Cranswick v Dougbar Pty Ltd & Earl [2004] QSC 397

State Reporting Bureau ^PCA^CSC 3^1- Queensland Government Department of Justice and Attorney-General Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION HELMAN J REVISED COPIES ISSUED State Reporting Bureau Date: 29 October, 2004 No BS4798 of 2003 CHRISTINE JULIET CRANSWICK and DOUGBAR PTY LTD and DOUGLAS PERCY HYNE EARL Applicant/Defendant First Respondent/ Plaintiff Second Respondent/ Plaintiff BRISBANE .. DATE 21/10/2004 JUDGMENT WARNING : The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal offence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for their protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those categories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. 1 Ith Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 7 -- 1 HIS HONOUR: .This is an application by- the defendants for orders that the originating application, filed on 30 May 2003, and the claim and statement of claim, filed on 20 June 2003, be struck out; that the injunction granted by Muir J. on 12 June 2003 be dissolved; and that the defendants have 10 judgment in this action against the plaintiff for recovery of possession of land at Nerang Street, Southport, and described in the application. The defendants also seek an order for costs against the plaintiff. The defendants have filed and rely on their amended defence and counterclaim filed 20 yesterday. The original defence and counterclaim was filed on 10 July 2003. The first defendant is the owner of a building at 1A Nerang Street, Southport, the real property description of which is 30 lot 2 on registered plan 112378 in the County of Ward, Parish of Nerang. Within the building there are premises that are let. The two that are the subject of the plaintiff's claim and the counterclaim are shops A and B. The second defendant is a director of the first defendant. The plaintiff is a 40 therapeutic masseuse who has carried on her business in the two shops I have referred to. The plaintiff claims to be the lessee of the two shops under an oral lease for five years. The first defendant contends 50 that she was merely a monthly tenant whose tenancy has been terminated. In the plaintiff's statement of claim she sought declarations and other relief, including an order for specific performance and injunctions, and in the alternative, damages 21102004 • -T20/RB2 8 M/T 2/20.04 (Helman J) 2 JUDGMENT 60 -- 2 of 7 -- 1 against the first defendant in reliance on her alleged lease. She also sought damages against the second defendant and based that claim on the allegations she made concerning the lease. The dispute between the parties goes back to discussions between the plaintiff and the second defendant in July 2002. Her case is that as a result of those discussions she was granted an oral lease of shop A for five years with an option to renew the lease for a further five years by the first defendant. It is common ground between the parties that the rent that it was agreed would be paid was $650 a month, which included outgoings, and to which should be added goods and services tax. The plaintiff alleges that in a further conversation between the second defendant and her, the second defendant granted her a lease on the same terms and conditions in relation to shop B, and he did so on behalf of the first defendant. The plaintiff alleges that she is entitled to an equitable lease of the two shops for five years with an option to renew the leases for a further five years in each case. The defendants dispute that there were any conversations in which the first defendant agreed to grant a five year lease of the shops and say that all that was agreed upon was that the plaintiff would have a monthly tenancy of the shops. It is not in dispute that the plaintiff was late in paying the rent and outgoings for January 2003 and then failed to pay the rent and outgoings for February, March, and April 2003, 21102004 T20/RB28 M/T 2/2004 (Helman J) 10 20 30 40 50 3 JUDGMENT 60 -- 3 of 7 -- asserting that the plaintiff held only a monthly tenancy of the shops. A notice to vacate them was served on her on 28 April 2003. The rent and outgoings were brought up to date on 29 May 2003, but the first defendant insisted that the plaintiff vacate the premises and it was then that the plaintiff asserted that she had possession of the shops under the five year lease, with an option to renew for a further five years . The plaintiff then began the present proceedings and sought an injunction to restrain the defendants from insisting that she vacate. The application came before Muir J., who made an order restraining the defendants from evicting the plaintiff while she continued to pay the rent, and his Honour gave directions concerning pleadings. The pleadings were duly exchanged as a result of his Honour's order, which proceeded on the conclusion that if the plaintiff's evidence were accepted, there was a triable issue "as to the circumstances in which, and the .basis upon which, and the times at which" the defendants might recover possession of the subject property from her. His Honour added that in his view, the evidence disclosed "the basis of an estoppel argument". That argument had not been fully articulated and that was why a statement of claim was required with despatch. The plaintiff has remained in possession of the two shops, but she ceased to pay rent in about July 2004. She failed to pay the $1430 due for July 2004 and that sum in each case due for 21102004 T20/RB28 M/T 2/2004 (Helman J) 4 JUDGMENT 1 10 20 30 40 50 60 / -- 4 of 7 -- August, September, and October. She has since made some payments to the defendants but she remains in arrears. As a result of her failure to pay the rent and outgoings from July to September 2004, the first defendant caused a notice to remedy breach pursuant to the provisions of the Property Law Act 1974 to be delivered to the plaintiff. 21102004 T20/RB28 M/T 2/2004 (Helman J) 1 10 The notice to remedy breach gave the plaintiff fourteen days to remedy the failure to pay the rent and outgoings then owing. It was delivered on the assumption - not accepted by 20 the defendants - that the plaintiff held a five year lease in the two shops. She failed to remedy the breaches of the lease she claims to have in respect of the shops. There was no response to the demand. 30 As a result of her failure to remedy the breaches of the alleged lease, the first defendant accepted what it characterized as the repudiation of the lease and terminated . it. By a letter of 22 September 2004 from the defendant's solicitors to the plaintiff, the first defendant terminated 40 the lease and required the plaintiff to deliver up keys to the premises by 9.30 a.m. on 23 September 2004. The plaintiff failed to deliver possession of the premises to the first defendant. The solicitors for the first defendant attended at the premises with the second defendant and sought possession 50 of them, which she refused to give. On the evidence before me, even on the plaintiff's pleaded case, she no longer has any right to possession of the two 5 JUDGMENT 60 -- 5 of 7 -- 21102004 T20/RB28 M/T 2/2004 (Helman J) shops. Even if she succeeded in establishing she was entitled 1 to the lease alleged, in the events that have taken place recently, that lease has come to an end by the termination consequent upon her failure to pay rent and outgoings and her failure to comply with the notice to remedy the breach. The plaintiff's failure to pay the rent as required shows that she has repudiated the lease by renouncing her obligations under it. There is no prospect even on her evidence, and on statements she has made today from the Bar table, that she will be in a position to remedy the breaches in a timely way. She asserts that if certain events occur she may be in. a position to remedy the breaches in the New Year, but that is mere speculation. What emerges from what is before me is that she is not in a position to meet the arrears of rent in the near future, and possibly not at all. While it may be accepted that mere non-payment of rent on time is not necessarily repudiation of a lease, the circumstances here justify.only one conclusion: that the plaintiff has evinced an intention to perform her obligations under the lease only as and when she determines she is able to do so. I have been referred to the case of Jarre Pty Ltd v. Vumbaca & Anor (No 2) [1999] N.S . W.Conv.R. 57,086, which is authority for the proposition that a lessee cannot rely on the fact that a business is unprofitable as a basis for refusing to meet rent payments. 20 30 40 50 By reason of the termination of the lease it is clear that the plaintiff can no longer sustain the claim that she is entitled 6 JUDGMENT 60 -- 6 of 7 -- to it. Further the damages claims are founded on the basis that she did not have a lease as she thought she would and so that claim similarly fails as in the events that have happened, if there were a lease it has been terminated and the plaintiff can have suffered no loss. In the events that have happened I conclude that the basis upon which Muir J. granted the injunction on 12 June 2003 is no longer relevant, and accordingly I conclude that it is appropriate that the injunction be dissolved. For the same reasons the defendants are entitled to judgment against the plaintiff on their counterclaim and I propose making that order . 21102004 T20/RB28 M/T 2/2004 (Helman J) HIS HONOUR: Order as in the initialled draft. I order that costs be on the standard basis. 1 10 20 30 40 50 7 JUDGMENT 80 -- 7 of 7 --