Issuing in retail tenancies list at VCAT without mediating at the Small Business Commissioner – proceedings ‘in the nature of an injunction’

A refusal by a landlord to provide a deed of renewal to a tenant or to provide consent to an assignment can be a source of significant anxiety for a tenant who is trying to sell its business, particularly if they are concerned that the buyer may go elsewhere if there are significant delays before settlement.

An issue that has plagued retail tenants’ lawyers for some time has been whether a tenant is required to attend a mediation at the Office of the Small Business Commissioner before issuing proceedings at VCAT to resolve these issues.  Tenants are often concerned that the delay caused by the need to mediate may cause their buyer to terminate the business sale contract.

Section 87 of the Retail Leases Act 2003 (Vic) states that (emphasis added):

(1)            A retail tenancy dispute may only be the subject of proceedings before the Tribunal (whether under this Act, the Fair Trading Act 1999 or any other Act) if the Small Business Commissioner has certified in writing that mediation or another appropriate form of alternative dispute resolution under this Part has failed, or is unlikely, to resolve it.

(2)            This section does not apply to proceedings for an order in the nature of an injunction.

(3)            This section does not affect the validity of any decision made by the Tribunal.

Ordinarily, a tenant faced with a landlord who is withholding consent to an assignment is required to seek a declaration that the landlord’s consent is wrongly withheld, rather than an injunction.

Similarly, a tenant who needs production of a deed of renewal in order to properly assign its lease would ordinarily seek specific performance of the agreement to lease.

That suggests that a mediation would be required before an application is made to VCAT.

However, in the recent decision of PB Hospitality Pty Ltd v Peto Bros Pty Ltd (unreported, VCAT, Deputy President Aird, 22 April 2013), the applicant sought mandatory injunctions that the landlord produce a signed renewal of lease and consent to the assignment of the lease.  The respondent submitted that the Tribunal did not have jurisdiction because the relief sought could not be properly characterised as either an injunction or an application in the nature of an injunction.  The Tribunal rejected that submission and found that it did have jurisdiction to hear the dispute without the need to mediate at the Office of the Small Business Commissioner.