Del Borrello v Mark David Reilly (As Administrator of Buccaneer Swimming Pools Pty Ltd)
[2001] WASC 157
•20 JUNE 2001
DEL BORRELLO & ANOR -v- MARK DAVID REILLY (AS ADMINISTRATOR OF BUCCANEER SWIMMING POOLS PTY LTD) & ORS [2001] WASC 157
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 157 | |
| 20/06/2001 | |||
| Case No: | CIV:1656/2001 | 23 MAY 2001 | |
| Coram: | WHEELER J | 23/05/01 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| PDF Version |
| Parties: | GARRY JOHN DEL BORRELLO BORRELLO GROUP PTY LTD (ACN 077 816 847) MARK DAVID REILLY (AS ADMINISTRATOR OF BUCCANEER SWIMMING POOLS PTY LTD) GLENN FEATHERBY (AS ADMINISTRATOR OF BUCCANEER SWIMMING POOLS PTY LTD) BUCCANEER SWIMMING POOLS PTY LTD AQUA TECHNICS (WA) PTY LTD (008 905 888) |
Catchwords: | Corporations Administration Lease Sale of assets Injunction to restrain removal of fittings turns on own facts |
Legislation: | Nil |
Case References: | Lam Soon Australian v Molit (No 55) Pty Ltd (1996) 22 ACSR 169 Pioneer Water Tanks v Delat Pty Ltd (1998) 16 ACLC 36 Foxcraft v The Ink Group Pty Ltd (1994) 15 ACSR 203 In re British Red Ash Collieries Ltd [1920] 1 Ch 326 Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (admin apptd) and Anor (No 2) (1996) 21 ACSR 157 Re Capital General Corporation Ltd; Rodgers v Radly & Ors; Rodgers v Sellars & Anor (2000) 37 ACSR 158 Slater & Anor v Global Finance Group Pty Ltd & Ors (1999) 30 ACSR 519 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- BORRELLO GROUP PTY LTD (ACN 077 816 847)
Plaintiffs
AND
MARK DAVID REILLY (AS ADMINISTRATOR OF BUCCANEER SWIMMING POOLS PTY LTD)
GLENN FEATHERBY (AS ADMINISTRATOR OF BUCCANEER SWIMMING POOLS PTY LTD)
First Defendants
BUCCANEER SWIMMING POOLS PTY LTD
Second Defendant
AQUA TECHNICS (WA) PTY LTD (008 905 888)
Third Defendant
(Page 2)
Catchwords:
Corporations - Administration - Lease - Sale of assets - Injunction to restrain removal of fittings - turns on own facts
Legislation:
Nil
Result:
Application allowed
Representation:
Counsel:
Plaintiffs : Mr C J L Pullin QC & Mr M A Detata
First Defendants : Mr K L Christensen
Second Defendant : Mr K L Christensen
Third Defendant : Mr L D Ayres
Solicitors:
Plaintiffs : Ian Tait & Co
First Defendants : Tottle Christensen
Second Defendant : Tottle Christensen
Third Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Lam Soon Australian v Molit (No 55) Pty Ltd (1996) 22 ACSR 169
Pioneer Water Tanks v Delat Pty Ltd (1998) 16 ACLC 36
Case(s) also cited:
Foxcraft v The Ink Group Pty Ltd (1994) 15 ACSR 203
In re British Red Ash Collieries Ltd [1920] 1 Ch 326
Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (admin apptd) and Anor (No 2) (1996) 21 ACSR 157
(Page 3)
Re Capital General Corporation Ltd; Rodgers v Radly & Ors; Rodgers v Sellars & Anor (2000) 37 ACSR 158
Slater & Anor v Global Finance Group Pty Ltd & Ors (1999) 30 ACSR 519
(Page 4)
1 WHEELER J: These are brief reasons which I now give for orders which I made on 23 May 2001 granting the plaintiffs leave pursuant to s 440D of the Corporations Law to commence proceedings against the defendants and against Buccaneer Swimming Pools Pty Ltd and to join Buccaneer Swimming Pools Pty Ltd as an additional defendant to the action, and restraining the defendants until trial or further order from removing ten display pools located at 28 Belmont Ave, Belmont. Briefly, the chronology is as follows.
2 Buccaneer Swimming Pools Pty Ltd ("Buccaneer") entered into a written lease with the plaintiffs on 26 March 1997 in respect of the premises at 28 Belmont Ave, Belmont. On the premises there are ten display pools, nine of which are fibreglass and one concrete. I will return to the terms of the lease presently. It has a term expiring on 31 March 2002.
3 On 29 March 2001, Buccaneer was placed into administration for the purposes of Part 5.3A of the Corporations Law. It is common ground that Buccaneer is insolvent. The first defendants are administrators of Buccaneer. They have paid rent until the month of May 2001. They had apparently engaged in negotiations with the third defendant, Aqua Technics (WA) Pty Ltd ("Aqua Technics") for the sale of the assets of Buccaneer.
4 Aqua Technics had, at the time of initial negotiations, advised the plaintiffs that Aqua Technics was not interested in taking an assignment of the existing lease but wanted a new lease with more favourable terms, including reduced rental. That was not acceptable to the plaintiffs.
5 At some later time, the administrators entered into an agreement with Aqua Technics for the sale of the business of Buccaneer, including the fibreglass pools located at 28 Belmont Ave, Belmont. The sale agreement does not involve any assignment of the lease. It will therefore be necessary for the pools to be removed from the premises in order for Aqua Technics to take possession of them. I was advised by counsel for the first and second defendants that settlement of that sale agreement was required to take place on Friday, 25 May.
6 The relevant clauses of the lease, which contain some apparent ambiguities and inconsistencies, are clauses 17 and 20.01. They read as follows:
"17.01 TENANT TO YIELD UP
(Page 5)
- At the expiration or sooner determination of the Term the Tenant shall yield up the Demised Premises in the order and condition described in Clause 8.05 hereof.
17.02 TENANT'S RIGHT TO REMOVE FITTINGS
If throughout the Term the Tenant promptly pays the Base Rental and Yearly Outgoings and strictly observes and performs all the terms covenants and conditions on its part to be observed and performed the Tenant during the last FOURTEEN (14) days of the Term may remove from the Demised all fixtures fittings floor coverings signs and notices which are erected or installed by the Tenant during or prior to the Term or purchased from a previous tenant of the Demised Premises (other than the Appurtenances and other fixtures which form an integral part of the building comprising the Demised Premises or other fixtures fittings furniture equipment and appliances included within the definition of the Demised Premises) PROVDED THAT the removal can be effected without causing substantial damage to the Demised Premises and PROVIDED FURTHER that the Tenant makes good to the satisfaction of the Landlord any damage caused to the Demised Premises by the removal.
17.03 TENANT'S OBLIGATIONS TO REMOVE FITTINGS
If the Tenant does not do so as of right under the provisions of the last preceding Clause then if required to do so by the Landlord the Tenant shall remove from the Demised Premises within FOURTEEN (14) days after the expiration or sooner determination of the Term any fixture fitting floor covering sign or notice and shall make good to the satisfaction of the Landlord any damage caused to the Demised Premises by the removal and if required by the Landlord shall re-alter any alterations made by the Tenant so that the Demised Premises are converted back to their original condition and the
(Page 6)
- Landlord may at its option itself cause any fixture fitting floor covering sign or notice to be removed and any damage to be made good and any alteration to be re-altered and may recover the cost thereof from the Tenant as a liquidated debt payable on demand.
- 17.04 ABANDONED FITTINGS BELONG TO THE LANDLORD
Any fitting or fixture not removed by the Tenant either as of right or by requirement of the Landlord as aforesaid will be deemed abandoned by the Tenant and will become the property of the Landlord.
…
17.06 BELOW GROUND AND ABOVE GROUND POOLS INSTALLED IN THE DEMISED PREMISES
Subjection (sic) to sub-clause 20.01 hereof it is expressly agreed between the Landlord and the Tenant that all above ground pools and below ground pools presently installed in or on or about the Demised Premises ('the Pools') shall be Tenant's fittings for the purpose of this clause 17, and sub-clause 17.02 shall apply to the removal by the Tenant of the Pools at the expiration or sooner determination of the Term.
20.01 TENANT'S CHATTELS
The following chattels are to remain the property of the Tenant:-
10 Below ground swimming pools on display
1 Pergola 'Parkview Pergolas'
1 Pool Fencing around display pools
1 Wall mounted fibre glass chopper gun
1 Wall mounted Gelcoat gun
1 Alarm System
1 Wall mounted resin mixer
(Page 7)
- 15 Fire extinguishers
2 above ground diesel tanks
1 Phone system
2 Air compressors"
7 There is a dispute about an alleged re-entry of the premises, to which I think it is unnecessary to refer.
8 The submission of the plaintiffs is relatively simple. It is submitted that although the pools might otherwise have been tenant's fixtures, the lease purports to deal comprehensively with the rights of Buccaneer in relation to the pools. Under the lease, it is argued, there is no right to remove the pools at all until the last 14 days of the lease, which time has not yet arrived. In any event, it is argued that any right to remove is conditional upon it being able to be exercised without substantial damage being caused to the premises and further that in any event the tenant has an obligation to make good any damage (substantial or otherwise) which would be caused by the removal. It is alleged that the damage, which could be caused by removal of the pools, would cost in the order of $50,000 to repair, and a quotation from a contractor is annexed to an affidavit filed on behalf of the plaintiffs. Then, finally, it is said that because of the insolvency of the defendants, it is not just that the plaintiffs should be confined in this case to their remedy of damages.
9 The defendants dispute the plaintiff's interpretation of the lease, submitting that cl 17.02 is inapplicable (as seems to be common ground) at the present time but further submitting that the common law right of the tenant to remove his fixtures applies and that that right is unconditional. Further, it is argued that there is no evidence that substantial damage will be caused by removal of the pools, as distinct from any "damage" which may have been caused for the purposes of installation. That is, it is said that prior to installation of each pool there must have been a large hole in the ground on the premises, and that subsequent to removal there would be a large hole in the ground on the premises and that this cannot amount to "damage". It is further argued that in any event the quotation in the sum of $50,000 refers to matters which are unlikely to fall within the understanding of damage "caused" by the removal.
10 As to all of these matters, it appears to me that there is at the least a serious question to be tried. I am disposed to accept the defendants' submission that it is unlikely that the damage will be of the order of $50,000. For example, the quotation provided by the plaintiffs refers to one of the items of work required as "demolition of one indoor concrete
(Page 8)
- pool"; since as I understand it only the fibreglass pools are in issue in this case, it is not clear to me why the concrete pool features in the quotation. However, I do accept that significant work might be required to make good and that the cost involved would be substantial. The issues relating to the interpretation of the lease, the right of the defendants to remove, and the question of what would constitute "damage" resulting from the removal all appear to me to be open.
11 Finally, and perhaps most importantly however, the defendants argue that because Buccaneer is a company in administration, either leave should not be granted pursuant to s 440D of the Corporations Law, or alternatively, the balance of convenience does not favour the grant of an injunction because, to grant an injunction in these circumstances would be to interfere with the statutory regime prescribed in the case of an administration.
12 It is submitted that the plaintiffs are to be regarded as simply another creditor of Buccaneer, and that it is not appropriate for a creditor to advance its interest over other creditors, particularly where, as here, such a course may cause detriment to other creditors. The submission is made that the obligation to pay or make good is simply a breach of the contract that at the date of appointment of the administrators is a present obligation and not a mere expectancy, relying on Lam Soon Australian v Molit (No 55) Pty Ltd (1996) 22 ACSR 169.
13 It appears to me that there is a certain confusion in the submissions of the defendants in relation to this point. So far as future rent is concerned, the plaintiffs may properly be regarded as "creditors". However, so far as the obligation in respect of any potential wrongful removal of the pools, or damage arising from removal, is concerned, it appears to me that the decision referred to by the defendants is to a contrary effect. The court observed in that case that a right to sue for damages for a particular future breach of a covenant is, looked at before the breach occurs, not even a contingent claim but a mere expectancy (page 180). Although the observation made is there, as it is noted, obiter, I would respectfully adopt it for present purposes.
14 It appears to me that in relation to the proposed removal of the pools, the defendants assert a right in the administrators to commit what may be either a tort or breach of contract against the plaintiffs which would have the result of making the plaintiffs creditors at a future time, and submit that scheme of the Corporations Law entitles them to do so. It appears to
(Page 9)
- me that the more appropriate analogy with the present circumstances is the case of Pioneer Water Tanks v Delat Pty Ltd (1998) 16 ACLC 36.
15 In that case, Carr J granted leave to the plaintiff to commence proceedings for an injunction against the defendant, which was a company in administration, in relation to an alleged infringement of patents owned by the plaintiff. His Honour regarded as a significant factor the circumstance that it was not a case in which a creditor was seeking to advance its position in relation to a debt existing at the time when the administration commenced (page 40) and that it was a case in which "more than just accrued rights are involved". I accept that the circumstances of that case were different and that the plaintiff's case was stronger, in that it was initially seeking leave only so that it could then apply for an interlocutory injunction (whereas in this case the plaintiff seeks both together) and that in that case the question of whether the patents were being infringed was bound up with the question of whether the defendant's business could continue to exist in any event.
16 However, in this case, the effect of the defendants' argument is that an administrator can commit a legal wrong in the course of an administration without the court having power to intervene to prevent it, at least where the person or entity to be wronged is in some other respect an existing creditor of the company in administration. I did not accept that proposition. I am also mindful of the defendants' own submission that the sum in issue is in any event a relatively small one in the context of the administration overall and in the context of the price proposed to be paid by the third named defendant for the business. Notwithstanding the submission to the contrary made on behalf of the administrators, this did not appear to me to be a case in which the administrators were simply unable to make any reasonable provision for the legitimate concerns of the plaintiffs without seriously prejudicing the other creditors.
17 For the reasons given above, I made the orders to which I have referred.
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