Dylanbella Pty Ltd Trading as Buckleys Auto Repairs as Trustee of the Trustee for Goran Family Trust v Nguyen
[2020] VCC 706
•2 June 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-20-01276
| DYLANBELLA PTY LTD (ABN 39 954 472 114) TRADING AS BUCKLEY’S AUTO REPAIRS AS TRUSTEE OF THE TRUSTEE FOR GORAN FAMILY TRUST | Plaintiff |
| v | |
| SEAN DANH NGUYEN & ORS | Defendants |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 2 June 2020 | |
CASE MAY BE CITED AS: | Dylanbella Pty Ltd Trading as Buckleys Auto Repairs as Trustee of the Trustee for Goran Family Trust v Nguyen & Ors | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 706 | |
REASONS FOR JUDGMENT
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Subject: COSTS APPLICATION
Catchwords: Proceeding by plaintiff for delivery up of goods or damages; interlocutory relief for delivery up sought by summons; property released by defendants following service of writ, summons and supporting affidavits; application for costs on an indemnity basis; goods retained by defendants apparently as part of illegal attempt to levy distress against evicted tenant; two Calderbank letters served prior to commencement of proceeding; defendants acted in disregard of established law until served with proceedings, affidavits and summons and failed to accept proposals in Calderbank letters until served with proceedings summons and affidavit material; costs awarded by way of lump sum on a full indemnity basis
Legislation Cited: Landlord and Tenant Act 1958 (repealed); Interpretation of Legislation Act 1984
Cases Cited:Asian Pacific Building Corp Pty Ltd v Sharon-Lee Holdings Pty Ltd [2013] VSC 11; Hoddinott v Willmott Forests Ltd [2012] VSC 282; Champagne View Pty Ltd v Shearwater Resort Management [2000] VSC 214; Hazeldenes Chicken Farm v Victorian WorkCover Authority [2005] VSCA 298; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; Re the Minister for Immigration and Ethnic Affairs Ex parte Lai Qin (1997) 186 CLR 622; Fire Containment Pty Ltd v Robins [2011] NSWSC 547; Peet Ltd v Richmond [2010] VSCA 71; [2015] WASC 94; J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No 2) (1993) 46 IR 301;
Judgment: 1. Proceeding dismissed
2.The defendants pay the plaintiff’s costs of this proceeding and of and incidental to the summons filed 23 March 2020 fixed in the sum of $14,852.92
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Thomas L Bevan | Longford Legal Pty Ltd |
| For the Defendants | Mr J Castelan | Tisher Liner FC Law |
HIS HONOUR:
Background
1 The Writ of Summons commencing this proceeding was filed 23 March 2020 seeking on behalf of the plaintiff company orders that certain goods be delivered up by the defendants, alternatively damages, costs and further or other relief. According to the Statement of Claim, Dylanbella operated a business known as Buckley’s Auto Repairs and obtained in or about June 2017 a licence from the occupier of the premises at 247-249 Hyde Street, Yarraville to use that property to store cars and other goods. The occupier, it was said, was Mr Troy Nguyen, who occupied the property as tenant of the defendants. On 6 March 2020, according to the pleading, the defendants terminated Mr Troy Nguyen’s tenancy by re-entering and changing the locks. The plaintiff, it was said, had 30 cars, three scooters and other goods stored at 247-249 Hyde Street at the time of the re-entry. The plaintiff complained that despite a demand, the defendants refused to deliver the goods to the plaintiff. On the same day, the plaintiff filed a summons returnable before the duty judge the following day, 24 March 2020, seeking an order that the defendants deliver up to Dylanbella the goods referred to in the schedule to the Summons.
2 According to an affidavit sworn 23 April 2020 by Ms Chantelle Nguyen, one of the defendants, no consent was obtained from the defendants to whatever licence arrangement Dylanbella had with the tenant, Mr Troy Nguyen. (Paragraph 7) She said that at the time of re-entry, the monthly rental, approximately $1,000, was some six months in arrears. (Paragraph 4)
3 Mr Bolog of Longford Legal, solicitors for Dylanbella, deposed in an affidavit dated 29 April 2020 that he telephoned a Mr Ryan whom he identified as the defendants’ managing agent for the property to 247-249 Hyde Street, telling him that Dylanbella wished to retrieve its goods from that property. He said that he told Mr Ryan that Dylanbella “would be prepared to take up a lease on the property and pay rent moving forward”. (Paragraph 3)
4 Mr Bolog said Mr Ryan replied that the property had already been leased to a third party and “that in order to gain access to the property to retrieve [its] goods [Dylanbella] would have to pay the rental arrears from the previous tenant, Mr Troy Minh Nguyen.” Mr Bolog says he replied that there was no legal basis for the defendants to insist on payment and Mr Ryan replied, “Pay the amount owing or go to court.” Mr Ryan was sent an email to Mr Bolog stating, “I have been instructed by the landlord that you consult the tenant Troy and if all fails then to proceed to the court or VCAT and put a formal application in.” (Paragraphs 4 and 5, Exhibit CB1) Mr Bolog said he prepared what he described as a “Calderbank letter” addressed to the defendants and dated 13 March 2020 which he sent to them by email and hand delivered at their “registered address”. The letter which was headed “Without prejudice save as to costs” set out the history of the matter, complained of the continuing losses which the plaintiff was suffering and asserted there was no legal basis for continued detention of the goods. The letter concluded saying if the matter were not resolved by 11.00am 16 March 2020 the plaintiff would commence proceedings in this court “for urgent injunctive relief” and the letter would be relied on on the question of costs. (Paragraphs 6 and 7, Exhibit CB2) He sent a further Calderbank letter dated 6 April 2020 proposing resolution of the dispute by the grant to his client of immediate access, payment of the amount of $15,000 for legal costs and damages within 21 days and mutual releases. Tisher Liner FC Law responded to Mr Bolog in a letter dated 7 April agreeing to the removal of the goods but denying any liability on the defendants’ part for costs or damages. (Paragraph 12, Exhibit CB4) The goods were retrieved on 17 April 2020. (Paragraph 13) According to Mr Bolog, Dylanbella incurred costs of $13,538.92 inclusive of Goods and Services Tax, consisting of: Counsel’s fees $4,290; disbursements $855.33. He produced Dylanbella’s costs agreement with him. (paragraphs 14 and 15, Exhibit CB6)
5 On 27 April 2020, Judicial Registrar Burchell made orders for the filing and service of submissions and affidavit materials to determine an application now pressed by Dylanbella for a lump sum costs order on a full indemnity basis in its favour. The learned Judicial Registrar ordered, “The plaintiff’s summons filed 23 March 2020 is dismissed, save for the question of costs.”
Plaintiff’s contentions
6 Mr Bevan of Counsel recited the history of the matter. He said, based upon the narrative, his client had a strong case. He said, “What the defendants did was to withhold those goods in exchange for the payment of arrears of rent. Distress for rent was abolished in Victoria in 1948.” He referred to Asian Pacific Building Corp Pty Ltd v Sharon-Lee Holdings Pty Ltd [2013] VSC 11 at [16]. Even where no adjudication had been made upon a claim or defence advanced by a litigant, in a clear case it would be appropriate to regard the claim or defence as so strong that one party has effectively surrendered and the “surrender” could be regarded as the event which the costs followed. He referred to Hoddinott v Willmott Forests Ltd [2012] VSC 282 [4] per Davies J and Champagne View Pty Ltd v Shearwater Resort Management [2000] VSC 214 per Gillard J. Accordingly he said there should be an award of costs in favour of the plaintiff.
7 He went further contending that the award should be on a full indemnity basis. He referred to a Calderbank letter dated 13 March 2020 referred to above, “The offer was clearly expressed. It foreshadowed indemnity costs if it was not accepted. Although open for a relatively short period of time, the circumstances created by the defendant imposed an urgency on the plaintiff to seek resolution. Rejection of the offer was unreasonable and justifies a special costs order.” He referred to Hazeldenes Chicken Farm v Victorian WorkCover Authority [2005] VSCA 298 [25]-[29].
8 Alternatively, he said the defendants had conducted themselves in wilful disregard of known facts or clearly established law and this justified the award of costs on a full indemnity basis. He referred to the decision of Harper J in Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 [7]. Mr Bevan suggested that the costs be fixed in accordance with Rule 63A.07(2)(c) at $14,858.92 “being costs of and incidental to the Summons up to 29 April 2020 of $13,538.92 plus costs of these submissions of $1,320.”
Contentions on behalf of the defendants
9 Mr Castelan, Counsel for the defendants, filed two outlines of submissions dated respectively 19 May and 22 May. He submitted that where there had been no adjudication upon the matters before the Court, the proper order was that there be no order as to costs. He said, “It will rarely, if ever, be appropriate where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial.” He referred to Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 [31] and Re the Minister for Immigration and Ethnic Affairs Ex parte Lai Qin (1997) 186 CLR 622, 625 per McHugh J and Fire Containment Pty Ltd v Robins [2011] NSWSC 547 [11] per Gzell J.
10 He reviewed the history of events and said it should be found that “the defendants did not act unreasonably in any respect.” They were not aware that Dylanbella had any agreement with the tenant and there was no reason to believe that the goods did not belong to the tenant. There was no document to support the “alleged licence”. Proper proof of those matters was not provided by affidavit until 26 March 2020. Thereupon the defendants agreed to the removal of the goods. He referred to Clause 4.1 of what was said to be the standard LIV lease which in Clause 4.1 states, “The tenant must not transfer this lease or sublet the premises without the landlord’s written consent …” [Unless there was a further provision in the lease relevant to the issue this clause would not appear to prohibit a licence as distinct from the subletting.] He said that the relief sought was equitable and therefore discretionary and there was no evidence of any agreement between the defendants and the plaintiff or that the plaintiff had informed the defendants about the goods or the alleged licence at any time before 6 March. There was no evidence that the plaintiff made any payment to any person for the storage of the goods and the goods were on the premises “illegally”. It was the plaintiff, Dylanbella, who said that he had acted unreasonably by declining to agree to the discontinuation of the proceeding with each party bearing their own costs as proposed in the letter from Tisher Liner of 9 April. Mr Castelan said that the proceeding should be dismissed and the plaintiff should pay the defendants’ costs of and incidental to the costs application and otherwise the costs should lie where they fell.
11 In the second costs submission dated 22 May 2020, Mr Castelan stressed the lack of evidence as to the defendants’ awareness of the “alleged licence”, the payment of any money to the tenant under the alleged licence, the arrears of rent owing to the plaintiff and the fact that the goods were “on the property unlawfully”. He said there was not an overwhelming case for conversion, referring to a number of old and well established authorities as to precisely what needs to be established for a successful conversion claim. He stressed that upon the giving of an undertaking from the plaintiff “not to damage the Property when collecting the goods” and the provision of evidence of ownership, the defendants allowed the goods to be collected. The claim for costs he said was disproportionate. It “exceeds one year’s worth of rent for the property” “in circumstances where the plaintiff itself paid zero. That is extraordinary.”
Conclusions
12 Much of what was urged on behalf of the defendants in opposition to the costs application was beside the point. Generally, the determination of where costs of a proceeding should lie depends upon the underlying merits of the claim and defence as between the parties to the proceeding and the parties’ conduct in the litigation and in the prelude to that litigation. It is difficult to see, therefore, how the apparently undoubted default by the tenant, Mr Troy Nguyen, the level of rental which he had committed to pay and the precise terms of the lease between him and the defendants can be material. As to the terms of the lease, Mr Castelan quoted from a standard Law Institute of Victoria lease; but the only affidavit filed on behalf of the defendants, by Ms Chantelle Nguyen, merely exhibits a schedule to a Law Institute lease. It is not clear whether this schedule was the only document “signed up” between the parties. The boiler plate clause quoted for the proposition that the plaintiff’s goods were on the property illegally does not deal with the issue of licences as distinct from sub-leases or assignments of lease at all.
13 Mr Bolog’s account of his dealings with the defendants’ agent stands uncontradicted. The conversations deposed to by Mr Bolog and the email from the managing agent, Mr Ryan, are supportive of Mr Bevan’s case that the defendants sought to retain the plaintiff’s property by way of an illegal exercise of a right of distress, illegal both because the property did not belong to the tenant and illegal because as between landlord and tenant, that remedy was abolished in Victoria in 1948. See the now repealed s10 of the Landlord and Tenant Act 1958: Interpretation of Legislation Act 1984 s14(2)(c). In a typical case where there are a number of complexities and conflicts of evidence, the general rule, that without an adjudication the principle of costs following the event cannot be applied, is undoubted. There are, however, instances where the matter is so clear that a determination can nevertheless be made as, for instance, where one of the parties has effectively surrendered. Hoddinott v Willmott Forests Ltd [2012] VSC 282 [4]; Peet Ltd v Richmond [2010] VSCA 71; Pyramid Constructions (WA) Pty Ltd v Form Doctors Pty Ltd [2015] WASC 94. To put it another way, it cannot be right to allow a defendant to ignore a letter of demand and put the plaintiff to the costs of commencing proceedings, filing a summons for urgent relief together with supporting affidavits and then surrender with no costs consequences. For reasons already explained, the defendants have been shown to have engaged in an illegal “try on”. I reject any contention that they have acted reasonably. The plaintiff should have a costs order in its favour.
14 The next question is whether an award of indemnity costs may be made. Where “the commencement or continuation of proceedings [is] in wilful disregard of known facts or clearly established law” (Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 [7]; J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No 2) (1993) 46 IR 301), such an award may be appropriate. In the present case, it is not the commencement of the proceeding which is in wilful disregard of clearly established law but the refusal of the defendants to release the plaintiff’s property despite being advised of the correct legal position; but the principle should be the same. This point is reinforced by the service of two Calderbank letters both of which were ignored by the defendants.
15 In the circumstances, I propose making a lump sum costs order upon a full indemnity basis as sought by Mr Bevan.
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