Robert Hay Senior Counsel Commercial Law: 2012

Thursday 6 December 2012

The Mortgagee's Power of Sale available for purchase from Lexis Nexis

The latest edition of The Mortgagee's Power of Sale has been published. Now in its third edition this book started life in 1980.

The book is primarily written for practitioners and the text is arranged, as far as possible, in the same chronological order as the steps a mortgagee may take in selling mortgaged property under the power of sale.

Clyde Croft (now Justice Croft of the Supreme Court of Victoria) was the sole author of the first edition and is a co-author of the third edition with Robert Hay.

The Chief Justice of the Supreme Court of Victoria, the Honourable Marilyn Warren AC has kindly written the foreword.

A formal launch for the book was held in January 2013.

Ecommerce - Purchase from Lexis Nexis Directly http://www.lexisnexis.com/en-us/about-us/about-us.page

Wednesday 24 October 2012

More on essential safety measures and cost recovery - Education Property Law Conference

Last week I was privileged to have presented a paper at the Leo Cussen Centre For Law Property Law Conference -

Entitled:- "Essential Services and the Recovery of Expenses".

The paper can be located by clicking on this link: Leo Cussen paper (October 2012)

Friday 12 October 2012

Land area of no consequence in determining whether premises are "retailpremises"

Occasionally I am asked whether premises are "retail premises" under s 4(1) of the Retail Leases Act 2003 where a retail business is conducted on a small piece of a substantial area of leased land. This issue arose in Bretair Pty Ltd v Cave [2012] VCAT 1039. The premises were used as a service station and road house restaurant business. The landlord contended that the premises were not “retail premises” because the leased land comprised 7.5 acres only part of which was used by the businesses conducted there. The Tribunal rejected the landlord’s claim holding that “The RLA does not distinguish between retail and non-retail premises based on the size of the land demised”. The Senior Member said:

….the fact that the buildings, canopies and driveways are surrounded by 7½ acres of land is of no consequence in deciding whether the RLA applies to the current lease agreement between the parties because there is no evidence that the surrounding land is used for any specific purpose other than it is simply being part of the leasehold interest.

The Senior Member also held that even if he were wrong, VCAT had jurisdiction to hear and determine the matter as a “consumer and trader dispute” under the Fair Trading Act 1999 or the Australian Consumer and Fair Trading Act 2012.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Thursday 11 October 2012

No easy answers to whether premises are "retail premises"

It is often difficult to determine whether premises are “retail premises” within the meaning of s 4 of the Retail Leases Act 2003 Act. Section 4(1) provides that “retail premises” means premises that:

“under the terms of the lease relating to the premises are used, or are to be used, wholly or predominantly for –

(a) the sale or hire of goods by retail or the retail provision of services.”

One difficulty that arises is that the definition excludes premises that are “intended for use as a residence” with the result that it is not always clear whether premises such as motels, serviced apartments and caravan parks are “retail premises”. In the recent decision of String v Gilandos Pty Ltd [2012] VSC 361 Croft J highlighted that there are no easy or broad brush answers: in each case the terms of the lease and the nature of the premises needs to be examined carefully.

His Honour was required to decide whether leases by owners of units in an apartment/resort complex to the operator of the resort were “retail premises leases” within the meaning of the Retail Tenancies Act 1986, the Retail Tenancies Reform Act 1998 and the 2003 Act. The operator paid rent to the owners and rented the units to members of the public. The units were used as “serviced apartments” and the members of the public did not know who the owners were. From at least 2007 to January 2012, no member of the public had stayed at the units on a permanent or semi-permanent basis and members of the public had only occupied the units for a day or few days at a time. His Honour determined (at [42]) that the units were used for short-term holiday accommodation in a manner difficult to distinguish in any meaningful way from the manner in which motel and hotel rooms were used.

At [47] His Honour considered the meaning of “serviced apartments” and said:

The term or description “serviced apartments” seems to be a relatively modern one; which probably accounts for the lack of assistance from dictionaries. Thus it cannot be assumed that this term or description has any settled meaning. Consequently it is only a term or description that derives meaning – other than in a very general sense – from the particular circumstances in which it is used; and, in most cases with respect to particular premises. This is, in my view, clear from the cases in which the term or description has been considered.

After reviewing the authorities, Croft J said at [52]:

Thus these cases indicate that there may be very fine distinctions between use of premises as a motel on the one hand or as a serviced apartment or serviced apartment complex on the other hand. The observations by the various courts and tribunals with respect to motels and serviced apartments indicate that the characteristics of both types of premises can overlap, thus adding to difficulties in characterising the mode of usage. A clear example is to be found in St Kilda City Council v Perplat Investments Pty Ltd [(1990) 72 LGRA 378] where Young CJ observed that, while it was open to the Tribunal to make a finding of fact based on the evidence before it that the proposed building would be used as serviced apartments, in his view, the proposed buildings looked more to be a motel.

Following Wellington v Norwich Uniton Life Insurance Society Limited [1991] 1 VR 333 and similar cases (at [58]), His Honour held that that the “ultimate consumer” test was the “touchstone of retailing, whether goods or services” and (at [65]) that members of the public were ultimate consumers for fee or reward (being fees paid for accommodation) and the units were used “wholly or predominantly for the carrying on of a business involving the sale or hire of goods by retail or the retail provision of services”. Thus, each of the leases were “retail premises leases”.

At [65] His Honour said:

Motels, hotels or resort complexes, generally speaking, provide retail services for fee or reward, including the hiring out of rooms. They may also sell food, liquor and other beverages, by retail, at any restaurant faculty provided. In any event, the hiring out of rooms or units for fee or reward to members of the public clearly constitutes the provison of retail services.

His Honour stressed that in each case the nature of the premises had to be analysed together with the manner in which the occupancy was provided. His Honour said at [68]:

I should, however, sound a note of caution in relation to this finding by emphasising that whether or not premises described as “serviced apartments” is to be characterised as “retail premises” depends upon the particular circumstances, including the nature of the premises, the manner in which occupancy is provided and the nature of that occupancy (see Meerkin v 24 Redan Street Pty Ltd [2007] VCAT 2182 (Deputy President Macnamara); though see Bradfield & Ors v QOB Tenancy Pty Ltd (Retail Tenancies) [2012] VCAT 755 (Senior Member Davis) where the parties took the common view that the serviced apartments ought to be considered as retail premises for the purposes of the 2003 Act (see paragraph [82]) . As I have said, the term or description, “serviced apartments”, is not a term of art. Rather, it is a term or description of premises which connotes a range of possibilities. At one end of the range one would find premises managed and occupied in a manner indistinguishable from a motel or hotel and at the other end premises indistinguishable from long term residential accommodation, separately let but with the attribute of being serviced. In the former case it would be expected that the Acts would apply on the basis that the premises are “retail premises” and in the latter case they would not, any more than they would to any block of residential units. In between there are a range of possibilities each of which may have different consequences in terms of the application of the Acts.

As to the exclusion from the definition of “any area intended for use as a residence”, His Honour said at [64]:

For the sake of completeness I observe that the Retail Leases (Amendment) Act 2005 amended the 2003 Act to include the words “not including any area intended for use as a residence” in the provisions defining the meaning of “retail premises”. In my view, the expression residential accommodation connotes accommodation of this type which is occupied with a degree of permanence. I observe that, consistent with this view, the Full Federal Court of Australia said, in Marana Holdings Pty Ltd v Commissioner of Taxation (2004) 141 FCR; 214 ALR 190; [2004] FCAC 307 (“Marana Holdings”) that: [citation omitted]

"It may be that the expression “residential accommodation” is sometimes used to describe short-term accommodation in an hotel or a motel. We are not sure that any such usage is as common in Australia as the Court of Appeal in Owen v Elliott [(Inspector of Taxes) [1900] 1 Ch 786] considered it to be in England. We would have thought that such accommodation is more often described as “temporary accommodation”, “holiday accommodation” or perhaps as “hotel accommodation” or “motel accommodation”".

Although Marana Holdings was not a retail leases case this statement is, in my view, one of general application. In the present case the agreed facts are that the Plaintiffs’ Units have been used as only temporary accommodation by its occupants,[citation omitted] so no issue arises with respect to the possibility of residential use.

The agency exception

His Honour also considered a claim by the operator the units were not "retail premises" because the employee or agency exception applied. Section 4(2)(b) of the 2003 Act exempts premises where the tenant is “carrying on” a business “on behalf of the landlord as the landlord’s employee or agent”. After a comprehensive consideration of the terms of the leases His Honour at [69] – [95] rejected the operator’s claim that it was carrying on a business as the landlord’s agent. Helpfully, His Honour at [94] said:

….in my view, the agency exception only applies if the tenant and landlord relationship is merely incidental to the agency relationship. So even if I am wrong in finding that there is no agency relationship, it cannot be said that the landlord and tenant relationship between the Plaintiffs and the Defendant is incidental to the agency relationship.

(italics added)

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Wednesday 10 October 2012

Tenant seeks to overturn VCAT's exclusive jurisidiction

In Ireland v Subway Systems Australia Pty Ltd and Subway Realty Pty Ltd [2012] VCAT 1061 a tenant contended if an agreement (which it contended was a licence) was held to be a lease then the dispute had to be determined by an arbitrator pursuant to an arbitration clause and not by VCAT. The arbitration clause was contained in the a document separate from the lease.

VCAT held that the agreement was a lease and therefore there was a "retail tenancy dispute" which, subject to the tenant's argument about the Commercial Arbitration Act, would be governed by the dispute provisions of the RLA. If the tenant's application had succeeded the whole regime of the dispute resolutions provisions in the RLA would have been displaced. The tenant argued that the arbitration clause should be given effect to because s 10 of the Commercial Arbitration Act 2011 was pronounced after the commencement of the 2003 Act and, by implication, repealed the provisions of the RLA that gave exclusive jurisdiction concerning retail tenancy disputes to VCAT.

The tenant contended that the word “court” in s 10 of the Commercial Arbitration Act included the Tribunal. At [45] the Tribunal accepted that there was authority supporting the proposition that, in some cases, the reference to a “court” will include the Tribunal. The tenant contended that to construe the word “court” in the Commercial Arbitration Act to include the Tribunal would not create inconsistency between that Act and the RLA because the Commercial Arbitration Act was a later Act of Parliament which would, by implication repeal the inconsistent provisions of the RLA. In rejecting the tenant’s contentions the Tribunal said:

[50]       I do not accept that submission. In Goodwin v Phillips (1908) 7 CLR 1 at 10, Barton J adopted the following statement from Hardcastle on Statutory Law:

The court must be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together, before they can from the language of the later imply the repeal of an express prior enactment, i.e., the repeal must, if not express flow from the necessary implication.

[51]       Further, in Saraswati v R (1991) 100 ALR 193 Gaudron J stated the following;

It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support the implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other (at 204)

[53]         In my view, limiting the word court in s 10 of the Commercial Arbitration Act 2011 to mean the Magistrates’ Court, County Court or Supreme Court would not lead to any inconsistency between the two Acts and is a construction that is to be adopted, having regard to the authorities cited above. Accordingly, I do not accept the submission that the word court in the Commercial Arbitration Act 2011 includes the Tribunal. It simply cannot be the case that Parliament intended that the Commercial Arbitration Act 2011 and the RLA were to cover the same field of operation. The RLA is expressed elaborately and specifically details how retail tenancy disputes are to be resolved. The Commercial Arbitration Act 2011 says nothing about resolving retail tenancy disputes and is expressed in a general manner. In my view, that is another factor weighing against a finding that Parliament intended the provisions of the Commercial Arbitration Act 2011 to take precedence over the dispute resolution provisions of the RLA. Accordingly, I find that the word court in the Commercial Arbitration Act 2011 does not include the Tribunal and as a consequence, the Commercial Arbitration Act 2011 has no application in determining the present dispute.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Wednesday 5 September 2012

The Mortgagee's Power Sale out soon

Some of my readers have suggested that this blog has quiet of late. The reason is that I have had a deadline to complete the new book which I had to the privilege to work with two brilliant legal minds who were co-authors - and we have been collaborating to finish the 3rd Edition of   The Mortgagee's Power of Sale.

Clyde Croft (now The Honourable Justice Croft) wrote the first edition, was co-author of the second edition and is co-author of the 3rd edition. T

he Mortgagee’s Power of Sale will provide an up-to-date, practical guide to the steps that a mortgagee must take to obtain possession of and sell land and a detailed analysis of a mortgagee’s duty in selling land.

Registered and unregistered mortgages are considered together with the different issues that arise when considering Torrens system and general land.

There is also a comprehensive discussion about a mortgagor’s rights including the lodging of caveats and obtaining an injunction t0 prevent a sale. W

hile maintaining its practical emphasis the book considers recent significant decisions such as Bofinger v Kingsway Group, MBF v Nolan Ltd and Residential Housing Corporation v Esber.   The book is likely to be published in late November the launch in January 2013.

Ecommerce is available from Lexis Nexis via this Link   http://www.lexisnexis.com/en-us/about-us/about-us.page

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Friday 31 August 2012

Can a landlord pass to the tenant the costs of complying with theBuilding Act?

I recently presented a short paper at the Law Institute of Victoria's Property Law Conference on the topical question of whether a landlord can recover from a tenant the costs of complying with the Building Act.

The paper is available. at this link

Property Law Conference ( August 2012)(3)

The Law Instute of Victoria is Sponsered by Greens List and a link to their web site is here for your information and attention http://www.liv.asn.au/about-liv/contact-us

Thursday 30 August 2012

Farewell Landlord and Tenant Act

The Landlord and Tenancy Act 1936 will be repealed effective 1 September 2012: see s.236 of the Australian Consumer Law and Fair Trading Act 2012 and the Victorian Government Gazette, No S291,

Moreover from 28 August 2012. Part 4.2 of ACLFT now governs a landlord's rights and obligations concerning uncollected goods left on leased premises.

While Part V of the Landlord and Tenant Act (control of rents and recovery of possession) has not been re-enacted in other legislation, Part V has been preserved with respect to existing tenancies governed by Part V[1].

[1] Section 236 of the Australian Consumer Law and Fair Trading Act 2012 and items 36.2 and 36.5 in schedule 6 to that Act.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Thursday 12 July 2012

Can the landlord pass on the costs of complying with the Building Act?

Some of Melbourne’s finest legal minds are spending long hours trying to solve the question of whether a landlord can recover from a tenant the costs of complying with the landlord’s obligations under the Building Act 1993 (Act) and regulations.

Much of the debate concerns s 251 which provides that:

“(1) If the owner of a building or land is required under this Act or the

regulations to carry out any work or do any other thing and the owner does not carry out the work or do the thing, the occupier of that building or land or any registered mortgagee of the land or the land on which the building is situated, may carry out the work or do the thing.

(2) An occupier may-

(a) recover any expenses necessarily incurred under subsection (1) from the owner as a debt due to the occupier; or

(b) deduct those expenses from or set them off against any rent due or to become due to the owner.

.....

(6) This section applies despite any covenant or agreement to the contrary.”

Underlining added

In my the view the effect of s.251 is that if the owner is required by the Act or the regulations to carry out any work or do any other thing and does not carry out the work or do the thing:

(a) the tenant can do the work that the landlord was obliged to do and recover the costs from the landlord owner as a debt; and

(b) the tenant can set-off the costs of doing the work that the landlord owner was obliged to do against the rent; and

(c) the usual rent covenant that rent must be paid "without deduction" will not assist the landlord if it fails to comply with s.251 and the tenant does the work that the landlord was obliged to do (Chen v Panmure Hotel Pty Ltd[1]).

However, s 251 does not answer the question whether a building owner can recover from the tenant the owner's costs of complying with its obligations under the Act and regulations. In other words, can the tenant be obliged to pay the owner’s costs of complying with the Act and regulations when s 251 has not been enlivened?

Section 39 of the Retail Leases Act 2003 (2003 Act) permits a landlord to recover outgoings from the tenant by appropriately drawn provisions in a lease. Section 41(1) of the 2003 Act makes void a provision in a lease that requires the tenant to pay an amount in respect of capital costs. Thus it is clear that the tenant could never be required to pay an amount in respect of capital works.

In my view, if s 251 is enlivened by the owner failing to do works that it was required to do under the Act and the tenant does that work, the owner cannot, pursuant to provisions in a lease, recover from the tenant the costs that the owner pays to the tenant under s 251.

But where 251 of the Act has not been enlivened and the owner seeks to recover from the tenant the costs that it has incurred in complying with the Act, it is not clear to me why the landlord should not be able to recover those costs from the tenant. Proponents of the view that the landlord cannot recover the costs will refer to Café Dansk Pty Ltd v Shiel[2] where Deputy President Macnamara (as his Honour then was) held that a landlord could not recover from the tenant the costs of complying with s 52 of the 2003 Act. In my view there are good arguments as to why Café Dansk is not correct, but even if it be assumed that the decision is correct the logic applied in Café Dansk does not necessarily apply when considering the Act. The Act and the 2003 Act are directed at different things. The Act is concerned with ensuring the safety of persons using buildings; its provisions are directed solely to that end; and it says nothing about the ultimate allocation of the costs of complying with the Act while the 2003 Act, and s 52 in particular, is remedial leglislation concerned with restoring the balance of rights as between landlords and tenants. In my view it is not at all clear that there is anything in the Act that rebuts the presumption that an Act is not to be construed as taking away existing common law rights unless the legislative right to do so is clear[3]. I am not convinced that it is clear that Parliament intended to take away the contractual right to pass on the costs of compliance.

[1] [2007]VCAT 2463

[2] [2009]VCAT 2009.

[3] Pearce, D.C and Geddes, R.S, Statutory Interpretation in Australia, 7^th ed, LexisNexis, 2011, paragraphs 5.27, 5.28 and 5.35.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Tuesday 3 July 2012

Consequences of repeal of Fair Trading Act

In yesterday's post I stated that the Fair Trading Act 1999 had been repealed effective 1 July 2012 and replaced with the Australian Consumer Law and Fair Trading Act 2012. Many commercial disputes brought in VCAT were "consumer and trader" disputes within the meaning of s.107 of the FTA. Chapter 7 of the new Act preserves the "consumer and trader" dispute regime. Note should be taken of s.3(2) which provides that unless the contrary intention appears the words and expressions used in the new Act have the same meaning as they have in the Australian Consumer Law. This means, for example, that in deciding whether a dispute is a "consumer and trader" dispute recourse will have to be had to the definition of "goods" and "services" in s.2 of the Australian Consumer Law.

Section 8 of the new Act provides that the "Australian Consumer Law text" applies as a law of Victoria. The expression "Australian Consumer Law Text" is defined in s.7 as meaning, among other things, schedule 2 to the Competition and Consumer Act 2010 (Cmlth), being the Australian Consumer Law. Thus, when considering, for example, a potential claim for misleading or deceptive conduct recourse must be had to s.18 of the the Australian Consumer Law and not to any provision in the new Act. VCAT has jurisdiction to hear and determine disputes under the Australian Consumer Law and thus the full suite of remedies available under the Australian Consumer Law can be utilized in VCAT. See: s.224 of the ACLFTA.

Readers should also note that the Landlord and Tenant Act 1958 will be, but has not yet been, repealed by the ACLFTA with the consequence that the law concerning uncollected goods left in premises at the termination of a lease remains in Part IVA of the Landlord and Tenant Act. When Part IVA is repealed Part 4.2 of the ACLFTA will be the statutory source of the law in Victoria concerning uncollected goods.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Monday 2 July 2012

Farewell to the Fair Trading Act - Repealed

The Fair Trading Act 1999 was repealed on 1 July 2012 and replaced by the Australian Consumer Law and Fair Trading Act 2012.

Some parts of the ACLFTA have not yet come into force including Part 4.2 (disposal of uncollected goods), Part 5.2 (liability of accommodation providers), s.234 (repeal of Disposal of Uncollected Goods Act 1961), s.235 (repeal of Carriers and Innkeepers Act 1958, s.236 (repeal of Landlord and Tenant Act 1958).

Under the ACLFTA VCAT retains its jurisdiction to hear and determine 'consumer and trader' disputes (Chapter 7) with the consequence that VCAT will continue to be able to hear and determine disputes between landlords and the guarantors of the tenant's obligation under a lease.

http://www.consumerlaw.gov.au/content/Content.aspx?doc=current_laws/vic.htm takes you to the pdf downloads of the new legislation and how it impacts on the general public, consumers, and the business sector amongst others. There is also links for non english speaking members of our community.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Friday 20 April 2012

The PPSA - where does one start?

It is remarkable what our leaders can inflict upon us in the name of “reform”.

At the very least the Personal Property Securities Act 2009 is confusing and messy. That it has been inflicted on business and their advisors in this form says much for how ‘out of touch’ our politicians and public servants are.

Property lawyers are relieved that an interest that provides for the creation or transfer of an interest in land is not caught by the Act[1]. But property lawyers cannot be complacent because many transactions that relate to property will come within the ambit of the Act.

The complexity and confusion apparent in the Act is so overwhelming that the first question has to be: where does one start? In answering this question the most useful text that I have come across is Lionel Meehan’s The PPS Guide which is available in the Law Institute’s bookshop.

[ To order this publication follow the link   http://www.liv.asn.au/bookshop/ordering-from-the-bookshop]

Unlike other authors Meehan sets out how to approach an Act matter. Meehan says that in order to determine whether the Act applies to a secured transaction four questions must be asked:

(a)               is there a “security interest”;

(b)              is the security interest granted in personal property;

(c)               has the security interest attached to the personal property; and

(d)              does the transaction have an Australian connection?[2]

If the answer to all these questions is yes, the transaction is caught by the Act and how it is treated under the Act needs to be considered.

[1] Section 8(1)(f).

[2] Meehan, paragraphs 2.004 and 5.002.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience

Author: Robert Hays Barrister subject to copyright under DMCA.

LIV is a proudly sponsored by Greenslist.

Monday 16 April 2012

OPINION PIECE

I have been asked to explain the opinion that I proffered on 13 April that a landlord which complies with s 251 of the Building Act 1993 could not recover the costs of compliance from the tenant.

Section 251 is similar in many respects to s 52 of the Retail Leases Act 2003: under both Acts the owner/landlord is required to do certain work and, if it is not done, the tenant can do the work and recover the cost of so doing from the owner/landlord.

VCAT has considered the question of whether a landlord can recover the costs of complying with s 52 of the 2003 Act. In Cafe Dansk Pty Ltd v Shiel [2009] VCAT 36 Deputy President Macnamara (as his Honour was then known) dismissed the landlord's argument at [44] as follows:

I find Dr Croft's sceptical views on this point compelling. It would, in my view, make a mockery of s 52 if Parliament having allocated the responsibility for certain repairs to the landlord, the landlord could then send the bill to the tenant for the cost of carrying out those repairs....

In my view the same logic applies to s 251 of the Building Act.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Friday 13 April 2012

Can the landlord require the tenant to pay the costs of complying withs 251 of the Building Act?

Yesterday I posted an article about s 251 of the Building Act 1993. The effect of s 251 is that if the owner of a property is required by the Act or by the Building Regulations 2006 to keep premises in a specified state:

(i) the owner cannot contract out of those obligations by, for example, including provisions in a lease that make the tenant liable to repair the particular items;

(ii) a tenant can do the work that the landlord was obliged to do and recover the costs from the landlord owner; and

(iii) a tenant can set-off the costs of doing the work that the landlord owner was obliged to do against the rent.

After the article was posted I was asked if the landlord could recover from the tenant the costs of complying with s 251.

Section 39 of the Retail Leases Act 2003 permits the landlord to recover outgoings from the tenant in specified circumstances.

Section 41(1) of the 2003 Act makes void a provision in a lease that requires the tenant to pay an amount in respect of capital costs.

In my view, s 251 would take precedence over s 39 of the 2003 Act with the consequence that the costs of complying with s.251 would not be recoverable.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Thursday 12 April 2012

The tenants' new weapon - s.251 of the Building Act 1993

Please note for members of the public or practitioners in the legal profession where English is your second language a translation key in all languages of the world is available on this blog to assist you. The plain English blog without translation facilities is located at  http://roberthaypropertybarrister.wordpress.com

Recently I have attended a number of mediations at which tenants have invoked s.251 of the Building Act 1993 as part of the bargaining process. Section 251 affords tenants a powerful weapon. Section 251 provides that:

(1) If the owner of a building or land is required under this Act or the
regulations to carry out any work or do any other thing and the owner does not carry out the work or do the thing, the occupier of that building or land or
any registered mortgagee of the land or the land on which the building is
situated, may carry out the work or do the thing.

(2) An occupier may-

   (a) recover any expenses necessarily incurred under subsection (1) from
        the owner as a debt due to the occupier; or

   (b) deduct those expenses from or set them off against any rent due or to
become due to the owner.

.....
(6) This section applies despite any covenant or agreement to the contrary.

The effect of s.251 is that if the owner is required by the Act or by the Building Regulations 2006 to keep premises in a specified state:

(i) the owner cannot contract out of those obligations by, for example, including provisions in a lease that make the tenant liable to repair the particular items (Chen v Panmure Hotel Pty Ltd [2007] VCAT 2463);

(ii) a tenant can do the work that the landlord was obliged to do and recover the costs from the landlord owner; and

(iii) a tenant can set-off the costs of doing the work that the landlord owner was obliged to do against the rent.

The usual rent covenant that rent must be paid "without deduction" will not avail the landlord if it fails to comply with s.251 and the tenant does the work that the landlord was obliged to do.

Regulations 1212-1217 require the owner to maintain essential safety measures for a specified class of building built before 1 July 1994.

Regulations 1201-1211 require the owner to maintain essential safety measures for the same classes of buildings built after 1 July 1994.

Regulation 1217 requires the owner of a building to maintain essential safety measures in a state that enables them to fulfil their purpose.

Under regulation 1205 the owner of a building or place of public entertainment must comply with a maintenance determination regarding a building built after 1 July 1994.

Regulations 1202 and 1213 define essential safety measures. Regulations 1208 and 1214 requires an owner of a building to prepare an annual essential safety measure report.

Section 251 imposes more significant obligations on a landlord than those implied into leases by s.52 of the Retail Leases Act 2003.

Before entering into a commercial lease both landlords and tenants should consider the effect of s.251 of the Act.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

The awarding of costs when Fair Trading Act claims are included in retail tenancy disputes

VCAT recently considered whether s.92 of the Retail Leases Act 2003 applied to claims made under the Fair Trading Act 1999 (FTA) in a proceeding that also involved what was undoubtedly a 'retail tenancy dispute'.

The effect of s.92(1) of the 2003 Act is that each party bears its own costs in a dispute governed by Part 10 (ie the dispute resolution provisions) of the 2003 Act.

In Complete Pets Pty Ltd v Coles Group Property Developments Pty Ltd [2012] VCAT 361 the head tenant was sued by a subtenant alleging that it was induced to enter into the lease by reason of misleading or deceptive conduct contrary to the FTA.

The subtenant sought an order that the sublease was void ab initio.

The guarantor of the subtenant's obligations also claimed to have been induced to enter into the guarantee by reason of misleading or deceptive conduct contrary to the FTA and sought an order the the guarantee was void ab initio.

Another applicant claimed to have been induced to invest in the business conducted at the leased premises by reason of misleading or deceptive conduct contrary to FTA and sought damages. The head tenant counterclaimed against the guarantor for unpaid rent and outgoings.

The head tenant's claim was the only claim that succeeded. The head tenant sought its costs under s.109 of the VCAT Act 1998.

The head tenant contended that the dispute was made up of four claims and conceded that the tenant’s claim against the landlord was a 'retail tenancy dispute' within the meaning of s.81 of the 2003 Act and therefore were caught by s.92(1).

However, the landlord contended that the other claims were ‘consumer-trader’ disputes under the FTA as defined in s.107 of the FTA and therefore the disputes were not covered by s.92 of the 2003 Act.

The Tribunal held that it was irrelevant whether relief was being sought under the FTA and that the “critical question” was whether the parties were, pursuant to s.90 of the 2003 Act, "parties to a proceeding before the Tribunal" on an application under s.89(1) of the 2003 Act.

If the parties were parties to a proceeding under s.89(1) s.92 of the 2003 Act applied and s.109 of the VVCAT Act was irrelevant. Section 89(1) of the 2003 Act provides that “The Tribunal has jurisdiction to hear and determine an application by a landlord or a tenant under a retail premises lease……seeking resolution of a retail tenancy dispute”.

The Tribunal took a purposive construction of the 2003 Act and held that the guarantor and the investors were "parties to the proceeding" within the meaning of s.90 of the 2003 Act with the consequence that s.92(1) applied and the parties had to bear their own costs. The head tenant also unsuccessfully argued that even if s.92(1) applied it was entitled to costs because the proceeding had been conducted vexatiously with the consequence that the exception to the general contained in s.92(2)(b) of the 2003 Act applied.

The vexatious conduct alleged was a refusal to accept offers of settlement.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Friday 23 March 2012

Beware national lease registration system

Victorian landlords and tenants should be slow to embrace the draft Uniform Torrens Title Act that has just been published.

At present there is no requirement in Victoria to register leases and s.42(2)(e) of the Transfer of Land Act 1958 provides that the interest of a tenant in possession of land is an exception to the rules regarding indefeasibility of title; in effect the interest of a tenant in possession is protected when land is sold despite the lease not being registered.

The non-registration of leases in Victoria has worked well and landlords and tenants have not had to bear the cost of establishing and maintaining a registration system. Under the draft Act the exception to indefeasibility will apply only to leases of not more than 3 years (s.34(1)(g)).

Many real estate agents will be delighted by the change because one of their complaints is that it is difficult for them to determine "market rents" in the absence of a database of leases. However, I have not heard any compelling arguments for registration of leases in Victoria.

If registration is required, landlords and tenants can expect delays in the Titles Offer and inevitably rising registration fees. Apart from the national "neatness" argument, the proponents of lease registration seem to have difficulty in pointing to its benefits. The draft Act is the product of the Property Law Reform Alliance.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Thursday 22 March 2012

Tenants need the protection of s.146 of the Property Law Act

I have had a number of queries about a recent post concerning N.C.Reid & Co v Pencarl Pty Ltd [2011] VCAT 2241. In Reid Judge O'Neill held that before re-entering leased premises the landlord did not have to serve a notice that complied with s.146 of the Property Law Act 1958.

The lease permitted the landlord to re-enter if the guarantor became bankrupt. Section 146 requires service of a notice where 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 a repudiation".

Judge O'Neill held that there was no "breach" and therefore a notice under s.146 was not required. If the case of Reid stands it has major implications for tenants who will lose the protection afforded by s.146.

Judge O'Neill does not appear to have been referred to authorities that might have persuaded him to adopt a different interpretation of s.146. For example, the application of the reasoning applied by McLelland J in Della Imports Pty Ltd v Birkenhead Investments Pty Ltd (1987) NSW Conv R 55-538 might have resulted in a different outcome.

McLelland J had to consider a lease that permitted the lessor to enter premises and determine the lease without notice if the lessee entered into liquidation or was wound up. His Honour held that the right of re-entry under the lease was a "right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any....condition in the lease", within the meaning of s.129 of the Conveyancing Act 1919 (being the NSW equivalent of s.146) and which could not be enforced unless and until the lessor gave notice under s.129 and in respect of which the tenant could apply for relief against forfeiture.

His Honour held that a provision in a lease that provided for re-entry on the happening of an event, regardless of whether or not there was any obligation on the lessee to prevent that even happening, was a "condition" within the meaning of s.129 and that the word "breach" in s.129 was equivalent to non-fulfilment". His Honour held that this interpretation was supported "by the evident policy of the provision [ie s.129 in NSW or s.146 in Victoria] which would otherwise be manifestly inadequate for the protection of lessees which it obviously is intended to confer".

If Reid is the law in Victoria s.146 will need to be amended.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Monday 5 March 2012

Collateral contract not a disposition of an interest in land

Earlier today I referred to two recent cases in which tenants successfully claimed that they had entered into collateral contracts with the operator of the Melbourne Casino and Entertainment Complex that entitled them to a further 5 year term following the 5 year term provided for in the lease. See: Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited and Fish and Company (Vic) Pty Ltd v Crown Melbourne Limited (VCAT, unreported, 24 February 2012).

I have been asked whether the collateral contracts were in writing and signed by Crown and, if not, why they were not caught by the Statute of Frauds.

The collateral contracts alleged were oral. Crown alleged that the tenants could not succeed because there was nothing in writing signed by Crown as required by the Statute of Frauds (ie s.126 of the Instruments Act 1958). VCAT held that the oral contracts did not relate to a disposition of an interest in land because all they required Crown to do was send a notice that it would renew the lease.

The collateral contracts were effectively an option exercisable by the tenant: that is an offer to grant a further term which Crown was contractually precluded from withdrawing while the option remained exercisable; there was no disposition of an interest in land until the tenant exercised the option; if the tenant did not exercise the option there was no disposition of an interest in land. See: BS Stillwell & Co v Budget Rent a Car System [1990] VR 589 at 594.

The cases contain an interesting discussion about the circumstances in which a collateral contract can be effective.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Tenants win claim for new 5 year term

Despite no mention being made of additional terms in their leases, the operators of two restaurants in the Melbourne Casino and Entertainment Complex have succeeded in claims that they were entitled to additional 5 year terms.

In Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited and Fish and Company (Vic) Pty Ltd v Crown Melbourne Limited (VCAT, unreported, 24 February 2012) the tenants, who operated the restaurants "Waterfront" and "Cafe Greco" successfully contended that Crown had breached a collateral contract that they would be granted an additional 5 year term after the expiry of the 5 year term provided for in their leases.

The principal of both tenants, Nicholas Zampelis, claimed that the tenants were induced to spend millions of dollars on fit-outs because of a promise that there existing leases would be renewed for a further term of 5 years. At the end of the initial 5 year term Crown refused to renew the leases and the areas occupied by "Waterfront" and "Cafe Greco" were leased to new tenants.

Crown denied the existence of any collateral contract. Damages are to be assessed. In an article published in the Sunday Age on 4 March 2012 a representative of Crown is reported to have said that Crown will appeal.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Michael Redfern - Barrister Deceased.

Michael Redfern died last Thursday night.

Many readers will know Michael either personally or as one of Australia's leading property lawyers.

Michael had been ill for a number of years.

Michael was a fine lawyer, a gentlemen, a mentor to many, generous and kind.

Any person who knew Michael could not help but like him.

Apart from his many years as a solicitor, Michael made major contributions to the law in Australia as co-author of 'Australian Tenancy Practice and Precedents', the author of many articles and the presenter of many seminars.

Michael will be sadly missed but his legacy lives on and he shall never be forgotten.

Michael's funeral will be held on Friday 9 March, 2:30pm at Le Pine, 1048 Whitehorse Rd Box Hill.

Michael, may you Rest in Peace.

Friday 17 February 2012

Presumption that no agreement intended until formal contract signed

Where an agreement concerns real estate there is a presumption that no binding contract was intended until "contracts" are exchanged.

If the agreement for sale refers to the execution of a more formal agreement, then the inference ordinarily to be drawn is that no binding contract is intended until execution of the formal agreement.

See: Elgas Ltd v A.J.Young Industries Pty Ltd (1986) 4 BPR 9,329 at 9,335 per McHugh JA. In Encino Plaza Pty Ltd v Wilson International Pty Ltd (1988) V ConvR 63,908 Ormiston J at 63,914-5 referred to a number of cases that supported the proposition that:

where the evidence shows that involved in the negotiations is the preparation of an important commercial agreement, then the normal or prima facie inference is that the parties do not intend to be bound before the precise terms of that agreement have been finalised and executed and, if necessary, exchanged.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Friday 10 February 2012

Major victory for tenants in landlord's liquidation

It has long been a vexed question whether a liquidator can disclaim a lease with the effect of extinguishing the tenant's leasehold estate or interest in the land?

In a major victory for tenants Justice Davies has answered that question with a resounding "no".

In In the Matter of Willmott Forests Ltd (in liquidation) [2012] VSC 29 the liquidators of a "responsible entity" in a forestry scheme sought to disclaim leases to enable the transfer of clear title to land.

Section 568 of the Corporations Act 2001 permits a liquidator to "disclaim" certain types of property of the company.

The disclaimer terminates "the company's rights, interests, liabilities and property to or in respect of the disclaimed property" (s.568D(1)). In Willmott the liquidators submitted that when a lease is disclaimed, the leasehold estate ceased to exist.

Her Honour rejected the liquidator's submission. At [9] Her Honour said that the submission:

fails to give due regard to the position in law that a lease creates both contractual and proprietary rights. A lease is a contract between the parties but a lease is also the grant by the landlord of an estate in land in the tenant, which a different estate in land to the landlord's freehold estate. The leasehold estate is a legal estate of which the tenant is the owner.

Her Honour held [at 11] that a disclaimer by the liquidator would only terminate the rights, interests, liabilities and property of the landlord but would not bring the lease to an end for all purposes. The tenant's proprietary interest in the land would not be brought to an end but would continue to subsist.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Why no requirement for a s.146 notice?

I have had a number of queries about my last post in which I referred to N.C.Reid & Co v Pencarl Pty Ltd [2011] VCAT 2241 in which Judge O'Neill held that before re-entering leased premises the landlord did not have to serve a notice that complied with s.146 of the Property Law Act 1958.

The lease permitted the landlord to re-enter if the guarantor became bankrupt.

Readers asked why s.146 did not apply?

Section 146 requires service of a notice where 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 a repudiation".

For s.146 to apply there must be a breach. The tenant argued that there had been a repudiation. His Honour rejected the tenant's argument and held that the re-entry took place by reason of a contractual right; there had not been a breach and therefore no notice was required.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.

Tuesday 7 February 2012

No s.146 notice required for contractual right to terminate

Leases often provide that the landlord may re-enter premises and end the lease if a guarantor becomes bankrupt.

In N.C.Reid & Co Pty Ltd v Pencarl Pty Ltd [2011] VCAT2241 the guarantor became bankrupt, the landlord re-entered the premises and leased the premises to a new tenant.

The existing tenant sought relief against forfeiture and/or damages.

The tenant claimed, among other things, that the landlord should have served a notice under s.146 of the Property Law Act 1958 because the lease had been terminated "for repudiation" with the consequence that the tenant would have had 14 days to remedy the breach.

The tenant's claim was unsuccessful. Judge O'Neill held that the lease had been terminated pursuant to a contractual right and not because of a repudiation of the lease and therefore a notice that complied with s.146 did not have to be served.

His Honour also said that in if there were a breach it could not have been rectified.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

Author: Robert Hays Barrister subject to copyright under DMCA.