Medioz Group Pty Ltd v Scentre Management Ltd
[2015] QCAT 546
•2 November 2015
| CITATION: | Medioz Group Pty Ltd v Scentre Management Ltd [2015] QCAT 546 |
| PARTIES: | Medioz Group Pty Ltd (Applicant) |
| v | |
| Scentre Management Ltd (Respondent) |
| APPLICATION NUMBER: | RSL063-15 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 26 October 2015 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howard |
| DELIVERED ON: | 2 November 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Subject to compliance by Medioz with order 2 below, until further order of the Tribunal, Scentre Management must: (a) remove the hoarding around the relevant premises; and (b) allow Medioz to have possession of the premises and not interfere with its quiet enjoyment of those premises. 2. Medioz must pay to Scentre Management: (a) within seven (7) days the full amount of all rent outstanding for the period 4 April 2015 to 7 August 2015 together with all outstanding outgoings for the period and the November rent payment under the lease; and (b) must make all future monthly payments of the rent in full and outgoings as they fall due. 3. Both parties have liberty to apply on the giving of 72 hours notice to the other. |
| CATCHWORDS: | RETAIL SHOP LEASE – INTERLOCUTORY INJUNCTION – whether prima facie case or serious question to be tried – where balance of convenience lies – where dispute about date of commencement of lease where signed but unwitnessed document but correspondence indicating negotiations about commencement date ongoing- whether discretion should be exercised Retail Shop Leases Act 1994 (Qld) Australian Broadcasting Corporation v O’Neil (2006) 227 CLR 57 |
REPRESENTATIVES:
| APPLICANT: | represented by Mr AM Christie, Counsel, instructed by Bartels Solicitors |
| RESPONDENT: | represented by Mr M Deutsch, solicitor, CBP Lawyers |
REASONS FOR DECISION
Medioz Group Pty Ltd (‘Medioz’) filed an application on 13 August 2015 seeking an interim order restraining Scentre Management Ltd (‘Scentre Management’) from:
[T]aking any recovery action, or taking possession of the contents of shop 1373 at Westfield Shopping Centre, Garden City…which is the subject of an agreement to lease between Scentre Management and Medioz Group, and in respect of which there is an issue outstanding, namely the commencement date of the lease and therefore the amount due to the respondent.
On 7 August 2015, Scentre Management had taken steps to retake possession, and hoarded over the front of the premises, thereby denying access to them by Medioz. Further, Scentre Management wrote to Medioz advising it that the lease was terminated. The retaking of possession was predicated upon a notice to remedy breach dated 26 June 2015 which included a claim for outstanding rent from 27 November 2014, being the date upon which Scentre Management says the lease commenced. Medioz says the lease did not commence until 4 April 2015. Scentre Management has taken no other steps.
Medioz submits that interim orders in the nature of an interlocutory injunction should be made which effectively return possession of the premises to it, so that it may trade pending the determination of the dispute.
At this stage, the parties have not undergone mediation under the Retail Shop Leases Act 1994 (Qld) (‘RSL Act’). Accordingly, the application for an interim order is the only proceeding before the Tribunal. However, the Notice of Dispute lodged with the Chief Executive under the RSL Act seeks final orders declaring that the commencement date of the lease is 4 April 2015.
The background to the reliance on competing commencement dates of the Lease
Medioz says in essence that when Mr Khan, the director of Medioz, signed the lease documentation on its behalf, that the commencement date of the lease was left blank. He further says that as late as June 2015, staff from Clayton Utz, lawyers, acting on behalf of Scentre Management, were seeking to confirm the commencement date to be in inserted into the lease.[1] Notwithstanding those enquiries, he says that on 6 July 2015, and before that issue had been agreed, the lease was registered with the Titles Office, bearing the commencement date of 27 November 2014. Medioz argues, in essence, that regard should be had to the Agreement to Lease document, in order to ascertain what the parties had agreed would be the commencement date. On that basis, it argues that the commencement date is 4 April 2015.
[1]Affidavit of Mr P Khan, annexure ‘PK-9’, p 64.
Scentre Management provides correspondence and email prior to 24 September 2014 which indicate that the terms of the Fit-Out Contribution Deed and the commencement date of the Lease were the subject of negotiation. The documents refer to the Landlord’s preparedness to make a greater contribution to the fit out if the commencement date was 27 November 2014, and all documentation was returned by no later than 23 September 2014.[2]
[2]Witness Statement of Sarah McIntyre, especially pages 87-93.
Scentre Management says that when Medioz’s lawyers returned the executed lease document to its lawyers via facsimile transmission on 24 September 2014, the commencement date of 27 November 2014 had already been inserted. A letter from Bartels Lawyers who acted for Medioz was sent by facsimile on that date. Some 66 pages in total were sent. The covering letter from Bartel’s to Clayton Utz refers to enclosing only the following documents:
1) Fit Out Contribution Deed; and
2) The Agreement for Lease.
The correspondence further states that Medioz’ representative is currently unavailable and:
If you wish to send fresh copies of the amended lease to us with the commencement date (27 November 2014) and the expiry date inserted in item 6 then please do so, it may take several weeks for the document to be signed as our client is not available presently.
Notwithstanding the assertion that the Fit Out Contribution Deed and the Agreement for Lease are the only enclosed documents, pages 25 to 66 of the attachments bearing the same facsimile header date, time and consecutive page-numbering, is a copy of a lease document signed only by Mr Khan. An execution date of 23 September 2014 is inserted, although there is no witness to his signature where the document requires it. A commencement date of 27 November 2014 appears in item 6 of the lease.
That said, on 27 January 2015, a representative of Clayton Utz sent an email to Ralph (Bartels) representing Medioz, regarding ‘Scentre Management Limited Lease to Medioz group Pty Ltd- Shop 1373 Garden City’ in the following terms:
We refer to your letter to us regarding the above matter.
Our client has instructed that it would be happy to consider the requested rent concession however, our client requires your client to advise the firm Commencement Date to be inserted into the Lease.[3]
[3]Affidavit of Mr Khan PK 8 page 63.
Then on 3 June 2015, another representative from Clayton Utz sent an email to ‘Ralph’ regarding the same subject in the following terms:
We refer to previous correspondence in this matter.
In order for us to proceed with the registration of your client’s Lease for the above premises, can you please confirm the commencement date of 27 November 2014 is now to be inserted into the Lease.[4]
[4]Ibid PK 9 page 64.
As discussed earlier, the Lease was registered on 6 July 2015.
On 14 July 2015, Bartels sent an email to the author of the email dated 3 June 2015, as follows:
We refer to your email of 3 June 2015 and would advise that our client commenced trading on Saturday, 4 April 2015.
…….fit out was not completed until shortly prior to that date.
Accordingly, our client has instructed us to advise that the commencement date of 4 April 2015 may be inserted into the Lease.
We look forward to hearing from you regarding registration of the Lease…[5]
[5]Ibid PK 10 page 66.
Then on 21 July 2015, Sarah McIntyre, Leasing Executive, Scentre Leasing Group, emailed Mr Khan directly requesting that he telephone her ‘so that we can discuss the Flamingos Chicken rental commencement date in more detail.’[6]
[6]Ibid, PK 11, page 67.
It is common ground that other than prepaid rent for one month, no rent has been paid by Medioz. It is also common ground that a final payment of contribution to fit-out by Scentre Management under the Fit-Out Contribution Deed has not been paid to Medioz. Scentre Management has suggested to Medioz that it has not been paid because a certificate of completion has not been forthcoming. Medioz says that the certificate of completion referred to in the relevant clause requires the lessor to provide a certificate (to itself), and it that it is therefore somewhat specious for it to say that it has not made that payment because it has not been provided with the certificate. Notwithstanding that matter, Medioz acknowledges it is not entitled under the lease to set off the rent against the further fit-out amount to owing to it. There is, also, in terms of the overall circumstances, an issue which does not seem to be disputed, that several weeks inconvenience was caused to Medioz as a result of a collapsed ceiling at the premises, which Scentre Management was required to remedy.
Strong prima facie case vs triable issue
Medioz argues that it must show a triable issue, but is not required to show a strong prima facie case. Scentre Management submits that a strong prima facie case is required before an interlocutory injunction may be made.
Scentre Management refers to the High Court’s decision in Australian Broadcasting Corporation v O’Neill.[7] In O’Neill, in their joint judgement Gummow and Hayne JJ explained the relevant principles arising from Beecham Group Limited v Bristol Laboratories Pty Ltd[8] for considering interlocutory injunctions (with whom Gleeson CJ and Crennan J appear to agree but this is further discussed below). They say:
By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.
[7](2006) 227 CLR 57 at [65].
[8](1968) 118 CLR 618.
Further, their Honours endorsed earlier statements of the High Court to the effect that the strength of the probability to be demonstrated depends upon the nature of the rights asserted and the practical consequences that will flow from the orders sought. They held that there was no objection to the use of the phrase ‘serious question,’ if that is understood to convey the notion that ‘the seriousness of the question, like the strength of the probability… depends upon the considerations.’[9]
[9]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, para [70].
Gleeson CJ and Crennan J said:
…in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of the injunction. These are the organising principles to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ, and their reiteration that the doctrine of the court established in Beecham Group Limited v Bristol Laboratories Pty Ltd [10] should be followed.[11]
[10](1968) 118 CLR 618.
[11]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 [19].
As was later observed by the Full Federal Court in Samsung Electronics Co. Ltd v Apple Inc:[12]
The requirement that, in order to obtain an interlocutory injunction, the plaintiff must demonstrate that, if no injunction is granted, he or she will suffer irreparable injury for which damages will not be adequate compensation… was not mentioned in Beecham. Nor was it referred to by Gummow and Hayne JJ in O’Neill. Nonetheless, Gleeson CJ and Crennan J included that requirement in their articulation of the relevant “organising principles”…. They also agreed with the explanation of those principles given by Gummow and Hayne JJ … in the same case. One way of reconciling the views of Gleeson CJ and Crennan J with those of Gummow and Hayne JJ on this point is to treat “irreparable harm” as one of the matters which would ordinarily need to be addressed in the Court’s consideration of the balance of convenience and justice rather than as a distinct and antecedent consideration. This approach has been taken by some judges…[13]
[12][2011] FCAFC 156.
[13]Ibid at [61].
The Full Federal Court continued:
The question of whether damages will be an adequate remedy for the alleged infringement of the plaintiff’s rights will always need to be considered when the Court has an application for interlocutory injunctive relief before it. It may or may not be determinative in any given case. That question involves an assessment by the Court as to whether the plaintiff would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted…[14]
[14]Ibid at [62].
Further, the Court held that the assessment of the likely harm to the plaintiff if no injunction is granted, and the adequacy of damages, will be important in determining where the balance of convenience lies. However, the Court said that to elevate this issue to a separate requirement was to adopt too rigid an approach.[15]
[15]Ibid at [62]-[63].
Having regard to these pronouncements, an applicant for interlocutory injunction must demonstrate that there is a serious question to be tried and in that sense, a prima facie case. There must be a sufficient likelihood of success to justify preservation of the status quo pending hearing. However, it is not required to show that it is more probable than not that it will be granted relief, although the strength of the case is to be considered, when having regard to the nature of the rights referred to.
Scentre Management argues that there is no strength in Medioz’s arguments because it says, there is no need when considering the interim application to go further than looking at the documents returned to Scentre Management’s lawyers on 24 September 2014. It argues that, regardless of the later correspondence around commencement dates, there has been no agreement to vary the date on the document, and that overwhelmingly, the weight of the evidence is that the commencement date was 27 November 2014.
Medioz says that even if 27 November 2014 appears to be the date, it is clear that there is ultimately no agreement. It argues that this is made clear by the later correspondence. That being the case, it says that it is necessary to go back to ‘first principles,’ and refers back to Agreement for Lease. It provides that commencement is the earlier of either the 30 days from the date that the Lessor certifies that the Premises are ready for the Lessee’s works to commence or the date of opening of the Lessee’s business at the Premises.[16] Medioz further says that the Lessor has not provided certification as required at any time since the Agreement for Lease was executed,[17] and that therefore, the commencement date is the date that the Lessee’s business opened, that is, 4 April 2015.
[16]Affidavit of Mr Khan - PK2 page 7 ‘5. Commencement of term’.
[17]While acknowledging the correspondence from Scentre group dated 1 July 2014 which is at page 87-88 of the Affidavit of Mr Khan, this correspondence specifically notes that ‘This notice does not alter how the commencement date of the lease term is determined pursuant to the Agreement for Lease.’
I am satisfied that there is a serious question for determination as to the date of commencement of the lease. On this interim application, I make no findings of fact. However, it is apparent that there are a variety of inconsistencies in the material before the Tribunal. Notwithstanding that the date 27 November 2014 appears in the signed but unwitnessed facsimile copy of the Lease Document sent on 24 September 2014 to Clayton Utz, the document is not referred to in the covering letter. On the contrary, the correspondence requests a new copy of the lease. The documentation sent before the faxing of the Lease Document indicates that negotiations were ongoing about the commencement date, as do the documents from Clayton Utz and Scentre Group to Medioz’s representatives even as late as July 2015.
Although the weight of evidence appears to favour a commencement date of 27 November 2014, it is apparent that the correspondence of 24 September 2014 from Medioz’s lawyers does not refer to attaching the lease document, but only the Fit Out Contribution document and the Agreement to Lease. Further, Mr Khan’s signature is not witnessed on that version of the lease. When and if it was later witnessed is not apparent, notwithstanding its later registration on 6 July 2015. It is further apparent that in the months before registration, correspondence from Scentre Management’s lawyers speaks to a desire to agree about the commencement date.
If Medioz is correct that the date of commencement is 4 April 2015, then the Notice to Remedy breach given by Scentre Management claiming rent from 27 November 2014 was ill-founded, and the purported termination of the lease may be invalid. Despite the weight of evidence, there is a serious issue to be tried and I am satisfied that there is a sufficient probability that the plaintiff may be granted final relief, such that the preservation of the status quo, pending the hearing is desirable in the circumstances.
The balance of convenience
Medioz says that all of the prejudice in this matter flows to it if interim orders are not made in its favour. It submits that holding Medioz out is catastrophic to it, noting that some $350,000.00 has been spent on fit out; three employees remain employed by Medioz, notwithstanding that they cannot currently perform their duties; Medioz continues to finance the fit out and Mr Khan has given personal guarantees for those sums.
Scentre Management says it validly terminated the lease. It acknowledges that it has hoarded up the store, but is preserving it pending the outcome of the application.
Of course, irrespective of the commencement date, Medioz has an obligation under the lease to pay rent, but other than one month’s rent in advance, it has not done so. There are also issues of the ceiling collapse and the non-payment of the final contribution by Scentre Management which are all part of the overall picture.
Would damages be an adequate remedy if Medioz is ultimately successful in the dispute? I am satisfied that damages would not place it in as good as position as it is in if the interim order is granted. This is clear because Medioz has a fledgling business in which a significant financial investment has been made. If the business is not given opportunity to become established, damages for loss of business are likely to be minimal as only a couple of months trading figures would be available against which to assess any damages and it will not have an ongoing and operating business and the goodwill which attaches to same.
I am cognisant that relief against forfeiture is a final remedy and that if Scentre Management is ultimately successful in its arguments, then by the granting this interim order, Medioz has been allowed to retake possession after what may be valid termination of the lease by Scentre Management. However, in the circumstances, I am satisfied that the potential detriment to Medioz outweighs the potential detriment to Scentre Management. Scentre Management will be entitled to any outstanding rent from Medioz for the premises in any event.
For completeness, I note that an undertaking as to damages has not been provided. However, Mr Khan has given a personal guarantee to meet Medioz liabilities under the lease. Given that any potential damages relate to rent, I consider this is not an impediment to granting orders.
In all of the circumstances discussed, I am satisfied that the balance of convenience favours granting interlocutory orders in favour of Medioz. That said, rent is outstanding. I am prepared to exercise my discretion to make orders sought only on the precondition that Medioz pays the full amount of the rent and outgoings for the period 4 April 2015 to 7 August 2015 and the November rent payment under the lease, and then pays its rent as each instalment falls due in accordance with the registered lease, in order to be allowed to re-enter and retain possession of the premises pending determination, or earlier settlement, of the claim made in the dispute.
Conclusions and orders
In the circumstances, I make orders as follows:
1. Subject to compliance by Medioz with order 2 below, until further order of the Tribunal, Scentre Management must:
(a)Remove the hoarding around the relevant premises; and
(b)Allow Medioz to have possession of the premises and not interfere with its quiet enjoyment of those premises.
2. Medioz must pay to Scentre Management:
(a)Within seven (7) days the full amount of all rent outstanding for the period 4 April 2015 to 7 August 2015 together with all outstanding outgoings for the period and the November rent payment under the lease; and
(b)Must make all future monthly payments of the rent in full and outgoings as they fall due.
3. Both parties have liberty to apply on the giving of 72 hours notice to the other.
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