Kekna Pty Ltd v Corea
[2013] WASC 346
•23 SEPTEMBER 2013
KEKNA PTY LTD -v- COREA [2013] WASC 346
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 346 | |
| Case No: | CIV:1007/2011 | 14 & 15 AUGUST 2013 | |
| Coram: | KENNETH MARTIN J | 23/09/13 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Order for possession and damages | ||
| B | |||
| PDF Version |
| Parties: | KEKNA PTY LTD ANTONIO COREA |
Catchwords: | Leased premises Action for possession Bankruptcy of tenant Claim of equity interest Contract of sale Specific performance Damages Loss of rent opportunity Use of chattels affixed to premises Trespass to land Turns on own facts |
Legislation: | Bankruptcy Act 1966 (Cth), s 206B(3) Residential Tenancies Act 1987 (WA), s 64 |
Case References: | Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ANTONIO COREA
Defendant
Catchwords:
Leased premises - Action for possession - Bankruptcy of tenant - Claim of equity interest - Contract of sale - Specific performance - Damages - Loss of rent opportunity - Use of chattels affixed to premises - Trespass to land - Turns on own facts
Legislation:
Bankruptcy Act 1966 (Cth), s 206B(3)
Residential Tenancies Act 1987 (WA), s 64
Result:
Order for possession and damages
Category: B
Representation:
Counsel:
Plaintiff : Ms L Young
Defendant : In person
Solicitors:
Plaintiff : Diamond Conway Lawyers
Defendant : In person
Case(s) referred to in judgment(s):
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
1 KENNETH MARTIN J: Kekna Pty Ltd (Kekna) is a corporation which is registered proprietor of land and buildings at 41 Gillam Drive, Kelmscott, Perth (the Premises). It became the proprietor of the Premises under acquisition from the previous owners settled in February 2005.
2 Kekna's sole director and shareholder is Mr Kyri Kyriakouleas, a resident of New South Wales. Mr Kyriakouleas provided two witness statements in these proceedings (exhibits R and S). At par 3, exhibit R, he explains that Kekna is trustee of the KK Family Trust and that its beneficiaries are his daughter and former wife, Ms Erica Kyriakouleas (whom he divorced in April 2010).
3 In these proceedings, Kekna seeks an order for possession of the Premises against the defendant, Mr Antonio Corea. There is no dispute Mr Corea is currently in possession of the Premises. He is, it would seem (from the introduction to Mr Corea's witness statement (exhibit U)), residing at the Premises. By occupation Mr Corea is a stonemason. He conducts a business, known as 'The Marble Man', from the Premises (pars 1 and 2, exhibit U).
4 Kekna contends there was a written lease agreement over the Premises entered by it with Mr Corea on 1 February 2005 (exhibit A). The lease agreement had a term of five years, commencing on 18 February 2005, terminating on 18 February 2010. The five-year term of that lease agreement was not renewed.
5 Significant to my evaluation of Mr Corea's defence resisting Kekna's claims to possession of the Premises are these undisputed facts:
(a) Mr Corea was made bankrupt in the period between May 2006 until July 2009, when he was discharged (exhibit Q, TB vol 4, page 957);
(b) around 1 October 2011, Mr Corea was given written notice to quit the Premises by Kekna's New South Wales' lawyers (exhibit 54, TB vol 2, pages 359 - 360);
(c) during December 2010 Mr Kyriakouleas, on behalf of Kekna, changed the lock on the gate to the Premises (exhibit 57, TB vol 2, pages 369 - 370); and
(d) notwithstanding Kekna's changing the lock on the gate, Mr Corea then re-entered the Premises in December 2010 (exhibit 58, TB vol 2, page 371). He has remained, living and working there since that time.
6 Mr Corea is in possession of the Premises to this day. From that base he continues to conduct a stonemasonry business, part of which involves the manufacturing of stone benchtops for kitchens. He has paid no rent whatsoever to Kekna.
7 Kekna's position is that, since December 2010, Mr Corea has been and remains, an unlawful trespasser upon the Premises. It seeks orders for possession requiring Mr Corea to remove himself, immediately. Kekna also seeks damages against Mr Corea for, effectively, the loss of the opportunity to derive rent from the Premises since December 2010.
8 Kekna seeks damages against Mr Corea as well, over alleged waste arising from the ongoing hire purchase payments Kekna has made to its bank (National Australia Bank) in respect of specialist industrial stone cutting equipment affixed to the Premises. That industrial equipment appears to have been used by Mr Corea from 2010 to the present in his business conducted from the Premises.
9 In response, Mr Corea, representing himself, contends for an 'equity position' in relation to the Premises. This claim is based upon Mr Corea's formerly close friendship with Mr Kyriakouleas and prior dealings, agreements or arrangements made with Mr Kyriakouleas, and thereby, with Kekna.
10 Mr Corea also contends for the existence of an enforceable contract of sale in his favour as a purchaser from Kekna. This contract of sale is alleged to have been concluded subsequent to Mr Corea's July 2009 discharge from bankruptcy. Mr Corea refers to as an accepted 'new offer' in par 3 of his amended defence and counterclaim.
11 The fundamental issues in this trial, therefore, involve Kekna's claims to possession of the Premises and to damages. They are set against the alternative opposing contentions of Mr Corea directed towards showing either some equity position in the Premises, alternatively, an enforceable contract of sale in his favour on which Mr Corea counterclaims an order for specific performance against Kekna.
The lease agreement
12 The existence of an enforceable and binding lease agreement in place between Kekna and Mr Corea was uncontroversial. The lease agreement became exhibit A at the trial.
13 Prior to 2005, Mr Corea had been in possession of the Premises under arrangements made with the prior owners, Mr and Mrs James. From them, Mr Corea held an option to purchase the Premises at a purchase price of $320,000 (exhibit 1). But clearly the premises were then acquired by Kekna during 2005. On 21 December 2004, Mr Corea had nominated Kekna as his nominee to Mr and Mrs James under his option to purchase (see exhibit 7, TB vol 2, page 159).
14 Kekna settled and became registered proprietor of the Premises in 2005. It would seem $10,000 of the $320,000 purchase price had earlier been outlayed by Mr Corea to Mr and Mrs James as his option fee. This was credited against the purchase price: note reference to $10,000 as option money under exhibit 8 (see TB vol 2, page 160).
15 Kekna's 2005 agreement to lease the Premises to Mr Corea and Mr Corea's subsequent occupation of the Premises under the terms of that agreement, is uncontroversial. Within the lease agreement the following features should be noted:
(a) the five-year term of the lease agreement, ending 17 February 2010, but with an option for Mr Corea to renew the lease for a further five years after that time (exhibit A, cl 15, and a schedule of particulars at pages 36 - 37 of the lease agreement, items 2 and 11);
(b) the annual rent (subject to review) was set at $40,000 per annum plus GST (exhibit A, schedule item 6);
(c) Mr Corea was granted a right of first refusal to purchase (exhibit A, schedule item 14 and special condition 2 page 37);
(d) Mr Corea was granted a distinct option to purchase the Premises from Kekna at a nominated purchase price of $352,000 (exhibit A, special condition 4, lease agreement pages 40 - 41, special condition 4(c), particularly (2));
(e) the duration of Mr Corea's above option to purchase the Premises was set at 30 months, expiring on 18 August 2007 (exhibit A, special condition 4, page 40 (preface).
16 I would also observe that the lease agreement contained an entire agreement clause (cl 12.13). The clause provided, in part, that the terms and conditions of the lease agreement contained the 'entire agreement' concluded between the parties and would supersede 'any negotiations or discussions prior to the execution of' the lease. That clause should be taken at face value.
Further underlying facts
17 Kekna became registered proprietor of the Premises on 22 February 2005. Funds were loaned to assist Kekna in its purchase of the Premises from the Laiki Bank Australia Ltd. That bank then held a registered mortgage over the Premises to secure the repayment of its loan to Kekna (exhibit 11, TB vol 2, page 168).
18 At this point, I would observe that it appears wholly uncontroversial Mr Corea and Mr Kyriakouleas had struck up a very firm friendship by early 2005. Mr Kyriakouleas was based in New South Wales. His company Granitek Australia Pty Ltd, was an importer of marble granite and a supplier of that product to Mr Corea's stonemasonry business based in Western Australia.
19 Mr Kyriakouleas and Mr Corea enjoyed a warm friendship. They dealt with each other in business rather informally over about 11 years. It was their friendship and close business association which led Mr Corea to nominate Kekna as his nominee to purchase the Premises pursuant to his purchase option rights from the former owners.
20 As now seen, Mr Corea held option rights from Kekna subsequently, within the lease agreement, for Mr Corea himself to purchase the Premises from Kekna under special condition 4. Mr Corea says this himself in his witness statement (exhibit U).
21 In February 2005, Mr Corea was paying rent to Kekna on a monthly basis - up to 30 October 2005 (exhibit U, par 51), but at this point, another corporation, Pietra Pty Ltd (Pietra), enters the picture. Mr Kyriakouleas caused the new corporation, Pietra, to be incorporated on 30 August 2005 (see search details for Pietra exhibit 56, TB vol 2, page 365).
22 Mr Kyriakouleas' then wife, Erica, became a sole director of Pietra on 30 September 2005. She and Mr Kyriakouleas each held one of the two ordinary shares issued in the corporation (exhibit 56, TB vol 2, page 367). Mr Kyriakouleas replaced his then ex-wife as sole director on 15 October 2010 (exhibit 56, TB vol 2, page 366).
23 In his witness statement (exhibit U) Mr Corea says the following concerning Pietra:
56. Pietra Pty Ltd was a company incorporated by Kyri, using his wife, Erica Kyriakouleas (Erica), as the director and Kyri was a shareholder.
57. Neither Erica nor Kyri had any involvement in the day to day operations of Pietra Pty Ltd trading as The Marble Man, nor the operations of the bank accounts, nor did they assist in securing clients, paying accounts or negotiating any business deals whatsoever.
58. Erica lived in Melbourne, Victoria, and never attended the premises.
59. Kyri lived in Sydney, New South Wales, and attended the premises on no more than three occasions between 2005 and 2010.
60. In late-2005 I became an employee of Pietra and was appointed the manager.
61. I was responsible for all the day to day activities including but not limited to; locating clients, ordering stock, delivering and installing product, payment of accounts, writing cheques, engaging tradesmen and staff, running the accounts and dealing with the day to day administration of the business The Marble Man.
24 This evidence by Mr Corea presents as uncontroversial. It can be accepted.
25 There is a minor, but wholly irrelevant side dispute over the number of occasions Mr Kyriakouleas physically visited the Premises at Kelmscott. This is unnecessary to resolve.
26 The significance of the emergence of Pietra is that from October 2005, it is accepted Pietra began to pay rent to Kekna for the Premises, in lieu of Mr Corea.
27 It was also Pietra that now operated the stonemasonry business of The Marble Man from the Premises. From this point, Mr Corea effectively became an employee and manager, engaged by Pietra. He was now essentially the person doing work on the ground at Perth for Pietra on a day-to-day basis, from a stonemasonry business operation and management perspective and reporting to Mr Kyriakouleas in New South Wales.
28 Mr Kyriakouleas says in his witness statement (exhibit R):
11. From on or about 1 November 2005, Pietra operated a new business from the property, for which it acquired the trading name 'The Marble Man'. Although Erica was the sole director of Pietra, I was the sole shareholder and responsible for overseeing the business and making business decisions. Erica had little, if any, involvement in running the business.
12. Pietra employed Mr Corea to manage and run on a day-to-day basis its business. As well as paying him a salary for his employment in that role, Pietra also provided Mr Corea with accommodation as part of his package …
13. From on or about 1 November 2005, Pietra paid rent for the property to Kekna … Mr Corea did not make any payments of rent at any time from 1 November 2005.
29 The evidence concerning Pietra's payment of rent to Kekna from this time is uncontroversial. Mr Corea by his witness statement put matters similarly:
52. In late-2005 I assigned my rights under the lease to a company called Pietra Pty Ltd ('Pietra).
53. I began to make the rental payments from Pietra's bank account from 1 November 2005 onwards.
54. I also assigned the business of The Marble Man to Pietra.
55. This assignment was verbal but with the consent of Kyri in his capacity as the director of Kekna.
30 There does not ever appear to have been any formal assignment of the lease agreement, in writing, to Pietra. Nevertheless, for all intents and purposes, both Mr Corea and Kekna look to have conducted themselves on such a basis, as from 1 November 2005 and thereafter, until at least 2009. Pietra had, therefore, effectively assumed the obligation to pay rent in lieu of Mr Corea and also to meet other incidental obligations associated with the Premises, such as paying rates and taxes.
31 Two further matters to observe upon at this point, are that:
(a) Pietra is not a party to these proceedings; and
(b) I was told from the bar table during trial (and it appears to be wholly uncontroversial) that Pietra presently is a deregistered corporation.
32 Mr Corea's employment by Pietra continued throughout the duration of his bankruptcy, which spanned the period 23 March 2006 to 23 July 2009.
33 The legal consequence of Mr Corea's (2006 – 2009) bankruptcy was that all his property became vested in his trustee in bankruptcy. That would include any rights of Mr Corea to exercise an option to purchase the Premises from the provisions of the February 2005 lease agreement with Kekna, had it extended beyond 18 August 2007. There is no evidence of any extension. It will be remembered that the duration of Mr Corea's option right was for 30 months, ending 18 August 2007. That end date, of course, fell within the 2006 - 2009 period of Mr Corea's bankruptcy.
34 There is no evidence before me, nor any suggestion, Mr Corea's bankruptcy trustee ever exercised or attempted to exercise an option to purchase the Premises as granted to Mr Corea under special condition 4 of the February 2005 lease agreement with Kekna.
35 During the period of his bankruptcy Mr Corea continued to work for Pietra as a salaried employee in the business of The Marble Man, conducted from the Premises. In that capacity, Mr Corea continued to both live and work at the Premises during the period of his 2006 - 2009 bankruptcy.
36 Any personal proprietary rights formerly held by Mr Corea, prior to bankruptcy had vested in his bankruptcy trustee. Therefore, in terms of ascertaining the possible extension of proprietary rights in Mr Corea concerning the Premises, that exercise must be primarily focussed upon events occurring after 23 July 2009.
37 During the period of his bankruptcy, Mr Kyriakouleas and Mr Corea remained firm friends. They were in regular contact. There appears, on Mr Corea's evidence, to have been some discussion between the two men about a prospect of Mr Corea becoming a director of Pietra, once he emerged from bankruptcy after July 2009 (see exhibit U, par 75). By s 206B(3) of the Bankruptcy Act 1966 (Cth), a person is disqualified from managing corporations, if that person is an undischarged bankrupt under the laws of Australia.
38 Mr Corea's witness statement from par 97 onwards addresses his position subsequent to his July 2009 discharge from bankruptcy. He still continued to work in The Marble Man business as Pietra's employee, effectively, as its local Perth business manager.
39 There looks to have been numerous email communications passing between Mr Corea and Mr Kyriakouleas between July 2009 and August 2010. The subject matter of these communications is an evolving offer proposal made by Mr Corea to purchase the Premises from Kekna. It is clear from documentation tendered at the trial (see particularly exhibits 63, 66 and 67), that Mr Corea and Mr Kyriakouleas were negotiating upon a purchase price (see also exhibit 69) for Mr Corea to acquire the Premises from Kekna.
40 Exhibit 66 demonstrates that by 31 August 2010 Mr Kyriakouleas (on behalf of Kekna) was offering to sell the Premises to Mr Corea for $850,000 (last page of that exhibit; email sent at 6.48 pm EST). However, Mr Corea's 31 August 2010 position as, reflected by his email offering to purchase sent the same day at 5.34 pm (WST), was pitched at the lesser price of $600,000. The parties were $250,000 apart on the offer price issue.
41 Despite much email communication back and forth around this time seeking to explain an underlying rationale for the differing offer amounts, the bottom line is that the passing correspondence clearly shows that Mr Corea and Mr Kyriakouleas (for Kekna) did not ever finally agree upon price. As a result, by law, there was no final or binding agreement ever perfected. The two men simply could not agree upon a purchase price. See partially exhibit 67, second page, where Mr Kyriakouleas at 6.19 pm (EST) responded to Mr Corea's offer to purchase at $600,000, in these terms:
Thanks but not interested.
42 Mr Corea's witness statement gets to the same position, as to this non-result (see exhibit U, par 108). It reads:
There were numerous communications between Kyri and I where I attempted to lock down a firm purchase price for the Kelmscott property, but despite my efforts we were unable to agree.
43 There also looks to have been an offer made of a further term of occupation of the Premises by a fresh lease by Kekna to Mr Corea (see par 110 of Mr Corea's witness statement, exhibit U). But Mr Corea looks then to have had a concern about backdating a document sent to him (see par 111, exhibit U). He relates (at par 112, exhibit U):
I refused to sign and backdate the document.
- In the end, nothing eventuated over new lease arrangements for the Premises favouring Mr Corea.
44 Mr Corea then relates (at par 121, exhibit U):
By 5 September 2010 the relationship between Kyri and myself was becoming acrimonious. At this date no new lease had been executed, nor contracts of sale prepared for the property. Kyri was alleging I was behind on my rental payments and I offered to credit Kekna an amount equal to the outstanding rental payments for June, July, August and September 2010.
45 Subsequently, Mr Corea received, via Kekna's solicitors (Heidtman & Co), a written notice to quit the Premises (see defence and counterclaim, par 5 (which is admitted)).
46 On 14 October 2010 Mr Corea's then solicitors, Frichot & Frichot, responded on his behalf (see exhibit 54, document P15, pages 359 - 360, TB vol 2). Mr Corea's solicitors replied:
Your notice to quit as director to our client is misconceived. It is in our view of no legal force or effect given that our client is not the tenant of the above premises. In particular, Pietra Pty Ltd (Pietra) has been and continues to remain in occupation of the premises as a tenant. We understand Pietra has paid rent to your client over a period of time pursuant to its lease agreement with your client and that your client has accepted such payments. Our client is presently entitled to enter and occupy the premises in his capacity as an employee of Pietra.
Given the above, it is our view that as a matter of law the notice to quit cannot be relied upon by your client to retake possession of the premises.
47 That communication was seriously misconceived. It overlooks the point that even if the corporation, Pietra, had effectively become an assignee of the Premises for Mr Corea, as was contended, the term of the February 2005 lease agreement had ended at 18 February 2010 and was not renewed. If, therefore, Pietra had been in occupation, as lessee, pursuant to an assignment of lease by convention, then the five-year term of the lease had expired. Therefore, Pietra had only remained in occupation pursuant to some sort of holding over scenario. None of that provided any lawful basis for Mr Corea personally to hold or enjoy rights to remain in occupation of the Premises.
48 Kekna retook possession of the Premises in December 2010 when Mr Kyriakouleas engaged a locksmith to change the lock on the gate. This happened in circumstances where no rental payments had been paid or received in respect of the Premises by Kekna from about the end of May 2010. Mr Kyriakouleas's first witness statement (exhibit R) says:
19. By the end of May 2010, the business had not improved, and as a result I caused Pietra to cease trading, and terminated Mr Corea's employment.
- He continues:
20. As no rent payments were being received, Kekna terminated the lease at the end of May 2010.
21. On 12 July 2010 Pietra ceased to be the proprietor of the business The Marble Man.
Mr Kyriakouleas then relates:
24. I went to Perth in early December 2010 and went to the property. I took a locksmith and we changed the locks on the property. I returned to Sydney the same day. I did not see Mr Corea on that occasion. He was not at the property whilst I was there.
So when you attended the property and locked the gates on me - locked me out, did you notice my personal belongings in the house?---I did not enter the property.
Was my dog on the property?---Your dog was on the property.
What did you do with the dog?---I didn't do anything with the dog.
50 In the circumstances, no leasehold or licence interest, justifying or permitting Mr Corea to remain in possession as an occupant of the Premises has been established. Mr Corea has not tendered or given any evidence of making rental payments to Kekna.
51 Since December 2010 Mr Corea's occupation of the Premises has been unlawful. From then Mr Corea was, and remains, a trespasser to the Premises.
52 At the end of the trial Mr Corea made some written submissions concerning the Residential Tenancies Act 1987 (WA). This was to contend a provision of that Act, at s 64 concerning notice of termination, had not been complied with by Kekna. However, the parties' pleadings for this trial contain no reference at all to the Residential Tenancies Act. Nor, for that matter, is it referred to by Mr Corea anywhere in his witness statement (exhibit U). The invocation of asserted rights under the Residential Tenancies Act by Mr Coreaappears to be an afterthought, to which (proper) objection was taken at trial by Kekna.
53 I add that an existence of a residential tenancy in Mr Corea as a tenant, subsequent to his emergence from bankruptcy in July 2009, is also highly questionable. The premises were used as well to conduct a stonemasonry business. In any event, notice to quit was given around 1 October 2010, and the Premises only re-entered around mid-December 2010. Hence, longer than 60 days' notice of intent to reoccupy was afforded. A late attempt to invoke rights under the Residential Tenancies Act,must be rejected.
Counterclaim: Specific performance
54 During the passing (largely email) exchanges between the parties, particularly leading up to 31 August 2010, the parties remained $250,000 apart over an acceptable purchase price. Mr Corea was prepared to pay $600,000 but Mr Kyriakouleas on behalf of Kekna would only accept $850,000. On my analysis of the passing offers between the parties, any suggestion that there was a consummated contract of sale in Mr Corea's favour in relation to a sale of the Premises to him fails. This claim, effectively, was a contention as to rights in Mr Corea arising after his emergence from bankruptcy in July 2009. I refer in that respect to par 13.3A of Mr Corea's defence and counterclaim, subpar (d), (e) and (f) and a reference at (e) to 'the new offer'. No effective contract of sale favouring Mr Corea is established. Accordingly, the claim to specific performance, sought in the alternative by reference to that 'new offer' under (b) of Mr Corea's counterclaim, must also fail. That conclusion as to specific performance renders the evidence of one of Mr Corea's trial witnesses, concerning Mr Corea's ability to perform on a purchase contract through the availability to him of potential loan finance in the amount of $650,000 on 28 days' notice of no utility (see the witness statement of Mr Alfonzo Delanzo, exhibit T).
55 That leaves for resolution Mr Corea's claim to some sort of unspecified equity position in the Premises. I deal with that issue next, then questions as to the plaintiff's claims to damages.
Mr Corea's claim to some sort of undefined equity interest in the Premises
56 The equitable interest in the Premises contention, made in the alternative, emerges out of components of page 3 of Mr Corea's amended defence and counterclaim (see pars 3.1 – 3.15). The claim looks to derive from arguments, that:
(a) Mr Corea paid $10,000 as the option fee to the previous owners of the Premises;
(b) Mr Corea nominated Kekna to be his nominee to purchase the Premises and his $10,000 payment was credited against the balance of the purchase price paid by Kekna to acquire the Premises in 2005;
(c) at the time the market value of the Premises was thought to be worth far more than the purchase price Kekna paid – possibly double;
(d) that his option to purchase from the former owners of the Premises was not even exercised by Mr Corea personally, does not matter;
(e) that Mr Corea was a bankrupt between May 2006 to July 2009, does not matter;
(f) Mr Corea from October 2005 ran Pietra as a business from the Premises at Kelmscott and maintained a firm friendship with Mr Kyriakouleas;
(g) post July 2009 Pietra looks to have loaned, at the behest of Mr Corea, roughly, some $118,000 to Mr Kyriakouleas, who was then in a considerable need of funds due to financial constraints brought about by his separation and pending divorce from his wife;
(h) across 2009 to 2010 Mr Corea and Mr Kyriakouleas held face to face meetings and negotiated (including by email) towards agreeing a price at which Mr Corea would purchase the Premises from Kekna, but, in the end were unable to agree as they remained about $250,000 apart over a sale price.
57 Unfortunately for Mr Corea, none of these matters, either alone or together, provide him with a legitimate basis to contend against Kekna that there was created some sort of equity or proprietary interest in the Premises. The fact of his bankruptcy status is a damaging factor in respect of any interests Mr Corea may have held before July 2009. After that point, nothing else viable emerges on the evidence to show a proprietary interest held by Mr Corea in the Premises.
58 Questions over the rights Pietra might or might not once have held against Kekna, or against Mr Kyriakouleas, or against Pietra, are not presently relevant. Pietra is not a party to this action. Moreover, I am told it is a deregistered corporation. None of that helps Mr Corea establish an interest against Kekna in the Premises.
59 Mr Corea's defence and counterclaim fails.
Kekna's claim for damages for lost rent
60 Kekna claims damages from Mr Corea as a result of his 're-entering and remaining in possession of the Premises', see par 14 of its statement of claim and prayer for relief (item (2)).
61 As explained, I am satisfied that Mr Corea has been in unlawful occupation of the Premises as a trespasser, since mid-December 2010. That is when he wrongly retook possession of the property after Mr Kyriakouleas arranged for a locksmith to change the locks on a gate at the Premises. Mr Corea ignored that, returned and has remained there since.
62 Since that time, there has been no payment of any rent made to Kekna. Mr Corea has, in the period since December 2010 to the present, continued to live at the Premises. He has also conducted a stonemasonry business from the Premises. In doing so, Mr Corea has utilised specialist stonecutting equipment that Kekna obtained by hire purchase arrangements of 2007 and which was installed at the Premises from about February 2007 (Mr Kyriakouleas's first witness statement, exhibit R, pars 14 and 16). That hired industrial equipment in question (now fully paid off and owned by Kekna) is:
(a) a NICA Bridge saw;
(b) two jib cranes;
(c) a vacuum lifter; and
(d) an edge master.
63 Concerning lost rent, Mr Corea has clearly enjoyed the benefit of the Premises, as a trespasser, both to live and work in since he re-entered in mid-December 2010. At first blush it might be thought rather surprising Kekna has not moved more speedily to have Mr Corea ejected from the Premises. This was explained by counsel for Kekna as partially referable to ongoing negotiations that proceeded between the parties in an endeavour to resolve the matter. I can understand that, given a longstanding friendship that had existed between Mr Corea and Mr Kyriakouleas. Nevertheless, Kekna was forced to commence these proceedings, CIV 1007 of 2011, on 6 January 2011 seeking possession through its then solicitors. Kekna's action seeking possession of the Premises has at all times been firmly resisted by Mr Corea and, as now seen, wrongly so.
64 Kekna seeks damages of $5,000 per month, or $60,000 per annum (inclusive of GST) as lost rent damages. The evidence adduced at trial relating to Kekna's claim for lost rent was sparse. It will be remembered that under the lease agreement of 2005 the stipulated initial rental payment for the Premises (and with provision for adjustment) was as per lease agreement schedule item 6 - namely, the annual rent of $40,000 per annum plus GST. Of course, a global financial crisis then intruded subsequent to October 2008.
65 Nevertheless, after Mr Corea emerged from bankruptcy in mid-2009 it appears the level of rent then being paid (by Pietra) for the Premises was in the order of $60,000 per year. By exhibit 70, Mr Corea, on 20 August 2010, wrote to his accountant and friend, a Mr Williams, in these terms (the email contains a number of typographical errors):
As I feel if and wen he comes back with only a lease its going to be high rent and Ive checked that it should be around 50K per and weve been paying 60K year Im very curious to see what happens
…
Im at the point of lookin for another factory but mmmm with no money doesnt make it easy.
See at the end of the day next door want it Kyri needs money and I will need to relocate Say Kyri sells for 700K next door give me 200K to relocate and say six to twelve months to do so
66 In all the circumstances, I am satisfied on the balance of probabilities that the Premises carried an open market rental value and that Kekna has lost a valuable opportunity of securing a market rent for the Premises after December 2010. This loss of opportunity was caused by Mr Corea. Kekna's loss of opportunity to derive a market rent arises by reason of Mr Corea's ongoing acts of trespass at the Premises.
67 There being no other direct evidence about what the marketable rental value the Premises would be a conservative approach should be taken. Allowing, say, a reasonable period of six to seven months for the Premises to be openly marketed and for a replacement specialist industrial tenant to be found, I assess Kekna's damages as lost rent, from 1 July 2011 to the present, at the rate of $50,000 per annum inclusive of GST (namely, Mr Corea's private assessment of the Premises' rental value in August 2010). This equates to lost rental opportunity damages of $4,166.66 per month GST inclusive from 1 July 2011 until when the Premises are vacated to Kekna.
Claim for damages by reference to use of Kekna hired industrial equipment at the Premises
68 Kekna seeks further damages from Mr Corea arising out of his use without authority of Kekna's hired stonemasonry equipment at the Premises. The evidence in relation to this claim is even more sparse than that adduced concerning Kekna's claim for damages for lost rent.
69 In the first place, it was submitted I should assess this aspect of the damages by reference to amounts of money that Kekna was paying out as hire payments to the (then) legal owner of the equipment (the National Australia Bank) under hire purchase arrangements entered by Kekna during 2007. I was also told during closing this hired equipment had since been paid off. From the time Kekna became legal owner of the equipment, a lesser damages amount is claimed.
70 Conceptually, I am not satisfied that the level of Kekna's outlays to the equipment owner entity from whom it hired the equipment provides a reliable basis upon which to assess damages against Mr Corea. There has clearly been a trespass to these chattels by his unauthorised use of this equipment after December 2010, whilst Mr Corea was a trespasser, at the Premises. In this respect, Mr Kyriakouleas's first witness statement (exhibit R, at par 32), read:
In addition, Kekna was liable for lease payments for the equipment, which remains at the property and is still used by Mr Corea. I have prepared a schedule for those lease payments showing the date of the payments, which is P45. (emphasis added)
71 However, it emerged during closing submissions at trial that there was no P45 document before me. Hence, there is no such document schedule introduced in evidence during the trial.
72 The stonemasonry equipment at issue appears to be of a specialist character in terms of use, being particularly aligned to the stonemasonry businesses of Pietra and then Mr Corea, either as an employee of Pietra or subsequently for himself, upon deregistration of Pietra.
73 I am not satisfied that Kekna's claim for damages for trespass to goods, or conversion, or detinue, assessed by reference to the amount of Kekna's hire payments on a monthly basis (approximately $3,300 a month) until February 2012, is an appropriate measure of loss. Nor am I satisfied that the subsequently claimed nominal figure of $1,000 a month, as from February 2012, referred to in closing by counsel for Kekna, carries any empirical foundation approaching the level of proof on the balance of probabilities. There was no evidence led at trial that there was either a stonemasonry or similar business in existence in Perth or in Western Australia willing to pay anything to Kekna for the commercial value of using this equipment, over a period post-December 2010 whilst the equipment was located at the Premises, and used there by Mr Corea.
74 In the end, I must assess Kekna's equipment use trespass damages as only nominal. I would award Kekna damages at the rate of $100 per month (inclusive of GST) for the period commencing 1 July 2011 (assuming once again that it would have taken some time to find an interested party to agree to pay to use or hire this specialist stonemasonry equipment).
Conclusion
75 At the end then, the orders I propose are:
(1) an order requiring the defendant, Mr Corea, within no later than 14 days to deliver up possession of the Premises at 41 Gillam Drive, Kelmscott to Kekna;
(2) Mr Corea is liable for damages for trespass to land to Kekna calculated by reference to lost rent at the rate of $4,166.66 per month (GST inclusive), for the period commencing 1 July 2011, until Mr Corea surrenders occupation of the Premises to Kekna; and
(3) Mr Corea is also liable for damages for trespass to Kekna's goods (although not in conversion or detinue) in respect of the stonemasonry equipment at the Premises assessed nominally at $100 per month (GST inclusive) from 1 July 2011 until the Premises and thereby the equipment is recovered by Kekna.
Costs
76 Costs were argued at the close of the trial. Counsel for Kekna submitted in closing this was a case where, if Kekna was successful, it should receive a special costs order in its favour. Kekna asserted that in the event of success, it sought an order that Mr Corea be held liable to pay indemnity costs. This was on the claimed basis Mr Corea's defence to the action was at all times unmeritorious and had been persisted with, despite Mr Corea running what was always, a hopeless defence. Mr Corea has personally represented himself since 20 January 2013 in defence of the litigation, including at the trial.
77 These reasons have now demonstrated that the matters advanced on behalf of Mr Corea as defences against Kekna's claim to possession of the Premises have all ultimately been assessed as being without merit. That assessment in the end has been straightforward, notwithstanding the need to sift through much unnecessary documentary material.
78 Furthermore, I am satisfied that Mr Corea took a deliberate decision to retake possession of the Premises after the locks around the gate had been changed by Kekna's locksmith in December 2010. Since then Mr Corea has personally benefited in an economic sense from his unlawful, drawn out occupation of the Premises from which he has been conducting a stonemasonry business.
79 In Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) the circumstances where an award of indemnity costs may be made were discussed by Pullin JA and myself. One of those circumstances was where a party persists in an unmeritorious defence: see [16]. That is what has happened here.
80 Whilst it may in the end make little difference in terms of Kekna's pragmatic recovery outcome, bearing in mind Mr Corea's professed inability to afford legal representation at trial, this is a case where I must and do assess what has been a sustained resistance to Kekna's action seeking possession of its Premises to have been at all times, unmeritorious and unreasonable. The fact Mr Corea has been self-represented in defending the action since 20 January 2013 does not detract from that assessment in any way.
81 I would, therefore, make an order awarding costs against Mr Corea on a solicitor and client basis to the plaintiff for this action save to the extent that they are assessed by a taxing officer of this court to have been of an unreasonable level or unreasonably incurred.