Snap Gym’s leasing of a suburban 24 hour workout space had dragged on for months before the landlord falsely stated that other offers had been received, “one of them for a gym”.
In late November 2014, landlord James Cheah – to apply pressure to the discussions –emailed Snap’s Amar Patel “that he had just heard from the other agent that two additional offers were being tabled”.
Cheah followed up a few days later with a proposal that included some rent-free and some fit out payments for a five year lease of the Claremont (Perth) ground floor premises.
That emailed offer was expressed to be “subject to acceptance in its entirety”.
Patel replied the same day that he was happy to proceed and would update the earlier offer to lease document and send it through for signing.
But the very next day, Cheah received a genuine offer from another 24/7 gym operator.
Believing it was not committed to Snap, the landlord eventually signed with the competitor.
The Supreme Court of Western Australia ruled Cheah’s false statement that two other offers were being tabled – when only one competing but unsatisfactory expression of interest had been received – was “misleading, if not deceptive”.
But what of the email exchange? Did it amount to a valid agreement to lease?
The landlord argued that even if agreement had been reached, it was still subject to a signed acceptance of a formal written offer.
Not only had the parties reached agreement on terms, but on 5 December – the following day – Cheah emailed an updated offer to lease to his agent confirming “the terms were acceptable to both parties”. That email was signed.
According to Justice Rene Le Miere, the various emails contained “all the essential terms of the agreement” and the information – that the landlord agreed to rent the premises to snap on the terms of the updated offer to lease – was conveyed by a reliable method appropriate in all the circumstances as required by the Electronic Transactions Act.
And Cheah’s sign off – Sincerely, James Cheah – sufficiently identified him and indicated his intention (acceptance) with respect to the information he communicated.
All the requirements have been met, the court found a valid agreement to lease had been validly entered into entitling Snap to a formal lease. The fact that the emailed terms had been agreed to be reduced to writing in the form of an offer to lease that did not materialise, was inconsequential.
The competitor 24/7 gym also had had a valid agreement to lease but because it was entered into after 5 December, it was accorded lower priority among the competing equitable interests, as it was last in time.
No doubt the competitor has a subsequent entitlement to damages against the landlord for not being able to take up the lease it also signed up for.