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

1. 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.

2. 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.

3. 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.

4. 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.

5. 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 against each of the cross-defendants, that is the former tenant of the property, together with a Mr LeMessurier and Mr Jackson, who appear before me today as litigants in person. They were relevantly directors during 2020 of the cross-defendant until at least December of that year, but in any event, for reasons I will come to, signed the lease as guarantors of the tenant's obligation under the lease entered into on 15 August 2019.

6. What is sought against the cross-defendants and each of them is the outstanding amount of rent and outgoings and arrears. As explained by Mr Reynolds this morning in opening, for the cross-claimant that amount totals $90,915 and although he has indicated that no interest is to be claimed for any past amounts, his client would, going forward, if that amount remains unpaid, claim interest upon it.

7. In addition to the arrears in rental, his client also claims an order restraining the first cross-defendant (the tenant) from storing any batteries, dangerous goods and hazardous goods on the premises and in the alternative an order requiring the first cross-defendant to remove all property, rubbish and debris from the common areas and restraining it from placing any of its property or rubbish or debris in those common areas and of course he claims costs.

8. The evidence that has been read before the Court was identified in his opening today. The only evidence put forward by the cross-defendants is an affidavit of Mr Jackson who, as I have indicated, appears as a litigant in person.

9. There is no doubt on the evidence and indeed on the pleadings, because the cross-defendant takes no part in the proceedings at all, nor has it put on any defence, nor has it filed any evidence in answer to the numerous complaints both from the landlord and from other persons in the near vicinity of the leased premises about numerous breaches by the cross-defendant in relation to the leased premises.

10. I am satisfied by the evidence sworn by various deponents, that those breaches did in fact occur and are made out and that there were activities undertaken on the property which were contrary to the terms of the lease.

11. There were also other breaches in relation to unpaid rental and insurance and matters of that sort set out in much greater detail in the submissions and evidence.

12. The two litigants in person do not put on any evidence to contest those factual assertions and in any event it seems to me they cannot be gainsaid.

13. It seems to me that the amount that is outstanding for unpaid rent and outgoings is the amount of $90,915. That is explained in two portions of evidence. First, at court book volume 2, at pages 123 and following, there are numerous invoices which had been raised for periods starting from 1 October 2019 and all concluding, at least on the face of these invoices, at 31 December 2020. Those invoices were all, it appears on their face, emailed to Mr Jackson. A reconciliation of the amounts of rent and outgoings as against various payments made, including the set-offs for the amount paid for bond, is to be found in the court book volume 2 at page 122. That reconciliation amounts to the ultimate $90,915.24 which I am satisfied, on the balance of the evidence, is the current amount of arrears outstanding by way of rental and outgoings.

14. As I have said, there is no defence relevantly on the part of the first cross-defendant, and judgment should be entered against the first cross-defendant for that amount.

15. The second and third cross-defendants have supplied a written outline, briefly added to orally. However I should just make reference to the defence that was filed on their behalves.

16. That is to be found in court book volume 1 at tab 12. That defence is, without intending any disrespect, what might be described as a defence in minimalist terms. It certainly admits certain paragraphs. It denies certain paragraphs and essentially it does not either admit or does not traverse most of the paragraphs of the cross-claim.

17. What is important, however, is that essentially the effect of the defence is really to put the cross-claimant to proof. I mean by that, that there is no positive defence raised, no matter of fact or law which is raised as a matter of substance, as to why the second and third cross-defendants should not be rendered liable for the outstanding amount that I have referred to.

18. The cross-claim itself pleads, with some degree of specificity, why it is that the second and third cross-defendants are liable and it is put squarely that they are liable on the basis of being guarantors of the tenant’s obligations.

19. The written outline which Mr LeMessurier and Mr Jackson provided to the Court this morning raises a number of issues. A substantial issue raised in the written outline was the precise amount that is outstanding. That has now been clarified and in any event it is one of the amounts which the second and third cross-defendants considered as a likely amount. In their paragraph 8 they do in fact identify the $90,915.24 for themselves.

20. When this matter was raised this morning, that is the ambiguity about the amount that was outstanding, Mr Reynolds, upon my invitation, explained how that amount was arrived at. Neither Mr LeMessurier nor Mr Jackson, who have at all times courteously and constructively put their matters before the Court, asked for any further indulgence by way of time in order to be able to meet the claim that has progressed today.

21. Essentially, however, their next point seems to be that they resigned as directors and they were never shareholders - that seems to be so - and therefore upon resignation, as I best understand their argument, they ceased to have any legal obligations under the terms of the lease. They refer to heads of agreement in their paragraph 17 and they also at the end of their document refer to s 9 of the Contracts Review Act 1980 (NSW) and raise the question of voidance or unenforceability of the guarantee. They also raise in their paragraph 25 their concern about possible future liability that might arise.

22. For various reasons I do not regard any of the matters raised by either Mr LeMessurier or Mr Jackson as having any substance.

23. The lease makes it abundantly plain that the obligations of the tenant were to be guaranteed. The amount of the rent was made explicit in item 7 of the schedule at page 116 of volume 2 of the Court book.

24. Mr LeMessurier and Mr Jackson are clearly identified as guarantors. They are not identified there as being guarantors by reason of their status as directors. They signed the guarantee on at least two occasions on 13 September. At page 118 they signed as directors but the next page they signed purely as guarantors and in my view the lease could be construed as suggesting that they only guaranteed the obligations of the tenant whilst ever they were directors.

25. The principal difficulty in any event with their argument is that the debt, which is outstanding, on any view of the facts appears to have accrued during the very time, that is during 2020 when they were directors, because it appears they did not resign until December 2020. In any event that plays no part, because in my view, their obligations by reason of the terms of the lease continue in any event, whether they are directors or not.

26. There is no provision of the lease which suggests that they cease to be guarantors of the tenant's obligations when they ceased to be directors or when they ceased to relinquish control of the tenant.

27. It seems to me that on a plain construction of the lease they were at all times and indeed remain liable for such amounts as may arise (presently the unpaid rental of the $90,915) but potentially any other damages that might arise pursuant to the landlord incurring loss as a result of any further breach of the lease. I say no more about that today because nothing further is claimed today.

28. So, so far as I am concerned, Mr Jackson and Mr LeMessurier remain liable as guarantors pursuant to the lease they signed in September 2019 for the outstanding balance of the $90,915 and I would make orders accordingly.

29. I should say something about the injunction sought. It does seem to me that there being no defence and no dispute as to the facts and there being an abundance of evidence as to the potential of hazardous product and other rubbish and debris on site, an appropriate case that the cross claimant is entitled to the injunctive relief sought, both in its primary form and/or in the alternative, against the first cross-defendant and I would grant relief in that regard as claimed.

30. I would invite short minutes of order to be brought in to reflect these reasons.

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Decision last updated: 31 March 2021