Perth West Central Apartment Hotel Pty Ltd v The Owners of 875 Wellington Street Strata Plan 13599 - [2019] WASC 294

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PERTH WEST CENTRAL APARTMENT HOTEL PTY LTD -v- THE OWNERS OF 875 WELLINGTON STREET STRATA PLAN 13599 [2019] WASC 294
CORAM:   MASTER SANDERSON
HEARD:   5 JUNE 2019
DELIVERED          :   15 AUGUST 2019
FILE NO/S:   CIV 2874 of 2018
BETWEEN:   PERTH WEST CENTRAL APARTMENT HOTEL PTY LTD
Plaintiff
AND
THE OWNERS OF 875 WELLINGTON STREET STRATA PLAN 13599
Defendant

Catchwords:

Practice and procedure - Application by defendant for summary judgment or to strike out substituted statement of claim - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)
Strata Titles Act 1985 (WA)

Result:

Substituted statement of claim struck out

Category: B

Representation:

Counsel:

Plaintiff	:	Dr B O'Hair
Defendant	:	Mr S D Majteles

Solicitors:

Plaintiff	:	Anthony Olsen
Defendant	:	Torrens Legal

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

Forsayth NL v Northern Gold NL (Unreported, WASC, Full Court, Library No 940012, 20 January 1994)

MASTER SANDERSON:

This was the defendant's application for summary judgment under O 16 of the Rules of the Supreme Court 1971 (WA) (the Rules). The summons for judgment as issued after the plaintiff filed a substituted statement of claim on 4 February 2019.[1] The matter came on for hearing on 5 June 2019. During the course of the hearing I suggested to the parties because of the nature of the matters at issue in the action, a mediation might take place before I made my decision. On 10 June 2019 I made orders allowing for mediation. A mediation took place but was unsuccessful. The matter came back in chambers in 6 August 2019 and I was advised by both parties no further mediation was planned and settlement of the action seemed unlikely. It was therefore necessary for me to deal with the summary judgment application. These reasons deal with that issue.
[1] Defendant's chamber summons filed 20 March 2019.
There was no dispute between the parties as to the principles applicable in this case. These were summarised at par 18 of the defendant's submissions filed in support of the application. That paragraph is in the following terms:
In resisting an application for summary judgment under O 16 r 1, the plaintiff ought be confined to the causes of action raised by his or her indorsement or statement of claim and the defendant will succeed if it can be demonstrated that there is no serious question to be tried upon any cause of action raised by the plaintiff. It is not for the court to identify causes of action which are not pleaded but which the evidence might arguably support.[2]
[2] Defendant's outline of submissions filed 16 May 2019.
That paragraph relies upon what was said by the Full Court of this court in Forsayth NL v Northern Gold NL (Unreported, WASC, Full Court, Library No 940012, 20 January 1994).
Turning then to the substituted statement of claim (SSC), the first four paragraphs identify the parties. The plaintiff is in the business of providing short term letting, hotel and serviced apartment style accommodation under the name of 'Perth City Stay Apartments'. These apartments are located at 875 Wellington Street, West Perth. The defendant is the body corporate in which the apartments the plaintiff lets are located.
On or about 1 July 2015 a company known as Joalicam Pty Ltd as trustee for the Joalicam Trust (Joalicam) and the defendant entered into a written agreement. Effectively the Joalicam Agreement (the Agreement) allowed for the conduct of a hotel accommodation business in the property and the non‑exclusive use of common areas for that purpose. Reference is made in the SSC to cl 4c of the Agreement. Reference is also made to cl 3a(iii) pursuant to which Joalicam was appointed the agent of the defendant to enforce the sch 2 by‑laws being applicable by‑laws for the defendant under the terms of the Strata Titles Act 1985 (WA). The plaintiff then pleads the Agreement was assigned to the plaintiff on or about 21 April 2017. The plaintiff pleads this assignment was permitted under the terms of the Agreement.
By par 15 of the SSC the plaintiff pleads there was a total of 80 accommodation units in the property, the units were owned by various parties and that some of the units were owned by a Mr Kamil and some were owned by Mr and Mrs Wheeler. The plaintiff also pleads a real estate agent was engaged to act as the strata manager. Paragraph 16 repeats the plea as to the plaintiff's right to provide property management services and the grant of the licence to conduct hotel and accommodation business. By par 19 of the SSC the plaintiff pleads that the defendant was aware of certain behaviour on the part of Mr Kamil. Essentially the plaintiff makes three complaints. First, that Mr Kamil was acting in breach of one of the by‑laws. Second, Mr Kamil was in the habit of using unbecoming language to people using the common property thus intimidating the plaintiff's employees. Third, Mr Kamil acted in concert with Mr and Mrs Wheeler to place a desk in the common areas without lawful authority. Particulars of Mr Kamil's conduct are provided in par 19(B) of the SSC. Paragraph 20 pleads the defendant permitted Mr Kamil to engage in this conduct.
Paragraphs 21 through to 25 of the SSC pleads certain by‑laws. They deal with such matters as obstruction of the common property, behaviour of proprietors and occupiers, moving furniture and the like. Paragraphs 26 through to 28 deal with an alleged breach by Mr Kamil of the by‑laws relating to parking of vehicles.
Paragraphs 29 through to 42 of the SSC appear under the heading 'undermining reputation of building'. It is pleaded that in or about September or October 2018 the plaintiff determined a particular person (named in the pleading) was blacklisted – that is to say she was not permitted to stay at the property. The pleading alleges Mr Kamil facilitated the person concerned staying in the property. That in turn led to other undesirables entering into the property and causing damage. Paragraphs 43 through to 59 plead a further instance where a blacklisted individual was allowed into the apartments with adverse consequences both in terms of damage to the apartments and damage to the reputation of the property. The plaintiff's complaints about what occurred are that the defendant 'authorised, or in the alternative, suffered or in the alternative connived' in Mr Kamil and Mr and Mrs Wheeler disregarding the blacklistings.
Paragraphs 60 through to 65 of the SSC detailed further alleged breaches of the by‑laws by the defendant. I do not need to deal with these in detail. Suffice it to say these paragraphs represent a variation on the theme and involve allegations of breaches of the by‑laws.
Paragraphs 69 through to 95 refer to various actions of Mr Kamil, Mr and Mrs Wheeler and others which are said to amount to breaches of the agreement between the plaintiff and the defendant. At least that is the allegation as I understand it. In par 95 the plaintiff says the failure of the defendant to act 'undermines the commercial relationship between the plaintiff and its customers', 'derogates from the grant of the defendant to the plaintiff' and amounts to a repudiation of the Agreement. The plaintiff seeks the following orders:
a. A declaration that the Plaintiff is entitled to terminate the Joalicam Agreement as assigned ('JA') for the First Defendant's repudiation of the Agreement or breach of a condition of the Agreement or serious breach of an innominate term of the Agreement or for derogation from the licences granted by the Agreement or such other declaration as is meet in the circumstances of the case.
b.A declaration that the Reception Desk and the Competing Reception Desk were erected without lawful authority or such other declaration as is meet in the circumstances of the case.
c. Injunctive relief restraining the First Defendant, its servants, its agents and howsoever otherwise from breaching the said by‑laws by continuing to have a Competing Reception Desk or any desk in substitution thereof on common property.
d. Injunctive relief restraining the First Defendant, its servants, its agents and howsoever otherwise from breaching the JA.
e. Damages for each of the breaches of the JA by the First Defendant as set out in paragraph 106 above.
f. Damages for loss of the bargain by virtue of the repudiation of JA, in the event that this Honourable Court makes the declaration in prayer for relief a. above, but the Plaintiff does not seek damages on the basis of the repudiation other than in conjunction with the making of the above declaration. For the avoidance of doubt, the Plaintiff is not accepting the above alleged acts of repudiation so as to terminate the contract by the provision of this substituted Statement of Claim. Nor does the Plaintiff assert an entitlement to terminate for the above mentioned acts of repudiation without the benefit of the determination of the Court. It is noted that these proceedings were originally commenced for the declaratory relief in prayer for relief a. and not for damages.
g. Such other Orders as this Honourable Court deems meet;
h. Costs.
The prayer for relief is rather strange. The way the pleading is constructed suggests the plaintiff is of the view the actions (or inaction) of the defendant amount to a repudiation of the contract. But rather than accept that repudiation the plaintiff has sought a declaration it is entitled to repudiate the contract. Generally speaking, when contractual disputes of this nature reach the court a party in the position of the plaintiff will have determined the conduct complained of is such as to amount to a repudiation and will have purported to accept that repudiation. If, at trial, the court is not satisfied there has been conduct which amounts to a repudiation then the other party to the contract may well itself accept the repudiation and sue for damages. Both parties are at risk. They must look at the conduct and assess its consequences in contractual terms.
The plaintiff here is attempting to put a foot in each camp. Assuming the declaration sought in par (a) was made the plaintiff could then accept the repudiation and sue for damages. But the prayer for relief seems to anticipate that even if the declaration were made the plaintiff might elect to leave the contract on foot and seek to enforce it by remedies found elsewhere in the prayer. Presumably at some stage the plaintiff would have to make an election. While I would not see a prayer couched in these terms as fatal to the plaintiff's claim, it is certainly unusual.
Before dealing in detail with the defendant's complaints I should make some preliminary comments about the form of the SSC. It is not an elegant pleading. It is prolix and it is a mixture of material facts, particulars and evidence. At times it is difficult to work out which is which. Furthermore, there are gratuitous statements in the document which, while intended to clarify the plaintiff' position, really have no place in a pleading. There is no doubt the form of the SSC raises difficulties in determining whether or not a cause of action is disclosed.
The defendant's position on the summary judgment application is summed up by par 9(a) of the defendant's written submissions. That paragraph reads as follows:
None of the material facts pleaded in the SSOC disclose a reasonable cause of action and the plaintiff's claim has no reasonable prospects of success. The SSOC does not identify any obligations owed by the Strata Company under the Joalicam Agreement that have been breached. There are no obligations under the Joalicam Agreement that could have been breached based on the material facts pleaded. Thus, the matter should be disposed of summarily.
Counsel for the defendant filed extensive written submissions in support of the application. Paragraphs 49 through to 124 of those submissions detail the way in which particular contractual provisions are pleaded, the alleged breaches of those conditions and how, if the contract was breached, no remedy is available. In making these submissions counsel has proceeded on the basis that for the purpose of the application the factual matters alleged by the plaintiff in the SSC must be accepted.
The nature of the defendant's complaints can be illustrated by quoting pars 60 through to 65 of the defendant's written submissions. These paragraphs read as follows:
60.In paragraph 41 of SSOC, the plaintiff alleges that the Strata Company has breached cll 3.a.ii. and 3.a.iii. of the Joalicam Agreement. In support, the plaintiff pleads the material facts in paragraphs 29 to 40 of the SSOC which are to the following effect:
(a) the plaintiff 'blacklisted' an alleged prostitute from the property;
(b) Mr Kamil was aware of and disregarded the blacklisting and gave the alleged prostitute a key to a room at the property and who stayed at the room on four occasions and did not pay rent on the last occasion;
(c) the alleged prostitute let friends and clients into the property, one of who is an alleged reputed drug dealer, the other a man who broke a door to one of the rooms, stayed without paying rent and broke a lock and kitchen cabinets; and
(d)the Strata Company 'authorised', 'suffered' or 'connived' at 'Mr Kamil's disregarding the blacklisting' and therefore breached the relevant clauses of the Joalicam Agreement.
61. The relevant subclauses of cl 3.a. of the Joalicam Agreement in effect grants the plaintiff the right to act as agent to administer the By-laws (save to take 'summative' (legal) action) and impose obligations on the plaintiff which include obligations to maintain a continuous presence on the property, to report, to keep the property secure, to call the police and to act 'formatively' with owners, occupiers and visitors to try and achieve compliance with the By-laws. Clauses 3.a.ii and iii. do not impose any obligations on the Strata Company.
62. The plaintiff's claim against the Strata Company that allegedly arises under paragraphs 29 to 41 of the SSOC must therefore fail as the plaintiff has not identified any obligation owed by the Strata Company to the plaintiff that could possibly have been breached. Nor does any obligation arise.
63. For the material facts pleaded to even get close to being sufficient to sustain a plea of a breach of the Joalicam Agreement, the plaintiff needs to identify some obligation owed by the Strata Company to the plaintiff under the Joalicam Agreement to the effect that the Strata Company would ensure that each of the individual owners complied with the plaintiff's 'blacklisting' decision – presumably a decision by the plaintiff as to which persons the owner could allow to have a key to a room or stay in the property. There is nothing in the Joalicam Agreement that suggests such an obligation exists. There is no occasion to imply any such term into the Joalicam Agreement. Such an obligation would be contrary to the individual owner's rights under the By-laws and at law.
64. Even if such an obligation could be said to arise (which it cannot):
(a) the power to 'blacklist' and the effect of the plaintiff's 'blacklisting' is not pleaded, nor would such a pleading be reasonable on any view of the terms of the Joalicam Agreement;
(b) the only pleaded conduct of the Strata Company is the alleged (but not particularised) 'authorising of', 'suffering of' or 'conniving at' the conduct of others which conduct could not constitute a breach of the possible obligation identified in paragraph 63 above (but not pleaded by the plaintiff and not reasonably open to be pleaded); and
(c) paragraphs 33 to 39 contain salacious, embarrassing and irrelevant allegations, the likely proof of which would greatly increase the costs of preparing and time taken for trial.
65.This claim has no merit and must fail. It should be dismissed.
The remainder of the defendant's submissions follow a similar line. Essentially the defendant alleges the plaintiff has failed to identify any contractual obligation as between the plaintiff and the defendant. The plaintiff has then failed to identify the particular breach of the obligation. Then the plaintiff has failed to say how breach of that obligation has led to a right to terminate the contract or any other right which may give rise to injunctive relief or a claim for damages. It is the primary submission of the defendant the defects are incurable. Paragraph 64 quoted above provides the defendant's reasoning as to why that is so.
While there is much in the defendant's complaints, at the moment the way in which the SSC is pleaded obscures rather than elucidates the plaintiff's position. A number of matters are clear. First, there is a contractual relationship between the plaintiff and the defendant. That arrangement gives the plaintiff certain rights (and liabilities) in relation to common property which is controlled by the defendant. There has been some behaviour which the plaintiff alleges is inconsistent with the by‑laws of the defendant. What is not clear on the pleadings at present is how the defendant has failed, in a contractual sense, to deal with that behaviour. Furthermore, there is no nexus drawn in the pleading between the anti‑social behaviour and the right of the defendant to terminate the contract.
As matters stand at the moment I am not satisfied that the pleading adequately puts the plaintiff's case. In other words, I am not satisfied the plaintiff does not have a cause of action such that summary judgment ought be granted to the defendant. On that basis, I propose to strike out the SSC and provide the plaintiff with leave to replead. I will adjourn the application for summary judgment with a view to reconsidering that application based upon a revamped statement of claim. To do otherwise with the pleading in its present state would run the risk of shutting out the plaintiff in circumstances where the position is not absolutely clear.
The application for summary judgment and the application to strike out the SSC were both well out of time. The defendant needed an extension of time to bring the application. This matter has had a rather unfortunate procedural history. Really it was not until the SSC was filed the defendant knew what case it had to meet. The application for summary judgment and to strike out the SSC was brought some six weeks after the SSC was filed. By any reasonable measure the application was only three weeks out of time. Given the nature of the pleading and all the surrounding circumstances I am satisfied an extension of time to bring this application is warranted. The plaintiff has suffered no prejudice as a consequence of the delay not has there been any significant increase in costs.
For these reasons the SSC will be struck out. The plaintiff should pay the defendant's costs of the application including reserve costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
15 AUGUST 2019