Bimem Nominees Pty Ltd v Methven Croydon Pty Ltd
[2016] VSC 473
•12 August 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2016 02844
| BIMEM NOMINEES PTY LTD (ACN 005 109 722) | Plaintiff |
| v | |
| METHVEN CROYDON PTY LTD (ACN 079 122 900) | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 August 2016 |
DATE OF JUDGMENT: | 12 August 2016 |
CASE MAY BE CITED AS: | Bimem Nominees Pty Ltd v Methven Croydon Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2016] VSC 473 |
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JUDICIAL REVIEW – Application for leave to appeal – Appeal with respect to refusal of interim injunctive relief by Victorian Civil and Administrative Tribunal – Effect of refusal as pre-empting final relief – Exercise of discretion by Court to grant injunctive relief – Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 – Paringa Mining & Exploration Co Pty Ltd v North Flinders Mines Ltd (1988) 165 CLR 452 – Victorian Civil and Administrative Tribunal Act 1998, s 148(1) and (7).
RETAIL LEASES – Construction of lease and sale of business provisions as to fixtures and fittings – Exclusive jurisdiction Victorian Civil and Administrative Tribunal – Retail Leases Act 2003, s 89.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D. Robertson QC Ms A. Smietanka | Mahons with Yunken and Yunken |
| For the Defendant | Mr P. Duggan | DST Legal |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Principles applicable with respect to appeals............................................................................... 1
Nature of the appeal.......................................................................................................................... 7
Factual matters.................................................................................................................................. 10
Questions of Law.............................................................................................................................. 13
Questions of Law (a)....................................................................................................................... 13
Question of Law (b) and (c)............................................................................................................ 19
The Plaintiff’s application to the Court for injunctive relief................................................... 20
Conclusion and orders.................................................................................................................... 22
HIS HONOUR:
Introduction
This is an application by Bimem Nominees Pty Ltd (“the Plaintiff”) for leave to appeal from an order of Deputy President Lulham of the Victorian Civil and Administrative Tribunal made on 15 July 2016 in proceeding number BP939/2016 (“Tribunal proceeding”), between the Plaintiff as Applicant and Methven Croydon Pty Ltd (“the Defendant”) as respondent, refusing the Plaintiff’s application for an interim injunction (“Tribunal Order”). The application is made pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”).
The Plaintiff submits that, if leave is granted, the appeal should be heard, determined and allowed forthwith, as is permitted by rule 4.14 of Chapter II of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008. The Defendant did not oppose such a course, though reserving its position with respect to the leave application and any appeal—and, ultimately, arguing against the Plaintiff’s application in both respects. I acceded to a “rolled up” hearing of the leave application and any appeal in light of the position of the parties and the utility of this course; a course I have previously reflected upon favourably.[1]
[1]See Swan v Uecker [2016] VSC 313, [14].
In the proposed appeal, the Plaintiff seeks orders that the Tribunal Order be set aside and there be substituted an interlocutory injunction restraining the Defendant from tearing down and removing certain fittings and fixtures from retail premises at 2 Croydon Road, Croydon, as it threatens to do, pending final determination of the Tribunal proceeding. The form of the interlocutory injunction sought is set out in the Plaintiff’s proposed Notice of Appeal.
Principles applicable with respect to appeals
The Plaintiff relies on the decision of the Court of Appeal in Secretary to the Department of Premier and Cabinet v Hulls.[2] On the basis of this decision, it submits that leave should be granted because the “justice of the case” requires it for the follow reasons:[3]
(a)The Plaintiff has identified questions of law that arise from the Tribunal’s order. These questions of law are set out in its proposed Notice of Appeal.[4]
(b)The questions of law are “important” to the appeal “succeeding or failing” in that if the Court finds an error of law in the Tribunal’s order, those errors may have led and, the Plaintiff submits would have led, to a Tribunal decision in its favour.[5]
(c)The questions of law bear upon the granting of the relief sought, in that all questions relate to the proper application of the law relating to the grant of interim and interlocutory injunctions; if there is shown to be an error the Plaintiff’s claim to relief will be “advanced” in that the Plaintiff contends that the Tribunal decision would have been different.[6]
(d)“[T]here [is] a real or significant argument to be put on [those] question[s] of law,”[7] in that there is “sufficient doubt” about the Tribunal’s decision to justify a grant of leave.[8]
(e)The proper application of the law in relation to interim and interlocutory injunctions has “considerable public importance” in that applications for injunctions “not infrequently arise”. It is in the public interest that any error in the application of the law in this area be corrected.[9]
(f)There would be “substantial injustice” to the Plaintiff to leave the Tribunal Order unreversed, if it is found to be tainted by error.[10] The substantial injustice lies in the fact that the refusal of an interim injunction will result in the destruction of the subject matter of the Tribunal proceeding. The refusal is tantamount to a final determination of this dispute as the lack of any interim or interlocutory injunctive relief is likely to result in the Defendant removing the items in dispute, as it threatens, and so prevent the Plaintiff from effectively seeking the final relief for which it has applied in the Tribunal Proceeding.
[2][1999] 3 VR 331 cited in Office of the Premier v Herald and Weekly Times Pty Ltd (2013) 38 VR 684.
[3][1999] 3 VR 331 335 [8].
[4][1999] 3 VR 331.
[5][1999] 3 VR 331 at 335 [9].
[6][1999] 3 VR 331 at 335 [9].
[7][1999] 3 VR 331 at 337 [16].
[8][1999] 3 VR 331 at 336 [8].
[9][1999] 3 VR 331 at 336 [11].
[10][1999] 3 VR 331 at 336 [14].
Further, the Plaintiff submits that it is not proper to refuse leave as the Tribunal Order is an order which is “dispositive of the proceeding”.[11] This Order is, the Plaintiff submits, dispositive in the sense that if there is no order restraining the Defendant from carrying out its threat to remove the items in dispute, it would be futile for the Plaintiff to pursue its desired remedy, which is a final injunction. Contrary to the Defendant’s argument, the Plaintiff submits that the refusal of the interim injunction was not merely a matter of practice and procedure; and that the Defendant’s argument in this respect is not supported by the case on which it relies, namely, Paringa Mining & Exploration Co Plc v North Flinders Mines Ltd.[12]
[11]Shelcon Pty Ltd v Duhovic (2007) 27 VAR 442 at 447 [32].
[12](1988) 165 CLR 452 at 457.
In opposition to the applications, the Defendant submits that the Plaintiff’s application at first instance for an injunction necessarily involved the exercise of the Tribunal’s discretion. Thus, the Defendant contends that because of this discretionary element, the Plaintiff must overcome a strong presumption in favour of the Tribunal’s decision; relying in this respect on Mace v Murray, where the High Court said:[13]
A court of appeal is not justified in interfering with the decision appealed from unless it reaches a clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a view different from that which the judges of the court of appeal would have taken if they had been in his place, but has failed properly to exercise the discretion committed to him.
[13]Mace v Murray (1955) 92 CLR 370 at 378 (citations omitted).
The Defendant submits that these considerations apply with even greater force when the matter of the appeal (as here) goes to practice and procedure.[14] The Victorian Court of Appeal recently stated:[15]
While there are no rigid or exhaustive criteria governing appeals from interlocutory decisions of practice and procedure, generally an appellate court will expect an applicant for leave to appeal from such decisions to establish both error of principle and that the decision appealed from will work a substantial injustice to one of the parties if left unreversed.
More particularly, the Defendant submits that first instance decisions as to the granting or withholding of interlocutory injunctions (as here) are exercises of discretion on a point of practice or procedure; relying, as indicated previously, on the Paringa Mining case.
[14]Adam P Brown Mail Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177.
[15]The Commissioner of the Australian Federal Police v Dong Jua International [2016] VSCA 15, [31].
As a preliminary to addressing some of these submissions more directly, it is helpful to consider the provisions of s 148 of the VCAT Act and some further authorities with respect to the proper approach of the Court with respect to such appeals.
Section 148(1) of the VCAT Act provides:
A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding—
(a)if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or
(b)in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.
It follows from this provision that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law, and secondly, that the Court gives leave to appeal. The legislative policy underlying these provisions is that “VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal.”[16] It follows that “[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal.”[17]
[16]Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6 and Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48 at 55 [28].
[17]Boucher v Dandenong Ranges Steiner School Inc (2005) 145 LGERA 21, [15] citing Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.
The leave requirement under s 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[18]
The requirement for leave under s 148(1) of the VCAT Act “is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal”.[19] It also confers a discretion about whether to grant leave[20] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[21] It will ordinarily be necessary (in addition to a clearly articulated question of law)[22] for an applicant to make out a prima facie case[23] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[24]
[18](2011) 83 ATR 832 at 833–4 [3].
[19]Commissioner of State Revenue v STIC Australia Pty Ltd (2010) 81 ATR 682 at 687 [10].
[20]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48.
[21]See Morris v R (1987) 163 CLR 454 at 475.
[22]Osland v Secretary to the Department of Justice [No 2] (2010) 241 CLR 320 at 333 [21].
[23]Morris v R (1987) 163 CLR 454 at 475; Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335.
[24]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd (2006) 63 ATR 65 at 69 [20], 77 [65].
In considering an application of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission said:[25]
[25](2005) 222 CLR 115 at 136 [64].
Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.[26] The focus of attention is on the substance of the decision and whether it has addressed the “real issue” presented by the contest between the parties.
Similarly, in Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc, Ashley J said:[27]
This Court has said more than once that it should not examine briefly stated reasons by an expert Tribunal in an over-legalistic manner or by the over-zealous drawing of inferences in order to disclose some supposed error; although where unambiguous language is used, the user should be taken to mean what the words say. I should add that the Court is not entitled to interfere with the Tribunal’s decision unless it is satisfied that there was in fact a vitiating error of law. It is not enough for the appellant to show that the Tribunal’s reasons for its decision are so expressed as to suggest the possibility that it proceeded upon a wrong view of the law. In support of the several propositions that I have just stated I refer to Portland Properties Pty Ltd v Melbourne & Metropolitan Board of Works,[28] Michaelis Bayley (Vic) Pty Ltd v Melbourne & Metropolitan Board of Works[29] and Teston Investments Pty Ltd v Melbourne & Metropolitan Board of Works.[30]
Additionally, “[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons.”[31]
[26]Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575, 597. Cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 348 [74].
[27](Unreported, Supreme Court of Victoria, Ashley J, 21 December 1994) [13].
[28](1971) 38 LGRA 6 at 18.
[29](1980) 44 LGRA 65 at 67–8.
[30](1985) 62 LGRA 346 at 349–50.
[31]The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442, [59].
In terms of the party submissions, it is clear from the authorities to which reference has been made that the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court and that a decision of such a tribunal is not to be interfered with absent a vitiating error of law. It also follows from these authorities that, absent such an error, the exercise of a discretion conferred upon a tribunal of this kind—such as that inherent in the power to grant injunctive relief—should not be interfered with.[32]
[32]The Tribunal had power to grant an injunction in the Tribunal Proceeding pursuant to s 123(1) of the VCAT Act. Section 123(1) allows the Tribunal to grant an injunction “if it is just and convenient to do so”. This discretion to grant an injunction is “to do so in conformity with equitable principles”. See The Herald & Weekly Times Pty Ltd v State of Victoria (2006) 25 VAR 124 at 134 [27].
As the High Court said in Paringa Mining, this is particularly the case “where an interlocutory order does not determine the rights of the parties”, observing that such an order “would usually be an exercise of discretion on a point of practice or procedure”.[33] It is, however, also clear from Paringa Mining that the refusal of an interlocutory injunction, which refusal might preclude the grant of substantive relief in the proceeding, “may amount to something more than a decision on a mere matter of practice and procedure”.[34]
[33](1988) 165 CLR 452 at 457.
[34](1988) 165 CLR 452 at 459.
In the present circumstances, I am of the opinion that the refusal by the Tribunal of the Plaintiff’s application for interlocutory injunctive relief—though interim or interlocutory—did have the effect of precluding the possibility of the Plaintiff obtaining the final relief sought in the proceedings in the event of its being successful. The particular circumstances of the matter, which makes this position clear, are considered in the reasons which follow.
For these reasons, I reject the Defendant’s contention that the Plaintiff’s application is precluded on the basis that its subject, the Tribunal Order, goes merely to matters of practice and procedure.
For the reasons which follow, I am satisfied that the Plaintiff has both established a question of law which warrants the grant of leave to appeal and, further, has been successful in this appeal. Were this simply an application for leave to appeal, I would, on the material to which reference has been made in these reasons, find that the Plaintiff has established that the “justice of the case” as discussed in Secretary of the Department of Premier and Cabinet v Hulls,[35] and that leave to appeal should be granted.
[35][1999] 3 VR 331.
Nature of the appeal
The Proposed Notice of Appeal which is exhibited to the Affidavit in Support of Application for Leave to Appeal sworn by Patrick Crowley Hartl on 19 July 2016 identifies the relevant question of law, the grounds of appeal and the orders sought, in the following terms:
ORDERS SOUGHT IN THIS APPEAL
The Appellant seeks orders that:
1. the appeal be allowed;
2. the Order of the Tribunal made 15 July 2016 dismissing the Appellant’s (Applicant’s) application for an interim injunction be set aside and there be substituted an injunction order restraining the Defendant, whether personally or by its servants or agents or otherwise from removing, alternating or otherwise interfering with:
a. the fixed partitioning;
b. the fixed workstations;
c. the reception desk;
d. the cabling —
or any part thereof at 2 Croydon Road, Croydon in the State of Victoria, until the final determination of the Application in the Tribunal or further order;
3. the Respondent pay the Appellant’s costs of the appeal; and
4. there be such other relief as this Court deems appropriate.
QUESTIONS OF LAW
The questions of law upon which the appeal is brought are as follows:
(a)whether the Tribunal correctly applied the law with respect to whether an interim injunction should have been granted to preserve the status quo pending the determination of the substantive Application to the Tribunal;
(b)whether the Tribunal wrongly construed the Sale of Business Agreement (which was Exhibit KGFG-6 before the Tribunal) as providing for the sale to the Respondent of the items in dispute between the Appellant and the Respondent, namely:
(i)the fixed partitioning;
(ii)the fixed workstations;
(iii)the reception desk; and
(iv)the cabling—
or any part thereof at 2 Croydon Road, Croydon in the State of Victoria (“the items in dispute”) or wrongly found that there was not a serious question to be tried as to that issue.
(c)whether the Tribunal wrongly construed the Lease (which was Exhibit KGFG-7 before the Tribunal) as not providing for the lease to the Respondent as part of the leased premises of the items in dispute between the Appellant and the Respondent or wrongly found that there was not a serious question to be tried as to that issue.
GROUNDS OF APPEAL
The grounds of appeal are as follows:
(a)The learned Deputy President erred in failing to construe the definition of “premises” in clause 1.1 of the Lease by holding that it included the items in dispute or at least that there was a serious question to be tried as to whether it included items in dispute.
(b)The learned Deputy President erred in failing to construe the expression “office furniture” in item 7 of Schedule 3 to the Business Sale Agreement by holding that it included the items in dispute or at least that there was a serious question to be tried as to whether it included the items in dispute.
(c)In observing that the plan incorporated in the Lease was also part of the Business Sale Agreement, the learned Deputy President failed to observe that it was only part of the Business Sale Agreement in as much as it was incorporated in the unexecuted copy of the Lease which was Schedule 7 to the Business Sale Agreement.
(d)In considering the “premises” defined in the Lease and whether the disputed items were part of the leased premises so defined, the learned Deputy President failed to address the concepts of the fixed improvements and the installations of the landlord referred to in clause 1.1 of the Lease other than to observe that the Items in dispute were not expressly included in the definition of “premises” by virtue of item 5 of the schedule to the Lease.
(e)The learned Deputy President erred in failing to address properly or at all the question whether there was a serious question to be tried as to whether the items in dispute were part of the leased premises under the Lease and instead finally determined the disputed questions of fact.
(f)The learned Deputy President erred in failing to address properly or at all the question of balance of convenience.
(g)The learned Deputy President erred in holding that the Applicant had to establish its ownership of the items in dispute in order to establish that there was a serious question to be tried.
(h)The learned Deputy President erred in failing to recognise that the Business Sale Agreement and Lease were part of the same transaction of series of transactions such that it was not open to the Tribunal to treat as relevant (as it did) the issue of ownership as between the Appellant and the Respondent of the items in dispute.
(i)The learned Deputy President wrongly treated his finding that the Appellant had not shown that it owned the items in dispute as relevant to the question whether, as between landlord and tenant (the Appellant and the Respondent), the Appellant had leased the items in dispute to the Respondent or there was, at least, a serious question to be tried as to whether the Appellant had leased the items in dispute to the Respondent.
(j)The learned Deputy President wrongly held that the Appellant had not shown that damages would not be an adequate remedy or that there was, at least, a serious question to be tried as to whether damages would not be an adequate remedy in circumstances where the items in dispute were shown in the plan incorporated in the Lease as a salient part of the leased premises, the tenant was prohibited under the Lease from making any alteration or addition to the leased premises without the landlord’s written consent and, as the parties were agreed, the items in dispute were of substantial significance in the assessment of the current market rent for the premises, an assessment which was to be made as at 1 May 2016 and potentially at the start of each of four further terms of five years beginning on 1 May 2018 under options to renew contained in the Lease.
As will be seen from the proposed Notice of Appeal, the Plaintiff seeks the order from this Court pursuant to s 148(7) of the VCAT Act; that is, an interlocutory injunction in substitution for the Tribunal’s order dismissing its interim injunction application.
Factual matters
By a lease dated 30 April 2015 (“the Lease”), the Plaintiff leased the premises at 2 Croydon Road, Croydon in the State of Victoria (“the Premises”) to the Defendant.
On 15 July 2016, the Plaintiff commenced the Tribunal proceeding against the Defendant in relation to:
(a)fixed partitioning;
(b)fixed workstations;
(c)a reception desk; and
(d)cabling
at the Premises (“the items in dispute”).
The Plaintiff’s case is that the items in dispute are part of the Premises as defined in the Lease and are leased to the Defendant. Unless restrained, the Defendant threatens to tear down and remove the items in dispute.
It is common ground that the Tribunal has exclusive jurisdiction to determine the dispute pursuant to s 89 of the Retail Leases Act 2003.
At about 4.00pm on 15 July 2016, the Tribunal constituted by Deputy President Lulham heard an application in the Tribunal proceeding by the Plaintiff for an interim injunction until the determination of an application for an interlocutory injunction. The form of the interim injunction sought by the Plaintiff which was, in substance, to restrain the tearing down and removal of the items in dispute by the Defendant, is set out in the Tribunal application.
At the end of the hearing, the Tribunal made orders dismissing the Plaintiff’s application for an interim injunction, made no order as to costs and adjourned the proceeding to a directions hearing at a date to be fixed. Deputy President Lulham gave oral reasons for his decision on 15 July 2016.[36] It appears that the Plaintiff has not sought written reasons from the Tribunal under s 117(2) of the VCAT Act.[37] The status quo is presently protected by undertakings to the Court set out in the Orders of McMillan J of 21 July 2016.
[36]See Transcript of Tribunal proceeding (15 July 2016), pp 24-6 (substantive matters) and p 32 (costs).
[37]Whether or not the provision of written reasons may or may not be desirable is not, in my view, of any significance in the present proceedings, having regard to the detail provided in Deputy President Lulham’s oral reasons, which was perfectly reasonable and appropriate in all the circumstances.
In the absence of the provision of formal written reasons by the Tribunal, the Defendant seeks to raise issues with respect to the Tribunal proceeding. Thus, the Defendant’s solicitor put into evidence her account of the Deputy President’s reasons and, with reference to the account of the Plaintiff’s evidence in this respect, says that while the opposing solicitors’ accounts are compatible with each other, they do not entirely coincide completely—
(a)The Plaintiff’s solicitor contends that the Tribunal found as facts, “The [Defendant] bought the business. The Business Sale Agreement is sufficiently wide to capture these items. The [Plaintiff] has not shown it owns the items to establish there is a serious question to be tried”.[38]
(b)The Defendant’s solicitor contends that the Tribunal found as a fact that the Defendant had “bought the disputed items”.[39]
[38]See Affidavit of Patrick Crowley Hartl (sworn 19 July 2016).
[39]See Affidavit of Dominica Sophia Tannock (sworn 27 July 2016).
On this basis, the Defendant submits that, in these circumstances, to the extent (if any) that two accounts materially conflict, Williams’ Civil Procedure Victoria states the general rule is that “the version which supports the decision appealed from will be accepted in the absence of any fair and practicable method of resolving the conflict”.[40] In my view, however, nothing flows from these submissions or this position in the present circumstances. The transcript of the Tribunal proceedings is the appropriate and significant record for the purpose of these proceedings and there is no basis to be seeking to look behind it and to rely on what are, in all probability, incomplete and impressionistic recollections of the solicitors involved. This is, nevertheless, not a criticism of them, but an observation with respect to the likely position in these circumstances.
[40](LexisNexis) [58.0.6.160].
In any event, the Defendant’s point is that, on either party’s version of the Tribunal’s reasons, the Tribunal found that the Plaintiff’s claim failed on the evidence. This was, the Defendant says, a finding of fact central to the Tribunal’s refusal to grant the injunction. Thus, it is submitted, as a finding on a question of fact is not now properly appealable pursuant to s 148 of the VCAT Act. Continuing, the Defendant contends that, having made the findings of fact, the Tribunal applied the correct legal principles in making the order: the Tribunal refused the injunction because the Plaintiff had not established there was a serious question to be tried; nor had the Plaintiff shown that damages would be an inadequate remedy.
Questions of Law
Questions of Law (a)
In relation to Questions of Law (a),[41] the Plaintiff submits that the question whether the Tribunal applied the correct legal test with respect to whether an interim injunction should have been granted to preserve the status quo is a question of law.[42] Moreover, the question of whether the Tribunal erred in its application of the legal test relating to interlocutory injunctions, has been held to be a question of law.[43] In this context, the Plaintiff refers to and repeats grounds of appeal (e), (f), (g), (h) and (i) set out in its Plaintiff’s proposed Notice of Appeal.
[41]See above, [17].
[42]Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771 at 783 [48] citing Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd [2010] 186 FCR 410. The Plaintiff notes that Cosmopolitan Hotel (Vic) Pty Ltd was appealed to the High Court of Australia, however, not in relation to this point.
[43]Brady Constructions v Everest Project Developments [2009] VSC 622.
More particularly, the Plaintiff contends that the Deputy President erred in failing to address properly or at all:
(a)whether there was a serious question to be tried as to whether the items in dispute were part of the property leased to the Defendant by the Plaintiff under the Lease; and/or
(b)the question of balance of convenience.
Rather, the Plaintiff submits that the Deputy President, by finding that the Plaintiff had failed to establish its ownership of the items in dispute, and relying on that finding to dismiss the application for an interim injunction, made a finding which finally determined the dispute. The Plaintiff also submits that the Deputy President erred in holding that the Plaintiff had to establish its ownership of the items in dispute in order to establish that there was a serious question to be tried. In this respect, the Plaintiff contends that it will never need to establish its ownership of the items in dispute. To succeed ultimately, it says that it need only establish that under the Lease, on its true construction, the items in dispute are part of the property leased by the Plaintiff to the Defendant. Thus it is submitted that at the interim or interlocutory stage, it need only raise a serious question that the items in dispute were part of the property leased.
The position of the Defendant in the context of this question is not at odds with respect to the applicable principles as advanced by the Plaintiff but, rather, to submit that the evidence before the Tribunal did not support the Plaintiff’s application for injunctive relief.
In relation to the evidence, the Defendant says that it is uncontroversial that the only evidence before the Tribunal was the affidavit sworn by Kurt Gerhard Friedrich Gunther on 15 July 2016.[44] With respect to this evidence, the Defendant submits, more particularly:[45]
[44](“the Gunther affidavit”).
[45]Defendant’s Outline of Submissions (28 July 2016) [16]–[17] (emphasis in original).
16.The Gunther affidavit and its exhibits can be summarised thus:
a)Gunther is a director of the plaintiff;
b)Gunther is also a director of Rosier Owners Corporation Management Pty Ltd (formerly Rosier Real Estate Pty Ltd) (“the business vendor”).
c)Gunther is a personal guarantor of the performance of the business vendor’s obligations.
d)The business vendor conducted a real estate business from the subject premises at 2 Croydon Road, Croydon until 30 April 2015. On that date it sold a substantial part of its business (but not all of it) to the defendant. The sale price included $20,000 as the agreed value of certain plant and equipment.[46]
[46]See the Business Sale Agreement (Gunther affidavit, Exhibit KGFG 6) and particularly in clause 1 the defined terms “Business Assets”, “Plaintiff and Equipment”, and “Excluded Assets” and the particular items listed as being part of the sale in schedule 3 and the further items listed as being excluded from the sale in schedule 5.
e)The subject matter of the sale was relevantly set out in a document (“the Business Sale Agreement”) which set out a list of “Business Assets” the subject of the sale and also “Excluded Assets” to be excluded from the sale.[47]
[47]See clause 3.1.1.1 of the Business Sale Agreement (Gunther affidavit, Exhibit KGFG 6).
f)The plant and equipment in the Business Sale Agreement relevantly included “all office furniture including carpets and blinds.”
g)The excluded assets included that part of the business vendor’s business which it conducted as a managing agent of owners corporations and also 5 cars, 5 office shredders, 6 franking machines and the contents of two particular offices other than at 2 Croydon Road, Croydon. (None of these excluded items have ever been subsequently claimed by the defendant).
h)As part of the Business Sale Agreement the defendant entered into a lease with the plaintiff for the business premises at 2 Croydon Road, Croydon commencing 1 May 2015.[48]
[48]See Schedule 7 of the Business Sale Agreement (Gunther Affidavit, Exhibit KGFG 6).
i)A dispute has recently arisen between the plaintiff and the defendant as to whether certain office furniture described by the plaintiff as “fixed partitioning, workstations, a reception desk and cabling” located at 2 Croydon Road, Croydon (“the disputed items”) belong to the plaintiff or the defendant.
17.As the sole evidence in support of a surprise injunction application at the Tribunal the Gunther affidavit contains some noteworthy omissions:
a)There is no direct assertion by Mr Gunther that the plaintiff actually owns (or ever owned) any of the disputed items.
b)There is no suggestion that the plaintiff installed any of the disputed items in the premises such as to bring them within the definition of “landlord’s installations” and/or “premises” for the purposes of clause 2.2.11 of the lease upon which the plaintiff now relies.
c)There is no evidential material capable of explaining how readily removable items such as the disputed items that had apparently been neither installed by the landlord nor ever owned by the landlord could reasonably come within the meaning of “landlord’s installations” and/or “premises” for the purposes of the lease.
d)There are no purchase receipts, maintenance receipts, tax depreciation schedules, insurance policies, equipment leases or other documentation evidencing that any of the disputed items were ever treated as the plaintiff’s own property during the course of its dealings with the business vendor and/or any other third parties.
e)There is no explanation as to how or why the disclosure statement the plaintiff provided to the defendant prior to both entry into the lease and the Business Sale Agreement failed to list as “existing structures, fixtures plant and equipment in the premises” for the purposes of section 1.4 of the disclosure statement any of the disputed items which the plaintiff now claims.
f)There is no suggestion that the business vendor is (or has ever been since the business sale) in any way compromised or embarrassed in the ongoing operation of its remaining owners corporation management business by the defendant’s exclusive possession since 30 April 2015 of each of the disputed items.
g)There is no evidence proffered as to why, in the absence of an injunction, the plaintiff’s interests would not be adequately protected by an order in its favour for damages in the event that the defendant is ultimately found to have breached the lease in relation to any of the disputed items.
Contrary to the argument of the Defendant implied at paragraph 17 of its submissions (as set out above), the Plaintiff submits that it would not be right to construe the expression “the installations of the landlord in the premises” in the definition of “landlord’s installations” in clause 1.1 of the Lease as if it required proof that the landlord itself or by its servants or agents had installed the relevant items as distinct from some predecessor in title or previous tenant of the landlord. The expression is, it is said, apt to include any installation on the premises at the time of the commencement of the Lease of which possession, under the Lease, is to pass to the tenant. Thus, the Plaintiff submits that it is not open to the Defendant to contend that the items in dispute were not part of the property leased to it under the Lease because the Plaintiff has not, by evidence, excluded the possibility that, as between it and some third person, that third person might have some interest in the items. In effect, it is said that, this would be to allow the Defendant in advancing such a contention to plead the jus tertii. A tenant is estopped, moreover, from disputing the title of his, her or its landlord.[49] It appears to be clear, as the Plaintiff submits, that in any event, the former tenant, Rosier Real Estate Pty Ltd, cannot contend that the Plaintiff as landlord had no right to lease the items in dispute to the Defendant: Rosier Real Estate Pty Ltd proffered the Lease to the Defendant under the Business Sale Agreement[50] and cannot derogate from it.
[49]Warner v Sampson [1959] 1 QB 297 at 316.
[50]See clause 6.2 and Schedule 7 of the Business Sale Agreement.
Thus, the Plaintiff contends that the Tribunal was wrong to hold that the items in dispute had been bought by the Defendant under the Business Sale Agreement in that it wrongly construed item 7 of Schedule 3 of the Business Sale Agreement as extending to the items in dispute or, at the very least, was wrong in not holding that the Plaintiff’s contention to the contrary raised a serious question to be tried. The Plaintiff also submits that its contention that the items in dispute were leased by the Plaintiff to the Defendant under the Lease because the premises as depicted in the plan included in the Lease showed the Premises as fitted out office premises incorporating the items in dispute or because of the definition of “landlord’s installations” in the Lease was correct or, at the very least, raised a serious question to be tried.
In my opinion, the submissions of the parties to which reference has been made, together with the evidentiary material relied upon in support of these submissions indicates very clear a prima facie case, a serious question to be tried, in the sense explained by the High Court.[51] Thus, issues of fact and law are highlighted which must be tested, argued and determined with the benefit of a full trial in the Tribunal. It is not appropriate for the Court to pre-empt this process in any way by expressing views now with respect to the legal analysis and position on construction of the Business Sale Agreement or the Lease as expressed or implied in the Tribunal’s reasons, save to emphasise that these matters require the benefit of the usual trial process. Moreover, a particular and important aspect of the Tribunal decision is that the refusal of interim or interlocutory injunctive relief as has occurred has the effect in the present circumstances of a final determination of the Plaintiff’s rights with respect to the state of the premises and its fitout. Moreover, the Defendant’s attempt to characterise the question of law for the Court as depending on whether there was no evidence or some evidence of particular matters before the Tribunal is misplaced.[52] The questions of law for the Court relate to the proper legal approach in an interim or interlocutory injunction application and the proper assessment of whether there was a prima facie case, a serious question to be tried, concerning the construction of the contractual documents.
[51]See Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 68 [19] and 81-4 [65]-[72]. See also Mendonca v Mason [2013] VSCA 280 [36]-[38].
[52]Defendant’s Outline of Submissions (28 July 2016) [14]-[17].
Moreover, the Plaintiff submits, and in my view correctly, that the Deputy President wrongly held that the Plaintiff had not shown that damages would not be an adequate remedy or that there was, at least a serious question to be tried as to whether damages would not be an adequate remedy. I accept that, as submitted by the Plaintiff, the circumstances do show that damages would not be an adequate remedy:
(a)the removal of the items in dispute would change the character of the Premises as leased by the Plaintiff to the Defendant from being fitted out office premises as depicted in the plan included in the Lease to being a bare shell;
(b)the operation of the Lease and the commercial advantages and disadvantages associated with the rent review provisions, the exercise of the successive options to renew and the prohibition of any alteration or addition to the Premises by the tenant without the consent of the landlord contained in clause 2.2.11 of the Lease would be radically changed by the removal of the items in dispute;
(c)the presence or absence of the items in dispute would have a substantial effect on the assessment of market rent as at 1 May 2016, which is the first rent review date (approximately 11%);
(d)the removal of the items in dispute would affect the assessment of the current market rent, not only as at 1 May 2016 but as at each of the four succeeding rent review dates, 1 May 2018, 1 May 2023, 1 May 2028 and 1 May 2033 (in the event that the succeeding options to renew were exercised). It is not reasonable to attempt to assess now what the possible rent review circumstances might be in those future years; and
(e)the removal of the items in dispute would result in them becoming worthless.
A further aspect of these matters discussed in the course of the appeal hearing was the inherent additional difficulty in assessing damages if it should be that it is established that removal of the disputed fittings would have an impact on rent reviews under the Lease or any further, renewed, terms. If this proves to be an element in the assessment of damages a failure to maintain the status quo now is likely to have the effect of transforming the proceedings from determination of entitlements by reference to the Lease and Business Sale Agreement provisions and, perhaps, some other factual matters into a proceeding involving valuation evidence as to probable rent review consequences. This transformation necessarily carries with it significant uncertainties and consequences in terms of time and cost. This is all to be considered in light of the position conceded by the Defendant at the appeal hearing that its present prejudice is principally having to store the new fixtures and fittings which it has had delivered to it—and in circumstances when it is conceded that it is presently paying no storage fees. Moreover, it could not be said that its having spent money on purchasing the business or on new fixtures and fittings is a relevant prejudice in the present circumstances prior to obtaining the Plaintiff’s consent to their installation or establishing the rights it asserts in the Tribunal proceedings.
For these reasons, I do not accept the Defendant’s submissions that damages would be readily and precisely calculable by the Plaintiff and that damages would be a perfectly adequate remedy for a commercial landlord in the Plaintiff’s position.[53] In my view it is clear that the balance of convenience favoured—and continues to favour—the grant of injunctive relief as sought for the purpose of maintaining the status quo.
[53]Defendant’s Outline of Submissions (28 July 2016) [19]–[20].
For these reasons, it also follows, in my view, that either refusing leave to appeal or dismissing the appeal would, contrary to the Defendant’s submissions, cause substantial injustice to the Plaintiff.[54] This is particularly so given the matters I have highlighted were the status quo not to be maintained.
[54]Cf Defendant’s Outline of Submissions (28 July 2016) [18]-[20].
Question of Law (b) and (c)
In relation to Questions of Law (b) and (c), which go to the construction of the Business Sale Agreement and the Lease, the Plaintiff submits that the proper construction of a contract is a question of law. In this respect, the Plaintiff refers to and repeats grounds of appeal (a), (b), (c) and (d) as set out in the Plaintiff’s proposed Notice of Appeal.
In Bulasa v Baytown Properties Pty Ltd and Rob Bassett-Smith,[55] a case involving a lease and the proper construction of a phrase in that lease, Gillard J said that: the question of “construction of a contract is a question of law.” As the Plaintiff submits, this position applies equally with respect to construction of the Business Sale Agreement and the Lease.[56]
[55][2003] VSC 248 at [39].
[56]Exhibit KGFG-7 before the Tribunal.
It follows from the previous discussion that I do not accept the Defendant’s argument that the Plaintiff failed on the facts. The question is whether the items in dispute are part of the property sold under the Business Sale Agreement (as the Defendant argues) or part of the property leased to the Defendant under the Lease (as the Plaintiff argues). These are questions of construction of those contractual documents. These are not questions of fact.
The Plaintiff’s application to the Court for injunctive relief
The Plaintiff submits that, pursuant to s 148(7) of the VCAT Act, it is appropriate for this Court to set aside the Tribunal Order and substitute for it an interlocutory injunction pending final determination of the Tribunal proceeding. This would preserve the status quo until the determination of the Tribunal proceeding.
To grant an interlocutory injunction, the Court has to be satisfied as to “two main inquiries”:
(a)firstly, that there is a prima facie case, a serious question to be tried; and
(b)secondly, that the “inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted”.[57]
[57]See Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 68 [19] and 81-4 [65]-[72]. See also Mendonca v Mason [2013] VSCA 280 [36]-[38].
To establish a prima facie case, the Plaintiff is not required to establish that “it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”.[58]
[58]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 82 [65].
In my opinion, the Plaintiff satisfies those main inquiries; both for the preceding reasons and on the basis of the material on which the Plaintiff relies and to which I now refer.
In support of the inquiry as to a prima facie case, the Plaintiff relies on the Gunther affidavit filed in support of the Tribunal application.[59] In support of the inquiry as to balance of convenience, the Plaintiff relies on:
(a)the threat by the Defendant to destroy and remove items in dispute;[60] and
(b)the effect of the removal of the items in dispute to the Plaintiff’s revisionary interest in the leased premises.[61]
[59]Affidavit of Mr Patrick Crowley Hartl (sworn 19 July 2016) Exhibit PCH-4.
[60]Gunther affidavit, Exhibit KGFG-13.
[61]Gunther affidavit, [18]–[19].
In Bradto Pty Ltd v State of Victoria,[62] the Court of Appeal said:
whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong”, in the sense of granting an injunction to a party who fails to establish his right at trial, or in failing to grant an injunction to a party who succeeds at trial.
Having regard to the Defendant’s threat to destroy and remove the items in dispute, any decision to refuse an interlocutory injunction would dispose of the Plaintiff’s ability to obtain the final order sought by the Plaintiff in the Tribunal.
[62](2006) 15 VR 65 at 24-35.
The Plaintiff submits that it is appropriate for this Court to exercise its discretion under ss 148(7)(b) or (d) of the VCAT Act to grant an interlocutory injunction pending the final determination of the VCAT Application. The Court will not, the Plaintiff says, be required to resolve disputed questions of fact in order to determine whether to grant the injunction that the Tribunal ought to have granted. The Plaintiff contends on this basis that the Tribunal ought to have granted an interim injunction but the appropriate order now that the Defendant has had proper notice is an interlocutory injunction.
Conclusion and orders
For the preceding reasons, I am satisfied that leave to appeal the Tribunal Order should be granted and the Tribunal Order set aside. Moreover, I am of the opinion that, for the preceding reasons and for the reasons proffered by the Plaintiff, it is appropriate in the circumstances for the Court to exercise its discretion under s 148(7)(b) to grant an interlocutory injunction as sought by the Plaintiff to maintain the status quo pending determination of the Tribunal proceeding. The Plaintiff, by its Senior Counsel, gave the usual undertaking as to damages in anticipation of the grant of such interlocutory relief.
The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs.
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