Clover Pines Pty Ltd v Avin Operations Pty Ltd [2003] VSC 242

5. On 23 May 2003, the Court of Appeal set aside the orders of Beach J other than the order for possession, made certain orders as to the times for filing of further affidavits and outlines of argument, and directed that the trial of the proceeding be on affidavit and be heard in the Practice Court on 24 June 2003 or so soon thereafter as the business of the Court might allow. The Court further ordered that the costs of the proceeding up until and including 13 January 2003, the date of Beach J's orders, be paid by the appellant, and that the costs of the proceeding after that date, as well as the appellant's costs of the appeal, be in the discretion of the trial judge.

8. The appellant's submissions before the Court of Appeal were based on procedural error only. JD Phillips JA, with whom Winneke P and Vincent JA agreed, noted at [32] of his judgment that the appellant had failed to identify any significant dispute of fact, as distinct from calling for the respondent properly to prove its case.

11. At the outset of the hearing I gave leave to the plaintiff to file an amended originating motion and summons whereby the plaintiff claimed that the defendant pay to it the sum of $54,335.61 and mesne profits assessed at $19,887.59 per month for the period 12 November 2003 (the date of forfeiture of the lease) to 13 January 2003.

14. The defendant did not seek to rely on any affidavit material, nor did it seek to cross-examine the deponents of any of the affidavits filed by the plaintiff. A number of unsuccessful objections were made to the admissibility of material tendered by the plaintiff.

18. The defendant made no challenge to the amount of $49,034 claimed in respect of rent and interest.

22. The claim for damages for mesne profits is calculated in accordance with the rent provided for under the lease for the relevant period. Mr Fox, for the defendant, relied on the decision of Gowans J in Gair v Smith [1] as authority for the proposition that mesne profits should be calculated in accordance with the net annual value of the property, and submitted that there was no evidence as to that figure. However, His Honour was there concerned with the rescission of a contract of sale, where there is no guidance in the document giving rise to the relationship as to what might be an appropriate amount. In the case of a lease, the practice is that mesne profits are to be assessed at the rate of the rent being paid under the lease. [2] No challenge was made to the actual calculation.

26. By Clause 2 (2)(a) of the lease the lessee covenants "To pay or reimburse the Lessor for" rates and other charges. Mr Fox submitted that there was no evidence that the plaintiff had made any payments of Council rates for which it could be reimbursed. However, the evidence constituted by the affidavit of Ms Scull, property manager of the plaintiff's agent, and the exhibits thereto, established that the defendant had not paid the amounts claimed, after the making of a demand therefor; the covenant to reimburse is merely an alternative to the covenant to pay, and the plaintiff's claim in respect of unpaid municipal rates is made out. There was no challenge to the amount of the rates.

30. The same submission that there was no evidence that the plaintiff had made any payments was made in respect of the amount of $838.25 claimed as water rates; similarly the affidavit of Ms Scull and the exhibits thereto establish that, subject to the matters set out in the two preceding paragraphs, the amounts claimed had been demanded and not been paid by the defendant.

33. I accept the submission of Mr Fox that the invoice from the water rating authority for an amount of $7.15 which is exhibited to the affidavit of Ms Scull does not indicate that it relates to the property, and accordingly the claim in respect of that amount fails.

36. Mr Manly, for the plaintiff, conceded that Mr Fox was correct in his submission that the amount of $481.06 shown as "annual parks charge" on the invoice from the water rating authority was a charge in respect of a full year, and should be reduced pro rata by $192.77 to an amount of $288.29. Thus the amount established as owing in respect of water rates is calculated as $838.25 less ($7.15 + $192.77), giving a final figure of $638.33.

40. By clause 2 (25)(c) of the lease, the defendant covenants "to effect and keep current" policies of insurance of a nature which is described or "alternatively (at the election of the Lessor) to reimburse the Lessor for all amounts paid by the Lessor for . . . premiums". Mr Fox again submitted that there was no evidence that the amount claimed for insurance premium had been paid by the lessor; however, the covenant to reimburse is merely an alternative to the covenant to pay, and the affidavit of Ms Scull and relevant exhibit establish that the defendant, after the making of a demand therefor, had not paid that amount. There was no challenge to the amount.

45. By clause 2 (31) of the lease the defendant covenants to pay to the lessor "all reasonable and proper costs charges and expenses which the Lessor may pay incur or expend in consequence of any default in the performance and observance " of any of the lessee's covenants or in the exercise or attempted exercise of powers under the lease. The evidence constituted by the affidavit of Ms Scull and exhibits thereto shows that a cheque for $20,319.88 paid by the defendant to the plaintiff's agent was dishonoured, and the bank charged a fee of $13. The agent claimed from the defendant $50, being the dishonoured cheque fee plus costs of issuing the invoice in that regard, and that amount has not been paid. There is no evidence as to the reasonableness of the charge of $37 for issuing the invoice, and my view is that $20 would be a more appropriate figure. I find that an amount of $33 under this head comes within the covenant in clause 2 (31) of the lease.

49. The evidence is that following a notice to quit which was expressed to expire at 4 pm on 29 July 2002, the agent instructed a locksmith to change the locks on the property. In the event the breach giving rise to the notice to quit was remedied on 29 July, and the instruction was cancelled while the locksmith was on site. The locksmith sent an account for $44 in respect of the attendance, and that amount, after demand being made therefor, has not been paid by the defendant. Mr Fox submitted that the locksmith must have been present before the time for remedying the breach had expired, and the amount was accordingly not payable by his client. However, assuming that the locksmith was on the property before 4 pm on 29 July, it does not seem to me unreasonable that he should be in attendance so as to be in a position to carry out his instruction at 4 pm if the breach had not been remedied. I find that the locksmith's fee comes within the covenant in clause 2(31).

1. that the defendant is indebted to the plaintiff in the sum of $54,118.69 made up as follows:

2. that the defendant pay to the plaintiff $47,067.29 by way of mesne profits.

66. Bearing in mind the orders made by the Court of Appeal, I invited submissions on costs generally at the conclusion of the hearing, while reserving to counsel the right to make further submissions on the delivery of judgment. Mr Fox submitted that if the plaintiff succeeded the amount recovered would be less than $100,000, being one half of the jurisdictional limit in the County Court, and accordingly, while the plaintiff would be entitled to its costs under the usual rule, it would be entitled only to the costs to which it would have been entitled in the County Court, on the basis of Rule 63.24 of the Supreme Court (General Rules of Civil Procedure) 1996. As the amount recovered by the plaintiff exceeds $100,000, it is not necessary for me to consider that submission. However, I would point out that this was an action for recovery of possession of land, not solely a proceeding for debt or damages, so that Rule 63.24 could have had no application to it. The rent payable under the lease was over $200,000 per annum, and that is a sufficient indication of the value of the property for me to be satisfied that Rule 63.25 likewise could have no operation.

69. Mr Fox submitted that the costs of the second day of the hearing should be borne by the plaintiff, as the need for a second day was attributable solely to the plaintiff. However, I am satisfied that that was not the case. The defendant's outline of argument was not filed within the time directed by the Court of Appeal, and was produced only on the morning of the hearing. The plaintiff was granted an adjournment in order to consider questions raised by the defendant which in any case had not been referred to in that outline of argument. The defendant's submissions were unnecessarily repetitive.

72. Although the defendant succeeded in its appeal, the Court of Appeal made no order for costs in its favour, but left the defendant's costs of the appeal, as well as the costs of the proceeding after 13 January 2003, to the discretion of the trial judge. As Mr Manly pointed out, this was a most unusual course for the Court to take, and I have no doubt that it was taken on due consideration.

75. In the event, the defendant has derived no significant benefit from the appeal. The total amount ordered to be paid by Beach J was $101,816.19. The total amount ordered to be paid after this hearing is $101,185.98. A difference of $630.21 in $100,000 does not justify the action of the defendant in initiating the appeal. No issue of substance was raised either on the appeal or before this Court. The minor matters which gave rise to the difference could have been sorted out between the parties. There was no suggestion in either forum that there was any disputed issue of fact or law.

78. There is no reason why the plaintiff should bear the defendant's costs of that ineffective proceeding. There will be no order as to the costs of the appeal or of the proceeding generally from 13 January 2003 until the determination of the appeal.

81. Counsel may wish to make submissions as to the costs of the present hearing.

[1] [1964] VicRp 107; [1964] VR 814

[2] See the decision of the Court of Appeal of the Supreme Court of Queensland in Rock Bottom Fashion Market Pty Ltd (in liquidation) v HR & CE Griffiths Pty Ltd decided on 6 March 1998 at page 11 of the judgment of Dowsett J with whom Pincus JA and Helman J agreed, and the authorities there cited (decision summarised at [1998] ANZ ConvR 549).