R and R Family Holdings Pty Ltd v Bevillesta Pty Ltd (Receivers and Managers Appointed)
[2013] NSWADT 95
•30 April 2013
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: R & R Family Holdings Pty Ltd v Bevillesta Pty Ltd (Receivers and Managers Appointed) [2013] NSWADT 95 Hearing dates: 19 February 2013 Decision date: 30 April 2013 Jurisdiction: Retail Leases Division Before: S Higgins, Deputy President Decision: 1. The interim order made, on 17 October 2012, is varied in the terms set out in paragraph 5 of these reasons for decision.
2. No order as to costs in regard to this application for interim order and the applicant's earlier application for an interim order.
Catchwords: Interlocutory/interim order - application by respondent seeking dissolution or vacation of earlier interim order Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994Cases Cited: Evriparas Pty Ltd v ING Management Limited [2011] NSWADT 273
Townsend v Chief Executive, State Rail Authority [1999] NSWADT 58Category: Interlocutory applications Parties: R & R Family Holdings Pty Ltd (applicant)
Bevillesta Pty Ltd (Receivers and managers Appointed)Representation: K Rees SC (for the applicant)
T Marskell (for the respondent)
Gilbert & Tobin Lawyers (for the respondent)
File Number(s): 125150 Publication restriction: N/A
REASONS FOR DECISION
Introduction
On 18 December 2012, the respondent, the owner of the Top Ryde City Centre (the Centre), made an application for an interim order in these proceedings. In that application the respondent sought a number of orders. The principal order sought was in the following terms:
1. Pursuant to section 72(1)(g) of the Retail Leases Act 1994 (NSW), the Urgent Interim Order made by the Tribunal in proceedings no. 125150 on 17 October 2012 be dissolved or vacated.
In the alternative, the respondent sought a variation to the urgent interim order made on 17 October 2012. The variations sought related to the applicant paying the outstanding rent, outgoings and promotion levies as well as the applicant being required to provide a bank guarantee in accordance with the terms of the lease. The respondent also sought an order that the applicant pay its costs in regard to this interim order application and the applicant's earlier interim order application.
The applicant had entered into a written lease with the respondent, in 2010, for shop GRD-R3005 in the Centre (the Lease). The permitted use of the leased premises (the shop) is 'Modern Australian menu including Pizza, Paster (sic), Rissotto (sic) limited to Five (5) dishes each'. The Lease is for a term of 10 years, commencing on 4 August 2010. And the applicant remains in possession at the time of hearing of this application.
The applicant asserts that the tribunal has no power to make the principal order sought by the respondent in its interim order application. In the alternative, the applicant argues that its claim against the respondent will be prejudiced if the order sought is made. It makes a similar argument in regard to the variation orders sought by the respondent.
The respondent's interim order application was heard on 19 February 2013. I reserved my decision at the conclusion of that hearing. For the reasons set out below, I have found that it is appropriate to vary interim order 1, made on 17 October 2012, as follows:
1.Subject to the applicant:
(a) paying to the respondent a weekly rent, in the amount of $1,846.00, commencing on1 February 2013. That rent is to be paid each and every Friday, unless the respondent agrees to some other day; and
(b) paying outgoings and promotion levy in accordance with clauses 7 and 8.3 of the Lease as and when they fall due, and
(c) providing the respondent with a bank guarantee, in favour of the respondent, for an amount that equals 12 weeks rent (i.e. 12 x $1,846.00). That bank guarantee is to be provided to the respondent on or before 10 May 2013;
the respondent must not pending the determination of these proceedings or further order of the tribunal:
(d) seek to exercise its right under clause 18.2 and 18.3 of the lease between the Applicant and the Respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012; or
(e) take any other step to terminate, or seek to terminate, the lease between the Applicant and the respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012.
For the reasons set out below, I have also determined that there should be no orders as to costs in regard to this interim order application and the earlier interim order application of the applicant.
Background - the applicant's claim and interim order application
The applicant filed its application for original decision, on 15 October 2012. In that application, the applicant made a retail tenancy claim and an unconscionable conduct claim, against the respondent, under section 71 of and 71A of the Retail Leases Act 1974 (RL Act) respectively. On the same day, the applicant also filed its interim order application (the applicant's interim order application). In its interim order application, the applicant sought a number of orders including an order restraining the respondent from (a) doing any act, the effect of which would or might interfere with the applicant's quiet enjoyment of the leased shop, (b) doing any act which would interfere with any service enjoyed by the applicant under the lease, or (c) enforcing its rights under clause 18.2 of the lease between the parties.
The applicant's interim order application came before the tribunal on 17 October 2012. By consent the tribunal made the following orders in regard to the applicant's interim order application:
1.Until further order, and without admission, the Respondent must not:
(a) seek to exercise its right under clause 18.2 and 18.3 of the lease between the Applicant and the Respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012; and
(b) take any other step to terminate, or seek to terminate, the lease between the Applicant and the respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012.
On this day, the tribunal also made directions, by consent, for the progress of the applicant's substantive claim. These included a direction that the applicant file and serve an Amended Application for Original Decision and Points of Claim. Pursuant to that direction, on 2 November 2012, the applicant filed and served an amended application.
Also in accordance with the directions made by the tribunal, on 17 October 2012, the respondent filed and served a defence to the applicant's amended application. The parties also participated in mediation, through the Retail Tenancy Unit. The mediation did not resolve the dispute.
The applicant's amended application next came before the tribunal, on 6 December 2012. Again the tribunal made directions by consent. The tribunal noted that the parties had agreed to the respondent filing and serving (by 14 December 2012) (a) an interim order application 'seeking to vacate, dissolve or vary' the interim orders made by the tribunal on 17 October 2012, or seeking any additional orders and (b) an application for original decision. As I have indicated, the respondent filed and served its interim order application on 18 December 2012 and it is that application which is the subject of this decision. The respondent also filed and served an application for original decision as ordered (file number 125181). In that application, the respondent has made a retail lease claim against the applicant for the payment of outstanding rent, outgoings and promotional levies. The claim is for the payment of $219,502.00.
The applicant's amended application, the respondent's interim order application and its application for original decision next came before the tribunal, at a directions hearing, on 24 January 2012. On this day, Judicial Member Molony made the following directions:
1.Adjourn the application for interim orders and the application generally to a date to be fixed on or before 28 February 2013 (allow 2 hours if possible).
2.Both parties are to advise Registry of available dates for that hearing on or before 1 February 2012.
3.In the interim R & R Family Holdings shall make payments on account of rent to Bevillesta Pty Ltd of $1,846-14 each week commencing on 1 February 2013.
The parties have informed me that the payment of $1,846.14 was an amount agreed to between them.
The tribunal's power to make interim orders
For the purpose of this interim order application, the tribunal's powers to make interim orders are contained in ss 72 and 72 AA of the RL Act. Section 72 provides as follows:
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) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,
(b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings,
(c) an order that a party to the proceedings:
(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of a lease, or
(ii) surrender possession of specified premises to another person, or
(iii) assign his or her or its rights under a lease to a specified person, or
(iv) do or perform, or refrain from doing or performing, any specified act, matter or thing,
(d) an order granting a party to the proceedings relief against forfeiture,
(e) an order, by consent of the parties, requiring the parties to the proceedings to rectify a lease,
(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) declaring that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee, 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) declaring that a party is or is not entitled to receive payment of the whole or a part of a security bond,
(g) such other order, in the nature of an interlocutory order of a kind referred to in paragraphs (a)-(f), as the Tribunal considers proper to be made in order to resolve or assist resolution of the dispute between the parties. (emphasis added)
(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under this 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. (emphasis added)
And section 72AA provides as follows:
72AA Powers of Tribunal relating to unconscionable conduct claims
(1) In proceedings for an unconscionable conduct 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) an order that a party to the proceedings pay money to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,
(b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings.
(2) The Tribunal may make such ancillary orders as it considers necessary for the purpose of enabling an order under this 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. (emphasis added)
Dissolution or vacation of interim orders made on 17 October 2012
As I have indicated, the respondent relies on para 72(1)(g) of the RL Act as vesting the tribunal with the power to dissolve or vacate the interim order made on 17 October 2012. However, it is not clear to me whether the respondent also contends that the orders made by the tribunal, on 17 October 2012, were made pursuant to para 72(1)(g) of the RL Act and not under subss 72(4) and 72AA(4) of the RL Act. Orders made under subss 72(4) and 72AA(4) of the RL Act are of course also interlocutory in nature.
As I have explained, the applicant contends that, on its proper construction, para 72(1)(g) does not vest the tribunal with the jurisdiction to make an interlocutory order of the kind sought by the respondent.
As can be seen from the terms of para 72(1)(g), the tribunal can only make an order 'of a kind' referred to in the preceding paras in that subsection, if it considers it appropriate to do so. Furthermore, it can only make an order of this kind where the order would 'resolve or assist in the resolution of the dispute between the parties.' The orders contained in paras 72(1)(a) to (e) are final orders the tribunal is empowered to make in determining a retail lease claim. As can be seen, final orders include the payment of money by one party to the other party to a retail lease claim, relief against forfeiture and declarations such as a declaration of the rights and liabilities of the parties under law.
As I understand the respondent's argument, it contends that on the basis of the applicant's points of claim, as contained in its amended application, there is in fact no point of claim which would give rise to relief in the form of relief against forfeiture. It is on this basis, that the respondent seeks dissolution or vacation of the interim orders made on 17 October 2012. That is, it argues that in light of the applicant's amended points of claim, there is no longer any utility in the interim order that was made.
Leaving aside, for the moment, the respondent's argument in regard to the applicant's points of claim, in my view, there is considerable merit in the applicant's argument as to whether para 72(1)(g) of the RL Act empowers the tribunal to make the order sought.
However, it is unnecessary for me to decide this as, in my opinion, subss 72(4) and 72AA(4) of the RL Act are sufficiently broad to empower the tribunal to make the orders sought by the respondent. Having regard to the terms of the interim order made on 17 October 2012, they were clearly made pursuant to one or both of these subsections. The orders were also expressly made subject to further order by the tribunal. Such further orders, in my view would be made pursuant to the same subsection(s). This would include an order dissolving or vacating the earlier interim orders that were made.
There is no dispute that the power vested in the tribunal under subss 72(4) and 72AA(4) of the RL Act is discretionary, as is the power to make interlocutory orders under para 72(1)(g).
Should the earlier interim order be dissolved/vacated? - as I have explained, the respondent argues that in light of the applicant's points of claim in its amended application there is no utility in retaining the interim orders as the points of claim, as drafted by the applicant, cannot give rise to relief in the form of relief against forfeiture. Instead they can only give rise to relief in the form recision of the lease and damages.
In my opinion, it would be inappropriate, at this early stage of the proceedings, without having heard any evidence, to place such a narrow construction on the applicant's claim, especially in light of the relief that is claimed and the fact that the applicant remains in possession of the premises. As has often been said, the tribunal is not a court of strict pleadings in that it may determine its own procedure, is not bound by the rules of evidence and is to act with as little formality as the circumstances of the case permit according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: see s 73 of the Administrative Decisions Tribunal Act 1997.
The relief sought by the applicant is in the following terms:
3. Pursuant to sections 72 and 72AA of the Act:
(a) an order that the Lessor pay $4000,00 to the Lessee by way of damages, restitution or refund;
(b) an order that any rental arrears purportedly owing to the Lessor are not due or owing by the Lessee to the Lessor;
(c) In the alternative 1 and 2 [i.e. order for recision and compensation]:
(i) an order that the Lessor provide rain covers and wet weather access to the Premises;
(ii) an order declaring the Lessor is only entitled to $2,000 (inclusive of all other costs and GST) rent per week under the Lease;
(iii) an order declaring that the Lessor is not entitled to a security bond under the Lease; and
(iv) an order granting the Lessee relief against forfeiture.
In my view, whether the applicant is entitled to the relief sought in para 3(c)(ii) above, is a matter for determination by the tribunal after hearing all the evidence and submissions of the parties.
Accordingly, I am not satisfied that it is appropriate to vacate or dissolve the interim order made by the tribunal on 17 October 2012.
Should the earlier interim order be varied? - as I explained to the parties, as general rule, where a lessee has failed to pay rent and seeks interim relief from being locked out by the lessor, such relief is usually granted subject to the lessee paying the outstanding rent and continuing to pay that rent pending the determination of the proceedings. While an order of this kind was not sought by the respondent, on 17 October 2012, it is clear that the respondent did not abandon its right to seek such orders if the tribunal were to make an order preventing it from acting on its letter of termination dated 11 October 2012. That is, the respondent has at no time conceded any aspect of its claim that the applicant is in breach of the Lease for having failed to pay, as required under the terms of the lease, rent, outgoings and promotion levy. As I have explained, the amount claimed by the respondent as being outstanding, as at December 2012, is considerable. At the same time, the amount claimed by the applicant is also considerable.
As indicated by the President in Townsend v Chief Executive, State Rail Authority [1999] NSWADT 56 at [12], the power vested in the tribunal under subs 72(4) should not be construed strictly. At [13] His Honour went on to state that the powers vested in the tribunal under the RL Act were designed to ensure fairness according to law in dealings between lessor and lessees. Nevertheless, factors such as balance of convenience and strength of the applicant's case were relevant factors to be considered in determining whether an interim order should be made. Other relevant factors include those listed in Evriparas Pty Ltd v ING Management Limited [2011] NSWADT 273at [14].
The applicant's case is essentially dependent on alleged pre-lease oral misrepresentations by the respondent and its agents. These have been identified by the applicant and will be tested at the hearing. In the meantime, the relationship between the parties is ongoing with the applicant continuing to be in possession of the shop and trading from it. That is, the Lease is still on foot. On that basis, in my view, as the applicant seeks to restrain the respondent form exercising its rights under the Lease (i.e. as set out in its letter of 12 October 2012), pending the determination of its application, the applicant should also be required to meet its obligations under that Lease until such time. In that regard I note clause 5.1 of the Lease provides for a base rent of $175,000.00 a year. This clause provides that this base rent is to be paid by equal monthly instalments ($14,583.33) on or before the first day of each month from the commencement of the lease. Clause 5.2 of the Lease makes provision for a fixed annual 5% increase in the base rent throughout the term of the Lease. I understand that in the course of the dispute between the parties, the respondent has granted an abatement of the rent to the applicant from time to time. More recently, the respondent consented to a rent amount of $1,846.00 (as rounded) a week. In my view, on the basis of this agreement, it is appropriate to vary the 17 October 2012 interim order by making the order subject to the applicant paying this amount each week pending the determination of both applications.
Clause 7 of the Lease provides that the applicant is to pay the respondent its share of the outgoings of the Centre. Clause 7.1 contains the obligation to make this payment. Clause 7.2 sets out matters included as outgoings and 7.6 sets out how the applicant's share of outgoings is to be calculated. And clause 8.3 of the Lease makes provision for the payment, by the applicant, of a monthly promotion levy. The levy is 10% of the base rent and it is also to be paid by the applicant at the commencement of each month. In my view, it is appropriate in varying the 17 October 2012 interim order, to include a provision that the order is subject to the applicant paying this amount as it falls due commencing on 1 May 2013.
Clause 9(a) of the Lease provides that, at least 7 days before the commencement of the Lease, the applicant must give the Manager of the Centre an unconditional bank guarantee, addressed to the respondent, in the amount of $56,120.00. Clause 9(b) provides that on an increase of the base rent, or the outgoings, or the promotions levy, the applicant is to increase the amount of the bank guarantee accordingly. Again, in my opinion, it is appropriate in varying the 17 October 2012 interim order, to include a provision that the order is subject to the applicant providing a bank guarantee, as required under the Lease. However, the amount of that guarantee should reflect a rental amount of $1,846.00 a week for 12 weeks. That bank guarantee should be provided, on or before 10 May 2013.
Each of the above (i.e. clauses 5, 7.1, 8 and 9), I note are described as essential term of the Lease: see clause 18.3.
I do not propose to include a requirement that the applicant also pay the alleged outstanding rent, outgoings and promotion levies as they appear to be disputed amounts and the interests of the respondent are protected through its claim against the applicant.
For the reasons set out above, I make an order varying the interim order made on 17 October 2012 as follows:
1.Subject to the applicant:
(a) paying to the respondent a weekly rent, in the amount of $1,846.00, commencing on1 February 2013. That rent is to be paid each and every Friday, unless the respondent agrees to some other day; and
(b) paying outgoings and promotion levy in accordance with clauses 7 and 8.3 of the Lease as and when they fall due, and
(c) providing the respondent with a bank guarantee, in favour of the respondent, for an amount that equals 12 weeks rent (i.e. 12 x $1,846.00). That bank guarantee is to be provided to the respondent on or before 10 May 2013;
the respondent must not pending the determination of these proceedings or further order of the tribunal:
(d) seek to exercise its right under clause 18.2 and 18.3 of the lease between the Applicant and the Respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012; or
(e) take any other step to terminate, or seek to terminate, the lease between the Applicant and the respondent by reason of the alleged breaches of the Applicant set out in the letter from the solicitors for the Respondent dated 11 October 2012.
A failure by the applicant to comply with 1(a), (b) or (c) above, will result in the interim order lapsing.
Costs
Section 77A of the RL Act provides that the Tribunal may award costs under s 88 of the ADT Act.
Section 88(1) of the ADT Act provides that each party is to pay its own costs except as provided in that section. Subs 88(1A) provides that the tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the matters set out in para (a) to (e) in that subsection. These matters are:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal, or
(vi) vexatiously conducting the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
As can be seen from the terms of s 88 of the ADT Act the general rule is that each party pay its own costs, unless one of the matters in para 88(1A) apply. In my view, having regard to the manner in which this interim order application and the earlier interim order application was made there is no basis to depart from the general rule that each party pay its own costs. I note that the respondent has not suggested that the applicant has acted inappropriately in bringing its application.
Accordingly, the appropriate order is that there be no order as to costs.
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Decision last updated: 02 May 2013
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