Rigney v Bennett Carroll Holdings Pty Ltd
[2017] QSC 124
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- Unreported Judgment
- Rigney v Bennett Carroll Holdings Pty Ltd[2017] QSC 124
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Rigney v Bennett Carroll Holdings Pty Ltd[2017] QSC 124
Rigney v Bennett Carroll Holdings Pty Ltd[2017] QSC 124
SUPREME COURT OF QUEENSLAND
CITATION: | Rigney & Anor v Bennett-Carroll Holdings Pty Ltd & Ors [2017] QSC 124 |
PARTIES: | NICHOLAS RIGNEY (first applicant) and MATTHEW MARMENT (second applicant) v BENNETT CARROLL HOLDINGS PTY LTD trading as BENNETT CARROLL SOLICITORS (first respondent) and The trustee of the MCLEAN FAMILY TRUST trading as ABSOULTE AUTOMOTIVE SOLUTIONS PTY LTD (second respondent) |
FILE NO/S: | BS 5488 of 2017 |
DIVISION: | Trial Division |
PROCEEDING: | Originating Application |
DELIVERED ON: | 20 June 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 7, 15 June 2017 |
JUDGE: | Brown J |
ORDER: | Order as per draft, initialled by Justice Brown, and placed with the file |
COUNSEL: | The applicants appeared on their own behalf R R Ivessa for the respondents |
SOLICITORS: | The applicants appeared on their own behalf Bennett Carroll Solicitors for the respondents |
- BROWN J: This is an application by Nicholas Rigney and Matthew Marment as co-tenants. Michael Marment applied to be joined as an applicant after the respondents contended that the application and relief sought could not be brought by only one tenant. As a result, the Court raised whether Mr Marment was intending to join the application. Leave was not opposed and Mr Marment was granted leave to be added as a party. The matter was brought by way of originating application on the basis of its urgency.[1] The applicants were not legally represented.
- The applicants are co-tenants of a three year lease of industrial premises, pursuant to a Commercial Tenancy Agreement with the second respondent, which was executed on 20 December 2016 (referred to as “The Commercial Tenancy Agreement” or “the lease”). The first respondent is the firm who act as the second respondent’s solicitors in relation to this dispute.
- An initial hearing took place on 7 June 2017. At the time I noted there were a number of factual matters raised that could not be determined. The applicants indicated that they primarily wished to get access to the leased premises even if not all matters could be determined at that time. The respondents contended that the real issue was whether the applicants should be given relief from forfeiture which they contended should not be given and the matter should be dismissed.
- The primary matter therefore that was argued on 7 June 2017 was whether the applicants were entitled to relief from forfeiture. I adjourned the matter to consider it and relisted it on 15 June 2017. Following my relisting the matter on 15 June 2017 and hearing further submissions as discussed below I determined it appropriate to make an order in terms of the Order dated 15 June 2017. As that was not finalised until after Court had adjourned, these reasons are published subsequent to making that order but reflect the basis upon which it was made.
- The substance of the complaints of the applicants, as best that can be discerned from the applicants’ originating application,[2] is:
- that the applicants should be allowed to take back possession of the leased property of 8b Moss Street, Slacks Creek, Queensland from the second respondent;
- that the second respondent did not have a lawful entitlement to re-enter the premises as there had been no breach of the lease for non-payment of rent;
- that the second respondent has breached the implied covenant with a lessee for quiet enjoyment and the implied convenience to remove the lessee’s fixtures;
- that the second respondent, in breach of the lease, has failed to provide the applicants with access to the whole of the rear tenancy driveway and hardstand which was included in the premises at 8b Moss Street; and
- that the respondents had misled the applicants in the permitted use of the property.
- As well as access to the premises, the relief sought in the Originating Application is generally by way of damages, costs and compensation, albeit referenced to the wording used in s 124 of the Property Law Act 1974 (Qld).
- Various allegations have also been made against the first respondent pursuant to the Legal Profession and Solicitors Rule 2007 (Qld) and the Legal Profession Act 2007 (Qld).
- Numerous factual and legal matters arose in the hearing of the application with competing versions being provided on behalf of each of the parties as to the date for payment of rent, the amount of rent payable, the permitted use of the premises, and the area which was the subject of the lease. Other issues were also raised as to whether the premises had been subleased, and whether the respondents were able to receive rent. A number of those matters cannot be resolved without a trial and are required to be determined for the court to decide the issues which appeared to be raised by the Originating Application.
Background
- A summary of the relevant events leading to the present application are set out below based largely on correspondence to the affidavit of Nicholas Rigney.[3]
- The second respondent issued the Notice to Remedy Breach dated 5 April 2017 alleging that the applicants had not used the premises in accordance with the permitted use of the premises and had left food and drink scraps visible from the external areas of the premises. At the hearing, the second respondent only relied on the Notice to Remedy Breach for non-payment of rent and did not seek to rely on this notice.
- The applicants asserted by an email of 11 April 2017 that the parties agreed that the permitted use of the premises was for automotive repairs as well as for a performance and engineering business and that the second respondent had told the applicants he referred to the permitted use as ‘storage’ only for insurance purposes.
- The applicants’ email was not specifically responded to by the second respondent’s solicitors who raised further breaches by letter dated 11 April 2017. It stated that the breach notice stood.
- On 18 April 2017 the applicants stated that they had ceased business[4] and asked for clarification to be sought of the use as outlined in their email of 17 April 2017, which rejected the alleged additional breaches and maintained the position previously stated as to the ‘permitted use’.
- On 30 April 2017 the applicants raised a number of issues in relation to the lease which included:
- the fact that the registered proprietor of the leased property was Broken Wallet Pty Ltd and not the respondent and requested a copy of the head lease;
- that they could not pay any further money to Absolute Automotive Solution Pty Ltd until the head lease was produced; and
- that there was an “agreement to lease” inserted in the Commercial Tenancy Agreement which was not part of the agreement according to what was said to be included in the Commercial Tenancy Agreement, namely the reference schedule and the commercial tenancy conditions and there was a disparity between the two documents as to the rent payable. The disparity in the rent payable was between the agreement to lease and the reference schedule to the Commercial Tenancy Agreement in that the former provides for $2,940 per month plus GST and the latter specifies the rent to be $2,940 per year plus GST. The applicants assert they had overpaid the rent based on the tenancy schedule.
- A notice to remedy the breach was attached to the door of the leased premises on 9 May 2017. The notice gave seven days to remedy the breach noting the obligation of the applicants under cl 3 to pay the rent in the amount of $2,940 plus GST on the 23rd day of each month. The breach was said to be failure to pay such rent, although the amount outstanding is unspecified. The notice also seeks the payment of $520 being the costs and outlays to issue the notice.
- On 24 May 2017 the landlord re-entered the premises and changed the locks.
- Following the receipt of the notice of 9 May 2017, Nicholas Rigney sent to the second respondent an email on 10 May 2017 copied to the first respondent outlining various matters upon which they sought clarification or challenge in respect of the lease. These matters were:
- the fact that the rent of $2,940 (excl GST) per month was only referred to in an agreement for lease whereas the reference schedule and Commercial Tenancy Agreement conditions of the Commercial Tenancy Agreement, provided for the rent to be $2,940 (excl GST) a year;
- that the lease did not state that the rent was to be paid on the 23rd of the month and that the date for rent to be paid was the first of the month subject to cl 3.11 of the agreement conditions; and
- that they sought a copy of the head lease between Broken Wallet Pty Ltd which was the registered proprietor of the property and Absolute Automotive, which had previously been requested. The email also sought the re-payment of the rent on the basis of the $2,940 representing the yearly rental rather than monthly rental.
- On 15 May 2017 the first respondent on behalf of the second respondent informed the applicants that having gone into occupancy on 20December 2017 and paid rental on or about the 20th day of each month that there was no basis upon which the rent was to be paid on the first day of the month stating it was not the intention of the parties in signing the Commercial Tenancy Agreement nor was it in accordance with the actions of the parties since December. The letter indicated that the email did not address the matter in the Notice to Remedy Breach and that their client intended to pursue the notice and exercise the rights upon expiry.
- By an email of 20May 2017 the applicants again raised the various matters which they had raised in their earlier email. In a further email of 20 May 2017 the applicants also stated that there had been an agreement that when the lease was signed on 20 December 2016 for it to start on 1 January 2017 as they had agreed with Mr McLean in prior text messages and conversations. According to the email the second respondent had agreed to the first of the month then changed to the 23rd, then to the 20th, then back to the 23rd but the applicants stated that what was originally agreed at the time of the lease was that the first of the month was to be the date from which rent was payable and it was asserted that that was stated in cl 3 of the agreement conditions.
- By an email dated 22 May 2017, the second respondent’s solicitors informed the applicants that they had taken possession on 23 December 2016 having signed the lease on 20 December and stated that the date from which the applicants’ liability commenced was 23 December 2016 which was the date they took possession.
- On 24 May 2017, the second respondent re-entered the premises and changed the locks. On 24 May 2017, the solicitors for the second respondent also informed the applicants that the second respondent had re-entered the premises and changed the locks as the breach which was the subject of the Notice to Remedy on 9 May 2017 had not been rectified. It also asserted that the tenancy was terminated. The email went on to state “Once all rent, outgoings and costs are paid, upon a written agreement and agreed time, access solely for the purpose of removing your items, will be granted. If payment is not made within seven days our client will proceed to deal with the chattels on site according to law.”
- By an email of the same date Nicholas Rigney, on behalf of the applicants, indicated that they did not accept that the landlord’s actions were lawful and appeared to rely on the fact that the rent stated in the tenancy schedule was $2,940 per year.
- By a further email of 24 May the first applicant also noted that even if the landlord’s interpretation of the lease was correct the second respondent held $3,234 in bond to remedy any breach in accordance with cl 1 of annexure 1 of the lease.
- According to the applicants they have been prevented from carrying on business and earning income as a result of the re-entry by the second respondent.
- The second respondent considered the primary relief sought was based on seeking relief from forfeiture.
- The second respondent contends that relief from forfeiture should not be made because:
- the applicants are in arrears in rent and have not paid the outstanding rent;
- the relationship of landlord and tenant has broken down irretrievably; and
- the second respondent has real concerns as to the applicants’ likelihood to pay rent given inter alia their history of payment, that they disputed the rent was $3,234 which it asserts was the agreed bargain and the fact that they had sought a remission on a filing fee.[5]
- As stated above, the second respondent contended that the application was really an application for relief for forfeiture, doing the best it could to ascertain the issues for the Originating Application. Having reviewed the applicants’ material, the issues raised by the applicants appeared to be broader than that. In particular, the applicants do not appear to accept that there was lawful entry by the second respondent. That called for consideration of the Notice to Remedy Breach.
The Notice to Remedy Breach
- The Commercial Tenancy Agreement is exhibit W to the affidavit of Nicholas Rigney. No date is nominated as the commencement date nor is there a date nominated for payment of rent.
- However, pursuant to cl 3.1(a) the tenant must pay the rent by equal monthly instalments in advance on the first day of each month. The applicants also assert that this was the date agreed between the parties even though they had access to the premises from 23 December 2016.
- Pursuant to cl 9.1 of the Commercial Tenancy Agreement, the tenant defaults under the tenancy if the rent or any money payable by the tenant is unpaid for fourteen days. Clause 9.2 provides that if the tenant defaults and does not remedy the default when the Lessor requires it to do so the Lessor may inter alia re-enter and take possession of the Premises and by notice terminate the tenancy.
- There is no provision in the Commercial Tenancy Agreement for the landlord to prevent the tenant having access to its goods and chattels until all rent, outgoings and costs are paid. The second respondent’s counsel could not point me to any basis upon which the second respondent was entitled to retain the tenant’s property on the basis stated.
- Annexure A of the agreement provides for payment of a bond in the sum of $2,940 plus GST.
- In relation to the Notice to Remedy Breach:
- it nominates the date upon which the rent is payable to be the 23rd day of each month and refers to cl 3. Clause 3 however provides for the payment of rent on a monthly basis on the first day of the month;
- it does not provide particulars of the amount outstanding save to assert there was a failure to pay rent; and
- it gives a period of 7 days to remedy the breach.
- As set out above there is an inconsistency between the Commercial Tenancy Agreement and ‘Agreement to lease’ which was inserted in the Commercial Tenancy Agreement and executed by all the parties.[6] Other than reliance on the terms of the commercial tenancy, the applicants did not give evidence that the rate agreed was the yearly rate. Mr McLean, the director of the second respondent, states that the rent negotiated between the parties was $2,940 per month plus GST.[7] The evidence indicates that the rent was paid on this basis for the first four months until disputes between the parties arose. In the hearing when I raised the fact that the second respondent had not sought to rectify the lease and the second respondent’s counsel indicated he made an oral application if necessary.
- Even if one accepts that the rent payable is $2,940 per month excluding GST, there is a potential issue as to the validity of the Notice to Remedy the Breach, given the dispute as to the date when rent was payable.
- The second respondent asserts that occupation commenced on 23 December 2016 and that was the day upon which the obligation to pay the rent commenced and it adopted that date for its invoicing. That does not however accord with the terms of the Commercial Tenancy Agreement. The applicants conversely assert that it was agreed between Mr McLean and the applicants, that rent was payable from 1 January 2017, and thereafter which accords with the terms of the lease.
- If the date from which rent was payable was the first of January and on the first day of the month thereafter that raises the question of when an event of default occurred under cl 9.1 prior to the issuing of the Notice to Remedy Breach. If the obligation arose on the first day of the month the Notice to Remedy Breach may have been issued prior to an event of default and prematurely. Thus the notice may be invalid.[8]
- While the respondents in their submissions asserted that even if the date for payment was the first day of the month, rent was still outstanding, that does not address the point that the notice may still be invalid.
- If the notice to remedy breach was not valid then the second respondent’s re-entry may not have been lawful and the forfeiture of the lease may be ineffective.[9] If that proves to be the case the question of relief from forfeiture would not arise.
- This is not a matter which was addressed by the second respondent in its submissions.
- However, the applicants did raise the lawfulness of re-entry by the landlord and the question of when rent was payable.[10]
- The question of the validity of the notice needs to be determined before any relief from forfeiture is determined.
- The Court cannot make a determination on this issue without the second respondent having the opportunity to make submissions in this regard and without resolving the date that rent was payable which will require consideration of the terms of the Commercial Tenancy Agreement and the effect of any oral agreement or agreement by conduct.
- There is a further dispute between the parties as to whether rent was payable for the period from 23 December 2016 until 1 January 2017 which requires a determination of fact given competing versions provided of events by each party.
- There is a dispute as to the permitted use agreed by the parties as opposed to that prescribed in the lease. The applicants assert that the second respondent inserted “storage premises” as the permitted use, but the applicants claim that Mr McLean stated that was for insurance reasons and that the parties had discussed the use of the premises being used for automotive repair as well as for a performance and engineering workshop. According to the applicants that was agreed before and at the time of signing of the lease. According to them they had used the premises for this purpose until the respondent sought in March 2017 to assert that they could not use the premises any further for that use. These matters are disputed by the second respondent.
- The second respondent raised at the hearing that while they did not rely on the Notice to Remedy Breach with respect to the permitted use as a basis for re-entry, they contend that the applicants are not using the premises for their permitted use and that is an additional basis upon which forfeiture should not be given.
- Relief from forfeiture for non-payment of rent where the outstanding rent is paid is generally given unless there is some other reason relief from forfeiture would be inequitable.[11] The second respondent contends, inter alia, that there is no likelihood the applicants can pay if relief from forfeiture is given. This is a matter disputed by the applicants who claim that the second respondent has interfered with their business and other than that interruption they can meet their monetary obligations. The applicants also raised the fact that there was a question of the second respondent to receive rent under the Commercial Tenancy Agreement which was a matter not responded to by the second respondent. There is a serious question to be tried as to whether the applicants are entitled to relief from forfeiture.
- As is evident from the above, there are a number of factual and legal matters which need to be determined in order to decide whether there needs to be or can be relief from forfeiture including the allegations of breach made by both the second respondent and the applicants.[12]
- On 15 June 2017 I relisted the matter and indicated to the parties that:
- there were a number of factual issues in dispute which could not be resolved without a hearing;
- in considering the contention by the applicants that re-entry by the landlord had not been lawful I was concerned that the Notice to Remedy Breach may not be valid but as that had not been a matter which the second respondent had addressed in its submissions, the second respondent would need an opportunity to make submissions in that regard;
- while there were a number of matters in dispute and I could not reach a final conclusion I was satisfied that the applicants had raised a serious question to be tried as to whether they were entitled to relief from forfeiture even if the re-entry was lawful;
- in the circumstances I proposed to make an interim order to preserve the status quo until the matter could be heard and determined which would permit the applicants to resume possession of the premises upon payment of rent within fourteen days. I indicated that payment of rent should be based on the amount of $2,940 plus GST per month which had been paid as the monthly rental until the dispute. As the Commercial Tenancy Agreement provided for the rent to be payable on the first of each month pursuant to cl 3.1 of the lease I indicated that is the basis upon which it should be paid for the interim. I indicated that I would frame relief in those terms without finally deciding any of the matters. This was in order to give the parties certainty and preserve both interests until the matter was determined. I indicated the calculation of outstanding rent should exclude the week of 23 December 2016 until 1 January 2017 which was the subject of dispute;
- it was a matter which I considered should be referred to mediation given the amount involved and the number of issues; and
- I was minded to remit the matter to the District Court given the value of the lease and the fact that the District Court had power to provide relief from forfeiture.
- I stood the matter down for the parties to consider the matter and to make submissions as to the proposed order. Following further submissions, I made the Order of 15 June 2017.
- Counsel for the first and second respondent sought an order for dismissal of the originating application against the first respondent. Both parties made further submissions in that regard. The allegations as framed by the applicants against the first respondent were based on breaches of what was described as the Legal Profession (Solicitors) Rule 2007 (which as the applicants indicated should have been the Australian Solicitors Conduct Rules 2012) and unidentified provisions of the Legal Profession Act. Counsel for the first respondent contended that neither the Conduct Rules nor the Legal Profession Act provided a cause of action to the applicants to seek relief from the first respondent. The allegations arose out of correspondence and notices sent by the first respondent on behalf of the second respondent. The applicants argued as the first respondent had sent the correspondence and the notices it was liable for damages as a result of the business losses the applicants allege that they have incurred. The applicants could not identify any basis upon which the first respondent was civilly liable for damages under either the Australian Conduct Rules or Legal Profession Act. I was satisfied that the originating application did not disclose any cause of action against the first respondent. Accordingly I determined that the action insofar as it is made against the first respondent should be dismissed and fixed the costs payable by the applicants.
- Counsel for the second respondent also contended that the applicants should be obliged to pay the outstanding outgoings prior to resuming possession of the premises unless they raised a dispute as to whether the outgoings were payable. As there is an obligation to pay outgoings under the Commercial Tenancy Agreement I considered that order appropriate. I also ordered that the rent payable by the applicants until the matter is resolved is to be based on the amount of $2,940 plus GST per month and to be paid on the first day of the month but otherwise the terms of Commercial Tenancy Agreement will apply to the payment of rent.
- The applicants submitted that they be allowed access to the premises to remove the various cars and parts so that they could work on the vehicles. Counsel for the second respondent could identify no basis upon which the second respondent had sought to assert that it would not release the applicants’ goods and chattels. As the applicants asserted they needed access to those vehicles for their business, I determined that they should be permitted immediate access to the premises and made orders accordingly. The order was made on the basis that the applicants would not interfere with security cameras of the second respondent to address a concern raised by the second respondent.
- Given the amount involved under the lease and the fact that the District Court has the power to make orders under s 124 of the Property Law Act[13] in the event that mediation is not successful, it appears that this matter may be better dealt with in the District Court to determine the issues arising in this dispute. However the second respondent raised the fact that the inherent jurisdiction of this Court may be relevant in terms of equitable relief that may be sought. As such, I have ordered that the matter be relisted before me if it is not successfully resolved in mediation to determine how the matter should be dealt with, at which time the question of the relevant jurisdiction will be revisited.
- Accordingly I was satisfied after the further hearing and the parties further submissions that an order should be made in the terms of the Order made on 15 June 2017.
Footnotes
[1] The respondents filed affidavit material on the day of the application, which raised and challenged a number of factual matters in response to the applicants.
[2] Given the applicants were self-represented, the substance of the matters outlined in the Originating Application had to be examined and having regard to the affidavit of Nicholas Rigney (CFI4), rather than just the way the issues were legally framed.
[3] CFI 4.
[4] The second respondent in submissions submitted that this was tantamount to an undertaking which on the applicants’ submissions they had breached.
[5] Evidence of late payment was set out in the affidavit of Michael McLean, filed 7 June 2016.
[6] The second respondent prepared the lease itself.
[7] Affidavit of Michael McLean filed 7 June 2016.
[8] Lightbrim Pty Ltd v Speed Rise Pty Ltd [2003] QSC 334.
[9] Elsafty Enterprises Pty Ltd v Mermaids Café & Bar Pty Ltd [2007] QSC 394.
[10] Albeit that it also referred to s 124 of the Property Law Act, so it is understandable why it was not addressed by the second respondent. See also the Affidavit of Nicholas Rigney CFI 4.
[11] See for example World By Noite Pty Ltd v Michael [2004] 1 Qd R 338.
[12] Braxco Pty Ltd v Pialba Commercial Gardens Pty Ltd [2010] QSC 210.
[13] District Court of Queensland Act 1967 (Qld), s 68.