Otter Group v Wylaars - [2013] VSC 98

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT

No. SCI 2013 00570

OTTER GROUP PTY LTD	Plaintiff
v
MARIA MARGARETHA WYLAARS and ANOR	Defendants

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JUDGE:	HOLLINGWORTH J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 February, 5 March 2013
DATE OF RULING:	15 March 2013
CASE MAY BE CITED AS:	Otter Group v Wylaars
MEDIUM NEUTRAL CITATION:	[2013] VSC 98

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CONTRACT – Lease – Banks and banking – Bank guarantee provided to secure tenant’s obligations under lease – Bank guarantee drawn down by landlord – Application by tenant for mandatory injunction seeking to compel landlord to reinstate bank guarantee until determination of dispute about existence of breaches – Tenant’s case for reinstating the bank guarantee weak at best – Damages an adequate remedy – Balance of convenience against grant of injunction – Interlocutory injunction refused

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Bailey	Moyle & Associates
For the Defendants	Mr N Frenkel	Nolch and Associates

HER HONOUR:

Introduction

The first defendant, Maria Wylaars, is the registered proprietor of industrial premises located at 1808 Princes Highway, Clayton. The second defendant, Stephanie Wylaars, manages the premises for her mother, Maria Wylaars.

The plaintiff (“Otter”) is a family-owned business, which manufactures and sells fastening, fencing and bathroom products to the hardware and building industries. From 1999, Otter was the lessee of the premises, under a series of renewals and variations to what was, originally, a 10 year lease.

Clause 16 of the lease required Otter to provide security against breaches of the lease by depositing a specified sum, or a bank guarantee in lieu of the specified sum. On 28 June 2011, Otter provided an ANZ bank guarantee in the sum of $564,144.50, being an amount equal to one year’s rental.

On 23 April 2012, Otter informed the Wylaars that it would not be seeking any further extension of the lease. On 31 October 2012, the lease period expired. Otter has paid no rent since that date.

A dispute has arisen as to whether Otter returned the premises in the condition required by the lease, and as to whether it is overholding and still liable to pay rent. The Wylaars assert that there are substantial problems with the condition in which the premises were left. They also assert that, by reason of clause 9.6 of the lease, Otter is deemed to still be in possession of the premises, and liable to pay rent, because it did not return all the keys to the premises, and has not removed all of its plant, fittings, fixtures and equipment. Otter asserts that it has complied with all its obligations, and is not liable for any rent after October 2012.

A mediation occurred on 24 January 2013, in an attempt to resolve the disputes between the parties. Whilst the mediation was on foot, Maria Wylaars attended at an ANZ bank branch and requested that the bank guarantee be paid in full, less $100. The bank paid…

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] VSC 98
Decision Date: 15 March 2013

CaseChat Overview and Summary

Otter Group, the tenant, commenced proceedings against Wylaars, the landlord, in relation to a dispute involving a lease of premises. The dispute centred on a bank guarantee provided by the tenant to secure their obligations under the lease. The landlord had drawn down on the bank guarantee, and the tenant sought a mandatory injunction to compel the landlord to reinstate the guarantee until the determination of the dispute about the existence of breaches. The matter was heard in the Supreme Court of Queensland.

The primary legal issue the court was required to decide was whether the tenant was entitled to an interlocutory mandatory injunction to reinstate the bank guarantee. The court considered the strength of the tenant’s case for reinstating the guarantee, which it found to be weak at best. The court also considered whether damages would be an adequate remedy for the tenant, which it found to be the case. Additionally, the court assessed the balance of convenience and determined that it favoured the refusal of an interlocutory injunction.

The court found that the tenant’s case for reinstating the bank guarantee was weak, as the tenant had not demonstrated a strong likelihood of success at trial. The court also noted that damages would be an adequate remedy for the tenant, as the tenant could recover any losses suffered due to the drawing down of the guarantee. Furthermore, the court found that the balance of convenience favoured the refusal of an interlocutory injunction, as the landlord would suffer significant prejudice if the guarantee were reinstated. Consequently, the court refused the tenant’s application for an interlocutory mandatory injunction.

Orders