APlus Capital Pty Ltd v Kontomichalos - [2024] VSC 546

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S ECI 2023 00613

APLUS CAPITAL PTY LTD & ORS (according to the attached Schedule)	Appellants
v
JOHN KONTOMICHALOS & ORS (according to the attached Schedule)	Respondents

JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 March 2024
DATE OF JUDGMENT:	6 September 2024
CASE MAY BE CITED AS:	APlus Capital Pty Ltd v Kontomichalos
MEDIUM NEUTRAL CITATION:	[2024] VSC 546

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GUARANTEE – Guarantees of tenant’s obligation under leases – Leases ended by acceptance of repudiation – Monthly tenancies thereafter – Whether guarantees applied to obligations under monthly tenancies.

APPEAL – Orders of VCAT – Application for leave to appeal on questions of law – Whether new questions of law should be permitted on appeal – Questions turning on legal issues only – New questions allowed – Victorian Civil and Administrative Tribunal Act 1998 s 148.

JUDGMENTS AND ORDERS – Form of order appropriate when multiple landlords succeed in rent claims against tenant – Aggregate order inappropriate – Orders required in respect of each successful landlord.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr A Panna KC	Canann Lawyers
For the Respondents	Mr L Virgona	KCL Law

HIS HONOUR:

Background

This proceeding is an application for leave to appeal orders of the Victorian Civil and Administrative Tribunal (VCAT or the Tribunal) dated 29 November 2022. Those orders arose from a dispute between the 22 respondents, the Landlords and the Tenant and its guarantors, for the payment of rent and charges for serviced apartments in a complex in Kew. The Landlords owned separate apartments in the complex.

The first appellant, APlus Capital Pty Ltd (APlus), was the Tenant under Leases of apartments in the complex owned by the respondent Landlords that were transferred to APlus in 2017. The guarantors of the Tenant were the second and third appellants, who were respectively a director and secretary of APlus.

APlus operated a business offering short and long term accommodation using approximately 50 apartments in the Kew complex. In response to a dispute with the Landlords regarding the repair of bathrooms in the apartments, APlus withheld rent. The Landlords commenced the VCAT proceeding against APlus, the guarantors, and others to claim outstanding rent and charges. APlus counterclaimed seeking damages and a declaration that APlus was entitled to deduct or withhold the rent claimed by the Landlords, or such portion thereof as the Tribunal determined. APlus argued that it had the right to withhold rent and other charges because the Landlords had not paid for the repair works and, as a result, the apartments could not be used, or only used to a limited extent.

In this Court, but not in the Tribunal, the guarantors argued that their guarantees applied only to obligations under the Leases transferred to APlus in 2017, and not obligations under the monthly tenancies that the Senior Member of the Tribunal hearing the proceeding found commenced on…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] VSC 546
Decision Date: 6 September 2024

CaseChat Overview and Summary

APlus Capital Pty Ltd sought to recover outstanding rental arrears from Kontomichalos, a former tenant, via the guarantors of the original lease. Kontomichalos argued that the guarantees did not apply to the monthly tenancies that followed the original leases, which had ended due to his alleged repudiation. The matter was first heard by the Victorian Civil and Administrative Tribunal (VCAT), which found in favour of APlus Capital. Kontomichalos appealed to the Supreme Court of Victoria on questions of law, specifically whether the guarantees covered the monthly tenancies.

The primary legal issue was whether the guarantees provided by Kontomichalos's guarantors for the original leases extended to the subsequent monthly tenancies. The court had to interpret the guarantees in light of the circumstances under which the leases ended and the nature of the subsequent tenancies. Another issue was whether new questions of law could be introduced on appeal, given the appeal was limited to questions of law.

The Court held that the guarantees did not extend to the subsequent monthly tenancies as the guarantees were expressly tied to the original leases. The Court emphasised that the guarantees were limited to the terms of the leases to which they were attached. Regarding the appeal, the Court found that new questions of law could be considered if they turned solely on legal issues and did not involve factual findings. The Court allowed the introduction of new questions of law because they were purely legal and did not require factual re-assessment.

The Court made orders for APlus Capital to recover the outstanding rents from the guarantors, but noted that separate orders should be made for each successful landlord, rather than an aggregate order. The Court's decision clarified the scope of guarantees in the context of lease terminations and provided guidance on the scope of appeals in VCAT matters.

Orders