Evans v Thurau Pty Ltd

[2011] VCC 1354

IN THE COUNTY COURT OF VICTORIA (Un) Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-11-04165

TERRY DENNIS EVANS, MARY ANN	Plaintiffs
TAPSALL and JOHANNES GERARD VAN VEEN
v.
THURAU PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	5 October 2011
DATE OF JUDGMENT:	5 October 2011 (revised 6 October 2011)
CASE MAY BE CITED AS:	Evans & Ors v Thurau Pty Ltd
MEDIUM NEUTRAL CITATION:	[2011] VCC 1354

REASONS FOR JUDGMENT

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Catchwords:  Practice and procedure – Jurisdiction – Dispute over sub-leases of
apartments at Falls Creek – Requirement that when apartment not used
by the sub-lesees or their associates during the snow season, the
apartment must be made available for letting by the general public –
Whether premises thereby to be regarded as “retail premises” –
Whether VCAT has exclusive jurisdiction to determine disputes –
ss.4(1), 81 and 89(4) Retail Leases Act 2003.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J. Tomlinson	Nevin Lenne & Gross
For the Defendant	Mr S. Hopper	Aitken Partners

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HIS HONOUR:

1 The plaintiffs issued an originating motion on 30 August 2011 seeking relief pursuant to s.137 of the Property Law Act 1958. The defendant submits that the Court has no jurisdiction to entertain the dispute because it involves a “retail tenancy dispute” and the Victorian Civil and Administrative Tribunal has exclusive jurisdiction. The essential

issue for determination at present is whether the dispute between the plaintiffs and
defendant is a “retail tenancy dispute” involving “retail premises” as that term is
defined in s.4 of the Retail Leases Act 2003.

2           There is limited authority on the phrase “retail premises”. I have been referred to two decisions of Nathan J in Wellington v Norwich Union Life Insurance Society Ltd [1991] 1 VR 333 and Sofos v Coburn (1992) V Conv R 54-439 and a decision of Deputy President Macnamara sitting at VCAT in Cambridge Coordinates Pty Ltd v Vikings Press Pty Ltd (2001) V Conv R 58-553.

3 I have also been referred to the extensive discussion in the leading text on the Act, authored by the Honourable Justice Croft. There appears to be a debate as to whether it is appropriate when determining whether premises are retail premises to look beyond the terms of the lease and any associated documents to take account of the activities actually performed at the leased premises. There are some circumstances in which it may be appropriate to go beyond the lease documents. For example, where the nature of the tenant changes from a company to a publicly listed company which thereby brings into operation s.4(2)(c) of the Act, as O’Bryan J decided in Towercom Pty Ltd v Strathfield Group Ltd (2001) V Conv R 54-634.

4           In the present case, I consider that I should confine my attention to the lease documents and the documents associated with the lease. In any event, it was submitted by defendant’s counsel, Mr Hopper, that the evidence as to the use of the

premises was “inconclusive”. Further, the submissions made by plaintiff’s counsel, Mr
Tomlinson, primarily concentrated on the terms of the documents themselves.

5           The relevant premises in the present case are two apartments at Falls Creek, which are contained in an apartment building containing 27 apartments, a restaurant and other associated facilities. The apartment block is held by the defendant, pursuant to a head lease dated 20 May 1993, with the Alpine Resorts Commission “for and on behalf of Her Majesty Queen Elizabeth II”.

6           The first apartment in question is Apartment 19, which is held by the first plaintiff, Mr

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Evans, pursuant to a sub-lease with the defendant, dated 7 May 2002. Mr Evans purchased his interest in the property in 2002 upon payment of a consideration of approximately $177,000. The ongoing rental payments pursuant to the sub-lease are

modest, although there are other payments required to be made on a regular basis to
the defendant.

7           The second premises in question is Apartment 14, which is held by the second and third plaintiffs, Ms Tapsall and Mr Van Veen, pursuant to an assignment of sub-lease, dated 12 March 2002. The assignors had originally entered into a sub-lease with the defendant on 12 July 1996. Pursuant to a contract of sale, dated 8 January 2002, Ms Ms Tapsall and Mr Van Veen purchased their interest in the apartment for approximately $171,000.

8           Pursuant to each of the sub-leases, the plaintiffs were required to use the premises as a “residential apartment” and were to use it “for no other purpose”. The sub-leases incorporated provisions of the head lease between the defendant and the Alpine Resort Commission, although, by Clause 3(d) of the sub-lease, the provisions of the sub-lease were to prevail if there was “conflict with or duplication of any of the obligations or covenants implied” from the incorporation of the provisions of the head lease in the sub-lease.

9           The critical issue in the case, as identified by counsel, is a provision in the head lease which provides that where an apartment in the apartment block is not being used by the sub-lessee or an associated person, then the apartment must be made “available

to the general public during the snow season on reasonable terms and conditions for

holiday lettings”. Any such holiday lettings are subject to further provisions, including that they be made through the defendant or the person nominated by the defendant. The occupation of the apartment is not restricted to the sub-lessee but also includes occupation “by the spouse or any descendant, parent, brother, sister or any

descendant of the brother or sister” or if the sub-lessee is a company, by a director or similarly associated person of the director.
10	retail premisesRetail Leases Act 2003 premises which are “used, or are to be used, wholly or predominantly for the sale or hire of goods by retail or the retail provision of services”. The defendants submission is that the predominant use of both Apartments 14 and 19 is “holiday

The definition of “” in s.4(1) of the means submission was made relying upon the terms of Clause 12.3.2, requiring a sub- lessee to make the apartment available to the general public during the snow season

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on reasonable terms and conditions for holiday lettings when the apartments are not
being used by the sub-lessee or associated persons.

11         Mr Hopper submitted that essentially what was purchased by the plaintiffs was the goodwill of a holiday accommodation business and the principal purpose of the lease was to facilitate the rental of the apartments to members of the public during the snow season. The head lease defines the snow season as the period, 8 June to 31 October each year, or a different period declared by the Commission, which Mr Tomlinson informed me from the bar table, without demur from Mr Hopper, was generally of a lesser period.

12

Mr Tomlinson submitted that the snow season was only a small period during the themselves, or through their associates, continuously through the snow season so that there was never an opportunity for the operation of Clause 12.3.2 of the head lease, and in these circumstances, where there was no more than a mere possibility of the premises being used for a retail purpose, it could not be said that this was what the premises were “wholly or predominantly” used for.

13         It is clear that the snowfields in Victoria are a very limited resource, both in terms of their location and the period of time during which they might be used for snow pursuits. It is clearly appropriate that, in the management of such a scare resource individuals who acquire the opportunity to obtain a proprietary interest in buildings erected on the snowfields should be required, if they are not being used, to make them available for letting by the general public. This seems to be the purpose and intent of Clause 12.3.2 of the head lease.

14         However, it seems to me that it does not follow that the purpose for which the apartments are “wholly or predominantly” used is for the “retail provision of services” and, therefore, that the apartments are “retail premises” as defined by the Act or the dispute which has arisen comes within the definition of a “retail tenancy dispute” which would give VCAT an exclusive jurisdiction to determine the dispute.

15         In my view, the apartments which are held, as Apartments 14 and 19 are, pursuant to the arrangements which I have set out, are predominantly held in circumstances where they are to be used by the plaintiffs and their associates as a residential apartment. It is only in circumstances where the apartments are not put to that use during the snow season that the plaintiffs must make the apartments available for holiday letting to the general public. That is a situation which may arise, although in

DRAFT

circumstances where there is continuous use by the plaintiffs or those associated with
them, these circumstances would never arise and for that reason, it cannot be said
hat the predominant use of the premises is the provision of “holiday accommodation”

or any other retail services.

16 excluded from the definition of “retail premises” by reason of a determination made by
the relevant minister, pursuant to s.5(1)(c) of the Act, published in the Victoria
Government Gazette on 30 April 2003. The determination was dated 29 April 2003
and was expressed to come into effect on 1 May 2003. The determination excluded

An alternative submission was made by Mr Tomlinson that the premises were “entirely on any one or more of the first three storeys in a building, excluding any basement levels”.

17

Mr Hopper submitted that the determination did not have effect because s.5 of the Act purporting to be made under s.5 of the Act must be beyond power. Although s.143 of the Evidence Act 2008 entitles a judge to take judicial notice of an instrument such as the determination of the minister published in the Government Gazette, and s.153 provides a presumption of regularity in relation to a document printed in the Government Gazette, I do not consider that in light of the matters raised by Mr Hopper concerning the coming into operation of the relevant part of the Act that I can rely upon the provisions of the Evidence Act to give validity to what appears to be done without power.

18         In any event, there is an argument as to the application of the minister’s determination to the apartments in question. There are a number of storeys to the apartment building. Mr Hopper has submitted that the bottom storey is clearly a basement, being cut into the side of the mountain and simply containing an electrical sub-station, a laundry and the support for a balcony above. If that storey is excluded, then Apartment 14 would be located on the third of three storeys, which would not be excluded by the determination by the minister.

19         I do not consider that it is necessary for me to decide this matter, save to the extent that I have expressed the view that it appears the determination was made without power. I consider that if the determination was made within power it would be

appropriate to regard the first level, containing the electrical sub-station and laundry
as a basement. I have reached those conclusions on the basis of studying the
photographs exhibited to an affidavit filed on behalf of the defendant and plans drawn

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by one of the plaintiffs and adopted by the others, and also a photograph handed up
by consent, which is marked Exhibit P1.

20         In the circumstances, it is simply appropriate to declare that I consider the Court has jurisdiction to determine the dispute raised by the plaintiffs in the originating motion and to invite the parties to make further submissions as to how that dispute might progress to trial.

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Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 5 October 2011 (and revised on 6 October 2011).

Dated: 6 October 2011

Caroline Dawes

Associate to His Honour Judge Anderson