In the present case there would seem to have been a lease between the parties commencing in 1991, which because of some error on the part of the solicitors concerned was not registered. However, the evidence suggests that the parties recognised the existence of that lease. It was subject to memorandum Z280069, which was the solicitors' standard terms and conditions of lease, which was lodged with the Land Titles Office under s 80A of the Act.

The evidence at this stage suggests (and I make it clear I am not making any finding) that the plaintiffs purported to exercise an option to renew their lease on 23 April 1994 and that pursuant to such purported exercise the defendant gave a notice on 23 May 1994 as follows:

"The Chamber is pleased to advise you that your lease will be renewed for 3 years as you requested, with an increase in your annual rent of 8%. Your option will take effect on the 6/9/94 until 6/9/97. The new rental amount should begin 6/9/94."

It would seem that the plaintiffs did not give any counter-notice after receiving that missive, but in fact paid the eight per cent additional rent from September 1994.

In August 1995 the defendant sold the property by auction. It says that the property was sold at an auction at which both the plaintiffs were physically present and that neither plaintiff made any objection to what the auctioneer said, which would have given the impression to those who attended the auction that the plaintiffs had no current rights over the property.

"15.A. If the Lessee desires to have a further Lease of the demised premises for the further term as may be set out in the Option Schedule hereto then:

(a) The Lessee shall at any time not more than nine (9) months and not less than three (3) months prior to the expiration of the term of this Lease (hereinafter called the Termination Date) by written notice so advise the Lessor and at the same time request the Lessor to state a rent to apply from the commencement of the further term.

(b) The Lessor shall following receipt of such notice from the Lessee give a written notice to the Lessee setting out the amount of such rent not less than two (2) months prior to the Termination Date.

(c) The Lessee shall within one (1) month of the date of receipt of the Lessor's notice given under paragraph (b) of this Clause or within such other period as may be agreed notify the Lessor in writing that either:

(i) The Lessee exercises the Lessee's option for renewal of this Lease and accepts

(ii) The Lessee exercises the Lessee's option for renewal of this Lease at a rent to

(d) Should the Lessor fail to give the Lessee the notice referred to in paragraph (b) of this Clause then the Lessee shall be deemed to have given to the Lessor a notice as referred to in sub-paragraph (ii) of paragraph (c) of this Clause.

(e) Should the Lessee fail to give any of such notices as are referred to in either sub-clauses (a) and (c) of this Clause to the Lessor the Lessee shall be deemed to have waived the right to exercise this option to renew."

Mr Hale, for the plaintiffs, says that it is strongly arguable that the plaintiffs have the right to have the agreement for an extended lease until 1997 specifically performed. He says that they have exercised their option and have paid the additional rent. Mr Confos, for the defendant, first of all, says that under cl 15A (a) and (b) any notice which the plaintiffs rely on as exercising the option did not state a rent, nor was it appropriately signed and that even if that point was held against him there was no counter-notice given under cl 15A (c) and so under cl 15A (e) any rights to exercise the option have been waived.

Furthermore, the conduct of the plaintiffs at the auction would operate by estoppel or otherwise to show to the defendant and the prospective purchaser that any rights that the plaintiffs had have been waived. If all else fails, there was no right for specific performance in any event because the land is held under a conditional purchase tenure and there is a prohibition on granting a lease without the consent of the appropriate authority, which was never obtained.

At this stage I am only considering whether the plaintiffs' claim may have substance. Even accepting the factual situation as is implicit in Mr Confos' submissions, it would seem to me that it was still strongly arguable that the plaintiffs' claim to a renewed lease may have substance. It is difficult to see how a clause like 15A (e) can operate when the parties show by their joint conduct that there is unlikely to be any waiver of their rights. Secondly, there is a big difference between the conditions that have to be complied with in order to exercise an option and the mechanics which have to be put in motion in order to effectuate the joint purpose; see Levitt v Illawarra Seafoods Pty Ltd (1982) 2 BPR 9503.

Accordingly, the technical submissions made by Mr Confos do not dissuade me from the prima facie view on the evidence that the plaintiffs case may have substance.

So far as there are questions of estoppel by conduct, these must be left for the trial. The material put forward by the defendant is not so cogent that one could say that the estoppel defence must succeed.

As far as the point is concerned about the lease being of conditional purchase land, Equity does not usually in a case of specific performance permit a defendant to hide behind its own default. If a lessor has purported to grant a lease which is subject to an inhibition, then ordinarily Equity requires the landlord to fulfil its promise by getting rid of the barrier to the grant of the lease, rather than permitting the landlord to hide behind a technicality.

Very often in the case of incapacity because of a condition in a Crown lease the court will require the condition to be discharged through the landlord paying to the Crown whatever is necessary to freehold the land. Whether that will happen in the instant case is a matter to be dealt with by the trial judge, but the fact that it is a real possibility sufficiently affects this last defence so that in my mind I cannot say it prevents the plaintiffs' claim having substance.

The plaintiffs' claim having substance it should be left to go to trial and the caveat should be left in force to maintain the position up until the hearing.

As the plaintiffs' claim is for continuation of a statutory injunction, it seems to me that the costs of the present proceedings should be the plaintiffs' costs in the cause.

1. Caveat O552443 is extended up to the determination of these proceedings or until further order.

2. The defendant has leave to amend the cross-claim by filing an amended document by 27 May 1996.

3. The costs of the current motion are the plaintiffs' costs in the cause; and

4. I note that the defendant will be making an application that the proceedings be expedited.