Kentwick Pty Ltd v Chandler[2007] QDC 179

DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiff corporation (Kentwick Pty Ltd) is seeking summary judgment on it’s claim against the defendants (the Chandlers), and on the Chandlers counter-claim.

2. [2]
   It is common ground that the Chandlers leased a shop in the Cartwright Centre from Kentwick and entered into a written agreement dated 19 March 2004. The lease was for the period from 15 April 2004 until 31 January 2008. Rafter & O'Hagan was the managing agent of the centre pursuant to a written appointment by Kentwick on 18 March 2003, until 31 July 2006. Rafter & O'Hagan employed Steve Jeisman who was responsible for the day-to-day management of the centre during the relevant period, and he had all relevant dealings with the defendants on behalf of Rafter & O'Hagan. It is common ground that in January 2006 the defendants vacated the premises in the Cartwright Centre and continued their business from other leased premises at Main Drive, Warana, which Rafter & O'Hagan managed for an unrelated party. The plaintiff’s claim is for unpaid rent and charges from March 2006 and for loss of a bargain less a discount for re-letting. It is accepted that if the plaintiff succeeds on it’s summary judgment application the judgment sum should be $48,497.13.

THE RELEVENT LAW

3. [3]
   Both rule 292 (summary judgment for plaintiff) and rule 293 (summary judgment for the defendant) use similar words. Rule 292 (relevantly) states:

If the court is satisfied that—

(a) the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and

(b) there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.

4. [4]
   The learned authors of Civil Procedure Queensland still quote Chesterman J’s judgment in Gray v Morris [2004] 2 Qd.R. 118 at 127 as authority for the proper principles to be applied in applications of this kind. Both parties accept that his Honour’s analysis has been overtaken by the Court’s judgment in Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd.R. 232 in which Williams JA said (at 17):

“there has been a significant change brought about by the implementation of r292 and r293 of the UCPR. The test for summary judgment is different, and the court must apply the words found in the rule. To use other language to define the test … only diverts the decision-maker from the relevant considerations. But, and this underlies all that is contained in the UCPR, ultimately the rules are there to facilitate the fair and just resolution of the matters in dispute. Summary judgment will not be obtained as a matter of course and the judge determining such an application is essentially called upon to determine whether the respondent … has established some real prospect of succeeding at a trial; if that is established then the matter must go to trial.”

5. [5]
   Chesterman J returned to the subject in Jessup v Lawyers Private Mortgages Ltd [2006] QSC 003 in which he pointed out that Salcedo did not overrule Gray v Morris, however, as he himself noted (at 13) the other members of that Court (Phillip McMurdo J with whom McPherson JA agreed) said (at 133):

“r292 and r293 should be applied by reference to their clear and unambiguous language, without a need for any paraphrase or comparison with a previous rule. But in the application of the plain words of r 292 and r 293, and in particular the consideration of whether there is a need for a trial, a court must keep in mind why the interests of justice usually require the issues to be investigated at a trial. In my view it surely remains the case, as Mason, Murphy, Wilson, Deane and Dawson JJ said in Fancourt … that “The power to order summary … judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried”. That remains a forceful and authoritative guidance and is in no way in tension with the application of these rules according to their own terms.”

6. [6]
   The words of the majority do sound very much like the words of Williams JA in Salcedo and to return to Chesterman J’s approach in Gray v Morris, as his Honour in his usual erudite and clearly expressed way did in Jessup, is not an approach that appeals to a Judge at this level.

7. [7]
   I intend to proceed therefore to apply the words used in the rules without any gloss and to follow Salcedo.

FACTUAL BACKGROUND

8. [8]
   Mr Brady helpfully has summarised (from the pleadings) his client’s case and I adopt his summary at paragraphs 5-7 of his written submissions.

“(5)The defendants allege that Mr Jeisman made certain representations to the defendants in late 2005 and early 2006. Those representations included:

1. (a)
   That the plaintiff would be able to get a new tenant for the Cartwright Centre shop very easily and very quickly;

1. (b)
   That retail space was in strong demand and that there were plenty of tenants waiting;

1. (d)
   That Mr Jeisman was confident that he could get someone to take over the tenancy of the Cartwright Centre shop very easily;

1. (e)
   That Mr Jeisman would seek an alternative tenant for the Cartwright Centre shop;

1. (f)
   That Mr Jeisman would have a new tenant for the Cartwright Centre shop very shortly;

1. (g)
   That Mr Jeisman thought that he had a tenant lined up for the Cartwright Centre shop, but ultimately no tenant was found.

(6)The defendants allege that those representations were made within the scope of Mr Jeisman’s actual or ostensible authority from the plaintiff and were made on behalf of the plaintiff. It is alleged that those representatives were false, or misleading or deceptive, or likely to mislead or deceive.

(7)The defendants allege that, acting in reliance upon the representations of Mr Jeisman, they vacated the Cartwright Centre shop and entered into a lease over separate premises at 5 Main Drive, Warana (“the Main Drive shop”). Notwithstanding the representations of Mr Jeisman, he did not attempt to locate a new tenant for the Cartwright Centre shop and a new tenant was not put in place until 1 April 2007.”

9. [9]
   Mr Handran invites me to proceed at this stage on the basis of the factual allegations made by the defendants which bear upon the issue of actual or ostensible agency and I agree that is the correct way to approach his primary application. Accepting that Mr Jeisman was the person relevantly dealing with the Chandlers on behalf of Rafter & O'Hagan throughout all material times, Mr Chandler, in his affidavit filed 25 July 2007 says this:

“(7)After about a year in the premises at Cartwright, shop 10b, in about December 2005 I found that our business was growing fast so that we required even more space. The second defendant and myself started casting around looking for alternative premises. After looking at buying some premises, Steve Jeisman introduced us to premises at Unit 1, 5 Main Drive, Warana. He was the agent for the landlord of these premises, as was as being the agent for the landlord of the Cartwright Centre premises. The solicitors for both landlords were the same as well namely McColm Matisinger.

(8)The premises at Unit 1, 5 Main Drive were much larger and more suited to our requirements. I said to Steve Jeisman,“if we take this place, what are we going to do with the other place?” meaning shop 10b Cartwright Centre. He said “well we are agents for both landlords and I am confident that we can quickly get a tenant for Shop 10b. I don’t think there will be any problem with the landlord giving approval to the new tenant.” I said to Jeisman “how long do you think it will take to find a new tenant.” He said to me “shops like this along Nicklin Way are in great demand. There are plenty of tenants waiting, up and down the coast.”

(9)Jeisman rang me just before Christmas 2005 and said “if you don’t sign the lease on the shop at Main Dice it is likely that someone else is going to take it. The people next door want to expand and they are talking about leasing it.” At the time we were trying to negotiate with Jeisman to get a couple of months rent free period from the landlord of the Main Drive premises. Jeisman and I had negotiated as well to get some structural alterations made to the Main Drive premises. He said to me “if you don’t sign the lease now there is no chance that we will be able to get a builder and organise the alterations before Christmas.” So the second defendant and I signed the lease of the Main Drive premises. The same day we went to have a look at the Main Drive premises and found that in fact the builder had been and the alterations were almost completed, despite what Jeisman had told us.”

And Mrs Chandler at paragraphs 8-12:

“(8)In his discussions with us regarding the purchase by us of a property from which to operate our business I raised with him the question of our moving out of the Cartwright Centre and he said “we will be able to get a new tenant very easily and very quickly. The landlord will have no objection to that. I am confident the we can get someone to take our your tenancy quite easily.”

(9)During the course of our negotiations with Steve Jeisman at my request gave me the assurance that he could quickly find a new tenant on at least three separate occasions.

(10)It transpired that we did not buy the alternative premises and in about December 2005 Jesiman recommended us to other premises at Unit 1, number 5 Main Drive, Warana which we could lease. The reason we had to move from the Cartwright Centre was that we simply did not have sufficient space because our business had grown so rapidly. The new premises were about three times as large.

(11)Rafter and O'Hagan were the managing agents for these premises also. Again I said to Steve Jeisman in the course of our discussions, “are you sure that we will be able to lease the ship in the Cartwright Centre?” He said “no worries at all about that.”

(12)We actually entered into possession of the premises at Unit 1, 5 Main Drive, Warana without signing the lease for those premises because we wanted to keep the pressure on Jeisman to find a new tenant for our ship in the Cartwright Centre. However under pressure from Jeisman who said someone else might lease the premises we signed the new lease. I remember when Steve Jeisman came around to the new shop in about January 2006 I said to him again “What are you doing about getting a tenant for the other shop?” He said “I’ll have a new tenant for you very shortly.” At about that time I noticed that Jeisman was agent for both landlord and McColm Matsinger solicitors for both landlords.”

THE ISSUE

10. [10]
    This issue at this point is straight forward. Has Kentwick satisfied me that the Chandlers have no real prospect of defending the claim (and prosecuting the counter-claim) on the basis that Jeisman’s statements to the defendants (as deposed to by the Chandlers) were made within the scope of his authority as agent and therefore binding on the plaintiff.

11. [11]
    It can be accepted that a disclosed principal is not bound by any act beyond the actual or apparent authority of the agent (Reynolds F.M.B., Bowstead on Agency, 15^thed (1985) at pp. 308-309).

12. [12]
    I did not understand Mr Brady to be arguing that the representations made by Jeisman were within the scope of his actual authority. Clause 10.2.2 of the Management Appointment Agreement forbids Rafter & O'Hagan from exercising Kentwick’s right to terminate the lease without Kentwick’s written consent. Mr Brady’s arguments relating to estoppel, unconscionablity and misleading and deceptive conduct all ultimately come back to the fundamental issue, whether or not, in the circumstances of this case it could be said that the representations made by Jeisman (and uncontested at this stage) were made within the implied authority given to Rafter & O'Hagan and it’s employees by Kentwick.

13. [13]
    It is clear that the Chandlers knew that the new and bigger premises were managed by Jeisman on behalf of another party. It is also clear that prior to Jeisman making any representations as to the surrender and/or termination of the lease, the Chandlers were looking for larger premises because their business had expanded so much. Mrs Chandler makes the point (at paragraph 4 of her affidavit filed 25 July 2007) that at the time they purchased their business it was first necessary for them to obtain the landlord’s approval of an assignment of the lease to them. The Chandlers must have been aware, at the time that Jeisman made the representations, of the terms of the lease they had signed on 26 February 2004.

14. [14]
    Relevantly to this issue of implied authority they must have been aware (a) that any notice under the lease (including a notice to terminate early) had to be in writing: Clause 1.41. Notwithstanding this, they say that they have acted on oral representations of Mr Jeisman. They must have been aware of the provisions in the lease relating to assignments and sub-letting namely Clauses 8.1 and 8.2. Clause 8.1 is in the clearest of terms of which the Chandlers must have been aware at the time they say they acted to part with possession of the premises.

15. [15]
    Whether ostensible or implied authority exists is a question of fact. In Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9 (a case factually distinguishable from the present) Street J (as his Honour then was) observed (at 18):

“The function of managing agents is not the subject of evidence, but I am prepared to assume that their duties involved the finding of lessees and occupants for the building, the collection of rents, and the control and supervision of the care and maintenance of the building. They would presumably also have authority to receive on behalf of the owner ordinary communications from lessees and others associated with the building. The managing agents might be regarded as having ostensible authority in negotiating a lease to make representations as to the state of the premises as distinct from giving any contractual warranties.”

16. [16]
    His Honour regarded the provisions of the deed of lease in that case as being determinative of the issue of ostensible authority in that case. As well as the particular provisions of the lease to which I have earlier referred, the Chandlers were aware at all material times that Jeisman was not acting as agent for Kentwick in relation to the later lease.

17. [17]
    In light of the factual matters, I am satisfied that the Chandlers have no real prospect of successfully defending the claim (or prosecuting the counter-claim) on the basis of their pleading that the representations made by Jeisman came within the ordinary implied authority vested in him as an employee of the plaintiff’s managing agent. Given the terms of the lease in particular and the Chandlers’ knowledge that Jeisman was representing two landlords, there is no real prospect of them establishing that in making those representations he was binding Kentwick.

ORDERS

In making order 1. I have taken into account that the defendant’s Bank Guarantee of $5,250 issued pursuant to the lease has been paid to the plaintiff.

1. Judgment is entered for the plaintiff for $48,497.13.
2. Judgment is entered for the plaintiff on the defendant’s counter-claim.
3. The defendant will pay the plaintiff’s costs of and incidental to the proceedings and application on the standard basis.