How late is too late for rent? – Kameel Pty Ltd v Antongtai Pty Ltd [2017] VCAT 469
In this Victorian case, the landlord claimed approximately $180,000 in unpaid rent, outgoings and interest. The lessee defended the claim with a limitation (out of time) argument and a res judicata (already litigated) argument. The lessor was able to overcome both of these defences and win most of the claim.
The landlord was claiming unpaid rent and outgoings under the lease. The lease commenced in 2008. The landlord terminated for breaches on 11 November 2016.
The majority of the unpaid rent and other money related to a period prior to September 2015.
The tenant was in liquidation and two of the three covenantors were no longer in the country, so the landlord made its claim against the third covenantor. That covenantor admitted that it was liable, but argued that he was not liable for the arrears claimed for the period prior to March 2015, because either:
- the landlord already had a judgement for unpaid rent for that prior period (the res judicata defence); or
- the landlord was out of time (the landlord has 6 years to make a claim for unpaid rent in Victoria).
The res judicata defence means that you cannot litigate the same thing twice. The landlord had made a claim for unpaid rent which was determined on 21 September 2015. The covenantor argued that any rent owed up to then should have been subject to those proceedings.
The covenantor was partially correct, but the defence of res judicata requires that the landlord must have had the opportunity to make the full claim at that time, and that the failure to do so was the landlord’s fault. In that earlier case, the landlord only claimed up to February 2015 because that is when those proceedings commenced. That older claim was for arrears that were accrued up to the time the landlord commenced proceedings.
The res judicata defence did not apply to unpaid rent from March to September 2015, and the landlord was entitled to that claim.
The covenantor also tried to argue that payments he had made during the period September 2015 to April 2016 should have been applied to those months. Instead, the landlord applied those payments to rent owed for the period prior to September 2015. The Tribunal approved of the landlord’s approach – “Where a payment is made in part satisfaction of a running account, it is open for the creditor to apply the payment to the oldest debt.”
Matthew Rafferty, Partner