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[2017] VSC 247
Supreme Court of Victoria
2017-05-10
Mukhtar AsJ
Original judgment source is linked above.
LANDLORD AND TENANT ― Lease of café premises ― Premises fitted with mechanical ventilation system from kitchen ― Shared ductwork with nearby restaurant premises ― Dispute about adequacy of extraction and exhaust system from leased premises ― Tenant's claim that installation of shared system was contrary to building legislation and standards and therefore 'illegal' ― Alleged non-disclosure of 'illegal' works by landlord ― Claim for return of all rent paid and cancellation of bank guarantee ― Dispute resolution ― Retail premises ― Whether this was a 'retail tenancy dispute' under Retail Leases Act 2003 (Vic) ― Exclusive jurisdiction in VCAT ― Whether dispute 'arising under or in relation' to retail lease lease ― Retail Leases Act 2003 (Vic) s 81.
LANDLORD AND TENANT ― Lease of café premises ― Premises fitted with mechanical ventilation system from kitchen ― Shared ductwork with nearby restaurant premises ― Tenant's assertion that ventilation system was in breach of Building Act or regulations ― Tenant's claim for prospective orders under enforcement provisions of Building Act ― Whether tenant has standing to under statutory enforcement provisions ― Building Act 1993 (Vic), s 253
1 There are features of this vexed case that make it better to state the Court's decision at the very outset, before undertaking the unavoidably long narrative concerning this landlord and tenant dispute over café premises in Collins Street Melbourne. It is not in dispute that the leased premises were 'retail premises' within the meaning of the Retail Leases Act 2003.
2 First, the Court will allow the application by the second defendant, the lessor, for a dismissal of the proceeding brought by the plaintiff as ex-lessee. The proceeding as against the lessor must be dismissed because the dispute is not justiciable in the Supreme Court. It is a 'retail tenancy dispute' within the meaning of s 81 of the Retail Leases Act 2003. That is, it is a dispute 'arising under or in relation to a retail premises lease' for which the Victorian Civil and Administrative Tribunal has exclusive jurisdiction under s 89 of the Retail Leases Act.
3 Mr Raptis has protested tenaciously that the overhead fan driven extraction and air ventilation system in the kitchen of the café has not performed adequately. He says the system did not comply with building standards or laws, and is therefore illegal. And, he says, back in time (1997) when the owner did building works at the premises, it did not obtain an occupancy permit under the Building Act. I am not at all sure, but it seems to be an argument that the formation of the lease involved prohibited conduct, or involved a contravention of statutory law in performance, and there was non-disclosure by the lessor about the 'illegality' before he agreed to make the lease. He says because of the illegality, there is no lease. He wants a return of all rent paid which as at 5 October 2016 as $268,367.71 and a release from a bank guarantee for 5 months' rent.
4 Their legal relationship is defined by a lease. The remedy he seeks is referable to the lease. I would hold that a dispute about the 'legality' of the lease (as he characterises it) does not remove it from the Act's capture of a dispute 'arising under or in relation to a retail premises lease.' Mr Raptis asserts that the illegality of the lease means there was no lease. But a lease is not illegal just because Mr Raptis asserts it. A dispute whether a lease is illegal is ― at least ― a dispute 'in relation to' the lease, and by law that is within VCAT's exclusive jurisdiction.
5 Secondly, the application by the first defendant the City of Melbourne to strike out paragraphs 3, 4 and 5 of the indorsement on the originating motion will be allowed. The content of the motion and the swollen supporting affidavits are very difficult to comprehend. Parts are not intelligible. It is difficult to discern what relief or remedy is being sought as against the City and I agree that it is legally embarrassing as a matter of composition. Not only that, but, as the evidence shows, the City of Melbourne decided on his complaints that the works and mechanical services at the premises were compliant. Despite that, Mr Raptis appears to be trying to propound an illegality case against the lessor by seeking orders under the general enforcement provisions of the Building Act, in particular s 253. But, he does not have standing to bring proceedings or seek orders or relief under those regulatory provisions. That is a matter for the Victorian Building Authority, or the building surveyor. It is not legally competent for Mr Raptis to seek the making of penal or infringement orders under the Building Act.
6 The City of Melbourne seeks a strike out under rule 23.02(a) and (c), that is to say the endorsement on the motion does not does not disclose a cause of action or is scandalous, frivolous or vexatious. That is unconcerned with merits but is directed to the composition of the claim. The difficulties with comprehending Mr Raptis' case at present leads the City to not move for a dismissal on the ground that no amendment could possibly save it. But, I think the matter should never have been commenced by motion because it is plain to see already that there is a substantial controversy on the facts.[1] Ultimately my order will be to convert the motion to a writ[2] and if Mr Raptis wishes to 'replead' a claim against the City he may do so by a statement of claim in accordance with pleading principles and practice but not before obtaining leave of the Court and satisfying the Court there is a sound basis for making a claim.[3]
7 The plaintiff Mr Raptis was, until 3 February this year, the lessee of premises known as Rear Ground Floor, 333 Collins Street, Melbourne. He took possession of the premises in December 2014. He ran a business there known as the Blu-Nite Café. The second defendant was the lessor. The ground floor is part of a building which in its original form was built in the 1890s as a bank site and was regarded, and became protected, as an historic and stylish landmark known for its Victorian façade, its dome, and its decorated banking chambers. In the 1990s the owners built a high-rise building over the historic dome in a tiered form at the back of the building, going back to Flinders Lane. The Blu-Nite café is on the ground floor at the back of the building and faces Flinders Lane. Also on the ground floor of the same building, but with a Collins Street frontage, is the Strozzi Ristorante Cafeteria.
8 Mr Raptis was an assignee of the leasehold estate. The first lease in time was made between the lessor and Eros Holdings (Aust) Pty Ltd, dated 27 July 2010.[4] The demised premises were described as the 'rear of Ground Floor Level 333 Collins Street, Melbourne comprising an area of approximately 368.5 square metres...as shown on an appended ground floor plan'. That lease was for a term of five years, commencing on 1 August 2010, for a permitted use of coffee shop, bistro and the retail sale of take away food. The initial lessee conducted a business under the name Saranti Café. The lease gave the lessee the option of renewals for two further terms each of five years. Within the definition clauses of the lease, 'mechanical services' is defined to mean exhaust or ventilation equipment, although I see nothing within the body of the very complex lease concerning obligations in that regard.
9 By a deed dated 27 November 2014 (called a Transfer of Lease) Eros Holdings transferred to Mr Raptis all of its interest in the lease with all renewal options.[5] Under that deed, Mr Raptis agreed that from the date of transfer, he would pay the rent and perform all of the obligations of the previous tenant under the lease. Mr Raptis took possession of the leased premises in December 2014. It is the fact that at all times whilst in occupation, Mr Raptis has been carrying on trading at the premises as a coffee shop under the name Blu-Nite Café. His business includes the retail sale of food and beverages, both for a take-away service and an eatin basis, in a café that seats about 50 customers. There is no doubt it is a business serving the public. It has a ground floor private dining room used for lunches, dinners, receptions, cocktail parties and business meetings.
10 By a Deed of Renewal and Variation of Lease dated 25 August 2015, the lessor agreed to renew the lease for another five years.[6] Annual rent was $123,000. The Bank Guarantee amount was equivalent to 5 months' annual rent plus outgoings. Before making that deed, Mr Raptis had complained to the lessor about the performance or effectiveness of the kitchen exhaust hood and air extraction system over the cookers and oven in the kitchen. The ventilation system is a mechanical service that is part of the fit out of the ground floor. It is fan driven. The overhead duct work for the system servicing his café is connected to duct work for the Strozzi Ristorante Cafeteria. The duct runs internally from a kitchen hood from that restaurant, over an arcade ceiling and then connects at a 'T intersection', as it were, with the duct from Blu-Nite café to a shared exhaust flue riser at level one of the building. In that sense it is a shared system.
11 That explains clause 6 of the Deed of Renewal which said (with my underlining) −
The Tenant has complained that the exhaust system from the Premises does not operate appropriately. The parties have both seen a report prepared by a contractor which states that the Building system functions according to specification from the external outlet point back down to the joint duct at Level 1 of the Building but that there appears to be a problem between Level 1 and the canopy in the Tenant's Premises. The Landlord agrees to arrange for its own contractor to attend at the Premises and remedy the problem at the Landlord's cost. However, if the contractor advises that the problem has been caused by misuse or the negligence of the Tenant in the operation or maintenance of the duct or dampers within it then the cost must be borne by the Tenant. Once this current exhaust performance issue is resolved in this fashion then the exhaust duct (and any other equipment in or associated with it) in the section between the canopy in the Tenant's Premises and the joint duct at Level 1 of the Building will be the Tenant's responsibility.
12 Mr Raptis then engaged consultants in the field. In November 2015, SDP Consulting inspected the kitchen exhaust system at the BluNite Café for him.[7] The resultant report confirmed that the kitchen exhaust was served by a common duct used by two tenancies. It concluded that the operation of the kitchen exhaust system was 'not adequate'. It made recommendations to replace the existing fan; to take measurements of the duct work; to conduct calculations to determine required static pressure; to examine existing drawings; and to take airflows below the canopy to ensure a balancing of the system. As I read it, the report recommended an upgrading. It is to be kept in mind that the complaint concern a kitchen exhaust system that was designed and installed in about 1997.
13 Come December 2015, Mr Raptis also turned his attention to involving the City of Melbourne ('the City') and the building surveyor as the person responsible for the grant of planning permits and various certificates under the Building Act. That approval process occurred in 1997-1998. I am told that the building surveyor was not from the City but was a private building surveyor, Mr Donald Smith of Blair Smith and Associates (who I am told has since died). In essence, Mr Raptis complained to the City that before agreeing to the lease the lessor did not tell him that there was a shared duct system. He says the presence of two kitchens sharing the system created two possible sources of a fire hazard and it was contrary to building laws or regulations or Australian Standards to have two restaurants sharing a common exhaust and extraction system. That is, Mr Raptis complained there should have been a separate exhaust and extraction system for each kitchen. He complained to the City that the building surveyor should not have approved of the works done at the ground floor, nor permitted occupation.
14 One particular aspect of his complaint should be isolated at the outset to help understand the finer points of the dispute. It concerns an occupancy permit. As may be generally known, a building permit may require an occupancy permit to be granted before occupation of the premises as built. But if an occupancy permit is not required, then the building surveyor must issue a certificate of final inspection following a certain stage.[8] Mr Raptis asserted in his complaint to the City that the combined duct work was never inspected and approved and 'therefore' the two restaurants did not have an occupancy permit.
15 On 1 February 2016 lawyers acting for Mr Raptis wrote to the lessor stating that action would be taken on the basis of pre-lease non-disclosure, and called on the landlord to bring the demised premises 'into compliance'.[9] The letter said (with my underlining):
We are instructed to commence legal action against you.
We are instructed by our client that as a result of investigations, the café lacks adequate planning and building permits and relevant AS standards compliance that compromise his ability to operate his business.
We are instructed that when our client purchased the business, relevant information which would have an impact on the business was withheld as mentioned above.
We note the lease disclosure statement executed by you claimed there was no such information to be disclosed.
We are instructed as the owners representative you for and on behalf of the owner withheld information that the premises was partitioned without planning and building approvals in breach of the planning and building legislation and that the failure to disclose has continued to date.
In particular, we are instructed that the following was not disclosed:
Our client instructs us that he seeks that the Landlord bring Blu Nite to full compliance with all necessary planning and building permits in place and landlords fittings to comply with Australian Standards, compliance certificates & Essential safety measure reports.
Furthermore, upon the above being satisfied, to evaluate the impact to the business.
That the above matters are inherited and ongoing liability.
16 The reference to a 'disclosure statement' in the fourth paragraph of that letter is to a statutory obligation on a landlord under s 7 of the Retail Leases Act to give a prescribed statement together with the proposed leases at least 7 days before entering into a retail premises lease.
17 An affidavit of the lessor's solicitor, Charles George Gardiner[10] describes the steps then taken by the lessor to investigate the performance of the ventilation system. In response to the threatening letter, the lessor's lawyers went to their client's defence with a comprehensive letter dealing in detail with each of Mr Raptis' complaints and threats dated 4 February 2016.[11] I shall not reproduce the contents. In essence the lessor avowed its intention to carry out its obligation under the deed of renewal 'to arrange for its own contractor to attend at the Premises and remedy the problem at the Landlord's cost', but complained that Mr Raptis was refusing to give internal access to the premises, which relegated the lessor's contractors to conduct external inspections of the system. The question of access seemed to be a serious one resulting in the lessor threatening an enforcement of its rights unless they were given access to the premises.[12] In those conditions, the letter produced a report from Entire Air Conditioning Pty Ltd[13] which stated that the building design allowed for a 4,000 litres per second kitchen exhaust fan to be installed and confirmed that the design flow rate of the fan as installed was 4,000 litres per second. The report says the fan was routinely inspected and was in good working order. It also reports that the kitchen at the Strozzi Restaurant had no known issues with exhaust flow. I am not sure when, but the lessor arranged for works to be carried out to replace damaged dampers and clean the ductwork accessible from outside the premises.
18 I gather that on 10 February 2016, an inspection of the system occurred at which Mr Raptis and representatives of the City and the lessor were also present. SDP Consulting, acting for Mr Raptis, prepared a report of that date[14] saying that mechanical contractors tried to balance the system and took readings for the kitchen canopy which, the report said, showed it to be non-compliant with an Australian Standard. The report said that no blockages were found in the kitchen duct work. Mechanical contractors tried to balance the system using existing dampers to ensure an even velocity but it still appeared that the kitchen exhaust system was regarded by Mr Raptis' contractors as still being noncompliant.
19 The materials in evidence shows there was a real question, on matters technical, as between the consultants engaged separately by the lessor and lessees on the question of compliance. The problem and the dispute really is of the sort that occurs in a commercial building dispute. By letter dated 19 February 2016[15] the lessor's lawyers sent Mr Raptis a copy of their expert's report which maintained the view that the extraction fans were operating to the required performance. What remained to be investigated was a testing of air velocities across the extraction hoods after adjustments to the ducting arrangements. To do that, the experts required access to the premises to undertake readings of air velocity. This occurred subsequently[16] and a report was prepared stating that air velocity was adequate and no further works were required. The lessor's position was that they: had taken all steps to investigate the issues of the exhaust fan whilst being denied access to the premises; at its own expense engaged contractors to attend the building and inspect the exhaust system; had replaced damaged dampers and cleaned duct work from outside the premises; and, confirmed that the exhaust fan as installed at the building was in good working order. The lessor had advice from the its mechanical services contractors that the exhaust system was compliant, and provided adequate air velocity and ventilation, and that any improvement or upgrade were a matter for the tenant and not a matter of the lessor's legal obligation under the terms of the lease.
20 Another inspection occurred on 25 February 2016 attended by Mr Raptis and his consultant and the lessor's representatives and experts. As a result the lessor's obtained and gave Mr Raptis another expert report of the system which said that measurement of air flow had been taken, considered to be more accurate than previously and the actual air flow exceeded design. [17] Technical reporting details were provided. It was at this point that the lessor took the position that it had fully discharged its obligations under the lease; that the complaints about permits and the approval history (i.e. the illegality point) were not only erroneous and misconceived but were irrelevant to the rights and obligations under the lease which, the lessor contended, had been discharged.
21 The materials show that the City looked into the regulatory side of the matter in response to Mr Raptis' complaints, and corresponded with him. By June 2016, the Deputy Municipal Building Surveyor told him that the City hired a mechanical engineer to investigate and report on the performance of the ventilation system. The result was a conclusion, adopted by the City, that the kitchen exhaust system was operating at 93% of the Australian Standard and that the premises were compliant with all applicable standards or requirements. He was told that there was no breach of the Building Regulations, and that no action would be taken.[18] As for the question of the occupancy permit, he was told that the building permit as issued in November 1997 for the ground floor works did not require an occupancy permit. Rather, the permit stated that a Certificate of Final Inspection was required prior to occupation of that part of the building, and, such a certificate was issued on 29 January 1998.[19] Both of those statements appear to be true. The building permit is in evidence.[20] It says 'A Certificate of final inspection is required prior to the occupation of this building' that is, the ground floor of the building. The Certificate of Final Inspection is in evidence.[21] It was issued on 29 January 1998. Mr Raptis' preoccupation with the occupancy permit for the ground floor works seems misconceived.
22 Correspondence dated 7 July 2016 from the Acting Municipal Building Surveyor stated that the Council were satisfied with the lessor's expert opinion that the mechanical installations for the Blue Nite Café were compliant, and said that 'no action will be taken by the Municipal Building Surveyor in relation to this matter.'[22]
23 The next event was the filing of the originating motion by Mr Raptis on 15 September 2016. On about 17 October 2016 he displayed a notice at the café which said:
Due to legality of operation concerns under the Building Act 1933 & Building Regulations 2006 and to 'restrain such breaches', Blu-Nite has decided to currently close in the interest of the wellbeing and safety of Clientele & Staff.
Apologies for any inconvenience caused.
24 On 16 January 2017 the landlord served on Mr Raptis a Notice of Default under s 146 of the Property Law Act. The notice was based upon the lease as made. It notified him that he failed to pay rent on 1 November 2016, in advance, for the rent due for December 2016. The notice also said that he had failed to continue to carry on the business as evident by the public notice at the café. The lessor's notice required him to remedy the breaches by paying the rent, opening up and running the business, and removing that notice. He was given 14 days to do so. There has not been any remedial action taken and thus by effect of the notice, the lease became terminated on 3 February 2017. Since November 2014, and until the recent termination of the lease, Mr Raptis has been in occupation of the premises and paid rent owing under the lease as and when it fell due. Business records in evidence show rent paid to 5 October 2016 as $268,367.71.
The immediate return of the rent paid to now and realease [sic] of the bank guarantee amount covering 6 months of the lease, based on the absence of an Occupancy Permit for use of the premise's [sic] as a café.
The relief can only be referrable to the legal relationship between Mr Raptis and the lessor as created under the lease. It can only be sought as against the lessor, not the City.
26 The problem is ascertaining the case sought to be made against the City. The motion is indorsed with this 'summary':
On 2 December 2014, I purchased the Saranti café/restaurant business with its leased premises located at 333 Collins Street, Melbourne 3000 and started to operate it as Blue Nite café/restaurant.
Commencing early 2015 various non-compliances began to become evident.
Reporting of these to 333 Choice Properties P/L - the building owner's representative as Landlord, Arnold Bloch Leibler - their legal representative and City of Melbourne did not provide resolution.
Through this time, beyond the initial non-compliances, it further became evident that the premise's [sic] from Blu Nite operates is leased illegally, as there does not nor ever has existed the compulsorily required Occupancy Certificate for use of the premises as a café/restaurant.
The Occupancy Certificate needed for Blu Nite to legally operate as a café/restaurant has been sought from Melbourne City Council since making initial contact with them in December 2015 but has not been received to this date.
The building construction completed in 1991 under State Government approval as an office building with the exemption of a restaurant and a bank.
It was not until 1997 a tenant was found to fitout the restaurant with the equipment and services needed for its use as a restaurant. This fitout did not complete with the necessary compliances to Australian Standards, Building Regulations and Codes which is why it was unable to secure the Occupancy Certificate compulsorily required to operate legally as a restaurant since then to this date.
The Affidavit with its Exhibits details and evidences that summarised here.
27 Omitting immaterial parts, the motion then seeks the following orders:
28 It is not at all clear against whom the orders in those four paragraphs are sought. The order sought in paragraph 6 is not intelligible, or, is frivolous. A court cannot order someone to initiate legal action, and paragraph 6 does not say to whom such an order is directed. I speculate it might be directed to the Victorian Building Authority or the building surveyor or an industry regulator. Is it seeking an order to compel the performance of a public duty? Is Mr Raptis asking the Court to form an advisory opinion to endorse the commencement of legal action? Some clarification is brought by Mr Raptis in a supporting affidavit in which he says the 'immediate relief' is the return of the rent paid under the lease and release of the bank guarantee under the lease on the ground of an absence of an occupancy permit for use of the premises as a café.[23] He also states that that 'No relief is currently sought from City of Melbourne ... but will be sought in subsequent Application as set out in Originating Motion' and refers back to the orders sought in paragraphs 3, 4 and 5 of the motion. If no relief is currently sought by Mr Raptis against the City then paragraph 6 is also vexatious.
29 The orders as sought in paragraph 3 and 4 of the motion look to s 253(2) of the Building Act. The relevant parts of s 253 state (with my underlining):
(1) The Authority or a municipal building surveyor or any other prescribed body or person may bring proceedings in any court of competent jurisdiction for an order under this section in the event of a breach, or threatened or apprehended breach, of this Act or the regulations or a notice, permit, order or a determination issued or made under this Act (including a notice or order or determination of the Building Appeals Board).
(2) The court, if it is satisfied that a breach, or threatened or apprehended breach, has been or will be committed or is likely to be committed, may make any one or more of the following orders -
(a) an order to restrain the breach or other conduct by the person by whom the breach is committed or by whom the threatened or apprehended breach is likely to be committed;
(b) an order requiring building work or protection work to be carried out;
(c) an order requiring the payment of money into court in respect of any building work carried out by, or to be carried out by, the municipal building surveyor;
(d) any necessary ancillary orders.
(3) An application for an order under this section may be made during proceedings for an offence under this Act or the regulations and an order may be made instead of or in addition to any penalty imposed in those or any other proceedings.
30 The motion also refers to regulation 1011(1) of the Building Regulations 2006. That regulation states:
(1) A person must not change the use of a building or place of public entertainment unless the building or place of public entertainment complies with the requirements of these Regulations applicable to the new use.
Penalty: 10 penalty units.
31 The motion also refers to a breach of s 40(1) of the Building Act. That section provides:
(1) A person must not occupy a building in contravention of the current occupancy permit or permits issued under this Division for the building.
Penalty: 120 penalty units, in the case of a natural person.
600 penalty units, in the case of a body corporate.
32 Pausing here, there is something more than a little strange about what Mr Raptis is endeavouring to do here. His legal relationship is with the lessor under the lease. Disputes under the lease, including the performance of mechanical services, are to be determined according to law primarily by reference to rights and obligations under the lease. That defines their legal relationship. The City has said the premises were compliant there was no breach of the Building Regulations, and that no action would be taken. The documents show no certificate of occupancy was required. The lessor says the ventilation system is compliant and not in breach of any obligation under the lease. Yet, Mr Raptis as the tenant wishes to create a problem with his tenancy under a regulatory regime. He, not the regulator, wants to propound a breach of a regulatory statute in aid of an overall claim that the presence of a shared ventilation system and the absence of an occupancy permit made the lease illegal with the result that he is not only free of it, but is entitled as against the landlord to a reimbursement of all rent paid and a discharge of a bank guarantee. He sues the City but seeks no orders against it. But, paragraph 3 and 4 of his motion wants orders or declarations concerning breaches of the Building Act and regulations from which to bring applications in the future.
33 Thus it appears he is seeking personally, somehow, now or later, to take or compel someone to take action under the General Enforcement Provisions of Part 13 of the Building Act which is the bailiwick of the Victorian Building Authority or municipal building surveyor or some other prescribed body or person conferred with the authority to do so. Moreover, his explanatory material advances some extreme remedies, presumably to be sought in future proceedings.[24] They include; a reinstatement of the 'illegally demolished Heritage part of the ground floor'; the removal of an internally constructed walled corridor; the demolition of the Strozzi Ristorante Cafeteria resulting in the disconnection of its kitchen exhaust duct from that of Blu Nite; the reinstatement of a restrictive covenant pertaining to the heritage overlay; and work to bring the kitchen exhaust duct work into compliance with Australian Standards. Only then, Mr Raptis protests, can an occupancy permit be issued. It may be this part of the motion can be disregarded now that the lease is terminated. That was not said. But, all of this involves the question whether he has the standing to personally seek orders under the penal and enforcement provisions of the Building Act or the regulations under it, as appears to be sought under paragraph 3 and 4.
34 That leaves paragraph 5 of the motion. It refers to a 'building development 'agreement' of the 1998 Planning Minister - State Government approval issued by City of Melbourne' and 'Supreme Court proceedings No. 2584 Dated 6 and 7 February 1991'. That citation is to an unreported decision of O'Bryan J on 11 February 1991 in Becton Corporation Pty Ltd and Anor v Tricontinental Corporation Limited and Anor.[25] That case concerned finance arrangements by Tricontinental in 1988 with a syndicate of lenders, and a put option agreement requiring the State Government Insurance Commission of South Australia to purchase the whole building project at 333 Collins Street. There was an application by Becton for summary judgment for a decree of specific performance. The agreement had a definition of 'practical completion' as a basis for determining when the 'project' was completed and a definition of practical completion as meaning the granting of a certificate of occupancy by the City of Melbourne. In that application, the plaintiffs asserted that the City of Melbourne had issued the last certificate of occupancy on 4 January 1991 and that practical completion had been reached, giving rise to repayment obligations.
35 That case concerned the construction of a clause of the agreement. The judge refused summary judgment, saying there was a question to be investigated. That case has nothing to do with the present. Paragraph 5 of the motion, like paragraph 6, is also frivolous.
36 Mr Raptis has filed a lot of material which is wide ranging, difficult to follow and looks to revisit the history of the whole building project at 333 Collins Street. From his multiple affidavits, he agitates two issues: the suitability or adequacy of the extraction system; and the alleged non-disclosure by the lessor about the shared ductwork and its unlawfulness and the absence of an occupancy permit. In the course of argument though, as the Court sought to elicit more from him about the nature of the dispute, Mr Raptis pitched it at a level of abstraction to say 'if the lease is established illegally then there is no lease'. And on that basis, he says he was entitled to leave the premises and reclaim his rent.
37 He has mounted a tenacious campaign about the processes by which the building permit was granted, and the absence of an occupancy permit. This extends to saying there was false conduct. He looks to four documents signed by Donald B Smith in 1997 as the private building surveyor, they being: the building permit, the application for that permit, the Certificate of Final Inspection, and a document put before the Referee Board. He has hired a 'Certified Document Examiner 'in the United Kingdom who acknowledged his instructions thus: 'You have instructed me to report that 4 signatures in the name of D.B. Smith submitted are not written from the hand of the same person'.[26] The instructee, who, disclaiming to be a forensic scientist, has made a report stating that all four signatures are not written in the hand of the same person.[27] I can only suppose this is part of his illegality and corruption case that the building surveyor illegally allowed a shared ducting system at the permit stage or occupation stage.
38 Mr Raptis' materials shows he has undertaken a campaign to publicise and amplify his grievance by notifying the Lord Mayor of Melbourne, the Melbourne City Council, the Melbourne Fire Brigade, the Victorian Ombudsman, the Independent Broad Based Anti-Corruption Commission, the Acting Australian Information Commissioner, the Financial Ombudsman, Transparency International Australia, the Director General of Environment and Planning Directorate, the Heritage Council of Victoria, the daily newspapers, the Australian Broadcasting Commission, and the commercial television networks. I mention this to expose how a mechanical services problem under a lease, of the sort that one might call a building case type of dispute, has obtained a life of its own and escalated into a widespread attack that is now transferred in ambit to this Court. It makes it all the more important to properly and clinically identify the issues on the applications before the Court and to be unconcerned with visiting every aspect of Mr Raptis' complaint within his vast body of material.
40 The lessor seeks a dismissal or permanent stay of the proceeding on the ground that as between lessor and lessee, this is retail tenancy dispute over which the Victorian Civil and Administrative Tribunal has exclusive jurisdiction under the Retail Leases Act 2003. Under s 89(1) of the Retail Leases Act 2003, the Victorian Civil and Administrative Tribunal is given jurisdiction to hear and determine an application by a landlord or tenant under a retail premises lease. Under s 89(4) of the Act, a retail tenancy dispute 'is not justiciable before any other Tribunal or a court or person acting judicially within the meaning of the Evidence (Miscellaneous Provisions) Act 1958'. Under s 81(1)(a) of the Act, a retail tenancy dispute is one 'arising under or in relation to a retail premises lease' and which does not does not fall within the exceptions under s 81(2). The exceptions are irrelevant here.
41 Mr Raptis conceded that the demised premises were 'retail premises' within the meaning of s 4(1) of the Retail Leases Act 2003. That is, his café was a place to which the public could resort for the supply of food and beverages and for hospitality services.[28] The question is whether the dispute as described in this court proceeding is one 'arising under or in relation to a retail premises lease'. Under s 83 'lease' includes a former lease. On that question, I simply could not get engagement from Mr Raptis. His position was simplistically this: the lease was illegal, so there was no lease. Mr Raptis seems to be saying two things. First, the ventilation system was shared with Strozzi and was non-compliant (to use a neutral term); he was not told that by the lessor; had he been told he would not have made the lease; the noncompliance meant that the lease was illegal under building laws and standards; it was also illegal because there was no occupancy permit; for all those reasons he was entitled to in effect a rescission of the lease and the return of his rent; and, in the future there ought be proceedings against the lessor for statutory breaches or infringements.
42 The legal term, or the legal doctrine, of illegality has been used by Mr Raptis too loosely and with casuistry. But allowances have to be made for a litigant in person, and this is no occasion for an exegesis on the subject. It is enough to say, I think, as an elementary matter that the essence of statutory illegality as a vitiating element of a contract lies in the element of prohibition.[29] There is no legislation put forward that prohibits the lease made in this case. Nor is there legislation that prohibits or limits the enforcement of the lease on the grounds here. Moreover, there is a basic fallacy in his contention that goes: as the lease was illegal there is no lease, contractual relations are annulled, and therefore there is no dispute under or in relation to the lease. The fact is the lease existed as a phenomenon. The lease was observed and performed over time and it is not made illegal by an assertion by him that it was illegal ― an assertion which is disputed. That is why, the question here is whether a dispute about the legality of retail premises is a dispute arising under or in relation to a retail premises lease within the meaning of s 81. If it is, then Mr Raptis' case must be dismissed by this Court, to be pursued by him at VCAT if he so chooses.
43 The expression 'arising under a retail premises lease' has attracted some judicial consideration. The phrase 'in relation to' is a common statutory expression and authorities have pronounced on the width to be given to its statutory construction.
44 In Exford Pines Pty Ltd v Vlado's Pty Ltd[30] this Court was dealing with an earlier version of the Retail Leases Act, namely, the Retail Tenancies Act 1986. Section 21(1) of that Act provided that, subject to certain exceptions, 'any dispute between a landlord and a tenant arising under a retail premises lease...must be referred to arbitration in accordance with this Part.' Similar to the current legislation, s 21(4) of that earlier Act provided that a dispute capable of being referred to arbitration was not justiciable in any court or tribunal. The tenant in Exford Pines alleged that it had been induced to make a lease of retail premises in reliance upon precontractual representations by the landlord which, it alleged, were false. Proceedings were commenced in the Supreme Court seeking damages and a variation of the rent payable under the lease. Tadgell J held that the dispute was not one 'arising under' a retail premises lease. His Honour so held on the basis that the dispute did not depend for its resolution on the terms of the lease or a provision of the Retail Tenancies Act that related to the lease.
45 Exford Pines was dealing with the expression 'arising under' without the additional words 'or relating to' as appears in the current Act. Nevertheless, the Court's finding concerning the narrowness of the phrase 'arising under' helps inform the statutory construction of the additional expression 'or in relation to'. The basis of the Court's decision in Exford Pines is stated in this passage:[31]
The dispute the subject of the plaintiff's claim happens to arise during the subsistence of a retail premises lease but it is not in my opinion a dispute 'arising under' the lease because the terms of the lease do not give rise to the dispute. There is no dispute about the application or the meaning of the effect of those terms, for they are not in contention. The plaintiff does not rely on the expressed terms of the lease in order to make out its claim, or rely on any implied term. It is true that the plaintiff must prove that the lease was made between the parties, but there is no dispute about that. What is in contention that the plaintiff must prove is that the alleged representations, or some of them, were made, and that they or some of them were untrue, and that the alleged warranties, or some of them, were given and that they were broken, and that accordingly the plaintiff has a right to relief, having entered into the lease.
I should be prepared to decide the present application on the simple ground that, so far as appears, the dispute between the parties does not at all depend on or concern the terms of the retail premises lease, and that accordingly the dispute cannot be said to arise under it. That conclusion appears to me to be dictated by the plain and ordinary meaning of the words ... 'Any dispute ... arising under a retail premises lease ... '.
46 In so finding, his Honour following earlier authorities on the point rejected a submission that the words 'any dispute...arising under a retail premises lease' cover a dispute arising by virtue of the existence of a retail premises lease, and any dispute between the parties to such a lease which emerges by virtue by the entry of the parties into the lease. His Honour's reasoning looked to decisions concerning the scope of arbitration clauses that provide for reference to arbitration of disputes according to various verbal formulae such as 'in connection with' or 'in relation to' or 'in respect of' or 'with regard to' or 'arising out of' or 'arising under' a contract. Recognising that care has to be taken about construction of such phraseology as used in consensual arbitration clauses, and the danger of applying meaning under private contracts to the intention by which Parliament is taken to have intended in statutory language, his Honour nevertheless noticed that influential decisions in the area indicated that the concept expressed in the words 'a dispute arising under the contract' tended to be regarded as narrower in concept that an expression such as 'a dispute arising in connection with' or 'in relation to' the contract. Reference was made to the English decisions which very much supported the narrower meaning of the word 'under' in the expression 'under the contract'. But, those decisions accepted that expressions such as 'arising out of' the agreement is very much wider than 'under the agreement'.[32] Those decisions support the view that the ordinary natural meaning of the words in the expression 'connected with' is wider than 'arising under'.
47 In the result, in Exford Pines, his Honour decided that the dispute with which the case was concerned was quite independent of any dispute about the lease or its terms 'and might very well have arisen after the lease had come or been brought to an end'.[33] His Honour held that the statute reference to 'arising under' was designed to refer to only those disputes which may arise regarding the rights and obligations which are created by the contract itself.
48 Exford Pines leads to the view, which I am bound to take, that arising under as it appears in s 81 of the Retail Leases Act 2003 has a narrow meaning and may permit of an argument (not made by Mr Raptis) that an attack on the validity of the lease is not one that arises under its terms unless there is something about its terms, or the performance of them, that gives rise to the illegality of the contract as formed or performed. But Exford Pines definitely supports the view that the addition of the words 'or in relation to' as they appear in s 81, enlarges the meaning of retail tenancy disputes so as to take it beyond a dispute confined to the terms of the lease or the provisions of the Act.
49 The expression 'in relation to' (just like 'in respect of') is a drafting expression that denotes a connection or relationship between one subject and another: see Pearce and Geddes, Statutory Interpretation in Australia.[34] The authors of that renowned work note that such connecting phrases are commonly used in legislation and take colour from their context. They say that expressions such as 'in respect of', 'relating to', 'related to' and 'with respect to' are not interpreted as having a different meaning to the phrase 'in relation to' and it is unlikely there would be any difference of substance between the expressions subject only to the overriding principle that context will always determine the scope of any expression. What prevails I think is the view that the expression 'in relation to' and synonymous expressions are words 'of wide and general import and should not be read down in the absence of some compelling reason for so doing': per Mason J in Perlman v Perlman.[35] Likewise in Travelex Limited v FCT, French CJ and Hayne J said:
It may readily be accepted that 'in relation to' is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ (citation omitted). It may also be accepted that 'the subject matter of the inquiry, the legislative history, and the facts of the case' (footnote omitted) are all matters that will bear upon the judgment of what relationship must be shown ... '.
In O'Grady v Northern Queensland Co Limited,[36] McHugh J said that the phrase 'proceedings arising in relation to mining or any mining tenement' meant that the phrase 'requires no more than a relationship, whether direct or indirect, between two subject matters'. Overall, an examination of the cases in the field of this drafting expression support the view that words such as 'in relation to' are amongst the broadest which could be used to denote a relationship between one subject matter and another. In Oceanic Life Limited v Chief Commissioner of Stamp Duties,[37] Fitzgerald JA rounded up the authorities to say ―
The width of the phrase "relating to" is undoubted. Lord Macnaghten stated that "[t]here is no expression more general or far-reaching", IRC v Maple & Co (Paris) Ltd (1908) AC 22, 26. See also Fountain v Alexander [1982] HCA 16; (1982) 150 CLR 615, 629; Colakovski v Telecommunications Corporation [1991] FCA 152; (1991) 100 ALR 111; Secretary, Department of Foreign Affairs & Trade v Boswell [1992] FCA 321; (1992) 108 ALR 77; PMT Partners Pty Ltd (in liq) v ANPWS [1995] HCA 36; (1995) 131 ALR 377, 398, although the addition of the words "or depending on" was presumably intended to give the combined phrase "relating to or depending on" a wider operation that "relating to." The difficulties of construction presented by such language have also been noted. Taylor J observed that "...the expression 'relating to' ...is...vague and indefinite..." and "...leaves unspecified the plane upon which the relationship is [to be] sought and identified." Tooheys Ltd v Commissioner of Stamp Duties (NSW) [1961] HCA 35; (1961) 105 CLR 602, 620. One area of debate has been whether, in particular legislation, a relationship need or need not be 'direct' or 'direct and immediate'. See, for example, Ausfield Pty Ltd v Leyland Motor Corp. of Australia Ltd (No 2) [1977] FCA 6; (1977) 14 ALR 457, 460, 462; Re Dingjan: ex p Wagner (1995) 128 ALR 81, 110, 115; Joye v Beach Petroleum NL & Cortans Ltd (in liq) [1996] FCA 1552; (1996) 137 ALR 506, 514. See also Perlman v Perlman [1984] HCA 4; (1984) 51 ALR 317. Overall, the position judicially adopted has been that the operation of the phrase 'relating to' is determined by the statutory context and purpose. Butler v Johnston [1984] FCA 118; (1984) 55 ALR 265, 268; Hatfield v Health Insurance Commission [1987] FCA 286; (1987) 77 ALR 103, 106-107.
50 According to the motion and the supporting materials, Mr Raptis' grievance is that he made the lease not being made aware by the lessor that the ducting system was shared. It has been squarely put as a non-disclosure case. It has now dilated to be described as an 'illegality' case to say that there was no lease. From there I take the argument to be: if there was no lease, then there was no dispute under or in relation to the lease. Put another way, the Retail Leases Act presupposes a valid and enforceable and not illegal lease. If that be the submission, I reject it for two reasons.
51 First, Mr Raptis cannot get away from the character of the matter as being a claim by him to be relieved of obligations past and continuing (but now ended) under a retail lease. That is his claim. I think the question whether or not the exhaust and extraction system was or was not compliant, or was or was not performing adequately, or whether the performance of the extraction system, if inadequate, was a matter going to the landlord's obligation under the lease to rectify or compensate, are all matters arising under the lease. The only legal relationship here is one of lessor and lessee under a retail lease. The dispute has arisen under that lease and comes to be legally assessed according to rights and obligations under that lease.
52 Secondly, and more broadly, if the dispute be characterised as a dispute about the ventilation system and whether the installation of the ventilation system rendered the lease 'illegal' as a matter of private bargain or as a matter of the collateral application of the Building Act or regulations, I am firmly of the view that is a dispute in relation to the lease. The phrase 'in relation to' is broad and of wide amplitude and common in the language of the law (a release is another example) when the intention is to cast a very wide net to capture all controversies. On principle, the words are met here because there is a direct relationship between one subject and another. In relation to the lease, there is a dispute about its legality. It is begging the question for Mr Raptis to assert there is no lease because it is illegal. The dispute will be whether the lease was illegal; and that is a dispute in relation to the retail tenancy lease. The lease will not be illegal until a Court or Tribunal holds that to be so. I think it reads too much into the Act to say that the Act assumes the retail premises lease has to be first found to be lawful before the dispute resolutions of the Act are engaged.
53 Thus the lessors application has to be granted. The proceedings as against it must be dismissed.
54 The City of Melbourne has applied to strike out paragraphs 3 and 4 of the motion under r 23.02(a) and to strike out paragraph 5 of the motion under rule 23.02(c). Those paragraphs are so numbered in the part of the motion (at p 5) in which Mr Raptis states the orders he is seeking.
55 Under the rules, unless it is a matter for judicial review, the indorsement to be made on an originating motion is to specify the relief or remedy sought and the Act under which the claim is made, and, where the proceeding seeks a question to be answered, the indorsement is to state the question.[38] Given the irregular way that Mr Raptis has prepared the contents of the originating motion, that part of the motion together with the part headed 'Relief Sought' (at p 3) and the part headed 'Summary' (at p 4) have to be regarded as the indorsement in order to deal with the City's application. Rule 23.02 speaks relevantly of the indorsement of the claim on the motion, or on any part of it.
56 In paragraph 34 of this judgment, I have already dealt with the order sought in paragraph 5 of the motion concerning the summary judgment application in Becton Corporation Pty Ltd and Anor v Tricontinental Corporation Limited and Anor.[39] The most one can take from the short judgement is that the agreement in question in that case provided that 333 Collins Street Pty Ltd would purchase the land and that Becton would construct the building on finance to be arranged by Tricontinental.[40] Mr Raptis relies on that decision to seek a declaration that an occupancy permit was required for the café premises. The decision and its subject matter manifestly does not provide a basis for the declaration sought. I would strike out paragraph 5 as embarrassing or vexatious.
57 Paragraphs 3 and 4 concern s 253 of the Building Act and regulation 1011(1) of the Building Regulations. I have already dealt with those provisions in this judgment. The Building Act establishes a regime for general enforcement of its provisions. The relevant provisions are regulatory or penal in nature. Section 253(1) permits or authorises 'The Authority or a municipal building surveyor or any other prescribed body or person...' to bring proceedings for an order. The persons authorised to bring proceedings under the regulatory regime are a closed category.
58 Mr Raptis deals with the question of standing by asserting his human rights. In an affidavit sworn on 13 December 2016, he says he has standing as a 'person' based upon the right to life under s 9 of the Charter of Human Rights and Responsibilities and the right to peaceful assembly and freedom of association under s 16 of the Charter, postulated as the human right to have safe premises to assemble with his clientele. I am afraid to say this affidavit is discursive and very difficult to comprehend. It does not make much sense. I can do more than selectively quote parts of the affidavit that carry the essence of what he says about standing:[41]
59 The City apprehends, correctly I think, that Mr Raptis has interpreted the phrase 'prescribed body or person' in s 253 of the Building Act in a disjunctive way to enable a 'person' to bring proceedings. As submitted, I think it is plainly a composite expression. Mr Raptis simply does not have the authority or standing to bring proceedings for an order under s 253. Therefore paragraphs 3 and 4 of the motion must be struck out. In my view, paragraph 6 must also collaterally be struck out.
60 There remains the question of what orders to make. An absence of jurisdiction necessarily means the proceeding against the lessor has to be dismissed. The City does not ask for a dismissal because it regards itself as not yet in a position to say there is no possible case to be made even by amendment until the City can better know what case he is trying to make.
61 I think the first remedial step is to not permit the case as against the City to proceed by way of an originating motion. It must be by writ. Then, there can be an order converting the motion to a writ.[42] I think the most resolute and procedurally uncomplicated course is to strike out the whole of the indorsement on the originating motion except for the statement of 'Relief Sought' at page 3 of the motion. That should remain to make curial sense of the dismissal of the proceeding as against the lessor. Then, as a strike out permits of a replead, I would order that if Mr Raptis intends to proceed against the City he must first seek the Court's leave to file and serve a proposed statement of claim supported by an affidavit verifying the material facts. If an application for leave is not filed by 30 June 2017, then the proceeding shall by self- execution be dismissed. Unless the parties wish to be heard on that disposition, I would invite the defendants to prepare a draft order to that effect to be settled.
62 On the question of costs, I can see no reason why they should not follow the event. That is, the plaintiff pay the lessor's costs of the proceeding and the application, and pay the City's costs of its application.
[3] See Environinvest v Pescott [2011] VSC 325, [67].
[7] Plaintiff's affidavit sworn 15 September 2016, exhibit 24, p95.
[8] See Part 4 and 5 of the Building Act, passim.
[13] Ibid. See also plaintiff's affidavit sworn 15 September 2017, exhibit 35, p133.
[14] Plaintiff's affidavit sworn 15 September 2016, exhibit 24, p 100.
[18] Plaintiff's affidavit sworn 15 September 2016, exhibit 16, 17.
[20] Plaintiff's affidavit sworn 15 September 2016, exhibit 12.
[23] Plaintiff's affidavit sworn 2 Feb 2017, p26.
[25] Exhibit 7 to the plaintiff's affidavit sworn 15 September 2016.
[28] See State of Victoria v Tymbrook [2005] VSC 267 and Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd [2013] VSC 344.
[29] See generally, Chesire & Fifoot Law of Contract (10th Aust ed) [18.6] ff.
[36] [1990] HCA 16; (1990) 169 CLR 356 at 374.
[39] Exhibit 7 to the plaintiff's affidavit sworn 15 September 2016.
[41] See the plaintiff's affidavit sworn 13 December 2016: 'Summary 2 - Standing' at p10 ff.
Raptis
City of Melbourne & Anor [2017] VSC 247
(1982) 150 CLR 615
(1991) 100 ALR 111
(1992) 108 ALR 77
(1995) 131 ALR 377
(1961) 105 CLR 602
(1977) 14 ALR 457
(1995) 128 ALR 81
(1996) 137 ALR 506
(1984) 51 ALR 317
(1984) 55 ALR 265
(1987) 77 ALR 103
(1990) 169 CLR 356