Transmetro Corporation Ltd v Skafola Pty Ltd

[2004] QSC 277

SUPREME COURT OF QUEENSLAND

CITATION:

Transmetro Corporation Ltd v Skafola Pty Ltd & Ors [2004] QSC 277

PARTIES:

TRANSMETRO CORPORATION LTD
ACN 001 809 043
(applicant)
v
SKAFOLA PTY LTD AND OTHERS
(respondents)

FILE NO:

SC No 6423 of 2004

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court, Brisbane

DELIVERED ON:

1 September 2004

DELIVERED AT:

Brisbane

HEARING DATE:

18 August 2004

JUDGE:

Chesterman J

ORDER:

Application dismissed with costs

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP BY COURT – GROUNDS FOR WINDING UP – STATUTORY DEMAND – where the applicant was a lessee of a number of lots in a building which operated as a motel business – where the respondents were the lot owners – when the respondents issued statutory demands to recover arrears of rent owed by the applicant to the respondents in accordance with their respective leases – where the applicant sought an order that the statutory demands be set aside pursuant to s 459G Corporations Act 2001 (Cth) – where the applicant had an offsetting claim which negated the amount of rent claimed by the respondents

Corporations Act 2001 (Cth), s 459G, s 459H(5)

Building Units and Group Titles Act 1980 (Qld), s 37

Hudson v Cripps [1896] 1 Ch 265, cited

Robinson v Kilvert (1889) 41 Ch 88, cited

COUNSEL:

Mr J B Sweeney for the applicant

Mr P J Favell for the respondents

SOLICITORS:

Hillhouse Burrough McKeown for the applicant

Walsh Halligan Douglas for the respondents

1. The applicant is the lessee of a number of lots in BUP 13764, a building known as the Tower Mill Motel Inn on Wickham Terrace.  The respondents are a number of owners of lots in the BUP who have leased them to the applicant to enable it to conduct a motel business by letting them out to the public as rooms.  The leases between the applicant and each of the respondents are in identical terms.

1. On 1 July 2004 the respondents issued a statutory demand for payment of debts, being arrears of rent owed by the applicant to the respondents pursuant to their respective leases.

1. By an application dated 23 July 2004 the applicant seeks an order that all of the respondents’ statutory demands be set aside pursuant to s 459G of the Corporations Act 2001 (Cth). The ground is identical for each of the demands issued by each of the respondents. It is that the applicant has an offsetting claim which equals or exceeds the amount of rent claimed, in total, by the respondents.

1. The respondents accept that they have made some errors in calculating the amounts of rent due to some of them, and the demands are therefore inaccurate in part. 

   
   

   The errors are small in amount and the applicant does not seek to justify its application on the ground of the errors which have been identified.  It is not in contention that the applicant owes the respondents arrears of rent in amounts which are ascertained.

1. The applicant claims that it has suffered substantial loss by reason of the respondents’ breaches of obligations contained in the leases.  The obligations are found in clauses 4.1 and 4.3 of the leases.  They provide:

‘4.1The Owner must allow the Lessee quiet possession of the Suite and the Common Property;

4.3The Owner must not interfere with the Lessee’s business conducted at the Motor Inn;’

1. Section 459H(5) of the Corporations Act defines an offsetting claim to mean a genuine claim that the company has against the person making the demand, by way of counter-claim, set-off or cross-demand, even though it does not arise out of the same transaction or circumstances as the debt to which the demand relates. 

1. The circumstances giving rise to the offsetting claim are set out in the affidavit of Mr Fawlk, the applicant’s property manager at the Tower Mill Motel.  It is, in essence, that the motel comprises of 75 suites spread over nine floors of the building.  Access is, of course, by lift which should be, if hotel guests are to not become dissatisfied, ‘quick and reliable’ giving access to their suites ‘on demand’.  To use the vulgar language of the affidavit, ‘bad lifts are a complete turn off for guests.’ 

1. The building had two lifts, one for guests and one for goods.  By March 2002 both the lifts were inadequate.  They were almost 40 years old and could not be brought to an acceptable standard for operation.  In August 2002 the body corporate (which is not a party to the application) resolved to replace the guest lift but this did not occur until March 2004.  In the interim the old lift continued to give problems. 

   
   

   It malfunctioned very frequently often trapping guests for extended periods. 

   
   

   It was slow and could carry only a few guests at a time.  It was generally unreliable.  The consequence was that the lift was the subject of constant complaint by guests and a number of groups who had used the motel on a regular basis declined to renew their bookings.  There was a subsequent reduction in the occupancy of the motel and its profitability.

1. The assessment of the loss presents difficulties but the amount is said to be substantial.

1. The applicant may have a genuine claim with respect to the condition of the lifts, but it is not a claim against the respondents. It would appear to be against the Body Corporate. It is that body which is charged with the operation and maintenance of the lifts, (see s 37 of the Building Units and Group Titles Act 1980 (Qld)).

   
   

   Clause 5.2 of the letting agreement between the applicant and the Body Corporate obliged the latter to keep and maintain the common property of the building ‘in a manner consistent with the fact that the Lots are let to members of the public.’ 

   
   

   The failure of the lifts may be a breach of that term, but it is not a breach by the respondents, and it is not something which is within the ambit of the covenant for quiet enjoyment.

1. By the covenant for quiet enjoyment the lessor undertakes that the tenant will be free from disturbance to its possession and enjoyment of the premises by the exercise of adverse rights over the property leased by the lessor or some person for whom he is responsible (see e.g. Hudson v Cripps [1896] 1 Ch 265 at 268; Robinson v Kilvert (1889) 41 Ch 88 at 96-97). The failure to maintain the lifts in good working order is not an act or omission of the respondent lessors, or anyone authorised by them or claiming title from them. It is not, therefore, a breach of the covenant.

1. The inadequacy of the lifts may have made access to the individual lots slow and unreliable but that was not something for which the respondents, as lessors, were responsible.  For the same reason the failure of the lift service was not an act of interference by the lessors with the applicant’s business.

1. The applicant has accordingly failed to show it has a genuine offsetting claim against the amounts admittedly due to the respondents.  The application must be dismissed with costs.

Schedule of First Respondents

Lease No	Lot	Suite No	Respondent’s Name	Respondent’s Address
700299117	31	101	Skafola Pty Ltd	PO Box 1298, Toowong, Qld 4066
700606601	32	102	DP Faggotter	28 Corbett Aven, Dubbo, NSW 2830
700351674	33	103	NT & R Clements	9/17 Muddlestone Pl, Bruce, ACT 2617
700229914	35	105	Delta Investments Pty Ltd	213-217 Queen St, Ayr, Qld 4807
700058528	41	201	RJ Cox	PO Box 13, Crabbes Creek, NSW 2483
700326197	42	202	Delta Investments Pty Ltd	213-217 Queen St, Ayr, Qld 4807
700220236	45	205	PJ Hunter	15 Brownsmith Cres, Kambah, ACT 2902
700528276	46	206	KL Oung	PO Box R39, Rhodes, NSW 2138
700092120	50	210	Sukhvinder Singh	9 Continua Ct, Wattle Grove, NSW 2173
700058533	53	303	JL Wharton	Jeffs Go-Vita, Shop 4, Erina Mall, Erina, NSW 2250
700706404	57	307	S Singh	9 Continua Ct, Wattle Grove, NSW 2173
L975370L	61	401	Delta Investments Pty Ltd	213-217 Queen St, Ayr, Qld 4807
701093252	64	404	L Majcan	26 Stainsby Ave, Kings Langley, NSW 2147
700115383	65	405	RVP Williams (purportedly served on behalf of RV & P Williams)	31 Short St, Banksia, NSW 2216
700369973	66	406	Glenda Ruth Gilkes	8 Lemon Gums Dr, Tamworth, NSW 2340
700369938	67	407	PJ Hart	73 Weemala Rd, Chester Hill, NSW 2162
700094803	69	409	CF Chambers	61 Scott St, Shoalhaven Heads, NSW 2535
700011238	73	503	TG Lord	8/25 Temperley St, Nicholls, ACT 2913
601036186	74	504	Michael TC Lam & Jane KW Hui	Flat A, 18th Floor, Millennium Court, 11 Sands St, Westpoint, Hong Kong
700299121	77	507	RG & DF Melbourne	147 Ziegenfuzz Rd, Thornlands, Qld 4164
700058658	78	508	I & RH Townsend	PO Box 1066, Bathurst, NSW 2795
700058689	79	509	I & RH Townsend	As above
700533554	80	510	M & K Hanna	9 Bolger St, Upper Mt Gravatt, Qld 4122
L966030B	82	602	P Thompson	65A Carrington Rd, Randwick, NSW 2031
700443284	83	603	LP Flahavin	2 Daintree Dr, Wattle Grove, NSW 2173
700115395	84	604	N Saxena	9 Luckins Pl, Fadden, ACT 2904
700828218	87	607	CS & VJ Carmichael	Kungari Timor Rd, Coonabarabran, NSW 2357
700518941	88	608	Scafola Pty Ltd (purportedly served on behalf of Davy Investment Pty Ltd)	15/58 Swann Rd, Taringa, Qld 4068
700297204	91	701	MJ & IC Talbot	22 Vimy St, Rainworth, Qld 4065
700027270	93	703	BR Elms (purportedly served on behalf of Lisa Elms)	PO Box 25, Esk, Qld 4312
700058727	94	704	CT Tran & HT Vien (purportedly served on behalf of Canh Trong Tran & Huong)	82 Harcourt Rd, Darra, Qld 4076
700521170	97	707	R & G Gopalkrishnan	3 Loble Pl, Wanniassa, ACT 2903
700859501	98	708	B Allen (purportedly served on behalf of BA & BA Allen)	11 Annesley Ave, Stanwell Tops, NSW 2508
700094785	99	709	CF Chambers (purportedly served on behalf of JD Chambers)	61 Scott St, Shoalhaven Heads, NSW 2535