In the matter of Hi-Fi Sydney Pty Ltd (Administrator Appointed)

[2015] NSWSC 1297

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Hi-Fi Sydney Pty Ltd (Administrator Appointed) [2015] NSWSC 1297
Hearing dates:	22 June 2015
Date of orders:	23 June 2015
Decision date:	23 June 2015
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Leave to amend interlocutory process declined.
Catchwords:	PROCEDURE – interlocutory process in nature of cross-claim – application to amend interlocutory process – where arguable case sought to be put on amended interlocutory process – whether prejudice occasioned to plaintiff of permitting amendment – absence of prejudice to defendant of not permitting amendment – held, leave to amend interlocutory process declined.
Legislation Cited:	(CTH) Corporations Act 2001, s 436C, s 440B, s 440D, s 444F(4) (NSW) Conveyancing Act 1919, s 129(1), Sch 6
Category:	Procedural and other rulings
Parties:	Carsingha Investments Pty Limited (ACN 169 790 523) (plaintiff) Hi-Fi Sydney Pty Ltd (administrator appointed) (ACN 136 479 895) (first defendant) Simon Patrick Nelson (second defendant) Karamika Pty Ltd (ACN 006 636 997) (third defendant)
Representation:	Counsel: D Sulan w R May (plaintiff/respondent) G Sirtes SC w J Shepard (first and second defendants/applicants)   Solicitors: Arnold Bloch Leibler (plaintiff/respondent) Mills Oakley Lawyers (first and second defendants/applicants) Mills Oakley Lawyers (third defendant)
File Number(s):	2015/159028

Judgment (ex tempore)

1. HIS HONOUR: These proceedings were initiated by originating process filed as recently as 28 May 2015, whereby the plaintiff Carsingha Investments Pty Ltd – to which, for the sake of convenience, I shall refer as CIPL – sought relief pursuant to (CTH) Corporations Act 2001, ss 440B and 440D, permitting it to exercise its right to take possession of a property in the Entertainment Quarter at Moore Park, of which it is the sub-lessor to the first defendant Hi-Fi Sydney Pty Ltd, which at that time was in voluntary administration pursuant to Corporations Act, s 436C, an administrator having been appointed by the third defendant Karamika Pty Ltd, a secured creditor of the first defendant.

2. A notice of default under the lease was given by CIPL on 13 March 2015, the default relied upon being the appointment of the administrator, and that default not having been remedied, on 7 April 2015 CIPL gave notice purporting to terminate the lease. As it transpires, the company is no longer in voluntary administration, a deed of company arrangement having recently been executed. Before the Court for final hearing is an interlocutory process filed as recently as 15 June 2015, whereby the company now seeks, effectively by way of cross-claim, relief against forfeiture of the lease and alternatively an order pursuant to Corporations Act, s 444F(4), to the effect that the plaintiff not take possession of the property.

3. On 15 June, Black J set the matter down for final hearing before me today and made directions to facilitate that course.

4. On 18 June 2015, the defendants informed the plaintiff that they proposed to seek leave to amend their interlocutory process by adding claims for a declaration that the notice of default of 13 March 2015 was void and of no effect for non-compliance with the requirements of (NSW) Conveyancing Act 1919, s 129(1) and Sch 6, and as a consequence that the sublease remained in force and had not been validly terminated. It is that application for leave to amend the interlocutory process with which I am presently concerned.

5. As I have said, the notice of default was given on 13 March – more than three months ago – and the notice of termination on 7 April – some two and a half months ago. Prior to last Friday, there had been no suggestion, in correspondence or in the course of the proceedings to date, that there had not been a valid and effective termination of the lease. To the contrary, the dealings between the parties, and the litigation, have proceeded on the basis that the sublease had been validly terminated.

6. Although I do not necessarily accept that by making a claim for relief against forfeiture the defendants are taken to have admitted that there was a valid termination, in circumstances where such relief was the principal relief sought and not alternative relief, and where proceedings for the extension of time to execute a DOCA were conducted on the footing that, were time not extended, the plaintiff would be entitled to re-enter, there was at least a strong indication, implicit if not express, that there was no issue about the validity of the termination. That is reinforced by correspondence as late as 27 May 2015, in which the company requested CIPL to "retract" the termination.

7. I am inclined to accept that the defendant has a strongly arguable case that the notice did not comply with the requirements of Conveyancing Act, s 129(1). Against that, permitting that case to be raised at this very belated stage would occasion significant prejudice to the plaintiff, essentially because the plaintiff is deprived of the opportunity of issuing another notice relying on the same breach, or on other breaches of which there is some evidence in the proceedings, and thereby to remediate any vulnerability arising from a defective notice.

8. It seems to me that loss of the opportunity to remediate its position in that way is significant prejudice which could have been avoided had the plaintiff been informed at an earlier stage that the validity of the termination was in dispute, let alone encouraged by the course adopted in the proceedings as a whole to believe that it was not in dispute.

9. Although ordinarily the absence of prejudice to a lessee from any defect in the notice would not be relevant on a question as to the validity of the notice, in balancing the prejudice to the parties in considering whether or not to grant leave to amend, I can have regard to the absence of prejudice to the defendant. Counsel has not been able to articulate any substantive prejudice occasioned to the defendant by the alleged defects in the notice, and given the course of events of the administration and the proceedings to date, I am unable to see how the defendant would have acted any differently had the notice been more fulsome and included the matters which are said to have been omitted from it.

10. In addition, if the issue of validity of the notice were successfully raised by the defendant at this stage, then one would face the prospect of further notices, a further hearing and a further application for relief against forfeiture addressing substantially the same issues as are to be addressed in any event on this occasion.

11. For those reasons, on balance significantly greater prejudice would be occasioned to the plaintiffs by permitting the defendants to amend their interlocutory process than would be occasioned to the defendants from declining leave to do so. In addition, it is in the interests of justice and the just, inexpensive and expeditious resolution of the issues between the parties that leave to amend be declined.

12. I decline leave to amend the interlocutory process.

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Decision last updated: 03 September 2015