The Meem Collective Pty Ltd v Kajula Pty Ltd

[2023] ACTMC 23

MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

The Meem Collective Pty Ltd v Kajula Pty Ltd

Citation:

[2023] ACTMC 23

Hearing Date(s):

17 May 2023

DecisionDate:

14 June 2023

Before:

Magistrate J Campbell

Decision:

See [69]-[70]

Catchwords:

CIVIL LAW – COMMERCIAL LEASE DISPUTE – Application to set aside interlocutory order and release party from undertakings given by consent

Legislation Cited:

Utilities (Technical Regulation) Act 2014 (ACT) s 35

Court Procedures Rules 2006 (ACT) r 1613(2)(c)

Cases Cited:

Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121

Danthanarayana v Gr8 Constructions Pty Ltd [2012] FCA 231

Nicols as trustee of the bankrupt estate of Manietta v Manietta, in the matter of Manietta [2022] FCA 39

Parties:

The Meem Collective Pty Ltd ( Plaintiff)

Kajula Pty Ltd ( Defendant)

Representation:

Counsel

Ms P Bindon ( Plaintiff)
Mr B Buckland ( Defendant)

Solicitors

King & Wood Mallesons ( Plaintiff)

Mills Oakley ( Defendant)

File Number(s):

CS 25 of 2023 (formerly CL 20 of 2022)

MAGISTRATE J CAMPBELL:

1.The Defendant in the proceedings and the Applicant in the Application in Proceeding (Kajula Pty Ltd, who I will refer to as the Lessor) seeks to set aside an interlocutory order and be released from the undertakings therein provided.  The interlocutory order maintained the existing lease arrangements between the Lessor and the Respondent on the Application (The Meem Collective Pty Ltd, who I will refer to as the Tenant) until the substantive proceedings are determined.  The Lessor claims that new evidence has become available which had the Lessor been aware, it would not have consented to the interlocutory orders.  The Tenant submits that the evidence relied on is not new nor does it change the thrust of the substantive proceedings.

Background

2.The Lessor is the owner of the land and buildings at Mouat St, Lyneham, ACT, known as the Old Canberra Inn (the premises).  On 15 December 2014 the Lessor and the Tenant signed a sublease for the premises.  On 28 July 2022 the Tenant purported to exercise its option to renew the Lease for a further 7 years.  The Lessor refused to grant the renewal alleging the Tenant was in breach of the Lease at the time the option was exercised. 

3.The Tenant commenced proceedings in the Magistrates Court on 30 November 2022 seeking declarations that the Tenant had validly exercised the option to extend the Lease and that the Lessor had engaged in unconscionable conduct or harsh and oppressive conduct in its dealings with the Tenant.  It further sought a mandatory injunction that the Lessor grant a renewal of the Lease.

4.Prior to the expiration of the Lease on 14 December 2022, the Tenant filed an originating application in the ACT Supreme Court seeking to injunct the Lessor from evicting the Tenant until the Magistrate proceedings were determined.  The application was uncontested and consent orders and undertakings were agreed by the parties.   Justice Kennett made the orders on 13 December 2022 and the order and undertakings in the same terms were then entered in the Magistrates Court on 22 December 2022.  The effect of these orders is to maintain the status quo until determination of the substantive proceedings.  The Supreme Court proceedings were discontinued and accordingly the present application only relates to the Magistrates Court order.  The order states:

By consent and until further order, the applicant be permitted to continue operating from Unit 79, Mouat St, Lyneham in the ACT (premises) on the same terms as the current lease on a ‘no admission’ basis.

It also contains the following undertaking:

The respondent undertakes not to take steps to evict the applicant or lock it out of the premises, or otherwise take any steps to end or terminate the lease, or the applicant’s occupation of the premises, until further order by the Court.

5.The Lessor filed an Application in Proceeding on 27 March 2023 seeking orders to set aside this interlocutory order.  The Lessor relies on its discovery on 6 March 2023 that the premises were non-compliant with the Trade Waste approval by Icon Water, namely that there was inadequate liquid trade waste pre-treatment (which related to the undersized greasetrap) and there was no current approval of the premises to discharge liquid trade waste to sewer (relating to the mobile kitchen not discharging through the existing greasetrap as required and that the seating capacity exceeded the 70 seats identified at the time of the approval).

6.In investigating this issue with Icon Water, the Lessor says it became aware that the Tenant had varied the Trade Waste Agreement between the Lessor and Icon Water without the Lessor’s prior written approval. It further claims that the Tenant has breached s 35 of the Utilities (Technical Regulation) Act 2014 (ACT). The Lessor claims this breach puts the premises at risk for the Lessor and any future tenants, as any censure from Icon Water attaches to the owner of the land. It claims this jeopardises the continued use of the premises as a licenced bar and restaurant.

7.It is accepted by both parties now (but not previously by the Lessor) that the Lessor bears the responsibility for complying with Icon Water’s requirements.

8.The Tenant submits that the Lessor has been on notice since June 2019 of the undersized greasetrap and has failed to take any steps to address this issue.  It claims the Lessor has been aware of the mobile kitchen since 2018.  The Tenant was unaware that the mobile kitchen was not connected to the existing greasetrap until the Icon Water inspection in 2023.  It relies on Approved Plans and a certificate of compliance that the plumber’s work in 2018 did in fact connect the mobile kitchen to the greasetrap. The Tenant has now rectified the connection.

Legal Principles

9.Rule 1613(2)(c) of the Court Procedures Rules 2006 (ACT) allows the Court to set aside an interlocutory order. The principles the Court must consider have been summarised by Justice Jagot in Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121 at [26] as follows:

·A court has jurisdiction to vary or set aside any interlocutory order but the re-litigation of issues already decided, even on an interlocutory basis, is undesirable having regard to the need for finality (Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46).

·The “overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case” (Brimaud at 46).

·The interests of justice should be assessed having regard to the nature of the interlocutory order in question. Interlocutory orders that are merely procedural or made by consent without any contest are different from substantive orders made after a contested hearing and intended to operate until the final hearing. In the latter case the general rule is that there must be a material change in circumstances or the discovery of new material which could not reasonably have been put before the court on the earlier application (Brimaud at 46).

·There is a debate in the authorities between approaches that are more and less permissive. Nevertheless the approach generally adopted at first instance accords with that of Goldberg J in P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466; [2009] FCA 413 at [49], namely, that an applicant seeking to vary a substantive interlocutory order made after a contested hearing must persuade the Court that:

… one or more of the following factors has occurred or is satisfied:

(a) there is new material or new evidence which was not available, or reasonably available, to them at the time the orders were made … ;
(b) there has been a material change in the circumstances since those orders were made;
(c) there are exceptional circumstances which warrant re-consideration of the matter … ; and
(d) as a matter of discretion, the justice of the matter requires that the applicants be allowed to revisit the matter …

10.This decision suggests that different considerations arise when the order and undertakings were by consent.

11.In Danthanarayana v Gr8 Constructions Pty Ltd [2012] FCA 231 at [43] Justice Foster stated:

The proprietors’ undertaking is not an order of the court — it is an undertaking to the court. It was not given after a contest. However, it was part of a consensual compromise regime arrived at in a setting which cried out for an immediate solution, whether imposed by the court or arrived at by consent. The undertaking was and is intended to operate until the final determination of the proceeding, although there is scope within the terms of the undertaking for the proprietors to apply to the court to vary or be released from the undertaking. The undertaking is not merely procedural. It offers substantial protection to the builder. It operates to put those who are considering dealing with the proprietors on notice of the fact that the proprietors have undertaken to the court not to further encumber or deal with the property and also on notice of the fact that there is litigation on foot between the proprietors and the builder in respect of the property. In practical terms, by the undertaking, the builder obtained all the benefits of having a caveat on the title with the additional protection of a promise not to further encumber the property.

12.Justice Cheeseman in Nicols as trustee of the bankrupt estate of Manietta v Manietta, in the matter of Manietta [2022] FCA 39 considered whether a change in circumstances is required where orders were made by consent. Her Honour stated at [62] – [63]:

The respondents counter that the principle that interlocutory orders may only be discharged in the event of a material change of circumstances does not apply in the present context where there has not been a contested hearing and the orders were made by consent and without admission: Brimaud v Honeysett Instant Print Pty Ltd [1988] 217 ALR 44 at 46 (McLelland J, as his Honour then was). The respondents draw attention to McLelland J’s observation that not all kinds of interlocutory applications attract the same considerations:

Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest “until further order” (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979

In the circumstances in which the 2020 freezing orders were made, the respondents submit that the position is analogous to that in Warringah Shire Council v Industrial Acceptance Corp (unreported, 40 SC(NSW), McLelland J, 22 November 1979) where McLelland J observed at 3:

However, where the parties agree upon the manner in which an application for interlocutory relief is to be disposed of and relief is granted pursuant to that agreement, whether by way of injunction or the acceptance by the Court of an undertaking, without any contest, any subsequent application for the variation of that relief must be approached on the basis of what justice requires as between the parties.

And at [64]:

In this respect I note that in Guo [Guo v Xu [2021] NSWSC 460], Rees J in reviewing the authorities on the court’s inherent power to vary or discharge a freezing order made by consent, did not conclude that the only circumstance in which the power could be exercised was where there had been a material change in circumstances. To the contrary, Rees J recognised that a material change of circumstance, being an aspect of the live issue before her Honour, was one situation in which the court may do so (at [162]):

Even where a freezing order is made, or an undertaking given, by consent, the Court has inherent power to vary the freezing order or release a party from their undertaking inter alia where new facts come into existence or are discovered which render enforcement of the order or undertaking unjust: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178; [1981] HCA 39 ; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447 per Isaacs J; RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389 at 392 –3; [1988] FCA 142 per Woodward and Foster JJ; per White J. However, the nature and quality of the consent underpinning the order or undertaking will affect the Court’s willingness to do so.

13.Accordingly, the new circumstances or evidence are a relevant consideration for this Court.  However, the nature and quality of the consent to the order and undertakings can also be considered.  I note there was no evidence before me about the circumstances of the consent being given.  I can only presume that it was done to maintain the existing relationship between the Lessor and the Tenant, as any termination of the Lease would in effect thwart the purposes of the substantive proceedings.  To release the Lessor from the undertakings, would allow the Lessor to evict the Tenant and offer the premises for rent.  Any eviction of the Tenant would significantly jeopardise the investment it has already put into the premises and remove its opportunity to continue to benefit from that investment.  The undertakings provide significant protection to the Tenant.

14.It is my view the Lessor bears the onus of satisfying me it is in the interests of justice having regard to the particular circumstances of this case, that the Court should set aside the order and release the Lessor from the undertakings it has given.

The Issues in the Substantive Proceedings

15.The substantive proceedings will consider whether either party has breached the terms of the Lease.  The Lessor claims that the Tenant breached the Lease by the following conduct:

a)    without written consent from the Lessor, the Tenant removed doors and fences, altered the colour scheme, installed air conditioning units, erected signs, made physical alterations to the premises including installing and affixing a mobile kitchen, altered the cool room and other structures, removed a water storage tank, removed light poles, installed lights and destroyed mature trees and bushes;

b)    it obstructed the use of common areas by the placement of portable toilets, two train carriages and a shipping container; and

c)    it failed to notify the Lessor of damaged sustained during a water leak in February 2018.

16.The Lease provided that the Tenant would spend at least $50,000 on improving the premises.  From the evidence of Benjamin Johnston (director of The Meem Collective Pty Ltd), the Tenant has spent considerably more than this on improvements to the premises.  The Tenant claims that the Lessor was fully aware of all the work that is now alleged to be breaches of the Lease.  In those circumstances, the Lessor has breached the Lease by refusing the renewal of the Lease, and further that the Lessor induced in the Tenant a belief that the Lessor did not regard the Tenant as being likely to become in default of the Lease and that upon the Tenant exercising the option the Lessor would grant the renewal of the Lease.

17.On 18 September 2020 the Lessor sent the first breach notice.  The Tenant responded on 19 January 2021.  The Lessor did not respond to the Tenant’s denial of breaching the Lease.

18.On 26 May 2022 the Lessor sent a second breach notice including the same breaches as the 2020 notice with some further breaches.  For the purposes of this Application that letter referred to the “installation of a portable kitchen which has involved the connection to services such as sewerage, drainage, water supply and electrical to the mains”.  It is evident that the Lessor was aware of the mobile kitchen at this time.  Other evidence which will be referred to below indicates the Lessor was aware of the mobile kitchen before the Second Breach Notice.

19.The Tenant responded on 28 July 2022 stating the mobile kitchen was not connected to the sewerage system.

Events leading to the Non-Compliance Notice

20.The Icon Water notice of non-compliance dated 6 March 2023 refers to the undersized greasetrap on the premises.  The Lessor claims it was not aware of any issues with the greasetrap prior to the issue of the first and second breach notices, hence they were not included as breaches (affidavit of Priya Dev dated 27 March 2023 at [14]). 

21.The first Trade Waste approval given to the Lessors by ACTEW was on 4 January 2013.  The application dated 19 December 2012, signed by Bhu Dev, a director of the Lessor, states the greasetrap is 1000L and the seating capacity of the premises was 30 outside and 40 inside.  Other evidence in the proceedings proves that the existing greasetrap was only 852L and that any hospitality business in the ACT requires a minimum of 1000L.  There was no evidence as to why the greasetrap was not measured at the time of the application in 2012.  The application requires the owner of the property to certify that the details supplied with the application are correct and the owner agrees to maintain and operate any pre-treatment facilities such as to meet these requirements and to notify ACTEW within one month of any change in the circumstances reported in this application. 

22.Clause 23(xvii) of the Lease with the Tenant provides: 

Non-domestic discharge to sewer approval was obtained from ACTEW Water in February 2013.  Any discharge must be in accordance with the approval.  The incoming tenant has the information.

23.Mr Johnston denies receiving this information prior to entering the Lease, however an email dated 14 October 2014 from Bhu Dev to Mr Johnston was tendered in the proceedings by the Lessor.  This stated, “I have attached a copy of the approval (or Conditions to the Approval) with our Application”.  Mr Johnston responded by email the next day stating, “Thank you for supplying the information relating to…the trade water compliance”.  I do not accept Mr Johnston’s evidence that he had not been provided with the documents prior to entering the Lease.

24.Mr Johnston further claims that the premises have never been limited to 70 seats.  A licensing plan dated December 2014 shows an approval for 225 people in the premises.  This document was provided by the parties in their joint submission to Capital Valuers in 2018 as part of a rent review valuation.  The Capital Valuers report refers to this capacity as the “licensed areas as at the commencement of the lease”.  There was no evidence as to why only 70 seats was listed on the 2012 application to ACTEW.  It appears the Tenant has always been operating with seating greater than 70 and this likely has been known to the Lessor at all times.

25.Given the Lessor was required to certify that it was compliant with the Utilities (Technical Regulation) Act, I expect a reasonably prudent person would ensure that the information contained in the Application was correct.  It appears that no such check was done by Mr Dev before signing the Application in 2012, otherwise he would have discovered an undersized greasetrap and more than 70 seats.  This was information that could have reasonably been obtained had the Lessor made these enquiries.

26.The Lease provides the following relevant terms:

Part 5.5.2 The Lessee will not interfere with any drains, water supply, gas, electrical, plumbing or other services contained in the Premises without the consent in writing of the Lessor.

Part 5.5.11:  The Lessee will observe all the requirements of any statutes, regulations, ordinances and by-laws affecting or relating to the Premises or to any business being conducted there.

Clause 23(v):  The Tenant will keep the waste, pipes and drains within the Premises in a clean, clear and free flowing condition.  The Tenant will, while in possession of the Premises, at the Tenant’s cost, maintain the whole of the Premises including all the Lessors fittings and furnishings in good repair.  This covenant will not impose on the Tenant any obligation in respect of any structural maintenance or replacement of fixtures or fittings due to wear or age except when it is rendered necessary by any act or omission on the part of the Tenant.

27.It is clear from the information from Icon Water tendered in the proceedings, that it is the owner of the land that has the responsibility for obtaining trade waste approvals for the premises.

28.In July 2018 the Tenant engaged 4You Projects in relation to planned works at the premises.  Anthony Ward, a hydraulic consultant, developed the plumbing drainage plans for the work.  As part of the proposed plans, the Tenant states that he had a phone conversation with Bhu Dev in the week before 15 August 2018, where he said “we are connecting the mobile kitchen and will need you to sign an Application for Non-Domestic Discharge to sewer.”   Mr Dev denies this conversation occurred.  However, on 15 August 2018, Mr Dev sent the first page of the Application to Mr Johnston.  This email was annexed to Mr Johnston’s affidavit.  The email attached the first page, with no details on the form other than Mr Dev’s signature as the property owner and dated 15 August 2018.  The Application contains the same certification required to be given by the owner, so it does surprise me that Mr Dev signed a blank form and sent it to Mr Johnston to complete the information. 

29.At some point the form was returned to Mr Dev and the copy of the application annexed to Ms Dev’s first affidavit contains the details of the property owner. This handwriting is consistent with Mr Bhu Dev’s handwriting at the bottom of the application and with the handwriting on the 2012 application.  The details of the occupier are not included.  This copy of the application has the attached pages which are entitled “Owner’s declaration of: the occupant’s business name, their processes, activities generating discharges to sewer and the nature of those discharges”.  The document states a “pub with bistro max seats 70” and an existing 1000L grease arrestor.  There is no evidence that Mr Dev or anyone else on behalf of the Lessor made any enquiries with Mr Johnston or Mr Ward regarding the information contained on these pages.  Reasonable enquiries by a prudent owner would have again revealed that the greasetrap was undersized and the premises had a greater seating capacity.

30.On 23 August 2018, Mr Dev emails the application and sends the original by post to Mr Johnston.    Mr Johnston’s details were added to the application and it was submitted to Icon Water on 27 August 2018.  The copy of the Application held by Icon Water has two received stamps, one dated 27 August and another dated 3 September 2018.  It is not known what the second date refers to.  The Trade Waste plans prepared by Mr Ward were included in the Application. 

31.The copy of the Application held by Icon Water has a handwritten amendment made to the size of the greasetrap, crossing out 1000L and replacing it with 512L with the initials JC beside the amendment.  I am presuming this amendment was made by Jason Campbell from Icon Water after receipt of the application.

32.I further note that under the heading “Notification of Approval”, it states “held for collection: name and telephone number for notification:  TONY [number redacted]”.  This mobile phone number is Mr Ward’s mobile phone number.  This may explain why the Lessor did not receive a copy of the Approval in 2018.  However, such information could have been easily obtained if the owner made an enquiry with Icon Water as to the progress or result of its Application signed on 15 August 2018.

33.On 4 September 2018, Icon Water requested the greasetrap be measured.  Mr Ward measured it on 11 September 2018 and calculated the volume to be 852 L.  This information was provided to Mr Campbell (Icon Water) on 12 September who responded that the service agreement would have to be adjusted to increase the frequency of pump outs. 

34.On 25 September 2018 the Food Grease Approval was granted referring to an application date of 6 September 2018.  There is no application with this date.  The Approval was for 5 years ending 24 September 2023.  This Approval oddly refers to an existing greasetrap of 512L, despite Icon Water being notified of the correct size of 852L.  There are no special conditions requiring the greasetrap be increased within a certain time.  The document records that Jason Campbell approved the application.  Neither Mr Johnston nor Mr Dev received a copy of this Approval.

35.On 20 November 2018 Mr Ward sent an email to Jason Campbell, forwarding a new Trade Waste Plan for the mobile kitchen and asking, “can we use the existing trade waste approval?”

36.On 4 December 2018 Jason Campbell sent an email to Mr Johnston stating:

…you may regard this email as a temporary approval until 30/6/19 pending a new application …to carry out the following works:

·Connect the food van to the drainage via the existing greasetrap

·Increase the frequency of cleaning to every 4 weeks

·Once renovations completed, install new greasetrap to replace existing 820L and sized appropriately …

·All to be done by 30/6/19 - Failure to comply will result in the business being non-compliant.

37.The Lessor was not included in this email.  There is no evidence why Icon Water did not send this temporary approval to the owner of the premises.

38.On 4 December 2018 Mr Johnston replied to Mr Campbell (Icon Water) confirming they had increased the frequency of pumps to every 4 weeks and will increase the size of the greasetrap during the works planned for next year.

39.On 4 December 2018, James Allar certified the plan for the connection of the mobile kitchen to the existing greasetrap was compliant.

40.Mr David Cooper, a licenced plumber was engaged to do the work.  He submitted his Hydraulic Start of Work Notice for plumbing and drainage work with Access Canberra on 11 December 2018.  Mr Cooper signed the Certificate of Compliance for the work connecting the mobile kitchen to the greasetrap via the pump station.  It appears the licensee completes the certificate of compliance.  Although there is a reference in Ms Dev’s second affidavit and Mr Cooper’s affidavit that the work was checked by EPSDD inspectors on 19 December 2018, there is no other evidence of this inspection and its findings. 

41.Between 13 – 17 December 2018 emails were exchanged between Mr Johnston and Sidhartha Dev (a director of the Lessor) arranging a visit to the premises by Bhu and Ratinder Dev (also directors of the Lessor).  Mr and Mrs Dev attended the premises on 18 December 2018 and Mr Johnston states he showed them the improvements he had made, including the mobile kitchen.  If Mr Johnston’s evidence is accepted, the Lessor, at least from this date, was aware of the existence of the mobile kitchen.

42.Coopers Plumbing forwarded an invoice for the plumbing work on the mobile kitchen on 19 December 2018, which referred to connecting “pumped discharge into trade waste vent above kitchen”.

43.On 2 June 2019 Mr Johnston sent an email to Sidhartha Dev stating:

We have also been advised by ICON Water that the greasetrap on site is below the minimum capacity for any hospitality venue in the ACT.  The capacity of the greasetrap is currently 852L and the minimum requirement for a venue with a capacity of 300 persons is 2000L.  The upgrade to the greasetrap must be done for future trade waste licences to be issued.  ICON Water have agreed to an increased pump out frequency in the meantime which is an additional cost borne by the Meem Collective.

And then later states:

These items are the responsibility of the Lessor and are a direct benefit to Kajula Pty Ltd in this instance.

44.Mr Dev responded to Mr Johnston’s email on 13 June 2019 stating:

·greasetrap (tenant’s responsibility)

·Approval was obtained from ACTEW Water in Feb 2013 and all information was provided to you prior to you taking the lease.  Non-domestic discharge to sewer approval was obtained from ACTEW.  Greasetrap upgrades due to higher patronage is the tenant’s responsibility.  The lease also specifies that the tenant is to comply with any conditions that may be imposed by the insurer or the ACT government (re: item 23(ix).

45.Mr Dev was incorrect in his interpretation of the Lease as to who bears the responsibility for the greasetrap.  His response also failed to refer to the 2018 application signed by Mr Bhu Dev.  There was no further communication from Mr Sidhartha Dev to the Tenant about this issue. 

46.It is evident that the Lessor was on notice that the greasetrap was undersized as at the date of Mr Johnston’s email.  The Lessor was informed that the greasetrap was not compliant and must be rectified before any future licences can be issued.  The Lessor was also now aware that the greasetrap was undersized for any hospitality venue in the ACT.   Rather than addressing this issue at the time, which was the Lessor’s responsibility, it chose to ignore it.

47.The Lessor claims that the Tenant did not disclose it had varied the Trade Waste Agreement without the written consent of the Lessor, and was operating in non-compliance of that Agreement.  It is not established on the present evidence that at the time of the email the Tenant was operating in non-compliance of the temporary agreement. 

48.The Lessor claims the Tenant did not disclose that it had told Icon Water it would install a new greasetrap nor that the work was required to be done by 30 June 2019.  I accept the Tenant has not disclosed those matters in the email, however having regard to the information Mr Johnston did provide and taking into account that it is the Lessor’s responsibility to manage the Agreement with Icon Water, it is reasonable to expect that the Lessor would have or at least could have made the relevant enquiries with Icon Water at that time. 

49.I do not find on the available evidence that the Tenant was deliberately withholding information to the Lessor at this time, as Mr Johnston invited the Lessor for a meeting on site to “go over the various expenditure items”.  This offer was not taken up by the Lessor.

50.In Ms Dev’s first affidavit she deposes that Ratinder Dev searched the Lessor’s files for any information related to the greasetrap.  The only information provided to Ms Dev was an email chain from August and September 2018 between the Tenant, Icon Water and 4You Projects referring to the undersized greasetrap.  This email was not forwarded to the Lessor at the time but came to the Lessor’s attention in the course of a rent review as part of the information provided to Capital Valuers on 20 November 2019. 

51.I consider the Lessor’s search of their own files regarding the greasetrap should have at least found the email of 2 June 2019 and Mr Dev’s response on 13 June. 

52.The Capital Valuers report dated 31 December 2019 for a valuation date as at 15 December 2018, specifically refers to the premises seating capacity as 225 people.  The Report also refers to the information received that the greasetrap was undersized at 852L.   At page 31 of the Report, referring to the works undertaken by the Tenant, it states “Despite these changes, it appears that the kitchen is still insufficient for a property of this type with the Lessee having installed a “food truck/caravan” to increase food preparation area (not included within the assessment)”.

53.This was a further opportunity for the Lessor to be aware of the undersized greasetrap and the seating capacity being greater than 70 permitted under the existing Trade Waste Agreement.  Still the Lessor did nothing about the undersized greasetrap or address the greater seating capacity issue.  This is contrary to the certification it provided in the application in 2018 where it had agreed to maintain and operate any pre-treatment facilities such as to meet these requirements and to notify Icon Water within one month of any change in the circumstances reported in this application. 

54.Mr Johnston states that on 11 September 2020 the mobile kitchen was rotated 90 degrees by Capital Cranes.  The Halgan Ecotec 95L pump was disconnected and moved no more than 1 metre and then reconnected by Mr Johnston’s business partner Nick Diver.  He states that no plumber was required and that no changes were made to the plumbing line or the greasetrap connection. 

55.It will no doubt be a matter of contest at the hearing whether the greasetrap connection was correctly affixed by Mr Cooper in 2018, or whether further plumbing work was done without approval from Access Canberra in 2020, resulting in the kitchen waste being discharged into the sewer rather than through the connection to the existing greasetrap.

56.In preparation for these proceedings, Ms Dev states on 28 February 2023 she spoke to Ms Chappell at Icon Water where she first learnt of the greasetrap issues.  That may have been the first time Ms Dev became aware but the Lessor company was aware of these issues prior to the making of the consent order.  I find that the Lessor was on notice at least by June 2019 and chose to ignore its own responsibilities under the Trade Waste Agreement.

57.I further find that the information regarding the temporary approval to the Trade Waste Agreement was information that could have reasonably been obtained. It is clear the Lessor was aware of connections to the mobile kitchen at least by the date of the Second Breach Notice, which referred to the installation of a portable kitchen which has involved the connection to services such as sewerage, drainage, water supply and that such action was done without obtaining the prior approvals and certifications from regulatory bodies.   I infer from the making of this allegation in the Second Breach Notice, the Lessor had knowledge of such connections and the absence of any approvals. The evidence however suggests no such enquiries were made by the Lessor at the time of making this breach allegation.  Had it made the enquiries at that time it would have discovered the Temporary Approval, drainage Plans and the certificate of compliance for the connection to the mobile kitchen.   It cannot now reverse its position and claim it was unaware of the connections.   I find that this is not new evidence or a change in circumstances.

58.The Lessor complains that at no time did the Tenant inform it that it was exceeding the 70 seat capacity required for the existing Trade Waste Agreement.  I do not accept the Lessor was unaware that the premises exceeded the permitted 70 seats under the Trade Waste Agreement.  The Lessor had included the licencing plans to Capital Valuers in 2019 which referred to the seating capacity of 225 and no doubt expected the business was being valued with this seating capacity.  It is clear from the Icon Water documents annexed to Mr Johnston’s affidavits that it is the owner’s obligation to ensure occupiers comply with any conditions in the Trade Waste Agreements.  At no time prior to the consent order have the Lessors required the Tenant to reduce its operations to be compliant with the 70 seat capacity in the Agreement.  It is my impression that the Lessor has given very little attention, if any, to its Agreement with Icon Water during the period of the Lease.  This is not new evidence or a change of circumstances.

Detriment to the Lessor by the continuation of the undertakings

59.The Lessor claims that the Tenant’s conduct has jeopardised the continued operation of the premises as a licenced bar and restaurant.  There is no suggestion in the correspondence from Icon Water since the Non-Compliance notice dated 6 March 2023 that Icon Water are intending to impose penalties or further sanctions against the Lessor.  In fact, all the correspondence from Icon Water is directed to rectifying the situation. 

60.Mr Campbell from Icon Water by email dated 5 April 2023, requested the Application and drainage plans be submitted by the Lessor to Icon Water by 17 May 2023.  On 12 April 2023, the Tenant’s solicitor offered to prepare the Application for the Lessor to sign.  This was not accepted by the Lessor.  

61.Ms Dev refers to a conversation between herself and Ms Chappell (Icon Water) on 26 April 2023.  Ms Dev sent an email to the other directors of the Lessor and her solicitor regarding this conversation.  She states in the email that Ms Chappell does not believe that the “Tenant is operating without trade waste approval, she believes that the Tenant is operating in non-compliance with the Trade Waste Agreement that was due to expire on 25 September 2023.  So, Shannon believes that the Trade Waste Agreement in still in force.  She believes that the Temporary Agreement was a variation to that agreement and that variation expired on 30/6/2019”.  She also said that Icon Water are more “focussed on the future rather than the past”.

62.Mills Oakley, solicitors for the Lessor, sent a letter to the solicitors for the Tenant the following day.  The tenor of the letter is quite different to the views expressed by Ms Chappell.  The letter states “Due to your client’s actions, the Trade Waste Agreement our client believed was in place, is now void. Our client is unable to restore the Trade Waste Agreement unless your client complies with the conditions in place in August 2018.”  This was not the information that Ms Chappell had provided to Ms Dev.  In fact, her belief was that the Agreement was still in place until September 2023.   Despite the Lessor now accepting the greasetrap is its responsibility, the letter of 27 April 2023 continued to demand the Tenant was to upgrade the greasetrap.  The option proposed by the Lessor was that the Tenant cease trading until it was compliant with the 2018 Approval, which required it to reduce its trading to 70 seats and upgrade the greasetrap.

63.I note that the Tenant has reconnected the mobile kitchen to the existing greasetrap so it is no longer discharging untreated trade waste to the sewer.  The Tenant is unable to do anything about the greasetrap as that is the owner’s responsibility.  It has however proposed that the Lessor pay for a new greasetrap up to the size of 1000L and the Tenant will cover the remaining costs, whether it be for a 2000L or 3000L greasetrap.  No doubt the Tenant is keen to address this issue, as the Lessor’s continued omission to address the undersized greasetrap will likely affect the continuation of its business. 

Interests of Justice

64.In considering the interests of justice, it is important to recognise that the parties made a forensic decision not to contest the injunction proceedings and agreed to certain undertakings.  The purpose of which was to maintain the status quo, allowing the Tenant to continue to operate its business and for the Lessor to continue to receive rent until the substantive proceedings are resolved.  The Lessor states that the failure to disclose matters relating to the Trade Waste Agreement are of such an egregious concern, that the relationship between the Tenant and the Lessor has broken down to the extent that the Lessor no longer trusts the Tenant will continue to honour its obligations under the Lease and properly maintain the property.  

65.I do not consider the Tenant’s conduct warrants this belief by the Lessor.  I do not consider that the Tenant has deliberately concealed the Temporary Agreement relating to the mobile kitchen.  Nor do I consider there is sufficient evidence at this stage to suggest the Tenant was deliberately or recklessly discharging untreated trade waste to the sewer.  

66.The Lessor further refers to the Tenant’s continuing lack of communications since the Non-Compliance notice.  Quite the contrary is demonstrated by the evidence showing the Tenant attended site inspections with the Lessor and representatives from Access Canberra and Icon Water as well as continuing to engage with those persons to resolve the issues.

67.In my view the Lessor’s claims do not differ from the previous alleged breaches in that they complain that certain works were undertaken without written prior approval.  The Lessor’s present claims do not change the thrust of the substantive proceedings.

68.The Tenant is improving the premises and is willing to negotiate the expense of installing a larger greasetrap.  This is necessary for the premises to continue to operate as a restaurant and bar, whether it is the Tenant or another tenant conducting the business.  This must be done even if the Tenant is to be evicted. 

69.In circumstances where there has not been any material change in the circumstances, I am not persuaded that the Lessor should be released from its undertaking.  Nor do I consider that there is any injustice in holding the Lessor to an undertaking that was given by consent which it knew was intended to operate until the determination of the hearing.  To allow the Lessor to be released of its undertaking would in effect thwart the legal proceedings and I consider this is not in the interests of justice in this case.

70.The Application in Proceedings filed by the Defendant in these proceedings on 27 March 2023 is dismissed. 

I certify that the preceding seventy [70] numbered paragraphs are a true copy of the Reasons for Decision of Her Honour Magistrate J Campbell.

Associate: Adelaide Grisard

Date:  14 June 2023