Total Destination Marketing Pty Ltd v Ainline Pty Ltd
[2011] NSWSC 1209
•28 September 2011
Supreme Court
New South Wales
Medium Neutral Citation: Total Destination Marketing Pty Ltd v Ainline Pty Ltd [2011] NSWSC 1209 Hearing dates: Wednesday, 28 September 2011 Decision date: 28 September 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: Defendant restrained from terminating or purporting to terminate lease.
Claims for relief in paragraphs 1, 3 and 4 of amended summons to be heard separately.
Motion for discovery adjourned until determination of preliminary question.
Catchwords: PRACTICE AND PROCEDURE - Plaintiff applies for determination of separate questions - separate questions primarily ones of construction - determination would render superfluous need to determine other claims for relief and would narrow compass of discovery.
INTERLOCUTORY INJUNCTIONS - defendant serves notice under (NSW) Conveyancing Act 1919, s 133E asserting breach of lease - plaintiff institutes proceedings within 28 days - s 133G entails lease to continue in force until proceedings determined - defendant files s 129 notice to circumvent operation of s 133G - no evidence of prejudice to defendant if injunction granted.Legislation Cited: (NSW) Conveyancing Act 1919, s 129, s 133E, s 133F, s 133G
(NSW) Uniform Civil Procedure Rules 2005, r 28.2Category: Procedural and other rulings Parties: Total Destination Marketing Pty Ltd (plaintiff)
Ainline Pty Ltd (defendant)Representation: Counsel:
Mr J Darvall (plaintiff)
Mr J A Trebeck (defendant)
Solicitors:
Last and Maxwell (plaintiff)
Doyle Edwards Anderson Lawyers Pty Ltd (defendant)
File Number(s): 2011/248532
Judgment (ex tempore)
HIS HONOUR: By notice of motion filed on 23 September 2011, the plaintiff Total Destination Marketing Pty Ltd claims, first, an interlocutory injunction restraining the defendant from terminating a lease or interfering with the plaintiff's possession of the subject premises; secondly, leave to file an amended summons; and thirdly, an order pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 28.2, that a question said to arise in the proceedings be heard and determined separately and before the other issues in the proceedings. The defendant Ainline Pty Ltd resists the injunction; agrees in part, but opposes in part, the granting of leave to amend; opposes the application for determination of a separate question.
It is convenient to deal, first, with the application for leave to amend. In the current summons, filed on 2 August 2011, the plaintiff claims a declaration that it has validly exercised an option to renew the subject lease and, alternatively, relief against forfeiture pursuant to (NSW) Conveyancing Act 1919, s 133F. Essentially, the plaintiff contends, primarily, that upon a proper construction of the lease, there has been no default on its part such as to disentitle it from exercising the option; but alternatively, if it is wrong in that regard, that - the defendant lessor having served notice under s 133E - the plaintiff it ought to be given relief against forfeiture under s 133F.
After the commencement of proceedings the defendant served a notice of breach of covenant under Conveyancing Act, s 129, foreshadowing determination of the lease and re-entry for substantially the same breaches as had been specified in the s 133E notice. By the proposed amended summons, the plaintiff would add, to its existing claims for relief: a declaration as to the true construction of the provisions of the lease in respect of which default is alleged; an injunction restraining the defendant from terminating the lease and/or interfering with the plaintiff's possession of the demised premises; a declaration that, on the true construction of another provision of the lease, it is not liable to pay strata contributions and that it has paid $166,207.49 in that respect on account of the defendant; and an order that the defendant pay to the plaintiff that sum.
The basis of opposition to the application for leave to amend is essentially that the claims in respect of the strata levies are for a liquidated sum, and ought to be pleaded. It may be that in due course it is appropriate to plead them, but it may be that the dispute is in such compass that it can be simply resolved on affidavit evidence without the additional cost and expense of pleading. In any event, there is insufficient reason why the plaintiff should not be permitted to include those claims for relief in proceedings already on foot between the parties. Whether it is necessary that they proceed on pleading can be determined if and when either party makes application that the proceedings continue on pleading. Accordingly, I propose to grant leave to amend the summons as sought.
I turn next to the application for an interlocutory injunction. The plaintiff's lease expires on 18 December 2011. It claims to have exercised an option to renew the lease by notice; although I am not sure that the evidence discloses when the notice to exercise was given but, on the present hearing, there does not appear to be any dispute that a notice was given.
On 5 July 2011, the defendant gave notice under Conveyancing Act, s 133E specifying, as the relevant breach:
You have breached your obligations pursuant to clause 21 of the lease in relation to payment of turnover rent to the landlord and you have failed to entitle the landlord to inspect and audit the records of the Gross Rooms Revenue in accordance with clause 21.5.
The plaintiff commenced these proceedings by summons, as I have recorded, on 2 August 2011, within 28 days after service of the s 133E notice. By operation of Conveyancing Act, s 133G(1)(c), the effect of the plaintiff commencing these proceedings within 28 days of the first s 133E notice was that the lease was continued in force, essentially until the disposal of the proceedings. On 2 September 2011 the defendant served a further s 133E notice, again relying on substantially the same breach, albeit in respect of later occasions. The relevant breach was again said to be of clause 21.5.
On 16 September 2011, however, the defendant served a notice of breach of covenant under Conveyancing Act, s 129(9); again the breaches specified were of clause 21 of the lease. The effect of service of the s 129 notice was potentially to circumvent the protection given to the plaintiff by s 133G, supporting an earlier termination of the lease.
There is no evidence of any particular prejudice to the defendant from the lease being able to run the course which s 133G would otherwise give it. The notice under s 129 has the appearance of an attempt to achieve an out of Court resolution of a dispute that was proceeding in the Court. In my view, there is every reason why the status quo imposed by s 133G should be preserved, and none apparent why it should be disturbed. The plaintiff is therefore entitled to the interlocutory injunction that it seeks.
That then brings me to the proposed separate question, which pertains to the proper construction of clause 21 - in particular, clause 21.5 - of the lease. If the construction contended for by the plaintiff is correct, that will entitle the plaintiff to the relief claimed in paragraphs 1, 3 and 4 of the summons, and will render superfluous the claim for relief against forfeiture contained in paragraph 2 of the summons. It will leave for further argument the claim in respect of the strata levies, which is in any event a discrete claim.
If the (alternative) claim for relief against forfeiture, in paragraph 2 of the summons, is to be agitated, then a number of discretionary issues will become relevant which are not otherwise relevant to the claims made in paragraphs 1, 3 and 4. As a result, the scope of discovery would be much wider than if the case were limited to the claims in paragraphs 1, 3 and 4.
The defendant foreshadowed, in submissions today - so far as can be ascertained from perusing the evidence for the first time - that it intended to bring a cross-claim for possession. A cross-claim for possession is of itself unsurprising, given the s 129 notice but on that claim the defendant would be limited to the grounds referred to in the s 129 notice, so that it would not extend the scope of discovery to allegedly under paid turnover rent. On a claim for unpaid turnover rent, the wider scope for discovery to which I have referred might well become relevant, but such a claim if successful would result in a monetary judgment, rather than one for possession of the premises. The significance of this is that. even if the cross-claim be brought - and in circumstances where it was raised for the first time in counsel's submissions today, I ought not, on this hearing, afford it a great deal of weight - it would not affect the position that resolution of the separate question favourable to the plaintiff would resolve the question of ongoing entitlement to possession of the premises.
It seems to me that while the separate question, if resolved favourably to the plaintiff, would leave outstanding the strata levy claim and potentially the foreshadowed cross-claim for overpaid rent, it would resolve the issues of breach, and possession, and perhaps (subject to the cross-claim) obviate any requirement for the wider scope of discovery to which I have referred.
Thus the separate question - which itself is a relatively narrow question of construction, the resolution of which I think would take the Court one to two hours - would dispose of most of the issues in the proceeding.
Accordingly, I have come to the conclusion that it is appropriate that the issues dependent on the construction of clause 21.5 be determined separately and before the other issues in the proceedings.
My orders are:
(1) Grant leave to the plaintiff to amend the summons by filing an amended summons in the form of the annexure JB4 to the affidavit of Julia Astrid Bridgewater sworn on 22 September 2011.
(2) Upon the plaintiff by its counsel giving to the Court the usual undertaking as to damages, order that until the hearing the defendant be restrained from by itself, its employees or agents, terminating or purporting to terminate lease registered number XXXXX XXXX upon the grounds specified in the notice of breach of covenant dated 16 September 2011.
(3) Pursuant to UCPR r 28.2, order that the claims for relief in paragraphs 1, 3 and 4 of the amended summons be determined separately and before the other issues in the proceedings.
(4) Adjourn the defendant's motion for discovery to be heard, if necessary, following the determination of the separate question.
(5) Order that costs of the motion be the plaintiff's costs in the proceedings.
(6) Adjourn the proceedings to 7 October 2011 at 10:00 am before the expedition list judge.
(7) Direct that the defendant file and serve a motion for expedition by 30 September 2011, such motion to be returnable before the expedition list judge on 7 October 2011.
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Decision last updated: 30 November 2011
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