he did not say this to Robert Waterson.[37]
[162]
[56] Robert Waterson emailed his solicitor after the conversation. He said -
[163]
"John Crossan has obtained a Form 13 and still maintains it is not necessary as the lease document the options.
[164]
He did note that we only paid stamp duty on 10 years initially and so we would be up for another 5 yrs stamp duty.
[165]
Does the registration of the lease cease after the stamp duty period?"
[166]
[57] I do not accept Robert Waterson's version of the conversation. As his solicitors subsequently advised him, because the renewed term was in excess of three years, it had to be registered to be binding on third parties.[38] It is unlikely that an experienced solicitor would have overlooked this requirement and said that the forms were "unnecessary because the lease documents the options." He may have misunderstood something Crossan said. It is possible that Crossan mentioned stamp duty, because this used to be payable on the renewal of leases, and it was usual for the tenant to have to pay it.
[167]
[58] In a handwritten letter to Crossan dated 25 June 2009 Robert Waterson said -
[168]
Copies of Form 13s as discussed. If you were able to consider and discuss with Mark it would be appreciated.
[169]
There are four copies for each lease (Lot 2 and Lot 52). If you can keep one copy of each and send the other three to our solicitor in the attached express post. (One for us, one for our solicitor and one for Dept of Natural Resources.)
[170]
I have attached to this note some further advices from our solicitor. Please share with Mark if you think appropriate.
[171]
Mark had asked that our solicitor detail the reasons 'the lease still exists'. I have asked our solicitor to keep the letter 'low key' as I don't wish to enter into argument.
[172]
[59] The solicitors' letter, dated 24 June 2009, was in these terms -
[173]
"We refer to the above matter and confirm that our client has exercised its Option to extend the term of the Lease for a further five (5) years commencing on the 1st of July, 2009.
[174]
We now enclose Form 13 Amendments of Lease for Lots 2 and 52 signed by our client.
[175]
We note that it is necessary to register the Form 13 Amendments of Lease at the titles office to formalise the extension of the terms of the Lease.
[176]
We enclose a copy of a letter from Weemah Park Pty Ltd to our clients dated the 1st of April, 2009. You will see that the parties have agreed on the Rent payable for the first year of the extended term commencing on the 1st of July, 2009.
[177]
We await receipt of the signed Form 13 Amendments of Lease at your earliest convenience.
[178]
If you have any queries please do not hesitate to contact us."
[179]
I do not accept Crossan's evidence that he received the solicitors' letter and a set of forms, and then Robert Waterson's letter and another set of forms.[39] I am satisfied he received Robert Waterson's letter, the solicitors' letter and the forms at the same time.
[180]
[60] Crossan did not discuss this correspondence with Murray.[40]
[181]
[61] From 1 July 2009 the plaintiff continued to occupy the motel premises, paying the rent specified in Crossan's letter of 1 April 2009. The defendant did not execute the Forms 13 and return them to the plaintiff. Instead there was correspondence between the solicitors for the plaintiff and Anne Murray & Co (solicitors engaged by Crossan and Murray) in which the battle lines were drawn. Max Waterson sided with the plaintiff.
[182]
[62] The plaintiff lodged caveats over the titles, and in due course commenced this proceeding.
[183]
Effect of failure to exercise options in timely way
[184]
[63] In Duncan Properties Pty Ltd v Hunter[41] lessees of a warehouse purported to exercise an option to renew their lease by letter sent after the time for giving notice of exercise of option. The lessor agreed to accept the purported exercise of option. Subsequently the lessees obtained other premises and refused to take the lease for the renewed term. De Jersey J said of the failure to exercise the option by the due date[42] -
[185]
"How should one characterise what occurred? The due exercise of the option of renewal in cl. 56 depended on exact compliance with its notice requirement. In my opinion, when notice was not given by 1 May 1989, the option lapsed completely, that result conforming with views expressed in United Scientific Holdings Ltd v. Burnley Borough Council,[43] and the decision of the New South Wales Full Court in Gilbert J. McCaul (Aust.) Pty Ltd v. Pitt Club Ltd.[44]"
[186]
As White J observed in Re Copperart Pty Ltd,[45] that seems to be the generally accepted approach, always subject to the terms of the option. In Duncan Properties de Jersey J found that the parties had subsequently agreed upon the grant of a new lease as if the option had been validly exercised.
[187]
[64] I respectfully adopt His Honour's approach to the present options. When the plaintiff failed to give timely written notice exercising the options, the options lapsed. Its letter of 25 January 2009 could at most take effect as an offer to enter new leases on terms as if the options had been duly exercised.
[188]
[65] Unless the parties agreed upon new leases as if the options were validly exercised, then, subject to the possibility that the defendant is estopped from asserting that there are no valid leases as if the options were exercised, the plaintiff's continued occupation of the premises from 1 July 2009 has been as a monthly tenant.
[189]
[66] However, that monthly tenancy could not be construed as one pursuant to the holding over provisions in the leases. Under those provisions, the rent payable would have been that payable immediately before the expiration of the leases. The plaintiff has been paying a considerably higher rent, being that proposed by the defendant on 1 April 2009 and accepted by the plaintiff on 23 April 2009.
[190]
[67] Of course, the parties were at liberty to agree upon a monthly tenancy at a higher rent - and it is the defendant's case that they did so.
[191]
Alternative formulations of plaintiff's claim - contract and estoppel by convention
[192]
[68] Counsel for the plaintiff formulated their client's case on two alternative bases - contract and estoppel by convention.
[193]
[69] Whether the parties reached an agreement having contractual effect is to be determined objectively. The traditional approach is to look for offer and acceptance, although there can be an implied contract in circumstances where acceptance of an offer cannot be established.[46] In Brambles Holdings Ltd v Bathurst City Council[47] Heydon JA reviewed relevant case law and academic commentary. In doing so, His Honour said [48]-
[194]
"Thus offer and acceptance analysis is a useful tool in most circumstances, and indeed is 'normal' and 'conventional' (Gibson v Manchester City Council.[49]) But limited recognition has been given to the possibility of finding that contracts exist even though it is not easy to locate an offer or acceptance. In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd,[50] McHugh JA (Hope JA and Mahoney JA concurring) said:
[195]
'It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of 'offer', 'acceptance', 'consideration' and 'intention to create a legal relationship' which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship ...
[196]
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.'"
[197]
See also Winks v WA Heck & Sons Pty Ltd[51] and Australian Energy Ltd v Lennard Oil NL.[52]
[198]
"(1) An offer terminates if there is an express or implied rejection of the offer by the offeree.
[199]
(3) Any acceptance of an offer on terms which differ from those in the offer is an implied rejection of the offer.[53]"
[200]
"[80] If offer and acceptance analysis is not always necessary or sufficient, principles such as the general principle that a rejection of an offer brings it to an end cannot be universal. A rejected offer could remain operative if it were repeated, or otherwise revived, or if in the circumstances it should for some other reason be treated, despite its rejection, as remaining on foot, available for acceptance, or for adoption as the basis of mutual assent manifested by conduct."
[201]
[72] Counsel for the plaintiff presented several alternative formulations of their client's claim in contract. One of the alternative cases pleaded was that -
[202]
"42. .......by the said leases, letters dated 20 January 2009, 25 January 2009, 1 April 2009 and 23 April 2009 aforesaid, there came into existence new leases from 1 July 2009 as if the options had been exercised for the rent as agreed in the latter two letters."[54]
[203]
The argument actually presented was that there was an express contract - that the letter of 25 January 2009 contained an offer which was accepted by the letter of 1 April 2009. [55] Counsel for the defendant did not press the need for an amendment of the pleading before the argument was run.[56]
[204]
[73] In construing the letters and emails which passed between the plaintiff and the defendant after the expirations of the leases, I have taken account of the context in which they were written - that is, of matters of objective fact known to both parties, and in particular:
[205]
(a) that the plaintiff on whose behalf it was written and the defendant to whose directors it was addressed had been parties to leases of motel premises, which had expired on 31 December 2009;
[206]
(b) the provisions of the leases, including those summarised in paragraph [18] above;
[207]
(c) that the plaintiff had failed to exercise the options to renew in the time allowed;
[208]
(d) that the defendant had obtained a valuation of the market rent of the premises;
[209]
(e) the letter from Crossan to Max Waterson of 20 January 2009;[57]
[210]
(f) that the plaintiff was aware of the contents of the valuation;
[211]
(g) that at least one director of the defendant (Murray) was asserting that the options had not been duly exercised;
[212]
(h) the preceding communications between the parties.
[213]
[74] In my view the letter of 25 January 2009 constituted an offer to take new leases as if the options had been duly exercised. Nothing turns on the fact that it did not refer to the leases in the plural.
[214]
[75] Under the leases, if the options were exercised, the rent for the first year of the new term was to be arrived at by employing the market review mechanism used for the rent payable after the first five years of the original term. The first of April 2009 was the earliest date on which the defendant could give notice of what it considered to be the annual market rent for the first year of the new term, whether or not Crossan, was conscious of this when he wrote the letter. [58]
[215]
[76] The letter of 1 April 2009 referred to the rent being "due for review" and the valuation received from Taylor Byrne. It then referred to the adoption of the valuer's assessment -
[216]
".....on and from 1 July 2009 ie Lots 2 & 52 commence at $449,500.00 ...plus GST" (Emphasis added.)
[217]
- the amount stated being the valuer's assessment of the annual market rent.
[218]
[77] I consider that the letter of 1 April 2009 was capable of constituting an acceptance of the offer made on 25 January 2009 (so long as it had not been rejected in the meantime.) If this is correct, it is not to the point that the plaintiff disputed the rent assessment on 13 April 2009. Under the lease it had 21 days in which it might do so, in which event the rent was to be determined in accordance with the prescribed dispute resolution process. Otherwise the rent nominated by the defendant was to apply. In fact the plaintiff subsequently accepted the rent, so obviating the need to invoke the dispute resolution process.
[219]
[78] On 6 February 2009 Murray had informed Robert Waterson by email -
[220]
"...that your Notification of Intention to take up the options is Null & Void ........
[221]
I intend to further speak about this matter with both Max [Waterson] & John [Crossan] and will advise further following such discussions.
[222]
....that Weemah Park could be searching for a new leasee [sic] at this present time."
[223]
[79] As Crossan had said to Robert Waterson, Murray was only one of three directors of the defendant. The very terms of the email bespoke the need for him to consult his fellow directors: he was not speaking on behalf of the defendant, or even purporting to do so. Rather he was expressing his own opinion. That email did not constitute a rejection of the plaintiff's offer of 25 January 2009.
[224]
[80] In summary, I am satisfied that by the letters of 25 January 2009 and 1 April 2009 the plaintiff offered to take and the defendant agreed to grant new leases on terms as if the options had been duly exercised.
[225]
[81] If the plaintiff's offer was rejected by Murray's email on 6 February 2009, then it is necessary to consider the alternative formulations of the plaintiff's claim in contract -
[226]
(i) that the letter of 1 April 2009 contained an offer by the defendant which was accepted by the plaintiff by the letter of 23 April 2009; and
[227]
(ii) that the letter of 1 April 2009 contained an offer by the defendant which was rejected by the plaintiff on 13 April 2009, and that the plaintiff made a counteroffer by the letter of 23 April 2009, which the defendant accepted partly orally and partly by conduct.
[228]
[82] I do not think that the letter of 1 April 2009 was capable of constituting an offer of new leases on terms as if the options had been duly exercised. It did not state the term of leases being offered or for how long the new rent was to apply. It was not a matter of necessary implication from the references to the rent being due for review and to the rent from 1 July 2009 as commencing at the nominated sum that the defendant was offering new leases on terms as if the options had been duly exercised.
[229]
[83] The formation of a contract involves the acceptance of what is offered. It is immaterial whether Robert Waterson interpreted the letter of 1 April 2009 as an offer of new leases on terms as if the options had been exercised, because considered objectively it did not bear that meaning. He could not add to the "offer" in the letter of 1 April 2009 (if it was such), or put a gloss on it, and then accept it.
[230]
[84] Robert Waterson's letter of 13 April 2009 was written within the 21 day period in which the plaintiff could dispute the rent nominated by the defendant had the options been validly exercised. He disputed the rent and proposed not following the dispute resolution process under the leases, but instead engaging in negotiation.
[231]
[85] In his letter of 23 April 2009 Robert Waterson referred to "the rentals for the further term of the lease...as adopted at your meeting of 18th March and set out in your letter of 1st April, 2009."
[232]
[86] If the letter of 1 April 2009 did contain an offer, it was not an offer of new leases on terms as if the options had been duly exercised, and the plaintiff could not accept any more than was offered. The plaintiff could not, by Robert Waterson's letter of 13 April 2009 or by the addition of the words "the further term of the lease" in his letter of 23 April 2009, turn the letter of 1 April 2009 into something that it was not.
[233]
[87] I reject the submission that by the letter of 1 April 2009 the defendant made an offer of new leases on terms as if the options had been duly exercised, which was accepted by the plaintiff by the letter of 23 April 2009.
[234]
[88] Whatever Robert Waterson subjectively meant by the terms of the letter of 23 April 2009, considered objectively that letter was not capable of constituting an offer of new leases on terms as if the options had been duly exercised. It was not a matter of necessary implication from the references to "the further term of the lease" and the defendant's letter of 1 April 2009. Accordingly, it is not necessary for me to determine whether an offer in those terms was accepted as alleged.[59]
[235]
[89] I reject the submission that by the letter of 23 April 2009 the plaintiff made a counteroffer to take leases on terms as if the options had been duly exercised, which was accepted by the defendant.
[236]
[90] Counsel for the plaintiff submitted that if the claim in contract failed, the defendant was nevertheless estopped from asserting that there are no valid leases as if the options were exercised. They submitted -
[237]
(a) that, from the time of the defendant's letter of 4 July 2008 to and including 31 December 2008, the plaintiff and the defendant shared the assumption that the options were to be taken to have been exercised, and conducted their relationship as lessee and lessor on that common assumption; and
[238]
(b) that, acting on that common assumption, the plaintiff took no formal step to exercise the options on or before 31 December 2008.
[239]
45.1 Clauses 3.2.1[61], 3.2.2[62], 3.3[63] and 15.8.3[64] of the leases;
[240]
45.2 The letter from the Defendant dated 4 July 2008;
[241]
45.3 The conduct of the Defendant in having a rent review prepared as pleaded in paragraph 21 herein;
[242]
45.4 By having the Plaintiff involved in the provision of information for the purpose of the rental valuation as pleaded in paragraphs 14 to 20 herein;
[243]
45.5 The letter of 20 January 2009 from the Defendant pleaded in paragraph 21 herein;
[244]
45.6 The telephone discussion between Mr. John Crossan of the Defendant and Mr. Robert Duncan Waterson of the Plaintiff on 25 January 2009 as pleaded in paragraph 23 herein;
[245]
45.7 The letter from the Plaintiff to the Defendant dated 25 January 2009 as pleaded in paragraph 24 herein;
[246]
45.8 The letters of 1 April 2009 and 23 April 2009 between the Plaintiff and Defendant as pleaded in paragraphs 28 and 29 respectively herein; and
[247]
45.9 The belief of the Defendant pleaded to in paragraph 34 herein."
[248]
[92] In oral submissions its counsel acknowledged that it could rely on conduct after 31 December 2008 only as being consistent with there having been such a common assumption to and including that date.[65]
[249]
[93] In Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd[66] the High Court said -
[250]
"Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognized: Thompson v. Palmer,[67]Grundt v Great Boulder Pty. Gold Mines Ltd,[68]Legione v Hateley,[69]Amalgamated Investment & Property Co Ltd (In liq) v Texas Commerce International Bank Ltd,[70] Spencer, Bower and Turner, Estoppel by Representation.[71]"
[251]
Earlier, Dixon J had said in Thompson v Palmer[72] and again in Grundt v Great Boulder Pty Gold Mines Ltd[73] -
[252]
"Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, as in Yorkshire Insurance Co. v. Craine,[74] cp. Cave v. Mills,[75]Smith v. Baker,[76]Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co,[77] and Ambu Nair v. Kelu Nair,[78] or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption."
[253]
In Republic of India v India Steamship Co Ltd (No 2) (The Indian Grace)[79] Lord Steyn said -
[254]
"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption.[80] It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention."
[255]
[94] These principles were discussed by McPherson J (with whom the other members of the Full Court of the Supreme Court of Queensland agreed) in Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd,[81] where His Honour said -
[256]
"The principle invoked first requires that evidence be identified which establishes the conventional basis for the assumption relied upon. The word 'conventional' in this context carries connotations of agreement, not necessarily express but to be inferred, or at least a demonstrable acceptance of a particular state of things, as the foundation for the dealings of the parties. There must, as the passage from Lord Denning's judgment acknowledges, be at least a 'course of dealing between the parties'; that is to say acts or conduct which impinge upon what his Lordship describes as 'their mutual affairs'.[82] Acts done privately by one party without coming to the knowledge of the other can scarcely be capable of affecting their mutual relations or of raising assumptions capable of forming a conventional or accepted basis governing their relations. To produce that consequence the acts or conduct relied upon must point plainly, if not unequivocally, to the assumption put forward as the conventional basis of relations. A course of dealing that is explicable by reference to some other equally plausible assumption inevitably falls short of establishing that the parties accept as the basis of their relations the particular assumption contended for."
[257]
[95] See also the review of authorities by Layton J of the Supreme Court of South Australia in Ewing International LP v Ausbulk Ltd (No 2).[83]
[258]
[96] By the letter of 4 July 2008, the defendant rejected the plaintiff's request for another two options; it continued -
[259]
".... and we will proceed to get a market appraisal for review at the end of your principal lease."
[260]
It contained no express reference to the options which had to be exercised by 31 December 2008.
[261]
[97] The plaintiff's case is that the parties had a common assumption "that the options were to be taken to have been exercised" - in other words, that it was unnecessary for the plaintiff to exercise them in accordance with the requirements of the leases. In my view such an inference cannot be drawn from the evidence. Both parties may well have assumed that the plaintiff would exercise the options, but that is not the common assumption alleged by the plaintiff.
[262]
[98] The plaintiff relies on only some of the provisions of the leases as matters from which the common assumption is to be inferred - namely, those relating to rent review and the holding over. Those provisions cannot be viewed in isolation from clause 17.1 in each lease, which prescribes that the option to renew is to be exercised by the plaintiff's giving notice not less than six months before the expiration of the lease.
[263]
[99] The defendant's retention of a valuer to assess the market rent, and its seeking and obtaining the plaintiff's assistance in providing him with necessary data, do not necessarily lead to an inference that the parties were conducting their relations on the basis there was no need for the plaintiff to exercise the options in a timely manner.
[264]
[100] And the conduct of the parties after 31 December 2009 is quite inconsistent with their having up to that date shared the assumption that it was unnecessary for the plaintiff to exercise the options.
[265]
[101] In short, the plaintiff's case on estoppel by convention could not succeed.
[266]
[102] I am satisfied that by the letters of 25 January 2009 and 1 April 2009 the parties agreed on new leases as if the options had been duly exercised ("my primary conclusion").
[267]
[103] I have gone on to consider the plaintiff's alternative formulations of its claim in contract and estoppel by convention in case my primary conclusion is wrong. I consider that the plaintiff could not succeed on any of these alternative contentions.
[268]
[104] I will hear their counsel on the form of the orders, and on costs.
[269]
[14] Further amended statement of claim, filed 7 June 2010 (court document 36) para 22.
[270]
[17] Further amended statement of claim, filed 7 June 2010 (court document 36), para 23.
[27] The beneficiaries were companies associated with Crossan, Max Waterson and Murray. See Weemah Park Unit Trust Financial Report for the Period ending 30 June 2008, trial bundle, document 60.
[80]K Lokumal & Sons (London) Ltd. v Lotte Shipping Co Pte Ltd. [1985] 2 Lloyd's Rep 28; Norwegian American Cruises A/S v. Paul Mundy Ltd [1988] 2 Lloyd's Rep 343; Treitel, GH, The Law of Contract (9th ed, 1995) at 112-113.