ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd (No. 3)

Case •

[2018] NSWSC 539

•

30 April 2018

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor (No. 3) [2018] NSWSC 539
Hearing dates: 15 December 2017; 27 April 2018
Date of orders: 30 April 2018
Decision date: 30 April 2018
Jurisdiction:Equity
Before: Slattery J
Decision:

Claim to set off claim for arrears rent against principal judgment disallowed. Defendant to pay two thirds of plaintiff’s costs of the re-hearing.

Catchwords:

SET OFF – judgment for $250,000 plus interest entered against the defendants for conversion of the plaintiff’s stock, plant and equipment – after judgment the defendants sought set off or a stay of part of the judgment on account of a claim in another jurisdiction for arrears of rent alleged to be due in respect of the rental premises where the re-entry occurred – whether the proceedings should be re-opened – whether defendants entitled to a set off – whether judgment should be partially stayed.

  COSTS – plaintiff successful in claim for conversion – but plaintiff claims substantial damages, including consequential loss – plaintiff only partly successful in claim for damages – should prior costs orders be revisited - what is appropriate costs order.
Legislation Cited: Federal Court of Australia Act 1976, s 22
Supreme Court Act 1970, s 63
Cases Cited: ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor (No. 2) [2017] NSWSC 1799
ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor [2017] NSWSC 1583
Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
Smith v New South Wales Bar Association (1992) 176 CLR 256
Texts Cited: RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)
Category:Costs
Parties: Plaintiff: ACN 116 746 859 (formerly Palermo Seafoods Pty Ltd)
Defendant: Lunapas Pty Ltd
Second Defendant: Luciano Menniti
Representation: Solicitors:
Plaintiff: in person
Defendants: in person, John Gregg, Gregg Lawyers
File Number(s): 2013/206954
Publication restriction: No

Judgment

  1. This is the Court’s third judgment upon the retrial of these proceedings. In the first judgment on the retrial, the Court awarded $250,000 to the plaintiff against both defendants on account of the defendants’ conversion of the plaintiff’s goods: ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor [2017] NSWSC 1583 (“the principal judgment”).

  2. The Court entered judgment against both defendants on 11 December 2017 for $250,000, a sum that represented (excluding interest up to judgment) the market value of the plaintiff’s plant, equipment and stock that the defendants converted on or about 8 May 2013.

  3. In the principal judgment the Court reserved all questions of interest and costs for further argument. Submissions in relation to pre-judgment interest were made on 15 December 2017, when the Court gave judgment and entered orders for pre-judgment interest up to 11 December 2017 in the sum of $70,648.12: ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd & Anor (No. 2) [2017] NSWSC 1799 (“the second judgment”).

  4. This judgment should be read together with the Court’s previous judgments. Events, matters and persons are referred to in this judgment in the same way as they are in the Court’s principal judgment and the Court’s second judgment.

  5. The remaining issues between the parties are: (1) whether the defendants are entitled to set-off a claim they have against Messrs Palermo in other jurisdictions against the plaintiff’s judgment in the present proceedings; and (2) what costs order should be made in these proceedings and should any of the previous costs orders be re-visited as a result of the Court’s findings in the principal judgment. These reasons now deal with each of those issues.

(1) The Defendants’ Claim for Set-Off

  1. The defendants claim that the judgment the Court entered on 11 December 2017 should now be set-off against a claim for rent arrears by Lunapas of $94,178.12, including costs and interest. The claim for unpaid rent was filed in a Statement of Claim lodged in the Magistrate’s Court at Southport in Queensland (Matter No. M0050064/2017).

  2. In a submission filed in this Court on 18 January 2018 in support of this set-off argument, Lunapas supplied copies of the Statement of Claim and the Defence in the Southport Magistrate’s Court. It is evident that the Lunapas Statement of Claim for rent was met with a Defence in that Court by Messrs Palermo that said that the alleged unpaid rent issue should be decided in these Supreme Court proceedings.

  3. Lunapas now submits that because this was the “cornerstone of the Defence in [the Southport Magistrate’s Court] matter” that the rent issue should indeed be decided in the present proceedings and Lunapas invites the Court now to do so. Lunapas relies upon Supreme Court Act1970, s 63, which provides as follows:

“63 Final determination

The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided.”

  1. Supreme Court Act, s 63 and its equivalents in other jurisdictions have been the subject of judicial commentary. Gibbs J said of the equivalent provision of the Federal Court of Australia Act1976, s 22 in Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7 at 489:

“Section 22 reproduces, with immaterial variations, the provisions of s. 43 of the Supreme Court of Judicature (Consolidation) Act 1925 (U.K.) which itself derives from s. 24 (7) of the Judicature Act 1873 (U.K.), whose provisions have been reproduced with or without amendment in subsequent enactments in the States of Australia as well as in s. 32 of the Judiciary Act. The provision, which has been considered in a number of authorities, has been said to mean "that whenever a subject of controversy arises in an action which can conveniently be determined between the parties to the action, the court should, if possible, determine it so as to prevent further and needless litigation": In the Goods of Tharp (84). In other words, it gave effect to a fundamental principle of the Judicature Act procedure, the avoidance of a multiplicity of proceedings. It has been said, and no doubt rightly, that having regard to the nature and purposes of the provision, it should be construed liberally: Roberts v. Gippsland Agricultural and Earth Moving Contracting Co. Pty. Ltd. (85); McLeish v. Faure (86).”

  1. The defendants submit that they believe that the claim by Lunapas for arrears of rent has been referred to “on many occasions during these lengthy hearings”. So they submit this Court should now take the claim for arrears of rent into account and allow for a set-off.

  2. Alternatively, Lunapas submits that upon it now undertaking to ensure that the proceedings were determined with all deliberate speed in the Southport Magistrate’s Court that the present judgment should be stayed at least as to the amount of money reasonably sought in those Queensland proceedings, so as to enable a set-off to be given effect.

  3. In my view, the Court should not accede to either of these submissions. Both submissions fail for the same reason. These submissions may be considered without the necessity to examine in this case whether the ingredients of an equitable or other set off are likely to be established with respect to the claim for the alleged arrears of rent: RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths), Chapter 39. Lunapas did not advance a clear case before judgment in these proceedings to alert this Court that it was claiming such a set-off. Nor did it seek to advance evidence as to its calculation of unpaid rent or to seek an admission from the Palermo interests as to the amount of any unpaid rent so as to quantify the amount of the set off. The whole of the legal and evidentiary issues concerning unpaid rent and the existence of the Southport Magistrate’s Court proceedings were left out of account before this Court gave the principal judgment.

  4. It may have indeed been possible to deal with these issues had they been raised at the proper time. But Lunapas would have had to raise the rent claim as part of its Defence here. Its failure to do so in a timely way during the hearing by seeking to amend its pleadings, by raising the matter in submissions or by adducing appropriate evidence is now a lost opportunity. The Palermos were always appearing in person at this rehearing. They had to travel from northern New South Wales. Lunapas had to travel from Queensland. It was difficult to get the parties together for the trial in this case. The balance of the issues concerning set-off and rent are likely to be contentious. Every other part of these proceedings has been contentious. It is neither practical nor convenient now for the Court to try and wrangle the parties back into a hearing in this Court in New South Wales to deal with this issue.

  5. Moreover, the defendants’ present application is really an application to amend its Defence and re-open its case after judgment in order to contest the plaintiff’s claim on the basis of a partial set-off. The obstacles to Lunapas being able to amend and re-open its case so late and in such circumstances are substantial: Smith v New South Wales Bar Association (1992) 176 CLR 256; [1992] HCA 36. No persuasive reason is shown why the Court should exercise its discretion now to permit that course, particularly where the nature of Palermo’s Defence in the Southport Magistrate’s Court was well known to Lunapas and Lunapas, it may be inferred, made the forensic decision not to amend its Defence before the Court delivered its principal judgment in the proceedings.

  6. The same argument equally applies to the alternative application for a partial stay of the judgment. The Palermos would be entitled to be heard in relation to a stay. There would likely be calculations to be done concerning what the extent of any stay should be. In my view, it is too late for the Lunapas interests to make such a claim for a stay.

  7. It should be observed that Supreme Court Act, s 63 refers to the granting of remedies upon claims “brought forward in the proceedings”. In my view, this issue has not been “brought forward” by Lunapas in these proceedings. And any argument by the defendants for a set off or a stay would also face the difficulty that the action for rent is brought in the Southport Magistrates Court by Lunapas, the first defendant here, but the second defendant, Mr Menniti has little basis to claim a set off.

  8. So far as the stay is concerned, Lunapas is still free to do what it appears to not to have done so far; namely, to accelerate the Southport Magistrate’s Court proceedings towards a final hearing and judgment so that it has a countervailing judgment in that court against the Palermo parties. There is nothing even now to prevent Lunapas from taking that course.

(2) The Costs Orders

  1. There are two costs sub-issues: (1) should previous costs orders be disturbed; and (2) should costs follow the event.

  2. The Court sees no basis to disturb previous costs orders. This Court undertook a re-hearing on a discrete part of these proceedings, as directed by the Court of Appeal. The re-hearing did not involve re-examining the prior decisions of other judges in the proceedings. But except to the extent that the Court of Appeal disturbed the prior decisions, this Court applied aspects of the findings in those decisions or the re-hearing. The Court will not make or change costs orders beyond the present hearing.

  3. The Palermo interests were substantially successful on this hearing. But they were successful in a much smaller sum than their original money claims, as the principal judgment makes clear. In my view, they should still have a substantial part of their costs. One can expect that some time was spent on the part of Lunapas in defending these unsuccessful claims that were severable in substance. In my view, in the circumstances, the appropriate order is that the defendants pay two-thirds of the plaintiff’s costs of the proceedings on the re-hearing.

  4. But these costs may be very small in any event. The Palermos were self-represented. They did incur some outgoings in filing and service fees and the like, so a costs order is appropriate. The calculation of the actual costs will be a matter for later costs assessment.

Conclusion and Orders

  1. Accordingly, the Court makes the following orders and directions:

  1. Order the defendants to pay two-thirds of the plaintiff’s costs of the re-hearing of the issues of quantum of loss due to conversion of the plaintiff’s goods.

  2. Dismiss the first defendant’s present claim to set off against the judgment entered on 11 December 2017 the first defendant’s action for arrears of rent in respect of the premises in the Southport Magistrate’s Court.

  3. Dismiss the defendants’ present claim to stay the plaintiff’s judgments on account of the first defendant’s action for arrears of rent in respect of the premises in the Southport Magistrate’s Court.

**********

Amendments

08 May 2018 - Coversheet amended to list parties as:

Plaintiff: ACN 116 746 859 (formerly Palermo Seafoods Pty Ltd)


Defendant: Lunapas Pty Ltd


Second Defendant: Luciano Menniti

Decision last updated: 08 May 2018

Actions
Download as PDF Download as Word Document