Parliv Pty Limited & Ors v Fast Feast Pty Limited & Ors [2008] NSWADT 298

CITATION: Parliv Pty Limited & Ors v Fast Feast Pty Limited & Ors [2008] NSWADT 298

DIVISION: Retail Leases Division

APPLICANT Parliv Pty Ltd & P.T. Ltd PARTIES: RESPONDENT Fast Feast Pty Ltd and James Henry Woo

FILE NUMBER: 075015, 075063

HEARING DATES: 5 September 2008

SUBMISSIONS CLOSED: 5 September 2008

EXTEMPORE DECISION DATE: 5 September 2008 BEFORE: Montgomery S - Judicial Member

CATCHWORDS: Interim order - Claim for declaration of rights, obligations and liabilities under a lease

Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Interpretation Act 1987 Retail Leases Act 1994

CASES CITED: Trust Company of Australia Ltd v Skiwing Pty Limited [2006] NSWSCA 387

APPLICANT R Angyal SC, barrister REPRESENTATION: RESPONDENT R Steele, barrister

ORDERS: Summary judgment is given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross Application for Original Decision. Costs are reserved.

REASONS FOR DECISION 1 The substantive matters in these proceedings relate to a retail shop lease of premises known as Shop 1173, Westfield Parramatta. The matters were the subject of a preliminary hearing on 22 June 2007. The matters came before me on 5 September 2008 for hearing on a Notice of Motion brought by Parliv Pty Ltd & P.T. Ltd ("the Applicants"). The Notice of Motion concerns the claim in paragraph 13(a) of the Cross-Application brought by Fast Feast Pty Limited and James Henry Woo ("the Respondents"). That paragraph claims damages of $235,000 for "loss of benefit of business agreement" ("the paragraph 13(a) claim"). 2 At the conclusion of the hearing I determined the issues that were the subject of the Notice of Motion and I gave brief reasons for my decision. The Respondent has requested written reasons for my decision and these reasons are provided in response to that request. The Notice of Motion 3 The Applicants' Notice of Motion is in the following terms: "The Applicants claim the following orders: 1 An order that summary judgment to be given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross-Application for Original Decision. Particulars 1.1 Paragraph 13 of the Cross-Application for Original Decision alleges that the Respondent suffered loss and damage as a result of breaches of the lease or breaches of duty by the Applicants. 1.2 Paragraph 13(a) of the Cross-Application for Original Decision alleges that the Respondent suffered loss and damage of $235,000 as a result of the loss of the benefit of a sale of business agreement. 1.3 The sale of business agreement referred to in paragraph 13(a) was the Contract for Sale of Business between the First Respondent and Michael W Pty Limited made in 21 November 2005. Special Condition 3(b) of the contract provided that it was a condition precedent to completion of the contract that the Applicants consent to a licence to Michael W Pty Limited of Shop 1173, Westfield Parramatta. 1.4 The Applicants have not consented to a licence to Michael W Pty Limited of Shop 1173, Westfield Parramatta. 1.5 As a result, the First Respondent was not at any time entitled to require Michael W Pty Limited to complete the Contract for Sale of Business. 1.6 If the Applicants have breached the lease or committed breaches of duties owed to the First Respondent (which they deny), the First Respondent has not suffered a loss as a consequence of the breaches. 2 Further or in the alternative to order 1, an order that summary judgment be given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross-Application for Original Decision on the following basis. Particulars 2.1 Paragraph 13 of the Cross-Application for Original Decision alleges that the Respondent suffered loss and damage as a result of breaches of the lease or breaches of duty by the Applicants. 2.2 Special Condition 14 of the Contract for Sale of Business between the First Respondent and Michael W Pty Limited provided that Michael W Pty Limited, at any time before three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract, Michael W Pty Limited could rescind the contract on terms set out there. 2.3 On 16 December 2006 (which was within three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract), Michael W Pty Limited elected to rescind the contract on the terms set out in Special Condition 14. 2.4 If (which the Applicants do not admit), the First Respondent suffered a loss as a consequence of the Contract for Sale of Business not having been completed, that loss was caused by the election of Michael W Pty Limited to rescind the contract pursuant to Special Condition 14 of the contract. 2.5 As a result, if the Applicants have breached the lease or committed breaches of duties owed to the First Respondent (which they deny), the First Respondent has not suffered a loss as a consequence of the breaches. 3 Further or in the alternative to Orders 1 and 2, an order that summary judgment be given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross-Application for Original Decision on the following basis. Particulars 3.1 Paragraph 13 of the Cross-Application for Original Decision alleges that the Respondent suffered loss and damage as a result of breaches of the lease or breaches of duty by the Applicants. 3.2 Special Condition 14 of the Contract for Sale of Business between the First Respondent and Michael W Pty Limited provided that Michael W Pty Limited, at any time before three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract, Michael W Pty Limited could rescind the contract on terms set out there. 3.3 On 16 December 2006 (which was within three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract), Michael W Pty Limited elected to rescind the contract on the terms set out in Special Condition 14. 3.4 Michael W Pty Limited elected to rescind the contract on 16 December 2005 on the terms set out in Special Condition 14 because Mr Michael Wong, the director of Michael W Pty Limited, was admitted to hospital on 15 December 2005 with internal bleeding that put his life at risk: see letter dated 16 December 2005 from Keith Chow & Co. to the solicitors for the First Respondent. 3.5 If (which the Applicants do not admit), the First Respondent suffered a loss as a consequence of the Contract for Sale of Business not having been completed, that loss was caused by the election of Michael W Pty Limited to rescind the contract pursuant to Special Condition 14 of the contract. 3.6 As a result, if the Applicants have breached the lease or committed breaches of duties owed to the First Respondent (which they deny), the First Respondent has not suffered a loss as a consequence of the breaches. 4 Further or in the alternative to orders 1 -3, an order that summary judgment be given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross-Application for Original Decision on the following basis. Particulars 4.1 Paragraph 13 of the Cross-Application for Original Decision alleges that the Respondent suffered loss and damage as a result of breaches of the lease or breaches of duty by the Applicants. 4.2 Special Condition 14 of the Contract for Sale of Business between the First Respondent and Michael W Pty Limited provided that Michael W Pty Limited, at any time before three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract, Michael W Pty Limited could rescind the contract on terms set out there. 4.3 On 16 December 2006 (which was within three months after the date that the business of the First Respondent commenced from Shop 1173, Westfield Parramatta and before completion of the contract), Michael W Pty Limited elected to rescind the contract on the terms set out in Special Condition 14. 4.4 Michael W Pty Limited elected to rescind the contract on 10 January 2006 on the terms set out in Special Condition 14 because the First Respondent had made misleading representations or misrepresentation to Mr Michael Wong, the director of Michael W Pty Limited: see letter dated 10 January 2006 from Keith Chow & Co. to the solicitors for the First Respondent. 4.5 If (which the Applicants do not admit), the First Respondent suffered a loss as a consequence of the Contact for Sale of Business not having been completed, that loss was caused by the election of Michael W Pty Limited to rescind the contract pursuant to Special Condition 14 of the contract. 4.6 As a result, if the Applicants have breached the lease or committed breaches of duties owed to the First Respondent (which they deny), the First Respondent has not suffered a loss as a consequence of the breaches." Does The Tribunal have power to summarily dismiss part of the claim? 4 The Respondents submit that the application is misconceived by virtue of the fact that the Tribunal does not have power under the Administrative Decisions Tribunal Act 1997 ("the ADT Act") to summarily dismiss part of the claim. They rely on the provisions of section 73 of the ADT Act in support of that submission. 5 Section 73 of the ADT Act provides in part: 73 Procedure of the Tribunal generally (1) The Tribunal may, subject to this Act and the rules of the Tribunal, determine its own procedure. (2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. (3) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. (4) The Tribunal is to take such measures as are reasonably practicable: (a) to ensure that the parties to the proceedings before it understand the nature of the assertions made in the proceedings and the legal implications of those assertions, and (b) if requested to do so—to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and (c) to ensure that the parties have the fullest opportunity practicable to be heard or otherwise have their submissions considered in the proceedings. (5) The Tribunal: (a) is to act as quickly as is practicable, and (b) is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, and (c) may require evidence or argument to be presented in writing and decide on the matters on which it will hear oral evidence or argument, and (d) in the case of a hearing—may require the presentation of the respective cases of the parties before it to be limited to the periods of time that it determines are reasonably necessary for the fair and adequate presentation of the cases, and (e) may require a document to be served outside the State, and (f) may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement), and (g) may dismiss at any stage any proceedings before it if the applicant withdraws the application to which the proceedings relate, and (h) may dismiss at any stage any proceedings before it if it considers the proceedings to be frivolous or vexatious or otherwise misconceived or lacking in substance. 6 The Respondents contend that section 73((5)(h) of the ADT Act only provides for the dismissal of proceedings generally. The Respondents submit that on this basis alone, the Notice of Motion should be dismissed. 7 In the alternative, the Respondents submit that if the Tribunal determines that it does have the power to make the orders sought in the Notice of Motion, then it should not do so in these circumstances. 8 The Applicants contend that the Respondents' submission is incorrect for several reasons. They rely on the provisions of section 73 of the ADT Act in support of that submission. They say that sub-section 73(1) gives the Tribunal the mandate to take any procedural steps except those that the ADT Act and the rules of natural justice forbid. In support of this submission Mr Angyal referred to paragraph [54] of the Court of Appeal decision in Trust Company of Australia Ltd v Skiwing Pty Limited [2006] NSWSCA 387 where it was held that: "The powers of the Tribunal, conferred by s 73 of the ADT Act, are broad and discretionary. They impose few express constraints, although it should be inferred that the Tribunal must act in a procedurally fair way, as between the parties. …" 9 Mr Angyal further submitted that the power to dismiss proceedings as a whole carries with it the power to dismiss part of the proceedings. The greater power necessarily includes the lesser. Sub-section 8(c) of the Interpretation Act 1987 (NSW) provides that a reference in an Act "to a word or expression in the plural form includes a reference to the word or expression in the singular form". Where, as here, the proceedings comprise several claims that each could be brought as separate proceedings, "proceedings" must be taken to refer to each of them. 10 He says that if there were any doubt that the Tribunal has power to dismiss part of proceedings, section 33 of the Interpretation Act requires that, in the interpretation of an Act, "a construction that would promote the purpose or object underlying the Act ...shall be preferred to a construction that would not promote that purpose or object". Interpreting paragraph 73(5)(h) to permit dismissal of part of proceedings promotes the objects stated in sub-sections 73(4) and 73(5)(a). 11 I agree with Mr Angyal's submissions on this issue. For the reasons he has argued, it is my view that the Tribunal has power under the ADT Act to summarily dismiss part of the claim. 12 I note that on 22 June 2007, a differently constituted Tribunal granted summary judgment against the third respondent to the Application for Original Decision. In doing so it clearly determined part of the proceedings. Argument on the Notice of Motion The Applicants' Case 13 The Applicants contend that the paragraph 13(a) claim cannot succeed. There are several bases on which this is asserted. Firstly, they say that the First Respondent has failed to prove that it would have been entitled to complete the Contract for Sale of Business. Alternatively, they say that the immediate cause of the First Respondent's loss was the rescission of the Contract for Sale of Business by Michael W Pty Limited. Further in the alternative they say that the immediate cause of the First Respondent's loss was either the illness of Mr Michael Wong or the misrepresentations allegedly made by the First Respondent. 14 Mr Angyal provided submissions in relation to each of those contentions. In relation to the first contention, his written submissions were as follows (paragraph numbering omitted): The First Respondent has failed to prove that it would have been entitled to complete the Contract for Sale of Business On 28 February 2008, the First Respondent was directed to file and serve its evidence by 9 April 2008. On 10 April 2008, the First Respondent sought and was granted until 8 May 2008 to file and serve its evidence. On 8 May 2008, the First Respondent sought and was granted until 20 May 2008 to file and serve any further lay or expert evidence. On 26 June 2008, Counsel for the First Respondent informed the Tribunal that it had filed and served all its evidence. The Contract for Sale of Business provided that it was a condition precedent to completion that the Applicants consent to a licence to Michael W Pty Limited of Shop 1173: Special Condition 3(b). Unless the First Respondent establishes that it had obtained or would have obtained the Applicants' consent to a licence, it would not have been entitled to demand that the Contract for Sale of Business be completed. Unless it can establish that, it has not established that it has suffered "loss of benefit of sale of business agreement' (Cross-Application, paragraph 13(a)). To succeed in its claim, the First Respondent must establish: - That its lease permitted it to licence the premises to Michael W Pty Limited; and - That it applied to the Applicants for their consent to license the premises to Michael W Pty Limited; and - That the Applicants consented to a licence of the premises to Michael W Pty Limited. Alternatively, the First Respondent must establish: - That its lease permitted it to licence the premises to Michael W Pty Limited; and - Had it applied to the Applicants for consent to a licence of the premises to Michael W Pty Limited, consent would have been granted. Under Special Condition 3(a) of the Contract for Sale of Business, it was a condition precedent to completion of the contract that Fast Feast Pty Limited or another franchisor enter into a franchise agreement with Michael W Pty Limited. Despite being granted several extensions of time to file and serve its evidence, the First Respondent has not served any evidence that either of the conditions precedent were satisfied or would have been satisfied. In the absence of such evidence, the claim in paragraph 13(a) must fail. Mr Angyal also provided submissions in relation to each of the other contentions. However, at the hearing I accepted the above arguments and therefore do not need to discuss the other submissions. The Respondents' Case 15 In the Respondents' submission, the Tribunal should exercise its discretion to dismiss proceedings summarily with exceptional caution and only if the circumstances clearly warrant such action. In a summary dismissal application the applicant's evidence must be taken at it highest. It is not necessary that an applicant prove that he or she has a good case but simply that there is a case to be argued. The strength or weakness of a case is a question for determination at the substantive hearing. 16 Pursuant to paragraph 73(5)(h) the Tribunal may dismiss proceedings before it if it considers the proceedings to be frivolous or vexatious or otherwise misconceived or lacking in substance. The Respondents submit that if an application has any hope of success it should not be struck out as vexatious. For proceeding to be "misconceived" or "lacking in substance" there must be no factual basis for the allegations, or the allegations must be wholly lacking merit. 17 Summary dismissal is not appropriate where there is a serious question of fact to be determined or where a serious question of credit is involved. If factual issues are likely to be affected by evidence in the possession of the respondent, that matter alone may make it inappropriate to dismiss the matter. Material in summonsed documents or answers on cross examination may lead to the proof of factual matters about which the applicant has no direct evidence. 18 The Respondents rely on a sworn affidavit provided by Mr Michael Wong, the director of Michael W Pty Ltd. Mr Wong's evidence is that he terminated the Contract of the Sale of Business because of the water leakage issues; and that if the premises had not suffered water leakage issues he would not have terminated the Contract of Sale. Mr Steele submits that taken at its highest, this evidence establishes an arguable case that the Applicants' alleged breaches of contract and duty caused the Respondents loss by the termination by Michael W Pty Ltd of the Contract for Sale of Business. The Respondents' submit that this claim is not wholly lacking in merit. 19 Mr Steele submits that none of the matters relied upon by the Applicants are matters which, in the context of Mr Wong's sworn evidence, could be said to render the Respondent's claim' so obviously untenable that it cannot possibly succeed. He made the following submissions: (a) The fact that the Applicants had not, at the time of rescission by Michael W Pry Limited of the Contract of Sale of Business, consented to a licence of the subject premises to Michael W Pry Limited is wholly irrelevant to any issue of causation. To the extent that it is, cross-examination of the Applicant's witness may bear upon the issue. (b) The fact that Special Condition 14 the Contract for Sale of Business provided for rescission by Michael W Pty Limited (unless the Contract had been completed) for any reason at any time prior to the expiration of three (3) months from the date of commencement of the business at the shop is, of itself, wholly irrelevant to the issue of causation in the case advanced by the Respondent in its cross application. (c) In the face of Mr Wong's sworn evidence, the hearsay evidence relied upon by the Applicant doesn't make the Respondent's claim untenable. Certainly, that evidence may raise a question as to credit, but summary dismissal is not appropriate in such a case. Discussion 20 At the hearing on 5 September 2008 I was persuaded by Mr Angyal's submissions as set out above. For that reason I do not need to discuss the other arguments presented on behalf of the Applicants. 21 In agree that for the paragraph 13(a) claim to succeed the First Respondent would need to prove that it would have been entitled to complete the Contract for Sale of Business. Unless it can present an arguable case that it had that entitlement, then the paragraph 13(a) claim is lacking in substance. 22 On the evidence before me, for the reasons argued by the Applicants, I am not satisfied that the First Respondent would have been entitled to complete the Contract for Sale of Business. Accordingly, the Applicants' application for dismissal of the paragraph 13(a) claim should be granted. The paragraph 13(a) claim should therefore be dismissed pursuant to paragraph 73(5)(h) of the ADT Act. 23 I note that Mr Angyal sought costs of the Notice of Motion on the basis that exceptional circumstances were made out. He submitted that the exceptional circumstances are that the relevant part of the cross application is without merit, and bringing a claim that has no merit such that it can be dismissed summarily constitutes exceptional circumstances in my submission. I determined that the issue of costs should be determined at the end of the substantive proceedings. Order 1. Summary judgment is given in favour of the Applicants with respect to paragraph 13(a) of the First Respondent's Cross-Application for Original Decision 2. Costs are reserved.