Tecoma Lodge Pty Ltd v Jerrang Aboriginal Trading Co-operative
[2000] VSC 557
•20 December 2000
| SUPREME COURT OF VICTORIA | Not Restricted |
| PRACTICE COURT |
No. 8003 of 2000
| TECOMA LODGE PTY LTD | Plaintiff |
| V | |
| JERRANG ABORIGINAL TRADING CO-OPERATIVE | Defendant |
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JUDGE: | BEACH, J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 20 December 2000 | |
DATE OF JUDGMENT: | 20 December 2000 | |
CASE MAY BE CITED AS: | Tecoma Lodge Pty Ltd v Jerrang Aboriginal Trading Co-operative | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 557 | |
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Practice and procedure - application for injunction - termination of lease - injunctive relief not justified.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr Peter Riordan | Mahonys |
| For the Defendant | Mr Peter Cawthorn | Raymond Paoli |
HIS HONOUR:
The defendant in this proceeding, Jerrang Aboriginal Trading Co-operative, is a corporation established pursuant to the Aboriginal Councils and Association Act 1975 (Cth).
In 1995 the defendant acquired what was previously the Macedon State Nursery from the State Government, an area of some 40 hectares. The purchase was financed by the Aboriginal and Torres Strait Islander Commission.
The plaintiff Tecoma Lodge Pty Ltd is a marketer and retailer of plant nursery garden products and landscaping accessories.
Pursuant to an agreement dated 11 September 1998 the plaintiff agreed to market the nursery products produced by the defendant at its nursery. That agreement was replaced by a more comprehensive agreement entered into by the parties on 4 November 1998. To enable it to act as the marketer and retailer of the defendant's products and to fulfil certain other obligations imposed on it by the deed, the plaintiff went into occupation of a retail shop of approximately 121 square metres on the nursery and a shadecloth area of approximately 1,344 square metres which had associated fittings and accessories.
It is the case for the plaintiff that it leased the shop and the shadecloth area for a term of three years commencing on 25 September 1998 with a two-year option. The case for the defendant is that at most the plaintiff had a monthly tenancy of the shop and shadecloth area.
The marketing agreement provided that the agreement should terminate if (inter alia) the plaintiff engaged in any conduct prejudicial to the business of the marketing of the product. In that respect see clause 8(4) of the agreement.
On 20 November 2000 the defendant served a notice of termination on the plaintiff. The relevant aspects of the notice read:
"Without prejudice to Jerrang's right to rely on other matters, Tecoma has engaged in conduct prejudicial to the business or marketing of the products by:
(a)Failing diligently to promote and procure sales of the products throughout Australia, as required by clause 5(3) of the Deed including the failure by Tecoma to develop and implement a marketing plan and strategy in breach of clause 5(3)(e) and failing to assist Jerrang in the development of product range and quality in breach of clause 5(3)(f);
(b)failing in all manners to act loyally and faithfully towards Jerrang in breach of clause 5(4);
(c)failing to act in such manner as Tecoma ought reasonably to have considered to be most beneficial to Jerrang in breach of clause 55)(a);
(d)failing to conduct the business in an orderly and business like manner in breach of clause 5(5)(b);
(e)failing to supply to Jerrang monthly sales, reports, returns and other information relating to the business in breach of clause 5(9);
(f)failing to provide the monthly report in breach of clause 5(12);
(g)failing to keep accurate and separate records and accounts in respect of a supply of the products in breach of clause 5(13);
(h)failing to permit Jerrang or its representatives at all reasonable times to inspect and take copies of all things material in respect of the use of the provider number only in breach of clause 5(15);
(i)failing to maintain a separate bank account in respect of money received by it in relation to the business and to deliver copies of statements of such account to Jerrang on demand in breach of clause 5(18); and
(j)failing to pay promptly to Jerrang all sums due to Jerrang in respect of the supply by Jerrang to Tecoma or the customers of Tecoma of the products; or any other sum payable by Tecoma to Jerrang under the terms of the Deed in breach of clause 5(19);
(k)supplying to chain stores where the provider number is used goods which are similar to or competitive with the products in breach of clause 5(2)(a) of the Deed."
On that same day the defendant gave the plaintiff a notice to vacate the shop and shade cloth area. The notice reads:
"TAKE NOTICE that you are required by Jerrang Aboriginal Trading Co-Operative Limited (Jerrang) to vacate the retail space described below and to deliver up possession of the retail space to Jerrang at the expiration of the month of your tenancy which shall expire next after the end of one month from the date of service of this notice."
And then there is specific reference to the shop and the shade cloth area.
On 13 December the plaintiff filed this proceeding in the court. By its prayer for relief it seeks:
"A. A declaration that the agreement for lease is valid and enforceable.
B. Specific performance of the agreement to lease.
C. An injunction, interlocutory and final, restraining the defendant, its employees and agents from interfering with the plaintiff's quiet enjoyment of the Leased Area.
D. An order that the defendant, by its employees or agents execute an instrument of lease in the terms of the agreement for lease or such terms as the court shall determine."
On 18 December the plaintiff filed a summons in the court whereby it seeks an order that the defendant by its employees and agents be restrained from entering on to or otherwise interfering with the plaintiff's quiet enjoyment of the areas leased to the plaintiff pursuant to the lease agreement dated 24 September 1998.
The lease agreement referred to in the statement of claim and summons is a one-page document headed "Lease Agreement", which reads:
“Jerrang Aboriginal Trading Co-operative hereby agrees to lease to Eagle Hawk Plant Supplies the following retail space within area “23D” Section “C” County of Bourke, Parish of Macedon:
Shop area of approximately 121 sq. m. including all fixtures and fittings
Shadecloth area of approximately 1,344 sq. m. with associated fixtures and fittings
Under the terms of the lease Jerrang Aboriginal Trading Co-operative hereby agrees to:
Manage the retail area in a professional commercial manner
Train both Aboriginal and non-Aboriginal staff in all aspects of retail sales
Pay Jerrang Aboriginal Trading Co-operative 90% of the Gross income from all retail sales within seven days of the completion of each trading week.
This lease agreement is valid for a period of three years with a two year option commencing 25 September, 1998.”
It is then dated 24 September 1998. The only signatures on it are those of two directors of the defendant.
In his affidavit of 14 December 2000, Grant Anthony Hosking, who is an employee of the plaintiff, has sworn that the document was signed by the directors of the plaintiff. However, no such document signed by the directors of the plaintiff has ever been produced to the court. In his affidavit of 18 December 2000, a director of the defendant, Kenneth Arthur Readwin, has sworn that the agreement was never signed by the plaintiff. The resolution of that issue must await the trial of the proceeding. However, what Readwin has sworn is:
“16. At the time that the Deed was prepared [that is, the marketing deed of agreement] a formal Lease Agreement was also prepared by the solicitors for Tecoma, Mahonys. That Lease Agreement was executed on 18 December 1998 by Tecoma. It was presented to Jerrang for signature and ultimately never executed.”
That that was the situation is confirmed by Readwin in his supplementary affidavit sworn 19 December, because he exhibits to that affidavit the lease of real estate prepared by Mahonys, which is dated 18 December 1998 and executed by the plaintiff but not executed by the defendant.
The fact that no such lease was ever executed by the defendant, and indeed the fact that the so-called lease of 24 September 1998 was never executed by the plaintiff, would tend to be confirmed by this somewhat unusual paragraph which appears in a letter of 27 June 2000 from the plaintiff to the defendant. The paragraph reads:
"Did you know the Deed Agreement Jerrang and Tecoma LodgePL signed on 4 November 1998 will not exist from 1 January 2000 and another agreement to a lease for the retail."
I am afraid it is anyone's guess as to what those words "another agreement to a lease for the retail" were intended to convey.
One observation which I feel can be made at this stage concerning the venture between the parties is that, from the material to hand, it has been a financial failure. In my opinion that much is clear from Readwin's affidavit and certain of the exhibits to the affidavit, particularly the report of Dr Peter Yau delivered to the defendant on 13 August 1999 (see Exhibit KAFR7) and the report of Deloitte Touche Tohmatsu dated 24 August 1999 (see Exhibit KAFR8). Indeed, Readwin has sworn that the financial situation of the defendant at the present time is so parlous that if the court were to grant the injunction in all probability the defendant would have to cease its operation at the nursery.
When this matter came before me this morning, shortly after counsel for the plaintiff commenced his submissions he informed me that at this stage the plaintiff was only seeking interim relief because it wished to have further time to file material in reply to the affidavits filed on behalf of the defendant.
As I pointed out at the time, it is the plaintiff's own fault that it finds itself in this situation. The plaintiff was served with the notice to vacate at the latest on 22 November, yet it waited until as recently as 18 December before filing its summons in the court.
In the circumstances I do not propose to grant any interim relief in this matter, and I do so for the following reasons.
(1)I think that it is strongly arguable that the behaviour of the plaintiff as referred to in Readwin's affidavits and the exhibits to those affidavits has been such as to justify the defendant giving it notice of termination of the marketing agreement.
(2)I think that it is strongly arguable that the so‑called lease agreement dated 24 September 1998 is unenforceable because of its uncertainty.
(3)I consider it strongly arguable that the plaintiff's occupation of the shop and shade cloth area was an integral part of the agreement to market and retail the defendant's products and that if that agreement has been lawfully terminated any lease, whether monthly or not, would also be terminated.
However, even if I had been satisfied that there were serious issues to be determined in the case, in my opinion the balance of convenience is not such as to justify the grant of relief, whether of an interim or an interlocutory nature. In that regard I refer again to the parlous financial position of the defendant and the harm which would be caused to it and its employees if injunctive relief was granted. I also point to the allegations of neglect on the part of the plaintiff in so far as the bluegum joint venture is concerned, again as spelt out in Readwin's affidavits.
Finally in this regard, in paragraph 12 of his affidavit of 14 December, Hosking has given the impression that if an injunction is not granted he and his wife will lose their livelihood. The affidavit of Readwin of 18 December establishes that in all probability that is not so. Based on material contained in that affidavit, not only was Hosking involved in the Mount Macedon nursery, he was also involved in a nursery at Riddell South and another one at Eaglehawk. Indeed, there is evidence - and, I stress, albeit hearsay at this stage - that Hosking has been transferring plants of the defendant to those nurseries without having any authority to do so.
It is for those reasons that I decline to grant any injunctive relief in this matter.
The plaintiff's summons filed in the court on 18 December is dismissed with costs to be taxed and paid by the plaintiff.
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