Maharaja's Palace Pty Ltd v Raj & Jai Construction Pty Ltd

Determination

The contention that a binding agreement for lease was concluded as alleged in the Statement of Claim essentially rests upon the testimony of Mr Benepal concerning his discussions with Mr Bhushan. No contemporaneous notes of the discussions are in evidence. There is also an absence of other contemporaneous documents that refer in their terms to the content of any discussions between the two men about a lease. The documents that record the terms of what might be described as the joint venture to be conducted through the new corporate entity (B&B) do not make reference to any discussions about a lease.
In these circumstances, it is necessary for the Court to place considerable reliance upon its assessment of the witnesses, particularly Messrs Benepal and Bhushan.
I did not find either to be an impressive witness. Mr Benepal's evidence given in the witness box was often expressed in vague or confusing terms. I have already referred to his evidence about shop 2 which is difficult to reconcile with the documentary evidence. Further, Mr Benepal gave some answers in cross-examination which I cannot accept. His evidence to the effect that all of the discussions about the details of the lease were held with Mr Bhushan, not Mr Goyal, and his denial that he ever spoke to Mr Goyal about having two leases, are examples.
I interpolate that I formed a relatively favourable view of Mr Goyal as a witness. His testimony was supported in important respects by notes he made in relation to meetings held with Mr Benepal in April and June 2015. Mr Goyal's evidence is preferred to that of Mr Benepal to the extent that their accounts diverge.
I have come to the overall conclusion that Mr Benepal's uncorroborated evidence concerning his discussions with Mr Bhushan must be treated with caution.
I also have reservations about Mr Bhushan as a witness. I consider that aspects of his testimony were overstated and to that extent unreliable. For example, he was not content to simply deny Mr Benepal's account of the central conversation about leasing; Mr Bhushan went on to depose that he did not have any other conversation with Mr Benepal concerning any new lease of any of the shops in the building. It would be most surprising if there were no conversations about lease arrangements in the course of the discussions about the joint venture. The proposed joint venture involved the conduct of a business in the building and an associated development of the upstairs area. Mr Bhushan's evidence in that regard was in any event undermined by his own assertion in cross-examination that he did speak to Mr Benepal about lease arrangements (one lease for the ground floor and one lease for upstairs). I note further that Mr Goyal gave evidence that he understood one of the terms of the joint venture required that a new lease be entered into. That understanding would presumably have come from Mr Bhushan. Mr Bhushan's evidence that it was not his practice to have discussions with business acquaintances which involved negotiations about monetary matters was also in my view an overstatement of the true position. I will add that whilst Mr Bhushan maintained, correctly in my view, that the $500,000 contributed towards the joint venture was his personal money rather than the money of Universal, his evidence to the effect that his nephew Mr Mohan was acting in the joint venture independently of the Bathla Group was implausible in light of other evidence, including the terms of the appendix to the Shareholders Agreement, the involvement of Mr Goyal in discussions in January 2018 about the purchase of "our share" in B&B, and the circumstances in which Mr Mohan resigned as a director of B&B shortly thereafter.
Based on Mr Bhushan's acceptance in cross-examination that he did speak to Mr Benepal about lease arrangements, and the inherent likelihood that this topic would be raised in the context of the discussions about the joint venture, I am prepared to accept that the two men did speak about lease arrangements for the new entity to be established that would carry on the businesses. This is likely to have occurred in about late 2014, not long before Mr Goyal became involved. However, for the reasons which follow, I do not accept that there was a conversation in the terms of or similar to that deposed to by Mr Benepal in which a binding agreement for lease was concluded. In particular, I am not satisfied that the defendant (for whom I accept Mr Bhushan was, relevantly, acting) bound itself to grant a lease over the ground floor shops (including shop 2) and upstairs shops 17 and 18 (or at least shop 18) for a starting rent of $198,000 per annum.
Despite my criticism of Mr Bhushan's evidence about not involving himself in negotiations about monetary matters, it is likely in my view that his discussions with Mr Benepal about lease arrangements were of a broad or general character only, and that Mr Bhushan did indeed then arrange for the discussions and any detailed negotiations with Mr Benepal to be carried on by Mr Goyal.
I generally accept (over Mr Benepal's denials) the evidence given by Mr Goyal as to his negotiations with Mr Benepal and Mr Sami about the proposed joint venture, including as to leasing. His account of two meetings with Mr Benepal at which leasing was discussed is to a degree supported by his notes. It was not suggested to him that the notes were not genuine, or might be inaccurate. This evidence establishes that in April 2015 there was discussion about the terms of a demolition clause, and a rent free period in respect of the new function centre. These are not minor matters. The evidence also establishes that on 4 June 2015 (after the Shareholders Agreement had been entered into) there was discussion about rents. According to Mr Goyal he spoke about a lease of the upstairs area (shops 17 and 18) to commence at a later time and with a three month rent free period at a starting rent of $10,000 per month (plus GST) increasing to $15,000 per month (plus GST) after one year, and a lease of the downstairs shops to commence on 1 June 2015 at a starting rent of $15,000 per month (plus GST). These amounts together are considerably greater than the $198,000 per annum which Mr Benepal claims to have agreed upon earlier with Mr Bhushan.
Mr Goyal's evidence is further supported by the terms of the instructions given to Mr Hardman in June 2015 for the preparation of a new lease. The form of lease so prepared and submitted is fundamentally at odds with the agreement asserted by Mr Benepal. He stated repeatedly when giving evidence that this form of lease was deficient because it did not include the upstairs area (or at least shop 18), but there is no evidence that this matter was raised by him at the time. Mr Benepal said in cross-examination that he did not provide the lease to a solicitor at that time. He sought to explain his inaction by the fact that he trusted Mr Bhushan who had become a friend he would talk to when he came to the restaurant.
However, Mr Benepal also gave evidence that in 2017, after Mr Bhushan had told him that the joint venture was not going to continue, he discussed the form of lease with Guardian Solicitors and told them that the lease was incomplete because it did not include shop 18. I do not accept that evidence. If he had given instructions to Guardian Solicitors to that effect they would scarcely have communicated with Mr Hardman or Ms Horan in February and April 2017 about the form of lease in the terms they did and without saying anything about an erroneous omission of shop 18. I reject Mr Benepal's suggestion that the solicitors may have "missed" the point he had raised with them. I do not accept that he gave instructions to his solicitors as he suggests.
In my opinion, Mr Benepal's failure in either 2015 or 2017 to take issue with the form of the lease that had been submitted tells strongly against the conclusion that he and Mr Bhushan had earlier reached agreement on the terms alleged.
I should add in this context that I do not think that the reference in Ms Srirangan's email to Ms Cignarella of 19 December 2016 to shop 18 "missing on lease" supports the view that shop 18 had been intended to be included in a new lease on the terms alleged. The reference must be read in its context. The email refers to the (monthly) rent under the new lease of $16,500 (that is, $198,000 per annum) applying only to the ground floor shops, with an additional rent payable for shop 18.
There is another strong indication that no binding agreement for lease was concluded as alleged. In this regard, I refer to the somewhat confusing evidence given by Mr Benepal towards the end of his cross-examination to the effect that the rent could have been more than $198,000 per annum (after the upstairs area including the former church area was complete), but he did not know what the rent was meant to be "because the lease was not fully completed and we were discussing rent and everything a lot of times, a number of times with Mr Bhushan".
It follows from the above that I am not satisfied that a binding agreement for lease was concluded as alleged. It is not necessary to consider whether the alleged acts of part performance give rise to an enforceable right to the grant of the alleged lease. I note, however, that reliance was placed on at least some of those acts, not only as acts of part performance strictly so called, but as subsequent conduct that supported the existence of the alleged agreement. I have considered them in that way. However, in my view, neither the acts when viewed individually, nor the acts when viewed together, provide a firm basis to infer the making of the alleged agreement. Many are referable to the establishment and carrying on of the joint venture (including the incorporation of B&B) and do not themselves concern occupation or use of the premises, or the terms of such. It is alleged that shortly after the Shareholders Agreement was made, B&B took occupation of the premises (being the ground floor shops and shop 18), carried on business there, and paid rent. The allegation of taking possession is denied, and I note that rent invoices do not seem to have been issued to B&B. However, even if B&B was in possession and making the payments, these matters carry little weight in circumstances where the amount of rent paid was in accordance with the existing leases, not the alleged agreement.
An estoppel case (pleaded at paragraphs 26 to 30 of the Statement of Claim) received little attention in submissions. This case rests upon the making of representations by the defendant in the course of the conversations alleged to have taken place between Messrs Benepal and Bhushan in 2014. As I have not accepted that there was a conversation about the leasing arrangements as alleged, the estoppel case must be rejected. A challenge to the efficacy of certain Notices to Quit issued by the defendant (pleaded at paragraphs 31 and 32 of the Statement of Claim) was not the subject of any submissions. Neither is any relief directed to those notices. The position taken by the plaintiffs is that B&B is in possession of the ground floor shops and shop 18. None of the notices were addressed to B&B, but I do not understand it to claim any entitlement to possession apart from the rights that would arise from the alleged agreement for lease (or the claimed estoppel). In these circumstances I see no reason why the Court should not simply order that the Statement of Claim be dismissed. The Court will also order that the plaintiffs pay the defendant's costs of the proceedings.

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (1)

Cited By (1)