MEK Nominees Pty Ltd v Secure Parking Pty Ltd
[2000] VSC 416
•4 October 2000
| SUPREME COURT OF VICTORIA | |
| PRACTICE COURT | Not Restricted |
No. 6990 of 2000
| MEK NOMINEES PTY LTD | Plaintiff |
| v | |
| SECURE PARKING PTY LTD | Defendant |
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JUDGE: | Gillard J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 October 2000 | |
DATE OF JUDGMENT: | 4 October 2000 | |
CASE MAY BE CITED AS: | MEK Nominees Pty Ltd v Secure Parking Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 416 | |
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Application by defendant to convert a motion to a writ to enable cross-claim.
Plaintiff entitled to proceed with motion.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr G. Colvan with | Tisher Liner & Co |
| For the Defendant | Mr R. Strong | Mallesons Stephen Jacques |
HIS HONOUR:
The defendant in the proceeding issued a summons on 28 September 2000 seeking the following orders:
"1.Directions set out in paragraphs 2, 3 and 4 of the orders of Nathan, J. made on 8 September 2000 be vacated.
2.This proceeding continue as if it had been commenced by writ.
3.The order set out in order 5 of the orders of Nathan, J. made on 8 September 2000 be amended so as to read:
'There be no order for the defendant's costs of summons dated 7 September 2000 and otherwise the cost of that summons and this day's hearings be reserved.'
4.Such further or other orders and directions as to the court shall be just."
The plaintiff, MEK Nominees Pty Ltd, is the owner of premises situated at 180 Russell Street, Melbourne, on which is erected a multi-storey car park. The defendant, Secure Parking Pty Ltd, is the tenant of the premises pursuant to a lease dated 12 August 1996. The lease is for a term of five years commencing on 1 May 1996 and follows that the lease will expire on the eve of 1 May 2001. The rental varies in accordance with provisions in the schedule, but it is in the order of $1.6 million per year, approximately $139,706 per month. The lease provides for further terms, being three terms each of five years.
A dispute has arisen between the parties, and on 31 August 2000 the plaintiff issued an originating motion invoking the summary jurisdiction of the court pursuant to s.137 of the Property Law Act 1958 to have the issues determined by the court. The principal bone of contention concerns the interpretation of clause 9.4(b)(i) of the lease and whether or not it applies to the circumstances which have arisen in the last year or so. Clause 9.4(b)(i) provides as follows:
"If at any time during the term of this lease the lessees trade or business carried on in or from the leased premises is restricted by reason of any law or action of the City of Melbourne or any other governing authority having jurisdiction in the matter the lessee may elect to pay thereafter during the period of such restriction in lieu of the rent then payable by the lessee a rent calculated in accordance with the following formula -"
Thereafter appears a formula which can apply in certain circumstances.
In a nutshell, the defendant contends that its business has been restricted by the opening of another car park at 222 Russell Street which occurred in or about May this year. This address is three allotments from the defendant's car park. The defendant formed the opinion that since planning permission was granted by some authority for a rival car park, this action has caused it loss. One could very readily understand that the opening of a new car park some three allotments from the defendant's car park could cause a drop in trade for some period of time. The interesting question in law arises whether or not some action by some authority has caused this downturn and hence the application of clause 9.4(b)(i) of the lease.
The defendant having formed the opinion that clause 9.4(b)(i) in fact applied, proceeded to reduce the rent, and as at today it has reduced the rent by $132,471. It would appear that if this matter is not resolved it will continue to reduce the rent up to the expiration of the lease in May next year.
The originating motion in its original form sought orders in the form of declaratory relief that the sub-clause did not apply. To understand the present application it is necessary to go back in time.
On 31 August 2000 the plaintiff issued a summons in the originating motion and it set out a number of questions in that summons. The summons was to be heard before a Master on 8 September. In accordance with the usual practice, it was referred then to the Practice Court on that day. On the day prior, the defendant's solicitors issued a summons seeking the following orders:
"An order staying or adjourning the plaintiff's summons dated 31 August 2000 pending the conciliation of the dispute pursuant to the provisions of clause 13 of the lease between the plaintiff and the defendant dated 12 August 1996."
This application came on before the Honourable Nathan, J. on 8 September and His Honour, after hearing argument, dismissed the defendant's application and adjourned the plaintiff's summons for hearing before the Practice Court on Tuesday, 10 October. His Honour also gave some directions in relation to further affidavit material, and the 5th order is in these terms:
"5. The plaintiffs costs are reserved."
One of the applications before me this day in the summons which has been issued seeks the operation of the slip rule in relation to the order for costs, and it is contended by the legal practitioners for the defendant that the order which was in fact authenticated by His Honour does not truly set out what His Honour ordered at the hearing.
In respect to this dispute, I have affidavit material from the solicitors acting for the respective parties, and it is quite clear that there is a dispute as to what His Honour did in fact order on that occasion. It is clear to me that I cannot possibly resolve the question on the affidavit material and, accordingly, I offered to the parties the option of going back to Nathan, J. to resolve the issue. That has been agreed between the parties. We understand that His Honour will be returning at the end of this month. So I have indicated to the parties that they should apply to His Honour to amend the order.
Since the hearing before His Honour on 8 September, the plaintiff has foreshadowed it will seek to amend its originating motion by inter alia seeking an order for the unpaid rent. This is on the basis that the plaintiff is successful in its proceeding, namely, persuading the court that the sub-clause does not apply in the circumstances. This has prompted the defendant to apply for the orders set out in its recent summons. What the defendant seeks to do is to raise a counterclaim or set-off in answer to any order for payment of the full rental if, as things turn out, the plaintiff is successful. It submits that the originating motion proceeding is inappropriate for what will be a contested factual case and, accordingly, the originating motion should be treated as a writ and that consequential orders should be made for pleadings. If this was done, then the defendant could counterclaim or raise by way of set-off any amount it asserts is owing by the plaintiff to it in answer to any order for rent made in favour of the plaintiff. The nature of the counterclaim or set-off is a claim for money due in respect of outgoings paid by the defendant pursuant to the lease which have to be audited at a later date, and if any overpayment has occurred that overpayment is to be refunded to the defendant.
These matters were raised fairly recently by the defendant and, as a result, an audit was carried out, and it is accepted by the plaintiff there is to be a refund of something in the order of $40,000. The defendant, for its part, says that the amount is much more than that, and a figure has been suggested of something in the order of $180,000. In addition, the defendant contends that errors have occurred over the past nine years and claims an amount in the order of some $500,000. The evidence in relation to this latter aspect, to say the least, is somewhat vague and lacks detail and particularity. One may query whether the defendant could ever recover a sum of that order. It cannot be overlooked that the Limitation of Actions Act may have some application.
The plaintiff opposes the orders sought in the recent summons. It submitted first that the issues raised by its originating motion are discrete issues and can be heard and determined without in any way impinging upon the question of the right of the parties in relation to rent and the like. A second point is, it wishes to proceed with its own proceeding, which is a discrete matter and involves an interpretation of an issue. Further, and this is a point of some substance, reference is made to clause 3.1 of the lease concerning payment of rent, and it is submitted that the clause requires payment of rent without deduction.
Clause 3.1 provides –
"During the whole of the term and any extension or renewal thereof to pay to the lessor or its managing agents or as otherwise directed free of all deductions the yearly rental provided in item 5 of the first schedule hereto."
The submission has been put to me that that is clear in its terms and it is not open, according to the agreement of the parties, for the defendant to reduce any payment of rent and that it is obliged to pay the full amount free from all deductions. In my opinion, there is a fair point made in that argument. That is not to say of course that it is not open to the defendant in a separate proceeding to raise questions of damages and any other amounts that may be due under the contract.
The defendant's submissions can be briefly summarised. The point is made that it is now envisaged that the plaintiff, at the hearing on 10 October, will seek not only a determination of the issues concerning construction and the application for the particular sub-clause but, if successful, would seek an order for the unpaid rent. It is submitted that the defendant has a set-off defence and/or counterclaim and that justice requires that the defendant be given an opportunity to litigate its defence and counterclaim.
I note that in the affidavits on behalf of the defendant it is contended it does have a set-off or counterclaim and clearly justice does demand it be given an opportunity to litigate its defence and counterclaim, but the question is whether justice demands that the plaintiff should be delayed in its proceeding whilst the defendant in the same proceeding litigates its defence and counterclaim.
It was also put on behalf of the defendant that there was no utility in having a separate hearing of a construction point. I note that submission, but the fact is that the plaintiff seeks to utilise a summary procedure under the Property Law Act, one of its main purpose being to provide a summary expeditious procedure to resolve disputes between landlord and tenant. I do not accept the submission that there is no utility in the separate hearing.
The plaintiff has brought the originating motion; it seeks to have the issues determined as between the parties and, in my view, it is entitled to have that issue determined as soon as possible. That is not to deny the fact that the defendant, if it thinks it does have a good counterclaim and/or set-off, to bring a separate proceeding in either the common law division or the commercial division and have that matter separately heard. But, in my view, the plaintiff is entitled to proceed with its proceeding and also to seek an order for the unpaid rent if in fact it is successful in the application.
When the matter was before Nathan, J., His Honour made the observation - and I entirely agree with him - that this matter ought to proceed as soon as possible; that the plaintiff should not be out of pocket if in fact the provision does not apply. Quite frankly, it is in the interests of both parties to resolve that matter as soon as possible. If the defendant is successful, then no doubt it will be very happy with that result and benefit from it. I do not see why it should not come to court next week and argue that the sub-clause did apply and it is entitled to reduce the rent. In my opinion the question is, what is the most appropriate thing to do consistent with what is just as between the parties? In my view, justice comes down very heavily on the side of the plaintiff to have its proceeding heard as soon as possible without it being in any way disadvantaged by having the cross-claim tacked onto its proceeding with the consequent delay that it will probably involve.
So, for those reasons, I propose to dismiss paragraphs 1 and 2 of the defendant's summons and I will adjourn the relief sought in paragraph 3 of that summons and refer it to the Honourable Justice Nathan for resolution.
I make the following orders:
1.That paragraphs 1 and 2 of the defendant's summons filed 22 September 2000 be dismissed.
2.That the relief sought in paragraph 3 of the said summons be referred to the Honourable Justice Nathan for hearing and determination.
3.That the defendant pay the plaintiff's costs of the defendant's summons.
4.Order that the court dispense with the requirements of Rules 5.03(1) and 8.02 of the Rules of Court and authorise plaintiff to commence a proceeding by originating motion in form 5C.
5.Direct that the plaintiff's solicitors draw up this order and it be signed by the judge pursuant to Rule 60.04(1) of the Rules of Court.
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