Dasanayake & Anor v Aust Pacific Developments Pty Ltd & Anor [2002] QSC 454

State Reporting Bureau goc%l QSC 454 Queensland Government Department of Justice and Attorney-General Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. REVISED COPIES ISSUED State Reporting Bureau Date /3 / / JZ / ^2 <30;2- 1/ SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION JONES J No S119 of 2002 PUNCHI DASANAYAKE and Applicants DEEPA DASANAYAKE (Plaintiffs) and AUST PACIFIC DEVELOPMENTS PTY LTD Respondent (ACN 074 776 211) (First Defendant) and MICHAEL JOSEPH McEVOY Respondent (Second Defendant) CAIRNS ..DATE 06/12/2002 JUDGMENT WARNING : The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal >ffence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for heir protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those :ategories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. 1 1 th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 14 -- 06122002 D.l T14/LVT M/T CNS2/2002 (Jones J) HIS HONOUR: In these proceedings, the applicants seek to 1 regain possession of premises which they leased from the first and second defendant. The applicants commenced the operation of a restaurant in the premises in April of 2001. Equipment for use in the restaurant was initially purchased by the first 10 defendant, but there were some moneys paid for that and the collateral agreement about paying the other part for the equipment on the sale of the premises. Moneys were spent in refitting the premises and the restaurant traded with cooperation between the parties, between April 2001 and October 2001. On the 24th of October 2001 the parties entered into a three- year lease in the terms of a written lease agreement which is exhibited particularly in the affidavit of Deepa Dasanayake 30 filed on the 21st of January 2002. That exhibit shows that the original annual rent of $36,000 per annum was altered to $24,000 per annum. It is a matter of contest between the parties whether that variation was unilateral, or whether it was authorised by all parties. That is a contested fact which 40 is probably unnecessary for me to determine because the parties did, at or about the same time, agree to what is called "special conditions" to be added to the lease. That special condition is in the following terms: 50 "The lessor will vary the rental as per the following - (i) Instead of the rental of $36,000 per annum plus outgoings, the lessor will accept 50 per cent of any profits. The lessees will provide their labour free in return." 2 JUDGMENT 60 -- 2 of 14 -- 06122002 D.l T14/LVT M/T CNS2/2002 (Jones J) The parties executed that special condition which is recorded « in handwriting and bears the date "24 October 2001". That appears to be the operative agreement as to the rent which ought to have been paid thereafter. 10 Between November and December 2001 there is a claim by the applicants that 50 per cent of the profits were paid, as well as additional payments in the sums of $400, $200 and $300. Those payments have not been acknowledged by the respondents. 20 In November 2001 the respondents sought to negotiate a new term of lease with a rental of $600 per week. That was not agreed, and the first of many incidents occurred on the 24th of December 2001 in which the applicants claim their right to quiet enjoyment of the premises was breached. This led to 30 proceedings being commenced in the Magistrates Court against the respondent for breach of the peace. On the 14th of January 2002 a further incident occurred in which the second named respondent removed the equipment from the demised premises and attempted to evict the applicants. This led to the institution of proceedings in this Court, initially in Brisbane, where a consent order was made on the 16th of January 2002 in which the applicants undertook to supply financial documents so that the quantum of rent could 50 be calculated; undertook to supply a list of income and expenditures daily; and the respondents undertook to return certain goods which had been taken on the 14th of January 2002. 3 JUDGMENT 60 -- 3 of 14 -- 06122002 D.l T14/LVT M/T CNS2/2002 (Jones J) The respondents agreed at the same time not to do, or to 1 permit to do any act, the effect whereof would be to interfere with the quiet enjoyment of the premises. There has been really no satisfactory compliance with either of those undertakings or agreements by either side. 10 There was partial compliance by the applicants with the supply of financial statements, but by no means were disclosed all the financial documents which were contemplated by that order. This was the subject of correspondence - see particularly Exhibit ALM2 to the affidavit of Amanda Millyard sworn the 22nd of February 2002. The problems between the parties continued. There are allegations by the respondents that rent was not being paid in 30 accordance with the agreement, and there were allegations by the applicants that their right to quiet enjoyment had been infringed. That led to further material being filed and ultimately to my making an order on the 6th of June 2002 in which I ordered that the respondents be restrained from doing 40 any acts which might interfere with the quiet enjoyment by the applicants of the premises. I further ordered that the second respondent return to the applicant property which was, in the course of material filed, acknowledged as their property. 50 That order was made, conscious that there was default on the part of the applicants as well in the payment of rent, and so it was a circumstance where I ordered that each party pay their own costs. 4 JUDGMENT 60 -- 4 of 14 -- 06122002 D.l T14/LVT M/T CNS2/2002 (Jones J) Following that hearing, the response of the defendants was to 1 deliver a notice pursuant to section 124 of the Property Law Act, in particular, seeking remedy for breaches under the lease by the payment of rent. No rent had, by that time, been paid since December of 2001. 10 20 30 40 50 5 JUDGMENT 80 -- 5 of 14 -- There was no response to that notice. Nor was there any 1 seeking of relief pursuant to section 124 against the effects of that notice. Even prior to that step there were other breaches to which reference has been made on these proceedings although they were not included in that notice. 10 One related to the payment of electricity accounts. There is evidence that initially the electricity supply to the restaurant was via a meter at other premises and so the applicants did not receive electricity accounts. But there is evidence also that prior to June electricity was directly connected to these premises. There is evidence that the electricity accounts had not been paid. There is evidence from the respondents that the applicants continued to operate the restaurant even though electricity had been disconnected 30 by drawing power to the restaurant from an outside source. The respondents point also to a failure to comply with the requirements of the Douglas Shire Council regarding signage. That does not seem to me to be a breach of the lease but the 40 erection of signage without the consent of the landlord was. There are also allegations of failing to comply with health requisitions of the local council and with problems in complying with the requirements of the liquor licence. 50 As I have mentioned many of these facts are disputed but some of them, particularly allegations about the electricity account, have not been challenged by the applicants in their final affidavit. 06122002 D.l T15/RGC M/T CNS2-3/2002 (Jones J) 6 JUDGMENT 60 -- 6 of 14 -- 06122002 D.l T15/RGC M/T CNS2-3/2002 (Jones J) Following the service of the notice to remedy defects, as I 1 have mentioned, there being no response by the applicants and no seeking of relief from the consequences, the respondents gave notice terminating the lease on the 29th of June 2002 and then re-entered the property on the 16th of August 2002 10 pursuant to clause 13.1 of the lease. Exhibit "DD-l" to affidavit of Deepa Dasanayake filed 21 January 2002. The terms of the lease gave the respondents the right to re enter in that way although in the circumstances which 20 prevailed before that and, as this Court was seized of the many disputed issues between the parties, it may have been more appropriate to seek the intervention of the Court at that stage. However those proceedings to regain possession, commenced on 10 September 2002, do not specifically seek 30 relief from the forfeiture which followed the non-compliance with the section 124 notice. The re-entry was made on that date which was some two weeks after the first respondent had signed a contract of sale over 40 the premises to a Mr Bruce Le Corneau. The sale of that property was completed on 21st of August 2002 and there is evidence of a real property search before me showing Mr Le Corneau as a registered owner. 50 Mr Le Corneau has been identified in the more recent documents as the third defendant in these proceedings although no application has ever been made for his being so joined. In 7 JUDGMENT 60 -- 7 of 14 -- 06122002 D.l T15/RGC M/T CNS2-3/2002 (Jones J) the light of the view that I have taken of these matters it is 1 probably of no significance. Unless the lease was validly determined or otherwise unenforceable Mr Corneau has taken subject to the interests 10 of the applicants - see sections 184 and 185 of the Land Title Act 1994. The applicants have suggested that this sale was a sham and a device to exclude her from the premises. In my view the sale would not have this effect if they were entitled to the benefits of the lease and could enforce it but, of course, if the lease had been validly determined they did not have any such right . The applicants continue to assert that the first and second defendants are and have been in breach of the lease on the basis that they have not permitted the applicants quiet enjoyment of the premises. These allegations are contested. They concern evidence about the changing of locks, the unlawful entry of premises and the destruction of food. 30 40 These contested allegations cannot be resolved in a hearing of this kind. They are matters, however, if they are to be pursued, which can be properly dealt with in an action for 50 damages if the behaviour has been shown to be unlawful or even to the effect as alleged that they have caused a destruction of the applicants' business. 8 JUDGMENT 60 -- 8 of 14 -- Given that the termination was on the non-payment of rent and that the only basis which is put forward by the applicants that rent was not to be paid was that the business did not operate at a profit rather suggests that its potential for financial ' success is illusory. In any event it is unlikely that any damages contemplated for breaches of the lease would warrant an action in the Supreme Court. I have had, in dealing with this matter, concerns about the behaviour of all parties which give rise to a suspicion that proper respect has not been given to the orders of this Court. However, the evidence does permit findings to be made on a number of matters. 06122002 D.l T15/RGC M/T CNS2-3/2002 (Jones J) 9 JUDGMENT -- 9 of 14 -- I am satisfied that on the 8th of June 2002 the respondents gave to the applicants a notice to remedy defects pursuant to section 124 of the Property Law Act. See affidavit of Laurie Patten filed 3rd October 2002. I am satisfied that that notice was not complied with and the applicants have not sought relief from the notice of termination which followed based upon non-compliance with the notice to remedy. I find that the applicants have not paid any rent since December 2001 nor have they provided the documents necessary for the calculation of rent as required by the order of the Court. This matter has a long and sorry history which it stems from a lease which had rental terms which were quite inappropriate for the nature of the business and, as has come to pass, the ( characters of the parties involved. The relief sought in these proceedings is limited to that sought by the applicants. The first is to regain possession of the premises and to begin trading again. On the material before me I am satisfied that the lease was terminated by the notice of the 29th of June 2002, and that the applicants therefore have no further right to possession under the lease. Having come to that view the relief sought in paragraph 2, seeking the formalisation of the lease by the third defendant (Mr Le Corneau) , is inappropriate as is the injunctive relief 06122002 D.l T16/AW M/T CNS3/2002 (Jones J) 10 JUDGMENT -- 10 of 14 -- whereby the applicant virtually sought quiet enjoyment of the premises. The other relief sought, namely the return or compensation for goods, is the subject of contest, and I am not prepared to make findings on the affidavit evidence before me. If the goods are of such a value to warrant further legal proceedings it would seem to me that they ought to be brought in the Small Claims Court . The final application is for an injunction to prevent the stripping of premises of the restaurant of its fittings and fixtures. In this regard I am unsure as to what fixtures and fittings are referred to but it does seem to me that the applicant should have the right within a further short period to remove from the restaurant any property which is rightly theirs, or which can be identified as tenants' fixtures for which they can prove payment. I I propose to order therefore that the applicants have the right within the next 10 days to remove any property in the restaurant which is rightfully theirs. That order may well require the consent of Mr Le Corneau, and if that is not given then I am prepared to hear further argument in relation to that matter, and if necessary, to grant the parties liberty to apply in respect of that matter. 06122002 D .1 T16/AW M/T CNS3/2002 (Jones J) 11 JUDGMENT -- 11 of 14 -- I will pause there. Is - and perhaps I should ask Mrs Dasanayake first: are there any fixtures or fittings to which you claim property still in the restaurant premises? APPLICANT D DASANAYAKE: Yes, sir, I believe there is. HIS HONOUR: What - what are they? Are you able to list them now, or do you need time? APPLICANT D DASANAYAKE: Some of the - some things I can't find at the moment in the restaurant. I don't know - maybe they have installed somewhere else, and some of them is still there . HIS HONOUR: Right. Are you able to identify those now, or would you need to go back to the restaurant to identify what you claim you have a right to? APPLICANT D DASANAYAKE: I - I have to go back to the restaurant, sir. HIS HONOUR: Okay. Well, Mr Le Corneau, are you prepared to allow Mrs Dasanayake access to the restaurant to identify anything that ' s theirs? MR LE CORNEAU: Yes, I am. Mike has a key and they're entitled to go in there. The only things I believe that are left there is a freezer and a microwave. The rest has been stored by - by Michael---- HIS HONOUR: Okay. MR LE CORNEAU: ---- in a storage shed in Mossman. HIS HONOUR: Michael being Mr McEvoy, the second ---- MR LE CORNEAU: Mr McEvoy, sorry. HIS HONOUR: Very well. So you're prepared ---- MR LE CORNEAU: And I've asked them on two occasions to come to the restaurant and pick it up, and that's why I went to their place the other Sunday to ask them to come and identify what was theirs before the renovators went in. I said if they don't pick it up the renovators will throw it all in the bin. I said, "I need you there." HIS HONOUR: Yes. All right. MR LE CORNEAU: But - yes - so it's been stored in the shed. 06122002 D .1 T16/AW M/T CNS3/2002 (Jones J) 12 JUDGMENT -- 12 of 14 -- 06122002 D.l T16/AW M/T CNS3/2002 (Jones J) HIS HONOUR: Do you agree for that to happen within the next 10 days? MR LE CORNEAU: Yes. HIS HONOUR: And whatever items are in storage will be delivered up - be available for the collection by the applicants? MR McEVOY: Yes, your Honour. HIS HONOUR: Yes. Very well. Well, there's no need to make any ---- I will give the parties liberty to apply on that aspect by giving notice to the other party. So they are getting two days' notice to each other party. That means, Mrs Dasanayake, if there is any difficulty about your gaining access to the restaurant, or the delivery of the other equipment to you, then you can come back to Court, but you would - you would need good grounds for me to act upon that . Yes . Thank you . MR ROYDS : Your Honour, I'm instructed that Mr McEvoy put their stuff in storage, and apparently there's a storage account which might need to be paid by the applicants. Certainly Mr McEvoy shouldn't be left with the account. HIS HONOUR: Yes. Well, that - that may be so, but it's not something that I'm prepared to rule upon. Okay. The question of costs . 13 JUDGMENT -- 13 of 14 -- HIS HONOUR: Because of what I have said in relation to the conduct of all parties I am not prepared to order the applicants to pay all the costs, but it does seem to me that they ought to pay the costs of and incidental to the action as from the 29th of June 2002 which is the date upon which I have determined the lease was terminated. Costs from that date will be assessed on the standard basis. 06122002 D.l T16/AW M/T CNS3/2002 (Jones J) 14 JUDGMENT -- 14 of 14 --