New South Wales Supreme Court CITATION : Ocean Leila Australia Pty Limited v Plaster Board Alexanderia Limited [2007] NSWSC 1293 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 13 November 2007 JUDGMENT DATE : 16 November 2007 JURISDICTION : Common Law Division - Possession List JUDGMENT OF : Associate Justice Harrison DECISION : (1) It is adjudged that the plaintiff have possession of the land at 326 Botany Road, Alexandria being the property contained in Certificate of Title Auto Consol 7487-215; (2) The claim for a monetary sum is stood over to the Registrar's list at 9.00am on 20 November 2007 for directions; (3) Argument will be heard as to costs and the date upon which a writ of possession should issue. CATCHWORDS : Transfer to Administrative Decisions Tribunal - summary judgment Civil Procedure Act 2005 (NSW) - s 61 Conveyancing Act 1919 LEGISLATION CITED : Retail Leases Act 1994 (NSW) - ss 68, 75 Uniform Civil Procedure Rules 2005 (NSW) - rr 12.7, 13, 14.28 Equity, Doctrines and Remedies 4th ed (2002) 1057 CASES CITED : General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Lord v Direct Acceptance Corporation Ltd (in Liq) (1993) 32 NSWLR 36 PARTIES : Ocean Leila Australia Pty Limited - Plaintiff Plasterboard Alexandria Pty Limited - Defendant FILE NUMBER(S) : SC 12276/2007 COUNSEL : Mr J Darvall - Plaintiff SOLICITORS : Mr J Grellman, Thorntons - Plaintiff Mr S Boticki (Director of Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON FRIDAY, 16 NOVEMBER 2007 12276/2007 - OCEAN LEILA AUSTRALIA PTY LIMITED v PLASTERBOARD ALEXANDRIA PTY LIMITED JUDGMENT (Transfer to Administrative Decisions Tribunal; summary judgment) 1 HER HONOUR: There are two notices of motion before the Court. By amended notice of motion filed 11 October 2007 the plaintiff seeks firstly, an order granting judgment in favour of the plaintiff pursuant to Rule 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR); secondly, in the alternative, an order that the defendant's defence be struck out and that judgment be entered in favour of the plaintiff pursuant to s 61 of the Civil Procedure Act 2005 (NSW) (CPA); and thirdly, in the alternative, an order that the defendant's defence be struck out in whole, pursuant to Rule 12.7 of the UCPR. 2 By notice of motion filed 17 August 2007, the defendant seeks firstly, an order that the proceedings be stayed; and secondly, that the proceedings be transferred to the Administrative Decisions Tribunal pursuant to s 68 and/or s 75 of the Retail Leases Act 1994 (NSW). 3 The plaintiff is Ocean Leila Australia Pty Limited (Ocean Leila). It relied on the affidavit of James Grellman sworn 16 August 2007 and three affidavits affidavit of Raimond Schaw sworn 15 August 2007, 10 October 2007 and 9 November 2007. The defendant is Plasterboard Alexandria Pty Limited (Plaster Alex). It relied on the affidavit of Stephen A Boticki sworn 17 August 2007. Mr Boticki is the sole director of Plaster Alex and appeared on behalf of the company. He was not legally represented. I shall deal firstly, with whether these proceedings should be transferred to the Administrative Appeals tribunal and then with the summary judgment application. The proceedings 4 Ocean Leila is the registered proprietor of the property at 326 Botany Road, Alexandria being the whole of the land contained in Certificate of Title Auto Consol 7487-215 (the land). It seeks possession of the property and payment of a monetary sum. 5 Mr Boticki was previously in occupation of the premises, through a former company which was liquidated. By letter dated 9 May 2006 the liquidator of the former company disclaimed the lease (see Ex RS1.55-56). 6 On 13 March 2006, Plaster Alex forwarded a leasing proposal for the land to Ocean Leila. On 9 May 2006, Ocean Leila submitted a draft lease to Plaster Alex setting out the terms upon which it was prepared to lease the land to Plaster Alex. Pursuant to the draft lease, the rent payable was $21,666.67 plus GST per month being a total of $23,833.32 per month. It is common ground between the parties that the draft lease was not executed. 7 On or about 23 May 2006, it is pleaded that Plaster Alex went into occupation of the land. It is not disputed Plaster Alex on account of occupation totalling $214,526.64 as at 20 March 2007 (Def [5] – 06/06/2007). 8 On 24 April 2007, Ocean Leila served on Plaster Alex a notice in writing requesting that Plaster Alex deliver up vacant possession of the land on or before 7 May 2007. On 4 September 2007, a further written notice was served on Plaster Alex. Whether these proceedings should be transferred to the Administrative Decisions Tribunal 9 Section 75 of the Retail Leases Act 1994 (NSW) (the Act) reads: "Removal of court proceedings to the Tribunal (1) If civil proceedings pending in a court involve a retail tenancy dispute, the court must on the application of any party to the proceedings transfer the proceedings (or so much of the proceedings as involve such a dispute) to the Tribunal to be dealt with as a claim under this Division, but only if the court is satisfied that: (a) the dispute is such as may effectively be dealt with as a claim under this Division and that it is appropriate that the dispute be dealt with by the Tribunal, and (b) the interests of justice do not require that the matter be dealt with by the court. (2) In determining whether or not it is appropriate that a matter be dealt with by the Tribunal, a court is to have regard to the general principle that retail tenancy disputes should be dealt with by the Tribunal rather than by a court. (3) Proceedings are taken to involve a retail tenancy dispute if any issue in dispute in the proceedings involves a liability or obligation with which a retail tenancy dispute is concerned. (4) This section does not prevent a court from granting urgent relief of an interlocutory nature where it is in the interests of justice to do so. (5) This section does not apply to proceedings by way of an appeal. (6) A court may make such ancillary orders as it considers necessary for the purpose of enabling an order under this section for the transfer of proceedings to the Tribunal to have full effect." 10 There is a dispute between the parties as to the lettable area of the premises. The plaintiff has a survey plan showing the lettable area to be approximately 2,500 square metres. The defendant has a plan which asserts that the lettable area is 915 square metres. The preponderance of evidence suggests that the area of the premises exceeds 1,000 square metres of lettable area. 11 Section 5 of the Act excludes certain retail shops from the operation of this Act. Section 5 relevantly reads that this Act does not apply to any of the following retail shops "(a) shops that have a lettable area of 1,000 square metres or more". 12 There is also a dispute as to whether or not the premises is a retail shop. The defendant says that it is a hardware shop and that 70% of his trade is from members of the public. The plaintiff referred to the lease and the proposed lease documentation wherein the permitted use of the premises is defined as being a warehouse/trade centre. If these proceedings are transferred to the Administrative Decisions Tribunal and findings are made that either the premises are over 1,000 square metres or that the premises are not retail premises the ADT will not have jurisdiction. It is my view that it is in the interest of justice that these proceedings remain in this Court. Summary judgment and strike out defence 13 Rule 13.1(1) of the UCPR provides: 13.1(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires." 14 Rule 13.4(1) of the UCPR provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are if the proceedings are frivolous or vexatious, or no reasonable cause of action is disclosed, or the proceedings are an abuse of the process of the court. 15 Rule 14.28(1) of the UCPR provides that the Court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court. 16 Rule 14.28(1) provides that the court may receive evidence on the hearing of an application for an order under sub-rule (1). 17 In the well known passage in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ at 129 stated: "It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense.'" The defence 18 The defence pleads that Plaster Alex occupied part of the premises as licensee from 15 June 2006 until 14 September 2006 in conjunction with the liquidator of Plasterboard Australia Pty Limited t/as Boral Plasterboard Alexandria. Plaster Alex says that some of the lettable area is unusable as the building leaks. Plaster Alex further alleges that the terms of a lease were agreed and that it was and is currently awaiting receipt of a written lease for execution which Ocean Leila has undertaken to prepare and forward but that the parties have acted in accordance with the terms of the lease since that time. 19 Various set offs are claimed against rent payable (see Def [5(b)] and [10]). 20 In Lord v Direct Acceptance Corporation Ltd (in Liq) (1993) 32 NSWLR 36 Sheller JA wrote the leading judgment with which Kirby P and Meagher JA agreed. Sheller JA discussed the equitable defence of set-off and says that the mere existence of a cross demand is not sufficient. Sheller JA at 367 stated: "The cases [on equitable set-off] have been extensively examined by Woodward J in D Galambos and Son Pty Ltd v McIntyre (1974) 5 ACTR 10 and Giles J in AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 at 710-712. In Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1102, Lord Brandon of Oakbrook said that the concept of impeaching the title to the legal demand was not one familiar today and referred to the expression used in Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 at 212-213 that a claim may be set-off if 'flowing out of and inseparably connected with the dealings and transactions which also give rise to the claim'." 21 However, Sheller JA (at 367) was of the view that the concept of equitable set-off was better stated in Meagher, Gummow and Lehane, Equity, Doctrines and Remedies (see 4th ed (2002), 1057 at [37-045(h)]) where the learned authors say that it is an indispensable requirement of equitable set-off that the set-off actually go to the root of, be essentially bound up with, and "impeach" the title of the plaintiff. The alleged set offs do not impeach the title of the plaintiff. 22 In oral submissions, Mr Boticki stated that he did not enter into the draft lease because clause 12.4 of the memorandum relating to maintenance had been removed. It has not. 23 Estoppel is also pleaded. Plaster Alex says that Ocean Leila by its conduct and representations agreed to grant to Plaster Alex on and from 15 September 2006 a lease of part of the premises for a term of two years with two further options to renew the lease at an agreed monthly rent of $10,908.33 inclusive of GST payable monthly on the 13th day of each calendar month and that Ocean Leila has refused to deliver a lease for execution. Plaster Alex says it acted to its detriment in reliance of these representation. 24 Both parties produced correspondence – see Exs B & 2. Nowhere in that correspondence does it appear that there was an agreement as to the terms of the lease. On the contrary, there were unsuccessful negotiations. At best, the plaintiff offered to take back approximately half of the areas of the premises which they could lease out separately if Plaster Alex agreed to create a partition, the costs to be shared equally between Plaster Alex and Ocean Leila, and to give Ocean Leila direct access in order for their agent to advertise and let available space. Once this was done, Ocean Leila would have agreed to offer Plaster Alex a new lease on the similar per square metre rate on the space that Plaster Alex occupied. It is common ground that the partition was never built. It is also common ground that no written lease was executed. 25 It is my view that the defendant's defence as pleaded is hopeless and should be struck out. I make such an order. The defendant is a tenant at will – see s 23D of the Conveyancing Act 1919 (NSW). A notice to quit was served on 4 September 2007. The plaintiff is entitled to possession of the subject property. 26 It is adjudged that the plaintiff have possession of the land at 326 Botany Road, Alexandria being the property contained in Certificate of Title Auto Consol 7487-215. 27 I stand the claim for a monetary sum over to the Registrar's list at 9.00am on 20 November 2007 for directions. 28 I will hear argument as to costs and the date upon which a writ of possession should issue. THE COURT ORDERS: (1) It is adjudged that the plaintiff have possession of the land at 326 Botany Road, Alexandria being the property contained in Certificate of Title Auto Consol 7487-215. (2) The claim for a monetary sum is stood over to the Registrar's list at 9.00am on 20 November 2007 for directions. (3) Argument will be heard as to costs and the date upon which a writ of possession should issue. ********** 28/11/2007 - Title Auto Consol 7487-214" changed to "Title Auto Consol 7487-215" - Paragraph(s) (4) and (26), Order (1) last page of judgment and order 1 of coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.