Valensise v Fairfield Chase Pty Ltd

[1989] FCA 652

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	No. G 690 of 1989

1

GENERAL DIVISION 1

BETWEEN: VALENSISE AND OTHERS

Applicants

AND:  FAIRFIELD CHASE PTY
LIMITED

Respondent

CORAM:	Einfeld J.
DATE :	18 October 1989

PLACE: Sydney

EX TEMPORE JUDGHENT

or more agreements between the parties under section 87.

This matter came before Mr Justice Beaumont yesterday and again this morning and has now come before me as an urgent application for interim orders. The proceedings proper are brought by the applicants seeking declarations of unlawful conduct under sections 52 and 53 (aa) of the Trade Practices Act and other relief, including damages under section 82 and variations of one

The factual circumstances applicable and relevant for present purposes are that the applicants have been and claim still to be tenants of Shop 6, Fairfield Chase, Fairfield, a shopping centre owned by the respondent. In that shop the applicants have been conducting since September 1988 a retail business selling women's

clothing and other accessories.

When the applicantst manageress attended to open the shop at the commencement of business on Tuesday, 17 October, she found that the locks had been changed and that she could not gain access to the premises. Until that time the business had operated normally and it is apparently not contested that there is in the shop at this present time a substantial quantity of stock plus fixtures and fittings, a small sum of money and other possessions of the applicants. The stock is assessed in the affidavit evidence presently before the Court as being worth of the order of approximately $60,000.

This application when first brought before the Court was ex parte and it sought two forms of interlocutory relief, the effect of

which was to return the position between these parties to the situation which persisted at the end of business on 16 October.	The material before the Court indicates that there is a
significant dispute which the applicants wish to raise, and in which on the evidence they are said to be supported by tenants of other shops of the same shopping centre, that the respondent engaged in false or misleading or deceptive statements at the
time the applicants' and the other tenants' leases were entered into. In brief the allegation is that the respondent represented to potential tenants, including the applicants, prior to their entry into leases, that the shopping centre and accompanying buildings would be substantially occupied by a wide variety of tenants of different kinds and interests and that there would be thereby generated in the premises substantial custom for the applicants and other tenants of shops. The applicants allege that these undertakings and statements were in substantial respects not complied with.
Whilst not admitting that there were such undertakings or statements made, the respondent informs the Court that the present shareholders and directors of the respondent company are not the same persons as gave any such undertakings or made any such statements. It seems to me that this fact has no relevance for present purposes which are brought against the company itself.
The applicants claim that as a result of the unlawful conduct committed by the respondent under the Trade Practices Act which is alleged in their application and affidavits, their business
has been substantially less profitable than would have been the case if the various undertakings and statements had been adhered
to. AS a consequence they say that they have been unable to pay the rent as required by the lease or the agreement for lease evidenced as being the legal basis on which the applicants have occupied the premises for some 13 months.
In this respect I observe in passing that two copies of the agreement for lease have been tendered and have, for present purposes, been admitted into evidence. These documents are not entirely identical. At least one of them is a very confusing collocation of materials from which alone it is not possible to determine all the elements of the agreement between the parties, at any rate clearly enough for the purposes of final resolution of this dispute. When this matter comes on for hearing, it will certainly be necessary for the documents in evidence to be properly rationalised and explained.
For present purposes it will be enough for me to observe that the applicants seem to have an arguable case that they have and have had a lease from the respondent of what is described in the documents as shops 43-44 of the ground floor of Fairfield Chase since 15 September 1988. I note at once that this numeration of the shops or shop which appears to have been demised to them is different to the numeration contained in other material, including correspondence which has flowed from the respondent to the applicants and which is annexed to some of the affidavits in evidence. -Arguably the applicantsr lease seems to be for some
One document says that the rental is some $ 4 3 , 4 7 5 per annum,
five years expiring on 1 4 September 1993.
although elsewhere in the documentation the rent is said to be $4,423 per month. As those two figures are not the same, it is not immediately possible for me to say what the rent is. One part of the alleged lease makes provision for a rent review after two years from the commencing date of the lease on 15 September 1988 but I am informed that there was a purported effort to increase the rent last month. I have not seen any documentation in this respect nor have I heard argument as to whether there was any permissible or possible increase, if in fact an effort was made to do so.
The applicants through their counsel say that they should be allowed to go back into the premises immediately, that even in the day and a half since they have been excluded they will have lost some thousands of dollars of profit, and that any further delay will destroy or substantially reduce the goodwill that they have built up over the period of time since they have been in occupation and conducting the business. I should also judicially note that we are in the final eight or 10 weeks before Christmas where it might be expected that the takings of businesses such as those conducted by the applicants might normally be expected to increase. The applicants' evidence also points to the fact that notwithstanding the alleged unlawful conduct by the respondent, their takings have been increasing over a period of time due to changes in their business policy and activities. They anticipate that there will be a continuation of this trend over the coming
underlying improvement in the profitability of their business. months even apart from the ordinary Christmas accretion to takings; in other words, that there should be a continuing
The consequence therefore of their being kept out of the premises while this matter is being litigated would appear to be not insubstantial. As the respondent has taken the matter into its own hands and not sought any orders of any Court to remove the applicants, I am not in a position to put the respondent on any condition as to damages should the litigation ultimately be resolved in favour of the applicants.
The respondent was given notice of the applicantsr ex parte application for interlocutory relief and has attended before me today with counsel who made four alternate applications, each premised upon the concept that there should be an adjournment of the application for interlocutory relief. The adjournment is sought for two or three days, in order to enable the respondent to put on evidence to demonstrate or seek to demonstrate that the applicants do not have an arguable case for relief and also presumably to deal with the issue of the balance of convenience if the applicants do have an arguable case for relief. The respondent seeks to argue primarily that there should be no interlocutory injunction or other relief permitting the applicants to resume possession of the premises while the litigation proceeds.
The first proposition put by the respondent was that the adjournment should be granted without conditions. This means
designed to establish whether the applicants have an arguable a few days time, subject to the availability of judicial time, that a hearing of the interlocutory application would be fixed in
case and if so, whether the balance of convenience suggests that the applicants should be readmitted to the premises by order of the Court.
As I pointed out in argument, if the application were granted in this form, it would have the consequence of not only excluding the applicants from the earning of such of their income as is derived from the shop in question, but of permitting the respondent to operate in respect of the premises as if this litigation had been concluded in their favour with the applicants having no arguable legal right to be in the premises at all.
The circumstances outlined by counsel for the respondent as to the present situation in the premises militate heavily against the grant of this application. Counsel for the respondent says that his client has for some time been negotiating a lease of what I might call the applicants' shop with what he describes as a major retailer in the Australian community, the name of which his client is not prepared to disclose to the applicants and was only prepared to disclose to me in confidence; this was not a course in which I was prepared to accede at this stage. He says that the reason why the respondent cannot disclose the name of this company is because it might prejudice the negotiations being conducted between the respondent and this company. On the other
hand, he says that his client and this other company are to all intents and purposes agreed upon the terms of a lease which the respondent is proposing to grant to this company, not only of the
premises occupied by the applicants in dispute in these proceedings but of other adjoining premises in the shopping centre.
At first it was even said that there was already a lease in existence. Then it was said that there was an agreement for a lease which is pending and imminent and it was also said that this other company had been given a licence to enter the relevant premises for the purpose, it was said, of measuring up the premises and taking such other steps preparatory to occupation as would imply that occupation was going to follow as a matter of course. No consideration for or documentation of the licence existed. The respondent argues that the entry of this large retailer into these premises will be beneficial to the tenants of Fairfield Chase, but obviously it cannot be beneficial to the applicants because it is a condition of the entry of this company into possession that the applicants are evicted. In any event, I have no evidence whatever before me as to what benefits the entry of this retailer could have in relation to the premises. Even if there was any such evidence, it would seem to me to be entirely irrelevant to the current proceedings. we are not now dealing with a case of what is morally or socially or even commercially good or bad, as the case may be, but whether the applicants have an arguable legal right to the possession of the particular shop.
would be able to permit its apparent proposed new tenant to If I granted an adjournment without conditions, the respondent
enter into the premises. No provisions were suggested as to how there might be a safeguard of the applicantsf stock and other possessions in the premises and there was no formulation of any proviso or other protective mechanism which would limit the new large retailer merely to a measuring up process or to other activities which did not change the nature and character of the premises. Nor were the applicantsJ commezcial interests mentioned.
nt one stage of the argument, there was even a suggestion that
workmen would be entering into the premises pending the determination of these proceedings. This would seem to me to be completely inappropriate, having in mind the fact that at the present time there is a substantial piece of litigation before the court which might have the effect of preventing the retailer from entering into these premises at all until September 1993. I therefore refuse the application for an adjournment without any conditions at all.
The second application was that the adjournment for two or three days should be granted on the respondent's undertaking that it would neither enter or re-enter the premises nor would it permit anyone else to enter including this anonymous large retailer.
The problem with this application is that the respondent's
favour of his client against the making of an injunction as counsel argued that the balance of convenience should be found in sought by the applicants because such an injunction might
prejudice the arrangements and relationship between the respondent and the anonymous retailer. If neither the respondent nor the retailer was permitted to enter the premises for any purposes at all, then the retailer would not be able to do any measuring or anything else in the premises, the agreement or virtual agreement between them would not be able to proceed or make progress, with the consequence that the balance of convenience argued for the respondent would not be applicable.
I can see no basis for granting an adjournment on such an undertaking which would have the effect of severely penalising the applicants, as every day the applicants are out of the premises not only do they lose the income they would otherwise have derived but of course the goodwill that they have built up will rapidly dissipate. It is obvious that small clothing retailers in a large shopping centre where they no doubt have other competitors could not survive a long period of closure that was involuntary and not for a stated purpose, such as a vacation, Christmas break or renovation to the premises of which the public could immediately be informed and which would be for a very limited period. It is one thing to talk of an adjournment for two or three days but then a hearing would have to be undertaken, with the likelihood of considerable factual dispute, having in mind the material that has already been placed in evidence by the applicants, that almost certainly would have to be resolved by cross-examining deponents of affidavits, the hearing of
The applicants would be out of the shop for a good deal longer submissions, and what would probably then be a reserved judgment. than two or three days, even if everything could be expedited to
permit all that to happen.
Another factor involved in the rejection of this application is that if the respondent is not permitted to re-enter or permit its large retailer to enter the premises, it gains nothing from the non-use of the premises at all, whereas the applicants would be able to gain the continuation of their income and perhaps even make arrangements for leaving the premises at a more appropriate time and with more opportunity to minimise their disruption. I therefore reject the second application for adjournment.
The next application made - actually it was fourth in order but it is convenient to deal with it out of order - was for the adjournment to be granted on the condition that the respondent provide what was described as alternative accommodation. NO such accommodation was identified and I am in no position, as there is no evidence on the subject, to fix such a condition. I have absolutely no idea how realistic such a condition would be, but it seems to me as a matter of common sense that requiring as a condition of a short adjournment for two or three days that the applicants should move the whole of their business is completely impractical. The condition is rejected by the applicants sight unseen, but alternative accommodation is not the only factor involved in this. In response to my questions and suggestions, the respondent agreed to pay for the move but gave no specifics of what they were prepared to do. It is not merely a question of
moving the stock, but as I would envisage it - although I have not seen the shop in question - it would mean the erection of internal fittings in any new shop; the place of the new shop
would be relevant, as would the condition in which the alternative accommodation was to be found and the nature of the business of its neighbours and others in the near vicinity. The factor of advertising of the move and the re-direction of the applicantsr existing and potential future clients would raise matters of considerable difficulty. A condition phrased as put to me by counsel for the respondent is really meaningless without additional detail and none has been provided. I therefore reject the application for adjournment on that condition.
The other proposition put by the respondent for its short adjournment was that there should only be an injunction to permit the applicants to resume possession if they pay what counsel for the respondent described as the arrears of rent. It is not denied on the evidence placed before me by the applicants that there are arrears of rent in terms of the lease, whatever that rent might be in the light of the existence in evidence of at least two different rents and the doubt as to the validity of an alleged recent attempt to increase one or other of these figures. Nonetheless, the applicants have been willing to place before me evidence that something of the order of $14,000 is presently due for rental and outgoings to the respondent.
The applicants make no offer to pay these arrears as so stated but say that they are willing to continue to pay the amount which they have apparently been paying, at least in recent times,
earlier referred of something over $4400 a month is or has been amounting to something between $1000 and $1200 a week. This seems to be an acknowledgment that the montly rental to which I
the basis upon which rent has been paid, at any rate in recent times. The applicants say they are prepared pending the hearing to continue to pay those sums on a weekly basis.
Some evidence has been placed before me by the applicants that an agreement was reached in August 1989 between their representative and a representative of the respondent for a gradual payment of the arrears of rent. There seems also to be some evidence that because of the financial circumstances of their tenants, the respondent agreed to reduce by half the rent paid by some earlier in the year. This did not apply to the applicants, apparently because it was granted only to those shopkeepers who were up to date with their rent at the time and not to those who, like the applicants, were apparently in arrears.
The respondent's case as put from the bar table on the applicants' primary claim for relief is that the applicants breached their lease by not paying the rent which was laid down in it and that pursuant to the lease it was therefore entitled to resume occupation of the premises by changing the locks before the commencement of business yesterday morning. It is agreed that the respondent sought the orders of no court to permit it to re-take possession.
I have not had an opportunity to study this lease in any detail,
purporting to be counterparts or even executed leases, they do and as I have said, there are a number of confusing features about the documents put into evidence, not least that although
not appear to be identical. However, in respect of what happens when the lessee defaults under the lease in any essential term, of which the payment of rent is certainly one, the documents are identical. They provide in clause 9.3 that if the lessee has failed to observe an essential term of the lease and the default
continues for a period of seven days after notice in writing has been given by the lessor to the lessee requiring rectification of the default, the lessor may terminate the lease from the giving of such notice and, without going into the details of the complete agreement, have the right to re-enter and to re-let the premises.
Evidence has been placed before me that by a document the photocopy of which is not immediately clear, but appears to be dated 9 October 1989, the applicants were given what is described as a Notice to Rectify Default. This appears to be a document drafted and prepared on the basis of clause 9.3. It draws attention to the fact that the applicants failed to return within
14 days of the date of receipt a duly executed lease as required
by another clause of the agreement, namely, clause 6.1. It said that this had to be achieved 'by' 17 October or, more correctly, before1 17 October. The applicants' affidavit evidence says that the first-named applicant received this notice but does not say when it was received. Nothing on the face of the document tells me when it was received.
production from its control and possession, the second of the two
On the other hand, there was provided to me, by tender from the applicants but after a call on notice to the respondent and
alleged leases or agreements for lease. On the face of it, this appears to be a fully executed lease or agreement for lease signed under the common seal of the respondent by a person purporting to be a director and allegedly affixed by the authority of the board of directors in the presence of the secretary. It was signed also by all four applicants.
This document is dated in handwriting 10 April 1989. As it may eventuate, when this matter is fully litigated, that this document is not the lease between the parties, I should say only for present purposes that it seems to me at least arguable, even strongly arguable on the evidence presently before me, that the applicants were not on 9 October in default of their obligation of returning a duly executed lease to the respondent as required by clause 6.1 of the agreement for lease. If so, there would have been no basis for the respondent to re-enter possession under clause 9.3 by reason of the service of that notice.
I do not decide, or even pass any observation, because I have not considered the matter, as to whether the failure to return a duly executed lease by October 1989 would represent an essential term of the lease so as to permit the lessor to re-enter if there was a breach. At that time, the applicant had been in occupation and conducting a business for more than 12 months, paying significant quantities of rent which on the evidence before me were fully accepted by the respondent in the intervening period.
There was also produced in evidence - and I mark it exhibit A3 -
a document dated 10 October 1989 headed: Notice to Pay
Outstanding Moneys, and addressed to the applicants at Shop 6, Fairfield Chase. The identification of shop 6 is also the subheading of the document. To what extent this is the same place as is referred to in the agreement for lease and accompanying documents produced from the custody of the respondent I do not know; but for present purposes I shall

assume that these premises, however numbered, are those which are the subject of these proceedings and which, until yesterday, were occupied by the applicants.

This document is said to be signed for and on behalf of Fairfield Chase Pty Limited by Curtis Mann, director. I am prepared to assume, without further present investigation, that the handwritten signature appearing on the face of the document is that of Mr Mann.

The notice tells the applicants that they are in breach of several clauses of the lease of Shop 6 in that some $3603.68 was due and payable on 1 September 1989 and has not been paid. The document says that interest is accruing at the rate of $1.97 per day and that, as a result of this default, the respondent is entitled to re-enter and take possession, to terminate the lease and recover the arrears of rent and outgoings and also to recover other matters including unspecified damages.

The document tells the applicants that, in the event that this so-called breach of these clauses of the lease is not rectified

within 14 days by the payment of the $3603.68 and interest, the	respondent proposed to exercise what it claims to be its rights,
as earlier set out.
The applicants admit that they received this document but I do not know when. If I assume that it was received on 10 October, there was simply no warrant at all for the respondent to change the locks on the premises at or after the end of business on 16 October and take possession immediately thereafter. Not only were the terms of the document itself not complied with in that it gave 14 days for payment, which was certainly not waited for; the requirement of clause 9.3 of the lease for 7 days was not adhered to.
Even more importantly, perhaps: there is no indication that Mr Mann is a director of this company and that the company has authorised him to issue the notice; there is no seal of the company affixed to the document; and I am unable to find that the company has itself complied with the lease. It certainly has not complied with its own notice.
There may, of course, be an explanation for these matters and if so, no doubt they will be brought out in the course of the litigation; but dealing with the matter as I must do now on a prima facie or arguable basis, it seems to me that the exclusion of the applicants from the premises provides a strong arguable case for interlocutory relief for the applicants.
I should add that the question of whether and to what extent rent
parties as a matter of quantum - the notice exhibit A3 stating is in arrears is not only a matter raised in dispute between the
that the arrears are $3603.68 plus interest at $1.97 a day, the applicants apparently admitting that their arrears are substantially greater than that. However, the evidence establishes that it may be premature to describe these non-payments, as it were, as true and justified arrears. I say that because the applicants will be seeking to argue in this
case, so the documents inform me, that because the respondent was in breach of its undertakings and statements contrary to the provisions of the Trade Practices Act, the lease payments ought to be varied by the court under section 87. If acceded to, the consequence of this submission would be that these amounts - whether they be in the $30005 or in the $14,000~ - may not be payable at all. That is a matter on which no doubt there will be substantial argument when the case comes before the Court.
For all those reasons I can see no basis for granting an adjournment conditioned upon an injunction which permits the applicants to resume provided they pay the so-called arrears of rent.
That leaves me then with two possibilities: one is to proceed with the hearing of the case immediately, the other is to grant the respondent an opportunity to put on evidence to oppose the application for interim relief.
The respondent has not stated what evidence it wishes to place before the Court or even indicated the type of defence it might
of unpaid rent. On the other hand, now that the respondent is have to the application of the applicants other than the matter
here, I must accept that counsel would not be likely to inform the Court that there is a case that the respondent wishes to argue on the application for interlocutory relief if that were not the case. In any event, of course, the litigation proper - that is the substantive application of the applicants - must proceed. It is clear that that could not be brought on for hearing in a short time, as there would be no justification, at present before the Court by way of evidence, for expediting the matter as a whole.
The respondent has foreshadowed that some difficulties might arise in respect of its proposed lease to the unnamed retailer, if the applicants were readmitted for any lengthy period, but I have only this material from the bar table and no evidence has yet been placed before the Court. However, once again I must accept that counsel would not be likely to make such a statement if there was no justification for it at all. I think in the circumstances that I should therefore permit the respondent an opportunity to place evidence of its situation before the Court so as to determine whether or to what extent interim relief should be given pending the hearing of the application proper.
For that reason I propose to grant a short adjournment to permit the respondent to place material before the Court, with the additional provision that the applicants should receive orders to permit them to resume possession forthwith.
On the usual undertaking by the applicants as to damages, I therefore order until further order that the respondent deliver
up possession of the premises sometimes known as shop 6 and sometimes apparently known as shop 43 to 44 Fairfield Chase, Fairfield to the applicants forthwith. I see no reason why the applicants should not be able to recommence business this afternoon. To avoid any possible mistake or dispute about the matter, the premises that are to be delivered up are those in which the applicants have been carrying on a womens' fashion retail business under the name "Valle Girl".
or more abundant caution, I also further order that pending the
determination of these interlocutory proceedings, or further order, the respondent shall not by its servants, agents, directors, officers or otherwise enter the premises otherwise than for legitimate purposes under the lease or agreement for lease between these parties, without permission of the applicants in writing being first obtained or further order of the Court.
I direct that the respondent shall file and serve, by not later than 4 pm on Friday, October 20, the affidavit or affidavits upon which it wishes to rely in answer to the applicantsr application for interim relief pending the final hearing and disposal of these proceedings.
I direct that the applicants file and serve any affidavit or affdavits in reply to the evidence of the respondent by not later than 4 pm on Monday, October 23. I fix the further hearing of this application for interim relief for 9.30 am on Tuesday,
mislaid in the Court registry, a copy of the affidavits is also October 24 before me. In order to avoid the affidavits being to be supplied to my Associate.
I grant the parties liberty to apply on 24 hours notice to my Associate. I reserve the question of costs.

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