Zianni Pty Ltd v Bojbasa - [2016] WADC 116

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: ZIANNI PTY LTD -v- BOJBASA [2016] WADC 116

CORAM: DEPUTY REGISTRAR KUBACZ

HEARD: 22 JULY 2016

DELIVERED : 9 AUGUST 2016

FILE NO/S: CIV 3507 of 2015

BETWEEN: ZIANNI PTY LTD
Plaintiff
AND
SLAVOJKA BOJBASA
Defendant

Catchwords:

Procedure - Summary judgment - Defendant's application - Contractual interpretation

Legislation:

Rules of the Supreme Court 1971

Result:

Defendant's application for summary judgment dismissed

Representation:

Counsel:

Plaintiff: Mr D G Johnston
Defendant: Mr R J Christensen

Solicitors:

Plaintiff: Moray & Agnew
Defendant: Zilkens & Co

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

Anderson v Effexseven (1999) 10 ANZ Ins Cas 61‑424
Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Balangarri Aboriginal Corp (in liq) v Cleanthous [2004] WASC 200
Barrick Gold of Australia Ltd, FL Smidth Inc [2007] WASC 186
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Michael v Nicolson (Unreported, WASC, Library No 950660S, 1 December 1995)
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

DEPUTY REGISTRAR KUBACZ: By application dated 5 May 2016 the defendant, Slavojka Bojbasa, sought to set aside default judgment against her and to apply for summary judgment against the plaintiff, Zianni Pty Ltd, pursuant to O 16 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC).
The plaintiff has claimed damages arising out of alleged damage to its property following the explosion of an automatic teller machine (ATM) installed by the defendant at its business premises which she leased from the plaintiff.
The plaintiff claims an indemnity from the defendant in relation to the damage and/or damages for breaches of the lease contract.
In respect to the setting aside of the default judgment, the defendant says that she did not intentionally delay the filing of a defence and therefore it should be set aside.
With respect to the summary judgment, the defendant says that she has a good defence on its merits and that the defence involves limited documentation and only questions of law and not fact so that it is an appropriate matter to be dealt with summarily.
The defendant's application is supported by the affidavits of Raymond John Christensen sworn 4 May 2016 and Slavojka Bojbasa also sworn 4 May 2016.

Setting aside default judgment

The defendant seeks an order that the judgment entered in default of filing a defence on 31 March 2016 be set aside.
The plaintiff in its written submissions did not oppose the application on the grounds that there are triable issues between the parties.
During oral argument the plaintiff clarified its instructions to consent to that part of the defendant's application.
Given the consent of the plaintiff with respect to the setting aside of the default judgment, I made orders setting aside the default judgment dated 31 March 2016 with costs.

Summary judgment - leave to bring the application

Order 16 r 1 of the RSC provides that any defendant to an action may within 21 days after an appearance or at any later time by leave of the court, apply for summary judgment on the grounds that the action is frivolous or vexatious, that the defendant has a good defence on the merits or that the action should be disposed of summarily.
Given the application was filed some three months following the entering of an appearance, the defendant needs leave to bring the application.
The onus is on the applicant to justify the delay by affidavit evidence. The failure to do so is fatal to applications under this order: Michael v Nicolson (Unreported, WASC, Library No 950660S, 1 December 1995); Barrick Gold of Australia Ltd, FL Smidth Inc [2007] WASC 186 [10].
Paragraphs 6 ‑ 16 of the affidavit of Raymond John Christensen sworn 4 May 2016, deals with the issue of delay. In summary the delay was caused by a number of factors including waiting on confirmation from the defendant's insurer as to its position on indemnity relating to the claim (pars 6 and 7), but more importantly the defendant engaging a lawyer to assist her who practises in family law and the failure of that lawyer to refer the matter to a litigation practice at an earlier time, which then caused the defendant to act in person for a time (pars 8 ‑ 12).
The defendant eventually met with Mr Christensen for the first time on 15 April 2016 (par 13), following a number of referrals. Following investigation by Mr Christensen into the defendant's claim between 18 ‑ 20 April 2016, he contacted the plaintiff's solicitors to discuss and agree to orders programing an anticipated application to set aside the default judgment (pars 13 ‑ 16).
The defendant was then given until 5 May 2016 to make her application to set aside the default judgement, by orders made by Deputy Registrar Hewitt on 21 April 2016.
The defendant then filed the application for summary judgment at that time.
Given the affidavit evidence of Mr Christensen, I am satisfied that the delay in making the application was in no way the fault of the defendant but was a product of her misunderstanding of procedure and engaging a lawyer who did not practice in litigation. The defendant was proactive in seeking legal advice and when she was eventually referred to Mr Christensen, he acted promptly to make the necessary applications.
I therefore find that the defendant has adequately justified on affidavit the reasons for the delay in bringing the application and I therefore grant the defendant leave to bring the application.

Summary judgment – the law

The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Balangarri Aboriginal Corp (in liq) v Cleanthous [2004] WASC 200 [10]; Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. The legal onus is on the defendant to show there is no serious question to be tried on any cause of action raised by the plaintiff: Anderson v Effexseven (1999) 10 ANZ Ins Cas 61‑424, 74,756 ‑ 74,757. The claim must be so clearly untenable that it cannot possibly succeed: Balangarri, [10]; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 ‑ 130.
By analogy to plaintiff's summary judgment applications, where there are disputed facts, and in the absence of cross‑examination, the application is to be determined on the basis that the plaintiff's version of the facts, assuming that it is not inherently incredible, would ultimately be accepted at the trial of the action: Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 608. If after argument there remains real uncertainty as to the defendant's right to judgment without further investigation of the facts, summary judgment must be refused: Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184, [28]; Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332, 335.

Background of the action

In summary and for the purposes of this application only, the agreed facts are that the defendant leased premises from the plaintiff to run a fish and chip shop (the 'Leased Premises'). At some time in December 2013, thieves placed what was believed to be a bomb next to an ATM located in the Leased Premises and detonated it causing an explosion. The ATM explosion damaged the Leased Premises and nearby shops in the same shopping complex as the Leased Premises that the plaintiff also owns.
There cannot be any contention that the defendant entered into a lease agreement with the plaintiff in April 2010 as a copy of the lease was placed into evidence under the cover of the affidavit of Winifred Anne Marchant dated 4 July 2016 on behalf of the plaintiff.
The plaintiff contends that, in breach of cl 3.1 and Item 8 of the second schedule, the defendant installed the ATM in the Leased Premises without the plaintiff's permission. They further allege that the explosion caused damage, not just to the defendant's leased premises, but to surrounding premises in the shopping centre to the value of $113,136.86.
By virtue of cl 6.2 of the lease the plaintiff claims that the defendant is liable to indemnify the plaintiff for the loss or damage it suffered as the damage was 'in connection with' damage to property arising out of an occurrence in or upon the Leased Premises or the use by the defendant of the Leased Premises.
In the alternative, the plaintiff claims damages for the breach of cl 3.1 of the lease.
The defendants contend that it has a good defence on the merits:
(a)as the lease, on its interpretation, does not oblige the defendant to indemnify the plaintiff for the costs it incurred in repairing the surrounding shops; and
(b)even if the installation of the ATM was a breach of the lease (which is not admitted) the breach did not cause the loss claimed by the plaintiff.

Indemnity under the lease

Clause 6.2 of the lease, found at page 23 of the affidavit of Winifred Anne Marchant dated 4 July 2016 reads as follows:
6.2Indemnification of Lessor
The Lessee shall during the entire term, on behalf of itself and the Lessor, effect and keep in good force a Public Liability policy of insurance to provide indemnity in respect of both personal injury to persons and damage to property in the usual terms with respect to the Leased Premises ... .
…
Except so far as the same may be covered by insurance effected by the Lessee … .the Lessee shall indemnify and keep indemnified the Lessor from and against all claims demands writs summonses actions suits proceedings judgments orders decrees damages costs losses and expenses of any nature whatsoever which the Lessor may suffer or incur in connection with loss of life personal injury and/or damage to property arising from or out of any occurrence in upon or at the Leased Premises or the use by the Lessee of the Leased Premises or any part thereof or to any person or the property of any person using or entering on or near any entrance passage vestibule or display window to into or of the Lease Premises or occasioned (wheresoever it may occur) wholly or in part by any act neglect default or omission by the Lessee his agents contractors servants workmen customers or any other person or persons using or upon the premises with his consent or approval expressed or implied.
I have underlined and italicised the word 'or' because this was a critical issue in the defendant's oral argument and central to her interpretation of the clause.
In oral argument, both defendant and plaintiff's counsel made submissions as to how cl 6.2 should be interpreted. The defendant submitted that the clause should be interpreted by removing the word 'or' (italicised and underlined above) as it submits that only through the deletion of that word can any useful meaning be attributed to the rest of the clause.
The defendant submits that with the word 'or' included, interpretation covers any risk of public liability which would be covered in the 'usual terms' of the public liability policy of insurance required to be taken out by the defendant. Otherwise, the tenant would be liable for risks that are not common law public liability risks such as negligence, private nuisance or occupier's liability, therefore falling outside the usual terms of a public liability policy and leaving the tenant with no recourse to an insurance policy. Any such interpretation, the defendant submits is an absurdity and is against the findings of the High Court in Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 where it was held that 'construction leading away from such an absurd, unreasonable and unjust result should be preferred'.
The defendant further submits that the use of the words 'using or entering on or near any entrance passage vestibule or display window or into or of the Leased Premises' indicate that it is the proximity of a person that triggers that part of the clause and not merely the property of a person, that must be 'near'. The words 'entrance passage or vestibule or display window' are all means by which people are conveyed and indicate that the mischief being considered is that of occupier's liability.
Lastly, the defendant submits that if any doubt remains as to the interpretation of the clause, the contra proferentum rule should be applied against the plaintiff's interpretation of the clause.
In opposition to this the plaintiff states that the indemnity clause is manifestly not intended to be limited to the scope of the defendant's cover under a public liability insurance policy. The purpose of the provision is to shift the risk of losses not covered by such policies onto the lessee.
The plaintiff further submits that on the natural and ordinary meaning of the words in the indemnity it manifestly applies to three separate and distinct circumstances:
in connection with loss and or damage to property
(a)arising from out of any occurrence in or at the Leased Premises or the use of the Leased Premises or any part thereof; or
(b)to any person or the property of any person entering on or near any entrance passage vestibule or display window into or of the Leased Premises; or
(c)occasioned wholly or in part by any act neglect or default or omission.
The plaintiff submits that in each circumstance there must be a general nexus between the plaintiff's loss suffered or incurred and the harm in connection with loss of life personal injury and/or damage to property. Each limb of the indemnity then describes a separate and distinct circumstance that has a specific nexus with the relevant harm.
The approach to be adopted in construing a lease is the 'objective approach so that the meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean': Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656 – 657.
Further, a lease has to be construed in context, considering its terms as a whole, giving consistent meaning to all of its terms and avoiding any apparent inconsistency: Australian Broadcasting Commission v Australian Performing Right Association Ltd (109).
There is no doubt that the verbosity of the indemnity clause at cl 6.2 of the lease lends itself to interpretation.
The plaintiff's interpretation of the clause has merit given that it seems to follow the 'objective approach' to construing the term in line with the principles espoused in Electricity Generation Corporation v Woodside Energy Ltd.
I am not satisfied that the defendant's approach of simply omitting a word from cl 6.2 to give support to her interpretation of the clause is an appropriate way in which to deal with the construction of a commercial contract as outlined the in relevant case law. As stated in Australian Broadcasting Commission v Australian Performing Right Association Ltd the clause needs to be construed in context, considering the terms as a whole. Omitting words from the clause does not consider the clause as a whole, in fact it seeks to consider the terms of the clause in the only way which can be positive for the defendant. This is not the correct way in which to approach interpretation of contractual clauses.
I am therefore not satisfied that the plaintiff's interpretation of the clause is claim so clearly untenable that it cannot possibly succeed: Balangarri, that the claim is frivolous or vexatious or that there is no merit in the plaintiff's interpretation and claim.
Whilst there may be some merit in the defendant's defence, this is not a matter which should be dealt with summarily as it is not clear on the evidence before me that the defendant's interpretation of the indemnity clause is the only interpretation that can be found.
Further, the plaintiff should have the opportunity to present its interpretation of the clause, and bring any evidence to support its interpretation in the trial setting.
There is clearly a serious question to be tried in this matter and therefore it is not an appropriate for the summary judgment to be granted.

Breach of lease terms

In the alternative to the indemnity claim, the plaintiff claims damages for the defendant's breach of the lease terms.
I will not go into detail as to the terms of the clauses purported to have been breached because for the purposes of this hearing, whilst the defendant does not admit the breach of the lease, for the purposes of the application breach of the lease was accepted (paragraph 41 of the defendants written submissions).
The defendant submitted that the issue is not the purported breach of the lease but whether any breaches were capable of causing the damages and the loss suffered.
In oral submissions, the plaintiff stated that from its view point the issue of causation is one of expert evidence and it wanted the opportunity to bring in expert opinion on this issue.
Given that following this submission there is real uncertainty as to the defendant's right to judgment without further investigation of the facts, summary judgment must be refused: Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184, [28]; Australian Can Co Pty Ltd v Levin & Co Pty Ltd (335).

Summary

For the reasons outline above, the defendant's application for summary judgment is hereby dismissed.
I will hear the parties on costs.