Pirea Building Supplies Pty Ltd v Graphics 103 Pty Ltd and Ors [2002] VSCA 25

Court of Appeal (Vic)|2002-03-06|Before: PHILLIPS and BATT, JJ.A.

Leases - Retail premises - Lease containing option to renew for three years - Notice of exercise of option allegedly given - Dispute over renewal - Failure by landlord to give notice of last day for exercise of option - Failure by landlord to give disclosure statement - Attempt by tenant to give notice of termination - Whether notice effective under relevant legislation - Retail Tenancies Act 1986 ss.4, 14(3), (4) and (9), Retail Tenancies Reform Act 1998 ss.4, 8, 17, 18(3), (4) and (7).

This is an appeal against the orders made in the County Court by a judge on 19 November 2001, in proceeding No. 2001/6795. The appellant was the plaintiff below, the landlord of certain premises, suing for damages in consequence of what was said to be the wrongful repudiation of a lease by the first defendant, now the first respondent. The other respondents to the appeal were also defendants below; they were the guarantors of the tenant. I shall continue to refer to the parties as plaintiff and defendants.

By the order made on 19 November 2001, the judge dismissed the plaintiff's proceeding on the application of the defendants. The defendants' summons, filed on 7 November 2001, sought an order for dismissal (sic) on several grounds in the alternative, in reliance upon Rules 23.01 and 23.03 of Ch.1. Alternatively, the defendants sought an order under Rule 23.02 striking out the pleading. The order as authenticated dismissed the proceeding, notwithstanding that his Honour's reasons for judgment concluded with the statement that the pleading disclosed no cause of action. I mention this now, only because it led to difficulty when the plaintiff applied for leave to appeal. That application came on for hearing before the Court as presently constituted on 8 February last and it was not then altogether clear whether leave to appeal was needed because, on a fair reading of the reasons for judgment, it seemed that the order had probably been made under Rule 23.03 and, as such, arguably reflected a decision on the merits. In the end we gave leave to appeal in case it was necessary and we also gave directions for expedition. Whether as of right or by leave, the appeal came before us last Monday for hearing and determination (the parties having filed consents to that course under paragraph (1)(c) of Rule 64.27 in case the appeal is not from a judgment or order in an interlocutory application within the meaning of paragraph (1)(d)).

In order to expedite the hearing of the appeal, we directed, inter alia, that the papers before us on the application for leave to appeal, with certain additions (such as the order we made, the notice of appeal and the notice of contention), should comprise the Appeal Book. We now have before us the plaintiff's summons for leave to appeal, filed on 29 November 2001, the affidavit of Charles Leonidas in support of that application, with its several exhibits, the affidavit of Chris Alexander in opposition to the plaintiff's application for leave and certain additional documents which the parties wished to have included. The affidavit of Mr Leonidas, which was sworn on 16 January 2002, exhibited the pleadings below, the defendants' summons of 7 November 2001 already mentioned and the affidavits filed in relation thereto. These were the affidavit of Richard Hugh Catchlove sworn on 14 November 2001 in support of the defendants' summons; the affidavit of Chris Alexander sworn on 15 November 2001, also in support; and the two several affidavits of Charles Leonidas, sworn respectively on 15 and 19 November 2001, in opposition to the defendants' summons.

It is from these last mentioned affidavits, and in particular those filed in support of the defendants' summons, that I now take the facts that follow. I emphasise that these are the facts as put before the judge on the defendants' application by summons; they may or may not be the facts as determined at trial, if this matter proceeds to trial.

On 28 August 1997 the plaintiff leased both a shop and an upstairs office to the first defendant for three years, in effect from 1 September 1997, with an option for a further term of three years. There were two leases, one for the shop and one for the upstairs office, and the tenant's obligations under the lease were guaranteed by the second and third defendants (who are husband and wife). I shall refer to both tenant and guarantors together as "the defendants" and to the tenant separately as simply "the defendant".

On 19 May 2000 the defendant purported to give notice in writing to exercise its options to renew both leases, the new terms to begin on 1 September 2000. In the affidavits, the defendants draw attention to the fact that in the schedule to the lease of the shop the last date specified for exercise of the option by the tenant was given as "1 July 2001" (in truth it is stated as 1 June 2001) while in the schedule to the other lease, that date was given as 21 May 2001. Not only were those dates different; they were wrong. Nevertheless, as the defendant claimed to have given notice on 19 May 2000, the notice, if given, was in time according to the terms of the leases, being "in writing not more than 6 months nor less than 3 months before the end of the term".

It appears, however, that dispute had earlier arisen between the plaintiff and the defendant over both the provision of air-conditioning and the metering of electricity, in consequence of which the defendant had commenced a proceeding against the plaintiff in the Victorian Civil and Administrative Tribunal, making complaint accordingly. (The points of claim as filed were dated in March 2000.) That proceeding was settled on 29 November 2000. The plaintiff's solicitors had shortly before sent a letter dated 23 November 2000 denying receipt of the defendant's notice of 19 May 2000 (to exercise the option) and asserting that the defendant was now on a monthly tenancy; and perhaps because of this, Clause 1 of the terms of settlement was that "the [plaintiff] agrees to renew the two leases" and "to take all reasonable steps to effect the same as soon as practicable". Consent orders were also agreed for the purpose of resolving the dispute between the parties otherwise.

Meanwhile, the initial three-year term of the two leases had expired on 31 August 2000. Neither lease made provision for the payment of GST on rental and another dispute arose between the plaintiff and the defendant, this time over the need or not for the plaintiff to provide the defendant with its ABN and to render regular tax invoices for the rent; and on 18 December 2000, in consequence of the dispute over the GST, the plaintiff's solicitors served on the defendants and their solicitors separate notices of default, threatening to terminate the defendant's tenancies for non-payment of rent. The letter to the defendants' solicitors concluded:

"Unless the tenant remedies the default, we advise that we shall not be in a position to entertain entering further leases with your client."

Quite apart from the dispute over the GST, the defendant was becoming disenchanted over the plaintiff's lack of action after the tribunal proceeding was settled, first in allegedly failing to take steps to instal air-conditioning in the upstairs office and, importantly for present purposes, in its failing to take any steps (so far as the defendant could see) to renew the two leases. (This is now characterised in the affidavits as "the plaintiff's recalcitrance to act to renew the two leases".) On 17 January 2001, the defendant, regarding its continuing occupation of the premises as still "uncertain", gave notice in writing to the plaintiff's solicitors of its intention to vacate the shop from 21 February 2001, though desiring still to take a new lease for the upstairs office.

On 23 January, the defendant's solicitors received, by facsimile, a letter from new solicitors acting for the plaintiff, advising that they would shortly be forwarding "the Landlord's Disclosure Statement and the Retail Tenancies booklet for both properties in due course". On 8 February, the defendant's solicitors replied by reiterating that the defendant would be vacating the ground floor premises by 21 February 2001, in accordance with its earlier letter of 17 January. Under cover of a letter dated 12 February 2001, the defendant then received from the plaintiff's new solicitors disclosure statements and two renewed leases, in draft form, for the shop and the upstairs office respectively. Although acknowledging receipt of the letter of 8 February, the letter of 12 February stated:

"You have exercised the option for both premises. Further, you executed Terms of Settlement whereby you would enter into the leases."

The solicitors requested the defendant to execute the disclosure statements and, "after 7 days ... [to] execute the enclosed leases and return the same to us". Vacating the premises, it was declared, would be "considered to be a breach of the lease".

In describing this event in their affidavits, the defendants add here their claim that, despite a statutory injunction that the landlord provide such a statement before any new lease was entered into, no disclosure statement was given by the plaintiff to the defendant in respect of either lease "at any time before February 2001 or thereabouts". Nor, the defendants claim in their affidavits, did the plaintiff notify the defendant, whether in writing or otherwise, "of the date after which the option to renew either of the Leases was no longer exercisable", despite another statutory injunction that such notice be given. Both these defaults are pleaded by the defendants in their Defence in the County Court proceeding, the first by reference to s.17 of the Retail Tenancies Reform Act 1998 ("the 1998 Act") and the second by reference to s.14(3) of the Retail Tenancies Act 1986 ("the 1986 Act"). As will be seen, it is by reference to such defaults on the part of the plaintiff that the defendants now seek to justify the notice to vacate of 17 January 2001 as being a notice of termination authorised, it is said, by s.17(2)(c) of the 1998 Act and s.14(9) of the 1986 Act, or its successor s.18(7) of the 1998 Act.

To conclude the narrative, on 14 February 2001 the defendant replied to the letter of 12 February by restating its intention to vacate the shop on 21 February 2001. However, the defendant objected to a proposal by the plaintiff to increase the rental of the upstairs office and required that the new rental be determined by an independent valuer. In consequence, a valuer was appointed and on 16 May 2001 the current market rental for the upstairs office was duly determined. The plaintiff insisted that the defendant could not take a new lease of the upstairs office without taking a new lease for the shop as well, but despite this insistence by the plaintiff, the defendant had, it appears, vacated the shop on 21 February 2001 (as foreshadowed on 17 January) and it is with the lease of those premises that we are now concerned.

On 12 July 2001 the plaintiff instituted a proceeding in the Magistrates' Court against all three defendants, claiming that the first defendant owed rent for the shop for the period from 21 February until 22 June 2001. On or about 3 August 2001, the plaintiff's solicitors lodged a caveat over the certificate of title to the matrimonial home of the second and third defendants. On 19 September 2001, the plaintiff commenced a proceeding in the County Court against the defendants, seeking damages for the loss and damage allegedly suffered by the plaintiff in consequence of the repudiation of the lease of the shop. It was alleged in the pleading that the defendant had failed to pay the newly assessed rental and abandoned the premises and that by reason of such repudiation of the lease the plaintiff had become entitled to, and did in fact, forfeit the renewed lease by re-entry on 15 June 2001. On 30 October the defendants filed a defence in the County Court proceeding and on 7 November 2001 they filed the summons earlier mentioned, seeking an order that the plaintiff's proceeding in the County Court be dismissed or alternatively that its pleading be struck out.

The defendant's summons came on for hearing before a judge on 16 November 2001 and argument was heard on that day and on 19 November. A number of arguments were put forward in support of the summons. The defendants contended, inter alia, that the County Court had no jurisdiction because the plaintiff, according to its prayer for relief, was claiming damages without limit. Apparently, when that objection was taken, counsel for the plaintiff promptly stood up and sought an amendment to specify that the claim was for damages not going beyond the jurisdiction of the court and the judge, without hearing argument, granted the application forthwith. No mention of the amendment, or leave to amend, is made in the judge's order and, accordingly, the plaintiff would have us correct the order to include the making of the amendment. The defendants claim that, although the application to amend was granted, it should not have been granted, given the surrounding circumstances.

Those circumstances were, in essence, the defendants' next point, which was that the plaintiff's proceeding in the County Court was an abuse of process. The defendants contended before the judge that the plaintiff could not proceed in two courts at once and that, as the plaintiff was already proceeding in the Magistrates' Court, the proceeding commenced subsequently in the County Court should be dismissed as an abuse. (Although the commencement of a second proceeding to like effect as an earlier one commonly results in a stay only, the defendants contend, it seems, that in a case like the present the second proceeding should be dismissed, not merely stayed.) The plaintiff's response before the judge was to describe in detail the amendment which it was seeking, or was about to seek, in the Magistrates' Court to make it plain that the relief sought there had nothing to do with the relief sought in the County Court, and no doubt the plaintiff relied too upon the asseveration by Mr Leonidas in his affidavit of 19 November 2001 that he had instructions to apply to the Magistrates' Court for an order transferring the proceeding into the County Court. But the defendants continued to press the point that, when commenced, the proceeding in the County Court had been an abuse of process and that it should be dismissed accordingly. That the claim in the County Court had been brought without limit on the damages sought merely strengthened the defendants' hand, or so it was said. In deciding the matter, however, his Honour did not refer to the argument of abuse of process.

As already stated, in its Defence the defendants relied upon the written notice given by the tenant on 17 January 2001 to vacate the shop premises. They claimed that this was notice of termination with effect from 21 February 2001, which could be justified either under s.17(2)(c) of the 1998 Act or under s.14(9) of the 1986 Act. The first of these arguments was not put to the judge, we were told, but the second, based on s.14 of the 1986 Act, plainly was, and his Honour found it compelling. It was on this ground, it seems, that the judge dismissed the proceeding.

His Honour gave oral reasons for judgment when announcing his decision on 19 November and later, at the request of the parties, supplied his handwritten notes. These notes have since been typed up and from them it appears that the judge reasoned as follows. It was, it would seem, common ground that the shop constituted "retail premises" within the meaning of the relevant legislation, for his Honour drew attention, first, to the absence of the notice required by s.14(3) of the 1986 Act or by its successor (that is, s.18(3) of the 1998 Act). His Honour then canvassed the steps taken to renew the lease, commencing with the defendant's notice in writing on 19 May 2000 and remarking that "there is no evidence of any response from the Plaintiff until the Defendant's accountant receives a letter from the Plaintiff's then solicitor dated 23 November 2000 denying to date that any request to renew was received by the Plaintiff or its managing agent." As nothing was done to renew the lease until 13 February 2001, when the draft lease was received by the defendant from the plaintiff's solicitors, the judge considered that "on the current state of the evidence, the lease expired on or about 31 August 2000". In his Honour's view, it seems, the lease had simply not been renewed by 17 January 2001. His Honour then concluded:

"The Defendant continued in occupation and it seems to me that section 18(4) of the 1998 Act continued the expired lease on the same terms and conditions. In the absence of any notice pursuant to s.14(3) of the 1986 Act or s.18 (4) of the 1998 Act it seems to me that the Defendant was entitled to terminate the lease when it did so. It follows that the Plaintiff has no cause of action against the Defendant arising out of the lease."

As already mentioned, the judge's order was that the proceeding be dismissed, not that the pleading be struck out. However, the parties before us were in agreement that, despite the last sentence of his Honour's reasons for judgment, the decision should be taken to be that, in his Honour's opinion, the defendants had an unanswerable defence on the merits. This bespeaks an order under Rule 23.03 - summary judgment for the defendant - and the parties were agreed that we should treat his Honour's decision as such. On this appeal the plaintiff contends that by so deciding his Honour fell into error. The defendants contend otherwise and argue that, even if there was error in what the judge said, the decision can be maintained on other grounds and to that effect they filed notice of contention. Indeed the other day they sought to amend that notice of contention to add yet a further argument, but I deal with that in due course.

As has been seen, his Honour's reasons for judgment turn on two points: first, that the lease had not been renewed and, secondly, that the landlord's failure to give notice under s.14(3) of the 1986 Act (or s.18(3) of its successor) extended the term of the lease and justified the notice given on 17 January 2001 by the tenant, as a notice of termination. The plaintiff, as appellant, now challenges the decision on both points, contending, first, that it was not open to his Honour to conclude that the lease was not renewed.

In substance, says the plaintiff, the renewal was admitted on the pleadings. In paragraph 6 of the statement of claim, the plaintiff alleges that it exercised the option to renew by notice dated 19 May 2000 and that is admitted in paragraph 6 of the defence. In paragraph 7 of the defence, the defendants admit, inter alia, that the renewed lease "started on the day after the lease ended which was on or around 1st September 2000". No reference was made by the judge in his reasons for judgment to these admissions and yet, as the plaintiff contends on this appeal, the admissions appear to establish the renewal so that it no longer is in issue. By reason of the admitted exercise of the option there was an agreement for a new lease commencing, it would seem, on and from 1 September 2000. His Honour's view therefore that the lease was not renewed was, with respect, not open to him on the pleadings as they stood. The defendants made no application to amend.

The second point was over the failure of the landlord, the plaintiff, to give the notice required by s.14(3) of the 1986 Act, or by its successor, s.18(3) of the 1998 Act. Both require that if a retail premises lease contains an option exercisable by the tenant to renew for a further term "the landlord must notify the tenant in writing of the date after which the option is no longer exercisable at least 3 months before that date" - and it is clear that no such notice was given in this case. The difficulty is what follows from that.

On the assumption that the 1986 Act governs, the consequence of a landlord's failure to give notice under sub-s.(3) is dealt with first in sub-s.(4). That reads:

"(4) If a landlord fails to notify a tenant as required by sub-section (3), the retail premises lease is to be taken to provide that the date after which the option is no longer exercisable is the day that is 3 months after the landlord gives the tenant the notice required by that sub-section and, if that date is later than the date of the expiry of the term of the lease, the lease continues, subject to sub-section (9), until that date."

And, according to sub-s.(8), the lease continues on the same terms and conditions as before.

To my mind, sub-s.(4) does no more than provide for the continuation of the lease for a time with the result, on the face of it, that the lease is then extended beyond the date expressly fixed in the lease for the expiry of the term. That, of course, is the defendants' contention, but the purpose of the provision is clear enough: it is to extend the time during which the option may be exercised. In this case, where it is admitted on the pleadings that notice to exercise the option was given on 19 May 2000 and thus more than three months before the expiry of the term as fixed by the lease itself, I cannot see what consequence of any relevance attaches to s.14(4). Once the lease was renewed, within the time fixed by the lease and with effect on and from 1 September 2000, any force otherwise attaching to the old lease by virtue of s.14(4) must surely be spent.

It is altogether unnecessary in this case to decide the consequence if the purported notice to exercise the option had been for some reason of no effect: that question was considered in Seacrest Pty Ltd v. Apriaden Pty Ltd[1]. Nor is it necessary to consider the consequence if the tenant purports to exercise the option during the period of statutory extension provided by s.14(4); for again, that is not this case. In this case notice to exercise the option was given, as admitted on the pleadings, on 19 May 2000 and thus before the commencement of any statutory extension of the term of the lease under s.14(4). In Seacrest[2], there are obiter dicta from two judges indicating that in such a case s.14(4) must accommodate the obvious result, which is that a new lease comes into existence upon the expiry of the old lease, without regard to any statutory extension of the term which might otherwise be effected by s.14(4) for want of the notice required by sub-s.(3). That flowed, it was suggested, from the purpose of sub-s.(4) and, with respect, I agree. Whatever force might otherwise be given to sub-s.(4) it was spent in this case upon the renewal's becoming effective on and from 1 September by reason of the timely exercise of the option for renewal as provided by the terms of the lease itself.

Of course in this case reliance was being placed not so much directly upon s.14(4) as upon s.14(9), and the latter, it was said, was still effective to justify the defendant's notice of 17 January 2001 as a notice of termination. So far as relevant sub-s.(9) reads:

"(9) If a landlord fails to notify a tenant as required by sub-section (3) ... , the tenant may, by written notice given to the landlord, determine the lease as from any day that is - (a) not earlier than the expiry of the term of the lease; and (b) not later than the day to which the lease would otherwise have continued by virtue of sub-section (4) ...".

On the face of it this does give the tenant the right to determine the lease, apparently at will, as from any day which is "not earlier than the expiry of the term of the lease" and "not later than the date to which the lease would otherwise have continued by virtue of sub-s.(4)". This, say the defendants, is what happened on 17 January 2001; notice of termination was given not earlier than the expiry of the (old) lease and not later than the date to which that lease would otherwise have continued (that is, but for the termination) by virtue of sub-s.(4). But that supposes that sub-s.(4) had some work to do, and, for the reasons I have given, it had none in this case. On 31 August 2000 the term of the (old) lease came to its appointed end and the new lease began to run the next day (as admitted in the pleadings). There was no room there for any continuation of the previous term by virtue of sub-s.(4) and so no extended period within which notice of termination might be given under sub-s.(9). The one follows from the other. Just as sub-s.(4) had no room to operate, neither did sub-s.(9). To put it another way, the term of the (old) lease had already come to an end before 17 January 2001 notwithstanding what otherwise might have been the effect of s.14(4); and so by 17 January, it was too late for the tenant to purport to exercise any power to terminate conferred by s.14(9).

This answers the reasons given by the judge for dismissing the plaintiff's proceeding on the summons of the defendants. His Honour considered that by reason of the two points I have dealt with the defendants were entitled to judgment under Rule 23.03 and in my opinion the plaintiff has established that on both counts his Honour fell into error. So far from having an unanswerable defence, I think that the defendant was not entitled to terminate the lease under s.14(9) of the 1986 Act - or indeed, if it matters, under s.18(7) of the 1998 Act which, so far as relevant, is in like terms. According to the decision of this Court in Antonio Giuseppina Ensabella & Sons Pty Ltd v. Players on Downunder[3], the 1998 Act does not have any application because of s.4; it would apply to the new lease created on and from 1 September 2000, but not to the old lease containing the option to renew, because that lease was entered into before 28 April 1998, the date on which s.4 of the 1998 Act commenced.

That last conclusion is enough to dispose of another issue that was raised in the Defence and argued on this appeal (although not, we were told, before his Honour). That issue turned on the failure of the landlord to give to the tenant the disclosure statement required by s.17 of the 1998 Act. This is one of the points raised in the notice of contention and it is convenient to dispatch it now. According to s.17(1)(a) of the 1998 Act, if "a tenant has an option under a lease for a further term" then the landlord is required to give to the tenant "at least 7 days before the end of the current term of the retail premises lease", a "disclosure statement" (which is a statement of relevant matters in a specified form). No such statement was given here in relation to the renewal of the lease, until on or about 12 February 2001 when the draft leases were forwarded for execution. Where there is default by a landlord under s.17(1), under s.17(2)(c) -

"... the tenant may give the landlord a written notice of termination at any time before the end of 7 days after the landlord gives the tenant a copy of the disclosure statement."

The answer, of course, lies again in the decision in Ensabella. As explained there, s.4 ensures that the 1998 Act applies only to a retail premises lease entered into after 28 April 1998 (the date on which s.4 commenced) and the lease containing the option was in this case entered into well before that date. Section 4 ensures also that the 1998 Act shall apply to a lease entered into under an option provided under a retail premises lease that was entered into before 28 April 1998, but that means only that s.17 will apply to the new lease which came about, on the pleadings, with effect on and from 1 September 2000. If that new lease itself contains an option for renewal, s.17 may well be attracted so as to require a disclosure statement at least seven days before the end of the term fixed by the new lease, but that of course lies well in the future and does not assist the argument of the defendants, which was that s.17 operated to require a disclosure statement before the end of the term of the old lease, not the new.

In order to support the argument, counsel for the defendants moved to paragraph (b) of s.17(1) and argued strenuously that the facts, as culled from the affidavits before his Honour, disclosed that the new lease, which came about on and from 1 September 2000, had been the product not (or not only) of the purported exercise of option in May 2000, but more importantly of the terms of settlement, which constituted, he said, a new agreement between the parties for a new lease, albeit a lease on the terms and conditions of the old. In this regard he relied upon the uncertainties mentioned by the judge in his reasons for judgment, including, for instance, the claim made by the plaintiff in the solicitors' letter of 23 November 2000 that the notice of 19 May 2000 to exercise the option had not been received by the landlord. And a new agreement for lease, made in November 2000, must have attracted, counsel said, the provisions of the 1998 Act, including s.17(1)(b).

I make two comments on that argument. First, it depends upon a detailed examination and analysis of the facts which is usually inappropriate on a summons seeking relief under Rule 23.03, especially when the affidavits were not drawn with this in mind. Secondly, and more importantly, it is an argument which, in my opinion, is inconsistent with the pleadings. Defendants' counsel sought to reconcile the argument now being mounted with the pleading that there had been an exercise of the option in May 2000 and in the result a new lease with effect on and from 1 September 2000, but in my opinion that attempt failed. The pleading of the defendants seems to me clear enough: there was a lease brought about by the exercise of the option, and accordingly there is no reason to distinguish the decision in Ensabella. To such a lease, containing such an option, s.17 of the 1998 Act does not apply and accordingly there was no default under that section.

Nothing daunted, defendants' counsel sought then to amend the notice of contention by relying upon s.8 of the 1998 Act which provides for a disclosure statement, in like form, "at least 7 days before a prospective tenant of retail premises enters into a retail premises lease". He contended that if s.17 did not apply for the reason just given, then s.8 did, because the 1998 Act plainly operated in respect of the new lease brought about by the exercise of the option. Section 4 expressly provides that the 1998 Act shall apply to a retail premises lease entered into after the commencement of s.4, including one entered into under an option provided under a lease entered into before that commencement - and that, he submitted, was an apt description of the lease which came into force on and from 1 September 2000. And as with s.17, s.8(2) provides that, in default of the giving of a disclosure statement within time, the tenant has the right to give written notice of termination before the end of seven days after the giving of the required statement.

More than one answer can be made to this submission. First, I am by no means clear that we should give leave now to the defendants to add a new ground to the notice of contention. On 8 February, when the application for leave came before us, we gave directions in order to expedite the hearing of this appeal and, inter alia, directed that any notice of contention be filed by 4 p.m. on 12 February 2002. The amendment now proposed was proposed very late in the piece (on 28 February) and after the plaintiff had filed its outline of submissions. The plaintiff has had little, if any, time to consider the new point. Moreover, on an application for summary judgment under Rule 23.03, it should be incumbent upon the applicant to put all his arguments before the judge, and not simply some of them. Perhaps, and I do not decide it, if the new point was so plain as to be beyond argument and was such as to resolve the matter finally in favour of the defendants, leave to amend might be given and the point entertained, if only to save further needless expense; but the point now raised, by reference to s.8, is in my opinion far from incontestable.

It is curious, at least, that s.8 exists as well as s.17, if s.8 is intended to deal not only with a lease being entered into for the first time, but also the renewal of a lease in the exercise of an option contained within the first. Plaintiff's counsel was quick to point out that s.8 refers only to a "prospective tenant", while s.17 refers to "the tenant", which is at least consistent with s.17 applying to disclosure upon renewal and s.8 to disclosure otherwise than upon renewal. There is support for this possibility in that s.8 of the 1998 Act had a precursor in s.7 of the 1986 Act which, as s.4 of the latter made plain, did not apply to a lease entered into under an option granted before the commencement of the 1986 Act. In the 1998 Act, the operation of the statute was extended expressly to include a lease entered into under an option granted before 28 April 1998, and at the same time s.17 was introduced. Perhaps that too suggests that s.17 applies on renewal and s.8 applies otherwise than on renewal. I express no opinion on the point, for we need not decide it: I mention it only to indicate that the point now sought to be raised by reference to s.8 of the 1998 Act is not beyond argument and in all the circumstances I would not permit the defendants to amend the notice of contention to rely upon it.

That is not to say, however, that the defendants should not be permitted to raise on this appeal their argument about abuse of process and the jurisdiction of the court below; for both points were raised below and, although neither is mentioned in the reasons for judgment, it is proper to allow the defendants to seek to support the decision reached below on those alternative arguments which were put though not ruled upon. Neither, however, appeals to me.

The argument about abuse of process rests upon the similarity between the proceeding commenced in the Magistrates' Court and the proceeding later commenced in the County Court. It seems to me, if I may say so, that the difference between them is more marked than the similarity. In the Magistrates' Court, the plaintiff was claiming for rent under the lease while it lasted, being arrears of rent to 22 June 2001. In the County Court the plaintiff was seeking damages for repudiation, and for loss and damage suffered in consequence of the termination of the lease based upon re-entry on 15 June 2001. There is of course, as counsel said, some overlap in respect of the week from 15 to 22 June, but that can be explained. We were told that rent was payable in advance and hence the claim for arrears of rent to 22 June. If rent was to be recovered to 22 June, that might of course affect the loss and damage for which damages could be sought as from 15 June, but that does not make the two proceedings so similar as to render the second an abuse of process.

Defendants' counsel did point to the similarity in wording in one aspect of the particulars of demand in the Magistrates' Court and the statement of claim in the County Court. He referred to the claim appearing in the former for "reinstatement costs incurred to make good premises", which, he argued, could be seen also in the County Court pleading: see para.(d) of the particulars given under paragraph 16. In neither case, however, is there any pleading of fact to support the claim for the cost of making good the premises and in both cases I think it no more than incidental to the main claim, if indeed it could be established under either pleading. Moreover, as plaintiff's counsel submitted, the concern of the defendants seems not so much with the similarity of the claim as with the possibility that the proceeding in the lower court, if prosecuted first, might give rise to an issue estoppel affecting the prosecution of the County Court proceeding. Such a concern may or may not be valid: anyway it does not mean that the later proceeding is brought in abuse of process. I would add that, as the matter was argued before us, any issue estoppel would seem to me, as at present advised, more likely to arise out of the defence of the tenant than out of the claim of the landlord.

To stay a proceeding for abuse, or even to dismiss it, is surely an exercise of the court's discretion to control its own proceedings. For example, it was so treated, I think, in Walton v. Gardiner[4]. I am not satisfied that, in the circumstances of the present case, the proceeding in the County Court should have been stayed (or dismissed as claimed) on the ground that it was a replication in part of the proceeding already commenced in the Magistrates' Court. The causes of action were different and that, I think, is very significant. Nor is the problem for the plaintiff exacerbated by the fact that in the County Court its pleading sought damages without limit: the judge's speedy accession to the application to amend can be justified under the County Court Act 1958 s.39 and, in the end, that mistake on the plaintiff's part was of no consequence. More significant, perhaps, was the plaintiff's stated intention to amend the claim in the lower court to eliminate any "overlap" and its instructions to transfer that proceeding into the County Court. Defendants' counsel referred us to Australian Consolidated Industries Ltd v. Scholle Industries Pty. Ltd.[5] and to Australian Commercial Research & Development Ltd. v. ANZ McCaughan Merchant Bank Ltd.[6], but neither was of any real assistance.

The notice of contention raised four points, three of which I have now dealt with: abuse of process, jurisdiction of the County Court and s.17(1) of the 1998 Act. There remains a fourth, however, which was this:

"The Appellant (Plaintiff) landlord had plainly repudiated the lease by 17 January 2001 and the First Respondent (First Defendant) tenant accepted such repudiation by letter of that date."

Again, this contention depends upon the facts before the judge in the County Court. Counsel frankly conceded before us that the question of repudiation by the plaintiff had not yet been pleaded, nor was it argued before the judge below. It seems to me that on a summons under Rule 23.03, the parameters at least of fact should ordinarily be regarded as fixed by the pleadings where pleadings have been exchanged, and in this case the pleadings did not assert repudiation by the landlord. As matters stand, I am minded to deny the defendants the opportunity of raising this argument for the first time on appeal, particularly as no application was made below to amend the pleadings. Anyway, as argued before us, it is plainly a point that depends upon a nice analysis of the facts and, again, an analysis which, as I apprehend it, is somewhat inconsistent with the pleading that the lease was renewed and did take effect on and from 1 September 2001; for the alleged repudiation, as I followed counsel, lay in the shilly-shallying of the plaintiff about renewing the lease. The question of repudiation, if it is to be explored at all, seems to me inappropriately raised on this particular application for summary judgment under Rule 23.03. To put it shortly, even if properly raised by the notice of contention, it is not in my opinion a point by reference to which the plaintiff ought to have succeeded below under Rule 23.03.

For these reasons, it is my opinion that his Honour erred in the reasons he gave for acceding to the defendants' application that the plaintiff's proceeding be dismissed. As the parties agreed, dismissal was achieved on this occasion under Rule 23.03 and in my opinion it was not open to the judge to conclude that the defendants had established an entitlement under that rule. I think that his Honour erred on both points dealt with by him in his reasons for judgment: and moreover, for the reasons I have given, none of the grounds taken in the notice of contention was such as to justify the decision that the defendants should have judgment summarily (or, as framed below, that the plaintiff's proceeding should be summarily dismissed). Such a remedy should be granted only in a clear case.

Accordingly, I would allow the appeal, set aside the orders made below and substitute in lieu an order dismissing the defendants' application, save for making an order as sought by the plaintiff to amend its prayer for relief to limit damages to those within the jurisdiction. If as a result the matter must proceed to trial, I emphasise again that the facts on which I have proceeded are simply the facts taken from the affidavits - and, in the main, the affidavits of the defendants - which were before the judge; and of course we cannot tell how far, if at all, those will be the facts

About half an hour ago, we delivered judgment in this matter, at the conclusion of which an indication was given of the orders to be made, allowing the appeal, setting aside the orders made below and substituting an order dismissing the defendants' application by summons, save for an order on that summons to amend the prayer for relief to limit the damages claimed to the jurisdiction of the County Court.

After judgment was delivered we heard counsel on the question of costs. There was no difficulty over the costs of this appeal. No question has been raised in that regard and the appeal will be allowed with costs.

However, a question has been debated, and at length, about the order that we should make in substitution for the orders made below in relation to costs. His Honour on 19 November 2001 ordered that the proceeding be dismissed. We have proposed substituting an order that the defendants' summons be dismissed. Below, the judge, after ordering that the proceeding be dismissed, ordered the plaintiff to pay the defendants' costs of the proceeding to be taxed in default of agreement, but added that that should include the costs of the application, which he fixed at $2,000.

On the face of it, should the defendants' summons be dismissed, it should be dismissed with costs if costs are to follow the event in the ordinary way. That is the point at which the parties have stuck. While Mr. Parncutt sought what we may call the usual order, Mr Sandbach has urged that although on this appeal matters were limited in argument on the basis that the judge acted under Rule 23.03, his summons,

as is plain on its face, went beyond an application for summary judgment under that Rule and extended to a claim that the pleading of the plaintiff was defective. The judge of course saw no need to deal with that aspect of the summons because he acceded to the claim under Rule 23.03 and dismissed the whole proceeding. Mr Sandbach emphasises that his client would wish to persist in the attack on the plaintiff's pleading and the question then arose whether we should now, in substitution for the order made below, dismiss the defendants' summons or make a more limited order allowing the defendants' summons still to proceed on the pleading points.

That difficulty was shortly resolved by Mr Parncutt indicating that his client sought leave to amend its pleading, and two consequences follow. First, we are relieved from the need to make the order mentioned at the end of our reasons for judgment - that is, that the plaintiff have leave to amend its prayer for relief to confine the claim to damages within the limited jurisdiction of the County Court. Secondly, Mr Sandbach's client no longer needs to consider pursuing the summons of 7 November because when Mr Parncutt's client re-pleads generally, Mr Sandbach's clients will doubtless have the opportunity, if so minded, to take out another summons to make such points in relation to the pleading as they see fit. Accordingly, we can simply dismiss the defendants' summons as first proposed.

In the circumstances, however, we should make clear that, while we are dismissing the summons of 7 November, nothing that has been said this morning in the reasons for judgment should be taken as ruling upon the pleading points as such. We do not know whether the pleading points which lay behind the summons of 7 November will be live issues if and when there is a re-pleading, and if and when a further summons is taken out by the defendants under Rule 23.02. We simply say that we do not pretend to have dealt with the pleading points this morning.

There remains, however, the question of what order should be made, by way of substitution, in relation to the costs of the defendants' summons of 7 November. Mr Sandbach urges us not to order that his client pay the costs of that summons, although it will stand dismissed. He relies upon what he says were the obvious deficiencies in the plaintiff's pleading which were at least in part a justification for the summons. For his part, Mr. Parncutt says that by seeking leave to amend he is not conceding that all the points, which the defendants had in mind, had to be addressed, although obviously he sees the need to amend in some respects. For example, he concedes the need expressly to limit the claim to damages within the jurisdiction of the County Court.

Having considered the competing submissions, we have reached this conclusion. While seeing some force in the arguments put by Mr Sandbach, we think that the bulk of the costs should none the less be borne by his client. In order to avoid cross orders in relation to costs over relatively small sums, we think that the justice of the case will be met if, in conjunction with the substituted order dismissing the summons of 7 November, we order that the unsuccessful defendants do pay the costs of that application, fixed at $1,000.

Accordingly, the Court now orders as follows:

1. That the appeal be allowed with costs (including the costs of the notice of appeal filed on 3 December 2001).

2. That the orders made in the County Court on 19 November 2001 be set aside and that in lieu it be ordered as follows:

(1) The plaintiff have leave to amend its statement of claim by 4 p.m. on 20 March 2002.

(2) Save as aforesaid, the application by the defendants by summons filed on 7 November 2001 be dismissed.

(3) That the defendants do pay the plaintiff's costs of the application which are fixed at $1,000.

On the application of respondents' counsel, the Court grants the respondents a certificate under the Appeal Costs Act in respect of their costs of the appeal.

[3] [2000] VSCA 73; unreported 2 May 2000.

[4] (1993) 177 C.L.R. 378 and 398-9 (to which Batt, J.A. referred me).

At a glance

Court

Decision date

Before

Source

Judgment (75 paragraphs)

Parties