Estate of the late Kate Lewy v Kitchen Elite

[2003] NSWSC 516

CITATION:	Estate of the late Kate Lewy v Kitchen Elite & Ors [2003] NSWSC 516
HEARING DATE(S):	4 June 2003
JUDGMENT DATE:	13 June 2003
JURISDICTION:	Common Law Division
JUDGMENT OF:	Master Malpass
DECISION:	The Notice of Motion is dismissed. The plaintiffs are to pay the costs of the Notice of Motion. The Exhibits may be returned.
CATCHWORDS:	Leave to file Cross-Claim by plaintiff - proposed Cross-Claim inconsistent with existing judgment in the proceedings - the proceedings had been brought against a deregistered company - nullity - need to set aside orders - abuse of process.
LEGISLATION CITED:	Companies Act 1928, s 230 (Victoria). Corporations Law, s 601AD. Supreme Court Act 1970, s 19, s 78. Supreme Court Rules 1970, Pt 2 r 3, Pt 6 r 10.
CASES CITED:	Cameron v Cole (1944) 68 CLR 571. Posner v Collector for Inter-State Destitute Persons (Vic) (1946) 74 CLR 461. United Service Insurance Co Ltd (in liq) v Lang (1935) 35 SR 487. Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590.
PARTIES :	Dennis Lewy, Ronny Lewy and Garry Lewy as the Joint Executors of the Estate of the Late Kate Lewy (Plaintiffs/First Cross-Defendants to First Cross-Claim/Proposed Second Cross-Claimants to Second Cross-Claim) v Kitchen Elite Pty Limited (First Defendant/ First Cross-Claimant to First Cross-Claim) Peter Bazos (Second Defendant/ Second Cross-Claimant to First Cross-Claim) Suzanne Linda Bazos (Third Defendant/ Third Cross-Claimant to First Cross-Claim) Nicholas Bazos (Fourth Defendant/Fourth Cross-Claimant to First Cross-Claim) Wah Chang Off Shore (Hong Kong) Pty Ltd (Second Cross-Defendant to First Cross-Claim/Proposed First Cross-Defendant to Second Cross-Claim)
FILE NUMBER(S):	SC 10219 of 1998
COUNSEL:	Mr P T Russell (Plaintiffs/First Cross-Defendants to First Cross-Claim/Proposed Second Cross-Claimants to Second Cross-Claim) Mr J Stoljar (Defendants/Cross-Claimants to First Cross-Claim) Mr J Neal (Second Cross-Defendant to First Cross-Claim/Proposed First Cross-Defendant to Second Cross-Claim)
SOLICITORS:	Cridlands Lawyers Incorporating Dickson Fisher Macansh (Plaintiffs/First Cross-Defendants to First Cross-Claim/Proposed Second Cross-Claimants to Second Cross-Claim) Bowen & Gerathy (Defendants/Cross-Claimants to First Cross-Claim) Minter Ellison (Second Cross-Defendant to First Cross-Claim/Proposed First Cross-Defendant to Second Cross-Claim)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Master Malpass

Friday 13 June 2003

10219 of 1998 Dennis Lewy, Ronny Lewy and Garry Lewy as the Joint Executors of the Estate of the Late Kate Lewy v Kitchen Elite Pty Limited & Ors

JUDGMENT

1 MASTER: The circumstances of this case are extraordinary. Also, despite the passing of more than 5 years the matter has not proceeded to a hearing and there are presently pleading disputes still on foot.

2 These proceedings were commenced by the filing of a Statement of Claim on 29 January 1998. The proceedings were brought by the late Kate Lewy (the deceased) against Kitchen Elite Pty Limited ACN 000 581 108 (Kitchen Elite No 1). Prior to the commencement of those proceedings, on 6 July 1994, Kitchen Elite No 1 had been deregistered. Prior to the commencement of those proceedings, on 20 November 1997, Kitchen Elite Pty Limited ACN 066 659 836 (Kitchen Elite No 2) had commenced proceedings against other parties (including Wah Chang Off Shore (Hong Kong) Pty Ltd (Wah Chang) ). Such proceedings have been referred to as the Kitchen Elite No 2 proceedings.

3 A lease of industrial premises had been entered into between the parties during 1993 (the lease). Wah Chang was the registered proprietor of adjacent premises. Certain building works were carried out on those premises which led to water damage to the leased premises. This took place during 1996 and 1997.

4 It appears that the Kitchen Elite No 1 was deregistered because of a failure to file an annual return. Rather than have it restored to the register, it was thought to be cheaper to register a new company. Accordingly, Kitchen Elite No 2 came to be incorporated. Occupation of the leased premises continued subject to the disruption caused by the water damage.

5 Rent was not paid. The plaintiff alleged default in the payment of rent and purported to determine the lease by Notice to Quit (served on 3 September 1997).

6 The original process in these proceedings propounded claims both for possession and a monetary judgment (in respect of unpaid rent and mesne profits). An Amended Statement of Claim was filed on 10 March 1998. On 14 April 1998 default judgment was obtained in respect of the claim for possession. An application was made to set aside both the default judgment and the writ of possession that had been subsequently issued. On 13 May 1998, Master Harrison dismissed the application. She delivered a written judgment which made certain findings (including a finding that the lease had been terminated by the giving of the Notice to Quit). Following dismissal of that application, vacant possession of the leased premises was obtained.

7 Following a letter from the solicitors then on the record for Kitchen Elite No 1 orders were made substituting the present defendants for Kitchen Elite No 1 and the filing of a Further Amended Statement of Claim.

8 The Further Amended Statement of Claim was filed on 17 December 1999. It is the process presently relied on by the plaintiffs (who have been substituted for the deceased). The defendants have filed both a Defence and a Cross-Claim. Broadly speaking, these pleadings dispute any liability for rent or mesne profits and propound a claim for damages founded on breach of the lease.

9 Orders were made which resulted in the two proceedings not being heard together. The Kitchen Elite No 2 proceedings went to a hearing and on 14 May 2002 judgment was entered in favour of Kitchen Elite No 2.

10 On 17 December 2002, the plaintiffs filed a Notice of Motion seeking leave to file a Second Cross-Claim against Wah Chang. In reality, it was an application for an exercise of the discretionary power to extend time for the filing of such a document. The relevant rules are Pt 2 r 3 and Pt 6 r 10 of the Supreme Court Rules 1970 (the Rules). The latter reads as follows:-

“ [6.10] r 10 Commencement

10 (1) A party against whom a claim is made in proceedings commenced by statement of claim and who claims relief under section 78 of the Act may make his claim by filing a pleading by way of cross-claim in those proceedings.

(2) A cross-claimant may file a cross-claim within the time fixed for filing his defence.”

The application is one that fell within the jurisdiction of a Registrar.

11 The proposed Cross-Claim seeks to propound a claim founded on negligence. In effect, it is seeking damages in respect of any loss of rent and any liability it may be found to have to the defendants arising out of the water damage. The plaintiffs say that it throws up a triable issue. Wah Chang sees it as an abuse of process.

12 The application was heard on 4 June 2003. Wah Chang opposes the application. The defendants neither consent to nor oppose it. The plaintiffs bear the onus of satisfying the court that leave should be granted.

13 The discretionary considerations have been limited to one issue. The issue between the parties is the viability of the proposed cause of action. Questions of delay, lack of explanation for delay and prejudice were not argued.

14 Hitherto, I was not aware of any other proceedings in which a plaintiff had purported to propound a Cross-Claim. It had been my experience that plaintiffs propounded their claims in a Statement of Claim and that defendants to that Statement of Claim propounded claims by way of Cross-Claims.

15 It was common ground that the course chosen by the plaintiffs was unusual. However, the other parties had not researched the question of whether or not such a course was permissible. Accordingly, they did not contend that it was impermissible and the question was not fully argued.

16 The plaintiffs contended that the Supreme Court Act 1970 (the Act) and the Rules allowed them to take that course. I must say that after having read inter alia ss 19 (the definition section which contains an inclusive definition of “defendant”) and 78 (which is headed Claim by defendant) of the Act I am yet to be satisfied that this is the case. I note that Ritchie’s Supreme Court Procedure NSW (Vol 1 [6.1.6] ) gives some qualified support for the plaintiffs’ submissions (at least if the matters on which the Cross-Claim is based arose after the commencement of the proceedings). Also, I note that this support appears to be founded on old English authority which may have been decided in the context of provisions that were not similar. However, for present purposes, I put that matter to one side.

17 In opposing the application, Wah Chang relies on the principles of election. It is said that the plaintiffs are now seeking in effect to approbate and reprobate the transaction upon which default judgment was obtained.

18 The plaintiffs say that the judgment was a nullity and that the principles of approbation and reprobation do not apply in the facts of this case.

19 The parties have made written submissions. These have been supplemented by lengthy oral submissions. There has been reference to numerous decided cases and texts. The submissions have thrown up a plethora of questions, many of which have not been fully argued. For present purposes I propose to deal only with those matters which may be determinative of the application.

20 The original claim was propounded on the basis that Kitchen Elite No 1 was the lessee under the lease. Default judgment was entered on a claim so propounded. An application to set aside that default judgment was successfully resisted. Enforcement action on that judgment saw the recovery of vacant possession from the parties that had been in occupation.

21 The proposed Cross-Claim is propounded on the basis that Kitchen Elite No 2 was the tenant under a common law tenancy. It claims a similar monetary judgment (for unpaid rent and mesne profits) in respect of a period that was similar to that claimed pursuant to the lease in the original claim.

22 In my view, the original claim and the proposed Cross-Claim are incompatible. The original claim has been prosecuted to judgment and that judgment has not been set aside. Indeed, it has been enforced.

23 During argument, I expressed my concern in relation to these matters and invited the attention of counsel to them.

24 In my view, what is sought to be done now by the plaintiff is to propound a claim which is incompatible with a claim that has already been prosecuted to judgment (which remains extant) in the same proceedings. I consider that the court should not grant such an application. It seems to me to be inter alia an abuse of process. As the proceedings presently stand, I am not satisfied that time should be extended to enable the filing of the proposed Cross-Claim.

25 The plaintiffs contend that the judgment is a nullity. The court has been referred to the observations made in United Service Insurance Co Ltd (in liq) v Lang (1935) 35 SR 487 and other authority. In Lang, the court was dealing with an appeal by a plaintiff which had no existence. The plaintiff had been dissolved as a defunct company under s 230 of the Victorian Companies Act 1928. At the conclusion of his judgment (at p 497), Jordan CJ observed that:-

“…………………….The verdict for the defendant and the order for costs given by the leaned District Court Judge are, of course, nullities, but in the absence of a plaintiff we have no more power to deal with them in the appeal than he had to make them in the action.”

26 There is other authority for the proposition that proceedings commenced in the name of a corporation which has ceased to exist are nullities. Also, there is authority for the proposition that where the defendant is dead at that time, the proceeding is a nullity unless legislation or the rules provide otherwise.

27 In the present case, the court is dealing with a company that was deregistered under the Corporations Law. The process of dissolution has been abolished. A deregistered company can now be reinstated under s 601AD (as opposed to being annulled by court order). Such an application may have been open to the plaintiff. The property of a deregistered company rests in ASIC and it is able to act on behalf of the deregistered company.

28 The authorities (including the observations made in Lang) preceded the regime that came into being under the Act. The parties have not been able to assist on the question of whether the old authorities have been affected by the enactment of that regime.

29 The reasoning supporting the authorities has not been made apparent on the material presented to me. Many of the questions thrown up have not been fully argued. Whilst I am yet to be satisfied that either the proceedings or the judgment are a nullity that question can be put aside for present purposes.

30 In Cameron v Cole (1944) 68 CLR 571 at 590, Rich J said :-

“……It is settled by the highest authority that the decision of a superior court, even if in excess of jurisdiction, is at the worst voidable, and is valid unless and until it is set aside……”

31 In Posner v Collector for Inter-State Destitute Persons (Vic) (1946) 74 CLR 461 at 489, Williams J said :-

“An order of a superior court is never void, but only voidable……”

32 I should add that what was said in these cases was followed in inter alia Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590.

33 The Supreme Court is a superior court. If either the proceedings or the judgment be a nullity, it is my view that the authorities require that there be an order setting aside the nullity.

34 In these circumstances it is unnecessary to deal with the competing arguments concerning the application of the principles of approbation and reprobation. Also, it is not necessary to deal with the complaints made by Wah Chang as to the deficiencies of the proposed pleading. Another matter was briefly canvassed during argument. It was a question of whether or not the plaintiffs should now be allowed to assert that the judgment was a nullity. As it was not fully argued, the question can be deferred for another day.

35 I should also mention that there is material before the court which suggests that in February 1995 (well prior to the commencement of the proceedings), the solicitors for the plaintiff were then notified both by telephone and letter that Kitchen Elite No 1 had been deregistered on 6 July 1994. The material was admitted without objection (it is an annexure to an affidavit sworn by Theresa Sukkar). Subsequent to its admission into evidence, counsel for the plaintiffs did make submissions in an endeavour to qualify the impact of this material. This material is relevant inter alia to the approbation and reprobation arguments.

36 The Notice of Motion is dismissed. The plaintiffs are to pay the costs of the Notice of Motion. The Exhibits may be returned.

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Last Modified: 06/17/2003