Melbourne. Senior Member A Vassie

Transcription

1 VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL CIVIL DIVISION OWNERS CORPORATION LIST VCAT REFERENCE NO.OC2599/2011 CATCHWORDS Occupier serviced-apartment business alleged breach of rules for use of common property whether respondent, as tenant, is an occupier of a lot. Dispute resolution process whether proceeding should be dismissed if owners corporation did not follow the process Owners Corporations Act 2006 ss 153, 164 Interpretation of Legislation Act 1984 s 45(1). Stay of proceeding Supreme Court proceeding commenced disputes over clauses in leases as well as owners corporation disputes whether just and convenient to stay this proceeding pending determination of Supreme Court proceeding stay ordered. APPLICANT: RESPONDENT: WHERE HELD: BEFORE: HEARING TYPE: Owners Corporation No 1 PS336302K Fairfax House Quest Lodging Pty Ltd Melbourne Senior Member A Vassie Preliminary hearing and stay application DATE OF HEARING: 22 October 2012 DATE OF ORDER: 30 November 2012 DATE OF REASONS: 30 November 2012 CITATION Owners Corporation No1- PS336302K v Fairfax House Quest Lodging Pty Ltd (Owners Corporation) [2012] VCAT 1837 ORDERS 1 The question set aside for separate hearing is answered in the negative. The proceeding should not be dismissed summarily on the ground that the respondent is not a lot owner or occupier of the premises at Little Collins Street, Melbourne or on the ground that the procedure in s 153(3) of the Owners Corporations Act 2006 has not been followed. 2 The proceeding is stayed until the determination of Supreme Court proceeding number SCI or until further order. SENIOR MEMBER A VASSIE

2 APPEARANCES: For Applicant For Respondent Mr M Whitten of Counsel Dr D Cremean and Mr F Jones of Counsel VCAT Reference No. OC2599/2011 Page 2 of 17

3 REASONS FOR DECISION 1. Fairfax House is situated at Little Collins Street, Melbourne. A plan of subdivision of the land on which Fairfax House is situated had created 31 lots and common property. The applicant Owners Corporation No 1 PS336302K ( the OC ) affects the 31 lots and the common property. 2. Several of those 31 lots, and some of the common property, are used for the purpose of a serviced-apartments business, one of the Quest group of such businesses. 3. The respondent Fairfax House Quest Lodging Pty Ltd ( Fairfax Quest ) is the tenant of some of the lots used for the serviced-apartments business. The OC alleges, but Fairfax Quest denies, that Fairfax Quest is the occupier of those lots. 4. On 21 November 1995 the OC had made and registered at the Office of Titles special rules. Under transitional provisions of the Owners Corporations Act 2006 ( the OC Act ) the special rules continued to be in force as rules of the OC to the extent that they were not inconsistent with the OC Act or with the regulations made under the OC Act which included model rules. 5. The OC commenced this proceeding on 12 December Points of Claim attached to the initiating application alleged that Fairfax Quest, as the occupier of lots, had breached the special rules and the model rules by (amongst other things) using the common property in a manner that unreasonably interfered with or prevented its use by owners or other occupiers, storing materials on the common property without the OC s written consent, and displaying signage without the OC s written consent. Particulars given of the alleged breaches included allegations that Fairfax Quest, as a serviced-apartments operator, was maintaining a reception area and service desk on common property, and was displaying signage on walls and in elevators. By the Points of Claim the OC sought declarations that Fairfax Quest was in breach of the rules and orders that it remedy all breaches. 6. On 22 October 2012 I heard an application by Fairfax Quest for (in substance) an order determining that under s 75(1) of the Victorian Civil and Administrative Tribunal Act 1998 ( the VCAT Act ) this proceeding ought to be dismissed summarily, alternatively for an order staying this proceeding until a Supreme Court proceeding, in which Fairfax Quest was one of two plaintiffs and the OC and 17 lot owners were defendants, had been heard and determined. 7. Those model rules which the OC has alleged that Fairfax Quest has breached all commence with the wording An owner or occupier of a lot must not. Neither party put into evidence before me a copy of the special rules. The Points of Claim did not allege which person or persons were, under the terms of the special rules, required to comply with them. VCAT Reference No. OC2599/2011 Page 3 of 17

4 However, in argument before me the parties appeared to assume that the special rules, like the model rules, specified that a lot owner or an occupier of a lot was required to comply with them. So I shall make the same assumption. It is common ground that Fairfax Quest is not a lot owner. It is only capable of being in breach of a model rule or (on the assumption I am making) in breach of a special rule if it is an occupier of a lot. 8. To understand why Fairfax Quest maintains that, despite being a tenant of some of the lots used for the serviced-apartment business, it is not the occupier of any lot, one needs to consider what has emerged from the affidavit evidence filed on its behalf: (a) The serviced-apartment business is operated under a franchise agreement. The franchisor is Quest Serviced Apartments Pty Ltd. (b) Until 21 March 2011 Kendow Pty Ltd was the franchisee and operated the business. (c) On 21 March 2011 Kendow Pty Ltd sold the business to Grand Pacific Resort International Pty Ltd ( Grand Pacific ), which has common directorship with Fairfax Quest. Settlement of the sale occurred on 18 April (d) On 18 April 2011 the franchisor entered into a (fresh) franchise agreement which named, as franchisees, Grand Pacific and also Fairfax Quest in its capacity as the tenant company. (e) Various owners of those lots that are used for the purpose of operating the serviced-apartment business have entered into leases of their respective lots to Fairfax Quest as tenant. (f) On a date which has not been disclosed in the evidence, Grand Pacific and Fairfax Quest entered into a Deed of Agency. The deed was not exhibited to the affidavit material. One paragraph in one of the affidavits stated that by way of a Deed of Agency, the tenant [Fairfax Quest] on behalf of the franchisee [Grand Pacific] holds leases with the landlords [lot owners] at the Little Collins Street premises. (g) Rent payable to the lot owners under those leases is paid by Grand Pacific, even though it is not the named tenant. (h) All employees who work on site at Fairfax House are employees of Grand Pacific, not of Fairfax Quest. 9. Although the affidavit evidence did not cover the matter, it is common knowledge, and not in dispute, that a serviced-apartment business operates by apartments being let out for short-term occupancy to customers of the business. 10. In short, Fairfax Quest contends that: (i) The occupier of any lot used in the serviced-apartments business is the particular customer who is in short-term occupancy of it. VCAT Reference No. OC2599/2011 Page 4 of 17

5 (ii) When any apartment does not have any short-term occupant, the occupier is Grand Pacific, it being the proprietor of the business. (iii) In either case, Fairfax Quest is never the occupier. Although named as a tenant under a lease from a lot owner, it holds the lease merely as an agent for Grand Pacific. 11. Fairfax Quest has another contention. It is that the OC did not comply with s 153(3) of the OC Act which requires an OC to have followed the dispute resolution process required by its rules before making any application to VCAT. The model rules set out a dispute resolution process. The application before me was argued by both sides on the footing that the OC had not followed that process before it had commenced this proceeding. Fairfax Quest has submitted that the non-compliance with s 153(3) is a fatal defect in the proceeding, meaning that the proceeding is bound to fail and ought to be dismissed summarily for that reason. 12. I now describe how the application which I heard on 22 October 2012 came to be made. 13. At a directions hearing on 17 May 2012 Fairfax Quest foreshadowed the making of a summary dismissal application and sought the following order, which I proceeded to make: There be set aside for a separate hearing on 28 August 2012 before a Presidential Member or a Senior Member (with a whole day being allowed for the hearing) the question whether, in law, having regard to S.75(1) of the VCAT Act 1998 and having regard also to the provisions of the Owners Corporations Act 2006 (including SS 3, 153(3) and 162 thereof), the proceeding should be dismissed on the ground that respondent is not a lot owner or occupier of the premises at Little Collins Street, Melbourne or on the ground that the procedure in S.153(3) has not been followed, and (if the respondent is not a lot owner or occupier or if such procedure was required to be but has not been followed) whether in law in consequence under S.75(2) of the VCAT Act compensation or costs should be ordered in the respondent s favour. I also set out a timetable for the parties to file and serve affidavit material in support of or in opposition to the summary dismissal application, which they did. 14. The separate hearing referred to in that order was fixed for 28 August In the meantime, Fairfax Quest and Grand Pacific had filed a Supreme Court Writ naming, as defendants, the OC and 17 of the lot owners of Fairfax House. At the commencement of the hearing on 28 August 2012 Counsel for Fairfax Quest made an oral application for an order staying this proceeding until the Supreme Court proceeding had been determined, as an alternative to the application for summary dismissal. I adjourned the hearing and ordered that the hearing of the question referred to above and VCAT Reference No. OC2599/2011 Page 5 of 17

6 the hearing of the stay application occur at the same time. Hence I heard them on 22 October Although I shall deal with the subject matter of the Supreme Court Writ in greater detail below in the context of the stay application, I mention now one part of it to which Counsel for the parties referred during argument on the issue of whether Fairfax Quest was an occupier to which the OC s rules applied. Kendow Pty Ltd, Grand Pacific s predecessor as proprietor of the serviced-apartments business, had held a written licence from the OC to occupy part of the common property. When the business was sold Kendow Pty Ltd agreed to assign the licence to Grand Pacific. The assignment needed the OC s consent. In the Writ the plaintiffs alleged that the OC had unreasonably refused to consent but was legally obliged to consent. They sought relief by way of an order requiring the OC to execute an assignment of the lease to demonstrate its consent to the assignment. The Summary Dismissal Question 16. The principles governing the disposition of an application under s 75(1) of the VCAT Act for summary dismissal or striking out of a proceeding are well established and were not in dispute during the hearing. The power to dismiss or strike out summarily should be exercised only where it is obvious that the proceeding is absolutely hopeless, unsustainable in fact or law or bound to fail, or where it is obvious that the proceeding is an abuse of process for other reasons. Moreover, the Tribunal should proceed upon the assumption that the applicant in the proceeding will be able to prove the facts alleged in the application. In Forrester v AIMS Corporation (2004) 22 VAR 97 Kaye J confirmed that those principles, expressed by the Court of Appeal in State Electricity Commission of Victoria v Rabel [1998] 1 VR 102, apply to applications brought under s On Fairfax Quest s own contention (see paragraph 10 above), Grand Pacific is an occupier of a lot whenever there is no customer occupying it on a short-term basis. The OC submitted that that contention would justify the Tribunal s joining Grand Pacific to the proceeding as a second respondent or as an interested party pursuant to s 60 of the VCAT Act, instead of summarily dismissing or striking out the proceeding. Yet during the hearing the OC shrank from making any application to join Grand Pacific as a party and for leave to amend its Points of Claim accordingly. So I consider that I must determine the summary dismissal question on the footing that the OC s case is that Fairfax Quest, not Grand Pacific, is the occupier of each lot which has been leased to Fairfax Quest as the named tenant. If that case is obviously untenable in fact or in law, a summary dismissal application must succeed. Any alternative allegation by the OC that the occupier was Grand Pacific would have to be made in a fresh proceeding. 18. Occupier. In my opinion, the allegation that Fairfax Quest is the occupier of a lot or lots at Fairfax House, and is thereby required to comply with VCAT Reference No. OC2599/2011 Page 6 of 17

7 rules directed to the conduct of the occupier of a lot with respect to common property, is not obviously untenable in fact or in law. There are several reasons why I say that. 19. First, a sample lease from a lot owner to Fairfax Quest that was exhibited to one of the affidavits filed by Fairfax Quest provided, as one would expect, that the lot owner as landlord granted to Fairfax Quest as tenant the right to quiet enjoyment and possession of the demised premises. Prima facie, therefore, Fairfax Quest as tenant, having a right to possession and occupation of the lot, is the occupier of the lot. 20. Secondly, Fairfax Quest s allegation that it is never an occupier of any lot that it holds as tenant under a lease depends upon the assertion that there is a Deed of Agency between it and Grand Pacific that has the effect of Grand Pacific being the true tenant. The Deed of Agency was not exhibited to Fairfax Quest s affidavits in support of the application for summary dismissal. As matters presently stand, I accept the OC s submission that the relationship between Fairfax Quest and Grand Pacific is a matter that the OC is entitled to explore at a hearing of the proceeding. 21. Thirdly, there have been cases on the law relating to occupiers liability in negligence to users of premises that have established that two persons may be occupiers of the same premises at the same time. 22. In Voli v Inglewood Shire Council (1963) 110 CLR 74, the Council let out its shire hall to a local association for the holding of a meeting. The plaintiff, a member of the association, was injured when the stage platform of the hall collapsed. The High Court held that by hiring out the hall the Council did not relinquish possession or control or avoid the responsibilities of an occupier (at p 91). Thus, during the meeting, the Council and the local association were both occupiers of the hall at the same time. 23. In Wheat v E Lacon & Co Ltd [1966] AC 552 the defendant company, which owned a public-house, entered into a service agreement with a manager whereby the manager agreed to carry on the public-house business in the licensed portion of the premises. The agreement provided that the manager was not to part with possession of the premises, was to allow the defendant company to enter the premises for the purpose of viewing the state of repair and inspecting the stock, and was entitled to occupy the premises for as long as he remained in the defendant s employment. The agreement went on to provide that the manager s occupation of the premises did not create any tenancy between the parties. A paying guest was killed when he fell on a staircase in the premises. His widow brought an action under the local Occupiers Liability Act. The defendant maintained that it was not an occupier for the purposes of that Act. The House of Lords held that it was. At pages Lord Denning stated: In order to be an occupier it is not necessary for a person to have entire control over the premises. He need not have exclusive occupation. Suffice it that he has some degree of control. He may VCAT Reference No. OC2599/2011 Page 7 of 17

8 share the control with others. Two or more may be occupiers. And whenever this happens, each is under a duty to use care towards persons coming lawfully on to the premises, dependent on his degree of control. If each fails in his duty, each is liable to a visitor who is injured in consequence of his failure, but each may have a claim to contribution from the other. In Salmond on Torts, 14 th ed. (1965), p. 372, it is said that an occupier is he who has the immediate supervision and control and the power of permitting or prohibiting the entry of other persons. This definition was adopted by Roxburgh J. in Hartwell v. Grayson, Rollo and Clover Docks Ltd. and by Diplock LJ in the present case. There is no doubt that a person who fulfils that test is an occupier. He is the person who says come in. But I think that test is too narrow by far. There are other people who are occupiers, even thought they do not say come in. If a person has any degree of control over the state of the premises it is enough. 24. So while a customer whom Grand Pacific has permitted to stay in a serviced apartment at Fairfax House on a short-term basis is no doubt an occupier of the apartment during the stay for it is the customer who may say come in it is legally possible for a person who has retained a degree of control of the apartment, despite the short-term stay, to be an occupier also at the same time. It is in the nature of a serviced-apartments business that there must be a retention of some degree of control that would enable the apartment to be cleaned and maintained during the customer s short-term occupation. The degree of control that Fairfax Quest has as tenant, whatever the detail of the relationship between it and Grand Pacific may be, is a question that I consider that OC is entitled to canvass at a hearing of the proceeding. 25. While those reasons are enough to dispose of the submission that it is so clear and obvious that Fairfax Quest is not an occupier of any lot that the proceeding ought to be dismissed summarily, there are two matters that the parties raised in their respective submissions that I think I should address. 26. Fairfax Quest submitted that the fact (so it contends) that it is the occupier of part of the common property, being entitled under a licence to occupy it, is irrelevant to the issue of whether it is an occupier of a lot. I agree. The question of whether Fairfax Quest has, or is entitled to have, a licence to occupy common property is relevant only to issues of whether in its capacity as occupier of a lot (if it is) it is in breach of certain rules of the OC if it does what it says the terms of its licence entitle it to do on common property, and, if it is indeed held to be in breach of those rules, whether the Tribunal ought to grant the OC any remedy. For the way in which Fairfax Quest s obligations under the rules (if it has them) ought to be balanced against its rights under the licence (if it has one or is entitled to one) is a matter that the Tribunal would have to consider at a hearing of the proceeding. VCAT Reference No. OC2599/2011 Page 8 of 17

9 27. The OC submitted that the business structure in which Fairfax Quest was allegedly participating claiming to be the occupier of part of the common property, but denying that it is the occupier of any lot and claiming that it holds leasehold interests in lots merely as an agent for Grand Pacific would be contrary to and would undermine the purpose and objectives of the statutory scheme regulating and governing owners corporations and the use of common property (paragraph 35 of the OC s written submission). The submission pointed out that s 137 of the OC Act imposes a duty on an occupier of a lot to comply with the OC Act, the regulations made under it and the OC s rules and not to permit common property to be used or neglected in a manner that is likely to cause damage or deterioration to the common property. It was submitted that an occupier of a lot cannot avoid this duty by licensing another person to use the common property; what may be a permitted use under the licence may nevertheless be a breach of the lot occupier s duty. But the submission begged the question of whether, under the alleged business structure, Fairfax Quest is the occupier of a lot at all. Moreover, the way to prevent any undermining of the kind refereed to in the submission would be to amend the relevant special rules to that they specifically apply to the conduct of a tenant of a lot, whether or not the tenant is the occupier of that lot. 28. Abuse of process. In paragraph 14 of the Statement of Claim annexed to its Supreme Court Writ the plaintiffs Fairfax Quest and Grand Pacific alleged that the serviced-apartments business had been at all relevant times, and continued to be, operated by Grand Pacific as the franchisee of a Quest franchise agreement and by Fairfax [Quest]. (I have added the underlining.) 29. In paragraph 14(b) of its Defence in the Supreme Court proceeding, the OC stated that it admits that Fairfax [Quest] and/or Grand Pacific purportedly occupy a reception desk, office, a [sic] amenities room, car park storage and have erected signage and placed advertising and promotional material in and on the common property but otherwise denied the allegation referred to above. (Again I have added the underlining.) 30. Fairfax Quest submitted that it was an abuse of process for the OC to contend in this proceeding that Fairfax Quest, as the occupier of lots, was breaching the OC s rules by using common property in the ways described in paragraph 14 of its Defence when, in that very paragraph, it was inconsistently contending (by way of a so-called admission) that it was Fairfax Quest and Grand Pacific, or one of them, which was breaching those rules. The abuse of process, it was submitted, was the making of the contention in this proceeding when the OC was making an inconsistent contention in another proceeding. 31. I think that that was a bold submission indeed, in view of Fairfax Quest s own inconsistent allegations (in the Supreme Court proceeding that it and Grand Pacific were carrying on the business, but in this proceeding that Grand Pacific alone was carrying on the business). At all events I do not VCAT Reference No. OC2599/2011 Page 9 of 17

10 accept the submission. The OC commenced this proceeding before there was any Supreme Court proceeding. By its Defence in the Supreme Court proceeding the OC was responding to allegations that the two plaintiffs together were carrying on a business and occupying common property. Had the OC first commenced Supreme Court proceedings itself to make allegations that Fairfax [Quest] and/or Grand Pacific were lot occupiers who were in breach of rules about use of common property, and had then commenced this proceeding to make an inconsistent allegation that Fairfax Quest alone was a lot occupier who was in breach of those rules, the submission that this proceeding was an abuse of process may have had some force. As things stand, it has no force at all, in my opinion. 32. Dispute resolution process. If a complaint is made to an owners corporation that the occupier of a lot is in breach of the owners corporation s rules, or if it otherwise comes to the attention of the owners corporation that an occupier of a lot may have breached the rules, s 153(2) of the OC Act provides that the owners corporation must make one of the three decisions: to take action under Part 10 of the OC Act in respect of the alleged breach (which involves the services of notices of the alleged breach), to apply to VCAT for an order requiring the lot occupier to rectify the breach, or to take no action. If the decision is to take action under Part 10 or to apply to VCAT, s 153(3) becomes applicable. It provides: (3) An owners corporation must not take action under this Part or apply to VCAT for an order in relation to an alleged breach unless (a) the dispute resolution process required by the rules has first been followed; and (b) the owners corporation is satisfied that the matter has not been resolved through that process. 33. As I have indicated above, it appears to be common ground that the OC did not follow the dispute resolution process required by the model rule before it commenced this proceeding, in which it is applying to VCAT for an order in relation to Fairfax Quest s alleged breach of the OC s rules. Fairfax Quest has submitted that this proceeding is not maintainable because the OC was never entitled to commence it, not having first followed the dispute resolution process, and that the proceeding should be dismissed summarily for that reason. 34. Section 153 does not specify any consequences for an owners corporation having failed to comply with s 153(3). It does not provide that a proceeding commenced without there having been such compliance is void or is irregular. However, s 164 of the OC Act provides: 164 VCAT may dismiss application VCAT may make an order dismissing or striking out an application by an owners corporation for an order requiring the rectification of a breach referred to in section 153 if it is VCAT Reference No. OC2599/2011 Page 10 of 17

11 satisfied that the owners corporation has not complied with that section. 35. Fairfax Quest has correctly submitted that s 153(3) is obligatory in its terms: an owners corporation must not apply to VCAT unless the two conditions set out in sub-paragraphs (a) and (b) have been met. In a consideration of whether s 164, on the other hand, is obligatory in its terms or merely confers a discretion upon the Tribunal to dismiss or to strike out, s 45(1) of the Interpretation of Legislation Act 1984 is relevant. It provides: 45 Construction of may and shall (1) Where in this Act or any Act passed or subordinate instrument made on or after the commencement of this Act the word may is used in conferring a power, that word shall be construed as meaning that the power so conferred may be exercised, or not, at discretion. 36. There is a good deal of learning about common law principles of construction of statutory provisions to determine whether they were obligatory (or mandatory) or discretionary (or directory), and to what extent legislation like s 45 of the Interpretation of Legislation Act differed from or affected the application of those common law principles. I see no reason in the present case to venture into the area of that learning. For I consider that by reason of s 45(1) alone it is well and truly arguable that s 164 of the OC Act confers upon the Tribunal a discretion to dismiss a proceeding if the applicant owners corporation has not complied with s 153, and equally confers upon the Tribunal a discretion not to dismiss or strike out; despite the obligatory terms of s 153, it is not obligatory for the Tribunal to dismiss or strike out when there has been non-compliance with s Fairfax Quest has submitted that, in the context of Part 10 of the OC Act as a whole, the power to dismiss or strike out that s 164 confers is a power that the Tribunal is under a duty to exercise if non-compliance with s 153(3) has been proved. That proposition is also arguable, but one cannot say that it is unarguably correct. I was referred to two previous decisions of the Tribunal that supported the view that the Tribunal is not obliged to dismiss or strike out for non-compliance with s 153. In neither of those cases was the issue fully argued or fully raised for consideration. So far as I am aware there has been no case in which the issue has been decided after full argument. This case is not the occasion for me to decide the issue. I need go no further than to conclude, as I have, that it is well and truly arguable that the Tribunal is not obliged to dismiss or strike out a proceeding merely because there has been non-compliance with s If there is a discretion not to dismiss or strike out a proceeding when there has been non-compliance with s 153, it is very probably the case that an applicant who has not complied can expect the Tribunal to exercise the discretion adversely to it unless good reason is shown for the noncompliance. If the non-complying applicant could persuade the Tribunal VCAT Reference No. OC2599/2011 Page 11 of 17

12 that any attempt to follow the dispute resolution procedure probably would have been futile, a reason for exercising the discretion in favour of the applicant would exist. 39. When I come to consider Fairfax Quest s alternative application for an order staying the proceeding I shall indicate how the grievance that the OC is airing in this proceeding is only one of many disputes and grievances that Fairfax Quest s affidavit material and Supreme Court Writ reveal. Because of the number, nature and complexity of those disputes and grievances I think that there is every chance that the OC would be able to persuade the Tribunal, at a hearing of this proceeding, that it would have been futile to attempt to follow the dispute resolution procedure in the model rules before commencing this proceeding. 40. Because it is well and truly arguable that the Tribunal is not obliged to dismiss or strike out this proceeding for non-compliance with s 153 of the OC Act, but has a discretion in the matter, and that the Tribunal ought to exercise that discretion in the applicant s favour, this proceeding ought not to be dismissed summarily by reason of the non-compliance with s Conclusion. The question set aside for a separate hearing is answered in the negative. The proceeding should not be dismissed on the ground that Fairfax Quest is not a lot owner or occupier or on the ground that the procedure set out in s 153(3) of the OC Act has not been followed. The Stay Application 42. As an alternative to the application for the determination of the question that I have just determined in the OC s favour, Fairfax Quest applied for an order staying this proceeding until its Supreme Court proceeding has been heard and determined. The Supreme Court proceeding is numbered SCI Central to the claims made in the Supreme Court proceeding is clause 13 of each lease between a lot owner as landlord and Fairfax Quest as tenant. Clause 13 is headed Attorney. There are five sub-clauses, 13.1 to I refer to clause 13.1 as the reasonable directions clause and to clause 13.2 as the nomination of attorney clause. They are: 13.1 The Landlord agrees that for the purposes of allowing the Tenant to better conduct the Tenant s business and to ensure compliance with the Landlord s and the Body Corporate s Covenants as contained in this Lease, the Landlord will at all or any meetings or of the Body Corporate or of the committee of the Body Corporate held during the Term, vote in accordance with the reasonable directions given by the Tenant To better secure the performance by the Landlord of the obligations under this Clause the Landlord by the execution of this Lease irrevocably nominates and appoints the Tenant and each direction and officer of the Tenant from time to time jointly and severally to be the attorney of the Landlord and to VCAT Reference No. OC2599/2011 Page 12 of 17

13 act, attend and vote as attorney in the Tenant s absolute discretion on behalf of the Landlord (including to allow the Tenant the power to appoint and dismiss the Body Corporate manager and to grant to the Tenant any leases or licenses in respect of the Common Property that are reasonably required for the operation of the Tenant s Business) at all or any meetings of the Body Corporate or of the committee of the Body Corporate to the exclusion of the Landlord if present at such but this appointment must not be used to vote on a motion to raise a Body Corporate levy for capital charges or require a contribution to a capital Sinking Fund over an amount of One Thousand Dollars ($1,000.00) per annum in each year of the Term. The Body Corporate is, of course, the OC. 44. Paragraphs 23 and 24 of the Statement of Claim annexed to the Supreme Court Writ allege that on 14 March 2012 the plaintiffs wrote to the 17 lot owners who were defendants giving them, under the reasonable directions clause, five directions, including a direction to vote in favour of the assignment of the licence to occupy part of the common property. Fairfax Quest s affidavit material exhibited an example of the letter (exhibit AB 25 to the affidavit of Ashok Bardolia affirmed on 27 August 2012). In fact the letter was dated 13 March Paragraphs 26 and 27 of the Statement of Claim allege that on 18 May 2012 the plaintiffs wrote to 3 of those 17 lot owners giving them directions under the reasonable directions clause. The letters of 18 may 2012 were exhibit AB 30 to the said affidavit of Mr Bardolia. The directions given in the letters included directions to withdraw this VCAT proceeding, to call a meeting of members of the OC, to include in the agenda for the meeting a resolution to withdraw this VCAT proceeding, and to vote in favour of the resolution. 46. The lot owners did not comply with those directions, so Mr Bardolia has deposed in his said affidavit. 47. In the Statement of Claim the plaintiffs ask for declarations that those directions were reasonable directions in accordance with the reasonable directions clause, and that under the nomination of attorney clause one or other of them is entitled to vote at a meeting of OC members or at a meeting of the OC s committee on behalf of the 17 owners, and in particular is entitled to vote to allow Fairfax Quest or Grand Pacific any licence in respect of the common property that is reasonably required for the operation of the serviced-apartments business. Those declarations are sought against the 17 lot owners. 48. I have already mentioned that in the Supreme Court proceeding the plaintiffs, as against the OC, have sought an order directing the OC to execute an assignment of the licence from Kendow Pty Ltd to Grand Pacific. By the Statement of Claim the plaintiffs ask for other relief against VCAT Reference No. OC2599/2011 Page 13 of 17

14 the OC. One claim for relief relates to fee notices or invoices. Fairfax Quest s affidavit material includes a complaint that fee notices purport to levy fees that include provision for the costs of this proceeding. They also ask for an injunction restraining the OC from removing any of the plaintiff s chattels, including advertising material and signage, from the common property. 49. Fairfax Quest has submitted that this proceeding ought to be stayed until the Supreme Court proceeding has been determined, because: (a) If the Supreme Court decides that Fairfax Quest was entitled, under the reasonable directions clause, to give the directions that it has given, and if Fairfax Quest is entitled, under the nomination of attorney clause, to vote at meetings on the 17 lot owners behalf, the members of the OC will be resolving to abandon this VCAT proceeding. If this VCAT proceeding were to be heard before the Supreme Court proceeding was heard, Fairfax Quest s opportunity to exercise those rights would be lost. (b) Similarly, if the Supreme Court decides those issues in favour of the plaintiffs, Fairfax Quest will be able to achieve the OC s consent to the assignment of the licence, enforcing the right that Grand Pacific has to occupy the part of the common property that it is presently occupying. If the VCAT proceeding were to be heard first, Grand Pacific s ability to entrench its right in that way might be lost, for VCAT might have decided that there was no right to occupy. (c) The lot owners are arguing in the Supreme Court proceeding that the leases between them and Fairfax Quest are retail premises leases within the meaning of that expression in the Retail Leases Act 2003 and that VCAT, not the Supreme Court, has jurisdiction to determine the disputes that the Supreme Court proceeding is about. (The OC s written submission in this proceeding raises the same potential argument.) If the argument is correct and those disputes have to be determined by VCAT in its Retail Tenancies List, the interests of justice will be better served if this proceeding and the Retail Tenancies List proceeding were to be heard together. That state of affairs could be achieved only if this proceeding is stayed temporarily. 50. As to the principles which should be applied when determining this stay application, I am afraid that I have not got assistance from authorities about whether a civil proceeding should be stayed when there are criminal proceedings pending (Graincorp Operations Ltd v Victorian WorkCover Authority [201] VCAT 2043, to which Counsel for the OC referred me, and which followed McMahon v Gould (1982) 7 ACLR 202) or from authorities about whether a proceeding should be stayed pending the hearing of an appeal from an interlocutory order in the proceeding (Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing Ltd (No 2) [2004] VSC 341, to which Counsel for Fairfax Quest referred me). More VCAT Reference No. OC2599/2011 Page 14 of 17

15 directly applicable to the circumstances of this case is the statement of principle that Deputy President McKenzie of this Tribunal (as she then was) expressed in Dowie v Northey [2000] VCAT 823: Prima facie a complainant is entitled to have his or her complaint herd in the ordinary course of the procedure and business of the Tribunal. It is a grave matter to interfere with this entitlement by a stay of proceedings which must be justified on proper grounds. The respondent, or the person who seeks the stay, needs to show that it is just and convenient that the complainant s ordinary right should be interfered with. The Tribunal s task is to balance justice between the parties having regard to all relevant factors. Each case must be judged according to its own circumstances. The effect of the stay on both complainant and respondent must be weighed. In appropriate cases proceedings may be allowed to proceed to a certain stage and then stayed. 51. In that same case Deputy President McKenzie expressed the view that the combination of ss 80, 97 and 98(3) of the VCAT Act empowers the Tribunal to stay a proceeding. The Tribunal has followed that view ever since. The OC did not dispute the existence of the power to grant the stay that Fairfax Quest has sought. 52. The OC has submitted that Fairfax Quest has not shown that it is just and convenient that the OC s prima facie right to have this proceeding heard in the ordinary course of the Tribunal s business should be interfered with, and that there should be no stay. Its reasons were: (i) (ii) (iii) (iv) (v) This proceeding was commenced before the Supreme Court proceeding was commenced. This proceeding is of narrow compass and could be determined without any need to grapple with any of the issues that the Supreme Court proceeding has thrown up. If the Supreme Court decides that the leases between Fairfax Quest and the 17 lot owners are retail premises leases, it will lose jurisdiction to hear and determine the disputes concerning those leases. Those disputes would have to be determined, if at all, in the Tribunal. So staying this proceeding might turn out to be futile. The Tribunal has jurisdiction in any event to hear and determine all of those disputes, be they retail tenancy disputes or owners corporation disputes. The evidence of the OC s chairperson Adele Crane, who swore an affidavit on 27 September 2012, is that the lot entitlements of the 17 lot owners whose votes Fairfax Quest claims to be entitled to control are 52.5% of the total lot entitlements, insufficient to pass a special resolution to abandon this proceeding or to consent to and execute an assignment of the licence to occupy common property. VCAT Reference No. OC2599/2011 Page 15 of 17

16 53. As to the last of those submissions, I accept that there is a real doubt as to whether Fairfax Quest, even if it could compel or achieve a vote of members of the OC to consent to an assignment of the lease, could achieve the passage of a special resolution to that effect. But although an owners corporation can only validly grant a licence by passing a special resolution to grant one (OC Act s 14), nothing in the OC Act provides that a special resolution is required for a decision to discontinue a legal proceeding, as distinct from a decision to commence one (s 18(1)). So the first of Fairfax Quest s submissions has force whether or not the last of the OC s submissions has force. 54. Despite the prima facie entitlement of the OC to have this proceeding which it commenced before the Supreme Court proceeding was commenced heard and determined in the ordinary course of the Tribunal s business, I have concluded that it is just and convenient to interfere with that right by granting a stay of the proceeding until the Supreme Court proceeding is heard and determined or until further order. I give the following reasons. 55. First, the use of common property, which is in issue in this proceeding, is only one small aspect of a complex series of disputes involving not only OC and Fairfax Quest but also Grand Pacific and 17 lot owners. It would be artificial and unrealistic to attempt to hear and determine the use-ofcommon-property- dispute in isolation from the many other matters that the Supreme Court proceeding, and Fairfax Quest s affidavit evidence, have raised: the structure (under a franchise arrangement) of the servicedapartments business, the relationship between Fairfax Quest and Grand Pacific, the reasonable directions clause and the nomination of attorney clauses in the leases and what rights are conferred by them, the licence to Kendow Pty Ltd, and the issue of whether consent to an assignment of the licence could be or may reasonably be withheld. While some of those matters might be capable of being determined in this Tribunal proceeding, not all of them are. The matters of dispute between the lot owners and Fairfax Quest and Grand Pacific are not. They are not owners corporation disputes. 56. To my mind, that first reason is the decisive reason. The others tend to weigh in favour of granting a stay but are not decisive. 57. Secondly, the question of whether Fairfax Quest has or is entitled to have a licence to occupy common property is likely to loom large at a hearing of this proceeding, because the hearing would require consideration of what balance ought to be struck between Fairfax Quest s rights under any such licence and its obligations under the OC s rules with respect to use of common property. That question has been raised fairly and squarely in the Supreme Court proceeding. There is potential embarrassment if the Tribunal purports to decide issues which are alive in proceedings in a superior Court. VCAT Reference No. OC2599/2011 Page 16 of 17

17 58. Thirdly, the possibility that the disputes between the lot owners and Fairfax Quest and Grand Pacific are retail tenancy disputes has a consequence that I think Fairfax Quest correctly identified in the third of its submissions. The hearing of this proceeding before any determination by the Supreme Court that there are retail tenancy disputes would mean an inconvenient fragmentation of proceedings in the Tribunal. It would be better and more convenient to wait and see what the Supreme Court decides on the retail tenancy question, or whether it decides it at all. 59. Fourthly, the possibility that Fairfax Quest might be able to achieve a vote of the OC s members to withdraw or discontinue this proceeding is more than theoretical. There would be potential injustice in having this proceeding determined before the Supreme Court decides Fairfax Quest s capacity, under the reasonable directions clause and the nomination of attorney clause, to achieve such a vote. 60. Finally, although the affidavit evidence before me did not touch upon the matter, it is not difficult to imagine that a determination of this proceeding in the OC s favour would have a significant impact on Grand Pacific s ability to conduct its business. To allow that to occur before Grand Pacific and Fairfax Quest had had the chance to vindicate their case in the Supreme Court would be unjust. 61. I shall order that this proceeding is stayed until Supreme Court proceeding number SCI has been heard and determined or until further order. The plaintiffs in that proceeding ought to pursue it expeditiously. If they do not, the OC would be entitled to apply for a lifting of the stay. SENIOR MEMBER A VASSIE VCAT Reference No. OC2599/2011 Page 17 of 17