Grayprop Pty Ltd v Maharaj International Pty Ltd [2001] QSC 387

[2] On 23 March 2001, the plaintiff brought an originating application seeking a declaration that the defendant lessee had not exercised the option to renew its lease of shop 10 in accordance with cl 20.4 of the lease.

[3] Clause 20.4 of the lease, which specifies how a notice may be given under the lease, contains a deeming provision concerning receipt of notices of a similar nature to that in s 347 of the Property Law Act 1974 (Qld) ("PLA"). Clause 20.4 of the lease provides:

"NOTICE TO LESSOR: Any notice or application in writing requiring to be given by the lessee to the lessor pursuant to the terms hereof may be left for the lessor at the office of the lessor's managing agent in the centre (if any) or alternatively may be forwarded to the lessor by prepaid certified mail service addressed to the lessor at the lessor's last known address or registered office (if any) in Queensland and such notice or demand if sent by post shall be deemed to have been given on the week day which is two (2) week days after the day on which the same was posted."

[4] Clause 20.7 of the lease provides for renewal of the lease as follows:

"OPTION FOR RENEWAL: If the lessee shall desire to take a renewed lease of the demised premises for the further term of years specified in (1) of Item 7 of the Reference Schedule hereto from the expiration of the term of this lease and shall give to the lessor not more than nine (9) months nor less than six (6) months previous notice in writing thereof...the lessor shall....lease to the lessee the demised premises for such further term of years specified in Item 7...".

[5] It is common ground that the lease term expired on 31 December 1999 and that, accordingly, written notice pursuant to cl 20.7 was required to be given between 1 April 1999 and 30 June 1999.

[6] The defendant says that written notice of the exercise of the option was given by letter dated 15 June 1999 addressed to the plaintiff which was sent by post to the plaintiff's postal address. The plaintiff denies receiving that letter during the period permitted by the lease or at all, and says it only received a copy of that letter from its solicitors well after the expiry of the relevant period.

[7] It appears that the defendant acquired the lease of the convenience shop when it bought the Cut Price store in early May 1998. Mrs Maharaj, who gave affidavit evidence on behalf of the defendant, is a director of the defendant and she and her husband, who gave both affidavit and oral evidence, operate the convenience store.

[8] Mr Magee, who gave both affidavit and oral evidence on behalf of the plaintiff, became a director of the plaintiff on 21 November 1999. He was also an officer of the Yeronga RSL Club ("YSC"), as were the other directors of the plaintiff, and as at June 1999 was the Chief Executive Officer of the YSC. The YSC's premises are located at the corner of Fairfield Road and Kadumba Street, Yeronga, next to the shopping centre, and serve as the registered office of the plaintiff.

[9] The originating application came on for determination summarily before de Jersey CJ on 29 March 2001, who was of the view that there was considerable doubt whether, on the case as presented, there was compliance with cl 20.4 of the lease or as otherwise applicable, s 347 of the PLA. His Honour further held that it was sufficiently arguable, to warrant his not dealing with the matter summarily, that the clause and the section did not exhaustively prescribe the available methods of bringing the notice of exercise of option to the notice of the lessor, and because the basis upon which the due exercise of the option could in that regard be established was a matter of dispute, the matter was set down for trial.

[10] It was not contested at the trial that the letter of 15 June 1999 was sent in the way described in the affidavit material of the defendant; that is, that the letter was typed, put in an envelope, and placed in the Australia Post mail box at the shopping centre as contended by the defendant.

[11] One of the issues for determination is whether, with respect to the mailing of the letter of 15 June 1999, the defendant can avail itself of the "deeming provisions" in cl 20.4 of the lease or of s 347(1) of the PLA.

[12] However, as was conceded by the plaintiff's counsel, cl 20.4 does not impose a mandatory method for giving notices required to be given under the lease[1] and the only consequence of not following the method specified therein is that the lessee cannot avail itself of the "deeming provision" as to receipt of the notice. A further issue thus arises if cl 20.4 and s 347(1) of the PLA are not applicable. That is, as to whether the defendant can show on the balance of probabilities actual receipt of the letter as a result of the method adopted by it in giving the requisite notice. A further question as to whether actual receipt was acknowledged by the plaintiff arises in that context.

[13] Accordingly, notwithstanding the narrow compass of the originating application, the issue on the present hearing was one of whether the option to renew the lease had been validly exercised under cl 20.7 of the lease.

[14] Mr Maharaj gave evidence of meeting Mr Magee in early May 1998 prior to the defendant purchasing the Cut Price store. At that meeting, Mr Maharaj says he was told of plans for expansion of the shopping centre.

[15] Mr Maharaj's evidence was that when the defendant bought the shop in May 1998, there was only one year left of the lease and that he was told by the vendor to make a note of the date by which the option for renewal of the lease had to be exercised. He says that he was also prompted to check the lease when he received a letter from Mr Magee in January 1999.[2]

[16] Mr Maharaj's affidavit referred to a telephone conversation with Mr Magee in late May 1999, during which Mr Maharaj mentioned that the option for the lease was "coming up for renewal" and that the defendant intended to take up the option, to which Mr Magee responded that it was an "administrative procedure" and that all that had to be done was to give him a letter saying the option was being taken up. Mr Maharaj said in oral evidence that he made the call from the reception of the YSC. Mr Magee denied this conversation took place.

[17] Mr Maharaj gave evidence that in late May or early June 1999, he spoke to Ms Patel of the defendant's solicitors about how to exercise the option under the lease and that Ms Patel stressed the need to exercise the option within the period specified in the lease. Mr Maharaj said he indicated that the option period had not expired and that he would exercise the option in one or two weeks. Ms Patel's affidavit[3] confirmed that this telephone conversation took place on about 2 June 1999, and exhibited a file note concerning it. Mrs Maharaj also gave confirmatory affidavit evidence concerning the phone call.

[18] Mr Maharaj gave evidence that on 15 June 1999 he drafted a letter exercising the option[4] on his computer[5] and that he showed the letter to his wife who signed the letter as a director. This letter is addressed to "The Directors, Grayprop Pty Ltd, C/- RSL Yeronga" (being the place where the plaintiff's office was, where he delivered the monthly rental cheque and where he had had some meetings with Mr Magee) because he had initially intended to personally deliver the letter. However, later that day he told his wife he was too busy to do so and that he considered it would be "more official" to post the option letter. He asked her to place the letter in an envelope to be addressed to "Tim Magee, Chief Executive Officer, Grayprop Pty Ltd, P.O. Box 3142, Yeronga, Qld 4104", to mark it "Private and Confidential" and to post it. He said that his wife showed him the envelope containing the letter and that, as was the standard procedure, the envelope contained the defendant's name and address as sender.

[19] According to Mrs Maharaj's affidavit,[6] on 15 June 1999 she was given the letter dated 15 June 1999 and placed it in an envelope which she addressed, as directed by her husband. She stated that she then posted the letter by dropping it into the post box in the shopping centre which was a short distance away. The defendant reopened its case to file a further affidavit by Mrs Maharaj deposing to placing a stamp on the envelope. Both Mr and Mrs Maharaj gave evidence that the defendant sold stamps in its shop. Mr Maharaj gave evidence that the letter was not returned to sender.

[20] Evidence was given by Gena Kassiou, a hairdresser, who ran another tenancy in the shopping centre, to the effect that she recalled that on about 15 June 1999, she saw Mrs Maharaj walking towards the post box situated outside her shop with an envelope and that she joked about whether she was posting a "love letter" and that she noticed the envelope was addressed to the plaintiff with a Post Office Box number.[7]

[21] Mr Maharaj's evidence was that since he had not heard from Mr Magee, he decided on 30 August 1999 to arrange to meet Mr Magee at the plaintiff's offices at the YSC to ask him about the new lease and other matters.[8] Mr Maharaj says he arranged the meeting by going to the YSC offices and phoning Mr Magee at the reception area and asking to see him.[9] Mr Maharaj says that at the meeting he handed a copy of the 15 June 1999 letter to Mr Magee, who took the letter and acknowledged receiving the original and said that the lease had been renewed when the option letter had been received. Mr Maharaj says that on that occasion he noticed concept plans for a village style centre in Mr Magee's office and that there was a discussion about the timing of the redevelopment. Mr Magee denies that this meeting with Mr Maharaj took place. Receipt of the option letter of 15 June 1999 is denied by Mr Magee, who deposed to first being shown a copy of the letter by the plaintiff's solicitors in November 2000.

[22] According to Mr Maharaj, when he had heard nothing further after the August 1999 meeting, he arranged a further meeting on 8 December 1999 with Mr Magee at the plaintiff's offices.[10] Mr Maharaj states that at that meeting he gave Mr Magee a letter dated 8 December 1999 addressed to "The CEO, Grayprop P/L".[11] The letter referred to "our earlier letter and discussions we had with you regarding exercising our lease option" and asked for the documentation in relation to the lease to be finalised. The letter also dealt with upgrading the delicatessen and chicken business conducted by the defendant. In addition, Mr Maharaj stated that at that meeting he gave Mr Magee another letter also dated 8 December 1999, addressed to "The CEO, Grayprop P/L, RSL, Yeronga" to thank the plaintiff for the opportunity to be part of the "superspin sponsorship",[12] with which the defendant had agreed to assist. In cross-examination Mr Maharaj was asked why he wrote two separate letters on the same date.[13] Mr Maharaj said that Mr Magee had requested that the superspin letter be separate from the other letter because Mr Magee wanted to use it to solicit other sponsorship and explained that that was why that letter was addressed to the RSL. Mr Maharaj said that Mr Magee read both letters and in relation to the letter concerning the option, Mr Magee reiterated that since the defendant had already exercised the option, the defendant had a further three year lease and granted consent for the improvements. Mr Maharaj said that he asked Mr Magee if he could give him something in writing confirming this as well as a consent to the upgrade/additional fit-outs for the expansion of the delicatessen and chicken business. Mr Magee accepted that there was a meeting with Mr Maharaj but said only the letter about the superspin sponsorship was given to him by Mr Maharaj.

[23] Mr Maharaj stated that in early April 2000, he had a telephone discussion with Mr Magee enquiring about the letter confirming the exercise of the option, during which he says Mr Magee said that he would chase up his solicitors. Mr Magee denied this occurred.

[24] In May 2000, the defendant received a letter from Mr Summerson, the President of the YSC, who was also a director of the plaintiff, advising that the shopping centre had been sold. Upon receipt of this letter, Mr Maharaj, according to his affidavit, telephoned Mr Magee and asked him "what was going on", reminding him about the conversations he had had concerning receiving written confirmation of the exercise of the option. He says that Mr Magee responded by saying that "the matter was out of his hands" and that the contract of sale of the shopping centre was to be completed on 31 August 2000. Mr Magee denied this occurred.

[25] According to Mr Maharaj's affidavit evidence, at the beginning of June 2000 he was advised by the new purchasers of the shopping centre (The White Property Group Pty Ltd) that the defendant would be required to provide a bank guarantee for one year's rent and to execute a new lease if the defendant wished to remain as a tenant. Mr Maharaj says he advised the new purchaser that he had an existing lease which expired on 31 December 2002.

[26] In July 2000, Mr Maharaj, according to his affidavit, telephoned Mr Summerson in relation to the new purchaser's demands, and complained about the plaintiff's failure to send written confirmation of the exercise of the option. He was advised to contact Mr Magee. Mr Maharaj says that for the next two months he endeavoured to ascertain what was going on and made various telephone calls to Mr Magee without any success.

[27] On or about 26 September 2000, Mr Maharaj received a letter from the White Property Group concerning the redevelopment of the shopping centre and advising that it would be exercising rights "pursuant to the demolition clause contained in your lease". On 6 October 2000, Mr Maharaj attended a meeting with Mr White of the White Property Group, at which he was given a fax of that date[14] from the purchaser's solicitors advising that the defendant's tenancy was a month to month tenancy, because it had failed to exercise its option in accordance with the lease.

[28] On or about 10 October 2000, Mr Maharaj instructed the defendant's solicitors to respond to the matters raised in the fax of 6 October 2000. Accordingly, on 10 October 2000 Patel Lawyers faxed the purchaser's solicitors advising that the defendant had exercised its option in accordance with the lease, enclosing a copy of the defendant's letter dated 15 June 1999 and confirming that Mr Maharaj had consulted them in early June 1999 concerning the wording of the letter exercising the option.[15] On 3 November 2000, the White Property Group offered the defendant a new lease on new terms. The offer was not accepted by the defendant.

[29] According to Mr Magee, the person primarily responsible for leasing matters for the plaintiff in June 1999 was Mr Summerson, with Mr Magee assisting and taking over that task upon becoming a director in November 1999. At about November 1999, the plaintiff changed its solicitors for leasing matters from Phillips Fox to Toogoods.

[30] Mr Magee agreed that he met with Mr Maharaj and the previous owner of the Cut Price store when Mr Maharaj was taking over the Cut Price store in 1998, although he did not refer to any such meeting in his affidavit.

[31] As mentioned, Mr Magee denied receiving the letter dated 15 June 1999 and maintains that the contents of that letter only came to his attention subsequently through his solicitors. He gave evidence that a search for the letter was made of the files maintained by the plaintiff of all the tenants, in addition to the defendant.

[32] Mr Magee also denied that a meeting took place at the YSC's offices in August 1999 as claimed by Mr Maharaj and says that Mr Maharaj could not on that occasion have viewed plans for the centre as Mr Magee did not receive a copy of the plans for the centre until late September 1999. Mr Butler, who was retained to provide concept and drawings for the redevelopment, gave evidence confirming this date.

[33] Mr Magee gave evidence that he had a telephone discussion early in 2000 with Mr Maharaj to the effect that Mr Maharaj was enquiring about renewing the option over the premises, to which Mr Magee responded that Mr Maharaj should have his solicitors contact the plaintiff's solicitors, being Messrs Toogoods, whose details he gave to Mr Maharaj. Mr Magee recalls that he was at the YSC when this telephone conversation took place. In cross-examination, Mr Magee appeared to have a very poor recollection of when this conversation took place, conceding that it could have taken place in December 1999.

[34] Mr Magee agrees that a meeting took place with Mr Maharaj, at a date in late 1999, about which he is uncertain, at his office at the YSC on which occasion he says he received from Mr Maharaj only one letter, namely the letter dated 8 December 1999 concerning the superspin sponsorship. Mr Magee says that at that meeting Mr Maharaj noticed the concept plans about the shopping centre and there was a discussion about them. Mr Magee denies that there were any discussions on that occasion about improvements to the defendant's premises. According to Mr Magee the discussion about those improvements took place during a telephone call with Mr Maharaj on a date of which he is unsure. Mr Magee says that during that phone call, he agreed to go to the defendant's shop to view the proposed changes, which he did straight after the call.

[35] Mr Magee agreed that when the purchaser of the shopping centre became aware of the contention that the option had been exercised, a sum of some $100,000 was retained from the settlement monies, because the purchaser held the plaintiff responsible for the existence of the defendant's tenancy of which it was previously unaware.

[36] As part of the plaintiff's efforts to assure the purchaser that there had been no exercise of the option, Mr Magee made a statutory declaration in late 2000[16] to the effect that he had not received the letter of 15 June 1999 and was not aware of it prior to being shown a copy by Mr Newport of Toogoods. He also stated in the statutory declaration that:

"[There had been] a discussion approximately three (3) to four (4) months ago with Parvendra Maharaj... to the effect that he enquired about renewing an option over the premises to which I responded that he should have his solicitors contact the Club's solicitors...

Following this conversation, which I believe occurred approximately three (3) to four (4) months ago, I was unaware that there had been any further developments in relation to the exercise of the option until contacted by our solicitors of the copy of the ... letter dated 15 June 1999."

[37] On cross-examination, Mr Magee conceded that the conversation referred to in the statutory declaration (during which Mr Maharaj enquired about renewing the lease) occurred prior to March 2000 and could have occurred in December 1999, and thus took place before the sale of the shopping centre in April 2000. Mr Magee conceded that he could not really remember when he had that conversation.

[38] It should be noted that as regards the letter dated 8 December 1999 relating to the option, Mr Magee initially stated in his first affidavit that he first received a copy of this letter from Toogoods on or about 1 March 2001.[17] However, he corrected his evidence as to the date of receipt to 1 March 2000.[18] In cross-examination it was put to him that that was inconsistent with Mr Magee not having heard of the contention that the defendant had exercised its option before the sale of the shopping centre. Mr Magee's response was to concede that he had corrected the date referred to in his affidavit as a result of reconstruction working off the plaintiff's solicitors' correspondence and that he did not have a recollection of when the letter of 8 December 1999 was received from the plaintiff's solicitors. I note however that in Mr Magee's subsequent affidavit[19] he says that he had never seen that letter until he saw a copy exhibited to Mr Maharaj's affidavit.[20]

[39] According to Mr Magee, in late November 1999 when Toogoods took over from Phillips Fox as the plaintiff's solicitors, Mr Newport went through the files, noticed that the defendant had not renewed its option and wrote to the plaintiff on 22 December 1999, advising the plaintiff of this and suggesting that the plaintiff offer a new lease to the defendant on the basis that the option had not been exercised. In March 2000 the plaintiff instructed its solicitors to prepare a new lease. At one stage, Mr Magee explained the instructions to draw up a new lease on the basis that he had at that stage received a copy of the option letter of 8 December 1999 from Toogoods.

[40] The solicitors proceeded to draw up a lease on the basis of it containing a relocation clause in the event of redevelopment of the centre which was not contained in the original lease. Such a lease was not tendered to the defendant before the sale of the shopping centre.

[41] On 20 October 2000, the plaintiff's solicitors wrote to the plaintiff to advise that the purchaser's solicitors had received notice that the defendant asserted that it had exercised the option pursuant to the lease.

Evidence Concerning the Mail Handling Procedures of Australia Post and the Plaintiff

[42] Both the YSC and the plaintiff share a post office box at the Yeronga Post Office at the shopping centre.

[43] Affidavit evidence was given by Peter Jackson of the Yeronga Post Office, which is located in the shopping centre. He gave evidence that the plaintiff had owned a post office box since prior to April 1999 and that the procedure for delivery of mail from at least April 1999 was for Australia Post Delivery Centre in Annerley to sort out all mail for the Yeronga area, including mail addressed to a post office box or a street address. That mail was then delivered to the Yeronga Post Office. The practice of the postman who delivers the mail to the Yeronga Post Office is to mark on the envelope the relevant post office box number of the recipient where the recipient has a post box number, even where the envelope is addressed to the recipient's street address. The usual practice of Australia Post and of the Yeronga Post Office is for all mail addressed to the street address of either the RSL Services Club, Yeronga, or the plaintiff to be placed into their shared post office box number at the Yeronga Post Office. No mail is ever dispatched to the plaintiff at its street address no matter the address shown on the mail item. Mr Jackson deposed to personally handing over all mail addressed to the plaintiff or the YSC to secretaries from the YSC and the plaintiff.

[44] Affidavit evidence was given by Glen Rea who is the manager of the Annerley Delivery Centre of Australia Post. His evidence was that the majority of the mail for the Yeronga area is sorted at Annerley and then dispatched to Australia Post, Yeronga. The usual practice of Australia Post is that where mail is addressed to a street address in Yeronga, and the recipient also has a post office box in Yeronga, the mail is marked for dispatch to the Yeronga Post Office. He gave evidence of perusal of his records for the past five years in relation to any interruption of the delivery of mail and any complaints of non-delivery of mail, which revealed no interruption or complaints.

[45] According to Mr Magee, Ms Hutchinson together with Ms Miles were responsible for the filing between June and December 1999.

[46] Ms Hutchinson, an employee of the YSC, in her affidavit stated that during the course of her duties she handled all correspondence addressed to the YSC or to Mr Magee on behalf of the YSC, and was working from 15 June 1999 every weekday and was not absent through holidays or sickness for the rest of June 1999 or for July 1999. She also stated that on or about 21 November 2000 she was shown a letter dated 15 June 1999 by the plaintiff's solicitors and that was the first time she had seen that letter.

[47] Evidence was also given by Ms Howkins, a former employee of the plaintiff and the YSC from 1992 until May 2000. For about nine to twelve months, from March 1999, one of her duties was to collect the mail from the Yeronga Post Office. The standard practice was that mail was collected from the counter of the post office. During the period of her employment no mail was ever delivered to the YSC's street address. Upon collecting the mail, the mail pertaining to the plaintiff was handed to Ms Miles, while the mail for the YSC was handed to Ms Hutchinson and to her predecessor, Ms Harris.[21]

[48] Evidence was given by Ms Miles, a former full time employee of the plaintiff and the YSC from October 1995 until January 1999. During that period she was responsible for opening all the mail addressed to the plaintiff and generally looking after all affairs pertaining to the plaintiff, except when away from work due to sickness or holidays. She gave all mail addressed to the plaintiff relating to the tenancies of the shopping centre to Mr Magee, including any renewals or extension of leases.[22]

Was there deemed receipt of the notice of exercise of option pursuant to cl 20.4 of the Lease and s 347 of the PLA?

[49] For present purposes, Clause 20.4 of the lease relevantly provides that:

(a) a notice required to be given under the lease may be:

(i) forwarded to the lessor by prepaid certified mail service;[23] and

(ii) addressed to the lessor at the lessor's last known address or registered office in Queensland.

(b) a notice so given is deemed to have been given on the week day which is two week days after the day on which it was posted.

[50] As mentioned, the registered office of the plaintiff at the relevant time was at the premises of the YSC at the corner of Fairfield Road & Kadumba Street, Yeronga. The plaintiff contends that the deeming provision in cl 20.4 does not apply because the letter of 15 June 1999 was not mailed to the lessor at the lessor's last known address or at its registered office, both of which it contends were at the corner of Fairfield Road & Kadumba Street, Yeronga, at which address Mr Maharaj attended on various occasions as referred to above. The plaintiff submits that that address was, to the defendant's knowledge, the last known address of the plaintiff and that it is irrelevant that correspondence addressed to that address would have been delivered to the plaintiff's post box.

[51] Similarly, the plaintiff contends that the deeming provision in s 347 of the PLA does not assist the defendant because the notice was not, as referred to in that section, left at the plaintiff's usual or last known place of abode, or posted by registered mail address to the plaintiff's usual or last known place of abode, or left at or posted to the plaintiff's registered office or principal place of business.

[52] The plaintiff contends that the plaintiff's mail box is not its last known address or registered office and relies on Sarikaya v Victorian Workcover Authority.[24] In that case, Black CJ held:

"... a post office box is not, in my view, the "address of a place" at which a document may be "left" for a person. The ordinary notion of "post office box" is of a container at a post office into which mail that has been duly posted is placed by postal authorities for retrieval by or on behalf of the holder of the box. Whether or not such a box is, in this context, the "address of a place", it is not the address of a place at which a document may be "left" by way of service."[25]

[53] On behalf of the defendant it was submitted that the plaintiff's postal address was the last known address for it when one was conceiving of sending a letter and that that was the address on the plaintiff's letterhead, since even if the letter was posted to the plaintiff's geographical location, it would only have ended up at the post office box. Accordingly, for the purposes of forwarding a letter by mail, the post office box address was the last known address and principal place of business.

[54] I do not accept the defendant's submissions in this regard. In my opinion the defendant did not, in mailing the letter of 15 June 1999 to the plaintiff's postal address, comply with the provisions of either cl 20.4 of the lease or of s 347 of the PLA so as to attract the deeming provisions in either cl 20.4 or s 347. Accordingly, the defendant is unable, by virtue of those provisions, to maintain that the mailing of the letter of 15 June 1999 exercising the option resulted in its deemed receipt by the plaintiff.

Did the Method Chosen by the Defendant to give Notice of the Exercise of the Option Result in its Receipt by the Plaintiff?

[55] It was open to the defendant to give the required notice of exercise of option by a means other than that referred to in cl 20.4, and to prove on the balance of probabilities that such notice was received by the plaintiff.

[56] On behalf of the defendant, it was contended that I should find on the balance of probabilities that the letter of 15 June 1999 was received by the plaintiff. It was submitted that this finding could be made independently of the issue of whether Mr Magee acknowledged receipt of the letter.

[57] On behalf of the plaintiff, it was contended that, absent any finding that there was an acknowledgment by Mr Magee of receipt of the letter, the only evidence to support a finding of actual receipt was the evidence that the letter was mailed and that that was insufficient. In this regard the plaintiff relied on the decision in Elizabeth City Centre v Corralyn Pty Ltd.[26] That case however was one where the tribunal of fact found that it was unable on the balance of probabilities to find that the written notice in question there had been received. The question on appeal was whether, given that finding, the mere mailing of the notice was sufficient to attract certain provisions in the lease which deemed the notice to have been received if it was mailed in a prescribed manner, or whether the postal rule applied so as to allow the conclusion that the notice was received.

[58] That is not the case here. Here the issue is whether on the balance of probabilities, the letter in issue was received. In deciding that issue one must have regard to the evidence of the manner in which the letter was addressed and posted, the evidence as to how it would have been handled by Australia Post, the evidence that the letter was not returned to sender, and the evidence as to the ordinary course of collecting the mail from the plaintiff's post office box and of dealing with it at the plaintiff's offices.

[59] The defendant submits that a consideration of that evidence leads to two possibilities. One is that the letter was lost in the course of the post and the other is that it was lost after receipt by the plaintiff.

[60] The defendant contends that the conclusion that the letter was lost in the post is baseless and that what is more probable is that the letter was lost in the plaintiff's office. The defendant submits that if one has regard to the changes in staff, other evidence as to the administration of the plaintiff's office and the failure to call certain officers to deny receipt, the balance of probabilities favours the view that the letter was received. In this regard, the defendant points out that only Mr Magee (on behalf of the plaintiff) and Ms Hutchinson (on behalf of the defendant) gave evidence as to non-receipt, and questions why Ms Hutchinson's predecessor Ms Harris did not give evidence, nor Mr Summerson, nor those at Phillips Fox having carriage of the tenancy file. However, I note that on the evidence, in mid-June it was Ms Hutchinson, not Ms Harris who attended to mail received by the plaintiff. Furthermore, the letter was asserted by the defendant to have been addressed to Mr Magee not Mr Summerson. On behalf of the defendant, submissions were also directed to the evidence as to the administration of the plaintiff's affairs and in particular to evidence by Ms Kassiou that the plaintiff appeared to have difficulties keeping a proper track of records of rental payments by Ms Kassiou.

[61] In my opinion the state of the evidence is not such that one could confidently say whether on the balance of probabilities the letter was received or not, without having regard to the issue of whether receipt was acknowledged by Mr Magee.

[62] Having had regard to the evidence, I am of the opinion that the evidence of Mr Maharaj as to the meetings on 30 August 1999 and 8 December 1999 should be accepted. Where there is a conflict between the evidence of Mr Maharaj and Mr Magee, the evidence of Mr Maharaj should be preferred.

[63] Mr Maharaj's evidence was clearer than that of Mr Magee, who conceded at various points in the evidence that his recollection was inaccurate with respect to the chronology of events, and that some of his evidence was based on a reconstruction aided by the assistance of his solicitor's file. That Mr Magee's recollection was not as clear as Mr Maharaj's is understandable since the defendant's tenancy was, after all, one of many tenancies with which Mr Magee was concerned.

[64] Further, Mr Maharaj's evidence was supported by diary entries. Counsel for the plaintiff made a number of submissions concerning the diary entries, suggesting that the time of their creation was questionable. Of course the diary entries were not said by the defendant to be contemporaneous, but to have been made before the meetings to which they referred as a reminder. I do not accept that the diary entries were fabricated.

[65] Although Mr Magee became a director in November 1999, Mr Magee was clearly concerned with aspects of the tenancies before that; for example, he had a meeting with Mr Maharaj upon Mr Maharaj taking over the tenancy from the previous tenants in May 1998 and signed correspondence as chief executive officer of the plaintiff in early 1999.[27]

[66] On behalf of the plaintiff, it was submitted that Mr Maharaj's credit is drawn into question because he clearly had a vested financial interest in the outcome of the litigation. I have taken that submission into account in concluding that Mr Maharaj's evidence should nevertheless be preferred over that of Mr Magee's. It was submitted that Mr Maharaj's explanation as to why there were two letters dated 8 December 1999, that is that Mr Magee requested that he write a separate letter for the superspin promotion, was curious. I do not accept that submission. It was also said that Mr Maharaj's credit was drawn into question because his evidence that he sighted plans at the 30 August 1999 meeting was an impossibility. It is true that the affidavit of Richard Butler makes it clear that the concept plans were not presented until 24 September 1999. Mr Maharaj was mistaken as to what he saw on the occasion of the 30 August 1999 meeting, however I do not accept that this matter has the consequence that Mr Maharaj's evidence should not be accepted. It was also said that Mr Maharaj's evidence that he was unable to contact Mr Magee for a two month period[28] is fanciful. It does appear however, that Mr Maharaj made this complaint previously in correspondence.[29]

[67] In those circumstances, I accept the evidence of Mr Maharaj that Mr Magee did acknowledge at a meeting on 30 August 1999 and at a subsequent meeting on 8 December 1999 that he had previously received the letter of 15 June 1999.

[68] Accordingly, I find on the balance of probabilities that the plaintiff did receive the letter of 15 June 1999 giving notice of exercise of the option.

[69] I declare that the defendant gave notice of the exercise of the option to the plaintiff within the requisite period prescribed by the lease. I shall hear the parties as to costs.

[1] See Elizabeth City Centre v Corralyn Pty Ltd [1994] SASC 5138; (1994) 63 SASR 235

[2] See Ex PM 1, affidavit of P Maharaj filed 28 March 2001.

[4] See Ex PM 2, affidavit of P Maharaj filed 28 March 2001.

[5] Mr Maharaj gave evidence of a computer printout as to the date of creation of the letter on his computer: see Ex PM 24, affidavit of P Maharaj filed 28 March 2001.

[8] Mr Maharaj gave evidence of a diary entry concerning the proposed meeting referred to in his diary: see Ex 6.

[9] Ms Howkins gave evidence of Mr Maharaj arranging meetings with Mr Magee by first calling in at the YSC reception: see Ex 8, para 10.

[10] Mr Maharaj gave evidence of an entry for the proposed meeting in his diary: see Ex 6.

[11] See Ex PM 3, affidavit of P Maharaj filed 28 March 2001.

[12] See Ex PM 4, affidavit of P Maharaj filed 28 March 2001.

[13] Mr Maharaj gave evidence of a computer extract evidencing the creation of the two letters of 8 December 1999: see Ex PM 24, affidavit of P Maharaj filed 28 March 2001.

[14] See Ex PM 6, affidavit of P Maharaj filed 23 March 2001.

[15] See Ex PM 6, affidavit of P Maharaj filed 23 March 2001.

[17] See affidavit of T Magee filed 23 March 2001, para 7, and ex TJM 2.

[19] See affidavit of T Magee filed 20 September 2001, para 6(c)

[20] See Ex PM3, affidavit of P Maharaj filed 23 March 2001.

[23] The evidence was that the facility known as pre-paid certified mail has been discontinued by Australia Post for some years, however nothing turned on this at the trial.

[24] [1997] FCA 1372; (1997) 80 FCR 262 at 263.

[25] The above passage was approved and applied in Croker v Ewen; Croker v Challoner [2000] NSWCA 186 (unreported 20 July 2000) by Giles JA at para 4. See also Kratzman (Toowong) Pty Ltd v Majorie's Investments Pty Ltd & Anor (1986) Q Conv R 54-3221.

[26] [1994] SASC 5138; (1994) 63 SASR 235.

[27] See Ex PM 1, affidavit of P Maharaj filed 28 March 2001.

[28] See para 45, affidavit of P Maharaj filed 28 March 2001.

[29] See Ex PM 15, affidavit of P Maharaj filed 28 March 2001.