Duke Holdings Pty Ltd v Finlas Pty Ltd & Anor No. DCCIV-02-1614

[2004] SADC 10

DUKE HO0LDINGS PTY LTD & ANOR v FINLAS PTY LTD & ANOR
[2004] SADC 10

Judge Lunn
Civil

REASONS ON 2^ND DEFENDANT’S APPEAL AGAINST ORDER FOR SUMMARY JUDGMENT.

1. The plaintiffs leased premises at 322 Unley Road, Unley to the 1^st defendant.  The 2^nd defendant guaranteed the 1^st defendant’s obligations to the plaintiffs.  The 1^st defendant either abandoned or surrendered the premises in about May 2001.  The plaintiffs were unable to re-let the premises and ultimately sold them on 7 June 2002.

2. The plaintiffs sued the defendants in this action for outstanding rent, outgoings and expenses until 7 June 2002.  The 1^st defendant has since gone into liquidation and the action against it is therefore stayed.  Its counterclaim is also stayed.

3. By an application for directions filed on 6 March 2003 the plaintiff sought summary judgment.  After a contested hearing a Master published reasons which were posted to the parties on 23 October 2003.  He made the following fiat:

   “1.Judgment for the plaintiff (sic) against the second defendant on the claim in the sum of $42,037.62.

   ……

   3.Second defendant to pay plaintiff’s costs of action on the claim as against the 2^nd defendant.

   4.Liberty to plaintiff (sic) to submit interest calculations on the judgment sum within 14 days.

   4.1    2^nd defendant has 14 days in which to take any objection;

   4.2    If none plaintiff at liberty to file judgment for sealing including interest.

   ……”

   On 10 November 2003 the 2^nd defendant, now acting in person, filed an appeal against this decision.  No point was taken on the appeal being a few days out of time.

4. It does not appear that any steps were taken under paragraph 4 of the Master’s fiat to quantify the pre-judgment interest. There was a potential difficulty on whether the Master had yet entered a judgment against which there could be an appeal. Under s39 of the District Court Act 1991 there cannot be a separate judgment for pre-judgment interest, but that interest is to be included in the judgment on the action.  However, any such difficulty has been overcome by the plaintiffs’ counsel at the hearing before me abandoning the claim to pre-judgment interest.  Hence there is a valid judgment for $42,037.62 made on 23 October 2003 which is properly the subject of the appeal.

5. The Master published detailed reasons for his decision.  I am satisfied they are correct and I adopt them.  However, I also add some brief reasons of my own for rejecting the contentions of the 2^nd defendant put forward on the hearing of the appeal.

6. There is no basis in fact or law to conclude that the plaintiff acquiesced in, or accepted, the 1^st defendant’s abandonment or surrender of the lease on any terms that no further moneys would be payable.  On 29 May 2001 the plaintiffs wrote to the 2^nd defendant demanding payment of the rent.

7. The 1^st defendant intended to use the premises as a showroom for kitchens which it planned to sell.  However, there is some evidence that the floor of the premises may not have been suitable for installation of display kitchens and for its use as a showroom.  Any statutory warranty under the Retail and Commercial Leases Act 1995 for fitness for purpose had been lawfully excluded pursuant to s18(3) of that Act in the lease documents.  Accordingly, the plaintiffs were not legally liable if the defendants could not use the premises for their intended purpose.  In any event the 1^st defendant’s projected business for the premises was never established because it was unable to raise the necessary finance.  That was the prime cause of the 1^st defendant’s loss and not any breach of warranty, even if it had existed.

8. The 2^nd defendant made a vague, generalised and unparticularised allegation that the plaintiffs had not mitigated their loss in the substantial period between the abandonment of the premises by the defendants and its ultimate sale by the plaintiffs.  There is an evidentiary onus on the 2^nd defendant to establish the plaintiffs’ failure to take reasonable steps to mitigate their damage.  The defendants did not deal with the factual basis of this allegation in the affidavits which they filed in opposition to the summary judgment.  The defendants have put forward nothing to show that they have any prospect of proving that the plaintiffs have breached their obligation to mitigate their damage.  On the evidence before the Court at present it is no more than speculation that the plaintiffs might have breached this obligation and that is not sufficient to counter an application for summary judgment: Leasing Corp Ltd v Clarke, Supreme Court of South Australia, Full Court 16/10/92, Jud No S3660, unreported.

9. I agree with the Master that on the material before the Court the 2^nd defendant has no arguable case in answer to the plaintiffs’ claim.  It would be an abuse of process to allow the matter to proceed to trial in that there is no just reason why the plaintiffs should be put to the considerable expense and delay involved in a full trial of the action.  The Master was correct in ordering summary judgment.  The Master’s determination of the application did not involve the exercise of any discretion, and thus I am not obliged to exercise any discretion afresh on the appeal: Transeast Pty Ltd Commonwealth Bank (1990) 157 LSJS 447.

10. On the hearing of the appeal counsel for the plaintiffs conceded that there was a small error in the figures put before the Master and that the judgment should be reduced by $216.66 being GST paid for January 2001 incorrectly not deducted from the claim.  Under Rule 84.12 the judgment sum is corrected and reduced to $41,820.96.  Subject to this reduction the appeal is dismissed.  The 2^nd defendant is to pay to the plaintiffs their costs of the appeal as agreed or taxed.