Shen v Coventry Village Pty Ltd - [2017] WADC 147

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SHEN -v- COVENTRY VILLAGE PTY LTD [2017] WADC 147

CORAM: MCCANN DCJ

HEARD: 29 SEPTEMBER 2017

DELIVERED : 10 NOVEMBER 2017

FILE NO/S: APP 32 of 2017

BETWEEN: JIAN MING SHEN
Appellant
AND
COVENTRY VILLAGE PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram  :MAGISTRATE COCKRAM
File No  :GCLM 11677 of 2015

Catchwords:

Magistrates Court appeal - Summary judgment - Conditional leave to defend and counterclaim - Turns on own facts

Legislation:

Magistrates Court (Civil Proceedings) Act 2004 s 40(3), s 40(5)
Property Law Act 1969 s 69, s 77
Transfer of Land Act 1983 s 68(1)(a)

Result:

Application for extension of time to appeal dismissed
Appeal dismissed

Representation:

Counsel:

Appellant: In person
Respondent: Mr G J Douglas

Solicitors:

Appellant: Not applicable
Respondent: Douglas Cheverall Lawyers

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

Coventry Village Pty Ltd v R-Australia Group Pty Ltd [No 2] [2016] WADC 99
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
McDiarmid v Rycar Pty Ltd [2006] WADC 39
Metwally v University of Wollongong (1985) 60 ALR 68
Raviv v Amerind Pty Ltd [2006] WADC 84
Re F [2001] FamCA 348
Wedge v Service Finance Corporation [2002] WASCA 54

MCCANN DCJ:

Introduction

In this matter the appellant seeks to appeal against a judgment of the Magistrates Court entered in favour of the respondent on 7 March 2017 whereby it was ordered that:
(i)Summary judgment is entered in favour of the claimant [respondent] against the defendant [appellant] in the sum of $62,739.97.
(ii)The appellant is to pay interest on $62,739.97 to 1 August 2015 fixed in the sum of $2,870.25.
(iii)The appellant is to pay interest on $62,739.97 from 2 August 2015 to 7 March 2017 at 16% per annum.
(iv)The appellant is to pay the costs of the application and of the claim to be assessed if not agreed.
These orders gave effect to a springing order that was made on 22 August 2016 and extended on 19 December 2016. I shall proceed on the basis that the appellant is seeking to appeal against all three decisions or orders.
The appellant did not file an appeal notice until 8 May 2007. Pursuant to s 40(3) of the Magistrates Court (Civil Proceedings) Act 2004 (the MCCP) he was well out of time. He therefore needs an extension of time to appeal.
He has filed a number of documents variously described as affidavits, grounds of appeal and submissions.
The appellant has been self-represented at all times in both courts, but has frequently had the assistance of an interpreter.

The application for extensions of time

The principles relating to an application for an extension of time to appeal are well known. In short, an extension should be granted (with or without conditions) if such is warranted having regard to the interests of justice. The court has a broad discretion and there are numerous potential criteria, but, as a general rule, the court will consider the merits of the proposed appeal, the public interest in the final and/or timely disposition of litigation, the applicant's reasons for needing an extension and the potential prejudice to either party.
Having regard to the fact that he has been self‑represented, is inexperienced in legal matters and speaks English as his second language, and having regard to the chronology set out below, I am not satisfied that the appellant made an informed decision to overlook his appeal rights. I am satisfied that he fell into error because of a lack of understanding of the appellate options available to him.
I am also satisfied that the respondent will not be prejudiced by the grant of an extension of time because, on the evidence (or absence of it), the delay has not significantly impacted on the respondent's financial position.
Also, the proceedings were dealt with in the Magistrates Court on an interlocutory rather than a final basis.
Therefore, the appellant's application for extensions of time turns on the merits of the proposed appeals.

Chronology

At all material times until 8 February 2013 Coventry Square WA Pty Ltd (ACN 140 160 407) as trustee for the Coventry Unit Trust was the registered proprietor of a large retail complex known as 'Coventry Square' located at 243 ‑ 253 Walter Road, Morley.
By an undated lease (the Lease) commencing on 1 May 2012 the appellant became the lessee of Shop 226, from which he operated a retail butchery. The term of the lease was five years. The rent was $57,200 per annum payable monthly in advance. The Lease contained provisions for the payment of various outgoings and 16% interest in default.
On 8 February 2013 the respondent became the registered proprietor of the premises and, I infer, Coventry Square was renamed 'Coventry Village'. Thereafter, I infer, the appellant paid rent to the respondent.
On or about 22 July 2015 the respondent served a notice of default upon the appellant in respect of unpaid rent and interest in the sum of $59,190.92.
On 4 August 2014 the respondent commenced proceedings in the Magistrates Court claiming the sum of $65,610.22 comprising outstanding rent, electricity charges and interest.
On 13 August 2015 the appellant filed a response and notice of intention to defend the respondent's claim.
On 22 August 2015 the respondent filed an application for summary judgment for the sum of $62,739.97 for arrears of rent and interest of $2,870.25 up to 1 August 2015 and thereafter at the rate of 16% per annum ($27.50 per day). The application was supported by a brief but adequate affidavit of Michael Brooksby Holtham.
On 13 June 2016 the appellant filed an affidavit in opposition to the application for summary judgment. In summary, he deposed that:
(i)He disputed the respondent's calculations as to the amount of rent that he owed, but did not condescend to particulars.
(ii)He contended that the respondent had breached the Lease in that it changed the lease plan upon which he relied when he entered into the Lease and by carrying out extensive renovations and alterations. He said that these matters adversely affected his business. He deposed that over 50% of the businesses in Coventry Village (approximately 80) had closed as a result of the disruption. He also complained that the lease plan was missing from the Lease in evidence.
(iii)He contended that he was entitled to 'compensation for business losses from January 2014 to the end of the lease term and for the cost to set up business in the Coventry Village'. In short, the appellant advanced a counterclaim.
The application for summary judgment was heard by Magistrate Cockram on 22 August 2016. The respondent was represented by a director, Mr Andrew Thorpe. Both parties were content to rely on their written materials, so oral submissions were quite brief.
His Honour gave oral reasons for decision and held that the application for summary judgment should be dismissed on the ground that there was a triable issue raised by the appellant's affidavit.
Mr Thorpe then submitted that the appellant was a man of means and should not have unconditional leave to defend.
His Honour then made orders as follows:
1.Conditional upon the appellant paying into court the sum of $40,000 by bank cheque within 28 days, the respondent's application for summary judgment was dismissed.
2.If the appellant did not comply with the condition in order 1, then there shall be orders in terms of the respondent's application for summary judgment.
3.The appellant may, within 21 days, apply to amend or set aside the condition in order 1.
4.An application under order 3 was to be supported by an affidavit providing full and frank disclosure of the appellant's financial circumstances.
5.Costs of the application be costs in the cause.
Pursuant to the liberty to apply reserved in order 3, on 5 September 2016 the appellant applied to set aside the condition attached to order 1. The application was accompanied by affidavit evidence to the effect that the appellant was impecunious and unable to comply with the condition (see [54] – [55]).
On 29 September 2016 the respondent filed an affidavit in response sworn by Mr Thorpe (see [57]).
On 5 October 2016 the appellant filed written submissions which were similar to his affidavit of 5 September 2016.
After preliminary hearings on 7 and 17 October 2016, the application was heard by Magistrate Cockram on 19 December 2016. His Honour ordered that:
(i)The appellant's application to cancel the condition attached to order 1 was dismissed.
(ii)The time for the appellant to pay $40,000 into court was extended by 14 days (ie, until 2 January 2017).
The appellant failed to comply with order (ii). On 7 March 2017 the court entered summary judgment in terms of the orders referred to at [1] above.
On 22 March 2017 the court issued a seizure order pursuant to the respondent's application to enforce the judgment. The execution of that order motivated the appellant to file the appeal(s).

The proposed grounds of appeal

On 31 March 2017 the appellant filed grounds of appeal as follows:
(i) The action of the renovation has changed the definition of the premise for the lease that whether breached the lease.
(ii) The lease of Coventry Square Markets where still valid after the registration of the business name was invalid and no longer applies for the premises on 2013.
(iii) The lease contract registered business name of Coventry Square Markets whether can be the legal ground for the business of Coventry Village for this court case as they are the different registration.
(iv) The claimant should take their responsibility for the longer period unsafe renovation that damaged my business and caused my investment loss.
The respondent accepts the learned magistrate's ruling on the merits of the counterclaim (ie as to the existence of a triable issue: see [40] below) and has not filed a notice of contention. Grounds (i) and (iv) relate to that counterclaim. They are therefore otiose to the appeal and are struck out.
Grounds of appeal (ii) and (iii) raise a new contention, namely that the respondent was not privy to the Lease and thus cannot enforce it.
The appellant is not entitled as of right to raise a ground that was not relied upon in the court below (see Metwally v University of Wollongong (1985) 60 ALR 68). However, the respondent has not taken this objection. At a directions hearing on 5 September 2017 the principal registrar reformulated grounds (ii) and (iii) as follows (ts 11 and 12 ‑ 13):
1.The judge [sic - magistrate] got it wrong to make the award in favour of Coventry Village Pty Ltd when the lease is in the name of Coventry Square WA Pty Ltd.
2.The magistrate failed to have regard to the fact that there is no lease agreement, signed by both parties, which identifies the appellant as the Lessee and the respondent as the Lessor.
It is to be noted that these grounds raise a complete defence on the merits, but do not challenge the reasons for the condition attached to order 1 itself (ie, the appellant's means) or the decision of 19 December 2016. However, the appellant filed a number of documents which predicate that that point is taken. I feel that it should be considered for completeness. So, after the hearing I invited the parties to file written submissions (see [63]).

Analysis

I propose to commence by addressing the learned magistrate's decisions (and reasons) on 22 August and 19 December 2016.

The defence and counterclaim and the hearing on 22 August 2016

The learned magistrate's reasons for decision (ts 3 – 6) were to the following effect.
His Honour commenced by summarising the respondent's claim and the appellant's affidavit in response. He noted some procedural defects in the affidavit but was prepared to make allowances because the appellant was 'clearly not a sophisticated litigant'. Nevertheless, he stated that he would 'deal, obviously with the application on the affidavits which fall before me'.
His Honour then addressed the principles relating to summary judgment. He referred to Raviv v Amerind Pty Ltd [2006] WADC 84, Wedge v Service Finance Corporation [2002] WASCA 54 and Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Coventry Village Pty Ltd v R-Australia Group Pty Ltd [No 2] [2016] WADC 99 and stated (the intercalation is mine):
The power to order summary of final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried …
The words [ie the power to give leave to defend] are invoked if the defendant cannot point to a specific issue which ought to be tried, but nevertheless satisfies the court that there are circumstances that ought to be investigated. The court can give leave to defend for a reason other than that there is a question to be tried.
His Honour noted that there are 'numerous decisions which indicate that any difficult or substantial questions of law should be left to a trial' and cited authorities.
The learned magistrate noted that the appellant had raised an issue as to 'whether or not there was an error in relation to rent which was owed and interest that might have been due on that sum', an issue as to the appellant being responsible for the cost of repairing a cool room and issues of misrepresentation which 'may raise issues under the Australian Consumer Law'. Finally, his Honour referred to a passage in Commercial Tenancy Law, 3^rd ed, Bradbrook, Croft and Hay, page 255 which supports the proposition that the Lease contained an implied term that the lessor would maintain the premises and, as such, considered that it 'might be arguable that a failure to maintain the premises has led to some loss by' the appellant or, at least there were 'circumstances that ought to be investigated'.
When his Honour had finished Mr Thorpe moved for conditions to be imposed upon the appellant having leave to defend. He said that he accepted his 'Honour's finding that there appears to be issues requiring investigation' (ts 7) but contended that the appellant's defence was 'shadowy' and 'a bold assertion' that failed to condescend to particulars.
Mr Thorpe then gave evidence from the bar table as to the appellant's ownership or legal interest in four real estate properties and, thus, his financial capacity to pay money into court.
The appellant then addressed the learned magistrate about those matters and in particular his ability to satisfy a judgment. He also said (ts 9):
And it's about 50% of the shops in Coventry have all closed down and, originally, it was supposed to be small stores but now there's big supermarkets in there.
The learned magistrate declined to revisit his decision and said (ts 9 ‑ 10):
I'm not going into the details of your defence, effectively. Okay. So I'm now giving my decision, so you just need to sit and listen. … From the information that you have given me and the information Mr Thorpe has provided, which I understand you agree with, it appears to me that you are a person who has substantial assets. Therefore, I accept that it is appropriate to make a conditional [sic - condition] … [for] dismissing … the application for summary judgment.
His Honour then made orders 1 to 5 referred to at [22] above and explained the terms to the appellant as he did so.
I infer that in deciding to give the appellant conditional leave to defend the learned magistrate relied on two grounds, one of which was implicit. Explicitly, his Honour took into account his understanding based on evidence from the bar table that the appellant had the financial means to make the payment. Implicitly, his Honour took into account that the defence and counterclaim was weak and/or fell into the exceptional category of claims which warranted investigation.
As to the implied ground (the merits of the defence and counterclaim), based on the evidence before the learned magistrate I am not satisfied that his ruling as to the relative weakness of the counterclaim was wrong in fact or law.
My reasons are as follows.
There is no dispute as to the implication of a term as to the maintenance of the premises. Further, pursuant to cl 4.1 the appellant was entitled to quiet enjoyment of the premises.
However, the appellant's evidence did make bare assertions and did fail to condescend to particulars about the renovations. This was important because pursuant to cl 5.24 of the Lease, the respondent was entitled to make changes and alterations to Coventry Village without any liability to compensation or otherwise to the appellant. This included the right to –
(a)alter the layout of Common Parts including access ways;
(b)close or change the use of Common Parts;
(c)extend or reduce the Centre.
….
provided that the respondent took all reasonable steps to minimise disruption to the appellant's business.
The appellant's evidence needed to identify renovations which fell outside the scope of cl 5.24, but did not do so.
The appellant sought to address the shortcomings in his evidence in affidavits sworn in the appeal in May and on 12 September 2017. He referred to 'massive renovations' which changed the character of the premises from 'a trading centre' to an 'unfinished building project' and to maintenance problems that were left unrepaired and persistent odours in a bin and toilet area which was 'just a few meters away' from his shop. Assuming (but not deciding) that the appellant should have leave to adduce this new evidence in the appeal ('exceptional circumstances' must be demonstrated: MCCP, s 40(5)), it does not persuade me that the learned magistrate's approach to the exercise of his discretion was wrong in law or not open to him. The appellant continues to make relatively generalised assertions about renovations and maintenance problems which would warrant investigation but fall short of meeting the requirement of a properly particularised, arguable case for breach of the Lease.
It must be remembered that the decisions appealed from do not impact on the appellant's right to proceed with his counterclaim. The judgment that was entered in the respondent's favour on 7 March 2017 (and the subsequent seizure order) relate only to the respondent's claim for a liquidated debt for unpaid rent for a closed period. The appellant is at liberty to continue or commence his own proceedings in the Magistrates Court, or another court, if he wishes to do so. Further, the condition attached to order 1 is commonly imposed in debt recovery proceedings where the court has reservations about the merits of the defence (see McDiarmid v Rycar Pty Ltd [2006] WADC 39).

The hearing on 19 December 2016

The application before the court on 19 December 2016 related to the condition attached to order 1 which required the appellant to pay $40,000 into court, which in turn, was based on the learned magistrate's understanding that the appellant was a man of sufficient assets and financial means to satisfy the condition. It is to be remembered that order 4 stipulated that the application be supported by an affidavit 'providing full and frank disclosure of his financial circumstances' which necessarily included his assets.
The appellant's affidavit of 5 September 2016 was brief and unhelpful to his cause. In par 2 he stated that he did not agree with the condition. In par 3 he attached a report from his accountant as to his 'financial circumstances' which he said was 'self-explanatory'. He deposed in par 4 that in the financial year 2015 his taxable income was $20,500 (a notice of tax assessment was annexed). He said that he was therefore 'unable to pay' the sum of $40,000 into court.
The accountant's report (together with some profit and loss accounts) was brief and dealt solely with the financial performance of the appellant's business. In short, the business had been unprofitable.

The appellant's affidavit did not deal in any way with the matters that had been taken into account by the learned magistrate on 22 August 2016, namely his real estate portfolio or other assets, or his liabilities.
The respondent attended to this by an affidavit of Mr Thorpe sworn on 29 September 2016. Mr Thorpe deposed to title searches and other inquiries which showed that the appellant and/or his wife owned or controlled a substantial real estate portfolio, subject to registered encumbrances in favour of Westpac Banking Corporation, and that they controlled a company which operated a small budget hotel. Clearly an onus then fell on the appellant to clarify the position or explain it away.
He did nothing about it. The learned magistrate pointed this out to him at the commencement of the hearing on 19 December 2016. The appellant said that there were parts of Mr Thorpe's affidavit which were 'not correct' and endeavoured to give evidence from the bar table (ts 3) and mentioned some documents that he had with him. His Honour declined to allow that to occur and said that 'evidence commenting on or directed to the information provided by Mr Thorpe … must be in an affidavit' (ts 3 and see also ts 4).
Later, when the learned magistrate was giving his decision the appellant interrupted to say that he had been unsure as to what information he was required to provide in his affidavit and had brought along 'loan documents' which were relevant. His Honour said that he was not 'looking at those' and had previously 'confirmed with you what it was you wanted to put before the court'. He then continued to give his decision (ts 6).
The learned magistrate's reasons were as follows (ts 4 ‑ 7):
(i)His Honour stated (in reference to an explicit objection from the appellant) that the appellant's financial position was relevant to his consideration of his ability 'to pay the $40,000'.
(ii)He stated that the appellant was required to 'give full and frank disclosure' of his financial circumstances but had failed to deal with the matters referred to in Mr Thorpe's affidavit. He said that there was 'no explanation as to why those properties are not capable of supporting a loan against him to pay this money into court'.
(iii)His Honour stated that the evidence was 'overwhelmingly in favour of a conclusion that [the appellant has] … not given full and frank disclosure and that is one reason why … [the] application should be dismissed'.
In May 2017 the appellant filed an affidavit in this court deposing that on 30 December 2016 he sent the loan documents to the Magistrates Court and they showed that he was 'unable to borrow the money'. These give the impression that the real estate that had been referred to in Mr Thorpe's affidavit was heavily encumbered by loans and the appellant could not borrow any more money against them.
I infer from the just‑mentioned evidence that the appellant seeks to contend in the appeal that the learned magistrate erred by refusing to allow him to tender the documentary evidence of the encumbrances.
On 12 October 2017 my associate sent the transcript of the hearing on 19 December 2016 to the parties and invited them to make any submissions they wished to make about it in writing by 30 October 2017.
The appellant filed submissions which (I understand) made the following points about the hearing which are, in effect, further grounds of appeal:
(i)Mr Thorpe was not a legal practitioner or a registered director of the respondent and there was no need to respond to his affidavit.
(ii)The affidavit evidence that he (the appellant) did file (see [54]‑[55]) provided an adequate explanation for his impecuniosity and inability to satisfy the condition.
(iii)The learned magistrate should have accepted the loan documents that he sought to hand up.
In my opinion there is obviously no merit in point (i).
As to points (ii) and (iii), based on the evidence before the learned magistrate on 19 December 2016, I am satisfied that it was open to his Honour to dismiss the application that was before him. Proof of the appellant's lack of income did not deal with his assets. Also, the appellant was well aware from his lengthy involvement in the matter that it was necessary that evidence be placed before the court in affidavit form if he wished it to be taken into account. Whilst the learned magistrate was somewhat strict in his insistence upon this, there was no procedural unfairness. Indeed, his Honour proceeded in a perfectly orthodox manner without losing sight of the appellant's forensic disadvantage.
Mr Douglas submitted as follows:
At this stage, we are unable to determine the relevance of these transcripts to the one ground of appeal …
If his Honour Judge McCann is minded to make a decision which has regard to these transcripts, and so takes into account broader issues than those in the single ground of appeal, we request an opportunity to be heard after being informed what the further issues are. Additionally we are instructed that there were appearances in these proceedings before Magistrate Cockram on October 7 and 17 2006 and that at least one of those was a hearing that canvassed issues that are likely to be relevant. Accordingly, we ask that transcripts of those appearances be obtained and the appeal be re-listed or we be informed of the broader issues in grounds to be determined, so we may make informed decisions.
If his Honour Judge McCann intends making a finding only in relation to the single ground described above, then we do not seek further transcripts nor need to make further submissions.
I have come to the view that it is not necessary to obtain the transcripts of the hearings on 7 and 17 October 2016, or re-list the matter for a further hearing. I have considered the proceedings on 19 December 2016 in the interests of completeness and fairness, but am not persuaded that an arguable ground of appeal could be made out (see above). In the circumstances, there is nothing to be gained by re‑listing the matter for a further hearing.
I have considered whether the learned magistrate should have entertained giving advice to the appellant about seeking an adjournment for the purpose of adducing his further evidence in sworn form. I have decided to put this consideration to one side. Whilst a court has a duty to ensure that unrepresented litigants are given a fair hearing (see generally Re F [2001] FamCA 348), and such might occasionally justify a judicial officer suggesting that a party apply for an adjournment, this was not essential in this case because the learned magistrate was consistent about the need for affidavit evidence throughout the proceedings and was mindful that the appellant had already been given ample opportunity to adduce evidence. His Honour would not have granted an adjournment and there was nothing to be gained by informing the appellant that he could apply.
In short, whilst the appellant has not helped himself, he has always had a fair and reasonable opportunity to put his case and I am not satisfied that a miscarriage of justice occurred on 22 August or 19 December 2016.

The privity issue

It is a general (but not immutable) principle of contractual law (known as the privity principle) that only a party (ie 'a privy') to a contract is entitled to enforce it (see, Cheshire & Fifoot, Law of Contract, 11^edAustralian edition, 7.1).
However, both the law of contract and the law of real property allow for contracts, and contractual benefits, to be assigned (ie, transferred) to others (see, generally Cheshire & Fifoot, par 8.2 regarding consensual assignments and s 77 of the Property Law Act 1969).
That is what occurred in this case when Coventry Square Pty Ltd transferred Coventry Square to the respondent. Clause 5.27 of the Lease provides:
If the lessor ceases to be the registered proprietor of the Land … the lessor ceases to be the lessor for the purposes of this Deed and the new registered proprietor will then become the 'lessor'.
Accordingly, the respondent was entitled, as lessor by assignment, to the benefits of the Lease and was thus entitled to sue for unpaid rent from 8 February 2013.
Further, the Lease was an unregistered lease for a term not exceeding five years to a tenant in possession at the time of the transfer from Coventry Square Pty Ltd to the respondent, and accordingly falls within of s 68(1)(a) of the Transfer of Land Act 1983, and accordingly is a 'lease' for the purposes of s 69 and s 77 of the Property Law Act. Section 77 provides that a registered proprietor is entitled to recover rent and other benefits reserved in a lease upon becoming the registered proprietor.
In conclusion, there is no merit in the appellant's contention that the respondent was not entitled to sue him for arrears of rent and grounds of appeal (ii) and (iii) are doomed to fail.

Conclusion in relation to the merits of the proposed appeal

In my opinion the learned magistrate correctly directed himself on the relevant legal principles on each occasion, considered all relevant factors and, in effect, ruled in the respondent's favour with respect to a condition that was open on the admissible evidence. His Honour also conducted the hearings in an orthodox and fair manner.
I am satisfied that no ground of appeal would be upheld if an extension of time was granted.

Orders

Accordingly I order that:
1.The application for an extension of time in which to appeal is dismissed.
2.The appeal is dismissed.