O'Malley Nominees Pty Ltd v Shawtec Pty Ltd

[2008] WADC 115

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   O'MALLEY NOMINEES PTY LTD -v- SHAWTEC PTY LTD & ORS [2008] WADC 115

CORAM:   REGISTRAR KINGSLEY

HEARD:   22 MAY 2008

DELIVERED          :   21 AUGUST 2008

FILE NO/S:   CIV 1163 of 2004

BETWEEN:   O'MALLEY NOMINEES PTY LTD (008 782 821)

Plaintiff

AND

SHAWTEC PTY LTD (070 514 966)
First Defendant

MICHAEL JOHN SHAW
LAURENCE DAVID SHAW
Second Defendant

Catchwords:

Practice - Application to amend defence - Amended defence in similar terms as that previously disallowed - Whether subsequent amendment an abuse of process

Legislation:

Nil

Result:

Application allowed

Representation:

Counsel:

Plaintiff:     Mr A J N Aristei

First Defendant              :     Mr A R MacPherson

Second Defendant         :     Mr A R MacPherson

Solicitors:

Plaintiff:     Vogt Graham Lawyers

First Defendant              :     Hotchkin Hanly

Second Defendant         :     Hotchkin Hanly

Case(s) referred to in judgment(s):

Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263

S, DJ v Channel Seven Adelaide Pty Ltd [2008] SASC 108

Thompson v Easterbrook (1951) 83 CLR 467

1. REGISTRAR KINGSLEY:  The application before me is a continuation of the defendant's application to amend their defence set‑off and counterclaim.  The plaintiff's action concerns the leasing of commercial units.  The plaintiff was the owner of several industrial and warehouse units including units 4, 5 and 6.  The plaintiff and first defendant were in some disputation in relation to the lease of the units and the first defendant was not paying rental outgoings and interest.  The first defendant contended that the leases for units 4, 5 and 6 were subject to the Commercial Tenancy (Retail Shops) Agreements Act 1985 ("Retail Shops Act") and thus the leases in question were "retail shop leases".

2. It is this issue that was sought to be pleaded in par 16 of a minute of proposed amended defence dated 31 October 2006 but filed 17 April 2007.  In reasons delivered 30 May 2007, I was of the opinion that units 4 and 5 were not subject to the Retail Shops Act.  It was my opinion that the status of the sub‑lease did not show that units 4 and 5 were to be used wholly or predominantly for the carrying on of the sale of goods by retail.  I was of the opinion that no reasonable cause of action existed under the Retail Shops Act in relation to units 4 and 5.  The defendant now seeks to bring in a further minute of proposed amended defence set‑off and counterclaim where the plea that units 4 and 5 are subject to the Retail Shops Act is again sought to be raised.  The plaintiff understandably opposes the amendments.

3. Plaintiff's counsel referred me to Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263 where at p 267 Kennedy J commented that the Judge hearing the original application had concluded that the appellant's summons to re‑amend the defence in the circumstances amounted to an abuse of process. With that opinion Kennedy J agreed. Kennedy J went on to say that whilst the particulars of the pleading have been slightly enlarged, that did not alter the position that the proposed amendment was in identical terms to that struck out by the learned Master.

4. Defendant's counsel submits that the case is more analogous to, S, DJ v Channel Seven Adelaide Pty Ltd [2008] SASC 108 where White J suggested that amendments addressing deficiencies identified by the court were not objectionable and the mere fact that the pleading was otherwise in substantially the same form as the pleading struck, did not make it an abuse of process. In the Channel Seven case the original pleading was struck because the defence pleaded evidence and not conduct. The amended pleading removed the plea of evidentiary matters and White J considered that:

   "If the proposed pleading does not repeat the vice upon which the Full Court ruled, the mere fact it may otherwise substantially be in the same form that was considered by the Full Court does not involve an abuse of process." [22]

Background

1. In July 1991, O'Malley Nominees Pty Ltd (O'Malley) as lessor entered into a lease with Ravenscroft Nominees Pty Ltd as lessee whereby O'Malley leased units 4 and 5 to Ravenscroft.  The lease period was for a period of 10 years to 1 July 2001.  Ravenscroft had an option (the first option) from 1 July 2001 to 1 July 2011 and a second option from 1 July 2001 to 1 July 2003.

2. In 1995 Shawtec offered to sub‑lease from Ravenscroft units 4 and 5.  The offer of sub‑lease dated 28 July 1995 provides at par 3 that the premises would be used for the manufacturing of office furniture, the use of oxy‑acetylene equipment, welding, grinding, powder coating, woodworking equipment.  Clause 8 of the sub‑lease provided, amongst other things, that Ravenscroft would not exercise their second 10 year option or the 2 year option period after June 2001 and assigned the right to take those options to Shawtec, with O'Malley's approval.  Ravenscroft accepted no liability under the existing lease thereafter.  The sub‑lease was signed by all parties.

3. The sub‑lease was for a period of 3 years commencing on 1 October 1995 and on 18 September 1998 the sub‑lease was renewed with all of the terms and conditions applying from the existing lease for the period commencing 1 October 1998 to 1 July 2001.  On 7 May 2001 the sub‑lease was further renewed with all the terms and conditions applying from the existing lease for the period commencing 1 July 2001 to 1 July 2003.

Discussion

1. In Moweno's case Young CJ in Eq commented that a court looks at the use reasonably contemplated by the parties where they entered into the lease.  Young CJ in Eq went on to say that the original purpose of the lease can be changed with the acquiescence of the lessor, and there may be arrangements which amount to an estoppel.  In making his comments Young CJ in Eq referred to Thompson v Easterbrook (1951) 83 CLR 467

2. In Thompson v Easterbrook (supra), the issue turned on whether the lease of premises was in fact a lease of a dwelling house.  The issue was important because if the premises were a dwelling house then the notice to quit was invalid.  In Thompson's case the Court accepted the proposition that at the time of letting the purpose must be ascertained, but it is apparent that the parties may afterwards change the nature of that purpose.  However the court was of the opinion that a change in purpose is not brought about by an alteration in the mode of actual use.  That alteration must be accompanied by something constituting a variation of the legal relations of the parties relating to the purpose for which the premises are in lease.  The court commented that:

   "In our opinion even an affirmative consent by the landlord will not suffice unless it is given by a contract between the parties, express or implied, or the circumstances lead to the conclusion that the landlord has waived any provisions of the lease inconsistent with the change of user or is estopped from objecting to the change" (p 482-483).

3. In this matter, from par 4.2 to 4.11, the defendant now pleads the material facts upon which the defendant submits a court can find that, at the outset, the plaintiff was aware units 4 and 5 would be used as a retail business.  Further, the defendants plead that from the plaintiff's own conduct, in that the plaintiff was a retail customer of the first defendant at units 4 and 5, the plaintiff is estopped from denying that units 4 and 5 were used by way of retail shop premises.

4. In my opinion the amendments now raised in the further minute fall within the Channel SevenAdelaide Pty Ltd (supra) case in that the amendments to be put forward are sufficient to promote an arguable case that units 4 and 5 fall within the definition of a retail shop lease.  The amendments cure the deficiencies of the earlier pleading.  That being the case, I am of the opinion that the amendments are not an abuse of process.

5. In my opinion it is not simply a case that the defendants seek to infuse the sub‑lease with oral components and written correspondence.  The issue being raised now by the defendants in a pleaded form is that contemplated in Moweno's (supra) case and Thompson's (supra) case that, at the outset, it was contemplated units 4 and 5 would be used as a retail shop lease or, during the course of the term of the lease, there is an acceptance by the plaintiff that the premises were in fact being used for retail purposes.

6. The plaintiff also submits that the amendments should be disallowed as the claim is liable to summary judgment as it exceeds the relevant limitation period of 6 years.  The relevant payments are alleged to have been made between 1 October 1998 and 30 June 2002.  The writ was issued in 2004.  In my opinion the amendments fall within the relation back rule in that the amendments take affect as if they had always been on the writ.

7. Having reached that point the plaintiff's direct me to their submissions dated 13 September 2007 detailing a series of objections to the minute.  In approaching the further minute I do so in the knowledge that there will be a number of case management and pre‑trial processes that in the end leave little opportunity for surprise at trial.  In this matter the plaintiff well knows the issue it now has to face and therefore in my opinion the further minute has fulfilled its function of identifying the issues and disclosing an arguable defence and counterclaim.  I am confident that any continuing deficiencies will be addressed by way of discovery and schedules of damages.

8. Accordingly in my opinion the further minute fulfils the functions it is required to do so and I give leave to the defendants to amend in its terms.  I will hear counsel as to costs and orders to progress this action.