Valensise, P & M & G v Fairfield Chase Pty Ltd
[1989] FCA 670
•7 Nov 1989
IN THE FEDERAL COURT OF AUSTRALIA No. . !5?.Q...!l.,.~7-
NEW SOUTH WALES DISTRICT REGISTRY NO. G 690 of 1989 1
GENERAL DIVISION 1 BETWEEN: PETER VALENSISE, MAR10 VALENSISE, GIN0 VALENSISE AND IVANKA KATALINC
Applicants
AND: FAIRFIELD CHASE PTY
LIMITED
Respondent
CORAM: Einfeld J. DATE : 7 November 1989 PLACE: Sydney
REASONS FOR INTERLOCUTORY JUDGHENT AND ORDERS
On 18 October 1989 I made urgent orders which permitted the applicants in this matter to resume a retail business in the respondent's shopping centre. The relevant facts are contained in the judgment delivered on that date.
The matter resumed on 24 October, with the respondent seeking the termination of the earlier orders and the applicants requesting
their continuation. That hearing concluded on 2 November. The principal difference between the two hearings was that this time the respondent presented a quantity of evidence to support the dissolution of the injunctions pronounced earlier and both parties' witnesses were cross examined. Thus the usual issues to be determined, viz. whether the applicants have made out a serious case to be argued and where the balance of convenience lies if they have, fall to be determined on somewhat more and more definitive evidence than was previously available. If the existing orders are continued, the factual situation thereby created will probably persist to the hearing of the action itself. In the circumstances here, this is said to have significant effects for the respondent's other tenant shopkeepers in the shopping centre. On the other hand, if the current situation is brought to an end, the applicantsr business at Fairfield Chase will close and, inter alia, whatever goodwill and profitability they had or could have had will be lost. This is said by the respondent to indicate that the applicants* only true loss is remediable in damages, thus forming the basis of the respondent's submission that the balance of convenience is in its favour .
By their amended application the applicants seek declarations that the respondent engaged in misleading or deceptive conduct in contravention of section 52, and false representations in contraventions of sections 53(aa) and 53A of the Trade Practices Act (the Act), and damages. They also seek an order under section 87 of the Act varying their lease agreement with the respondent by re-fixing the rent of the shop premises. Under the accrued or cross vesting jurisdiction, they seek a declaration of
unlawfulness in respect of the respondent's purported termination and forfeiture of the lease, i.e. that the lease is still operating, or relief against the forfeiture. They seek a collateral injunction to restrain the respondent from terminating the lease or treating it as terminated.
The respondent conceded that the applicants had established a serious question to be tried under section 52. As it made no submission about the claims under sections 53 (aa) and 53A of the Act, I take this concession to apply to those causes of action as well. Although the respondent produced evidence to contradict the relevant conduct and misrepresentations alleged by the applicants and said that the applicants' evidence failed to allege that they were induced by the deceptive conduct to enter into the lease, I do not think that either of these circumstances weakens the applicants' case for interlocutory relief. For present purposes I am prepared to infer the allegation of inducement although I agree that this may provide difficulties of proof at the hearing of the principal proceedings.
I have said that the respondent's major argument is that the applicantsr claims under the Act can only sound in damages. It also argues that their other accrued or equitable/common law claims cannot succeed. The respondent says further that even if the applicants could in theory make out a case under one of these additional heads for re-instatement or continuation of the lease, it cannot be causally linked to the claims under the Act. The respondent says that if the lease has been forfeited, there is
nothing to re-instate or vary under section 87 and the only possible remedy is damages. The damages may very well be substantial: Brown v Jam Factory [l9811 53 FLR 340.
In the circumstances described in the previous judgment, there are admitted arrears of rent, although the amount involved is disputed, ironically with the applicants admitting to greater arrears than the respondent alleges. The respondent says that prima facie this is not affected by the applicants' counter allegation, amounting in substance to a cross claim, that the rent should be less than the respondent claims because of the respondent's alleged statutory misconduct. The respondent says that the applicants' claim for relief against forfeiture, even if it can be claimed in the same proceedings as seek a declaration for non-forfeiture, can virtually never be granted if the rent is not brought up to date. Even if the quantum of the rent was fixed as the applicants seek in their amended application, it seems that there may still be arrears of rent.
Unaided by authority, I should have thought that section 87 would most rarely be permitted to be used as a vehicle for the fixing
by the Courts of commercial rents: Milchas Investments Pty Ltd v Larkin [l9891 ATPR 40-956 at p. 50, 441 per Young J. However, Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd [l9811 36 ALR 23 and Henjo Investments Pty Limited v Collins Marrackville Pty Limited [l9881 79 ALR 83 were both cases where this Court did adopt that course, in the former case in not entirely dissimilar circumstances to the present case.
~t is not appropriate that I examine at this stage whether this is an appropriate case for the exercise of this jurisdiction. It is true that McLelland J in Kolback Securities Ltd v Epoch Mining -NL [l9871 8 NSWLR 553 held to the effect that the merits, in the sense of the weakness, of the case sought to be made out in the principal proceedings may and perhaps should be looked at when this type of interlocutory relief is sought. However, it seems to me that in this case the matter is apparently within the purview of possible results, that it is peculiarly appropriate for resolution at the trial, and that it could not be dealt with definitively at an interlocutory hearing such as here where an urgent resolution is essential in the interests of the parties and others, and of justice at large.
Another reason for not attempting this exercise at present is the very serious doubt, briefly outlined in my earlier judgment and considerably expanded in this hearing, about whether there was in law a valid lease agreement between these parties and if so which of four possible agreements might govern their relationship now. This problem also affects the argument about whether the forfeiture was effective or the lease should be re-instated or
held never to have been terminated. After the almost farcical attempt at the earlier hearing to identify "the lease", the respondent produced in evidence at this hearing a registered Memorandum said to be incorporated in "the lease". By clause 37 of this Memorandum, non-payment of rent for 14 days after its due date permits a number of instant consequences including re-entry and the right to treat the non-payment as repudiation of the lease.
This raises an issue as to the status of clause 9.3 of the agreement for lease, tendered in evidence, in relation to the non-payment of rent and the notice of 10 October 1989 apparently given under it, to which reference was made in the earlier judgment. If clause 9.3 can apply to non-payment of rent situations, the applicants say that the respondent failed to wait for the notice to take effect and then failed to give the second notice contemplated by the clause to determine the applicants* possession. The applicants also say that the respondent should be estopped from denying the validity and truth of the notice. The respondent says that, in the events which occurred, the notice was not necessary or relevant to the non-payment relied on (because it related to September's not October's default) - indeed before me the notice was actually called, I thought a little incredulously, a "courtesy". The respondent also said that there is anyway no evidence of reliance on the notice by the applicants and action by them to their detriment as a result. The respondent also identified the general law background in New South Wales as being that before a lease may be forfeited, a notice to remedy is required in respect of other breaches of
to be resumed by the landlord whether with or without curial lease but not in respect of failure to pay rent and of possession proceedings: S. 129(8) Conveyancing Act (NSW).
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I accept that there is more than a little doubt about whether the notice raises a true estoppel, but believe that there is in any event another basis for not dismissing this issue as
comprehensively and summarily as the respondent seeks.
~t least some of clause 37 is in the discretion of the lessor. This means that the October 10 notice may represent the respondent's exercise of one or more of the discretions. If so, an argument may be available that the immediate re-entry without notice permitted by clause 37 was not the course on which the respondent chose to embark in this case. Thus when the respondent changed the locks on October 16, it may not have effected forfeiture of the lease at all by virtue of clause 37. I do not think I should say more in this connection at this stage than that the applicants' case in relation to the October 10 notice is in my view not without sufficient merit to permit its presentation at trial.
I agree with the respondent that re-instatement cannot or seems
unlikely to follow the declarations of statutory unlawfulness sought under the Act - and I do not understand the applicants to submit otherwise - but section 87 does seem to provide a mechanism for varying a lease which is still on foot, including one re-instated, or declared never to have been terminated, by proceedings other than those taken under and pursuant to the ~ c t .
does not put this case into such a rare category that I should at The fact that this jurisdiction might or should be sparingly used this very early stage foreclose the possibility of its being raised at all. Yet that would be the consequence of refusing the applicants the type of interlocutory relief they are seeking.
At this hearing I asked senior counsel for the respondent whether he was arguing that there was no case available to the applicants which could lead to an order by which they could retain or regain possession. After consideration his answer was that such an order could only flow as a relief against forfeiture and that was not available because the rent had not been paid or tendered. He pointed to the fact that even now the applicants are not agreeing to pay the arrears of rent, although they are agreeing to pay
$1000 or thereabouts per week by way of rent or licence or occupation fee pending the determination of the proceedings and a decision as to what the rent is. His argument was that relief against forfeiture is a discretionary remedy and that the discretion will readily be exercised in favour of relief only where the rent is fully paid.
I do not think that this argument disposes of this matter. In my view, it is not such an answer as to destroy the seriousness of the argument that a lease still exists, even if it may be that re-instatement might only follow from an order by way of relief against forfeiture. I think that the applicants have established a serious case to be argued for a remedy other than damages, including a result that would permit them to remain in the premises until September 1993.
That brings me to the difficult task in this case of balancing the respective conveniences of the parties. My earlier statements advert to the problem here. The applicants' case is, as mentioned earlier, that everything other than damages will be academic if they are forced out of the premises now. It is true that the business does not seem to have been a roaring success although recent steps have apparently been taken, with some success, towards improving its profitability and the Christmas season is almost here, with its expected boon to takings. On the other hand, it seems to me that as damages for loss of goodwill would largely be calculable on previous takings, the applicants would be left with an unrecoverable or evidentially difficult loss for a business which they assert will develop substantially over the ensuing months. The applicants also point to the fact that they would also, as I have said, lose their right to argue that their 5 year lease should persist for longer than 14 months and thus have a significant part of these complex and difficult proceedings pre-determined against them without full evidence or complete argument.
The respondent says that its shopping centre needs a large retailer to establish or enhance its overall viability. Ironically this assertion is also part of the applicants' case for principal relief because they allege that this was what was promised before they signed anything and entered into possession, and presumably induced them to do so. The respondent says that many other shopkeepers would be benefitted by the entry of what is now revealed to be a Norman Ross store to sell electrical
goods. Again the applicants would probably agree; they certainly intended to allege that the absence of the large store or supermarket promised to them before they entered into possession
has caused them a sizeable loss of profitability.The respondent says that it is occasionally appropriate to take into account the interests of third parties in cases such as this and that I should do so here. Even assuming that there is a
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case for doing so - and the authorities cited by the respondent ! , hardly provide a confident base from which to find that there is: Miller v Jackson [l9771 QB 966; Kennaway v Thompson [l9811 QB 88; Spry, Equitable Remedies (3rd Ed) at pp 385-6 - the absence of any evidence from any of these other shopkeepers makes difficult the drawing of any powerful conclusions in this regard. In fact the respondent relied mainly upon evidence of an expert, a general summary by one officer of the respondent, and the hearsay evidence of another who asked only a vague unhelpful question of the shopkeepers quizzed on the matter. This evidence was objected to as irrelevant. I think it is generally relevant but of little weight.
The respondent also led evidence that the proposed Norman Ross lease is yet to be consummated completely, and the applicants argued that this effectively destroys the respondent's case here. However, I think that agreement is sufficiently far advanced to lead to the conclusion that a lease is near and likely to be finalised if legally possible. However, the evidence of the negotiations for the lease and other matters suggest that the interests and rights of the applicants have been regarded as of
been treated as dispensable elements in the matter. In these little consequence and importance and that the applicants have circumstances it does not seem right to consider the imminence and pendency of the Norman Ross lease as particularly relevant or weighty factors of convenience. Nor should I consider as especially persuasive in this connection the fact that if Norman ~ o s s was permitted to enter, the respondent might please other shopkeepers or be saved from claims of unlawful conduct under the ~ c t by other shopkeepers similar to those being made by the applicants. Yet the respondent, while not expressly embracing those arguments, does not really put its own convenience in any other positive way, not even that its own trading or commercial profitability will be improved if the applicants are denied possession pending the hearing.
It would seem to be rare that a party making out an arguable and not trivial or weak prima facie case will be denied the maintenance of a position from which that case may fully proceed, unless the balance of convenience is heavily weighted towards the opposite party. This must especially be so where the second party is advancing its convenience as in effect being the wishes and interests of third parties who provide no cause of action to the first party themselves such as would permit the pursuit of the principal intended fruits of the first party's proposed action. In any event, I think that the hardship of these applicants considerably outweighs the difficulties posed for the respondent by the making of interlocutory orders for possession in favour of the applicants.
the agreements between these parties is $4423 per month, I direct On the prima facie basis that the rent presently operable under that the parties bring in short minutes of orders determining the current arrears of rent and providing for the applicants to pay into Court the sum so calculated for investment under the Rules pending hearing and determination by the Court. I further order that until further order the applicants pay to the respondent the sum of $1020.70 on or before Friday of each week, the first payment to be made on or before Friday November 10 1989.
t . , q I ' ! : 2 Provided these conditions are complied with and on the usual . , ., undertaking as to damages by the applicants, I order until further order that: ! ., (1 the respondent continue to permit the applicants access to and possession of the premises sometimes known as
shop 6 and sometimes as shop 43 to 44 Fairfield Chase, . , Fairfield for the purpose of conducting the business now . , called "Valle Girl"; and that ,'
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the respondent shall not by its servants, agents, . . directors, officers or otherwise enter the premises I ' otherwise than for legitimate purposes under the lease L.; L. or agreement for lease between these parties, without I . ! permission of the applicants being first obtained or
further order of the Court.
I reserve liberty to any party to apply on one week's notice to
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my Associate or to another Judge of the Court. Costs will be
costs in the cause. I direct that any further amended application and the statement of claim in the matter be filed and
served by not later than 4 pm on Wednesday November 15 1989.
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: . 1 order that the matter be listed for directions on Thursday
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November 30 1989 on which date, unless the matter is or is likely 1 I !- to be settled or otherwise not to be proceeded with, and subject to any further interlocutory proceedings, the parties are to 1 , bring in short minutes of a timetable for the further Drosr nf 1.: this matter towards a final hearing.
preced,!~g p x j i s are a 1:ue copy of the , v .
R~~~~~~ for Judgmcni herein of his Honour Justice Einfeld
A s s o c ~ a ! ~ L ..
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