AMP Royal Randwick Pty Ltd v Haweli Pty Ltd - [2019] WADC 59

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   AMP ROYAL RANDWICK PTY LTD -v- HAWELI PTY LTD [2019] WADC 59
CORAM:   REGISTRAR KINGSLEY
HEARD:   1 FEBRUARY 2019
DELIVERED          :   26 APRIL 2019
FILE NO/S:   CIV 2377 of 2018
BETWEEN:   AMP ROYAL RANDWICK PTY LTD
Plaintiff

AND

HAWELI PTY LTD
First Defendant

RAHUL BATRA
Second Defendant

SONIA BATRA
Third Defendant

Catchwords:

Practice and procedure - Application to set aside judgment - No new principles

Legislation:

Nil

Result:

Application allowed

Representation:

Counsel:

Plaintiff	:	Mr D Giglia
First Defendant	:	No appearance
Second Defendant	:	In person
Third Defendant	:	No appearance

Solicitors:

Plaintiff	:	Hotchkin Hanly Lawyers
First Defendant	:	Not applicable
Second Defendant	:	Not applicable
Third Defendant	:	Not applicable

Case(s) referred to in decision(s):

Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Southern British National Trust Ltd v Pither (1937) 57 CLR 89
Tobin v Dodd [2004] WASCA 288
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534

REGISTRAR KINGSLEY:

The second defendant (Mr Batra) has brought an application to set aside the default judgment entered 18 July 2018. The application is supported by Mr Batra's affidavit sworn 4 September 2018 (Mr Batra's first affidavit), Mr Batra's affidavit dated 6 November 2018 (Mr Batra's second affidavit), affidavit of Mr Batra sworn 17 December 2018 (Mr Batra's third affidavit) and the affidavit of Mr Sankhyan dated 21 December 2018 (Mr Sankhyan's first affidavit) and 17 January 2019 (Mr Sankhyan's second affidavit).
The plaintiff oppose the application and has filed the affidavit of Mr Giglia dated 3 October 2018 (Mr Giglia's affidavit) and of Andrea Louise Smith dated 14 December 2018 (Ms Smith's affidavit).

Background

By a statement of claim dated 28 June 2018 the plaintiff (AMP) pleads that AMP as lessor in or about 31 January 2014 entered in a lease agreement with Batra Brothers Pty Ltd (Batra Brothers) for a term of five years (the Shop 109 Lease).
The Shop 109 Lease contained terms whereby Mr Batra and the third defendant unconditionally and irrevocably guaranteed to AMP the due and punctual performance and observance by Batra Brothers of its obligations under the Shop 109 Lease.
In or around 26 April 2016 Batra Brothers, the first defendant, Mr Batra, and the third defendant entered into an Assignment of Lease (Assignment of Lease). By the Assignment of Lease, Batra Brothers assigned to Haweli Pty Ltd (Haweli) all of Batra Brothers' estate interests rights and obligations in respect of Shop 109 under the Shop 109 Lease. In addition Mr Batra and the third defendant guaranteed the obligations of Haweli under the Assignment of Lease.
Due to various defaults AMP issued a notice of default on 21 February 2018 requiring Haweli to rectify the breaches. AMP pleads that despite demand Haweli failed to rectify the breaches and on 13 March 2018 AMP terminated the lease by re‑entry.
By reason of Haweli's breaches of the lease and the termination, AMP alleged it suffered loss and damage being payment of a liquidated amount for unpaid rent and an indemnity for loss and damage suffered as a result of the breach and termination of the lease. AMP filed a writ in June 2018, and entered judgments in default of appearance in July 2018.
Mr Batra's first affidavit in support of the application to set aside default judgment did not condescend to any details.
Mr Batra's second affidavit goes into significantly more detail. Mr Batra deposes that there were negotiations with Anthony Scaffidi in April 2013 in relation to opening an Indian food court outlet in the Ocean Keys Shopping Centre. Mr Batra deposes that Anthony Scaffidi made representations that Ocean Keys Shopping Centre had a current footfall of $5 million and will be significantly increasing with new renovations and expansions. Mr Batra contends that the renovations and expansions had not happened.
By March 2014 Batra Brothers were experiencing some financial stress. Mr Batra in an email to AMP complains that he has not received the signed lease back nor provided the landlord with the bank guarantee and deposit so the lease contract is not complete and he has rights to withdraw (email sent 7 March 2014 at 1.57 pm). This was in response to AMP's email of 7 March 2014 at 1.05 pm where AMP stated Batra Brothers were bound by the lease so legally Batra Brothers cannot just get out of it.
Mr Batra deposes that he had a meeting with Jacquie Merriman around 11 March 2014 and, having related to Ms Merriman Batra Brothers' situation, was advised that if he did not go ahead with the lease then Mr Batra and the third defendant were to be sued for damages for the whole term of the lease. Mr Batra deposes that notwithstanding she would get the landlord (AMP) to increase an incentive by $50,000, Mr Batra stated that that would not help with his financial condition and was advised that if he did not proceed with the lease, he would be sued for damages.
Mr Batra deposes that there was a misrepresentation of customer footfall that AMP took advantage of his condition by enforcing hard terms and conditions and they kept his equipment and used it for AMP's benefit to provide to a new tenant.
In his second affidavit, Mr Sankhyan confirms that he had been present in negotiations with Mr Batra and Anthony Scaffidi in April 2013. Mr Sankhyan deposes that Mr Batra offered rental of $80,000 to $85,000 based on the current footfall of five million people per annum. Mr Sankhyan deposes that Anthony Scaffidi, to use Mr Sankhyan's words, 'ensured that the footfall will increase to a significant 20% and over once the renovation and expansion was completed'. On that basis Mr Batra agreed to the base rent of $105,000 based on the significant increase in footfalls.
It would appear then that Mr Batra's defences are:
•Misrepresentation;
•The lease agreement was signed under economic duress;
•Not all services of variable outgoings were provided by the plaintiff.
Mr Batra appears in person. As a consequence, and it is a fundamental right of a litigant to appear in person, the court must assume the burden of ascertaining the right of the litigant to ensure that, in a poorly expressed or unstructured document there is no viable cause of action (Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 536; Tobin v Dodd [2004] WASCA 288).
The most compelling argument of Mr Batra is that of misrepresentation. The purported representations were made by the plaintiff's agent to Batra Brothers. Batra Brothers of course is not a party to these proceedings. The lease was assigned by Batra Brothers to Haweli and the plaintiff sues to enforce against Mr Batra the guarantee Mr Batra gave when Haweli entered into that assignment. It is the submission of plaintiff's counsel that any rights that may flow from a misrepresentation to Batra Brothers does not flow to Haweli.
The plaintiff submits that the negotiation with Mr Scaffidi were by Batra Brothers, which is not a party to the action. The plaintiff submits that it sues under the guarantee given by Ms Batra when Haweli entered into the assignment of the lease.
It is Mr Batia's evidence, supported by Mr Sankhyan, that as a result of Mr Scaffidi's misleading and deceptive representations, Batra Brothers entered into the lease. On that evidence, arguably, Batra Brothers had a claim against the plaintiff for misleading and deceptive conduct.
An assignment, in its general sense is the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee (Norman v Federal Commissioner of Taxation (1963) 109 CLR 9). It is the case that the assignee will take the assignment subject to its right to approach a Court for an order by virtue of some vitiating factor (Southern British National Trust Ltd v Pither (1937) 57 CLR 89).
This right can be explained by reference to the fact the assignment is a transfer, and any vitiating factor constitutes a defect in title (Southern British).
In my opinion whilst the purported representations were made to Batra Brothers, Mr Batra, as guarantor of the assignee, Haweli could defend the plaintiffs claim on the basis the purported misrepresentation could void the original lease.
The guarantee does contain a clause specifically seeking to preserve the obligations of the guarantor should the lease be found void or voidable (cl 16.4, Deed of Assignment).
According to O'Donovan and Phillips in The Modern Contract of Guarantee (3^rd ed, (1996) at page 274) a clause purporting to preserve the guarantors liability in the event of a defective principal transaction will not be effective, because the guarantee as a whole never becomes operative.
Mr Batra has also raised issues about abandoned property, and not gaining full use of services such as access to the loading dock. These allegations are not supported by particulars. Whilst there have been hard bargaining in the negotiation with Batra Brothers, that in itself does not give rise to a cause of action. Mr Batra has not given full particulars in relation to this cause of action.
For these reasons, in my opinion, Mr Batra has an arguable issue in relation to misrepresentation which potentially disclose a defence to AMP's claim under the Australian Consumer Law. The judgment entered against him should be set aside.
I will hear counsel for the plaintiff and Mr Batra as to the form of orders.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
ET
Court Officer
24 APRIL 2019