Dennis Lewy v Kitchen Elite Pty Ltd

[2004] NSWSC 409

CITATION:	Dennis Lewy & Ors v Kitchen Elite Pty Ltd & Ors [2004] NSWSC 409 revised - 12/05/2004
HEARING DATE(S):	24 March 2004
JUDGMENT DATE:	24 March 2004
JURISDICTION:	Common Law
JUDGMENT OF:	Adams J at 1
DECISION:	Order of the Master quashed. The cross-defendant to have the costs incurred by virtue of the plaintiff seeking leave to commence a cross-claim against it. The cross plaintiff to have the costs both before the Master and here in relation to the disputation as to whether leave should be granted.
LEGISLATION CITED:	Corporations Law, s 601AD
CASES CITED:	Evans v Bartlam (1937) AC 743 (1999) James Hardie & Coy Pty Limited v Seltsam Pty Limited (1999) 196 CLR 53 Multicon Engineering Pty Ltd v Federal Airports Corporation (2000) 47 NSWLR 631
PARTIES :	Dennis Lewy, Ronny Lewy & Garry Lewy as the Joint Exeuctors of the Estate of the late Kate Lewy (Plaintiffs) v Kitchen Elite Pty Limited (First Defendant) Peter Bazos (Second Defendant) Suzanne Linda Bazos (Third Defendant) Nicholas Bazos (Fourth Defendant) Dennis Lewy, Ronny Lewy & Garry Lewy as th Joint Executors of the Estate of the late Kate Lewy (First Cross Defendant) Wah Chang Off Shore (Hong Kong) Pty Ltd (Second Cross-Defendant)
FILE NUMBER(S):	SC 10219/98
COUNSEL:	Mr P T Russell (Plaintiffs) Mr J Stoljar (Defendants) Mr Ian Faulkner SC (Poroposed cross-defendant)
SOLICITORS:	Cridlands Lawyers Incorporating Dickson Fisher Macansh (Plaintiffs) Bowen & Gerathy (Defendants) Minter Ellison (Proposed cross-defendant)

LOWER COURTJURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):
LOWER COURT JUDICIAL OFFICER :	Master Malpass

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

ADAMS J

WEDNESDAY 24 MARCH 2004

10219/98 - DENNIS LEWY AND OTHERS v KITCHEN ELITE PTY LIMITED AND OTHERS

JUDGMENT

1 HIS HONOUR: In this matter I have reached a clear view as to how it should be disposed of, and I am indebted to counsel for the candour and thoroughness of their submissions which enables me to deliver this judgment ex tempore. In the nature of things, this judgment may not do justice to each argument that has been directed to me but I hope that I shall address the substance of the cases made on each side.

2 In June 1987 Kitchen Elite Pty Limited ACN 000581108 (Kitchen Elite No 1) was registered. In November 1992 it entered into a lease of certain premises as tenant with a Ms Kate Lewy as landlord. In July 1994 Kitchen Elite No. 1 was deregistered. Section 601AD of the Corporations Law provides that a company ceases to exist on de-registration. However, there is no doubt that the premises were occupied by persons who had been associated with the then non-existent company. In October 1994 Kitchen Elite Pty Limited ACN 066659836 (Kitchen Elite No 2) was incorporated.

3 On 29 January 1998, the landlord commenced proceedings against Kitchen Elite No 1 in this Court, filing a statement of claim which sought possession for non-payment of rent and other outgoings and mesne profits. These proceedings were of course invalid since there was no extant defendant. In March 1998 the statement of claim was amended but the defendant remained unchanged. In April 1998 default judgment was entered against the (named) defendant for possession of the premises and a writ of possession was issued. In the following month the defendant, although it did not exist, sought to set aside the judgment and writ of possession. Master Harrison declined to set aside the judgment.

4 In May 1998 Kitchen Elite No 1 purported to file a defence to the money claims in the proceedings brought by the landlord and cross-claimed against Wah-Chang Off Shore (Hong Kong) Pty Limited (Wah-Chang) for damage to the property caused by structural works being undertaken by Wah-Chang on its neighbouring premises. The landlord defended the cross-claim brought by Kitchen Elite No. 1 in June 1998. Shortly after, Wah-Chang filed a notice of appearance, and over a month later Kitchen Elite No 1 purported to file a further amended defence and further amended cross-claim.

5 On the same day, or possibly the day thereafter, the landlord obtained possession of the property. Something less than five months later, on 3 December 1999, the landlord, by Notice of Motion, sought to substitute Kitchen Elite No 2 and the directors of Kitchen Elite No 1 as defendants. On 13 December 1999 orders were made accordingly. None of the parties opposed the substitution. The motion was supported by the affidavit of Mr Thomas James Wallace, who was the landlord's solicitor. The affidavit sets out the chronology of pleadings to that time and attached a letter of 13 November 1998 from the solicitors for Kitchen Elite No 1 advising that the company had been deregistered on 6 July 1994 and that Kitchen Elite No 2 had been registered on 4 October 1994. The directors of both companies were the same persons.

The affidavit concludes as follows –

“I am informed by Dennis Lewy, the son of the plaintiff and the plaintiff's property manager, that the plaintiff:
(a) in commencing these proceedings, at all times intended to sue as the defendant the tenant (in the premises during the periods of unpaid rent and outgoings as claimed in the statement of claim); and
(b) not knowing that the original company deregistered believed, in commencing these proceedings against the original company, that it was the tenant at all times pursuant to the lease referred to in the statement of claim.”

6 Although this paragraph does not assert that the deponent believed the information given, I think it should be read as implicit. It seems to me that the overwhelming likelihood is that Kitchen Elite No 1 was mistakenly sued because it was not appreciated that it had been deregistered and that the actual tenant at the time of the commencement of proceedings was Kitchen Elite No 2.

7 It is clear that Kitchen Elite No 2 did not take the point that Kitchen Elite No 1 was not the relevant tenant and was unconcerned with the mistaken identity of the tenant and accepted that the references to Kitchen Elite No 1 were intended to be references to Kitchen Elite No 2.

8 Wah-Chang, of course, was unaware of these matters, except to the extent that it may be said to have constructive knowledge by virtue of the Companies Registry. It was, therefore, constructively in a position to have objected to the cross-claim brought by Kitchen Elite No 1 against it in May 1998. It is almost certain, I think, that it did not make the point, because it was unaware of the identification issue. In the real world, this question would be regarded as one of formal significance only, at all events, and not worth the expenditure of costs.

9 After the substitution of the correct defendant, the landlord sought to cross-claim against Wah-Chang for the interference to her tenants' occupation, against the risk that the tenants’ defence of interference might succeed. It was necessary to obtain leave for this cross-claim and Wah-Chang opposed its grant.

10 Master Malpass refused leave to bring the cross-claim, essentially upon the basis that it was not consistent with the original claim that had been prosecuted to judgment and which had not been set aside. It is not suggested that the naming of the wrong defendant was in any sense fraudulent and the only reasonable inference is that it was merely a mistake.

11 The learned Master, however, pointed out that not only had judgment been obtained, a writ of possession had issued. He expressed his concern about these matters during argument, as they had not hitherto been raised by the parties.

12 There has been much debate before me as to whether the default judgment is a valid judgment or not. Even if it were valid, however, it is meaningless since it propounds an order against a non-existent party. The writ issued pursuant to it is also meaningless for the same reason.

13 It is submitted to me by Mr Faulkner SC for Wah-Chang, that it nevertheless may be said to have had a commercial impact, in that the tenant has left the premises.

14 The tenants have never suggested, and indeed they could not suggest, that they were ever misled by the proceedings, the order or the writ, since the tenant of all people must have known about the de-registration of Kitchen Elite No 1 and the subsequent registration of Kitchen Elite No 2. I am unable to see how the obtaining of the order was of the slightest benefit to the plaintiff, since it is evident that it was both legally and factually ineffective.

15 The Master concluded that the landlord sought now to propound a claim, namely that the tenant is Kitchen Elite No 2, which is incompatible with a claim that had already been prosecuted to judgment, namely that the tenant was Kitchen Elite No 1. I do not see how this can be so, having regard to the orders made to substitute the present defendants for the deregistered company. If the inconsistency be significant, it is incompatible also with that order. Having regard, therefore, to the form of the current proceedings, I am of the view that the landlord is not seeking to propound an incompatible claim. It is true that, in a sense, the present claim is inconsistent with the form of the extant order, but that form will not stand in the way of the present claim unless it is in substance different. The only difference is that, by error, the deregistered company was named rather than its successor.

16 In substance, the proceedings were brought against and the order obtained against the tenant of the premises. The only inconsistency is that the tenant was given the wrong name. Having formed this view, I have therefore not found it necessary to consider whether the default judgment is a nullity.

17 It is obvious, from what I have already said, that I do not regard the proposed cross-claim as representing an abuse of the process of the court. It is clear that no question of estoppel arises, since at no time has Wah-Chang acted to its detriment in reliance on the mistaken naming of the tenant. If I may say so, with respect, the arguments put to me by Mr Faulkner for Wah-Chang might have had some weight had the proceedings in fact been taken against different tenants as distinct from, as I have found, being the same party misnamed. It is for this reason that it has been unnecessary for me to analyse the possible application in this case of Multicon Engineering Pty Ltd v Federal AirportsCorporation (2000) 47 NSWLR 631, James Hardie & Coy Pty Limited v Seltsam Pty Limited (1999) 196 CLR 53 and Evans v Bartlam (1937) AC 743 (1999), amongst other decisions of high authority to which I have been referred.

18 Accordingly, the order of the Master is quashed. I give leave to the plaintiff to file a cross-claim in the form of the cross-claim annexed to the affidavit of Thomas James Wallace sworn 16 October 2002. I note in this respect, however, that Wah-Chang has taken objection to a number of the paragraphs and proposed causes of action in the cross-claim to which the plaintiff has indicated an inclination to accede. I do not, by this order, propose to determine any issue between the parties in this regard. Those matters can be determined in the ordinary course of case management.

The cross-claim is to take effect from 17 September 2002.

19 The cross-defendant is entitled to an order for the costs incurred by virtue of the plaintiff seeking leave to commence a cross-claim against it, but the cross plaintiff is to have the costs, both before the Master and here, in relation to the disputation as to whether leave should be granted.

20 I will make no order as to the defendants’ costs, either before the Master or here.

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Last Modified: 05/13/2004