Supreme Court New South Wales Medium Neutral Citation: Body Technology Pty Ltd v Babak Moini [2011] NSWSC 930 Hearing dates: 10/06/2011 Decision date: 10 June 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: Application to transfer proceedings from Local Court to Supreme Court dismissed. Catchwords: PRACTICE AND PROCEDURE - Application to transfer proceedings from Local to Supreme Court - where applicant asserts defence of equitable set-off to Local Court proceedings - equitable set-off without substance - no sufficient reason for removing proceedings to Supreme Court. Legislation Cited: (NSW) Civil Procedure Act, s 140 Cases Cited: Hill v Ziymack (1908) 7 CLR 352 James v Commonwealth Bank of Australia (1992) 37 FCR 445 Lord v Direct Acceptance Corporation Ltd (in liq) (1993) 32 NSWLR 362 Category: Procedural and other rulings Parties: Body Technology (plaintiff) Babak Moini (first defendant) Barodo Investments Pty Ltd (second defendant) Cosmetic Laser Clinic Pty Ltd (third defendant) Health and Beauty International Ltd (in liq) (fourth defendant) Nevodnich Olga Semenivna USR T/A Megahoster.net (fifth defendant) (UK2 Group) Limited (sixth defendant) Representation: Counsel: Mr S O'Brien (plaintiff) Ms J Chambers (first, second & third defendants) Solicitors: Yates Beaggi Lawyers (plaintiff) ClarkeKann Lawyers (first, second & third defendants) File Number(s): 2009/326322 Judgment (EX TEMPORE) 1In the substantive proceedings, the plaintiff Body Technology Pty Ltd ('Body Technology') sues six defendants, including the first defendant Babak Moini, for various relief arising out of contracts said to have been made between various of the defendants and ultimately the plaintiff, pursuant to which the plaintiff claims to have acquired certain business and domain names and associated business assets, which are engaged in the conduct of cosmetic and laser clinics. As against Mr Moini, the plaintiff claims an order that he be restrained from interfering in the plaintiff's commercial interests and undertakings, and in particular with one of the subject domain names, and an inquiry as to the damages caused by him and other of the defendants by such interference. 2While those proceedings were pending in this Court, Mr Moini commenced proceedings against Body Technology in the Local Court wherein, by amended statement of claim filed on 6 January 2011, he claims a liquidated sum of $18,595.89, or alternatively damages for conversion and exemplary damages. His claim is that whereas he was, by assignment from the previous tenant, lessee of certain premises at North Sydney - which became one of the business assets subsequently sold to the plaintiff - upon assignment of the lease in or about February 2010 to Laser Clinics Australia (North Sydney) Pty Ltd (a company which so far as I can tell is not a party to the Supreme Court proceedings), he became entitled to return of the rental bond; that in June 2010 the Retail Tenancy Unit drew a cheque in favour of Avana (a business name formerly used by Mr Moini) for that purpose, which was received and presented by Body Technology and thereby, so Mr Moini says, converted to its own use. 3By notice of motion filed on 19 April 2011, Body Technology claims an order pursuant to (NSW) Civil Procedure Act , s 140(1), that the Local Court proceedings be transferred to this Court and heard concurrently with the Supreme Court proceedings. The central contention on the transfer application is that Body Technology having invoked an equitable set-off in the Local Court proceedings, arising out of the facts and matters pleaded in the Supreme Court proceedings it is appropriate and preferable that the proceedings be heard in the one Court. 4If there were any substance in the assertion that there was an equitable set-off, that contention would almost certainly be correct. However, it is clear that to raise an equitable set off it is insufficient that there be a mere cross-demand, and it is insufficient even that the demand and cross-demand arise out of the same transaction. What is essential is that the equitable set-off must impeach, or go to the root of, the plaintiff's title to sue [see, for example, Hill v Ziymack (1908) 7 CLR 352, 360-362 (per Griffith CJ, Barton J agreeing); Lord v Direct Acceptance Corporation Ltd (in liq) (1993) 32 NSWLR 362; and James v Commonwealth Bank of Australia (1992) 37 FCR 445]. 5In this case, Body Technology's claim is for an inquiry as to damages, which may or may not ultimately establish that Mr Moini owes it some amount by way of damages for interference with the contractual relations between it and the companies from which it claims to have purchased the laser and cosmetics business. It is to my mind impossible to see how that claim impinges Mr Moini's title to the return of the rental bond. The relationship concerning the rental bond is one between the lessee and the lessor, and arguably the statutory authority established to hold rental bonds. 6It seems to me that one useful way - although I do not suggest it is universal - of testing whether the claim impugns title to receipt of the money for which Mr Moini sues, is to ask on what basis Body Technology, had it become aware of the lessor's intention to refund the bond to Mr Moini, would have been able to obtain an injunction in equity to restrain it from doing so. Although Mr O'Brien, for Body Technology, valiantly tried to provide a convincing answer to that question, I have to say to my mind there is no convincing answer to it. 7The claims are discrete, and the fact that there may be some common matters of fact does not begin to establish a defence of equitable set-off. In my view, while if there were a tenable defence of equitable set-off, the case for removal would be a strong one, having concluded that that defence is without substance, I do not think there is - in the words of Civil Procedure Act s140(4), 'sufficient reason' - for hearing the Local Court proceedings in this Court. 8I order that the motion be dismissed with costs. ********** 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. Decision last updated: 25 August 2011