Davies v Batros [2008] RSLT 21

[2008] RSLT 21 RETAIL SHOP LEASE TRIBUNAL In the matter of Dispute No. 2008/0038 GARY FLETCHERE-DAVIES - Claimant - and - MARIETTE FRANCES BATROS - Respondent Composition of Tribunal:- B Cotterell (Chair) N Judge D McBryde Appearances: Claimant: Ms B Hartigan Instructed by Macrossan & Amiet, Solicitors Respondent: Stephen Bullow of Counsel DECISION 17th day of December 2008 -- 1 of 7 -- This is claim by Gary Fletchere-Davies for reasonable compensation under Section 22 (4) of the Retail Shop Leases Act arising from alleged loss or damages suffered by him because the lessor, Mariette Frances Batros failed to provide a draft of the lease and a disclosure statement prior to 3 September 2007 when the claimant states that he entered into possession of the premises. Under Section 11 (b) he says the lease was entered into on that date. The Evidence The evidence in this matter consisted of a statement by Mr Fletchere-Davies dated 18 th September 2008; which was followed by two (2) in response by Ms Batros dated 7 and 8 October 2008. Mr Fletchere-Davies did not respond to these although he was entitled to do so. When Ms Batros filed her counter claim for rent arrears Mr Fletchere-Davies filed another statement dated 4 December and Ms Batros one dated 13 December 2008. She also filed a statement by a witness who was not available at the Hearing for cross-examination; so the Tribunal will ignore that statement. Both parties were assisted by lawyers in the preparation of their statements. The Tribunal therefore expected that both had a full opportunity to place before it all evidence relevant to their case. Attached to these statements were the documents relevant to the case and in particular to the negotiations between the parties in their attempt to conclude a written lease which complied with the Retail Shop Leases Act. The only other evidence was that which emerged from the cross-examination of Mr Fletchere-Davies and Ms Batros at the Hearing. The Tribunal considered all of the evidence although we may not refer to all of it in these reasons for our decision. The Facts The lease, according to the Claimant, was oral and involved a payment of $1,000 per week and was to be for 3 years. The payment is not in dispute but the -- 2 of 7 -- respondent disputes any agreement as to a 3 year term. She states that the claimant was wanting premises as he had nowhere to go and in August 2007 she agreed he could use the premises and pay her $1,000 per week plus GST until they agreed on the terms of the lease, including the term; or he found something else. The respondent said she would speak to her solicitors, and she did so on 3 September 2007. On 17 October 2007 the respondent solicitors, McKays, wrote to the Claimant with an offer to lease for an initial term of 3 years; with no options to renew. The Tribunal noted that this was significantly different from what the claimant wanted, which was 15 or 20 years. The rent was $1,000 per week; plus GST; with an annual market review. There were other terms set out which are not relevant here. Sometime later; but prior to 8 November 2007, the claimant provided the respondent with a Commercial Tenancy Agreement which refers to an initial term of 3 years, but 4 options of 3 years making a total of 15 years and commencing on 15 October 2007. The monthly rent is shown as $52,000 per annum plus GST; and annual CPI review. On 8 November 2007 the respondent’s solicitors emailed the claimant and informed him that the Commercial Tenancy Agreement did not comply with the Retail Shop Leases Act and the he, the solicitor, had drawn up a lease which did comply and a disclosure statement under the Act. He asked the claimant to read the lease and advise if satisfactory, and he would print the disclosure statement, have the respondent sign it and deliver it to the claimant. He went on to say that the Act then required the claimant to wait 7 days before signing the lease. The claimant then had his solicitors, Macrossan and Amiet, respond to McKays on 16 November 2007. In this letter Macrossan and Amiet refer to an alleged agreement between the claimant and the respondent of 5 x 3 year terms and they noted that the lease was for 4 x 3 years. They raised other issues including Clause 18.2 which they stated is unusual and which they required to be deleted. -- 3 of 7 -- On 21 December 2007 McKays responded to Macrossan and Amiet and denied agreeing to a potential 15 year term and stated that “if the offer is not accepted then our client will insist on the lease being limited to the 3 years she originally proposed”. On 24 January 2008 Macrossan and Amiet again responded to McKays stating that the initial discussion for lease term was for 20 years; and then agreed it would be either 3 + 3 + 3 + 3 + 3 (a total of 15 years) or 5 + 5 + 5 +5 (a total of 20 years). The Tribunal notes that Macrossan and Amiet state there was never a discussion of simply 3 years. On 12 February 2008 Macrossan and Amiet wrote to McKays suggesting a meeting to resolve the terms of the proposed lease. On 18 February 2008 McKays responded and notably stated “no agreement has been reached on the length of the lease and our client’s preference is that it be limited to a 3 year term’. The respondent then offered 3 years plus 3 x 3 (making 12 years). McKays then stated that if the claimant was not prepared to accept this offer, the respondent would treat him as a tenant from month to month. During these negotiations, arising out of an issue with the respondents ABN, she supplied on 21 December 2007 the claimant with 3 tax invoices. The first was for the period 15 October to 15 November in the sum of $5,000. The second was for 15 November to 15 December in the sum of $4,333.33; and the third for 15 December to 15 January in the sum of $4,333.33. These invoices recorded sums which had at that stage been paid by the claimant to the respondent. On 20 February 2008 Macrossan and Amiet terminated the alleged oral lease pursuant to Section 22 (3) of the Retail Shop Leases Act and claimed compensation under Section 22 (4). The claimant continued in possession of the premises after that date and on 11 August 2008 Macrossan and Amiet terminated the month to month lease stating that “we note that there is no lease signed and there is merely a month to month lease with a term commencing on the 15 th of each month”. -- 4 of 7 -- Findings The Tribunal notes and accepts the evidence of Ms Batros that the claimant went into possession of the premises on the basis of paying $1,000 per week; and that she would speak to her solicitors about a lease. The Tribunal notes Mr Fletchere-Davies’ evidence to the Tribunal lacked any reference to the terms of agreement beyond this. The Tribunal also notes that the respondent’s offer of a lease was made by McKays on 17 October 2007 to the claimant. The Tribunal accepts that there was never an agreement for simply a 3 year term as stated by Macrossan and Amiet on 24 January 2008. Therefore the Tribunal finds that the lease as at 3 September 2008 included the $1,000 per week and an agreement to negotiate and draft a formal lease. The claimant entered into possession on 3 September 2007 and commenced to have fit out undertaken which was finalised approximately the first week in October when he commenced operating in the premises. All of this occurred before the negotiations for the formal lease commenced on 17 October. The expenses for the fitout basically constitute his claim for compensation. The Law The Tribunal adopts the decision in Turner and York, Motors Pty Ltd 1951; HCA ’52 commencing at paragraph 11, where Dixon J states “…If an intending lessor lets the intending lessee into occupation of the premises in anticipation of an agreement for a lease or of a lease, simply so that he may temporarily occupy while they proceed to negotiate the terms and conditions upon which the intending tenant shall hold, it is of course true that in the meantime the intending lessee holds as a tenant at will only. It is not inconsistent with the intending lessee’s continuing so to hold that he pays the landowner some compensation for the use of the land and indeed, if it is not intended that his occupation of the land shall be gratuitous the owner may recover from him upon a quantum value for use and occupation. But the reservation and receipt of a periodical rent as such affords strong evidence of the creation of a periodical term. “Where the parties enter under a mere agreement for a future lease they are tenants at will; and if rent is paid under the agreement, they become -- 5 of 7 -- tenants from year to year, determinable upon the execution of the lease contracted for, that being the primary contract”: per Littledale J in Hammerton v Steed, 1824, 3 B & C 478 at page 483 (107 ER 811, at p 813)”. On this basis the Tribunal concluded that the parties had entered into a tenancy at will, and that this converted into a periodic tenancy on a month to month basis from 21 December 2007, when the respondent served the claimant with the tax invoices and her acceptance of the monthly rent. The Tribunal also notes a similar outcome in Kellow-Faulkners Motors Pty Ltd v Nimorakiotakis & Ors, [2000] VSCA 1 (11 February 2000) Having determined that the retail shop lease here was firstly a tenancy at will followed by a periodic tenancy; and noting that even the claimant accepts that there was a periodic tenancy from February 2008; the Tribunal finds that Section 21 (1) (a) applies, which means that Section 22 does not apply. Therefore the claim must be dismissed in its entirety. Turning them to the counter claim for rent arrears; the Tribunal notes the concession by the claimant at the hearing that rent and GST of $4,766.63 is owed to the respondent for the period 15 October 2007 to 14 September 2008. The Tribunal rejects the respondents claim for the period prior to 15 October 2007 on the basis that her own documents issued on 21 December 2007 to the claimant accepted the $5,000 as being for the period commencing 15 October 2007; and there was never a claim for rent prior to that date until 13 October 2008 when the parties were in dispute in this Tribunal. The Tribunal determined that all the respondent was entitled to in terms of rent arrears was the amount of $4,766.63, including GST, which was conceded by the claimant. -- 6 of 7 -- The Tribunal orders that the claimant pay the respondent the sum of $4,766.63 including GST, by 16 January 2009. Those orders and the reasons will be issued by the Registry in about a week. B Cotterell Chair -- 7 of 7 --