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Beware the Wolf in Sheep’s Clothing – the Need to Professionally Document Business Arrangement

In the recent decision ofMay v Walker [2024] NSWSC 612 the Supreme Court of New South Wales dismissed the application of the two plaintiffs, Abby May and Dean Gibson, who claimed the defendant, Neil Walker, had agreed to lease to them his ski lodge in Crackenback.

The Plaintiffs’ Claim

The plaintiffs claimed that they had a 30-year lease of the ski lodge, based on a residential tenancy agreement that they alleged the defendant signed on 7 June 2023. They also sought damages, equitable compensation, compensation under the Australian Consumer Law, and quantum meruit for work done on the property.

  • The plaintiffs claimed to have a 30-year lease of the ski lodge from the defendant:

The plaintiffs alleged that they befriended the defendant, an elderly bachelor who owned the property, and offered to help him run and improve the property in exchange for a long-term lease and an option to purchase. They produced various documents to support their claim, including a handwritten note and a residential tenancy agreement.

  • The plaintiffs sought damages, equitable compensation, compensation under the Australian Consumer Law and quantum meruit for work done on the property:

The plaintiffs argued that they had spent money and labour on the property, such as excavating, painting, repairing, and installing a bore pump. They also claimed that they had advertised and managed the ski lodge, securing bookings and guests. They asserted that they had suffered loss and injustice as a result of the defendant’s breach of contract, representation, and estoppel.

The Defence

The defendant denied signing the lease and argued that he only offered the plaintiffs rent-free accommodation in exchange for their work on the property and management of the ski lodge. He also contended that the plaintiffs falsified documents, pressured him to sign a lease, and tried to take advantage of his age and loneliness.

  • The defendant denied signing the lease and said he only offered the plaintiffs rent-free accommodation for their work:

The defendant testified that he met the plaintiffs on a bus and invited them to stay at his property for a couple of weeks to see if they got along. He said he agreed to let them manage the ski lodge and do some work on the property in return for living there without paying rent. He said he never signed any lease or agreed to any long-term arrangement with the plaintiffs.

  • The defendant contended that the plaintiffs falsified documents, pressured him to sign a lease, and tried to take advantage of his age and loneliness:

The defendant produced evidence that the plaintiffs had fabricated invoices, altered the dates on documents, and used an old residential tenancy form that he kept in the house. He also said that the plaintiffs had repeatedly asked him to sign a lease that would give them a 30-year term, an option to purchase, and a share of the income. He said that the plaintiffs had exploited his vulnerability, as he was 82 years old, isolated, and in poor health.

  • The defendant argued that he had no contract, representation, estoppel, or quantum meruit obligations to the plaintiffs:

The defendant submitted that there was no contract between him and the plaintiffs, as there was no offer, acceptance, consideration, or intention to create legal relations. He also denied making any representation or promise that the plaintiffs had a 30-year lease or that they could purchase the property. He further denied that the plaintiffs had relied on any such representation or promise to their detriment. He also disputed that the plaintiffs had conferred any benefit on him by their work, as the work was poorly done, caused damage, and did not increase the value of the property.

The Judgment

  • The Court dismissed the plaintiffs’ claims and found that they were rogues who had no contract, representation, estoppel, or quantum meruit entitlements. The Court also found that the plaintiffs had fabricated evidence, damaged the property, and harassed the defendant.
  • The Court dismissed the plaintiffs’ claims with costs, finding that they had not established any contractual, equitable, or statutory entitlement to the property or compensation.
  • The Court held that the defendant did not sign the lease or any other document that purported to give the plaintiffs a 30-year lease or an option to purchase. The Court found that the documents relied on by the plaintiffs were either incomplete, unsigned, falsified, or irrelevant. The Court also rejected the plaintiffs’ evidence as unsatisfactory, evasive, and inconsistent.
  • The Court further held that the defendant did not make any representation or promise that induced the plaintiffs to believe that they had a 30-year lease or an option to purchase. The Court found that the defendant only offered the plaintiffs rent-free accommodation in exchange for their work on the property, and that he was not willing to agree to any long-term arrangement.
  • The Court also found that the plaintiffs did not rely on any representation or promise by the defendant, as they were aware that he was reluctant and resistant to their proposals.
  • The Court additionally held that the plaintiffs did not have any claim for quantum meruit, as they did not confer any benefit on the defendant by their work on the property. The Court found that the work done by the plaintiffs was of poor quality, caused damage to the property, and did not increase its value. The Court also found that the work was done in return for rent-free accommodation or as part of the management of the ski lodge, and that there was no injustice in denying the plaintiffs any further payment.

Takeaways

Beware the wolf in sheep’s clothing: chance encounters can lead to incredibly rewarding and fruitful relationships, but care should always be taken when they become transactional. Spending the money to properly document agreements saves time, energy, money when the relationship breaks down and the parties end up in Court.

For more information about commercial litigation disputes, contact David Collins in the Mullane & Lindsay litigation team.

Liability limited by a scheme approved under Professional Standards Legislation

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