A court has dismissed the claim from husband and wife video store operators who alleged their landlord accepted a proposal to wipe $19,700 back rent and grant a new ten year term at a fixed nominal rent.
The breathtaking assertion arose after Gordon and Annette Hutchison fell into arrears just six months after commencing their venture at the Highfield Village shopping centre in the Toowoomba suburb of Highfields in May 2012. Their company had a 5 year lease of the shop at $5k per month.
Landlord John Stirling – following conventional procedure – issued a notice to remedy breach of covenant specifying the delinquency. However in a measure of compromise, he offered to re-structure the lease in March 2013 with a deal that also allowed time for payment of arrears.
Not content, the Hutchisons substantially amended and annotated the new lease documents before returning them in an envelope to the landlord’s agent with two cheques totalling $2000 meant to cover three years rent in advance and also the arrears.
“The altered lease document was a very different thing indeed from the lease which was then registered and binding upon the parties,” reads the Supreme Court judgment. Apart from the reduction in annual rental to about 1% of the previous figure, the requirement to pay a percentage of outgoings and a security deposit were deleted as were the personal guarantees across which Mr Hutchison had written “no longer required”. The permitted use was also annotated by addition of the words “plus any other use as determined by the lessee”.
The tenant also “saw fit to stamp each and every page” with the words “not negotiable, non-transferable, without recourse” in a misguided attempt to gain some legal advantage by application of the law relating to bills of exchange.
The landlord sued to recover the arrears and also possession of the premises. In their defence, the Hutchisons contended that by banking the cheque, the agent and the landlord had “unambiguously” agreed to their counter-offer of an entirely new deal at just $50/month.
In the court’s view ‘such a radical departure from the terms of the existing lease’ could not be construed just from banking the cheque. Neither was the delay by the landlord in sending notice of its rejection an acceptance of the tenant’s proposition.
The Hutchison’s attempt ‘to engineer some obscure legal position to promote their position’ was, in the court’s view, ‘nonsensical’.
Judgment was entered against the tenant company and the Hutchisons as guarantors for the full amount of rent owing up to the date of hearing of $30,000.