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[2009] VSC 666
defendant. The application by Figgins to set aside the statutory demand was dismissed and the application for an adjournment was refused; costs awarded to Bevendale including reserved costs (see [46]).
Figgins applied to set aside a statutory demand served by Bevendale for unpaid rent, arguing an assignment to a third party (Asco) and the Retail Leases Act discharged its liability. The Court found Figgins did not show a genuine dispute: Asco had withdrawn, Figgins continued to occupy and pay rent, there was no evidence of the disclosure required by the Retail Leases Act to trigger statutory protection, and the lease expressly preserved Figgins' liability unless s 62 applied. The application was dismissed and the adjournment to await VCAT was refused (see [31]-[46]).
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Figgins Holdings Pty Ltd (the tenant) leased Shop 273 at Epping Plaza from Bevendale Pty Ltd (the landlord) under a lease dated 11 January 2008 (six-year term commencing 21 June 2007) ([9]). In mid-January 2009 Figgins identified Asco International Pty Ltd as a proposed assignee and a document headed "Master Property Lease assignment deed" was signed between Figgins and Asco ([11]). Figgins says it notified Bevendale and provided the proposed assignee with a disclosure statement; Bevendale counters that required disclosure and information were not properly provided and that the assignee withdrew its interest on 2 March 2009 ([12], [19]). Figgins continued to occupy and pay rent through April 2009 and notified closure on 5 June 2009; keys were returned on 12 June 2009 ([9], [20], [23]).
3 cited instruments linked from this judgment.
Bevendale served a statutory demand dated 10 June 2009 (served 18 June) for $18,803.07 for unpaid rent and outgoings ([1], [22]). Figgins filed an originating process under s 459G of the Corporations Act on 6 July 2009 seeking to set aside the demand and, later, sought an adjournment of this proceeding until after the retail-tenancy dispute could be considered by VCAT ([1], [6], [5], [7]). The Court (Gardiner AsJ) heard the matter on 16 October 2009 and delivered judgment on 4 November 2009.
The pivotal factual contentions were: (a) whether an assignment to Asco became effective by operation of s 61(6) of the Retail Leases Act (Vic) and thus discharged Figgins from rent obligations; (b) whether s 62 of the Retail Leases Act absolved Figgins from liability as an assignor; and (c) whether Figgins had a genuine dispute about the debt sufficient to set aside the statutory demand or to justify an adjournment pending VCAT ([29]-[31], [33], [38]).
Three interrelated reasons drove the decision.
Genuine dispute standard not satisfied. The applicant under s 459G must establish a "genuine dispute", meaning a plausible contention requiring investigation with sufficient objective existence and prima facie plausibility, not mere assertion or bluster (the court applied established authorities and restated the standard at [24]-[28]). Figgins bore the onus of demonstrating such a dispute and did not do so ([44]).
No evidence of statutory preconditions for s 62 protection. Section 62(1) of the Retail Leases Act provides protection for assignors only where the tenant gives the landlord and proposed assignee a disclosure statement in accordance with the relevant subsection of s 61 (read, after amendment, as s 61(5A)) and the disclosure statement is not false, misleading or materially incomplete ([34]-[39]). The Court found no persuasive evidence Figgins provided the required disclosure under s 61(5A), nor that the assignment related to the lease of premises that would continue to be used for an ongoing business, the evidence pointed to re-badging rather than a takeover of an ongoing business ([38]-[39]).
Lease clause preserved lessee liability. Clause 8.13 of the lease expressly preserved the lessee's liability for rental covenants 'subject to section 62(1) of the Act' ([40]). Because Figgins did not establish that s 62(1) applied, clause 8.13 operated to keep Figgins liable notwithstanding any assignment that may have been argued to be effective ([41]-[43]).
The Court also made a statutory-interpretation point. The reference in s 62(1)(a) to s 61(4) should be read as a reference to s 61(5A) by operation of s 17(1A) of the Interpretation of Legislation Act 1984 (Vic), because the amending Act simply renumbered the subsections and the content is identical ([35]-[37]).
Because Figgins failed to show a genuine dispute as to the debt, the application under s 459G was dismissed; the adjournment was refused for similar reasons because even a favourable VCAT determination on the assignment would not negate Figgins' liability under the lease absent compliance with s 62(1) ([45]).
Before this decision, the governing principles for a s 459G application were established in authorities cited by the Court, notably Equity in Eyota Pty Ltd v Hanare Pty Ltd (1994) 12 ACSR 785 and the Court of Appeal decision TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70. Those authorities set out that a genuine dispute requires something more than assertion; it must have prima facie plausibility and factual particularity ([24]-[28]).
This judgment applied those established principles to a fact pattern involving retail-lease assignments and the particular protection conferred by ss 61 and 62 of the Retail Leases Act. It confirms that:
The genuine-dispute threshold is applied with scrutiny to the surrounding evidence and conduct (notably the tenant's continuing payment and occupation) ([31]-[33], [44]); and
Statutory protection for assignors under s 62 is conditional and will not be inferred where the statutory disclosure requirements in s 61(5A) are not shown to have been met, even where there is contest about landlord consent ([38]-[41]).
There is no novel legal principle overturning prior law; rather the case applies existing principles to the retail-lease context and clarifies that renumbering in an amending Act does not defeat the legislative reference, by application of s 17(1A) IOLA (Interpretation of Legislation Act) ([35]-[37]).
Para [8]: "I considered that it would not be appropriate to adjourn this application... unless Figgins could establish that it had a genuine and arguable dispute..." Translation: The Court will not delay deciding the statutory-demand application just because a related dispute is before VCAT; the tenant must first show there is a real dispute worth sending to that forum.
Para [38]: "Section 62... applies only where 'a tenant gives a landlord and proposed assignee a copy of a disclosure statement in accordance with section 61(4) [61(5A)]'." Translation: The statutory protection that can free a tenant of future liability after assignment depends on a specific disclosure being given as required by the Retail Leases Act.
Para [41]: "Because it did not, its obligations are preserved." Translation: Figgins did not meet the statutory requirements, so it stayed responsible for paying rent under the lease.
Para [43]: "Figgins remains liable ... unless it can show it is entitled to rely upon section 62(1)." Translation: The lease keeps Figgins on the hook for rent unless Figgins proves the statutory safety net applies.
Para [46]: "The application is dismissed with costs..." Translation: The Court rejects Figgins' bid to set aside the demand and orders Figgins to pay costs.
This decision is directly relevant where:
A lessee served with a statutory demand claims it is discharged from liability because it purportedly assigned a retail lease, but there is dispute about whether the statutory assignment regime under the Retail Leases Act was complied with ([29]-[39]); and/or
The lessee seeks an adjournment of a s 459G application pending resolution of a related retail-tenancy dispute in VCAT, but has not shown a genuine dispute in the current court and/or has not met statutory conditions that would negate its liability under the lease ([8], [45]).
Key factual signals that weigh against a finding of a genuine dispute include the tenant's continuing payment of rent and continued occupation after the date on which it contends its liability ceased, lack of evidence of the required statutory disclosure, and evidence of withdrawal or non-progression of the proposed assignment ([9], [12], [19], [32], [39]).
This judgment itself primarily applies established authorities (Eyota, TR Administration, Powerhouse, Spencer Constructions) and interprets ss 61 and 62 of the Retail Leases Act in the statutory-demand context ([24]-[28], [30]-[41]). The judgment does not report subsequent treatment by later courts within the text. Therefore, this decision should be read as a reasoned application of the genuine-dispute test and as an example of how courts will scrutinise documentary and conduct-based evidence where an assignment and statutory protection are relied upon to discharge liability for a debt under a statutory demand. Users seeking subsequent appellate treatment or citation history should consult a citator service for post-2009 authorities citing Figgins Holdings Pty Ltd v Bevendale Pty Ltd [2009] VSC 666.
The boundary between an assignment 'in connection with' an ongoing business (triggering s 61(5A)/s 62) and a transaction amounting to a mere re-badging or fresh tenancy remains fact-specific. Here the Court found no evidence of a bona fide takeover of an ongoing business ([38]-[39]). Future cases will need to delineate more precisely what transactional elements (e.g. transfer of stock, goodwill, continuity of trade) suffice.
The decision applies the Interpretation of Legislation Act s 17(1A) to read s 62(1)(a) as referencing the renumbered s 61(5A) ([35]-[37]). There remains scope for debate in other contexts about whether a different 'contrary intention' might require a different reading, though not in this case.
The Court emphasised the tenant's conduct (continuing to pay rent and occupy premises) as relevant to credibility of the asserted discharge ([32], [44]). The precise evidential weight to be afforded to such conduct versus documentary compliance in differing factual matrices is a question for future decisions.
Procedurally, how a court should exercise its discretion to adjourn a s 459G proceeding pending another tribunal's process when the outcome there could affect but not necessarily extinguish liability, remains a discretionary, context-driven enquiry; this judgment illustrates a restrictive approach where the applicant has not demonstrated a genuine dispute and the collateral determination would not eliminate primary liability absent statutory compliance ([8], [45]).
Practitioners advising tenants faced with statutory demands should therefore focus on assembling clear documentary evidence of compliance with the Retail Leases Act disclosure requirements, evidencing continuity of business where relevant, and avoiding conduct inconsistent with claiming discharge (such as continued payment and occupation), if they wish to establish a genuine dispute in a s 459G application.
CORPORATIONS - statutory demand - claim for rent due under lease subject to Retail Leases Act 2003 (Vic) - application for adjournment of proceeding until after plaintiffs claim in respect of validity and effect of assignment of lease had been dealt with in the VCAT - Retail Leases Act 2003 (Vic) ss 61 and 62 - application for adjournment refused - proceeding dismissed.
1 By an originating process filed 6 July 2009, the Plaintiff, Figgins Holdings Pty Ltd ("Figgins") applies pursuant to section 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 10 June 2009 which was served on it by the Defendant, Bevendale Pty Ltd ("Bevendale") on 18 June 2009. The demand claims the sum of $18,803.07 which is alleged to be owing for rent and other payments pursuant to a lease dated 11 January 2008 of retail premises at Shop 273, Epping Plaza Shopping Centre, Epping, Victoria.
2 Figgins relies on three affidavits in support of its application:
3 The earlier affidavit of Mr Rewell deposes to service of the application to set aside the demand which is not in issue.
5 On 22 July 2009, Associate Justice Efthim gave directions in respect of filing and service of affidavit material in the application. Figgins was ordered to file and serve any affidavits in reply to Bevendale's affidavits by 2 September 2009 but it was not until the morning of the hearing that Mr Rewell's second affidavit was filed and served. There was no objection to its reception and leave was granted to Figgins to rely upon it.
6 Mr Rewell's affidavit of 16 October 2009 was relied upon in support of an application to adjourn the hearing of this proceeding until after an application involving the tenancy the subject of this proceeding had been considered by the Victorian Civil and Administrative Tribunal ("VCAT"). Bevendale opposed the application for an adjournment.
7 On 8 September 2009, Figgins sent an application for referral of a retail tenancy dispute to the Small Business Commissioner. Figgins' solicitors requested that the dispute be mediated pursuant to the Retail Leases Act 2003 (Vic) ("the Act") on the next available date. The segment of the application where Figgins was asked to describe the dispute stated as follows:
The Tenant entered into a Master Property Lease assignment deed in or about January 2009. The Landlord has consented or is taken to have consented to the assignment. The Landlord has made demands of the Tenant with respect to the rent and outgoings under the lease for which the Assignee is liable.
8 I considered that it would not be appropriate to adjourn this application until after the dispute had been considered by VCAT unless Figgins could establish that it had a genuine and arguable dispute to agitate in that forum. It was therefore necessary for me to hear the parties regarding the application for the adjournment and also the substantive application in order to expose the arguments in that regard.
9 Mr Figgins is the director of Figgins. He deposes that Bevendale is the landlord of Shop 273, Epping Plaza in Epping, Victoria. By a lease dated 11 January 2008, Figgins leased the shop from Bevendale for a term of six years commencing on 21 June 2007. Mr Figgins says that Figgins has paid rent to 30 April 2009 but it has made no payment of rent for May or June 2009 nor the instalment for rates.
10 Mr Figgins states that Figgins took up occupation of the shop in mid 2007 and used the premises as a retailer of women's footwear under the trade name Shoo Biz. The business was not successful and Mr Figgins concluded that the shop was no longer suitable for the Figgins business.
11 In mid-January 2009, Figgins identified an assignee to take over the lease, Asco International Pty Ltd ("Asco"). Asco and Figgins signed a document headed "Master Property Lease assignment deed".
12 Mr Figgins deposes that on 19 January 2009, Figgins advised Bevendale in writing that a substitute tenant had been obtained, provided Bevendale with contact details for Asco and sought approval for the assignment. On 21 January 2009, Figgins provided Asco with a copy of the letter to Bevendale which requested approval for the assignment and enclosed a Lessor Disclosure Statement and a current lease synopsis. On 27 January 2009, Figgins emailed Asco sending an assignment application form for completion by Asco and return to Figgins. On 2 March 2009, Bevendale provided Figgins with a facsimile from Asco indicating that Asco wished to withdraw "its interest in the proposed assignment".
13 Figgins says that the assignment with Asco is effective and that, by operation of the Act, Bevendale is taken to have consented to the assignment to Asco resulting in Figgins being discharged from its rental obligations under the lease.
14 Mr Figgins' affidavit also contends that it has an offsetting claim against Bevendale but at the hearing this was not pursued.
15 Nicola Gorry is the lease administration manager of Bevendale. She states that on 5 January 2009, Figgins wrote to Bevendale indicating that it had been decided to discontinue the Shoo Biz retail operations and that an assignment of the lease for the shop was not proposed. She states that Figgins sought an immediate surrender of the lease.
16 On 7 January 2009, Bevendale wrote back to Figgins stating that Bevendale would not agree to an early surrender of the lease but undertook to expeditiously consider any request for an assignment of it.
17 On 22 January 2009, Bevendale wrote to Figgins (which Figgins subsequently forwarded to Asco) requiring Figgins to complete an assignment application form which provided information regarding the financial resources and business experience of the proposed assignee of the lease.
18 On 30 January 2009, Asco sent Figgins a completed version of the form with a covering letter from Mr Hutchins of Asco. Asco indicated that it would re-brand the store under a different name and undertake a cosmetic makeover of the store.
19 On 2 February 2009, Ms Gorry wrote to Mr Hutchins stating that by reason of the change in trading name and a refurbishment of the premises, Bevendale would require full details of those changes. On 18 February 2009, Ms Gorry spoke with
Mr Johnston from Figgins stating that she was awaiting the information which she had requested in her facsimile of 2 February 2009 to Asco before the application to assign the lease could be approved. On 24 February 2009, Mr Hutchins telephoned Ms Gorry and stated that Asco now wished to re-brand the premises to "Famous Footwear" and Ms Gorry stated that she still required the information she had sought in her facsimile of 2 February 2009. On 2 March 2009, Mr Hutchins advised Ms Gorry that he would provide the requested information that day but instead, Ms Gorry received a facsimile from Asco which stated that Asco did not wish to proceed with the proposed assignment.
20 Nothing more occcurred until 3 months later on 5 June 2009 when Bevendale received a letter from Mr Figgins stating that Figgins had decided to close the Shoo Biz retail operation that day. He cited the reason for the closure as being lack of profitability. He also stated that Figgins would clear out the stock and surrender the keys to the premises early in the following week. His letter culminated in the comment that he "regretted the necessity for such action and trusted that a substitute tenant can be secured in the near future".
21 Ms Gorry deposes that she never received the letter of 21 January 2009 enclosing the request for assignment, the Lessor Disclosure Statement and the current lease synopsis nor has she ever seen any disclosure statement prepared by Figgins in relation to the proposed assignment. I note that the letter of 21 January is addressed to Asco and is not copied to Bevendale. She does not say whether or not she received Figgins' letter of 19 January 2009 advising that a substitute tenant had been obtained and requesting the assignment to Asco be approved (exhibit JDF-6 to Mr Figgins' affidavit).
22 Ms Gorry then details the composition of the amount claimed in the demand.
23 In her affidavit, Julie Joy Watson deposes that she is the centre manager of Epping Plaza Shopping Centre. She states that prior to 12 June 2009, Figgins was in possession of the premises and the keys were returned on that date. The remainder of her affidavit is given over to matters in regard to the offsetting claim which are no longer pursued by Figgins.
24 The principles to be applied when considering applications under section 459G of the Corporations Act have been the subject of numerous authorities. They have been recently collected and considered by the Court of Appeal in TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACSR 67. At paragraph [64], Dodds-Streeton AJ quoted from the decision of McLelland CJ in Equity in Eyota Pty Ltd v Hanare Pty Ltd (1994) 12 ACSR 785 where his Honour stated at 787:-
It is however, necessary to consider the meaning of the expression "genuine dispute" where it occurs in Section 450H (sic). In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sorts of considerations as the "serious question be tried" criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit "however equivocal, lacking in precision, inconsistent with undisputed temporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having "sufficient prime facie plausibility to merit further investigation as to [its] truth ..."
As the terms of s 459H of the Corporations Act and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something "between mere assertion and the proof that would be necessary in the court of law" may suffice. A selective focus on a part of the formulation in South Australia v Wall, divorced from its overall context, may obscure the flexilibity of judicial approach appropriate in the present context if it suggests that the company must formally or comprehensively evidence the basis of its dispute or off-setting claim. The legislation requires something less.
26 In Powerhouse Australia Pty Ltd v Viarc Pty Ltd [2006] VSC 508, Dodds-Streeton J (as she then was) observed at paragraph [48]:-
While it is not a very exacting standard, on the other hand, mere assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which "bears on whether or not the asserted dispute or off-setting claim is genuine". Indeed, that is its necessary function.
The dispute or offsetting claim should, as is been recognised, have some objective existence, and the Plaintiff bears the onus of establishing genuineness of the dispute or offsetting claim.
28 In Spencer Constructions Pty Ltd v G & M Aldridge [1997] FCA 681; (1997) 76 FCR 452 at 464, the Full Court of the Federal Court observed that for a genuine dispute to exist, it must be "bona fide and truly exist in fact", and the grounds for alleging its existence must "be real and not spurious, hypothetical or misconceived". The dispute should have sufficient objective existence and prime facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile.
29 Figgins contends that Part VII of the Act operates in these circumstances such that:
(ii) Figgins is no longer liable for the rent payable under the lease.
30 The parties agree that the lease is a retail lease under the Act. Section 61 of that Act provides relevantly:-
61. Procedure for obtaining consent to assignment
(1) A retail premises lease is taken to provide as set out in this section.
(2) A request for the landlord's consent to an assignment of the lease must be in writing and the tenant must provide the landlord with such information as the landlord reasonably requires about the financial resources and business experience of the proposed assignee.
(3) Before requesting the landlord's consent, the tenant must give the proposed assignee-
(a) a copy of any disclosure statement given to the tenant concerning the lease; and
(b) details of any changes of which the tenant is aware, or could reasonably be expected to be aware, that have affected the information in the disclosure statement since it was given to the tenant.
Penalty: 10 penalty units.
(4) [repealed by section 29 of the Retail Leases (Amendment) Act 2005]
(5) [not relevant]
(5A) If the assignment is in connection with the lease of retail premises that will continue to be used for the carrying on of an ongoing business, the tenant must give the landlord and the proposed assignee a disclosure statement in the form prescribed by the regulations (but the layout of the statement need not be the same as the prescribed disclosure statement).
(6) The landlord must deal expeditiously with a request for consent and is taken to have consented to the assignment if-
(a) the tenant has complied with this section; and
(b) the landlord has not, within 28 days after the request was made, given written notice to the tenant consenting or withholding consent.
31 Figgins submits that it has followed the regime in section 61 of the Act in regard to provision of the relevant material for the assignment. It submits that it has obtained an assignment under section 61(6) by reason that Bevendale has not, within 28 days after the request for consent was made, given written notice to Figgins consenting or withholding consent. Figgins states that on 19 January 2009, Bevendale was requested to approve of the assignment in accordance with clause 8 of the lease, which makes provision for assignment and subletting, pursuant to section 61(2). On 21 January 2009, that is after, and not before, requesting the landlord's consent, Figgins gave the proposed assignee a copy of the disclosure statement. Section 61(3) requires that disclosure statement to be provided before requesting the landlord's consent and imposes a penalty of 10 penalty units for failing to do so.
32 Figgins contends that on and from 17 February 2009, when the 28 day period expired and consent to the assignment was taken to have been given under section 61(6) of the Act, it was not liable for rent under the lease. This assertion is inconsistent with its conduct; it continued to pay rent for March and April 2009 and continued to occupy the shop until 12 June 2009 when it was vacated. It has taken no steps until very recently to assert that the assignment to Asco is effective. As late as 3 June 2009, Mr Figgins was writing to Bevendale's representative, Mr Arnold Kupshik, of the Pacific Group of Companies, stating as follows:
Shop 273 - Epping Plaza Shopping Centre,
We hereby advise that we have decided to close our "Shoo Biz" retail operation conducted from the above premises on Friday 5 June 2009.
Regrettably, despite our best efforts, the shop is not trading profitably and has not done so for some time.
There is insufficient passing shopping traffic at this location to maintain a viable footwear store.
We shall clear all our stock and surrender the keys to the premises early next week.
Again, we regret the necessity for such action and trust that a substitute tenant can be secured in the near future.
33 Section 61(6)(a) of the Act provides that a landlord is only taken to have consented to the assignment if the tenant has complied with section 61. Bevendale says that Figgins has not complied with the section. In particular, Bevendale says there has been non-compliance with section 61(3) by reason that Figgins has not given the proposed assignee a copy of the disclosure statement before requesting the landlord's consent. Bevendale points to exhibits "JDF-6" and "JDF-7". "JDF-6" is a letter of 19 January 2009 to Ms Gorry stating that a substitute tenant has been secured and that approval was sought for an assignment of lease. Exhibit "JDF-7" is a letter written two days later to the proposed assignee, Asco, enclosing the disclosure statement required by section 61(3). As such, there has been non-compliance with section 61(3). However, for the reasons developed below in respect of the operation of section 62 of the Act, it is not necessary for me to analyse the consequences of this.
34 Bevendale says that even if it is assumed that there has been an assignment which is effective to Asco, Figgins remains liable for the rent under the lease unless it can avail itself of the provisions of section 62 of the Act. Section 62 of the Act states:
62. Protection of assignors and guarantors
(1) This section applies if-
(a) a tenant gives a landlord and proposed assignee a copy of a disclosure statement in accordance with section 61(4); and
(b) the disclosure statement does not contain any information that is false, misleading or materially incomplete.
(2) None of the following persons are liable to perform any obligations under the lease or to pay to the landlord any money in respect of amounts payable by the proposed assignee-
(a) the tenant;
(b) a guarantor or covenantor of the tenant."
35 In the legislation's current form there is no section 61(4) as it was repealed in 2005 by section 29 of the Retail Leases (Amendment) Act 2005. Section 61(5A) of the present legislation, which was inserted by the same legislation which repealed section 61(4), is identical in its terms to the repealed section 61(4) however section 62(1)(a) has not been amended to reflect this.
36 Mr Evans, Counsel for Bevendale, referred me to section 17(1A) of the Interpretation of Legislation Act 1984 (Vic), which provides:
(1A) A reference in an Act to any provision of that or any other Act or to any provision of a subordinate instrument must, if the provision in question has been renumbered or relocated, be construed as a reference to the provision as renumbered or relocated and in force for the time being, unless the contrary intention appears.
37 Section 61(4) and section 61(5A) of the current version of the Act are, as I have observed, identical in their terms and the effect of section 29 of the Retail Leases (Amendment) Act 2005 is a renumbering or relocation of section 61. I consider that the reference in section 62(1)(a) to section 61(4) should be read as a reference to section 61(5A). I note that the explanatory memorandum to the amending Act states that section 29 amends section 61 of the principal Act "to change the order of the sub-sections".
38 Section 62 of the Act, which has the effect of absolving a tenant from liability to perform any obligations under the lease subsequent to an effective assignment, is a provision which by its terms applies only where "a tenant gives a landlord and proposed assignee a copy of a disclosure statement in accordance with section 61(4) [61(5A)]". A statement under section 61(5A) is only provided:
[i]f the assignment is in connection with the lease of retail premises that will continue to be used for the carrying on of an ongoing business . . .
39 The evidence indicates that the assignment in this case was not in respect of an ongoing business. There is no evidence that Asco was taking over the business formerly run by Figgins. Rather, Figgins was quitting the business and Asco was "rebadging" the shop. Asco was not buying any stock from Figgins or paying it for any goodwill. In any event, there is no evidence that the requisite disclosure statements have been provided by Figgins under section 61(5A) of the Act.
40 If Figgins cannot obtain the protection of section 62 of the Act, one then has to turn to what the provisions of the lease provide. Clause 8 of the lease makes provision for assignment. It sets out the regime to effect an assignment which follows the provisions of the Act. Paragraph 8.13 provides:
Subject to section 62(1) of the Act, the covenants and agreements on the part of any such assignee shall be deemed to be supplementary to these presents and shall not in any way relieve or be deemed to relieve the Lessee from his liability hereunder and any assignment shall contain an acknowledge to this effect.
41 Paragraph 8.13 of the lease is expressed to be subject to section 62(1) of the Act. Had Figgins provided a disclosure statement under section 61(5A) by reason of it assigning a lease that would continue to be used for the carrying on of an ongoing business, section 62(1) would have operated to discharge it from its rental obligations. Because it did not, its obligations are preserved. Even if there had been an effective assignment as contended, Figgins remains liable under the covenants under the lease to pay rent and outgoings.
42 Mr Evans referred me to Halsbury's Laws of Australia at paragraph 245-1550 which states as follows:
Consequences to the lessor upon assignment of the leasehold estate.
The transfer of the estate of the lessee does not alter the contract between the lessor and the lessee. This contract can be enforced by the lessee for existing breaches and by the lessor, notwithstanding that the lessor may have acquired rights against the assignee. However, the lessor cannot have two satisfactions for the one cause of action.
This allows the lessor to bring an action against the lessee to recover rent which should have been paid by the assignee, even where since the date of the assignment the amount of the rent has been increased, provided that the increase was envisaged in the contract between the lessor and the lessee.
43 In my view, whatever be the position with regard to assignment and the compliance with the provisions of section 61 of the Act by Figgins, Figgins remains liable for the obligations to pay rent under paragraph 8.13 of the lease unless it can show it is entitled to rely upon section 62(1).
44 Figgins, which bears the onus of establishing a genuine dispute in this case, must demonstrate that there is a plausible contention requiring investigation. Figgins has not demonstrated by evidence that it is entitled to the protection afforded by section 62 of the Act and, whatever the position is so far as the assignment to Asco is concerned, it remains liable for performance of the rental covenants.
45 In the circumstances, I do not consider that there is any justification for adjourning the application to a date subsequent to a the hearing in VCAT. Even if it is established in VCAT that Asco is liable on the assignment, Figgins will still be liable for the ongoing obligation for rent subject to whatever rights it may have against Asco. Even if the lease was being assigned in respect of a premises from which an ongoing business was to be conducted, there has not been compliance with section 61(5A) of the Act.
46 The application for an adjournment is refused. For the same reasons, I do not consider that Figgins has discharged the onus upon it to establish that there is a plausible contention requiring investigation which could be the basis for a genuine dispute about the existence or amount of the debt the subject of the statutory demand. The application is dismissed with costs including any reserved costs.
Figgins Holdings Pty Ltd
Bevendale Pty Ltd [2009] VSC 666
(1997) 76 FCR 452
The application by Figgins to set aside the statutory demand was dismissed and the application for an adjournment was refused; costs awarded to Bevendale including reserved costs (see [46]).