Briffa v Palasovski

[2015] NSWSC 213

Supreme Court

New South Wales

Medium Neutral Citation:	Briffa v Palasovski [2015] NSWSC 213
Hearing dates:	2 February 2015
Date of orders:	02 February 2015
Decision date:	02 February 2015
Jurisdiction:	Equity Division - Corporations List
Before:	Brereton J
Decision:	The Amended Statement of Claim filed on 23 January 2015 be struck out; the claim for relief in paragraph 3 of the Notice of Motion filed on 17 September 2014 be dismissed; the plaintiff file and serve any Further Amended Statement of Claim by 23 February 2015; the proceedings be adjourned to 2 March 2015 at 10.00am for directions before me; the balance of the motion filed 17 September 2014 be adjourned to 2 March 2015.
Catchwords:	PROCEDURE – stay of proceedings – where party liable for costs of proceedings commences further proceedings on the same cause of action or for the same relief – where costs order made against bankrupt – absence of jurisdiction to make costs order – where costs not assessed – discretion not to exercise power to stay proceedings
Legislation Cited:	(NSW) Uniform Civil Procedure Rules 2005, r 12.10, r 13.6 (NSW) Civil Procedure Act 2005, s 67
Cases Cited:	CGU Insurance Limited v Watson (as trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301
Category:	Procedural and other rulings
Parties:	Berlinda Briffa (plaintiff) Tony Palasovski (first defendant), Boris Palasovski (second defendant), Elena Palasovski (third defendant), Nicholas Palasovski (fourth defendant)
Representation:	Counsel: In person (plaintiff) R Perla (defendants) Solicitors: Kaylene Cuddy Coutts Solicitors & Conveyancers (defendants)
File Number(s):	2014/205458

Judgment (Ex tempore)

1. HIS HONOUR: The defendants were the registered proprietors of premises at 7-9 Reaghs Farm Road, Minto. On or about 12 January 2007, they leased those premises to the plaintiff Berlinda Briffa and her then partner, who were trading as Indoor Sports World. On or about 12 December 2008, the plaintiff acquired her partner's interest in the business, and the partner was released from all obligations under the lease, the plaintiff remaining as the sole lessee of the premises.

2. It would seem that some time in mid-2009 the defendants took possession of the premises, as on 6 July 2009 the plaintiff commenced proceedings by Notice of Motion in this Court numbered 3566 of 2009 against the defendants seeking an order that the defendants give her possession of the premises and undertake various repairs to the premises. Those proceedings were resolved by way of a consent order made on 15 July 2009, as follows:

1. The Plaintiff is to pay the Defendants a Bond, by bank cheque, in the sum of $16,000 on Friday 17 June 2009 at 9 am at the offices of Messrs Dougherty & Smith, solicitors.

2. The Defendants will grant access to the Plaintiff to re-enter the premises on Friday 17 July 2009 at 9 am upon production of the bank cheque referred to in paragraph 1 above.

3. The Defendants agree to a reduction in rent until the roof is repaired in sum of $550 per day if the rainfall is over 7 millimetres.

4. The Defendants agree to engage a roofer to inspect and repair the roof with the roofer to supply a guarantee of repair.

5. The Defendants agree to engage a tradesperson from 20 July 2009 to repair the following:

1. The roof;

2. All roller doors (by insurance or otherwise);

3. The front door;

4. The men’s toilet system;

5. The emergency back up lights; and

6. The ceiling lighting.

6. The Defendants agree to give the Plaintiff one-week abatement in rent from 17 July 2009 to 23 July 2009.

7. The Defendants undertake to deliver to the Plaintiff a Duly executed Memorandum of Lease in duplicate for the premises at 7-9 Reaghs Farm Road, Minto upon the Plaintiff paying the registration fee and stamp duty to the Defendants’ solicitor, Mr Graeme Dougherty of Dougherty & Smith.

8. The Plaintiff undertakes to pay rent as agreed under the lease one week in advance commencing on 24 July 2009 and to pay rent on time and punctually in the future.

9. The parties hereby agree to amend item 12 of the Lease in order that rent shall be payable one week in advance every Friday.

10. The Plaintiff hereby releases the Defendants from any claim she may have for damages to the premises or in relation to the running of the business in respect of these proceedings.

11. The Defendant hereby releases the Plaintiff from any claim they may have under the terms of the Lease in respect of these proceedings.

12. The Plaintiff agrees to pay the Defendants’ costs as agreed or assessed.

13. The proceedings are to be dismissed.

3. It will be observed that the plaintiff obtained a measure of success under that order, although the proceedings were dismissed and the plaintiff agreed to pay the defendants’ costs as agreed or assessed. It is disputable whether that was a costs “order”, it being recorded as an agreement, as is much of the remainder of the so-called order.

4. The defendants say that their costs of those proceedings amounted to $17,000 and that payment of those costs was requested from the plaintiffs, although there is no evidence of any communication to that effect. But it is acknowledged that those costs have, on any view, not been assessed. In any event, that is largely beside the point, save arguably as to discretion, because that order is not relied on for the purpose of the present application.

5. Although it seems likely for present purposes – although the evidence is far from satisfactory – that the plaintiff paid the bond referred to in the July 2009 order, it seems that she thereafter fell into default under the lease again and was in default during late 2009, consequent upon which, on 6 January 2010, the defendants again took possession of the premises. Subsequently, the defendants commenced proceedings for unpaid rent and on 3 June 2010 the Local Court at Camden after an undefended hearing gave judgment against the plaintiff for $59,825.81.

6. On 4 January 2011, the plaintiff commenced proceedings in this Court apparently numbered 2010/363460, claiming, "Payment for the business and contents as well as loss of profits for Sporties as from 3 August 2010 as the plaintiff’s business was reopened by the defendant and pain and suffering." Essentially the pleading complained that after taking possession, the defendants re-opened her business, using her contents and clients.

7. On 22 June 2011, the Court ordered, pursuant to rule 13.6 of the (NSW) Uniform Civil Procedure Rules 2005, that the proceedings be dismissed and that the plaintiff pay the defendant's costs of the proceedings.

8. The plaintiff says – and it is consistent with what she has earlier alleged in her verified pleadings – that by the end of 2010 she was bankrupt, and ceased to be bankrupt as from 20 December 2013. There is prima facie plausibility in that, as the ordinary statutory period after which a bankrupt would be discharged is a period of three years. It therefore seems quite likely, although as I have said the evidence is less than satisfactory, that when the costs order was purportedly made by the Court on 22 June 2011 the plaintiff was in fact bankrupt, and in those circumstances it is very doubtful that the Court could have made a costs order against her. In any event, that costs order has never been assessed.

9. On 11 July 2014, the plaintiff commenced the current proceedings, in which she claims substantially the same relief as was claimed in the 2011 proceedings and pleads substantially the same matters. The defendants filed a defence on 12 August 2014, and on 4 September 2014 a motion, since amended, seeking an order that the Statement of Claim be struck out and alternatively summarily dismissed, and (pursuant to the amendment) in the further alternative, that the proceedings be stayed pursuant to UCPR, r 12.10 or (NSW) Civil Procedure Act 2005, s 67, on the footing that the costs order made in the 2011 proceedings remains unpaid.

10. The proceedings came before Kunc J on 3 October 2014 when his Honour allowed the plaintiff an adjournment for a period of four weeks in order to enable her to obtain legal advice. His Honour said, "The Court notes that the plaintiff has been informed that she should be in a position to proceed on the next occasion. That means next time, no excuses," to which the plaintiff responded, "Yes. Thank you very much.”

11. The proceedings then came before me in the Applications List on 31 October 2014. Although the plaintiff sought a further adjournment, having read the affidavit evidence and the defendant's submissions, it seemed to me that on any view the Statement of Claim was demurrable and I ordered that it be struck out and that any Amended Statement of Claim be filed and served by 28 November with the balance of the motion being adjourned to 5 December. I also ordered that the plaintiff pay the defendant's costs of the appearance before Kunc J and on that day, assessed in the sum of $3,300.

12. The plaintiff did not serve any amended Statement of Claim in compliance with that order, and when the matter returned before me on 5 December 2014 there was no appearance by or on behalf of the plaintiff. I ordered that unless by 18 December the plaintiff had filed and served an Amended Statement of Claim the proceedings be dismissed and that the defendant serve a copy of the orders on the plaintiff by 9 December, and adjourned the proceedings to 19 December for that purpose.

13. On 19 December, there was no appearance by or on behalf of the plaintiff, but the defendant had not strictly complied with the order requiring service of a copy of the order on the plaintiff by 9 December. Accordingly, I ordered that the orders of 5 December be set aside and substituted an order that unless by 23 January 2015 the plaintiff has filed and served an Amended Statement of Claim, the proceedings be dismissed; that the defendant serve a copy of that order by 10 January; and that the proceedings be adjourned to 2 February for directions.

14. The plaintiff has now, on or about 23 January 2015, filed and served an Amended Statement of Claim. It, however, suffers from largely the same defects as the first Statement of Claim. It simply does not make clear what is the plaintiff's cause of action and how it is put.

15. The plaintiff advances a number of reasons, none of which are substantiated by the evidence, for a further opportunity to obtain advice to put her pleading in order. Without accepting that any of the matters to which she has referred are established, I formed the view that she should be given one last opportunity to formulate an acceptable pleading of her case. The plaintiff must understand that this involves her being granted an indulgence on an indulgence on an indulgence, having regard to what Kunc J said close to six months ago now.

16. In the light of that, I do not propose to deal today with the balance of the motion so far as it seeks the dismissal of the proceedings. However, the defendant suggested that the application for a stay contained in paragraph 3 of the amended motion would not be affected by any potential amendment, and accordingly I proceeded to hear that application.

17. UCPR, r 12.10, provides as follows:

If:

(a) as a consequence of the dismissal of proceedings, a party is liable to pay the costs of another party in relation to those proceedings, and

(b) before payment of the costs, the party commences further proceedings against that other party on the same or substantially the same cause of action, or for the same or substantially the same relief, as that on or for which the former proceedings were commenced,

the court may stay the further proceedings until those costs are paid and make such consequential orders as it thinks fit.

18. The Court has also as an inherent power to stay later proceedings until costs in earlier proceedings have been paid, based on its power to prevent the abuses or vexatious use of its processes: [CGU Insurance Limited v Watson (as trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301, [40]]. However, given the availability of rule 12.10 in this case, it is preferable to focus on that rule, which makes express provision.

19. As I have observed in the course of recounting the history, the costs order relied on for present purposes is the 2011 costs order. It seems highly disputable that it was a valid and effective exercise of the Court's jurisdiction, given the plaintiff's then apparent bankruptcy. Moreover, those costs have been not been assessed, so the plaintiff cannot know how much is payable under that order. Indeed, unlike in respect of the 2009 order, there is not even any evidence from the defendants as to the quantification, or an estimate of how much is payable under that costs order, nor that any request for payment has been made.

20. In those circumstances, even if it can be said that for the purposes of rule 12.10 a party is liable to pay the costs of another party once an order has been made and before the order has been quantified by assessment, the absence of an assessable amount and the absence of any evidence of a demand or request for payment of a particular amount weighs in the discretionary consideration of whether the power under rule 12.10 should be exercised. Given the considerable doubts that attend the validity of the order in the first place, as it seems likely the plaintiff was then bankrupt, and the absence of any assessment or quantification of the order, it seems to me that this is not an appropriate case for the exercise of that power.

21. The Court orders that:

1. The Amended Statement of Claim filed on 23 January 2015 be struck out.

2. The claim for relief in paragraph 3 of the Notice of Motion filed on 17 September 2014 be dismissed.

3. The plaintiff file and serve any Further Amended Statement of Claim by 23 February 2015.

4. The proceedings be adjourned to 2 March 2015 at 10.00am for directions before me.

5. The balance of the motion filed 17 September 2014 be adjourned to 2 March 2015.

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Decision last updated: 12 March 2015