Coles Group Property Developments Ltd v Hill
[2011] VCC 683
•17 June 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST – EXPEDITED CASES
Case No. CI-11-01555
| COLES GROUP PROPERTY | Plaintiff |
| DEVELOPMENTS LIMITED | |
| v | |
| TRAVIS JOHN HILL | Defendant |
| and | |
| TRAVIS JOHN HILL | Plaintiff by Counterclaim |
| v | |
| COLES GROUP PROPERTY | Defendant by Counterclaim |
| DEVELOPMENTS LTD |
---
| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 7 June 2011; further written submissions received dated 10 June 2011 |
| DATE OF JUDGMENT: | 17 June 2011 |
| CASE MAY BE CITED AS: | Coles Group Property Developments Ltd v Hill |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 683 |
REASONS FOR JUDGMENT
Catchwords: Application for a stay: claim against guarantor of a retail premises lease- claim part of larger dispute which includes a claim brought by the tenant in the Victorian Civil and Administrative Tribunal (VCAT) based on representations inducing entry into the lease - whether tenant’s claim is only justiciable in VCAT- jurisdiction of court under s89(4) of the Retail Leases Act 2003- stay granted
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L.E.P. MaGowan | Ligeti Partners |
| For the Defendant | Mr P.T. Nugent | Howard Andrews Lawyers |
| HER HONOUR: |
1 The defendant (plaintiff by counterclaim) seeks an order that the court stay this proceeding pursuant to Order 23.01(1) of the County Court Civil Procedure Rules 2008 on the basis that the proceeding is vexatious or is an abuse of the process of the court. The defendant relies on an affidavit of Mr Peter Gibbons sworn 1 June 2011.
2 The proceeding concerns a claim against a guarantor of a lease where both parties accepted that the lease in question was a “retail premises lease” for the purposes of the Retail Leases Act 2003 (RLA).
3 The primary way the application was framed was that the proceeding in this court is a sub-set of a larger dispute. That entire dispute included a claim by the tenant seeking relief under the Fair Trading Act 1999 (FTA) for misleading and deceptive conduct which has been issued in VCAT. The defendant submitted that this claim arose under or in relation to a retail premises lease and was brought under Part 10 of the RLA. Moreover, that by reason of s89(4) of the RLA, this matter could only proceed in VCAT. He further submitted that the stay should be granted on discretionary grounds.
4 The plaintiff (Coles) opposed the stay and, in particular, submitted that the court could hear the entire dispute including the subject matter of the tenant’s claim in the VCAT proceeding pursuant to the FTA. In a further written submission[1], the plaintiff also submitted that the merits of the defendant’s application should be considered “as between the plaintiff and the defendant.”
[1] Written submission in reply dated 10 June 2011 at para 2
5 Both parties accepted that the defendant bore the onus of establishing it was appropriate to order a stay.
Background
6 Mr Hill is a Director of Complete Pets Pty Ltd (“Complete Pets”). Complete Pets was the sub-lessee of Shop 21, Showgrounds Village Shopping Centre, 320-380 Epsom Road, Ascot Vale, in the State of Victoria from the plaintiff. Mr Hill was also the guarantor of the sub-lease granted to Complete Pets.
7 On 4 March 2011 Complete Pets, Mr Hill and a co-director of Complete Pets, Mr Daniels, lodged an application with the Office of the Small Business Commissioner (OSBC) seeking a mediation of a dispute that had arisen between the parties. The application was supported by proposed “points of claim.” Those points of claim had a heading, “Victorian Civil and Administrative Tribunal (VCAT) at Melbourne Retail Tenancies List” and were in the names of Complete Pets, Mr Hill and Mr Daniels. They alleged that Coles had made representations in trade or commerce prior to entry into the lease. Further that, relying upon those representations, the parties took various steps which included that Complete Pets leased the premises from Coles and that Mr Hill entered into the guarantee. It was further alleged that the representations were misleading or deceptive or likely to mislead or deceive under the FTA and that the applicants were entitled to relief under ss158 and 159 of the FTA which included that both the lease and the guarantee contained therein be declared void.
8 These points of claim were served on Coles under correspondence of 7 March from the OSBC. By correspondence of 16 March 2011, Coles then sent a letter stating inter alia that Coles was “prepared to attend a mediation to discuss this matter prior to any claims being pursued in the Victorian Civil and Administrative Tribunal.” The correspondence also proposed a mediation for April 18,19 or 20.
9 However, prior to the mediation, the current proceeding was issued in this court on 8 April 2011. The proceeding is brought by Coles against Mr Hill alone and seeks to recover various amounts outstanding pursuant to his guarantee of the lease.
10 The mediation was held on 20 April 2011 and was ultimately unsuccessful.
11 However, it was not until 3 May 2011 that the OBSC issued a certificate pursuant to s87(1) of the RLA certifying that mediation or another appropriate form of alternative dispute resolution under Part 10 of the RLA had failed to resolve the dispute. Pursuant to s87(1), a retail tenancy dispute may only be the subject of proceedings before VCAT if the Commissioner has issued such a certificate.
12 Immediately following the issue of this certificate, on 4 May 2011, Complete Pets, Mr Hill and Mr Daniels issued a proceeding in the Retail Tenancies List in VCAT. The applicant’s points of claim were essentially identical to those contained in the points of claim previously served and again sought to set aside the lease and guarantee contained therein under the FTA because of alleged representations made to Complete Pets and Mr Hill.
13 On 23 May 2001 a defence and counterclaim was filed in this court. That defence and counterclaim relied on the alleged misrepresentations the subject of the draft points of claim in the VCAT proceeding. It also sought an order that the guarantee given under the lease be declared void.
14 By correspondence of 23 May, the solicitors for the defendant sought the plaintiff’s consent to a stay of this proceeding.
15 By correspondence of 25 May, the solicitors for the plaintiff rejected this suggestion and proposed instead that the VCAT proceeding be stayed.
Resolution
16 The defendant accepted that the current proceeding against the guarantor is within the jurisdiction of this court. However, he submitted that this claim could also be heard in VCAT as a “consumer and trader dispute” relying on the authority of Tucci v VCAT and Athedium (Vic) Pty Ltd.[2] Moreover, he submitted that the current dispute between the landlord and tenant in VCAT could only be heard in VCAT pursuant to s89(4) of the RLA. In these circumstances, there was a risk that the court and VCAT may make different factual findings and, further, that Mr Hills (and Coles) would be required to incur two sets of costs.
[2] [2010] VSC 425 especially at [8]
17 The plaintiff accepted that VCAT could hear the subject matter of the Claim and Counterclaim (also citing Tucci) and did not generally challenge the jurisdiction of VCAT in relation to the proceeding already issued therein. However, it submitted that the court could also determine the tenant’s claims in VCAT and emphasised that, on 3 June 2011, the plaintiff’s solicitors wrote to the defendant’s solicitors consenting to the joinder of the parties in the VCAT proceeding for this to occur.
18 Accordingly, a crucial issue between the parties was whether the court had jurisdiction over the tenant’s claims currently the subject of the VCAT proceeding.
Jurisdiction of court in relation to tenant’s claims for misrepresentations in
VCAT19 Pursuant to s.89(1), VCAT has jurisdiction to hear and determine an application by a landlord or tenant under a retail premises lease, or by a specialist retail valuer, seeking resolution of a retail tenancy dispute. Sub- section 89(4) provides that with certain exceptions (including a claim under Part 9 for Unconscionable Conduct) a retail tenancy dispute “is not justiciable before any other tribunal or a court or person acting judicially within the meaning of the Evidence (Miscellaneous Provisions) Act 1958.”
20 Section 81 defines the concept of a “retail tenancy dispute.” Section 81(1)(a) (i) provides that a retail tenancy dispute has two components if the lease is one to which this Act applies or applied because of Part 3:
• it is a dispute between a landlord and tenant; • the dispute is one arising under or in relation to a retail premises lease. 21 Pursuant to s. 11(1) of the RLA, the Act applies to a retail premises lease that is entered into after the commencement of the section. Section 11 commenced on 1 May 2003. Accordingly, given the lease in this case was apparently entered into after the commencement of s. 11 of the RLA, namely in February 2010, it follows that s81(1)(a)(i) applies.
22 While the tenant has now vacated the premises it remains the “tenant” and Coles remains the “landlord” by reason of the extended definition of “tenant” and “landlord” provided by s. 83 of the RLA. Accordingly, the claim brought by Complete Pets against Coles in VCAT appears to be a dispute between a “tenant” and a “landlord” as those terms are used in s. 81(1) of the RLA.
23 The relevant question is then whether the VCAT dispute arises “under or in relation to” the lease pursuant to s81(1)(a)(i).
24 On a straightforward application of this phrase, the claim in VCAT may not directly arise “under” the lease. However, the claim relies on representations alleged to be made by Coles to Mr Hill and Complete Pets prior to entry into the lease and so as to induce entry into that lease. The claim further seeks to set aside the lease. In this sense, it would appear that, even though no specific mention is made of the RLA (as the plaintiff contends), and further that relief is sought pursuant to the FTA, that the dispute arises “in relation to” the lease.
25 In the decision of Exford Pines Pty Ltd v Vlado’s Pty Ltd,[3] Tadgell J was required to consider the meaning of the expression "arising under" a lease, in s 21(1) of a previous version of the RLA: the Retail Tenancies Act 1986 (Vic). This subsection provided that subject to certain exceptions "any dispute between a landlord and a tenant arising under a retail premises lease ... must be referred to arbitration in accordance with this Part". Tadgell J held that a dispute between a landlord and a tenant did not "arise under" a lease unless that dispute was concerned with the rights and obligations which are created by the lease. His Honour therefore held that the expression "arising under" did not have application to a tenant’s claims based on misleading conduct inducing entry into the lease.
[3] [1992] 2 VR 449
26 Importantly, however, his Honour suggested that expressions such as "a dispute arising in connection with" or, "in relation to" or, "arising out of" a contract are regarded as very much wider than a dispute arising "under" a contract.[4]
[4] [1992] 2 VR 449 at 452
27 In a decision of Finkelstein J in KC Park Safe Pty Ltd v Adelaide Terrace Investments Pty Ltd[5] his Honour referred to this distinction made by Tadgell J and determined that a dispute based on misrepresentations leading to the making of a guarantee was a dispute “relating to the guarantee” for the purposes of a jurisdiction clause.
[5] Unreported decision of the Federal Court of 15 May 1998
28 The above authority therefore suggests that the words “in relation to” should be construed relatively widely and no authority was produced which suggested some contrary view should be taken under the current RLA. Thus, although the plaintiff cited a decision of Judge Lewitan in Bevendale Pty Ltd v Sahil Rasul, [6] her Honour appeared to be more directly concerned with what defences a defendant guarantor could raise,[7] rather than with the question of jurisdiction in relation to any claims of the tenant. There had also been considerable delay by the defendant guarantor in that case which is not applicable here.
[6] [2009] VCC 1562
[7] [2009] VCC 1562 at [35]
29 The plain words of s81(1)(a), namely, “in relation to” therefore appear to contemplate the claims of Complete Pets in VCAT.
30 This view is also supported by the following matters:
(a) that the relief sought in VCAT includes orders that the lease be declared void; that provisions in the lease, including the payment of rent, not be enforced; and that Coles refund all moneys paid under the lease;
(b) that during the Second Reading Speech delivered in relation to the Retail Tenancies Reform Bill[8] the Minister made it clear that one of the purposes of the Retail Tenancies Reform Act 1998 was to ensure that there was an effective low cost dispute resolution system to resolve “all disputes between tenants and landlords”;
(c) that the terms of s81(1) and the jurisdiction of VCAT under s89 have
been described as “extensive.”[9][8] Victoria Parliamentary Debates, Legislative Assembly, 19 February 1998, p 151: The Retail Tenancies Reform Act 1998 was the predecessor of the RLA.
[9] And see State of Victoria v Tymbrook Pty Ltd [2005] VSC 267 especially at [11]-[12] per Byrne J
31 In all of the circumstances, in my view the VCAT proceeding brought by Complete Pets constitutes a dispute arising “in relation to” a retail premises lease with the result that it is a retail tenancy dispute that is not justiciable in this court by reason of s89(4).
whether stay appropriate
32 In the light of the above finding, it follows that unless a stay is granted, the dispute between the various participants, including the tenant, is likely to be fragmented. There is a significant risk of inconsistent findings as well as a risk of the duplication of costs.
33 The plaintiff submitted that the merits of the defendant’s application ought to be considered as between the plaintiff and the defendant alone. However, in my view it would be inappropriate for this court to ignore the fact that there are two proceedings on foot involving substantially the same issues.
34 The plaintiff also submitted that the application for a stay should have been brought pursuant to s112 of the FTA which provides that the court must order a stay in certain circumstances. However, this provision is not exhaustive of the circumstances in which a stay may be granted by this court.
35 The plaintiff then submitted that the issue of multiplicity of proceedings is dealt with by s77 of the VCAT Act which gives a power to the Tribunal to make an order striking out all, or any part, of a proceeding if it considers that the subject-matter of the proceeding would be more appropriately dealt with by another body. Again, however, this does not assist the plaintiff. If an application is made under s77 its resolution will ultimately be a matter for VCAT, and not this court. However, for reasons already given, I do not consider that the tenant’s current claims in VCAT could be dealt with by this court.
36 Given the court’s inability to hear the tenant’s claims, two proceedings in respect of essentially the same subject matter will remain on foot if a stay is not granted. In such circumstances, there is a risk that both VCAT and this court may be asked to adjudicate on whether the relevant representations were made and whether the guarantee provided by Mr Hill is enforceable. Such a situation in my view is oppressive and unfair and brings the administration of justice into disrepute in the sense that it risks the making of inconsistent findings.[10] As mentioned already, such a situation also poses the risk that the parties will be required to incur two rather than one set of costs.
[10] And see State Bank of NSW v Stenhouse (1997) Aust Torts Reports [81-423] at 64,086.
37 There are also discretionary grounds which support the ordering of a stay. Thus, although it is true that the proceeding in this court was commenced first in time, both sets of proceedings are at an early stage. The tenant and the defendant also signalled their intention to have the entire dispute determined by VCAT and were only prevented from issuing earlier by the need to await the relevant certificate under s87. By way of contrast, the plaintiff issued proceedings somewhat peremptorily and notwithstanding that it had agreed to mediate the proceeding pursuant to the processes provided for under the RLA, and in anticipation of the dispute being pursued in VCAT.
38 In all of the circumstances, then, the defendant has satisfied me that it is appropriate that the entire dispute between all of the participants be determined in VCAT as originally envisaged and in circumstances where this court is unable to do so.
39 The defendant has therefore satisfied me that it is appropriate to order the stay sought.
Conclusion
40 I am satisfied that the defendant is entitled to the stay sought.
41 I will hear from the parties on the precise form of orders.
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