Lagerbar Balmain Pty Ltd v Riverview Hotel Balmain Pty Ltd

[2006] NSWSC 1433

CITATION:	Lagerbar Balmain Pty Ltd v Riverview Hotel Balmain Pty Ltd [2006] NSWSC 1433 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	15 December 2006
JUDGMENT DATE :	15 December 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	12/15/2006
DECISION:	Defendant’s undertaking released.
CATCHWORDS:	UNDERTAKING TO COURT – Whether one party unreasonably refused to comply with interim agreement between parties – whether other party’s undertaking to Court conditional on performance of agreement should be released.
PARTIES:	Lagerbar Balmain Pty Ltd – Plaintiff Riverview Hotel Balmain Pty Ltd – Defendant
FILE NUMBER(S):	SC 5365/06
COUNSEL:	P. Wilson (Sol) – Plaintiff N. Gye – Defendant
SOLICITORS:	Adams Molloy – Plaintiff Barringer Leather Lawyers – Defendant

5365/06 Lagerbar Balmain Pty Ltd v Riverview Hotel Balmain Pty Ltd

JUDGMENT – Ex tempore
15 December, 2006

1    The Defendant in these proceedings moves on a Notice of Motion filed on 30 November 2006. There are a number of prayers for relief in that Notice of Motion but only one is pursued today, that is, the relief sought in paragraph 3 of the Notice of Motion which seeks an order that the Defendant be released from an undertaking contained in paragraph 5 of Consent Orders which were made by this Court on 23 October 2006. The orders which were made on that day are contained in a handwritten document prepared by the parties. The document is headed “Consent Orders”. It commences:

“The court notes the agreement of the parties and orders that:

(1) The parties serve upon each other experts’ reports on the issue of abatement of rent by 10 November 2006.”

Paragraph 2 requires the service of evidence by a certain time. The matter is then adjourned into the Registrar’s list on 13 November 2006.

2    The second page of the document is headed “Agreement between Parties” and is in the following terms:

“1. The parties will exchange experts’ reports on the issue of abatement of rent by 10 November.

2. If a percentage figure of total rent cannot be agreed as an abatement figure as at 10 November, then the parties agree to accept the average figure between the two experts’ figures until determination of these proceedings.

3. The Plaintiff undertakes to pay rent subject to deduction of the agreed abatement until determination of these proceedings.

4. The Plaintiff will adjust the September and October rental payments on 15 November 2006 to take into account the agreed abatement figure and pay any adjusted rent by 15 November 2006.

5. The Defendant undertakes not to seek to determine the lease or enter into possession of the premises at Riverview Hotel until determination of this matter or further order from the Court.

6. If one of the experts’ reports has not been served by 10 November, the abatement figure shall be the figure in the report which has been served, until the other report is served and will then be in accordance with paragraph 2 above.”

3    The Plaintiff served an expert’s report as to the rent abatement figure by 10 November 2006, but the Defendant did not serve its expert’s report, until 14 November 2006.

4    The Plaintiff has refused to pay rent, being the average figure between the two experts’ reports in accordance with paragraphs 2 and 3 of the Consent Orders, because it says the report served by the Defendant was not an expert’s report in that it did not state in the body of the report that the expert complied with the Code of Conduct required for experts under the Rules. The Defendant now seeks a release from the undertaking in paragraph 5 of the agreement on the basis that the Plaintiff refuses to comply with its undertaking in paragraph 3.

5 The Plaintiff’s solicitor, Mr Wilson, maintains that the document which was served on 14 November by the Defendant was not a report within the terms of the agreement between the parties by reason of non-compliance with the requirements of UCPR Pt 31 r 23(1), (3) and (4). I do not agree with that submission.

6 UCPR Pt 31 r 23 governs the admissibility of an expert’s report into evidence and it is concerned, as well, with the service upon parties of experts’ reports intended to be used as evidence. The consent orders made on 23 October 2006, and the agreement of the parties noted in those orders, serve two different purposes. The purpose of the orders is the regulation of interlocutory steps to bring the matter on for hearing. A timetable is ordered in the first three paragraphs. Clearly when, in paragraph 1, the parties are ordered to serve upon each other experts’ reports on the issue of abatement of rent, those experts’ reports would have to comply with the requirements of Pt 31 r 23, otherwise they would not be properly served in accordance with the Rules and could not be used as evidence in the proceedings.

7    However, the purpose of the agreement between the parties is to provide a regime for the continued operation of the Hotel, which is the subject matter of these proceedings, in a manner which is fair and acceptable to both parties as to payment of rent pending determination of the proceedings. In other words, the agreement between the parties is a private agreement, although the parties undertook to the Court that if that agreement is observed they will take, or refrain from taking, certain action.

8 The experts’ reports in paragraph 1 of the agreement inter partes may well be the same reports as are the subject of paragraph 1 of the Orders for the timetable but, in my view, a report for the purposes of the private agreement between the parties does not have to comply with the evidentiary regulatory requirements of Pt 31 r 23.

9    In other words, a report may be an expert’s report for the purposes of the private agreement between the parties, although it may be inadmissible as evidence in the proceedings and not qualify as an expert’s report for purposes of the interlocutory steps ordered by the Court.

10    In my view, in asserting that the report served by the Defendant was no report at all, the Plaintiff has taken an unmeritorious and unsustainable position as the basis for refusing to pay rent in accordance with the private agreement between the parties.

11    Paragraph 6 of the private agreement between the parties expressly contemplates that one of the reports may not be served by 10 November 2006. It provides for what is to happen in that event and recognises that the appropriate adjustment will be made if a report by one of the parties is served out of time.

12    For those reasons, I conclude that the Plaintiff was not justified in refusing to pay rent in accordance with paragraphs 2 and 3 of the agreement between the parties. Because the Plaintiff has not complied with the terms of the agreement it is not just to hold the Defendant to performance of its undertaking to the Court in paragraph 5 of the agreement.

13    I will stand the proceedings over to the Registrar’s list in the first instance on 1 February 2007.

14    Costs of the motion today will be paid by the Plaintiff.

15    The order of the Court is that the Defendant is released from the undertaking contained in paragraph 5 of the Consent Orders made on 23 October 2006.

– oOo –

29/12/2006 - To correct the date of judgment inserted on the first page of the judgment. - Paragraph(s) n/a