Sturt Street a Quest Inn Pty Ltd ACN 099 333 392 v Templeton
[2019] SASC 158
•29 August 2019
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
STURT STREET A QUEST INN PTY LTD ACN 099 333 392 v TEMPLETON
[2019] SASC 158
Judgment of The Honourable Justice Lovell
29 August 2019
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - ADMISSION OF FURTHER EVIDENCE
LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION - JURISDICTION, POWERS AND APPEALS OF COURTS AND TRIBUNALS - JURISDICTION GENERALLY
The respondent leased his premises to the appellant. The clear intention of both parties at the time of entering into the lease was that the appellant would rent the premises to members of the public as a "serviced apartment". The respondent and appellant fell into dispute and the respondent brought an application in the Magistrates Court, pursuant to the Retail and Commercial Leases Act 1995 (SA). The main question on appeal is whether, in these circumstances, the lease is a "retail shop lease" pursuant to that Act.
Held: appellant allowed to adduce further evidence before this Court.
Retail and Commercial Leases Act 1995 (SA) s 68; s 3; Magistrates Court Civil Rules 2013 (SA) r 30(2); Supreme Court Civil Rules 2006 r 286, referred to.
Zwillinger v Schulof [1963] VR 407; Howley v Ghan [2019] SASC 4; Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150; Milera v Wilson (1980) 23 SASR 485; Stringer & Ors v Gilandos Pty Ltd [2012] VSC 361, considered.
STURT STREET A QUEST INN PTY LTD ACN 099 333 392 v TEMPLETON
[2019] SASC 158LOVELL J:
Overview
Mr Templeton leased his premises to Sturt Street A Quest Inn Pty Ltd (‘Quest’). Quest operates a business of renting, to members of the public, serviced apartments. The clear intention of both parties at the time the lease was entered into was that Quest, as part of its business, would offer this apartment for rent to the public. The main question on appeal is whether, in these circumstances, the lease entered into by Mr Templeton and Quest is covered by the Retail and Commercial Leases Act 1995 (SA) (‘the Act’).
Background
The respondent, Mr Templeton, is the registered proprietor of Lot 9 26 Sturt Street Adelaide Australia (‘the Premises’). The appellant, Quest, entered into an agreement to lease the Premises (‘the Lease’). The Premises are one of 23 contiguous properties from which the appellant operates a business of serviced apartments.
A dispute arose when the appellant’s managing director, Mr Ian Rochow, withheld rent and outgoings on the basis that Mr Templeton, the Lessor, had failed to fulfil his obligations under the Lease to perform capital works on the Premises. Mr Templeton brought proceedings in the Magistrates Court in which he argued that the appellant was not entitled to withhold rent.
At trial, the appellant implicitly accepted that the Act applied. The Magistrate proceeded to hear the trial on that basis. The Magistrate held that the appellant was not entitled to withhold rent and ordered it pay the respondent the rent owing with interest. The appellant appeals this finding.
The rent for the new term was also in dispute. The Magistrate determined the rent by relying on the respondent’s valuation. The appellant appeals this finding.
The appellant now seeks to argue that the Lease is not a “retail shop lease” and that the Act does not apply. The appellant contends that the Magistrate therefore did not have the jurisdiction to make any orders pursuant to the Act. The appellant conceded that the jurisdiction argument was not raised before the Magistrate.
Grounds of Appeal
The appellant relied on three grounds of appeal.
1The Learned Magistrate did not have jurisdiction to hear the matter as the Lease in question was not a “retail shop lease” pursuant to the Retail and Commercial Leases Act 1995 (SA). The respondent did not establish the evidentiary foundation for jurisdiction.
2The Learned Magistrate erred in finding at [13] of her 11 December 2018 reasons that the appellant was not entitled to withhold rent pursuant to cl.6.2 of the Lease and, as a result, the respondent was wrongly awarded interest for the period that rent was withheld. The appellant relies on cl.11.3 of the Lease to support the right to withhold rent during the relevant period.
3The Learned Magistrate erred at [26] of her December reasons in not accepting the appellant’s valuation, and instead relying upon and accepting the respondent’s rent notice, resulting in an error in making Order 1.3 (and as a consequence, Orders 1.4 and 1.5) in February 2019. In the alternative, the Magistrate erred in not relying on an independent valuation to determine the rent.
For the reasons that follow, it is only necessary for me, initially, to consider the first ground.
Ground One
The appellant contends that the Magistrate did not have jurisdiction to determine the issues before her. Mr Templeton brought his application in the Magistrates Court pursuant to s 68 of the Act. An application under that section can only be brought by a party to a “retail shop lease” as defined by the Act.
As mentioned, it is common ground that the Magistrate was not asked to determine the question of jurisdiction. The trial proceeded on the basis that the Lease was a “retail shop lease” for the purposes of the Act.
Further, r 30(2) of the Magistrates Court Civil Rules 2013 (SA) relevantly states:
A party intending to object to the jurisdiction of the Court may only do so on an interlocutory application filed at the same time as the defence.
No objection to jurisdiction was made by Quest. The appellant submits that the time for objecting to the jurisdiction of the Court did not formally arise as the appellant never filed a defence. This is a practical consequence of the Magistrate’s order that the trial was to proceed by affidavit evidence (in lieu of formal pleadings).
Any act which is inconsistent with an objection to the jurisdiction of the Court may be taken as a waiver of his/her right to protest jurisdiction.[1] The appellant’s failure to object was a submission, by conduct, to the Magistrate’s jurisdiction to hear the application. Notwithstanding the absence of a filed defence, the appellant concedes that the trial was defended without the issue of jurisdiction being raised.
[1] Zwillinger v Schulof [1963] VR 407 at 413 – 414.
The appellant was unrepresented at trial and did not raise the issue of the Court’s jurisdiction to hear the matter. There were three hearings[2] subsequent to the appellant retaining counsel. The question of jurisdiction was only raised for the first time on appeal.
[2] On 17 January, 5 February and 22 February 2019.
The appellant contends that it is in the interests of justice to allow the point to be heard, noting the appellant’s lack of representation at first instance and the effect that the outcome of this appeal will have on the appellant’s other matters before the Magistrates Court. As was stated in Howley v Ghan:[3]
Applying and enforcing the rules to promote the expeditious, economical and just conduct and resolution of an action or proceeding in a high volume jurisdiction where very many matters are prosecuted by unrepresented litigants with no legal training demands a greater degree of tolerance and patience than litigants in this Court may expect. Nonetheless, it is essential to the administration of justice that any self-represented litigant in the Magistrates Court inform themselves as to the requirements under the rules and use their best endeavours to comply.
[3] [2019] SASC 4 at [38].
The appellant was only represented by counsel in the Magistrates Court late in the proceedings. However, of relevance is the fact that Mr Templeton initially sought relief from the Residential Tenancies jurisdiction of the South Australian Civil and Administration Tribunal (‘SACAT’). At that stage, Quest had legal representation. Quest argued before the Tribunal that the Lease was not a residential lease and therefore SACAT did not have jurisdiction. That argument, which was accepted by the Tribunal, suggests that the appellant considered the question of jurisdiction.
While the necessity of objecting to the jurisdiction of the Court at the time of trial may have not been apparent to the appellant, there is clear unfairness to the respondent if the appellant were to now be allowed to raise this point.
While such unfairness to the respondent would usually be determinative of the matter, the question of jurisdiction raises difficult issues. Although an objection to the jurisdiction of the Court is to be filed with a defence, it is not a defence. Parties cannot, by submission to the jurisdiction of a court, confer jurisdiction which the court does not otherwise possess.[4] The Court’s jurisdiction is a “proper matter to determine on appeal even if it has not been considered in the Court below”.[5] The question that arises is whether the submission of the appellant on the question of jurisdiction has any merit.
[4] Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 163.
[5] Milera v Wilson (1980) 23 SASR 485 at 488.
Section 68 of the Act provides:
(1) An application for an order under this section may be commenced by application to the Magistrates Court by a party (or former party) to a retail shop lease or a collateral agreement.
(2) The Magistrates Court may on application under this section, by order—
(a)restrain an action in breach of this Act, a retail shop lease or a collateral agreement; or
(b)require a person to comply with an obligation under this Act, a retail shop lease or a collateral agreement; or
(c)order a person to make a payment (including a payment of compensation) that is payable under this Act, a retail shop lease or a collateral agreement; or
(d)order the payment of compensation for loss or damage resulting from a breach of this Act, a retail shop lease or a collateral agreement; or
(e)relieve a party to a retail shop lease or a collateral agreement from the obligation to comply with a provision of the lease or agreement; or
(f)reinstate rights under a retail shop lease that have been forfeited or have otherwise terminated; or
(g)require the payment of rent under a retail shop lease into the Magistrates Court until the lease has been performed or an application for compensation has been determined; or
(h)require that rent paid into the Magistrates Court be paid out and applied as directed by the Magistrates Court; or
(i)require a tenant to surrender possession of premises to the lessor; or
(j)do anything else necessary or desirable to resolve a dispute between the parties to the retail shop lease.
Section 3 of the Act defines “retail shop” and “retail shop lease” as follows:
retail shop means –
(a) business premises –
(i) at which goods are sold to the public by retail; or
(ii) at which services are provided to the public, or to which the public is invited to negotiate for the supply of services; or
(b)business premises classified by regulation as premises to which this Act applies
but does not include business premises of a class excluded by regulation from the ambit of this definition;
retail shop lease or lease means an agreement under which a person grants or agrees to grant to another person for value a right to occupy a retail shop for carrying on a business –
(a) whether or not the right is a right of exclusive occupation; and
(b) whether the agreement is express or implied; and
(c) whether the agreement is oral or in writing, or partly oral and partly in writing;
The appellant argues that serviced apartments represent a grey area between a residential and commercial arrangement, citing Stringer & Ors v Gilandos Pty Ltd.[6]In Stringer, Croft J considered whether leases of units forming part of an apartment/resort complex constituted “retail premises leases” for the purposes of the equivalent Victorian legislation. In deciding that the relevant premises were “retail premises”, Croft J issued a warning against the blanket characterisation of all serviced apartments as “retail premises”. His Honour said:[7]
I should, however, sound a note of caution in relation to this finding by emphasising that whether or not premises described as “serviced apartments” is to be characterised as “retail premises” depends upon the particular circumstances, including the nature of the premises, the manner of in which occupancy is provided and the nature of that occupancy. As I have said, the term or description, “serviced apartments”, is not a term of art. Rather, it is a term or description of premises which connotes a range of possibilities. At one end of the range one would find premises managed and occupied in a manner indistinguishable from a motel or hotel and at the other end premises indistinguishable from long term residential accommodation, separately let but with the attribute of being serviced. In the former case it would be expected that the Acts would apply on the basis that the premises are “retail premises” and in the latter case they would not, any more than they would to any block of residential units. In between there are a range of possibilities each of which may have different consequences in terms of the application of the Acts.
(Footnotes omitted).
[6] [2012] VSC 361.
[7] Stringer & Ors v Gilandos Pty Ltd [2012] VSC 361 at [68].
Serviced apartments exist on a spectrum. In Stringer, Croft J considered it necessary to give the expression “serviced apartments” meaning by reference to actual usage according to a Statement of Agreed Facts prepared by the parties, the provisions of the lease and affidavit evidence. The Statement of Agreed Facts and affidavit evidence in Stringer provided details as to the actual use of the premises, including whether the units were used on a long-term basis and a description of facilities.
The appellant has a reasonably arguable case, subject to the question of further evidence. Whether the Lease is a “retail shop lease” will depend, in part, on the nature of the arrangements between Quest and its customers, including the details of any goods or services provided by Quest.
The material before me relevant to jurisdiction is:
·the Affidavit of James Templeton dated 1 August 2018, which states that the Premises are operated by the Lessee as serviced apartments. Annexed to this Affidavit is the Lease;
·the Affidavit of Ian Rochow dated 30 August 2018, which states that “we are trying to run a reputable serviced apartment accommodation business that competes with other hotels and when landlords don’t keep their apartments in condition it makes it very hard to keep people coming back and damages out reputation this is why the clause of 6.2 is in the lease”; and
·the Plaintiff’s (respondent’s) Written Submissions dated 3 September 2018, which states that the Premises are operated as serviced apartments and the Defendant leases those apartments to other third parties on to other third parties on “short term vacancies”.
The following provisions of the Lease are also relevant:
·cl 8.2.1.1 which states that the Lessor acknowledges that the Lessee intends to conduct a serviced apartment business from the Premises;
·cl 8.2.1.2 which acknowledges that the Lessee may sell the said business and assign the Lease;
·cl 8.2.2 which provides the Lessee with a right to assign, transfer, sell or otherwise dispose of their interest in the Premises to any person who has entered or who intends to enter into a franchise agreement to conduct a serviced apartment or other similar business; and
·cl 19 which states that the Act will apply to the resolution of all disputes arising under the Lease.
As the question of jurisdiction was not argued before the Magistrate, the evidence largely concerned the deterioration of the relationship between the appellant and the respondent, reparative works and the circumstances surrounding the non-payment of rent. The affidavit evidence of Mr Rochow that the serviced apartment “competes with other hotels” suggests that the Lease is closer to the retail end of the spectrum.[8] This is supported by the submission of Mr Templeton that the apartment is leased on “short term vacancies”.[9] Beyond this, there was little evidence as to the actual use of the Premises by the sub-lessees. The appellant submitted that it would need to provide further evidence on the question of the arrangements between it and the respondent and sought leave to adduce such evidence.
[8] The Affidavit of Ian Rochow dated 30 August 2018.
[9] The Plaintiff’s Written Submissions dated 3 September 2018.
I consider the evidence before me on appeal is not sufficient to properly determine the issue of jurisdiction; further evidence is required.
Rule 286 of the Supreme Court (Civil) Rules 2006 (SA) governs the hearing of an appeal to this Court. Pursuant to r 286(3)(a), the Court may have regard to evidence that was before the Magistrate or exercise its discretion to admit further evidence relevant to a question of fact.
There is no doubt the evidence sought to be adduced on appeal was available to be given at trial. If the argument on appeal was a simple factual issue, it is unlikely that leave to adduce fresh evidence would be given. However, as the question is one of jurisdiction, it is in the interests of justice for the evidence to be adduced.
The question arises whether I should remit the matter to the Magistrates Court for further evidence to be taken. Given the matter is currently before me and as the evidence is likely to be limited, it would be more efficient for the evidence to be given before me. In the circumstances, I will not remit the matter to the Magistrates Court.
I will allow the appellant to adduce further evidence.
I will hear the parties as to the appropriate orders