Hruska v Maxcem Pty Ltd - [2021] SADC 153

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HRUSKA & ANOR v MAXCEM PTY LTD & ANOR
[2021] SADC 153
Reasons for Decision of his Honour Judge Slattery (ex tempore)
17 December 2021
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION
The parties are involved in a long-running dispute about the lease arrangements between the applicants as lessors and the first respondent as lessee of a restaurant and associated land in the Adelaide Hills. The applicants allege that rent is outstanding from at least November 2017.
There has been a history of disputes between the parties about the lease including about the terms of settlement of a previous dispute, the operation of a further licence to occupy other land owned by the lessors for an activity ancillary to the operation of the restaurant. Alternative claims are made that if the formal lease does not apply, an equitable lease in the same terms exists between the parties and that it may be enforced.
The first respondent has filed a defence and a cross claim seeking orders of the court in relation to the leased property and the rights and obligations under the parties’ contractual or equitable arrangements. The respondents contend that the applicants’ claims are premature and should be stayed under the operation of the COVID-19 Emergency Response (Commercial Leases No 2) Regulations 2020 (SA) (the Regulations). The respondents contend that under the Regulations, the Magistrates Court has exclusive jurisdiction to hear and determine claims between the lessors and the lessee arising during the period in which the Regulations operated, namely between 15 May 2020 and 3 January 2021 (the COVID Regulation period). The respondents have commenced separate Magistrates Court proceedings seeking a resolution of the parties’ disputes arising during the COVID Regulation period. The applicants have brought an application pursuant to s 19(1) of the Magistrates Court Act for a transfer of those Magistrates Court proceedings to the District Court.
Notwithstanding that the respondents have operated the restaurant since 27 July 2020, it paid only half rent for a short period of time between January and April 2021. Otherwise, the respondents have paid no rent or outgoings since March 2020. The applicants are reliant upon the rent from the property for their sustenance. The failure or refusal of the first respondent to pay rent and outgoings have left the applicants bereft.
There are a range of claims arising between the parties in relation to these obligations under the lease including in relation to rent from 7 November 2017 and in relation to all of the obligations under the lease before and after the COVID Regulation period, all of which are justiciable by this court. The total outstanding rent exceeds $250,000 before outgoings and costs.
Whether the respondents’ application for a stay should be granted;
Whether the applicants’ application for a transfer of the Magistrates Court proceedings should be granted;
Whether and to what extent the Regulations exclude the jurisdiction of any court apart from the Magistrates Court to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Hruska v Maxcem Pty Ltd [2021] SADC 153
Case: [2021] SADC 153
Decision Date: 17 December 2021

CaseChat Overview and Summary

The case of Hruska v Maxcem Pty Ltd involved a dispute between the lessor and lessees regarding the interpretation of a lease agreement during the COVID-19 pandemic. The matter was heard in the Supreme Court of Victoria, where the respondents sought a stay of proceedings in the District Court and a transfer of the matter to the District Court. The lessors, Hruska, argued that the Magistrates Court had exclusive jurisdiction over matters arising during the COVID-19 Regulation period, irrespective of the amount or type of claim, and that there was no power to transfer such matters to another court.

The court was required to decide on the jurisdiction of the Magistrates Court over matters arising during the COVID-19 Regulation period and whether the District Court had the power to transfer such matters to itself. The court also needed to determine whether there was a lacuna in the operation of the Regulations due to the absence of a power in the Magistrates Court to transfer an action arising in the COVID-19 Regulation period to a higher court.

The court found that the respondents' application for a stay of the District Court action was dismissed as the matters raised in the District Court action were justiciable and arose outside of the COVID-19 Regulation period. The court held that the claims arising in the District Court action raised the same or similar legal issues as those raised in the Magistrates Court proceedings, and that those issues could be resolved in the District Court action. The court found that the Magistrates Court had exclusive jurisdiction to hear and determine claims arising between the lessors and lessees during the COVID-19 Regulation period, and that there was no power in the Magistrates Court to transfer such matters to another court. The court also found that the District Court did not have the power to transfer such matters to itself.

The court found that there was a lacuna within the operation of the Regulations due to the absence of a power in the Magistrates Court to transfer an action arising in the COVID-19 Regulation period to a higher court. The application for a transfer of the proceedings in the Magistrates Court to the District Court was dismissed.

Orders

Orders of the court

Held:

1. The respondents’ application for a stay of the District Court action is dismissed. That action raises matters that are justiciable and arise outside of the COVID Regulation period;

2. The claims arising in the District Court action raises the same or similar legal issues as are raised in the respondents’ Magistrates Court proceedings and insofar as those issues are to be canvassed in respect of the claims of the applicant in the period prior to and after the COVID Regulation period, they may be resolved in the District Court action;

3. The Magistrates Court has exclusive jurisdiction to hear and determine claims arising between the lessors and the lessees during the COVID Regulation period irrespective of the amount or type of the claim;

4. The Magistrates Court does not have the power under the Regulations to transfer any action between lessor and lessee arising within the COVID Regulation period to any other court;

5. The District Court does not have the power pursuant to s 19(1) of the Magistrates Court Act to transfer to the District Court any action commenced in the Magistrates Court where that action involves a claim between lessor and lessee arising during the COVID Regulation period;

6. There is a lacuna within the operation of the Regulations due to the absence of a power in the Magistrates Court to transfer an action arising in the COVID Regulation period to a higher court or, in the absence of the Regulations defining “court” to include, according to its jurisdiction, a higher court;

7. The application for a transfer of the proceedings in the Magistrates Court to the District Court pursuant to s 19(1) of the Magistrates Court Act is dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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