Well Garnished Pty Ltd v Chaos Investments Pty Ltd

reasons for decision 1This is an interlocutory application for the striking out of part of the Applicant's claim. It is made on the basis that the part sought to be struck out was subject to an "accord and satisfaction" when previous proceedings before this Tribunal were disposed of. 2The previous proceedings 115129 where the parties were identical to those in these proceedings sought the following orders. 1. A declaration that the Notice issued under Section 129 of the Conveyancing Act 1919 (NSW) dated 14 July 2011 ('section 129 notice') is invalid. 2. A declaration that the Notice of Termination of Lease dated 26 August 2011 ('Notice of Termination') is invalid. 3. A declaration that the Notice to Quit dated 26 August 2011 ('Notice to Quit') is invalid. 4. A declaration that there is no breach of the lease registered AD776302A as transferred and assigned between the Applicant and the Respondent by the Applicant as alleged in the Section 129 Notice or at all. 5. A declaration that the lease is on foot and is to continue to operate in accordance with its terms and conditions. 6. An order that the Respondent by itself, its servants and agents be restrained from taking any action to enforce the delivery up or to take possession of the premises known as Shop1, 1599-1601 Anzac Parade La Perouse folio identifier 13/SP78989 ('the premises') until further order of the Tribunal. 7. Further and in the alternative an order that the applicant be relieved against forfeiture of the lease in respect of the premises upon such terms as the tribunal thinks fit. 8. An order that the Respondents, its servants and agents be restrained from entering upon the premises other than for the purposes and by the manner prescribed in the lease. 9. An order that Respondents be restrained from asserting or proving to the Registrar General that it has lawfully re-entered or recovered possession of the premises insofar as such re-entry or recovery related to any forfeiture incurred by the Respondent until further order of the Tribunal. 10. An order that the Respondents pay reasonable compensation to the Applicants for the significant disruption of and the significant adverse effect on the trading of the lessee caused by the continued harassment and trespass by the Respondent on the premises. 11. An order that the Respondents pay reasonable compensation to the Applicant for taking the unreasonable action giving rise to the need for this application which has had a significant adverse effect on the trading of the applicant in the premises. 12. Such further or other orders as the Tribunal thinks necessary. 3The claim for compensation or damages was particularised as follows: Ground 8 The applicant seeks compensation pursuant to section 34(1) for disturbance by the Repondents. Particulars 8.1 From the April 2008 to June 2011 Alex Alexandrou on behalf of the Respondents entered the premises on numerous occasions without notice and or permission and breached the covenant for Quite Enjoyment. Particulars 8.2 In June 2011 the Applicant asked Alex Alexandrou and the Respondents to cease and desist the continuous trespass and breach of the covenant of quite enjoyment and in retaliation the Respondents caused the before mentioned steps to be taken to terminate the Applicants lease. 4In the present proceedings the Applicant relies on the Amended Application for Original Decision filed 14 February 2013. In it the Applicant seeks the following order: (1)A declaration that the Lease AD776302A entered into by Elyan No 1 Pty Limited as lessee with His Majesty's Apartments Pty Ltd CAN 120 210 237 ('His Majesty's Apartments') as lessor for the premises in folio identifier 13 /SP 7898 commonly known as ('Shop 1), 1599 - 1601 Anzac Parade, La Perouse, as assigned to Well Garnished Pty Limited ('Well Garnished') ('the Lease') by Deed of Consent dated 5 November 2010 as Lessee is Retail Lease for the purposes of Retail Leases Act 1994 (NSW) ('the Act') (2)A declaration that the Applicant has complied with its obligations of Repair and Removal on Vacation of the premises pursuant to Clause 13.1 of the Lease. (3)A declaration that the First and Second Respondent have not suffered any loss due to any breach of the Lease by the Applicant. (4)A declaration that pursuant to section 62B(1) of the Act the First and or Second Respondent engaged in conduct, in connection with a retail shop lease, that in all the circumstances was unconscionable in that the First and Second Respondent engaged in unconscionable conduct in that it unreasonably refused and or withheld to consent to the assignment of the Lease on the the 14 February 2012. (5)Further and in the alternative a declaration that pursuant to section 62B(1) the First and or Second Respondent engaged in conduct, in connection with a retail shop lease, that in all the circumstances was unconscionable in that the First and Second Respondent engaged in unconscionable conduct in that it unreasonably refused and or withheld to consent to the assignment of the lease on the the 5 August 2012. (6)A declaration that pursuant to section 62B(1) the First and or Second Respondents engaged in conduct, in connection with a retail shop lease, that in all the circumstances was unconscionable in that the First and Second Respondent caused significant disruption of and have had a significant adverse effect on the trading of the Applicant caused by the continued harassment and trespass by the Respondent on the premises. (7)A declaration that the First and or Second Respondent breached the covenant for quiet enjoyment. (8)A declaration that the First and or Second Respondent has unreasonably taken action that has caused a significant disruption or has had a significant adverse effect on, trading of the lessee in the shop pursuant to Section 34 of the Retail Leases Act. (9)Further and in the alternative that the First and or Second Respondent failed to take all reasonable step to prevent or put a stop to anything that caused significant disruption of, or which has a significant adverse effect on trading of the lessee in the shop pursuant to section 34 of the Retail Leases Act; (10)A declaration that First and or Second Respondent failed to allow the Applicant to occupy and use the premises without the First and or Second Respondent interrupting or disturbing the Applicant in breach of clause Lease. (11)An order that the Respondents do all things necessary to deliver up and release to the Applicant the Commonwealth Bank Guarantee ('the Guarantee') dated 21 April 2009 in the sum of $21,107.10 including but limited to a. Providing written notification to the Commonwealth Bank that the Guarantee is no longer required; and or b. Deliver up the Guarantee to the Commonwealth Bank within 48 hours of this order. (12)An order that the First and or Second Respondents pay reasonable compensation to the Applicants for the breach of the covenant for quiet enjoyment further details will be provided upon receipt. (13)An order that the First and or Second Respondents pay such reasonable compensation as the Tribunal sees fit to the Applicant for breach of section 34 of the Retail Leases Act further details will be provided upon receipt. (14)An order that the First and or Second Respondents pay reasonable compensation to the Applicants for the losses suffered arising out of the Unconscionable Conduct alleged in paragraph 2, 3 and 6 set out below. (15)An order that the Respondents pay the Applicant costs of the proceedings before the Tribunal. (16)Such further order as the Tribunal thinks necessary. 5The orders which the Respondent seeks to impeach are those numbered 6, 7, 8, 9, 10, 12, 13 and 14. 6Allied to the orders listed in the preceding paragraph are the particulars provided in respect of them viz (4)That the First and or Second Respondent breached the covenant of quiet enjoyment both express in the lease at clause 15.4 of the Lease and the covenant for quiet enjoyment implied in the Lease by Law. (a)The Lessor through its officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise know and Tony at La Perouse by entering the business premises without notice to discuss matters arising out of the Lease and or issues regarding the Strata Corporation and or Body Corporate on numerous occasions for the duration of the Lease. (b)The Lessor through its officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony's at La Perouse by entering the business premises without notice and failing to pay proper remuneration for services provided by the staff and or the Lessee of Tony's at La Perouse on numerous occasions for the duration of the Lease. (c)The Lessor through its officers, employees and agents (Alex Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises without notice and demanding immediate service, being rude to and harassing both the business manager and staff of Shop 1 at Tonys at La Perouse on numerous occasions for the duration of the Lease. (5)That the First or Second Respondent has unreasonably taken action that has caused a significant adverse effect on, trading of the lessee in the shop pursuant to Section 34 of the Retail Lease Act; (a)The Lessor through it officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises with notice to discuss matters arising out the Lease and or issue regarding the Strata Corporation and or Body Corporate on numerous occasions for the duration of the Lease. (b)The Lessor through it officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony's La Perouse by entering the business premises without notice and failing to pay proper remuneration for services provided by the staff and or the Lessee of Tony's at La Perouse on numerous occasions for the duration of the Lease. (c)The Lessor through its officers, employees and or agents (Alex Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises without notice and demanding immediate service, being rude to and harassing both the business manager and staff of Shop 1 at Tonys at La Perouse on numerous occasions for the duration of the Lease. (6)The First or Second Respondent engaged in conduct, in connection with a retail shop lease, that in all circumstances was unconscionable causing the Lessee to be unable to assign its lease and receive the benefit of two five year options and causing the Lessee to have to vacate the premises at the expiration of the Lease of the business known as "Tonys at La Perouse". (a)The Lessor through it officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises without notice to discuss matters arising out of the Lease and or issues regarding the Strata Corporation and or Body Corporate on numerous occasions for the duration of the Lease. (b)The Lessor through it officers, employees and or agents (Alex, Mario and Stephen Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises without notice and failing to pay proper remuneration for services provided by the staff and or the Lessee of Tony's at La Perouse on numerous occasions for the duration of the Lease. (c)The Lessor through its officers, employees and agents (Alex Alexandrou) continually harassed and interrupted and or disturbed the Lessee in the operation of Shop 1 otherwise known as Tony at La Perouse by entering the business premises without notice and demanding immediate service, being rude to and harassing both the business manager and staff of Shop 1 at Tony's at La Perouse on numerous occasions for the duration of the Lease. 7In support of the interlocutory application Mr Jacobs Counsel for the Respondents read three (3) affidavits of Stephen Alexander sworn 19 July 2013, 19 August 2013 and 28 August 2013. He also tendered as exhibits four (4) affidavits filed in the previous proceedings. 8In the earliest of his affidavits Mr Alexander sole director and secretary of the Second Respondent said that in October 2011 he became involved in discussions with Mr Campbell Petrie the Solicitor for the Applicant with regard to settlement of the earlier proceedings. On 15 December 2011 the parties attended a mediation and the following day Mr Alexander received an email from Mr Petrie: "We refer to the mediation held in this matter yesterday and note that it appears the matter is settled on the following basis:- Cool Room Motors As these have been removed from the car space in lot 1 this is no longer a claim for a breach by the landlord in accordance with Section 129 Notice we enclose herewith copy of a letter from Delta Refrigeration Services confirming the moving of the motors. If your client wishes to inspect the car space please contact our office this week in order to obtain a suitable time to gain access to examine the car space of lot 1 to confirm this. This would need to happen between 9am and 11am from Wednesday to Friday after Boxing day. In respect of the statement issued on 7 December last listing the total outstanding items we respond as follows:- Land Tax The landlord agrees to forgo the payment of the amount of $146.04. Strata Levies It is agreed that as of 1 January 2012 the tenant shall pay $1,190.10 into Chaos Investments Bank Account and a further sum of $40.57 to the Strata Managers in respect of the outstanding invoice. Water Rates It is agreed that the tenant shall pay the sum of $256.61 to Chaos Investments by way of refund. The credit of $22.10 will be available to us at the next payment due by the tenant of the next quarter. Council Rates The tenant will pay the sum of $31.32 to the landlord in respect of outstanding council rates. Grease Trap Charge Subject to receiving confirmation as to a number of matters our client agrees in principal to pay her share of the cost of the actual pump out of the Grease Trap which we note is $1,397.00 (this is an excessive figure based upon the current payments for Grease Trap pump out) together with 50% of the costs of cleaning of the basement area. Our client will not agree to pay the interest in view of the fact that she was told not to pay this charge ($423.31) by your client. However, prior to reaching a final agreement we require that you forward to us a copy of the invoice issued in respect of the Grease Trap charged to your client. Subject as to receiving advice on the above matters could you please confirm that upon reaching a resolution as to the Grease Trap charge that the landlord on payment on the amount set out above will withdraw the Section 129 Notice the Notice of Termination of Lease and Notice to Vacate Premises. We look forward to hearing from you in relation to the above matters. 9Thereafter at the request of a Solicitor in Mr Petries' office Mr Alexander inspected the subject premises and had a conversation with Mr Tony Kaman a principal of the Applicant. According to the affidavit: There was further pleasant conversation between Tony and I wherein the agreement that had been reached at mediation was confirmed. I then rose from my chair, as did Tony, and we shook hands. My brother and I then left. 10Mr Alexander said that he then remonstrated with Mr Petrie by telephone "that the $4000.00 agreed at mediation had now been reduced to $2000.00". 11There followed two emails one from Mr Alexander to Mr Petrie: The understanding was $4,000. Subject to your client paying $4,000 less deductions for payments made ($1,190.10 + $40.74) then my client will accept the sum of $2,796.16 in full and final settlement for the grease trap and will withdraw all 3 notices. 12And the other from Mr Petrie to Mr Alexander: We refer to your email and confirm our client's instructions that they will tomorrow pay into the account of Chaos Investments the sum of $2,2769-16 being the $4,000-00 referred to less the payments listed in your email which they have already made in final settlement of the claim for the Grease trap expenses. Upon receipt could you please forward a confirmation that the three Notices served upon our client are withdrawn. We will then prepare draft Orders to be signed and handed up on Thursday that provide that the proceedings are by consent Discontinued with each party to pay their own costs. We look forward to hearing from you. 13Mr Alexander's affidavit proceeds to relate: On 12 January 2012 Mr Campbell Petrie attended upon this Honourable Tribunal and according to the official audio recording of that day, which I have obtained and listened to, he announced to the Honourable Tribunal words to the effect that: "this matter has been resolved and we have a form of order we will be seeking you to make today." 14The records of the Tribunal indicate that there was filed with it a document headed "Order" signed by Mr Petrie on behalf of the Applicant and by Mr Alexander. The document read: The parties seek the following orders by consent: 1. That the proceedings be discontinued. 2. Each party pay their own costs. 15No other evidence in the case seems to me relevant to the issue I have to decide although I note that annexed to Mr Alexander's affidavit of 28 August 2013 is a letter from Mr Petrie to the Solicitors for the Respondents in which he states: In any event, we confirm that our client will be abandoning grounds 5a-e and grounds 6a-e of our amended application on the issue of trespass and disruption to trading. 16Mr Petrie a very experienced solicitor gave oral evidence that the passage quoted inadvertently omitted the word "not" before the word "be". Although Mr Petrie was cross examined upon the subject I accept without hesitation that there was an unintentional error which is of no significance. 17Mr Jacobs submitted that the terms of the Orders to which the parties consented in January 2012 amounted to an accord and satisfaction in respect of all matters outstanding between the parties and related to the lease up to the institution of the earlier proceedings. He referred to the decision of the Court of Appeal in El-Mir and Anor v Risk [2005] NSWCA 215. The judgment in that case was given by McColl JA (Handley JA and Ipp JA agreeing). It concerned inter alia the question whether the resolution of a commercial arbitration constituted an accord and satisfaction. The underlying facts were as stated by McColl JA: 5. The respondent, relying on a provision in the building contract, sought to recover the monies said to be owing to him by recourse to commercial arbitration pursuant to the Commercial Arbitration Act 1984. The appellants cross-claimed alleging the respondent's building work was defective. The arbitration proceeded before the late Mr E E Morris, in June 1997. Both parties had legal representation. After some evidence had been taken the matter was, as the arbitrator was informed by the respondent's solicitor Mr Snelgrove, "settled". The terms of settlement were read onto the transcript as well as being reduced to writing in a document signed by the parties' solicitors. The document was headed "Terms of Settlement", dated 27 June 1997 and stated: "1. Each party, without admission, withdraws their respective claims and cross claims against the other party. 2. Each party is to bear its own costs of the arbitration. 3. Each party to bear equally the costs of the arbitrator."" 18The issue whether this constituted an accord and satisfaction arose when one of the parties to the arbitration commenced an action in the District Court claiming damages for alleged defective building work. The principles involved were explained by her Honour: 48. The "essence of accord and satisfaction 'is the acceptance by the plaintiff of something in place of his cause of action', ... the accord is the agreement or consent to accept the satisfaction ... upon provision of the satisfaction, there is a discharge with extinguishes the cause of action". Federal Commissioner of Taxation v Orica Ltd [1998] HCA 33; (1998) 194 CLR 500 per Gummow J at [116] citing Dixon J in McDermott v Black at 183 - 185; see also British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB 616 at 643 per Scrutton LJ. In Thompson v Australian Capital Television Pty Ltd and Other [1996] HCA 38; (1996) 186 CLR 574 at 610, Gummow J emphasised that accord and satisfaction "requires acceptance of something in place of the full remedy to which the recipient is entitled". (emphasis added) 49. Where there is an agreement to accept a promise in satisfaction of the cause of action, "the original cause of action is discharged from the date when the promise is made": McDermott v Black per Starke J (at176); Dixon J (at 183 - 185); see also British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd (at 644) per Scrutton LJ. 50. The consequences of the discharge of the original cause of action by accord and satisfaction were explained by Phillips JA (with whom Winneke P and Charles JA agreed) in Osborn & Bernotti t/as G04 Productions v McDermott t/as RA McDermott & Co Karmine Pty Ltd [1998] 3 VR 1 at 8, in a passage referred to with apparent approval by Gummow and Hayne JJ in Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635 at [56]. Phillips JA said: "Where there is an accord and satisfaction, the agreement for compromise may be enforced, and indeed only that agreement may be enforced, because ex hypothesi the previous cause of action has gone; it has been 'satisfied' by the making of the new agreement constituted by abandonment of the earlier cause of action in return for the promise of other benefit." (emphasis added) 19As her Honour observed the question whether there has been an accord and satisfaction is one of fact. It turns upon the parties intentions which may be discerned from the terms of any document said to constitute all or part of the agreement or in the surrounding circumstances. 20Mr Jacobs submitted that the compromise which resulted in the consent order by which the proceedings were discontinued constituted an accord and satisfaction in respect of all matters raised in the proceedings including the claims for orders 10 and 11. He submitted that in place of those claims the Applicant received the withdrawal of the Notice of Termination, the withdrawal of the Notice to Quit and the substitution of an obligation to pay a greater amount on account of outgoings than was claimed by the Respondents who also abandoned their claim for costs. 21Mr Donohue Counsel for the Applicant submitted on the other hand that the proceedings were discontinued rather than dismissed and that the emails between the parties made it clear that their negotiations did not relate to orders 10 and 11 sought by the Applicant. For instance so he argued Mr Petrie's letter of 16 December 2011 deals only with disputes regarding the Cool Room Motor, Land Tax, Strata Levies, Rates, and the Grease Trap Charge. 22However in my view a letter from Mr Petrie to Mr Alexander of 9 January 2012 and in particular the paragraph "that upon the above occurring that the proceedings filed at the ADT will be withdrawn and each party to pay their own costs" resolves the issue against the Applicant. It seems clear to me that Mr Petrie intended that all matters at issue in the then pending proceedings were being compromised and settled. If he thought otherwise he could easily have said so and ensured that the proceedings continued in so far as the relief sought by the Applicant under Orders 10 and 11 was concerned. 23Mr Donohue put his submissions on an alternative basis namely that the current proceedings make a claim for unconscionable conduct under s.62B of the Retail Leases Act whereas the earlier proceedings made no such claim. He contends that if his client is prevented from relying on matters in existence at the date the earlier proceedings were commenced it will be prejudiced in light of the wide ambit of the concept of unconscionability reflected in s.62B. That may be so but the right to seek damages for unconscionable conduct was available in 2011 and although such damages were not expressly claimed they could have been on the facts pleaded. It is not I think to the point that the Applicant may now wish to bolster its case with matters arising in the intervening period. That right should have been expressly reserved. 24In the result I think that the Respondents have established their right to relief. I make these orders.