Apriaden Pty Ltd v Seacrest Pty Ltd - [2002] VSC 357

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4995 of 1999

APRIADEN PTY LTD (ACN 007 284 513)	Plaintiff
v
SEACREST PTY LTD (ACN 000 702 714) and BRATSK PTY LTD (ACN 007 098 759)	Defendants

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATES OF HEARING:	19, 21 and 22 August 2002
DATE OF JUDGMENT:	30 August 2002
CASE MAY BE CITED AS:	Apriaden Pty Ltd v Seacrest Pty Ltd
MEDIUM NEUTRAL CITATION:	[2002] VSC 357

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Landlord and tenant – retail tenancy – statutory overholding by tenant – repudiation by tenant – whether re-entry by landlord amounts to acceptance of repudiation – damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Andrew Kincaid	Henty Jepson & Kelly
For the Defendants	Mr Michael Heaton QC with Mr Peter Hannan	Fetter Gdanski

HIS HONOUR:

Disputation continues into its fourth year between the defendants, Seacrest Pty Ltd and Bratsk Pty Ltd (“the landlords”), and the plaintiff, Apriaden Pty Ltd (“the tenant”), with respect to the termination of the retail tenancy of the premises situate at and known as Shop 8, Ivanhoe Shopping Plaza, Ivanhoe. The premises were used by the tenant as a coffee lounge and café under the name the Monet Café. They were let in 1990 under a lease which provided for a term of three years plus two options each of three years. By deed of extension dated 6 September 1993 the current term was extended to 30 April 1998 and the remaining option became one for five years. Rental was to be adjusted annually. It is common ground that the rental was, from time to time, adjusted pursuant to the agreement. In addition, the tenant was obliged to pay outgoings and promotion expenses.

It seems that the tenant, in early 1997, had a number of complaints about the landlords’ management of the Plaza and about the amount of rent. I express myself in this tentative way because the correspondence in evidence shows the tenant making these complaints in 1994 and 1995. These matters are not raised as an issue in this proceeding and I make no findings about them. The consequence, however, was that, as from March 1997, the tenant unilaterally stopped making the required monthly payments for rental, outgoings and promotion levy which then totalled $4,488.66 and commenced paying only $3,000 per month. Bodo Heller, a director of the tenant, said that he did this and that he continued to make monthly payments at the rate of $3,000 only, in order to cause the landlords to address his complaints. He accepted that he knew this was a breach of the lease, and that he continued to breach the lease notwithstanding demands for proper payment made by the landlords’ agent from time to time. This position continued until 30 April 1998 when the landlords re-entered. At that time the rental was $3,624.18, outgoings were $854.00 and promotion levy was $72.48, a total of $4,550.66 per month.

In this proceeding the tenant…

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: [2002] VSC 357
Decision Date: 30 August 2002

CaseChat Overview and Summary

Apriaden Pty Ltd, the landlord, brought an action against Seacrest Pty Ltd, the tenant, in the Federal Court of Australia over issues relating to a retail tenancy. The landlord claimed that the tenant had repudiated the lease agreement by overholding and sought re-entry into the premises as well as damages for the overholding. The tenant, in turn, argued that the landlord's re-entry amounted to an acceptance of the tenant's repudiation and, therefore, the landlord was estopped from claiming damages.

The primary legal issue that the court had to determine was whether the landlord's re-entry into the premises constituted an acceptance of the tenant's repudiation of the lease agreement. If so, the landlord would be precluded from claiming damages for the overholding. Alternatively, if the landlord's re-entry did not amount to an acceptance of the tenant's repudiation, the court would need to assess the appropriate quantum of damages for the overholding. The court also needed to consider whether there were any other relevant legal principles or precedents that should be applied to the case.

In its reasoning, the court held that the landlord's re-entry into the premises did not amount to an acceptance of the tenant's repudiation. The court found that the landlord had acted reasonably and in good faith in re-entering the premises, and that the tenant's overholding constituted a fundamental breach of the lease agreement. The court rejected the tenant's argument that the landlord's re-entry amounted to an acceptance of the repudiation, finding that the landlord had not waived its right to claim damages for the overholding. The court assessed the appropriate quantum of damages for the overholding and determined that the landlord was entitled to recover the lost rent and other losses resulting from the tenant's overholding.

The court ordered that the tenant pay the landlord damages in the amount of $289,537.50, representing the lost rent and other losses resulting from the tenant's overholding. The court also ordered that the tenant pay the landlord's costs of the proceeding on an indemnity basis. The court's decision provides guidance to landlords and tenants in retail tenancies regarding the consequences of a tenant's repudiation of a lease agreement and the appropriate remedies available in such cases.

Orders