Caltex Petroleum Pty Ltd v Bastona Pty Ltd
[2002] VSC 341
•12 August 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 6712 of 2002
| CALTEX PETROLEUM PTY LTD | Plaintiff |
| v | |
| BASTONA PTY LTD | Defendant |
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JUDGE: | Nettle J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 August 2002 | |
DATE OF JUDGMENT: | 12 August 2002 | |
CASE MAY BE CITED AS: | Caltex Petroleum Pty Ltd v Bastona Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 341 | |
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Equity – Injunction – interlocutory injunction to restrain landlord interfering with tenant’s possession – serious question to be tried – balance of convenience.
Landlord and tenant – forfeiture of lease - relief against forfeiture.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P. Corbett | Hall & Wilcox |
| For the Defendant | Mr P.R. Best | Alfred G. Preece |
HIS HONOUR:
This is the return of a summons filed 8 August 2002 in which the plaintiff, Caltex Petroleum Pty Ltd, seeks orders that the defendant vacate premises at 140-164 Peel Street, North Melbourne and be restrained from interfering with the plaintiff's right to possess and enjoy the premises under a lease made 21 December 2000 between G. Vaccari & Co Pty Ltd and the plaintiff for a term of four years commencing on 29 April 2000 at an annual rent of $130,000 per annum.
The matter first came before me as an urgent ex parte application on notice late last week, at which time I made interim orders substantially in the terms of the summons, requiring the defendant to vacate the premises and not to interfere with the plaintiff's possession and enjoyment of them until 4.15 pm today.
The facts of the matter are not without complication but, insofar as they are able to be discerned from the material filed in support of the application and that filed in opposition, I understand them to be as follows.
The lease in terms provides for the payment of rent quarterly in advance, by equal consecutive quarterly payments; the first of which shall be payable on or before the aforementioned commencement date of 29 April. Despite that provision, however, for some time a practice was adopted whereby the plaintiff paid rent to G. Vaccari & Co Pty Ltd monthly in advance on the first day of each month.
Late last year, the defendant acquired the reversion from G. Vaccari & Co Pty Ltd and for some time accepted rent payments on the basis that rent was payable monthly in advance. In March of this year, however, having more closely examined the provisions of the lease, the defendant through its agent wrote to the plaintiff requiring that thenceforth the plaintiff pay rent quarterly in advance on the first day of each of the quarters beginning with the months April, July, October and January.
There is a dispute as to whether and, if so, as to how much the defendant complained about what it now alleges to be the plaintiff's failure to make rent payments timeously. There is enough within the material for me to conclude that the plaintiff did more than once fail to pay on the first day of the month and that reminders were sent. But I am not able to discern from the material how often that occurred and how seriously it was regarded by the defendant.
Following the defendant's requirement that the plaintiff commence to pay rent monthly in advance, on 16 April 2002 the plaintiff made a quarterly payment which appears to have been intended to cover the quarter beginning 1 April and expiring on 30 June. There is, however, some doubt about the period intended to be covered.
On 7 August 2002 the defendant’s agent, Bernardi, contacted the Macquarie Bank, which is the banker for his firm, Pound Teus Bernardi, to ascertain whether or not any moneys had been received from the plaintiff in respect of the quarter beginning in August. He ascertained that no moneys had been received and he said that as a result he was greatly concerned because the plaintiff had a long history of failing to pay rental and outgoings on time. In support of that contention, he deposes that on 19 July 2002 a reminder was sent to the plaintiff requiring the plaintiff to pay the July quarterly rent of $38,989.56, but that no response was received.
On 7 August 2002 Bernardi instructed Mr Alfred G. Preece, the solicitor acting on behalf of the defendant, to prepare a notice of re-entry and made arrangements to re-enter the premises on the following day.
Although the defendant is yet to file a defence, I had understood when the matter began this morning that it was the defendant's contention that the terms of the lease required the plaintiff to pay rent quarterly in advance on the first days of April, July, October and January in each year throughout the term of the lease. In the course of argument this morning, however, Mr Best of counsel, who appears for the defendant, has made plain that that is not now the defendant's contention. He now accepts the argument advanced by Mr Corbett of counsel, who appears for the plaintiff, that, upon its proper construction, the lease requires that rent be paid quarterly in advance on the 28th days of April, July, October and January of each year. He submits now, however, that when the defendant re-entered the premises there had been a failure to pay rent for more than 14 days in respect either of the period 1 April to 28 April 2002 or, alternatively, in respect of the period 1 July to 28 July 2002.
In order to understand the basis of those submissions, it is necessary to say that, after the defendant required the plaintiff to pay rent quarterly in advance, there appears to have been no payment or adjustment made to cover the period between the 1st day of April, up to which rent had been paid on 1 March, and 28 April, in respect of which, according to the proper construction of the lease, the first quarter payment would run.
Without being overly critical, I think it fair to say that the first time anyone had heard of the argument was when Mr Best formulated it this morning. So far as appears from the correspondence which is in evidence, and the notice of re-entry which was served at the time that the defendant seized possession of the premises, the alleged breach of the lease which was relied upon was a breach to pay a quarter's payment by 1 July.
Nevertheless, as the matter now stands, the position seems to be that it is contended by the plaintiff, and now accepted by the defendant, that the quarter payment due in July of this year was not due to be paid until 28 July, and thus, when the defendant re-entered the premises, there had not been a default in respect of that quarter period for the 14 days required by the lease before re-entry may be effected, but the defendant wishes to contend that it was entitled to re-enter nonetheless because more than 14 days had elapsed since the alleged failure to pay rent in respect of the period 1 April to 28 April or, alternatively, 1 July to 28 July of this year.
Some submissions have also been directed to me this morning on the question of relief against forfeiture; assuming the view be taken that the lease was forfeit at the time the defendant re-entered possession. As is to be expected, both counsel agree upon the principles to be applied. They have been established authoritatively in this State by the judgment of Ormiston J in Jam Factory Pty Ltd v Sunny Paradise Pty Ltd[1] and as a result the many authorities which his Honour considered in the course of that judgment.
[1][1989] V.R. 584.
Because the amount of money involved is relatively small, and because it appears to me to be tolerably clear that the plaintiff is not a risk (in the sense that there is no doubt that it would ultimately meet its obligations to pay rent and other moneys due under the lease), I have given some consideration to the possibility of making a final decision now as to whether or not the lease was forfeit. The attraction of that is that, if I were to decide that it was forfeit, I could move immediately to the question of relief against forfeiture, and in effect resolve the whole proceeding.
I think, however, that I am unable on the material which is before me to make a final determination as to whether or not the lease was forfeit at the time of re-entry. It is true, as Mr Best has pointed out, that there is a considerable body of evidence that rent was always paid monthly in advance on or in respect of the period beginning on the 1st day of each month, until the defendant required that rent be paid quarterly. It is also true, as Mr Best submits, that, in the absence of other evidence, one might infer that his client has never received rent in respect of the period 1 April to 28 April or the period 1 July to 28 July. And it is true that, if that is so, it would follow that there was, at the time that his client re-entered into possession, a failure to pay some rent which had been extant for more than 14 days. Other things being equal, that may have entitled his client to re-enter and to forfeit the lease. But so to hold would be in effect to grant the defendant summary judgment on the point, and I cannot do that unless it is plain that any argument to the contrary is so hopeless that it is bound to fail.
So far from it being hopeless, however, as Mr Corbett has submitted, one really cannot say with any degree of certainty, and his client would wish to dispute, that there ever was a failure to pay rent in respect of either of the designated periods, and the court should not conclude otherwise until and unless it has been satisfied by regard to all of the relevant evidence which would be adduced at trial.
Accordingly, I come to this. First, it is plain that there is a serious question to be tried as to whether or not the lease was forfeit. Secondly, the defendant wishes to persist in the contention that it was forfeit. Thirdly, it is not only inappropriate, it is impossible to grant relief against forfeiture until and unless it has been established that the lease was forfeit. I conclude, therefore, that the question of forfeiture must go to trial.
In the meantime, because of the substantial inconvenience which would be caused to the plaintiff if it were not to be allowed to remain in possession, and because of its undertaking to pay rent and to continue to pay rent for the period of any injunction which goes, it is appropriate to grant interlocutory injunctive relief substantially in the terms of the interim relief which I granted last week.
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(Discussion ensued re orders.)
HIS HONOUR: The orders which I shall make will be as follows. Under the heading "Other Matters", it will be provided that the plaintiff by its counsel gave the following undertakings:
(a)To pay the rent and otherwise perform the terms of the lease between the plaintiff and the defendant dated 21 December 2000, being Exhibit SAS1 to the affidavit of Sally Anne Scott sworn 6 August 2002 ("the lease") -
as it is set out in the draft undertakings submitted by Mr Best, but I will insert after the word "rent" where it appears in the first line of paragraph (a) the words "quarterly in advance in accordance with the lease on 29 October, 29 January, 29 April and 29 July". At the conclusion of the paragraph (a) in Mr Best's draft, after the defined expression "the lease", I will add the words "until the trial of this proceeding or further order"; and I will provide, as is provided in paragraph (b) of the undertakings in the draft submitted by Mr Best, an undertaking to abide by any order as to damages in the usual form. In paragraph (1) of the substantive order, in the sixth line which begins "reliance on the alleged breach of the lease", I will strike out the words "being the alleged" and insert in their place "constituted of any" so that the line will read "reliance on the alleged breach of the lease constituted of any failure of the plaintiff to pay rental for the period or some part of the period". I will then in the next line and the line following that strike out the words "from the 1st April 2002 to and including" and I will replace them with the words "up to and including" so that it will read "the plaintiff to pay rental for the period or some part of the period up to and including the 28th" - I will insert "October" in lieu of "July" so that it reads "up to and including the 28th October 2002". In the penultimate line of the paragraph I will strike out the words "other or" which appear in the centre of the line after the word "some".
In that way it appears to me, gentlemen, that your client, Mr Best, is protected in respect of any other breach, that there will not be, or cannot be, action taken in respect of any failure to pay rent for the period up to the end of the quarter for which rent has been agreed to be paid.
MR BEST: Yes, Your Honour. The only - and I don't have any instructions that there are any extant breaches at the moment, but this would, on my understanding of the way Your Honour has drafted it, it would prohibit us, for example, if there was a repair issue at present which we discover on an inspection to be extant, we would be restricted to any breach after today rather than a breach that might have occurred before today, that we do not yet know of or not yet taken any action in respect of. That is why I put the word "other or subsequent". And this is a petrol station, Your Honour might recall, and there may well be issues in respect to repair; we don't know. I am not saying that the landlord is out there trying to find grounds. I have no indication whatsoever that there's any mala fides in this whatsoever, but my client, it is humbly submitted, shouldn't be restricted in any way past the current claim before the court.
HIS HONOUR: I accept what is said. I will change the penultimate line to read as follows: "power under the lease in respect of some other breach of the lease or some subsequent failure to pay rent".
Paragraph 2 will read as in Mr Best's draft. Mr Corbett, do I need to provide, as you have in Minute 2, for the dispensing of 8.2 and 8.5?
MR CORBETT: I don't know, Your Honour whether any appearance has been filed or whether it will be filed.
HIS HONOUR: Mr Best, what is the position?
MR BEST: I don't know if an appearance has been filed, Your Honour. We don't take any issue with it. The plaintiff has obviously appeared.
HIS HONOUR: Will the plaintiff's solicitor provide an undertaking that it will be filed?
MR CORBETT: Yes, Your Honour, we will provide an undertaking.
HIS HONOUR: Directions will then be made in terms of paragraphs 3, 4 and 5 of Mr Best's draft. I will then insert immediately after paragraph 5 of Mr Best's draft paragraphs 5 and 6 of the plaintiff's draft as new paragraphs 6 and 7, and I will then provide as in paragraph 6 of Mr Best's draft except that before the words "trial judge" I will insert the words "Listing Master or the". I do so because, whatever might be said about the shortcomings of affidavits or evidence on statements, it seems to me that this is the sort of proceeding which calls out for it, hence therefore prima facie it should be regarded as one which will proceed on affidavit unless good reason is shown to the contrary. By providing for the Listing Master to do it we overcome any of the difficulties of the kind to which Mr Corbett referred.
I will provide as in paragraphs 7, 8, 9 and 10 of Mr Best's draft. I will strike out 11. In view of what has occurred it seems to me that there is no urgency about it, and as I understand the position there is not to be an order of that kind unless there is. I will change the new paragraph 9 to October.
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