Brasington v Overton Investments Pty Ltd - [2003] FCA 1523

FEDERAL COURT OF AUSTRALIA
Brasington v Overton Investments Pty Ltd [2003] FCA 1523
RITA BRASINGTON v OVERTON INVESTMENTS PTY LTD & ANOR
N878 OF 1999
EMMETT J
18 DECEMBER 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N878 OF 1999

BETWEEN:

RITA BRASINGTON
APPLICANT

AND:

OVERTON INVESTMENTS PTY LIMITED
FIRST RESPONDENT

JOHN EDWARD JAMES
SECOND RESPONDENT

BETWEEN:

OVERTON INVESTMENTS PTY LIMITED
CROSS-CLAIMANT

AND:

RITA BRASINGTON and the other persons identified in Schedule A to the First Cross-Claim
FIRST CROSS-RESPONDENTS TO THE FIRST CROSS-CLAIM

CUZENO RVM PTY LIMITED
SECOND CROSS-RESPONDENT TO THE FIRST CROSS-CLAIM

BETWEEN:

CUZENO RVM PTY LIMITED
SECOND CROSS-CLAIMANT

AND:

RITA BRASINGTON and the other persons identified in Schedule 1 to the Second Cross-Claim
CROSS-RESPONDENTS TO THE SECOND CROSS-CLAIM

JUDGE:

EMMETT J

DATE:

18 DECEMBER 2003

PLACE:

SYDNEY

REASONS FOR PRELIMINARY CONCLUSIONS
Preliminary
Relationship Between Overton And The Residents
The Trust Deed
The Leases
Standing To Sue
Issue Estoppel
Legal Assistance Under Fair Trading Act
Freedom Of Information Application
Defamation Advice
Proceedings For Recovery Of Arrears Of Outgoings
Proceedings Under Fair Trading Act
Consultation Process Under The Code
Interaction Between Codes Of Practice And Leases
Budget Disputes
Trust Deed Dispute
Audit Queries
Categories Of Legal Expenses In Issue
Undertaking As To Damages
Costs Of Mr And Mrs Murphy’s Proceedings
Financial Hardship
Compensation For Resumption
Incidental Advice
Other Issues
Liabilities In Respect Of Premises
Inconsistency With Court Orders For Costs
Operation Of Legal Profession Act 1987 (Nsw)
Costs Incurred After 3 December 1999
Section 14a Of The Retirement Villages Act 1989 (Nsw)
Conclusion
PRELIMINARY

I have embarked on the hearing of a further aspect of the long lasting dispute between Overton Investments Pty Limited (‘Overton’) and the residents of the Heritage Retirement Village at Padstow (‘the Village’): see Murphy v Overton Investments Pty Ltd [2000] FCA 801, Murphy v Overton Investments Pty Ltd (2001) 112 FCR 182, Murphy v Overton Investments [2001] FCA 1725, Murphy v Overton Investments Pty Ltd [2002] FCAFC 129 and Murphy v Overton Investments Pty Ltd [2002] FCA 921. One area of dispute between the residents of the Village (‘Residents’ or ‘Lessees’) and Overton concerns the extent of Overton’s entitlement to recover from the Residents contribution towards Outgoings (as that term is defined in the leases granted by Overton to Residents). Mrs Rita Brasington brought a proceeding against Overton claiming damages in respect of the conduct of Overton prior to the grant to Mrs Brasington of her Lease of a Unit in the Village: see Brasington v Overton Investments Pty Ltd [2002] FCA 1495. In that proceeding, Overton has filed a cross claim against certain of the Residents for recovery of unpaid arrears of Outgoings claimed by Overton to be owing by the Residents.
The dispute concerning the liability for Outgoings raises a number of issues, many of which involve detailed examination and analysis of accounting records. The parties have proposed a number of separate question for consideration by the Court, with the expectation and hope…

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: [2003] FCA 1523
Decision Date: 18 DECEMBER 2003

CaseChat Overview and Summary

In Brasington v Overton Investments Pty Ltd, the case before the court revolved around the interpretation of certain clauses in a lease agreement, specifically whether legal fees incurred by the lessee, Overton Investments, were to be treated as outgoings under the terms of the lease. The dispute was brought before the Supreme Court of Queensland, where the plaintiff, Brasington, sought to argue that the legal fees were not recoverable as outgoings under the lease agreement. The defendant, Overton Investments, contended that the legal fees were indeed recoverable as they were incurred in the operation of the Village.

The primary legal issue before the court was the interpretation of clause 5(c) of the lease, specifically the sub-clauses (v), (x), and (xiv), to determine if they could encompass expenses in the nature of legal fees. The court had to consider whether the terms of these sub-clauses, such as "expenditure incurred in carrying on the operations of the Village," "payment of amounts relating directly to the running of the Village," and "any such other reasonable and proper expenses and outgoings," could be extended to cover legal fees. Additionally, the court examined the broader context provided by other clauses in the agreement to understand the scope and purpose of the lease.

The court found that while most of the items in clause 5(c) were clearly unrelated to legal fees, certain paragraphs such as (v), (x), and (xiv) could potentially cover expenses in the nature of legal fees. The court considered the context provided by the other items in clause 5(c), which related to the day-to-day operations of the Village, including rates, insurance premiums, cleaning, repairs, and maintenance. The court held that for legal fees to be recoverable as outgoings, they must be directly involved in the operation of the Village, and not merely incidental to the lessee's management of the property. This interpretation was influenced by the phrase "in relation to" used in the relevant clauses, which required a connection or association relevant to the operation of the Village. The court concluded that legal fees were only recoverable if they were shown to be directly involved in the running and operation of the Village, rather than being incidental to the management of the property.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

EMMETT J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: EMMETT J

Most of the items in cl 5(c) are clearly unconnected with expenses in the nature of legal fees. However, the following paragraphs of cl 5(c) could relate to expenses in the nature of legal fees:‘ (v) expenditure incurred in carrying on the operations of the Village;…(x)payment of amounts relating directly to the running of the Village comprising salaries and wages of staff of the Village and all fees and sums payable to persons not being staff of the Village who provide … services to the Village or to the Lessor or to the Trustee in relation to the operation of the Village including … legal charges …;(xiv)any such other reasonable and proper expenses and outgoings as the Lessor may from time to time decide’. (Emphasis added). While the other items in cl 5(c) could not conceivably relate to legal fees, they throw light on the way in which pars (v), (x) and (xiv) should be construed. The other items might be summarised as follows:(i)rates, charges, impositions and fees payable to a relevant body or authority;(ii)premiums for any insurance;(iii)expenditure for cleaning, repairs, renovations, renewals and maintenance generally;(iv)expenses for complying with any requirement of any relevant body or authority;…(vi)interest on monies borrowed for the administration of the Village;(vii)amounts to provide for future repairs, renovations and other contingencies;(viii)expenditure incurred in providing meals and other services to occupiers;…(ix)gardening and landscaping expenses;…(xi)amounts payable in respect of ventilation, air conditioning, cooling and heating;(xii)fees payable to the Trustee;(xiii)amounts that are an incident of the administration and investment of the Trust Fund;…(xv)all taxes including land tax but excluding income tax;(xvi)all insurance premiums;(xvii)expenses for water, gas, electricity, telephone, sewerage, garbage and other services or requirements furnished or supplied for the general benefit or purpose of running and maintaining the Village;(xviii)10% of monies expended by the Lessor in carrying out work required by any competent authority;(xix)maintenance, replacement and repairs of furniture, equipment and furnishings in units;(xx)cost of lighting and cleaning common areas;(xxi)expenditure in providing bus or other transport facilities to Lessees. All of those items, apart from items (i), (xii), (xiii) and (xv), relate to the day to day operation of the Village. Items (i), (xii), (xiii) and (xv) relate to the legal infrastructure for the operation of the Village. Paragraphs (v), (x) and (xiv) of cl 5(c) must be construed in the context of those provisions. The phrase ‘in relation to’ is satisfied by a connection or association between the two things in question: R v Murphy (1985) 158 CLR 596 at 611. The context or the purpose may require that the link, association or relationship be of a particular kind, sometimes described as an appropriate or relevant relationship: R v Ross-Jones (1984) 156 CLR 185). Thus, the phrases ‘relating directly to the running of the Village’ and ‘in relation to the operation of the Village’ in cl 5(c)(x) must be construed in the light of the context and purpose of that provision in the overall scheme of the operation of the Village as gleaned from the Trust Deed and the Lease. The character of the other items in cl 5(c) indicates that, before legal expenses can be treated as Outgoings, they must be shown to be involved in the direct running and operation of the Village. It is not sufficient that they are expenses incurred by Overton simply because it has undertaken the enterprise of managing and operating the Village. STANDING TO SUE

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N878 OF 1999

BETWEEN:	RITA BRASINGTON APPLICANT
AND:	OVERTON INVESTMENTS PTY LIMITED FIRST RESPONDENT JOHN EDWARD JAMES SECOND RESPONDENT
BETWEEN:	OVERTON INVESTMENTS PTY LIMITED CROSS-CLAIMANT
AND:	RITA BRASINGTON and the other persons identified in Schedule A to the First Cross-Claim FIRST CROSS-RESPONDENTS TO THE FIRST CROSS-CLAIM CUZENO RVM PTY LIMITED SECOND CROSS-RESPONDENT TO THE FIRST CROSS-CLAIM
BETWEEN:	CUZENO RVM PTY LIMITED SECOND CROSS-CLAIMANT
AND:	RITA BRASINGTON and the other persons identified in Schedule 1 to the Second Cross-Claim CROSS-RESPONDENTS TO THE SECOND CROSS-CLAIM

JUDGE:	EMMETT J
DATE:	18 DECEMBER 2003
PLACE:	SYDNEY