1. The Landlord contends that the terms of the Lease granted it a lien over the Goods, which entitled it to retain the Goods pending payment of all amounts owing under the Lease.
2. The relevant clauses of the Lease which are said to give rise to the lien are:

8.1.1 If the reserved rent or any part of it or any other payment due is unpaid for a period of seven (7) days after the date on which it ought to have been paid whether or not any formal or legal demand has been made (the obligation to pay the reserved rent and the obligation to make other payments of money being fundamental and essential provisions in that were they not agreed by the parties as being so fundamental and essential the Lessor would not have entered into this Lease); or

then any one or more of the events referred to in sub-clauses 8.1.1 to 8.1.5 constitutes a repudiation of this Lease by the Lessee giving rise to the right of the Lessor to forfeit this Lease in any one or more of such events at any time or times and without notice or demand the Lessor has the right to accept such repudiation and terminate and forfeit this Lease consequent upon its acceptance of such repudiation and re-enter the Premises or any part in the name of the whole whereupon the estate and interest of the Lessee in the Premises is terminated and expel and remove the Lessee and those claiming under it without being taken or decreed guilty of trespass and without prejudice to any action or other remedy which the Lessor has or might or otherwise could have for arrears of rent or breach of covenant or for damages as a result of or flowing from any such repudiation and its acceptance and the consequent termination and forfeiture of this Lease including any loss or damage the Lessor may suffer as a result of the termination of this Lease prior to the date of the expiry of the Term and the Lessor will be freed and discharged from any action suit claim or demand by or obligation to the Lessee under or by virtue of this Lease. Further, the Lessor shall have a maintained a lien on all the goods, chattels and equipment of the Lessee in the Premises upon the Lessee being in breach of its obligations under the Lease and the Lessee agrees that the Lessor may remove and retain the said goods chattels and equipment until the Lessee has paid to the Lessor all amounts of money owing to the Lessor by the Lessee. [emphasis added]

The Lessor may upon re-entry remove from the Premises any stock-in-trade and other fittings and fixtures of the Lessee and store them in a public warehouse or elsewhere at the cost of and for the account of the Lessee without being deemed guilty of conversion or becoming liable for any loss or damage occasioned by removal or storage

1. Mr Bromley submits that the seizure of the Goods by the Landlord was unlawful and that the lien provided in Clause 8.1 was unenforceable because it had the affect of granting Landlord a right to distrain for rent. He contended that such a right is prohibited under s.12 of the Landlord and Tenant Act 1958, which provided:

It is hereby declared that on the 13th day of August One thousand nine hundred and forty eight distress for rent was abolished.

1. It was not contested that the prohibition to distrain for rent remains in force notwithstanding that s.12 of the Landlord and Tenant Act 1958 comprised a suite of provisions that were repealed with the introduction of the Consumer Affairs Legislation Amendment Act 2010. In particular, Mr Bromley submitted that under s.14(2) of the Interpretation of Legislation Act 1984, the repeal of s.12 of the Landlord and Tenant Act 1958 does not revive a right for distress for rent. That section states:

14 Provision as to the effect of repeal etc of Acts

(b) expires, lapses or otherwise ceases to have effect-

The repeal, amendment, expiry, lapsing or ceasing to have effect of that Act or provision shall not, unless contrary intention expressly appears-

(c) revive anything not in force or existing at the time at which the repeal, amendment, expiry, lapsing or ceasing to have effect becomes operative;

(d) affect the previous operation of that Act or provision or anything duly done or suffered under that Act or provision....

1. The Landlord concedes that if the retention of the Goods by it constituted distress for rent, such action would be unlawful.
2. Consequently, Mr Bromley submitted that the action of the Landlord in taking possession and retaining the Goods until rent arrears were paid constitutes distress for rent. He argued that Clause 8.1 of the Lease was unenforceable and the Landlord had no right to retain the Goods in reliance upon that clause.

1. Mr Mereine relied on a number of authorities in support of the contention that Clause 8.1 did not operate as distress for rent. He argued that Clause 8.1 was similar to the clauses that were considered by the Supreme Court of Queensland in Van Der Velde v Marklyn Enterprises Pty Ltd [1] and the Supreme Court of Western Australia in RAC Finance Ltd v Fewton Pty Ltd (in liquidation).[2] In both cases, the court determined that the contractual clause giving rise to the lien did not constitute distress for rent. In particular, in Van Der Velde, Wilson J stated:

[12] At common law if a tenant did not pay his rent, the landlord could seize and retain his goods. If the tenant wished to regain possession of his goods, he had either to pay the rent or to apply for an order restoring them (i.e. to "replevy" them). The landlord could not sell the goods. The Distress for Rent Act 1689 (UK) granted the landlord power to sell. But from the late 19th century the availability of the remedy in England was restricted by a series of statutes. There were similar developments in Queensland, culminating in the abolition of distress for rent (and rates) by s 103 of the Property Law Act 1974...

[13] Clause 44.2 is a contractual provision between the tenant and the respondent. It is binding on the applicants as liquidators if it is otherwise valid. By virtue of that clause the respondent had the right, exerciseable in the event of termination by re-entry, to retain possession of the tenant's property. That right is clearly intended to survive the termination of the tenancy. By contrast, distress could be levied only during the subsistence of the tenancy: once a tenancy has been terminated, the landlord could not thereafter distrain for rent: see Woodfall para 9.006. It follows from this fundamental distinction that cl 44.2 is not tantamount to distress for rent.

In my view there are two answers to the serious character of the issue which the plaintiffs contend for.

The first is that, the right of re-entry having been exercised, there is no actual existing demise. There are not the conditions which on the classic formulations of distress are necessary for it to be considered that the Act of 1936 has in some way been transgressed.

Secondly, I do not consider in any event that CL5(1)(b) can be categorised as the exercise of the remedy of distress or a distress for rent. In my view it is clearly a provision of the powers arising upon re-entry upon the termination of the demise. Viewed in that light and characterised as such it simply does not come within any prohibition that may follow from the 1936 Act and cannot be regarded as void or unenforceable for that reason.[3]

1. Mr Mereine submitted that Clause 8.1 merely gave the Landlord a right to a possessory lien to secure payment of any monies owed to the Landlord. However, the possessory lien did not come into effect until the Landlord actually took possession of the Goods, which occurred after the Lease had been terminated. Accordingly, he argued that until the Landlord took possession of the Goods, it merely had a contractual right to a lien which had not yet crystallised.
2. I accept that a possessory lien cannot operate in the absence of the lienee actually having possession of the goods. In Van Der Velde, Wilson J stated:

[14] As counsel for the respondent submitted, cl 44.2 confers a mere possessory lien. It is not a charge requiring registration under s.262 of the Corporations Act 2001, the critical difference being that it depends for its existence on possession whereas a charge exists regardless of possession.

1. Similarly, in Protean Enterprises (Newmarket) Pty Ltd v Randall,[4] the plaintiff sought to enforce a lien over animal carcasses slaughtered at premises leased by it but used by an operator of the abattoir under a licence granted to it by the plaintiff. The carcasses were, however, in the possession of a third party, namely the defendant butchers, who had collected the carcasses from the operator of the abattoir. Although the Full Court of the Victorian Supreme Court did not find any right to a lien existed, Gillard J, who delivered the judgement of the court (Gillard, Menhennitt and Norris JJ) make the following comments as to the operation of a possessory lien:

So far as possessory liens are concerned, they may only arise from possession of property given to the lienee by or with the authority of the owner of the property.[5]

1. Consequently, the court held that as the licensee did not have possession of the carcasses, no lien could arise in any event.
2. Consequently, Mr Mereine contended that as distress for rent could only be levied during the subsistence of the lease and that the exercise of the contractual lien only crystallised after the lease had come to an end, it could not be said that Landlord had exercised a 'right' to distrain for rent.

1. It is common ground that the Landlord did not take any steps to sieze and retain the Goods until after the Lease was terminated following its re-entry. Consequently, the facts in the present case are to be distinguished from those considered by the Tribunal in Munchies Pty Ltd v Nikolitsis.[6] In that case, the landlord re-entered demised premises and refused to allow the tenant to collect plant, stock and equipment until certain demands regarding payment of rent were met. Deputy President Macnamara (as he then was) held that there was no contractual right to grant a lien and further determined that the landlord's re-entry was unlawful and constituted trespass. He held that the demand by the landlord constituted distress for rent and was unlawful. However, Munchies Pty Ltd is very different to the facts in the present case. In particular, here it is common ground that the re-entry was lawful and that the lease was lawfully terminated prior to the Goods being seized and retained.
2. At first glance, the facts in the present case appear similar to those in Van Der Velde and RAC Finances. In Van Der Velde, the contractual right to retain the Goods was held to be an accrued right that survived termination of the Lease. In the present case, Mr Mereine submitted that the seizure and retention of the Goods following termination of the Lease was the exercise of an accrued contractual right. In other words, it was a contractual right which vested prior to the Lease coming to an end.
3. However, Mr Bromley contended that Clause 8.1, on its proper construction, would also allow the Landlord to maintain a lien on the Goods in circumstances where the Tenant breached any of the terms of the Lease as identified in subclauses 8.1.1 to 8.1.6. In other words, he contended that the right to maintain a lien was not conditional upon re-entry and termination but was a general right that could be exercised while the Lease was in existence. In those circumstances he argued that Clause 8.1 purported to give the Landlord a right to distrain for rent, contrary to s.12 of the Landlord and Tenant Act 1958, and as a consequence, should be rendered void being against public policy.
4. There is some force in that argument. If the clause is to be construed as giving the Landlord a right to retain the Goods during the currency of the Lease pending payment of rent in arrears, then I consider that the clause is tantamount to distress for rent.
5. Mr Mereine argued that the clause is not to be construed in the manner suggested by Mr Bromley. He submitted that the last sentence of Clause 8.1 must be read contextually and not in isolation. Clause 8.1 is entitled RE-ENTRY AND FORFEITURE. It prescribes the events that give the Landlord a right to re-enter and terminate the Lease. It sets out the procedure to be adopted to effect that outcome. According to Mr Mereine, the clause does not create rights that are not linked to the re-entry and forfeiture of the Lease. Mr Mereine pointed to the last sentence of the clause, which commences with the word Further, which he contended made it clear that the right to a lien only arose after termination and forfeiture. In other words, it conveyed the meaning that in addition to the rights and indemnities sought to be provided following re-entry and forfeiture, the Landlord also had a right to maintain a lien on the Goods, following re-entry and forfeiture.
6. Mr Mereine submitted that the interpretation of Clause 8.1 as being a right contingent upon there first being re-entry and forfeiture is consistent with the words of Clause 8.4. Clause 8.4 describes what is to happen to the Goods when removed from the Premises. It commences with the words: The Lessor may upon re-entry.
7. Mr Mereine argued that had there been a right to maintain a lien over the Goods for breach alone, then Clause 8.4 would not have been expressed with the proviso may upon re-entry. It would have been expressed with words that connected it to a lien crystallising upon default.
8. I have some difficulty in accepting the construction of Clause 8.1 as meaning that the right to maintain a lien over the Goods crystallised after termination of the Lease. The words of the clause are confusing because they appear to either include superfluous words or are missing a connecting word, such as "or". In my view, it is likely that the drafting of the clause contains a typographical omission by failing to include the connecting word "or", such that the clause should be read as:

Further, the Lessor shall have a [or] maintain a lien on all the goods ...

1. The clause contemplates that the Landlord is entitled to maintain a lien over goods seized and retained by it, which indicates that a lien must already be in existence prior to termination of the Lease because the right to remove and retain the Goods crystallises upon the Tenant being in breach. Naturally, that would mean that the Landlord must have already had possession of the Goods as a possessory lien cannot exist without the lienee having possession of the goods in question.
2. That interpretation is consistent with the words that follow: upon the Lessee being in breach of its obligations under the Lease. In other words, the clause purports to give the Landlord a right to remove and retain the Goods upon breach of the Lease, following which a lien arises in favour of the Landlord which can be maintained until the Tenant has paid to the Landlord all amounts of money owing to the Landlord.
3. As I have already commented, that interpretation of the clause is also consistent with the nature of possessory lien. In particular, it is illusionary to speak of a right to a possessory lien because a lien cannot exist in the absence of the lienee first having possession of the goods. There is no bear right to a lien without there also being a corresponding right to possess or sieze. Properly construed the right that Mr Mereine speaks of is the right to sieze or possess.
4. In the present case, I find that that the right to seize and possess the goods crystallised upon breach. So much is clear from the express words of the clause. In that sense, in so far as the Landlord purports to exercise the right to seize and possess during the currency of the Lease, such conduct amounts to distress for rent and is unlawful.
5. Mr Bromley submits that in those circumstances, the clause is against public policy and therefore rendered void. I was referred to a number of authorities dealing with the issue whether a clause is rendered void where it purports to authorise conduct that is otherwise prohibited by law. In Yango Pastoral Company Pty Ltd v First Chicago Australia Limited,[7] the High Court of Australia considered whether a mortgage, loan and guarantee were illegal and unenforceable because the mortgagee bank had contravened s.8 of the Banking Act 1959, by not having the required authority to carry on banking business in Australia. Gibbs AJA stated:

There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful: (1) The contract may be to do something which the statute forbids; (2) The contract may be one which the statute expressly or impliedly prohibits; (3) The contract, although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful; or (4) The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits.[8]

It is often said that a contract expressly or impliedly prohibited by statute is void and unenforceable. That statement is true as a general rule, but for complete accuracy needs qualification, because it is possible for a statute in terms to prohibit a contract and yet to provide, expressly or impliedly, that the contract will be valid and enforceable. However cases are likely to be rare in which a statute prohibits a contract but nevertheless reveals an intention that it shall be valid and enforceable, and in most cases it is sufficient to say, as has been said in many cases of authority, but the test is whether the contract is prohibited by the statute.[9]

1. Mr Mereine argued that category 4 is applicable to the present case. He submitted that even if the right to seize and possess crystallised upon the Tenant being in breach of the Lease, the exercise of that right did not occur until after the Lease had come to an end. Accordingly, the conduct authorised pursuant to Clause 8.1 was not contrary to law and the clause is therefore not rendered void. In Yango Pastoral the High Court ultimately did not find the mortgage, loan and guarantee void because:

The contract was not "nullified for disobedience to a statute", within the rule of public policy discussed by Lord Wright in Vita Food Products Inc v Unus Shipping Co Ltd, (46) because the disobedience in the present case was not in the performance of the contract it was something quite collateral.

1. Similarly, Fitzgerald v F J Leonhardt Pty Ltd,[10] concerned a case where a licensed driller sued the landowner for the cost of drilling bore holes on the landowner's property. However, at the relevant time, four of the bores that were drilled were unauthorised under the Water Act 1992 because the landowner had not obtained bore construction permits. The landowner contended that, by seeking to recover against him, the driller was wrongfully seeking to further an illegal purpose. Dawson and Toohey JJ stated:

It has sometimes been said that a contract is illegal if its performance involves breach of a statute passed for the protection of the public (26) but, stated in that way, the proposition is too broad. The purpose of the statute may be served by the imposition of a penalty, notwithstanding that it is for the protection of the public (27).

... A plaintiff will not be denied relief under the principle unless he has to rely upon an unlawful or immoral transaction to establish his cause of action (29).[11]

1. Mr Mereine conceded that had the Landlord seized the Goods during the currency of the Lease, then the Landlord would be in breach of the Landlord and Tenant Act 1958 and could not rely on the principles referred to in Yango Pastoral and Fitzgerald.
2. I do not consider that the facts in the present case fall within what has been described as a category 4 circumstance. In my view, Clause 8.1 purports to give a right to sieze and possess the Goods upon breach and during the currency of the Lease, which is prohibited by statute, notwithstanding that the seizure and possession may have occurred after the Lease was terminated. Nevertheless, the seizure and possession of the Goods occurred pursuant to and in reliance upon a clause which is contrary to statute. In Yango Pastoral Gibbs AJA stated:

The question whether a statute, on its proper construction, intends to vitiate a contract made in breach of its provisions, is one which must be determined in accordance with the ordinary principles that govern the construction of statutes. "The determining factor is the true effect and meaning of the statute" (St John Shipping Corporation v Joseph Rank Ltd. (23). "One must have regard to the language used and the scope and purpose of the statute" (Archbolds (Freightage) Ltd v Spanglett Ltd (24). One consideration that has been regarded as important in a great many cases, of which Cope v Rowlands (25) is a notable example, is whether the object of the statute - or one of its objects - is the protection of the public.[12]

1. The conduct which Clause 8.1 purports to authorise is prohibited by statute. The proposition that the clause can be saved, merely because it is able to be exercised in a manner which would not otherwise offend the Landlord and Tenant Act, is against the object of the Act, namely to prevent a landlord from holding the property of a tenant pending payment of money due under the lease. The language and the scope of the Landlord and Tenant Act clearly prohibit a landlord from exercising a right to distrain for rent. However, Clause 8.1 purports to give the Landlord that right. Accordingly, I find that Clause 8.1 is void and enforceable, insofar as it purports to give the Landlord a right to hold the Goods pending payment of money due under the Lease.
2. In that sense, Clause 8.1 is expressed differently to the clauses under consideration in Van Der Velde and RAC Finance. In both those cases, the clause giving the Landlord a right to seize and retain was expressed to only operate after the termination. The right to seize and retain did not crystallise upon breach alone.
3. Consequently, I do not find that there is any contractual right to seize and retain the Goods pending payment of monies owing under the Lease. The seizure and subsequent retention, whether it occurred before or after termination is unlawful because the clause upon which such a 'right' relies is void as being against public policy.
4. Further, I do not accept that Clause 8.1 can be read down so as to only give the Landlord a right to seize and retain the Goods following termination of the Lease (and thereby avoid infringing the Landlord and Tenant Act). In my view, the clause was expressed to operate during the currency of the Lease because it purported to give a right that crystallised upon breach, was contingent on the future performance of the Lease and did not state that the right was exercisable after termination of the Lease, which was case in Van Der Velde and RAC Finance.
5. If I were to accept that the right to seize and retain the Goods only crystallised after the Lease came to an end, then on what basis can it be said that a contractual right to seize and retain the goods exists? The contractual foundation to the right to seize and retain the Goods is the Lease itself. However, if the Lease no longer exists, how can such a right survive independent to it?
6. In Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Ltd [13] the High Court considered the operation of accrued rights. Dixon and Evatt JJ stated:

In general the termination of an executory agreement out of the performance of which pecuniary demands may arise imports that, just as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence if it depends upon a further act of performance. If the title to rights consists of vestitive facts which would result from the further execution of a contract but which have not been brought about before the agreement terminates, the rights cannot arise. But if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or contingent upon some event, not involving further performance of the contract, does not prevent it maturing into an immediately enforceable obligation. [14]

1. In my view, the seizure and retention of the Goods pursuant to Clause 8.1 is an act in performance of the Lease. The words comprising the last sentence of Clause 8.1 entitle the Landlord to take certain steps upon breach, namely to seize and possess the Goods. The only vested and accrued right is the right to maintain a lien over goods seized and possessed pursuant to that clause. However, if the right to seize and possess is not exercised during the currency of the Lease, then that right extinguishes upon termination of the Lease. Clause 8.1 does not give a right to seize and possess the Goods in the absence of a subsisting lease. It only gives a right to maintain a lien over goods already seized and possessed pursuant to Clause 8.1.
2. Therefore, I do not find that Clause 8.1 created an accrued right, the effect of which was to permit the Landlord to seize and retain the Goods after the Lease had come to an end. The 'right' to seize and retain the Goods, albeit contrary to the Landlord and Tenant Act, was extinguished once the Lease came to an end.
3. In my view, Clause 8.4 does not take the matter any further. That clause only operates to allow the Landlord to remove the Goods and store them at the Tenant's cost, pending collection by the Tenant. The clause says nothing about giving the Landlord a right to seize and hold the Goods, pending payment by the Tenant of all monies due under the Lease. Moreover, there are no words expressed in Clause 8.4 which tie it to the purported right to retain the Goods, given in Clause 8.1. Clause 8.4 stands independently from the subclauses dealing with re-entry and forfeiture.
4. Consequently, the question reserved for preliminary hearing as to whether the retention by the Landlord of goods belonging to the Tenant constitutes distress for rent is answered in the negative. The Goods were seized and retained after the Lease had come to an end and in those circumstances, it cannot be said that the conduct amounts to distress for rent. However, the subsidiary question whether the retention of those goods is pursuant to a contractual lien in favour of the Landlord is answered in the negative. There is no contractual or other right to seize and retain the Goods following termination of the Lease, pending payment of outstanding monies owed under the Lease.

[1] [2005] QSC 239

[2] (Unreported, Supreme Court of Western Australia per Nicholson J, 9 December 1993)

[4] [1975] VicRp 30; [1975] VR 327.

[6] [2006] VCAT 929.

[7] [1978] HCA 42; (1978) 139 CLR 410

[10] [1997] HCA 17; (1997) 189 CLR 215.

[12] [1978] HCA 42; (1978) 139 CLR 410 at 413-14

[13] [1936] HCA 6; (1936) 54 CLR 361