South Veterinary Group Pty Ltd and Sharpe and Anor
[2007] WASAT 46
•19 FEBRUARY 2007
SOUTH VETERINARY GROUP PTY LTD and SHARPE & ANOR [2007] WASAT 46
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 46 | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:1102/2006 | 2 FEBRUARY 2007 | |
| Coram: | DR B DE VILLIERS (MEMBER) | 18/02/07 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | The application by the respondents for an order that the interim relief granted by the Tribunal on 25 July 2006 and affirmed on 4 October 2006 be removed, is refused | ||
| B | |||
| PDF Version |
| Parties: | SOUTH VETERINARY GROUP PTY LTD ROBERT SHARPE JILLIAN SHARPE |
Catchwords: | Commercial tenancies Interim order Extension of interim relief Criteria for grant and extension of interim relief Criteria to set aside interim relief Question arising from a lease Can the Tribunal find that the lease has been breached before it is established that the lease comes within the operation of the Act and therefore within the jurisdiction of the Tribunal? What factors can be taken into account for interim relief to be set aside |
Legislation: | Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 26(1)(b) |
Case References: | Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 McGregor v Henry [2006] NSWC 368 Michael v State Housing Commission (1996) 45 Ald 1 Pearce & Anor and Germain [2006] WASAT 305 South Veterinary Group Pty Ltd and Sharpe & Anor [2006] WASAT 222 South Veterinary Group Pty Ltd and Sharpe & Anor [2006] WASAT 371 Tymray Pty Ltd (Admin Apptd) v Mercantile Mutual Life Insurance Co Ltd (1994) 13 ACSR 111 |
Orders | The application by the respondents for an order that the interim relief granted by the Tribunal on 25 July 2006 and affirmed on 4 October 2006 be removed, is refused |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : SOUTH VETERINARY GROUP PTY LTD and SHARPE & ANOR [2007] WASAT 46 MEMBER : DR B DE VILLIERS (MEMBER) HEARD : 2 FEBRUARY 2007 DELIVERED : 19 FEBRUARY 2007 FILE NO/S : CC 1102 of 2006 BETWEEN : SOUTH VETERINARY GROUP PTY LTD
- Applicant
AND
ROBERT SHARPE
JILLIAN SHARPE
Respondents
Catchwords:
Commercial tenancies - Interim order - Extension of interim relief - Criteria for grant and extension of interim relief - Criteria to set aside interim relief - Question arising from a lease - Can the Tribunal find that the lease has been breached before it is established that the lease comes within the operation of the Act and therefore within the jurisdiction of the Tribunal? - What factors can be taken into account for interim relief to be set aside
(Page 2)
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 26(1)(b)
Result:
The application by the respondents for an order that the interim relief granted by the Tribunal on 25 July 2006 and affirmed on 4 October 2006 be removed, is refused
Category: B
Representation:
Counsel:
Applicant : Mr D South
Respondents : Mr R Griffiths
Solicitors:
Applicant : South Legal
Respondents : Griffiths & Godecke
Case(s) referred to in decision(s):
Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404
McGregor v Henry [2006] NSWC 368
Michael v State Housing Commission (1996) 45 Ald 1
Pearce & Anor and Germain [2006] WASAT 305
South Veterinary Group Pty Ltd and Sharpe & Anor [2006] WASAT 222
South Veterinary Group Pty Ltd and Sharpe & Anor [2006] WASAT 371
Tymray Pty Ltd (Admin Apptd) v Mercantile Mutual Life Insurance Co Ltd (1994) 13 ACSR 111
(Page 3)
Summary of Tribunal's decision
1 The Tribunal was requested by the respondents to remove an injunction that was granted on 25 July 2006 in [2006] WASAT 222. The respondents contended that the applicant was in breach of the lease and that the lease had expired. The applicant contended that he and the respondents had reached agreement that the rental be taken from the amount held in trust. The parties were in disagreement as to whether the Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) applies to the lease.
2 The Tribunal held that
(i) it cannot determine questions arising from a lease unless it is satisfied that the lease falls within its jurisdiction;
(ii) the interim proceedings cannot deal with the threshold question; and
(iii) the considerations that must be taken into account when an injunction is granted or prior to it being removed, favour the applicant and therefore the interim relief should remain in place.
Background
4 The Tribunal was requested by the respondents on 3 January 2007 to remove the injunction that was granted on 25 July 2006.
5 The background to, and reasons for, the grant of injunction can be found in the reasons for decision in South Veterinary Group Pty Ltd and Sharp & Anor [2006] WASAT 222.
6 The Tribunal previously dismissed on 4 October 2006 an application by the respondents that the interim relief should be regarded as having expired on 31 October 2006. The written reasons are found in South Veterinary Group Pty Ltd and Sharpe & Anor [2006] WASAT 371.
(Page 4)
7 The Tribunal listed the interim application for 2 February 2007 to coincide with a directions hearing scheduled for the matter on the same day.
8 The Tribunal received submissions from both parties and affidavits in support on the respective contentions. The Tribunal also received oral submissions from counsel acting for the parties. The respondents were given seven days to make further submissions in response to the list of authorities referred to by Mr South. The Tribunal took all of the information and submissions into account in coming to its decision.
9 Mr Griffiths, for the respondent, contended in brief that there were two grounds for the injunction to be set aside, namely the applicant's alleged failure to pay rent and the question if there is a lease on foot. Mr Griffiths indicated that the first ground is the primary basis upon which the application is based.
Submissions
10 In summary, Mr Griffiths contended as follows:
(a) The applicant has a track record of paying rent late in breach of the lease. Mr Griffiths presented information to support his contention that at several occasions during the term of the lease, the applicant was late in rental payments and therefore in breach of the lease.
(b) The applicant has not paid rent for the months November 2006, December 2006 and January 2007 in breach of the lease. The applicant is therefore not coming to the Tribunal with "clean hands" and can as a result not rely on equity to protect its interests (McGregor v Henry [2006] NSWC 368). Even if equitable remedy were available, the Tribunal does not have inherent power to grant equitable relief (Pearce & Anor and Germain [2006] WASAT 305).
(c) The applicant is abusing the Tribunal process and has misrepresented discussions he had with the respondent's agent. No agreement had been reached on a new lease, for the amount held as bond to be used towards outstanding rent or for legal proceedings to be discontinued. Mr South therefore misrepresented the situation to the Tribunal.
(Page 5)
- (d) The injunction is oppressive in that the respondents are not receiving rent, they cannot enter their premises and they cannot make the premises available to another potential tenant.
(e) The cost undertaking given by the applicant is not acceptable since the company may be nothing but a "shelf company" or "$2 company" and therefore unable to stand in for losses that may be suffered by the respondents. Mr Griffiths sought a personal assurance and undertaking for damages from Mr South as director of the applicant.
(f) In response to a question by the Tribunal, the respondents indicated their willingness to give an undertaking for damages that the applicant may suffer if the injunction is removed and the matter is determined in favour of the applicant. Mr Griffiths indicated that if the injunction is removed, a reasonable time of one month (as indicated as reasonable by Mr South) would be allowed for the applicant to vacate the premises.
(g) There is no lease on foot since the applicant had repeatedly breached the lease through late payment of rent and the term of the lease has run out. There is enough evidence before the Tribunal to find that the lease had been breached and that the respondents were therefore entitled to refuse to renew the lease.
(h) The authorities referred to by Mr South are, according to Mr Griffiths, not applicable to the matter under consideration. Mr Griffith's contentions were set out in his submission dated 8 February 2007.
(i) Mr Griffiths provided the Tribunal with an affidavit of Ms Sally Beecroft on 15 February 2007 in which she explains why she believes the applicant to be in arrears with rental payments. The Tribunal noted the content of the affidavit.
11 Mr South, in summary, responded to the contentions in the following way:
(a) The previous findings of the Tribunal should remain on foot, namely that there are sufficient grounds for the injunction to remain in place until main questions in dispute have been determined. The counter-issues raised
- by Mr Griffiths such as alleged breaches of the lease, cannot, regardless of their merit, be considered in full as part of an interim application.
- (b) The considerations to take into account for the grant or the lifting of an injunction are set out in the reasons for decision of the Tribunal on 27 July 2006. Mr Griffiths has not shown that the circumstances that gave rise to the injunction have changed sufficiently for it to be removed. All the information provided to the Tribunal in support of this interim application, is "irrelevant" since it deals with the main questions to be tried. The balance of convenience continues to favour the applicant and the status quo should be retained.
(c) The potential prejudice faced by the respondents can be quantified as rental income which is covered by the undertaking for damages given by the applicant and previously accepted by the respondent. There is no evidence to support the respondent's contention that the applicant is facing financial strife or difficulties. On the other hand, the potential risk and damage to the applicant, its staff and the animals in its care is substantial, cannot be quantified and cannot be ameliorated by an order for damages. The balance of convenience therefore continues to justify the injunction.
(d) In regard to the alleged non-payment of rent for the months November 2006, December 2006 and January 2007, Mr South referred to what he believed was an agreement reached for the respondent to withdraw the rent from the amount it held in bond by the agent of the respondent. According to his calculation, the applicant was in credit on 1 February 2007 and not in debit as alleged by the respondent. He contended that the bond held adequate funds for the rent of the three months in question.
(e) Mr South referred to several authorities in support of his contention that the applicants should be entitled to remain in occupation until the main questions in dispute have been decided. He relied in particular on Tymray Pty Ltd (Admin Apptd) v Mercantile Mutual Life Insurance Co Ltd (1994) 13 ACSR 111, Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 and Michael v State Housing Commission (1996) 45 Ald 1.
(Page 7)
- (f) The applicant renewed its undertaking for damages that the respondent may suffer as a result of the injunction.
(g) Mr South contended that the alleged late payment of rent during the term of the lease cannot be used as a ground for the injunction to be lifted since the allegations relate to questions arising from the lease that are yet to be determined.
Consideration
12 The Tribunal explained in its previous reasons for decision that the application for injunctive relief and the removal thereof, are of an interim nature and that it cannot deal with the main questions arising from the lease during interlocutory proceedings.
13 It appears from the main application, the amendments thereto and the issues raised by both parties in the course of proceedings thus far, that several contentious questions arise from the lease and that the Tribunal will in due course be required to deal with same.
14 The parties are in agreement that a "threshold" question is whether the Commercial Tenancies (Retail Shops) Agreement Act 1985 (WA) (CT Act) applies to the lease.
15 The Tribunal does not accept the contention by Mr Griffiths that a finding can be made regarding the alleged braches of the lease through late payment of rent regardless of whether the lease falls within the CT Act. The jurisdiction of the Tribunal to deal with the question can only be livened when the threshold question has been settled.
16 Consequently, as explained by the Tribunal before, unless and until that threshold question is determined, the Tribunal cannot consider other questions arising from the lease since it may not have jurisdiction to do so. Allegations of breaches of the lease will therefore be dealt with at an appropriate time, provided that the Tribunal has jurisdiction over the matter. It may be frustrating to the respondents, but account must also be taken of the interests of the applicant who may experience frustrations of its own.
17 Once the threshold question is determined - the Tribunal intends to deal with it as a priority - further programming orders can be made to determine the questions arising from the lease. Such questions can be referred for mediation or programmed for hearing. In light of commercial
(Page 8)
- considerations the parties may find it beneficial to consider their dispute in the context of mediation.
18 In its reasons for decision in WASAT [2006] 222 par 3 the Tribunal set out the principles it has to consider prior to the granting of an injunction. Those principles are as follows:
(a) There is a serious question to be tried.
(b) The interim proceeding is not aimed at determining the matter in substance.
(c) Damages may not be a sufficient remedy to the applicant if the decision is ultimately in its favour.
(d) The balance of convenience of both parties.
(e) Preservation of the status quo.
(f) An undertaking as to damages.
19 These principles continue to guide the Tribunal as to whether the injunction should remain in place or be removed. I will in due course deal with each of these principles.
20 Mr Griffiths indicated that the primary basis for seeking an order that the injunction be removed, is the failure by the applicant to pay rent for the months November 2006, December 2006 and January 2007. Mr South offered an explanation of his understanding of an agreement that had ostensibly been reached with the agent of the respondents for the rent to be deducted from his bond.
21 The Tribunal is not required to make a determination in regard to whether an agreement had been reached. In fact, this latest dispute further emphasises why clarity should be given to the threshold question as soon as possible so as to deal with the other matters of substance. The Tribunal notes that Mr South is on record that the amount held by the respondents as a bond, should be used for purposes of rent for the months November, December and January. It appears therefore that the risk faced by the respondents up to now is adequately addressed through the undertaking for damages and the amount held in bond.
22 Mr Griffiths' reference to examples of breaches of the lease due to late payments, does not alter the fundamental reasons why the injunction was granted in the first place. The Tribunal recognised at the time that there are serious questions to be tried but that the injunction-proceedings
(Page 9)
- were not the appropriate stage for the matters to be aired. That remains the view of the Tribunal.
23 The Tribunal invited Mr Griffiths to explain what circumstances have changed since the granting of the injunction, to justify the removal thereof. His main contention was that of non-payment of rent which, according to the Tribunal, is a question to be dealt with in due course as part of the proceedings if indeed the lease falls within the CT Act. It would be premature to consider at this stage whether the applicant was indeed in breach of the lease in the way alleged by the respondents.
24 The Tribunal does not accept Mr Griffiths' contention that the late payment of rent is a matter for the Tribunal to consider regardless of whether the lease falls within the ambit of the CT Act. The Tribunal can only exercise jurisdiction over the dispute if the CT Act applies. The powers of the Tribunal is set out by the enabling Act and if that Act does not apply to the lease, there is no ground for the Tribunal to be involved in the matter. Either or both parties can bring an application before another court in which jurisdiction such a dispute may rest.
25 The Tribunal is not required at this stage to make any funding as to whether a settlement agreement was reached between the parties in late 2006. Mr Griffiths does not dispute that settlement discussions had occurred and there is no evidence from the respondents or the agent to refute contention of Mr South that settlement discussions had occurred. The question whether the discussions between the parties and subsequent exchange of letters satisfy the conclusion that a binding agreement had been reached, may be a question for the Tribunal to consider in due course after it has heard further evidence.
26 Mr Griffiths took issue with the letter sent to the Tribunal by Mr South on 27 November 2006 in which he (Mr South) says that it "appears" as if the dispute had been settled and that the hearing may be vacated and replaced with a directions hearing. Based on the information before it, the Tribunal does not find the letter extraordinary or misleading for three reasons:
Firstly, it is not disputed by the respondents that some settlement discussions had occurred although the outcome remains unclear.
Secondly, it is in the public interest and the interest of the parties to advise the Tribunal if a hearing may be done away with
- in order to save costs and time that may be taken by preparing for trial.
- Thirdly, the applicant is entitled to notify the Tribunal if he is satisfied that a matter has settled since it is his application.
27 The Tribunal does not find anything untoward in the letter or anything misleading in it. The fact that a settlement had not been reached according to the respondents, does not negate that at the time of the writing of the letter it may have appeared to Mr South that the matter may settle. As soon as it became apparent that the dispute had not settled, a directions hearing was called.
28 The Tribunal accepts that the consequences of the injunction are that it limits the ability of the respondents to enter the premises, to change locks or to make it available for lease to other potential tenants. The respondents may perceive the injunction as "oppressive" but the Tribunal is guided by a balance of convenience of both parties. The lifting of the injunction may in fact also be oppressive to the applicant if the respondents lock them from the premises and it turns out that the questions are determined in favour of the applicant.
29 For reasons set out in earlier decisions, the Tribunal is satisfied that the interests of the respondents are sufficiently taken care of by the damage undertaking given by the applicant.
30 The damage suffered, if any, relates mainly to rental income by the respondents (estimated at $20 000 at time of the hearing on 2 February 2007) and can be made good by an award of damages and the money held in bond.
31 On the other hand, the potential losses and trauma that can be suffered by the applicant, its clients, staff and animals in care, if they were to vacate the premises, could potentially run into hundreds of thousands of dollars.
32 The offer for damages submitted by the respondents during the hearing, does not mitigate the risks posed if the injunction is lifted. The balance of convenience clearly falls on the side of retaining the injunction.
33 The Tribunal notes the request by Mr Griffiths that Mr South personally guarantees damages that may be suffered by the respondents. The Tribunal, however, accepts the previous undertaking for damages by the applicants for the following reasons:
(Page 11)
- (a) The respondents had accepted the undertaking of the applicant previously and reminded the Tribunal in letter dated 22 December 2006 that "it was and always has been our understanding that the Applicant provided an undertaking as to damages which continues to operate for as long as the injunction dated 25 July 2006 continues to be in force". If the undertaking was acceptable to the respondents in 22 December 2006, why would it not be acceptable on 2 February 2007?
(b) There is no evidence to suggest that the applicant is a "$2 company", a "shelf company" or at risk of failing to meet its obligations under the lease.
34 The Tribunal notes the respective submissions regarding the authorities Mr South referred to. There is no need for the Tribunal to respond to each of the matters in detail. We are satisfied that, given the facts in this matter, the interim relief should be extended.
35 We do not accept the contention of Mr Griffiths that there is evidence of the applicants' intention not to pay rent or that the applicant is not approaching the matter with clean hands.
36 The Tribunal accepts the decision in Pearce and Germain that it does not have an inherent power to grant equitable relief. However, the power to grant the interim injunction is not found in a general inherent power, but in s 26(1)(b) of the CT Act.
37 In regard to the affidavit of Ms Sally Beecroft which was filed on 15 February 2007, the Tribunal notes that:
(a) the affidavit does not dispute that settlement discussions had occurred;
(b) Ms Beecroft does not comment on the contention that agreement had been reached for the monies held in bond to be used for the rent for the months November to January; and
(c) that Mr Griffiths does not provide reasons why leave was not sought from the Tribunal during the hearing to make further submissions or to provide additional evidence.
Finding
38 In conclusion the Tribunal finds as follows:
(Page 12)
- (a) There are several questions to be tried and those questions can only be determined once the threshold question is settled in order to enliven the jurisdiction of the Tribunal. Programming orders will be made expeditiously to bring the matter to trial. Any further delays to deal with the jurisdictional issue will be unfair to both parties.
(b) The interim proceeding cannot be utilised for determining the questions in substance. Both parties have raised questions that fall outside the scope of interim proceedings and those will be dealt with at trial.
(c) An award of damages may not a sufficient or appropriate remedy to the applicant if the decision is ultimately in its favour. Mr South, a director of the applicant, estimated the potential loss if the applicant had to vacate the premises at $600 000. Animals would have to be relocated, staff retrenched and business goodwill would suffer. The applicant has given an undertaking for damages to the respondents, which relate mainly to potential loss of income from rental. The risk faced by the respondents pales in comparison with those by the applicant.
(d) The balance of convenience of both parties dictates that, for reasons set out above and in previous reasons, the injunction should remain on foot.
(e) The status quo should be preserved for reasons given.
39 The application for the injunction to be removed, is therefore dismissed.
Order:
1 The application by the respondents for an order that the interim relief granted by the Tribunal on 25 July 2006 and affirmed on 4 October 2006 be removed, is refused.
I certify that this and the preceding [39] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER
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