DISTRICT COURT OF QUEENSLAND
CITATION:
Goldsmith & another v AMP Life Ltd [2020] QDC 140
PARTIES:
ANDREW DAVID GOLDSMITH
AND
JANNE ELIZABETH TIPPET
(Plaintiffs)
v
AMP LIFE LTD ACN 079 300 379
(Defendant)
FILE NO/S:
419/16
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
25 June 2020
DELIVERED AT:
Brisbane
HEARING DATE:
5 – 7 May; 11 May; 13 May 2020
JUDGE:
Porter QC DCJ
ORDER:
1. The plaintiffs’ claims are dismissed.
2. The defendant’s counterclaim is dismissed.
CATCHWORDS:
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES – where the plaintiffs’ company Gold Tip operated a news agency business in the defendant’s shopping centre as a lessee – where there were two leases – where the leases included terms implied under s 43(1)(b) and (c) of the Retail Shop Leases Act 1994 (Qld) (RSLA) – where the defendant commenced substantial renovations to the shopping centre while the defendant was occupying under the first lease – where the plaintiffs allege that certain actions taken by the defendant in the course of the renovations met the requirements of s 43(1)(b) and (c) in relation to both leases – whether certain actions taken by the defendant in the course of the renovations give rise to a right to compensation for loss flowing from those actions – whether the actions taken by the defendant in the course of the renovations caused loss to Gold Tip – whether the loss and damage allegedly caused to the Gold Tip under the first lease may include loss accruing in the period of operation under the second lease
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – LIMITATIONS OF ACTIONS – whether the cause of action arising under s 43(1) was a simple contract, thereby attracting a 6 year limitation period – where the defendant contends that any claim by the plaintiffs is statute barred – where the plaintiffs contend that the cause of action under s. 43(1) was an action upon a specialty covenant in a deed – where although the first lease was not in the form of a deed it was registered on the real property register, thereby attracting s. 176 of the Land Title Act 1994 (Qld) – where s. 176 of the Land Title Act 1994 (Qld) provides that a registered instrument operates as a deed – whether s 43(1) is incorporated into the first lease by law – whether the claim under s. 43(1) is an action upon a specialty and the plaintiffs therefore have 12 years to commence proceedings
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM – SET-OFF – where Gold Tip ceased paying the monthly rent under its second lease – where that sum is the subject of a counterclaim in these proceedings against the plaintiffs as assignees of the rights of Gold Tip under s. 43(1) RSLA – whether that claim can be raised against the plaintiffs as assignees as a set off or counterclaim
Legislation
Corporations Act 2001 (Cth) s. 477(2)(c)
Land Title Act 1994 (Qld) s. 176
Limitations of Actions Act 1974 (Qld) s. 10; 25; 42
Retail Shop Leases Act 1994 (Qld) ss. 18; 42; 43(1)(b); 43(1)(c)
Cases
Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Forsyth v Gibbs [2009] 1 Qd R 403
Franks v Equitiloan Securities Pty Limited [2007] NSWSC 812
Gallagher Bassett Services NSW Pty Ltd v Murdock (2013) 86 NSWLR 13
Hamilton v Porta [1958] VR 247
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
March v Stramare (1991) 171 CLR 506
Travel Compensation Fund v Tambree (T/As R Tambree and Associates) (2005) 222 ALR 263
R v Karl Ernst Kleimeyer [2014] QCA 56
Secondary Sources
Nicholas Seddon, Seddon on Deeds, (The Federation Press, 1st ed, 2015)
Robert Frederick Norton, A treatise on deeds, (Sweet and Maxwell, 2nd ed, 1928)
John Dyson Heydon, Mark James Leeming and Peter Turner, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (LexisNexis, 5th ed, 2015)
Peter Young, Clyde Croft and Megan Smith, On Equity (Thomson Reuters, 1st ed, 2009)
Rory Derham, Derham on the Law of Set-off (Oxford University Press, 4th ed, 2010)
COUNSEL:
N H Ferrett QC; C Upton for the plaintiff
C Schneider for the defendant
SOLICITORS:
Woods Prince Lawyers for the plaintiff
Norton Rose Fulbright for the defendant
Table of Contents
Summary
Preliminary observations
The lay witnesses
The expert witnesses
The works and the parties’ dealings
The Centre before redevelopment
The old shop and the business before redevelopment
The first stage of the works: 18 June 2008 to 1 July 2009
Works on the northern side of the Centre
Works on the southern side of the Centre
The April 2009 settlement
The second lease
The second stage of the work: 1 July 2009 to 4 February 2010
Overview of the works
Events directly affecting the old shop
The third stage of the work: 4 February 2010 to 10 June 2010
The Centre as at 4 February 2010
Works carried out between February 2010 and 10 June 2010
The impact of work on the general amenity of the Centre
Works after the Grand Opening
Events leading to these proceedings
The customer numbers and turnover
The financial performance of the business
Some issues not pressed
Analysis of the cause of action under s. 42
The works caused relevant effects on the old shop
September 2008 to July 2009
August 2009 to February 2010
The works caused no relevant effects on the new shop
Loss and damage arising from acts affecting the old shop
Ms Meulman’s evidence
Stabilisation
Expected growth in sales
Other arguments on loss after February 2010
The causal inference argument
No loss proved from relevant works after February 2010
Loss for the period July 2009 to February 2010
Claim on the first lease not statute barred
The Counterclaim
The set-off point
The extinguishment issue
Limitations defence to the counterclaim
Summary
The plaintiffs were the directors of Gold Tip (News) Pty Ltd (Gold Tip). From October 2004, Gold Tip carried on a news agency business (the business) at Mt Ommaney Shopping Centre (the Centre) as assignee of an existing lease (the first lease) of an existing news agency shop located in the Centre (the old shop).
In June 2008, the defendant (AMP) commenced substantial renovations of the Centre (the works) which continued until at least mid-2010. Prior to the commencement of the works, Gold Tip and AMP commenced negotiations for a new lease (the second lease) of a new shop (the new shop) to accommodate the business in the expanded Centre in a new location. The second lease commenced on 4 February 2010, when the business commenced operating from the new shop. The business did not succeed and Gold Tip was wound up on 30 March 2012.
It is accepted that both leases included terms implied under s.43(1)(b) and (c) Retail Shop Leases Act 1994 (Qld) (RSLA) which obliged AMP to pay compensation for loss caused by actions by AMP which restricted access to, or the flow of customers past, a leased shop or disrupted trading in a leased shop.
The plaintiffs allege that certain actions by AMP in the course of the works met the requirements of s. 43(1)(b) and/or (c) in relation to both shops, giving rise to a right to compensation to Gold Tip for loss caused by those actions. The plaintiffs sue on the leases by reason of an assignment to the plaintiffs by the liquidator of Gold Tip of Gold Tip’s causes of action against AMP.
AMP denies any entitlement to compensation under either lease. It also contends that any claim under the first lease is statute barred. It also raises a set-off and counterclaim against the plaintiffs for unpaid rent sums due by Gold Tip under the second lease.
The plaintiffs did not actively dispute the debt alleged by AMP under the second lease. Rather, they contend that they are not liable on the counterclaim as assignees and further, that the counterclaim is statute barred. They also submit that AMP’s counterclaim cannot be set-off against claims for compensation under the first lease. They accept it could be set off against claims for compensation under the second lease.
For the reasons below, I have reached the following conclusions:
(a)The plaintiffs have established an entitlement to compensation in respect of the effect of works on the old shop in the amount of $65,000;
(b)I dismiss the claim for compensation in relation to the new shop because I am not satisfied that AMP took any actions affecting the new shop which engaged the provisions of s. 43(1)(b) and/or (c);
(c)AMP has made out its claimed debt for $77,006.47, but is not entitled to judgment on its counterclaim against the plaintiffs because they are not liable on that claim as assignees. However, AMP is entitled to rely on its debt as a defence by way of equitable set-off against the compensation due under the first lease, which defence cannot be answered by a limitations defence; and
(d)Accordingly, AMP has a defence to the whole of the plaintiffs’ entitlement to compensation under the first lease.
The ultimate outcome therefore is that the plaintiffs’ claims are dismissed and AMP’ counterclaim is dismissed.
Preliminary observations
At the heart of this trial is section 43(1) RSLA, which relevantly provides:
43 When compensation is payable by lessor
(1) The lessor is liable to pay to the lessee reasonably compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor’s authority–
…
(b)takes action (other than action under a lawful requirement) that substantially restricts, or alters:
(i) access by customers to the leased shop; or
(ii)the flow of potential customers past the shop; or
(c)causes significant disruption to the lessee’s trading in the lease shop…
There are a number of preliminary observations to make.
First, in addition to s. 43(1), the plaintiffs pleading also relied on alleged breaches of the express covenants for quiet enjoyment in each lease and on the contention that by the effect of the works on the each shop was such as to derogate from the grant under the leases. One might think that the scope and efficacy of s. 43 RLSA would at the least equate with, and probably significantly exceed, the scope and efficacy of claims under these other heads. This was ultimately accepted by the plaintiffs’ counsel, Mr Ferret QC and Mr Upton.[1] These reasons therefore deal only with the claims under s. 43(1).
[1] TS5-9.44 to 5-10.8
Second, by its pleading AMP:
(a)Alleged that this Court did not have jurisdiction to hear and determine a claim under s. 43 RSLA; and
(b)Disputed that the tenure of Gold Tip after the expiration of the first lease was regulated by the RSLA.
However, in opening, Ms Schneider, who appeared for AMP, conceded that this Court had jurisdiction to hear and determine such a claim, rightly in my respectful view.[2] Further, in closing, she accepted that whatever the true nature of the tenure of Gold Tip after expiry of the first lease, it was a lease regulated by the RSLA.[3]
[2] TS1-3.40 to 4.26; and see the amendment to the Fourth Amended Defence (FAD) paragraph 24(c)(ii)(C)
[3] TS 5-9.35 to .38
Third, a claim for compensation under s. 43(1)(b) and (c) requires the plaintiffs to establish:
(a)That AMP took certain actions;
(b)That those actions caused one or both of the consequences for the leased shop identified in those subsections; and
(c)That those consequences in turn caused loss to Gold Tip.
For the first lease, the plaintiffs plead the carrying out of the whole of the works. The plaintiffs then plead that the works caused the relevant consequences by reference to various particularised actions: the closing of entrances, the blocking off of malls and the restriction of vehicle access. The plaintiffs also particularised the loss of amenity (toilets closed, dust and noise), the closure of other shops generally and near the old shop in particular and the reduction in size of the old shop and reduced trade compared to trading before the works.
For the second lease, the plaintiffs relied on all the matters pleaded in relation to the first lease plus the allegation that after the grand reopening in June 2010, there were on-going works which caused the relevant effect on the new shop, including on-going fit outs, roadworks, defective lifts, loading dock construction and reduced trade compared to trading before the works.
The plaintiffs then plead in a conclusory way that those actions and effects caused loss and damage compensable under s. 43(1). There is no pleading of any facts linking any particular actions of AMP to any particular consequence under the s. 43(1)(b) or (c), nor that any particular consequence led to any particular identified loss. The plaintiffs’ case is that the Court should infer that there were impacts of the kind contemplated by s. 43(1) from the evidence as whole. Particular emphasis is placed on the allegation that the business did not succeed in the financial years of the works (FY2009 and thereafter) and that the more probable inference is that the works caused that outcome.
It is therefore a necessary first step that I make findings about the progress of the works from time to time. It is convenient at the same time, to trace through the dealings between the parties in that chronology. Before doing so, it is convenient to make some comments about the witnesses called by the parties.
The lay witnesses
Mr Goldsmith was the only lay witness for the plaintiffs. Mr Goldsmith was a director of Gold Tip and, along with Ms Tippet, managed the business and worked in the business over the whole of the relevant period. He dealt with AMP’s officers. He gave evidence about events at the Centre and in the business. Messrs Carroll and Ihm were the lay witnesses for AMP. They were, successively, the manager of the Centre; Mr Carroll from the before the commencement of the renovations until about June 2010, Mr Ihm for the remainder of the relevant period. Mr Carroll gave evidence about events at the Centre before and during the works and Mr Ihm about after the works. Both referred to dealings with Mr Goldsmith. Taken with the contemporaneous documents, the evidence of these three witnesses provides the foundation for my findings as the relevant events against which the issue of the impact, if any, on the business from time to time of the works must be assessed.
All three lay witnesses were cross examined. Although Mr Goldsmith was an honest witness, making reasonable concessions against his interests in cross examination, his sense of grievance over the fate of Gold Tip sometimes seemed to impede the reliability of his recollection, particularly in his affidavit filed in chief. Mr Ihm was initially tense and defensive in cross examination, though ultimately I had little basis to doubt his evidence. I found Mr Carroll to be a careful and reliable historian. Ultimately, after cross examination, very little of the narrative of events was in dispute (in contrast to the questions of the effect of the works on the trading of the business, which was hotly contested).
The expert witnesses
Both parties called evidence from expert accountants on the question of the calculation of potential losses of the business. The plaintiffs relied on reports from Mr Peter Haley and the defendants relied on reports from Mr Bradley Hellen. Mr Haley’s evidence focused on calculation of loss on certain instructed assumptions. Mr Helen critiqued Mr Haley’s calculations in certain respects and carried out calculations on other assumptions.
Both parties also called expert evidence directed at informing the question of whether and to what extent, the works impacted on the business.
The plaintiffs called two experts on that issue.
(a)Ms Kerrianne Muelman is an economist with experience in the retail and property market. She gave evidence about the effect renovation works can have on shopping centres generally, on some aspects of the economic environment at the time and on the impact of the works on foot traffic and on the performance of the Centre overall.
(b)Ms Teri Dee Roberts is a valuer. She had provided a predicted valuation of the business prior to completion of the works assuming completion of the redevelopment and the move to the new shop on instructions from Gold Tip’s financier, the NAB. In reaching her predicted valuation of the business, she adopted an assumed increase in turnover of 20% on moving to the new shop. She provided that valuation to NAB in October 2009. Mr Haley was instructed to assume that increase in his calculations. Ms Roberts was called so that her valuation could be tendered to support Mr Haley’s calculation.
AMP also led expert evidence on the causation issue:
(a)In addition to his accounting evidence, Mr Hellen gave evidence critiquing Ms Robert’s predicted increase in turnover; and
(b)AMP also called Mr Rumbens, a macro economist. He gave evidence as to macroeconomic trends in the economy generally and for news agency businesses in particular. The gravamen of his evidence was that relevant macro-economic trends were against the business over the relevant period.
I analyse the competing expert opinions below, after making findings about the dealings between the parties.
The works and the parties’ dealings
The Centre before redevelopment
As at 2004, AMP owned the Centre. Exhibit 15 contains two A3 sized plans of the Centre, one before (the before plan) and one after (the after plan) the works.
Prior to the redevelopment, the Centre was some 36,000m2. Its major tenants were Woolworths, Coles, Big W and Kmart, located as shown on the before plan.
There were two main doors to the Centre. These are marked on the before plan as the North door and the South door. There were also other entry doors. One was located immediately to the west of Kmart. There was also an entry door in the western mall leading to the Big W shop, although these other doors did not figure much in the evidence, perhaps because the North and South doors were adjacent to the main parking areas.
There were three main areas of parking available at the Centre[4] before the works:
(a)The North car park which comprised the area to the north of the North Door shown on the before plan;
(b)The South car park, located in the area to the South of the South door shown on the before plan; and
(c)The undercroft car park located under the Big W tenancy shown on the before plan to the west of the Centre. It did not figure materially in either parties’ case.
[4] Per Mr Carroll at T3/25:39-47 and T3/26:1-6.
It was a significant element of the plaintiffs’ case that parts of the North and South car parks were closed during the renovations. It was not in dispute that this did occur, as explained below. However, the impact of the closure of those car parks seems logically to depend, at least in part, on the relative importance of those car parks to the total available parking and the extent to which they were closed during the works. The evidence on this question was incomplete. Even the number of parks in each car park was not definitively proved. It was common ground, it seems, that:
(a)The total number of car parks before the renovation works was 2100;
(b)The total number of car parks after the renovation works was increased to 2400;
(c)When the North car park was closed, some 870 parks of that total were lost until the new multistory car park was opened in December 2008, which increased the car parks in the North car park considerably;
(d)When the South car park was closed, some 250 parks were lost until a new multistory car park was built, which opened in December 2009; and
(e)The undercroft car park was smaller than the North and South car parks.
It was confirmed in evidence that the North and South car parks included the whole of the open areas shown to the north and south of the respective doors on the before plan. On that evidence, it is unclear if the whole of the North car park was ever closed, but it seems unlikely. It seems certain that only a part of the South car park was ever closed. It should be kept in mind, however, that the effect of closing the door providing access to those car parks probably made use of the remaining open areas much less utile.
The old shop and the business before redevelopment
As at 2004, there was a news agency business being operated in the Centre by another tenant pursuant to the first lease, which was a registered and due to expire on 10 July 2006. It is common ground the first lease was regulated by the RSLA. The location of the old shop is marked on the before plan.
The relevant characteristics of the location of the old shop include the following:
(a)The old shop was located on a corner site of a right angled mall in the middle of the Centre;
(b)That mall had Coles as the main tenant with the Coles entry opposite the first shop;
(c)A Terry White branded pharmacy was located to the south of the first shop in the tenancy marked 39 to 41 on the before plan;
(d)Evidence was given (which I accept) that the location of the three shops was mutually supportive of foot traffic being attracted to the Coles Mall, with each shop being both a destination in its own right (as explained in the next paragraph) as well as obtaining the benefit of discretionary spending from tenants attracted to the other two shops; and
(e)The South door and car park were closest to the first shop.
The old shop was the only news agency in the Centre. As noted already, it had a monopoly on the sale of Golden Casket and related lotto type business. It also had a monopoly on the supply of newspapers in the Centre, though it provided papers to the supermarkets and some other locations for sale. The lottery business and, to an extent the newspaper business, made the first shop a destination in its own right for some customers.
Gold Tip took an assignment of the first lease from the existing lessee on about 11 October 2004. At the time Gold Tip took over the old shop and the business, the business comprised the sale of newspapers, magazine, lottery products, greeting cards, stationery, confectionery and gifts. The full range of traditional news agency products. It also had a print centre that provided photocopying, laminating, binding and design and production of personalized wedding and event stationery. The business also incorporated a bookshop which had interconnected premises and its own entrance.
On acquisition of the business, Mr Goldsmith and Ms Tippett caused Gold Tip to modernise the sale and stock control systems by installing computerised point of sale systems. Mr Goldsmith swore that this permitted the plaintiffs continually to analyse the performance of the business. Similarly, Mr Goldsmith gave evidence that the plaintiffs introduced mapping of the shop designed to assist in analysing the productivity of each meter of floor space allocated to each product category and thereby improve the productivity of the floor space.[5] For reasons never explored in evidence, the data generated by these systems was not relied upon to prove the plaintiffs’ claims.
[5] Goldsmith affidavit paragraphs 19 to 21
Mr Goldsmith swore that these systems, along with maintaining electronic accounts on MYOB, allowed the plaintiffs to monitor the performance of the Business “which ran successfully and profitably for the next four years”.[6] I do not accept that characterisation of its performance: see from paragraphs [114] to [125] below.
[6] Goldsmith affidavit paragraph 24
On 10 July 2006, the first lease expired. Some months later, it was formally extended until 10 December 2007 (the first extension).[7] The extension was documented as a Form 13 Amendment and provided that the “document sets out the amendments to the Lease, which apply from 11 July 2006”. It extended the expiry date to 10 December 2007 and otherwise confirmed “all other clauses of the Lease”. There is no evidence that it was registered.
[7] TB B2.08
Mr Goldsmith’s said that in mid-2007 he was told a redevelopment would start within two years and that the business would be moving to a new location. He says he was told that the budget was about $145m and the Centre was to increase by some 45% or 20,000m2. All four statements proved to be correct.[8]
[8] Goldsmith at paragraph 26
On 10 December 2007, the first extension expired. The first lease was further extended to 30 June 2008 (the second extension).[9] It was extended in the same formal manner which attended the first extension, and again does not appear to have been registered. Strangely, the second extension was not executed until February 2009 (Gold Tip) and April 2009 (AMP). It was therefore executed many months after the second extension had expired. The reason for this was never explored.
[9] TB B.2.10
The second extension conveniently states the payment obligations under the first lease as at December 2007, being:
(a)Base rent (Item 3) was set at $278,250.00, (some $23,000 per month) to be thereafter adjusted in accordance with the rent review provisions of the first lease;
(b)Marketing levy (Item 10) was set at $13,912.50 to be thereafter adjusted in annually accordance with the first lease;
(c)Outgoings were calculated as a percentage of floor area; and
(d)Turnover rent applied calculated as 7% on Gold Tip’s annual Gross Sales to the extent those gross sales exceeded the base rent.
The second extension expired on 30 June 2008. Despite the fact that the second extension was signed in February and April 2009, there was no further formal extension of the first lease. Accordingly, from 30 June 2008 until Gold Tip vacated the old shop and the lease of that shop was terminated on 3 February 2010, Gold Tip was holding over on the terms for holding over specified in the first lease (see paragraph [225] below). Notwithstanding that this was the case, these reasons for convenience continue to refer to the tenure of the old shop as arising under the first lease. The precise nature of that tenure is only contentious in relation to AMP’s limitations defence.
The first stage of the works: 18 June 2008 to 1 July 2009[10]
[10] I acknowledge that the findings of fact which follow up to the end of the works are drawn substantially the summary of the evidence prepared by AMP Mr Ferrett, QC, recognised the impartial character of the summary. Ultimately, however, the findings are mine and reflect with my own view of the evidence.
Works on the northern side of the Centre
The work commenced on or about 18 June 2008, when workers were onsite in the North car park setting up their camp. In September 2008, the North door and North car park were closed.[11] The closure of the North car park saw a loss of about 870 car parks,[12] a 40% reduction in the total number of available car parks.[13] The October 2008 monthly report records:[14]
The redevelopment project is on target with the overall programme but the centre is being impacted by the loss of approx. 870 car parks (out of a total 2100) and the economic downturn.
[11] Carroll Affidavit, [38(b)]; Mr Goldsmith accepted this timing in cross examination: T1/37:8-10, 29-45
[12] T1/37:8-13.
[13] T1/37:24-27; T1-37:42-43.
[14] T3/24:46 and T3/25:1-6; TB E4.10 at page TB2552. (on page 3, under the headings “General Update” and “Key issues”)
Around the time the North car park was closed, a small number of car parks were closed in the southern car park (approximately 25) to make way for the construction of a new hydrant for the Centre’s sprinkler system.[15] However, the balance of the South car park and the under croft car park remained open.[16] From September 2008, construction of the new North multi-storey car park commenced,[17] with that car park being completed and open to customers by 23 December 2008.[18] The opening of that multi-storey car park made approximately 1,600 available parks on the north side of the Centre.[19] In an email that Mr Goldsmith sent to Mr Carroll on 23 December 2008, Mr Goldsmith described the new multi-storey car park as “terrific”.[20]
[15] T3/25:16-19.
[16] T3/25:12-14.
[17] T1/22-24.
[18] Carroll Affidavit, [38(c)] T1/41:26-27.
[19] T1/42:43-45. Carroll Affidavit, [38(c)] (TB E3.1, page TB2170)
[20] TB.B.15; T1/41:9-27.
However, in his affidavit evidence Mr Goldsmith said that when the new multi-storey car park opened in December 2008, the lifts for that car park had not yet been installed. He said there was a delay between the opening of the new multi-storey northern car park, and the installation and commissioning of the lifts,[21] and that the lifts remained out of operation during the first part of 2009.[22] Mr Goldsmith also gave evidence that there was a period during the first half of 2009 when customer escalators (or “travelators”) on the northern side of the Centre near Kmart were malfunctioning.[23] Mr Goldsmith said that during this period, AMP had extra staff on hand to assist customers in accessing the levels of the new multi-storey car park by pushing their trolleys up and down access ramps.[24]
[21] T1/43:1-14.
[22] T1/43:34-38.
[23] T1/43:43-46 and T1/44:1.
[24] T1/43:16-18.
In cross-examination, Mr Goldsmith confirmed that the events in relation to the customer lifts and travelators on the northern side of the Centre that he described during his cross-examination are the same events as those to which he referred in paragraph 75 of his affidavit.[25] Mr Goldsmith’s evidence was that these issues with the customer lifts and travelators on the north side of the Centre were addressed at some stage during the first half of 2009, and by mid-2009, these issues in relation to the operation of the customer lifts and travelators on the northern side of the Centre had been fixed.[26]
[25] T1/44:25-29.
[26] T1/43:34-38, T1/44:31-35, T1/52:42-47 and T1/53:1.
Mr Goldsmith’s concession is important. Paragraph 75 of his affidavit attributes these dislocations in the use of the new North multi-story car park to the period after the grand reopening of the Centre in June 2010. AMP alleges that all the work in the Centre and for the car parks was well and truly completed by June 2010. As far as the North multi-story car park is concerned, Mr Goldsmith’s evidence in cross examination supports AMP’s position.
When the North door was shut in about September 2008, the other three entrances remained open.
After the closure of the North door and car park, works commenced on an extension to the northern mall. This included the construction of a number of new shops as well as a new space ultimately occupied by Target.[27] The extensions to the North mall were opened on about 18 May 2009, and in May 2009 the new Target store at the Centre also opened for trade,[28] with access available directly from the new multi-storey car park.[29] The new North mall and North door are marked on the after plan.
[27] T1/39:19-31
[28] Carroll Affidavit, [38(e)] and [38(f)] (TB.E3.1, pages TB2170-2171) and see Mr Goldsmith at T1/45:4-9
[29] T1/45:11-19.
Mr Goldsmith’s evidence was that the construction of the new multi-storey North car in the second half of 2008, the North mall extension in late 2008 and early 2009 were each sizeable undertakings involving a considerable amount of construction work.[30] That is hardly to be doubted. During the period in which this work was completed (about September 2008 to about May 2009), there was a large construction workforce on site at the Centre working on the northern car park and northern mall extension. In cross-examination, Mr Goldsmith confirmed that it was during this period (about September 2008 to about May 2009) that he observed the events set out in paragraph 32 of his affidavit.[31] That is, during the period from about September 2008 to about May 2009, Mr Goldsmith observed that the coming and going of construction personnel and vehicles caused some traffic congestion at the Centre.[32]
[30] T1/39:33-38.
[31] TB.B.1.
[32] T1/39:43-46 and T1/40:1-2.
Further, in cross-examination Mr Goldsmith also clarified that it was during the period after the North car park closed and before the new multi-storey car park opened (i.e., about September 2008 to about late December 2008) that he received the customer complaints and feedback described in paragraphs 32 and 36 of his affidavit, and observed the reduced visits from regular customers to the business that he described in those paragraphs.[33]
[33] T1/40:8-29.
Works on the southern side of the Centre
In January 2009 (i.e., after the new North multi-storey car park had opened[34]), the South door was closed and the South car park closed.[35] Mr Goldsmith’s evidence was that the South car park was smaller than the old North car park, and the closure of the South car park in January 2009 resulted in approximately 260 car parks being lost from the Centre site.[36] Work then commenced on the construction of the new South mall showing on the after plan and continue thereafter until late 2009.
[34] T1/42-47.
[35] Goldsmith Affidavit, [42] (TB.B.1); Carroll Affidavit, [38(d)] (TB.E3.1, page TB2170).
[36] T1/47:32-39.
The April 2009 settlement
It was accepted by AMP that the works between June 2008 and June 2009 were extensive and negatively affected the trading of the business from the old shop.[37] In April 2009, Gold Tip and AMP reached agreement that some compensation would be provided to the business by AMP for that impact (the April 2009 agreement). The April 2009 agreement was contained in the following emails exchanged between Mr Carroll (on behalf of AMP) and Mr Goldsmith on 6 and 7 April 2009:[38]
[37] Goldsmith Affidavit, [36], [38] and [41].
[38] TB.B.20
(a)On 6 April 2009, Mr Carroll wrote:
I have spoken to my Divisional Manager and have secured approval to a concession of $30K which can be applied against the recent rent account immediately. This is slightly short of the amount you are requesting but reflects that the main impact from the development would not have occurred till the north door closed in mid September 2008, thus the reason for backdating the concession till 1 September.
This is offered on the basis that it is a full and final settlement of all claims made by you in respect of the redevelopment project.
On your written acceptance of the above we will immediately prepare a credit to your account and advise our lease administrator to proceed with instructing our solicitors to prepare the lease documents for the new premises. I look forward to your response to finalise this matter.
[emphasis added]
(b)On 7 April 2009, Mr Goldsmith replied (emphasis added):
The $30k, and your reason for reducing our claim to that amount, seems fair. On that basis we’re happy to accept the offer. We’re prepared to waive all further claims for loss of business related to the redevelopment from its inception through to June 30th this year.
… Because we don’t know what the future holds, it would be irresponsible to waive away all future claims related to the redevelopment. But as I’ve said above, for the period that ends June 30 this year, we will make no further claims.
I hope this is satisfactory.
[emphasis added]
The underlined sections of the exchange demonstrate that Mr Goldsmith rejected the basis upon which AMP offered the compensation and made a counter offer in terms of his email. It is uncontentious that AMP accepted this counteroffer by applying the rental credit of $30,000 after receipt of the email. The dispute is as to the scope of the claims settled by that payment.
AMP contends that on the proper construction of the April 2009 agreement, it settled all claims for compensation for loss or damage caused by conduct occurring before 30 June 2009 and that as a result, any aspect of the claims now made by the Plaintiff for loss said to have been caused by the actions of AMP carried out prior to 30 June 2009 are barred by the agreement.[39] The plaintiffs contend that the April 2009 agreement only compromised Gold Tip’s entitlement to compensation for loss suffered up to 30 June 2009 by reason of conduct before that date, but preserved the right to compensation for conduct before that date which manifested in further loss or damage after that date.[40]
[39] FAD paragraph 24(b)
[40] Further Amended Reply and Answer (FARA) paragraph 21(iii)
In my view, the latter construction is correct. It is consistent with the language of the 7 April email which is concerned to preserve the position in respect of the future. There is no reason, in the context in which this email was sent, to read that down as if it was concerned only with future loss from future actions by AMP as opposed to future loss from past as well as future actions. Looked at objectively, it is unlikely that a reasonable commercial person in the position of the parties would think that Mr Goldsmith was seeking to imply such a technical distinction, especially where his concern was plainly for the impacts on the business, not their cause.
However, in my view, the April 2009 settlement is more important for what it reveals about the impact of the works up to that point. It is worth noting that at the time Mr Goldsmith wrote his email in April 2009, the works on the northern part of the Centre had been underway since September 2008, at least 7 months. It seems to me that Mr Goldsmith was well placed therefore to consider the impact of that work on the business when he reached the agreement with AMP. His agreement reflects, in my view, his contemporaneous view as to the magnitude of the impact of the works up to that time. That view is that the impact he had observed was compensable by the sum of $30,000. This is inconsistent with contemporaneous impressions of customer connections being seriously impacted, regular customers being lost or a major impact on trading, at least at that time. That does not mean, of course, that he might not have underestimated those impacts and he was plainly cautious about that possibility in the future. But it is some indicator of his contemporaneous perception of the seriousness of the situation at that time.
The second lease
In about October 2008, negotiations for Gold Tip to take a lease of the new shop in the proposed South mall began. Between March and April 2009, AMP and Gold Tip finalised what was, in effect, an agreement to lease the new shop. At that stage it was contemplated that Gold Tip would move into the new shop in about November 2009. On 11 June 2009, the second lease was signed by Gold Tip. It was not signed by AMP until March 2010, but nothing turns on that. The parties were effectively bound by the terms of the second lease from June 2009.
The second lease relevantly provided[41]:
(a)Base rent of $265,000 pa;
(b)Turnover rent at 8%;
(c)Marketing levy of $13,250;
(d)For provision of a bank guarantee of $113,900; and
(e)For personal guarantees from the plaintiffs.
[41] TB B2.21 at TB Pages 95-96
The area of the new shop is specified as 274m2. The plan identifying the location of the new shop in the second lease is clear as to its position in relation to Coles and Aldi in the new South mall. Coles is the largest tenancy to the south and Aldi the tenancy directly east.[42] The Commencement Date appears not to have been completed at the time the second lease was signed by Gold Tip. It appears to have been written in by hand when the date was identified following the new shop becoming ready for occupation.
The second stage of the work: 1 July 2009 to 4 February 2010
[42] TB B2.21 TB Page 217.
Overview of the works
Mr Goldsmith’s evidence was that the South carpark and customer access to the South mall remained shut for almost all of 2009.[43] While broadly correct, that assertion lacks precision. That precision was provided in Mr Carroll’s evidence on this point, which I accept. He gave evidence that throughout the second half of the 2009, the works continued to be completed in stages. In particular:
(a)In July 2009, the new food court opened at the Centre;
(b)In September 2009, the Big W refurbishment was completed, Suncorp opened, and trade in the new South mall recommenced;
(c)In October 2009, the new Coles tenancy handed over and parts of the South carpark re-opened for staff and construction parking; and
(d)On about 10 December 2009, the South carpark was completed and the new South mall commenced trade.[44]
[43] T1/47:46-47 and T1/48:1-21.
[44] Carroll Affidavit, [38(g)-(m)] (TB.E3.1, page TB2171).
If regard is had to the after plan, one can see the shaded area comprising the South Mall, which included the new shop, as well as the location of the old shop. It can be seen then that work was being undertaken in a manner likely to sterilise access to the old shop from the South door for the whole of 2009.
Events directly affecting the old shop
Resumption of part of the old shop and compensation agreed
In August 2009, as part of the works, approximately one-third of the old shop was resumed by AMP and a temporary ‘safety wall’ was constructed inside the Gold Tip shop between the vacated area and the rest of the news agency. This involved the surrender of that part of the old shop which comprised the bookshop. It also involved the surrender of part of the new agency where the print centre had been located. The print centre was demolished and aspects of the store fixtures altered. Mr Goldsmith gave evidence that, as a result, the shop presentation was “significantly degraded”.[45] I accept that evidence. However, the legal and factual context of the surrender is important.
[45] Goldsmith Affidavit, [52]-[53] (TB.B.1, page TB0070).
The only documentary evidence touching on this issue was Mr Nagel’s email of 7 August 2009. It stated:
Andy
Further to our discussion this morning, I have spoken with John Carroll and Stephen Beer (Development Manager) and we would be in a position to take back the area discussed with you on site today. I will await your further instruction in relation to timing that best suits you however, we could place a hoarding on the column line discussed as early as Monday/Tuesday next week.
I understand that there is a massive amount of work to be undertaken on your part in order to clear the area of stock etc, so please let me know once you have spoken with the shopfitter as to when you anticipate being able to hand the area back.
Furthermore, we will allow you to trade externally of the lease line in the Coles Mall, outlined by the expansion joints in the existing floor that we marked out today. This will be at no cost to you though you will require insurance etc to cover this floor area.
We are required to give you 30 days notice of our intent to partially surrender the floor area, so I will get you that notice however, if you return email with a date that you give me, we can accept it instead of waiting the full 30 days.
The sooner we do this the sooner we can pro-rata your rental back for the smaller shop, which is obviously the driving factor from your perspective.
Give me a call if you wish to discuss anything.
Thanks
It is unclear to me the source of the legal requirement referred to by Mr Nagel (who was the development manager for the works). It does not appear in terms in the first lease (though see clause 17.5 and clause 18, the application of which is ambiguous) nor could I identify a provision of the RSLA in those terms. However, what was clear from the ensuing correspondence and Mr Goldsmith’s evidence on the issue is that the surrender of part of the shop was undertaken with Gold Tip’s consent and in the understanding, if not formal agreement, that rental would abate proportionately. As it turned out, it abated somewhat more than that.[46]
[46] TS1-53.29 – TS1-65.19 and exhibit 2
Gold Tip and AMP reached an agreement on reduction of obligations under the first lease terms following these changes (the surrender agreement). AMP does not appear to contend that it bargained for a release of compensation claims which might have arisen as consideration for this agreement. No evidence of express agreement is in evidence, and neither Mr Carroll nor Mr Goldsmith gave much evidence about it. Such evidence as there is, comprises the following.
There is a detailed proposal from Mr Carroll sent 14 September 2009 which is a little hard fully to comprehend without explanation, but appears to offer a significant rent reduction, to a gross rent of $15,833 per month plus GST and electricity. Importantly, that offer was made inter alia on the basis that it settled any claim for compensation or concessions.
I infer that this proposal was not accepted by Mr Goldsmith. The only further evidence was that contained in the email exchange in November 2009, which appears to record confirmation of an earlier agreement that rent on the old shop would be charged at 14.5% of monthly sales and commissions. This is a gross rent of about $16,782 in September 2009 based on the sale and commissions of $115,739.[47] That is of the order of half the rent due under the terms of the first lease: see paragraph [41] above. And of course as turnover fell, so would the rent payable.
[47] See exhibit 10
The old shop becomes isolated
On 10 December 2009, Coles and Terry White moved into the new South mall. Mr Goldsmith gave evidence that after this time all of the other shops surrounding the Gold Tip business were closed. In early January 2010, one end of that mall in which the old shop was then located was closed off and hoarded up. The location of this hoarding is shown on the before map, marked with “Barrier installed”. Mr Goldsmith accepted that it was installed in early January 2010 not December 2009. The result was that the Gold Tip business was left to trade in a “dead-end” mall with no passing customer traffic.[48] It remained in this situation until it moved to the new shop on 4 February 2010.
[48] Goldsmith Affidavit, [63]-[65] (TB.B.1, page TB0072).
Possession of the new shop delayed
It appears that it was originally contemplated that Gold Tip would move to the new shop in September 2009. This was delayed on a couple of occasions with the ultimate day for commencement being 4 February 2010. It appears that the holding over period under the first lease ended on that day.
The third stage of the work: 4 February 2010 to 10 June 2010
The Centre as at 4 February 2010
By early February 2010, all entrances to the Centre were open and there were approximately 2,200 carparks open to customers at the Centre.[49] Thereafter, there were no further works carried out at the Centre that had the effect of reducing the number of car parks available to customers.[50] Further, aside from the Aldi store, all of the shops in the new North and South malls were open for trade.[51] In particular as at early February 2010, the major retailers Big W, Woolworths, Target and Coles were all open and trading.[52] The new Aldi opened for trade on about 25 February 2010.[53]
[49] Carroll Affidavit, [38(n)(i)-(ii)] and [54(a)] (TB.E3.1 pages TB2171 and 2175).
[50] Carroll Affidavit, [50] (TB.E3.1 page TB2174).
[51] T1/84:25-31.
[52] Carroll Affidavit, [54(b)] (TB.E3.1 page 2175).
[53] Carroll Affidavit, [54(c)] (TB.E3.1 page 2175); T1/76:38-45.
The remaining area of the substantial works was in the so called JB Hi-Fi mall (the JB Mall). It is marked as such on the after plan to the west of the new shop. [54]
[54] Carroll Affidavit, [54(e)] (TB.E3.1 page 2175), T1/77:4-31).
Works carried out between February 2010 and 10 June 2010
The JB Mall extended west at a perpendicular angle from the main North-South mall.[55] This area was hoarded up at both its western and eastern ends. Mr Goldsmith’s evidence was that the hoarding at the eastern end of the new JB Mall was flush with the end of the JB Mall and did not protrude into the North-South.[56] Similarly, the hoarding-up of the JB Mall area did not restrict customer access to other parts of the Centre that were open and trading[57] (including the South mall precinct in which the new shop was located). None of this was controversial.
[55] Exhibit 9; T1/81:36-43
[56] Exhibit 9; T1/77:36-37.
[57] Carroll Affidavit, [54(e)] (TB.E3.1 page 2175).
It was also uncontroversial that, between February 2010 and early June 2010, works on the new JB Mall were completed and the Centre was open for trade from June 2010.[58] Mr Carroll’s evidence (on which he was not challenged) was that these ongoing works carried on the JB Mall between February 2010 and early June 2010 were done predominantly at night outside of business hours.[59]
[58] T1/85:29.
[59] Carroll Affidavit, [56] (TB.E3.1 page 2176).
Mr Goldsmith said that these works were completed behind hoarding, were not visible to customers,[60] and that between February 2010 and early June 2010, there was no significant construction noise experienced at the Centre during business hours from those works.[61] Mr Carroll said apart from the JB Mall works, only minor works were carried out at the Centre. These further works were also undertaken at night outside of business hours.[62]
[60] T1/82:30-35.
[61] T1/82:38-47.
[62] Carroll Affidavit, [55] and [56] (TB.E3.1 page 2176).
Mr Goldsmith took photographs of the new shop on opening[63] which show that the new shop’s large customer entrance opened directly onto a broad customer mall with no impediments to customer access.[64]
[63] Goldsmith Affidavit, [66] (TB.B.1).
[64] TB.B2.30.
On 10 June 2010, the Centre held a “Grand Reopening” event. Subject to the minor fit out work identified by Mr Carroll, all the work was completed inside the Centre by then. Nothing suggests that remaining work had any effect on trading or customer movement, generally or for the new shop in particular.
In his affidavit, Mr Goldsmith gave evidence that, after Gold Tip moved into this new shop on 4 February 2010, works continued outside the main Centre building.[65] In cross-examination, when asked to explain the nature of these works, Mr Goldsmith gave evidence that during this period there were trucks and construction personnel “going backwards and forwards” on the Centre access road, and that this had the effect of causing intermittent delays to customers in access Centre carparks.[66] Mr Goldsmith’s evidence, however, was that during this period, customers remained able to access the carparks at the Centre.[67]
[65] Goldsmith Affidavit, [70] (TB.B.1).
[66] T1/84:39-46 and T/85:14-17.
[67] T1/85:12.
Mr Goldsmith also gave evidence that during this period there were occasions on which the traffic lights at the Dandenong Road intersection with the Centre access road “would get stuck on red” or “wouldn’t be working”. Mr Goldsmith’s evidence was that any delays caused by this traffic light issue were occasional in nature.[68]
[68] T1/86:1-2.
Mr Ihm gave evidence that when he started work, the works were complete.[69] He said that after mid-2010, there were only minor external works completed on loading docks such as line marking and the installation of hand-rails and bollards[70] which did not affect the flow of customer traffic.[71] Mr Ihm said that he was not aware of there being any issue with the traffic intersection at Dandenong road after he commenced as the Centre Manager of the Centre in mid-2010, despite being present on site.[72]
[69] Affidavit of Steven Bernard Ihm (TB.E.1) (Ihm Affidavit), [14].
[70] T3/52:24-30.
[71] T3/52:32-41.
[72] T3/52:43-45.
I see no basis to infer from this modest evidence of activity related to the works that the remaining external works materially impacted on customer access or trading in the Centre. The customer traffic figures show a significant improvement in traffic, on any measure, from at least early 2010 (see the analysis from paragraph [111] – [113] below).
I find that by June 2010 at the latest, the works were effectively complete, inside and out.
The impact of work on the general amenity of the Centre
The above findings identify the key events in the carrying out of the works. The central question in this trial is whether, and to what extent, those works included actions by AMP that fell within the scope of s. 43(1)(b) or (c) RSLA and caused loss or damage to the lessee.
As noted above, in articulating how the works fell within the scope of those subsections, the plaintiffs relied on some general allegations about the loss of amenity arising from closure of toilets, and “noise, dust and general disturbance in and around the Centre.” Mr Goldsmith’s affidavit contained some general remarks about these matters[73], but in a form which lacked any precision as to detail or timing. His cross examination on this issue was another example of his willingness of make reasonable concessions.
(a)As to toilets, he accepted that across all stages of the works, toilet facilities remained open.[74] Mr Goldsmith accepted that during the works, additional toilet facilities were added to the Centre; and that older facilities were only closed once new toilet facilities had been opened.[75]
(b)As to construction noise, Mr Goldsmith accepted that in the period after the Gold Tip business moved into the new shop in February 2010, there was not significant construction noise experienced at the Centre during business hours.[76] Mr Goldsmith also accepted that construction dust which appeared to have been generated by overnight works was quickly cleaned up (although, as is inevitable) some residual dust remained.[77]
[73] Goldsmith affidavit at [35]
[74] T1/86:25-6.
[75] T1/86:29-30.
[76] T1/82:41-47
[77] T1/84:5-14.
Mr Goldsmith’s observations were consistent with Mr Carroll’s evidence that the vast majority (i.e. 90-95%) of construction works carried out the Centre were undertaking outside of hours to avoid intrusion on day-to-day trade, that works carried out during trading hours were of a “very minor scale” only[78] and that construction activities carried out on the mall extensions, although more intensive during business hours, were similarly restricted in terms of noise during the trading day. Mr Carroll’s evidence was that there were a few occasions when noisy works were started during the business day; and that when this occurred Mr Carroll or one of his team members acted very quickly to put a stop to the performance of those works until after the trading day had ended.[79] As to construction dust, Mr Carroll’s evidence was that plastic sheeting was used during the overnight works to manage construction dust, and there was a thorough clean conducted of the Centre each day before it opened for trade.[80]
[78] T3/36:7-24.
[79] T3/37:1-14.
[80] T3/36:28-28.
I accept Mr Carroll’s evidence on these matters. Although it might be reasonable to assume that some impact occurred on customer enthusiasm for the Centre because of the works being carried out, Mr Goldsmith could point to no specific impact from dust, noise or toilet availability which materially affected customer access or flow or disrupted Gold Tip’s trade. I am unpersuaded that there was. The evidence supports the conclusion that Centre management were acutely concerned to minimise amenity impacts of the kind referred to in this section of this judgment and they appear to have been largely successful in doing so.
Works after the Grand Opening
For the reasons given in paragraphs [78] to [82] above, I have found that the works were, for purposes relevant to the plaintiffs’ claims, complete by the time of the Grand Opening. I do not accept that there were actions by AMP after that date which caused any of the consequences identified in s. 43(1)(b) or (c).
Events leading to these proceedings
The scope of the factual matters to be traversed in the period after the grand re-opening has been considerably narrowed by concessions made by the parties at trial (collected for convenience in paragraph [126] below). However, there remain a number of matters to consider.
From 4 February 2010, the business traded from the new shop. Gold Tip did not trade with the success that Mr Goldsmith had expected. He remained concerned about the impact of the works on the business while operating from the old shop. From at least September 2010, Gold Tip and AMP were in dispute as to Gold Tip’s entitlements, if any, arising out of the impact of the works on the business at the old shop and the new.
From December 2010 until October 2011, Gold Tip ceased paying the monthly amounts due under the second lease, with amounts due ultimately totalling $179,036.56. On 2 September 2011, AMP called on the bank guarantee given by Gold Tip to secure performance under the second lease in the amount of $113,900. After receipt of this sum, AMP contends some $77,006.47 was owing under the second lease. That sum is counterclaimed in these proceedings by AMP against the plaintiffs. There is no genuine dispute in these proceedings that that sum is due under the second lease. I find that it is. The question in this trial is whether that claim can be raised against the plaintiffs, whether as a set off or counterclaim.
Gold Tip brought proceedings in QCAT in February 2011 seeking, inter alia, compensation under the RSLA in respect of both leases. On 14 December 2011, and before those proceedings were resolved, Gold Tip went into voluntary administration. On 23 February 2012, the voluntary administration came to an end with the execution of a Deed of Company Arrangement. It is not suggested that that deed compromised AMP’s claims under the second lease.
On 13 March 2012, AMP issued a notice to remedy breach of covenant calling on Gold Tip to pay the outstanding amounts due under the second lease and to renew the bank guarantee. Gold Tip did not remedy those breaches and AMP terminated the second lease on 28 March 2012. Gold Tip thereafter ceased to trade, in breach of the deed of company arrangement. The deed therefore terminated according to its terms and Gold Tip was wound up on 30 March 2012, with the deed administrators being appointed liquidators. AMP received no dividend under the deed or in the winding up.
The winding up of Gold Tip had financial consequences for the plaintiffs. They had given guarantees to creditors of Gold Tip. Further, the business was the source of income of the plaintiffs. Both plaintiffs were unable to pay their debts. They investigated a personal insolvency agreement and on 25 May 2012, Messrs van der Velde and Cronan were appointed as controlling trustees under s. 188 Bankruptcy Act 1966 (Cth) (the Bankruptcy Act).
On 25 May 2012, the plaintiffs as debtors and the controlling trustees executed a Personal Insolvency Agreement under Part X of the Bankruptcy Act (the Part X). It provided, in effect, for payments of some $60,000 to be distributed amongst the creditors of the plaintiffs in accordance with the agreement. It provided a release from provable debts in the event the terms of the agreement were complied with by the plaintiffs. In particular, clause 7 of the agreement provided:
7. Release from Provable Debts and Bar to Creditors’ Claims
(a)Provided the Debtors comply with their obligations under the Terms of the Personal Insolvency Agreement and the assignment and payments required by clause 3 of the Personal Insolvency Agreement are made, then upon the distribution of monies received by the Trustees, the Trustees shall issue a certificate stating that the terms of the Personal Insolvency Agreement have been complied with, and upon the issuance of that certificate, the Debtors shall be released from all provable debts as at the date of acceptance of the personal insolvency Agreement.
(b)This Personal insolvency Agreement may be pleaded by the Debtors against any creditor owed a provable debt, in bar of the creditor’s debt, whether or not the debt is or not admitted or established under the Personal Insolvency Agreement, except if this Personal Insolvency Agreement has been terminated.
It is not in dispute that the plaintiffs performed their obligations under the Part X and took the benefit of the releases in clause 7. Mr van der Velde filed a notice confirming completion of the Part X obligations on 12 June 2013.
Soon after securing their releases under the Part X, the plaintiffs contacted the liquidator of Gold Tip seeking to acquire the company’s rights to take legal action against AMP and some other parties. The liquidators agreed to assign such rights by Deed of Assignment made 22 November 2013. The Deed of Assignment relevantly provides:
(a)By clause 1:
1. ASSIGNMENT
Upon payment in full of the amount referred to in clause 3, the Assignor agrees to assign, transfer, convey and makeover to the Assignees all of the Assignor’s rights, title and interest in the Property with the full benefit and advantage of the Property to hold the same under the use of the Assignees absolutely, subject to the terms of the Deed.
(b)By the Schedule:
Item 4 4.1 Definition of Property
The Property
The right to take action for the recovery of losses incurred or suffered by the Assignor (including the bare right to litigate) against the following companies and individuals:
(a) AMP Capital Limited;
(b) AMP Life Limited;
(c) associated AMP companies;
(d) employees and former employees of AMP companies;
(e)Woods Prince Lawyers and its partners, officers, employees and former employees;
(f) Wayne and Florence Jones and the companies they control; and
(g) Nextra Australia and associated companies.
…
4.4 Individuals
The Property also includes the right to act against, by way of report or complaint to appropriate professional or statutory authorities, the individuals included in Item 4.1 of this Schedule.
Item 5
Consideration The Assignees will pay $5,000, inclusive of GST if applicable, in full and final settlement for the Assignment.
Faced with those problems counsel for Equititrust submitted that, given the matter was being dealt with on an interlocutory basis, it was at least arguable that his client could counterclaim against the assignee for the whole of the counterclaim. Brereton J was having none of it. His Honour dealt with that argument as follows:
30 Mr Cox, for Equititrust, frankly conceded that he had been unable to find any case to the contrary of Young v Kitchin or Mitchell v Purnell Motors, but argued that the rationale of those cases was not apparent, and that if the true basis of s 12 was that an assignee could not take the benefit of any assignment without the accompanying burden, then it was at least sufficiently arguable that they were wrong to justify permitting the matter to go to final hearing – and, thus, allowing the amendment for that purpose.
31 First, it has to be said that while the two cases to which I have referred are only decisions at first instance, they have stood, so far as I can tell unquestioned and uncriticised, for many years. Secondly, I think they do have a fairly clear rationale. The reason why s 12 makes an assignment subject to the equities is in order that the obligor is no worse off, and the assignee no better off than was the assignor prior to the assignment. This was explained, also by Jacobs J, in Re Harry Simpson and Co Pty Ltd v the Companies Act (1964) 81 WN (NSW) 207, in which his Honour said (at 209):
However, I think that that assignment is, in accordance with s 12, subject to the equities attaching to the original debt. In the context of s 12 I think the word “equities” has to be given a wide meaning and it has been said that the assignee can be in no better position than the assignor was prior to the assignment.
32 The reference to “it has been said” is probably a reference to the dictum of Lord Jessell MR in Mersey Steel & Iron Co v Naylor Benson & Co (1892) 9 QBD 648 (at 664) in which, in the context of an assignment to a trustee in bankruptcy, his Lordship said:
Judges have said that the assignee in bankruptcy, as he was then called, was not to be in a better position by bringing an action than if the claim had been made in the bankruptcy court.
33 The preserving of the “equities”, by s 12, means that the obligor can raise against an assignee all matters that he could have raised against the assignor in extinguishment or reduction of the liability. This ensures that the obligor does not become liable to pay the assignee a sum which, because of an available set-off or counter-claim, it would never have had to pay to the assignor. But that is not to say that the obligor should be better off. The obligor retains its rights against the assignor, who remains primarily liable on any counter-obligation. This leaves the obligor in no worse position than would have been the case in the absence of an assignment. As against the assignee, the obligor retains the benefit of the defences it would have had against the assignor. That extends to defences by a way of cross-claim, which can be set off in extinguishing or reduction of the obligor’s liability, but it does not extend to improving the obligor’s position by creating new rights to sue the assignee, in circumstances where those rights lie against the assignor. Liabilities, unlike assets, are not capable of assignment. It is consistent with this that the idea of an equity, in this context at least, is that while it impeaches the right of the assignee, it does not create a right in the obligor. Although it is not directly on point, some observations of Lush J in Provident Finance Corporation Pty Ltd v Hammond [1978] VR 312 also illuminate the position. His Honour said (at 319):
The essential concept of an equity in this context is that it is a transaction or event or circumstance which entitles the debtor to say that it is unjust that the debt should be enforced against him without bringing into account his cross-claim arising from the transaction, event or circumstance. In some cases, e.g. Athenaeum Life Assurance Society v Pooley (1858) 3 De G and J 294, the equity would have been enforced by restraining the creditor or his assignee from suing at law. The result seems to have been that the whole dispute was then dealt with in the Chancery courts, even if the chose sued upon was a legal chose.
34 This tends to show that the equities spoken of are defensive, being matters which justice requires be brought to account in permitting a claim to be enforced. It does not support the view that the equities are “offensive” ones creating new rights or improving the position of the obligor.
35 The only basis upon which the contrary has been advanced is that. with the benefit of the assignment, comes the burden. But, once again, liabilities are not capable of assignment, and the fact that a right is assigned does not mean that a corresponding liability is assigned with it, even if closely connected to it.
I respectfully agree with his Honour. Franks has not been considered or referred to in Queensland since it was delivered. However, in my respectful view, it is plainly correct. AMP’s counterclaim is dismissed.
The set-off point
In my view, AMP can raise the debt under the second lease as a defence to Gold Tip’s claim under s. 43(1) in respect of the first least by way of equitable set off. In Forsyth v Gibbs [2009] 1 Qd R 403, Keane JA, with whom Fraser JA and McMurdo P agreed, observed:
[9] Consistently with the technique of equity, which does not seek to define what an elephant is but knows one when it sees one, the principles governing the availability of equitable set-off of cross-claims are couched in open textured terms, such as "sufficient connection" and "unfairness". In some cases, it will be necessary to engage in an evaluation of a range of facts which might establish "sufficient connection" or "unfairness" of the relevant kind. But the principles to be applied are not so vague or subjective that it is never possible to determine, for the purposes of an application for summary judgment, that the facts alleged by a defendant simply fall short of what is required.
[10] It is important to emphasise that the availability of an equitable set-off between cross-claims does not depend upon an unfettered discretionary assessment of whether it would be "unfair" in a general sense for a plaintiff to insist on payment of the debt owed to it while the cross-claim remains unpaid. It is essential that there be such a connection between the claim and cross-claim that the cross-claim can be said to impeach the claim so as to make it unfair for the claim to be allowed without taking account of the cross-claim.
[11] Thus in Piggott v Williams, the claim of a solicitor who sued his former client to recover fees for services rendered was successfully met by a plea of equitable set-off on the basis that the fees were only incurred by reason of the solicitor's lack of due skill and diligence. The solicitor's breach of his obligations of skill and diligence was itself the source of the claim for his fees. This case affords an example of what is meant when it is said that the claim to set-off must "impeach" or go to "the root of" the plaintiff's claim.
[12] An example of a failed attempt to assert an equitable set-off, which is particularly pertinent to a summary judgment situation, is afforded by the decision of the Full Court of the Supreme Court of Victoria in Indrisie v General Credits Ltd. There, an order for summary judgment was upheld against a guarantor who sought to rely upon a cross-claim for damages available to the principal debtor against its creditor by way of set-off against the guarantor's liability on the guarantee. The Full Court said:
"… reference to cases such as Edward Ward and Co v McDougall [1972] VR 433; British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137; [1979] 2 All ER 1063 and Eagle Star Nominees Ltd v Merril [1982] VR 557 shows that, in order to rely upon a cross-claim as an equitable set-off, there must be such a nexus between the claim and cross-claim that the cross-claim can be said to impeach the plaintiff's claim. In the present case the claim for unliquidated damages is founded, not upon the transaction in respect of which the principal debtor is said to be liable, but upon a collateral contract entirely independent of that for which the respondent has the benefit of a security for due performance. The appellants' claim clearly does not meet the test to be applied, namely can the cross-claim be said to impeach the title to the respondent's legal demand?"
[Footnotes omitted]
The plaintiff’s contention was that AMP could not set off the debt due under the second lease against a right to compensation under the first lease, because the liabilities arose under different instruments and therefore AMP’s claim did not impeach the claim under the first lease. In my respectful view, this is too narrow a view to take of the nature of the two claims.
The plaintiff’s claim under the first lease is for compensation for loss and damage caused by AMP to the business of Gold Tip. AMP’s claim is for a debt due to it from Gold Tip in relation to the conducting of that same business. The continuity of the business from the old shop to the new shop was central to the plaintiffs’ arguments advanced as to loss suffered after the move to the new shop for conduct affecting the old shop.[107] The claim advanced in this way by the plaintiffs included the period when Gold Tip was not paying the rental on the new shop. The plaintiffs have in fact been successful, albeit very modestly, in respect of that argument.
[107] See Mr Ferret’s argument at TS5-74.23
The relevant connection between the two claims is that they involve claims for damage to, and costs incurred by, the same business as between the same parties. This makes it unfair, in my view, for the claim for compensation to be allowed against AMP without taking account of AMP’s claim.
The extinguishment issue
In written submissions, the plaintiffs argued that after the dissolution of Gold Tip following completion of the winding up, AMP’s debt was extinguished, such that it could no longer be raised as a defence to the claims by the plaintiffs as assignees of the causes of action. While the first proposition has some authority to support it,[108] it would take compelling authority to persuade me of the second proposition, given the potential for it to operate oppressively and the apparent inequity in permitting an assignee to avoid a good defence on that basis, particularly where the potential set-off existed at the date of the assignment.
[108] See Gallagher Bassett Services NSW Pty Ltd v Murdock (2013) 86 NSWLR 13 at 17
The point was not raised in the pleadings and was only raised in final written submissions. Ms Schneider submitted it had to be pleaded and that if it had been raised in the pleadings, AMP could have applied to have Gold Tip re-registered if necessary. For this reason, it was my understanding that Mr Ferret ultimately did not press the argument. [109] If I have misunderstood, I find that Ms Schneider’s argument is correct[110] and the matter cannot now be raised.
[109] TS 5-87.1 to .13
[110] See the Answer at paragraph 3 and note that at least one essential fact (the dissolution of Gold Tip) was not, so far as I could discern, ever pleaded in any of the extensive pleadings.
Limitations defence to the counterclaim
The plaintiffs raised a limitations defence to the counterclaim by AMP alleging that the counterclaim was barred by s. 25 LAA.[111] Section 25 provides:
[111] Section 10(2) LAA was also pleaded but it relates to actions for account.
25 Actions to recover rent
An action shall not be brought nor a distress made to recover arrears of rent or damages in respect thereof after the expiration of 6 years from the date on which the arrears became due.
The matter was not raised in the defendant’s written closing and I remain unsure if it was pressed by Mr Ferret.[112] Ultimately, I think it would be unfair to assume the argument had been abandoned, so I will deal with it.
[112] TS5-40.35
The first matter to note is that the plaintiffs’ limitation defence is irrelevant to AMP’s right to raise the counterclaim as an equitable set-off. As Mr Derham explains[113]:
[113] Rory Derham, Derham on the Law of Set-off (Oxford University Press, 4th ed, 2010) at page 111.
(7) Statute of Limitation
The substantive nature of the defence of equitable set-off may assume importance in the case of a statute of limitation. The usual form of statute of limitation preserves the existence of the right but takes away the remedy of enforcing the right by action at law. Since the Statutes of Set-off merely perform a procedural function, a defence of set-off under the Statutes may only be based upon a debt that is enforceable by action. Therefore, a debt owing by the claimant which is unenforceable as a result of the expiration of a limitation period would not give rise to a defence under the Statutes. Equitable set-off, on the other hand, is a substantive defence which does not require an order of the court for its enforcement. As a consequence, it is not sufficient to deny an equitable set-off that the cross demand upon which it is based is no longer enforceable by action because of the expiration of a limitation period. Indeed, that approach has been adopted in circumstances where an action brought on the cross-demand previously had been struck out for want of prosecution.
[Footnotes omitted]
It is strictly unnecessary for me to decide whether the counterclaim is statute barred because of my conclusion that AMP cannot recover on that counterclaim against the plaintiffs. However, in the event I am wrong on that matter, I will briefly consider the issue.
There appears to be no dispute by AMP that the counterclaim in caught by s. 25 LAA, nor that the counterclaim was first brought after the expiry of 6 years since the date on which the arrears became due. Rather, AMP relied on s. 42 LAA, which provides:
42 Provisions as to set-off or counterclaim
For the purposes of this Act, a claim by way of set-off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.
The plaintiffs articulated no reason why this provision would not apply to the counterclaim pleaded in this case. If that is so, then the counterclaim is deemed to have been commenced on 4 February 2016. Each of the monthly rental amounts claimed in the counterclaim accrued after 4 February 2010: see paragraph [90] above.
Accordingly, AMP’s counterclaim, if available against the plaintiffs, would not have been answered by a limitation defence.