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Cooma Clothing Pty Ltd v Create Invest Develop Pty Ltd

Cooma Clothing Pty Ltd v Create Invest Develop Pty Ltd

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Case Copied 10 May 2013 39 min read

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0018
COOMA CLOTHING PTY LTD (ACN 136 547 192) & ORS	Applicants
v
CREATE INVEST DEVELOP PTY LTD (ACN 142 532 232)	Respondent

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JUDGES	NETTLE and NEAVE JJA
WHERE HELD	MELBOURNE
DATE OF HEARING	26 April, 3 May 2013
DATE OF JUDGMENT	10 May 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 106
JUDGMENT APPEALED FROM	VCAT Reference No R65/2012, Judge Macnamara, Vice President dated 1 November 2012

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LANDLORD AND TENANT – Retail premises lease – Renewal – Executory contract between tenant under retail premises lease and purchaser of reversion under uncompleted contract of sale of reversion for new lease of premises to commence upon expiration of existing retail premises lease – Whether executory contract a ‘renewal’ of lease within meaning of Retail Leases Act 2003 (Vic) – Whether executory contract valid and enforceable though not a ‘renewal’ – Assignment – Purported assignment by tenant to new tenant (‘assignee’) of both remainder of term of lease and executory contract for new lease – Whether assignment effective to convey both benefit and burden of executory contract for new lease – Later completion of contract of sale of reversion – Whether purchaser of reversion entitled to enforce executory contract for new lease as against assignee – Guarantee – Construction of guarantee – Whether guarantee of assignee’s obligations extending to assignee’s obligations under executory contract for new lease – Whether guarantee of obligations under executory contract for new lease a covenant running with land – Chan v Cresdon Pty Ltd (1989) 168 CLR 242, distinguished; P A Swift Investments v Combined English Stores Group Plc [1989] AC 632, Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237, applied – Retail Leases Act 2003 (Vic), ss 3, 8, 9(b), 21(4); Property Law Act 1958 (Vic), ss 140, 141, 142 and 154; Transfer of Land Act 1958 (Vic), ss 40, 42(2)(e) and 66.

APPEAL – Practice and Procedure – Application for leave to appeal out of time from decision of Victorian and Administrative Tribunal (‘VCAT’) – Need to show good reason for delay – Retail premises lease – Application for leave to appeal granted but appeal dismissed – Picken v President etc of the Shire of Alexander (1890) 16 VLR 309, 311; In the Marriage of J F and J E McAleese (1977) 3 Fam LR 11604, referred to – Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 148(2).

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Appearances:	Counsel	Solicitors
For the Applicants	Mr J D Atkins with Mr V C Nath	Wilbert Mapombere
For the Respondent	Mr M T Settle	HDL Legal & Consulting

NETTLE JA

NEAVE JA:

This is an application for an extension of time in which to apply pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 for leave to appeal against orders of a Vice President of the Tribunal and for a stay of his Honour’s orders pending the hearing and…

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: [2013] VSCA 106
Decision Date: 10 May 2013

CaseChat Overview and Summary

Cooma Clothing Pty Ltd, the tenant under a retail premises lease, sought to appeal against a decision of the Victorian Civil and Administrative Tribunal (VCAT) concerning the lease’s renewal, assignment, and associated guarantees. The primary respondent, Create Invest Develop Pty Ltd, was the purchaser of the reversion under an uncompleted contract of sale, intending to enter into a new lease with the tenant upon the existing lease’s expiration. The dispute centred on whether the contract between the tenant and the purchaser constituted a valid ‘renewal’ under the Retail Leases Act 2003 (Vic) and whether the executory contract remained enforceable if it did not qualify as a renewal. Additionally, the assignment of the tenant’s interest to a new tenant and the enforceability of guarantees provided by the assignee were contentious issues.

The legal issues encompassed the interpretation of the term ‘renewal’ within the Retail Leases Act 2003 (Vic) and whether the executory contract could be deemed enforceable despite not meeting the statutory definition. Furthermore, the validity of the assignment of both the lease and the executory contract to the assignee, and the extent of the guarantor’s obligations, were pivotal. The court examined whether the guarantor’s obligations extended to the assignee’s responsibilities under the executory contract and if such obligations were enforceable as a covenant running with the land. Relevant legislation included the Retail Leases Act 2003 (Vic), Property Law Act 1958 (Vic), and Transfer of Land Act 1958 (Vic).

The court found that the executory contract did not constitute a ‘renewal’ under the Retail Leases Act 2003 (Vic), but it was still a valid and enforceable agreement. The assignment of both the lease and the executory contract to the assignee was deemed effective, transferring both the benefit and burden of the executory contract. However, the purchaser of the reversion was entitled to enforce the executory contract against the assignee upon the completion of the contract of sale of the reversion. The court also ruled that the guarantee provided by the assignee did not extend to the assignee’s obligations under the executory contract for the new lease, distinguishing it from the principle in Chan v Cresdon Pty Ltd (1989) 168 CLR 242. The appeal was dismissed due to the lack of a compelling reason for the delay in filing the application for leave to appeal, despite the application being granted under the Victorian Civil and Administrative Tribunal Act 1998 (Vic).

Orders