Ash Building Products Pty Ltd v Clama Industries Pty Ltd
[2007] VSC 570
•14 November 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
No. 6691 of 2007
| IN THE MATTER OF ASH BUILDING PRODUCTS PTY LTD (ACN 111 680 570) BETWEEN: | |
| ASH BUILDING PRODUCTS PTY LTD (ACN 111 680 570) | Plaintiff |
| v | |
| CLAMA INDUSTRIES PTY LTD | Defendant |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 November 2007 | |
DATE OF JUDGMENT: | 14 November 2007 | |
CASE MAY BE CITED AS: | Ash Building Products Pty Ltd v. Clama Industries Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 570 | |
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CORPORATIONS – Setting aside statutory demand – Application to set aside statutory demand under s 459J(1)(b) on the grounds that the court is satisfied that there is some “other reason why the demand should be set aside” – Whether the court in its discretion under s 459J(1)(b) should set aside a statutory demand by a landlord against a tenant for arrears of rent on the grounds the landlord’s claim for rent ought to be dealt with under the Retail Leases Act 2003 – ss 459G and 459J Corporations Act 2001
LANDLORD AND TENANT – Retail Leases Act 2003 – Retail tenancy dispute – Whether a claim for rent not legally disputed by the tenant may nevertheless be the subject of a retail tenancy dispute for the purposes of the Retail Leases Act 2003 – Whether a landlord’s claim for rent must be disputed on legal grounds to constitute a retail tenancy dispute for the purposes of the Act – Whether a retail tenancy dispute under the Act encompasses a failure to pay rent coupled with a claim by the tenant for an indulgence or concession by the landlord - Whether the Supreme Court is denied jurisdiction to hear and determine an application to set aside a statutory demand for arrears of rent by reason of the Retail Leases Act 2003 – ss 81, 87, 89 and 90 of Retail Leases Act 2003
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P T Duggan | McNab, McNab & Starke |
| For the Defendant | Ms C F Gobbo | Cornwall Stodart |
TABLE OF CONTENTS
INTRODUCTION.............................................................................................................................. 1
THE APPLICATION......................................................................................................................... 1
THE EVIDENCE................................................................................................................................. 1
THE ISSUES........................................................................................................................................ 3
RETAIL TENANCY........................................................................................................................... 4
RETAIL TENANCY DISPUTE........................................................................................................ 5
SOME OTHER REASON THE DEMAND SHOULD BE SET ASIDE.................................... 5
FURTHER SUBMISSIONS BY CLAMA....................................................................................... 6
CONCLUSION................................................................................................................................... 7
HIS HONOUR
INTRODUCTION
I have before me an appeal from a decision of Master Efthim made on 17 October 2007 wherein the Master dismissed an application made under s 459G of the Corporations Act2001 to set aside a statutory demand made 21 May 2007 and extended the period for compliance with the statutory demand to November 2007.
In this appeal, Mr Duggan of counsel appears for the plaintiff appellant, Ash Building Products Pty Ltd (Ash Building) and Ms Gobbo of counsel appears for the defendant respondent, Clama Industries Pty Ltd (Clama).
The appeal proceeds by way of a hearing de novo.
THE APPLICATION
Ash Building applies under s 459G and s 459J(1) of the Corporations Act 2001 for an order setting aside the statutory demand on the grounds that;
(a) there is a dispute between Ash Building and Clama as to the amount of the debt claimed in the statutory demand; and
(b) Clama’s claim upon which the statutory demand is based is a retail tenancy dispute within the meaning of the Retail Leases Act2003 by virtue of which:
(1) the claim may only be the subject of proceedings if the Small Business Commissioner has certified in writing that mediation or another appropriate form of alternative resolution has failed to resolve the matter; and
(2) the Victorian Civil Administrative Tribunal (“VCAT”) is invested with exclusive jurisdiction in respect of the claim and no proceeding in respect to the claim may be commenced in any other court or tribunal.
THE EVIDENCE
The application is supported by an affidavit of Michael Almonara sworn 13 June 2007. He deposes that he is a director and secretary of Ash Building.
He says that on or about 25 May 2007 Clama caused to be served on Ash Building a statutory demand under s 459E of the Corporations Act 2001 requiring Ash Building to pay Clama $53,000 claimed to be owing by Ash Building to Clama.
He says on or about 29 March 2007, Clama instituted proceedings against Ash Building in Melbourne Magistrates' Court in respect of the claim the subject of the statutory demand. He says Clama amended the Magistrates' Court complaint to substitute him as the defendant, in place of Ash Building, on the grounds that he guaranteed the obligations of Ash Building under a retail premises lease.
Mr Almonara exhibits the amended Magistrates' Court complaint. He says that by notice of defence dated 3 May 2007 he defended the amended Magistrates’ Court complaint and he produces the notice of defence. He says the notice of defence was served on the solicitors for Clama under cover letter dated 3 May.
He says the Magistrates' Court proceeding is ongoing and has been referred to mediation. He says:
On the basis of the status of the Magistrates' Court proceeding and for the reasons set out in the notice of defence, I say that there is a genuine dispute in respect of the claim made by Clama herein. I say further that the grounds upon which the Magistrates' Court proceeding is being defended were known to the defendant at the time that it issued the statutory demand.
Under the notice of defence[1], Ash Building alleges that Clama’s claims of unpaid rental and other amounts are pursuant to a lease of retail premises within the meaning of the Retail Leases Act 2003. Ash Building alleges that as such, Clama's claim is a retail tenancy dispute within the meaning of the Act.
[1]Exhibit MA3
He then says that Clama’s solicitors responded to the matters alleged in the notice of dispute by a letter dated 14 May 2007 and claimed Ash Building was a tenant of a retail premises. He submits that as a result Clama’s claim is retail tenancy dispute as defined by the Retail Leases Act 2003 and that no proceeding may be instituted in respect of the claim in the absence of the required written certification from the Small Business Commissioner and then only in VCAT.
He concludes:
I say further that the statutory demand has been served for the sole purpose of providing grounds for the institution of an application to a court, having jurisdiction under the Corporations Act 2001 for the winding up of the company but in, the premises, no court has such jurisdiction.
The notice of defence filed by Ash Building in the Magistrates’ Court alleges that the lease was a retail premises lease, and that Clama’s claim includes amounts for alleged unpaid rental, namely rates, insurances, lessor’s costs, and expenses. The defence alleges that Clama’s claim is a retail tenancy dispute within the meaning of the Act, and it may only be subject to proceedings with the Small Business Commissioner's certification, and that VCAT has exclusive jurisdiction.
THE ISSUES
The defence filed by Ash Building in the Magistrates’ Court raises the same defence of lack of jurisdiction as is raised in the affidavit on this appeal.
Initially, Ash Building alleges that the affidavit material showed that there was a genuine dispute between the company and Clama about the existence of a debt to which the demand relates. That ground is no longer relied on.
Ash Building also rely on s 459J(1) of the Corporations Act 2001. It provides under the heading of SETTING ASIDE DEMAND ON OTHER GROUNDS:
[Defect of other reason] On an application under s 459G, the court may, by order, set aside the demand if it is satisfied that:
(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside.
Ash Building argues that the scheme of the Retail Leases Act 2003 requires that retail tenancy disputes should be dealt with under the provisions of that Act, and that Act sets out an exhaustive jurisdiction for dealing with those disputes. Ash Building refers to s 87(1) of the Retail Leases Act 2003 which provides:
Retail tenancy disputes must first be referred for alternative dispute resolution
(1) A retail tenancy dispute may only be the subject of proceedings before the Tribunal, whether under this Act, the Fair Trading Act, or any other Act, if the small business commissioner has certified in writing that mediation or another appropriate formal alternative dispute resolution under this part has failed or is unlikely to resolve it.
Under Division 3 of the Act, provision is made for alternative dispute resolution.
Ash Building also relies upon sub-ss (1) and (4) of s 89 of the Retail Leases Act 2003, which provide:
Jurisdiction of Tribunal
(1) The Tribunal has jurisdiction to hear and determine an application by landlord or tenant under a retail premises lease, or by a specialist retail valuer, seeking resolution of a retail tenancy dispute.
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(4) Subject to s 23(4) (key-money and goodwill payments prohibited), a retail tenancy dispute, other than –
(a) an application for relief against forfeiture; or
(b) a claim under Part 9 (unconscionable conduct)
is not justiciable before any other tribunal or court or person acting judicially within the meaning of the Evidence Act 1958.
RETAIL TENANCY
Has Ash Building established that its tenancy was a retail tenancy? The lease exhibited to the affidavit of Agostino Vidotto sworn 25 July 2007, specifies the permitted uses which include building products display and warehousing. The lease also expressly contemplates it may be subject to the Retail Leases Act 2003. Ash Building’s business includes displaying building products.
Ash Building also relies on a letter written by the solicitors for Clama Industries, which asserts the Magistrates’ Court proceeding was misconceived on the ground that the Retail Leases Act 2003 only applied as between the landlord and tenant. As such it did not apply to guarantors. Ash Building argues that as the letter did not suggest the lease was not a lease of a retail premises the letter should be treated as a concession by Clama that the lease was a lease of retail premises.
In my view, sufficient evidence was given for me to proceed on the basis that the tenancy is a retail tenancy.
RETAIL TENANCY DISPUTE
In substance, s 81 of the Retail Tenancies Act 2003 defines a “retail tenancy dispute” to be a dispute between a landlord and tenant arising under or out of a retail premises lease. In my view, the material does not show that there is any dispute between Ash Building and Clama in the sense referred to in the Retail Tenancies Act 2003. The only issue between Ash Buildings and Clama is the jurisdictional defence. Such a dispute does not arise under or out of a lease. The jurisdiction of the Supreme Court is only excluded if there is a retail tenancy dispute. If there is no retail tenancy dispute, then the jurisdiction of the Supreme Court is not excluded.
Ash Building disavowed any reliance on s 459H(1) of the Corporations Act 2001, under which all Ash Building need establish is that there is a genuine dispute between the company and Clama about the existence or amount of the debt to which the demand relates.
SOME OTHER REASON THE DEMAND SHOULD BE SET ASIDE
In the alternative, if the Supreme Court does have jurisdiction, Ash Building submits that the court should exercise its discretion to set aside the demand where it is satisfied there is some other reason why the demand should be set aside under s 459J(1) of the Corporations Act 2001.
Ash Building submits that the demand should be set aside on the grounds that to permit it to stand would undermine the scheme of the Retail Leases Act 2003 and permit landlords to avoid the protections given to tenants by the Retail Leases Act 2003.
Ash Building submits that the scheme of the Retail Leases Act2003 contemplates the resolution of disputes that may not be legal in nature and includes claims made by a tenant in default for indulgences or concessions because of financial considerations. Ash Building submits that the scheme of the Act is that such disputes should be mediated and then if not resolved be dealt with by VCAT. It also submits that the Act excludes other forums to allow the parties to the retail lease to use less confrontational forms of proceedings.
Even if that be the case, I feel in the circumstances where there is no dispute as to the rent owed, the policy of the Retail Leases Act 2003 does not override the policy underlying the provisions for winding up insolvent companies under the Corporations Act 2001. There is a public benefit in winding up insolvent companies. Creditors are fairly treated and the public is protected against insolvent trading by the company. In making these observations, it should not be taken as a finding that s 459J(1) of the Corporations Act 2001 is to be applied in the manner suggested by Ash Building.
I reject the claim that the court should set aside the demand under s 459J(1) of the Corporations Act 2001.
FURTHER SUBMISSIONS BY CLAMA
For the above reasons, it is unnecessary for me to decide the other arguments that were put by Ms Gobbo, counsel for Clama. I will, however, set them out.
Ms Gobbo submits that the statutory notice is not a proceeding and therefore is not caught by sub-s 89(4) of the Retail Leases Act 2003. The Act provides that the Tribunal (VCAT) hears “proceedings” in relation to retail tenancy disputes: see s 90.
Ms Gobbo further submits that by hearing and determining the application to set aside the statutory demand, the Supreme Court is not adjudicating upon any “dispute” for the purposes of s 89(4) of the Retail Leases Act 2003, which relevantly provides:
….a retail tenancy dispute…. is not justiciable before any other tribunal or a court or a person acting judicially within the meaning of the Evidence Act 1958.
Ms Gobbo submits that in determining whether to set aside a statutory demand, the Supreme court is not adjudicating upon or seeking to resolve a dispute between the landlord and tenant.
CONCLUSION
I dismiss the appeal with costs.
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