PROFILE EVENTS PTY LTD AND WEST BEACH TRUST

[2008] SADC 30

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

PROFILE EVENTS PTY LTD v WEST BEACH TRUST

[2008] SADC 30

Reasons for Ruling of Her Honour Judge McIntyre

1 April 2008

PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS

PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE

The plaintiff sought leave to amend its statement of claim and to transfer the within proceedings to the Supreme Court of South Australia - application to transfer proceedings abandoned - leave granted to file amended statement of claim - costs order.  Held - the defendant is entitled to the costs of and incidental to the application dated 12 September 2007 in any event - no order in relation to application dated 22 February 2007.

Defendant applies to have injunction discharged or varied - Held - injunction varied to increase rental payment.

District Court Act 1991 s42(1); District Court Rules 1987 R101.01; Crown Proceedings Act 1992 s7; Retail & Commercial Leases Act 1995 (multiple), referred to.
Golski v Kirk (1987) 72 ALR 443, considered.

PROFILE EVENTS PTY LTD v WEST BEACH TRUST
[2008] SADC 30

Background

1. This is a complex matter arising out of the plaintiff’s occupation of premises owned by the defendant.  The plaintiff and defendant have unsuccessfully sought to agree the terms and conditions of a written lease agreement. 

2. The plaintiff seeks, inter alia, declarations that:

   ·From 1 November 2001 to 2 December 2006 the plaintiff was in possession of business premises known as “the Shores Function Complex” situated in the former Woolshed building at the corner of Military Road and Hamar Avenue West Beach pursuant to a retail shop lease and subject to the provisions of the Retail & Commercial Leases Act 1995;

   ·The initial term of the retail shop lease was due to expire on 2 December 2006 with two options of renewal for further terms of 5 years from 3 December 2011 and 3 December 2016 respectively.

3. Proceedings were commenced by the plaintiff in the Magistrates Court of South Australia on 29 November 2004.  On 7 December 2004 the plaintiff obtained an injunction enabling it to continue in occupation of the premises and restraining the defendant from taking action, without notice, that might interfere with the capacity of the plaintiff to trade. 

4. This is a Ruling on two interlocutory applications issued by the plaintiff and one by the defendant.

   Plaintiff’s Applications

5. The plaintiff issued a notice for specific directions dated 22 February 2007 as amended on 13 March 2007, inter alia, seeking leave to amend its statement of claim in terms of a draft annexed to an affidavit of Mark Eric Hamilton sworn on 13 March 2007 (“the first application”).

6. The plaintiff issued a further notice for specific directions dated 12 September 2007 seeking, inter alia, to transfer the within proceedings to the Supreme Court of South Australia and seeking leave to file an amended statement of claim in accordance with a draft annexed to the affidavit of Andrew Cranage Friebe sworn on 12 September 2007 (“the second application”). 

   History of the Plaintiff’s Applications

7. The chronology of these applications is as follows:

14/3/2007	On the first return date of the plaintiff’s first application, the application was adjourned for argument on 14 May 2007.  The plaintiff was ordered to file a further affidavit verifying the contents of the proposed amended statement of claim.
14/5/2007	The application was adjourned to the Short Notice List Judge for urgent listing.
04/6/2007	The plaintiff was granted leave to file and serve an amended statement of claim by 5.00 pm Tuesday 5 June 2007.
07/6/2007	By consent, the plaintiff was granted leave to uplift FDN 35, an amended statement of claim, and replace it with the amended statement of claim in the form attached to an application of that date.
13/6/2007	An amended statement of claim was filed by the plaintiff.
12/9/2007	Plaintiff issued the second application.
14/9/2007	Second application listed for argument.  Costs reserved.
14/12/2007	Matter proceeded to argument.
11/2/2008	Argument resumed.

Hearing 11 February 2008

1. On 11 February 2008, the plaintiff abandoned its application to transfer the matter to the Supreme Court.  Leave was granted to file an amended statement of claim, in terms of a draft handed up on 11 February 2008, on or before 15 February 2008.  Accordingly, the sole remaining issue on the plaintiff’s applications relates to the question of costs.

2. The first application appears to have been dealt with by the orders made on 4 June 2007 granting the plaintiff leave to file and serve an amended statement of claim.  Accordingly I decline to make any orders in respect of the costs of that application.

3. The costs of the second application do however require determination.  The nature and purpose of that application was two-fold.  First, the plaintiff wished to have the matter transferred to the Supreme Court.  That application has been withdrawn.  Second, the plaintiff sought to further amend its statement of claim. 

4. Section 42(1) of the District Court Act1991 (SA) and Rule 101.01 of the District Court Rules (1987 Rules) vest a wide discretion to award costs.  This must however be exercised judicially.  In the normal course of events, the plaintiff should pay the costs of the application on the basis that the first part of the application was withdrawn and the second sought an indulgence.  Given the discretionary nature of a costs order, these general rules can be no more than a guide[1]. 

   [1] Golski v. Kirk (1987) 72 ALR 443

5. The plaintiff resists an order for costs on the basis that the necessity for the amendments to the pleadings arises out of conduct of the defendant since the original particulars of claim were filed.  It is said that these additional matters have required the revisiting of the whole of the pleadings.  It is not a matter, the plaintiff says, of simply refining the original pleadings. 

6. The defendant’s counsel submitted that the amended statement of claim, tendered on the first occasion in Court on 11 February 2007, did not apparently assert any matters that had arisen after the date of the application to amend.   Counsel for the plaintiff however submitted that paragraph 80 onwards related to matters that had occurred since October 2007.  These matters were referred to in the affidavit of Mr Andrew Cranage Friebe, the sole director of the plaintiff, dated 14 December 2007.  True it is Mr Friebe’s affidavit refers to alleged activity on the part of the defendant occurring in October 2007, the statement of claim is however couched in general terms and the relevant paragraphs do not mention any dates.  I cannot, on the material before me, relate the matters outlined in the affidavit of Mr Friebe to the matters pleaded at paragraph 80 onwards of the draft amended statement of claim. 

7. I also note that the application to amend the statement of claim pre-dates the activities alleged to have occurred in October 2007.  Clearly therefore there was an intention to amend the statement of claim prior to those activities.  The plaintiff presumably sought to further amend the pleadings to reflect the matters it says arise from the alleged activities in October 2007.

8. I further note that the defendant had no opportunity to avoid costs by consenting to the application as the amended statement of claim was not provided until shortly prior to the adjourned hearing on 11 February 2008 and was, even then, not in the format required by the relevant rules. 

   Application to Vary or Discharge the Injunction

9. The defendant filed an amended notice for specific directions dated 4 June 2007 seeking orders in respect of an injunction granted in the Adelaide Magistrates Court on 7 December 2004. 

10. The defendant applies to have the injunction discharged and to have the plaintiff surrender possession of the premises. 

11. In the alternative, the defendant applies to have the injunction varied to increase the rental payment under the terms of the lease agreement asserted by the plaintiff (but denied by the defendant).  The defendant seeks orders that the plaintiff pay a lump sum of $18,890.64 being arrears of rent, and, an increased rental of $6,284.84 per month from 31 July 2007 up to and including 31 October 2007.  There are no calculations of rental beyond this period but, the defendant seeks a further increase under the terms of the (disputed) lease after 31 October 2007.  The defendant also seeks an undertaking as to damages. 

12. The application was made specially returnable on 4 June 2007 at which time it was considered together with the plaintiff’s first application.  Both parties were granted leave to file affidavits in respect of the defendant’s application by 18 June 2007.  On 14 September 2007 this application was joined with the plaintiff’s second application and another application by the defendant for security for costs.  It was directed that these matters be listed for argument for a period of half a day. 

13. The matter first came before me on 14 December 2007.  Argument was not completed within the half day listed and accordingly, the matter was adjourned to 11 February 2008 at which time argument on this application was completed. 

14. The plaintiff sought to tender further affidavit material in consequence of matters that arose after 11 February 2008 which it is said impacts upon the application to vary or discharge the injunction.  The defendant consented to the tendering of the additional affidavit material.  I received written submissions from both parties and heard oral submissions on 1 April 2008. 

    Arguments

15. There was a substantial quantity of affidavit material referred to by the parties in the course of argument. 

16. The defendant relies upon the following:

    ·Affirmations of Anthony John Keane dated 6 March 2007 and 4 April 2007 with the exception of paragraph 5 of the latter affirmation.

    ·Affirmation of Anne Margaret Rosalie Duncan filed on 4 June 2007 together with 6 exhibits, 21 September 2007 (noting an objection raised by the plaintiff in respect of paragraphs 10 – 22 of that affidavit) and 21 December 2007.

17. The plaintiff relied upon a number of affidavits from Andrew Cranage Friebe the sole director of the plaintiff.  These were sworn as follows:

    ·11 May 2007 – paragraphs 1 – 3 and 12 – 34 inclusive together with the exhibits.

    ·24 May 2007 with the exception of paragraphs 15, 16, 19 and a portion of paragraph 20, paragraphs 26, 27, 32.7 and 32.8 as noted in the transcript.

    ·Two affidavits both dated 12 September 2007.  The first, FDN 42, subject to the deletion of part of paragraph 15 as noted in the transcript together with the exhibits.  The second affidavit, with no FDN number, excluding the exhibit.

    ·24 October 2007 together with exhibits, with the exception of paragraphs 3, 6, part of 7, 11, 17 and 20, and noting the objection raised by the defendant to paragraphs 2, 4, 10 and 19.

    ·14 December 2007 with deletions to paragraph 6 and exhibits C and G as noted in the transcript.

    ·20 March 2008.

18. The plaintiff further relied upon an affidavit of Benjamin Douglas Allen sworn 20 March 2008. 

19. The defendant argues for the discharge of the injunction on the basis that s7 of the Crown Proceedings Act 1992 provides that a mandatory injunction cannot be granted against the Crown.  It is conceded that this matter was not raised before the Magistrate granting the injunction.  It is said that the effect of the injunction is twofold.  First it is prohibitary and second it is mandatory in that paragraph 2 compels the defendant to accept the plaintiff as a tenant.  The second basis of the application is that the plaintiff has not given an undertaking as to damages and accordingly, it is said that I have discretion to dissolve the injunction.

20. In the alternative, the defendant contends that I should vary the injunction to allow for an increase in rental since the injunction was granted.  It is said that the injunction provided for the payment of rent “until further order” and, that at the time the injunction was granted, it was anticipated that the matter would be heard within a relatively short time frame.  It is now some three years later and the defendant contends that it is appropriate to review the base rent, and, to consider the consumer price index (“CPI”) increases as contemplated by the terms and conditions that the plaintiff contends were agreed between the parties.  The defendant does not accept the plaintiff’s contentions as to the terms of the agreement but says that, at the least, the plaintiff should be paying rent in accordance with the terms of the lease it contends arises by agreement between the parties. 

21. The plaintiff’s contentions as to the terms of this lease are set out in paragraphs 9, 10 and 11 of the further amended statement of claim filed in February 2008 (“the statement of claim”) under the heading “October 2001 Agreement”.  Paragraph 11 of the statement of claim refers to a leasing structure comprising a 5 plus 5 plus 5 year lease period, rent of $65,000 or, if greater, a percentage of turnover with the first 6 months rent free. 

22. Exhibit ‘AMRD1’ to Ms Duncan’s affirmation dated 1 June 2007 and filed on 4 June 2007 is the letter from the defendant to the plaintiff dated 18 October 2001 referred to in paragraph 10 of the statement of claim.  This letter refers to a first year rental of $5,416 per month or 10% of the turnover whichever is greater.  The minimum rental of $5,416 was to be increased annually in accordance with the CPI to ensure that it kept pace with inflation.  The defendant contends that at the very least, there ought to be a variation of the injunction in accordance with the calculations set out in Ms Duncan’s affirmation.  The affirmation deals only with the calculation to 31 October 2007.  The defendant however seeks, if successful in having the principle of CPI increases applied, liberty to file further material in relation to the period after 31 October 2007. 

23. The plaintiff resists the application for discharge and the alternative application for variation of the injunction. 

24. In relation to the discharge of the injunction the plaintiff says that the defendant’s complaints are in the nature of appeal points that I do not have jurisdiction to consider. 

25. It is plain that the Crown Proceedings Act 1992 issue was not raised before the learned Chief Magistrate.  The plaintiff contends that, even assuming that there is an error in the judgment (which it does not concede), this can only be dealt with on appeal.  In the alternative, the plaintiff contends that the injunction is not mandatory and accordingly the Crown Proceedings Act 1992 does not preclude the granting of the injunction.  Further, the plaintiff contends the failure to provide an undertaking as to damages is not a sufficient reason to discharge the injunction, and, there is no basis to require one at this stage of proceedings.

26. In relation to the issue of variation the plaintiff advances two arguments.  First the plaintiff contends that it would be an inappropriate exercise of discretion to vary the rental on the basis that the defendant has delayed in seeking the increase thus causing arrears.  Second the plaintiff submits that the prejudice to the defendant occasioned by the current level of rental payments, identified in the various affidavits, is not as significant as the prejudice to the plaintiff in paying an increased rental.  The plaintiff cannot pay an increased rental and the plaintiff’s financial situation has been caused by conduct of the defendant including, but not limited to recent events concerning a licensing matter.  The balance of convenience dictates that the rental payments should not be increased, as the defendant is better able to bear the cost.  It is further said that, whilst the plaintiff does contend that the agreement is as set out above, there were a number of other obligations set out in the proposed agreement that the defendant has failed to carry out.  These are amplified in the latest iteration of the statement of claim. 

27. The affidavit material filed as to the issue that arose following the conclusion of oral argument relates to an application by the plaintiff to the office of Liquor & Gambling Commissioner for a limited (temporary) liquor licence required for a major event and subsequent litigation.  It is said that the conduct of the defendant relating to the application for the limited (temporary) liquor licence impacts upon the economic burdens of the plaintiff.  These burdens are said to include the costs incurred in litigation in defending the application and a risk of similar issues arising in the future impacting upon the plaintiff’s ability to commit to future bookings requiring similar licences.  It is further stated that the conduct of the defendant stands in the way of its invoking the court’s discretion in its favour.

    Discharge of Injunction

28. I agree with the plaintiff’s contention that the defendant’s argument in respect to the Crown Proceedings Act 1992 is, in essence, an appeal point that I have no jurisdiction to deal with.  If the defendant wishes to pursue this issue then it must do so elsewhere.

29. It is unusual that an undertaking as to damages was not required at the time the injunction was granted.  It does appear however that the learned Chief Magistrate considered this issue.  He has indicated in his reasons for decision of 7 December 2004 that there was an inability on the part of the plaintiff’s counsel to give an undertaking.  Again, this is a matter that would be the subject of an appeal rather than a matter for this Court. 

30. Accordingly, I refuse the defendant’s application to discharge the injunction.

    Variation

31. I now turn to the second part of the defendant’s application dealing with the variation of the injunction to allow for an increase in rental.  It is my view that there is a discretion to vary this aspect of the injunction. 

32. Payment of rent at “a base monthly rental being one twelfth of $65,000” was directed “until further order”.  There has been a substantial delay in these proceedings. At the time the injunction was granted in December 2004, it was anticipated that the matter would come on for hearing within the near future.  I note the submissions of the parties as to the reasons for the delay. Whatever the reasons, it is now over three years since the injunction was granted.  I have noted the plaintiff’s submissions that this matter should now proceed more swiftly than it has in the past.  Whilst I hope that this may be the case, it is plain that there are a number of pre-trial matters to be attended to before the matter can be set for a listing conference.  In the circumstances I consider it reasonable to review the quantum of rental payments. 

33. I note the plaintiff’s submissions in relation to the balance of convenience and the plaintiff’s financial position. It is plain from the financial material attached to Mr Friebe’s affidavit of 11 May 2007 that the plaintiff made a loss for each of the financial years ended 30 June 2002, 2003 and 2004.  As at 30 June 2006 the plaintiff’s position had improved to a point where it had net assets of $18,802.29.  The plaintiff did not apparently make any profit for the financial year to 30 June 2007[2].   This is the extent of the material available to me.  I do not consider it sufficient to make a finding that the plaintiff cannot pay an increased rental.  The new affidavit material does not assist other than to highlight some commercial difficulties that might arise in consequence of the recent licensing court dispute. 

    [2]    Affidavit of Andrew Cranage Friebe dated 12 September 2007 paragraph 12

1. Further, the defendant is seeking no more than the plaintiff contends is its due under the rental agreement.  I note the submission that there are other matters the plaintiff complains have not been attended to by the defendant.  I further note the complaints the plaintiffs make of the recent conduct of the defendant in relation to the liquor licence.  I am not in a position to, nor should I, enter into an examination of the proceedings before the Licensing Court.   These matters can be dealt with in the substantive action by way of damages. 

2. Accordingly, I consider it appropriate to increase the rental payment in line with CPI increases as contemplated by the agreement the plaintiff contends was reached between the parties in October 2001. 

3. The defendant seeks arrears of increased rental.  I consider it inappropriate to require the plaintiff to pay an increased rental prior to the date of the defendant’s application.  There is no explanation as to why the defendant did not issue this application earlier.  The delay has caused a substantial quantum of rental arrears.  Accordingly, I decline to order that the plaintiff pay increased rental prior to 4 June 2007, the date of the application. 

   Conclusion

   Ruling on Plaintiff’s Applications

4. In the circumstances therefore I see no reason to depart from the usual orders in relation to costs and I award the defendant costs of and incidental to the application dated 12 September 2007 in any event.  I make no order in relation to the application dated 22 February 2007.

   Injunction

5. For the reasons outlined above I propose to vary paragraph 5 of the injunction dated 7 December 2004 to require the plaintiff to pay increased rental from 4 June 2007 in accordance with the rental agreement it contends is the agreement between the parties.  The material I have before me deals only with a calculation to 31 October 2007.  I will hear the parties on the precise terms of the further order I should make.

6. I will hear the parties as to the costs of the injunction application.