Thalmann Holdings WA Pty Ltd v Simm Group (WA) Pty Ltd - [2023] WASC 328

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   THALMANN HOLDINGS WA PTY LTD -v- SIMM GROUP (WA) PTY LTD [2023] WASC 328
CORAM:   HOWARD J
HEARD:   23 AUGUST 2023
DELIVERED          :   23 AUGUST 2023
PUBLISHED           :   25 AUGUST 2023
FILE NO/S:   CIV 1279 of 2023
BETWEEN:   THALMANN HOLDINGS WA PTY LTD
Plaintiff
AND
SIMM GROUP (WA) PTY LTD
Defendant

Catchwords:

Termination of lease - Breach of a commercial lease - Sub-leasing without consent - Whether actions by lessor inconsistent with termination of lease - Application for summary judgment pursuant to O 14 r 1 of the Rules - Application for summary judgment out of time - Application allowed

Legislation:

Rules of the Supreme Court 1971 (WA), O 14 r 1

Result:

Application for summary judgment granted

Category: B

Representation:

Counsel:

Plaintiff	:	Mr J A Robertson
Defendant	:	Ms R R Joseph

Solicitors:

Plaintiff	:	Williams & Hughes
Defendant	:	Mendelawitz Morton Commercial Lawyers

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

Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14

HOWARD J:

(This judgment was delivered extemporaneously on 23 August 2023 and has been lightly edited for clarity.)

Introduction

The plaintiff commenced these proceedings by a writ endorsed with a statement of claim on 21 March 2023.
The defendant filed its defence on 24 April 2023. As will be seen, many of the factual matters alleged in the statement of claim are admitted by the defendant.
The plaintiff leased premises in Kewdale to the defendant pursuant to a written lease.
The plaintiff claims the written lease agreement came to an end when it re-entered the premises following breach by the defendant. As will be seen, the defendant continues to put that matter in issue.
By chamber summons dated 19 May 2023, the plaintiff applies for summary judgment pursuant to O 14 r 1 of the Rules of the Supreme Court 1971 (WA) (the Rules). The plaintiff is out of time to apply and requires leave to make its application. In the circumstances, I am satisfied that the plaintiff ought be granted that leave given the view I have taken as to the merits of its application.
Until very recently, the defendant was in possession of the premises, and by its chamber summons the plaintiff had sought an order that the defendant vacate the premises.
I am told today that the defendant has given up possession of the premises to the plaintiff and the plaintiff no longer seeks an order to that effect.
The plaintiff's chamber summons is supported by an affidavit of Mr Mark Iselin Thalmann dated 19 May 2023 (Thalmann Affidavit), one of its directors.
The defendant continues to oppose the application in relation to the question of whether the lease was lawfully terminated and read an affidavit of Mr Michael Sydney Simm dated 12 June 2023 (First Simm Affidavit), who is a director of the defendant, and a second affidavit of Mr Simm made 17 August 2023 (Second Simm Affidavit).

Procedural History

On 25 May 2023 Master Sanderson made programming Orders which listed a special appointment for 14 August 2023 and ordered parties to file and serve affidavits and submissions.
On 2 August 2023, two days after its submissions were due, the defendant's solicitors applied by consent for a five day extension to lodge their submissions on the basis that a settlement may be imminent.
I note also that the defendant then filed submissions on 7 August 2023; filed supplementary submissions on that same day; and then filed amended (from the first mentioned) submissions on 10 August 2023. Those submissions are relied on today by the defendant.
After hours on 11 August 2023 (the Friday evening before the Monday's hearing), the defendant filed a notice of change of representation and an affidavit of its new solicitor (Ms Richmond‑Scott) made 11 August 2023.
On 14 August 2023, the defendant by counsel sought, on the basis of Ms Richmond-Scott's affidavit, a 14 day adjournment.
Ms Richmond-Scott deposed to holding a belief that:
It is likely that:
8.1there are facts and matters, that are not presently before the Court, that appear to be relevant to a defence and set-off that may be available to the defendant; and
8.2these further facts and matters, that are not presently before the Court, may impact upon the disposition of the Application.
Understandably and properly, counsel for the defendant on the adjournment application (of 14 August 2023) did not seek to advance how a 'set-off' may arise by way of defence to the plaintiff's claim, in effect, for possession of its own property.
Nonetheless, Orders were made on 14 August 2023 allowing the defendant until 17 August 2023 to file any supplementary materials with the special appointment being adjourned to today, 23 August 2023.
When I granted the adjournment on 14 August 2023, I made Orders that the defendant was to pay the plaintiff's costs incurred and thrown away by reason of the adjournment on an indemnity basis.[1]
[1] Orders of Howard J made on 14 August 2023, Order [4].
Ultimately, the Second Simm Affidavit was subsequently filed but no 'new' matters were deposed to which impacted upon the disposition of this application. The defendant also filed a short supplementary outline of submissions which did not make any further submissions as to the disposition of the substance of the plaintiff's summary judgment application.
Nonetheless and notwithstanding that opportunity by the adjournment, the defendant still opposes the Orders sought by the plaintiff.

Factual Background

Save as indicated, the following facts were common ground, or not disputed.
The plaintiff is the registered owner of commercial property situated at 17 Glassford Road, Kewdale, Western Australia (Leased Premises).[2]
[2] Plaintiff's Statement of Claim dated 21 March 2023 (SOC) at [1.2]; Defendant's Defence dated 24 April 2023 (Defence) at [2].
On 30 November 2021, parties entered into a written lease agreement (Lease)[3] over the Leased Premises:[4] the Lease included the following:
…
[3] Thalmann Affidavit at MIT-1; First Simm Affidavit at MSS-2.
[4] SOC at [1.3]; Defence at [2]
Clause 8: Assignment, Under-Letting, Etc
8.1 Restrictions on Assignment
The Lessee shall not … part with possession of the Leased Premises or any part thereof … for all or any part of the Term … without the prior written consent of the Lessor on each occasion PROVIDED THAT the Lessor shall not unreasonably withhold consent where the Lessee shall have first performed the following which shall be conditions precedent to the Lessee obtaining such consent, that is to say:
(a)The Lessee shall submit to the Lessor the name, address and occupation of any proposed … sub-lessee … possessor … together with ample proof to the satisfaction of the Lessor that such a person is of at least equal financial standing as the Lessee and responsible, respectable and capable financially of meeting the commitments of this Lease;
…
Clause 11: Default of Repudiation by Lessee
11.1 Lessor's Rights if Lessee Defaults
If:
…
(b)The lessee … sub-lets … parts with the possession … or agrees so to do other than in compliance with clause 8.1:
…
then in any such case it shall be lawful for the Lessor … to re-enter the Leased Premises … and thereupon this Lease and the Term hereby created shall cease and determine without prejudice to any right of action or remedy of the Lessor in respect of the breach non-performance or non‑observance of any covenant or condition hereof.
…
11.5 Acceptance of Lease Moneys
Acceptance of any Lease Moneys by the Lessor after default by the Lessee under this Lease shall be without prejudice to the exercise by the Lessor of the powers conferred upon the Lessor by clause 11.1 or any other right, power or privilege of the Lessor and shall not operate as an election by the Lessor either to exercise or not to exercise any such rights, powers or privileges.
11.6 No Waiver
No consent or waiver expressed or implied by the Lessor to or of any breach of any covenant or condition by the Lessee shall be construed as a consent or waiver to or of any other breach of the same or any other covenant or condition.
…[5]
[5] Thalmann Affidavit at MIT-1 on pages 28-29, 31-33; First Simm Affidavit at MSS-2 on pages 34-35, 37-39.
On 7 December 2022, the defendant contacted the Plaintiff's Leasing Agent, requesting consent to sublet the Leased Premises to Blackhawk Freightlines Pty Ltd ACN 641 768 710 (BHF) under clause 8.1 of the Lease.[6]
[6] Thalmann Affidavit at MIT-2 on page 54.
On that day, the Plaintiff's Leasing Agent requested further details from the defendant to satisfy clause 8.1(a) of the Lease.[7]
[7] Ibid at MIT-2 on page 53.
On 19 December 2022, the Defendant's Leasing Agent furnished the Plaintiff's Leasing Agent with a proposed sub-lease (commencement date of 19 December 2022), and a credit report of BHF.[8]
[8] First Simm Affidavit at MSS-4 on page 78.
On the same day, the Plaintiff's Leasing Agent requested additional information regarding both BHF and the defendant from both the defendant and the Defendant's Leasing Agent.[9] The following day, the defendant furnished the plaintiff some information, but the balance of the requested information was said to be outstanding.[10]
[9] Ibid at MSS-4 on page 77.
[10] Ibid at MSS-4 on page 72.
The defendant admits it allowed BHF to take possession of the Leased Premises in November 2021;[11] which possession was first noted by the Plaintiff's Leasing Agent on 21 December 2022.[12] By its defence, the defendant admitted that it had breached the Lease by allowing BHF to take possession of the Leased Premises.[13]
[11] First Simm Affidavit at [7] on page 3.
[12] SOC at [9]; Defence at [2].
[13] Defence [2].
On 23 December 2023, the plaintiff issued a default notice to the defendant in respect of the alleged breach of clause 8.1 of the Lease and requested BHF immediately vacate the premises.[14]
[14] Thalmann Affidavit at MIT-3 on pages 110-111.
On 2 February 2023, the plaintiff re-entered the premises and the following day informed the defendant's solicitors that the Lease had been terminated.[15]
[15] Ibid at MIT-4 on pages 113-114.
Despite notice of termination, BHF continued to occupy the Leased Premises until 3 March 2023, when it vacated.[16]
[16] SOC at [14]; Defence at [15].
On 3 March 2023, the defendant resumed occupation of the Leased Premises and maintained possession until recently.

The principles to be applied

As the Court of Appeal said in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24], the principles to be applied on an application for summary judgment are well established:
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings that went to trial, that summary judgment ought properly be granted. (case citations have been omitted)

Disposition of the Application

In its statement of claim dated 21 March 2023 (SOC), the plaintiff pleads:
[11]On 2 February 2023 [the plaintiff] re-entered the Premises, took possession of the Premises and thereby terminated the Lease.
[12]By written notice, from [the plaintiff's] former solicitors, dated 3 February 2023 [the plaintiff] gave [the defendant] notice [the plaintiff] terminated the Lease on 2 February 2023.
By [2] of the defendant's defence (Defence), the defendant 'admits the factual matters only' in SOC [11] and [12]. I have taken that to mean that the defendant admits that the plaintiff re-entered and took possession of the premises on 2 February 2023; and gave written notice dated 3 February 2023 which stated that the plaintiff had terminated the Lease on 2 February 2023.
The document referred to in SOC [12] is contained at MIT-4 on page 113 to the Thalmann Affidavit. It stated, in part:
…
We write to inform you that our client on 2 February 2023 re-entered the above premises and terminated your Lease as a result of SIMM Group (WA) Pty Ltd having parted with the possession of all or part of the premises and having entered into a sublease arrangement for all or part of the premises with a third party without the prior written consent of our client in breach of clause 8.1 of the Lease as previously advised to you.
…
Termination of the Lease is without prejudice to the other rights of our client under the Lease including, without limitation, the right to commence legal proceedings against you.
…
As noted, it is common ground that the defendant had breached the Lease by subleasing and parting with possession of the Leased Premises to BHF without the plaintiff's consent.[17] There was no suggestion by the defendant that it had complied with or attempted to comply with clause 8.1 of the Lease before it did so.
[17] Defence [2]; Thalmann Affidavit at MIT-1 on page 28, Lease clause 8.1.
The effect of the defendant breaching clause 8.1 of the Lease; and the admitted fact that the plaintiff re‑entered the Leased Premises had the effect on a plain reading of clause 11.1 of the Lease that the Lease came to an end.
The question sought to be agitated by the defendant then becomes whether anything which occurred around the plaintiff's re‑entry of the Leased Premises displaces the plain effect of clause 11.1 of the Lease.
The defendant contends that the plaintiff waived the breach.[18] At its highest, it appears that the defendant contends that the defendant’s breach of clause 8.1 of the Lease was waived by the plaintiff and so could not be relied upon. The defendant relies on an email from the plaintiff dated 12 January 2023[19] and an email of 16 February 2023.[20]
[18] Defendant's amended submissions dated 10 August 2023 at [19].
[19] First Simm Affidavit at MSS-4 on page 64.
[20] Ibid at MSS-7 on page 83.
In the defendant's Supplementary Submissions, the same underlying factual material (and emails) is relied upon to assert an estoppel which, presumably, is asserted to prevent the plaintiff relying on the defendant's (admitted) breach of the Lease. It is convenient to consider the asserted 'waiver' and 'estoppel' 'defences' factually together.
The defendant has called the email sent on 12 January 2023, the 'Requesting E-mail'; it appears as part of MSS-4 on page 64 of the First Simm Affidavit.
While the Requesting E-mail sent on behalf of the plaintiff required certain proof from the defendant as to BHF's standing, character and capacity as per clause 8.1(a) of the Lease, it also contained the following:
3.Unless Sim Group (WA) Pty Ltd complies with the notice of default by … (2) immediately ceasing the unauthorised possession and sublease to [BHF], then the lessor reserves its rights to terminate the lease without further notice to the lessee …
On the evidence, the defendant had not done those things prior to 2 February 2023 when the plaintiff re-entered the Leased Premises and, on my view, by operation of clause 11.1 of the Lease, effectively terminated the Lease.
I do not consider it arguable that the Requesting E-mail was in any factual sense a waiver by the plaintiff of the defendant's earlier breach of clause 8.1 of the Lease.
As I read the defendant's submissions, it also contends that the plaintiff's letter dated 16 February 2023 was part of the waiver by the plaintiff of the defendant's breach.[21]
[21] First Simm Affidavit at MSS-7 on page 83.
The plaintiff's letter of 16 February 2023 started with the following:
1.The Landlord refers to and relies on the notice issued on 23 December 2022 (Notice).
2.The Landlord's position is it terminated the Lease and re-entered the Premises and the tenant is an unlawful trespasser.
That letter then acknowledged that the plaintiff had received a set of draft management accounts of BHF and various other matters. In my view, the plaintiff's solicitors' letter of 16 February 2023, at its highest, indicated that the plaintiff was open to further discussions and made certain requests in [3.2] - [3.6] of that letter.
The letter then stated:
4.In the event the items in [3] above are not forthcoming … we will take the landlord's instructions to commence proceedings in the Supreme Court against the tenant and [BHF] seeking the foreshadowed declaratory and other relief for the unlawful parting of possession of the Premises.
It is, in my view, impossible to read the letter of 16 February 2023 as the plaintiff waiving the defendant's breach or disavowing that the Lease had been terminated.
By parity of reasoning, I do not consider it possible to read the Requesting Email of 12 January 2023, nor the letter dated 16 February 2023, either separately or together as a representation or 'inducement'[22] which could properly or arguably ground an estoppel against the plaintiff exercising its rights under the Lease.
[22] As it is termed in [3] of the defendant's supplementary submissions dated 7 August 2023.
The defendant also contended, or appeared to contend, that the plaintiff had continued to accept payment of rent from it after the termination on 2 or 3 February 2023.
There was a factual dispute about that as the Thalmann Affidavit [12] deposed to the plaintiff not invoicing the defendant for rent or outgoings since the termination of the Lease and that any funds subsequently received had been transferred to the plaintiff's solicitors' trust account where they were being held on a without prejudice basis to the plaintiff's right to claim damages for trespass.
Neither party addressed the significance of clause 11.5 or clause 11.6 of the Lease in their submissions or arguments.
In light of clause 11.5 and clause 11.6 of the Lease, in all of the circumstances, I do not consider that I need to resolve the question of whether rent and outgoings have been paid by the defendant and the significance of how they may have been treated by the plaintiff. That is, at the highest for the defendant, it appears that the payment of any rent could not, contractually, amount to a waiver or an election on the part of the plaintiff.

Minute of Consent Orders

Within the hour before the adjourned special appointment of today, the defendant’s solicitors filed a memorandum of proposed consent Orders with the Court.
The parties sought to have the special appointment today be vacated, the summary judgment application dated 19 May 2023 be discontinued, and the matter listed for directions on the Court’s first available date after 30 September 2023.
When Court resumed at 2.00pm, I asked counsel whether each of the matters in Orders 1, 2, 3 and 4 of the chamber summons dated 19 May 2023 had been resolved by the parties.
My concern was that there should be no issues left to be resolved after 30 September 2023 which were before the Court and could be resolved now: the matter having been the subject of several affidavits and submissions, and now two listed special appointments.
While the Court could not (and would not) have made an Order for damages to be paid on the defendant’s breach on a summary judgment application, the Court was otherwise in a position to deal with the other summary judgment matters in dispute today.
After a short adjournment to allow counsel to seek instructions, counsel for the defendant informed the Court that their instructions were that the defendant did oppose the making of Order 3 (regarding whether the Lease had been lawfully terminated) and that the defendant relied on its written submissions.
In my view, on case management principles and the efficient disposition of the Court’s business, it would have been unsatisfactory to leave that issue to be potentially agitated later and so I have dealt with it today.

Orders

Following discussion with counsel after the delivery of these reasons, I would make Orders as follows:
1. The plaintiff be granted leave to bring this application for summary judgment out of time.
2. It is declared that the Lease was lawfully terminated by the plaintiff re-entering the Leased Premises on 2 February 2023.

The parties had agreed that the defendant would pay the plaintiff’s costs of the proceedings to date fixed in the amount of $15,000, and I so ordered.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JR
Associate to Hon Justice Howard
25 AUGUST 2023