Australian Waste Recyclers Pty Ltd v Professor Bin Pty Ltd
[2021] VSC 674
•15 October 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2021 03670
| AUSTRALIAN WASTE RECYCLERS PTY LTD (ACN 637 451 177) | Applicant |
| v | |
| PROFESSOR BIN PTY LTD (ACN 168 789 517) | Respondent |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 14 October 2021 |
DATE OF RULING: | 15 October 2021 |
CASE MAY BE CITED AS: | Australian Waste Recyclers Pty Ltd v Professor Bin Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 674 |
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PRACTICE AND PROCEDURE – Interlocutory application for stay of decision of Victorian Civil and Administrative Tribunal – Where stay consented to subject to conditions – Whether conditions proposed by respondent appropriate – Stay granted subject to conditions.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A Blair | Lewis O’Brien & Associates |
| For the Respondent | Mr J Korman | My Legal Advisor |
HIS HONOUR:
A. Overview
Professor Bin Pty Ltd (‘Professor Bin’) owns land in Dandenong South that was leased to Australian Waste Recyclers Pty Ltd (‘AWR’). The Victorian Civil and Administrative Tribunal (‘the Tribunal’) has declared that the lease was validly terminated by Professor Bin in April this year. In its reasons, the Tribunal concluded, also, that AWR owed Professor Bin money assessed by reference to monthly licence fees that would have been payable if the parties had complied with their contractual obligations. For reasons that are not clear, the Tribunal did not reduce that conclusion into an order that AWR pay those sums to Professor Bin, despite the fact that Professor Bin sought damages on that basis.
AWR is currently in possession and wishes to remain in possession. It has filed an application for leave to appeal against the Tribunal’s orders, and has applied to this Court for an order staying the Tribunal’s orders until the hearing of the application for leave to appeal and any appeal or further order. That application was heard by me on 14 October 2021. It proceeded in a rather unusual manner. Professor Bin’s position, in part clarified during discussion, was that it opposed the grant of any stay, but that it would not oppose a stay if it were a condition of the stay that AWR pay the moneys that the Tribunal had concluded that it owed assessed by reference to unpaid licence fees, and that AWR continue to pay those monthly amounts in the meantime. It offered to have those moneys paid into and held in its solicitors’ trust account pending the outcome of the application for leave to appeal or any appeal or further order. AWR did not agree to those conditions being imposed.
After hearing argument on whether, if I were to grant a stay, I should impose such conditions, I determined, and advised the parties that:
(a) if I were to grant to AWR the stay it sought, I would impose a condition that AWR pay the sum that the Tribunal had determined that it owed Professor Bin, and that it continue to make a payment equivalent to the monthly loss that the Tribunal found was accruing, but that some time had to be allowed for that to happen in case AWR did not have immediately available the necessary funds;
(b) those payments should be made to the trust account of Professor Bin’s solicitors as proposed;
(c) in those circumstances, in light of Professor Bin’s (sensible) approach, the issue came down to the precise form of the conditions that ought to be imposed.
(d) I was open to further argument about how the order should be formulated, and the precise details of the way in which some accommodation was to be given to AWR in case it did not have immediately available the necessary funds. I asked the parties to endeavour to agree on a form of order, but directed that, if agreement could not be reached, each party circulate a proposed form of order and a two-page submission by noon on 15 October 2021, after which I would decide the matter on the papers; and
(e) I would provide my reasons later.
The parties were unable to reach agreement on a form of order. These are my reasons for my determination to grant the stay but on conditions, and the conditions that I have determined to impose.
B. Background to the dispute
Professor Bin wanted to sell the land. The land was subject to a holdover monthly tenancy. Persons associated with AWR indicated a willingness to purchase the land. However, AWR required that the land first be leased to AWR, and the sale contract be prepared and entered into only after the lease had been entered into. The sale contract was to have a nominee clause. The purpose of arranging the deal in this way was so that the property could be sold with an operating business because that would provide AWR with some tax benefits, and also for ‘asset protection reasons’.[1]
[1]According to Mr Bradshaw, the office manager of AWR.
On 21 and 23 January 2020, AWR and Professor Bin signed a heads of agreement. The heads of agreement set out the terms of the lease and provided that it would commence 31 days after the execution of the heads of agreement. It also provided, under the heading ‘miscellaneous’, that the property ‘was to be purchased as a going concern 29 days after lease commencement date’. The heads of agreement then set out the amount of the purchase price, the amount of the deposit, the time for settlement, and for a ‘licencing agreement of $50,000 per annum’. It was common ground that the heads of agreement was intended to be immediately binding.[2]
[2]Cf Masters v Cameron (1954) 91 CLR 353.
On 24 January 2020, Professor Bin gave a month’s notice to the holdover tenant and on 18 February 2020 it entered into the lease arrangement with AWR. In due course, AWR went into possession. On 11 March 2020, Professor Bin sent to AWR a contract of sale ‘for the purchaser’s execution’. The contract referred to, and had as an attachment, a licence agreement that provided for a monthly payment of $4,166.66 (which is $50,000 per annum). The problems then started. On 31 March 2020, AWR replied, stating:
We have gone over the contract with our solicitor.
In light of the current worldwide circumstances we have been strongly advised not to enter into any new sale/purchase agreements due to the uncertainty at the moment.
There was then a series of communications between AWR and Professor Bin in which various terms were sought to be amended (including the amount of the deposit and the settlement date) and other terms were sought to be removed or rewritten. No sale contract was signed. In April 2020, Professor Bin, contending that the lease was conditional on the entry into of a sale agreement, demanded that AWR vacate the premises. On 16 and 26 April 2020, Professor Bin attempted to re-enter the premises, including by changing the locks. AWR obtained interlocutory relief from the Tribunal and on 30 April 2020 regained possession of the premises. It remains in the premises, carrying its business from there. It has been making lease payments, but not the licence payments that were anticipated in the heads of agreement.
After some further, failed, attempts to reach agreement on a sale, Professor Bin commenced a proceeding in the Tribunal in which it sought a declaration that the lease had been validly terminated, an order that AWR vacate the premises, and damages arising from AWR’s failure to pay the licence fee. AWR counterclaimed. It sought damages for loss suffered as a result of Professor Bin’s re-entries. It alleged that it remained ‘ready willing and able’ to perform its obligations under the heads of agreement. On 3 June 2021, the Tribunal confirmed the hearing date of 9 June 2021 but ordered that the counterclaim would not be heard then but would be determined at a later hearing.
On 6 September 2021, the Tribunal ordered that Professor Bin was entitled to possession of the premises, and declared that the lease had been validly terminated by Professor Bin. On 6 October 2021, the Tribunal ordered that the respondent deliver up possession of the premises by 11:59pm on 15 October 2021. AWR commenced an application for leave to appeal from the decision of the Tribunal. It then sought an order from this Court staying the Tribunal’s orders until the hearing of the application for leave to appeal and any appeal or further order. That application came on for hearing on 14 October 2021.
C. Should a stay be granted and if so should terms be implied?
The Tribunal concluded, in substance, that the lease was conditional on the entry into a contract of sale within a reasonable time and that that condition had not been satisfied, with the result that the lease was voidable. The Tribunal also found that Professor Bin ‘could not reasonably have been expected to do anything further to ensure that the parties entered into a contract on terms consistent with the’ heads of agreement. In reaching these conclusions, the Tribunal rejected AWR’s argument that the lease was a standalone arrangement, in the sense that Professor Bin remained bound by the lease independently of whether a contract of sale was signed, but was able, if so advised, to seek to enforce the separate obligation to purchase as contained in the heads of agreement.
The Tribunal also concluded:
Having also found that AWR breached the [heads of agreement], the appropriate measure of damages is an amount to reflect the $4,166.66 per month licence payable from the date the parties ought to have entered into the contract of sale, being within a reasonable period. In the circumstances a reasonable period is 30 days after 17 June 2020 when Professor Bin last tried to engage with AWR on the contract of sale terms. At the date of these reasons, that will be 13 months’ worth of payments which equates to $54,166.58.
AWR noted that the Tribunal had not in fact made an order that it pay those sums to Professor Bin. It was not clear why this was so. Possibly, it was because the Tribunal had not yet determined AWR’s counterclaim and there may be a set-off defence. Be that as it may, at present, a liability has been established.
When a party seeks an interlocutory injunction pending trial, they have to show that there is a serious question to be tried, that damages will not be an adequate remedy, and that the balance of convenience favours maintaining the status quo pending trial.[3] It is not, in reality, a series of separate tests. Rather, these factors are considered together in order to determine whether the interests of justice favour granting the relief sought; an assessment must be made of which course carries the least risk of injustice.[4] In terms of the Supreme Court Act 1986, the question is whether it is ‘just and convenient’ to make the order.[5] The Court has the power to impose ‘such terms and conditions as the court thinks fit’.[6]
[3]See, eg, Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 68 [19] (Gleeson CJ and Crennan J), 81-2 [65], 83-4 [71] (Gummow and Hayne JJ).
[4]Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, 73 [35] (Maxwell P and Charles JA).
[5]Supreme Court Act 1986 (Vic) s 37(1).
[6]Ibid s 37(2).
However, when the order sought is not to maintain the status quo pending a court’s determination of the parties’ rights but is instead to prevent an order that has already been made from coming into effect pending an appeal, an additional factor is introduced into the balancing exercise. That factor derives from the fact that the parties have already had a judicial determination of the dispute.[7] The party affected by the order is not simply a party with a claim, but is a party with a lawfully-established right. That party is entitled to a presumption that the judgment is correct and the onus to persuade the Court has to be discharged in that context.[8] It has been said that ‘exceptional circumstances’ must exist.[9] But it has also been said, perhaps with some tension, that there are no rigid rules.[10] If such a requirement is present, it is met if there is a real risk that failing to grant the stay would have the effect of rendering nugatory success in the appeal.[11]
[7]I include within this concept a determination of the parties’ rights by a statutory body, such as the Tribunal.
[8]Maher v Commonwealth Bank of Australia [2008] VSCA 122, [20] (Redlich and Dodds-Streeton JJA).
[9]Medical Practitioners Board of Victoria v Lal (2008) VAR 347, 349 [15], 349–50 [16] (Redlich and Weinberg JJA). Cf Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685, 694E (Kirby P, Hope and McHugh JJA) where the Court specifically rejected such a requirement.
[10]Maher v Commonwealth Bank of Australia [2008] VSCA 122, [23] (Redlich and Dodds-Streeton JJA).
[11]Ibid [26] (Redlich and Dodds-Streeton JJA).
Here, Professor Bin has indicated that it would not oppose an order staying the effect of the VCAT orders if, but only if, it is accompanied by a condition that AWR pay the amounts that the Tribunal has found that it should be paying in damages. AWR does not agree to the imposition of such a condition.
In determining whether or not to impose this condition on the grant of a stay, it is significant that Professor Bin is the holder of a decision in its favour. It may be the Tribunal’s decision is wrong, but if it is, it is not obviously so. Accordingly, I ought to approach the question on the assumption that AWR is liable to pay the sums found to Professor Bin.
In a very real sense, the question comes down to whether the sums of money, which on the present findings ought to be paid by AWR to Professor Bin, should remain in AWR’s hands pending hearing of the application for leave to appeal, or ought to be in Professor Bin’s hands pending hearing of the application for leave to appeal.
The material initially relied upon by AWR in support of its application for a stay did not establish that AWR was not able to pay the amounts referred to by the Tribunal, or that requiring it to do so would cause it significant harm, let alone sufficient harm to make it unfair to require it to do so. Indeed, its position was that it was ready, willing and able to purchase the property, which, if true, must mean that it had available to it the means of raising the $90,000 that would be required as a deposit.
The offer by Professor Bin to have the money retained in a trust account precludes any concern that AWR might not be able to recover the moneys if it ultimately succeeds in the appeal. If the moneys are in that trust account, they can in due course be delivered to Professor Bin, or returned to AWR.
If I were to stay the operation of the Tribunal’s order requiring AWR to vacate the premises without imposing such a condition, the effect would be to permit AWR to remain in Professor Bin’s premises and to conduct its business operations from there in circumstances where on the present findings it has no right to do so, and without it having to pay to Professor Bin the moneys that the Tribunal has determined it ought to be paying for the ability to do so.
In these circumstances, I consider it fair and in the interests of justice to require as a condition of the grant of interlocutory relief that AWR discharge in the meantime the liability that the Tribunal has found it has to Professor Bin.
D. What conditions should be imposed?
AWR contended that if I were to impose conditions, they should be no more than that it commence to pay an amount equivalent to the licence fee as from 1 November 2021 (in addition to the rent, of course), and that it make payments towards the arrears by weekly payments of $2,000 per week from 22 October 2021 for 12[12] weeks and then a final payment on 14 January 2022. The final payment would be $37,629.88. Its reasoning was that the amount found by the Tribunal of $54,166.58 ought to be increased having regard to the payments that ought to have been made between then and now, but reduced by $10,000 on the basis that it paid that much as a holding deposit under the heads of agreement. If this is done, the figure of $54,166.58 is altered to $51,629.88. If $24,000 is then taken off, being the twelve payments of $2,000, the amount is further reduced to $37,629.88. AWR filed a further affidavit sworn by its solicitor indicating that these amounts were what he was instructed were the most that AWR could sensibly afford.
[12]The applicant in its written submission mistakenly counted these to be 11 weeks.
Professor Bin contended that the present amount owing is $61,666.57, and sought to have those arrears paid by stages with a final payment on 1 January 2022.
I do not accept that the deposit of $10,000 paid by AWR should be taken into account. If AWR had entered into the sale agreement and associated licence agreement, it would have had to make these licence payments, notwithstanding that it had paid this deposit.
Also, it is not necessary to be too precise: the amounts paid are simply to prevent an injustice arising pending the hearing of the application for leave to appeal and any appeal. To the extent that they do not precisely mirror the amounts payable as licence fees, AWR may ultimately be required to pay a larger amount in damages, or Professor Bin may ultimately be required to pay some money back. That is for another day.
In the circumstances, I propose to impose conditions on the stay that AWR continue to pay the lease payments, and that in addition it make 12 weekly payments of $2,000 commencing from 22 October 2021, and an additional sum of $37,629.88 on 14 January 2022.
Further, the form of order ought to make it clear that if the payments are not made the stay will cease to take effect.
E. What form should the stay take?
The Tribunal ordered that AWR was entitled to possession of the premises, declared that there was an implied term in the lease agreement, and declared that the lease was validly terminated on 27 April 2021.
Professor Bin contended that there should only be a stay of the order for possession. I consider that the stay ought to apply generally to all three orders.
AWR also sought an order that Professor Bin be restrained from re-entering the property without further order. I am not persuaded that such an order is necessary or appropriate. I am prepared to assume that there is no risk in Professor Bin attempting to re-enter the property on the basis that it was justified in doing so by reason of the events that culminated in the Tribunal hearing. There is no reason to preclude it from seeking to re-enter in the unlikely event that other circumstances arise that would make it legal for it to do so. Equally, there is no reason to preclude it from seeking to re-enter without first having to obtain leave from the Court to do so if the conditions imposed on AWR are not met.
Accordingly, I will make the following order:
1.Subject to paras 2 and 3 below, the order made by the Victorian Civil and Administrative Tribunal on 6 September 2021 and para 2 of the order made on 6 October 2021 in proceeding number BP1631/2020 be stayed until the hearing and determination of the applicant’s application for leave to appeal and any appeal against those orders, or further order.
2.As a condition of the stay provided for by para 1 above, the applicant pay into the trust account of the solicitors for the respondent:
(a)$4,166.66 on or before the first day of each calendar month, commencing in November 2021, so long as the applicant remains in possession of the property at 1/5 Berends Drive, Dandenong South;
(b)$2,000, weekly, on or before 22 and 29 October 2021, 5, 12, 19 and 26 November 2021, 3, 10, 17, 24 and 31 December 2021, and 7 January 2022; and
(c)$37,629.88 on or before 14 January 2022.
3.In the event that any of the payments required to be made by para 2 above are not paid within three business days of the dates on which they are required to be paid, the stay contained in para 1 shall cease to have effect.
I will record in other matters that the sum in para 2 (a) is assessed by reference to the amounts payable under the lease agreement, and the circumstances that have led to the imposition of the obligation contained in para 2(b).
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