Profile Events Pty Ltd v West Beach Trust (No 3)

[2011] SADC 106

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

PROFILE EVENTS PTY LTD v WEST BEACH TRUST (NO 3)

[2011] SADC 106

Judgment of His Honour Judge Burley

15 July 2011

LANDLORD AND TENANT - RENT - GENERALLY

Assessment of arrears of rent - rent calculated by reference to annual "turnover" of business - meaning of "turnover" - whether GST included in turnover.

PROFILE EVENTS PTY LTD v WEST BEACH TRUST (NO 3)
[2011] SADC 106

1. These reasons relate to the recovery of arrears of rent by the defendant on the counter-claim.  They should be read in conjunction with the reasons published by me on 14 April 2010, in particular [136], [138] and [146].  I mention, in addition, [147] which is as follows:

   As to the quantum of the arrears of rent, I have evidence before me, which is summarised in Annexure 1A to DWS, which enables the rent, calculated by reference to turnover, to be ascertained up to the 31 December 2008.  Such a calculation must exclude GST and amounts to a total of $335,329.00 from which is to be deducted rent actually paid. The evidence does not permit me to make an accurate calculation of arrears of rent after 31 December 2008.  In those circumstances I think it appropriate to limit, for the moment, my orders on the counter-claim to declaration that the defendant is entitled to recover from the plaintiff arrears of rent from 3 June 2002 to the date on which (if that has occurred) the plaintiff commenced (and continued) to pay the full amount of the rent.  In any event, an order directing a master to undertake the appropriate enquiry as to the amount of the arrears should also be made.  The parties should not lose sight of the fact that the calculation of the amount due could be a relatively straightforward exercise, in which event a consent judgment on the counter-claim might be entered.

2. Alas, a consent judgment has not been possible.  Even after dealings between the parties since 2001 and protracted proceedings, culminating in a lengthy and expensive trial and a subsequent unsuccessful appeal, the parties cannot agree the precise calculation of arrears of rent.

3. Their present disagreement arises in relation to the requirement that rent be paid by reference to turnover.  To the extent that that provision applies to the period of the tenure, or any part thereof, the parties have agreed the method of calculation of arrears except for the inclusion or exclusion of GST.  (Hence there is no need to proceed with the enquiry before a master.)  It is common ground the GST was payable by a third party in respect of the hire from the plaintiff of the premises and in respect of any goods supplied by the plaintiff to the third party.  The point of disagreement is: is the amount paid by whatever party in respect of GST to be included in the turnover by reference to which rent is to be calculated? “Turnover”, in this context, means gross income.  At [147], I referred to the exclusion of GST.  Although it was not specifically stated in my reasons, the meaning of “turnover”, viewed objectively, must necessarily exclude GST because that is a tax payable to the Federal Government as opposed to income received by the plaintiff.  It is the net amount of GST, after allowance for credits of GST to the plaintiff in respect of its business operations at the premises, that cannot form part of the turnover or gross income of the plaintiff.  Arrears of rent should be calculated accordingly. 

4. Although, as stated in the defendant’s written submissions in reply, my earlier reasons referred to the exclusion of GST by reference to the calculation of arrears (Annexure 1A) provided by the defendant, the same reasoning (as set out above) applies to the calculation of arrears which must now be paid.  For these reasons, there will be a declaration that arrears of rent must be calculated (for the periods before and after judgment on 14 April 2010) by reference to the exclusion of the net amount of GST payable in respect of the business conducted by the plaintiff at the premises.

5. As to the costs associated with obtaining the above declaration, in the absence of submissions to the contrary from the defendant, I would award the costs of same to the defendant.  If, notwithstanding that tentative intimation, the defendant wishes to be heard on the question of costs, there will be liberty to apply within seven days of receipt of these reasons.  There will also be liberty to speak to the minutes.