Trevorah v ANS Investments Pty Ltd
[2017] VSC 149
•22 MARCH 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
| AT MELBOURNE COMMERCIAL COURT |
S CI 2017 00822
| WALTER TREVORAH | Plaintiff |
| v | |
| ANS INVESTMENTS PTY LTD AND OTHERS | Defendants |
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JUDGE: | ELLIOTT J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 22 MARCH 2017 |
DATE OF RULING: | 22 MARCH 2017 |
CASE MAY BE CITED AS: | TREVORAH v ANS INVESTMENTS PTY LTD |
MEDIUM NEUTRAL CITATION: | [2017] VSC 149 |
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PROPERTY — Warehousing premises — Alleged assignment of lease from company to plaintiff — Company in liquidation — Failure to exercise option to renew lease — Licence for plaintiff to occupy premises — Alleged right to remain in occupation.
PRACTICE AND PROCEDURE — Interlocutory injunction — Balance of convenience — Availability of alternative premises — Damages an adequate remedy — Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Stark | Horsley Ryan & Associates |
| For the 1st Defendant | Mr S Morris | Kyriakou & Associates Pty Ltd |
| For the 2nd Defendant | No appearance | |
| For the 3rd Defendant | Dr N Hannan | Thomson Geer |
HIS HONOUR:
A. Introduction
By summons filed 8 March 2017, the plaintiff, Walter Trevorah (“Trevorah”), sought interlocutory injunctive relief with respect to his ongoing occupancy at Unit 1, 40 Metrolink Drive, Campbellfield (“the Premises”). Trevorah has commenced this proceeding against:
(1) ANS Investments Pty Ltd, the landlord of the Premises and the 1st defendant (“ANS Investments”);
(2) National Estate Agents Pty Ltd, the landlord’s agent and the 2nd defendant (“National Estate Agents”); and
(3) Salvatore Algeri (“Algeri”), who is the 3rd defendant, in his capacity as liquidator of Federation Logistics Pty Ltd (in liquidation) (“Federation Logistics”).
Trevorah is a director of Federation Logistics.
B. Background
B.1 The lease
The issues in dispute arise out of a lease entered into between ANS Investments and Federation Logistics in 2012 with respect to the Premises. In support of this application, Trevorah originally swore that the lease commenced on 23 April 2012 and was for a period of 5 years. In oral evidence, given in court today, he explained that this evidence was incorrect, and that the lease was executed on 16 July 2012 and commenced at a later point in time.[1]
[1]The actual trigger for the commencement of the lease was the “issue of the Occupancy Permit”, which was not before the court. There was no evidence as to when it may have been issued.
Based on further evidence, the detail of which is not necessary to discuss, Trevorah's counsel submitted the lease commenced on or about 16 July 2012. Without making any interlocutory finding, I will proceed on that basis.
As the lease is for a term of 5 years, on the assumption that the lease remains on foot,[2] it would expire on or about 16 July 2017. Pursuant to clause 4(b) of the lease, notice must be given of any exercise of the right to renew the lease no fewer than 6 months prior to expiry. It follows that any such right that Federation Logistics (or, for that matter, Trevorah) may have had has expired.
[2]Algeri disclaimed the lease, in response to a notice under s 568(8) of the Corporations Act 2001 (Cth), on 1 March 2017. See par 22 below.
The inability of Federation Logistics (or Trevorah) to renew the lease is not affected by an offer made by ANS Investments on 30 November 2016 to allow for notice to be given until 11 April 2017. This offer was withdrawn a week later, without any attempt by Federation Logistics or Trevorah to avail itself or himself of the opportunity.
In short, on the evidence before the court, there is no basis upon which Trevorah could assert a lawful entitlement to possession of the Premises beyond mid-July 2017. As will become apparent, this fact is material to the outcome of this application.
B.2 Interim orders and the evidence relied upon
Trevorah’s summons was filed on the afternoon of 8 March 2017, and was made returnable on 9 March 2017. Although notice was given to the defendants, it was very short. On an interim basis, the following orders were made by consent:
(1) The 1st defendant and its servants and agents be restrained, until the trial of this proceeding or further order, from taking any steps to remove the plaintiff as the occupier of the property contained in certificate of title volume 11394 folio 270 at, and known as, unit 1, 40 Metrolink Drive, Campbellfield (“the Premises”).
(2) The 1st defendant and its servants and agents be restrained, until 4.00 pm on 22 March 2017 or further order, from refusing or denying access to the plaintiff to the Premises.
The hearing of the application was adjourned until today.
The principal affidavit in support of the application was sworn by Trevorah on 9 March 2017. That affidavit explained that Federation Logistics was wound up by an order of this court on 15 July 2014, with Algeri appointed as liquidator. The affidavit included the following:
6.In July 2014 I engaged in negotiations with Mr Shane Varenhout of CBRE, the then managing agents for [ANS Investments] on behalf of [ANS Investments] through Ms Stephanie Forgione, an employee of Deloittes, the firm of which [Algeri] is a member under which I proposed that I would continue to operate the business conducted by [Federation Logistics] from the [Premises] under the lease.
7.As a result of those negotiations, constituted on my part, with the input of Ms Forgione, on my behalf, in discussions with Mr Varenhout and by my proposing that and agreeing to continue to operate the business in my own name from the [Premises] under the lease, I have, since July 2014, operated the business from the Premises in accordance with the terms of the lease.
There are a number of observations to make about this evidence.
First, much of it is inadmissible, comprising of little more than assertions about conclusions reached, rather than giving evidence of the negotiations that occurred.
Secondly, Trevorah states that the negotiations were in part undertaken by Stephanie Forgione (“Forgione”) on his behalf, without suggesting that he was present when any such negotiations occurred. Forgione has gone on oath to state that she never represented to Trevorah that Trevorah would take an assignment of the lease or become the lessee by some other means.
Thirdly, the agreement alleged is that Trevorah would be able to continue to operate “the business in [his] own name from the [Premises] under the lease”. Nothing in that asserted agreement suggests a novation or assignment of the existing lease, or that it was expressly or impliedly agreed that Trevorah would become the tenant.
In conclusion, the evidence as affirmed by Trevorah has serious shortcomings. It is questionable whether the evidence establishes a prima facie case.
B.3 The Licence Agreement
As noted above,[3] the principal affidavit asserted that, since July 2014, Trevorah had “operated the business from the [Premises] in accordance with the terms of the lease”. However, quite remarkably, neither this affidavit nor any other affidavit relied upon on 9 March 2017 made any reference to a licence agreement that was signed by Trevorah on 18 July 2014 (“the Licence Agreement”).[4]
[3]See par 9 above.
[4]This was explained by Trevorah in a later affidavit, in which it was affirmed that Trevorah “did not directly recall it”.
The parties to the Licence Agreement were Trevorah and his wife (each defined separately as the “Licensee”), Federation Logistics (defined as the “Licensor”) and Algeri.
The Licence Agreement, the due execution of which is not in dispute, included the following recital:
C.The Licensor has agreed to grant to the Licensee and the Licensee has agreed to take from the Licensor a licence to occupy the Premises, use the Assets and conduct the Business from the Premises during the Period[5] in consideration for payment of the Licence Fee by the Licensee and subject to the terms contained in this document.
[5]The Period was a defined term. In effect, the Licence Agreement was ongoing unless the parties agreed otherwise or Algeri gave 48 hours’ notice in writing of termination. See also cl 3.1 below.
It also included the following “operative provisions”:
2.1(a)The Licensor grants to the Licensee and the Licensee takes from the Licensor a licence to occupy the Premises, conduct the Business and use the Assets during the Period, in consideration for payment of the Licence Fee by the Licensee, for the purpose of conducting the Business as a going concern and subject to the terms and conditions contained in this document.
(b)Despite clause 2.1(a), the Licensor retains ownership of, full control over and has full and free access to the Premises, the Business and the Assets for all purposes the Licensor thinks fit, provided the Licensor does not, except in an emergency, unreasonably interfere with the Licensee's rights granted under this document.
2.2The rights granted to the Licensee under this document are personal and contractual only. Nothing in this document:
(a)grants or creates or may be construed as granting or creating any tenancy between the parties; and
(b)or (sic) confers upon the Licensee any estate, proprietary right or interest in the Premises, the Business or the Assets.
3.1This document commences on the Commencement Date and continues for the Period until terminated.
There is no suggestion the Licence Agreement was terminated or replaced with some other agreement as between Algeri and the Licensees.
Clause 5.1 of the Licence Agreement imposed a series of obligations on the Licensees consistent with the obligations of Federation Logistics as tenant under the lease. Those obligations included:[6]
The Licensee must … pay to the landlord of the [P]remises the rent and outgoings payable under the existing Lease of the Premises, in accordance with the terms of the Lease and at all times comply with the remaining obligations of the Licensor under the terms of the Lease.
Further, clause 5.2(a) provided:
The licensee must not during the Period, in the Licensor's name or otherwise … enter into any contract (other than in the normal course of conducting the Business) in connection with the Premises, the Assets or the Business.
[6]Clause 5.1(m).
In other words, by entering into the Licence Agreement, Trevorah, together with his wife, effectively took on the obligations of Federation Logistics under the lease on the express agreement that neither he nor she would be the actual lessee.
B.4 Rental receipts
Trevorah gave evidence that ANS Investments’ agents, both past and present, directed him to make payments “as lessee” from July 2014. To support this, a receipt history created by National Estate Agents was exhibited, together with an example invoice. In my view, far from supporting Trevorah's case, these documents suggest the agents were still acting on the basis that Federation Logistics was the tenant.
The receipt history, dated 9 February 2017, refers to the Premises and is titled “Federation Logistics Pty Ltd”. It makes no reference to Trevorah as tenant.
The example invoice, dated 14 December 2016, is also addressed to Federation Logistics. The address then refers to Trevorah and his home address, but the invoice makes it plain who was being identified as the lessee. It includes the statements, “Payment from Federation Logistics Pty Ltd” and “re Federation Logistics Pty Ltd”. There is no reference anywhere in the invoice to Trevorah as the lessee.
B.5 Other issues
On 1 March 2017, Algeri, on behalf of Federation Logistics, purported to disclaim the lease pursuant to s 568(1) of the Corporations Act 2001 (Cth). If effective, the effect of that disclaimer was to terminate, from 1 March 2017, the rights, interests, liabilities and property of Federation Logistics in respect of the “disclaimer property”.[7]
[7]Corporations Act, s 568D.
Trevorah submitted that the disclaimer was ineffective, and in any event that, by virtue of s 139(1) of the Property Law Act 1958 (Vic), the tenant’s rights under the lease survived Algeri’s disclaimer of the lease.
C. Relevant principles
The principles to be applied when determining whether an interlocutory injunction ought to be granted are not in dispute. The granting of interlocutory relief is discretionary. In exercising its discretion, the court must be satisfied that there is a serious question to be tried, in the sense that the plaintiff must show a sufficient likelihood of success to justify the preservation of the status quo pending trial in the circumstances. Further, an injunction will not be granted if damages would be an adequate remedy. If these matters are established, the balance of convenience must favour the grant of the injunction before it may be ordered.
The requirements of a serious question and the balance of convenience need to be examined together.[8] If the claim of the plaintiff is very weak, then, ordinarily, the balance of convenience must be more strongly in favour of the plaintiff before the court grants any injunctive relief. This is so that there is a lesser risk of injustice in the granting of any injunction.[9]
[8]Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, 74 [39], 82 [84] (Maxwell P and Charles JA).
[9]Ibid, 74 [40].
Moreover, the court should always bear in mind that it “should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’, in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial”.[10]
[10]Ibid, 73 [35].
Finally, as the relief is discretionary, the court may consider any other factors relevant to the exercise of the court's discretion, such as delay.[11]
D. Consideration
[11]Ibid, 81-82 [81].
D.1 A serious question to be tried?
As will be apparent from the matters set out above, the evidence before the court demonstrates that, on the issue of whether there is a serious question to be tried, the case is a weak one.
Trevorah principally relies on the objective evidence of his performance, consistent with the terms of the lease, since July 2014. However, Trevorah unequivocally agreed to those obligations under the Licence Agreement in any event, and on the express agreement that he would not become the lessee.
Further, Trevorah cannot rely on ANS Investments’ conduct to suggest the landlord was treating him as a tenant. The day before the Licence Agreement was entered into, Forgione emailed the agent to tell it that Algeri, as liquidator, was considering entering into a licence agreement “with the current directors of [Federation Logistics] which will enable them to continue to trade the business”. No objection was taken by the agent or ANS Investments to this course. Accordingly, the dealings subsequently with Trevorah with respect to the Premises were entirely consistent with treating Trevorah as no more than a licensee.
Furthermore, there are other matters which need to be raised with respect to the strength of the case put. The documentary evidence shows that, despite Trevorah being aware from at least 14 December 2016 of ANS Investments’ position with respect to the alleged lease, he asserted no right to stay in possession. On the contrary, on 7 December 2016, Trevorah agreed to vacate the Premises by 10 January 2017 (something which he has failed to do). This agreement is recorded in an email chain which contains an email from National Estate Agents, sent on 7 December 2016, warning Trevorah that, if he did not vacate by that time, a “lockout” would be arranged. Also, by this email chain, the latest email of which is dated 14 December 2016, express reference was made to the sale of the Premises by ANS Investments.
I note that the injunction was sought to preserve “the status quo”, but there must be some doubt as to whether it is as submitted by Trevorah. Pursuant to the Licence Agreement, both Trevorah and his wife agreed to occupy the Premises. There is no evidence as to why, as asserted from the bar table, Trevorah's wife was not in occupation of the Premises in accordance with the terms of the Licence Agreement, a position that would be entirely inconsistent with Trevorah having exclusive possession, as he contends.
D.2 Balance of convenience
Notwithstanding each of the matters referred to above, I will proceed to address the balance of convenience on the basis that Trevorah has a good arguable case of establishing a lawful tenancy of the Premises until mid-July 2017.[12]
[12]On this approach, there is no need to consider whether Algeri has validly disclaimed the lease under the Corporations Act, or to consider any operation of s 139 of the Property Law Act.
When the evidence is considered as a whole, there are a number of reasons why the balance of convenience favours the injunction not being granted.
First, there is no suggestion that Trevorah needs these particular premises to conduct his business. He simply needs warehousing facilities to store and have access to approximately 1,000 pallets of equipment.
Secondly, the evidence strongly suggests such warehousing facilities are readily available elsewhere. Trevorah has been in negotiations since around 10 March 2017 for the lease of alternate premises, which were advertised online. Those premises, which are suitable for Trevorah’s business, were advertised at $92,000 rental per annum. This rental is $8,000 per annum less than the 2012 base rent provided for in the lease of the Premises. Trevorah gave evidence that he has put in an offer for $90,000 per annum for the rent, which has not been accepted. Obviously the difference between the parties with respect to the rental is minimal. There are also ongoing negotiations about the amount of bond required, Trevorah offering 3 months and the landlord wanting “up to 12 months”.
Save for these issues, negotiations in respect of these alternative premises are completed, including business references being checked and approved. There seems to be no real obstacle to alternate premises being secured, save perhaps the willingness of Trevorah to enter into a new arrangement. Indeed, there was nothing in the evidence to suggest there were not also other premises available in the market if Trevorah sought them out.
Thirdly, the ability of Trevorah to remain at the Premises lawfully is limited to fewer than 4 months. If an injunction were granted, Trevorah would have to take the steps he is now taking in any event in 3 or 4 months’ time. In these circumstances, the inevitable inconvenience to Trevorah would not be significantly diminished by the granting of an injunction.
In contrast, if the injunction were granted, ANS Investments runs the risk of losing the sale of the Premises. ANS Investments has already entered into a contract of sale, a condition of which is that the purchaser obtains vacant possession. Although Trevorah's counsel raised issues concerning the enforceability of the contract of sale, there is at least a real issue as to whether the granting of the injunction would cause a sale, that would otherwise have gone ahead, not to proceed.
Fourthly, ANS Investments is the trustee of a superannuation fund. It is in that capacity that it owns the Premises. ANS Investments has entered into a construction contract with respect to another property, which contract may be jeopardised if the sale of the Premises does not proceed.
In summary, for the reasons set out above, the balance of convenience strongly favours refusing to continue the existing injunction.
D.3 Additional matters
ANS Investments has put evidence before the court of its financial position. It is clear if Trevorah is put to the extra cost and ultimately succeeds at trial, ANS Investments has the wherewithal to meet any damages claim. In my view, in the circumstances of this case, if Trevorah ultimately succeeds at trial, damages will be an adequate remedy.
Finally, as a discretionary matter, I note there was considerable delay in Trevorah taking action to obtain relief, given that he was warned of a lockout as early as 7 December 2016.
E. Conclusion
For the reasons stated above, the injunction must be refused.
Orders will be made accordingly.
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