MRI Pty Ltd v Soar Development Group Pty Ltd - [2021] NSWSC 309

Supreme Court

New South Wales

Medium Neutral Citation: MRI Pty Ltd v Soar Development Group Pty Ltd [2021] NSWSC 309
Hearing dates: 19 March 2021
Decision date: 19 March 2021
Jurisdiction: Equity - Expedition List
Before: Sackar J
Decision:
See paras [28]-[29]

Catchwords:
LEASES AND TENANCIES — Rent and outgoings — Recovery of rent and arrears
GUARANTEE AND INDEMNITY — Actions to enforce guarantee — Guarantors liability — where directors of tenant company signed a lease as guarantors of the tenant’s obligations under the lease
EQUITY — Equitable remedies — Injunctions — injunction to remove property, rubbish and debris from common areas — injunction restraining placement of property, rubbish or debris in common areas

Legislation Cited:
Contracts Review Act 1980 (NSW)

Cases Cited:
n/a

Texts Cited:
n/a

Category: Principal judgment
Parties: MRI PSO Pty Ltd (plaintiff)
Soar Development Group Pty Limited (defendant)
Soar Development Group Pty Ltd (cross claimant)
MRI PSO Pty Ltd (first cross defendant)
William Le Messurier (second cross defendant)
Bruce Jackson (third cross defendant)
Representation:
Counsel:
P Reynolds (cross claimant)
Solicitors:
BC Lawyers (cross claimant)
Self represented (second cross defendant)
Self represented (third cross defendant)

File Number(s): 2020/324162

Judgment – ex tempore

The history of these proceedings may briefly be stated as follows: On 15 August 2019, the cross-claimant and the cross-defendant entered a lease in relation to certain premises described in more detail in the lease as Orange Grove Road, Warwick Farm, a property at which the cross defendant conducted certain industrial activities. A dispute arose between the respective parties which came before the court last year.
Prior to that, the cross-defendant, as tenant under the lease, brought proceedings before the Duty Judge in order to restrain the landlord (cross-claimant) from retaking possession of the property. Those proceedings were commenced around 13 November and an ex parte injunction was granted in favour of the tenant. The matter again came before the Duty Judge on 19 November as a result there was a compromise position arrived at pending a final hearing, the dispute concerned alleged unpaid rent and other activities on the part of the tenant.
The principal proceedings brought by the tenant (cross-defendant in these proceedings) did not ultimately eventuate, although as I say proceedings were commenced. In the course of those proceedings, the cross-claim which I will come back to in a moment and which I am currently dealing with was commenced by the cross-claimant, the landlord.
As the matter progressed before me, and ultimately on 9 March this year, the solicitors acting for the plaintiffs (tenant) on the summons, (the cross-defendant before me today) sent a letter to my Associate indicating that they would not be filing any defence to the cross-claim, nor would they be filing any evidence. Further, that they would not be appearing at the hearing of the matter today or taking any further part in the matter.
The cross-claim is dated 3 February 2021. It seeks a number of items of relief, but principally it seeks judgment for the cross-claimant…

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: [2021] NSWSC 309
Decision Date: 19 March 2021

CaseChat Overview and Summary

The dispute between MRI Pty Ltd and Soar Development Group Pty Ltd arose from a lease agreement where the tenant company, Soar Development Group Pty Ltd, defaulted on its rental obligations. The landlords, MRI Pty Ltd, sought to recover the outstanding rent and other expenses from both the tenant and the guarantors. The directors of Soar Development Group Pty Ltd had signed the lease as guarantors of the tenant's obligations. The landlords applied for relief to recover the outstanding amounts and sought an injunction to remove property, rubbish, and debris from the common areas and to prevent the tenant from placing further items in those areas.

The primary legal issues before the court involved the enforceability of the guarantee provided by the directors of Soar Development Group Pty Ltd and the extent of their liability for the tenant's defaults. Additionally, the court had to consider the landlords' request for an injunction to remove and prevent the placement of property, rubbish, and debris in the common areas of the leased property. The court's analysis focused on the terms of the lease agreement, the nature of the guarantors' obligations, and the equitable remedies available to the landlords.

The court found that the directors of Soar Development Group Pty Ltd, having signed the lease as guarantors, were indeed liable for the tenant's defaults. The court emphasised that the guarantors' liability was not limited by their status as directors but extended to the full extent of the tenant's obligations under the lease. Regarding the injunction, the court granted the landlords' application, recognising the necessity to protect the integrity and usability of the common areas. The court noted the significant impact of the tenant's actions on the property and the rights of other tenants, justifying the need for immediate intervention.

In summary, the court held that the guarantors were liable for the tenant's defaults and granted the landlords' application for an injunction. The court ordered that the guarantors were to pay the outstanding rental amounts and expenses. Further, the tenant was directed to remove all property, rubbish, and debris from the common areas and was restrained from placing any further items in those areas. The court's decision provided clarity on the enforceability of the guarantee and the availability of equitable remedies in such circumstances.

Orders