Coletta v Fairfield Chase Pty Ltd

[1990] FCA 833

JuDPUEM No.

IN THE FEDERAL COURT OF AUSTRALIA

)

$

I

NEW SOUTH WALES DISTRICT REGISTRY

)	NG 7 2 3 05 1989
)	NG 876 of 1989

GENERAL DIVISION

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BETWEEN: MARCO COLETTA AND ORS

Applicants

AND :  FAIRFIELD CHASE PTY LIMITED AND

21 JAN L683 ORS

Respondents

EX TEMPORE JUDGMENT

Einfeld J 11 May 1990

There are before the Court two notices of motion which were originally filed on 9 January this year and first came before the Court on 2 2 January, possibly after an earlier return date. On that date, 2 2 January, the notices of motion were in substance adjourned to the hearing of the substantive litigation between the parties on conditions, one of which was that occupation fees which I: then fixed should be paid. The notices of motion were re-listed for hearing today in the light of the allegation by the first respondent/cross claimant that the conditions had not been complied with.

has been no argument put that the Court does not have	jurisdiction to make orders which would have the same effect as
an order of eviction or writ of possession, although precisely in what form such orders should be framed is a matter for later argument and has not been raised as an element of dispute today.
The grounds upon which the orders for possession are sought are that the applicants/cross respondents have not paid their rents under leases between them and the cross claimant, or alternatively have not paid the occupation fees which I fixed on 22 January as a condition for the adjournment of the notices of motion.
The cross respondents Coletta and Adams entered into an agreement for the lease of a shop at the Fairfield Chase on 1 January 1989. A similar agreement was entered into by the cross respondent Sobbi on 7 February 1989. It appears that since approximately those dates these parties have been in occupation of those shops where they have been conducting various businesses.
Some payments by way of rent were made by each of these parties but there is no dispute that as from 4 October 1989 in the case of Coletta and Adams and 5 September 1989 in the case of Sobbi no rent or occupation fee has been paid. The rent in the case of
parties at $4476.57 per month and the occupation fee which I Coletta and Adams was fixed by the lease arrangements between the
ordered on 22 January 1990 was $3516.97. In the case of Sobbi, the rent fixed by the lease or the agreement for lease was $2600.83 and the occupation fee I ordered was $2160. According to the evidence, no payments of the occupation fee have been made by either of these parties.
Hence there seems to be no doubt but that these cross respondents are in breach of their obligations to pay rent as fixed by the agreements for lease and of the conditions on which I adjourned the notices of motion on 22 January 1990. There is raised some dispute about whether there were true agreements for lease between the cross claimant and these cross respondents but although there are arguments that can be put (and will be put at the hearing of the principal claims) as to what the arrangements were between these parties, I can see no arguable or available claim that the arrangements between these parties as regards rent was other than on the terms set out in those agreements. It is also clear that they have occupied the premises by no other claim of right until the alleged termination of the leases. They paid rent and have presumably operated their businesses on no other basis.
The cross claimant says that it is entitled to possession for breach of a fundamental term of the agreement between the parties that rent be paid. They say secondly, as a purely ancillary or identical argument, that they are entitled to possession because the occupation fee has not been paid during the period in which
the conditions on which it was adjourned. the application for summary eviction has been adjourned and on
The cross respondents, in a most capable argument advanced by their solicitor in a very difficult area of the law, have argued that it is not appropriate to give summary judgment in this way and ask that these motions be adjourned to the hearing of their claims against the cross claimant under the Trade Practices Act fixed for hearing later in the year. He called upon long-standing and unchallengeable authority that summary relief should not be granted unless the case put forward to resist it is hopeless. He says that I should not move in this instance because the arguments that are available are certainly presentable and in some respects likely to be successful.
This requires a consideration of the case as a whole. The matters come before the Court as part of a very large collection of litigation that has been in the Court now since late in 1989. It has occupied a great deal of time and consumed no doubt a very considerable amount of legal costs for many parties. They involve overall a dispute between a number of tenants of the shopping centre known as the Fairfield Chase and the management of the Centre about the terms and conditions under which the various shopkeepers went into possession and entered leases in 1988 and early 1989. The allegation in general terms is that there were a large number of representations made by representatives of Fairfield Chase, in most cases by real estate agents responsible for or with the task of letting the various spaces available in the shopping centre, which induced the
various shopkeepers to take up spaces and for which they entered various lease documents.
The assertions made by these shopkeepers is that these representations were false, that they were gross and that there has been widespread breach of these undertakings. So it is alleged that the Trade Practices Act has been contravened. They say they have suffered losses in their businesses as a result.
The relief which the various shopkeepers seek is varied but essentially can be boiled down to three major areas: one is damages; the second is relief under section 8 7 of the Trade Practices Act for variation of the lease in a number of respects; and the third is relief against forfeiture. The forfeiture of these leases comes about, so the cross claimant alleges, by the fact that the leases or agreements for lease under which occupation took place in each case contained a provision that if the rent was not paid and the leeway for non-payment was exceeded, no further notice was necessary to terminate the lease and to permit eviction.
In fact the cross claimant asserts that notice was given by way of the cross claim which is in a sense now before the Court by way of the notice of motion, that the respective leases in these two cases are at an end, and that prima facie the landlord is entitled to possession.
The relief which is sought by the cross-respondents against these forfeitures, which is expressed in similar terms to the relief sought under section 87, is that the leases should be

The notices of motion arise under the first respondent's cross claims in these cases. They seek a number of orders of which only summary judgment for eviction has really been argued. There

possession and that I should fix the rent at much lesser sums	reconstituted, that the respondents should be allowed back into
than provided for in the leases retrospectively to the beginning of the cross respondents' occupation of the premises. One of the section 87 arguments - a quite difficult proposition - is that in effect using subsection (2)(b) of that section, I should vary the leases with retroactive effect so as in effect to reverse the terminations themselves. I do not know of any case, and no case has been cited, in which such a thing has ever been done or even that it has ever been asked for before. Even the proposal for rent variation is supported by little precedent. I have said at times during this case arguendo that in my view the Court would be wary of becoming a rent-fixing tribunal. I do not say that this case might not be appropriate for such an exercise if the evidence is led in due course to provide a basis for it but to assist the applicants in their presentation of their cases on the principal applications, I confess to expressing doubt that section 87(2)(b) is intended to be used generally for that purpose. This is because by its terms, subsection (2) is ancillary to and supportive of subsections (1) and (1A) which are designed to provide the Court with the power to compensate the victim of a contravention of the Act for the loss or damage that that person has suffered or to prevent or reduce the loss or damage. Subject of course to full argument in due course, I doubt if retrospective reductions of rent and rewriting of leases are such compensation.
The major matter raised in defence of these notices of motion for possession is that relief against forfeiture might be granted in this case where the mixture of facts includes that these
cross-respondents have paid no rent or occupation fee for
something of the order of eight months. Evidence has been brought that the management of the cross claimant, which I should add has changed completely since the alleged misrepresentations were made, is continually subject to outgoings for the maintenance and upkeep of the shopping centre. That means that a

considerable amount of money, as set out in the evidence, has been and needs to be expended on a continuing basis to pay statutory and local government charges, to maintain basic services and to provide safety for both occupants and the shopping public. No contribution has been made to those outgoings by these cross-respondents since the last quarter of last year and yet they have, in the continuing conduct of their businesses, gained the advantage of the facilities which the cross-claimant has continued to provide.

The claim that rent has not been paid has not been denied nor has it been denied that the occupation fees have not been paid despite the fact that at the time when I adjourned these notices of motion, the then legal representative of these very cross respondents was in fact the applicant for the adjournment and participated in the quest for a suitable occupation fee without ever seriously arguing that no occupation fee ought to be fixed. To the extent to which he did present such an argument, I rejected the argument at that time and would reject it again today.

As a consequence, there is no defence now filed or presented, and	no evidence tendered, to oppose the proposition put by the	cross-claimant that there has been a breach of the lease on a
fundamental question. What is put are the claims to which I have referred, namely, that orders would be made in the cross respondentsr primary case for relief that would have the effect of reversing or nullifying the termination and secondly, that the cross-respondents are entitled to damages which at least equal if

not exceed the amount of unpaid rent. In other words, they seek to set off against the unpaid rent the amount of damages to which they claim to be entitled for the breaches of the Act. No evidence or even serious particulars were presented of these damages claims, but in these 2 cases, they are said from the bar table to exceed the amounts of unpaid rent.

This raises interesting and somewhat difficult points concerning the jurisdiction which the Court is now exercising. As I have said, the notices of motion come before the Court in support of the cross-claims and seek the same or similar orders as those sought in the cross-claims. Ordinarily, these matters would have nothing to do with the jurisdiction of the Federal Court and would have to be brought in one of the State courts. They come before the Court as part of the accrued jurisdiction following upon the commencement by the cross-respondents of their basic claims for contravention of the Trade Practices Act.

Nevertheless, it does not seem to me that in such a proceeding it is appropriate to intermix, as is sought here by the cross-respondents, the various forms of relief that are sought, particularly in relation to the damages aspect of the matter.

hearing later in the year. They will exist and stand on their	The damages claims by the cross-respondents have been fixed for
own. They relate to quite different subject matters and are dependent upon the proof of quite different facts and matters than those which are the subject of the present notices of motion and the cross-claims which operate with them.

I do not believe that these damages claims should be intermixed

with, and prima facie treated as a set off against, the amounts of rent for which the cross-respondents are clearly in default and which form the basis of these applications for eviction. I can see no reason why there should be a refusal to grant possession for the non-payment of rent because there is a damages claim (and I emphasise "claim") for an amount which I am for this purpose prepared to assume exceeds the unpaid rent. On the face of the material before me which appears to be undisputed, the cross-respondents have an obligation to pay rent which is completely independent of any claims they may have for misrepresentation and for misleading or deceptive conduct under the Trade Practices Act, none of which have been quantified in any way.

AS to the argument that I should not grant eviction because of the available claims for relief against forfeiture and under section 87, it will suffice for present purposes to observe that, in my opinion, whatever those claims are, they are not of sufficient weight to entice me to permit the cross-respondents to avoid the consequences of their non-payment of rent or occupation fees.

~lthough the cross claimant argued that as a matter of law,	relief against forfeiture may not or would not be granted where
the rent has not been paid, and I have not had time to consider the law on this matter at all, it may be that the cross-respondents are entitled to some relief against forfeiture of these leases. However, in the presence of the non-payment of

rent for so long, I find it difficult to imagine that they could have a strong case for relief by way of restoration of the leases on the basis that the rents did not have to be paid for the periods for which they have not been paid. Whatever the strength of the case for orders under section 87, on the evidence presently before me, orders are not likely to be granted that the leases should be varied in such a way as to rephrase or reconstitute the termination provisions or to write into each of the leases a clause which would protect these cross-respondents from having to pay their rents or from eviction if they do not pay the rents.

Section 8 7 and the law relating to relief against forfeiture are not simple areas of the law and there is a considerable dispute in the authorities and text books in the case of relief against forfeiture as to the circumstances under which the relief might be granted and what relief might be granted in the various circumstances that arise. Section 8 7 is a section of the Act which has aroused a very small amount of reported litigation up to the present. Nothing that has been written or said of the ramifications of the section that time has thus far permitted me to read suggests to me that an order would be likely, even if it

protect these cross-respondents from eviction on the grounds that	is available, of the kind that would be necessary in order to
they did not pay and have not paid or tendered their rents for such long periods.
The law has many odd features but it would be an extraordinary result if business people were allowed to occupy commercial

premises without rent while conducting their businesses, and then be supported in their non-payment until and because of a hearing of claims for damages against their landlord for conduct offending against the Trade Practices Act.

There is no evidence here that the landlord's application for eviction has been motivated by bad faith or improper motives of some other kind. Indeed the evidence establishes that the landlord has been quite patient in these matters in the sense at least that it instructed its solicitor to write letters to each of these cross-respondents claiming the unpaid occupation fees since January 1990 and do little else until now despite the fact that letters not only failed to extract the occupation fees but appeared to have failed to extract answers of any kind.

I cannot see that the Court's discretion to adjourn these matters

can be aroused to permit the raising of claims which whilst on the face of them may have some arguability but are not yet supported either by evidence, principle or precedent. I think that applies in these particular cases.

For those reasons it is my view that the motions in principle

back to my observations at the beginning of this judgment that	ought to be granted. I use the phrase "in principle", harking
the form of orders that should now be made may be a matter for some discussion and negotiation and I will give the parties time to formulate minutes of appropriate orders. I do not propose at the moment to make findings in relation to the precise amounts of rent owing because amongst other things they are subject to
interest which would have to be calculated and the amounts will vary depending on whether they are for the periods when rents were payable or when the occupation fees were payable.
In addition, the parties will have a reasonably early opportunity to compare the amounts which the cross-claimant says are due - the evidence of which appears to be uncontested in mathematical terms - with the amounts which the cross-respondents might be able to obtain by way of judgments in the Trade Practices action.
I will hear the parties on another occasion to be fixed shortly as to what I should do in this respect and when it should be done, but for the moment I am content to indicate that, in accordance with orders and directions that will be made hopefully by consent but if not after further consideration, judgment or orders for possession of the respective shop premises will be granted in favour of the cross-claimant.
I will also entertain an application for a stay of execution of
these orders for a period in order to enable an orderly run-down of the respective businesses, and the cross-respondents may make such application in this regard as they are advised. I certify that this and the cleve,-,

preceding pages are a true copy of the

Reasons for Judgment herein of his Honour

: Justice Einfeld