The Trust Company Limited v Blue Train Cafe Pty Ltd [2024] VSC 232

LEASES AND TENANCIES - Commercial leases - Where tenant must pay ongoing costs for services attributable to premises each month is payable by the tenant each month - Dispute over calculation of monthly ongoing costs - Application for interlocutory injunction by the tenant - Whether the full amount of outstanding outgoing charges needs to be paid in advance as a precondition to interlocutory injunction - Matter of discretion for VCAT - Proper application of principle does not mandate such a precondition.

1 This proceeding is brought pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act"). The appellant, The Trust Company Limited (ACN 004 027 749) ("the Appellant"), seeks leave to appeal Orders 1 to 4 of the orders made by Deputy President Riegler ("the Orders"), constituting the Victorian Civil and Administrative Tribunal ("VCAT" or "the Tribunal") made on 19 January 2024 in VCAT proceeding number BP1414/2022. The Tribunal published reasons for the making of these Orders ("Tribunal Reasons").[1] The appeal was heard on 11 April 2024.

2 The Appellant is the registered proprietor of premises known as Shop UR3/U10, within the Southgate Retail Precinct ("the Premises"). The respondent, Blue Train Cafe Pty Ltd (ACN 163 850 815) ("the Respondent"), is the tenant of these premises which it operates as a café/restaurant. The relationship between the parties is governed by a lease dated 21 November 2012, Deed of Variation of Lease dated 22 May 2013 and an Assignment of Lease dated 13 August 2013 ("the Lease").

3 Since late 2019, the parties have been in dispute over the condition of the Premises, the payment of outgoings for the cost of services attributable to the Premises (referred to as "OPEX Charges"), and other matters largely relating to a claim for loss based on an allegation that the Appellant has allowed the shopping complex in which the Premises are located to fall into disrepair.

4 The proceeding in the Tribunal in relation to which this appeal is brought concerns a claim for damages by the Respondent against the Appellant in the vicinity of $2 million. As well as disputing the claim against it, the Appellant counterclaims for contended rental arrears of $404,435.02 spanning back to October 2019.

5 On 1 November 2023, the Appellant served the Respondent with a notice of breach of lease under s 146 of the Property Law Act 1958, alleging that the Appellant had failed to pay rent, outgoings and other charges (including GST) amounting to $445,826.27 ("the Default Notice").

6 As indicated, the parties have been in ongoing dispute about the calculation of OPEX Charges. Specifically, OPEX Charges are expenses incurred by the Southgate Retail Precinct, which are apportioned amongst all tenants, including the Respondent. The Respondent disputes the amount of expenses apportioned to it. With the disparity in the parties' calculations spanning several years, the aggregate amount of OPEX Charges in dispute exceeds $400,000.

7 The dispute at the heart of the VCAT proceedings concerns the Respondent's application for an interlocutory injunction restraining the Appellant from terminating or forfeiting the Lease in reliance upon the Default Notice. The central issue is what proportion of the amount claimed by the Appellant in arrears and the subject of the Default Notice arises from the disputed OPEX Charges. The position of the Respondent as stated in the Tribunal's reasons is that the whole of the amount claimed by the Appellant relates to the disputed OPEX Charges. The Respondent submitted that since the dispute regarding calculation of the OPEX Charges spans back to late 2019, the Appellant should not be allowed to rely on that dispute as a basis upon which to terminate the Lease. Though the Appellant conceded that much of the amount claimed in the Default Notice arises from the disputed OPEX Charges, it argued that not all amounts could be attributed to the disputed OPEX Charges. The Appellant referred to electricity and gas charges which were levied against the Respondent in 2020 but remain unpaid.

8 In the Orders, the Tribunal granted an interlocutory injunction restraining the Appellant from entering into possession of the Premises in reliance on the Default Notice dated 1 November 2023. The Orders in this respect were made conditional upon the Respondent continuing to pay full rent in advance of each month, and 10% of the Appellant's monthly calculation of the OPEX Charges; which did not need to be paid in advance of each month. The Tribunal acknowledged that it had not heard from the parties before determining the 10% figure with regard to the OPEX Charges and so, in Order 3, expressly reserved liberty to apply with respect to the calculation of OPEX Charges.[2] At the hearing, the parties reached the view[3] that the Tribunal's calculation of OPEX Charges was likely based on a factual misunderstanding, with the percentage of turnover paid towards rent and OPEX Charges, 7.5% being mistaken for the percentage of turnover being paid towards the OPEX Charges.[4]

9 By the proposed Notice of Appeal, dated 15 February 2024, the Appellants seek to appeal Orders 1 to 4 of the Orders of the Tribunal. They are set out below:

(1) UPON THE UNDERTAKING BY THE APPLICANT to abide by any order the Tribunal may make as to damages in case the Tribunal shall hereafter be of the opinion that the respondent shall have sustained any damages by reason of this order for which the applicant ought to pay the respondent, the Tribunal orders that until the further hearing of the applicant's application or until further order, the respondent by itself, its servants and agents is restrained from entering into possession of the premises located and known as Shop UR3/U10, within the Southgate Retail Precinct, Southbank, Vic, 3006 ('the Premises') in reliance upon the notice of breach of lease dated 1 November 2023 ('the Default Notice').

(2) Subject to Order 3 of these orders, Order 1 is subject to or conditional upon the applicant paying future rent (payable in advance), outgoings which are specific to the Premises and future outgoings known as OPEX charges, fixed at 10 percent of the respondent's calculation of OPEX charges or such other percentage as agreed between the parties (pending the final hearing and determination of the correct amount of OPEX charges payable by the applicant).

(3) The parties are at liberty to apply to adjust the percentage of OPEX charges payable by the applicant pending the final hearing and determination of applicant's claim and respondent's counterclaim, the subject of this proceeding.

(4) For the avoidance of doubt, the interlocutory injunction granted under Order 1 of these orders:

(a) is confined to restraining the respondent from re‑entering the Premises in reliance upon the Default Notice; and

(b) does not otherwise prevent the respondent from exercising its rights under the Lease for a breach of the Lease unrelated to the subject matter of this proceeding.

A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding -

(a) if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or

(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.

11 It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law, and secondly, that the Court gives leave to appeal. The legislative policy underlying these provisions is that "VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal".[5] It follows that "[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal".[6]

12 The leave requirement under s 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[7]

The requirement for leave under s 148(1) of the [VCAT Act] "is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the court do found the subject matter of the appeal".[8] It also confers a discretion about whether to grant leave[9] which an applicant must persuade the court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[10] It will ordinarily be necessary (in addition to a clearly articulated question of law)[11] for an applicant to make out a prima facie case[12] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[13]

13 An additional safeguard has since been imposed. Effective from 1 May 2018, the VCAT Act was amended to include s 148(2A).[14] The section provides:

The Trial Division of the Supreme Court may grant an application for leave to appeal under this section only if it is satisfied that the appeal has a real prospect of success.

14 This amendment sees the replacement of the requirement that an applicant seeking leave to appeal from VCAT to the Trial Division of the Supreme Court must show that there is a real or significant argument to be put that an error below exists,[15] sometimes referred to as the Hulls test.[16] Instead, all applicants under s 148 are now subject to the same and more burdensome requirement: they must demonstrate that the appeal has a real prospect of success.[17] With respect to applications subject to the same test,[18] the Court of Appeal has said:[19]

The test under s 63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a "real" as opposed to a "fanciful" chance of success; that the "real chance of success" test is to some degree a more liberal test than the "hopeless" or "bound to fail" test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent's case is not "hopeless" or "bound to fail", it does not have a real prospect of succeeding.

15 The new requirement of s 148(2A) makes express the restraint this Court ought exercise when reviewing decisions of VCAT, a restraint long and more generally recognised in case authority. In considering applications of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission said:[20]

Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.[21] The focus of attention is on the substance of the decision and whether it has addressed the "real issue" presented by the contest between the parties.

16 Similarly, in Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc, Ashley J said:[22]

This Court has said more than once that it should not examine briefly stated reasons by an expert Tribunal in an over‑legalistic manner or by the over‑zealous drawing of inferences in order to disclose some supposed error; although where unambiguous language is used, the user should be taken to mean what the words say. I should add that the Court is not entitled to interfere with the Tribunal's decision unless it is satisfied that there was in fact a vitiating error of law. It is not enough for the appellant to show that the Tribunal's reasons for its decision are so expressed as to suggest the possibility that it proceeded upon a wrong view of the law. In support of the several propositions that I have just stated I refer to Portland Properties Pty Ltd v Melbourne & Metropolitan Board of Works,[23] Michaelis Bayley (Vic) Pty Ltd v Melbourne & Metropolitan Board of Works[24] and Teston Investments Pty Ltd v Melbourne & Metropolitan Board of Works.[25]

17 Additionally, "[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons."[26]

18 It is clear from the authorities to which reference has been made that the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court and that a decision of such a tribunal is not to be interfered with absent a vitiating error of law.[27]

19 Moreover, the authorities also indicate and emphasise that it is not the function of the Court on an application under s 148 of the VCAT Act to substitute its own views on the evidence which is before the Tribunal, its relevance, significance and inferences which might be drawn from it. Thus, the Court of Appeal in Hoskin v Greater Bendigo City Council[28] said, with respect to an appeal pursuant to s 148 of the VCAT Act:[29]

1. Such an appeal is limited to an appeal on questions of law.[30]
2. It is not open to this Court to entertain further debate as to the merits of the Tribunal's decision on the facts. It is only if a conclusion on the facts was not open to it that an error with respect to factual matters will involve a question of law.[31]
3. This Court's function is limited to the exercise of a supervisory jurisdiction intended to ensure that the merits review which the Tribunal carried out was undertaken in accordance with its statutory obligations.

20 For the reasons which follow, I am not satisfied that the Appellant has established any proper basis upon which leave to appeal should be granted on any of the five proposed Grounds. Moreover, as these reasons indicate, an appeal on any of these proposed Grounds would, in my view, have failed in any event, even if leave to appeal were to have been granted.

21 Leave to appeal is sought with respect to the following questions of law by the Appellant in the proposed Notice of Appeal:

(1) Whether the Tribunal correctly applied the law with respect to the granting of an interim injunction when making the Orders;

(2) Whether there was any evidentiary basis for order 2 of the Orders; and

(3) Whether, as required by s 98(1)(a) of the VCAT Act, the Tribunal accorded the Appellant natural justice when making order 2 of the Orders.

22 Five grounds were advanced in support of the appeal. Grounds 1 to 3 focus on the Tribunal's granting of the injunction and were addressed together by counsel for the Appellant at the hearing.[32] Grounds 4 and 5 were proffered as alternative grounds, effectively going to whether the Tribunal misunderstood evidence. The grounds are set out below:

(1) When granting the interlocutory injunction in order 1 of the Orders, the Tribunal erred (at [35‑36] of the Reasons) by failing to apply the equitable maxim that he who seeks equity must do equity and consequently by failing to impose conditions that the respondent pay:

1. The amount of the Appellant's OPEX Charges payable by the Respondent under the lease unpaid as at 23 November 2023 (being $445,826.27) to the Appellant's solicitors to be held on trust pending the written agreement of the parties or further order of the Tribunal; and
2. On the first day of each month between 1 November 2023 and the expiry of the Lease on 31 March 2025 the entire monthly amount of the OPEX Charges (being $22,074.81 at the time of appeal) plus GST.

(2) Further to ground 1, when granting the Interlocutory Injunction the Tribunal erred (at [36] of the Reasons) by distinguishing Telstra Corporation Ltd v First Netcom Pty Ltd ("Telstra")[33] on the basis that the principles applied by the Full Court of the Federal Court, though applicable to contracts, were not applicable to the Lease.

(3) Further to grounds 1 and 2, when granting the Interlocutory Injunction the Tribunal erred (at [41 and 44] of the Reasons) by:

1. Holding that the status quo was not that the Lease continue with the Respondent performing all of its obligations under the Lease (including paying 100 percent of monthly OPEX Charges); but rather
2. Holding that the status quo was that Blue Train paying about 7.5 percent of monthly OPEX (in breach of the Lease).

(4) Alternatively to grounds 1 to 3, when granting the Interlocutory Injunction the Tribunal erred (at [44] of the Reasons) by imposing the condition in order 2 of the Orders that the Respondent pay 10 percent of the OPEX Charges when:

1. There was no evidentiary basis for that 10 percent; and
2. Blue Train had been paying between 16.5 and 34.5 percent of the OPEX Charges and the condition had the effect of prejudicing the Appellant.

(5) Further to ground 4, when granting the Interlocutory Injunction the Tribunal erred (at [44] of the Reasons) by making order 2 of the Orders without first giving the Appellant an opportunity to adduce evidence and make submissions about that order.

23 As observed by Counsel for the Appellant, Grounds 1 to 3 concern the Tribunal's granting of the injunction. It is convenient to address these together. The Appellant submits that the Tribunal erred by distinguishing Telstra and failing to consider evidence about the Respondent's financial position when granting the injunction.[34] The Appellant further submits that the Lease obliged the Respondent to pay 100% of the monthly OPEX Charges in advance, and that the injunction granted by the Tribunal did not maintain the status quo.[35]

24 The Appellant submits that in granting the injunction, the Tribunal failed to apply the equitable maxim "they who seek equity must do equity" ("the Maxim").[36] It argues that a proper application of the Maxim leads to a precondition being imposed such that the Respondent is required to pay both the outstanding amount of OPEX Charges under the lease as at 23 November 2023 (being $445,826.27) to the Appellant's solicitors on trust, along with the entire monthly amount of OPEX Charges on the first day of the month for each day between 1 November 2023 and 31 March 2025 (being $22,074.81) plus GST.

25 The Appellant asserts that the decision of the Full Federal Court in Telstra, albeit in a commercial contracting context, supports the imposition of such a precondition.[37] In Telstra, First Netcom, a telecommunications reseller, argued that it did not owe the amount stated in invoices. The Full Court found that before seeking an injunction against Telstra's termination of a services agreement, First Netcom had to do equity by paying the undisputed outstanding sum it owed under the services agreement to Telstra or into Court.[38] In arriving at this conclusion, the Full Court applied the Maxim.[39] The Appellant says that the total amount of OPEX Charges owed by the Respondent, on its own calculation, along with the forward‑looking monthly OPEX Charges from November 2023 to the end of the Lease in March 2025, are undisputed sums owed by the Respondent under the Lease. On the Appellant's view, the evidence before the Tribunal establishes that it was owed $445,826.27 by the Respondent as at October 2023. It submits that the proper monthly OPEX Charges are $21,210. Accordingly, it argues that the Respondent, seeking equitable relief in the injunction, must first do equity by paying the total amount of OPEX Charges owed into trust, and continue paying the OPEX Charges in full at the start of each month until the expiry of the Lease.

26 Further referring to Telstra, the Appellant cites the Full Court's dissolution of an injunction granted at first instance because First Netcom failed to provide evidence of its financial position to the Full Court.[40] The Appellant says that the Respondent and the Guarantors had the opportunity to provide evidence as to their financial positions but did not do so.[41] The Appellant seeks to emphasise the mandatory language used by the Full Court in Telstra, arguing that "applying the Maxim would have required the Tribunal 'of necessity, [to] have regard to the financial circumstances of the applicant for injunctive relief'".[42] On the Appellant's approach, it was incumbent on the Tribunal to have regard to the financial position of the Respondent, and that the Tribunal erred by failing to do so.[43]

27 The Appellant also raises the principle that a court will not make an order for specific performance unless the applicant is ready, willing and able to perform their end of the bargain.[44] It says that the financial evidence of the Respondent's solvency was critical to determining its ability to perform in this respect. The Appellant points to the Tribunal's reliance upon the Respondent's submission that its ability to continue trading would be "seriously undermine[d]"[45] if it was required to pay the amount claimed for past OPEX Charges.[46] Had there been some evidence to support this submission, the Appellant says that application of Telstra required the Tribunal to refuse the injunction.

28 The Appellant submits that it suffers real prejudice arising from the Tribunal's failure to apply the Maxim when granting the injunction. It argues that with the Respondent's continuing monthly payments of only $5,000 towards the monthly OPEX Charges of $21,210 from November 2023 until the Lease's expiry on 31 March 2025, a total amount of $272,000 plus GST would be owed. It says that by the end of the Lease, the Respondent would owe over $700,000, comprising of rent payments and OPEX Charges, with over $550,000 of the amount being unsecured.[47]

29 The Tribunal distinguished Telstra on the basis that the dispute in question "related to a contractual relationship between the parties",[48] a "fundamentally different" context to the leasehold proprietary interest on these facts.[49] The Appellant argues that the Tribunal erred in drawing this distinction because a lease grants a proprietary interest on a contractual basis, and general principles of contractual law apply to leases. The Appellant cites the High Court decision in Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd ("Gumland")[50] in support of this proposition.[51]

30 The Appellant further cites the New South Wales Supreme Court decision in Solowave v Nechi Holdings Pty Ltd ("Solowave") as authority for the application of the Maxim to a commercial leasing dispute.[52] In Solowave, a tenant sought an injunction restraining a landlord from re‑entering a commercial property.[53] The Court granted the injunction but imposed a precondition that the plaintiff pay the undisputed sum owed to the defendant.[54] VCAT decisions in which similar orders were made were also cited by the Appellant.[55]

31 Referring to Telstra, the Appellant submits that by requiring the full payment of the disputed amount into Court, the Full Court prevented a "status quo" where First Netcom was allowed to continue to breach its contract with Telstra.[56] In this instance, the Appellant contends that the status quo would be best maintained by requiring the Respondent to perform its obligations under the Lease and paying the entire sum of the unpaid OPEX Charges, and making full payment of forward‑looking OPEX Charges at the start of each month for the duration of the injunction. By finding that a lower amount be paid instead, it says that the Tribunal had maintained a status quo where the Respondent had been breaching the Lease and so misdirected itself in law.[57]

32 The Respondent's position is that the Tribunal was faced with a question which required the exercise of discretion according to equitable principles in deciding whether to grant the interlocutory injunction. Having considered all of the matters raised by the Appellant, it submits that the Tribunal properly exercised its discretion in deciding to grant the injunction, and hence there is no error of law.

33 The Respondent submits that, even if Telstra were applicable, the decision could not be regarded as prescribing a hard and fast general rule mandating a precondition, in this case, that the Respondent make full payment of the total sum of OPEX Charges calculated by the Appellant, and pay the full amount of forward‑looking OPEX Charges at the start of each month. Counsel for the Respondent raised authorities with respect to Telstra, seeking to emphasise that Telstra and the Maxim only require advance payment of the undisputed sum owed.[58] In Technical Innovation Corp Pty Ltd v Australian Technological Innovation Corp Pty Ltd, the Federal Court rejected a submission that the applicants were disentitled to equitable relief because they were in breach of a licence agreement. In distinguishing Telstra, it found that "the occurrence, nature and circumstances surrounding the breaches are in dispute and the resolution can only properly take place after a full hearing".[59] Accordingly, the Respondent argues that the OPEX Charges, as the subject of an ongoing dispute, should not be treated as an undisputed sum.[60] The Respondent seeks to highlight passages from the Tribunal's reasons characterising the calculation of OPEX Charges as complex and best resolved through a substantive trial.[61]

34 In oral argument, the Respondent sought to emphasise the discretionary nature of injunctive relief, submitting that this Court ought not interfere with the Tribunal's exercise of discretion.[62] The Respondent seeks to rely on the following dicta of Croft J in Bimem Nominees Pty Ltd v Methven Croydon Pty Ltd ("Bimem Nominees"),[63] considering this discretion:

[I]t is clear from the authorities to which reference has been made that the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court and that a decision of such a tribunal is not to be interfered with absent a vitiating error of law. It also follows from these authorities that, absent such an error, the exercise of a discretion conferred upon a tribunal of this kind - such as that inherent in the power to grant injunctive relief - should not be interfered with.

35 Citing the High Court in Paringa Mining & Exploration Co Plc v North Flinders Mines Ltd,[64] Croft J added that this is "particularly the case 'where an interlocutory order does not determine the rights of the parties'".[65]

36 Further, even if it was open for this Court to evaluate the Tribunal's exercise of discretion, the Respondent submits that the Tribunal had discharged what was required of it in granting the injunction by balancing the consciences of the various parties involved, and by considering the lengthy pretrial steps taken.[66] It characterises the Tribunal's decision to grant the injunction as being fortified by evidence of bank guarantees, and thus appropriately considered the financial position of the Respondent.[67] In doing so, the Respondent seeks to highlight a bank guarantee of $151,250, supplemented by two personal guarantees, as considered by the Tribunal in its reasons.[68] It further refers to evidence of the Respondent's sustained profitability as providing comfort to the Tribunal in granting the injunction.[69]

37 The Respondent opposes the Appellant's position that the status quo would be best maintained by impositions of the preconditions sought. It says that if the Respondent were required to make advanced payment of the total OPEX Charges that the Appellant claims to be owed, its ability to continue trading would be undermined.[70] It follows that the continuity of the lease for the months between November 2023 and the end of the lease in March 2025 would also be jeopardised.

38 As to prejudice suffered by the Appellant, the Respondent says that maintaining the status quo for the duration of the injunction will not alter the prejudice suffered by the Appellant when compared to the past four years.[71]

39 For the reasons that follow, I find that the Tribunal's granting of the interlocutory injunction was consistent with the Maxim, and, in particular, Telstra.

40 An interlocutory order for an injunction, such as the one granted by the Tribunal, is a matter of practice and procedure.[72] This Court must exercise "particular caution" when reviewing such a decision.[73] Absent a vitiating error in law, the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court.[74] The Tribunal was required to make an interim decision on a complex matter affecting proprietary interests of the parties. It considered all relevant matters and, when granting the interlocutory injunction, exercised its discretion in a manner consistent with the Maxim, and thus, the principle in Telstra.

41 I do not accept the Appellant's submission that the Tribunal's decision to distinguish Telstra amounts to an error of law. As observed by the Appellant,[75] and as supported by the authorities, a leasehold interest arises from contract, thus allowing for the application of contractual principles to leases.[76] The decision in Telstra stands as an instance of the Maxim's application in the context of a claim for injunctive relief leaving its application to be considered in light of the particular circumstances in which such a claim is made in other cases.

42 It follows that application of the Maxim and Telstra does not necessarily require a finding that the Respondent make advance payment of the outstanding OPEX Charges, and monthly payment of ongoing OPEX Charges, as a precondition to an injunction. The OPEX Charges claimed by the Appellant are not, in my view, analogous to the undisputed sum owed by First Netcom in Telstra.[77] The Tribunal found that the parties had been in dispute over the calculation of OPEX Charges for over four years, as informed by a Default Notice and other documents including the Points of Counterclaim filed by the Appellant.[78] The calculation of the proportion of outgoings for which the Respondent is liable was found by the Tribunal to be a difficult exercise owing to the relevant clauses of the Lease, design of the greater areas surrounding the Premises, and the fact that not all outgoings payable could be characterised as OPEX Charges.[79] In the absence of evidence from the parties as to calculation of the OPEX Charges payable,[80] the Tribunal found that the question of OPEX Charges to be paid by the Respondent is most appropriate to be determined at trial.[81] To determine this question at the interlocutory stage was held to be "impossible and inappropriate".[82] I agree with the Tribunal's finding on the complexity of the exercise of calculating OPEX Charges. Such a question is best suited for determination through a substantive trial where parties can assist the Tribunal with comprehensive evidence and submissions. As submitted by the Respondent, the Tribunal's decision to grant the injunction with the usual undertaking as to damages was informed by evidence of a bank guarantee and two personal guarantees. On this basis, it rejected a submission that the injunction without the precondition of full payment was "insufficient".[83] The reasoning employed by the Tribunal is consistent with the Maxim, and does not give rise to an error in law.

43 Additionally, the Tribunal allowed liberty to apply to readjust the amount of the OPEX Charges. Where the amount of OPEX Charges payable by the Respondent were the subject of a complex dispute, it would not be consistent with the Maxim to impose the precondition sought by the Appellant.

44 There are important differences between commercial leases, involving proprietary interests, and ordinary commercial contracts such at that in Telstra. The different interests at stake will bear upon the exercise of equitable discretion in granting injunctive relief. The Tribunal's application of principle in granting the injunction is consistent with the nature of the Lease in dispute. The OPEX Charges are calculated by the landlord each month, with no evidence put before the Tribunal as to how they are calculated. As referred to in the Tribunal's reasons,[84] and as submitted at various stages by both parties,[85] requiring the Respondent to pay the full amount of the OPEX Charges as a precondition to the injunction would have defeated its ability to trade. Had the Tribunal granted the preconditions sought by Appellant, the status quo in an ongoing lease would have been undermined.

45 The Appellant raises Grounds 4 and 5 as alternative grounds to Grounds 1 to 3.

46 When granting the injunction, the Tribunal set a precondition that 10% of the monthly OPEX Charges are to be paid by the Respondent at the start of each month, finding that this "best reflects ... the status quo over the past four years".[86] As raised by the Appellant,[87] and conceded at trial by Counsel for the Respondent,[88] it appears that the Tribunal misunderstood the evidence before it in calculating the 10% rate of monthly OPEX Charges. The nature of this error is set out below. The issue is whether this leads to an error of law.

47 As observed by the Tribunal, citing the Respondent's evidence,[89] the Respondent unilaterally purported to be paying rent on a 'turnover' basis after the conclusion of Covid‑19 restrictions in January 2023.

48 The Appellant points to a spreadsheet tendered before the Tribunal by the Respondent,[90] arguing that the Respondent had been making monthly payments in arrears such that no more than 7.5% of its monthly turnover would go towards rent and OPEX Charges.[91] In oral argument, counsel for the Appellant argued that the Respondent had a pattern of contributing payments towards the monthly rent, albeit in arrears, and applying the balance to the OPEX Charges.[92]

49 For example, in June 2023, the Respondent was invoiced a total of $38,548.51 for a total of six items including rent of $11,837.87, OPEX Charges of $21,210.40 and GST, due on 1 June 2023.[93] No payment was made by the Respondent on 1 June 2023.[94] As highlighted by the Appellant, the Respondent's monthly turnover for June 2023 was $221,771.59. The Respondent then applied 7.5% of the monthly turnover ($16,632.87) to first the rent, and then the OPEX Charges, leaving only $4,795 for the OPEX Charges.[95] This amounted to 22.6% of the OPEX Charges having been paid by the Respondent under the status quo, an amount greater than the 10% rate found by the Tribunal.

50 When setting the percentage of OPEX Charges to be paid during the injunction, the Tribunal referred to a spreadsheet provided by the Appellant demonstrating that between 7.5% and 8% of the Respondent's monthly turnover was paid towards rent and OPEX Charges in the manner set out above.[96] However, the Tribunal's reasons refer to these payments as reflecting payment of "8 percent and more recently 7.5 percent of OPEX charges claimed by the Landlord".[97] Accordingly, the Tribunal may have erroneously treated the percentage figures as parts of the monthly OPEX Charges, rather than of the monthly turnover. However, even if this were the position it does not, of itself, necessarily amount to an error of law.

51 As observed by Counsel for the Appellant in oral argument,[98] the Tribunal's reasons acknowledge that it had not heard from the parties regarding what would be a fair and desirable percentage of the OPEX Charges, and hence, allow parties liberty to apply to have that percentage amount varied.[99]

52 The Appellant submits that the Tribunal had "no basis whatsoever"[100] for deciding that 10% of the OPEX Charges are to be paid by the Tenant as a precondition to granting an injunction, and hence, an error of law was made by the Tribunal.[101] It says that from the spreadsheet put before the Tribunal, the average percentage of OPEX Charges paid each month by the Respondent was 21.86%.[102] Further, this figure fluctuated depending on turnover, reaching 54.66% of the monthly OPEX Charge in December 2023.[103]

53 The Appellant cites authority from the Court of Appeal, finding that an error with respect to factual matters will raise a question of law only if a conclusion on the facts was not open to the Tribunal.[104]

54 Further the Appellant submits that the Tribunal did not inform parties that it would be assisted by submissions as to the percentage of monthly OPEX Charges to be paid going forward, and thus did not afford the parties natural justice. The Appellant relies on the Court of Appeal's decision in Towie v Medical Practitioners Board of Victoria ("Towie") considering an appeal from VCAT arising from an application to review a disciplinary decision.[105] The Court of Appeal found that the Tribunal's duty to accord procedural fairness involves allowing a party to a controversy the fair opportunity to contradict or correct relevant statements prejudicial to their view.[106] The Court of Appeal went on to say the following:

In particular, when an order is to be made which will deprive a person of some right or interest or legitimate expectation, the person is entitled to know the case sought to be made against them and to be given an opportunity of replying to it.[107]

55 Had the Appellant been provided with the opportunity of assisting the Tribunal, it submits that it would have corrected the error in setting the 10% rate of monthly OPEX Charges.

56 Finally, the Appellant submits that granting liberty to apply with respect to the calculation of OPEX Charges payable does not cure the Tribunal's error of law in making a decision without evidentiary basis and denying the Appellant natural justice.

57 The Respondent submits that there is no basis for this Court to alter the 10% calculation of OPEX Charges.[108] Even if the Tribunal erred in determining the appropriate percentage of OPEX Charges to be payable, it says that the Tribunal has granted liberty for the parties to apply for recalculation of the OPEX Charges by providing further information.[109] As such, it says that the proper forum to raise this matter is before the Tribunal, pursuant to Order 3.[110]

58 For the reasons that follow, I am not satisfied that the Tribunal has made an error of law when calculating the OPEX Charges payable as a precondition to the injunction.

59 For the Appellant to succeed in its appeal, it must show that there was an error in principle that works a substantial injustice.[111]

60 Whether there was no evidence to support the Tribunal's factual finding in setting the precondition is a question of law.[112] It must be shown that the Tribunal made a finding that was "simply not open to it", usually requiring a finding that "there was no evidence on the basis of which the Tribunal could reach that finding, not that there was some evidence tending to a different conclusion".[113] A finding of fact by the Tribunal cannot be challenged on the "no evidence" ground where there was some evidence to support it. Nor can a finding of fact be challenged by this Court simply because it forms the view that the finding was made in error or against the weight of the evidence.[114] The question is whether there was any, rather than sufficient, evidence for the Tribunal to arrive at a factual finding.[115] This question is to be determined by reference to the evidence and inferences most favourable to the Respondent.[116]

61 The spreadsheet, tendered in evidence before the Tribunal by the Respondent,[117] provided a factual basis for the calculation of monthly OPEX Charges to be paid as a precondition to the injunction. It displays the Respondent's turnover for a number of months, alongside the OPEX Charges and rent charged by the Appellant. The spreadsheet also demonstrates the Respondent's habit of making monthly payments such that a percentage of turnover is applied first to the rent, and later to the OPEX Charges. The spreadsheet serves as evidence to arrive at the factual finding and hence, I do not accept the Appellant's submission that there was "no basis whatsoever"[118] for the 10% rate of OPEX Charges awarded by the Tribunal. It does not matter that the Tribunal misunderstood the significance of the turnover percentage figure presented in the Respondent's spreadsheet. The calculation of the percentage of OPEX Charges to be paid each month was a function of its discretion in awarding an interlocutory injunction, and was grounded in an evidentiary basis.

62 The Appellant's further claim that the Tribunal breached principles of natural justice has no foundation. The principles of natural justice, outlined in Towie, were invoked in the context of an appeal from disciplinary proceedings where the Tribunal reviewed findings as to unprofessional conduct by the appellant,[119] a context distinguishable to the facts before the Tribunal in this matter. The Court of Appeal set aside the Tribunal's decision, among other reasons, because the appellant was denied procedural fairness.[120] The hearing proceeded despite the appellant's request for adjournment after being adjourned to a date unsuitable for the appellant's counsel. The appellant was unrepresented, believed that he was appearing at a directions hearing, and was not given an opportunity to explain alleged non‑compliance with prior orders. The Tribunal resolved to persist in hearing the application and did not make clear that it intended to do so, finding to dismiss the application.[121] The Court of Appeal found that the Tribunal had failed to afford the appellant a "meaningful opportunity to deal with the substance of the allegation".[122] In Towie, a final decision was made about the appellant's application in disciplinary proceedings without adequate consideration of the appellant's position, or ability to provide adequate representation.

63 By contrast, the Tribunal in these proceedings granted an interlocutory injunction pending the determination of a complex and long‑running dispute surrounding a commercial lease. When setting the precondition to the injunction, the Tribunal made best efforts to estimate the OPEX Charges payable by the Respondent on the evidence provided to it by the parties. It considered the parties' submissions including a spreadsheet of payments,[123] the importance of preserving a status quo where the lease was on foot,[124] and the Respondent's financial position.[125] In doing so, it exercised a discretion as a function of its role as a specialist Tribunal which ought not be interfered with absent a vitiating error of law.[126] Acknowledging the disputed basis upon which the OPEX Charges were calculated, the Tribunal resolved to determine the matter after a substantive trial,[127] but allowed parties to approach it for redetermination,[128] upholding natural justice principles by preserving the parties' right to be heard. The proper avenue for the parties to address this issue is by approaching the Tribunal.

64 In light of the finding that there is no error of law, there is no need to consider whether the Appellant suffered substantial injustice. Regardless, it does not appear that the Appellant has suffered substantial injustice as a result of the Tribunal's decision. The Appellant may exercise its liberty to apply and approach the Tribunal to adjust the OPEX Charges payable under the precondition under Order 3.[129] It may also make submissions about the OPEX Charges payable when the matter reaches trial before the Tribunal.

65 For the preceding reasons, leave to appeal is refused.

66 I reserve the question of costs and will hear the parties as necessary on this issue.

[1] Blue Train Café Pty Ltd v The Trust Company Limited (Building and Property) [2024] VCAT 75.

[2] Blue Train Café Pty Ltd v The Trust Company Limited (Building and Property) [2024] VCAT 75 at [45].

[3] T8-10; T22:22-23:16. T26:28-30; T27:30-T28:2.

[4] T8-10; T22:22-23:16. T26:28-30; T27:30-T28:2.

[5] Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-6 and Myers v Medical Practitioners' Board (Vic) [2007] VSCA 163; (2007) 18 VR 48 at 55-6 [28].

[6] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400; (2005) 145 LGERA 21 at 26 [15] citing Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198; (2005) 13 VR 275.

[7] (2011) 83 ATR 832 at 833-4 [3].

[8] Commissioner of State Revenue (Vic) v STIC Australia Pty Ltd [2010] VSC 608; (2010) 81 ATR 682 at 687 [10] per Davies J.

[9] Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Al‑Hakim v Monash University (unreported, Court of Appeal, Vic, No 3707 of 2003, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48.

[10] See Morris v The Queen [1987] HCA 50; (1987) 163 CLR 454 at 475; [1987] HCA 50; 61 ALJR 588 at 597; [1987] HCA 50; 28 A Crim R 48 at 63-64; [1987] HCA 50; 74 ALR 161 at 176-177 per Dawson J.

[11] Osland v Secretary to the Department of Justice [No 2] [2010] HCA 24; (2010) 241 CLR 320 at 333 [21]; [2010] HCA 24; 84 ALJR 528 at 536 [21]; [2010] HCA 24; 267 ALR 231 at 240 [21] per French CJ, Gummow and Bell JJ.

[12] Morris v The Queen [1987] HCA 50; (1987) 163 CLR 454 at 475; [1987] HCA 50; 61 ALJR 588 at 597; [1987] HCA 50; 28 A Crim R 48 at 63-64; [1987] HCA 50; 74 ALR 161

at 176-177 per Dawson J; Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335 [10]; [1999] VSCA 117; 15 VAR 360 at 366 [10].

[13] Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-336 [11]; [1999] VSCA 117; 15 VAR 360 at 366 [11] per Phillips JA; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203; (2006) 63 ATR 65 at 69 [20] and 77 [65] per Hollingworth J.

[14] Justice Legislation Amendment (Court Security, Juries and Other Matters) Act 2017, s 31(3).

[15] Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48 at 55 [28], citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335.

[16] See Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 7th ed, 2022) at 965-7.

[17] The same requirement is imposed upon applicants for leave to appeal a VCAT decision before the Court of Appeal under s 148(1)(a) of the VCAT Act with the additional requirement to such an application set out at s 14C of the Supreme Court Act 1986; see Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 7th ed, 2022) at 950-4.

[18] Section 63(1) of the Civil Procedure Act 2010 empowers a court to give summary judgment in a civil proceeding if the defence, inter alia, has "no real prospect of success".

[19] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27 at 39 [29]. See also Kennedy v Shire of Campaspe [2005] VSCA 47 at [3]-[14].

[20] [2005] HCA 40; (2005) 222 CLR 115 at 136 [64].

[21] Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575, 597; cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 348 [74].

[22] (Supreme Court of Victoria, Ashley J, 21 December 1994) at 13.

[23] (1971) 38 LGRA 6 at 18.

[24] (1980) 44 LGRA 65 at 67-8.

[25] (1985) 62 LGRA 346 at 349-50.

[26] The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442 at [59].

[27] And see Rysze International Pty Ltd v Yong [2021] VSC 786 at [12]; Club Fogolar Furlan Melbourne v Paramount Investments Group Pty Ltd [2024] VSC 208 at [12].

[28] [2015] VSCA 350; (2015) 48 VR 715.

[29] [2015] VSCA 350; (2015) 48 VR 715 at 720 at [9]-[11]; and see Karakatsanis v Racing Victoria Ltd [2013] VSCA 305; (2013) 42 VR 176 at 186 [22] (CA); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771 at 782 [41] and 805, [162] and [165] (CA); and Maund v Racing Victoria Ltd [2016] VSCA 132 at [67].

[30] Transport Accident Commission v Hoffman [1989] VicRp 18; [1989] VR 197 at 199; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48 at 59 [44].

[31] S v Crimes Compensation Tribunal [1998] 1 VR 83 at 88-93; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48 at 59 [44].

[33] [1997] FCA 860; (1997) 78 FCR 132 ("Telstra").

[35] Appellant's Submissions, [39]-[43].

[36] Appellant's Submissions, [28], [34].

[37] Appellant's Submissions, [29] citing Telstra at 136F-137C; and see PW Young, CE Croft and ML Smith, On Equity (Lawbook Co, 2009), 175-180.

[38] Appellant's Submissions, [29]; Telstra at 136F-137C.

[42] Appellant's Submissions, [36] citing Telstra at 137E.

[44] T17:1-26 citing Telstra at 136G.

[50] [2008] HCA 10; (2008) 234 CLR 237 at 259 [58] ("Gumland").

[52] [2005] NSWSC 837 ("Solowave"); Appellant's Submissions, [32].

[55] Ganka Holdings Pty Ltd v Athina Nominees Pty Ltd [2001] VCAT 1444; Kew Avenue Pty Ltd v Panorama Investment (Essendon) Pty Ltd [2023] VCAT 85 at [12].

[56] Appellant's Submissions, [40]-[43] citing Telstra at 134E-F.

[59] [1999] FCA 1288 at [14].

[61] T28:23-30. citing Tribunal Reasons, [42], [44], [45].

[63] [2016] VSC 473 at 6 [12] ("Bimem Nominees").

[64] [1988] HCA 53; (1988) 165 CLR 452 at 457.

[66] T26:21-27, T29:11-30:3, T34:18-35:7.

[68] T29:6-30 citing Tribunal Reasons, [39].

[70] Appellant's Submissions, [16]; T21:2-12.

[72] The Venerable Hout Chhet & Ors v Khmer Buddhist Temple Association Inc (ABN 63 990 104 294) [2021] VSCA 266 at 14 [47] ("Chhet").

[76] Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; [2008] 234 CLR 237 at [58]; Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17 at 29 per Mason J.

[85] Appellant's Submissions, [36]; Tribunal Reasons, [35].

[89] Tribunal Reasons, [19] citing affidavit of Xavier Dimattina dated 8 November 2023 [14].

[90] Affidavit of Jasmina Bradonjic dated 15 February 2024, 52.

[93] Affidavit of Jasmina Bradonjic dated 15 February 2024, 56; Appellant's Submissions, [10].

[100] Appellant's Submissions, [53].

[101] Appellant's Submissions, [45].

[102] Appellant's Submissions, [50].

[103] Appellant's Submissions, [52].

[104] Hoskin v Greater Bendigo City Council [2015] VSCA 350; (2015) 48 VR 715 at [10] and the authorities there referred to.

[105] Appellant's Submissions, [47]; Towie v Medical Practitioners Board of Victoria [2008] VSCA 157 ("Towie").

[108] Respondent's Submissions, [23].

[112] Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 at 418 [91]; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1 at 10 [33].

[113] Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72; Miller v Martin [2021] VSCA 108 at [72].

[114] Director of Liquor Licensing v Kordister Pty Ltd [2011] VSC 207 at [248]; and see Karakatsanis v Racing Victoria Ltd [2013] VSCA 305; (2013) 42 VR 176 at 185-6 [21]; Kyriackou v Law Institute of Victoria Ltd [2014] VSCA 322; (2014) 45 VR 540 at 544 [14]; Higgins Nine Group Pty Ltd v Ladro Greville St Pty Ltd [2016] VSC 244 at [28], [31]; Turkey v Mackie Pty Ltd [2019] VSC 103 at [22]; Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72 at [198]; Weber v Carkeek [2020] VSC 366 at [69].

[115] Ferris v Victoria [2018] VSCA 240 at [5].

[116] Karakatsanis v Racing Victoria Ltd [2013] VSCA 305; (2013) 42 VR 176 at 186 [24].

[117] Exhibit "JB‑1" to the Affidavit of Jasmina Bradonjic, dated 15 February 2024, 52.

[118] Appellant's Submissions, [53].

[121] Towie at 11 [25], 14 [35].

[125] Tribunal Reasons, [35], [40].