DS Queen St Mall Pty Ltd v Texrose Pty Ltd
[2006] QDC 221
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- DS Queen St Mall Pty Ltd v Texrose Pty Ltd[2006] QDC 221
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DS Queen St Mall Pty Ltd v Texrose Pty Ltd[2006] QDC 221
DS Queen St Mall Pty Ltd v Texrose Pty Ltd[2006] QDC 221
DISTRICT COURT | No Appeal No 3696 of 2005 |
CIVIL JURISDICTION
JUDGE FORNO QC
DS QUEEN ST MALL PTY LTD ACN 070 411 022 | Plaintiff/Respondent |
and
TEXROSE PTY LTD ACN 053 308 044 | First Defendant/First Appellant |
and
NEVILLE PEARD | Second Defendant/Second Appellant |
and
ISPT PTY LTD ACN 064 041 283 | Third Defendant/Not a Party to Appeal |
BRISBANE
..DATE 26/05/2006
JUDGMENT
HIS HONOUR: This is an appeal by the first and second defendants in a Magistrates Court action against the decision of the learned Magistrate by which she dismissed their application for summary judgment against the plaintiff.
The basis of the application was that the plaintiff had no standing and therefore was not entitled to sue the defendants, therefore there was no real prospect of success and there was otherwise no need for a trial (see Salcedo [2005] QCA 227).
The defendants, at relevant times, were the tenant and its guarantor in business premises owned by. DS Queen Street Mall Pty Ltd. After rent had fallen into arrears the premises were sold to ISPT Pty Ltd. DS Queen Street Mall, in its own name, then sued for the arrears. The Magistrate held that that was legitimate.
Section 117 of the Property Law Act was the subject of a decision of the Full Court in Ashmore Developments Pty Ltd versus Eaton (1992) 2 Queensland Reports 1 and there is no contest that that is the appropriate authority to be considered in the present case.
In that case the Full Court held that the effect of section 117 was to confer on the assignee of the reversion a right to the benefit of the arrears of rent accrued prior to the assignment and once that right was acquired by the assignee it was lost to the assignor in the absence of agreement to the contrary. I emphasise “in the absence of agreement to the contrary”. This contemplates that since the parties to the contract of sale in question are free to negotiate a price on whatever basis they wish, they may want to exclude the operation of section 117 in whole or in part.
As pointed out plainly by Macrossan and Ryan JJ who formed the majority, excluding the operation by agreement can only logically operate as between the parties to the contract inter se and would not entitle the vendor to sue its erstwhile tenant for arrears of rent.
It appears to me, with respect, that the learned Magistrate has overlooked or has misinterpreted that basic point, perhaps in the flurry of argument. So far as concerns “the application of the principles in Ashmore to this case” (see Magistrate's written decision at page 2) is concerned it wouldn't matter if the Magistrate's interpretation of clause 6.6 of the contract of sale were correct. That is “that is makes provision for the bringing of proceedings (by the respondent here) against the first and second defendants . . .”
In any case I disagree with the learned Magistrate's interpretation of that clause. Comparing that clause with clause 14 in Ashmore there are some differences. Of clause 14 the contract of sale in Ashmore Ryan J said,
“The agreement between the assignor and assignee in clause 14 of the contract of sale was one which bound them but which did not affect the lessee.
The lessee was obliged by section 141 to pay the rent to the assignee. The assignee agreed with the assignor that the rent up to the date of possession would belong to the assignor. The result of this arrangement was to effect an equitable assignment of the debt from the assignee (who became the assignor of the debt) to the assignor (who became the assignee of the debt). There is nothing to show that notice of the assignment from the purchaser to the vendor of the rent was given to the lessee prior to the bringing of the action.
The position is, therefore, as was stated by Atkinson J in Holt versus Heatherfield Trust Ltd [1942] 2 KB 1 at 41:
‘Until notice be given the assignment is an equitable assignment but it is an assignment which requires nothing more from the assignor to become a legal assignment. The assignee may himself give notice at any time before action brought and further than even before notice he may sue in his own name provided that he makes the assignor a party to the action as plaintiff if he agrees and as defendant if he does not consent...’”
By clause 6.6(c) it would appear that the parties sought to preserve from the operation of section 117 of the Property Law Act unpaid rent and have it remain as the entitlement of the vendors. In case that were thought not to be effective a fallback position to achieve the same result is provided for in a subsequent subparagraph. There is, it seems to me, an acknowledgement of what must occur to give the vendor standing in an action against the tenant in these circumstances as provided for in Holt versus Heatherfield Trust Ltd [1942] 2 KB 1 at 41, referred to by Ryan J just quoted.
Here, as in Ashmore, the lessee was obliged by section 117 to pay rent to the assignee. In Ashmore there was nothing to show notice of the assignment from the purchaser to the lessee. On the contrary in this case there was a notice but that purported to oblige the lessee to pay to the assignee. The effect of clause 6.6(e) is to obviate the necessity for consent of the assignee to the plaintiffs suing in the name of the assignee. In other words the consent is given under the contract.
Despite all of this the plaintiff sued in its own name. It clearly had no standing and the Magistrate ought to have given judgment by default as sought by the defendants. The assignee, I should add, since this was the subject of some argument, was clearly not joined on the basis that consent was not forthcoming but rather on the basis that it was claimed it retained some of the remissions of rent to which the plaintiff was entitled.
In those circumstances it is necessary that the Magistrate's order be set aside.
...
HIS HONOUR: The Magistrate's decision is set aside.
MR FRYBERG: Your Honour, the Magistrate's decision should be set aside and Judgment should be entered in favour of the appellant, Texrose Pty Ltd, and the - I think the other defendant who I also appeared for - it should be - on the Court file.
HIS HONOUR: Neville Peard, P-E-A-R-D.
MR FRYBERG: Yes, I think that's - yes, I think it's Mr Peard. Judgment entered for those two defendants against the plaintiff and thereby the action be dismissed - at least that's against those two defendants.
HIS HONOUR: Yes. Right. Now, do you want to say something more?
MR LOVE: Yes, your Honour. My concern chiefly is that I would have expected that a finding of - that this particular appeal relates to a - application from summary judgment. It doesn't - it's not appeal in respect of the substantive issues of the case and I would submit that it would have been up to the learned Magistrate to have formed a view and then that becomes an issue to be decided at trial rather than on appeal. So my expectation would have been that on the setting aside of the - that were it to be set aside, it should in fact be remitted or - well, this was my expectation, your Honour, that if it were the case that you found against our party, it would be remitted, rather than having a decision made on its substantive issue.
I must say also that it's worth pointing out if - I don't know if you want to hear costs matters at the moment, but I just have some concerns, your Honour, in term of granting Judgment in favour of the appellant in what is essentially an application for summary judgment. The other - if your Honour wishes to hear arguments on costs I am willing to make some but my preference would be as I said, that we go away and see if we can consider it more fully.
...
HIS HONOUR: My formal orders are that the appeal is allowed. The Magistrate's decision is set aside. In lieu of the Magistrate's decision I give judgment in favour of the defendants - appellants here - Texrose Proprietary Limited and Neville Peard against the plaintiff/respondent D S Queen Street Mall Proprietary Limited.
I have heard something in argument concerning costs and it seems to me, firstly, that I should order and I do that the respondent pay the costs of and incidental to the appeal to the appellants - that is to say the costs of the appeal as well as the action.
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