Pearce & Anor and Germain
[2006] WASAT 305
•6 OCTOBER 2006
PEARCE & ANOR and GERMAIN [2006] WASAT 305
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 305 | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:3592/2005 | 14 AUGUST 2006 WRITTEN SUBMISSIONS RECEIVED 31 AUGUST 2006 AND 14 SEPTEMBER 2006 | |
| Coram: | HON R VIOL (SUPPLEMENTARY DEPUTY PRESIDENT) | 6/10/06 | |
| 31 | Judgment Part: | 1 of 1 | |
| Result: | Held that the State Administrative Tribunal does not have jurisdiction to grant relief against forfeiture and has jurisdiction to grant equitable relief only as found in State Administrative Tribunal Act 2004 (WA) and enabling Acts. | ||
| B | |||
| PDF Version |
| Parties: | MURRAY GRAHAM PEARCE MARGARET EVA PEARCE TERRANCE ANTHONY GERMAIN |
Catchwords: | Landlord and tenant Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) Whether Tribunal has jurisdiction to grant equitable relief and in particular relief against forfeiture |
Legislation: | Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 16, s 16(1)(b), s 16(2), s 26, s 27(3) Commercial Tribunal Act 1984 (WA) District Court of Western Australia Act 1969 (WA), s 55 Property Law Act 1969 (WA), s 7, s 81, s 81(2) State Administrative Tribunal Act 2004 (WA), s 8, pt 3, s 13, s 13(2), s 14, s 15, s 16, s 16(1), s 26(1)(b), s 44(3), s 44(4), s 90, s 91 Supreme Court Act 1935 (WA), s 16.1(d) |
Case References: | Bilek and Vata Investments Pty Ltd [2005] WASAT 39 Bykowski and Tebron Pty Ltd [2005] WASAT 178 Commodore Homes (WA) Pty Ltd v Standley [2001] WADC 89Yeates Daw-Win Pty Ltd v Tagliaterri (1986) ANZ Court v R 875 Global Doctor Ltd v Hodgkinson & Anor [2003] WASC 119 Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584 Legione v Hately (1982) 152 CLR 406 Mapen Pty Ltd and Aspen (Septimus Roe) Pty Ltd [2005] WASAT 136 Mavromatidis v Dundon (1997) 18 WAR 298 Minister for Lands and Forests v McPherson [1990] 22 NSW LR 687 Stern v McArthur (1987) 165 CLR 489 Taylor Forms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSW SC 186 Commercial Developments Pty Ltd v Merchantile Mutual Insurance (Workers Compensation) Ltd (1991) (5WAR 208 at 217, 221) Edgar Enterprises and Minister for Transport [2005] WASAT 260 Minister for Transport and Edgar Enterprises [2006] WASC 27 |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : PEARCE & ANOR and GERMAIN [2006] WASAT 305 MEMBER : HON R VIOL (SUPPLEMENTARY DEPUTY PRESIDENT) HEARD : 14 AUGUST 2006
- WRITTEN SUBMISSIONS RECEIVED 31 AUGUST 2006 AND 14 SEPTEMBER 2006
- MARGARET EVA PEARCE
Applicants
AND
TERRANCE ANTHONY GERMAIN
Respondent
- Applicant
AND
MURRAY GRAHAM PEARCE
MARGARET EVA PEARCE
Respondents
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Catchwords:
Landlord and tenant - Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) - Whether Tribunal has jurisdiction to grant equitable relief and in particular relief against forfeiture
Legislation:
Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 16, s 16(1)(b), s 16(2), s 26, s 27(3)
Commercial Tribunal Act 1984 (WA)
District Court of Western Australia Act 1969 (WA), s 55
Property Law Act 1969 (WA), s 7, s 81, s 81(2)
State Administrative Tribunal Act 2004 (WA), s 8, pt 3, s 13, s 13(2), s 14, s 15, s 16, s 16(1), s 26(1)(b), s 44(3), s 44(4), s 90, s 91
Supreme Court Act 1935 (WA), s 16.1(d)
Result:
Held that the State Administrative Tribunal does not have jurisdiction to grant relief against forfeiture and has jurisdiction to grant equitable relief only as found in State Administrative Tribunal Act 2004 (WA) and enabling Acts.
Category: B
Representation:
CC 3592 of 2005
Counsel:
Applicants : Mr P Lander
Respondent : Mr P May
Solicitors:
Applicants : Lander Hynes
Respondent : Peter May
- <mpr>
CC 3714 of 2005
Counsel:
Applicant : Mr P May
Respondents : Mr P Lander
Solicitors:
Applicant : Peter May
Respondents : Lander Hynes
Case(s) referred to in decision(s):
Bilek and Vata Investments Pty Ltd [2005] WASAT 39
Bykowski and Tebron Pty Ltd [2005] WASAT 178
Commodore Homes (WA) Pty Ltd v Standley [2001] WADC 89Yeates
Daw-Win Pty Ltd v Tagliaterri (1986) ANZ Court v R 875
Global Doctor Ltd v Hodgkinson & Anor [2003] WASC 119
Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584
Legione v Hately (1982) 152 CLR 406
Mapen Pty Ltd and Aspen (Septimus Roe) Pty Ltd [2005] WASAT 136
Mavromatidis v Dundon (1997) 18 WAR 298
Minister for Lands and Forests v McPherson [1990] 22 NSW LR 687
Stern v McArthur (1987) 165 CLR 489
Taylor Forms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSW SC 186
Case(s) also cited:
Commercial Developments Pty Ltd v Merchantile Mutual Insurance (Workers Compensation) Ltd (1991) (5WAR 208 at 217, 221)
Edgar Enterprises and Minister for Transport [2005] WASAT 260
Minister for Transport and Edgar Enterprises [2006] WASC 27
(Page 4)
Summary
1 The parties to a lease commenced proceedings against each other pursuant to the CommercialTenancy (Retail Shop) Agreements Act 1885 (WA).
2 One of the parties sought an order from the Tribunal for relief against forfeiture of their rights under the lease.
3 The question was raised as to whether the Tribunal had jurisdiction to grant such an order and/or equitable relief generally.
4 The Tribunal found that it did not have jurisdiction to order relief against forfeiture and that it did not have a general power to grant equitable relief.
Applications
5 On 1 November 2005, Murray Graham Pearce and Eva Pearce (the Pearces) filed application number 3592/05 (the Pearce application) in the Tribunal seeking relief against Terrance Anthony Germain (Germain) as respondent pursuant to the Commercial Tenancy (Retail Shop) Agreements Act 1885 (WA) (the CTRSA Act).
6 On 28 November 2005, Germain filed application number 3714/05 in the Tribunal (the Germain application) also seeking relief under the CTRSA Act, against the Pearces as respondents.
7 In each of the applications, the applicants alleged a breach of a commercial tenancy agreement entered into between them, by the other.
8 On 15 June 2006, the Tribunal ordered both the applications to be heard together.
Background
9 Germain was at all relevant times the owner of commercial premises at 32 Prince Street, Busselton (the premises).
10 On 4 June 1996, by a lease of that date, the Pearces leased the premises from Germain for a period of five years commencing on 1 February 2001. The expiry date was 31 January 2006. The amount of the rent was $23 440 per annum. There was an option to renew granted to
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- the Pearces for a period of five years from 1 February 2001 until 31 January 2006. The lease provided for a rent review after the first 12 months and every 12 months thereafter.
11 During their occupancy of the premises under the lease, the Pearces carried on business, inter alia, as second-hand dealers.
12 On 10 October 2003, the parties executed a renewal of the lease extending the term of the lease from 1 February 2001 to 31 January 2006.
13 On 17 November 2004, the Pearces left the premises and continued their business at another address in Busselton.
14 In early December 2004, Germain undertook certain works on or around the premises.
15 Early in 2005, the parties began negotiations for a rent review. They were unable to agree on the rent. It was agreed that an independent valuer could be appointed to conduct the rent review – one Timothy Dale (a licenced valuer in Busselton) was appointed for this purpose.
16 The amount of rent recommended by Dale was not acceptable to both parties.
17 On 30 May 2005, Germain re-entered the premises and remained in possession until, some months later, he leased them to a third party
Grounds of applications and responses
18 Because of the issues dealt with in this decision, it is relevant at this stage to record the grounds of the parties' applications and the relief sought in the Tribunal.
19 In their application filed on 10 November 2005, the Pearces set out the following grounds upon which the order sought by them should be made:
"1. By lease dated 4 June 1996 the Respondent leased to the Applicants the land and building at 22 Prince Street Busselton (Premises) for a term commencing on 5 January 1996 and expiring on 31 January 2001 and granted to the Applicants an option to renew the lease for 5 years commencing 1 February 2001 and expiring on 31 January 2006.
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- 2. By Deed of Extension between the parties dated 10 October 2003 the term of the Lease was extended to 31 January 2006.
3. It was an express term of the Lease (clause 10.1) that the Applicants paying the rent and observing the covenants in the Lease were entitled to peaceably hold and enjoy the Premises during the term of the Lease without any interruption by the Respondent.
4. In breach of the Lease, on or about 6 December 2004 without the consent of the Applicants and without prior notice or warning the Respondent entered upon the Premises and removed brick paving from the entrance to the said building and from the driveway on the east side of the said building, and left the entrance to the building blocked with sand.
5. In breach of the Lease, on or about 8 December 2004 without the consent of the Applicants and without prior notice or warning, the Respondent removed the letterbox from the front of the Premises and left the letterbox on the ground in the said driveway.
6. In breach of the Lease, on or about 8 December 2004 without the consent of the Applicants and without prior notice or warning the Respondent removed two signs of the Applicants from the front of the Premises and left the signs on the ground in the said driveway.
7. In breach of the Lease, on or about 16 December 2004 without the consent of the Applicants and without prior notice or warning the Respondent entered the building and removed a sink and a cupboard from the building and left the sink and the cupboard on the ground in the said driveway.
8. In breach of the Lease, on or about 21 December 2004 without the consent of the Applicants and without prior notice or warning the Respondent entered the building and triggered the Applicants' burglar alarms.
9. Pursuant to the Lease the rent payable under the Lease was to be reviewed as at 1 February 2004 and as of that
- date the rent would be the fair market rent for the Premises agreed between the parties or failing agreement, determined by a licensed valuer agreed by the parties.
- 10. The parties were unable to agree the reviewed rent.
11. Pursuant to the Lease the parties agreed that a licensed valuer, one Timothy Dale would determine the fair market rent for the Premises as at 1 February 2005.
12. On 3 March 2005 Dale determined that the fair market rent for the Premises at 1 February 2005 was $45 100.00 whereupon $45 100 was the rent payable under the Lease from 1 February 2005.
13. In breach of the Lease the Respondent denies (by his lawyers letter of 20 April 2005) that $45 100 was the rent payable under the Lease from 1 February 2005.
14. In breach of the Lease the Respondent claims that the rent payable under the Lease from 1 February is $71 524.80.
15. In breach of the Lease, on or about 30 May 2005 without the consent without the consent of the Applicants and without prior notice or warning, the Respondent entered the Premises.
16. In breach of the Lease, by letter dated 30 May 2005 from his lawyer the Respondent maintains that the Respondent has re-entered the Premises and that the Respondents [sic] are excluded from the Premises.
17. The Applicants have accepted the Respondent's repudiation of the Lease by letter."
20 The Pearces thus alleged that Germain was in breach of the Lease in a number of respects.
21 In such application the Pearces sought the following relief:
1. A declaration that the lease between the Pearces and Germain dated 4 June 1996 was terminated by the Pearces' acceptance of Germain's repudiatory conduct, comprising entering the leased premises without permission, removing the tenants' plant and equipment,
- re-entering the leased premises and excluding the Pearces, and purporting to terminate the lease.
- 2. An order that Germain pay compensation and damages to the Pearces:
a) rent and outgoings paid by the Pearces since 6 December 2004 alternatively since 30 May 2005;
b) the Pearces' legal expenses up to the issue of the proceedings;
3. Interest on compensation and damages from the date it accrued until judgment at 6% per annum pursuant to s 32 of the Supreme Court Act 1935 (WA) as amended; and
4. Costs.
22 Having alleged Germain breached the lease, the Pearces contended that such breach involved "repudiatory conduct" on the part of Germain, which repudiation the Pearces "accepted". Once again there is no admission by the Pearces that they had breached the lease.
23 On 28 November 2005, Germain filed a response in the Tribunal to the Pearces' application on the following grounds:
"1. The application is defective in that contrary to the SAT Practice Note 2 the application fails to specify the question or questions arising under the Lease. It is not possible for the Respondent to address the questions, nor respond to them, when there are no questions for determination.
2. The application is defective because, contrary to the SAT Practice Note 2, the Applicants' claim for monetary compensation does not contain any evidence or itemisation of the amount of pecuniary loss allegedly suffered by the Applicants and full details of its calculation. It is not possible for the Respondent to address the allegations, nor respond to them, when there are no details included in the Application.
3. The Respondent:
- (a) denies repudiatory conduct as alleged, at all;
(b) denies removing the Applicant's plant or equipment; and
(c) denies that the Applicant has suffered any loss or damage as alleged or at all.
- 4. The Respondent states that:
(a) On or about the 17th November 2004 the Applicant ceased trading at the Respondent's premises and relocated his business to alternate premises in Busselton;
(b) the Applicant orally agreed with the Respondent to the termination of the lease and further introduced to the Respondent a prospective tenant to take over a lease of the premises;
(c) the Applicant gave express consent to the lessor to enter the lessor's premises, which the Respondent was in any event entitled to do pursuant to the lease, which consent included providing the Respondent with the Applicant's security access code to disarm the alarm system;
(d) the Applicant breached the lease by the non payment of rent; and
(e) as a consequence of that breach the Respondent terminated the lease by lawful re-entry in accordance with the terms of the lease.
5. The Applicant has suffered no loss or damage, having been offered by the Respondent the opportunity to surrender the lease which offer the Applicant refused.
The Respondent states that:
(a) the Applicant has not suffered loss or damage as alleged or at all;
(b) the party suffering loss or damage is the Respondent who suffers loss or damage because:
- (i) the Applicant's conduct has caused the loss of the prospective new tenant who was to have leased the premises with immediate effect from the termination of the Applicant's lease;
(ii) the Applicant's failure to pay the rent due under the lease;
(iii) the Respondent has been put to the cost of advertising for a replacement tenant and has incurred costs in signage, newspaper advertisements, and real estate agent's commissions for the finding of a new tenant; and
(iv) the Respondent has suffered the loss of rental income during the period between the termination of the lease by lawful re-entry and the date upon which the Respondent's new tenant becomes liable for the payment of rent.
- 6. The Applicant's claim for costs is flawed because:
(a) the Applicant was offered the opportunity to surrender the lease and thereby avoid the costs as claimed; and
(b) in any event the lease provides that is the Applicant (as lessee) who is responsible for the payment of the Respondent's costs consequent upon the breach of the lease by the Applicant.
7. In response to the grounds as alleged by the Applicant in his application:
(a) in response to paragraph 4 of the Applicant's grounds the Respondent states that the lease obliged the Applicant to keep the premises in a substantial state of repair and maintenance and in breach thereof the Applicant failed to do so leaving the paving slabs broken, cracked, uneven,
- unsightly, oil stained and damaged and the lawn damaged and dying from heavy vehicular traffic.
- (b) by agreement between the Applicant and the Respondent the paving was removed and replaced;
(c) the paving works were carried out with the knowledge and in the presence of the Applicant and with the Applicant's agreement.
- 8. In response to paragraph 5 of the Applicant's grounds the Respondent states that:
(a) by clause 6.7 of the lease the Applicant may not erect signs without the consent of the Respondent;
(b) in breach of the lease the Applicant erected signs without seeking such consent and without obtaining the licence required from the Shire of Busselton.
9. In response to paragraph 7 of the Applicant's grounds the Respondent denies the facts as alleged and says that in breach of the Applicant's obligations under the lease the Applicant failed to keep and maintain the premises in good state of repair and condition and that in exercise of the powers contained in the lease, and with the Applicant's agreement, the Respondent carried out the repair works to the fixtures and fittings.
10. In response to paragraph 12 of the Applicant's grounds the Respondent denies that the valuer Mr Dale determined the fair market rental for the premises in that the rental determination undertaken by Mr Dale was fundamentally flawed in that his appraisal of fair market rental was 20% lower than the true fair market rent. The lease does not oblige the Respondent to accept a rental determination which is fundamentally flawed.
11. In response to paragraph 15 of the Applicant's grounds the Respondent denies the allegation and states that the Respondent lawfully re-entered upon the premises in exercise of the powers contained in the lease entitling him
- to do so upon the breach of the lease by the Applicant due to the non-payment of rent.
- 12. The Respondent:
(a) denies each and every breach of the lease by the Respondent as alleged by the Applicant; and
(b) states that even if (which is denied) the Respondent had breached the lease as alleged the Applicant suffered no loss or damage as a consequence.
13. The Respondent is filing an application with the State Administrative Tribunal being a reference under Section 16(1) [sic] of the Commercial Tenancy (Retail Shops) Agreements Act and will be seeking from the Tribunal an order that this matter and that matter be heard simultaneously."
24 Germain thus denied any breach of the lease by him and alleged various breaches of the lease by the Pearces. Germain has also contended that the re-entry of the premises by him was lawful, arising as it was from the Pearces' breach of the lease.
25 On 30 November 2005, Germain filed an application in the Tribunal seeking relief from the Pearces.
26 In such application Germain set out the following grounds in support:
"1. The lease obliged the Respondent to keep the premises in substantial state of repair and maintenance and in breach thereof the Respondent failed to do so.
2. The lease prohibited the Respondent from erecting signs on the leased premises without the consent of the Applicant and in breach thereof the Respondent erected signs without seeking such consent.
3. The Lease obliged the Respondent to pay the rent and outgoings specified therein at the time and in the manner stated in the Lease and in breach thereof the Respondent failed to do so.
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- 4. The lease obliged the Respondent to pay the costs and expenses suffered or incurred by the Applicant as the result of a breach of the lease by the Respondent.
5. Consequent upon the Respondent's breach of the lease the Applicant has terminated the lease and re-entered the leased premises.
6. As the result of the matters referred to in paragraphs 1, 2, 3 & 4 hereof the Applicant has suffered loss and damage and incurred costs."
27 This application effectively repeats the substance of the response.
28 In his application, Germain sought the following orders from the Tribunal:
"1. The Applicant was entitled to and did lawfully terminate the lease on 18th May 2005.
2. The Respondent breached the lease by failing to keep and maintain the premises in the condition required by the Lease.
3. As the result of the Respondent's breaches of the lease the lessor suffered costs, damages and expenses in the sum of $47,840.03 [sic].
4. The Respondent pay to the Applicant:
(a) the sum of $47,840.03[sic];
(b) the Respondent pay the Applicant's costs of the application on an indemnity basis;
(c) the Applicant pay to the Respondent interest on the sum of $47,840.03 from the date upon which each of the component parts thereof became payable to the Applicant, at the rate being 2% greater than the ANZ Banking Group Limited Reference Rate from time to time being the interest rate applicable under the terms of the lease; [sic]
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- 5. The Respondent pay to the Applicant the amount of all rates, taxes, rent and variable outgoings which would have been payable by the Respondent to the Applicant had the Respondent not breached the lease up to and including 30th November 2005 such sum to be agreed or failing agreement assessed by the Tribunal."
29 The particulars giving rise to the sum of $47 840.03 were set out in the application, however, at this point these do not need to be detailed.
30 On 14 February 2006, Germain filed a Statement of Issues Facts and Contentions in the Tribunal, which included the following facts alleged by Germain:
"1. The Lessee discontinued trading from the Leased Premises, removed all of his stock plant and equipment, taped black plastic over the windows and kept the door locked and not open for business from on or about the 17th November 2004. The Applicants suffered no loss or disadvantage at all during the period when the Lessor's words were carried out by the Respondent. At no time after the 17th November 2004 prior to the date on which the Lease was terminated on the 18th May 2005 did the Applicants re-open the Leased Premises or resume trading therefrom.
2. The Lessor's works were carried out as a consequence of the Applicant's breach of the Lease in respect of the maintenance and repair of the Leased Premises. The Lessor's works were carried out with the full knowledge of the Applicants, in the presence of the male Applicant, and with the Applicants' consent.
3. The disputed rent review was carried out in accordance with the terms of the Lease whereby the Respondent proposed a new market rent, the Applicants disputed the figure proposed by the Respondent, and the parties agreed to appoint a valuer to determine the market value.
4. There is no provision in the lease that obliges the parties to accept the valuation as determined or which specifies that the valuation is final and binding on the parties. In any event even if such a provision existed then
- Respondent [sic] has the lawful right to challenge the rental determination.
- 5. The Respondent was in the course of challenging the valuation when the lease was terminated for non-payment of rent by the Applicants. Clause 2.3(d) of the Lease obliged the Applicants to continue to pay rent at the old rate (prior to the rent review) until such time as the reviewed rent was agreed or determined. Upon the determination [sic] of the Lease the Respondent's challenge to the rent valuation was no longer required and was discontinued.
6. The works of which the Applicants complain were necessitated by the Applicants' breach of the Lease.
7. The works of which the Applicants complain were carried out with the knowledge and consent of the Applicants and at a time after the Applicants had elected not to conduct business from the Leased Premises.
8. There was no disruption or disadvantage suffered by the Applicants as the result of the Respondent's works.
9. The unlawful sign removed by the Respondent was one of many signs erected by the Applicants, all the rest of which remained erected and untouched by the Respondent and therefore caused no loss or disadvantage to the Applicants who had in any event closed the premises and discontinued trading therefrom.
10. The disputed rent review is irrelevant to the dispute because the Lease was terminated by the Respondent due to the failure of the Applicant to pay rent at the old (pre-rent review) rate as required by the Lease."
31 Finally, on 26 June 2006, the Pearces filed an Amended Statement of Issues Facts and Contentions in the Tribunal.
32 The facts alleged at that point by the applicants were:
"1. By lease dated 4 June 1996 the Respondent leased to the Applicants the land and building at 22 Prince Street Busselton ('Premises') for a term commencing on
- 5 January 1996 and expiring on 31 January 2001 and granted to the Applicants an option to renew the lease for 5 years commencing on 1 February 2001 and expiring on 31 January 2005.
- 2. By Deed of Extension between the parties dated 10 October 2003 the term of the Lease was extended to 31 January 2006.
3. It was an express term of the Lease (clause 10.1) that the Applicants paying the rent and observing the covenants in the Lease were entitled to peaceably hold and enjoy the Premises during the term of the Lease without any interruption by the Respondent.
4. In breach of the Lease, in December 2004 without the consent of the Applicants and without prior notice or warning the Respondent:
(a) entered upon the Premises and removed brick paving from the entrance to the said building and from the driveway on the east side of the said building, and left the entrance to the building blocked with sand;
(b) removed the Applicants signs and the letterbox from the front of the premises and left the letterbox on the ground in the said driveway;
(c) entered the building and removed a sink and a cupboard and left the sink and the cupboard on the ground in the said driveway;
(d) entered the building and triggered the Applicants' burglar alarms;
(e) entered the building and removed the Applicants' stock in trade and fittings and retained them;
(f) leased the premises including a large shop fitting belonging to the Applicants to a new tenant.
5. Pursuant to the Lease the rent payable under the Lease was to be reviewed as at 1 February 2005 and as of that date the rent would be the fair market rent for the
- Premises agreed between the parties or failing agreement, determined by a licensed valuer agreed by the parties.
- 6. The parties were unable to agree the reviewed rent.
7. Pursuant to the Lease the parties agreed that a licensed valuer, one Timothy Dale would determine the fair market rent for the Premises at 1 February 2005.
8. On 3 March 2005 Dale determined that the fair market rent for the Premises at 1 February 2005 was $45,100.00, whereupon $45,100 was the rent payable under the Lease from 1 February 2005.
9. In breach of the Lease the Respondent denies (by his lawyers letter of 20 April 2005) that $45,100 was the rent payable under the Lease from 1 February 2005.
10. In breach of the Lease the Respondent claims that the rent payable under the Lease from 1 February is $71,524.80.
11. In breach of the Lease, on or about 30 May 2005 without the consent of the Applicants and without prior notice or warning, the Respondent entered the Premises.
12. In breach of the Lease, by letter dated 30 May 2005 from his lawyer the Respondent maintained that the Respondent has re-entered the premises and that the Respondents [sic] are excluded from the Premises.
13. The Applicants have accepted the Respondent's repudiation of the Lease by letter.
14. The Respondent failed to disclose that the Respondent had taken the Applicants stock in trade and shop fittings, and failed to give the Applicants a list of what he had retained and removed, and retained the stock in trade, and allowed a new tenant to use a large shop fitting belonging to the Applicants.
15. The Applicants have suffered the following loss and damage and estimate this amounts to the figures below:
Loss of goodwill: $50,000 to $80,000
- Stock in trade: $10,000
Rent: $22,200
Outgoings $6,000
TOTAL: $88,200 TO $118,200
- 16. In the circumstances of aggravation described above the Applicants will apply for an order that the Respondent pay the Applicants' legal costs."
33 In the document filed by the Pearces on 26 June, 2006, they identified a number of Issues to be determined.
34 Issue 6 was in these terms:
"As a matter of law was the Respondent entitled to re-enter the premises in late May 2005 on the grounds of alleged non-payment of rent, or was the Respondent precluded from doing so because of his earlier breaches and repudiation of the lease, or because the Applicant's obligation to pay rent was suspended by reason of those breaches and repudiations, or for any other reason".
35 Issue 7 was in these terms:
"if yes (to Issue 6);
(a) Are the Applicants entitled to relief against forfeiture?
(b) Does the Tribunal have jurisdiction to grant that relief?"
36 Even though the Pearces had not, in terms, sought an order for relief against forfeiture of their interest in the lease, it was contended that such an order was available on the various allegations and contentions made in the various documents filed by them.
37 When the matter came on to the hearing by the Tribunal, the Respondent accepted that as the documents stood, it was open for the Pearces to seek an order for relief against forfeiture and that this claim was a live issue on the documents. The Tribunal has proceeded in agreement with that view.
38 At the commencement of the hearing before the Tribunal on 14 August 2006, the Respondent submitted that the Tribunal had no
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- jurisdiction to make the order for relief against forfeiture, and that, in any event, the Tribunal had no inherent power to grant equitable relief.
39 The parties required this jurisdictional question to be determined before the matter proceeded further.
40 In addition to oral submissions made to the Tribunal on 14 August 2006, the Tribunal, at the request of counsel, was provided with written submissions on behalf of Germain on 31 August 2006, and the Pearces on 14 September 2006.
Basis of objection to jurisdiction
41 It was the submission on behalf of Germain that the Tribunal did not have jurisdiction to make an order granting relief against forfeiture because:
(a) The relief sought was equitable in nature, and because the Tribunal did not have inherent power to grant equitable relief, there must be power granted expressly by a statute to the Tribunal. It was submitted that such power was not to be found in any statute in Western Australia and in particular the State Administrative Tribunal Act 2004 (SAT Act) or any of the enabling acts, and in particular the CTRSA Act.
(b) Assuming the Tribunal had a general power to grant equitable relief, such power could not be exercised in this case because:
(i) As the premises had been re-let to a third party prior to the commencement of this application, the resulting acquisition of rights by such third party was a bar to the granting of an order for relief against forfeiture in favour of the Pearces.
(ii) The lease had not been forfeited by Germain, the Pearces maintaining that Germain had repudiated the lease rather than forfeiting it.
(iii) The Tribunal had no basis for granting relief against forfeiture in circumstances such as the present when the Pearces were contending that there had been no breach of the lease by them, the granting of relief against forfeiture being
- dependent upon the party seeking such relief admitting a breach of the lease involved.
42 Although it was not a jurisdictional question, it was further contended on behalf of Germain that if it was found that the Tribunal had no jurisdiction to grant relief against forfeiture, the matter could not be transferred to any other court having such jurisdiction. Reference was made to the CTRSA Act, s 27(3) which is in the following terms:
"27(3) where a question has been referred to the Tribunal under this Act and the question is one that a court also has jurisdiction to determine, the proceedings for the determination of the question shall –
(a) If all the parties to the proceedings so agree; or
(b) If, on the application of a party or of its own motion, the Tribunal so directs,
be transferred to the court and shall be disposed of as if the proceedings had been instituted before the court."
43 It was argued that the word "also" in that section (bearing in mind that the Tribunal did not have equitable jurisdiction) prevented any such transfer to another relevant court.
Contentions on behalf of the Pearces
44 It was contended on behalf of the Pearces that the Tribunal has jurisdiction to grant relief against forfeiture because the Power is granted by s 81(2) of the Property Law Act 1969 (WA), and in addition, sections 16 and 26 of the CTRSA Act, taken together, provide the Tribunal with wide powers to make any order (including those of an equitable nature) with a view to achieving a solution acceptable to the parties to the lease.
45 As to the submissions based on an assumption that the Tribunal had power to grant equitable relief, it was contended on behalf of the Pearces that such jurisdiction did exist in this particular case because the Pearces were no longer seeking, as part of the claim for relief against forfeiture, to be returned to the premises but instead to avoid being ordered to pay rent said by Germain to be due after forfeiture. This being so, it was contended that it was irrelevant that there was any acquisition of rights by any third party, or that the Pearces were maintaining that Germain had
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- repudiated the lease rather than forfeiting it, or finally, that the Pearces were contending that there was no breach of the lease by them.
Whether the Tribunal has jurisdiction to grant equitable relief, including relief against forfeiture
46 It is clear that the principles upon which relief against forfeiture concerning leases of land may be granted are equitable (see Stern v McArthur (1987) 165 CLR 489 and Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584 per Ormiston J at 590-91). See also Cheshire and Fifoot's "Law of Contract" (8th Australian edition paragraph 21.2.4).
47 It is also clear that the Supreme Court of Western Australia has power to grant equitable relief (Supreme Court Act 1935 (WA), s 16.1(d)).
48 The question whether or not courts or tribunals in the State of Western Australia other than the Supreme Court have the power to grant equitable relief in relation to any matter depends upon the express terms of the legislation setting up that court or tribunal and investing it with jurisdiction (see Global Doctor Ltd v Hodgkinson & Anor [2003] WASC 119 per Barker J).
49 The need for an express statutory grant of power can be seen in relation to the District Court of Western Australia. Even though s 55 of the District Court of Western Australia Act1969 (WA) gives the District Court of Western Australia power to grant equitable remedies, this grant has been limited to an ancillary or auxiliary power to be exercised in the determination of claims otherwise than the jurisdiction of the court. (See Commercial Developments Pty Ltd v Merchantile Mutual Insurance (Workers Compensation) Ltd (1991) (5WAR 208 at 217, 221). (See also Seaman – "Civil Procedure in Western Australia" (Vol 2 par 13539 to 13540)).
50 It is thus first necessary to turn to the SAT Act where by s 8 the Tribunal is granted "the jurisdiction described in Part 3".
51 The relevant sections in Part 3 of the SAT Act are:
"13. Source of jurisdiction
(1) A provision of an enabling Act that enables an application to be made to the Tribunal gives the Tribunal jurisdiction to deal with the matter concerned.
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- (2) In addition to the jurisdiction that an enabling Act gives to deal with a matter, the Tribunal has any jurisdiction that this Act gives in relation to that matter.
(3) The Tribunal also has the jurisdiction given by section 44(3) and (4).
14. Kinds of jurisdiction
A matter in which the Tribunal has jurisdiction comes within either its original jurisdiction or its review jurisdiction.
15. What comes within original jurisdiction
(1) If the matter that an enabling Act gives the Tribunal jurisdiction to deal with does not involve a review of a decision, the matter comes within the Tribunal's original jurisdiction.
(2) A matter referred to the Tribunal under section 44(4) comes within the Tribunal's original jurisdiction.
16. Exercising original jurisdiction
(1) In exercising its original jurisdiction the Tribunal is to deal with a matter in accordance with this Act and the enabling Act.
(2) The enabling Act may modify the operation of this Act in relation to a matter that comes within the Tribunal's original jurisdiction."
52 It is clear that in dealing with matters concerning questions arising under a lease and the CTRSA Act, the Tribunal is exercising its original jurisdiction.
53 As to s 13(2) and s 16(1) within the SAT Act, the power of the Tribunal to grant equitable relief is limited, and relates only to the power to grant an interim injunction (s 90) and a declaration (s 91).
54 In particular s 90 provides:
"90. Injunction
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- (1) The Tribunal may by order grant an interim injunction in any proceeding if it is just and convenient to do so.
(2) The Tribunal's power to make an order under subsection (1) is exercisable by a judicial member.
(3) The Tribunal may make the order on the application of a party or on its own initiative.
(4) An interim injunction may be granted whether or not a person whose interests may be affected -
(a) is a party; or
(b) has been given an opportunity to be heard.
(5) An interim injunction may be granted -
(a) in any case - for a specified period; and
(b) if granted on the application of a party - for the period up to the final determination of that application.
(6) In granting an interim injunction, the Tribunal -
(a) may require an undertaking as to costs or damages as it considers appropriate; and
(b) may provide for the lifting of the injunction if specified conditions are met.
(7) The Tribunal may assess any costs or damages referred to in subsection (6)(a) and any amount so assessed is a debt recoverable in a court of competent jurisdiction.
(8) The rules may place conditions on the Tribunal's power to grant an interim injunction.
(9) The Tribunal's power under this section is in addition to, and does not limit, any power of the Tribunal under the enabling Act to make an order in the nature of an injunction."
55 Section 91 provides:
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- "91. Declaration
(1) The Tribunal may make a declaration concerning any matter in a proceeding instead of any orders it could make, or in addition to any orders it makes, in the proceeding.
(2) The Tribunal's power to make a declaration under subsection (1) is exercisable only by a judicial member.
(3) The Tribunal's power under this section is in addition to, and does not limit, any power of the Tribunal under the enabling Act to make a declaration.
(4) The Tribunal may at any time make any order necessary or desirable to give effect to a declaration made under subsection (1).
(5) A declaration made under subsection (1) is binding, according to its terms, on -
(a) the parties to the proceeding; or
(b) such of them as are specified in the declaration,
and not otherwise."
56 It is the case therefore that the SAT Act does not expressly grant to the Tribunal a power to grant equitable relief in general terms, and there is no specific power to make orders for relief against forfeiture.
57 It is thus necessary to turn to the relevant enabling Act, that is, the CTRSA Act. The two sections which are relevant are:
"16. Reference of questions to Registrar
(1) Subject to section 11(5), a party to a retail shop lease may refer to the Tribunal any question between the parties which he believes to be a question arising under the lease and the Tribunal shall -
(a) determine whether or not the question referred to him is a question arising under the lease; and
- (b) if it is such a question, hear the question with a view to achieving a solution acceptable to the parties to the lease.
- (2) The matter for determination referred to in subsection (1)(a) -
(a) may be determined by the Tribunal in such manner as it thinks fit, subject to each party being given an opportunity to make a written submission; and
(b) for the purposes of section 27, is deemed to be a question referred to the Tribunal.
(3) Nothing in this section prevents a matter or question from being dealt with through a compulsory conference or mediation process under the State Administrative Tribunal Act 2004."
58 Also, s 26 provides:
26. Orders of Tribunal
(1) Without limiting any power to make an order that is conferred by the State Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make -
(a) an order that requires a party to proceedings before it to pay money to a person specified in the order;
(b) an order for a party to proceedings before it to do, or refrain from doing, anything specified in the order; or
(c) an order dismissing proceedings before it.
(1a) The power in subsection (1)(b) includes power for the Tribunal to order the parties to enter into an agreement varying a retail shop lease as specified in the order where the Tribunal has found that the tenant under the lease was before entering into the lease misled by the landlord as to the meaning or effect of a term or condition of the lease.
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- (1aa) The Tribunal may, where it considers it appropriate to do so, make an order terminating a retail shop lease under section 6A.
[(2) repealed]
(3) An order of the Tribunal requiring anything to be done or discontinued may fix the time within which that thing is to be done or discontinued, as the case may be.
59 As to s 16, it does not in the Tribunal's view expressly empower the Tribunal to grant equitable relief in the nature of relief against forfeiture.
60 The clear purpose of s 16 is to provide a means by which parties to retail shop leases may refer disputes to the Tribunal and for the determination to be made using the procedures available to the Tribunal and with the philosophical intent expressed in s 16(1)(b). The words "hear the question with a view to achieving a solution acceptable to the parties to the lease" import an intention to allow the Tribunal to deal with the dispute in the manner aimed at achieving an amicable outcome – it does not, in the Tribunal's view, involve the granting of specific forms of relief. Further, in s 16(2), the words "may be determined by the Tribunal in such manner as it thinks fit" refer, in the Tribunal's view, to the machinery by which the dispute is to be dealt with rather than any particular orders which may be made in the course of satisfying the requirement of s 16(1)(b).
61 The Pearces have relied upon s 81 of the Property Law Act 1969 (WA) as providing a statutory basis for the Tribunal, when dealing with making orders for an equitable nature. It was argued that as s 81(2) empowered a "Court" to grant or refuse relief against forfeiture and "Court" is defined by s 7 of the Property Law Act1969 to include the Supreme Court or a Judge. Thus, it was said a "Judge" or judicial member of the Tribunal would have such power.
62 The Tribunal is unable to accept this submission. Although the Tribunal has judicial members, these members can only by virtue of s 8 and Part 3 (Sections 13-16) of the SAT Act, exercise such powers as are granted by statute and the enabling Acts. Also the authorities already referred to, and in particular, Global Doctor Ltd v Hodgkinson & Anor [2003] WASCA 119 do not support the Pearces' contention.
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63 The Tribunal is therefore of the view that power to grant equitable relief and in particular, relief against forfeiture, cannot be found in s 16 of the CTRSA Act.
64 Any orders which can be made by the Tribunal dealing with the matter under s 16, are set out in s 26 of the CTRSA Act.
65 It is clear from the terms of s 26 that, once again, there is no express power given to the tribunal to make orders for relief against forfeiture. In general terms, prior to the Tribunal being empowered to determine questions under the CTRSA Act, such questions were determined by the Commercial Tribunal of Western Australia which was established under the Commercial Tribunal Act 1984 (WA) (CT Act). The Commercial Tribunal was given the power to make certain orders under s 26 of the CTRSA Act, the same section from which the Tribunal now derives its powers.
66 The question whether, under s 26 of the CTRSA Act the Commercial Tribunal had the power to deal with questions relating to the forfeiture of leases and to grant relief against forfeiture was dealt with by the Supreme Court of Western Australia in Mavromatidis v Dundon (1997) 18 WAR 298. The Full Court held that the Commercial Tribunal did not have such power. At page 303 Templeman J (delivering the judgment on behalf of the Full Court) said:
"the law relating to forfeiture and relief from forfeiture is complex. The effect of forfeiture – particularly near the commencement of a five-year term is very serious. It is, I think, important that questions relating to forfeiture and to relief should be subject to careful scrutiny. Such questions should not be decided by a Tribunal which consists of a majority of lay persons and in a way which does not afford a tenant that protection which the law would ordinarily give him. I appreciate that in the present case the matter was heard by the chairman sitting alone, but that, of course, does not detract from the principle."
67 His Honour was referring to a chairman who was required by the CT Act to be a legal practitioner of not less than seven years' standing.
68 Although the makeup of the Tribunal may differ from case to case to that of the Commercial Tribunal, in the Tribunal's view, the opinion expressed by the Full Court has application to this Tribunal, even though
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- many of the non-judicial members are legally qualified and some are judicial members.
69 Counsel for the Pearces gave a number of examples in which it is said the Tribunal differs from Commercial Tribunal in terms of their powers generally. It is accepted that the Tribunal does have the powers referred to by counsel but none of these involve a grant of power to make equitable orders other than the granting of interim injunctions and declarations.
70 Reference should also be made to Taylor Forms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSW SC 186 in which Kirby J (as he then was) held that the New South Wales Commercial Tribunal did not have the power to give effect to a defence based on promissory estoppel. Also, in Commodore Homes (WA) Pty Ltd v Standley [2001] WADC 89Yeates DCJ gave the same decision in relation to the Building Disputes Committee.
71 Counsel for the Pearces referred to previous matters in the Tribunal where, under the previous CT Act the Tribunal made orders of an equitable nature. In particular, reference was made to Bykowski and Tebron Pty Ltd [2005] WASAT 178 where Member Spillane granted an order for equitable assignment, and Mapen Pty Ltd and Aspen (Septimus Roe)Pty Ltd [2005] WASAT 136 where Member Carey granted an equitable set-off.
72 A perusal of such cases reveals that there was no objection to jurisdiction made in those cases and thus the question of the power to grant equitable relief was not, per se, dealt with by the Tribunal, it apparently being assumed that such power did in fact exist. The Tribunal is of the view that it is not bound by those decisions.
73 In Bilek and Vata Investments Pty Ltd [2005] WASAT 39 Senior Member Raymond accepted a submission that s 26 of the CTRSA Act did not empower the Tribunal to grant relief against forfeiture. In that case the relief sought was characterised as seeking a mandatory injunction and Senior Member Raymond found that the power granted to the Tribunal under s 26(1)(b) included a power to grant such an injunction.
74 This, in the Tribunal's view, is the only power of an equitable nature granted to the Tribunal by the CRTSA Act; it obviously does not include the power to grant relief against forfeiture.
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75 In the result, the authorities make it clear that the Tribunal is not a court exercising powers which may be inherent or specifically granted to it by statute (as in the District Court in relation to equitable orders), but a Tribunal exercising such powers as granted to it by the SAT Act and/or the relevant enabling Acts, and exercising these powers in a manner and with a philosophy peculiar to Tribunals generally and to the State Administrative Tribunal in particular. Such powers do not include a general power to grant equitable relief, or a power to make an order for relief against forfeiture.
If the Tribunal has power to grant relief against forfeiture, can the power be exercised in this case?
76 Although not now essential for the Tribunal to deal with this question in this case, it is appropriate for some observations to be made on the various matters raised on behalf of the parties.
77 The three objections raised on behalf of Germain involve a consideration of the equitable doctrine of relief against forfeiture. In considering this, it should be remembered that relief against forfeiture can be found not only in equity but also by statute. Both forms of relief, however, can be applied concurrently (see Minister for Lands and Forests v McPherson [1991] 22 NSWLR 687). Relief is given by equity against the unjust forfeiture of proprietary interests. If one party is in breach of a contract, the other contracting party may choose to terminate the contract. If such termination will result in an "unjust forfeiture" of the property interests of the parties in breach, equity will grant relief against such forfeiture. Indeed, equity may enforce the contract specifically at the suit of the breaching party (see Legione v Hately(1982) 152 CLR 406 at 447 per Mason and Dean JJ.
78 Thus, there must a breach of the contract by the party seeking relief before the relief can be sought. If the breach is of an essential term of the contract, equity will grant relief if the resulting forfeiture of the breaching party's interest would be unconscionable (see Stern v McArthur(1987) 165 CLR 489).
79 In deciding whether relief should be granted, the facts in each case must be considered with particular emphasis on the benefit accruing to the terminating party at the cost to the breaching party.
80 In the present case, the respondent contends that on the papers there has been no "forfeiture" of the lease by Germain alleged by the Pearces,
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- but a repudiation of the terms of it. Further, it is said that the Pearces have alleged no breach of the lease by them.
81 The Tribunal see some difficulties with this approach. The Tribunal could, if provided proceeding to hear the claim in this matter, find that there has been a breach of the lease by the Pearces, in which case the question of a possible forfeiture would arise for consideration. Also, the Tribunal could conceivably, rather than finding that Germain has repudiated the contract, find that there has been an attempt to forfeit the Pearces' rights under the lease.
82 This being so, the Tribunal could, if the appropriate findings on the facts were made, find a termination of the lease by Germain, and an attempt to forfeit the same by them leading to relief against forfeiture being considered.
83 It follows therefore, in the Tribunal's view, that two of the objections made by Germain cannot be upheld.
84 Finally, Germain has contended that because the premises have been re-let to a third party, relief against forfeiture is no longer available to the Pearces (see Daw-Win Pty Ltd v Tagliaterri (1986) ANZ Court v R 875). In this case, however, the relief sought is not in the nature of an order allowing the Pearces to re-occupy the premises; the Pearces are only seeking to be relieved of any obligation to pay rent after the alleged forfeiture by Germain.
85 In these circumstances, the Tribunal is of the view that equity could grant such relief.
86 Thus, the Tribunal is of the view that, assuming that it has jurisdiction to grant equitable relief, and would proceed to deal with such claims, it would not refuse the relief on the three grounds contended by Germain.
87 In the final result however, the Tribunal confirms that in its view it does not have inherent power to grant equitable relief, and that the only power to grant such relief is that expressly provided by sections 90 (interim injunction) and 91 (declarations) of the SAT Act; this being so, the Tribunal does not have power to grant relief against forfeiture.
88 The Tribunal will now hear submissions as to whether the parties wish to continue the matter in the Tribunal with such relief as is left
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- available to them as a result of this decision, or to transfer the matter to a court having jurisdiction to grant equitable relief.
I certify that this and the preceding [88] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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HON R VIOL, SUPPLEMENTARY DEPUTY PRESIDENT
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