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[2012] VCAT 1061
Victorian Civil and Administrative Tribunal
2012-07-20
Mr J
Original judgment source is linked above.
LANDLORD AND TENANT - Retail Leases Act 2003 - whether lease or licence agreement, whether VCAT a 'court' for the purpose of s.10 of the Commercial Arbitration Act 2010; whether arbitration agreement ousts jurisdiction of VCAT.
Ireland v Subway Systems Australia Pty Ltd & Anor (Retail Tenancies) [2012] VCAT 1061
This proceeding is referred to a further directions hearing before Senior Member Riegler at 9.30 am on 17 August 2012 at 55 King Street, Melbourne, Victoria, 3000 at which time the Tribunal will hear further submissions as to the form of the orders to be made, having regard to these Reasons, and make further orders as to the future conduct of the proceeding.
10. DISPUTE RESOLUTION. The parties want to settle all issues quickly, amicably, and in the most cost effective fashion. To accomplish these goals, the parties agree to the following provisions that will apply to resolve any dispute or claim arising out of or relating to this Agreement, or any other Franchise Agreement the parties have with each other (a "Dispute"):
c. The parties will arbitrate the Dispute if the mediation clause in Subparagraph 10.a. is not enforceable, or the parties do not settle the Dispute under the informal discussion and mediation procedures above, or the Dispute is one which this Agreement provides will be submitted directly to arbitration, except as provided in this Agreement. The arbitration will be held in accordance with the United Nations Commission on International Trade Regulations and Law (UNCITRAL) Arbitration Rules administered by an arbitration association, such as the American Arbitration Association or the Institute of Arbitrators and Mediators Australia, at a hearing to be held in Queensland.
(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
Was the occupancy of Shop 24 pursuant to a leasehold interest?
The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.[3]
What then is the fundamental right which a tenant has that distinguishes his position from that of the licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some stipulated purpose or purposes. And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life, or lives. If he was, he is a tenant. And he cannot be other than a tenant because a legal right to exclusive possession is a tenancy and the creation of such a right is a demise. To say that a man who has, by agreement with a landlord, a right to exclusive possession of land for a term is not a tenant is simply to contradict the first proposition by the second.
Under this License the Licensor grants a mere Licence to the Licensee and nothing in this Licence will be taken to confer a right of exclusive possession on the Licensee. Without limitation the Licensor reserves the right to enter onto the premises at any time. The Licensor grants to the Licensee, subject to the terms and conditions of this Licence, only those rights which the Licensor has acquired under the Head Lease and nothing in this Licence will be taken to confer on the Licensee a right greater than any right which the Licensor has under the Head Lease.
This Licence shall confer no right of exclusive occupation of the premises to the Licensee and the Licensor may at any time and at all times from time to time exercise all of its rights as Lessee including (but without in any way limiting the generality of this provision) its rights to use, possess and enjoy the whole or any part of the Premises save only in so far as such rights shall prevent the operation of the Licence hereby granted.
The existence of a right of entry onto the land does not necessarily displace the tenant's right to exclusive possession and turn the transaction into a license. Statutory powers of entry which do not destroy tenancy abound. It is beyond the scope of this work to list such powers which apply equally whether the occupier be freeholder or leaseholder.
The intention of the parties to confer or not to confer a right to exclusive possession is to be gleaned rather from the objective facts and surrounding circumstances than from the form of words that have been used...
The contract must be read as a whole though the individual clauses of it may point one way or the other. The covenant for quiet enjoyment will be indicative of the lease. In the search for the true intention even an express declaration that one or other relationship is intended is not conclusive. For the way that the parties described the legal relationship can never estop the courts from determining what that relationship really is...
The reservation of the right of entry to inspect or repair is not inconsistent with a lease. Neither is the fact that the tenant has exclusive possession only for a series of discrete periods, as in the case of a time sharing scheme. A covenant as to user does not mean that the grantee does not have exclusive possession and it makes no difference that the same end is attained by phrasing the covenant as a limitation whereby the tenant's power to use the premises is restricted.[6]
(a) at all reasonable times enter the Premises and view its state of repair and may serve on the Lessee a notice in writing of any defect requiring it within a reasonable time to repair that defect in accordance with any term of this Lease,...
16.6 The Lessor may at all reasonable times and after reasonable notice (except in the case of an emergency) enter the Premises for any one or more the following purposes:
(a) complying with the terms of any law affecting the Premises and any notices served on the Lessor or Lessee by any statutory, licensing, municipal or other competent authority;
(b) carrying out any repairs, alterations or works of a structural nature;
(c) installing any services such as air-conditioning apparatus, automatic fire sprinklers, gas pipes, water pipes, drainage pipes, cables or electrical wiring;
(d) making any repairs which the Lessor may think necessary to the Premises;
(e) making any improvements or alterations to the adjoining premises or to the Centre which the Lessor may consider necessary;
(g) exercising the powers and authorities of the Lessor under this Lease.
Turning to the issue of whether clause 2.2 is illusory, it should be borne in mind that this provision is part of a bargain between the franchisor and the franchisee. There is no reason in principle why a prospective franchisor and a prospective franchisee cannot agree that as between themselves, the latter was not to have exclusive possession of the subject premises and that the franchisor would continue to enjoy them as owner or lessee, providing that enjoyment did not hinder the franchisee's conduct of its franchise business. There may be many sound commercial reasons why the franchisor would insist on this. One such reason may be that it would ease the franchisor's task of controlling and supervising the franchisee. The ultimate question is, of course, whether the effect of the franchisor's grant constituted the franchisee a licensee or a lessee of the franchisor (or, for present purposes, whether it had the effect of giving the franchisee exclusive possession of the premises)?[7]
In that context their Lordships recognised that evidence of subsequent conduct which, they said, was not admissible on the question of construction of the contract, was nevertheless admissible on the issue of whether a particular provision of it was intended to have legal effect or was only a pretence. Lord Oliver said this, at 469:
"... though subsequent conduct is irrelevant as an aid to construction, it is certainly admissible as evidence on the question of whether the documents were or were not genuine documents giving effect to the parties' true intentions."
Please find enclosed herewith a copy of your signed sub-lease document, which is for your safekeeping.
I would bring to your attention that it is valuable and could be required in future should you wish to Transfer or Surrender the Lease. Please ensure that it is stored securely.
Does the arbitration agreement take precedence of the jurisdiction of the Tribunal?
Authority makes plain that the reference to "court" in s.471B is not to be construed in a strict sense, but in a fashion that is broad enough to cover a proceeding in a tribunal such as the Victorian Civil and Administrative Tribunal: See the Recent Decision of Merkel J in Australian Liquor Hospitality and Miscellaneous Workers' Union v Homecare Transport Pty Ltd [3] and also earlier decisions concerned with the comparable provisions in of the Companies Code such as Revasal Pty Ltd (in Liq) [4] and Mowbray College and Exhibit Design and Construction Pty Ltd (in Liq) [5] [9]
The court must be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together, before they can from the language of the later imply the repeal of an express prior enactment, i.e., the repeal must, if not express flow from the necessary implication.
It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support the implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other.[13]
[1] The term Affiliate is defined in the Franchise Agreement dated 28 October 2003 to mean a person or entity that directly or indirectly through one or more intermediatories controls, is controlled by or is under common control with, another person or entity.
[2] Paragraph 11 of the affidavit of Jocelyn Sain-Fryer dated 17 May 2012, paragraph 6 of the affidavit of Aaron Ireland sworn on 31 May 2012 and paragraph 6 (c) of the affidavit of George Konidaris sworn on 31 May 2012.
[3] [1985] UKHL 4; [1985] AC 809 at 819.
[6] Australian Tenancy Practice and Precedents (Redfern & Cassidy) at Page 1575-1576 (footnotes omitted).
[9] [2002] VSC 418 at [15]. Footnotes omitted. See also Brian Rochford Ltd (administrator appointed) v Textile Clothing and Footwear Union of New South Wales (1998) 47 NSWLR 47; Helm v Hansley Holdings Pty Ltd (in Liq) [1999] WASCA 71
[10] Director of Housing v Sudi [2011] VSCA 266 at [29], [155-157]; Kracke v Mental Health Review Board (2009) 29 VAR 1; ABY, ABZ v Patient Review Panel [2011] VCAT 905 at [26] per Justice Ross P; Rosengarten v American Airlines Inc [2011] VCAT 1535.
[11] [1908] HCA 55; (1908) 7 CLR 1 at 10
Ireland
Subway Systems Australia Pty Ltd & Anor
(1959) 101 CLR 209
(1998) 47 NSWLR 47
(1908) 7 CLR 1
(1991) 100 ALR 193