1. The preliminary questions set out in the Tribunal's orders dated 24 August 2012 are answered as follows:
   • (a) As to question 2(a) of the Tribunal's Orders dated 24 August 2012, I find and declare that the lease dated 27 June 2006 has not been terminated by notice dated 15 June 2012.
   • (b) Having regard to Order 1(a) of these orders, it is unnecessary to answer question 2(b) of the Tribunal's Orders dated 24 August 2012.
   • (c) As to question 2(c) of the Tribunal's Orders dated 24 August 2012:
     • (i) Having found that a cause of action lies against the First Respondent, the respondents' application for an order that the proceeding as against all respondents be struck out pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1998 is dismissed.
     • (ii) Having found that the Applicant's Further Amended Points of Claim does not disclose an open and arguable cause of action against the Second and Third Respondents, the claims against those parties is struck out pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1998, with liberty given to the Applicant to make application for leave to further amend its points of claim.
2. This proceeding is referred to a directions hearing at 11.30 on 11 November 2012 at 55 King Street, Melbourne, at which time the Tribunal will make orders for the future conduct of the proceeding, including listing the matter for final hearing.

1. This interlocutory proceeding arises after long and protracted litigation between the parties, which culminated, at least in part, in a determination by the Tribunal on 1 December 2011 ('the Earlier Proceeding'). That determination required the First Respondent to pay the Applicant damages of $218,599.63 plus interest.
2. The nature of the dispute comprising the Earlier Proceeding is not dissimilar to what is before the Tribunal in this proceeding. In essence, the Applicant ('the Tenant') leased retail premises located in Brighton ('the Premises') from the First Respondent ('the Landlord') pursuant to a lease agreement dated 10 November 2006 ('the Lease'). The Premises have long suffered from water ingress and moisture problems, leading to the Premises being unfit for occupation. As a result, the Tenant was awarded damages commensurate with its loss occasioned by the inability to occupy and trade from the Premises.
3. The orders made by the Tribunal on 1 December 2011 awarded damages up until the 31 December 2011 (paragraph 311) and it would appear from the published Reasons that this date was selected on the assumption that the Premises would be repaired and fit for occupation sometime in January 2012. According to the Tenant, this has not occurred. It contends that the Premises remain unfit for occupation and that work is still to be completed to remedy the water ingress and moisture problems.
4. Consequently, the Tenant has not re-occupied or re-commenced trading from the Premises. As was the case in the Earlier Proceeding, the Tenant now claims loss and damage based on its inability to re-occupy and trade from the Premises. In particular, it claims:
   • (a) loss of the value of the business goodwill of $40,000; and
   • (b) loss of profits from 1 January 2012 and continuing.
5. On 15 June 2012, the Landlord served the Tenant with a default notice purporting to be a notice under s.146 of the Property Law Act 1958 ('the Notice of Default'). The Notice of Default alleged that the Tenant had assigned the Lease without the consent of the Landlord and contrary to the terms of the Lease. The 'assignment' was said to have occurred because the directors and shareholders of the Tenant had changed, which the Lease deemed to constitute an assignment of the Lease.
6. By further correspondence dated 24 July 2012, the Landlord gave notice to the Tenant that as the breaches referred to in the Notice of Default had not been rectified; the Lease was at an end.
7. By this interlocutory application, the Respondents raise a number of issues arising out of the matters referred to above and in defence to the Tenant's claim:
   • (a) First, they contend that the lease between the parties was lawfully terminated on 24 July 2012. Therefore, any claimed loss of profits cannot extend past that date. Similarly, there is no basis to claim for the loss of the goodwill value in the absence of a leasehold interest.
   • (b) Second, they say that the current proceeding is res judicata because what is claimed has already been heard and determined in the Earlier Proceeding.
   • (c) Third, and in the alternative, they contend that that no claim lies against the Second and Third Respondents at law, based on the current pleading. In that regard, they contend that the claims against the Second and Third Respondents should be struck out pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1998.
8. Having regard to the issues raised by the Respondents, a number of questions were set aside for preliminary hearing in Order 2 of the Tribunal's orders dated 24 August 2012:
   • (a) Has the lease dated 27 June 2006 being lawfully terminated?
   • (b) If yes to question (a), does the Applicant otherwise occupy the premises pursuant to a valid lease agreement?
   • (c) If yes to question (a), and no to question (b), does the Applicant have any cause of action against the respondents in this proceeding?
9. My comments and findings in answer to these questions are set out hereunder.

1. As stated above, on 15 June 2012, the Landlord served the Tenant with the Notice of Default. The particulars of default were stated as:
   1. The Lessee has breached the lease by assigning the lease without prior written consent of the Lessor.
   2. The Lessee has failed to provide the Lessor with a satisfactory replacement indemnity guarantee.
2. What follows are my observations and findings in respect of each of the allegations of breach.

Was there an assignment without the Landlord's consent?

1. It is common ground that when the Lease was first entered into on 10 November 2006, Irene Spaleta was the sole director and sole shareholder of the Tenant. She also guaranteed the Tenant's obligations under the Lease, pursuant to a guarantee executed by her in favour of the Landlord.
2. On 8 August 2011, Bob Spaleta became a co-director of the Tenant. At that time, he also became the controlling shareholder of the Tenant.
3. On 21 November 2010, Irena Spaleta ceased to be a director of the Tenant. It is not disputed that at least from 21 November 2011, control of the Tenant changed from Irena Spaleta to Bob Spaleta.
4. On 12 December 2011, Irena Spaleta was made a bankrupt. Therefore, she is currently unable to hold directorship in the Tenant.
5. The Landlord alleges that the Tenant assigned the Lease without prior written consent of the Landlord because there was a change in the shareholding and directorship of the Tenant, which transferred control of the Tenant from Irena Spaleta to her husband, Bob Spaleta.
6. Clause 1(t) of the Lease states, in part:

1. THE LESSEE COVENANTS AND AGREES with the Lessor as follows:

(t) Not to assign, sub-let, mortgage, charge, licence or otherwise part with possession of the Premises without the prior written consent of the Lessor and the provisions of Section 144 (1) of the Property Law Act 958 are expressly excluded provided that:

(i) Consent must not be unreasonably withheld to an assignment or sub-lease where:

(A) Written request has been made to the Lessor for consent.

(i) The membership of the body corporate or any holding company of the body corporate; or

(ii) The beneficial ownership of any shares in the capital of the body corporate or any holding company of the body corporate; or

(iii) The beneficial ownership of the business or assets of the body corporate;

(C) As a result of that change, the body corporate or the business of the body corporate is after the change effectively controlled by a person or persons who at the Commencement Date did not effectively control the body corporate or the business of the body corporate -

the Lessee shall, unless the prior written consent of the Lessor has been obtained to the change, be deemed to have assigned this Lease.

(v) The Lessor may require any new director of a body corporate to execute an indemnity guarantee of the performance and observance of the lessee's covenants contained in this Lease and to lodge a bond or bank guarantee as security for the amount described in Clause 1 (v) below.

1. The Tenant disputes that it did not make a prior written request for the consent of the Landlord to the proposed changes to its directorship and shareholding. Mr Spaleta, who appeared on its behalf, argued that by letter dated 8 July 2011, consent was sought from the Landlord. However, no response was received from the Landlord. Consequently, he submits that pursuant to s.61(6) of the Retail Leases Act 2003, the Landlord is deemed to have consented to the assignment. In support of that contention, the Tenant relies upon an affidavit sworn by Irena Spaleta on 16 July 2012, wherein she deposed to having sent written notice of the proposed changes directly to Ada Houghton, the director of the Landlord. She states:
   1. On 8 July 2011, I sent a letter to the respondent and its director Mrs Ada Houghton ("Mrs Houghton") informing the respondent of changes to be made to the applicants ownership and its directors.

1. On 21 December 2011, at the costs hearing at the Tribunal (R187/2010) His Honour Judge Lacava informed the respondent and its legal representatives that I was the former director of the applicant and Bob Spaleta was the director of the applicant.

1. On 21 December 2011, following the costs hearing at the Tribunal, I wrote and sent a letter to Mrs Houghton advising Mrs Houghton that I had become bankrupt and that Bob Spaleta is the sole owner and director of the applicant and that all correspondence and enquiries would be forwarded to him...
2. The letter dated 8 July 2011, referred to by Irena Spaleta states, in part:

I am writing to inform you that due to issues with my health, there will be a change in ownership at Versus (Aus) Pty Ltd to Bob Spaleta of... Bob is currently a manager at Versus (Aus) Pty Ltd and will become sole owner and a director of Versus (Aus) Pty Ltd.

Given that there is no change to the lessee (it is still Versus (Aus) Pty Ltd), a Disclosure Statement from the landlord is not required. Please forward your written consent and any queries or request further information to Versus (Aus) Pty Ltd...

1. The Landlord disputes having received the letter dated 8 July 2011. In particular, Mrs Houghton filed an answering affidavit, wherein she states, in part:
   1. I am a director of the first respondent to this proceeding... and have been since 27 March 1981.
   2. I reside permanently at... Retirement Home... and have done so since on or about 14 March 2008. I am currently 95 years old.

1. In paragraph 7 of her Affidavit Irena Spaleta states that she sent a letter to me on 8 July 2011 informing the Respondents of changes to be made to the Applicant's ownership and its directors. She exhibits what she claims is a copy of the letter as her exhibit IS-1. That statement is untrue. I have never received such a letter, and I first became aware of the purported letter dated 8 July 2011 when I received and read the Affidavit.
2. In paragraph 23 of her Affidavit Ms Spaleta further states that on 21 December 2011 she wrote and sent a letter to me advising me that she had become bankrupt and that her husband Bob Spaleta was the sole owner and director of the Applicant...
3. That statement is also untrue. I have never received such a letter. I first became aware of the letter dated 21 December 2011 when I received and read a letter from the Applicant to my solicitors... dated 5 July 2012 enclosing a copy of the said letter.
4. I do not recall receiving the letters described in paragraph 4 and 5 herein in or about 8 July 2011 or 21 December 2011 respectively, and do not believe that I have received them or that they were sent to me.
5. Mr Gronow of counsel, who appeared on behalf of the Respondent, argued that there were two modes of service available to the Tenant in order to effect good service of the 8 July letter. It could have posted the letter to the Landlord's nominated address for service set out in the Lease or it could have served the letter in accordance with s.109X of the Corporations Law 2001 (Cth). In the latter case, this would require the letter to be either posted to the registered office of the Landlord or personally served on Mrs Houghton, a director of the Landlord.[1] However, neither option was adopted. Instead, the letter was posted to Mrs Houghton's residential address. It was not personally served and Mrs Houghton deposes to never having received the letter. Therefore, service of that letter is said to be ineffective.
6. Mr Gronow argued that it was of no consequence whether the letter was sent by post because there is no evidence that the letter was ever received by the Landlord or Mrs Houghton. He referred to Woodgate v Garard Pty Ltd,[2] a decision concerning service of a statutory demand. In Woodgate, Palmer J distinguished between what he referred to as the prescribed modes of service pursuant to s.109X of the Corporations Act 2001 (Cth) and what he referred to as informal service. His Honour stated:

iv) the prescribed modes are not exclusive of other modes of service; if some other mode of service is employed, whether it is good service depends upon whether the serving party can prove to the Court's satisfaction that the document actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the document, or documents of that nature...

vi) Where a document, not served in a prescribed mode, comes to the actual attention of the sole director of the company it will be presumed, unless a strong case to the contrary is shown, that the director is the responsible officer and the service is good...;

vii) a party invoking the effective informal service rule bears the onus of proving the time at which the document came to the actual attention of a responsible officer of the company and, in view of the serious consequences which may attend, the Court will not likely draw inferences or make assumptions as to the time of service...

1. In the present case, it is common ground that the 8 July 2011 letter was not sent to the registered office of the Landlord or to the address for service nominated in the Schedule to the Lease. Mr Spaleta submitted that correspondence was forwarded to Mrs Houghton at the request of the Third Respondent. However, there is no evidence of that, despite Mrs Spaleta addressing that issue in her affidavit sworn on 16 July 2012, where she stated:

The reasons as to why I wrote to the letter [21 December 2011 letter] to Mrs Houghton, who is about 95 years old, are as follows:

a) Mrs Houghton is not contactable in any other way but by way of mail;

1. at the trial at the tribunal from 31 October 2011 to 16 November 2011, the respondent's director Barbara Lepp and the respondent's representative, Mr Harold Lepp gave evidence that Mrs Houghton is exclusively in charge of the respondent and the respondent's only decision maker.

1. Therefore, I do not accept that the Tenant was advised to address all correspondence to the Landlord to Mrs Houghton's residential address.
2. Nevertheless, Mr Spaleta argued that there are a number of factors which lead to a strong inference that the Landlord had received notice of the change in shareholding and directorship. In particular:
   • (a) He pointed to correspondence from the Landlord prior to December 2011, which was addressed solely to Irena Spaleta or to Irena and Bob Spaleta jointly, contrasted to correspondence after December 2011 and which was addressed solely to Bob Spaleta on behalf the Tenant.
   • (b) He made reference to correspondence dated 21 September 2011 from the Landlord's solicitors to Mrs Spaleta on behalf of the Tenant, which stated, in part:

Bob Spaleta has deposed to these matters despite being a director and shareholder of Versus.

It would appear that the directors of Versus are taking steps to avoid creditors of Versus having recourse to the assets of Versus following the commencement of bankruptcy proceedings against you. In particular, we refer to the recent change of shareholding in Versus whereby, until recently, you were the sole shareholder of Versus and now your husband, Bob Spaleta, is the sole shareholder of Versus. We believe the transfer of shareholding from you to Bob Spaleta was put in place so that in the event you were declared bankrupt, your shares in Versus would not vest in the trustee in bankruptcy.

1. In my view, the Landlord must have been aware by 21 September 2011 that changes were made both in the directorship and shareholding of the Tenant. So much is evident from the correspondence referred to above. However, that does not necessarily mean that the letter dated 8 July 2011 was actually received by Mrs Houghton or that the Landlord was made aware of the changes before they occurred. Indeed, Mrs Houghton's evidence is unchallenged. All that the Tenant can say is that the letter was posted. It has no knowledge as to whether the letter was received.
2. In my view, the mere existence of the 8 July letter, without proof of service, does not establish that the Tenant sought the consent of the Landlord before the changes were made. The Lease expressly requires that written consent be obtained prior to the assignment occurring. Mere knowledge of the fact does not obviate the requirement for written consent to be first sought. Therefore, I find that the Tenant failed to make a written request of the Landlord for consent to the changes in the directorship and shareholding of the Tenant. In that regard, it breached the terms of the Lease.

Did the Tenant breach the lease by not providing a guarantee?

1. Clause 1(t)(v) of the Lease entitles the Landlord to require any new director of the Tenant to execute an indemnity and guarantee securing the performance of the Tenant covenants contained in the Lease.
2. Mr Gronow submitted that the Notice of Default constituted a request that the new director, Bob Spaleta, execute an indemnity and guarantee in accordance with that clause. He argued that the guarantee previously given by Irena Spaleta was now worthless, given her status as an undischarged bankrupt. The Notice of Default stated:

The Lessee has failed to provide the Lessor with a satisfactory replacement indemnity and guarantee.

1. In my view, the Notice of Default does not constitute a request by the Landlord to require a new director of the Tenant to execute an indemnity and guarantee. In fact, the Notice of Default makes no such request. It simply states that the Tenant has breached the Lease by not providing a satisfactory replacement indemnity and guarantee, whatever that means.
2. Further, I am troubled by the submission that the Notice of Default constitutes both a request for a replacement guarantee while at the same time, constituting the particulars of a breach. In my view, the Tenant can only be in breach once it refuses to comply with its obligations to provide an indemnity and guarantee by the new director. No demand was made prior to the Notice of Default being served.[3] In those circumstances, I do not consider that the Tenant could have been in breach at the time when the Notice of Default was served.
3. Further, clause 1(t)(v) of the Lease does not impose an automatic obligation on the Tenant to arrange for its director to execute an indemnity and guarantee. The clause merely gives the Landlord the right to require that such an indemnity and guarantee be executed. Whether that right is exercised is at the discretion of the Landlord. So much is clear by the express use of the word may in the clause. Accordingly, I do not consider that at that time when the Notice of Default was served, the Tenant was in breach by reason of not having provided an indemnity and guarantee from the new director, Mr Spaleta.

1. Mr Spaleta argued that knowledge of the change in directorship and shareholding weighed against the Landlord's failure to act until after this proceeding was issued entitles the Tenant to raise a defence of laches. In particular, he contends that the Landlord had knowledge of the changes and further proposed changes in the directorship and shareholding of the Tenant by 21 September 2011 or at the very latest at the costs hearing on 21 December 2011, when the issue was raised during the course of the Tribunal hearing. However, the Landlord chose not to act on the alleged breach until 15 June 2012, by which time the changes had occurred and nothing could be done to reverse those changes, having regard to the bankruptcy of Mrs Spaleta. Consequently, he argues that the delay in acting upon the breach disavows the Landlord from being able to rely upon it as a ground to terminate the Lease.
2. It is correct that delay or laches in pursuing an equitable right may amount to an affirmation of or assent to the violation of that right. However, laches is a defence against the prosecution of a purely equitable claim. In the present case, the Landlord asserts a legal right given to it under the lease agreement.[4] Moreover, the contention that the Lease has been forfeited is raised as a defence to the claims made against the Landlord. It is not the prosecution of an equitable right.
3. In my view, the 'defence' raised by Mr Spaleta is really a defence couched in terms of waiver or estoppel. However, that argument was not advanced by Mr Spaleta and for the reasons which follow, it is unnecessary for me to consider that argument further.
4. In particular, Mr Spaleta further contended that apart from corresponding with the Landlord, the Tenant did not act in response to the Notice of Default because it believed that there was nothing it could do to satisfy the notice. Therefore, there was no basis to terminate the Lease in reliance upon the notice. There is force in that submission.
5. The notice was stated to be a notice pursuant to clause 3(d) of the Lease and s.146 of the Property Law Act 1958. That provision states:

146 Restrictions and relief against forfeiture of leases and under-leases

(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease or otherwise arising by operation of law for a breach of any covenant or condition in the lease, including a breach amounting to repudiation, shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice -

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and

(c) in any case, requiring the lessee to make compensation in money for the breach -

and the lessee fails, within a reasonable time thereafter, or the time not being less than fourteen days fixed by the lease to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.

1. Having regard to Mr Spaleta's contention, a question arises whether the notice was effective notice under s.146 of the Property Law Act 1958. The Notice of Default expressly required the Tenant to remedy the default within 14 days. However, how was that to be done? Simply seeking consent after the fact would not remedy the breach. In order to remedy the breach, prior written consent was required. However, that was no longer possible because the restructure had occurred more than 6 months prior to the Notice of Default.
2. In my view, the Notice of Default is inadequate because it failed to spell out what the Landlord required of the Tenant in order to avoid forfeiture. To simply state that the default must be remedied, in circumstances where it is impossible to go back in time, creates uncertainty as to what acts or omissions were required in order to remedy the breach.
3. In Primary Re Limited v Great Southern Holdings Ltd, [5] Judd J discussed the legal principles applicable to determining the validity of a notice of default given under s.146 of the Property Law Act 1958. He referred to the judgment of Hodgson J in Macquarie International Health Clinic Pty Ltd v Sydney South West Area,[6] where his Honour reviewed a number of authorities in considering the application of s.129 of the Conveyancing Act 1919 (NSW), being the NSW equivalent of s.146 of the Property Law Act 1958. In Macquarie International Health Clinic, Hodgson J observed:

[308] The purpose of s.129 is to give the lessee an opportunity to remedy any alleged breaches before the lessor exercises its legal right of forfeiture: Fletcher v Nokes [1897] 1 Ch 271 at 274; Horsey Estate Ltd v Steiger [1899] 2 QB 79 at 91; Ex parte Dally-Watkins; Re Wilson (1956) 72 WN (NSW) 454 at 456.

[309] In my opinion, a proper opportunity is not afforded unless the lessee is alerted to the particular breaches on which the lessor proposes to rely and what the lessor requires in order to bring about a position where termination would not occur.

[312] Lord Russell CJ said ([1899] 2 QB 79 at 91):

To determine the character of the required notice, what it shall contain and when it ought to be given, it is necessary to consider the scope of s.14 of the Act of 1881 as a whole. The object seems to be to require in the defined cases (1.) That a notice shall precede any proceeding to enforce a forfeiture, (2.) That the notice shall be such as to give the tenant precise information of what is alleged against him and what is demanded from him, and (3.) That a reasonable time shall after notice be allowed the tenant to act before an action is brought. The reason is clear: he ought to have the opportunity of considering whether he can admit the breach alleged; whether it is capable of remedy, whether he ought to offer any, and, if so, what, compensation; and, finally, if the case is one for relief, whether he ought or ought not promptly to apply for such relief. In short, the notice is intended to give to the person whose interest it is sought to forfeit the opportunity of considering his position before an action is brought against him.

[323] In my opinion, the above authorities clearly indicate that a notice under s.129 must not only allege breach, but must also describe the particular acts or omissions constituting the alleged breach; and the notice must indicate the acts of the tenant which the landlord would consider sufficient for the lease to continue, and upon completion of which the landlord would abandon its claim to forfeit.

[324] In particular, the lessee should not be left to speculate as to whether, if it took whatever action it could to remedy the specified breaches, the lessor might nevertheless proceed to terminate the lease on the basis that the breaches were not capable of remedy or that, because what the lessee did was insufficient to eliminate loss caused to the lessor by the late performance of the lessee's obligations, the lessee was still in breach.

1. In my view, the notice of default served by the Landlord failed to indicate the acts of the tenant which the landlord would consider sufficient for the lease to continue, and upon completion of which the landlord would abandon its claim to forfeit, at least in relation to the alleged breach by the Tenant to obtain prior written consent. At best, it required the Tenant to read between the lines in order to understand what was needed to be done to avoid forfeiture.
2. Having regard to my comments above, I find that the notice was ineffective notice for the purpose of satisfying s.146 of the Property Law Act 1958. Consequently, I find that the Lease has not been terminated by the Landlord.

Does the Tenant have a cause of action against the Respondents?

1. As indicated above, there are two aspects in answer to this question. First, the Landlord contends that the subject matter of the current proceeding was heard and determined in the Earlier Proceeding. Accordingly, the current proceeding is res judicata. Consequently, Mr Gronow submitted that the initiation of the current proceeding is an abuse of process and should be struck out pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1998 ('the Act').
2. Second, even if the current proceeding is valid, the claims against the Second and Third Respondents are bad at law and should be struck out pursuant to s.75 of the Act.

Is the current proceeding as against the Landlord maintainable?

1. Mr Gronow submitted that what is being claimed in the current proceeding is already the subject of a determination made in the Earlier Proceeding. He referred me to a number of authorities dealing with the doctrine of res judicata.
2. In Chamberlain v Deputy Commissioner of Taxation,[7] the Deputy Commissioner of Taxation ('the DCT') issued proceedings against the taxpayer, which were subsequently settled. The terms of settlement provided that the taxpayer pay the DCT $25,557.92 plus costs. Four days after judgment had been entered pursuant to the terms of settlement, the DCT issued another proceeding against the taxpayer claiming $230,021.28. That later proceeding applied a credit to the debt claimed reflecting the $25,557.92 paid by the taxpayer pursuant to the terms of settlement. The taxpayer raised a defence that the DCT was estopped and precluded from alleging that he was further indebted because the cause of action had merged into the earlier judgment. In the joint judgment of Dean, Toohey and Gaudron JJ, their Honours stated:

The point of the present appeal is that the respondent brought an action against the appellant and recovered judgement against him. He obtained a judgement of the Court in which the cause of action upon which he relied merged, thereby destroying its independent existence so long as that judgement stood. And, so long as that judgement stands, it is not competent for the respondent to bring further proceedings in respect of the same cause of action. It is no answer to say that the Court might, if appropriate, stay the second action as an abuse of process. The impediment goes deeper than that; res judicata may sustain a plea of abuse of process but in that case the appropriate remedy is to strike out the latter action.[8]

1. Mr Gronow submitted that the cause of action raised by the Tenant in the present proceeding is the same cause of action raised in the Earlier Proceeding and for which judgement has been obtained.
2. I accept that there are similarities between what is claimed in the present proceeding and what was claimed in the Earlier Proceeding. In particular, loss of profit, which makes up the bulk of the present damages claim, also represented the bulk of the judgement sum awarded in favour of the Tenant. Although no claim was made for the loss of the value of the business goodwill in the Earlier Proceeding, Mr Gronnow submitted that this claim should have been made in that Earlier Proceeding and the Tenant is thereby precluded from now pursuing that type of claim.[9]
3. Mr Spaleta argued that the present claim does not arise out of the same cause of action pursued in the Earlier Proceeding. In particular, he submitted that the loss of profit claim now pursued relates to a different point in time. He argued that the loss of profit claim in the Earlier Proceeding was assessed up until 31 December 2011 and this was deliberately done on the assumption that the Premises would be fit for re-occupation in January 2012. As the Premises continue to be unfit for occupation, the present claim relates to loss of profit after the period January 2012. He further submitted that the claim relating to the loss of the value of business goodwill only arose because of the continued failure to make the Premises fit for occupation. This loss had not accrued prior to the hearing of the Earlier Proceeding.
4. Mr Gronow submitted that orders made by the Tribunal on 1 December 2011 determined the Tenant's loss of profit claim once and for all. He pointed to Order 2 of the Tribunal's orders which stated:

The rent and outgoings payable by the applicant to the respondent will continue to abate until all mould is eradicated from both the surfaces and in the air at the premises.

1. Mr Gronnow argued that Order 2 reflected a determination granting compensation in respect of any future loss of profit, in the event that the Premises continue to remain unfit for occupation. I do not accept that proposition. In particular, the Reasons published by the Tribunal do not support such a conclusion:

[311] The tribunal ordered that the rent and outgoings be abated whilst the applicant is required to vacate the premises. Whilst the applicant has not had to pay those expenses, it has nonetheless lost the opportunity to earn profits which it could reasonably have expected to earn had it been in occupation and trading. Therefore, I have projected the figures for loss of sales into the 2011 year until 31 December 2011.

1. In my view, it is clear from a plain reading of the Reasons that the abatement of rent did not constitute an award of compensation in respect of any future loss of earnings after 31 December 2011. In fact, it would have been of little utility to require the Tenant to continue to pay rent because the rent paid would then become part of the Tenant's claim for loss and damage, given that it could not occupy the Premises by reason of the acts or omissions on the part of the Landlord.
2. In my view, there is a fundamental difference between the facts in the present case and those which were considered by the High Court in Chamberlain. In particular, in Chamberlain the debt claimed by the DCT in the second proceeding was the same debt claimed in the first proceeding. It related to the same tax assessments over the same period of time. That is not the case in the present proceeding. The cause of action did not crystallise until after the Landlord failed to make the Premises fit for occupation in January 2012. Similarly, the claim for loss of business goodwill is couched in terms of the loss eventuating as a result of the Premises not being able to be re-occupied in January 2012. In that sense, both claims only crystallised after January 2012. They could not have been the subject of litigation prior to that date.
3. Mr Gronow further argued that the claims constitute a claim for damages for breach of the Tribunal's orders to make the Premises fit for occupation. He submitted that such a claim was not maintainable. I do not accept that the claim is couched in terms of damages for breach of the Tribunal's orders. In fact, there is no order specifically requiring that the Landlord make the Premises fit for occupation. That obligation is found in the terms of the Lease itself. Therefore, it cannot be said that the damages claimed are akin to a claim seeking enforcement of a previous judgement.
4. Consequently, I find that the claims made by the Tenant as against the Landlord are maintainable.

Is the proceeding as against the 2nd and 3rd Respondents maintainable?

1. Mr Gronow submitted that no legal cause of action has been made out in the Further Amended Points of Claim filed by the Tenant.
2. In the Further Amended Points of Claim dated 23 July 2012, the Tenant claims loss of profit and loss of goodwill value against all three respondents. It is not entirely clear how the claim is couched as against the Second and Third Respondents, who are directors of the Landlord.
3. In paragraph 6 of the Further Amended Points of Claim, it is alleged that the Third Respondent sent numerous e-mails to the Tenant that the remedial works would commence from January 2012. It is then alleged that the respondents had engaged in unconscionable conduct, although it is not clear as to what act or omissions constitute the unconscionable conduct.
4. In paragraph 8 of the Further Amended Points of Claim, it is alleged that despite the representations, the respondents had failed to restore the Premises to a fit state.
5. In paragraph 9 of the Further Amended Points of Claim, it is alleged that the respondents have failed to deliver the Premises in a fit state in accordance with the Lease and the Retail Leases Act 2003. I understand this to mean that the claim is couched in terms of a breach of the Lease agreement. In other words, damages for breach of contract.
6. There is no allegation of any contract between the Second and Third Respondents and the Tenant. They are directors of the Landlord and are separate legal entities to that party. It is unclear to me on what legal ground the Tenant maintains a claim against those parties.
7. In Destin Constructions Pty Ltd v McLennon,[10] I made the following observations regarding the application of s.75 of the Act:

[7] Section 75 empowers the Tribunal to strike out a claim found in a pleading: Yim v State of Victoria [2000] VCAT 821. The test to be applied in determining an application under s 75 is one that should be exercised with great care and should never be exercised unless it is clear that there is no question to be tried: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87 at [99].

[8] Section 75 does not allow the Tribunal to strike out a pleading that merely displays poor drafting: West Homes (Australia) Pty Ltd v Crebar Pty Ltd & Ors [2001] VCAT 46. Therefore, s 75 is not to be used as a mechanism to have a 'pleadings' summons only: Barbon v West Homes Australia Pty Ltd [2001] VSC 405. It must be exercised when there are no merits to the claim, rather than when the pleadings have not been sufficiently detailed. In West Homes the Tribunal stated:

[11] It is basic that the Tribunal should require that this duty be observed. Otherwise, natural justice will be denied. Often, though, it is quite possible for a party to make its case known sufficiently without having to resort to fine legalese. Indeed, fine legalese can often obscure. Moreover, the Tribunal is not bound to proceed with all technicality and undue formality. A so-called "pleading" summons invites excessive semantical debate. Ideally, Points of Claim, or of Defence, should normally be able to be understood by the average person.

1. In Norman v Australian Red Cross Society,[11] the Tribunal accepted that the principles discussed in the Court of Appeal's decision in State Electricity Commission v Rabel [12] applied when considering an application under s.75 of the Act. Those principles are summarised in Pizer's Annotated VCAT Act [13] to include:
   • (a) The application is for the summary termination of the proceeding; it is not the full hearing of the proceeding.
   • (b) The Tribunal's procedure on the application is in its discretion. The application may be determined on the pleadings or by way of submissions, or by allowing the parties to put forward affidavit material or oral evidence.
   • (c) If a party indicates to the Tribunal that the whole of their case is contained in the material put before the Tribunal, the Tribunal is entitled to determine the matter by asking whether, on all the material placed before it, there is a question of real substance to go to a full hearing.
   • (d) The Tribunal should exercise caution before summarily terminating a proceeding.
   • (e) For a dismissal or strike out to succeed, the proceeding must be obviously hopeless, obviously unsustainable in fact or in law, can on no reasonable view justify relief, or be bound to fail.
   • (f) A complaint cannot be struck out as lacking in substance merely because it does not in itself contain the evidence supporting the claims made.
2. In the present case, I accept Mr Gronow's submission that no cause of action has been established as against the Second and Third Respondents based on what is set forth in the Applicant's Further Amended Points of Claim. There is no contract alleged between them and the Tenant. There is no duty of care alleged. Moreover, no breach of any statutory provision is raised against them.
3. What is alleged is that the Third Respondent made representations from December 2012 until March 2013 that the Landlord would commence remedial work on the Premises, which has not occurred. However, nothing is said as to how those representations altered the position of the Tenant, given that no allegation is made that it relied upon those representations in any way. Its position before and after the alleged representations remains the same - unable to occupy the Premises.
4. It is further alleged that all respondents engaged in unconscionable conduct, which according to the document, is based on a factual contention that they knew not repairing would have serious negative effects upon the applicant's business and allowed it happen. Even if that factual contention could amount to unconscionable conduct, which I doubt, it fails to recognise that it is the Landlord, as distinct to its directors, which is responsible for the remedial work to be undertaken to the Premises.
5. Nothing is said as to how liability is to imputed to the directors, as distinct to the Landlord and in those circumstances, I find that no cause of action can be distilled from the document. The claim as against the Second and Third Respondents does not disclose an open and arguable case. Consequently, I will order that those claims are to be struck out, with liberty to apply for leave to file and serve an amended claim against those parties.

[1] Section 109X(1)(a) and (b) of the Corporations Act 2001 (Cth).

[2] [2010] NSWSC 508.

[3] The first occasion that a formal request was made was by letter from the landlord's solicitors to the Tenant dated 6 July 2012. That letter was in response to queries raised by the Tenant following receipt of the Notice of Default.

[4] Orr v Ford ([1989] HCA 4; 1989) 167 CLR 316 at 340.

[5] [2011] VSC 242.

[6] [2010] NSWCA 268.

[7] [1988] HCA 21; (1987-1988) 164 CLR 502.

[9] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 597.

[10] [2010] VCAT 1582.

[11] (1998) 14 VAR 243.

[12] [1998] 1 VR 102.

[13] Pizer's Annotated VCAT Act (4th Ed) 2012 published by JNL Nominees Pty Ltd at 274-275.