Picwoods P/L v Panagopoulos & 1 Or

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6214/03 PICWOODS PTY LIMITED v KONSTANTINOS PANAGOPOULOS & 1 Or JUDGMENT 1 HIS HONOUR: The plaintiff in these proceedings is in the business of arranging outdoor advertising. The defendants are the registered proprietors of land in folio identifier 2/170039 being a property at 962 Pacific Highway, Roseville. 2 The property is located at the junction of Boundary Road and Pacific Highway. Both are busy roads. The property has high visibility to traffic. There is a two-storey building on the site. On the roof area, there is constructed a large advertising panel. The Issues 3 The plaintiff claims that on 15 April 2003 an agreement was made by Mr Woods, acting for the plaintiff, and the first defendant, acting for himself and his wife, who is the second defendant, for the grant of a lease of the roofed area including the advertising sign for a term of five years with an option for a further five years at a rent of $65,000 per annum plus GST payable monthly. The agreement is said to be evidenced in writing, initialled by Mr Woods and by the first defendant. 4 The principal issues in the proceedings are:

(a) whether Mr Woods and the first defendant by their words and conduct evinced an intention that the parties be immediately bound by the terms of the document initialled by them on 15 April 2003;

(b) whether that document contained all the essential terms for a binding agreement; and

(c) whether the first defendant purported to enter into the alleged agreement for himself and as agent for the second defendant, and if he did, whether he had authority to do so. 5 To some extent the issues overlap. For example, the absence of agreement on an essential term, or even an important term, would point to its being unlikely that the parties intended to be immediately bound by the terms on which they were agreed. 6 The question of whether there was a binding agreement is to be determined objectively by reference to what the parties have said and done. It is no answer for a person to say that he did not intend to enter into a contract if he so conducted himself that a reasonable person in the position of the other contracting party would understand from his words and conduct, and having regard to the surrounding circumstances and the subject matter of the transaction, that he did. The converse is also true. 7 Evidence of the parties' subsequent conduct is admissible to determine whether the parties intended to be immediately bound by what they did. (See generally Australian Broadcasting Corporation v XIV Commonwealth Games (1988) 18 NSWLR 540). Background 8 Negotiations between Mr Woods and the first defendant for the right to use the advertising site commenced in about the middle of 2002. The signage space on the roof of the property had been subject to a lease which had been assigned by the lessee to a company called Eye Corp Australia Pty Limited ("Eye Corp"). That lease was terminated on 30 May 2001. A dispute arose between the defendants and Eye Corp as to the right of the latter to remove the panels of the sign and the supporting structure. 9 The upshot of that dispute was that proceedings were commenced by Eye Corp against the defendants in the Local Court. On 2 August 2002, an arbitrator's award was made against the defendant in favour of Eye Corp for an amount of $9,833.20. It appears that the award was not sent to the defendants until 12 September 2002. 10 On 27 September 2002, Mr Woods said to the first defendant words to the effect that he would pay the judgment amount if the defendants would enter into a lease with him. Negotiations for a lease continued. 11 On 25 October 2002, Mr Woods and the first defendant agreed on the figure of $60,000 per annum plus GST. They shook hands. The first defendant at that stage said "this is a done deal and I will give you a copy of the lease for you to review." It seems this did not happen. In November 2002, Mr Woods provided a copy of a lease form used by the plaintiff for the first defendant to review. It was unacceptable to him. 12 On 20 November 2002, the first defendant gave Mr Woods a copy of what Mr Woods called "the defendants' standard lease". This document and subsequent lease documents which passed between the parties took the form of a schedule to be annexed to a lease form which would be required to be completed and executed to permit registration of the lease under the Real Property Act. 13 Discussions about the form of the lease to be used continued from time to time. In January 2003 Mr Woods gave the first defendant a copy of the lease schedule with various amendments to it. That document, which is exhibit 3 to Mr Woods' affidavit of 4 December 2003, included a provision for the commencement date of the lease. It defined the commencement date as being "the date specified above" and made provision for the insertion of the date. 14 On or about 14 February 2003, the first defendant increased the amount of rent which he said he required. The parties agreed upon an annual rent of $65,000. 15 At this time, the first defendant wrote a notation on what was then the extant draft lease of the schedule, albeit that it then still provided for an annual rent of $60,000 per annum plus GST. The notation was "this deal is applicable till 19/2/03 KP". The first defendant also gave Mr Woods a piece of paper which said amongst other things "accept my lease intact 19/2/03 original settlement by 20/2/03". The word which I have taken to be "original" is unclear but I do not think that matters. The first defendant initialled each line. 16 On 19 February 2003, Mr Woods gave the first defendant a clean copy of the lease schedule incorporating the matters which had been agreed to on that date. There was discussion about the payment of the amount of the arbitration award which Eye Corp had obtained. Mr Woods was to provide a bank cheque for the first defendant to take to the Local Court in the amount of the award. At this time, the first defendant said words to the effect that "it is all concluded, I will now have it made it ready for registration". 17 However, on the next day, 20 February 2003, the parties disagreed upon the terms of the lease schedule. According to Mr Woods, the first defendant said that he did not want this version of the final lease and he would give Mr Woods a further lease to look at. 18 On 4 March 2003, the plaintiff paid the debt owed by the defendants pursuant to what was then a judgment of the Local Court and which was owed by them to Eye Corp. The amount paid was $10,042.60. 19 Mr Woods gave the first defendant a receipt for this payment on 4 March. He delivered what he called a promissory letter from the plaintiff. It stated the plaintiff's intention to enter into a lease for a portion of the roof, that after the plaintiff provided the funds to the first defendant to pay Eye Corp, Eye Corp would be paid, and that the first defendant would immediately see that the lease was available for execution by both parties. 20 It was at about this time that the first defendant signed and delivered an undated letter addressed to Mr Woods. It contained provision for a signature by the second defendant, but the document was not in fact signed by her. 21 It stated: "Konstantinos Panagopoulos and Dimitria Panagopoulos of 16 Harnet Avenue, Marrickville NSW 2204, owners of the premises at 962 Pacific Highway, Roseville, lessers of the demised premises (portion of the roof) of the above property do faithfully pledge that: 'Immediately upon receiving the agreed receipt from Eyecorp Australia Pty Limited for the resolution of the arbitrator's award and registrar's notice (15437/01) and (doc number AB664/345) they will execute the agreed lease, with Picwoods Pty Limited, for the demised premises; and that should the lease not proceed with (sic) then the funds provided by the Picwoods Pty Limited to satisfy the above arbitrator's award and registrar's notice, will be refunded within 28 days.'"

22 The plaintiff has not contended that the payment which it made to Eye Corp and this exchange of correspondence created a contract for lease in terms of any version of the lease schedule which had been produced to that date. 23 On 20 March 2003, the first defendant gave Mr Woods a fresh lease. There were a number of significant changes to the previous version of the lease. These were the inclusion of a clause that required a directors' guarantee of the lessee's obligations, an increase of 10 per cent in the rent payable if the option were exercised, and a clause that the lessee should pay rates, taxes and charges assessed and charged on the premises. 24 At a meeting held on 26 March 2003, some of the changes were accepted by the plaintiff, some were not. Mr Woods rejected the guarantee clause. He also asked for a clause to be reinserted to provide for the early termination of the lease if the premises were resumed by a governmental authority. He accepted a modified form of the clause relating to taxes and charges. The first defendant said that he would re-do the lease. The Initialled Lease Terms 25 On 11 April 2003, the first defendant sent an amended version of the lease schedule to Mr Woods. The first defendant says that it had his handwriting on the top saying "draft only". Mr Woods denied this. He says that those words were only placed on the document much later. 26 On 15 April 2003, the first defendant and Mr Woods met and reviewed the lease schedule which had been sent by the first defendant to Mr Woods on 11 April. They went through the schedule: clause by clause. They amended the heading to clause 14 by deleting the words "and taxes" from the heading. That was a clause which dealt with the payment of charges which the lessee would assume the obligation to pay. Mr Woods and the first defendant initialled each of the pages of the lease schedule. They also initialled the amendment to the heading in clause 14. Mr Woods dated the document at the foot of the first page. 27 In his affidavit of 4 December 2003, Mr Woods, after referring to the initialling and dating of the document, said: "I recall that I then said to the first defendant 'I will not lodge the lease for registration as I am paying stamp duties'. The first defendant then said 'no, I won't let you process it. I want to do it myself'. The lease was then dated and signed off by both the first defendant and myself on behalf of the plaintiff. Exhibited hereto and marked EX8 is a true copy of the signed lease.".

28 I note that the exhibit does not contain the signatures of the parties in addition to the initials which both Mr Woods and Mr Panagopoulos placed on the document. 29 The document which Mr Woods exhibited as exhibit 8 was not a complete lease that could be registered. The document contemplated the execution of a "Lease Form". Such a form is required to be executed to permit registration. The "Lease Form" would state the title to property leased. It would specify the part of the premises which were leased. It would specify by whom the document was lodged. It would name the lessor, the lessee, the term, the commencing date, the terminating date, the option of renewal, the rent, and the date of execution. It would incorporate the schedule and would make provision for execution by the lessors and the lessee. (See the forms approved by the Registrar General pursuant to section 104 of the Real Property Act). 30 Of this meeting of 15 April 2003, the first defendant said: "a few days later, we received the lease and both initialled each page. I did not witness Mr Woods dating each page. We agreed that I would process the lease or (sic) registration. At this stage, the lease was still a Draft and I asked Mr Woods to fax me the initial copy". (Affidavit of 14 August 2004 paragraph 36).

31 Thus, there was no evidence that the parties said anything as to whether they did or did not intend to be immediately bound by the terms which they had initialled. 32 The schedule which was initialled stated that it was annexure A of the blank pages referred to in the lease between the defendants and the plaintiff. The parties were identified. The premises were identified as the part of the roof area of the building known as 962 Pacific Highway, Roseville as shown on the plan, registered lease 367458. The rent was specified as $65,000 exclusive of GST, being $71,500 inclusive of GST. 33 The schedule provided for the payment of the rent by equal monthly instalments in advance of the Payment Date. The Payment Date was defined as the Commencement Date and after that, the first day of each month of the term of any holding over period. The Term was defined as the period of five years and where appropriate, the period of any additional term. Clause 2.1 provided that the term of the lease was 5 years commencing on the Commencement Date. 34 Unlike the earlier February versions of the lease schedule, the schedule did not include the provision for the insertion of a date. The "Commencement Date" was defined as "the date shown as the Commencement Date" on the Lease Form. 35 The failure of the document to specify a date for commencement of the term or a method for determining that date, raises a question as to whether all of the essential terms are agreed and even if they were, whether they were all specified in the document. That is a question to which I will return. Events After 15 April 2003 36 Returning to the narrative of events, in his first affidavit of 4 December 2003, Mr Woods said that on Wednesday 7 May 2003, he received a telephone call on his mobile phone from the first defendant. He said that the first defendant said to him that the registered lease had been prepared and was ready for execution by both himself and his wife at the shop the next morning. Mr Panagopoulos said that he would call Mr Woods the next morning when his wife arrived for a time for Mr Woods to come over. 37 This evidence was corroborated by Mr Cole who said that he heard the conversation. It was received by Mr Woods on his speakerphone in his car. Mr Cole said that Mr Panagopoulos told Mr Woods that he had processed the lease and it was ready for registration. Mr Woods said "what does this mean?" Mr Panagopoulos said "it is all arranged. Both my wife and I are in agreement. I will arrange for my wife and the witness to sign the lease tomorrow at my shop". 38 According to Mr Cole, Mr Woods said that he looked forward to settling the matter the next day. Mr Woods did not hear from the first defendant the next day. He said that on 9 May he chased up the first defendant who said the lease was not ready. 39 On 21 May 2003, according to Mr Woods, he had a meeting with the first defendant. Mr Woods says that at that meeting the following exchange occurred:

"40. On Wednesday 21 May 2003 I had a further meeting with the First Defendant. The First Defendant said the following words or words to a similar effect: 'I will not go ahead with the initialled lease of 15 April 2003.' I said: 'Why not? You have committed yourself.' The First Defendant then said: 'Let me look at it.' The First Defendant then proceeded to grab the initialed lease from me and proceeded to write the words "draft only copy" across the top. I said: 'I have a copy of the original so that will not do you any good.' The First Defendant said: 'I want that back as well' I then said: 'You are committed and you cannot withdraw you have initialed and exchanged promissory letters as far as I am concerned the agreement is complete.' I then said: 'Registration whilst it has to be done does not affect the validity of our agreement.' The First Defendant then said: 'I don't care." The First Defendant then said: 'If you are prepared to provide a guarantee then I will proceed.' I then said: 'This is the only amendment that I will agree to, amend the lease to incorporate this change.' Exhibited hereto and marked with the letter " EX9 " is a true copy of the lease upon which the First Defendant wrote the words 'draft only'." 40 The original document of which exhibit 9 is a copy, has the words "draft only" on it. Those words have been crossed out by Mr Woods and the following notation added: "Added inappropriately by lessor after agreement reached on 15/04/03". Mr Woods could not recall when those words of his were added. 41 In his oral evidence, Mr Woods explained that the exhibit 8 which was a copy of the initial lease schedule without the words "draft only" on it had been created by him by putting a post-it note over the words in the original document "draft only" and photo copying the page. 42 Contrary to what he said to the first defendant as described in paragraph 40 of his affidavit of 4 December 2003, Mr Woods did not take a copy of the initialled lease terms before the words "draft only" were added. Indeed, it appears that no copy was taken. The original was kept by Mr Woods even though it had been agreed that the first defendant would prepare a lease for registration. 43 On 30 May 2003, the first defendant provided a new form of lease to Mr Woods. It had written on it the words "Draft lease only. Please consider and return within seven days i.e. 6/6/03". 44 The changes which the first defendant had made to the lease terms of 15 April included a clause that the lessee pay all council rates, taxes and charges assessed and charged on the premises. It also included a clause whereby the directors of the lessee would guarantee its obligations. The lease schedule removed the clause which had been contained in the lease terms of 15 April allowing the lessee to terminate the lease if the premises were resumed. 45 On 6 June 2003, Mr Woods wrote a letter to the first defendant as follows: "Dear Mr Panagopoulos,

This letter is to confirm the intention of PicWoods Pty Limited to proceed with the draft version (30/05/03) of the lease for the sign and structure at the above address The only amendment is the re-inclusion of clause 18, 'Resumption of Premises', from the previous version of the lease, dated 15 April, 2003, (copy of clause 18 is attached to this letter) and to confirm that any reference to tax refers to GST. Further, PicWoods as previously stated in our agreement letter of 28 April, 2003, agrees to pay any charge that the sign attracts from any appropriate statutory authority as stated and intended, in clause 13. As these are the last of the matters to be determined it is now appropriate that the execution of the lease will proceed with immediately. Due to the fact that this matter has taken far too much time we would suggest that the lease be executed no later than Thursday June 15th, 2003 or earlier. Would you please be kind enough to acknowledge and agree our intentions by signing below. Should you wish PicWoods is prepared to assist in the above process ".

46 The first defendant regarded this letter as a counter offer and refused to go further. Were the Initialled Terms Headed "Draft Only"? 47 In deciding whether the words "Draft Only" were on the lease schedule when the document was initialled, or whether they were added later, the most significant piece of evidence is a copy of a facsimile sent by Mr Woods to Mr Panagopoulos on 27 April 2003. The facsimile consisted only the lease schedule of 15 April 2003 which had been initialled by both the first defendant and Mr Woods. The words "Draft Only" were on this document. 48 Prima facie at least this suggests that the words "Draft Only" were not added at a meeting on 21 May 2003 as Mr Woods deposed to in his affidavit of 4 December. For the plaintiff, it was submitted that the words may have been added by Mr Panagopoulos after he received the facsimile on 27 April. Alternatively, Mr Woods said that the events which he described as having taken place on 21 May could have occurred at one of two meetings he had with the first defendant on 22 or 26 April 2003. 49 There is some support for the first suggestion in an affidavit sworn by the first defendant on 17 March 2004. In that affidavit, he said in paragraph 30 that on 27 April 2003 he had rung Mr Woods to remind him to fax to him a copy of the lease as the first defendant was responsible for preparing the lease in registrable form and he had not taken a copy of it. He said in that affidavit "I have received a fax copy of the draft lease being the version contained in exhibit 8 of Mr Woods' affidavit although not containing the words 'draft only'". 50 The first defendant disclaimed this evidence in his oral evidence. As exhibit 8 did not include the words "Draft Only", it is apparent to me that the inclusion of the word "not" in this sentence of the affidavit was a simple mistake. 51 The first defendant accused his former solicitor of having prepared a totally fraudulent affidavit and having manipulated his evidence. This was only one instance of his propensity to make wild allegations which had no proper foundation. There were many other such instances. For example, he accused Mr Woods of fraudulently substituting a page into the document tendered as the initialled lease schedule. I reject that evidence. Each page of the lease schedule, exhibit D, had been initialled. I reject the implicit suggestion that the first defendant's initials on the page had been forged. 52 Nonetheless, it is clear from a comparison between the copy fax of 27 April 2003 and the original schedule, exhibit D, that the words "Draft Only" could not have been added to the fax and then separately added to the original. It is to be borne in mind that the original was in the possession of the plaintiff. The positioning of words and the letters, the style and the size of the letters, and the smudges on the words, are identical. Therefore, I am satisfied that the words were on the document on 27 April 2003 when it was faxed to the first defendant. 53 That leaves the possibility that the words were added on 22 or 26 April in circumstances which Mr Woods originally said took place at a meeting on 21 May 2003. I do not accept that that was so. If the events deposed to in paragraph 40 of Mr Woods' affidavit had occurred on 22 or 26 April, I think it is inconceivable that Mr Woods would not have either crossed out the words "Draft Only" or added a notation such as that which appears on exhibit D and exhibit 9 to his affidavit, or that he would not, in the fax, have made some reference to the conversation which, if this were the case, had only just occurred and insisted that the first defendant not withdraw. 54 Also, if the conversation of 21 May had occurred about a month, earlier one would have expected some reference to have been made to the inclusion of a guarantee clause which, according to Mr Woods, had been agreed on at the same time, or at about the same time, as Mr Panagopoulos wrote the words "Draft Only" on the lease. 55 For these reasons, I am not satisfied that the words "Draft Only" were added in the circumstances described by Mr Woods. Rather I conclude that they were on the document from the time Mr Panagopoulos sent the lease schedule to Mr Woods on 11 April. That, of course, does not resolve the question of whether the parties intended to be bound by their initialling of the document on 15 April 2003. 56 If I found that the words "Draft Only" were included on the document when it was sent on 11 April 2003, the plaintiff submitted that although the document was then a draft, it ceased to have that character after the parties had ticked off each clause, amended the heading of the clause dealing with rates and taxes and initialled the document. The plaintiff submitted that the initialling could have no purpose except to indicate the parties' agreement to be bound by the terms to which they had agreed. 57 The alternative view is that the initialling marked the parties' then agreement on terms from which they would be expected not to withdraw, although legally free to do so, without their intending to be immediately bound by those terms. That is, the initialling should put beyond dispute, the stage then reached in the negotiation towards a binding agreement, without the parties thereby intending to be bound until the formal lease incorporating the schedule was signed. 58 An important, but not decisive consideration in considering which of these two views is the better one, is that the words "Draft Only" were not then deleted. Nor was there any evidence of either party saying anything which expressed an intention to be bound by the terms which they initialled. 59 The fact that the first defendant had already reneged on previous agreements is equivocal. It might indicate that procuring the first defendant's initials to the document was something done with the intention of binding him and his wife. On other hand, his previous unreliability would suggest that if the parties intended to be bound, they would execute the lease document itself. There was no matter that needed to be agreed to complete the lease form except the Commencement Date. It is to that which I will now turn. Failure to Specify the Commencement Date 60 The identification of the commencement date as well as the duration of the term of the lease are essential terms for a contract for a lease for a fixed term. It is sufficient if the commencement date can be inferred from the instrument. (Darling Point Securities Pty Limited v Industrial Equity Pty Limited, NSW Court of Appeal, 9 July 1991, BC9101808 at 4). 61 The commencement date need not be a certain date provided it would become certain before the lease takes effect in interest or possession (Selever v Klaskova, Powell J 15/03/88, unreported, BC8802123 at 7). 62 Thus a lease to commence when the construction of the building is completed (Perry v Saunders (1961) 104 CLR 149 at 152), or to commence when a property becomes vacant (Brilliant v Michaels [1945] 1 ER 121), or to commence when the lessor takes possession (Whitlock v Brew (1968) 11 CLR 597 at 604), is sufficiently certain. 63 However, as Lord Denning MR said in Harvey v Pratt (1965) 2 All ER 786 at 787: "… it has been settled for all my time, that in order to have a valid agreement for a lease, it is essential that it should appear, either in express terms or by reference to some writing which would make it certain, or by reasonable inference from the language used, on what day the term is to commence. As Lush LJ said in Marshall v Berridge (1981) 19 Ch D 233 (at 245): 'there must be a certain beginning and a certain ending otherwise it is not a perfect lease and a contract must in order to satisfy the Statute of Frauds, contain this reference.'"

64 The Court of Appeal rejected the submission that it would be an implied term of an agreement for lease which did not fix a commencing date that the lease should commence within a reasonable time. (See also Darling Point Securities Pty Limited v Industrial Equity Pty Limited at 4). 65 The difficulty in the present case is that if the initialled lease schedule is an agreement for lease, it does not specify the date upon which the term of the lease is to commence. It says that the commencement date will be the date to be inserted in the Lease Form as the commencing date. 66 Mr A Fernon of counsel who appeared for the plaintiff submitted that either: (a) the term would commence on the date on which the Lease Form was executed; or (b) that the term would commence on the day the defendants stipulated as the commencement date on the lease form which was to be prepared by them and that they had a discretion to fix such a date provided they acted in good faith and reasonably. 67 As to the first submission, I think that where the parties have agreed to bring a formal lease into existence, a term of the agreement that the lease should commence from the date the lease is executed may well be sufficiently certain. In Marshall v Berridge, Baggallay LJ appeared to consider that an agreement for a lease to commence on the signing of another formal agreement could be sufficiently certain (244). See also Brilliant v Michaels (1945) 1 All ER 123 at 127. 68 However, the lease schedule does not specify the date of the execution of the lease as being the commencement date. It provides for a date which is not specified to be inserted as the commencement date. I should add that unlike the previous drafts of the lease schedule, the document does not specify the date of the agreement as being the commencement date. 69 Counsel did not submit, and I think counsel was right not to submit, that it could be inferred that the lease would commence from the date of the agreement. 70 The basis for the alternative submission was that it had been agreed that the defendant would "process the lease for registration". The plaintiff submitted that it had therefore been agreed that the first defendant would complete the Lease Form to be executed and lodged for registration and thereby it had been agreed that he would fill in the commencement date which would be part of that form. Hence, it was submitted that the parties had agreed that the defendants could select a commencement date provided they acted in good faith and reasonably. 71 In Godecke v Kirwan (1973) 129 CLR 629, Walsh J with whom Mason J agreed, referred (at 641-2) with approval to the judgment of Bray CJ in Powell v Jones (1968) SASR 394 in holding there was no reason in principle that there cannot be a binding agreement if some matter is left to be determined by one of the contracting parties. There, the agreement provided that clauses of a formal contract for sale should be determined as the vendor's solicitor might reasonably require. 72 In Powell v Jones, Bray CJ referred to the limitation on this principle as being that it cannot be left to a party the option of whether there should be any performance at all, as distinct from his determining the mode of performance to be adopted. 73 In Godecke v Kirwan Gibbs J at 647 said that there can no concluded bargain if a vital matter such as price or rent is left to the determination of one of the parties although it may be different if agreement is reached on all the essential terms and the determination of subsidiary matters has been left to one of the parties. (Sweet & Maxwell Limited v Universal News Limited [1964] 2 QB 699). 74 My principal difficulty with this submission for the plaintiff is not that an agreement that the lease should commence from the date the defendants acting reasonably and in good faith should determine, would be uncertain, but that there is no provision in the lease schedule to that effect. That is to say, assuming, without deciding, that such an agreement would be sufficiently certain, I do not think that such an agreement was made. 75 Although, the first defendant was to prepare the form of the lease, it was not agreed that the plaintiff would be bound by whatever date he inserted or reasonably inserted as the commencement date. Given that the first defendant had proved to be difficult and perhaps even untrustworthy in the proffering of the lease terms, it is not all likely, I think, that the plaintiff would have agreed to put itself in his hands. The specification of the commencement date in the lease form was a matter which required the further agreement of the parties. 76 If, contrary to my view, I could infer from the oral agreement that the defendant should prepare the lease form, that the plaintiff agreed to be bound by whatever date the defendants inserted as the commencement date, that would not in any event avail the plaintiff. The commencement of the term must be capable of being identified from the writing in order to satisfy the requirements of section 54A of the Conveyancing Act. (See Harvey v Pratt at 787.) 77 Accordingly, I do not consider that all of the essential terms for an agreement for lease were agreed and in any event, they were not all included in the writing. 78 That is sufficient to dispose of the matter but in deference to the careful argument of Mr Fernon, I should express my views on the principal other matters which were argued. Document not Initialled on Behalf of Second Defendant 79 In my view, it is a strong indication that the parties did not, objectively speaking, intend to be bound by the initialled document that the first defendant initialled the document for himself and did not purport to initial it for his wife. 80 The plaintiff submitted that it could be inferred that the first defendant had authority to contract on behalf of his wife. It was submitted that that inference could be drawn from the fact she left all dealings with the plaintiff to him, that he never referred any of the matters he was negotiating to the plaintiff for her for her approval, and that the first defendant fully expected that his wife would sign the form of the lease when he asked her to do so as she had full confidence in him. He told Mr Woods that he and his wife were in agreement and that he had arranged with his wife for her to sign it. 81 Mr Fernon referred me to Field v Shoalhaven Transport (1970) 3 NSWLR at 103 and Pola v Commonwealth Bank of Australia (Sundberg J, 19 December 1997, unreported) for the proposition that the principal's assent to an agent acting on her behalf could be inferred from conduct even though that assent was not expressed in so many words. Further, that that inference could be drawn more confidently as the second defendant gave no evidence to rebut it. 82 In Pola v Commonwealth Bank of Australia Sundberg J said (at 12): "In general, no formality is necessary for the appointment of an agent to act on behalf of his principal: Field v Shoalhaven Transport Pty Ltd [1970] 3 NSWR 96 at 103. It is only necessary that the principal and agent consent to that relationship: Garnac Grain Co Inc v HMF Faure and Fairclough Ltd [1968] AC 1130 at 1137. The consent need not give rise to a contract between them: Williston on Contracts 3rd ed (1959) at 186. The existence of agency may often be established from the words of the parties and the circumstances of the particular case, and may be implied from prior habits or from a course of dealing between the parties where the agent has repeatedly been permitted to perform similar acts in the past: Busby v Walker (1956) 84 So 2d 304. If the facts fairly disclose that one party is acting for or representing another by the latter's authority, the agency exists: Field at 103. Thus the consent of the principal may be implied where he places another in such a situation that a reasonable man would understand the other to have the principal's authority to act on his behalf, or where the principal's words or conduct, coming to the knowledge of the agent, are such as to lead to the reasonable inference that he is authorising the agent to act for him: Pole v Leask (1863) 33 L J Ch 155 at 161-2."

83 Were it necessary to decide the point, I would be inclined to the view that it should be implied from the course of dealing and their prior habits that the first defendant did have authority to bind his wife to an agreement. One indicium of that is that the second defendant did not sign the letter which the first defendant signed relating to the terms upon which the plaintiff provided funds to discharge the defendants' judgment debt to Eye Corp. She left that to her husband. I think it is clear that she as well as her husband was bound what he had then agreed. 84 If the first defendant entered into an agreement on her behalf, I am inclined to think that he had her authority to do so. As Mr Fernon also submitted, it is not necessary for the purpose of section 54A of the Conveyancing Act that that authority be in writing. See Baloglow v Konstantinidis [2001] NSW CA 451 at [161], [188] - [193]). 85 However, although the first defendant may have such authority, it does not appear to me that he purported to exercise it. Counsel referred me, inter alia, to the decisions in Dillon v Nash [1950] VLR 293 and Parker v Manessis [1974] WAR 5 in submitting it should be inferred that the first defendant did purport to contract on behalf of his wife. 86 In those cases it did not appear from the face of the instruments that the signing party was purporting to contract both for herself or himself and also for and on behalf of her and his spouse. 87 In Dillon v Nash Sholl J said at 296: "...if it is not inconsistent with the writing to show that A, contracting as vendor, is really an agent for B, the principal, the same reasoning, in my opinion, extends to warrant my holding that it is not inconsistent with the writing to show that A, contracting as vendor, is really so contracting for himself as principal and as agent for B, another principal."

88 This was followed by Virtue SPJ in Parker v Manessis at 438. It does not follow that because A has authority to contract on behalf of himself and B, that he does so when he signs a document without expressly exercising that authority. In each case it is a question of fact. Where the evidence is at best equivocal as to whether the first defendant was intending to contract by initialling the document, I do not infer that he was purporting to exercise an implied authority to make a contract on behalf of his wife in the absence of any expressed indication of such an intention. No Intention to be Bound 89 There is thus a combination of matters that lead me to conclude that, objectively speaking, the parties did not intend to be immediately bound by the terms of agreement on 15 April. One is the fact I have just dealt with, that the first defendant did not purport to sign on behalf of his wife. Another is that an essential term was not agreed. Another is that the parties anticipated that the formal lease would be signed and there was only one matter to be agreed. Hence, if they intended to be immediately bound, there was no reason the formal lease could not have drawn up and signed at the same time. Another is that the words "Draft Only" were not deleted. Another is the failure of the plaintiff to assert the existence of such an agreement in its correspondence of 6 June 2003. There is no hint in that letter that the party had previously agreed to bind themselves to what Mr Woods there called "the previous version of the lease dated 15/04/03". Another matter is the absence of any evidence when the lease was initialled that anything was said to denote that the parties had thereby entered into a binding agreement. Another is that the parties did not both keep a copy of the terms initialled on 15 April. 90 For these reasons, I conclude that there was no binding agreement in terms of the lease schedule of 15 April 2003 and hence the plaintiff principal claim fails. 91 There was no dispute that in the event I found the plaintiff was not entitled to the declaration and orders for specific performance which were claimed, that the defendants were liable to repay the sum of $10,042.60 which the plaintiff had paid on their behalf. Accordingly, in due course, I will make an order in terms of paragraph 4 of the further amended summons. Defendants' Claim for Damages 92 In paragraph 22 of the first defendant's further affidavit No. 5 sworn on 23 September 2004, the first defendant claimed to be entitled to an amount of $64,411.18 as costs and damages. I will deal with the question of costs in a moment. 93 In submissions, the first defendant explained that his claim for damages was that because of the claim which the plaintiff had made, he had been unable to let the roof space to another party. However, no cross-claim was filed. I do not accept the defendants' implicit submission that I should dispense with the need to file a cross-claim. The alleged cause of action has no obvious merit. No interlocutory injunction was sought or obtained restraining the defendants from dealing with their property in whatever way they wished. 94 I cannot detect any cause of action for the damages claimed. The defendants, prima facie, are entitled to an order for their costs. For much of the proceedings they have been un-represented. 95 The first defendant said that his first affidavit was prepared by his then solicitor. But he repudiated that document and swore another five affidavits. I will direct that the defendants' costs not include any amount incurred in preparing the affidavit of 17 March 2004. 96 Subject to that, the defendants are entitled to an order that the plaintiff pay the defendants' costs of the proceedings. 97 For these reasons, I make the following orders:

1. Order that the defendants pay to the plaintiff the sum $10,042.60;

3. Order that the plaintiff pay the defendants' costs of the proceedings other than the costs for the preparation of the first defendant's affidavit of 17 March 2004;

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