State of Victoria v Bradto Pty Ltd

State of Victoria v Bradto Pty Ltd - [2006] VCAT 99 - VCAT 2006 case summary — Zoe

[7]

1 This matter, which comes before me by way of an application by the State of Victoria ("the SOV") against Bradto Pty Ltd ("Bradto") and Tymbook Pty Ltd ("Tymbook") for interlocutory injunctions, has a long and tortuous history. Given its nature, it has consumed an inordinate amount of time. It has already been the subject of quite lengthy and detailed rulings by myself on 7th September 2005 (which ruling did not involve Tymbook); 13th October 2005; 10th November 2005; and 1st December 2005. These are in addition to a costs ruling. It has also been the subject of a lengthy ruling by Deputy President Macnamara on 27 October 2005 and by the President, Justice Stuart Morris, on 29th November 2005. The number of sitting days consumed by what should have a been a moderately brief matter is quite extraordinary. When the merits of the application were finally addressed, after some 16 or 17 sitting days, the matter was disposed of in 3½ days, although some might consider that such a period was in itself lengthy for an application of this nature.

2 The power of this Tribunal to grant injunctions is found in s.123 of the Victorian Civil and Administrative Tribunal Act 1998. That power includes the granting of interim injunctions, a term which is of sufficient breadth to include relief in the nature of an interlocutory injunction. Further, as is stated in "Pizer's Annotated VCAT Act", Second Edition, at paragraph 4396, this Tribunal is influenced by equitable principles governing the award of injunctions when determining whether it is "just and convenient" to grant an injunction pursuant to s.123. At paragraph 4399, reference is made to the approach adopted by Morris J in Smith v Football Victoria Limited [2003] VCAT 936; (2003) 20 VAR 119, such approach being essentially that the Tribunal in granting interlocutory injunctions should take whichever course appears to carry the lower risk of injustice if it should turn out to have granted an injunction to a party who fails to establish its right at the trial, or would fail if there was a trial, or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial.

[8]

3 The factual background to this application was first set out in my ruling of 7th September 2005. In particular, I refer to and adopt the factual background set out in paragraphs 2-9 of that ruling which set out both a brief synopsis of the facts and something of the history of the litigation of the matter. I would again repeat that the core facts are as follows. Bradto and Tymbook are occupiers of premises known as the Triangle Site pursuant to Crown leases of some 50 years duration which the SOV alleges terminate on 31st March 2006. The SOV has plans to develop the Triangle Site. Expressions of interest were called for in relation to such development, and a shortlist of 3 possible developers has been announced. In order to provide what it alleges to be relevant information to the tenderers for the development, the SOV claims that, pursuant to the leases in question, it is entitled to obtain, for certain of its servants and agents, access to the relevant premises for the purpose of examination in relation to the possible presence of asbestos or other hazardous materials. It is conceded that such examination may involve the drilling of holes, the taking of samples and the like. Such access is opposed by Bradto and Tymbook. The SOV is seeking injunctions against both Bradto and Tymbook. The injunctions are in virtually identical terms and, in essence, seek to restrain Bradto and Tymbook from obstructing access to various servants and agents on certain terms and within certain hours. Save that permanent injunctions are no longer sought, and that what could be described as related proceedings have now been commenced by a company called Maztan Pty Ltd ("Maztan") which is sub-letting the site of which Bradto is the registered tenant, there is nothing the broad, general outline set out in the ruling of 7th September 2005 which requires substantial alteration.

4 Any findings of fact which I am making in this matter are for the purposes of the request for the granting of interlocutory injunctions and the arguments concerning them which are before me. I am making no ruling in relation to what could be described as the overall merits of any leasehold or tenure dispute between the SOV, Bradto, Tymbook and, for that matter, Maztan, insofar as such dispute goes beyond what is requested in the present application for injunctions. Indeed, as I understand it, one reason why Deputy President Macnamara determined that the matter should proceed solely on the basis of a request for interlocutory injunctions as opposed to permanent injunctions was so that any possible difficulty relating to issue estoppel could be removed.

5 Accordingly, the factual basis on which I am proceeding is essentially that which has been previously described. It is derived from the numerous affidavits and documents placed before me and the outlines provided by counsel. No viva voce evidence was introduced, and there was no cross-examination of deponents of affidavits.

6 In relation to the presentation of the matter, Mr Garde QC with Mr Fox and Mr Clarke appeared on behalf of the SOV. Mr North SC with Mr Nugent and Mr Hopper appeared on behalf of Bradto. Mr Hammond QC with Mr Reilly appeared on behalf of Tymbook. Lengthy submissions, both written and oral, were advanced on behalf of the parties. Whilst, of necessity, ultimately a timetable was imposed in relation to the making of oral submissions, the parties were then afforded the opportunity of making any further written submissions on any relevant aspect of the matter. Further such submissions were received.

7 The submissions made were of such length that I shall not attempt to set them out in detail here. I shall now present, in brief summary form, some basic aspects of the cases as advanced by the parties. These summaries incorporate all oral and written submissions, including any reply, and including written submissions subsequently received. I shall not deal with each such component separately. Furthermore, in these summaries I shall not refer to the numerous authorities which were placed before me in support of the many arguments which were advanced. I shall now deal with the cases for the respective parties in the order in which they were presented.

[11]

11 Thus, it is argued that the word "and" is used in the key clause to link various obligations. They are sequential covenants given by the contracting parties. Accordingly, where, in the key clause of the Crown lease, it is provided that servants or agents of Her Majesty (as landlord) are permitted at all reasonable times to enter upon and examine the condition of the demised premises, this is a separate covenant to the following one, which refers to the repairing and making good of all defects specified by written notice. The SOV may either send in servants or agents to examine the stated condition of the premises or it may repair and make good defects on the premises subject to written notice. One is not contingent upon the other. If the lessee fails to repair or make good the defects, the landlord can then make good the repairs at the expense of the tenant or reclaim the cost thereof. The obligation to permit the landlord to enter onto and examine the premises is not contingent upon some right of the landlord to effect repairs. The right of entry by the landlord or its agents is a separate right the subject of a covenant by the tenant, and it does not mean that such right to enter and examine only arises in the context of executing repairs.

12 If there is any doubt or ambiguity as to the meaning of the key clause, that doubt or ambiguity is to be resolved against the tenants as covenantors. Various authorities and texts are referred to in this regard. Furthermore, the clauses under consideration are to be interpreted in favour of the landlord. Its right is superior if there is any conflict apparent between its rights of entry and the covenant for quiet enjoyment. Authorities are again cited.

13 The persons for whom access is sought to the relevant premises are agents of the SOV. The authorities establish that the Victorian Government Solicitor, and its employees, may employ agents on behalf of the SOV. Accordingly, pursuant to the various authorities and the legislation, those persons who have been appointed to enter upon and examine the demised premises have been properly appointed. There is no relevant distinction between the SOV and "Her Majesty". Management of Crown lands is vested in the responsible Minister, pursuant to the provisions of the Lands Act 1958. Therefore the relevant government officers act on behalf of the Crown. The lessor, or landlord, is the SOV and the appointed agents, who may enter the demised premises, have been specifically so appointed by authorised officers of the Crown, via their appointment by the relevant department or public servant. The chain of authorised appointment is apparent and unbroken.

14 The demised premises constitute both the land and the structures erected thereupon. Any attempt by Tymbook to rely upon the Revocation and Excision of Crown Reservations Act 1955 ("the Revocation Act) is unsustainable. It is clear that title to the various pieces of land referred to in the Revocation Act was to be vested in the Crown free from all contrary interests.

15 Claims by Bradto and Tymbook to further leasehold interest in the land, in the sense of more extensive interests than those embodied in the Crown leases, should be rejected. Argument is advanced based upon statutory interpretation and authorities. These relate to both ownership of relevant buildings and to possible extensions of the leases.

16 Maztan is not a party and is not involved in the contract. If it wanted to be heard, it should have been joined in the application, but, despite the opportunity arising for this to occur, it did not happen.

17 In dealing with a document such as a Crown lease, the purpose for which a right under a covenant is exercised is irrelevant. If the landlord possesses a right to enter upon the premises and examine its state and condition, the motivation or purpose for the landlord so doing is irrelevant. The right to enter is a general one without reference to purpose.

18 The word "examine" as used in the relevant clauses is sufficiently broad to permit the digging or drilling of holes and the taking of samples. The authorities establish that the word "examination" refers to a more thorough and scientific process than, for example, the word "inspection", and extends to testing including, in the case of a building site, an examination of cores obtained by test drilling.

19 Whether the injunctions sought are mandatory or prohibitory, they should be granted. In fact they are prohibitory. The relevant authorities establish this. The balance of convenience favours the granting of the injunctions. The access proposed is within reasonable times. There is no evidence suggesting a financial loss on the part of the respondents. Sufficient undertakings have been offered. There is ample evidence of financial detriment if the injunctions are not granted, and of the fact that it is in the public interest that the relief be granted. The form of the proposed orders make it clear that there will be no significant interference with the operation of the enterprises of the respondents. If the injunctions are not granted, there will be significant financial detriment to the SOV and to others. Thus the balance of convenience favours the granting of the injunctions. It could hardly be argued but that there is a serious question to be tried.

20 An examination of the correspondence and documentation in the matter indicates that no significant delay has been caused by the SOV, and no significant prejudice has recurred as a result of any delay, should such have happened. Reasons are set out as to why this is so.

21 In summary, the orders sought should be granted.

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22 The lengthy submissions advanced on behalf of Bradto could be summarised as follows. Whilst the injunction sought is expressed in the form of a prohibitory injunction, in substance it is in fact mandatory. Mandatory interlocutory injunctions are granted only in very rare cases. It would be manifestly unjust both to Bradto and Maztan if such an injunction were granted in the present case, particularly bearing in mind that Maztan has on foot its own proceedings for injunctions seeking, inter alia, that relevant persons be enjoined from entering the premises.

23 Further, a high degree of assurance is required that, at trial, it will appear that the injunction was rightly granted.

24 Apart from the higher standards which may be required in the case of mandatory injunctions, an applicant for a non-mandatory injunction must satisfy the decision-making body that there is a serious question to be tried and, secondly, that the balance of convenience favours the granting of the relief sought. In the present case there is no serious question to be tried. This is so for a number of reasons. These include that the Tribunal should not be satisfied that the lease upon which the SOV relies is the lease which governs the legal relationship between Maztan, Bradto and the SOV; that the key clause does not permit invasive and destructive testing as is proposed, and, even if it does, such testing is not related to the SOV's interest in the premises as a landlord but for the provision of a report to short-listed tenderers who may wish to demolish the Palace Entertainment Complex which is on the demised premises; furthermore, there is no basis upon which the Tribunal can conclude that the SOV has in fact requested or sanctioned the proposed testing; and, in any event, there is no basis upon which the Tribunal can conclude that those who will carry out or organise the testing have been properly appointed by the SOV. In relation to the lease which is a governing relationship, Bradto asserts that an extension of the term of the lease was granted, this extension being effectively conditional upon the carrying out of certain works, and this has occurred.

25 In relation to the balance of convenience and other discretionary matters, these favour the proposition that the application should be refused. An injunction of the type sought should not be granted because so to do would have the practical effect of determining the litigation. The granting of an interlocutory injunction would effectively be the equivalent of granting a final injunction. Unless the case is so strong that it would be a waste of time and expense to let the action go to trial, the application for an injunction should be refused. That is not the situation here.

26 A comparison between the inconvenience, loss and damage suffered by the respective parties leads to the conclusion that the injunction should not be granted. There is no cogent evidence of any inconvenience, loss, or damage which would be suffered by the SOV if the injunction is refused. If the injunction is granted, there will be inconvenience, loss and damage, and also the disruption of business suffered by Maztan, it being a third party not before the Tribunal. In addition, in practical terms Bradto will be compelled to assist with the testing and examination of the premises in a situation where it is not the occupier.

27 The SOV does not come with clean hands. The SOV has effectively split its case, the injunction issue being a new part of a much broader dispute. It is also apparent from the history of the matter that there is no real urgency, and any urgency has been manufactured. In fact there has been very considerable delay on the part of the SOV, which is another reason why the injunction should not be granted. The orders sought are ambiguous and it would be impossible to comply with them. Damages would be a proper remedy in any event. In fact, any damages suffered by the SOV in the event that, at a final hearing, it is determined that Bradto has acted in breach of the key clause would be nil. By way of contrast, if the injunction is granted, Bradto is unlikely to ever have its rights adjudicated upon finally. In addition, Maztan, not being a party, will have no right to claim damages even if it be subsequently determined that an injunction was improperly granted.

28 In relation to the construction of the key clause, the buildings which it is proposed shall be examined do not belong to, and have never belonged to, the Crown or the SOV. The key clause is to be read conjunctively rather than disjunctively. Thus, the right to examine is restricted to an examination for the purpose of repairing and making good any defects specified by written notice given pursuant to the lease. Such things as the drilling of holes in the wall and the turning off of power do not fall within the meaning of the word "examine". The buildings in question are not part of the demised premises. The proposed works do not relate to the state and condition of the demised premises. To examine is not to take samples and conduct tests. Even if inspection in the terms proposed were otherwise permissible under the lease, the purpose for which the SOV is seeking to conduct such an inspection is not permissible. Extensive details concerning delay on the part of the SOV, the issue of who represents the Crown and who in fact appointed Noel Arnold and Associates as agents, and submissions in relation to alleged loss and damage suffered by the SOV are contained in the various appendices annexed to the written submissions filed on behalf of Bradto.

29 For a considerable number of reasons, the application by the SOV should be refused and no injunction should be granted.

[13]

30 Lengthy submissions were also made on behalf of Tymbook, and these could be summarised briefly as follows.

31 A detailed analysis of the historical documentation relating to the site now occupied by Tymbook reveals that the improvements upon it are owned by it. A consideration of the authorities and relevant pieces of legislation confirms this. The key clause is a repair clause. It is limited to the demised premises. If Tymbook owns the buildings they cannot form part of the demised premises. A lessor cannot lease to a lessee the lessee's own property. If Tymbook owns the buildings, they cannot be demised to it, the key clause cannot be relied upon, and the application for an injunction fails. Certainly there could be no high degree of assurance that the SOV would ultimately succeed at a final hearing.

32 As stated, an inspection of the numerous relevant historical documents reveals that Tymbook owns the buildings. (A lengthy analysis of these documents was presented by Mr Hammond. I do not propose to set it out here. Suffice to say that, in his submission, such an analysis led to the conclusion which I have set out). Further, a consideration of ss.41 and 42 of the Transfer of Land Act 1958 leads to the conclusion that the effect of registration of Tymbook's leasehold interest is to confer indefeasibility upon its title to its interest in the relevant land. When Palais Pictures Pty Ltd (Tymbook's predecessor) became the registered proprietor of a leasehold interest under the lease, it did not lose any interest which it previously had. If it owned the improvements, it did not lose them by reason of registration. If it retained ownership of the buildings, it could, and did, sell them to Tymbook. The lessee's ownership of the buildings was rendered indefeasible.

33 Further, a distinction is to be drawn between entities such as "Her Majesty", "the Governor in Council" and "the State of Victoria". Pursuant to the key clause, it is "Her Majesty" by her servants or agents who has the right to enter upon and examine the state and condition of the demised premises. It is not the State of Victoria.

34 Tymbook also adopts the arguments put forward on behalf of Bradto in relation to such matters as the nature of the injunctions sought, the test to be applied, the balance of convenience, the construction of the key clause, delay, the meaning of "examine", the validity of appointment of consultants and agents, and the like.

35 The orders sought pursuant to the proposed amendments of the SOV's application should not be granted and leave should not be given to amend in relation to the form of the proposed orders now sought. There are problems of interpretation. The proposed amendments beg questions as to the meaning of various words such as "impeding, obstructing, refusing or denying access". The various persons for whom access is sought have not been identified properly or at all. The proposed orders lack the required clarity, unambiguity and the like. Both the original orders sought and the proposed amendments should be refused.

36 Tymbook may well establish at the final hearing of the proceeding an entitlement to a further term of the lease of the land. If that be so, there would be no urgency in relation to consultants entering upon the premises for the stated purpose and this would weigh in the balance of convenience against the granting of the interlocutory injunctions sought.

37 The SOV has overstated the effect of the Revocation Act. The question of who now owns the buildings is a matter of fact to be determined by reference to what has occurred during the period of the lease and after the order of the Governor in Council. Palais Pictures Pty Ltd owned the buildings and sold those to Tymbook. The assignment of the lease and sale of the buildings was consented to by the Minister.

38 The consultants for whom access is sought pursuant to the key clause are not agents properly appointed by the SOV and any delay in relation to their work is largely a delay consequential upon delay on the part of the SOV. There has been no lawful or valid requests that the SOV, its consultants or agents enter and examine the buildings. There is no evidence that their reports would be of any significance in relation to a consideration of the obligations of the State and Tymbook under the lease, a proposition alleged on behalf of the SOV. Even if the consultants are experts, their entry and examination must be for the purpose of determining what repairs the Crown proposes Tymbook may have to make to the demised premises. In that regard, the lessor's right to enter and examine pursuant to the key clause must be limited to purposes related to the subject matter of the lease and not for some of the purposes referred to in the SOV's submissions.

39 The submissions advanced on behalf of the SOV to the effect that, if there is ambiguity, a covenant of a lease is to be interpreted against the covenantor is a principle of construction which has been supplanted by the principle that ordinary principles of contract apply to leases. The key clause is not an exclusion clause. The principal authority upon which reliance is placed for the proposition that the landlord's right is superior is distinguishable and subsequent authorities should be considered.

40 Tymbook does not take issue with the bringing of the proceedings in the name of the SOV. Rather, it submits that the SOV is not the lessor and has not appointed any agents for the purpose of the key clause. There is no evidence that the Crown, by the Governor in Council or otherwise, has acted to appoint the agents as agents of the lessor. There is no evidence before the Tribunal of any instruction from the lessor to others, such as officers of the Victorian Government Solicitor, to appoint any person as agent for any purpose. There is apparent confusion in the SOV's position regarding the question of who the lessor is and who has power to appoint agents. As is clear from the Constitution Act 1975, the "State of Victoria" is neither the Governor nor the Governor in Council.

41 The interpretation of the key clause as urged by the SOV is incorrect. The entry and examination must be entry and examination for "repair" purposes. The interpretation urged by the SOV is not supported by the use of the word "and" in other clauses in the lease, and the SOV has adopted a selective approach in this regard.

42 In summary, the injunctions sought should not be granted.

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50 Turning to the question of the balance of convenience, whether viewed separately from or in conjunction with the question of a serious question to be tried, this also seems to me to favour the granting of the injunction sought. On the basis of the material presented before me, the balance of convenience favours the SOV. It has given the usual undertaking. In addition, as part of the orders which it seeks, it gives further undertakings limiting the number of bore holes at each demised premises to 4 prior to the date on which it alleges the leases terminate. It is prepared to undertake to cause as little damage as may be possible and to make good any damage within 8 hours of any examination. It is limiting the hours during which it will seek access on the part of the examiners to between 8:00am and 5:00pm. (It is to be recalled that the businesses operating on each site, and particularly on the Bradto site, are frequently conducted during the evening and night hours). It will give 24 hours written notice of any proposed access. The proposed testing period is "in the order of a week or more" as conceded by Bradto in its written submissions. There is no cogent evidence before me of any loss which is likely to be sustained in relation to either premises. The SOV is not seeking to assert absolute ownership or entitlement in relation to the subject premises. It is not as if it is seeking something in the nature of a demolition order. It is not seeking that its servants or agents enter and burn, pillage and destroy. The contrary is the situation. It is seeking that its servants and agents enter for very limited testing purposes and is giving undertakings and seeking orders which would minimise any inconvenience. As stated, this is in addition to the usual undertaking in relation to damages.

51 I also accept that there is ample evidence of potential financial detriment to the SOV, which detriment might extend to some third parties. This is a substantial project of some importance to the SOV. Delay in the completion of a major project such as this can be expected to be productive of significant loss, and I accept the affidavit material in this regard. I also accept that detriment, and loss of confidence, may be caused to the third parties who are part of the tendering process in relation to the demised premises.

52 In summary, when the issues of a serious question to be tried and the balance of convenience are considered, the scales seem to me to swing in a most pronounced fashion in favour of the granting of an injunction of the type sought.

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53 It has also been argued that, if the injunction is granted, the SOV will in effect be obtaining final relief and Bradto and Tymbook would then effectively be deprived of a trial. It is argued that an injunction should not be granted unless the case for final relief is so strong that it would be a waste of time and expense to let the action go to trial. Firstly, I am not satisfied that, if the relief sought was granted, that would effectively constitute the granting of final relief. Whilst the SOV is undertaking that it and its agents will not dig more than 4 bore holes in the demised premises before 31st March 2006, the relief sought is otherwise open-ended. If it ultimately be determined that this interlocutory injunction was wrongly granted, the SOV would then be prevented from gaining further access for its relevant servants and agents. It is also to be remembered that, in relation to any access and examination which would have occurred, the SOV has given the usual undertaking as to damages. It is prepared to give additional undertakings which would have the effect of minimising damage and inconvenience. As previously stated, the granting of the relief sought in the form of an interlocutory injunction will not impinge upon general questions of leasehold and tenure, and the nature of the relief sought is a long way removed from something such as a demolition order or the permanent closure of a business.

54 Furthermore, as I understand it, Bradto and Tymbook have argued and shall be arguing that their leasehold interests in fact extend for many years into the future. If they succeed in that argument, questions of access and examination pursuant to the key clause may well extend far beyond 1st April 2006, which is currently the ostensible date pursuant to the leases by which they must vacate the premises. If they are incorrect in their argument and the leases expire on 31st March 2006, so that the passage of time would mean that the interlocutory relief practically became final relief, then the likelihood of ultimate success by the SOV may well have to be considered. On the other hand, if that be so, and bearing in mind the balance of convenience, it is very difficult to see what if any damage would occur as a result of examinations of the type sought which would be carried out during the death throes of 50 year leases with 2 months to run. This is particularly so when the undertakings are borne in mind.

55 Secondly, if the practical effect of granting the interlocutory injunction is in fact to afford final relief and to end the proceeding, the likelihood of the SOV succeeding in the proceeding should be considered. Throughout this ruling I have referred many times to the high degree of assurance of success which, whether or not that be the test, I possess in relation to the various arguments raised on behalf of the SOV. Obviously that is also the case in relation to the application generally. Should it be required, I possess that high degree of assurance that this is a proceeding which shall succeed at trial.

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(i) Clean Hands

56 I turn now to some of the other discretionary matters which have been raised. The first of these with which I shall deal relates to the SOV not coming with clean hands. Related to that is the question of delay. I am certainly not persuaded that the fact that the relief sought in this application by the SOV is narrower than the relief which it was seeking in the Supreme Court of Victoria is some sort of indication of bad faith or a lack of clean hands. It having been determined in the Supreme Court that jurisdiction in relation to a dispute such as this lay within this Tribunal, and the passage of time having increased the pressure upon it, the SOV opted to issue the present proceedings seeking injunctive relief out of this Tribunal. I see nothing in that course of events which should attract criticism, and certainly not criticism of such magnitude as to prevent injunctive relief from being afforded.

(ii) Delay and Lack of Urgency

57 I am similarly unimpressed by arguments concerning delay and an apparent lack of urgency on the part of the SOV. In relation to delay, I am not satisfied that there has been any untoward delay on the part of the SOV. Further, there is no cogent evidence before me that the passage of time has caused any prejudice to either Bradto or Tymbook. I agree with the submissions of Mr Garde in relation to these propositions. Certainly there has been no delay such as to constitute a bar to the obtaining of an interlocutory injunction, nor to constitute a discretionary factor operating against the application. Various items of correspondence have been referred to and placed before me in relation to this question. I accept that access was first formally requested on behalf of the SOV in relation to the Bradto site on 1st March 2005. I accept that the solicitors for Bradto sought an extension of time in this regard and also sought more information. It was not clear that access would be denied until 6th May 2005. In relation to Tymbook, access was not requested until 28th February 2005, and no response was received until 4th April 2005, when access was refused. The SOV then initiated legal proceedings in the Supreme Court of Victoria on 28th June 2005. Obviously some time was required for the preparation of those Supreme Court proceedings. I do not regard that delay as being untoward or excessive. Further, in each instance, Bradto and Tymbook were at least partially responsible for the amount of time that elapsed between the request for access and the issuing of proceedings.

58 By agreement, the question of jurisdiction was argued as a preliminary point before the Supreme Court of Victoria. On 29th July 2005 Byrne J determined that the Supreme Court had no jurisdiction. The applications presently before me were then issued on 25th August 2005. Again I do not consider that this constitutes any untoward delay. Nor do I consider that the error on the part of the SOV in initially commencing proceedings in the Supreme Court constitutes some reprehensible delay on its part. It may have made a jurisdictional error, and this may have retarded its request for relief, but there is certainly no suggestion that this was some sort of wilful time-wasting exercise.

59 I can find nothing by way of untoward delay on the part of the SOV in the manner in which it has conducted the litigation before this Tribunal. I have been critical of the amount of time which has been consumed in the conduct of this application, but little, if any, of that criticism has been directed towards the SOV. Indeed, at all times the impression that I have gained is that it has been anxious to push on with the litigation with all possible dispatch.

60 In his submissions, Mr Garde referred to several extracts from "Equitable Remedies" by Dr I Spry. These included the following:-

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63 The affidavit of Stephen Plozza of 24th August 2005 refers to delays being caused by the refusal of access as "... seriously compromising the planned redevelopment of the Triangle Site ...". Both Mr Watkinson and Mr Plozza work at the management level of the Department of Sustainability and Environment and have been directly involved in the proposed redevelopment of the Triangle Site. I accept their evidence. Neither was cross-examined. Other affidavit material also demonstrates the urgency of the situation as perceived by the SOV. There is nothing relating to the urgency of the situation which I accept as being indicative of a lack of clean hands on the part of the SOV. Certainly there is nothing which would persuade me that, for this reason, the relief sought should not be granted, or that the scales should in some way be tilted against the SOV.

(iii) Interference with Rights of Maztan

64 Another argument advanced, particularly on behalf of Bradto, is based upon alleged interference with the rights of the sub-tenant, Maztan. As has been stated, Maztan is not a party to the present application. Before Deputy President Macnamara, it was offered the opportunity to be heard and to be joined in the current proceedings. Through its counsel (it was made plain that Maztan has the same legal representation as Bradto), it declined so to do. Before me there was no application made on behalf of Maztan that it should be joined in these proceedings. As I stated in my ruling of 10th November 2005, whilst Mr North on behalf of Bradto raised the issue of matters being heard together, no such application was in fact made and indeed, prior to the application resulting in that ruling, I was not even informed that proceedings that might be related had been issued by Maztan or were in contemplation. In addition, as I also stated in that ruling, the argument at all times before me had been presented as one between the SOV and Bradto. The argument revolves around the key clause which shows Bradto as the registered lessee. Mr Gerry Pilarinos, a Director and Company Secretary of Bradto, stated in his affidavit of 5th September 2005 that Bradto was the lessee of the site. I agree with Mr Garde that there is no privity of estate or contract between the SOV and Maztan, that Maztan is bound under its arrangements with Bradto to observe the head lease, and that Bradto is in a position to hold Maztan to its obligations. Similarly, if an injunction of the type sought is granted, the SOV can hold Bradto to its obligations, something which it could not do in relation to Maztan, by reason of the existence of the sub-lease and the lack of privity of estate or contract between it and Maztan.

65 If Maztan has broader proceedings on foot which deal with the leasehold generally and tenure, so be it. Those proceedings can ultimately be determined on their merits, without there being any risk of issue estoppel arising as a result of this application. There is nothing in relation to Maztan that persuades me that an interlocutory injunction of the type sought should not be granted against Bradto or that there exists a factor which should in some way count against the SOV in its application.

(iv) Damages Appropriate Remedy

66 I am also not persuaded that the injunction should be refused because damages are the proper remedy. The nature of the relief here sought relates to the advancement of a major redevelopment and the operation and integrity of a tendering process. The SOV is seeking to prevent any obstruction to that redevelopment and that process. Damages are not an adequate remedy. I note that, in his most recent written submissions, Mr North asserted that damages would be nil. I am not moved by any argument in this regard.

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67 I have also taken into account other arguments which have been advanced. Some of these could be described as relating to the ultimate prospects of success by the SOV at a final trial. I shall now deal with such issues. As I have already stated, I am not persuaded that the SOV's prospects of success are slim, and, based upon the material currently presented, I am in fact of the contrary view.

(i) Construction of the Key Clause

68 In relation to the construction of the key clause, I am of the opinion that the argument advanced by Mr Garde is correct. This clause caused me some concern, in that it may have been able to be interpreted in a conjunctive rather than a disjunctive manner, as argued by Mr North and Mr Hammond. If it were so interpreted, the permitted entry of the servants and agents to examine the state and condition of the premises would be linked to the words "... and will repair and make good all defects specified by written notice ...". Thus, arguably, entry for the purposes of testing, boring holes and the like would not be entry for the purposes of repair and the making good of defects, and would not fall within the clause. Arguably, if that interpretation were correct, the SOV's prospects of ultimate success would be considerably diminished. However, despite the arguments of both Mr North and Mr Hammond to the contrary, I am persuaded that the interpretation urged by Mr Garde is correct. I accept that the lease is drafted in a style which provides sequential obligations. Clause 3 is a good example of this. In the key clause, the first obligation of the lessee is to permit specified persons to enter upon and examine the state and condition of the demised premises. The second obligation is to prepare and make good all defects specified by written notice. I agree with Mr Garde that the two are separate. If the lessor was aware of a defect in the premises, written notice could be served without the need for any entry and examination. The obligations seem to me to be separate, and it is at least well and truly arguable that the clause should be interpreted in this way, and the prospects of the success of such an argument would seem to me to be high.

69 I am also in agreement with Mr Garde that arguments as to the purpose behind the SOV's entry and examination are not to the point. Unless it could be argued that the reasons behind the proposed entry and examination are so nefarious as to render the SOV an entity not coming with clean hands, and I do not accept that such is the case, the ultimate purpose of the entry and examination seems to me to be irrelevant. Once the covenant is read with a disjunctive "and" - which is a proposition which I have accepted - the right to enter and examine is free-standing and not, for example, linked to the concept of repair. The right to enter and examine is a general right so to do.

(ii) Meaning of "Examine"

70 Having referred several times to the word "examine", I shall now deal with arguments concerning the meaning of that word. It seems to me to be strongly arguable that the meaning contended for by Mr Garde is correct. I favour that view. I do not accept that the right to examine is limited to a visual inspection. It seems to me to be unlikely that the landlord could enter upon and examine the premises and, if, for example, it found that structures were collapsing because of possible wood-rot or white ant infestations, then could not take samples or carry out tests in order to ascertain the cause of the malady. None of the cases to which I have been referred are precisely on point. The nearest one can get to the present situation are the observations of Wells J in R v Franklin (1979) 22 SASR 101 where, in dealing with the word "examination" in a totally different context, it was stated that:-

[34]

Again the context is different, but Cantley J seems to have been drawing a distinction between "inspection", which involves looking carefully and critically with the naked eye, and "examination" which he refers to in conjunction with "testing". In summary, even if a high degree of assurance were required that it would appear that the injunction was rightly granted, in relation to this point that high degree of assurance exists. Again, I am not saying that that is the test which should be applied. However, even if it was seen as the high water mark of satisfaction required, in my opinion it has been met. Again it is also to be remembered that the SOV has given the usual undertaking as to damages in addition to proposing other undertakings concerning the minimisation of damage to the premises. The nature of the testing to be carried out is also to be borne in mind. The possibility of detriment being suffered wrongfully by Bradto and Tymbook should be viewed in this light.

(iii) Appointment and Agency

72 In relation to the appointment and agency issues, I again agree with Mr Garde. The SOV is the landlord. Rent is payable to it. The lessor pursuant to Crown leases is the Crown (Her Majesty) in right of the State of Victoria. Ministers of the Crown are agents of the Crown in right of the State of Victoria. Members of the Public Service are similarly agents. They are in turn able to act with the authority of the Crown in right of the State of Victoria. Each of these propositions advanced by Mr Garde is a proposition with which I agree. They are certainly arguable, and, at an ultimate hearing, would have high prospects of success. Mr Garde advanced detailed arguments in relation to this point. I agree with them. I also accept his submission, and the material upon which it is based, and his assurance that each person who shall enter upon the demised premises has been or will be appointed an agent or officer of the Crown in right of the State of Victoria, and has been or will be properly so appointed.

(iv) Ownership of Buildings on Demised Premises

73 Similarly, I am not persuaded by arguments concerning the effect of ownership of the buildings upon the demised premises. I agree with the argument of Mr Garde that the demised premises are constituted by the land and the structures upon it. In his submissions, Mr Garde referred to various authorities in relation to this, including cases such as Kays Leading Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VicRp 62; [1962] VR 429 and also to statutory provisions such as s.62(1) of the Property Law Act 1958. In addition I agree with the submissions of Mr Garde in relation to the Revocation Act. When the wording of the key clause is considered, containing as it does references to examining the state and condition of the demised premises and repairing and making good defects, it seems to me to be even more strongly arguable that the demised premises include the space occupied by the buildings on the premises.

74 It also seems to me to be strongly arguable as an alternative, and, if necessary, I would have a high degree of assurance as to the success of the argument, that the buildings form part of the demised premises for the purposes of the leases during their currency, even if legal ownership of the buildings resides in the lessees and the buildings could theoretically be dismantled and removed at the expiration of the leases. In arriving at that conclusion, I have borne in mind not only those arguments which received considerable emphasis, but I have also considered the operation of s.28(2) of the Landlord and Tenant Act 1958 and the decision in Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue [2004] VSCA 10. In the present case, it seems to me to be strongly maintainable that the buildings are to be treated as part of the demised premises for the purpose of the key clause. This is so for a number of reasons, including the following:-

[42]

76 Thus, I am of the view that the SOV is successful in its application. In my opinion, and bearing in mind both the wording of s.123 of the Victorian Civil and Administrative Tribunal Act 1998 and equitable principles, it is just and convenient to grant the injunctions sought. This is subject to any "fine tuning" of the wording of the orders sought as shall now be discussed.

77 Subject to the following, leave to file and serve the proposed amended orders is granted. I am of the view that orders should be made of the type sought. I am not of the view that the wording as now drafted is inadequate, ambiguous, impossible to comply with, begs questions, or is otherwise unsatisfactory, as urged by Mr North and Mr Hammond. I was critical of an earlier draft of the proposed orders, but my criticisms have been heeded. Because there have been a number of attempts at the drafting of the proposed orders, and because I am not entirely clear as to whether Bradto and Tymbook wish to be heard further as to the precise wording (the current version of the proposed orders having been received with the written submissions after the conclusion of oral arguments) I shall entertain argument, if any, concerning the precise wording of the orders. However, it is my determination that orders of the type sought shall be made, and I might add that, whilst I have not yet heard argument, there is nothing in the proposed wording that currently causes me any concern. However, if it be thought necessary, I shall listen to any argument or suggestion concerning the exact words to be used.

78 I can only repeat again that the conduct of this application seems to me to have involved inordinately excessive time and expense. This is particularly so when the nature of the relief sought and its comparatively narrow ambit is considered, and when the nature of this Tribunal and the objects of the Act under which it operates are borne in mind.

79 I shall hear counsel as to the wording of the orders should this be thought necessary, and also as to any ancillary orders that may be required. My ruling as to the costs sought by the City of Port Phillip and Rebecca Doherty and the subpoenas served upon them shall be delivered separately and subsequently.

At a glance

Court

Decision date

Before

Source

Judgment (42 paragraphs)

State of Victoria v Bradto Pty Ltd (Palace Entertainment Complex) and Tymbook Pty Ltd (Palais Theatre)(Retail Tenancies) [2006] VCAT 99 (3 February 2006)

Parties

Legislation Cited (1)

Cases Cited (3)