Fancy a Bite Pty Limited v Iof Custodian Pty Limited

[2015] NSWCATCD 28

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Fancy a Bite Pty Limited v IOF Custodian Pty Limited [2015] NSWCATCD 28

Hearing dates:

26 February 2015

Decision date:

11 March 2015

Jurisdiction:

Consumer and Commercial Division

Before:

D Bluth, Senior Member

Decision:

1. The Tribunal orders that until further order of the Tribunal, the respondent is restrained from:

a.  excluding the Applicant from retail shop premises known as shop F2, Food Court Level, 99 Walker Street, North Sydney NSW; and
b.  interfering with the Applicant's use and occupation of the premises.

2. Until further order the Applicant is excused from providing to the Respondent an undertaking as to damages.

Catchwords:

Demolition notice, injunctive relief, requirement for undertaking as to damages, balance of convenience, s72(4) Retail Leases Act, 1994

Legislation Cited:

Retail Leases Act 1994

Cases Cited:

Allen v Jambo Holdings Pty Ltd (1980) 2 ALL ER 502
Car City Minchinbury Pty Limited v Lifestyle Vehicles Pty Limited [2008] NSWADTAP 76
Car City Minchinbury Pty Limited v Lifestyle Vehicles Pty Limited [2008] NSWADTAP 76
Dein & Dein v Bealey (1960) NSWR 385
Nam v Commonwealth Funds Management [2002] NSWADT 80
Spuds Surf Chatswood Pty Ltd v P T Limited [2007] NSWADT 130
Victims Compensation Fund Corporation v Brown [2003] HCA 54

Texts Cited:

The Principles of Equitable Remedies by ICF Spry, Seventh Edition 2007
Equity Doctrines and Remedies Fifth Edition 2015, JD Heydon, MJ Leeming and PG Turner

Category:

Principal judgment

Parties:

Fancy a Bite Pty Ltd (applicant/ lessee
IOF Custodian Pty Limited (respondent/ lessor)

Representation:

Counsel: Mr Victor Kerr
Mr Guy Parker SC
Solicitors: David Landa Stewart (applicant)
Mills Oakley, Lawyers (respondent)

File Number(s):

COM 15/06476

Publication restriction:

Nil

REASONS FOR DECISION

1. The Applicant Fancy a Bite Pty Limited filed an Application for Original Decision on 6 February 2015 relating to receipt of a demolition notice issued by IOF Custodian Pty Limited the Respondent (IOF) requiring the applicant to vacate a retail premises being shop F2, Food Court, 99 Walker Street, North Sydney (the shop) by close of business on 2 March 2015.

2. By that Application filed under COM 15/06481 the Applicant sought a number of declaratory orders from the Tribunal to the effect that the demolition notice was invalid and of no effect.

3. At the same time the Applicant filed Retail Leases Application for Interim Orders under file number COM 15/06476 seeking the following:

1. That until further order of the Tribunal, IOF be restrained from excluding the Applicant from the shop and be restrained from interfering with the Applicant's use and occupation of the shop.

2. Until further order, the Applicant be excused from providing to IOF an undertaking as to damages.

3. That the Tribunal finds that there are special circumstances warranting an order that IOF pay the Applicant's costs and incidental to this Application pursuant to Section 60 of the Civil and Administrative Tribunal Act 2013 and Section 77A of the Retail Leases Act 1994 (NSW) (the RL Act).

4. Such further or other orders as the Tribunal deems appropriate.

4. The Application was heard on 26 February 2015. Mr Victor Kerr appeared for the Applicant and Mr Guy Parker SC appeared on behalf of IOF.

Lease between the parties

5. The Applicant entered into a lease with the previous owner of the property GE Real Estate Investments Australia Pty Limited from 1 September 2008. That lease expires on 2015. The lease is registered number AE215757N and provided to the Applicant occupation of the shop (the Lease).

6. In or about 2013 GE sold the complex in which the shop is situated to IOF and IOF subsequently undertook a review of the retail area in the complex.

Proposed development of retail complex

7. The complex in which the shop is situated is described by Mr Damian Ward Solicitor for IOF in his affidavit of 26 February 2015 as:

'One of the premises owned by the Fund (IOF) is the land and improvements being a complex at 99 Walker Street, North Sydney. This complex contains five levels of basement car parking, a two level lower ground and ground floor podium (featuring a food retail area) and 21 levels of office space situated above the podium.'

8. Mr Ward in his affidavit at paragraphs 2.4 - 2.9 provides a summary of what has transpired:

'2.4   In about 2012, the principle(sic) commercial tenant of the complex, AAMI Insurance, vacated the complex. This caused a significant drop in patronage of the food court.

2.5   In about September and October 2013, IOF undertook negotiations with both Coles and Woolworths in relation to potentially entering into a lease over the food court for use as a supermarket. By about February 2014 IOF had decided it wished to pursue this option. There were further negotiations with Coles and Woolworths until about early June 2014, by which stage IOF elected to continue negotiations with Coles only.

2.6   Agreement on all terms was reached by Coles in mid August 2014, following two-three months of extensive negotiations. The agreement was not signed until 1 October 2014 however this was for logistical reasons regarding arrangements for execution of it by appropriate signatories.

2.7   A Development Application to be lodged with North Sydney Council was prepared with the assistance of external town planning consultants and was ready for lodgement by about 26 August 2014. The DA took several months to prepare.

2.8   It was anticipated the application would take approximately 6 months to be determined.

2.9 On or about 26 August 2014, IOF issued to each of the tenants in the food court and retail area Demolition Notices under clause 26 of each of the relevant leases and pursuant to Section 35 of the Retail Leases Act 1994.

9. Mr Ward then stated that on 1 October 2014, IOF entered into a binding agreement for lease with Coles Supermarkets for a term of 20 years for the whole of the retail floor. Annexed to Mr Ward's affidavit at tab D is a letter from Rider Levett Bucknall, Quantity Surveyors, dated 2 August 2014 estimating that the costs of the preparatory base building works to be undertaken by IOF so as to allow Coles to commence its fit out are $8,450,000.00.

The Lease

10. The first information item of the Lease is the description of the premises being leased on the front page. These are described as:

'Premises' being shop F2 on the Food Court Level of the Building known as 99 Walker Street, North Sydney.

11. Clause 1 of the Lease is the interpretation clause. A number of items are defined and these are as follows:

'Building' means the commercial office building and all other improvements (other than the Tenants' Property) on the Land.

'Centre' means:

(a) the Land and other land which the Landlord uses with the Land for a shopping centre, a parking area or other undertaking related to a shopping centre or a parking area; and

(b) all improvements (other than the Tenants' Property) on the Land and the other land.'

12. Clause 26 of the Lease contains a demolition clause as follows:

26   Notice of Termination

If the Landlord wants to demolish, substantially repair, renovate or reconstruct the Centre or the part of it containing the Premises, the Landlord may terminate this lease by giving the Tenant:

(a) sufficient details of the proposed works to indicate a genuine proposal to carry them out within a reasonably practicable time after this lease is terminated; and

(b) at least 6 months' notice of termination, unless the Term is 12 months or less in which case the notice of termination must be at least 3 months.

Retail Leases Act 1994

13. Section 35 of the RL Act states as follows:

'Section 35 - Demolition

(1) If a retail shop lease provides for termination of the lease on the grounds of proposed demolition of the building of which the retail shop forms part, the lease is taken to include provision to the following effect:

(a) The lease cannot be terminated on that ground unless and until the lessor has provided the lessee with details of the proposed demolition sufficient to indicate a genuine proposal to demolish that building within a reasonably practicable time after the lease is to be terminated.

(b) The lease cannot be terminated by the lessor on that ground without at least 6 months written notice of termination.

(c) ….

(2) ….

(3) ….

3(a) ….

(4) For the purposes of this section, "demolition" of the building of which a retail shop forms part includes any substantial repair, renovation or reconstruction of the building that cannot be carried out practicably without vacant possession of the shop.

14. Section 72 of the RL Act provides to this Tribunal certain powers as follows:

'Section 72, Powers of Tribunal relating to retail tenancy claims:

(1) In proceedings for a retail tenancy claim lodged with the Tribunal under this Part, the Tribunal is empowered to make any one or more of the following orders that it considers appropriate.

(a) ...

(b) ...

(c) an order that a party to the proceedings:

(i)   ….

(ii)   surrender possession of specified premises to another person, or

(iii)   ….

(iv)   ….

(d) an order granting a party to the proceedings relief against forfeiture,

(e) ….

(f) an order:

(i) declaring any provision made by a lease to be void for being inconsistent with this Act or the regulations, or

(ii) … or

(iii) declaring the rights and liabilities of the parties under law, whether any consequential relief is or could be claimed or not, or

(iv) ….

(g) ….

(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under the section to have full effect.

(3) The Tribunal may impose such conditions as it considers appropriate when making an order under this section.

(4) The Tribunal may make an interim order under this section pending final determination of a claim, if it appears to the Tribunal desirable to do so.

15. Certain provisions of the RL Act can override a clause of a lease. Section 7 provides as follows:

Section 7 - This Act overrides Leases.

This Act operates despite the provision of a lease. A provision of a lease is void to the extent that the provision is inconsistent with the provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease.

Demolition Notice

16. The demolition notice issued by IOF to the applicant is a notice dated 26 August 2014 purportedly given under s 35 of the RL Act addressed to the Applicant at the shop and states as follows:

'The Tenant leases the Premises from the Landlord pursuant to the lease in respect of the Premises registered as AD930751 (transfer pursuant to registered transfer of lease AH491801 and varied by registered variation of lease AH4918012 (Lease). The Food Court Level is also known as the Ground Level of the Building.'

The Landlord gives notice to the Tenant in accordance with clause 26 of the Lease and s 35 of the Retail Leases Act 1994 (NSW):

1.   that the Landlord:

(a) has entered into an agreement to lease the majority of the ground floor of the Building (among other parts of the Building) (Coles Premises) to Coles Supermarkets Australia Pty Limited ACN 004 189 708 (Coles) for use as a supermarket. The part of the ground floor being leased to Coles as shown on the attached plan as 'Retail Tenant 1';

(b) will lodge the Application for development approval (DA) with the North Sydney City Council either on 22 August 2014 or in the week commencing on 25 August 2014. The DA is for a number of items relating to the Coles Premises, including the use of the Coles Premises for the permitted use under the lease and also the works necessary to create and fit out the Coles Premises for use as a supermarket. The Landlord has reasonable expectation that the DA will be approved within 4-6 months from the date it is lodged. The works necessary to create and fit out the Coles Premises will commence shortly after the approval of the DA; and

(c) will demolish, substantially renovate and/or substantially reconstruct the ground floor (which contains the Premises) by removing all of the existing shops to create the Coles Premises.

2.   the demolition, renovation works and/or reconstruction works cannot be carried out practicably without vacant possession of the Premises; and

3.   vacant possession of the Premises is required by close of business on 2 March 2015.

17. Annexed to the Demolition Notice is an architectural drawing showing that the Coles Premises takes up nearly all of the ground floor retail fronting Mount Street, Little Walker Street and Walker Street.

18. Mr David Kuoch, the sole director and sold shareholder of the Applicant provided an affidavit dated 25 February 2015. He says:

3.   In late November 2014 I consulted Phillip Biber, Solicitor, in relation to the Demolition Notice served on my company by [IOF] after obtaining prior legal advice from another lawyer.

11.   Even though the Applicant's business has turned a small profit for most of the time it has been trading from the Premises, the possible consequences of the Applicant providing an undertaking as to damage or possibly me being required to stand behind my company and personally provide an undertaking as to damages to the Tribunal will not be possible for me to give as I shall be unable to meet any claim for damages should I be unsuccessful in my application for final relief.

13.   I am requested to vacate the premises on or before 2 March 2015 my family loses its only source of income and shortly after 2 March 2015 I understand that [IOF] will demolish the [retail centre].

14.   It is my expectation that if I were able to trade from [the shop] even though the food court level is presently far from inviting to customers I anticipate that I could still make a profit of approximately $100,000 over that seven month period.

Jurisdiction and principles

19. The Application for Interim Orders is made under s 72(4) of the RL Act. That section empowers the Tribunal to make an interim order pending final determination of a claim if it appears desirable to the Tribunal to do so.

20. Mr Kerr submitted that the principles to be considered by the Tribunal should include:

1. considering the nature of final relief to determine the scope of the interim relief and that the Tribunal is a statutory tribunal with range of statutory remedies at its disposal to ensure fairness according to law in dealings between lessors and lessees;

2. having regard to general considerations of balance of convenience and the strength of the applicant's case;

3. it is not a pre-condition of an application for interim relief that an applicant given an undertaking as to damages since that would prevent an applicant of limited means from ever obtaining interim relief; and

4. that an applicant must show a reasonably arguable case or, perhaps, a case which is immune to strike out.

21. The Tribunal now looks closely at the matters raised by Mr Kerr and the submissions by Mr Parker SC on behalf of IOF.

Reasonably arguable case

22. Mr Kerr submitted that the Applicant's case is that the demolition notice purported to have been issued under clause 26 of the Lease is defective because:

1. the notice at most concerns demolition of part of the building to which the shop is contained namely the Ground Floor only,

2. the notice does not comply with s 35 of the RL Act which requires demolition of the (whole) building or at least "substantial repair renovation or reconstruction of the (whole) building" citing s 35(4) of the RL Act;

3. to the extent that clause 26 of the Lease would permit demolition of part of the building it is inconsistent with s 35 of the Act and thus void under s 7. Mr Kerr also said there will be no, or little, dispute as to the relevant facts, so that the issue is one of statutory construction. The statutory construction point has not been previously considered by any court or the Tribunal so far as the Applicants' researches can ascertain and finally that the position put by the Applicant cannot be described as fanciful; and

4. in the decision of Spuds Surf Chatswood Pty Ltd v PT Limited [2007] NSWADT 130 the Tribunal agreed that 'the question to be asked' was not whether the lessee had a prima facie case but whether its case was reasonably arguable on the facts as asserted and could not be categorised as "hopeless" or "without merit".

23. Mr Parker SC in turn on behalf of IOF submitted that there was not a reasonably arguable case at all. The Applicant's position was weak on its merits. Section 35 spoke for itself and there was no need for a statutory construction. It is noticeable that Mr Kerr in his submissions inserts the word 'whole' when he recites s 35, however, that word does not appear at all in s 35.

24. Mr Parker SC rejected the concept put forward by the Applicant that the building referred to in s 35 was in fact the whole of 99 Walker Street, North Sydney. Further, the Lease had defined the shop premises as within the Centre and distinguished it from the building. If IOF was wrong in that regard then IOF would rely on s35(4) that what is proposed to be undertaken, especially to the costs of over $8,000,000.00, is in fact a substantial repair, renovation or reconstruction of the building that cannot be carried practicably without vacant possession of the shop and the evidence clearly goes to this.

25. Mr Parker SC also rejected the concept put forward by the Applicant that clause 26 of the Lease was void as it was contrary to s 35 of the RL Act. The position of IOF was that clause 26 and the s 35 could stand side by side.

Undertaking as to damages

26. Mr Kerr drew significant comfort from decisions of this Tribunal in Nam v Commonwealth Funds Management [2002] NSW ADT 80 (Nam) and Spuds Surf Chatswood Pty Ltd v PT Limited [2007] NSW ADT 130 (Spuds) that the Tribunal does not seek to impose the giving of an undertaking as to damages on an applicant for interim relief including injunctive relief. Mr Kerr referred the Tribunal to a decision of Judge K O'Connor President of the Administrative Decisions Tribunal in Nam at (92):

'92.   Retail leases law also has a public policy setting, though no doubt not seen by many as being as significant as the place occupied by environmental protection laws. The relationship between retail shop tenants and lessors is no longer a matter for private contract. The Act introduces binding, minimum standards. The Tribunal is not prepared to endorse as a precondition to the grant of interim statutory relief under the Act the giving of an undertaking as to damages.'

27. Strong dicta is found in Spuds, the decision of Judicial Member Molloy when analysing the position to date and following the dicta of Judge K O'Connor  - in Nam when he says at [67-68]:

'67. His Honour went on to observe, at [81], that the Retail Leases Act 1994 was 'remedial legislation'. Its primary focus is the relationship between lessors and lessees in retail shopping centres.

At [82] his Honour referred to the 1998 amendments introducing into the Act "provisions under which lessees may sue lessors for unconscionable conduct, reflecting the Parliament's concern over the conduct of some lessors in their management of shopping centres … the 1998 amendments also extended the range of orders that the Tribunal could make in relation to retail tenancy claims, and introduced the power to grant interim relief."

At (87) his Honour referred to an observation of Lord Denning NR in Allen v Jambo Holdings Pty Ltd (1980) 2 ALL ER 502 where at 503 his Lordship stated, in relation to the grant of a Mareva injunction that "One has to look at these matters broadly. As a matter of convenience, balancing one side against the other …"and, at [92] O'Connor DCJ observed that retail leases law "also has a public policy set in, though no doubt not seen by many as being as significant as the place occupied by environmental protection laws. The relationship between retail shop tenants and lessor is no longer a matter of private contract. The Act introduces binding minimum standards. The Tribunal is not prepared to endorse as a precondition to the grant of interim statutory relief under the Act the giving of an undertaking as to damages.…"

'68.   It is plain from Nam that the Tribunal, when considering the grant of some form of interim order, should give close regard to the economic impact of the orders that are sought and the orders (if any) that the Tribunal proposes to grant.

28. As mentioned above, it was the proposition of Mr Kerr on behalf of the Applicant that it was not a precondition of an Application for Interim Orders before the Tribunal that an applicant must give an undertaking as to damages relying on Nam and Spuds. Mr Parker SC on behalf of IOF took issue with the dicta in these decisions. He directed the attention of the Tribunal to other considerations to question the overriding principle that an undertaking as damages would not be a precondition of any application before the Tribunal. He stated that the common law position before the Supreme Court was that a requirement as to an undertaking for damages was a matter of course. He produced to the Tribunal extracts from the learned text of the Principles of Equitable Remedies by I.C.F. Spry 2007 and Equity Doctrines and Remedy 5th Edition by Heydon, Leeming and Turner 2015 as supporting the proposition that an undertaking for damages should be required by the Tribunal from the Applicant. Mr Parker SC also took issue with the concept that the RL Act was in fact remedial legislation to benefit one party that is tenants.

29. Mr Parker SC directed the Tribunal's attention to the following paragraphs by the learned text authors. In Spry at pages 481-2 the following was found:

In deciding on the course that is most just in all the circumstances the court ordinarily proceeds on the basis that any interlocutory injunction that is granted is subject to an undertaking by the plaintiff as to damages. The most usual undertaking to be required has been an undertaking that the plaintiff will "abide by any order at which this court may make as to damages, in case this court shall be of opinion that the defendant shall have sustained any, by reason of this order, which the plaintiff ought to pay", but different forms have prevailed in different jurisdictions in accordance with the rules of court and the practice directions made from time to time.

And at p 486:

The general considerations that govern the giving of an undertaking as to damages often lead to the imposition of other conditions on the plaintiff. As has been observed here, in appropriate cases he may be required, not only to give an undertaking as to damages, but also to lodge a security, or to undertake that he will do so, an order that satisfaction of any order as to damages or otherwise may be sufficiently provided for (see cases cited).

And from Equity Doctrines and Remedies at paragraph 21-410 the following:

Almost as a matter of course, a court will decline to grant an interlocutory injunction unless the plaintiff undertakes to the court to abide by any order it may later make if it turns out that the injunction should not have been made. If no undertaking can be given, no injunction will issue… The importance of an undertaking is immense, as in the absence of an undertaking a defendant who is ultimately victorious at the final hearing has no recourse to recover the damages that defendant may have incurred from complying with an interlocutory injunction.

30. Mr Parker SC makes a further point that it appeared to be unfair that an Applicant/Plaintiff would be required to give an undertaking as to damage if the matter were heard in the Supreme Court as opposed to no undertaking as to damages before the Tribunal. This dichotomy is more apparent when one considers the jurisdictional overlap under s76 of RL Act. It would appear that this discrepancy is based on the earlier decisions encompassing a view that the RL Act is remedial legislation. This is a view that troubled this Tribunal and the Tribunal prefers to look at a later decision of the Appeal Panel in Car City Minchinbury Pty Limited v Lifestyle Vehicles Pty Limited [2008] NSW ADTAP 76 [Minchinbury].

31. In Minchinbury the Appeal Panel was asked to take on board the aspect of the RL Act being of remedial legislation and having beneficial character. It was important for the benefit of the Applicant on the question of construction, as to whether the use of the premises by the Applicant fell within the purview of the RL Act. The Appeal Panel stated at paragraph (64):

64. In arguing that because the RL Act was 'beneficial legislation' the phrases in Schedule 1 defining 'retail shop business' should be construed broadly, Dr Keogh relied on three authorities: Malouf (t/as Fusion Point) v Manly Council [2004] NSWSC 24, Manly Council v Malouf (2004) 61 NSWLR 394; [2004] NSWCA 299 and Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48 …

32. The Appeal Panel reviewed the decisions and came to the following view [72]:

72. In more general terms, we incline to the opinion, as we indicated to counsel during the hearing, that the intent of the RL Act is to alter pre‑existing common law and statutory principles relating to retail leases in ways that will benefit both lessors and lessees. The benefits that it confers include, as Shaw J noted in Malouf (t/as Fusion Point) v Manly Council) [2004] NSW SC 24, the availability of a Tribunal to resolve retail tenancy disputes. To treat the protection of retail tenants as the only beneficial purpose underlying the Act is to take an unduly narrow view of what it seeks to achieve.'

33. One further observation of the Appeal Panel should be noted at [74]:

74.   We must observe the principle that, as Tobias JA said in Manly Council v Malouf at 410 [74] 'beneficial legislation … should not be construed narrowly' but this does not mean that other principles of statutory construction must be put to one side when they would or might produce a different outcome.'

34. The Appeal Panel at [75] followed Heydon J (with whom other members of the High Court agreed) in Victims Compensation Fund Corporation v Brown [2003] HCA 54 at 296:

Although the purpose of the Act [the Victim Support and Rehabilitation Act 1996] is beneficial, it does not follow that recovery is contemplated for every act of violence or every consequence that could be described as an injury. The numerous injuries set out in the Table to Sch 1 (which extends over 12 pages) are identified with considerable precision. The clauses in Sch 1 which precede the Table, too, are drafted with some attempt at precision. The legislation confers benefits, and no doubt it should not be construed restrictively, but in dealing with specific limited words like those of cl 5, it is not open to apply much liberality of construction.

35. In resolving whether a certain use was within the RL Act or not the Appeal Panel [76] followed what Heydon J had said as cited above:

76. Both the long title to the RL Act and the approach taken in s 3 and Schedule 1 to defining 'retail shop lease' make it clear that not all retail leases are intended to fall within the legal regime created by the Act. The Act does not indicate expressly or by implication that it covers all leases of premises that are granted for the purpose of conducting a retail business. It does not adopt the methodology of stating that all such leases are covered except where the business to be carried on falls within one or more of a number of defined categories. Instead, the methodology adopted is that of providing that unless a business falls within one or more of the categories that are from Schedule 1, the relevant lease will not be a 'retail shop lease.

36. Further, this Tribunal does not agree with the proposition previously put by Tribunal members such as in Nam and Spuds that leases in the retail area are no longer matters of private contract. In the opinion of this Tribunal they are still matters of private contract with the occasional intervention of the RL Act to imply clauses and provide limitations on certain provisions within a retail lease making them void (see s 7) such as ratchet clauses, or the choice of two methods of rent review. There is also intervention in the area of landlord's freedom to consent to assignment of a lease and the requirement for the lodging of rental bonds. However, overall retail leases are matters of private contract between the parties.

37. Accordingly, the Tribunal is persuaded by the arguments by Mr Parker SC that an undertaking as to damages is required to be given by an Applicant seeking interim orders even before this Tribunal. Why, should for example, a tenant not be required to give an undertaking as to damages when that tenant seeking an interim order may be part of an international chain of retail shops such as fashion, fast food or music and the landlord is a local private family company? The strength does not necessarily always lie with the landlord. It is for that reason, as the Appeal Panel stated in Minchinbury that the beneficial aspect of the RL Act is for both lessors and lessees.

Balance of convenience

38. Mr Kerr on behalf of the Applicant submitted that the Applicant has a significant personal and financial investment in the shop. It is the only source of income to the Applicant. Mr Parker SC raised an issue as to delay on behalf of the Applicant in that the Demolition Notice was issued in August 2014 and only in December 2014 were these matters agitated and consequently the delay, given that the expiration of the Demolition Notice is within 4 days has created significant inconvenience to, and pressure, on IOF.

39. Mr Parker SC stated that IOF was ready to proceed in its development and sought evidence from Ms Victoria Tavendale, the General Manager of North Sydney IOF Portfolio. Ms Tavendale gave evidence before the Tribunal that IOF was ready to proceed on the redevelopment though in fact no development consent was yet to hand. As indicated in the Demolition Notice a Development Application had been lodged with North Sydney and it was the evidence of Ms Tavendale that development consent was imminent. Further, notwithstanding that there was no development consent IOF was prepared to proceed with the early works required which did not require development consent but rather only a complying development certificate (CDC). The evidence from Ms Tavendale was that no CDC had been applied for though it would only take a week. The agreement for lease with Coles was produced and it was acknowledged that there were dates and time schedules to be met pursuant to the agreement for lease which required IOF to move expeditiously.

40. In turn Mr Kerr made the point that development consent had not yet been granted and that until it had been granted the balance of convenience may not necessarily lie with IOF. Mention was made that another tenant had obtained interim injunctive relief until April 2015. It was the evidence of Ms Tavendale, that notwithstanding the existence of another tenant, early works for the demolition of the retail area could be undertaken because that remaining tenant had external access.

The determination of the Tribunal on the issues

Reasonably arguable case

41. The Tribunal has not formed a view as to the validity of the Demolition Notice. However the Tribunal has formed the view that the arguments put forward by the Applicant cannot be construed as fanciful nor does the Tribunal agree with the position put forward by Mr Parker SC on behalf of IOF that the arguments are without merit. Following Spuds the case for the Applicant could not be categorised as "hopeless" or "without merit".

42. The Tribunal determines that the Applicant has an arguable case in relation to the validity of the Demolition Notice issued pursuant to clause 26 of the Lease and s 35 of the RL Act.

Undertaking as to damages

43. The Tribunal rejects the earlier views put forward by members of this Tribunal and its predecessor that it should not be a precondition of an application for interim relief before this Tribunal that an Applicant be required to give an undertaking as to damages. As noted the RL Act is in fact remedial legislation for the benefit of the landlord and tenants, not just tenants. Accordingly the Tribunal prefers the view put forward by Mr Parker SC that an undertaking as to damages in the ordinary course is required.

44. However, this is not the end of the matter. In the learned text produced by Mr Parker SC the Tribunal notes from Spry in Principles of Equity Remedy at page 483 the following:

"It has indeed been suggested that an undertaking as to damages "ought to be given on every interlocutory injunction", but it is the preferable view that in very exceptional cases this course may be inappropriate. So it was said by North J, 'If in the exercise of his discretion a judge should think fit to dispense with such an undertaking he could of course do so, and there are cases of which judges have done so; but this would only be under special circumstances. "(Attorney‑General v Albany Hotel Co (1896) 2 CH 696 at p 700: and SEE Beecham Group Ltd v Bristle Laboratories Pty Ltd (1968) 118 CLR 618 at p 623).'

45. The learned authors in Heydon, Leeming, and Turner in Equity Doctrines and Remedies at paragraph 21-410 state as follows:

There are dicta suggesting an exception where poverty prevents a plaintiff from offering an undertaking at all, or an undertaking which is likely to be valuable.

The case cited is Dein & Dein v Bealey (1960) NSWR 385 at 386 by the learned judge Jacobs J who stated:

If I took a different view, however, I would not think that the evidence is sufficient upon the question of the plaintiff's special damage to entitle them to an injunction at this stage. However, I would in that event have given to the plaintiffs the opportunity to obtain that further evidence and I would in the meantime have granted interlocutory relief for a short period, and I think I would have exercised my discretion to dispense with an undertaking as to damages - provided the period was a very short one.

46. The Tribunal notes that the determination of the arguable case of the Applicant is before the Tribunal on 17 March 2015. In these circumstances as the period is very short the Tribunal exercises its discretion not to require an undertaking as to damages from the Applicant in favour of IOF. The Tribunal notes the financial position of the Applicant in that the Applicant states that it is not in a position to provide an undertaking. The Tribunal is not called to exercise any discretion on this particular issue, because of the short time frame in bringing this dispute before the Tribunal for determination of the major issue is sufficient to not require the undertaking.

Balance of Convenience

47. While no doubt IOF is eager to proceed, the evidence before the Tribunal is that there is no development consent for the proposed redevelopment and no CDC for early works such as demolition. Mr Parker SC that in any event IOF should be allowed to proceed with its works, the Application for Interim Orders should be refused, in part because of the delay and that if subsequently it was held that the Demolition Notice was invalid, the Applicant would be entitled to damages and IOF was certainly good for damages. Whilst this may be the case, and the delay certainly goes against the Applicants, Mr Kerr responded, in the view of the Tribunal succinctly when he said that while damages may be available, once the Lease is destroyed, it is gone forever. In these circumstances the Tribunal agrees with that proposition, that on the balance of convenience, the interlocutory relief should be granted.

48. As part of the relief sought the Applicant desired its costs be paid. The Tribunal finds no circumstances under s 77A of the RL Act to warrant such an order especially as the Applicant has delayed in bringing these proceedings. I agreed that mediation would not be appropriate in this matter.

Orders

1. The Tribunal orders that until further order of the Tribunal, the respondent is restrained from:

1. excluding the Applicant from retail shop premises known as Shop F2, Food Court Level, 99 Walker Street, North Sydney NSW, and

2. interfering with the Applicant's use and occupation of the premises.

2. Until further order the Applicant is excused from providing to the Respondent an undertaking as to damages.

D Bluth

Senior Member

Civil and Administrative Tribunal of New South Wales

11 March 2015

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 07 May 2015