Contempree v BS Investments Pty Ltd - [2020] QCA 255

SUPREME COURT OF QUEENSLAND

CITATION:

Contempree v BS Investments Pty Ltd & Anor [2020] QCA 255

PARTIES:

MARK CONTEMPREE
(appellant)
v
BS INVESTMENTS PTY LTD ACN 135 819 939 AS TRUSTEE FOR B&G SMITH INVESTMENT TRUST
(first respondent)
TIRLEY HOLDINGS PTY LTD ACN 135 942 862 AS TRUSTEE FOR GODDARD FAMILY TRUST
(second respondent)

FILE NO/S:

Appeal No 4005 of 2020
DC No 33 of 2019

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Southport – [2019] QDC 29 (Kent QC DCJ)

DELIVERED ON:

17 November 2020

DELIVERED AT:

Brisbane

HEARING DATE:

17 August 2020

JUDGES:

Sofronoff P, Mullins JA and Lyons SJA

ORDER:

Appeal dismissed with costs.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – where the appellant is a director of a company – where the company ran a backpackers hostel from a commercial building it owned – where the respondents purchased the land and premises from the company and leased the premises back to the company – where the company then in turn assigned the lease to a third party company – where the original lease was not registered until after it was assigned to the third party company – where the third party company’s obligations under the lease were guaranteed by, amongst others, the appellant – where the third party company initially paid rent but subsequently fell into arrears – where the respondents commenced proceedings against the guarantors for payment under the guarantee and were awarded judgment in the Magistrates Court – where the respondents then commenced proceedings in the District Court – where the appellant alleged at trial that there was no valid lease because it was not a registered lease at the time the assignment was entered into and therefore there was no performance to guarantee – where the basis of that argument was that the lease was not valid at law until it was registered and the respondents’ failure to have the lease registered until then constituted a repudiation of the agreement to lease, which gave the appellant the right to rescind the agreement to lease – where the appellant argued that the rescission was effected by vacating possession – where the appellant also pleaded at trial: that the guarantee did not comply with requirements of the Property Law Act 1974 (Qld); that the only lease in existence was a tenancy from month-to-month; that there was an Anshun estoppel by operation of the earlier Magistrates Court proceedings and the respondents were precluded from bringing the proceedings at trial pursuant to the res judicata principle; and that to the extent that it was argued a lease existed between the respondents and the third part company, that it was surrendered or terminated and that the guarantee was therefore limited to that period (and that in that respect, the respondents failed in their duty to mitigate losses in respect of the alleged lease) – where the respondents argued that the…

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: [2020] QCA 255
Decision Date: 17 November 2020

CaseChat Overview and Summary

In the case of Contempree v BS Investments Pty Ltd, the appellant, Mr Contempree, who is a director of the company Bemon, appealed against a decision of the District Court which found him liable for guaranteeing certain lease obligations of a third party company, Foxworth. The dispute involved a commercial building owned by Bemon, which ran a backpackers hostel. The respondents purchased the land and premises from Bemon and leased them back to Bemon. Bemon then assigned the lease to Foxworth, and the lease was subsequently registered. Foxworth fell into rent arrears, and the respondents pursued Mr Contempree and others for payment under the guarantee. The District Court found in favour of the respondents, and Mr Contempree appealed on multiple grounds.

The legal issues in the case centered on the validity of the lease, its assignment, the enforceability of the guarantee, and whether the lease had been surrendered or terminated. Mr Contempree argued that the lease was not valid until registered, and its non-registration constituted a repudiation of the agreement to lease, which entitled him to rescind the agreement. He also contended that the guarantee did not comply with the Property Law Act 1974 (Qld), that there was an Anshun estoppel preventing the respondents from bringing the proceedings, and that the lease had been surrendered or terminated. The respondents maintained that the lease was an equitable lease from the date of the deed of assignment and guarantees, that nothing was done to bring it to an end, and that the guarantees were enforceable.

The court examined the arguments put forth by Mr Contempree and the respondents. The learned trial judge concluded that the assignment and guarantees were effective, despite some imperfections in the documents. The judge found no material omissions or ambiguities that would favour Mr Contempree and held that neither Bemon nor Mr Contempree took any step to terminate the lease. The court also held that Foxworth’s occupation of the property was pursuant to the registered lease, and the obligations under the lease continued. The trial judge ruled that there was no surrender or other termination of the lease following Foxworth’s abandonment and that the respondents were entitled to enforce the guarantees. Consequently, the respondents were awarded judgment in their favour.

In light of the foregoing, the appeal was dismissed with costs. The court found no merit in Mr Contempree’s arguments and upheld the District Court’s decision.

Orders

Orders of the court

Appeal dismissed with costs.

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

At trial the current respondents argued that the lease was at least an equitable lease from the date of execution of the deed of assignment and the guarantees. Furthermore, it was argued that nothing was done to bring it to an end. It was capable of being assigned and was assigned with that assignment subsequently perfected by registration. Accordingly it was argued that the guarantees were enforceable, there was no surrender or repudiation of the lease which remained on foot and no issues of estoppel or res judicata arose.The District Court Decision After a three-day trial the learned trial judge concluded that the assignment and guarantees were effective. Whilst he considered that there were some omissions in the documents and they were imperfectly executed, he did not consider they were material and was ultimately satisfied they did not give rise to any ambiguity such as to result in an alternative interpretation which would favour the appellant. Furthermore it was held that neither Bemon nor the appellant Mr Contempree took any step to terminate the lease on any of the bases that were being advanced prior to the registration of the lease and assignment as between the parties. The trial judge also held that Foxworth’s occupation of the property was pursuant to the registered lease, not a tenancy at will, at least from 20 February 2017. The trial judge held that the assignment and guarantees were broadly drafted and the effect of them was that they would take effect immediately or at least from registration. The trial judge held that the obligations of the appellant to guarantee Foxworth’s obligations continued and were enforceable. The trial judge explicitly held that the circumstances did not amount to any surrender or any other termination of the lease following Foxworth’s abandonment. It was held that the obligations under the lease continued and the respondents were within their rights to enforce the guarantees. Accordingly the respondents succeeded against all of the defendants and there was judgment in the respondents’ favour.Notice of Appeal The appellant’s Notice of Appeal raised some 30 grounds of appeal which overlap substantially. In the outline of argument Counsel for the appellant grouped those grounds into six categories which I shall adopt for convenience:(a)Grounds 1 – 3: The Lease;(b)Grounds 4 – 5: The Assignment of the Lease;(c)Grounds 6 – 8: The Guarantee of the Lease;(d)Grounds 9 – 30: The Surrender of the Lease;(e)Erroneous Findings of Fact re the Surrender of the lease; and(f)Erroneous Findings at Law re the Surrender of the Lease.Preliminary Observations The transaction between Bemon and Foxworth was intended to take effect on 16 December 2016 (identified in a Deed of Covenant, discussed below, as the Assignment Date). It appears to have been uncontroversial that Bemon departed from the premises on 19 December 2016. The monies for which the respondents sued were identified in a document described as the Activity Statement for Foxworth Pty Ltd for 01/12/16 to 02/12/19, which became Exhibit 2 (the Activity Statement).[1] It is apparent from the Activity Statement that rent for the first five months of Foxworth’s occupation was paid.[1]See the evidence of Goddard at ARB 347–350; and of Smith at ARB 400. Exhibit 1 is materially the same as Exhibit 2.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Contempree v BS Investments Pty Ltd & Anor [2020] QCA 255
PARTIES:	MARK CONTEMPREE (appellant) v BS INVESTMENTS PTY LTD ACN 135 819 939 AS TRUSTEE FOR B&G SMITH INVESTMENT TRUST (first respondent) TIRLEY HOLDINGS PTY LTD ACN 135 942 862 AS TRUSTEE FOR GODDARD FAMILY TRUST (second respondent)
FILE NO/S:	Appeal No 4005 of 2020 DC No 33 of 2019
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	District Court at Southport – [2019] QDC 29 (Kent QC DCJ)
DELIVERED ON:	17 November 2020
DELIVERED AT:	Brisbane
HEARING DATE:	17 August 2020
JUDGES:	Sofronoff P, Mullins JA and Lyons SJA
ORDER:	Appeal dismissed with costs.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – where the appellant is a director of a company – where the company ran a backpackers hostel from a commercial building it owned – where the respondents purchased the land and premises from the company and leased the premises back to the company – where the company then in turn assigned the lease to a third party company – where the original lease was not registered until after it was assigned to the third party company – where the third party company’s obligations under the lease were guaranteed by, amongst others, the appellant – where the third party company initially paid rent but subsequently fell into arrears – where the respondents commenced proceedings against the guarantors for payment under the guarantee and were awarded judgment in the Magistrates Court – where the respondents then commenced proceedings in the District Court – where the appellant alleged at trial that there was no valid lease because it was not a registered lease at the time the assignment was entered into and therefore there was no performance to guarantee – where the basis of that argument was that the lease was not valid at law until it was registered and the respondents’ failure to have the lease registered until then constituted a repudiation of the agreement to lease, which gave the appellant the right to rescind the agreement to lease – where the appellant argued that the rescission was effected by vacating possession – where the appellant also pleaded at trial: that the guarantee did not comply with requirements of the Property Law Act 1974 (Qld); that the only lease in existence was a tenancy from month-to-month; that there was an Anshun estoppel by operation of the earlier Magistrates Court proceedings and the respondents were precluded from bringing the proceedings at trial pursuant to the res judicata principle; and that to the extent that it was argued a lease existed between the respondents and the third part company, that it was surrendered or terminated and that the guarantee was therefore limited to that period (and that in that respect, the respondents failed in their duty to mitigate losses in respect of the alleged lease) – where the respondents argued that the…