NGN Fitness Pty Ltd v Lacey's Gym Franchsing Pty Ltd
[2022] WADC 83
•6 SEPTEMBER 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: NGN FITNESS PTY LTD -v- LACEY'S GYM FRANCHSING PTY LTD [2022] WADC 83
CORAM: REGISTRAR HOGAN
HEARD: 3 AUGUST 2022
DELIVERED : 6 SEPTEMBER 2022
FILE NO/S: CIV 828 of 2021
BETWEEN: NGN FITNESS PTY LTD
Plaintiff
AND
LACEY'S GYM FRANCHSING PTY LTD
First Defendant
JUSTIN JAMES LACEY
Second Defendant
Catchwords:
Practice and procedure - Plaintiff's summary judgment application
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Representation:
Counsel:
| Plaintiff | : | Mr P Donovan |
| First Defendant | : | Mr K Morgan |
| Second Defendant | : | Mr K Morgan |
Solicitors:
| Plaintiff | : | MDS Legal |
| First Defendant | : | Murfett Legal |
| Second Defendant | : | Murfett Legal |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 11] [2016] WASC 235
Ratnam v Cumarasamy [1965] 1 WLR 8; [1964] 3 All ER 933
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
REGISTRAR HOGAN:
By chamber summons dated 25 May 2022 the plaintiff seeks leave to bring an application for summary judgment against the first and second defendants.
The plaintiff's application was supported by the affidavits of Nigel Housden, sworn 25 May 2022 and Camilla D'Angelo Radenti, sworn 16 June 2022.
The first defendant filed an affidavit of Justin James Lacey, sworn on 14 July 2022, in opposition to the plaintiff's application.
Background
The first defendant as franchisor and the plaintiff as franchisee were parties to a franchise agreement dated 26 May 2018 in respect to the Lacey's Gym Franchise.
The directors of the plaintiff are Nigel Housden and Nicholas Housden.
Nicholas Housden, Nigel Housden and Gillian Housden were guarantors under the franchise agreement.
The sole director of the first defendant is the second defendant.
These proceedings arose out of a mediation agreement (The Agreement) that arose out of a dispute concerning the franchise agreement.
A mediation attended by the directors of the plaintiff and the second defendant in the presence of their lawyers was held on 8 October 2018 to resolve the dispute between the parties.
At the mediation, The Agreement was reached. On 23 November 2018, Nicholas Housden, Nigel Housden and Gillian Housden, and the defendants agreed to vary The Agreement by way of a Deed of Variation (The Deed).
On 23 November 2018, the first defendant, in part performance of the agreements with the plaintiff, paid the plaintiff by electronic transfer, $19,149.
Between 26 April 2019 and 20 March 2020, the first defendant paid to the plaintiff, an amount of $24,500 in 47 transfers of $500.00 and one of $1,000.00.
Plaintiff's claim
The plaintiff pleads against the first defendant that as a party to The Agreement and The Deed the first defendant was to pay the plaintiff:
(a) the amount of $105,601 being the outstanding balance on the primary sum due and payable;
(b) the reimbursement of rent in respect of leased premises in the amount of $4,846 (Rent Reimbursement); and
(c) interest charged in accordance with the terms of The Agreement.
The plaintiff pleads against the second defendant, pursuant to the terms of The Agreement and The Deed, that the second defendant guaranteed the first defendant's obligations under The Agreement and The Deed to pay the balance of the primary sum and interest owed to the plaintiff.
The plaintiff pleads that the first defendant defaulted in paying the primary sum, Rent Reimbursement, and interest thereon and that thereafter the second defendant, as guarantor, has defaulted in paying the primary sum and interest thereon.
Extension of time to make the application
The plaintiff's application has been brought out of time limitations prescribed by O 14 r 1(1) of the Rules of the Supreme Court1971 (WA) (RSC).
Order 14 r 1(1) of the RSC stipulates that an application for summary judgment must be made within 21 days after an appearance is filed or at any time later by leave of the court.
The defendants filed their appearances on 21 April 2021 and the application for summary judgment was filed on 25 May 2022, some 400 days after the appearances were filed.
The plaintiff has sought the leave of the court to apply for summary judgment. The onus is on the applicant to justify the delay in bringing the application.
Prejudice to the defendant is one consideration the court must consider in its discretion to allow an application to be brought out of time. It is not the only issue that must be considered.
There does not appear to be any prejudice to the defendant in the lateness of the application. In fact, the lengthy delay afforded the defendants the opportunity to extend the parameters of the defence and to counterclaim.
In Ratnam v Cumarasamy [1965] 1 WLR 8 [12]; [1964] 3 All ER 933, 935 (Ratnam) the Privy Council said in relation to an extension of time for compliance with rules of court:
The rules of court must, prima facie be obeyed, and, in order to justify a court in extending the time during which some step in procedure requires to be taken, there must be some material upon which the court can exercise its discretion. If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a timetable for the conduct of litigation.
Ratnam was cited in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 11] [2016] WASC 235 in support of material having to be before the court upon which it can exercise its discretion. It will usually be incumbent on an applicant for an extension of time to provide an adequate explanation for the delay except where the case for summary judgment is so strong and the absence of a defence is so clear, that the justice of the case requires the application be granted.
The plaintiff failed to address the issue of delay in its affidavits. The Radenti affidavit annexes correspondence exchanged by the parties between 27 October 2021 and 10 May 2022, prior to the filing of the chambers application, but is silent on the seven months prior to then. The Housden affidavit does not address the issue of delay.
Summary judgment principles
The principles of when a court should allow an application for summary judgment are well established and have been summarised in a number of judgments in both the Supreme and District Courts, including Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24].
It is trite law that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 [99]. It is only in the clearest of cases where there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57].
The defendant must show by affidavit or otherwise that there is some triable issue either of fact or law and that it has an arguable defence or a defence on the merits. The party opposing an application for summary judgment does not have to establish a defence on the balance of probabilities but must at least show cause why there is an arguable defence: Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27 [4] (Martin CJ, Newnes & Murphy JJ).
The defendants filed a minute of proposed amended defence on 3 August 2022, which formed the basis of the structure of oral submissions in the summary judgment application.
The draft defence included pleadings:
(a)of a denial that the second defendant was a party to The Agreement claiming that he was a volunteer under The Deed;
(b)that The Agreement was subject to various implied terms and clauses regarding council approval and conditions precedent; and
(c)that The Agreement and The Deed were unenforceable for failure of consideration, issues of unconscionability and estoppel.
The defendants contended that there was a Third Agreement and that the Third Agreement contained provisions for lower instalment payments and an agreement to pay monies owed upon the sale of one or more gyms that were owned by the second defendant.
The draft defence at paragraphs 9.6 (b) and (e) pleads the Third Agreement was partly in writing, partly inferred by the conduct of the parties and in part made verbally.
Nigel Housden, at par 31 of his affidavit, deposes 'at no time did I, or did my lawyers on my behalf agree to any such variation or Third Agreement, as pleaded by the defendants'.
The submissions made on behalf of the defendants and the draft minute of proposed amended defence filed on behalf of the defendants, do not admit that the plaintiff is entitled to the payments as pleaded by the plaintiff however, correspondence from the second defendant to Nigel Housden, either acknowledges or confirms that a debt is owed, but seeks, based on financial difficulty, leeway to meet the repayment schedule.
The Deed stated that instalments were to commence on 15 April 2019, such instalments defined in paragraph 1(c) of The Agreement - 'the balance of $130,101 to be paid in 13 equal instalments', monthly.
An email dated 12 April 2019 from Steve Hansen who was engaged by the defendants as a business agent stated that he had 'agreed $500 per week as opposed to $1,000' (annexed at 'NH-13' to the Housden affidavit), and that such amounts were to be paid from 9 April 2019. Payments commenced from that time until March 2020 at the rate of $500 per week. This is consistent with the pleading that the Third Agreement is partly inferred by the conduct of the parties.
An email from Justin Lacey to Nigel Housden annexed at 'NH-15' to the Housden affidavit states 'as you agreed I could pay you after the gym sells'.
The plaintiff contends that the dispute is a simple case of a debt, claimed because of an agreement reached at mediation and that the complexity suggested in the written submissions or filed documents of the defendants is illusory.
In consideration of the evidence before me, it is my opinion that even at its lowest point there is evidence of an agreement regarding the amount, manner, and timing of repayments.
I cannot exclude the existence of a Third Agreement. Whilst Nigel Housden deposes to there being no Third Agreement made by him or his lawyers, on his behalf, it does not preclude the existence of an agreement regarding the manner and timing of repayments.
I consider that the existence and extent of a Third Agreement, should be a matter for a trial judge.
It is not necessary to deal with the various other defences which are pleaded by the defendants or that were the subject of the defendants' submissions.
I conclude it cannot be said there is no real question to be tried.
In the circumstances, leave to bring the application for summary judgment out of time is refused and the application dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
TS
Court Officer
6 SEPTEMBER 2022
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