JZ Lee Interiors Pty Ltd v Smith - [2015] VSC 693

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2015 05133

JZ LEE INTERIORS PTY LTD (ACN 075 815 093)	Plaintiff
v
BRENDON ASHLEY SMITH AND ANOTHER	Defendants

S CI 2015 5139

JOSIP VRAPCENJAK as trustee for the VRAPCENJAK FAMILY TRUST AND ANOTHER	Plaintiffs
v
BRENDON ASHLEY SMITH	Defendant

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JUDGE:	ELLIOTT J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	3 DECEMBER 2015
DATE OF JUDGMENT:	8 DECEMBER 2015
CASE MAY BE CITED AS:	JZ LEE INTERIORS PTY LTD v SMITH
MEDIUM NEUTRAL CITATION:	[2015] VSC 693

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PRACTICE AND PROCEDURE – Pleadings – application for leave to amend statement of claim – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 36.01(1).

PRACTICE AND PROCEDURE – Security for costs – delay – past costs – future costs – discretion – Corporations Act 2001 (Cth), s 1335(1), Supreme Court Rules, r 62.02(1).

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APPEARANCES:

Counsel

Solicitors

For the Plaintiff

Mr I Upjohn QC with

Mr S Freire

For the Defendants

Ms M Loughnan QC with
Mr S Dyrenfurth

HIS HONOUR:

A. Introduction

There are 2 proceedings before the court. The first proceeding (“the Damages Proceeding”) is a claim by the plaintiff, JZ Lee Interiors Pty Ltd (“JZ Lee Interiors”) against the defendants, Brendon Ashley Smith (“Smith”) and a company owned by Smith, Donamis Consultants (Vic) Pty Ltd (“Donamis”) (collectively, “the Defendants”). In the Damages Proceeding, the Defendants have filed a counterclaim against JZ Lee Interiors, seeking declaratory and injunctive relief based on an alleged settlement agreement entered into on 27 July 2013, by which “all mutual ongoing and outstanding commercial and personal interests, benefits and obligations” were “fully and finally” determined. Alternatively, the Defendants seek damages by their counterclaim.

In the second proceeding (“the Contribution and Restitution Proceeding”), JZ Lee Interiors is the second plaintiff. The first plaintiff, Josip Vrapcenjak (“Vrapcenjak”), is the sole director and shareholder of JZ Lee Interiors. Vrapcenjak, as trustee for the Vrapcenjak family trust, has a claim for contribution against Smith and JZ Lee Interiors seeks restitution from Smith. (Vrapcenjak and JZ Lee Interiors will be referred to collectively as “the Plaintiffs”.)

In the Damages Proceeding, JZ Lee Interiors has made 2 applications, by which it seeks:

(1) Leave to amend the statement of claim.
(2)Security for costs against Donamis, as the second plaintiff by counterclaim.

Also in the Damages Proceeding, application is made by the Defendants for security for costs against JZ Lee Interiors.

In the Contribution and Restitution Proceeding, Smith seeks security for costs against JZ Lee Interiors in its capacity as the second plaintiff.

Although there are corporate parties, the disputes are essentially between Vrapcenjak and Smith. For many years, Vrapcenjak and Smith were in business together. Before they had a serious falling out, Smith provided his services through Donamis.

B. Application for leave to amend the statement of claim

There was no real dispute between the parties as to the test to be applied in considering the proposed amendments. On an application such as this, the…

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

Case: [2015] VSC 693
Decision Date: 8 DECEMBER 2015

CaseChat Overview and Summary

JZ Lee Interiors Pty Ltd, a design and construction company, brought a claim against Smith, an individual, in the Supreme Court of Victoria. The dispute centred on contractual obligations and alleged breaches relating to interior design and construction services. The court was tasked with addressing two primary issues: whether the plaintiff was entitled to amend its statement of claim and the appropriateness of granting security for past and future costs.

Regarding the amendment of the statement of claim, the plaintiff sought leave to add a new cause of action based on the tort of misleading and deceptive conduct. The defendant opposed the application, arguing that it was an attempt to introduce a new cause of action at a late stage in the proceedings. The court considered the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 36.01(1), which permit amendments of pleadings where justice so requires. The court ultimately held that the amendment would not cause prejudice to the defendant and was therefore in the interest of justice.

In relation to security for costs, the plaintiff sought an order for security to cover past and future costs of the proceedings. The defendant opposed this application on the grounds that the plaintiff had unreasonably delayed in bringing the claim and that there was no substantial merit to the plaintiff’s case. The court exercised its discretion under the Corporations Act 2001 (Cth), s 1335(1) and the Supreme Court Rules, r 62.02(1), and determined that the plaintiff had not shown sufficient grounds to warrant an order for security. The court noted the plaintiff's delay and lack of substantial merit as significant factors in its decision.

The court dismissed the plaintiff's application for leave to amend the statement of claim and denied the application for security for past and future costs.

Orders