Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation

Introduction

1. The plaintiff is the registered proprietor of a property in Molesworth Street, Lismore. In 2012, it entered into a lease of the property in favour of the defendant, which is a corporation incorporated pursuant to the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) ("the CATSI Act"). The defendant provides a range of care services to indigenous children who require out-of-home care due to difficult family circumstances.
2. The lease was for a five year term commencing on 1 May 2012 and terminating on 30 April 2017. The lease contained an option to renew for a further term of five years.
3. These proceedings relate to that option to renew. The plaintiff claims that in April 2016: 1. the option to renew was exercised by the defendant, thereby giving rise to a binding agreement for lease for the renewed term; or 2. the parties otherwise entered into a binding agreement for a lease for a further term of five years.
4. The plaintiff claims, in the alternative, that the defendant is estopped from denying that a binding agreement for lease was so entered into.
5. The plaintiff contends that in April 2018 it terminated the agreement for lease following its repudiation by the defendant. Damages of $479,546 (including interest) are claimed.
6. The defendant denies that the plaintiff is entitled to any damages. The defendant disputes that any concluded agreement for lease was made, whether pursuant to an exercise of the option or otherwise. The defendant further contends that the persons said to have acted so as to bind it (namely, the CEO of the defendant and a solicitor instructed by her) lacked actual or ostensible authority to do so. The defendant also contends that the alleged agreement for lease is not enforceable due to a want of writing that satisfies the requirements of s 54A of the Conveyancing Act 1919 (NSW). Finally, the defendant denies that any estoppel arises because: 1. any reliance by the plaintiff was not reasonable in the circumstances; 2. the plaintiff suffered no relevant detriment; and 3. even if the plaintiff did suffer detriment, it was so small that it would not be unconscionable for the defendant to maintain that no binding agreement had been made.

Background

1. The lease of the premises from the plaintiff to the defendant was dated 14 May 2012. As mentioned above, the term was from 1 May 2012 to 30 April 2017. The lease was registered (No AH220480).
2. The lease was initially executed on behalf of the defendant by Ms Tiani Browning and Ms Lenore Marlowe. By their signing, each purported to be the holder of the office of director. It appears, however, that whilst Ms Marlowe had been appointed to the role of CEO, she was not a director at that time.
3. After the lease was executed on behalf of the plaintiff (by Mr Philipp Kreutzer and Ms Lynne Kreutzer as directors) and lodged for registration, Land & Property Information raised a requisition stating that the lease did not appear to have been executed in accordance with s 99-5 of the CATSI Act. The requisition stated that the website of "ORAC" (presumably intended as a reference to the website of the Office of the Registrar of Indigenous Corporations) revealed a discrepancy "in the capacity stated for Lenore Marlowe". Ms Marlowe was not shown as a director on the extract of information for the defendant. She was shown only as a "contact person" (see s 257-5(2) of the CATSI Act).
4. Following the requisition, steps were taken to have the lease executed by a director of the defendant (Ms Virginia Paden) in place of Ms Marlowe, and then re-lodged for registration on 13 September 2012.
5. Clause 4 of the lease contained an option to renew. Clause 4.4 relevantly provided: The lessee can exercise the option only if - 4.4.1 the lessee serves on the lessor a notice of exercise of option not earlier than the first day stated in item 12D in the schedule and not later than the last day stated in item 12E in the schedule; 4.4.2 there is at the time of service no rent or outgoing that is overdue for payment; and 4.4.3 at the time of service all the other obligations of the lessee have been complied with or fully remedied in accordance with the terms of any notice to remedy given by the lessor. If this lease is extended by legislation, items 12D and 12E in the schedule are adjusted accordingly. The first day stated in item 12D was 1 December 2016. The last day stated in item 12E was 1 February 2017. Clause 4.6 made provision in respect of the terms of the new lease to be granted pursuant to an exercise of the option.

The alleged exercise of option to renew or making of agreement for lease

1. Mr Kreutzer deposed that in the course of his contact with the staff of the defendant during the term of the lease, he became aware that Ms Marlowe was the "chief executive" of the defendant. He said that she was always his contact when matters relating to the tenancy of the property arose. Mr Kreutzer gave evidence in the witness box to the effect that the usual subject matter of his dealings with Ms Marlowe included proposals for minor alterations to the building, and maintenance issues. He also gave evidence that on occasions, in relation to very minor matters, he received calls from other staff members who said they were contacting him on Ms Marlowe's behalf.
2. Mr Kreutzer deposed that on about 14 March 2016 he attended a meeting with Ms Marlowe at the premises to discuss some recently completed remedial works and a proposed refurbishment of the ground floor area to accommodate additional staff. Mr Kreutzer deposed that he said words to the following effect to Ms Marlowe: Would the lessee consider exercising the option to renew? If the lessee were to exercise the option at an early date, the lessor will not apply the 4% rent increase which is due to take effect on 1 May 2016 and also the rent for first year of the new lease, commencing on 1 May 2017 will be the same rent as the last year of the existing term.
3. Mr Kreutzer deposed that Ms Marlowe said words to the following effect: We have a budget of $300,000 for the refurbishment.
4. Over the course of the next few weeks, a number of emails were sent between Mr Kreutzer and Ms Marlowe. An email was also sent to Mr Kreutzer by a solicitor instructed by Ms Marlowe, namely Mr John Maxwell. The plaintiff alleges that by these emails either the option to renew contained in the lease was exercised, or a binding agreement for lease was otherwise entered into.
5. The first of the emails was sent by Mr Kreutzer to Ms Marlowe (referred to as "Minna") on 14 March 2016. It was in the following terms: Thanks for making time to see me this afternoon. I confirm that if you can let me have a letter confirming that Ngunya Jarjum will be exercising the option for a second 5 year term commencing when the current lease ends in 2017, we will proceed on the basis that the 4% rent increment due in May of this year will not be applied and that the current rent will be the commencing rent for the first year of the new lease. Also, the internal adjustments you propose are acceptable to us. Finally, I confirm that we are now able to reactivate the disabled access proposal which I have already started with discussions with the lift supplier and builder.
6. Mr Kreutzer sent a further email on 16 March 2016 in the following terms: Looking back at my email of a couple of days ago, I think I could have been clearer in expressing what I was proposing. I suggested that we would forego the rent increment due in May if Ngunya Jarjum wrote confirming that it will be exercising its option. I also said we would not seek any increase in rent for the first year of the new lease. As the increment we will be waiving amounts to $5,399.00 over the next year commencing May 2016, I should have made it clear that what I was proposing was an exercise of the option. Obviously a letter in the terms I used in my email might not amount to a formal exercise and any uncertainty about it might be against the interests of both us as owners and Ngunya Jarjum as tenant. Although the lease says that the option can be exercised in a certain time period (next December/January) the lessor can waive that requirement and accept an exercise of the option at any time. Please have a look at the matter and let me know whether my suggestion is acceptable.
7. Mr Kreutzer sent a third email on 18 March 2016 in the following terms: Sorry to keep chasing you up on this. I have been able to get my financier to agree that if exercising the renewal option now is a problem, a letter confirming that you will be exercising the option later in the year will be good enough. Whichever way you go, it would help if the letter confirmed that the new lease will be for 5 years, which is what the agreement says anyway, and that the current rent of $134,983.00 will apply to next year and to the first year of the new lease. Let me know if there are any problems.
8. On 1 April 2016 Ms Marlowe sent an email to Mr Kreutzer in the following terms: Sorry will get it to you ASAP. Too much happening!!!
9. A short time later on 1 April 2016 Mr Kreutzer sent an email to Ms Marlowe in the following terms: Has there been any progress on the lease confirmation letter? Also, I asked our plumber, Peter Shearman, to give me a quote for replacing the toilet suites that have been playing up. Have you heard from him?
10. On 5 April 2016 Ms Marlowe sent an email to Mr Kreutzer in the following terms: Just waiting for feed-back from our solicitor. Then we will confirm the 5 year option.
11. Earlier on 5 April 2016 Ms Marlowe had sent an email to Mr Maxwell in which she sought "some advice regarding renewal".
12. On 6 April 2016 Mr Maxwell sent an email to Mr Kreutzer, copied to Ms Marlowe, in the following terms: Minna has referred your emails about the exercise of the option for renewal of the lease to me. I confirm that Ngunya Jarjum wishes to exercise its option for renewal in accordance with your emails of 15, 16 & 18 March namely on the basis that the rent for the balance of the existing term will not be increased and will also remain for the first year of the new term commencing on 1 May 2017.
13. Later on 6 April 2016 Mr Kreutzer responded by email in the following terms: Thanks for the email. Will be in touch in due course regarding new lease documentation.

Subsequent events

1. From May 2016 the plaintiff sent rent invoices to the defendant that were based on an annual rent of $134,983. That was the amount of rent payable as at April 2016. Accordingly, the plaintiff did not claim the 4% increase in rent to which it was entitled pursuant to the terms of the lease (see cl 5.4 and item 16). It seems that the defendant continued to pay the rent in accordance with the invoices submitted to it.
2. By late May 2016 the defendant had retained Lyon Architects in respect of proposed renovations to the premises. This was made known to Mr Kreutzer.
3. Mr Kreutzer gave evidence that on 29 June 2016 he attended a meeting with Ms Marlowe at the premises during which a conversation to the following effect occurred: Ms Marlowe: We are concerned the renewal of the lease for a further 5 years may not be adequate given the projected costs of the works. As you know we have a budget of $300,000. Mr Kreutzer: The lessor will be prepared to grant a new term of 10 years instead of the 5 years as provided in the lease. Ms Marlowe: We agree to consider taking another 10 year term.
4. Mr Kreutzer also gave evidence that at another meeting with Ms Marlowe, held on 25 August 2016, she said to him words to the following effect: We request that the new lease will provide for a term of 10 years.
5. At about that time an employee of the defendant provided Mr Kreutzer with a builder's quote for about $166,000 relating to the proposed works at the premises. There was also some discussion between Mr Kreutzer and Ms Marlowe concerning the installation of equipment to aid disabled persons' access to the premises.
6. On 5 September 2016 Mr Kreutzer gave instructions to Mr Maxwell to prepare a lease and submit it to the defendant. Mr Kreutzer's email to Mr Maxwell on that day includes the following: Ngunya Jarjum have indicated that instead of a 5 year renewal with option for further 5 years, they would like to a take a new lease for a term of 10 years. The company is happy to proceed on this basis. I have attached the first 6 pages of the current lease. The balance of the lease is in the form of Annexure B of the 2007 Law Society of NSW lease, unamended. Please prepare and submit to the tenant the new lease taking into account the following changes to the copy attached to this email: Term: 10 years Commencing date: 1 May 2017 Terminating date: 30 April 2027 Annexure A Item 12 - No option to renew Maximum period - 10 years Item 13 - $134,983.00 per annum $11,248.50 monthly - delete everything in brackets after the monthly instalment figure. From the first rent review date $140,382.00 - monthly instalments of $11,698.50. … Your costs in the matter will be payable by the tenant. Security is held by Summerland Credit Union whose consent will be needed in due course.
7. On 7 September 2016 Mr Maxwell sent an email to Mr Kreutzer in the following terms: I have prepared the lease and attach Annexure A for your approval. However I wonder about a ten year term with a fixed 4% rent increase each year. By the end of the lease the yearly rent increases can become very steep and my recollection is that you have been very reasonable in regard to the rent and I wonder if a fairer way of dealing with the rent would be for there to be a review to market after five years and then the annual increase again.
8. Mr Kreutzer replied by email on 8 September 2016 in the following terms: Thanks for the draft. All looks good. As to the annual increment, we have had some unsatisfactory experiences with Review to Market clauses and prefer to stick to percentage increments. I take your point as to the ten year term. When seeking the exercise of the option to renew, we waived the increment for this current year and also waived it for the first year of the new term. The effect is a two-year pause in the fixed increments. We will, however, reduce the annual increment to 3%. At that point, the risk starts to shift to the lessor of falling behind the market. We see that as a reasonable compromise.
9. On 22 September 2016 Mr Maxwell sent an email to Mr Kreutzer in which he described Mr Kreutzer's instructions as "most reasonable", and stated that he would "arrange for the lease to be executed by [the defendant]".
10. On 28 September 2016 Mr Maxwell sent an email to Ms Marlowe which was in the following terms: I confirm my telephone advice that I have prepared the Lease from Phil Kreutzer's company Left Bank Investments Pty Ltd which is in identical format to the previous Lease apart from the rent and rent increase calculations. The rent from the commencement date for the first 12 months is $134,983.00 yearly payable by monthly instalments of $11,248.50 plus GST which equates to $12,373.35 and then from the first rent review for the next 12 months is $140,382.00 payable by monthly instalments of $11,698.50 exclusive of GST which is $12,868.35 including GST. Thereafter, the rent increases by 3% yearly. You are also liable to pay all the water, sewage and drainage charges in relation to the premises. The Lease needs to be signed by two officers of Ngunya Jarjum and I note that you are making arrangements to come down and see me so that it can be executed. I attach a tax invoice in relation to the costs of preparation of the Lease. Please get in touch so that we can arrange to get together. The attached tax invoice referred to legal fees "for acting on behalf of both the Lessor and the Lessee…".
11. Mr Kreutzer deposed that at a further meeting at the premises on 10 October 2016 Ms Marlowe said to him: We confirm that architects drawings have been approved but the some [sic] electrical issues are still to be resolved and costed. The lessee's intention is to complete all the costings and documentation by Christmas this year and the work to commence by January next year. We can confirm that the draft lease had been received by John Maxwell and is ready for signature by the Lessee.
12. Mr Kreutzer deposed that at various meetings with Ms Marlowe she told him that the defendant was "happy that we have extended the lease and been able to renovate".
13. By October 2016 the plaintiff had arranged for the supply and installation of lift equipment to facilitate access to the premises by disabled persons. It should be noted that the lease contained a provision (cl 19.1) obliging the plaintiff to install "a disabled access lift" for the ground floor of the premises, but this obligation had remained unperformed.
14. On 6 December 2016 Mr Kreutzer enquired of Mr Maxwell about "any progress with the signing of the new lease". Mr Maxwell sent an email to Mr Kreutzer in response which included the following: I gave the lease to Michelle from NJ on 3 November to take back to Minna to organise the execution. Just rang Minna and she said that she was sure that it had been signed and would arrange for it to come back forthwith. Will report when it is in my hands.
15. It appears from a Director's Report given at the Annual General Meeting of the defendant on 9 December 2016 that by that time funding had been secured for the renovations to the premises "to allow for disability access and the increase in staff workstations for the 30 fulltime staff".
16. On 17 January 2017 Mr Kreutzer sent an email to Mr Maxwell in which advice was sought as to whether there had been any developments with the lease. It appears that on 19 January 2017 an employee of the defendant, Ms Hicks, sent an email to Mr Maxwell in which it was stated that Ms Marlowe needed to meet with the owner to discuss the lease, and that at this stage the lease prepared by Mr Maxwell "has not been signed off".
17. Mr Kreutzer met with Ms Marlowe on about 24 January 2017. He deposed that there was a conversation to the following effect: Ms Marlowe: Because of the changes with the lessee's funding arrangements the lessee will not be able to commit to a 10 year lease. I request that the lessor agree to a 2 year term. Mr Kreutzer: The lessor would not agree to a 2 year term as the option to renew for a 5 year term had already been exercised. No lessor is likely to agree to a reduction from 5 years to 2 years. Ms Marlowe: I understand the lessor's position and confirm that the lessee will proceed with a term of 5 years.
18. On 27 January 2017 Mr Kreutzer sent an email to Mr Maxwell in the following terms: I had a meeting with Minna earlier this week. It seems that bureaucratic shuffling of deckchairs in Sydney has placed them in a difficult position. Although they feel that their position is basically safe, they are not able to commit to a 10 year term. We agreed that the new lease should be for a 5 year term (in accordance with the option which has already been exercised) and to include an option to renew for a further 5 years. Please amend the draft lease and resubmit to Ngunya Jarjum.
19. On 8 February 2017 (after Mr Kreutzer again sought news in relation to the new lease) Mr Maxwell sent an email to Mr Kreutzer which included the following: I have spoken to NJ and will deliver the fresh pages down today and understand that the board members will be in this week and the lease should be signed. I will follow up on Monday and let you know the situation.
20. Later on 8 February 2017 Mr Maxwell sent a letter to Ms Marlowe which included the following: I understand from Philipp Kreutzer that is has been agreed between the parties that the Lease term will be reduced to five years with an option for a further five years. In these circumstances I have redrawn the front page and Annexure A of the Lease and attach two copies of that material with this letter. Would you please substitute these pages in the Lease document that I earlier sent to you and then arrange for the Lease to be signed by two members of the Board on pages 2, at the foot of each of the pages 3 to 6 of Annexure A and on pages 7 and 19 of Annexure B.
21. The lease document was not at any stage executed by two members of the defendant's board. It seems, however, that around that time Ms Browning (who was at all relevant times a director) signed the lease document. Ms Browning deposed that she wanted to use this as a "negotiating tool" to persuade Mr Kreutzer to agree to reduce the rent.
22. Also around that time, an Acting CEO of the defendant (Ms Jacky) was installed in place of Ms Marlowe.
23. Minutes of meetings of the defendant's board indicate that issues concerning the new lease were discussed at numerous meetings held in March 2017. It appears that the defendant was seeking to obtain legal advice as to its position. By 30 March 2017 the defendant had received some advice from a solicitor, Mr Keith Graham.
24. On about 31 March 2017 the lower floor of the premises was inundated by flood waters. Significant damage was sustained (including to the "disabled access lift"), seemingly making continued occupation impossible, at least in the short term.
25. On 19 April 2017 Mr Graham sent a letter to Mr Maxwell in the following terms: We advise that we now act on behalf of the Lessee in the above matter and note that you act for the Lessor Left Bank Investments Pty Ltd and have previously also acted for our client with respect to the Lease. We note that the current Lease expires on the 30th of April 2017 and no new Lease has been entered into. We are instructed that since the recent flood that the premises are unsuitable for occupation including but not limited to the fact that all first floor carpets have been inundated and need replacement. Our client was instructed by the Landlord's representative that this was not its responsibility as the carpets belonged to our client. We are instructed by our client that the carpets were in fact included with the premises when rented and therefore form part of the rented premises. Our client has had to rent alternative premises to continue to operate and will not be renewing the Lease past the 30th of April 2017.
26. Mr Maxwell forwarded the letter to Mr Kreutzer. His covering email was in the following terms: I attach a letter that I received by email this morning from the new solicitors acting on behalf of Ngunya Jarjum which you will see indicates that they will not be entering into the new lease from 30 April. I am no [sic] sure that it is a simple as that as they exercised the option in the previous lease (see my email to you of 6 April and your previous emails direct with Minna). However having in mind my earlier involvement for Ngunya Jarjum I do not think I should advise you further in relation to the matter.
27. There were further communications between the parties directed to issues concerning the leasing of the premises. I have considered these, but it is unnecessary to set any of them out.
28. The parties fell into dispute about who had responsibility to effect the cleaning and repairing of the premises. It appears that the defendant nonetheless continued to pay rent (at the rate of $134,983 p.a.) until the end of May 2017. The defendant formally vacated the premises and returned the keys to the plaintiff on about 20 June 2017. Ms Browning said in cross-examination that a decision was made after the flood not to return to the premises.
29. These proceedings were commenced in October 2017. The plaintiff was at that stage seeking specific performance of an agreement for lease.
30. The plaintiff thereafter found a new tenant for part of the premises. A lease of the lower floor was entered into for a three year period commencing on 16 April 2018.
31. On 6 April 2018 solicitors acting for the plaintiff (Heydons) sent a letter to the defendant and its solicitors (Stevens Vuaran) in which it was stated: … The lessor regards your client as being in fundamental breach and repudiation of the lease and that they are entitled to exercise their rights as lessor pursuant to the lease entered into by your client whereby your client covenanted and agreed to comply with the terms of the lease and to pay the rent. Pursuant to clause 12.1 of the lease, the lessor hereby gives your client notice of termination under the Notice of Breach, Repudiation and termination attached. … The attached Notice of Breach, Repudiation and Termination of Lease refers to a repudiation of a lease that is said to have arisen from the exercise of the option to renew contained in registered lease AH220480.

(a) Concluded agreement

1. It is convenient to first consider whether a concluded agreement for lease was made on 6 April 2016 in the course of the dealings between Ms Marlowe and Mr Maxwell on behalf of the defendant and Mr Kreutzer on behalf of the plaintiff. This question is separate from the question whether any concluded agreement is binding upon the defendant as an agreement made by an agent (or agents) acting within the scope of an actual or ostensible authority to do so. It is also separate from the question whether any concluded agreement might not be enforceable against the defendant due to a failure to satisfy the requirements of s 54A of the Conveyancing Act. Those questions are dealt with later, as is the question whether the defendant is bound by an estoppel which precludes it from denying that it entered into a binding and enforceable agreement for lease.
2. The question whether a concluded agreement for lease was made on 6 April 2016 is to be determined by an objective assessment of the conduct of the parties (see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549-50; Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [64]-[65]; Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWCA 210 at [4], [141] and [144]-[145]). An assessment of this kind very commonly employs an offer and acceptance analysis, but that is not always required. In some situations a contract may be found to have been made even though it is difficult or even impossible to discern the acceptance of an offer, the mutual assent of the parties being manifest in other ways (see the discussion by Heydon JA, as his Honour then was, in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [71]-[81]). It is well established that conduct of the parties subsequent to the alleged making of the agreement may be relevant to the question whether a concluded agreement was reached (see Brambles Holdings Ltd v Bathurst City Council (supra) at [25]; Pavlovic v Universal Music Australia Pty Ltd (supra) at [118]; Darzi Group Pty Ltd v Nolde Pty Ltd (supra) at [5], [50] and [158]).
3. In the present case it is sufficient to employ an offer and acceptance analysis. The starting point is of course the option to renew contained in the lease. Whether the option to renew be regarded as an irrevocable offer able to be accepted by the defendant in accordance with its terms, or a contract to grant a further lease conditional upon the defendant exercising the option in accordance with its terms (see Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 at 71-2), it is clear that if the option was exercised by the defendant in accordance with its terms the parties would be bound to enter into a new lease on the terms provided for in the option to renew. The option could be exercised by the defendant at any time during the period from 1 December 2016 to 1 February 2017.
4. However, the evidence given by Mr Kreutzer, including the emails sent by him to Ms Marlowe on 14, 16 and 18 March 2016, indicate that the plaintiff wanted the defendant to take action well prior to that period in relation to the option. In brief, the plaintiff wanted the defendant to either exercise the option early and on terms that differed from those contained in the option, or else confirm that it would be exercising the option "later in the year" again, it seems, on terms that differed from those contained in the option. The first of those alternatives emerges particularly from the emails of 14 and 16 March 2016. Those emails, read together, show that the plaintiff was willing to accept an early exercise of the option for a new five year term commencing upon the expiry of the existing lease at a rent for the first year equal to the current rent (of $134,983 per annum). The second of these alternatives emerges particularly from the email of 18 March 2016. That email shows that the plaintiff would regard it as "good enough" if the defendant confirmed that it would exercise the option later in the year for a new five year term at a rent for the first year equal to the current rent (of $134,983 per annum).
5. The terms of the email sent by Mr Maxwell on 6 April 2016, which are expressed in the present tense, tend to suggest an acceptance of the first alternative; that is to say, an immediate (and thus early) exercise of the option, rather than an expression of an intention to exercise the option later in the year.
6. When that email is read in the light of Mr Kreutzer's earlier emails, to which express reference is made (noting that the reference to an email of 15 March 2016 is plainly an erroneous reference to Mr Kreutzer's email of 14 March 2016), it is apparent in my view that Mr Maxwell was conveying a wish to immediately exercise the option to renew on the basis that the rent for the balance of the existing term would not be increased above its current rate of $134,983 per annum, and that rent would remain the rent for the first year of the new term.
7. I infer from the emails sent by Ms Marlowe on 5 April 2016, and the fact that Mr Maxwell's 6 April 2016 email was copied to her, that Ms Marlowe and Mr Maxwell conferred before the 6 April 2016 was sent. I further infer that Mr Maxwell's email, which does not appear to have been later contradicted by Ms Marlowe, accorded with her instructions.
8. Viewed objectively, Mr Maxwell's email conveys an acceptance of the proposal put forward by Mr Kreutzer that the option be exercised early on terms that differ from the terms of the option itself. The difference is that the rent for the first year of the new lease would be $134,983 rather than the current market rent determined in accordance with item 13 of the Schedule and cll 4.6 and 5.12-5.21 of the lease. Put in terms of offer and acceptance analysis, Mr Maxwell's email, which employs the language of exercise of an option, can be fairly regarded as the acceptance of an offer contained in Mr Kreutzer's emails to enter into a new lease on certain terms.
9. It cannot be said, however, that there was an exercise of the option to renew contained in the lease. That option was only able to be exercised in accordance with cl 4.4 of the lease. Clause 4.4 required, inter alia, the exercise to occur in the period from 1 December 2016 to 1 February 2017. Moreover, that option was for a new lease on the terms set forth in cl 4.6, not a new lease on any different terms. The question thus becomes whether the acceptance of the offer contained in Mr Kreutzer's emails amounted to the making of a concluded agreement for a different lease (cf Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312; [2003] NSWSC 851 at [27]).
10. In my opinion such an agreement was concluded on 6 April 2016. The communications between the parties must be considered against the background that the parties were in an existing lessor/lessee relationship governed by the terms of the registered lease, including its provisions concerning the option to renew. So viewed, Mr Kreutzer's emails clearly put forward a proposed alternative to an exercise of the option in accordance with its terms. In essence, Mr Kreutzer proposed that there be an exercise of a different option to renew. That is so even though he continued to refer to an exercise by the defendant of "the option" or "its [the defendant's] option". The emails specified the particular respects in which the proposed course of action departed from the option itself. These were, first, the time when the option would be exercised and, secondly, the rent that would apply at the commencement of the new term. It may be inferred that in all other respects the proposed course of action was intended to accord with the option itself.
11. The defendant pointed out in submissions that under the terms of the option the initial rent under the new lease was to remain constant for two years until the first rent review date (see the proviso to item 16 of the Schedule), whereas Mr Kreutzer's proposal specified an initial rent for the first year of the new lease. In cross-examination, Mr Kreutzer said that he was unaware of the proviso to item 16 of the Schedule, and that his understanding would have been that the first rent increase for the new lease he was proposing would occur one year after its commencement. Mr Kreutzer's subjective understanding is of course not relevant to the question whether a concluded agreement was made.
12. In my opinion, the communications between the parties objectively reveal a consensus on the rent that would apply at the commencement of the new term (i.e. $134,983 per annum). Moreover, the communications do not, despite the references to the rent "for the first year of the new year", evince an intention to change the rent review provisions that would apply to the new lease. Those provisions were not adverted to at all. The parties objectively agreed upon an initial rent that would be subject to review in accordance with the existing rent review provisions. An agreement to that effect appears to have been reached, even if either or both of the parties might have erroneously thought that under the rent review provisions the initial rent would be reviewed after 12 months.
13. The defendant submitted that the intention of the parties, objectively ascertained, was to be bound only upon the formal exchange of signed leases. Numerous matters were raised in support of this submission including: 1. that being bound only upon exchange accorded with the usual expectation of parties to conveyancing transactions; 2. that the parties here contemplated that a formal lease document would be prepared and executed; and 3. that the parties continued to negotiate after April 2016 about the terms of the new lease.
14. As to the first matter, it is not appropriate, at least in a case involving an alleged agreement for lease, to presume that the parties do not intend to be bound until a formal exchange of agreements has occurred (see Darzi Group Pty Ltd v Nolde Pty Ltd (supra) at [6] and [149]-[150]; cf [143]). The focus must be upon an objective assessment of the communications between the parties viewed in the circumstances of the case at hand. In this case, an important circumstance was the existing lessor/lessee relationship that included the option to renew (see Darzi Group Pty Ltd v Nolde Pty Ltd (supra) at [148]).
15. As to the second matter, whilst it is true that the parties contemplated that a formal lease document would be prepared and executed, in circumstances where Mr Kreutzer proposed that there be an exercise of an option to renew and Mr Maxwell accepted that proposal, the contemplation of execution of a formal lease does not tell against a conclusion that a concluded agreement had been made. The exercise of an option to take a new lease, upon certain terms, ordinarily amounts to an immediately binding agreement for lease even though the parties expect that a formal lease containing the agreed terms will later be prepared and executed.
16. As to the third matter, the negotiations that took place from about late June 2016 concerning the term of the new lease and the level of rent increases on review, seem to me to be consistent with the parties, having already reached agreement, discussing changes to that agreement. These negotiations do not in my view suggest that the earlier acceptance of the proposal to exercise an option to renew did not bring about a concluded agreement. I appreciate that the communications that occurred after 6 April 2016 do not contain statements in terms that a binding agreement for lease had been entered into; neither do they contain statements in terms that no binding agreement had been made.
17. For the above reasons, it is my opinion that a concluded agreement for lease was made on 6 April 2016 in the course of the dealings between Ms Marlowe and Mr Maxwell on behalf of the defendant and Mr Kreutzer on behalf of the plaintiff. Viewed objectively, those dealings indicate not only the existence of consensus as to the terms necessary for an agreement for lease, but also an intention to conclude a binding agreement for lease through the exercise of an option to renew.

(b) Authority

1. The next issue to consider is whether the agreement concluded on behalf of the defendant by Ms Marlowe and Mr Maxwell is binding upon the defendant as an agreement made by an agent (or agents) acting within the scope of an actual or ostensible authority to do so.
2. The plaintiff submitted that Ms Marlowe had actual or alternatively ostensible authority to bind the defendant to an agreement for lease. It was submitted that she relevantly had authority to communicate acceptance of Mr Kreutzer's proposal for the exercise of the option so that the defendant was bound by the legal consequences of that communication. In this regard, reference was made to the decision of Palmer J in Jiwunda v Trustees of the Travel Compensation Fund (2006) 12 BPR 23,857; [2006] NSWSC 741 at [63]. The plaintiff submitted that in these circumstances it was open to Ms Marlowe to instruct Mr Maxwell to communicate the acceptance to Mr Kreutzer.
3. As far as actual authority is concerned, the plaintiff referred to a Delegation Manual, in particular an appendix to the manual, part of which states that the CEO of the defendant had delegated authority in respect of "management of and signing off on leasing arrangements". The plaintiff further submitted that actual authority could be inferred in all the circumstances including: 1. the defendant did not call evidence from Ms Marlowe; 2. the defendant did not adduce evidence of any resolutions made by its directors at relevant times; 3. the likelihood that in any event resolutions of the directors were not recorded; 4. to the knowledge of the defendant's board Ms Marlowe was in charge of a project involving the expenditure of a significant amount of money on the premises; 5. on 30 March 2017 the defendant's board carried a resolution to the effect that the defendant's solicitor "attempt to negotiate out of the 5 year lease"; and 6. the defendant's initial Defence contained an admission that it had agreed, subject to a number of conditions precedent, to renew its lease.
4. The plaintiff submitted that at all relevant times Ms Marlowe held the position of CEO of the defendant, and she in fact dealt with Mr Kreutzer on all issues in relation to the tenancy and the property, including the proposed refurbishment of the ground floor area. The plaintiff also pointed out that in 2012 Ms Marlowe had signed the lease on behalf of the defendant, purportedly as a director.
5. As far as ostensible authority is concerned, the plaintiff submitted that the defendant held out Ms Marlowe as a person with the requisite authority because she was held out as the CEO, and indeed had earlier been held out as a director by her signing of the lease in 2012. The plaintiff further submitted that the defendant had allowed Ms Marlowe to be its "public face" in all dealings with the plaintiff in relation to the premises, including the proposed refurbishment. In addition, the plaintiff submitted that by reason of s 104-1 of the CATSI Act it was entitled to rely upon the statutory assumptions set forth in ss 104-5(4) and 104-5(5) of that Act, which are in the following terms: (4) A person may assume that anyone who is held out by the corporation to be an officer or agent of the corporation: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar Aboriginal and Torres Strait Islander corporation. (5) A person may assume that the officers and agents of the corporation properly perform their duties to the corporation. (cf ss 129(3) and 129(4) of the Corporations Act 2001 (Cth))
6. The defendant submitted that Ms Marlowe was never in fact a director, or even a secretary, of the corporation. Reference was made to s 274-1 of the CATSI Act which provides that the business of an Aboriginal and Torres Strait Islander corporation is to be managed by or under the direction of the directors, who may exercise all the powers of the corporation except those required to be exercised in general meeting. The defendant also referred to s 274-10 which empowers the directors, by resolution, to delegate any of their powers to a committee of directors, a director, an employee of the corporation, or any other person. It was submitted that there was no evidence of any board resolution that relevantly delegated to Ms Marlowe the power to bind the corporation to a lease or an agreement for lease. It was further submitted that there was no evidence of any formal resolution of the board which adopted the Delegation Manual. The defendant submitted that in any event the portion of the appendix relied upon by the plaintiff should not be construed as conferring authority on the CEO to bind the corporation to leases or agreements for lease.
7. As for ostensible authority, the defendant submitted that Ms Marlowe was never held out as having the requisite authority, and s 104-5 of the CATSI Act did not assist the plaintiff. It was put that there was no basis to conclude that the powers and duties of a CEO of an Aboriginal and Torres Strait Islander corporation customarily included the power to bind the corporation to a new or varied lease, or exercise an option to renew a lease (see s 104-5(4)), and s 104-5(5) was concerned only with the proper performance of duties by an officer, not the scope of an officer's authority. The defendant also submitted that it was clear that, as a solicitor, Mr Maxwell had neither an actual authority nor an ostensible authority to bind the defendant to a new or varied lease.
8. Section 274-1 of the CATSI Act provides that aside from matters that must be dealt with in general meeting, the business of an Aboriginal and Torres Strait Islander corporation is to be managed by or under the direction of the directors of the corporation. However, s 274-10 expressly empowers the directors, by resolution, to delegate their powers. Section 99-1 further provides that an Aboriginal and Torres Strait Islander corporation's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the corporation's express or implied authority and on behalf of the corporation without using a common seal.
9. It has not been shown that Ms Marlowe was at any time a director of the defendant. As far as the evidence goes, it appears that she was not a director when she signed the lease on behalf of the defendant in 2012, and not a director during the financial year ending on 30 June 2016. When the agreement was made in April 2016, and for some years previously, Ms Marlowe was the holder of the position of CEO.
10. Mr Kreutzer knew that Ms Marlowe held that position. He regarded her as the "chief executive" of the defendant. Prior to April 2016 Mr Kreutzer dealt with Ms Marlowe in relation to matters concerning the lease including minor building alterations and maintenance issues.
11. Mr Kreutzer did not give evidence that in 2016 he believed Ms Marlowe to be a director of the defendant. I note, however, that some of the submissions made by the plaintiff refer to a holding out by the defendant of Ms Marlowe as a director. These submissions were based upon the fact that she signed the lease in 2012 on behalf of the defendant, purportedly, and erroneously, as a director.
12. As mentioned earlier, this irregularity caused a requisition to be raised by Land & Property Information. It further appears that the National Australia Bank raised with Mr Kreutzer a question as to whether the persons who signed the lease on behalf of the defendant had the authority to do so. It is also clear that Mr Kreutzer was aware in 2012 that the defendant was incorporated under the CATSI Act.
13. Mr Maxwell, who had acted for the defendant in relation to the lease and was acting for the plaintiff (or perhaps both parties) in respect of the registration of the lease, became aware from a search undertaken on 11 September 2012 that Ms Marlowe was neither a director nor a secretary of the defendant, but was designated as a "contact person". Mr Maxwell also became aware that the lease had been signed by a director "in substitution for" Ms Marlowe. Mr Maxwell might not have actually passed this information onto Mr Kreutzer. But as the information was obtained by Mr Maxwell in the course of his acting for the plaintiff, knowledge of it would in any event be attributed to the plaintiff. In these circumstances it cannot be maintained that in 2016 the plaintiff was relying upon any holding out by the defendant that Ms Marlowe was a director.
14. The question of Ms Marlowe's authority falls to be considered on the basis that she in fact held the position of CEO, and was held out by the defendant as such.
15. I agree with the submission made by the plaintiff that the question may be stated as whether Ms Marlowe had authority to communicate an acceptance of Mr Kreutzer's proposal for the exercise of the option so that the defendant was bound by the legal consequences of that communication. Of course, even so stated, the question is whether Ms Marlowe had authority to do a particular act which binds the defendant to an agreement for lease.
16. I will deal first with actual authority. It is trite that a principal (in this case the defendant) may confer authority upon an agent (in this case Ms Marlowe) to do certain things on its behalf. The conferral of authority can be express, or implied from the conduct of the parties. The relevant conduct can include the appointment of an agent to a certain office or position.
17. The defendant adduced evidence from one of its directors, Ms Tiani Browning. She became a director in 2012, and remained a director at all material times until October 2017. She was re-appointed as a director in December 2018 following a period when the defendant was under special administration (see Part 11-2 of the CATSI Act).
18. Ms Browning deposed that searches had been carried out but no minutes of board meetings could be found in respect of the period from 1 January 2016 to 1 August 2016. It seems that some records, both hard copy and electronic, were lost as a result of the flood that occurred in March 2017. Ms Browning was unsure about the number of any board meetings that were held in that period, and about the number of any such meetings she attended. In cross-examination, she said that it was highly unlikely that no such meetings were held in the period from November 2015 to August 2016. I note in this regard that the Financial Report for the year ended 30 June 2016 stated that seven directors' meetings were held in that financial year, and that all directors attended more than three meetings. In any event, Ms Browning deposed that in relation to the period from January to August 2016, she could recall no board resolutions to the effect that the defendant would enter into a lease or exercise an option to renew the lease of the premises, or to the effect that the CEO was authorised to make or communicate any decision about whether the defendant would exercise the option to renew the lease.
19. Ms Browning deposed that she could recall no discussions between directors, or between the directors and Ms Marlowe, about the possible renewal of the lease prior to the latter half of 2016. Ms Browning confirmed in cross-examination that she saw Mr Maxwell's email of 28 September 2016 and the attached tax invoice. Ms Browning further deposed, and maintained in cross-examination, that she had not seen Mr Maxwell's email of 6 April 2016 at or around the time it was sent. Ms Browning deposed that she was not aware until early 2017 that the plaintiff claimed that the defendant had exercised the option to renew the lease.
20. The evidence does not show that the defendant's board ever passed a resolution that would authorise Ms Marlowe (or the CEO) to exercise any option to renew the lease or otherwise accept a proposal from the plaintiff for a new lease of the premises.
21. However, the plaintiff submitted that the terms of the Delegation Manual amounted to an express conferral of such an authority, which included authority to communicate acceptance of Mr Kreutzer's proposal.
22. Ms Browning gave evidence that levels of authority designated or assigned to the board and management of the defendant are prescribed in a Delegation Manual and a Policy and Procedures Manual. The Delegation Manual (reproduced at pages 25 to 36 of Exhibit A) was apparently prepared in 2013. It is stated on its cover that it is to be read in conjunction with the Policy and Procedures Manual (part of which is reproduced at pages 37 to 41 of Exhibit A). The Delegation Manual contains a "Delegation Approval Limit Table" which indicates that the CEO is delegated to approve expenditure up to a value of $5,000, but must seek approval from the board at the next available meeting for expenditure of more than $5,000 unless the expenditure is urgent, in which case the CEO must seek approval from the board members by means of email or telephone. If approval from all board members is unattainable, the Chairperson and Treasurer can authorise urgent expenditure up to $10,000.
23. The Delegation Manual has an appendix (referred to as Appendix A) which refers to various matters including "Premises". Appendix A (reproduced at pages 42 to 60 of Exhibit A) contains tables which are colour shaded so as to show areas of authority delegated to various organs including "Board", "CEO" and "FM" (presumably Finance Manager). The section headed "Premises" indicates that authority to "arrange routine maintenance" and to "arrange for routine gardening and maintenance of property" is delegated to the Finance Manager. Authority for "management of and signing off on leasing arrangements" appears to be delegated to the board and to the CEO.
24. The last-quoted words are capable of being construed so as to encompass "signing off" on leases themselves or agreements for lease. The plaintiff submitted that the words should be so construed. However, it seems to me that when the words are read in their context as part of the Delegation Manual and in the light of the Policy and Procedures Manual, they should not be given such a broad construction.
25. I have already referred to the provisions of the Delegation Manual which restrict the authority of the CEO in relation to expenditure to amounts up to $5,000. Whilst approving expenditure is not synonymous with the making of contracts that involve monetary liabilities, it would be incongruous for the CEO to have authority to make contracts that bind the defendant to contractual liabilities (such as obligations to pay rent of more than $100,000 per annum over a number of years) that would vastly exceed the amount of expenditure the CEO is authorised to approve.
26. In addition, the terms of the Policy and Procedures Manual (in particular for Standard 21, which is specifically referred to at the foot of the pages of the Delegation Manual and its Appendix A) include the following: Role of the CEO The CEO is responsible for the day-to-day operations of the organisation. The Statement of Duties of the CEO is contained in TEMPLATES and FORMS attached at the end of this section of the Manual. The delegated responsibilities of the CEO are contained in the attached Delegations Manual. DECISION MAKING DELEGATION See Delegations Manual for full details of responsibilities and financial limits for incurring expenditure. The CEO The Ngunya Jarjum CEO has full decision-making delegation for the day to day running of the organisation. See Delegations Manual in OTHER RELATED POLICIES at end of this section of the Manual. The CEO has delegation to approve expenditure up to the value of $5,000. For urgent expenditure beyond this delegation the CEO must seek approval from the Chairperson and Treasurer up to a maximum delegation of $10,000. For non-urgent expenditure beyond $5,000 the CEO must seek approval from the Executive Board at the next Board meeting.
27. The Delegation Manual (and hence its Appendix A) is required to be read in conjunction with the Policy and Procedures Manual. In light of the language of that manual, which emphasises that the delegation of authority to the CEO is for the "day-to-day" operations and running of the organisation, it would not be appropriate to read "signing off on leasing arrangements" as extending to the binding of the defendant to leases or agreements for lease. Those matters cannot be reasonably regarded as part of the day-to-day operations of the defendant.
28. So construed, "leasing arrangements" would still have work to do. Matters that commonly arise in the context of commercial leases (including the lease in this case), such as agreeing to a particular valuer for rent review purposes, arranging for alterations or repairs to the premises, arranging insurance, and permitting access for inspections would fall within "leasing arrangements" for the purposes of the appendix to the Delegation Manual. Accordingly, I do not think that the terms of the Delegation Manual amount to an express conferral of authority upon Ms Marlowe as CEO to bind the defendant to an agreement for lease.
29. I have in addition considered the various matters advanced by the plaintiff in support of an inference of the existence of actual authority, including the matters referred to above (at [75]).
30. The failure of the defendant to call Ms Marlowe is of little weight in circumstances where she ceased her employment with the defendant in early 2017 and it seems that Mr Kreutzer has himself had some contact with Ms Marlowe since the commencement of the proceedings.
31. It is true that the evidence adduced by the defendant concerning meetings of the directors and resolutions of the directors was incomplete. Moreover, even allowing for the effects of the flood, there is reason to believe that the defendant's record keeping was inadequate. I nevertheless accept the evidence given by Ms Browning to the effect that as far as she was aware no discussions involving the directors were held concerning the possible renewal of the lease until the latter half of 2016. I think that Ms Browning gave her evidence honestly and to the best of her ability. The likelihood is that there was no conferral upon Ms Marlowe by the directors, whether acting formally by way of resolution, or informally, of authority to exercise any option to renew or otherwise bind the defendant to an agreement for lease. I note that the minutes of the board meeting of 20 April 2017 record that the previous CEO (Ms Marlowe) "withheld all information in relation to negotiation of draft lease from the Board" and that information and details on that matter were "only now becoming known".
32. It is also true that Ms Marlowe was the manager in charge of the planned refurbishment of the premises. That was accepted by Ms Browning, who further agreed that Ms Marlowe kept the board informed about the plans, at least "to a degree". Ms Browning further agreed that an important part of those plans (which were envisaged to involve significant expenditure on the part of the defendant) was "the lease of the premises beyond the end of April 2017". However, I do not think that it follows from Ms Marlowe's role in relation to the refurbishment plans that she would have the authority to bind the defendant to a new lease of the premises. It could reasonably be expected that if the plans were to be carried through the defendant would almost certainly want to have a new lease so as to be able to make use of the refurbished premises. But in early 2016, when the project became the subject of discussion between Ms Marlowe and Mr Kreutzer, the defendant had an existing option to renew that was able to be exercised in the period from 1 December 2016 to 1 December 2017. Given that the project was then at an early stage it is difficult to see why Ms Marlowe's role as CEO in charge of the project would implicitly carry with it any authority to make decisions about a new lease that would commence after the expiry of the existing lease in about 12 months' time.
33. The reference in the board minutes of 30 March 2017 to attempting to "negotiate out of the 5 year lease" does not in my view amount to a recognition that Ms Marlowe actually had authority to exercise the option which the plaintiff was by that time asserting had been exercised. The statement was made in circumstances where the defendant had only recently obtained independent legal advice about the situation. I do not think that the apparent recognition that there was something to negotiate "out of" is tantamount to an admission that Ms Marlowe in fact had authority to bind the defendant to a new lease.
34. The defendant's initial Defence does seem to accept (in paragraph 5) that the defendant had agreed to renew its lease subject to a number of conditions precedent. This is consistent with an acceptance that Ms Marlowe had authority to make such an agreement on behalf of the defendant, but is not in its terms an affirmative statement that such authority existed. I do not think that the failure of the defendant to initially raise a Defence of lack of authority provides a strong foundation for an inference that actual authority existed. In a case that raises numerous issues, it may well be that for a time the point was simply overlooked. (The same point could be made about the plaintiff's estoppel claim.)
35. Of course, the question whether that inference should be drawn must depend upon an overall assessment of the relevant evidence. Having considered the totality of the evidence, I am not satisfied that it should be inferred in all the circumstances that actual authority had been conferred upon Ms Marlowe to bind the defendant to an agreement for lease.
36. I am also unpersuaded that actual authority should be implied from the conduct of the parties. Whilst the defendant placed Ms Marlowe in the position of CEO, that position does not, of itself, ordinarily carry with it an authority to make agreements in the nature of agreements for lease. There is nothing about the particular nature or activities of the defendant that would call for a different conclusion in this case. Neither is there any evidence of a course of dealing whereby the defendant effectively allowed the CEO to make agreements of that nature (cf Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 at 133-4).
37. It follows from the above that Ms Marlowe, in acting as she did in April 2016 in accepting Mr Kreutzer's proposal for a new lease, was acting beyond the limits of the authority conferred upon her by the defendant.
38. I turn now to deal with ostensible authority.
39. It is again trite that a principal may be bound by the acts of an agent acting outside the bounds of their actual authority if the agent can be seen to be exercising an ostensible authority to perform the relevant acts on behalf of the principal. An ostensible authority can be bestowed upon an agent by means of a relevant "holding out" or representation by the principal. An ostensible authority operates as a kind of estoppel that precludes the principal from asserting, against a third party who relied upon the holding out or representation, that it is not bound by the acts of the agent. So, if a third party, acting in reliance upon the representation of authority enters into a contract with the agent, the principal is estopped from asserting that it is not bound by the contract (see Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503; Armagas Ltd v Mundogas SA [1986] 1 AC 717 at 777; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 187; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [36]).
40. For the reasons given above (at [85]) I cannot accept that in 2016 the plaintiff was relying upon any holding out or representation by the defendant that Ms Marlowe was a director. Rather, the relevant holding out by the defendant was the holding out of Ms Marlowe as the CEO. Further, I would accept that the holding out included the holding out of Ms Marlowe as the manager in charge of the planned refurbishment whose duties extended to liaising with the plaintiff about the project.
41. I do not think that this holding out of Ms Marlowe amounted to a representation that she had authority to exercise any option to renew or otherwise bind the defendant to any agreements in the nature of agreements for lease. I have already stated that the position of CEO does not itself ordinarily carry with it an authority to make agreements of that nature. Moreover, I do not consider that Ms Marlowe's role as the manager in charge of the planned refurbishment of the premises leads to a different conclusion. It may be accepted that pursuit of the project might have a bearing upon the defendant's intentions in respect of the taking of a new lease, but the management of the project and decisions about entering into a new lease seem to me to remain essentially distinct in a practical sense. That is to say, they are not so closely inter-dependent that it would be reasonable to assume that Ms Marlowe as the CEO and manager of the project would have the authority to exercise the option to renew or otherwise bind the defendant to an agreement for lease.
42. I should add that the present case is unlike Jiwunda v Trustees of the Travel Compensation Fund (supra) where there was a prior course of dealing in which the defendant company held out its agent to the plaintiff as having authority to give notice as to whether or not the plaintiff's offer of a new lease was accepted (see at [67]-[70]). There is no similar course of dealing here.
43. The plaintiff was entitled to make the assumptions specified in s 104-5(4) of the CATSI Act, namely, that Ms Marlowe has been duly appointed as the CEO of the defendant and has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer of a similar Aboriginal and Torres Strait Islander corporation. However, no evidence was adduced to show that the CEO of such a corporation customarily exercised or performed any specified powers or duties. In particular, it was not shown that a CEO of such a corporation would customarily exercise powers to exercise an option to renew a lease or otherwise bind the corporation to agreements for lease. In these circumstances the provision does not assist the plaintiff to establish that Ms Marlowe had authority to bind the defendant to an agreement for lease.
44. The plaintiff's reliance upon s 104-5(5) seems to me to be misplaced. The assumption the subject of that provision is concerned with the manner of performance of duties, not with questions of authority. Section 104-5(5) is seemingly directed towards a different issue, namely, the enforceability of a contract made by an agent acting in breach of duty (see Great Investments Ltd v Warner (2016) 243 FCR 516; [2016] FCAFC 85 at [98]-[99] in relation to the similar provisions contained in the Corporations Act). To assume that Ms Marlowe properly carried out her duties as an officer of the defendant (that is to say, with care and diligence, in good faith, in the best interests of the corporation, and for proper purposes - see Pico Holdings Inc v Wave Vistas Pty Ltd (2005) 79 ALJR 825; [2005] HCA 13 at [58]) is not necessarily to assume that she was at the same time acting within the scope of her authority.
45. In my opinion, the plaintiff has failed to establish that in April 2016 Ms Marlowe had either the actual authority or the ostensible authority to bind the defendant to an agreement for lease. It was not open to Ms Marlowe to so bind the defendant, whether by exercising the option to renew or by accepting Mr Kreutzer's proposal to enter into a new lease. Nevertheless, Ms Marlowe instructed Mr Maxwell to communicate to the plaintiff her acceptance of Mr Kreutzer's proposal to enter into a new lease. Mr Maxwell did so by his email to Mr Kreutzer of 6 April 2016. This communication was not effective to bind the defendant to the agreement for lease as the agreement was not made on behalf of the defendant by an agent (or agents) acting within the scope of an actual or ostensible authority to do so. Ultimately, I did not understand the plaintiff to suggest that Mr Maxwell himself, as a solicitor acting for the defendant, had authority to bind the defendant to an agreement for lease.

(c) Conveyancing Act, s 54A

1. My conclusion concerning authority renders it unnecessary to consider the operation of s 54A of the Conveyancing Act. The concluded agreement for lease made on behalf of the defendant is not enforceable against it in any event due to the lack of authority.

(d) Estoppel

1. The next issue to consider is whether the defendant is estopped from denying that it agreed to enter into a new lease on the terms alleged by the plaintiff. The estoppel is pleaded in paragraph 7A of the Further Amended Statement of Claim, which incorporates paragraphs 4A, 5, 6, 6A and 7 of the pleading. As I understand the pleading, the plaintiff asserts that the estoppel essentially arises from the sending of Mr Maxwell's email of 6 April 2016. It is alleged that the plaintiff relied upon that email as either an acceptance of the offer referred to in Mr Kreutzer's email of 16 March 2016, or a valid exercise of the option to renew. It is alleged that after receipt of the 6 April 2016 email, the plaintiff proceeded to act in reliance upon it, including by charging and accepting a "reduced rent" from 1 May 2016, engaging in negotiations in respect of the new lease, and giving permission for works to be undertaken by the defendant at the premises.
2. Mr Kreutzer gave evidence of the plaintiff's reliance. In his affidavit of 10 August 2018, he deposed that in reliance upon the defendant's representation that it was going to spend considerable money on refurbishment and enter into a new lease for a five year term, the plaintiff agreed not to increase the rent on the review date of 1 May 2016. Mr Kreutzer further deposed that the plaintiff would not have provided the defendant with that rent concession if the plaintiff had not believed that the defendant had exercised the option and would execute a new lease for a term of 5 years.
3. In his affidavit of 22 May 2019, Mr Kreutzer deposed that if he had not believed in October 2016 that the defendant had agreed to renew the lease, the plaintiff would not have proceeded to purchase the lift equipment that was installed in the premises at about that time. Mr Kreutzer deposed that he did many things, including attending meetings and approving the undertaking of works, on the basis that there was an enforceable agreement to renew the lease. Mr Kreutzer further deposed that had he been told that the defendant was intending not to renew the lease he would have advertised for a new tenant.
4. In his affidavit of 30 August 2019, Mr Kreutzer deposed that he agreed to certain requests made in the negotiations that occurred in 2016 because he believed that the defendant had exercised the option to renew.
5. In cross-examination, Mr Kreutzer agreed that in his email of 14 March 2016 he was not seeking to link the plaintiff's approval of the proposed refurbishment (the "internal adjustments") to an exercise by the defendant of the option to renew. He also accepted that the "disabled access proposal" referred to in the email was the subject of an obligation upon the plaintiff under the existing lease. When pressed about his understanding of Mr Maxwell's 6 April 2016 email, Mr Kreutzer was firm in stating, in effect, that he understood it to be an exercise of an option to renew on the terms that are referred to in the email and those that preceded it. As he put it at one point, he understood that the parties had "agreed on a new basis for exercising that option".
6. I accept that Mr Kreutzer held that understanding at all relevant times. I generally accept Mr Kreutzer's evidence. As was the case with Ms Browning, he appeared to give his evidence honestly and to the best of his ability.
7. The plaintiff submitted that Mr Maxwell's email of 6 April 2016 amounted to a clear representation that the defendant had exercised the option to renew and was accepting a new lease for a five year term. The plaintiff submitted that the parties thereafter acted accordingly, including during the period specified in the lease for the exercise of the option to renew. The plaintiff suggested that an estoppel by convention arose, and that this type of estoppel was within the plaintiff's pleading. It was submitted that the plaintiff clearly relied upon the defendant's representation and thereby suffered detriment, at least by not enforcing the rent increase on 1 May 2016, by giving consent to the proposed refurbishment works, by purchasing and installing the lift equipment, and by not seeking a new tenant. It was submitted that it would be unconscionable for the defendant to resile from its representation.
8. The defendant submitted that the estoppel was not made out in circumstances where the terms of any new lease remained throughout 2016 in a state of uncertainty, such that the plaintiff could not have assumed that a new lease would be entered into as alleged. It was also submitted that the plaintiff had failed to establish that it suffered any material detriment. It was pointed out that the rent concession for the final year of the lease was worth only about $5,400. The defendant also pointed to Mr Kreutzer's acceptance that he gave approval for the refurbishment works without linking it with any exercise of option, and his acceptance that the plaintiff was obliged under the lease to install a "disabled access lift". Finally, the defendant submitted that enforcement of the plaintiff's expectation of a new lease would be massively out of proportion to any detriment actually suffered by the plaintiff.
9. The submissions of neither party dealt expressly with the relationship between the alleged estoppel and the question of authority. However, it seems to me that the conclusions I have reached as to authority are of central importance to the determination of the estoppel question.
10. It is implicit in the estoppel propounded by the plaintiff that the defendant is precluded from denying that it became bound by an enforceable agreement for a new lease. This is illustrated by the plaintiff's submission that the estoppel, if made out, would overcome any difficulty arising from s 54A of the Conveyancing Act. However, the Court has found that Ms Marlowe, who gave instructions to Mr Maxwell to communicate with the plaintiff in the terms contained in his 6 April 2016 email, lacked authority to bind the defendant to an agreement for lease. Not only did she lack actual authority in that regard, she also lacked an ostensible authority conferred by some holding out or representation made by the defendant.
11. The relevant conduct relied upon as the foundation of the estoppel was not in fact authorised by the defendant and, in accordance with the principles that underlie the doctrine of ostensible authority, the defendant is not estopped from asserting that it is not bound by the contract purportedly made by the agent. In these circumstances, it is difficult to see why the 6 April 2016 email should be regarded as a representation, made by the defendant, that it had bound itself to an enforceable agreement for lease. I do not think that it ought be so regarded.
12. Moreover, insofar as the plaintiff relied upon the email as a representation that the defendant had bound itself to an enforceable agreement for lease, I do not think that the plaintiff can be considered to have acted reasonably in the circumstances. The plaintiff was aware that the defendant was a corporation incorporated under the CATSI Act. The plaintiff ought be taken to have been aware of its provisions, including s 274-1 (which concerns the powers of the directors) and s 274-10 (which concerns the delegation of powers by the directors). The plaintiff was content to deal with the CEO of the defendant in relation to the exercise of the option to renew without seeing evidence of any delegation of power by the directors. The plaintiff thereby took a risk that Ms Marlowe might lack the requisite authority to bind the defendant. As I have already stated, the position of CEO does not, of itself, ordinarily carry with it an authority to make agreements in the nature of agreements for lease. Further, there was no prior course of dealing that involved a holding out by the defendant of Ms Marlowe as possessing an authority of that kind. Finally, none of the assumptions the plaintiff was entitled to make in accordance with s 104-5 of the CATSI Act enabled it to assume that Ms Marlowe had the authority to bind the defendant to an agreement for lease.
13. It might not have been unreasonable for the plaintiff to assume that it was likely that the defendant would ultimately enter into a new lease on the terms negotiated with Ms Marlowe, but in my view the plaintiff was not reasonably justified in assuming that the defendant had bound itself to do so on 6 April 2016. Further, I cannot discern anything in the conduct of the defendant after 6 April 2016 that would provide a reasonable basis for the holding of the assumption. There was no conduct of the defendant in the nature of a ratification of Ms Marlowe's acts. The likelihood is, based on Ms Browning's evidence and the note contained in the board minutes of 20 April 2017 (referred to above at [103]), that the defendant's board did not even become aware of the alleged exercise of option until early in 2017. I have not overlooked that by about late September 2016 Ms Browning (and presumably at least some other directors) became aware of the lease that had been drafted by Mr Maxwell, but it was not at that stage suggested to the defendant that it was bound to execute that lease, or some other form of lease.
14. Viewing the circumstances overall, I am not satisfied that the defendant played such a part in the adoption by the plaintiff of its assumption concerning a binding agreement for lease that it would be unfair or unjust if the defendant was left free to ignore the assumption (see Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675-6). In my opinion, it is not unconscionable for the defendant to maintain that it was not bound by the agreement purportedly made on its behalf by Ms Marlowe and Mr Maxwell in April 2016. I am therefore not satisfied that the estoppel propounded by the plaintiff has been made out. I should add that I do not think that an estoppel by convention is within the plaintiff's pleading. Even if it was, I would not conclude that the defendant proceeded on the assumed basis that it was bound by an agreement for lease.
15. Before leaving this topic I should also state that I accept that the plaintiff would suffer some detriment if the assumption it made, that the defendant had bound itself to take a new lease, was not fulfilled. This detriment would principally consist of not taking steps to enforce the rent increase during the final year of the term, and a lost opportunity to take earlier steps to seek another tenant. Otherwise, it is difficult to identify any substantial detriment. Having regard to the terms of Mr Kreutzer's 14 March 2016 email, and his concession about it in cross-examination, I do not think that the provision of consent to the proposed refurbishment amounts to a detriment suffered in reliance upon the holding of the assumption. As for the lift equipment, whilst I accept that the plaintiff would not have proceeded to purchase and install it absent the assumption it made, I would not be prepared to view that as relevant detriment in circumstances where the plaintiff remained subject to an unfulfilled contractual obligation to install such equipment.
16. In view of the conclusion I have reached as to the establishment of the estoppel, it is not necessary to proceed to consider the question of relief. In particular, it is not necessary to consider whether the relief sought by the plaintiff, which is designed to place the parties in the position they would have been in had a new lease been entered into, should be declined on the basis that it would be disproportionate to the amount of detriment suffered by the plaintiff (see Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [83]-[84]).

(e) Conclusion

1. The plaintiff has failed to establish that a binding and enforceable agreement for lease was made between it and the defendant. The plaintiff has further failed to establish an estoppel that would preclude the defendant from denying that a binding and enforceable agreement for lease was made. It follows that the plaintiff's Further Amended Statement of Claim must be dismissed. The Court will further order that the plaintiff pay the defendant's costs of the proceedings.

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